Lets take a look at what is happening in asia too. Those markets were closed. Hang seng off by. 1 and the shanghai up about a quarter percent. Youll see at this hour, slight gains across the board italy up three major averages up. 1 to. 2 . The tenyear is yielding 1. 772 . The 30year at 1. 28. We were just talking about all of this. All of those moves made. Pretty confusing to figure out what was happening and why i think there are a lot of people looking at a lot of these small events and does it have bigger implications. In this environment where everyone is feeling uncertain. I think these fractures make more people nervous. Whether this is a bigger issue, i will know this weighs on investors sieky i had a 2007, summer of 2007 bnp scare. There was maybe 2 billion that was frozen, sub prime and there was a freak out. At the time, it didnt feel meaningful this is the first time the fed stepped in the only time they did this was in the middle of a crisis. Thats right. This is a warning sign sometimes technical factors are really technical factors there is nothing else. I can say on the black rock trading floor, there was no panic. Interesting just a handful of headlines. Trying to make sense of why they were doing this. Not sure of how much it was happening. I agree a little confusing all of these small things can together really way on how investors act. In the same vein, lets take oil and crude. The issue where even 48 hours ago, there was a freak out they jump by more than 10 after the weekend attacks. Gave back much of those gains the kingdom minister said that that was lost has already been restored indication a third of it may be back on line they are ahead of where people were expecting things to be. They said the attacks wont affect or impact aramcos upcoming ipo now going to be going public and moving ahead nonetheless the country is committed to that ipo and set to hold a News Conference later we expect to hold a lot more about who they think was behind tha that attack. Continuing to deny the attack. We cant believe anything it is going to be six months before they are back on line was the original estimate. Im saying when you are trying to decide right after an event, it is best to hold tight. If we hear that sixmonth disruption, even though we dont report as much skbroo talking about 30 to 40day supply. Six months, i was thinking, wow, they must really be damaged. Weve had power go out and transformers saying, look, when there is even just a fire, it creates lasting damage in this case, it is not going to be six months bringing you the other big corporate story. New developments in weworks push to go publish still before years end adam neumann said he had been, quote, humbled by the shelved ipo and received the role he needed to play he went on to say the weak debut for others contributed to his decision to delay. I sat with him now three or four months ago uber as ipo had taken place. I said to him, how much focus do you put, how anxious are you at the time it was, doesnt matter to me, irrelevant im just suggesting all of this dare i say, there is an element of hypocrisy here. Well, it doesnt matter if you can still get investors interested in you. Having seen what happened to uber, to lyft and smiledirectclub. Because they kicked the tires a little harder. Right if the prices look right you dont have to be concerned about what came before you there will be demand for your shares fedex shares are folding like wet cardboard. That was on fast money last night. Perfect et pretty good. You ever put the trash out in the rain wet cardboard. It is gross. When i read that, i said that person needs a raise and then they messaged me and said im going to use that hes still watching this morning. We appreciate it a big drop in profit sharply cut its output for the year continuing to face weakness in its express unit buying hurt by the u. S. china trade war, amazon, many things here is fred smith on the Conference Call. There is no company or person that has been more vocal in our option to trade policies we are pursuing it is not just the u. S i think china is pursuing bad trade policy ahead of stronger Online Shopping but also spending heavily on transportation and equipment to keep up f fedex ended the contract in months addressing the loss of amazons business the amazon contracts represented a small proportion of revenues, the nature of our business is such that the profits will be affected with significant flow through to the bottom line. We have closed additional business to replace this traffic. They have other deals to replace that with walmart and dicks sporting goods. If it flows through to the bottom line. Small impact but flows through means it was a small impact yo impacto impact outcome chewy. I do everything i can for pet food what did you decide . About the possibility. A dog in the household . Did you put it off. How long can you stall the boys watch the show if it was going to be coming, and it was a surprise. Let me ask you, the more i talk about it, the more they bug you . You believe me, youll be just around germs all the time. I think youll get sick less you want the dog for the kids for the first 20 years of their life for their immunity. At my point, thats over for Mental Health there is a reason all dogs go to heaven, they are all good. They are you know this. I do. I also have a golden retriever wonderful brian, he has these little dogs. Dogs are good for Mental Health ill have to get you more. I already have three. Why President Trump will be likely disappointed. Once we get to the quarter point, we are fine look at the biggest premarket winners and losers in the dow. S been omitted to avoid spoiling this is us for the few who havent seen it. Season 4 of this is us is almost here. To catch every past episode, just say this is us into your xfinity voice remote. Like the one where i. [ buzzer ] or the one where we show. [ buzzer ] when he was a. [ buzzer ] plus you can watch this is us anywhere with Xfinity Stream app. Especially the. [ buzzer ] episode. Awww, that ones my favorite. Catch every episode of this is us with xfinity. It is a big day for the Federal Reserve. Setting the policy decision in the next few hours and injecting another 25point rate cut. Another likely to disappoint President Trump who has called on the fed bone heads. Im quoting. That is actually in the telepromter. Was it . It was. Look. It is right there. I want to have a band, jay and the bone heads bath of pride wear it well how you doing joining us now, alec young our guest host for the hour, kate moore i guess i shouldnt even ask whether the day will come where the overall economy is not as dependent on every minute reaction every little minute action is just the underlying economy. The fed fund futures have gone from 95 chance to 65 because we had better than expected retail sales. I think the market is feeling a little more comfortable. The economy is not on life support. They are cutting from an insurance perspective. I dont think they are cutting because of tremendous nearterm urgency. His range is 2,700 to 3,000. China is coming to talk do you raise to the low end or the high end. I kind of see the overall point. There is a possibility well be pleasantly surprised they said the talks disappointment market sell off in order to get consensus earning growth is around 9 . You need current tariffs to be removed and you need a solid positive trade deal. The market is 17 times to get the expansion you need 7, 8, 9, 10 Earnings Growth. Well probably beat that and come in flat there is no room the tax cut hit a really high bar. Most people are impressed the market has done as well. I would argue that earnings likely to get down 100 in that camp. The valuation on that story is the rest of the opportunity set. Nothing is particularly cheap. Can we stay at 17 times perhaps get another turn on. It is highly possible. If the numbers come down, well be slightly above. You think we can get to 19 times . I would argue. I think it is possible. If we get some of the ticks on the policy side. You mention china trade stuff. You can get an environment the market grinds a little higher. While i see all of the rational for strategists on the street to keep the range between 2,900 and 3,000. Even as a bull, you are not really pounding the table. Relative to where i was six to nine months ago, no, im not. Why not you dont want people to say, yeah, it is not an easy sale and go higher. No. You have all of the sentiment stuff going for you. Weve had to going the entire run, unloved some of the macrodata has been strong. We are quite constructive on the consumer in general. Tell them, kate if you dont have that deterioration there, are we really worried we need to take over aggressively in the overall market if you look at the valuations on the home depot, mcdonalds these are not starbucks. These are expensive. Weve had the move a lot of people are like, wait a minute, these stocks are running too far. Companies like waste management. Great companies but youve got a lot of these trading at 25, 30 earnings dont imply the stocks you just mentioned are 25, 30 which ones mcdonalds is over 200. These are expensive. Are they expensive with sustainable Earnings Growth or because theyll be able to grow throu throughout all parts of the cycle. They are willing to pay a couple of turns higher. Im just saying companies will need time to grow those the fed is still in cutting mode there is no reason to think that rates are going to spike no reason to think you are going to have a multiple contraction it is hard to argue trade is the only wildcard there is big structural al issues that will not be resolved overnight. If they can get rid of the tariffs. I think thats what we need to see. What about the election people Start Talking about some pretty extreme views the market tends to look out six to nine months the other thing, we dont even know who the nominee is. Right it does look like that is shoerg up the street thinks trump is going to win so they dont take these all that seriously the track record is just not that good. Investors get ahead and overexcited and we draw down going to year end, do you expect higher or lower levels . A lot depends on what happens in october i think we know biden and warren are separating themselves two different it is going to be biden warren i think biden warren hell serve one term he thinks thats the ticket he thinks if biden wins, warren will be on the ticket. Make your 6 23 i could change it at 7 23 but right now, thats my call. Viewers are demanding moore. Kate will be with us when we return you have heard that before i have indeed today, the apple watch hes been testing the new watch. Hell join us with the pros and cons and whether im going to have to get a new one. Back in a moment it was sophies big day. By the way, shes the next mozart. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. And now for their service to the community, we present limu emu doug with this key to the city. [ applause ] its an honor to tell you that Liberty Mutual customizes your Car Insurance so you only pay for what you need. And now we need to get back to work. [ applause and band playing ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. When i needed to create a better visitor experience. Improve our workflow. Attract new customers. Thats when fastsigns recommended fleet graphics. Yeah, and now business is rolling in. Get started at fastsigns. Com. Welcome back to squawk box this morning the apple review here. Wearing it with the always on screen thats the big deal. And a compass which doesnt sound like a big deal but ill explain. Previously, you would let the watch idle and it would turn off. Now when you are on the treadmill, now it is always on certain apps the worst thing is not having it always on when you are in a meeting and you need to see what time it is, you have to do this little arm twitch and now everyone is looking at you it is hard to go back i had the series 4 apple told me 70 of its buyers are new buyers this is the best selling watch in the world now it doesnt surprise me. Series 3 is 200. This thing will set you back 400 right for those people, is this necessary . If you want the best apple watch now. If you are new to this and you want to check it out, get the series 3, it is 200 the compass now when you come out of the subway you can use your compass and figure out where you are by the way, she wears an ora ring i wear one to sleep. Joe doesnt think it is that attractive i think it is one of the greatest devices i dont endorse products but it has changed my sleeping patterns apple watch doesnt have sleeping there are Third Party Apps it is uncomfortable to wear overnight and the battery issue. You need to charge it. Apple has said they are waiting to get it right. They bought bet it i dont know what they are doing with it. You walked in one day about how you hadnt slept all night you knew you hadnt. You had the read thing telling you hadnt slept which makes you feel worse about things. When i see im really trending in the wrong direction, it says take action. I dont need anybody to tell me that. The other thing is the value. The value of deep sleep, which is different than rem sleep. Because i sometime ring and the watch at the same time to see how they are doing i think the ring is more accurate do you remember the pioneers, they set off in a covered wagon. They had compasses. They could never go fully no fossil fuels your world is going to change. We are so pam perrperred i love gadgets. Did you know there is a patch. It will monitor your glucose and your blood you can connect it to the phone. Do you admire them . Do you think you are aspiring i cant sleep without airconditioning you could start with a series 3. Ive worked hard my whole life for a nice watch. I want to be like odell. When we come back, well tell you about new challenges for some of the Biggest Challenges in the United States and vaping alert. A new headline out of china. Well be right back. When you retire will you or will you just be you, without the constraints of a full time job . You can grow your Retirement Savings with pacific life and create the future thats most meaningful to you. Which means you can retire, without retiring from life. Having the flexibility to retire on your terms. Thats the power of pacific. Ask your financial professional about pacific life today. Announcer welcome back you are watching squawk box. Welcome back. It is time for the executive edge Tech Companies under fire in the u. S. And europe. Lawmakers grilled Justice Department and ftc officials over investigations to big tech call the the probes empty suits. Apple continues to fright European Union watch dogs in court calling the 14 billion proposed deal in back taxes something that defies reality and common sense today, facebook, google and twitter are set to testify fighting on line extremeism. And juul sales have been stopped in china just days after they went on sale will. Part of it might be a health thing or even a trade thing. A lot of speculation out there meantime, similar things happening in new york but a bit of a different way officials here have become the second state to ban flavored ecigarettes voting to adopt the request that applies to all flavored products other than tobacco. He left out i think there is a problem menthol that is still allowed. Tobacco still allowed. Retailers have a twoweek grace period coming up, ride hailing drivers staging protests yesterday in new york. Well tell you why and talk with the former general manager of uber in new york and dont list our interview with ken burns to discuss his latest project pretty interesting all kinds of Country Music that is uniquely american you are watching squawk box on cnbc through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. You still have service . Call the Insurance Company sfx [phone ringing] its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Welcome back uber and lyft drivers protesting in new york over the new app and how long drivers can use the app. This is different. Congestion prices earlier this year was something uber supported. This is symptoms of what is happening across the company who is responsible for the changes and the new rules . Joining us is josh moore Founding Partner of global capital. Jed, drivers shut down the fdr in rush hour traffic something we are seeing across the country. What do you think . Shutting down traffic is not a good way to bring anyone to your side. Ultimately, unintended consequences of laws created with good intention. Ultimately, if lyft shuts down their app, uber has to respond it is more of a utilization that really take away the flexibility that drivers join. It is about saying if you are going to use a car on the road, it has to be used x percent or 70 of the time. Sometimes the cars will be less used and more used the city has been implementing things to achieve. Theyve limited the number of licenses out 18 months, there is no end in sight there. Wage floors and good policy. They start to take a shot at uber when unintended consequences start uber has dealt with the backlash you see it in france and in california with the minimum wage laws really targeting them i dont work at uber. I did for a long time. I would say, the idea that unregulated is not really true in new york city, they are comply to regulations. Go back, when uber came in. It is the Silicon Valley move fast and break things before they have time to tell you what to do ultimately it comes down to employment laws being written decades before things like uber could exist. The question is are the drivers contractors. Long before smartphone or uber, if the worker sets their own schedule and brings their own equipment, then they are independent contractors. If they are controlled by the company, then they are not this kind of falls in between. Even with travis calling on a third way with unique attributes some of these drivers are contractors because they are working part time. But others if you are driving 60 hours a week, you are an employee now, they are working to try and furiously come up with a fix or compromise i think the company has tried maybe not hard enough to try and find ways to find that middle ground in new york, they kreet aid the the driver guild to try and find this third way forward ultimately, it is not ubers job to drive laws. It is reasonable to think what is going on is not the right way. There are some benefits if they gave to drivers, they would be in trouble with independent contractor law some of the rules are over simplified they are employees, it is not that simple. Right what do you think this means in terms of ride share employees . In new york, im seeing two different laws passed. Sensible ones come from council and the vindictive ones seem to come from city hall. At some point, you need to pick a path i think the sensible regulations make sense and are grade and uber probably supports them. Things like you must be utilized 70 of the time strikes me as being the second group thank you for coming in coming up, one of the streets top tech picks with the top picks for the rest of the year joining us on set next as we head to the break, take a look at what is happening on the markets. We have green arrows welcome back to squawk box this morning tech performing up more than 30 so far this year joining us to tell us some top names in the field right now is mark mahaney, lead analyst at rbc markets. Tell us something unusual, provocative, novel you just ran a story yesterday about wearable devices. Not in the next three to five years, but in the next five to ten years. The idea is there long term. Thats the next frontier for internet interactivity. You had fitbit, that was a device company. Yeah. Go pro, i dont want to say it was a device company. People dont love hardware companies. They dont. Apple is a unicorn on a relative basis. People want to be able to interact with their apps, with voice recognition, Voice Activation Technology where it is, i think its just a matter of time before somebody gets it right. There are going to be a lot of writeoffs, products that didnt work out well. The idea that you can use something seamlessly, thats how we went to mobile devices. This is the next step. It will take a long time. Given the run that techs already taken. Yeah. What would you buy still in this environment. The most contrarian longs in large cap internet right now, the top one is netflix we still like facebook and number three you just talked about it a little bit, uber. Thats a deep contrarian long. Speak to the contrarian on netflix because obviously theres been lots of concern with the rollout plans later this fall of apple plus, perhaps even more importantly disney plus, hbo max. Yesterday nbc universal, comcast our Parent Company announced peacock streaming service. What kind of competition what does that mean to netflix long term i think what it tells you is theres a huge market for streaming and disney agrees and a. M. Le agr apple agrees theres only one company, 150 million paid subs. They can afford to spend 500 million most easily. You dont want to say its zero sum, but how big can you grow the pie in this instance . Well, we have done a lot of survey work over the last year and a half we think 2 3 of people, internet users, would like to purchase at least two services, two streaming services putting all of this in context you could subscribe to netflix, apple and disney and spend 21 a month. You try to go out to a Movie Theater in manhattan for less than 21, you cant do it. Its still a very compelling value proposition. The biggest risk is when and if the day comes i can turn on and off these subscriptions literally and just press the button so when my favorite show is on, i subscribe. The crown is on, i subscribe if its off, i turn it off if i want handmadens tale i turn it off. That is a big risk. That is a real risk if it ever happens, it would fundamentally unless andrew said you cant do it on a monthbymonth basis. Its already happened netflix has always made it super easy to subscribe on, subscribe off. Last time i checked its a pretty Popular Service the services that made it very difficult to turn off and turn back on, cable last time i checked theyre less popular. Users want to be able to turn on and off and the way netflix has to keep them is by generating good content theyre doing it. We had a conversation with uber and the regulatory risks. You like the Company Regulatory risks are across all of these names for good and for bad and for investors its usually bad. Uber is set up where youll see accelerated revenue in bookings growth you have an operator running the company, not a visionary theyll bring down losses. They are taking price actions. They can take pricing up the economics of ride sharing are Getting Better spotify so our number four pick in the group. Right. Two catalysts coming up we think theyll finish the other label deals, sony and warner music coming up secondly, we think theyre going to launch a new type of revenue stream advertising, subscription revenue, anr when labels pay for Artist Development i think were going to see those kinds of dollars move over to spotify. When you say Artist Development, theyre going to be paying spotify to promote artists. Go into rap caviar. You probably listen to a lot of rap music. Oh, absolutely. Theres 12 million of rap caviar all of its organic results. I didnt know there was a channel called rap caviar. 12 Million People use it. One of the things i love about spotify is i learned why people were listening to it. You have to do this right google as a company did this right. They gave you organic search results and eventually began bringing in paid search results. Theres an opportunity for spoti spotify. You dont put bad music in front of consumers artists spend 5 billion a Year Spending their own music and labels there will be a new revenue stream. Mark, great to see you. Thank you. Appreciate it thanks also to kate moore for being with us for the hour great to see you and come back. Another orr ring wearer a clear sweep weve had a couple guests this morning all right when we come back,documentaria ken burns will talk to us about a new project about a uniquely art form, Country Music, but first our guest host for the rest of the show is home depot cofounder ken langone squawk box will be right back. Limu emu doug hour 36 in the stakeout. As soon as the homeowners arrive, well inform them that Liberty Mutual customizes home insurance, so theyll only pay for what they need. Your turn to keep watch, limu. Wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. By the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Jay powell in the spotlight. A titan of business and philanthropy home depot cofounder ken langone talks to us about business and politics. Plus, the history of Country Music. Phenomenally great music. Documentarian ken burns with joe, becky and me as the second hour of squawk box begins right now. Live from the beating heart of business. New york this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc im becky quick along with joe kernen and Andrew Ross Sorkin. U. S. Equities are indicated slightly lower ahead of the fed meeting. Ken langone is here. Were having our own conversation on the set. Dow futures down by 22 points. There he is. Hi, ken. Good morning, everybody. Its great to have you here. How are you out here . Buckle up, people, two hours with ken. Buckle up well get you to the headlines fed ex shares are slumping in the premarket this morning the company missed estimates of the top and bottom lines with this latest Quarterly Earnings it cut its full year forecast due to what it says is increasing costs, slowing Global Economy and, yes, a drop in business from amazon and a bit surprising given that fedex was the one that said they were the ones that decided to end that business with amazon a lot of people imagined that was a low margin business for them and clearly it has taken a hit here were also watching shares of Southwest Airlines after upbeat comments by the company in sec filings. Southwest continues to experience solid demand even after the grounding of its 737 max fleet. It is maintaining its current quarterly revenue forecast and expects its expenses to increase less than it had previously anticipated. If youre out there looking for a home, Mortgage Applications falling 1 10 of a percent released from the Mortgage Bankers association. Refinancing declined but that was offset by a jump in new home applications average 30 year rate rose from 4. 1 thats up from 3. 82 the prior week. We are also watching crude Oil Prices Crude Oil up by more than 10 after the weekend attacks on saudi arabia facilities. They have given back much of the gains after saudi arabia said it would restore most of its oil output and return to normal levels within weeks. The kingdoms new Energy Minister said 50 of the production that was lost in saturdays attack has already been restored. He said the attacks wont affect aramco ipo theyve said the company is committed to an ipo in the next 12 months. The countrys Defense Ministry set to hold a News Conference. We expect to learn more about who the kingdom thinks was behind that attack at that point. Irans Defense Ministry continuing to deny any role in the attacks, but you can see wti down by 43 cents to 58. 91. Its a big fed day. Even bigger, this is a break through that andrew is here with you. I agree. Im trying to figure out, did you not know he was going to be here or are you facing your fears . Are you just deciding to do it head on . Inexplicable coincidences, a handful of times that i have been traveling did shall. His shrink said to him eventually you have to confront the guy. Youve got to show up. Ken, i wouldnt show up you immediately started on him. But in a nice way. Can i ask you a favor can you treat him as a cnbc employee, not as an employee of some of the other places that youve already been casting aspersions to him about. Hes a cnbc employee hes a squawk box anchor. Ill treat him as my friend. Who needs advice. From time to time. Get these entities out of the discussion. Thank you, joe. I appreciate that supporting just to make sure, our journalistic standards on this show, your show see oh, dont you agreed not to bring this up. Stays at the at the highest level. Im being positive. Going to be positive. We want to be the ee ppitome the best journalistic standards. Were going to strive for that chairman jay powell is set to deliver the latest Central Bank Policy theyre expecting another 25 basis point rate cut steve, if we get this 25 basis points i just want to tell you that everything in my life is going to be absolutely perfect. Okay. This is all i this is what im waiting for. Thats the thing. If i can get this 25 basis points and get 1 4 pointless on all this stuff, i think everything like the lion with the thorn, right . In aesops fable. Pull that out. Comes right out. Isnt it crazy . We obsess. Well, some people do. I guess im one of them. Heres the deal, joe the fed announcement takes place with i would call it unprecedented pressure on the central bank to cut here, especially from joe kernen, pressure from other Central Banks like the ecb which are cutting, pressure from the markets. They threaten to sell off if they dont get the cut they want then theres pressure nearly daily from the president of the United States. The question today is do we get a hawkish or a dovish 25 basis point cut. That is is it part of that midcycle adjustment just a couple that were done or part of a longer, deeper easing cycle. We think the committee will signal that it is prepared to do more while avoiding precommitting to additional cuts or any specific choreography edward moya writes, if powell emphasizes the down side risk to the economy and delivers a dovish cut, we could see the punch bowl argument support. What about comments from the president. What kind of impact this has on the fed. First of all, i want to show you trumps comments on the fed are seen 67 of our respondents saying theyre entirely inappropriate. Not somewhat, not neither, not somewhat, but 67 say entirely inappropriate here you know, heres the main question president can say what he wants. Doesnt have any impact on the Federal Reserve. Take a look at the next. I was kind of surprised by these results. 52 say no but 36 say it makes policy looser than it otherwise would be heres some of the commentary we got on this question chris rucke, chief financial Economist Says the fed cant not hear what the president is saying trumps criticism of current Monetary Policy makes it more likely that Interest Rates are going to go lower than they would have richard sichel, philadelphia trust company, says his statements have been correct for the most part. He could deliver the comments more diplomatically. Becky, thats the range of opinions that are out there. Not everybody disagrees with the president though mostly they do disagree on his descriptions for policy but theres pretty good agreement about the way hes saying it. Steve, can you just comment on what feels like a headline thats already disappeared and maybe really was just a technical issue but yesterday, of course, there was a question about liquidity in the market. New york fed stepping in i would argue in a big way they hadnt done Something Like that since the financial crisis. What does it mean in terms of short term reap poe rates and liquidity. I push back, andrew it has not gone away im not saying its gone away im suggesting for reasons that seem inexplicable to me, if you pick up the papers, people are not focused on it. We were very focused on it. The point being, andrew, its a big issue. Yesterday the reap ppo rate, equivalent to the fed fund rate blew out it raises questions of the Federal Reserves ability to reach the target rate of between 2 and 2 1 4. They came in with a 53 billion infusion of liquidity into the market at around 4 00 yesterday it said its plan to go do nother operation this morning, between 8 15 and 8 30 a. M. Where its going to inject an additional 75 or make available an additional 75 billion of liquidity with the question being can the Federal Reserve given the excess reserves that are out there, the huge Balance Sheet it has, the quantitative tightening that it did and all the other things that are going on with the post doddfrank world, can it control the funds rate. I have a question steve, can you name one president since world war ii that said rates should be higher one. No. Of course you cant they all want lower rates because they think it enhances the economy which they think enhappens their political standing this is natural. The fact that the president acts in a different way, stick to the message. The message is simple. So, ken, let me get this right. By the way, i dont think rates should go down. I want to start the first argument of the morning with ken before andrew does. Im out of shape. Do you think its appropriate for the president to call the chairman a bonehead and enemy . Thats okay, it doesnt matter how hes saying, just what hes saying no, no, answer the question. Im going to. Can i answer it my own way i dont know. Do you want to give me an answer, ill read it all right. Im not going to comment on the way the president behaves or what he says or what he does. Why not you comment on Everything Else well, then lets talk a little bit about the Smear Campaign with this guy kavanaugh. So youre not answering the question how do i feel my style is different than his but guess what, he was elected president of the United States and, by the way so its okay. Hes acting exactly the way he was when he ran for the presidency. So it was litigated. So its okay . The public has spoken the way his manners are, the way he says i happen to look, the bottom line to me is how good is he doing and i think hes i think hes doing a hell of a job. He didnt when you say, gosh, i couldndont know whos a bigger enemy, xi or powell, its the typical hyperbole. Youre taking everything he says absolutely seriously or literally instead of seriously hes just saying weve got problems with china, we have even bigger problems i dont know, joe there was another time where the chosen one. I find it amusing the rhetorical loops you have to jump through to defend the president. Well then langone let there be peace and be let it begin with me. Do we not stant for any proprietary and public discourse. Calling the president of the United States a racist no, i a racist. Let there be peace and let it begin with you you were about to say. Me . Yeah, you just said it. I was about to say i think maybe the fact that this guy is this way gives him the resolve he gets beat up every single day. Theres nothing that he can do that he gets any credit for. Maybe because the president is put together this way hes able to resist. I couldnt take it, and im a battler. I couldnt take what hes taking. Having said that, when it comes to the fed, you dont necessarily think the fed should be cutting here . I dont think what this was all about, taking an aspirin before you have a headache do you take an aspirin before youve got a headache . No. This is what this is. So then but you want to take the you want to take the antibiotic before its sepsis, too. No, you should not take an antibiotic before you need to because that will give you resistance. You dont want to wait until youre actually really sick to take the antibiotic. Look, rates are there are preemptive things this is a currency thing right now, ken. I just bought a company, closed on it last week, majority stake in a company 2. 63 for five years fixed this is nuts youre being given its like saying to a gambling addict, hey, heres a million bucks, go on into the casino and have some fun. You dont think the economy warrants this . Savings are up. Consumer debt is down. Equity in homes are going up and doing strong the consumer by virtue of their spending habits, everybodys sort of enthusiastic id be careful about christmas, but everybody is enthusiastic about this coming Christmas Season i feel pretty good about it. I dont know if im at 5 . I dont know where the hell i am the thing is, i think things are pretty good. But i think just to be fair, i think you could genuinely say, because i think this is actually how you feel but you dont want to say it, that you like the results of where the country is today with the president in charge and that you want to give him credit for that but at the same time you dont like the things that he says and the way he behaves no, no, no, no, no. Dont put words in my mouth. Hes trying. Im saying his style is different than mine would be and i think ive got to give him the benefit of hes the president of the united all these people ought to understand hes the president of the United States. He can be whomever but i imagine at some level you i know you well enough to know that if he was not the president of the United States and he was your child you would be very unhappy if he behaves this way and said some of the things he says. Have you met any of my kids yet . Listen, im not arguing im saying to you, im not going to judge how this man behaves. I know one thing i know one thing, i could not take the pummelling he gets every if he came up with a cure for every form of cancer, the New York Times would find something bad about that. Walked on water its because he cant swim. If jesus happened to come back and say, lets take a walk on the water, theyd say its a fraud. He cant swim. Look, im not ducking a question im being honest i am not going to judge this man because, frankly, i think it takes what hes got to put up with what he gets. Every day. You dont think he creates what he gets meaning the exaggerating its circular its circular. It may be to an end you like but im not sure youre a person who always believes the ends justify the means. Do you like the names hes called like a racist. Thats a very serious thing. I think there are people of color in this country who feel that way and the fact that they feel that way suggests that theres something wrong. Wait a minute. I dont know what that is and i dont know whats in his heart and im not going to make that statement 62 years ago when i tried to get a job on wall street a guy said to me point blank, kid, we have jewish friends, we have irish kids we put on the floor of the exchange and italian kids we make clerks in the back office i have two choices, angry and ridicule them for what they did or say, ill show these bastards i think i did the latter the point im making to you is you cant make an argument based that some people might feel that way. All i know is judge him by his behavior look at what he did the other Mariana Rivera getting the president ial Freedom Award go look, talk to people that did business with him. Talk to people who did business with him . There are people who wouldnt do business with him. I cant think of a worse thing to be called in my mind than be called a racist. If you call me a racist i dont disagree with you i think its a terrible phrase, but the fact that there are people in this country who feel that way suggest that theres something on the other end of this. Youre telling me that if somebody has feelings that automatically means it is . No, i dont, but i think that theres been theres been enough commentary over the past several years publicly that has led penal to feel this way. Ill tell you what and i dont think its all political. Ill tell you what, how about what we did at nyu. Which was fabulous, by the way. Hold on. Ken langone has effectively created an endowment so that med students do not pay a dollar to go to medical school and i think we at this on this set and everywhere else have given you an enormous amount of credit. Were talking about felt. Somebody felt this way that they thought im irresponsible for what i did does that mean im irresponsible . Think about that. Ken what i did and my wife did you were at a town hall it went from impeachment to racism theyre all on that page youre not going to get around. Back to interest. I think this should not go down. Terribly misreported and misrepresented hold on i dont think rates should go down. Yes. I think the economy is in good shape do i worry about a recession i worry about a recession every day. Ken is with us. Were going to have much more with ken for the next two hours. Never one to hold back, my friend. When we come back, ken burns has a new documentary out and its all about Country Music and its roots. Fascinating industry hes going to join us in just a bit to discuss in the meantime, check out the futures as we head to that break right now. We are in the red. Dow off about 42 points. More on the markets straight ahead. Stay tuned, youre watching squawk box on cnbc at synchrony, were changing whats possible. For instance, we know how your customers shop. And what theyve already purchased. Like this lamp. And we use those insights to show you what they might consider buying next. Midcentury modern, nice. That way, you can keep sending them offers for the perfect products. And that keeps them coming back. Hows that for changing whats possible . Welcome back, everybody. Wall streets index funds have achieved a new level they have 4. 27 trillion in assets as of august 31st that is more than the 4. 25 trillion in actively managed funds. Thats the first time the index funds have ever had more assets than their actively managed counterparts. Still to come, a 16 hour tour of Country Music. Ken burns explores he is our special guest. Well talk about the business of c Country Music when squawk box comes right back. Time now for todays aflac trivia question. Nasa unveiled its first space shuttle, the enterprise, in 1976 how much did it cost to build . The answer when cnbcs squawk box continues we think you would really shine in the aflac program. Aflac coach saban we have Health Insurance. Did Health Insurance pay for everything . No, we still have bills. Aflac gives you money directly to help with those. Aflac and your deductibles, knee brace, whatever you choose. Aflac sounds like a winner. Umhum. Umhum. We try. Get help with expenses Health Insurance doesnt cover. Get to know us at. Duck aflac dot com the riskiest job. The consequences underwater can escalate quickly. The next thing i know, she swam off with the camera. Its like, hey, thats mine i want to keep doing what i love. Thats the retirement plan. With my annuity i know theres a guarantee. Annuities can provide protected income for life. Learn more at retireyourrisk. Org now the answer to todays aflac trivia question. Nasa unveiled its first space shuttle, the enterprise, in 1976 how much did it cost to build . The answer, almost 10 billion all right. Our next guests new Film Documents the roots of Country Music and the start of music as a business in this country lets welcome documentary filmmaker ken burns whose new film for pbs is Country Music and anybody whos seen anything youve done, ken, i can watch anything youve done, but this really appeals to me, too. 16 hours. 16 hours. Its surprising. Thats not enough time . Not enough time. Eight sessions. Eight episodes. Eight two hours. One is a little bit more than that i was totally surprised by the africanamerican influence on early Country Music, about the role of women, strong women from the beginning, the original american guitarest is may bell carter of the carter family. About the tensions between commerce and creativity. But i was not prepared for the emotion. Im a child of r b and rock and roll the emotion in this. When you hear Hank Williams say the silence of a falling star lights up a purple sky and as i wonder where you are im so lonesome i could cry right i mean, this is poetry mixed with music which is the fastest art form there is, and it is one of the dominant art forms. Uniquely american jazz, too, but jazz has spread to become a global so theyre all the same theyre all variations of the same thing we tend to think that jazz or that Country Music is a separate one thing. Its not an island nation. You dont need a visa or a passport it abuts jazz and blues and rhythm and blues and with rhythm and blues, its the parent of rock and roll and it abuts country and gospel and folk and classical and rap and all these things. If youve seen walk the line or anything about johnny cash, you know its hes the patriarch of the whole story here. Right we started with the carter family, which he marries into and we end with his death at the highlight of his career when hes working with a rap and hiphop producer rick reuben theres no borders in Country Music. Thats the interesting thing commerce and convenience categorizes this stuff into these categories that just dont work. Youve seen personal jesus. That is haunting. He insisted in doing a gospel show in everyone of the things he did and his tv shows. There are struggles, too, as you point out. W wayland and willie go to nashville. Willie goes to nashville, he gets drunk and lays out in the middle of broadway expecting to be run over. He wakes up, comes back, leaves nashville and can make it in texas and he warns his buddy, wayland, dont go. Wayland goes and says, im doing it on my terms and totally revolutionizes artists control of where they can record, who they can record with, what kind of production values that theyre going to have. So that outlaw movement, as much of us celebrating its otherness, was actually a wholesale takeover of the music business at the time. Ken burns redneck. All my people come from the mountains of virginia. You were a hillbilly. Its in your blood . Its in my blood but its in all of our blood because its connected to jazz. Whats the origin so the origin is essentially an intersection of commerce and technology when youve got a phonograph, which has been around for a few decades and this new medium of radio in the 1920s, youve got what were called race records, meaning the blues, being sold and then broadcast and then somebody said, well, i wonder if theres a market for this old time hill Country Music which then became hillbilly music which then became country and western which then became just country. And so the creativity and commerce went hand in hand sometimes they fought, sometimes they didnt. When rock and roll was dominant in the 50s and Country Music sales died, nashville scrambled and started producing the nashville sound, smoother strings, no fiddles, backup singers, not scratchy nasal voices and somebody asked chet atkins, what is the national sound . He jangled the change in his pocket and said, thats the national sound meaning it was a business proposition and all of these things coincide. Youre not reaching people unless youre in concert with a business formula sometimes that works to the arts detriment. Right. Sometimes it works from a business perspective how is country doing relative to the others so right now . Right now. Oh, its huge second only to rap and hiphop. Hiphop the gulf between where country is relative to rap and hiphop, is it very close . Relatively close. It wasnt always that. This was hillbilly music looked down upon by most people the songwriter Harlan Howard called it 3 4 of the truth it means its speaking about universal Human Emotions that we all feel, like im so lonesome i could cry. About love and loss. And its only because we dont deal with that that we disguise it and say its about pickup trucks, good old boys, sixpacks and beer theres a minor genre thats about that on the break you were mentioning songs that are specific to the intimate relationships between men and women and country has been able to do that the way r b, and ill tell you something. When ray charles had Creative Control of an album for the first time in his professional life, he shocked everybody in his crowd by recording modern sounds in country and western music and the number one hit of the summer of 1962 was i cant stop loving you, a country song by don gibson. Go back and listen to that this morning and thats a country song its sung by a soul singer but its a country song. Ken, there must be a lot of video. Civil war, if you needed old stills. I couldnt get an interview with abraham lincoln. Exactly but i couldnt stop watching that even though it was all stills so you must have this is all video. We had 101 interviews only one of them is an historian. The rest are the singers themselves who know the history as good as any historian weve lost 20 of those people including meryl hle haggard we looked at 100,000 photographs and used 3300 in the final film and we listened to thousands of pieces of music for the 584 music cuts that are in there. Rock aint rock either. The stones. Theyre all different every one of the beetles got into music through Country Music. Ringo, it was gene autry and could you boy stuff. George harrison it was elvis. Jimmy rogers and the guitar playing of chet atkins for williams, im so lonesome i could cry. Its powerful i made it for andrew. I didnt make it for you because i knew i had you. You have wayland and hanks on his fourth generation. Holly was the third episode called the hillbilly shakespeare. She ends the whole episode by singing a capella im so lonesome i could cry. I got more texts and emails from people saying i was in tears i didnt think i liked Country Music. Literally, i made it for you you can stream it. Its available for free from pbs. He did a nice thing for you. Yeah. Ive been working for 8 1 2 years for you. Somebody is. I know. Im disqualified. You might believe in the American Dream again. Let me tell you something ken burns, thank you. Country music is on pbs stations streaming online ken and ken. Thanks for being with us congeve got a lot more mi up on squawk. When we return, well talk markets and the fed when we come back the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. It also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Really . [horn honks] man this is what i feel like when i wear regular shoes, cramped and uncomfortable. We can arrange a little upgrade. Which is why i wear skechers. Wide fit shoes. They have extra room throughout. Theyre like a luxury ride for my feet. Try skechers wide fit shoes. So, every day, we put our latest technology and unrivaled network to work. The United States Postal Service makes more ecommerce deliveries to homes than anyone else in the country. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to squawk box. Want to get back to the markets as we count down to the fed statement coming up on rates later today. Joining us is Portfolio Manager at douglas c. Lane hes a cnbc contributor. Mike santoli is in the house cnbc Senior Market contributor and a man whos been holding his tongue all morning, ken langone is here. Being nice. Sirat, what do you expect to hear later today well, i wont make it a multipart question. I think we get 25 and then the question is what do they say from there i do think theyll say things arent as bad as everybody expects. Right. Is that ghusd or bad news is that good news bad news or is that bad if they go that way, i think thats more the market will perceive it as bad news because theyre probably going to think that 25 and done. So you want them to say that, ah, maybe things are not as good as we want them to be. I want them to say what the truth is i think the reality is like we need people to tell us whats really going on as opposed to trying and see where you think the market is going to do. Whatever they think the market is going to do, Something Else will impact it look at oil. There are always uncertainties going on but i think getting real data and real facts would be really important. You know, what i worry about with lower rates, i worry about people disregarding risk and thats scary, thats how you get in trouble. Speaking about risk. What do you think obviously, thats always the concern. Weve got a quarter point rate cut in july and the market did not take it as an excuse to add more risk. It backed off. Its not the cost of money thats necessarily the trigger for whether people are going too get reckless. Look at how big private equity is today. Sure. Overall thats all Interest Rate related all Interest Rate. And Balance Sheets. All im saying is i hope people are mindful, okay when you borrow money you have to pay it back. Theres a group on the fed thats making that thats why they voted against the rate cut in july and it will probably happen again. Speculate what we hear from powell and the same question that sirat just spoke to this issue of what the market needs to hear to go higher and what could result in it going lower. The pattern is the market wants to push for a little bit more and more clarity that were going to get more. Honestly, i think the instinct for powell is going to be to preserve flexibility because whats happened since the last meeting in terms of their major inputs u. S. Economy has shown to be on firmer footing inflation ticked up a little bit. The yield curve was slightly uninverted again there are a lot of these things you thought its a no brainer. Theyre not going to close the door theyre still in the mode of saying what were doing now is about sustaining the expansion, not necessarily rescuing an economy. I think the technical factor i know doesnt mean muchbut th yield curve just when you look at it from the outside, if it inverts it just causes the algos to start selling. Talking about technical factors, what was your reaction to what took place in the short term repo market yesterday morning . The rescue effort that the new york fed took on it was a little delayed in terms of it happened, but i think its important that they do those things. Thats kind of what you want them to be there as a backstop to if things happen in the economy and things are bad liquidity is important is that a blip or is that going to be a signal that were going to are we going to look at this and say it was a weird technical thing and be well forget about it or when people write history three, four years from now to the extent theres a problem well look back at that . I think its a mostly technical thing. Its a clog in the plumbing in the short end but related to real things, which is massive treasury issuance is packing bank Balance Sheets. Theres more collateral out there than theres cash to serve it thats really the main cause banks are a little bit constrained in terms of how they can make markets in this stuff and lend cash. I would feel a little better if the people in that room, some of them, had some practical business experience. Theyre academics. Jay powell had some practical business experience. Some. Talking about people that understand how it works every day. And what worries me is at some point were going to have to pay. Were going to have to pay for the freedom that we have in borrowing money because people think if its that cheap i never have to give it back. And the offset is when you start raising again, the negative shocks that come with that i mean, were so low as it is. I just dont think you go lower and people are going to borrow more its already really low. Low compared to what . Were going down today to just under 2 in the short end. Thats one of the highest Interest Rates in the world right now. Right . So thats the world were in. Right are you looking around the globe or historically . Relative to where we are its very low relative to the rest of the world, but then also we have much stronger growth and we have a currency thats not depreciating. We all of a sudden got a growth scare as soon as real Interest Rates got above zero. How strong are we in terms of momentum we dont know. Ill tell you Something Else, i give the banks a lot of credit im really i think the banks today are in the best shape theyve been in certainly in my lifetime i think notwithstanding that theres a shortage demand, i dont think the banks are going to drop their standards. Thats important because if we get into a bad period, this time around the banks are going to be there and particularly i saw mike last night. We didnt get a chance to talk im impressed with the guys running the banks, jamie, mike moynihan, mike theyre solid Business People and theyre not going to do foolish things. A couple of the ones you just mentioned have done well, bank of america and jpmorgan. New high. Theyve done very well, too financials in general have not done well because of the low Interest Rates. Because theyre more theyre more focused these big banks have a diversity of business activity. Jpmorgan has a robust Asset Management business, big time, and they do a hell of a job. I say that because im a customer of theirs and im partial because i own their stock. Im a fan of jamies. Our over weights are in financials theyve got wellrun businesses. Not given any credit for it. To the credit part, theyre not giving credit easily away. Thats what im saying. But theyre trading at 11 times earnings, 10 times earnings, discounts to book. I mean, look at Morgan Stanley, jpmorgan. Blackstone holdings. If you do get this kind of rotation we saw last week at the start of it, youre going into a value rotation of companies that have secular growth rate if you have patience and youre not just looking for momentum, i think thats an area it will take a while to play out. By the way, you mentioned Morgan Stanley these other banks, Morgan Stanley, goldman sachs, merrill lynch, theyre doing a good job, too. Im very comfortable and i think if we had a bit of a recession it might not be a bad thing. Thats interesting. Okay weve got to go. Sirat, thank you. Mike, thank you. Good to see you both. When we come back, taxing charities. The economists behind the wealth tax say the rich should be taxed on what they own and what they give away. Robert brink joins us with a preview. What do you have good morning, becky under the creators of the wealth tax the bill and Melinda Gates foundation would pay over 1 billion a year in wealth taxes we look at the planned costs and taxing charities coming up after the break. Todays big number, 428 billion. Thats how much money americans donated to charity in 2018 according to a report by giving u. S. A. Should be guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. When didwhen i needed ton . Jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Were changing whats possible every single day. With technology that helps you offer shoppers a better experience. Take your companys app. We can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. And now, applying for credit can happen in a flash. That way, more people can start shopping with you on the spot, wherever they are. Hows that for changing whats possible . Fushing for a tax on giving. They say that as part of a new wealth tax, certain types of charity should be taxed to, quote, curb abuses the first is private foundations which have about 850 billion in assets so bill gates would be taxed on his 100 billion in personal wealth along with the more than 40 billion that the bill and Melinda Gates foundation have. That would include, of course, money given to the foundation by warren buffet so warren buffets wealth would be taxed as part of gatess wealth the economists say that people who give to donoradvised funds or private foundations still control that money until its distributed to charities so, quote, such wealth constitutes individual power hang on, ken were going to get to you. I know youre going to speak up on this. And, quote, it makes sense to make such wealth taxable warren has not publicly announced how charity would be specifically handled in her wealth tax the tax, of course, is an annual tax 2 on over 50 million, 3 over 50 billion what theyre not saying is when you give 100 million to the langone nyu Medical Center or the harlem childrens zone, that would not be taxed what theyre saying is when you put that money in a foundation or donoradvised funds which is essentially warehousing that wealth, not going to charity, they say that should be taxed because you still control it but its not doing any social good. You have a legal obligation once you put it in there to pay out 5 . With foundations. Not with donoradvised funds. Thats 850 billion. Thats the biggest piece youre talking about. Yeah. Yeah donoradvised i dont understand what im saying to you youve already got all the money that buffet and bill have put in there, 5 s got to go out every year. Correct. Thats automatic. Its a guarantee theyre going to get if they kept it themselves they have no obligation. Some would say 95 isnt doing any good and has already been written off taxes and is not being counted as their wealth when it should be because they control it. The one thing this nation ought to be proud of itself for around the world, and this city, is philanthropy. Absolutely. Philanthropy is a decidedly an american thing and a new york thing. Thats why i want to be clear. They are not saying you should tax the philanthropy you do. Theyre saying when you have a foundation that sits there for eternity. Can i put a fine point on this. Ill take help wherever i can get it. I think theres a couple of issues here. The first is what i think theyre really looking at, i havent talked to these folks directly but a lot of people around this issue, is folks in a windfall year, in a windfall year take that money and rather than have it taxed put it into their own personal foundation. As a result that money effectively does not get taxed and is not used for basic services you get to direct that money. If you didnt put it in, you dont have the obligation of paying that 5 . You eventually have to pay it out, but the question is in these windfall years how should people think about that . By the way, the flip side, i would make this argument and bill gates has made the argument, one of the Biggest Challenges is if you have a lot of money, is you are giving it away smartly in one year forcing people to give a lot away the first year doesnt make sense either theres sort of a balance. One of the things i admire about your philanthropy, you dont just write a check, you give your lead othership, wisdom, guidance. Thats stretching the point when you say i have wisdom, okay dont get carried away. My point is shouldnt you give it while youre alive instead of putting it in a foundation ive got to hold on, ken new jersey congressman josh g gottheimer youre the other half of the conversation, ken. Whats the name of your group . Problem solvers caucus. Youre barely a democrat. Probably not in favor of higher taxes at this point when you see whats happening in new york and new jersey now carl icahn is gone enjoying his money in lorida. Im a proud democrat but i dont think the answer is at all to actually raise taxes on Charitable Giving. I think thats a big mistake youll disincentive advise people from giving you want to encourage and ensure that money actually gets to charities and goes out the door to help people, thats the purpose of giving, but if you make a decision in that year to give it to a foundation, right, to make a charitable contribution, we should encourage that in fact, we should celebrate that the idea that we would do anything to disincentive advise it is a huge mistake. I dont have a foundation for one reason i want my wife and i, we earned it, to decide where its going i dont want to put it into a foundation where 50 years later somebodys giving something to a cause that i would not have any interest in or i might resent. But the bigger issue here to me is this. Believe it or not, i have five years to earn enough money to write off when we make a big for example, when we paid all that money to nyu, there was no way i could earn enough money in those because its a 30 limit on top of that. Right. That was a give away with no tax benefit at all. Right. Nothing changed in my life. Not one my wife and i havent given up ken, youre doing it right. The question is what about those who take the tax windfall. Then they end up hiring their family members hold on like the clintons oh, yeah like the clintons. Bingo. Christ, everybody is shake my hand on that thats true and its a problem. Worse than that, she had all of her Campaign Workers a huge problem. The point is there are people who are abusing the system you might not have abused the system if you want to use the clintons as an example, go for it. How about gates and buffet, theyre not abusing the system they put billions of dollars this is not an argument about the gates and buff fets. Charity at large and the fact that theres a lot of wealthy people who have used charity and abused it paying their families, paying for planes, paying for all sorts of things. Yes, it gets put into charity. There are costs on top of the charity. Lets have a real conversation about how this works. Let me tell you what bothers me a little bit. A lot of these people that are making these decisions will give you all the barbed wire you can eat for nothing. Thats their charity they havent given a nickell away and theyre sitting here saying, be careful it works in america. Philanthropy go to colleges, go to universities. I agree with that i think kens making a great point. We have to be very careful with everything we do we should make sure theres no abuse, make sure the money gets to charity we have to be careful not to disincentive advise Charitable Giving just like we need to bring tax cuts back and all of these things. Are you on board with a wealth tax, an Elizabeth Warren wealth tax you know the answer to that of course i dont believe in that i think we need to make sure im confused. I want to have a coming out party for the Republican Party membership josh every time youre on i say the republicans are leaving the lights on for you when you want to come home. There are plenty of fiscally responsible democrats. I want to throw the party for you, josh, when you come out of the closet lets stick with Charitable Giving today. Okay. You dont want to talk about wealth taxes seriously, wealth tax is gaining a lot of momentum in a large part of the party of your party now and the Republican Party. I think its a sliver of the party. Really . That is thats not the answer i mean, the answer is josh, 2 3 of americans support it you talk about party leadership, both sides, but the wealth tax is popular and getting a lot of traction, a lot of coverage. 2z 2 3 of americans support it. If you are in new jersey with a state level Tax Deduction where we got totally hosed, weve been paying more to help others lets talk about actually addressing real tax issues we have to deal with. Joao degrees with that. Reinstate the salt deduction. No. I kind of like thats not what happened to me. I liked it that these profitable states, i know they contribute a lot, andrew. Finally they might have to get their act together, some of the salt states, right stop doing what youre doing its not working congressman, thank you langone will be here ken will be here for the rest of the hour robert, you wont. Squawk returns in just a moment tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. You spend days researching bed sheets. And weeks picking a dog bed. So why would you settle for just any bank . Just do what you do with Everything Else. Ask the internet ask your friends. Ask your co workers. Were pretty sure theyll send you over to us. Because were not just a bank. Were an ally. Ally, this is pamela how can i help you . Liberty mutual customizes your Car Insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Decision day at the fed. Much of wall street expecting a rate cut but could we see a curveball from the central bank . Shares of fed ex under pressure this morning. Blaming amazon and a slowing Global Economy as it slashes its outlook. Vaping nation. How big could the stock be after the backlash from ecigarettes. The final hour of squawk box begins right now live from the most powerful city in the world, new york. This is squawk box. Good morning welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. Im joe kernen along with becky quick and Andrew Ross Sorkin we have langone, home depot cofounder, ken langone. You might not know hes here because hes pretty quiet. Not a bad day today intimidating me, joe frightening me to death. Oh, no. Hard to do. First time hes been here when with me, the last four times. I was starting to get the signal he didnt like me. Do you know when we see each other we hug. Hug, sometimes kiss. I give a kiss. I give a kiss you dont shave, i dont kiss all right we are down 40 points on the dow this morning a little bit weaker after the good week we had, nine Straight Days of dow gains. Now weve sort of been stabilizing at least up a little bit yesterday after all was said and done. Down today the nasdaq indicated down 20. The s p off 6. Treasury yields, when we had oil surging i thought maybe that would cause yields to strike oil comes back down a little and now this is moderating 177 on the ten year and the 30 year as you can see is back above 2 pretty handily. Lets get you caught up on our top stories this morning it is decision day at the Federal Reserve. The feds expected to cut Interest Rates today for just the second time in a decade although it is unlikely we will hear much about future cuts from fed chair jay powell the Central Banks also expected to face some internal opposition if it votes for a cut with at least two discents from regional fed president s likely crude Oil Prices Trading lower this morning as saudi arabia said that production would fully recover from this weekends attacks by the end of the month. The saudi Defense Ministry said it will be holding a News Conference to provide proof of irans involvement in the attacks on saudi oils infrastructure iran is denying that it was involved in the violence but again we will hear more later today. Fed ex reporting a miss on the bottom and top lines for the first quarter. The company cutting its full year forecast. Fed ex is blaming the slashed outlook on higher costs, lower revenue from amazon deliveries and a slowing Global Economy trade war part of that fed ex shares down by 11 this morning. Congressional leaders getting a chance to question some of the nations top tech regulators yesterday ylan mui joining us with some of the drama that unfolded. Good morning. Reporter good morning, andrew well, tensions between those federal regulators spilled out into the open yesterday during a hearing in the senate. The ftc and doj admitted that there is a little bit of turf warfare over their duelling antitrust investigations into big tech ill take that as a yes, things have broken down, at least in part. Im thats yeah. I would i would agree with that. I cannot deny that there are instances where chairman simons and my time is wasted on those types of squabbles reporter ftc chairman Joseph Simons and the doj got slammed by lawmakers on both sides of the aisle. Mike lee said it doesnt make sense to double up on big tech and that companies could exploit their fight. Doing so simply looks like both agencies simply want to have not just a slice of the same pie but the same slice of the same pie at the same time. This will have the agencies stumbling over each other and will inevitably undermine rather than further the enforcement efforts of both agencies. Reporter now the senators pushed the agencies to be more aggressive in their investigations and after the hearing was over i asked dell raheem if he plans to interview sundar prihai as part of the probe. We may need to should our investigation lead to that i expect hell be cooperating in this matter. This is important i think for everybody involved. Reporter guys, we will see if and when that interview does happen thank you, ylan we are going to talk more about all of the privacy issues. We welcome bob davis, managing partner at highland capital. Ken langone is here as well. Bob, the question id ask you is whether antitrust policy, as it exists today, makes sense in terms of how to address some of the the size and scale of some of these Big Companies . One of the things weve clearly seen is the price for consumers has actually come down or at least stayed steady. We keep hearing from competitors this effectively is a tax on everybody. Boy, first of all, good morning. This is a doubleedged sword theres no easy answer in this one. Its hard to say for the big Tech Companies dont have monopoli monopoliestic power. The standard oils of the world, they bought all of the oil supply and the consumer was gouged what were seeing with most of the companies today digital tech, for the most part with the consumer, thats free. Google, i pay nothing for it facebook i pay nothing, its free amazon brings a product to me for less money than anything ive seen before its hard to look at where the consumer is harmed theres a lot of roadblocks out there that we have to be really careful of i think this is where the regulators are right theres a real balance we look at i take a look at many of these areas and you start to say, what happens when amazon promotes its own Amazon Basics product in expense of all the other brands out there which they do over and over and over again. Happened to google. People have been white labeling products in the retail world for as long as i can remember. They sure have, but in the retail world you at least have the benefit of walking down that aisle and seeing the product in the amazon world when you search for something, Amazon Basics, first, second, third, thats what you see. Its promoted to you in a really over powering way. Im not advocating to break up amazon to be clear im saying there is a balance we have to find. What would you do, ken . I dont know what i would do. You think of how the productivity gains weve received in this country, which arent included in gdp by the way, i think as a kid when i was in graduate school how i got to new york city to the library an hour in, an hour out. I sit in my ipad. Look up google. Ive got everything there. My life wouldnt function if i didnt have amazon direct delivery. Lets have some boundaries but we ought to be celebrating look at what china is doing. China is encouraging this kind of thing because it is a country asset, a major asset we have got tech geniuses in this country that we should be celebrating because it makes life better for all of us. Hey, bob but we need a balance as well. Yeah, i have no trouble, but lets not throw the baby out with the bath water. Im with you on that, ken as a venture capitalist my whole world is about startups, getting Young Companies off the ground these guys truly have market power in a way thats been unprecedented. Market power unto itself is not facebook with 2. 7 billion users, thats a lot of users out there and when they gobble up Something Like instagram for a billion, its a rounding error for them consolidate the market. Bob, heres the issue at least as i see it. A, theres nothing illegal about being a monopoly unto itself theres a misunderstanding the question is whether you created it illegally or are sustaining it illegally is fundamentally the question lets assume that it is a monopoly then what . You know, im thinking youre a venture capitalist youve invested in all sorts of consumerrelated companies to acquire a new customer today almost by default requires you to go through facebook and or google theres just no two ways about it but at least theres two players. No maybe a third with amazon . Yeah, maybe a third with amazon of course, thats one of the things about these companies that makes them so strong as a Software Company and as a tech company, theres no marginal costs for incremental user for them as a Consumer Company i have substantial marginal costs and thats all going to amazon im sorry, going to google and facebook again, im not advocating you break these apart. I think we need to find a right level of balance theres extremists on both sides of this issue. The folks hollering, banging to say break them apart, that doesnt solve anything they solve real pain problems for all of us. We need a little balance the other thing is we havent talked about this. Facebook is introducing its new digital currency, lira that introduces a whole new bag of worms should that be successful now we have facebook competing with fiat currency is the u. S. Dollar something thats irrelevant . Because facebook has 3 billion global users that are using its dollars or its currency lever . Well see where that goes, but those are the types of things i think we need to think about important plays. Bob, can i pick up the conversation for one second . Yeah. One thing i want bed to talk about and get kens views on, whats taking place in the ipo market and a market you know well it feels like the bell has maybe rung or at least temporarily this wework delayed if not canceled, well see, ipo seems to be it you look at uber, you look at lyft, smile club direct, you look at some of these things, what do you think has happened here well, a couple of things. First of all, i wouldnt lay out because of a handful of ipos that says the market is damaged. I wouldnt under estimate the great value and the Economic Uplift that these companies have given to the marketplace i have a friend i have a friend, we call him eddie vacation he hasnt worked two Straight Days in his life hes not contributing. These companies are contributing real value, building real businesses into the u. S. Economy and thats whats powerful that said, that said we have a handful you have to wonder where theyre going. When a company in its perspective says i dont know if ill ever make money, thats tricky when we were to grow parallel its losses and revenue dollar for dollar, its losses outpace its revenue, thats a different situation. Thats a world that im not accustomed to. What do you think let me tell you what, these values being put out on some of these companies is an argument i would use that we dont need lower Interest Rates theres a lot of money out there. A lot of money out there and, frankly, i think we dont need major surgery, we need some modifications, some tuneups. Id be very concerned about messing with this whole area let the market decide if it wants to get burned. Weworks probably got the message, hey, guys, dont forget they sold softbank 2 billion worth in january. Yeah. For what valuation . 47. 47. Blended down into the high 20s just to be fair. But, yes ill tell you what i think part of the problem is you look at these companies and everybody wants the tech label because the tech Company Trades at a high level its tough to think of these companies as true tech one of the benefits of tech is we talked about this earlier, zero marginal cost wework has substantial marginal cost every location is a new set of leases that you find for themselves it doesnt exist they put this tech label on. Wework is a property company, operating Management Company and in the best case we compare it in my opinion to the Great Hotel Groups you know, supply and demand still works. Where do we get a downturn and some of the vacancies. Theyre not going to move out, theyre going to go broke. They have longterm leases. Wework has longterm leases with short term leases. Theyre doing the exact opposite borrowing short term lending long term. Nuts bob davis, thank you. Great to see you all. Ken is with us for the rest of the hour. Whos about to get hit the hardest by the growing crackdown on vaping . Were going to talk to a top analyst about new government bans and what ochgss tptions the industrys biggest players had i had to look over my shoulder the entire ride in so i didnt get in trouble in the car. No, ive never vaped youre watching squawk box on cnbc no two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. Welcome back to squawk box. Dow futures down by 33 points. Thats how much the market was up yesterday s p futures down by 5. Everyone is waiting to see what the fed has to say later today seventh person now has died in the United States from vaping related disease. According to California Health officials. Late last night new york passed a law banning flavored ecigarett ecigarettes. Joining us, owen bennett its good to see you. Good morning. So whos biggest in the flavored vape . Who should we worry about for starters and how does it spreads . It splits between obviously retail and then online and age verified locations what happened in march, they targeted Convenience Stores. Now theyre targeting all flavors in all locations when you look at juul, its removed flavors from Convenience Stores and now its flavors online and age verified locations. Flavors including mint and menthol, all of them a 70 plus and flavors including mint and menthol and then probably most at risk now is njoy who came on the scene in the last four months they have a huge portfolio of flavors. What are the chances that these are isolated versus something that were just seeing the beginning of it could be a chronic problem. It can happen the first time you do it . What kind of disease is this we need to know. From what we understand, its due to a thing called acetate. Its not being linked to nicotine vape as of yet and so things like that i mean, this is our view one of the things which people worry about tobacco now is the threat and our view has been barriers do persist. One of the things that supports that is regulation we think regulation like this is a sentiment of tobacco, it takes a lot of the Tobacco Products off the market and ensures safe ones somebody can come in the market in four months and take 10 of the market share . Yes they came in at an aggressive price point. They came in at 99 cents giving devices away the consumables came in lower priced as well they can fund the mta which they need to do with the fda to get approval. Let me be a entrepreneur. This is a brandnew industry, right . Relatively brand new. Yeah. This is a time to put a number on it if you buy it, you pay that amount and that amount of money goes into a fund for when they get sick, they get cancer, whatever they have, theyre paying for their own health care the burden of health care we talk about the cost of health care in america. Why should another person whos barely making ends meet have to pay for the therapy or health care of somebody who willfully, who willfully does things to themselves that requires Extensive Health Care Coverage say were going to have a fund which is going to be used to compensate or pay for the cost of taking care because its going to happen. Somebody said on television the other day, theyre right, the less things you ingest into your lungs, the better off you are. Your lungs are there for air, not for colored smoke or whatever the hell is i dont know the point is lets set it up where its stand alone okay, you want to go ahead and kill yourselves, at least weve got the money to take care of you, youre paying for it. A great trojan horse helping people quit is where it started. Thats nonsense. Thats what they said thats how it started. Theres a place for that, owen i think they are helping people quit. It comes down to now we dont actually know the longterm impact of vaping, correct. Anything thats popped up around health concerns, this is using the legal thinner. Not vaping itself. Popcorn longs has popped up. Thats called diacetel it is used in certain flavors. In the u. K. Thats banned within vapor. I remember five years ago when vapor started coming out there was reports that it contained antifreeze so you can continue to get these reports where people look at the Science Behind it, its saving lives at present. Yes, you cant say its risk free but at the moment we know its a lot safer than cigarettes. If youre quitting cigarettes, you dont need mango flavored ecigarettes or something along those lines to do any of those situations that was the when joe talked about the trojan horse, sure, were going to help you quit cigarettes and heres 40 flavors that appeal to teenage kids or middle school kids and now you have an epidemic of kids who were never involved with this. I dont disagree with that but i think the u. S. Is kind of unique in terms of it got out of hand the u. K. , 25 of that market is vapor. They have flavors but theres very little or small sku. Where did i see 90 is flavored in sales here for juul, that includes menthol or mint. 90 of your revenue is in flavors. What does that tell you . Yeah, i mean, juul, definitely thats appealing to teenagers. This is why theyre taking action now removal of flavors if someone you dont need keep tobacco because the tradeoff then is go back to cigarettes, quit altogether which is obviously good or go to a tobacco flaivor. Where is the proof that this actually saves lives thats a nice statement to make. Shouldnt we have some documentation . Ill go another way. How many kids are vaping that wouldnt smoke that are now vaping thats the opposite side of the equati equation. Sure. Data thus far, which theres very little, doesnt say theres a gateway unto real cigarettes. Give it time. In terms of saving lives, its i mean, the data we have right now, its 95 safer than cigarettes in terms of the carcinogens, et cetera on that basis it is safer. We dont cant rule out the risk ten years from now. What we do know is what was happening actually wasnt working. People werent quitting, people were dieing. In the 50s weve got to go well talk when we come back from break thank you. Coming up at the bottom of the hour, some big break dagg at that from the housing sector well inyoth wn quk returnshe fun fact 1 in 4 of us millennials have debt we might die with. And most of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. Comcast is stepping up its efforts to appeal to cord cutters. Theyre making the xfinity flex device available to internet only customers it gives customers access to netflix, amazon, prime video and hulu as well as a variety of Live Programming customers get two boxes for free and can rent additional ones for 5 a month sounds like comcast obviously our Parent Company, but it sounds like they are willing to cannibalize their own business in the cable business like they are somebody else is going to. Thats right. When we come back, breaking data, the guaust read on Housing Starts just a few minutes away. Squawk will be right back. Ough retirement. Dealing with todays expenses. While helping plan, invest and protect for the future. So theyll be okay . I think theyll be fine. Voya. Helping you to and through retirement. Have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. Welcome back to squawk box. Rick santelli here live on the cme floor with breaking news august read on Housing Starts and permits. Starts up over 12 1. 364 million seasonally, annualized units thats way above the 1. 25 we were expecting it was a nice revision to last month popping it up to 1. 25 which makes the 12 plus percent increase that much more juicy. A little over 7. 5 doing quick math 1. 491 million seasonally adjusted units from 1. 317. That was a bit less on the revision but nonetheless two nice pops in housing yesterday National Association for Home Builders index popped nicely the best level of the year and we had Strong Industrial production so the recent spat of data has been pretty good albeit here we are at 1. 78 and a 10year note consider this, basically two weeks ago we settled at 145, the lowest close of the cycle. Friday we were up at 1. 90. You can see theres been an awful lot of volatility in august and september on treasuries on that, lets get straight over to Steve Liesman. It was over subscribed. The lowest level coming in at 2. 1. The weighted average, 2. 2 on treasuries 2. 24 on agencies and 2 point be point 26 on mortgage backs we came in we opened 3 3 4. Went up to 4 1 2 remember the reason why thats a big deal is because the feds trying to set this rate between 2 1 4. It looks like the fed took this on and put liquidity in the system it seems like a 5 billion differential some traders said if there wasnt enough the fed might come in and do another operation. I didnt hear that from the fed. It seems like the fed is at or close its rate its trying to set. Steve, doesnt this really underscore that the topic of conversation by jay powell and company should be about the Balance Sheet and quantitative easing now im not saying i am looking to make an opinion on either but lowering 1 4 point, lourwering , lowering 75 would not have changed the conditions of the shortterm funding market over the last 48 hours, would you not agree with that . Definitely. It might have had an effect where people were holding off. The fed could come in other traders have suggested to me and do a longer term operation to put this stuff to bed for a little bit longer but it wouldnt do so with the fed about to cut Interest Rates. That would be a troubled operation. People should have expected this the regulatory changes to more reserves and made a scarcity is something the fed can and should have done something about. So were going to see whether or not the Federal Reserve takes some action to get control of its primary tool, which is its overnight Interest Rate. Do you think they should lower rates today . My opinion . Yes im im bewtixt and between. I look at the data its pretty good we had inflation data on threemonth average was topping 3 weve had wage data which on a threemonth data was topping 3 . Good industrial data prospectively, i dont think theres a lot the fed loses on this quarter point personally i would have preferred the fed hold off. I agree. Hold its ammunition for when things get more serious. The market pressured them. Whats rick thing ken, ill give you a oneword answer, no matter of fact, two word answer, absolutely not hows that, ken . I agree look at Housing Starts those numbers are phenomenal. Yeah. Unbelievable. Lets get to that gentleman, thank you diane olick is here to talk about the big housing numbers we just got. Yeah, it was a strong number no question. Im going to say it again. Up 12 . Unbelievable. Month to month. Up 6 year over year i have to break it out multifamily to Single Family. Big pop is multifamily. Single family up 4 , 3 . The problem is we dont need the multifamily construction as much as we need Single Family. Its been volatile you did see the big plunge in Mortgage Rates in august that had the builders happy builders though yesterday warned in the sentiment numbers that theres this balance going between lower Mortgage Rates and fear over the economy which is pushing the Mortgage Rates down. It seems like its abated a bit in the last week or two. It has. We saw rates jump up a little bit. We still need much more Single Family housing were not even near a million starts we should be over a million on Single Family. The problem is the price point, 75 of Single Family homes are priced between 250,000 and a million dollars. That is not where they need to be thats not where the entry level buyer is need to be lower. Look, what im saying is you cantmicromanage this. And if you get an excess of multidwelling, eventually it spills over into individual homes because people eventually move from an apartment where theyre paying rent to a home where they have equity i think the good thing is the banks are holding pretty fast to the qualifications to get mortgages so we dont have happen what happened 12 years ago, 13 years ago. In other words, the loans are going to be a much more solid than they would have been. What do you think about the fact that so many people are moving out of the multifamily apartments and moving into Single Family rentals . Single Family Rental demand is huge right now and continues to grow. Yeah, but that that corrects itself because what happens . If they cant move into a Single Family rental they still have the issue. Am i better off continuing to rent or am i better off if i can come up with the 20 , if thats the number, that allows me to start having equity in my own home. You think its ready for a correction theres an awful lot of private equity money in there. No, thats the point. Part of that is the money is pouring in at some point it stops if it doesnt get a return. How come there just isnt more supply . How come theyre not building more Single Family homes they will say land, material, regulation, cost theyre so high they cant afford to put up the entrylevel homes. Cost prohibitive. No return for it. You have one builder, d. R. Horton, which is the largest builder which has an express home. Their price points are right. Their price points are right. Everybody made fun of them no way, you cant build the entry level home theyre doing very well. Liesman, are you do you feel better about the repo andrew, do you feel better there may not be a too big to fail sequel. I really dont want to write another book. You were concerned. You were pale. I will tell you, joe, it reminds me of diane is talking about Single Family home i was a reporter in florida and i had to talk about sewage rates. Lifting rates. I hate it when repo comes around if this would go away, i would be really happy. The viewers are going crazy more repo, more repo. Are you getting that email . Would you forward some of that to me, joe the problem is it frees up the subprime summer of 2007, nobody wanted to talk about it because everybody thought it was plumbing doesnt mean thats what we were told, not supposed to talk about cdos. I talked about it listen, this thing has calmed down a little bit. It looks like its okay. Well see. Well see if it creates the kind of dislocation. Its not a credit risk issue like it was back then. Right. People are not not providing liquidity to the market because theyre afraid a big Investment Bank will go down. Theres a supply demand issue thats regulatory, seasonal and has to do with the fed providing the right amount of liquidity. Maybe they got control of it this morning. Steve yes. A guess, you cant be wrong or right, just a guess, if the white house werent making the noise its making about lower rates, do you think the fed would feel any need to lower rates at this time in other words, if the president wasnt clamoring for lower rates would the fed be lowering rates well never know. Were speculating. Youre speculating. The fed cannot exist in a vacuum i think the fed feels like the threat to it right now is existential in the sense that if it doesnt get this right you could have a Popular Movement against an independent central bank this country did not really cotton to the idea of a central bank in the 1800s. It took jefferson everything he had and jackson got rid of it. There are the comparison between jackson and trump. We dont have time for that discussion. Youre right. Steve, thank you. Diana, thank you rick, thanks. Lets talk a little bit more about what wall street is expecting today from the fed and what a rate cut might mean joining us is david wessel hes at the brookings institution. Also neil irwin is senior economic correspondent for the New York Times. And Steve Liesman who is not going away hes staying here for this conversation, too. Our guest host ken langone also staying here neil, let me ask you one quick thought on what the repo activity means. Is this something in this discussion, is this something that you kind of look at and say, its okay for the moment . Yeah, i think so. This isnt a solvency issue like 2007 was, this is a technical mistake that the market made and the new york fed i dont view this as something thats telling us something about the economy. What do you think, david, in terms of what the fed should be doing today . Well, i think that the repo sthing a technicality but i think it is a problem because theres two things the central bank has to do is move Interest Rates the right way at the right time and look like it knows what its doing this undermines the latter i expect as everybody else does the fed to cut Interest Rates a quarter of a point i think there will be a lot of focus on what jay powell says going forward. Hes had problems in the past explaining what is their reaction function as economists and market people call it. What will lead them to cut rates . I think cutting rates is the right decision there are risks to the outlook and the risks to having too much inflation are relatively minor in my view i think its a close call and theres a lot of discussion and some dissent i think the really hard thing is for them to say what do they expect to do for the rest of the year and not confuse people more than they are already. Steve, what are the risks in terms of what he says and how the market reacts to it . Well, its kind of interesting. There may be some reporter out there, some enterprising reporter thats going to ask the fed chairman is this a mid cycle adjustment or not, right it was the phrase mid cycle adjustment that suggested this was a limited series of rate cuts that caused the market to have a bit of a fit last time around and then they kind of rethought it and it came back and it was okay. But the question is are we now in an easing cycle and really to davids point, a kind of framework has been lacking here david, im going throw this back at you youre going to cut rates and i raised my hand, i say, mr. Chairman, mr. Wessel, youre cutting rates based on which particular data . I get the idea that the outlook and the risks are bad, but what data do you point to for a rate cut, david i think they would have to say that theyre worried about the global output. The Global Outlook the slowing of the Global Economy. But mr. Chairman, but mr. Chairman, what data . What data . You said i asked you about the data you told me you were data dependent. Now youre telling me youre not data dependent anymore, mr. Chairman. I point to the german data and the japanese and then youll ask me if you are the central bank of the world. Exactly. They have to move based on what they expect to happen to the economy. Is this risk management, mid cycle adjust , just a little bit to protect us against a bad downturn or do we think the economy is really tanking and this is the beginning of a series . I think the problem is he wont want to answer that question he doesnt have a consensus on the federal open Market Committee and unlike some previous chairs, hes not willing to say the heck with this big argument we had, let me tell you what my story is about the economy and where im going. I think thats why hes having trouble. You know what i wish . What. I wish larry, lindsay, kevin walsh were in that room this afternoon. We need some more balance. I think that whats going on now with rates is nuts, nuts. From balance, you just mean people who are a little bit more hawkish on this . Yes. Kevin warsh said if they want to do anything, shrink the Balance Sheet. Not cut the rate. Look, we want to be careful that we dont get the world to believe we can manage the world into prosperity. Recessions are like diets. You need one every once in a while. Im not saying we should force one, but i think this concern we have and whats going on here, 1 4 of a point, what the hell does it mean . Its the message youre sending that bothers me. Youre again encouraging excess of speculation and that does not have a happy ending. Wait until 2021 until the next recession, ken . For the next diet. Kidding im kidding. By the way, i dont see it maybe steve may disagree with me i think this economy is in pretty good shape. I agree with you, ken ive been the one saying its in good shape. Were finally in agreement. I enjoy agreeing with you, ken. I think youre a nice and smart guy and been very successful congratulations on all of your philanthropy which i drive in new york which is a big help to the community. I hope you can use us. I hope i dont need any of your stuff. You dont want to have a physical or something. Yeah, but not for the serious stuff. No, no. Right. I think the economy has been in good shape. A lot of people abandoned what they thought about the economy i want to give neil the last word hes been patient. Neil you have to answer this quickly. If youre powell, how do you work your way out of this issue . Go back to the mid cycle adjustment idea. Useful idea that markets didnt like last time but it looks more accurate than some of these other descriptions. Guys, byebye good to see you. When we come back, a special preview of cnbcs delivering alpha conference tomorrow. The whole investing world will be watching plus more with our guest host ken langone you dont want to miss tomorrow. Everybody from Vice President ndnce to chairman of the sec a more squawk returns in a moment major developed market out there not in negative Interest Rate. The fed is expected to at least cut rates. Theyve communicated this pattern. Whats your sense of how this will work . The fed is in a tricky situation right now. On one hand i dont think the economy needs the stimulus that an Interest Rate cut would deliver but on the other hand i dont think the economy is running so hot that an Interest Rate hike would be necessary. Thank you so much thank you welcome back, everybody. We are just one day away from cnbcs delivering alpha investor summit which brings together some of the worlds most influential Money Managers and political figures. Leslie picker joins us with a look at what we can expect tomorrow. Hey, becky. As youve been talking about all morning, these are unprecedented times in the markets theres more than 16 trillion worth of negative yielding debt around the world passive funds make up half the stock market and geopolitical strife seems to increasingly whipsaw the market tomorrow legions of investors, politicians and investors will convene to discuss the issues and what it means for your portfolio. Vice president mike pence will be sitting down with joe blackstones Steve Schwarzman will be speaking with becky. Jay clayton will kick off the event with andrew. Ill close it down with apollos josh harris. Other speakers include david tailor and nelson peltz who just two years ago battled one another in one of the most expensive and bitterly contested proxy fights and mary erdos overzing a trillion dollars in assets ms. Beschloss will talk about how to do well by investing well it will continue throughout the day. Thank you got to prepare for everything, i guess. Get ready here we go. 24 hours. Lets get back to our guest host this morning, ken langone, cofounder of invamed associates and home depot im told that ge is on your mind absolutely. It is i think larry kulp is doing a hell of a job. I think whats left has got good futures, aircraft engines, medical. I think youve got finally some strong governance there on the board. Im very impressed with the board and i there is real great value here the tragedy, in 2000, g ee had 106 billion market cap. Today, ges market cap is one third of what home depots is. Ges is 80 billion youre 250. The destruction of value. I want to really see what the s. E. C. Is going to come up with and what went on over there. Okay there was a lot of rosycomment made and a lot of encouragement about a bright future. Just get the press releases and read them. I think something needs to be done here. Management needs to be held accountable, particularly where they promise the Promised Land and you dont get there. This is the first time youre buying shares yourself since you left the board. When jeff asked me to leave the board, i waited three months so i wouldnt have to file and i sold all my stock. This is the first time i owned ge stock in 14 years i think culp is the real im very impressed with him. Im very impressed with the board. Another one im really excited about is option care it is a home infusion. And madison deerborn controls it, theyre great people i think theyre going to a hell of a job with it in two years youll have reimbursement. Home infusion people going to the hospital, they get vitamin or treatment for a disease, they come to your home and thats much more efficient and one more way were going to control healthcare costs so i like the economics there. The proof of the pudding is in the eating the fact that ge think of the World Without ge engines wouldnt happen. So well get through boeing, by the way, going to be fine theyre going through some agony now, but these guys know what theyre doing and they had a glitch and theyll fix it. All right thank you. Okay . Yeah. Okay we want to get to the New York Stock Exchange where jim cramer joins us now. Lets start with fedex youre watching that stock, which is just really taking a beating this morning, jim. Yeah, there was open rebellion on the Conference Call the analysts were doing a combination of saying, look, youre executing poorly, you dont know how to forecast, and ive got to tell you, fred smith pushes back and says, look, this is a different kind of environment. It is an environment where we arewhistling past the graveyard, the european problems are from china, were causing the china problems in the trade war, and it is going to get back to the United States i heard you talking about what information would say the fed should cut i think that while fedex is a bit of a microcosm for the domestic and international economy, there is plenty of ammo in this call there is a big company that makes you feel like you should be nervous about the economy i like fred smith very much. I think hes a really good economist and it is a surprising Conference Call. One that is very negative. And so would you pick the stock up or no it is just too hard i think that they are trying to expand everywhere, which is terrific they have to do that at the same time, they have to retrench because of china. Dont know if there will be a deal and they have to go back in china. Still integrating europe they dont have a forecast that anybody trusts you have to have a lot of hope to be in this one. I would prefer u. P. S. Here which i think has things more under control. Your point was the fed might be in a position where it should cut, i think what youre saying, isnt it, jim . Definitely in a position to cut. It is just a very dispiriting call, and fred thinks were all being way too rosy about the economy and it is a matter of time he says the consumer economy is strong does fred have an ax to grind . I always felt he doesnt he was on mad money last time. I think hes a straight shooter. A lot of people were surprised that the last bit of amazon business was a little more lucrative, but you know ken, fred smith is a hard working, good, smart guy. Dont bet against fred smith. Hes a hell of a operator, a visionary and gets the job done. Jim, want to weigh in on kens view on gm ge rather. I think larry culp is amazing. People do not understand at the same time hes looking to find the Balance Sheet, dealing with the longterm care, hes also addressing power and i also really agree with ken about the accountability here. There were projections made on mad money that this company was going to earn a couple of bucks. And the projections were just ill advised. Ill give them that. But larry has been dealing with all that fallout and does it with a great attitude. Hes just a remarkable can do guy. Hes a bit of a belichick in him, lets get this job done, lets hit our assignments, and i would not bet against him either hes fantastic. Hes been buying the stock himself. The stock larry culp . Yeah. Jim, can i ask you real quickly, im just trying to play out what happens if that amazon business was more lucrative than it had been expected the last tranche of it, that means they were paying a lot of money for a reason, hard to do is this going to mean potential problems for amazon not being aebel to get the stuff delivered the same way, the bonanza for u. P. S. Or the post office or whoever else is picking it up . Another side to what just happened with that trade. The end of january, fred said there was 1. 3 of the business, it does sound like it was lucrative. Amazon had a lot of asks, and the asks seemed like they were too much versus the other business that they can pick up to replace it. It sounds to me like if you heard the call, you would say amazon has got to pick it up itself, which is not good for amazon or for customers who think theyre getting stuff in the same amount of time, maybe they dont. Yes, yes. I dont think u. P. S. Is going to bite on it u. P. S. Has a Good Business model right now. There was a lot of confusion on the call that people thought that amazon was smaller this last bit was lucrative there were people who i thought were questioning freds abilities, and questioning whether fred is being up front and i think the answer is hes got great ability and hes totally up front and the reason why theyre so dispiriting, very few ceos do that anymore. We got to mention this, this tweet from President Trump, ive instructed ive just instructed the secretary of the treasury to substantially increase sanctions on the country of iran. This is a tv. Maybe this is the response. An economic shot across the bow instead of some other type of shot across the bow. Yeah, theyre just theyre a scofflaw great to see you last night. And just love everything you do. That can i say jim, just quick, fedex is high fix cost business, so that incremental buy is profitable. Well leave it there. See you in a couple of minutes dont mess an exclusive interview on the Halftime Report with jeffrey gundlach, 12 30 eastern time were back in a minute as soon as the homeowners arrive, well inform them that Liberty Mutual customizes home insurance, so theyll only pay for what they need. Your turn to keep watch, limu. Wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. All right, want to thank ken langone for being with us this morning. Always a pleasure. Come back soon. I sure will. Lots more to talk about next time and a lot happening today. Make sure youre watching to hear what happens with the fed decision see you tomorrow with delivering alpha. Now it is time for squawk on the street. Good morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. The dow is up 9 in the past ten days fed decision at 2 00 repo squeeze quiets down new york fed operation for a second day today europe is green. Uk inflation disappoints oil down as the saudis give more intel on the attacks and the