Transcripts For CNBC Squawk On The Street 20160926

Twitter stock under a bit of pressure this morning. Company getting downgrade to underperform from oppenheimer. Well give you the latest on that potential deal for twitter. Share of deutsche hitting record low on fears a looming 14 billion fine from the u. S. Will force a capital increase. Reports say angela amerimerkel not step in with any state aid. But first, the first president ial debate between donald trump and Hillary Clinton. Could mark a turning point in the race for the white house. Many National Polls showing candidates in a dead heat. Be sure to watch cnbcs debate coverage tonight 9 00 eastern time. Jim, we talk a lot about how the market is synthesizing politics. This is a new chapter now starting now. Theres this undercurrent going on now. Ive got john harwood here, so i always defer, but this trump is more thoughtful trump. I dont know if thats true. I also know roger ailes resigned certain point from fox and rogers id always like to hear how much hes really involved, but if he is calm, if he doesnt throw anything, i think there will be American People who say, hey, maybe i misread this guy. And thats what i think is in the air. All right. But what about getting any sort of sense to the nuts and bolts of some of his policies . You dont think people care . You think all he has to do is show up and be calm and that will be enough . I dont think people are reading no, theres an ethos to what hes talking about. If he stops talking about its going to transcend because hell be less of a wild man. Again, johns here. When you talk about business propositions, there was a nice spirited discussion this morning with andrew and joe. Kind of a little different, little more kind of like little trash talk, more cincinnati bengal like. And one of the conclusions was where are the people who are rich who are Business People who are supporting trump . And it was kind of interesting because they have the top 100 givers, theyre not trump people. That was very much an issue because where are they . And if theyre really for hillary, is that bad for hillary . Joe was the vontes in that exchange. That was my point. There were some personal paths. Thats typical. Look, this is a big moment in the campaign. Some real drama ahead for a huge Television Audience tonight. Its going to be at Hofstra University. I think weve got a picture, some video of the theater where this is going to take place, moderated of course by our colleague lester holt of nbc nightly news. If you look at debate history, theres a lot of debate about debates. Whether theyve been decisive element in any president ial campaign. But lets run through some of the ones that get talked about the most. First of all 1960, the first nationally televised debates john f. Kennedy met with Richard Nixon. And Richard Nixon was sweating. He wasnt as handsome as john f. Kennedy. That was believed to be a moment where john kennedy sort of passed the threshold, moved ahead. Can never sort out all the factors involved in a president ial debate. But that seemed to help john f. Kennedy. 1980 Ronald Reagan against jimmy carter. That was the sole debate they had that year. And Ronald Reagan was talking to a country that was very discontented, kind of like the country is discontent now. Jimmy carter was the incumbent, the president was trying to paint Ronald Reagan as an unacceptable alternative, a frightening alternative, by reassuring the American People Ronald Reagan crossed a threshold that accelerated his momentum. He won that election easily. Then you go ahead to the some of the recent elections that weve had. 2012 mitt romney facing president obama, he made significant progress in the polls after that first debate, but it proved to be a short lived bump. It consolidated republican support, didnt get him over the top. The same thing happened with john kerry in 2004, even Walter Mondale in 1994 against Ronald Reagan. Made progress in the first debate, but it didnt work. Now, the closest analog the Trump Campaign may be hoping to emulate is 2000 when al gore faced off against george w. Bush. You had a country that was at peace, that was reasonably prosperous. Al gore was steeped in policy, long federal career both in the congress as well as eight years as Vice President. He clearly knew more about federal issues than george w. Bush. But the dominant impression that emerged from that encounter was that al gore was a little overbearing, a little condescending and george bush was more likable. That clearly eroded some of the advantage that al gore had reaped from his successionful conventi convention. And of course it was very tight. Gore won the popular vote, did not become president. So your point tonight is less about policy and more about just measuring a candidate personally . Well, i think voters take the measure of whos a potential president. So i think jim has part of it, which is whats your demeanor, whats your bearing. The pugnacious donald trump has not played well with a crowd of voters that he needs, collegeeducated white women, collegeeducated whites in general. But i think, david also makes a valid point, which is donald trump to win those voters needs to show some fluency, some command of issues. Hes not going to match Hillary Clinton. Hes not going to know as much as Hillary Clinton. But hes got to show that hes serious to get that critical quantum of voters that he needs. He is close to Hillary Clinton. But hes behind. He needs more people than hes got right now. And how important will it be in terms of calling him out if and when he says things that are not true . The press seems to be more willing to do lately. Full page story in the washington post. I did, yes. Thats been the entire working the refs back and forth between the two campaigns. Clinton campaign saying lester holt needs to call out donald trump for saying things that arent true. Trump campaign saying not the role of the press. Debate commission sort of backing up the Trump Campaign. Janet brown was on television yesterday and say the moderators not supposed to be the encyclopedia. There are degrees to it. You cant do it all the time. Youre not a third contestant up there. But you do have to try to keep help viewers understand what is true. And i think lester will do that. Also some discussion this morning about how social media has changed the way we digest these events. The idea being the first 30 minutes are so crucial because the narrative gets written and then gets spun continually for the remainder exactly right. The first the opening couple of questions, the body language of the candidates, the content of their answers is going to start shaping reaction in realtime. You know, in the past weve talked about how al gore and George Bush Al Gore may have won the debate on points, but he lost it in the spin room afterwards when people were republicans very skillfully made the case he was kind of a jerk. And that took hold. Saturday night live did a devastating depiction of him, but that happened after the debate. Tonights going to happen during the debate. I cant wait to hear your guys take on, i remember very closely the carterreagan debate. I remember talking with my family. And we thought that reagan was like gold water and that maybe he was off the reservation. That he was certainly not president ial. Who was an actor, and you left the debate and you said, holy cow, hes a humorous man with some sort of charisma. There you go again. The great line. There you go again. We all talked about that. The democrats in the room all talked about that and felt ashamed about their support of carter because they were clearly dealing with someone in re beon reagan who was much more exciting. He had more grounding than donald trump has. But donald trump in the age of Reality Television has got a star quality that has served him pretty well. Absolutely. This will be exciting. 9 00 tonight. John, well see you then. You bet. Dont forget our coverage right here on cnbc. And other news, pivoting to banks, deutsche lows on fears theyll have to face 14 billion fine. Germanys largest lender says Capital Raising is not an issue and has never asked for government help. And then published reports say goldman will cut a quarter of Investment Banking jobs in asia amid a slowdown in m a. But a lot of discussion this morning about what a reasonable fine for d. B. Could be. I think lets compare this with j. P. Morgan 13 billion in justice. Jamie dimon, im not saying anyone was a wizard at seeing things coming. But he had 28 billion in reserves going into negotiations. Deutsche bank for many years did not think this could ever lead to anything big. So if you look at the reserves, theyre dramatically smaller. About six, as i recall. Yeah. You had to pay those fines. And i was looking through about when you had to pay them. Were they staggered . Right. No. You had to write a check. I think thats part of the worry. Deutsche bank came in with a very different lowball offer. And the problem is that if you go back over the way these were litigated previously, everyone knew, dont say anything to the press. Deutsche bank has been as naive as i think some would say wells fargos been. They dont know the power of government. Theyre not dealing from a position of strength. Weve talked often over the last few years about holes in the Balance Sheet. Others have wondered. It is incredible to look at the Balance Sheet of this bank versus market cap in terms of, a, one is enormous and the other is so small. But if the German Government is not going to come to its aid, does it have the wherewithal to understand the pressures from not just regulatory fines but more importantly eroding assets on its Balance Sheet . Or is it taking moves it needs to . Good question. One thing about the Justice Department the last go around, tony west, whos now the General Council of pepsico, looked at the reserves. He looked at what they could pay and he arrived at a figure. Now, tonys moved on. Hes quite an accomplished fella. But theyre looking at the reserves of Deutsche Bank. And Deutsche Bank played its hand all wrong again. Deutsche bank in 2010, 2011 said, listen, its america. They play fair. Now, they play fair, but there were populists, theyre not gone. In the end it came down to how much can we bang them for and still not have big layoffs. Here i dont think the government cares how much Deutsche Bank stays or goes. Thats a good point. Good angle, jim. Well cover more later. When we come back, latest on twitter after david reported the company is closer to a sale. Down today on a downgrade. Well talk about that. Take another rolook at the premarket. One week left in september, one week left in q3, already the least volatile month in years. More squawk after a short break. Orchestration to printing, dramatically increasing print security with enterprise printers by hp. Which is great, unless youre a corporate spy. Unsecured printing makes your network vulnerable. Enterprise printers by hp help prevent costly Security Breaches that can compromise your network and reputation. So im stuck spying the Old Fashioned way. Hey. Im not spying. Secure printing by hp. I. T. Orchestration by cdw. 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. Well, twitter shares are down this morning after oppenheimer downgraded the company to underperform citing decreasing engagement. The stock also they say overvalued compared to its peers. Of course thats all fundamentals. But right now were really dealing more with who wants to buy it and how much theyre willing to pay and how much competition there may be to buy twitter. I can tell you at this point after of course all reporting on friday is simply that when that occurs, in other words when everything gets out there the way it has, typically advisors and the company and its board usually like to try and accelerate things. And that most likely is the case. So, guys, if it was on a timetable x, now its y, being shorter. Lets get the interest, lets get the bids in, lets figure it out and get moving one way or the other. Its highly unusual to read so much about someone, marc benio benioff, just determined to buy it and see the stock go down very big. And have it play out in the media to some degree. Yeah. Thats never been the way to get something cheaper. No, but then the question becomes and many people are trying to figure out what is the willingness of mr. Benioffs part as salesforce ceo what is he willing to pay and for that much how much is google willing to pay. Google have a lot stronger Balance Sheet. Lot stronger Balance Sheet. People do the math and say, well, salesforce, issue 19 of it in stock by the way of their own stock to get a deal done. Thats the level you have to be below if you dont want to have a vote, according to rules right here. And then lever up the Balance Sheet to four times, which wouldnt be that bad. They could get it done. You could get to 26. The oppenheimer analyst talking about their 17 number, you know, based on where they see ebitda for 17. At 13 times 17 estimates ebitda they get a target price of 17 on twitter. But if you go to a 20 multiple, which was paid for linkedin, you get closer to 26 which by the way was the ipo price. Yes. But some of their engagement down 9 in august, mobile uniques up 10 versus snapchat 77. Yeah, its been tough. I know that the Company Continues to pin it anecdotally on things like the nfl. And its really not about that. Ive tried to educate people. Its not about a given event and how its covered. Its about growth. Which is why you move to potentially saying lets see what we can get out there because we dont have the growth. But we may have value in a certain way to a salesforce that is not something that youre necessarily going to fully understand from the fundamentals. This is a Customer Relations play. But its such an expensive one that you better be game, set, match if you buy it. And thats part of the problem. People keep saying to me benioffs out of things to do so hes doing this. Marcs not out of things to do. Marc sees this company in a different light. He just doesnt see it the way it is, which is, oh, lets talk about the debates tonight and the real donald trump. Hes seeing it as a way for Proctor Gamble to stay in touch remember, clorox was using twitter to find out where to send clorox during the h to your point thats a big number to pay for that. That is big. Theres also someone joked on friday that benioff is like the guy swiping right on tndr like on every photo. You dont buy that . No, hes a little more clever than that. I think hes trying to see how much his stock gets hit if he did this. He cares passionately about the stock. Remember, the quarter itself was not that good. And where do i come up with that analysis . Benioff who said it on mad money. This man plays with more of an open hand than pretty much everyone. But we are going into dream force next week, so theres going to be a bit of a blackout where dream force is going to be focused on einstein, which is Artificial Intelligence. But the Artificial Intelligence really dovetails with twitter. Again, the notion of trying to figure out where a customer is going. Zuckerberg thought about that. Of course steve jobs thought about that before everyone. Marc benioff studied with larry ellison, hes not throwing away money the way people think hes going to. We may get more clarity. Hopefully i can bring it in the next few you sure brought it on friday. Dont you love press reports . David fabers press reports did this. What is that about . Its like press reports break the spanishamerican war. No, it was hearst. Well get countdown to the bell in a couple minutes, a busy week, nike earnings on deck, pepsi, carnival, a lot of housing, a lot of fed speak. Well talk about all of that after a short break. What powers the Digital World. Communication. Thats why a cutting Edge University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. 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. 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Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Its a monday morning. Sorry to say. But we got about seven and a half minutes before we get started with trading here. We like to Check Research typically during the mad dash, especially when you think its salient. Theres a very se remembcere analyst made a series of calls rather remarkable. With foot locker, what hes come back with is foot locker goes to overweight, big price target im sorry, hes liked foot locker the whole way, but he kind of agrees with nike ahead of tomorrow when the nike reports. Now, this is important, why . This is about increased competition from adidas. He also has somewhat negative things about vf corp. , but hes like this for a long time. I think people have to recognize this was a battle between nike and under armour, which under armour is woefully smaller than nike, but adidas came back. With the stan smith shoe. When you get management and they come in after youve had this long run of one company, it kind of takes you by surprise. Its a little bit like disney where suddenly we hear espn where people are obviously the stock is not doing good, but the idea something wrong with this senior Growth Company has a lot of people rattled. And youll be more rattled if you read matthews piece. Very smart. Thats a gutsy call a day ahead of earnings. Yeah. I mean, i typically feel that when someone does that theres a level of conviction. Why not wait until after . It wouldnt have harmed anything. But i think matthew just felt that this research that dictated he had to come out. There are a little more coincidence saying a call about nike more about a call of how you should own foot locker because thats the winner whether its nike, adidas, under armour, because the quarter was excellent. They said some things about the linearity of the call Going Forward at finish line, but nikes had a long run, let it cool. All right. Well, were going to have that to keep an eye on this morning in addition to shares of yahoo. We heard from Tim Armstrong, one of the architects of verizon to buy earlier on squawk box. Listen to what he had to say about that huge breach that took place more recently. More right after this. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade youre watching cnbcs squawk on the street live from the Financial Capital of the world. Opening bell set to ring in two minutes. President ial debate tonight, busy week full of fed speak, key earnings, final week of the quarter, jim. Earnings season is going to start soon and already looks for down. I think that would matter more in a world where we werent able to analyze certain sectors. Now, they did point out that oil had been an issue. They think oil is going to be less. The price of oil has had far less to do with the companies that have cheap oil in the ground being able to make money. Thats going to run out this quarter. So youre not going to see that going our way. I do think by the Way Technology will surprise to the upside. Banks will be flat. Retail has been quite weak. Health care is all over the map. I saw this morning pfizer coming out. And i didnt quite understand why they felt they had to come out and say were not splitting in two. It had not been a focus. But thats a kind of thing that a lot of people feel these Big Pharma Companies are no longer really growth engines when it comes to earnings. I know. I have to agree with that. That is a big story, fairly big story, right . There had been this expectation not that it was going to happen tomorrow, but that they would certainly if they had done the allergan deal was also expected. Now theyre happier together. Yeah. Yes. I thought that was very interesting. But i do feel the consumer got funk in the month of august. We havent figured out. The average move for september over the past ten years is 4. 4 . An election year, earnings all over the map and no real volatility, vix so low. All this very surprising. Theres the opening bell and the s p at the bottom of your screen. Guggenheim Funds Investment advisors ringing the bell down here this morning celebrating the launch of its total return bond etf over the nasdaq cogint celebrating its rebranding. Yeah. Some of these companies, thatd be very exciting. I keep seeing new companies ringing the bell. And im you know, i try to keep track as Many Companies as possible. Wow, we really have so Many Companies. We kind of have too Many Companies. I want to put something right to david. We have companies that were formed and came out of the Great Recession and started doing well. Theyre being snapped up. This Philadelphia Company got a very interesting bid from a German Company this weekend. And its just kind of like, well why go buy this company . And i think there are a lot of companies that foreigners think are very undervalued here. Maybe put back to you, monsanto gets upgraded from sell to hold bayer bid, why are European Companies suddenly taking a liking to us given the fact the dollar is so strong . Its a good question. And i dont have one answer for you other than the buyers as in Bayer Monsanto or looking for the same thing theyre always looking for over here. These are the large European Companies were typically talking about, champions in their own industry, in their own continent. And theyre looking for top line growth the way everybody else is. And theyre willing to withstand the dollar in order to do it. Dont forget their borrowing rates are so extraordinarily low that that makes up for any hit from the dollar and then some. Right. Not to mention weve mentioned this strange thing where the ecb is truly buying some of the bonds being issued to finance some of these deals. Which is just extraordinary. Weve also said of the three biggest deals of the year, all foreign buyers shopping in the u. S. You have yes. Its interesting, a lot of those are very weak currencies. If the mexicans start buying our companies, youll know because the peso is 20to1, five or six years ago it was 12to1. Might be a lot of focus of the debate tonight, i know mark fields has said routinely from forbes, not like taking jobs away but with a 20to1 talking about by far the cheapest workers in the world. Very educated workforce. Interesting you mention monsanto because the stock is well below the level it inhabited when the deal was announced when it was around 108. Were talking 128 deal. Well, its all about the concern about antitrust that we had talked about many times here both here in the u. S. And in the eu. Whats Margreth Vestager going to say, marketing tell the Competition Committee and on and on and on. Got an upgrade today. Very significant. I think one of the reasons i want to circle back is theres a bid underneath. A lot of people afraid to short, a lot of people afraid to leave because with the succession of very big companies, the acquisitions have just continued. And thereve been global acquisitions. I bring up the Philadelphia Company this was the old prompted put too much debt on it, came out without a lot of debt, reorganized and had good earnings and, bingo, gets taken away. As we head into the last quarter of the year i can tell you the chatter i get from bankers and everybody else involved in the merger and acquisition industry is things are pretty good. Theyre not 2015 levels, which was record. But theyre pretty strong. In terms of things we may see prior to year end. I still expect a huge number of deals in the technology, Semiconductor Area because there are too Many Companies competing for a few clients work and they have to merge in order to be stronger and have some price heft against their customers. In the meantime chevron and exxon the only dow components in the green with the index down 100. This meeting again in algiers, with the saudis pushing, you dont buy it. Algerian minister said, pumping more saudis arent idiots. They know as soon as they give up that share, america will take it. Theyre exporting a huge amount to us, and these other countries will take it. The saudis are going to have a very big deal, very big ipo. And the saudis dont theres just so much influx, but the one thing thats not influx is the saudis cutting back. According to algeria theyd be cutting back almost 500,000 barrels a day. That would make no economic sense for the saudis to do. What does make sense is you keep talking oil up and make little money each day. Can you imagine if we were able to talk up prices for whatever we were making . Like if every day fritolay came out say tomorrow you might want to buy ahead of tomorrow no. Only these guys can get away with it. The algerian minister convinced a lot of people this weekend. Look at that, oil was down almost 4 on friday. These guys can no one has less credibility than an oil minister. And no one gets treated with more regal like way by the press than an oil minister. David, if i were an oil minister, i would tell you, you know what, i know you dont think that its early in the nfl season, but i bought the super bowl tickets. And you might say, hey, cramer says eagles going to the super bowl so therefore it could happen. I dont know anything. Well, given that performance yesterday. Well, that was Howie Roseman who is the deal maker of the year because he got wentz for us. You got a quarterback for the next 15 years. Thats a good thing. Thank you very much. Lets talk yahoo. Stock down another 6 . As we said many times, yahoo moves to a large extent on the movement in alibaba. But that did change today and more so on friday after we got news of this huge breach that had taken place. Where cashed and cash passwords and user names had been taken. Not conceivably used for anything. Also encrypted passwords. But the question is did verizon know . When did they know . And what does it mean for their deal to buy the core business of yahoo . On friday i reported of course that they had only found out it was fairly recently after the deal was announced that they brought in a firm to do some forensic analysis on an alleged hack that actually didnt take place. And then these guys found the hack from 2014 and a number of database files that had been copied back then. Again, the key to the movement in stock is does this mean maybe theres going to be a material adverse change . Doesnt appear thats the case as of yet. At least in speaking to the lawyers and bankers involved. But heres Tim Armstrong, the guy whos going to run yahoo when and if it gets bought by verizon, on where things stand right now. One of the terms of the contract is that they hadnt had a serious that there were no data breaches. And i guess contractually are you allowed to go back . What does the contract say . You know, i think on both sides the contract has very good protections just in terms of, you know, going through that type of a process on a sale process. I would say, look, theres incredibly smart people on both sides. Our interest level is protecting consumers, protecting verizon shareholders, making sure that yahoo if the deal goes through that we have a great relationship with yahoo on the way through. And were at such an early stage on this that i just think if we comment on anything right now, a, it wouldnt be accurate. And, b, this is one of those cases where its a cause for methodical walk through. Calmer heads. Yes. All right. There you go. There are companies that do nothing but try to figure this stuff out. Right. There are some you call in early. Theres some that you are its already too late. I was surprised at that comment because i thought they should completely have this thing. They want to see if theres any impact on yahoos business. I think thats also part of the comment, lets see where it goes. Because if you see a dramatic falloff in yahoo subscribers then for example, conceivably if youre verizon you can say wait a minute the economic fundamentals are not the same. I think it was erotic, where was a dramatic falloff of online business, david . America online. Yes. So, i mean, Tim Armstrong can uniquely manage any falloff of yahoo. Yes. He had no comment on twitter by the way. No comment. He didnt say benioffs paying 24 . No, he didnt go into benioff, i talked about 20 seconds does that give you any price talk. Hes not saying it. And, you know, the tweet that we referenced, was a personal tweet. Yes. When everyone thinks theres nothing such as personal, its all business. Yes. Speaking of business, chevron the only dow component thats green. Were down 144 in the 10year back below 1. 6. Lets get to dom which you chu floor. You hit a lot of key topics overall floor traders talking about the idea were seeing a little action here in terms of the overall stock market. Perhaps its a good thing as we head towards the end of the month. A historically volatile month for stocks. We do see the fractional losses for the major indices except the nasdaq getting out with the dow down about 140 points. If you look at the way the sector story is playing out, whats interesting because of the fed and everything also around Interest Rates, utilitys had been a monthtodate winner, but in todays trading session as you pointed out because of the oil price story and Everything Else with opec, Energy Stocks are the outperformers, only sector in the green today, materials outperformers as well. The notable laggards, tech and financials, people dont like to see that the two biggest sectors in the s p 500 maybe lagging behind here on an otherwise down day. Certainly well see if volumes validate that. Also take a look whats happening elsewhere with the market because there are some interesting moves happening with regard to volatility overall. We did see that volatility kind of spike higher heading into the fed meeting. All of a sudden it collapsed. And then you saw perhaps that move higher in volatility right now. Thats going to be one of those things were going to watch for sure. The other piece of color i want to add from the floor down here, guys, just about every other person ive spoken to on the way in and out of the Trading Floor today has talked about the idea that the debates going to be a huge watch tonight. Everyone here is talking about what thats going to entail. And every question ive gotten so far from traders down here is what are you expecting. I dont know what to expect and thats why ill be watching tonight. Still, thats going to be a huge deal. Floor traders at the new york stock exchange, guys, theyre a small part of the financial industry as a whole, the population there. But still, throughout the course of the day im going to be trying to figure out, carl, what these guys are thinking, what they want to hear and what they think could be a game changer in terms of how they feel theyre going to vote, guys. Back over to you. Well see what happens at 9 00, dom, thanks for that. Lets get to the bond pits and talk about the aforementioned 10year, Rick Santelli. Hey, carl. No surprise with traders on this floor as a twoday chart of 10s as weve slipped in yield. How far have we slipped . Exactly where were supposed to slip to. Look at a start of august 1st. We are now welcome to the august range. Every day in august but one settled within 1. 50s and now were back in the 1. 50s. It makes sense. This is a key area. The fact of the matter is we didnt trade through the 1. 75. Were back down to the very much overtraded sideways range from august. Now everythings marked rather clearly, according to the technicians. You want to watch 1. 72 to 1. 75 above. And any violation of that bottom at 1. 45 and anything under 1. 50 below us. Remember the alltime low yield closed around 1. 35. If you look at a july 1st start to the japanese government bonds, theres one thing that should jump out at you. The fact is that we are not at zero. Okay. Thats the peg. And of course the market just doesnt ever seem to want to cooperate with the bank of japan on any level, even the dollar yen flirting with 100 today flies in the face of what currencys doing as an export economy, getting stronger. Because actually it dovetails with that. But what doesnt dovetail is the fact the currencys getting stronger when the bank of japans doing everything to make it weaker. And finally, lets look at the dollar index chart starting on 8 1. So many still use the talk of 2015, strong dollar, strong dollar, strong dollar. Its not a strong dollar. Weve been pretty much down on the year other than the beginning of the year with the dollar index. And traders think 94 to 94. 50 is the big line youre supposed to watch below the market. But they dont think were going to violate it any time soon because unlike the dollar yen, the euro relationship which really measures the bulk of the dollar index has been a little more tame with respect to its strength against the dollar. Carl, back to you. All right, rick, talk to you soon. Rick santelli in chicago. When we come back, what do undecided voters want to hear from the candidates in tonights debate . A strategist will tell us what participants in his focus group are saying. Be sure to watch cnbcs coverage of the debate tonight 9 00 eastern time. The dow down 139 and the s p back to 2150. My business was built with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . [baby talk] [child giggling] child look, ma. No hands. Children i, j, k. [bicycle bell rings] [indistinct chatter] [telephone rings] man hello . [boing] [laughter] man you may kiss the bride. [applause] woman ahh. [indistinct conversation] 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. Its peyton on sunday mornings you like football . Its directv nfl sunday ticket. I can watch every sunday ticket game live on any device. Well im retired now. So i just sit here watch nothing. If i were you, id work as long as you can, son. Get nfl sunday ticket only on directv. And watch Live Football anywhere. Switch today and get 100 reward card. A battle brewing in the light beer space. Take a look at this new ad campaign from miller coors taking a shot as rival anheuserbusch inbev. Bud light says raise one to right now, so right not raise the right one . Miller lite has more taste and half the carbs. Comes as the sale of light beer continues to fall. Market share for light beer down 32 from a peak of 35. 5 back in 07. Much of that decline actually comes from bud light where sales have fallen for the past ten quarters. Why is that . Geez, you know what, a lot of this is what constellation has done, stz. Theyve got a double digit beer grower in modelo and corona and i think theyve taken a lot of people by surprise because they were off the radar screen. Of course somehow people identify buds not going to like what i have to say, but i think craft beer versus bud, you know, bud became goliath. And the craft beers play this angle very much. We are not bud. We are not bud. And, you know, the Craft Beer Movement is a far more powerful movement than people realize particularly as craft beers get recognized by each state that allows them to sell beer at a bar. So, i mean, be careful, bud. Youre vulnerable. Vulnerable. Big cash flow. Yeah. Speaking of drinks, theres a drink named for a man were mourning today. The world is mourning the loss of golfing legend Arnold Palmer. He died yesterday at the age of 87. Won 62 titles on the pga tour including seven majors, four masters. Credited with boosting golfs popularity as a spectator sport. Was awarded the president ial medal of freedom and the congressional gold medal. So many things to talk about. His rivalry with nicklaus. There are two reactions. One is we started watching golf in my house with this guy. But second, this guys a businessman. And he was really i think the first sports business person. The first guy to be able to say, listen, were going to take the, you know, take our market, take what is rightfully ours because people watch us, were going to make money. And that was a revolution. Also taking the game from this country club patrician angle into a mass market, arnies army. The cover of time being tweeted again today from 1960. I know that we not only started following golf at our house, but we decided to go see a match. Go to white marsh, which was an open. We always thought it was a rich people game. Absolutely right. Suddenly it was like, wow, were still drinking Arnold Palmers. We dont drink the Arnold Palmer that i often hear about, the, you know, lemonade, ice tea, we tend to augment it. But that may just be our house. I dont know. Gone at 87. Squawk on the street will be right back. Whether its bringing cuttingedge wifi to 35,000 fans. Or keeping a Hotels Guests connected. Businesses count on communication, and communication counts on centurylink. Time for cramer and stop trading. I was going to talk about the secondary, but some things came up this morning. Smith wesson on a loss, i bring that up because tonight ill be watching the debate and thats very much a trump stock. And little very much overlooked downgrade by drexel about disney about hold and nba pressure and cord cutting. Wont go away, but also talks about shanghai losses. Shanghai is you dont think about it as shanghai losses, but volume very light. Threw twx in there as well. They did. Similar challenges. What id say is disney seems luckless whats the thesis on the nba though . Step up costs. Yeah. I know that advice its not nearly as important as the actual cord cutting. And of course shanghais been a huge success even though right. Thats why i thought thats the wrong spin. Lets take a longer view. But i think people are piling on now at disney. I think its a 15yard taunt, frankly. Im going to take it on the kick. We mentioned target earlier. The target. Com president is leaving after just a couple of months, four months after the promotion. I think people have to recognize that target is searching for what went wrong in the last couple quarters. And that was a very big hire. And i think one of the things that went wrong, sorry, guys, is walmart. No one thought of walmart as the way its become. We didnt think that walmart a year and a half ago was embraced with anything other than turmoil. And now i think its embraced with strategy. And Doug Mcmillan has done some remarkable things there. Of course amazon, i dont know amazons down today big target boost. I get buy amazon, buy it. They cant be stopped right now. Cowen takes to 960. They say 46 million prime members. Talk about echo being a multibillion dollar amazon is very tough for anyone to reckon with. Youve got to be like burlington i saw a nice upgrade for the old burlington stores. Burlington coat factory. You have to be so off price as to be able to come in under amazon. Amazons also part of the problem with food. Theres just i dont know, if i had to go up against amazon every day, i would say, you know, maybe i switch industries and go into the auto industry. Its easier. Lets hope they dont go into the tv anchor business. Oh, indeed. Whats on mad tonight . We have a company, visalign, these are the easy braces, so to speak. Theyre everywhere. Everywhere. I mean, i had braces. My mom would say, you can get a milk shake. It was the most painful thing in the world. This is what people used now. When i first heard i said i dont want them. Who uses invisalign. And then you see the numbers dont look at me like that. Just checking to see if you got them. Im done turning to you because what do you mean . Because i get the kind of heisman, the subtle heisman. But its called like this. This is your own heisman. Is that what i do . Yeah. Come on. Terrible towel to wipe that face off. A lot of terrible towels left in the stands there yesterday. Oh, my gosh. You dont have braces. See you tonight, jim. Mad money 6 00 p. M. Good luck tonight. Youll do fabulous. See what happens at 9 00. Watch the market dows down 139 as we count down to the president ial debate in 11 hours and 3 minutes. Good monday morning. Im Carl Quintanilla along with david faber. Sarah eisen is off today. Dow down 139 on the heels of weakness in european banks. Watching for debate tonight at 9 00 eastern time. But in the meantime lets get to some economic data. Rick santellis got that. Rick. Yes. Were looking at the august read for new home sales. And it is down 7. 6 . Thats actually kind of close to what we were expecting. 609,000 seasonally adjusted annualized units. Last month originally released 654,000 was the best reits since the fall of 07. It was upgraded a bit to 659,000, which gives you your minus 7. 6 . Lets get the shovel out and dig deeper into the detail of this report. For that were going to go to diana olick in our d. C. Office. Diana. Not unexpected. We did expect some giveback from july because july we saw that big 12 jump. We have a 4. 6 month supply of new homes for sale. Thats better than in july where we had only 4. 3. And we need that supply right now because supply of existing homes for sale is at record lows. The price 284,000 the median price of a newly built home in august. Thats down 5. 4 . And for buyers thats good news. It may also be a shift in the mix because we are seeing the builders start to look at that entry level buyer again. They werent in the market. They have come back to the market because theres so little for sale right now. Builders, again, turning toward that entry level buyer, not as much as wed like to see. But to see that price come down to 5. 4 is good news for the buyers getting in there. And, again, to see supply rates we just need more housing starts. But this number as you said right along expectations. Back to you. Diana. Thank you for that. Diana olick and Rick Santelli. Donald trump and Hillary Clinton getting ready to go headtohead tonight in the first president ial debate. Our john harwood is with us at post nine for what we can expect to hear from the two candidates and what the fallout may be, john. Carl, weve talked in the last hour about the debate over the impact of debates. Lets take a look at some of the past events that have shaped our understanding of these events. First of all, 1960. You had Richard Nixon and john f. Kennedy. Richard nixson was better looking, wasnt sweating as much as Richard Nixon. May have helped a little bit. Evidence isnt clear. 1980, jimmy carter unpopular democratic president ial. Ronald reagan running against him. Jimmy carter was trying to depict Ronald Reagan as an unsafe alternative. Ronald reagan in fact showed that he was up to the job and was a reassuring presence for voters. That may have helped him, but again, he had momentum before that debate. Then you had 2012. Mitt romney was debating president obama. My mitt romney had not consolidated all the republican vote, had a very strong first debate against president obama. He did consolidate it. Moved ahead in the polls. But as in some other cases that were comparable, that lead didnt last. That advantage that he had didnt last. Same thing happened to john kerry. But heres one where it may have made a difference. Talking about 2000 when al gore incumbent democratic Vice President was debating Texas Governor george w. Bush. Al gore knew a lot about federal policy, was very experienced in it. George w. Bush came from texas, was burdened with the reputation of somebody who didnt know a lot of details. But guess what . George w. Bush came across as more likable, especially in the post debate spin, which influenced the polls. So take a look at this full screen of the polling evidence from that race. Before the first debate al gore went in he had an 8 percentage point lead over george w. Bush. After that first debate they were tied. Even though the night of the debate respondents thought gore won, in the News Conference bush was portrayed as winner. Then after the second debate, george w. Bush took a twopoint lead. After the third debate, he took a fourpoint lead. In the end al gore got more votes than george w. Bush, but those debates clearly reset the race and gave george bush a head of steam which may have been what allowed him to survive that election, survive florida and become president , carl. Thats a good curtain raiser on tonight, john. One topic concerning the economic tax plans, joining us to talk about that chairman and ceo of the federal savings bank, and former senior Economic Advisor to Vice President biden, cnbc contributor jared bernstein. Gentlemen, good morning to you both. Good morning. Steve, i wonder if the examples that john provides if theres an analog for tonight that youre using in your head. Well, i think all of johns points as usual are spoton. I think the important thing is that the American People as a whole are really going to get to see the guy that gets up every day, works his tail off, laces up his Running Shoes and runs. I can tell you from a guy that tries to keep pace with him, its an enduring and exciting task. I think people are going to see hes the kind of clear eyed leader that will lead us out of our challenges. Does his demeanor need to be different than what he had in the primaries. Axelrod wrote over the weekend, ride in on the horse that got you here. Theres the donald trump that is really being exposed and then theres the sound bite donald trump. And i think were going to see the whole donald trump unedited tonight. And i think the American People are going to appreciate that, enjoy it and like it. Steve, id like to ask you and jared both to comment on one particular issue that hasnt gotten a heck of a lot of attention in the race but may get some tonight. Committee for responsible federal budget came out with a study that showed that Hillary Clinton had basically paid for her promises. She would add 20 billion a year to the deficit. But the donald trump would add 530 billion a year to the deficit because of the size of his tax cut. How important is that . First of all, ive stated i believe thats fuzzy math. For a guy that works with math every day and has for over 22 years, i can tell you ive got real questions there. But when i talk about the way we pay for this, these plans, this growth, our fight out of the economy. The math is simple. You talk about tax, trade, energy and deregulation. Add 75 basis points for tax reduction, add 75 basis points for the reduction in deregulation, up to potentially 3 trillion, add another 1 , youre not only 3. 5 total growth in gdp and paying for all of the programs that mr. Trump has talked about, if we can get to 4 , were actually paying down the national debt. Thats really exciting. Does that make any sense to you . No, not really. In fact, that sounds like was it george bush who called it fuzzy math . Thats super fuzzy math. Look, you cant you simply cant cut 5 trillion in taxes over ten years, thats the estimate of what Donald Trumps tax plan do. And cross your fingers and hope to make it down make it back with the kind of supply side trickle down fairy dust the republicans have sprinkled over their tax plans now for decades. And i think the key thing here is that tonight both candidates are going to be competing for a kind of voter in the middle of the economic scale who feels like this economy has left them behind. And if Hillary Clinton has a chance to scrutinize the plan that you just heard being defended, it will reveal that this is a plan that not only leaves middle class voters behind, but according to some new research out over the weekend actually raises the tax bill on low income families because it gets rid of the personal exemption, which is actually a big deal for some low income families, especially single moms. So i think the more substance we get into on tax plans its going to help candidate clinton. Im trying to do the odds about whether or not dynamic scoring gets mentioned tonight. Right. And how politically potent that is for people who are just now turning to the race. With all due respect to my colleague on the other end of the headset as it were, i didnt study music and social work, ive been running businesses. Im an entrepreneur. I employ hundreds and hundreds of people from a selfstarted business. I am the person lets talk numbers. I am the person who is actually an example of coming from nothing, being a main street guy, not a wall street guy with all due respect to this wonderful location were in today. You know, strapping starting a business by strapping up my boot straps as it were and actually moving to action. Doing exactly what mr. Trump is talking about through Small Business tax cutting, through deregulation, have you applied for a home loan in the last three to five years . I can tell you as one of the largest privately held federally chartered banks that one of the issues in america it is an absolute nightmare. You better bring a phone book of paper with you. Spur first time home buyers we just heard a moment ago how recurring sales are off 5. 4 . Thats the market we need to inspire and the market we need to grow. Jared, let me ask you about an issue we havent talked about yet. Hillary clinton the other day proposed a higher estate tax for the largest estates, right . Right. A 65 rate for couples estates of 1 billion or more and a sliding scale going down. Is that a vulnerability for her because he will say youre raising tacraise ing taxes, or get rid of the tax that would tax your children . I think the latter. And let me just say what you heard between me and my colleague is a microcosm of what youre going to hear tonight. Im dolling out hard numbers, evidence, facts about whats going on and hes imputing my College Degree. That may work in a debate, but i think especially in a context like this where people are actually concerned about the facts of the case, we need to look at the numbers. Now, it is the case that donald trump eliminates the estate tax. Okay, thats on the books. The estate tax effects the top 0. 2 of estates. Again, another hard number. You want to talk about who got a College Degree where . I can do it all day. You want to talk about hard numbers, talk about numbers that actually effect people, this is a 4 billion tax cut for trumps own family. Couldnt disagree more. If you want to talk about real americans, im talking about middle and lower class americans. Take the average family, duel income they dont pay the estate tax. No, not estate tax, but look real life, 50,000 a year income, if you have 8,000 in child care, youre going to pay 35 less personal income tax. If you make 75,000, pay 10,000 in child care through his tax break youre going to pay 30 less personal income tax. That makes an enormous difference. Is that a liability for trump . I dont think it is. I think the estate tax clearly states he doesnt want double taxation. Taxation from when you pay tax on your business and then retaxed again when you die. I dont think anyone would disagree that double taxation is wrong. I agree this might be a little bit of a preset to what you may see in a brawl tonight. But i think overall, look, theres a lot, a lot, a lot in common here. What we have to focus on is moving America Forward and moving this economy forward and do that through the fourpoint plan of tax, trade, energy and deregulation. I think he makes a fair point in terms of the people that very small group of people who claim the estate tax who have to pay the estate tax at the top of the scale. They will very much appreciate having it eliminated. And if thats the kind of folks youre targeting, then i think this helps them. And its actually the opposite of Hillary Clinton who is only increasing taxes on people above 250,000. And that by the way is how she avoids adding 5 trillion to the debt over ten years. Now, those are very much value decisions. We finally in this little conversation have actually gotten to critical distinctions between what trump does and what clinton does. Yes. Well just have to see whether voters respond better to kind of a plan that actually reaches out and tries to help the middle class and one of the old trickle down kinds of ideas that mostly cuts taxes for those at the very top. A tax cut for all americans is not a trickledown for all americans. This is a good sets us up nicely for tonight. Steve, jared, appreciate your time very much. Thank you. Thank you. Of course, tonight the president ial debate 9 00 p. M. Eastern time. Coverage begins at 9 00 right here on cnbc. Well, coming up, shares of do Deutsche Bank getting hit on concerns about capital, more trouble also perhaps for wells fargo. The ceo at least getting ready to head back to capitol hill. Plus, your money, your vote. What investors will need to watch for in tonights debate. Were going to discuss that. A lot more squawk on the street. Stay with us. Whether its connecting one of the worlds most innovative campuses. Or bringing wifi to 65,000 fans. Businesses count on communication, and communication counts on centurylink. But the best place to start is in the forest. Kubo i spy something beginning with. S beetle snow. Kubo no. Beetle snow covered trees. Monkey nothing to do with snow. Narrator head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. Kubo wow narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo come on, this way. Narrator visit discovertheforest. Org to find the closest forest or park to you. Could result my name is Valerie Decker and im a troubleman for pg e. I am a First Responder to emergencies 24 hours a day, everyday of the year. My children and my family are on my mind when im working all the time. My neighbors are here, my friends and family live here, so its important for me to respond as quickly as possible and get the power back on. Its an amazing feeling turning those lights back on. Be informed about outages in your area. Sign up for outage alerts at pge. Com outagealerts. Together, were building a better california. Deutsche bank shares on lows that a 14 billion fine will force a capital increase. Reports say Angela Merkel will not step in with any german aid for the bank. And more bad news as well for wells fargo, potentially. Some former employees following a class action lawsuit. Ceo john stumpf expected back on the hot seat before the House Financial Services committee, that is due on thursday. For more on the state of the banks, were joined by paul miller, head of Financial Institutions research at fbr and j lee. Let me begin with you on Deutsche Bank, how much worse can it get for these guys . When you look at market cap versus the size of their Balance Sheet, its a staggering, staggering difference. Is as bad as its going to get now . Or is it going to get worse . You know, i dont cover Deutsche Bank, so i really dont have an opinion about that. All right. I hear you. How about you, do you cover Deutsche Bank at all ju yun li. I dont cover them directly. I dont think the fine size will be as large as the 14 billion being reported. How large do you think it will be . I dont think weve put out any kind of speculation on that fact. But we dont believe it will be as large as the 14 billion thats being quoted in the media. All right. Well, given were not going to get incisight on Deutsche Bank, lets move to wells fargo. Does this drip, drip, drip, if you will, of bad news have an impact on the stock price . I think it does have an impact on the stock price. Its going to continue to have an impact on the stock price until the board makes some type of action here. It seems like the board is not making any action, which is i think going to cause continued pressure on the stock on the downside. And i dont think its going to be that much better for them in front of the house as it was in the senate last week. Hopefully stumpf is better prepared going into this. But, you know, i just think this is going to get worse before it gets better at this point. Joon lee, Interest Rates may go up, wells fargo conceivably amongst many other banks would actually benefit from net interest margin. Is that something that you are taking to your view overall of the sector . Yes, absolutely. I mean, i think for now clearly with the disappointing news from the fed recently, i think, you know, i think many of the banks were sort of banking on more rate rises this year and hasnt materialized. A lower for longer is going to prevail for quite some time. But any uptick in rates will certainly help their net interest margins as we move forward. And, paul, back to wells for a moment. You know, a lot of people questioning whether or not mr. Stumpf can continue to lead that bank. Do you have an opinion . And do you believe a change in leadership might end up being a positive . I think a change in leadership will be a positive at this point. Is for the simple fact i think thats what the regulators want. At this point i think thats what investors want. They want to move this behind. They want to turn that page as long as stumpf is there its hard to turn the page. Thats going to help the stock tremendously when the board or decision comes out of there and stumpf moves on. Sorry, were out of time already. But thanks to you both. Paul miller of course head of Financial Institutions research at fbr and joonyung lee head of financials at fitch. Thank you. Oil moving up the session highs although shares overall in the red under pressure as banks and Energy Stocks continue to fall while investors await the debate tonight. For more on the markets this morning joining us is david lebavits. Guys, good morning to you both. Good morning. David, im wondering with the debate tonight have you been thinking about ideas to hedge a victory in either column . Our view is that the biggest risk that the election poses is one of uncertainty. And our concern is that the building uncertainty over these next few months ends up effecting consumer spending. But our view is that both candidates are a little more progrowth than their predecessors so we think the risk to the economy is to the upside regardless of who finds themselves in office. We think a little more Government Spending would be a tailwind for growth. Were not terribly concerned. We think a balanced portfolio makes sense. Maintain exposure to core fixed income because our view is treasuries will still provide that hedge. But we also see an improving growth outlook. We think it doesnt make sense to get rid of your risk assets at least not at the current juncture. Are you suggesting that sort of home buyers, consumers, freeze into place for the next six weeks . What effect would that have on q3 gdp . I think q3 gdp for the most part is in the books at this point. Our biggest concern is with respect to the fourth quarter. I think the threat that the election really poses is that consumers begin to get a little nervous. Consumers then begin to retrench and an economy which is 70 con sumgs that has impacts on top line growth particularly when investment is lackluster, youre in the middle of an inventory cycle. The consumer is whats keeping us in play right now. So i think the risk is directed towards that part of the economy. Jason, you agree with that . And what does that do to that narrative of the second half recovery from the first half we weakness . Well, you know, we been in this mindset that were basically in this slow growth expansion. And the president ial election really doesnt change that. Everybody kind of keeps bringing up different worries along the way. Were in the seventh year. Growth is too slow. Stocks are too expensive. And yet we kind of keep on plodding on with the market continually moving up and gdp continuing to move up. We think the president ial elections are yet another instance of that. The reality of it is the president ial elections when you look at them the pattern in the markets around them, there are a lot of noise. We tend to get concerns that pop up. We tend to get some market dislocations in sectors, and then they reverse over the next six to nine months afterwards as people basically realize, okay, that was just an election for this one piece of the overall legislative political process. And theres all these other pieces that basically counteract that. Thats the truth here, whether we end up with one or the other president , the reality is theyre going to be faced by a fairly strong oppositional congress in either way and going to have a hard time getting through the more dramatic policies that are the big game changers. Hey, david, its john harwood. Ive gt a question for you. You talked about uncertainty over the outcome of the election. But when you think about either Hillary Clinton or donald trump in the oval office, which one do you think brings about brings with them greater uncertainty Going Forward once the inauguration occurs . So my Immediate Reaction would be that trump brings with him greater uncertainty. Mostly because Hillary Clinton is a known quantity. There we can basically expect at least four more years of what weve had over the past eight. So i think that just not knowing as much about trumps plan, you know, presents him as the greater source of uncertainty. However, i would agree with what my colleague said. We should take a step back and everybody gets really wrapped up in whats going to happen in november. Whos going to get elected president. Theyre going to be faced with gridlock in washington because my guess is whoever takes the White House Congress is going to go the other way. And so, you know, gridlock in washington historically has been good for the markets. And if thats the outcome, i actually think risk assets arent terribly vulnerable. Finally, jason, barclays put out a chart today various instruments and their correlation to the impride probability, brent and s p with the lowest, does that make sense to you . I think the dollar does. He has put out a kind of antiglobalism dollar sort of message every once in a while, you know, kind of u. S. Centric message. I dont know if that makes sense longer term, again because the likelihood of him being able to influence those policies to the degree the market assumes right now is probably a lot lower in reality and therefore probably would move the other way once we get past the elections. Well see what happens tonight. Gentlemen, appreciate that very much. David lebovitz at j. P. Morgan and jason pride at glen meade. When we return, a wild ride for twitter shares, falling today at least amidst a downgrade this morning after that more than 20 gain on friday. 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Everybody weighing in with what they think its worth. Always difficult to know in these kinds of situations, but certainly when one looks at the fundamentals some analysts are coming out saying, man, thats a stretch to say it could be worth as much as call it mid 20s. Where are you . Yeah, were actually at a 13 price target. I mean, the fundamentals i dont disagree on the fundamentals. The fundamentals are weak. Decelerating in q3, we have revenue estimated to be down in q4. Theyre not growing users or engagement growth and theyre also have been trouble pressing up ad load. So that leads to kind of slowing advertising growth. So the fundamentals are weak. But, you know, if you have interested multiple companies that would be interested in the asset, then, you know, maybe they can get somewhere around these levels or above. It will just depend on the interest. And, you know, when i look at it for the companies in my universe, i cover alphabet and facebook, et cetera. For alphabet or google it doesnt make sense with me because they have multiple deals with twitter, multiple deals with double click and also kind of running tweets through some search terms. And also im not sure if investors would like a google acquisition of twitter, at least from investors that ive talked to. Basically they have 70 billion in cash on their Balance Sheet. 30 billion in the u. S. They would use a chunk of that to buy twitter, maybe a buyback or other acquisitions. I think investors would be more comfortable with. Yeah, thats interesting to get that perspective. Of course, in part the board as i reported was moved to consider a sale when interests came in as a result of those deteriorating fundamentals you describe hence if in fact they dont sell one would imagine a lot of air between here and there but unclear to know where its going to end up. Lets move onto facebook. That stock did suffer a bit on friday on this news about the change or at least reporting metrics that werent quite accurate to their advertisers. Long term impact from that at all . No. No long term impact. They miscalculated on a metric that was not billable for advertisers. Its very early for video for facebook. Its a huge its probably the Biggest Initiative at the company right now. I think increasingly over time the feed is going to be more video oriented. And, you know, i dont think it will be a problem. Its a little blip in the road, but not a long term issue at all for the company. Yeah. And theres one very different than twitter at least what i find, john, is people say the multiple actually seems very reasonable given the growth rate. Do you agree . Yeah, totally. I mean, weve seen multiple compression for facebook this year despite the runup in the stock. I mean, if you look at it, facebooks growing. Theyll grow revenue two or three times what google is. And the multiple disparity, its wide, but come in. We like facebook. We have a 150 target price on facebook. We think the runway is clear to get there. You know, we like obviously the video and they just have a lot of good things going on fundamentally at the company. Im told you cover snapchat, so to speak, even though its not a public company. Is that true . And if so, why . We look at it. Its obviously an important player in the social whole social media spectrum. So weve looked at it. Ive seen the company in recently. Things are going well there. They have 150 million daily active users. It really resonates the platform with the younger demos. I think theyre doing 10 billion plus video views a day. People spending 25 million a day on average. Its an important platform. I kind of look at it as half messaging and half, kind of, video or, you know, video content. So its dechtly an important platform Going Forward. And the companys doing great. And finally, i guess well end with amazon. You put a lot of pages out on that recently. What motivated you to write amazon dominates primetime . And what conclusions can we take from it in 20 seconds . Yeah. So prime subs are accelerating at scale in the u. S. We have a proprietary data stream going back four years that suggest 49 million u. S. Prime members. And we think that tam is about 60 million remaining in the u. S. Half of those actually bought goods in august. So we think the conversion will be high. And the runway is clear for much higher prime membership over time for the company. And primes really just changing industry dynamics both in retail and media. Its an incredible mote for amazon. Were super up on amazon. Im going to make sure to give it a read as well. John, thanks for hitting so many different stocks in a short amount of time. Thank you. When we come back actually, send it to susan lee with a quick market flash. Hi, carl, energy among the only in fact the only major sector of the s p 500 trading higher today on the back of rallying crude prices up over 3 at this point. So the top Energy Gainers chesapeake, murphy oil, and this activity being driven by higher crude off the opec meeting taking place in algeria. Producers are trying really hard to work at a plan to try to limit output. Back to you. Susan, thanks. When we come back, Hillary Clinton, donald trump getting ready to faceoff for the first time in tonights president ial debate. What will be the message from the candidates . Make sure to tune in tonight. Watch cnbcs coverage beginning at 9 00 p. M. Eastern time. Good morning everyone. Im sue herera. Here is your cnbc news update at this hour. Houston police say a gunman who shot and wounded nine people has been shot and killed by police. One of the wounded is in critical condition. Police say the gunman was a lawyer and that there apparently was an issue with his law firm. Spanish police have arrested two moroccan men accused of supporting islamic militants. Spanish Officials Say one of the men was planning on joining isis in syria to be trained before then returning to europe to take part in an attack. A wildfire that started in Northern California yesterday has quickly spread. The socalled sawmill fire is only 10 contained as of last night. About 240 firefighters from nine agencies are fighting that blaze. Evacuation orders have been put in place. And the golfing world is mourning the death of legendary golfer Arnold Palmer. He died last night from complications of heart issues. The king brought golf to the masses winning more than 90 tournaments including seven majors. He was 87 years old. That is the cnbc news update this hour. Carl, back down to you. Quite a life, sue. Thank you very much. Our sue herera. It is proving to be the mustwatch political event of the season. Hillary clinton and donald trump squaring off tonight in their first oneonone primetime debate. With polls showing an increasingly tight race, both candidates are vying for the undecideds. So just what are those voters hoping to hear tonight . For more this morning were joined by veteran political strategist, the ceo of clark Street Strategies and former bush and reagan advisor. Guys, good morning. Good morning. Good to be here. You were with us a few weeks ago. You said clinton has so much invested in trump being unhinged in this debate that its easy for him to jump over that bar. Do you feel the same way now . Is that to me, im sorry, carl . Yeah, ed. Yeah, i think the expectations trump has the easier job tonight. He has to not blither. He has to look somewhat informed. He has to look somewhat poised. Hillary, on the other hand, has got to do everything right. I think you may be in a situation where whoever talks the most tonight loses. Hillary has got to diminish the notion that shes rehearsed, that she is just a version of more of the same without the excitement. Obama part three. And thats going to be tough for her to present herself as an agent of change. Trumps got to say hes not dangerous change. He has the easier job. Let me ask a question and have chris react to it as well. How has it changed the task facing the candidates that the undecided voters that both sides are targeting are collegeeducated men and women, collegeeducated whites in particular, which is not the base that donald trump built in the primary campaign. Does he have to do Something Different because those are the voters he needs to reach right now . I think his base is more committed to him than hillarys is committed to her in this sense. Trump has got to appeal to marginal Republican Voters who traditionally vote republican that want to vote republican who are concerned about his temperament and his knowledge. So thats the hurdle he has tonight. On the other hand, hillary had to move to the left. She had to tamp down a Bernie Sanders insurgency from the left. And if she starts to move to the right, then she looks disingenuous and runs the risk of low turnout. Shes going to get the bulk of the democratic vote. She has to worry about the raw numbers in some of the democratic constituencies in suppressing turnout by lackluster debate performances and a lackluster campaign. Chris . Well, this is a tough one to read in terms of this debate because they both have, i think, some challenges. And i would argue trump probably has far greater ones. We did a focus group in florida with undecided voters. And what we found was, you know, these are two candidates that are kind of drowning in a sea of negati negativity. They dont want debate of 90 minutes of back and forth personal attacks. What they want to see is a s substantive debate with real details and specifics about where these two candidates are going to take the country. If you watch donald trump over the primary and general election season, specifics in details amongst some of the more complex issues is not his strength. Hes never been in the situation before where hes oneonone. And that i think poses a serious challenge. If he goes in there and simply just is nice, that is not really going to be enough to move voters. The demographic that youre talking about, the 15 or 20 depending on the state i would call undecided or soft leaners, they want to hear more than just rhetoric where saying im going to make America Great again and again and again. Youve got to be more detailed. I think the challenge for secretary clinton she has all the policy knowledge in the world. If this were a resume contest this election would be over. Shes got to present an impassioned clear vision that speaks to the frustrations and anger that people feel out there. And if the one thing that i think donald trump has done well, he has tapped that anger and frustration. And at a minimum hes won some people over. But those blocks of folks that are still undecided, those are the ones that are going to be really key tonight. I know the bases are going to be waiting for the punches to be thrown and giggling at every right hook. But the reality is its the undecideds that are going to decide this election especially in those key states that were seeing today whether its pennsylvania or colorado that have really tightened up. Yeah. I would disagree with that. Ed, go ahead. Well, i was going to say i dont disagree with that. I just think hillary has the tougher challenge. Shes got to present herself as something of a change agent. This is a change election. And shes got to present herself as something more than the status quo, defending the status quo. Thats going to be hard for her to do. Trump, on the other hand, has to dial change back a little bit. Hes got to be changed. Its not reckless or ignorant. But i would say the one thing that trump has that is a huge hurdle for him to climb, or climb over, one of the things that folks have repeatedly said when weve done these focus groups is, you know, theyre tired of his offensive rhetoric. Its really put them in a bad place with these voters or put him in a bad place with these voters. Hes got to address that. And my guess is he will not. Hes probably going to get asked a question about that indirectly or in response from secretary clinton. And hes got to address that. And even worse, if he crosses a line tonight and he says something that is offensive, there is no place to hide. It is a 90minute no commercial debate. It is thunder dome politics. One of them is going to come out of here with some degree of momentum, arguably. But it is going to be serious challenge for someone like donald trump whos never done this before. Yeah. But i wonder if thats the one thing trump is ready for is temperament questions and temperament tone. What i worry about, im not really a trump supporter, but if i were coaching trump i would more worry about a what is aleppo moment, i would worry about him not knowing what the knew clear triad, not knowing the difference between medicare and medicaid. I wonder, ed, whether attitude at this point surpasses policy aptitude. I mean, we saw what that did for johnson on msnbc, but does that matter for him . I think it does. I think it does. This is a threedebate vat stra. So if the first debate for trump is just about tone and tenor, hes got two more debates to sort of tamp down his knowledge of the issues, geography, other things that need to reassure people that he is sufficiently informed and equipped to be president. You know, heres what i would say to that. I think heres the real danger, i think, for donald trump. It is tone no question. People are going to be looking at that to see how he treats hillary, is he respectful in tone. I mean, everyones going to be looking for the temperament. But heres the reality and everybody remembers at least if theyre old enough the ford comment about eastern europe. Or the rick perry forgetting about the third piece of his strategy of government change. Those moments when they happen become the defining moments of a debate. And trump, i think, faces a real hurdle. Listen, even the smartest person in the world has a difficult time remembering every possible detail. But when you go into a debate lacking basic fundamental knowledge about how government works, public policy, those become a problem. If the moderator asks a pointed question, how would you deal with the knew clear triad . Maybe thats not going to be a question, but if hes asked something that pointed, how does donald trump respond when he doesnt know what the triad is . Ed, let me ask you one last question. Sure. Im pretty sure chris is supporting Hillary Clinton. You said youre not really a trump supporter. Who do you want to win the election . Well, im a nonsupporter at this point. Ive never said never trump. Ive been waiting for trump. Maybe hell come through tonight. Maybe not. Ed rogers, chris kofinis, guys, thanks so much. Well be watching tonight at 9 00. Catch coverage first president ial debate on cnbc. Pfizer one of the biggest losers in the dow. Its falling after announcing it is decided not to split into two companies. Much more ahead on squawk on the street. Stay with us. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive announcer get caught buzzed driving, and you could do some hard time. Woman craig. Knock it off sorry, mom. Announcer it could cost you around 10,000 in fines, legal fees, and increased insurance rates, and that could set you back a few years. Buzzed, busted, and broke because buzzed driving is drunk driving. This is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. Is a rocky month ahead for Health Care Stocks . Goldman sachs says yes, and they have an idea for how to profit. Get the full story at tradingnation. Cnbc. Com. More squawk on the street coming up. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. All right. Welcome back. Lets get over to Rick Santelli now at the cme group in chicago. He has the santelli exchange. Rick. Thank you, and good morning, david. Good morning to my first guest of the week, peter boockvar, thanks for taking the time, peter. Thanks for having me, rick. All right. Its hard for me not to see kind of whats shaping up to be a big issue regarding Central Bank Policy. And im referring to Deutsche Bank. You know, theres a debate now, is it a lehman moment or not with Deutsche Bank. To me, if youre having that discussion at all, its kind of like a lehman moment. Your thoughts on the situation . Well, it is on one hand because its obviously the biggest german bank and its their monster bank. Its the monster bank of europe in a way. Its not necessarily a lehman moment because we have to assume that the German Government in some way will bail them out. But i think it gets to the larger picture of the destruction of the profitability and economics of banking in this modern day regulatory and Central Bank World were in. Oh, i completely agree. And thats where i want to go. Youre on the right road. We got off on the right exit. You know, if you look at it in real macro over simplified terms, everything central bankers are trying to do to help a problem that janet yellen and company now dont think they can fix because it isnt isnt cyclical, its structural issues, in the end these negative rates draghi is dealing with arent going to be healthy for Deutsche Bank, they arent going to be healthy for any bank, so in the end they are creating a different problem thats going to have to be fixed in the future and im not sure Angela Merkel is going to have the political currency to deal with this. Your thought . Certainly not before the 2017 election, but lets break down negative Interest Rates. It is a tax on capital. So every day they are bleeding the european banks. Now, european banks are trying or scrambling to offset that tax by at least raising their cost to capital on others, but most of them cant get away with that, so every day they are basically handing money over to the European Central bank and then draghi says its not my problem youre not making money, its because we have too many banks, so the crux of the problem is monetary policy, its the yield curve, and whats merkel going to do about it, shovel more cash into a capitalized bank, but unless Central Bank Policy changed, the economics of the banking business wont change either. You know, my final issue to bring up is, now this intersection even gets more crowded with vehicles, think basel 3, theres been a boat load of squawking on raising capital requirements. I dont think they are going to be able to deal with the issues of basel 3. Whats that mean in the grand scheme of things, your final comment. The Central Banks are crushing profitability. Politicians are saying european banks have to make more money and provide a bigger cushion, but they are having difficulty because of the damage to their business model, so how do you raise more capital if your profits are declining . I mean, its inherent conflict because i think people dont fully understand the damage that central bankers are doing. Certainly, politicians dont, so i think they need to get into a room together and explain to each other how they can somehow mesh this together, but inherently its impossible. Yeah, boy, ill tell you what, with policy implementers like this, who needs a lehman moment . Policy itself is turning out to be its own little crisis. Peter, thank you. Slow moving train wreck. Exactly. David, back to you. All right, thank you very much, Rick Santelli. As we head to break, take a look where stocks are trading. You can see we are down on all the broad averages right now. By the way, quick programming note. Make sure to catch our coverage of the first president ial debate of the 2016 election kicking off right here on cnbc at 9 00 p. M. Eastern time. We have a lot more ahead for you on squawk on the street. What powers the Digital World . Communication. Like centurylinks Broadband Network that gives 35,000 fans a cutting edge game experience. Or the network that keeps a leading hotel chains guests connected at work, and at play. Or the it platform that powers millions of ecards every day for one of the largest greeting card companies. Businesses count on communication, and communication counts on centurylink. Heres a look at the Energy Sector and real estate. Only s p sectors in the green today on a down day for the markets. Halliburton up, wti is up. Interesting to note the Broader Market is down, that is not a correlation weve seen, when wti has been up, the market very often has followed, and likewise on the way down. Not so today. All right, john, i dont know, about ten hours, i think, judging from the countdown clock. The polls are tightening, what are you going to be looking for this evening . Each candidate has a challenge. Donald trump faces an electorate that most of them think he doesnt have the temperament, kpeens to be president. He has an enthusiastic following, though. Hillary clinton doesnt have the enthusiasm. She needs to generate some traction. David plouffe said this morning this night tonight is 75 of the rest of the election, big moment for both of these candidates. I know youll be there at hofstra, john, and joining us throughout the day and evening. Thanks to john harwood for joining us here on squawk on the street. Be sure to catch the president ial debate 9 00 p. M. Eastern time is when it all starts. Now a look at whats coming up on squawk alley. John . Good morning. Were going to be watching snapchat making big waves in the social media world with its spectacle, a piece of hardware. Also the ceo of roku with an update on the streaming marketplace, what next there, and which candidate is best for tech. We will dig into actual policy coming up on squawk alley. 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. But the best place to start is in the forest. Kubo i spy something beginning with. S beetle snow. Kubo no. Beetle snow covered trees. Monkey nothing to do with snow. Narrator head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. Kubo wow narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo come on, this way. Narrator visit discovertheforest. Org to find the closest forest or park to you. Good morning, it is 11 00 a. M. At Hofstra University in hempstead, new york, the site of tonights first president ial debate and squawk alley is live. Welcome to squawk alley for monday