bank. >> micron issues a trade warning. shares down this morning on a disappointing outlook and ceo san yjay mehrota joins us in a e minutes. >> tell the story. i'm sorry to interrupt. >> no problem. >> eagles won last night i can do whatever i want. >> and half of the debuts trading below their offer price. does that spell trouble for the ipo market wells is up in the premarket after naming bank of melon ceo charlie scharf he held the top job at visa. wells plagued by scandals struggled to find a replacement. alan parker will stay interim until scharf joins the company the conference call is under way and we'll bring you developments on that. he had quite a run at visa and left for geographic reasons really. >> yes, he did able to stay in new york, his family still going to be with him. one daughter right there, another one close by, folks nearby, very much dedicated to them i got to tell you, congratulations, or as people would say, as president ford would say, their long national nightmare is over. i think the one thing that charlie doesn't have to worry about is, yes, senator warren. it is not the sins of our fathers, i think the company under tim sloan did a fabulous job. that didn't matter to miss warren i think this is a brilliant move i think the expenses will be really coming down you know charlie is a big technology guy it is going to help there. they got him which was a tough, tough thing because of the geography, half the banks -- no, about a quarter of the banks in charlotte, huge of amount of the bank in the midwest. >> yes it is the compilation of so many banks through the years, the old mcmb and -- right, there is so many of them. with the wells fargo name. >> so i think this is amazing. i think it is a fantastic way -- i think the stock is up. it would be up even more if we didn't have a terrible yield curve. this is a good move. >> what does it mean for bank of new york mellon? he was recruited there, happy to get him, trian a large shareholder there. >> custody bank. i don't think -- i think it was a -- a bit of a holding pattern for charlie. >> there had always been some chatter that the -- if and when the day came that jamie dimon saw fit to retire, mr. scharf was seen as somebody who might succeed him should they go outside that bank. who knows. that may never -- i'll probably be retired before jamie dimon. >> i think charlie likes a domestic bank. i think he sees a lot of good things, just in the same way that al kelly wanted to go be the international globetrotter he is at visa, fantastic job i think that charlie wants to be -- wants it to be the great american bank, i think the expenses are wrong i know he's -- given a free hand to purge if he wants to. but charlie is a considered man, won't go in there with guns blazing. what is wrong, what's right. do the expenses or not -- warren buffett very much behind it. >> we have been talking for months about who they with replace, who they needed, banker or tech guy, you think he's a good hybrid of the two. >> yes i know some of the people around him are chuckling saying nobody can get the job. this was a job offered to charlie a while ago and charlie didn't want to take it i think the opportunity was just too great, my understanding. i think it is terrific because i think those of us who knew him when he worked at visa recognized that he was fantastic at being switzerland, everyone took -- people took visa he -- what >> nothing >> why did you raise your eyebrows >> i'm trying to get focused >> i got stuff for eyes. >> the type on the computer is so small now, i'm just constantly sort of -- >> is that what it is? >> yes it got smaller >> get you the readers tie jejes digest -- >> i'll get him readers. can i bring it back to the subject of the matter here since i worked all night on scharf. >> keep us on track. >> thank you this is a man who i think, remember, got -- knows tech, microsoft board, smart i think he'll go in there. the stock is up and going up i think this is very tight i don't think it was leaked. i think that this is the game changer. and how great it is for wells. i bet you tim sloan had a great relationship with charlie scharf not like this is -- tim sloan, the previous ceo, raw deal because he was doing so well. >> he got treated in a tough way. >> and he's a good man david, remember, we're on a podcast, when you don't say anything, it means you're disagreeing. >> we also are television and i still sort of think about that as our bulk audience so they can see that i'm agreeing with you >> wilf will be with us. >> base salary, 2.5 million? charlie is underpaid >> the ak is out as thanks to our willfred frost $5 million cash incentive. >> restricted shares >> target annual incentive opportunity of 200% of annual base, going to be 2.5. so -- >> this is the one thing that senator warren won't hiklike, a that stock, what has he done charlie is a guy when he left visa, it was family, there were people at other networks who speculated there was something wrong. they were off base, ail edill a and did suboptimal reporting he can stay where he is. >> he is staying in new york. >> he likes that amy likes that, hissive wi wife. >> i think it is interesting he's not going -- >> what is interesting about it? they have a huge amount of business in new york. >> they do is the headquarters of the company where the ceo is or not? >> i think he's a traveling headquarters. >> which makes sense. >> you say about the jpmorgan deal. >> a time when -- >> what? >> when amazon was going to have a number of different headquarters. >> and one of your -- distinguished congress person from your borough -- >> got her to destroy the greatest economic development opportunity we ever had. i can't read this. >> no one can. >> thank you i'm not crazy. >> i was so -- i want to go back to charlie he loves the company obviously he took very seriously the fact that the report was so critical, and this is my understanding, i've known him for -- don't have any special insight on the fact that he thinks this is one of the greatest opportunities if not the greatest opportunity to build the most profitable american bank with great expense ratio. there is still a lot of money that is -- still a lot of people who can go i don't want to say he'll come in, he's not changed >> i do. >> al dunlap. >> he was here. >> wells fargo should be up even more not right now. on twitter people say he's pumping -- i'm not pumping wells fargo. i'm pumped they got charlie scharf big hire for them. big. >> the hard work begins for scharf that's for sure. when we come back, shares of micron are down on weaker than expected guidance. it has still been a good year for the stock, up 45%. we got an exclusive with sanjay mehrota in a moment. take a look back at the president's remarks this week when he did mention micron and china. >> to advance the chinese government's five-year economic plan, a company owned by the chinese state, allegedly stole micron's designs, valued up to $8.7 billion, soon the chinese company obtains patents for nearly an identical product. and micron was banned from selling its own goods in china but we are seeking justice at fidelity, we believe your money should always be working harder. that's why your cash automatically goes into a money market fund when you open a new account. just another reminder of the value you'll find at fidelity. open an account today. a new kind of credit card.ind at fidelity. created by apple, not a bank. with a better way to track where you spend. a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones. oh, and if you happen to be somewhere that doesn't accept apple pay yet, there's this. nice. ♪ when i needed to create a better visitor experience. improve our workflow. attract new customers. that's when fastsigns recommended fleet graphics. yeah, and now business is rolling in. get started at fastsigns.com. rallying well ahead of the quarter, shares of micron are falling now before the bell. the chipmaker, we got to find out about this, i thought the whole narrative on the call was off base joining us first on cnbc is micron ceo sanjay mehrotra good to see you, sir. >> good to be on the show, jim, thank you. >> sanjay, i listened to the whole call there was a big perception, maybe misperception, that because your ref news avenues ag up your margins should be going up and your margins were disappointing. is that true or do they gang up on you because they were so wrong recommending your stock at 47 and 51. >> guidance for fq 1 is actually higher the midpoint is higher than what we achieved in fq 4. our margin guidance is lower that is because there is indeed still some excess supply what is important to know is that the end market demand trends are back to normal now. customer inventories are back to normal, the industry has some excess supply. that is impacting the pricing. that's affecting our fq 1 guidance here. it is important to note that the demand growth is now higher than the supply growth. the industry is coming down rapidly. so basically the stage is set for the improving fundamentals in the industry. as i look at 2020, yes, in the first calendar quarter of 2020, there may be some seasonality. long-term health of the industry, i'm optimistic about industry fundamentals in 2020. >> sanjay, that's important. long-term 2020 is like tomorrow. i felt that you did not speak enough about demand growth in the call whether for smartphone, graphics, cloud demand, those would have changed the dynamic had you addressed them i think the stock went to 51 i think the stock went to 45 and the confusion i had were analysts were expecting that this next quarter was going to be huge instead of 2020 being huge >> you know, long-term demand as you pointed out absolutely strong in our industry look at the trends in cloud computing. ai applications are driving more need for memory storage and new cpu platforms are being introduced in the market that have more channels that acquired more memory and storage, more dram and flash smartphones, 5g, this will drive long-term growth in the market, average capacity of content in your smartphone for dram and flash continues to increase. and we are very pleased, when you look at iot, autonomous, cloud, smartphones, and market drivers are all pointing to increasing content this year in smartphones, flash content is increasing by 50% on average and dram content by 25% on average demand trends are solid in our industry we are just in a period of excess supply and, again, the industry has done a good job, certainly micron has done a good job in terms of controlling its supply growth so that now the demand growth is greater than supply growth and that bodes well for the long-term fundamentals of industry in some parts of our business, the leading ethnodge knows, we seeing supply shortages for our business i'm enthusiastic about what is ahead for micron. >> i thought you didn't emphasize that enough on the call and i think people took a misdirection 80 million shares, there is still a huge amount of firepower in your buyback. that's only 2.7 billion, you have a lot of cash stock at 45, 46. go to your board, go to your treasurer, go to your cfo and say let's go back in i understand you did in the buy stock when it went to the high 40s, low 50s this is your sweet spot. you put money to work after this interview? >> 2019, we actually bought back shares at the average of 40, $2.7 billion given back to the shareholders through share repurchase program and we remain committed to dedicating at least 50% of our free cash flow on an ongoing bas basis. >> micron, with respect to things in its control, executing very well. with respect to our cost competitiveness, narrowing the gap, resulting in relatively improved ebitda margins for our business, our product from portfolio, deepening our partnerships with customers and exercising pricing so we are executing well and i'm confident about the long-term prospects for our industry and for micron's business. >> potential upside, and when it could hit. i know you've been using that 100 day target for inventory inventory, 131 at the end of last quarter how far away are you from the target and when it comes, is it possible we'll see a bit -- not a spike, but a nice change in how much you're getting for dram and therefore, again, your numbers are going to prove to be conservative >> you are right to note our inventories came down actually fast in our last fiscal quarter that we just reported. in fact, our inventory improvement is faster than what we anticipated a few months ago. this is because the demand as we had projected actually initially is coming back for our products in the second half of this year. so we also said in the call yesterday that our inventory will continue to improve this quarter as well. so basically the necessary conditions are set demand in terms of volume is increasing the supply and inventory position is improving. and there is always a lag. i can't predict, there is always a lag, could be a few months and, of course, barring economic conditions, we see ongoing improvement in inventory, ongoing improvement in industry fundamentals it is a matter of time, jim. >> we played the sound of the president in front of the u.n. this week. your reaction to being used as an example of chinese ip theft and did you help them get to this $8 billion number >> so what i'll tell you, first of all, president trump, the meeting that he mentioned, took place a couple of months ago, where the white house had invited several industry ceos to discuss the technology landscape and he appreciated to express our points of views in that meeting. the president also in the u.n. address this week delivered to chinese company where you have a dispute with respect to misappropriation of our trade secrets and other intellectual property and we are appreciative of u.s. administration's focus on protecting intellectual property and department of justice actually on its own, as well as the department of commerce had done their own analysis in terms of the impact and the numbers that the president quoted in his speech what i'll tell you is that micron, very rich 40-year history, invested billions of dollars over the years in advancing memory and technology, development, more than 40,000 patterns that we have contributed to the industry over 40 years, so, of course, you know, we will defend our intellectual property and we do believe that intellectual property should be valued around the world. so it is an important principle for micron, which is absolutely driving innovation forward and addressing exciting -- from data center to iot to autonomous in the end market today. >> how do you view the overall dispute with china right now and the potential resolution you want your intellectual property protected that is a key part of what the administration is pushing for at the same time suffering as a result of those who you supply components to. how to ydo you view it from here >> we want our intellectual property to be protected legal systems to be such that intellectual property protection is enforceable china is an important market for micron and semiconductor industry in general. within china, you know, it is -- we are micron is deeply engaged with our customers there we have very good relationship for very many years. and those customers are valued customers to us and we are delivering tremendous value with our memory and storage, which are absolutely key enablers for the innovation agenda for customers worldwide, including customers in china so i think it is very important that the two largest global economies here, u.s. and china, are able to work out their defenses and really come up with systems in an enforceable fashion that enable free and fair trade, including intellectual property protection so i am optimistic i'm hopeful that -- and it is important for the growth of not only the semicop dunductor compe but the local economies that the two countries are able to resolve the differences and come up with an agreement that ultimately enables people and the businesses to really feel the growth here. >> sanjay, one last question the cloud stocks have been horrendous anything related to servers have been just horrible but you're still seeing demand are these industries that are connected to that doing awful? why are they getting hit why are the stocks coming down givend n the demand story you'r outlining in your conference call >> cloud and data center growth for us is strong of course, in the first half of the calendar year, our demand in that market segment was affected because last year the customers there had built inventory, but they were consuming that inventory in the first half to meet the end market demand so our end market demand in those applications continue to be strong. we see ongoing growth in cloud applications yes, the capex spend, sometimes the demand there can be lumpy. but long-term plan is one that requires more ai in cloud applications and that means deeper data insights and guess what, that data lives in the solutions that micron provides so we look at cloud and data center as a long-term growth vector where the growth will be greater than the average of the industry growth both for dram and flash solutions. >> all right, that's terrific. i'm more updabeat than you were bring your game, man come on. i've seen you on "mad money. i know you can do it i give you the hard time i thought the quarter was great. congratulations. sanjay mehrotra, the ceo of micron good it seto see you, sir. >> thank you. the opening bell on this friday as the dow tries to close out the week green back in a minute ♪ ♪♪ ♪♪ ♪♪ 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. ♪ plants capture co2. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪ as a principal i can tell you this. when one student gets left behind, we all get left behind. this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer. ♪ let's squeeze in a mad dash. final trading session of the week we got four minutes until we get started with that here at the nyse what are you going to focus on >> a hit job done on church and dwight the old arm and hammer i think it is a fantastic company. i thought it was an ill advised, suboptimal report. this morning -- >> short seller came out with that. >> a short seller. >> that's fine >> two-sided market. >> they do a lot of work the way i was going is bank of america has said use this rare opportunity for stock that is always commanded premium multiple, doesn't have right now, because it has consistent organic growth, free cash flow, healthy balance sheet, very good m&a. i know the short sellers are not happy with the acquisition of water pick they weren't maybe happy with the acquisition of flawless. i think these are okay acquisitions but this is a lean, mean acquiring machine and i agree with bank of america that it should be bought >> okay. >> after that soliloquy, that's all you can say? >> what am i supposed to say >> i don't know. i'll have my bond. how about that >> okay. say that too >> i can play that game. i can play that game of not talking. i can do this too. >> no, you can't, actually, you can't play that game of not talking. that's something you're incapable of. >> you and my wife. >> me and your wife, yeah. both on you. >> i was at summit last night, she was in brooklyn, some of the best days, no fights, no fights >> just reading about the history of wells fargo, bank of america. >> you're reading about -- >> b of a. i got the mcmb thing wrong it was bank of america i should know. i should know all that >> how many years have you been here >> 26. >> since when? what day >> 1993. >> what date >> 26 years today. >> 26th anniversary. how do you like this >> congratulations. >> thank you it is really nice. thank you. >> congratulations >> congratulations to both of you for being with me for a number of those years. i don't know how you do it carl what do we got? >> i was looking, guys, at the consumption and spending figures from today, jim. saving rate went up, consumptions pretty weak after a torrid q2 and capex -- capital goods orders >> business investment, that's the ground zero of what the president has to worry about in the trade war. i had tyler morrison on, stock up 70% why starter homes? millennials starting to buy homes. something that warren buffett prepared one day, it is happening now. two cohorts, plus 30 and plus 35 are really starting to buy homes. that's the strength in the economy along with watch, which is walmart, amazon, target, costco, home depot weakest in the economy is business spend they're shaking in their boots sanjay is -- sanjay mehrotra, ceo of micron, at one point, he goes i don't know how much business i'm going to do with huawei huge customer. there is a worry that october 10th trade idea, that gets floated. my sources say don't get your hopes up don't get your hopes up for a trade deal >> going to be an important week, the second week of october. let's get the opening bell here, s&p 500, cnbc real time exchange at the big board at the nasdaq, the prime minister of trinidad and tobago. we'll watch micron and wells at the open here. see what we get in terms of reaction. >> look, i think that there are a lot of people who may not know who charlie scharf is and those are people who might have owned the stock for one of the greatest runs of all time. >> right. >> and charlie did that. david, you know, jamie doesn't show any signs of really wanting to -- >> no, i don't think he's been in the job now 16, 17 years, jamie dimon's run it, he's the longest standing for sure ceo of a major bank without a doubt blankfein having left goldman, and many of the others that our viewers won't know his board is happy to have him for as long as he wants to serve, i think, is a fair way to put it i think so i think so there are some who would say regardless of being one of the great chief executives that there is a benefit to a new view and perspective on things, that -- but i don't think the board thinks that way. they think they have got the best ceo ever and he will serve as long as he wants. by the way, we're talking jamie dimon now, not old. >> if you're 52, 53, and you know that he may not leave, do you have to go >> generations of executives have departed jpmorgan because of the fact that clearly there was not going to be an opportunity there. so that has got to be something -- one of the most important roles a board plays is succession without a doubt or should be if they're doing it right. at wells, clearly they had some issues there but at jpmorgan, they have led a series of potential and, again, everybody speculates, go, the question is, okay, what happens -- who is the long-term answer again the board probably knows but, yeah, people have -- >> much like ge's diaspora that went on to run large companies, here you have the cavanaghs and the staleys and now the scharfs going off to do big things >> scharf left the bank quite some time ago. but, yes >> i think visa was not -- visa was a plastic company before he got there. charlie always had a fascination with technology. i think that wells fargo has underspent in technology at bank of new york, he spent a huge amount and yet his expenses still went down for overall. what does that tell you? productivity, productivity, productivity which is why, again, wells can go up regardless of net interest margin because charlie is a whiz with technology he's one of the few older people i know who is very fassel with tech very fassel. >> he's not old. >> well, he has that white hair. i'm going to send that guy -- if he darkens his hair -- >> you clearly believe they're going to be able to reduce costs in a more significant way than they have? >> six months from now six months from now. not first. he takes three months to analyze the situation. another three months to start placing the orders to get more productive and more sales force.com things i just think that -- look, i can't tell you enough about how this was a much better hire than that i ridiculed them they couldn't get one. you know how i felt about tim sloan, great job they did not give hemim a chanc. >> there were headlines this week, parker was going to give the job by default that was byhanging out, that didn't happen. >> that story was completely and utterly wrong. isn't that interesting we often talk about the idea that in journalism, you're allowed to be completely wrong and no journalism jail they don't take your card away it is great. in any other profession, they take your card away. >> stocks still move on the same journalist on coming back. >> peloton is flat after -- down 11 the first day, second worst unicorn debut of the year after smile direct you were not hot on this name going in. >> there was a juiced up road show where people got very, very excited about the company. but it is -- i can't -- i can't express to you how wrong that stock is for this market the revenue grown was terrific they have terrific subscription growth it is without a doubt the -- for what you want to do, the rubric of healthcare, entertainment, subscription, but priced so high that someone should be outed for getting this wrong they never will. these are faceless people who are never called -- what no accountability. ever blown a deal? i was involved with a blown deal >> smile direct and lyft were both jpmorgan. wework would have been also with goldman. >> what are you trying to say there were people from jpmorgan that might have screwed up >> this was interesting for a number of reasons, not just the terrible perform be as of many of the larger of ipos we have seen of late, but the change in the marketplace in terms of investors and what they're looking for, value started to move past growth you've seen is in the performance of some of the na names. wework created a real backlash in part because people didn't necessarily believe in the business value or that it should be accorded anything leak a technology multiple given what is going on at the company they're not even adding leasing space anymore. >> we saw the bonds break out. saw the bonds widen. >> and then you have endeavor from yesterday, which couldn't make it out in part because of peloton. >> right please do that, because endeavor was a company that -- ebitda positive, high cash generation and, yes, they're my age -- >> we're clients that's true. >> i'm compromised >> tesla, neo, uber, lyft, cannabis, wework all of these disruptive platforms or ideas we either mispriced or not delivering. >> full bull markets that's a great list. david costin is the guy who first brought this to our attention. he talked about the -- goldman sachs, the low quality of ipos and put a nice booklet out >> i have it on my desk up there. i haven't looked through it all, but a lot of glossy pages. but low quality, it depends on what your view is. uber is still a -- >> still a cab company >> that has other divisions. it is consuming a lot of capital, also growing very fast. >> then the times today taking softbank to task, whether it is sprint or uber or wework is there fund model flawed and what do the saudis think about that and what will it mean when it comes time to raise more money. >> talked about vision fund two, the saudis who committed 45 billion to vision fund one, which is roughly 100 now 27 of that 45 is in that preferred, pays 7% yearly dividend they are valid questions to ask. the stock has been down part on the performance of some of those investments, what they invested over $10 billion in wework the company probably not worth $10 billion, that's fair to say. >> fair. >> uber has not been a winner. there had been some, though, they traded in and out of nvidia pretty well. >> nvidia is a buyer. >> arm holdings, not sure where they're marking that >> that was nice. >> how that's doing. sprint, you got to -- if you're softbank, you want that deal to close. get that -- it is segregated, get it off entirely. >> it is a good call they're easy to blast. but, look, the wework model, initially, some of these deals have come last year at this time, we would be, like, wow, these things all came, they took too long >> they came too late. >> they came too late. >> they came a little later in the growth cycle than they would have because of the ability to raise so much private capital. and then there is the question as to whether that private capital is allowing some of the ceos to do things they otherwise wouldn't if they were more disciplined as a result of the public markets >> you should write a book about that that's what happened that's what happened these things were long in the tooth. they trade as if they were public companies look how much they were able to sell. >> of all the things i think that took people's breath away the most, he sold over half a billion dollars worth of stock not to mention some of the internal loans and then the -- >> the perks >> so many other things. >> $60 million jet. >> now for sale. you saw the s&p downgrade yesterday, down a notch. >> look. >> zelnick didn't sell anything. >> cal nick wrote that piece about he felt he was a bad guy vanity fair. i liked that my wife -- >> the cara swisher interview. >> my wife loves that guy. >> travis? >> he gave me the heisman. he said i'm so much richer than you, i don't want to talk to you. i want to talk to your wife, not you. you're so poor i found it mildly insulting. >> i got the nicer more humble travis when i met him a number of times >> i never saw that nicer, more humble i saw that tony romo is very nice to me eagles fan but, yeah, cal nick is a -- i think he's a reformed guy. you know yeah >> yeah. >> he would not talk to us when uber went public sat way up there >> i know. we're seeing -- because of the micron, sanjay being so downbeat, by the way, the call was upbeat for about 490 words and then four words that just caused everybody's jaw to drop i thought those four words should not control i think demand is coming back now. the server demand is good. the pc demand is -- >> stock is down more than it was in the premarkets. >> of course look, there was a call just two days ago, 51 saying you had to buy. that was ridiculous. that was just a ridiculous call. everybody who bought it on that call, it is feeling very -- they want to get run over the head with a peloton peloton. >> you really -- he doesn't like peloton. it is a platform for his wife's clothes. >> lisa does. >> wasn't just a sports bra. there is so much lululemon hanging on that stuff. like this is like a lululemon store she's got hanging on the bike. >> you did say it was a good place to hang your pants. >> my wife was a state champion when she was 14, she knows where she's speaking people on twitter, if you want to have at me, i did not hang my brione on that because there was no more room >> as i'm sure you watched yesterday, when i had ginni rometty, hans vesper join me for this panel on 5g, that's -- that's just not good >> should have been at 18. at 18. >> 29. they had to do 29. >> 18 is where you start getting real value for peloton 18 what are you doing on the set? not even time. see who's here >> yes, willfred frost ready to come on. >> is that in honor of me? >> it is in honor of you >> it is all about me. it is about mindfulness at the same time. go ahead. >> thank you, jim. i did want to come back and talking about uber, of course, and business of which was enabled by 4g. yesterday, a rare opportunity to sit down with ceos of verizon, ibm and qualcomm to talk about that 5g is going to enable in the enterprise not the consumer which we talk about, which is very important for the likes of a verizon, but more for the enterprise. it is a few years away something else that came up in the conversation that we had yesterday was also this idea of who is ahead so much of what goes on here in the business community is that the efficiencies that are going to be created, the new industries will be created as a result of 5g and the enterprise will be of national significance and there is the question, are the chinese ahead of us or not ste steve mollenkroft, here is what he had to say. >> they're going at it with a lot of intensity what is different this time around is the speed to which the chinese are deploying relative to the leadership that maybe established other places in cellular, launching verizon or japan and then it might be several years before you get a tremendous amount of intensity with deployment in china not the case this time you're seeing a lot of deployment intensity early on. it is always more opaque as to what exactly is going on a lot of intensity and the delay between those two milestones very short this time >> very interesting i think in part also because larry kudlow and i have a disagreement on air in terms of how fast china is. there are different ways to measure it and nothing, of course, says the u.s. won't be ahead eventually but the chinese can coordinate more by forcing things that we rely on in terms of the -- >> it is a dictatorship. >> you can put something there and put something there and deal with that and right away and all those thins have to be negotiated here. >> he told the truth >> yes, he did. >> it was good >> before we get to wilf, if you think this long national nightmare of ipos is done, there are six, complete loser biotech deals. loser, losing money. i got to tell you something, this is going to be more -- >> more stuff pulled >> i hope so every one of the company maze need money though. these companies, they're not even in phase one, like phase half i'm doing better with my drug trial. >> yeah. we're going keep our eye on the ipo market window tightening the wells call is finished willfred frost is here. >> the main headline is there is no promise or change in guidance which doesn't exist in terms of when they get the fed asset cap lifted they said there are things they can do with a permanent ceo you can't do with an interim ceo which was sort of in ans are to that particular question wouldn't give any color, charlie scharf, in strategic updates he may or may not be giving soon. the start is soon, 22nd of october. analysts on the call seemed pleasesed with the appointment charlie scharf talked through his broad experience as to why he is qualified for this particular job i also got a quote from jamie dimon on this appointment, of course, scharf had over a decade at jpmorgan before mellon. said charlie is an excellent choice he has great experience, a high character, a first class leader. interesting thing about this, first time one of jamie dimon's former employees has become a direct competitor. when scharf left visa, he was more of a partner than a competitor bank of mellon somewhere in between. you can say barclays is a sort of compete, but different region wells fargo, jpmorgan, two big retail banks in the region, going head to head the tone of support. $2.5 million base salary, bonus up to 300% of that total would be $10 million also, $26 million of options he had at bny mellon moving over. that's quite a high headline number which i'm sure can be enough to attract political criticism. that said, this is a lot less than the base rate for this type of role. tim sloan on $18 million in his final year going rate at the big six ceos is over $20 million for all of the others last year so it is a bit of a pay raise, but somewhere in between, those headline numbers anyway, once you talk $10 million, will get some political -- >> i'm so glad you brought this up looming behind all of this is one person, the person who -- the person who everybody knows is gunning for banking sectors, how does this make it look for elizabeth warren and that pay package? >> including $26 million in options which is the sort of price to get him out before he even started but that is, jim, as you well know, a lot less than other options. other options at jpmorgan, like mary ann lake would have been around $40 million of options. this is low in that sense, and you got to trade off do you want someone with huge bank experience. he's got payment experience, he's got retail bank experience, he's been a ceo, he stood in front of congress and has regulatory experience. this appointment had to be approved by the occ. they approved it you can't please everyone. pleasing the shareholders, up 4.5%, it is going to get that political attack unless you paid him nothing. >> the one thing that everyone knows about charlie scharf, he does not suffer fools gladly he is not going to let people lecture him about he doesn't know about banking, what happens when senator warren says, listen you blah, blah, blah, will he come back or will he just say, yeah, i apologize? >> let's wait and see when the next political hearing is. to be fair to him, he was in the one in april, earlier this year, alongside the other eight. i was in the room. he didn't have to say much he didn't get asked very much. the only things they had to say was i'm very sorry, congress person, i don't do that part of the business kind of amazing. lack of education from the questions. but -- i'm afraid to say we'll see. we'll see when he gets put out of the spotlight how he responds he's seen as an excellent operator he hasn't yet perhaps had to deal with as many clients in their past roles, payments wasn't so much involved with that asset management, custodian, dealinging with institutions, not individual clients >> what is the bigger warren indicator, unh or wfc? >> unh wfc, she has been saying one of the big problems with tim sloan was that tim sloan was part of the organization devastating -- devastating 110 page report just left everybody -- threw everybody under the bus. he can't be thrown under the bus. >> he's an outsider. that's one of the key things >> that's -- she can't hit him with that. >> a lot of people said they would have liked it to be female appointment, it is not they do female appointment it's not. >> the report was floated. >> it would have been very, very expensive, a lot more so with google options to buy out, to move across. i don't know what her base salary is at google, but i imagine it's pretty high as well in terms of the salary you've got an outside. you're got someone that ticks the regulatory box i'm just saying that senator warren i'm sure with the pay will get agitated. in terms of the options out there, all analysts said to me it was one of the top five short lists and people thought they were dropping well below that as time had passed. >> given how much time had gone by. >> the idea that they had to move to california. >> i'm sure that was a big factor he pushed for and he got. >> well, thanks. good to see you, wilford frost >> income and spending made some uncomfortable, but do remember on the weaker spending, it was pretty powerful at the beginning of last month. we gave a little bit back. look at one week of tens tens are up one on the day down two on the week that pretty much sums up treasury virtually unchanged. 10 year note yields, it's been down a 30 base quarter it's been all about foreign exchange we now have fresh 28 month closes above the euro and the dollar index the euro versus the dollar is starting in may of 2017. the dollar yen isn't at the best levels in 28 months, but certainly the dollars climbed close to the best levels since very early august. that really is a victory and there is a one week of the dollar index it's having a great week, a great quarter. every close in the last two days has been fresh 28 month highs even though intraday 9,937 from the third of september still stands as the intraday high. back to you. >> all right rick, talk to you in a few minutes. when we come back, "shark ta tank" roger is going to join us. we keep our eye on wework. dow still hanging on as it tries to finish green for the week we're back in a moment obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪ iit's not "acceptable or nothing." and it's definitely not "close enough or nothing." mercedes-benz suvs were engineered with only one mission in mind. to be the best. in the category, in the industry...in the world. lease the gla 250 suv for just $329 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. let's get to jim and stop trading. >> two stocks going in different directions micron is going to continue to force down texas instruments which was looked to be commodity but is doing well in the internet of things merrill lynch says some great things about it. texas instruments has had a remarkable run anybody remembers them from the good old days, they were cowboys. they ain't cowboys now so this upgrade from bank of america and merrill lynch is going to have legs temple does have the ceo has the best record of any long term serving ceo in terms of stock performance. second best. so i think that stock goes higher and it shows you what this market really likes it likes texan. >> hard to believe there was a $90 name at the beginning of the year. >> isn't that incredible >> when it dropped below 100. >> tonight >> i've got good rx. anybody that's tried to get good medicines that you think is a ripoff, this guy really helps. there's a lot of people who are being ripped off by the system this guy is the antidote to being ripped off when you get big bills, he can lower them for you he's done it for me. it wasn't like i didn't know who the hell he was. i used the company. >> it's in the ads. >> it works. how is the peloton ads doing >> jim, good week. we'll see you tonight on "mad money. when we come back, we'll talk about real estate, s&p' needcoum data wasn't good and michigan in a few minutes. along with support, chantix is proven to help you quit. with chantix you can keep smoking at first and ease into quitting so when the day arrives, you'll be more ready to kiss cigarettes goodbye. when you try to quit smoking, with or without chantix, you may have nicotine withdrawal symptoms. stop chantix and get help right away if you have changes in behavior or thinking, aggression, hostility, depressed mood, suicidal thoughts or actions, seizures, new or worse heart or blood vessel problems, sleepwalking, or life-threatening allergic and skin reactions. decrease alcohol use. use caution driving or operating machinery. tell your doctor if you've had mental health problems. the most common side effect is nausea. talk to your doctor about chantix. ♪ at verizon, we're building the most powerful 5g experience for america. that's why the nfl chose verizon. because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you. good friday morning. welcome back to "squawk on the street." i'm carl quinn let's get you mixed with rick santelli. >> final breed on university of michigan sentiment the 92 is the mid read that gets tossed the new read actually improved 93.2 that's the best read since july. since july so it's not huge by any means and the high water mark for the year is a flat 100 that was in may, but it's still better than the mid read let's go through some internals. i always like the inflation outro outlooks the five to ten year inflation outlook moved up a tenth we have interest rates down a basis point on the session down several on the week carl, back to you. >> rick, thank you very much. road map begins with wells fargo today finally getting a new ceo. we're going to tell whou he is and what his appointment meened >> highly endeavor pulls its ipo the day before its debut. blaming the trade war, sales at micron down sharply hear what the ceo told us about the quarter and the road ahead. after six months without a permanent ceo, wells fargo hires charles scharf to head the company. >> so here he is on the analyst call that just took place. >> a permanent ceo does create the ability to move company forward in a different way as i said earlier, the way i go about doing my business is to work really closely with management team. i think about it like a partnership. you need to engage the entire company around a common set of goals, understanding, the way you want to do business. that's something i think that i, you know, has been lucky enough to do successfully at both visa and bny and i'm looking 20 doing here as well. >> his appointment is a big win for wells fargo certainly relative to where expectations have got in the six months since tim sloan stepped down he has retail banking experience of over a decade, fin tech experience at visa where his share price performance far exceeded the s&p financial index, and custody and asset management experience from bn wrry mellon lagged but was ahead of state street he will receive a $2.5 million base salary, maximum of $10 in year one, $26 million. options will be bought out and moved across this is a pay rise for him but significantly lower than tim sloan was on, $18 million, and another big six bank ceos or on oh moment. it's probably still enough to attract political attention. he will remain based in new york city and not relocate to the west coast investors like the news. shares up 4.5% his old boss jamie dimon and his old rival likes it too charlie is an excellent choice for this role. the share price performance, though, the clear jump showing what investors think. >> bny melon is a -- >> five years i spent there. >> that's right, we forget you had a career before television. >> he had a career before taking this role. at bny mellon, the hiring practices at the bank, can we expect that kind of approach at wells? >> well, from the call, we got no news at all in terms of what his approach will be it was sort of sitting on the fence. i don't say that as a criticism. clearly he hasn't taken up the role yet they don't want to tear up the targets yet. another point he did at bny mellon was a head count reduction and reducing their sprawling empaire. we'll wait and see it's a very different role number one on the agenda is get the fed asset cap lifted as soon as they can do that will be another leg up one would imagine in the share price the other thing which i think some people are pointing to is ca he take wells fargo forward in the kind of tech space? they've clearly been investing in that space, but they've had distractions it's important for all the big retail banks moving forward. he's on the board of microsoft he's in the payment space of visa that's an area i'm sure was a tragt ti -- attractive to the board of wells fargo. >> and a trust level with wall street going back to being cfo of bank one, it's somebody that i think the institutional investment committee probably feels as if they know and can communicate with. >> absolutely right. and he ran the retail bank as well at jp morgan which gave him access of course to investors and on top of that i bring out the point he's known by regulators 3 1/2 years in bny mellon, one of the important financial institutions in the u.s., so he's done that dance as it were. it's going to get harder for him now. this is the most kind of regulated bank at the moment but i think he's got pretty broad experience you can't knock that at all. >> all right thanks. >> pulled its ipo yesterday. it was scheduled to go public today and start trading. bob is on the floor. he's got more on what is a suddenly ipo market. >> they tried to get it done and couldn't just take a look they were trying to rais $600 million yesterday they cut the terms earlier on in the day to 15 to 26 to 27. that's a 30% haircut they still couldn't get done. it's the culmination of a very tough week overall we had wework imploding. that seems like a long time ago. we had peloton disappointing then we had endeavor withdrawing and smile direct club, that's down 40% this week after a disappointing debut. there's two major issues for ipos right now and one smaller one. the two major ones we're getting a valuation pushback peloton lost $200 million and a billion dollars in sales there's some governance issues the whole thing with weworks family tie system also playing into the mix the ipo market didn't just start rolling over it started in july the ipo etf topped out july 26th that's what the market topped. you see it's been slowly rolling over since then and accelerated a little this week even big names are way off their highs. i know everybody talks about lyft as the big disappointment on the year, but a lot of names that are still up are way off of their highs. take a look at slack its biggest day was its first day of trading slack is 45% off that high on that first day the great example, what everybody uses, beyond meat is way above the initial price. we priced it 25. look at that rocket. it went to $240 in july at the end of july when the market topped out where is it today? it's at $150 meat is -- beyond meat is almost 40% off of the high that it's hit. yes, it's still up big on the year, but i think you have to look at the trend here and the trend tells us that the ipo market topped out a couple of months ago and just now is some of the really big news becoming very apparent. back to you. >> bob, clearly a market that wants known quantities more than the untested ones for the moment anyway thanks very much. elsewhere in the market stocks getting burly gains, the s&p 500 and the dow in the red, holding on to some smaller gains. global stocks in the midst f a stock as well. more disappointing economic data and uncertainty in washington which is weighing on both equity and treasury markets here to discuss it all, good morning to you both. >> good morning. >> al, just to start with you, the general tone of the economic data i would put it roughly as expected, but still in a slower kind of 2% zone for the u.s. and slower elsewhere are markets okay with this for the moment given what central banks are up to and trade pra perhaps has that carrot sticking ahead of the market? >> i think the market is concerned really the perception of a slow down in moment, certainly the manufacturing sectors in terms of investment in gdp, that's soft we know the trade picture globally is weak as well so much is resting on the consumer we just had consumer expenditure data today a little on the soft side in talking about consumer spending now at about 2.4%, 2.5% gdp only going to come in at 1.5% that's a little too slow. >> we've obviously pulled back from the brink of the intense recession fears of august. bond yields are up a bit globally, but kind of stalled out at these levels. where does that take us, do you think, in terms of searching for a catalyst, a confirmation that you've seen? >> i think we're dealing with the market at the moment that is uncertain about the path ahead it's looking for a narrative we don't have a huge amount of clarity in what the federal reserve is going to do they seem to be very divided as a committee and that makes it hard to project forward as an investor meanwhile, on the trade front, who knows how that pans out in the next month or so what about elections, what about brexit risk? i think there's a lot of heightened uncertainty we're looking around for a narrative. what that means from an investor position point of view going into the fourth quarter i don't think now is the time for big punchy bets. pull back on risk. wait for some sort of clarity whether it comes from the economic data, whether it comes from the policymakers. >> all the uncertainty you mentioned, you didn't mention how the impeachment inquiry will impact trade negotiation dynamics, right? or policies of any kind really. >> absolutely. this is the environment we live in we're in quite a polarized political environment, and geopolitical risk in europe and china is very elevated investors we're talking to are saying i'm not sure which way this is going to go and i'm frankly in completely the same camp therefore, now is the time to pull back on some of those risks. maybe one of the reasons why we're seeing u.s. bond yields despite ticking up slightly in the last couple of days quite anchored down. >> so are households mimicking what corporate treasuries have been doing for a year? >> not quite yet the verdict is still out what we've seen is still in savings ratios bumping up in the latest data. the ratios are still quite high. there's capacity for the consumer to still be there, but as you've just mentioned, all these uncertainties really are not going to be terribly helpful. >> uncertainties aren't helpful. in addition to everything we've mentioned, you've got the ipo indigestion in the market. it just seems as if there have been more opportunities or excuses for the markets to back off even more than they have how do you explain that they aren't >> there's a lot of built in resilience the best explanation is what's gone on in the bond market the bond market has rallied so much there's so much emphasis on what the fed's done, but the bond market has eased so substantially for the federal reserve i think that's provided flows back into the equity market and provided a buffer for risk in general. >> so just mechanical? people also pointed out economic surprise indexes have perked up a little bit just because numbers coming in better than forecast. >> we are seeing that, but then sort of coincide that with what's happening outside of the united states. we've got a global economic backdrop, particularly in europe, where the region seems to be heading krtowards recessi. pmi numbers across europe were weak for september they were bad in germany this goes back to the trade tensions the united states and the chinese economy look okay, but those other countries, germany, korea, taiwan, they've been caught in the crossfire. that's where i think investors both in the u.s. and internationally are struggling with how does the u.s. holdup in a weak or maybe even recessionary global environment >> so with global growth weak, investors this year have been taking gambles on high growth ipos do you think that door is shut what does it mean if that door is shut? >> i think that door probably is shut really. just amping up the risk and the risk appetite is just not the way to go at this point in time. a more cautionary note is desirable. i think the kind of view that we've been putting forward is much more a case of just receive the front end of the curb. the federal reserve can do more than the market expects and substantially more than the feds are expecting. >> do more than they themselves. we'll leave it there. >> thanks very much. when we come back right here, the ipo slump nearly half of 2019 public debut is now trading below the offer price. so what are investors looking for and does this spell more trouble ahead? robert herjavec is going to be s.th u we'll talk to him about that and other things "squawk on the street" coming right back where you spend.to track a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones. oh, and if you happen to be somewhere that doesn't accept apple pay yet, there's this. nice. ♪ man: can i find an investment firm that has a truly long-term view? it begins by being privately owned. with more than 85 years of experience over multiple market cycles. with portfolio managers who are encouraged to do what's right over what's popular. focused on helping me achieve my investors' unique goals. can i find an investment firm that gets long term the way i do? with capital group, i can. talk to your advisor or consultant for investment risks and information. charles scharf has been named the new ceo of wells fargo. the former visa ceo and current microsoft board member will officially start his new role on october 21 taking over for interim ceo allen parker we welcome new york times columnist jim stewart to talk about that, the ipo market and a burn of other things you think it's a good hire >> i do. i did a fair amount of wells fargo, the scandal it was something that really struck me there was how pervasive it had become in the culture that they wanted yes people they wanted people who did what they were told, didn't ask any questions, didn't raise any concerns if they thought they were crossing a line into legality which i find in any company is a huge red flag the people who try to do something about that, you know, fake account scandal were all punished some of them lost their job. they were demoted. they were shunned. the message to everybody else was loud and clear, tow the company line or you are out of here i saw that going all the way up to the very top. i don't think you can change a culture like that with an insider. i don't care how well-intentioned sloan may have been they all were breathing the same air and drinking this water which i think goes way back to the nor west days. it kind of takes somebody at the top and there's going to have to be a lot of housecleaning there. >> aside from being an outsider, i mean, he's got to essentially allow the bank to grow again he's got to get permission for the bank to grow >> well, yeah. i will say, again, one good thing i'll say about him, and the bar is pretty low, he emerged from the financial crisis in ensuing years without being seriously tarnished. he's a veteran banking executive. i mean, maybe, you know, it's really good for him to somehow, he kept his head down. he's hardly a household name mellon bank of new york is under the radar sort of institution. now, it will be interesting to see can he leap into the retail banking world which you kind of think about retail banking there's a lot going on there, particularly with the digitization and a lot of the work, the continuing shift to digital, the kind of upstarts nipping around in the retail space. there are going to be some big challenges in adapting to this new world. >> perhaps no bank has gotten more scrutiny from at least one senator we know well, warren and others than wells. is it your sense, we were going through his compensation earlier that there is going to be still some -- something to pay there in terms of dealing with congress and/or senator warren >> i think maybe the -- how many more pounds of flesh can you take out of them they've been beaten up so much what we saw in that whole saga was an amazing disconnect between wells fargo and this sort of bubble they were living in and the rest of the world they had the stamp of approval from warren buffett, you know, investors love them. they kept putting out all the good numbers they were like this untethered out there at their headquarters. they went to testify in congress, it was like they didn't know what hit them. i was kind of shocked at how, after all the financial cries, the criticism of the banks, you knew where warren was coming from, how ill prepared they were for the realities that were going to face them i hope -- i think they're facing up to it finally. >> jim, i want to turn to the ipo market peloton yesterday not performing well endeavor delays. wework a total rejection by investors leading to a lot of other things what's your sense in terms of what it may be telling us? >> i think it's healthy that investors are discerning what would really worry me is people just throwing money at all these things and hoping that something is going to stick and do well. i think people are scrutinizing these individually i think there's kind of a theme here which i alluded to before which is the more sort of so 50 indicated and technological and difficult the business is to understand in a way, more of a slack investors are going to cut. if you're talking about exercise equipment, i mean, doesn't everybody know somebody whose basement is filled with the exercise equipment of yesterday? my dad actually had one of those belts that wiggle you stood on and wiggled and that thing was collecting dust in our basement for years. that was a hot exercise thing and weight loss. so i think there's a lot of skepticism and for good reason then you start drilling down to the numbers, you've got money losing companies what's the growth tragedy? what's the loss trajectory you don't want to see the losses going up quarter to quarter. >> we -- mike, you stood really a bad thing when you broke syndicate day one. now it's almost the rule. >> you have to price it at the high end of the range and say everyone wanted in on the first day. it shows you, though, they seem to think they actually were being conservative in the pricing. honestly, it's how much they've raised privately, all these companies, and therefore it sort of sets the bar for their minimum in their head for what they would be worth in the public market. i wonder what the blow back effect is going to be there in terms of private investment and the assumptions you make. >> i kind of look back now at the snap offering and i think -- and maybe that was the high water mark of this i remember looking closely at those valuations and straching -- scratching my head i couldn't get much mier thhigh 25%. that number was just off the chart compared to earlier ipos then everybody wanted -- oh, i want that multiple, bring me that that could not have been sustained. >> i mean, i think you can even go back and say that, you know, facebook's rough first eight months was baz thecause they ind on $100 billion out of the gate. >> they had some execution issues as we all know. >> and then it took them eight months and really, you know, an unlikely kind of turn around and strategy to get them where they are. >> i do think an interesting question which people are now raising is as the ipo numbers are going down, what does that do to the whole venture pipeline because it's all about, you know, what's your future return when you put that first dollar in to help one of these starter things is this going to chill innovation it's going to chill the ability to raise money i suspect the answer to some of that is yes. that's not so bad either you don't want these big institutions investing in venture funds and then just throwing their money inchr indiscriminately. >> there is a sound idea that any growth of a private model in silicon valley, they bought a lot of software. it isn't as if they were putting the money that real companies weren't collecting who knows what that means in terms of the economics. >> i think you've got some models out there, the big tech companies that were startups at one time and now they're for better or worse, they're natural monopolies i think people are dazzled by that they want the next one of those. but you need a very good story and a convincing story frankly, an exercise bike is not going to ever be -- >> it's not about the interaction. it's about the digital media >> it has a spin on it. >> programming, a subscription service. >> it checks a lot of boxes. butda dare i say -- i said -- iv always said you need a good story, but you need something to back up the good story you need some numbers. you need a trajectory. that's what some of these companies don't have. >> don't go away we want to get your take on bernie sanders, elizabeth warren of course unveiling their tax plans. robert frank joins us with a look at what it might mean for the wealthy. >> in the race to tax the wealthy, bernie sanders just took the lead. he aims to raise $4.4 trillion over 10 years. that's 60% over warren it will include federal revenue by about 10% all of that from about 180,000 families the way he's going to get that is a lower threshold and higher rates. elizabeth warren plans to tax wealth over $50 million. sanders would tax wealth over 32 that's about 100,000 households he would be adding warren taxes at 2%, billionaires at 3%. sanders has a much more complex sliding scale that goes all the way up to 8% that is more than four times higher than the highest wealth tax that they have ever had or had in the past in europe. it just says an example, jeff bezos would pay $9 billion under the sanders plan he promised it would cut in half the fortunes of all billionaires within 15 years. to make sure wealthy couples don't avoid by divorcing, the thresh h threshold for singles would be half of that jim is a model for all of us jim, i would ask you do all of these plans, do any of them in your view, are they workable which one do you think could actually function in the current tax code >> well, i think the simple answer to that is no i don't think any of them are workable the more complex they are, i start to see the levels of complexity and the layers and the categories, first thing i know of is tax avoidance the tax lawyers will have a field day and before we know it billionaires will be slithering through the cracks and will not be paying these rates. secondly, the sanders proposal to me shows the danger of the slippery slope here. you start with a waelgealth taxf $50 million. then it's down to $32 million. then tomorrow it's $16 million pretty soon what's it going to go to? $2 million you've got retirees who aren't making any more money and people are saying we're going to start taking chunks of your net worth away from you every day. that is a complete disaster. i don't see the wealth tax going anywhere. >> you don't see the party adopting it as their central platform >> frankly, it makes me squeequy when i think of all the problems we could be addressing can i go back to basics? can we just start with the tax code we have right now and make it fair, make it apply to everybody? and i could do that and raise more money than the wealth tax is going to do we don't have to turn to some exotic new additional tax to make the system more efficient, to help narrow the differences of inequality, to make it fair and to generate more revenue why doesn't somebody do that >> that's going to be it is key. cutting spending is just not happening. we're going in the opposite direction. >> they're trying to get at this massive pool of untacked accumulated wealth capital gains tax has not been talked about and the estate tax to get at. >> absolutely. the estate tax and capital gains are two obvious places to start. i've been saying a long time why do we have these very favorable capital gains rates particularly when it applies to people whose vast fortunes are coming from stock and their startup companies and investment money i mean, that's not such a radical idea why do you have to go embrace this crazy wealth tax notion which by the way there's a reason those rates are so low in europe the wealth tax is extremely unpopular. let's pay the tax when you make it wouldn't it be nice to think i'm safe now, i can keep this, i can plan on the future, i can invest for the future i think the wealth tax is a terrible idea. >> how will you go about valuing those wine cellars, those boats? >> it's a mess. >> we covered a lot of ground there. let's head to a quick break. checking on shares of micron falling on a disappointing outlook this morning down about 10% companies saying sales to huawei were down, quote, meaningfully, and the major averages, broadly kind of idling around the flat line the dow had slim gains, s&p flat nasdaq is the underperformer again. 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(indistthat was awful.tering) why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. when i lost my sight, my biggest fear was losing my independence. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me. it is time for our etf spotlight. taking a look today at the s&p oil and gas spider etf it is rebounding from its slide earlier this morning that dip coming after iran's president claimed the u.s. offered to remove sanctions in exchange for negotiations. wti crude also did fall as much as a percent before the president's tweet denying that claim. wti still slightly lower on the day. quote, iran wanted me to lift the sanction imposed on them in order to meet. i said of course no. that was the president's tweet the xle and the oih etfs trading positive following that news let's get over to sue herera and get a news update. >> good morning, carl. good morning, everyone here's what's happening at this hour tehran says a british flagged oil tanker held by iran since july has left the country. the statement came this morning about two hours after a ship tracking website showed the tanker had begun transmitting its location for the first time in weeks britain's prince harry detonating a land mine in angola where a charity is working to clear them harry's mother also carried out charity work in angola to raise awareness of the dangers of land mines. back here at home the chicago teacher's union voting to authorize a strike. chicago officials are offering a 16% raise, but union officials say it's about more than just pay. >> we need staffing in areas like nursing, for social workers and for some education services. we need enforceable caps in class size we need pay in benefits too. pay in benefits alone are not enough we care deeply about the learning and working conditions in our schools. >> if no resolution is reached, the teachers could walk off the job on october 7th you are up to date that's the news update this hour carl, i'll send it back downtown to you. >> sue, thank you. when we come back, it's among the biggest tenants and new york and london. wework halting all new lease agreements as it tries to reign in costs and what it means for broader private markets. dow is up 41 don't go away. as a struggling actor, i need all the breaks that i can get. at liberty butchemel... cut. liberty mu... line? cut. liberty mutual customizes your car insurance so you only pay for what you need. cut. liberty m... am i allowed to riff? what if i come out of the water? liberty biberty... cut. we'll dub it. liberty mutual customizes your car insurance so you only pay for what you need. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ obviously ipos have been in turmoil. peloton is down again today after slipping in its public debut raising questions about valuations in the investor climate. this as wework according to reports will be halting new leases with big tenants in new york and london to cut their losses here to make sense of it all is robert of "shark tank". biggest commercial tenant in new york one of the biggest in london what would it mean to the commercial at least if in fact this happens >> it's bad. the largest tenant in new york, the largest tenant in london, i think the largest tenant in chicago and a bunch of other major centers, especially if we're heading into a recession and things aren't going to be great, it's bad to have all the big commercial lenders all put i wonder what the exposure is for big commercial markets. >> the market has gotten better in the past couple months some argue. >> i don't know if we're going into a recession i'm very bullish, the cost of money today, i look at the trends, i look at china and all the other trade issues, but as a guy running a $300 million business, what impacts me the most is cost of the money. you cannot beat the interest rates today. it cost me nothing to borrow money today. as a business owner, that's really powerful. if i can borrow at 2%, 3% and grow by 10% or 20%, i'm going to take that all day long. >> what we're seeing in residential makes sense to you. >> it does make sense to me and i think i'm not convinced we're heading into a recession i think the economy is strong. i think there's a lot of capital investment going on. but i guess we'll see. >> if you're benefiting from an extremely low cost of money, you're competing against people probably who are too do you see that enabling anything that's excessive or a little bit wild in the market in terms of private investment, startups, or has a lot of what's gone on in the market? >> what i am seeing is because the interest rates are so low, it's putting a lot of pressure on funds to get greater returns. the amount of liquidity in the market is not great for somebody like me. so i'm competing against people that are raising incredible amounts of money they have really no game plan to get to profitability and that's always dangerous when you build a company where the only possible exit is a sale or a ludicrous ipo, you haven't built a great business but if you can build a great business, you can always get to liquidity then. >> speaking of ipos, we built a graphic of ipo performance this year smile direct down 41 lyft down 41 uber down 30 peloton down 16. what is happening? >> gosh, i really thought peloton was going to do great. i don't have a peloton i'm a huge soul cycle addict, so i have to say that, but they have a great recurring revenue model. i think their recurring revenue is around $220 million a year. that's a great business. what it tells me is if you're losing money, it's not a great time to do an ipo. as great a company as peloton is, they're still going to lose -- i forget the dollar amount lyft is losing money uber is losing money the ipo market is really not very kind to companies that aren't making money. >> in a vacuum, though, last week, if you knew all of peloton's financials and their plan for growing and the scale, you said it's worth about $7 billion. i wouldn't necessarily say it's a terrible thing that's what it's worth right now after the decline. it's kind of about what the ask was in terms of the ipo price. >> i was offered shares in the pre-ipo and i took some because i thought it's a great business model. in the end, they probably went to the high end of the range which probably wasn't smart, because i think they felt good about their numbers. there's a lot of appetite pre-ipo, i can tell you that i would have priced it -- i always like an ipo price that you always want to pop on the 50 day. i think it would have been a little smart toer to price at te lower end of the range and hope it rebounds. >> you like the business model. >> i love a recurring revenue model. in our business, 1/3 is recurring. when i can make up every month and know i have a certain amount of renew coming in, that's powerful in our space, recurring revenue usually gets valued at 4 to 8 times top line revenue >> i guess the question is, how many people are going to be locking in for that recurring revenue? do you have a number in your head of how many subs they need to actually make it work >> i don't so on one hand, i know the recurring revenue is great i know they're getting a lot of subscribers. i forget the number, but you've still got to keep your costs in line recurring revenue is great it's a great dream and it makes everything happen, but you've still got to run a solid business and i think they've spent a lot of money in order to gain market share, but eventually, you've got to get over that hump i just don't know where they are. i see a lot of competition coming up. soul cycle is coming out with a competitive product. nordic track i think is announcing a spinning product. and it works great look at me i'm 85 years old i'm in great shape because of soul cycle. >> not a day over 80 >> the other big story today is cyber and this door dash breach which exposed nearly $5 million users, vendors, delivery people. it's been a while since we've had to deal with a real hiccup in this space. what do you think it means >> i just had a meeting with a big customer in that same space and they said to me no one is going to breach us, what data do we have that anybody wants when are companies going to wake up and realize they're the custodians of clients data when you have privacy information, when you have my credit card number, when you've got that kind of data, you've got to take care of it it amazes me that still today ceos aren't paying attention to that. >> you don't feel they are it feels as though it's become a board level issue. >> it is a board level issue, but i don't think people are taking it serious enough i think there's two different kind of companies. people really invested in cyber and see it as a competitive edge and other ones that kind of pay favor to it and make minor investments in it and really isn't part of their culture. but i think you're going to see more and more of that. like, i went the other day to a retail shop and i wanted to buy a bicycle for my twins so that i can drive them around in they wanted my credit card information obviously, but they wanted my personal home address. they wanted my email address here's the amazing thing i said i don't want to give it to you you know what the guy said to me i can't sell you the bike. it was a $2,000 bike i don't trust what they're doing with my information and i don't want to give it to them. i think it's unfortunate for door dash, but i think we're going to see more of those or we're going to see regulations around privacy. >> sometimes it's a relief to say here's some cash, give me the good. >> i just want to buy stuff. why can't i buy stuff? >> robert, thank you a quick reminder, you can catch robert tonight, "shark tank" right here on cnbc when we come back, it is a battle in the auto industry. classic carmakers versus big tech who is going to win out on that? we'll check in witwah ll street's top auto analyst in a moment at verizon, we're building the most powerful 5g experience for america. that's why the nfl chose verizon. because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you. 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(vo) go national. go like a pro. banks trying to break out and one technician sees a critical level in the bond market that could mean boom or bust find out me oron trading nation. more "squawk on the street" is coming up. woman: what gives me confidence about investment decisions? rigorous fundamental research. with portfolio managers focused on the long term. who look beyond the spreadsheets to understand companies, from breakroom to boardroom. who know the only way to get a 360 view is to go around the world to get it. can i rely on deep research to help make quality investment decisions? with capital group, i can. talk to your advisor or consultant for investment risks and information. taking a look at two auto stocks in the headline general motors still struggling to make a deal with the uaw and tesla rallying a bit as elon musk says it could deliver a record number of vehicles in the third quarter. joining us now, adam jonas let's just get started if you don't mind by putting the current gm negotiations in some broader context here what is at stake not just in terms of dollars and cents for what it might cost the company for for gm's ability to manage the transition into the future for this industry? >> sure. we think -- first, uaw strike for old gm before the bankruptcy would have threatened the solvency of the company. for new gm a uaw strike could be worth maybe $50 or $70 million a day. maybe when this is all said and done it cost them a billion dollars of kosh most dollars most of which they'll make up for over the next few months we understand this is a headline and it's news worthy, but in the granted scheme of gm strategy, they're going to get this behind them and they have much, much bigger issues to deal with at the board level. >> and those bigger issues, so from what you're saying, outcome of this strike is not going to impede gm's flexibility in terms of what they do need to do in the grand plan, and where are they in terms of managing toward ev and autonomous? >> so there's an enormous level of awareness within the management team and the board for what they need to do few examples i'll highlight, their ability to attract outside capital for some work in autonomous and electric vehicles that otherwise would be sitting on p and l, they have been frugal on that and very wise i think what's interesting and has gone unnoticed, general motors don't do hybrids any more they killed the hybrid program, chevy volt, you might remember that, and they're going straight to all new electric, battery electric architectures they're taking more of a clean sheet approach and focusing on profitable units where they have proven they can dominate, pickups, suvs, and using that dividend to pivot the business where they need to be the next 10, 20 years >> adam, want to move to autonomous things have been moving slower than some anticipated. you acknowledged this in a recent report as well. you lowered the dcf on wamo, for example. what are we seeing in terms of long term opportunity and lengths at which it will take us to get there >> so wamo is covered by brian nowak. what we've seen the last two years, two issues. the technology to actually for driverless, may be the hardest thing humanity tried to do the technological task itself, and data required to train a neural network is difficult, may take years to do the other thing is from a regulatory and moral, ethical, legal standpoint, removing the driver has to date proven almost impossible if you can't remove the driver for regulatory reasons, your business model doesn't work. if you don't have a business model, you don't have revenue. so what brian nowak has done is pushed out, still acknowledged there's progress that will be made bi telemetry of adoption is more out to the right. >> only a second, why isn't me oh a cautionary tale on tesla? >> one could argue it could be could be argued both ways. the china team thinks that interest in tesla ahead of model 3 domestic production in china may have contributed to some lack of demand at neo. this is i think a tale of you need stable, patient capital and you need best in class product and no one at this point has surpassed tesla for best product in the market. >> adam, thanks very much for the time this morning. appreciate it. >> thanks for having me. let's send it to jon fortt for a look at what's coming up on "squawk alley." >> hi, david you might remember this from six months or so ago, the galaxy fold didn't quite make it there was a problem with the hinge then, but it is out w.no we'll find out from a couple of reviewers if it is any good. that's coming up on "squawk alley. if they're talking about you... you must be doing something right. experience the style, craftsmanship, and technology that have made the rx the leading luxury suv of all time. lease the 2019 rx 350 for $399 a month for 36 months. experience amazing at your lexus dealer. it also has the highest growth in manufacturing jobs in the us. it's 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. that's financial wellness. put your employees on a path to financial wellness with prudential. welcome back to "squawk on the street." dominic chu. stocks are just above the flat line, strength in financials and energy offset by weakness in defense sectors like utilities and real estate. let's drill down on one of the notable underperformers, communication services stocks. heavyweights like disney and google and alphabet and facebook dragging the group lower on the day. the social media giant on pace for the worst week since 2018, amidst regulatory concerns keep an eye on facebook shares back to you at the new york stock exchange lel.e'll watch that 180 ve have a good weekend. see you soon "squawk alley" is up next. this is apple card. a new kind of credit card. created by apple, not a bank. with a better way to track where you spend. a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones. oh, and if you happen to be somewhere that doesn't accept apple pay yet, there's this. nice. ♪ for farmers here, this is our life's work. but when a recall happens, perfectly good food goes to waste. now, we've got away around that. looks good. we're on target. blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. it's used by some of the biggest retailers everywhere. a nice wedge. so more food ends up on your table, is that daddy's lettuce? 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"squawk alley" is live ♪ ♪ good friday morning. welcome to "squawk alley." i am carly fiori quintanilla wi fortt. dow is up on decent headlines on usmca. we will begin with ipos shifting negative with nearly half the ipos trading

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