Low. Our roadmap begins with red october. Stocks off to the worst since the crisis futures have a new open. After the worst manufacturing in a decade, sources work on that this morning. Shares of pep ki so fueled by sales growth and a nice earnings beat ceo will join us first on cnpc in a few minutes market versus a rough time in an economic slow down a second selloff resulted in the dow falling more than 800 points s p lost its gains from queue and q3 combined. Investors will be paying close attention to Services Data in less than an hour from now jim, they say of the two times that ism manufacturers contracted, we havent had a recession because Services Held in last night i had marty mucci on from paychecks. My old colleague larry kudlow chief economic adviser to the president says thats where it comes from its not like gm creates jobs. He says this was the best time theyve had and september was a strong month in the country and was constrained by not being able to find more employees. Its kind of like there is two worlds here. Like marty is talking about acceleration in the economy and that we would have tremendous job growth if there were more people then we got the other part of the economy, which is the rails and the air transports and manufacturing, which is just not good and the warmer the marty mucci paychecks is who spends, who is buying houses lennar was one of the best quarters ive seen lennar have and theyre the largest home builder. So there are things happening in the xi that are incredibly strong and there are things that are happening that are incredibly weak. I dont want to just focus on the part thats weak marty was saying everybody is way do you gloom why i. Yesterday they called it fears of a semi recession because so much of the industrial economy is weak as you said the rest is not this is what the paycheck ceo told jim last night on mod money. My mad money my feeling is businesses are concerned, the demand for their products is there, theyre out trying to hire the Biggest Challenges is hiring people to fill the demand that they have, thats good news. Thats unbelievable i mean, its funny, sometimes you talk with executives after the camera is over marty id like to check my bull here, i know its important to be reasoned. He says, look, the issue in this country is we need more workers. Now, thats typically not the recession narrative. The recession narrative is we have a surplus of workers. Thats not the case. So i felt very sanguine after speaking to marty and also of, for background, the people at len far, they cant build the homes fast enough. So youve got that part of the economy, 10 of economy is housing. It does punch above its way. You find yourself thinking, before i get too bearish, remember these are the people who buy things thats why watching walmart, amazon, target, costco and home depot remains strong when our cart is a chart of the u. S. Economy, when you speak to the president s people, yes, i do theyre like in disbelief that we dont think its great that they put 7. 5 being in tariffs on europe because that like marty mucci will say the tariffs are impacting only 25 of the businesses that we have of which 75 of the 25 say there is no issue. Going into the crisis, our viewers will remember being told that housing, a small part of the economy. Dont worry too much now we are being told, oh, its reflective of the entire economy. I think thats a great point. I think the difference is when i remember when bob k toll came o talking about flips and there were way too many areas that are hot. Here its kind of opposite its, yes, there is some home buying for rental. That is a Johnathan Gray issue in terms of real estate allocation. The black sun, yeah but i do think that when i say futures had it. Single family, there is a demographic movement out of the parents home. Its probably happening in two waves. I know its nobodys term, they are finally getting off the couch. I was sick of being at home as frankly as it is, you have to make deals for them that dont really work hard they snack thats why pepsi added a quarter. They snack got to go to trailer joes you got to get this new red hot doritos. When we told you, not you, im from philadelphia, you is different. Its a fair point that are you making about the economy but during the course of the day when you and i are talking to people, or are you here or there, the trade work comes up every single time. Yesterday we were having lunch, i passed somebody who is a director on, actual lay director on three or four major boards when we were talking about it that uncertainty, that inability to want to actually allocate more capital than would be typically the case. Because you simply dont know. Thats going on, thats having a real impact it has an impact far beyond the Manufacturing Sector i will tell you, why do you think the stockmarkets will get clobbered . Because of that . Right so its getting reset, recognition that some companies are getting hurt now the directors that are on the boards of some of the companies i deal with, theyre saying like whats the problem were domestic weve built in our tariff, dollar tree. The dollar trees all right why is the russell down 12 from the last high . Why is it no higher down than it was in september of 2017 i think there is a lot of money coming out of the market because a lot of people feel it has to roll over i think there is a very big fear factor the fear factor again overdone, i think, with Elizabeth WarrenBernie Sanders does have Health IssuesElizabeth Warren jumps to the floor and there are people out there who believe Elizabeth Warren is quite frankly a redistribution i think shes, she is i think she can be tempered. Cashman said 200 points of the selling yesterday he thought was a sanders selloff i couldnt agree more do you remember a year out from the election the markets reacting in any way the expectation of either trump or obviously it was not expected at that point to win . It seems a bit far out to be discounting back the probability of a warren victory before the first primary has even begun i have agreed with you, but there when i read the second to the right of the New York Times yesterday about how Elizabeth Warren basically wants to redistribute how wealth is in this country as is Bernie Sanders, i hear, you know, your directors, you talk about tariffs, my directors talk about warren no, weve talked about this already many times you think its wrong to keep talking about it shell take the segment and tweet it out, see, theyre afraid of me it comes up almost every top. Top marginal tax rates, wealth tax, raising Capital Gains tax, dividend tax, i mean, we all know what you are talking and, jim yeah. Maybe its child care and healthcare and other universal things i dont know. I have tried to talk executives off the ledge because i think that senator warren in my belief can be less of a fear factor so to speak. She can be tempered she seems to view Corporate America as just bad. She if you look at her, im not going to disagree. Thats where i wonder i disagree. You didnt go in feeling that way. I think shes emboldened. I was hoping if Bernie Sanders drops out, she doesnt have as to worry about that flack anymore. But i think most observers suggest dont fault way ahead of widen in at least iowa and new hampshire. You are hoping she does the politically right think in terms of bolsters her candidacy in the general election should she be the nominee by moving more to the center more to the center my hope Means Nothing i hope for the eagles to beat the jets i think that hope can be real it can be a trap game im saying the people, the wall street people who live in fear and shake because of Elizabeth Warren, what lets get back to the trade war. You want the trade wars all right. Do you see this . Do we have a camera . You know what this is, this is an irmes tie they gave this an exception. This tie is more than the apartment you live in. It needs an exemption. We have a president he put 7. 5 billion i know. 245i exempt it irmez. By the way my italian wine and olive oil, exempted. Its about me, david, its auto about me impressive. When we come back, pepsico shares are aiming for a fresh record high, betterthanexpected results we will talk about strategy and advertising budgets. First on cnbc interview in a moment as we suggest, futures suggest a third day, but that most important number is about 50 minutes away, ism services ngo away. 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. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Pepsico is popping at the bell snap giant helped fuel sales growth and an earnings beat, joining us first on cnbc is pepsico chairman and ceo Hugh Johnston thank you for coming on squawk on the street great to see you as well, jim, good morning. Lets get right to it there are a lot of people that say basically you did not raise forecast i see that you pivoted towards a higher growth rate than wall street expected and to me, that means its a very tough quarter. That you are being rosier than wall street thought yeah, jim, i would agree with that as you noted, earlier this the year we really made a move to pivot towards higher growth, investing back in business in a much more significant way than weve had previously were doing it across the board, advertising, selling campaignability, manufacturing capability all of that money is going back into the business with the goal of accelerating our growth for both us and our customers. Frankly, its working really well right now weve seen it over the course of multiple quarters at this point. Were seeing it across a broad base of businesses so we really feel good about the Third Quarter and how the year has gone so far. Thats why we raised our revenue guidance for the full year because as we look at things, we do see apositive picture all right so you know i walk the aisles in the supermarket, to me it seems like the aisle that is carbonated, you picked up share against cocacola. The aisle that is frito lay, you took a couple yards of share with some of these new hot products is my Square Footage right yeah, were certainly doing better in terms of space in the market both in terms of the aisles as well as the perimeter of the store as well where a lot of sales happen because our products are so impulse. I think whats happening more than anything is the increased advertising we have is causing consumers to shop us more aggressively and our customers are rewarding us with that space because they know that we can help them grow and thats a big challenge for them so the snack food business as well as the Beverage Business really has good momentum right now, competitively as well as supporting our customers. I hate to say this, you and i are old timers you remember when we used to focus on gator aid and the growth and how important that is could that be happening ago en i see big numbers gator ade . I think we have good momentum in that gator ade business right now. Its a combination of a couple of things. Number one, just the increased advertising level and the quality of the advertising i think its picked up quite nicely as well in addition to that, gator ade zero is a terrific new product its the biggest zero calorie isotonic in the marketplace so far. Even though the market is a little over a year old in addition to that, we bolted launch, for atmosphere tleets they can meet their hydration needs all day long that product is off to a great start. Im bullish on the gator ade business right now i think we got terrific momentum there. Hugh, speaking of advertising and marketing, do i have this trigger right tracking up 12 for the year how long can you sustain that . Thats correct. Yeah weve seen a nice pickup listen, as we see ourselves accelerate, i think you will see us continue to pour money into advertising and marketing. Its having a desired effect and importantly, were getting good returns on that advertising. Obviously as the cfo, i what up that pretty losely we are seeing good positive Financial Results out of the increase in advertising. Not just in sales. 12 is correct i think we will continued to increase as a good, healthy clip. And your Investor Base seems to get it. Would you agree . You obviously had the increase in sg a. Theyre not concerned about it because it does seem to be driving that organic sales that you are talking about. Thats exactly right. The increase in sg a is purely driven in selling capabilities to go along with our advertising and marketing increases as well. So the Investor Base understands, putting money into these areas results in a stronger more sustainable franchise. To put it in financial terms, it extends the duration of strong perform performance. Combine that with the fact that we got a billion dollar Productivity Program going on this year. So were reducing nonvalue added costs and investing in costs that drive the success of a business i think investors appreciate that, particularly in todays choppy and challenging environment for them hugh, you got about 15 seconds, eb tells me the economy is slow and look out how bad is it for pepsico . You know, jim, ki speak for our business what we see as a consumer that really likes our products and is buying them at an increasing rate as far as we can tell, the consumer is doing just fine right now. There you go. I know we are supposed to be hanging ourselves. It looks like we are hanging ourselves, we are drinking pepsico and having a couple snacks hugh johnson, thank you so much. A great quarter from pepsico thank you. I struggle to be as negative when these millennials like it hot. Some like it hot, david. I was waiting for it. We have a mad dash countdown to the opening bell take a look at the free market on this busy thursday. Ism services in 40 minutes dont go away. 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Were about five minutes from the opening bell lets get a mad dash were going to sit down today. Right david, but it wont matter are you still going to deliver what do you got . David, you know what . Its really interesting. Clorox yesterday had an analyst meeting. It wasnt talked about other than this morning j. P. Morgan lowered the price market heres what it was, this was a reset. Now we saw the same thing with mccormick. They reset, thats, of course, the Spice Company franks, mustard, after they reset, they beat iically clorox is doing the same thing. I think they go forward and they beat theyve got something new. A lot of Companies Come up to me these days, we got cbd do i want to use no name cbd david, betters bees is going to have cbd i think thats a good House Keeping seal of approval thats going to take share been the likes of the walgreens aisles. So i like color rooks here to the reset. Its been weak lately, they think playing back frankly is very easily mimicked, but if they can do betters bees cbd, its going to be the buzz that, oh, i didnt mean that, but the buzz that people need because all, right now lord jones is the established brand which is kronos but Everyone Wants to be cbd yet, most people dont trust the brands they see the name. Obviously 99. 9 . Some things that you would put on. Topical right. I know that larry merlot, by the way, manyer low included in the tariffs. Cvs ceo wants to have a lot of cbd in his stores which would he choose . Mr. You know joe blow cbd or owould they choose betters bees i think this is going to be a major issue even though they teased it. Wouldnt it be nice if we had some true studies of the effectiveness of cbd in terms of what it does best, what it really treats well what it doesnt treat well there is a lack of scientific study. In part, because a lot of these scientists arent able to work on this stuff. They dont know how to dose it i think its important it will start coming out its not necessarily going to be juul i think it will come out some things it does work for. Right. Now i am the chief spokesman for the american yes, you told me that. And it does help topically. A lot of people feel that way. My job is just awareness that migraine is a real actual illness, not like when i was in my hedge fund, someone says migraine, take two buff rin and get out of here. Its real. Cbd is one of the many things people are trying. There is some success, all anecdotal. Dr. Gottlieb who i have been tough on when it comes to juul has been very circumspect about cbd doesnt want it regarded as a cure all you have to get funding for these studies. People are coming around as far as clorox between that