Equity markets and check out the futures this morning. At this point there are very sharp upward moves. Dow futures are indicated up. S p futures indicated up by 22 and the nasdaq up by 56. Of course september hasnt been so good but with one trading session left, the dow, s p is and nasdaq are all sharply lower on the month. Nasdaq is down by 5. 4 . If you check things out for the quarter to date returns all three major indexes are poised to hit their worst record. You take a look at declines of 9 across the board. Heres the stories you need to be watching this morning. We start with the job market. Forecasters say the economy likely added 200,000 private sector jobs last month. Adp viewed as a key indicator ahead of this fridays big monthly payrolls number. In washington the senate and the house expected to pass a stop gap funding bill that will avert a shutdown for now. In the meantime, Senate Majority leader Mitch Mcconnell says Congressional Republican leaders will begin a talk on a two year budget deal and ralph lauren is stepping down as ceo of ralph lauren. Hell be a big part of the business leading the design team and serving as executive chairman but Stefan Larrson will take over the job. Shares traded at 602 this morning but theyre up 4. 5 . Big question, whats going to happen that. They have always been a luxury brand. Does he try to move them upscale or down scale . They spent an enormous amount of money trying to move more upscale. But the polo business is one that actually you could potentially move down scale but then what does that do on a subsidiary note, this morning, shares of gap which owns old navy cut to sell. Price target cut to 25. The stock is at 30 because larsson is leading. Old navy has been one of the best one of the last things with value. And then theres david lauren who will still stay at the company who i know. People thought he might become the next ceo but the question is what will happen there. Ralph is busy running his restaurant empire. Another stock to watch this morning, Barracuda Networks getting slammed and missing expectations and also comscore getting a boost. Rentrak shares are also jumping. And Diamond Foods with better than expected earnings but revenue falling short. And costco falling too. In Chesapeake Energy cutting about 15 of its work force. Company blaming lower oil and gas prices. In other Corporate News this morning Starboard Value built a 3. 7 stake in advanced auto parts. They met with management and is urging the company to push margins higher. Apple launching apple music. The company also announcing it will roll out on android phones this fall. That stock is up by about 1 . The uaw threatening a strike at a key ford plant that makes the f150 pick up truck. Members could walk out in five days over disbreeagreements abo contract. Tesla delivering its first model x electric suv. Its not cheap. Priced as high as 144,000. It looks awesome. It does look awesome. Elon musk estimates 25,000 customers already preordered the cross over, if you order now, musk says it will take 8 to 12 months to receive the cars. Its got the winged door. But its the price of the house in many areas of the United States. Can you imagine driving that on the road. 8 to 12 month wait to get one. Theres no shortage of demand for these high end cars. Were still two or three years away from the 40,000 sedan which is supposed to take them over the top . Is that the time line . Im still looking for a shchy volt. It never happens. Ferrari set to launch ipo on friday. The offering will be 1 billion in size and could price during the week of october 12th. Lets get a check on the markets. Obviously big gains already. Looks like the dow futures are up by 180 points this morning. Yesterday the s p 500 broke a losing streak with gains of over 2 points. Of course if you look at this the s p 500 is still within about 1 of the low it hit in august. Lets take a look at whats been happening in europe and the early trading there. Youll see at this point theres sharp gains there as well. The cac is the biggest winner up by 2. 5 at this point but the dax in germany and italian market up by 2. 3 and ftse up by 2 . Check out what happened overnight in a yachlt yesterdtr. Hang seng was also up. Take a look at the oil markets. Wti crude down by about 17 cents. And if you take a look at the bond market youll see that at least at this point the ten year is is yielding just above 2 . So those yields continue to be under pressure. 2. 095 . Dollar is up against the euro and the yen. And finally gold prices look like they are down by just about 4 to 1,122. 50 an ounce. It has been a bit of a rough start to what we have seen to stocks. The dow since the start of september down close to 3 . The dow almost 4. 5 and the nasdaq still struggling more than the other indices. Question becomes is the fall going to get rougher for investors or will we get a Fourth Quarter come back . Joining us is the chief Investment Officer of port fofo solutions and chris lets start with you. Its been a rough ride for stocks. A lot of people thinking were in a bear market. Jim cramer has been saying this for awhile. What do you think . Its a correction for sure. First its earnings recession. Not an economic recession. Second is uncertainty from Central Banks and you get downward revisions to sales and earnings numbers and guidance that will be rough for all of 2015 and probably lower for 2016. That recipe is for a lot of market turbulence i think. Its hard to think about what the catalyst is if youre looking at earnings revisions going down. Its hard. Policy got us in here at some ways and policy gets us out. Because they raise rates or they do Something Else to add more stimulus. Fiscal stimulus. Everybody is looking at the bad news building in but you could see announcements in other parts of the world that stop the export of dedeflation. Youre not talking about our federal reserve. Just generally central bank. Theres 32 Central Banks around the world engaged in some kind of monetary or fiscal stimulus right now and were still talking about the possibility of a major global slow down. The problem youre facing is a world of excess supply. We translated into a world of excess supply and it doubled down in 2007 when china tried to disengage from the crisis and were living with that. Its keeping downward pressure on prices. Companies without Pricing Power cant get double digit returns so they have to go back to squeezing costs. To summarize carl icahns video yesterday, ill paraphrase, the medicine is making us sick. If we get more medicine will we get better. The right medicine is fiscal stimulus. Now you have to go to the next step or you wait in overtime, we will lower our return expectations and the world will move forward. Theres two ways of approaching it. Were impatient so we want the physical stimulus to get us there quicker. Ill patient but are you going to be getting any of this physical stimulus . Weve been waiting for this for years and years. Very unlikely. Youre getting a little bit in japan. Abe is trying to move with his new divisions. But at a much slower space than anybody thought. Exactly. 2. 5 years ago we were talking ability the 3rd arrow. But then you other things happening. The u. K. Has done best of anybody and the uk. Economy is actually the shining light which is really interesting for an economy. The lead story in the wall street journal today talks about how our exports are nowhere near what we thought. Were looking at a dip since 2008. Since the financial crisis came about. Part of what you talked about are the idea of other Central Banks doing more to add stimulus. Thats going to hurt our exports further. Potentially. But theyre all part of the economy. Its not a huge driver. The big driver is still the consumer. Hard to put the u. S. Economy in a recession at this level. We just dont have growth thats fast enough that everybody juans so the market was overpricing in and the point made earlier, adjustment as far as expectations. Its going to be bumpy. Theres a lot of things that could derail a view of just good enough. From the resolution value to no announcement from china in october. Upgrade portfolios and focus on cash employee. Do you still like u. S. Stocks though . Yeah. The places are the Cash Flow Companies and high credit rating. Theres too much debt. Japan looks interesting. Profit margins are coming up. The restructural Reform Program is taking a long time but a lot more positive. Is there an upside to this imported deflation that were getting . The upside is that consumers get the benefit of lower prices. The down side sits pressure on corporate profitability which is pressure on corporate earnings and then pressure on the cost stru structure. If you have more Central Bank Stimulus youre going to have a stronger dollar. If you have actual fiscal stimulus coming that will give you the opposite in terms of the currency. If europe goes with fiscal policy programs, asia does it, well get their currencies doing better. On the same token if we then do fiscal policy on our side what would it look like . If you were going to fiscal poll i changes here in america what would it look loike . Change Capital Gains tax laws. Anything after five years is tax free. Tax free. Everything in america is three month quarterly returns. We have to break that problem. Double digit three quarter quarterly returns in a world of excess supply is not healthy. Thank you for coming in today. Coming up, the race to keep the government open for business, plus those that dont learn from history are doomed of course to repeat it. Neal ferguson is here. Hell share some lessons with todays politicians and business leaders. Thats next. But first heres a look back at this date in history. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Midnight tonight is the deadline for congress to fund the government and a shutdown will hopefully be averted. Lawmakers are gearing up for round 2. Nbcs tracie potts reports from washington. Everyone is relieved that were keeping the government open. A last Minute Senate vote later this morning, another this afternoon in the house just hours before the deadline and lawmakers expect to barely avoid a Government Shutdown. Its not the way to do business. It doesnt have to be that way. Todays votes add 13 billion for defense, 700 million to fight fires and extend Everything Else through december 11th. Its a holiday gift for america. The prospect of shutting down the government again. They want a longterm deal through 2017. So that next year we can have a regular appropriations process. But conservatives are still fighting to strip money from planned parenthood. The groups president endured a five hour grilling tuesday. Do you defend the sell of baby body parts. No. And in the middle of all of this, leadership is changing. Im not going to be any different tomorrow than i am today. Republicans are trying to figure out how much they can negotiate before john boehner leaves next month. We will have more coming up in the next hour. Well also talk to david walker coming up at 7 30 eastern time. President obama sitting down with a hand full of World Leaders including the chinese president xi jinping and Vladimir Putin and castro but the president has now come under fire for his latest Foreign Policy dealings. Neal ferguson is here to add his voice to the conversation. Hes a noted biographer and process or of history and also author of kissinger. Its the first of two volumes. This is going to be a decade long project for you. Yeah, i spent ten years putting this together and every morning i wake up and think it will be even harder. So when you go back let me just ask you about the book for one second which is what made you decide to devote a decade of your life to kissinger . What did you think would be constructive to us . Theres nobody that contributed more to the theory and practice of american Foreign Policy. He remains the great strategist and its extraordinary that nearly every president since kennedy great and controversial. There are those that said hes accused of war crimes. Thats another reason for writing the book. Hes the most controversial figure in terms of Foreign Policy so i thought it was worth writing a scholarly serious book that looks into this mans life and the first half of his life is extraordinary. Its a tale of a refugee that flees to the United States and ends up being appointed National Security advisor in 1968. Its an amazing american story. If you were to apply his thinking to now and specifically, for example, to our relationship with china, xi jinping, he helped us to create a relationship with china in the first place. A great conversation might have been between president obama and Henry Kissinger about this subject since he spent three days in meeting with xi jinping this year. And has more insight than any other american. Thats not happening. As far as i know thats not happened. This one really doesnt and thats maybe why the strategy that we see today is less than i impressive. Do the imaginary conversation for us. I would say tell me what is it that xi jinping is trying to get out of this visit and the answer might go Something Like this you have to understand that xi jinping is in the midst of massive internal reforms but hes also trying to project a more assertive china. Were no longer in the age of quite rise. China wants to be a player and be treated if not as a super power then a Regional Power and you need to try to understand him as somebody who is simultaneously fighting pretty different domestic battles against opponents of reform and trying to play a new role in the international system. While youre here, can we ask you about whats been happening with economic proposals that republicans candidates put forth at this point. We see a lot of competing ones out there. Youre an expert that looked through some of this stuff in the past. What do you think about the ideas that donald trump put forth . Were starting to compare and contrast the items. I dont take Donald Trumps proposals on anything very seriously and i do think this belongs in the entertainment section of the show. Jeb bush is beginning to sound more convincing. I liked his oped on the need for deregulation. This is a country thats in a fiscal no mans land. We still dont have a credible plan to address the entitlements programs but lets not forget the Foreign Policy issues. The president is not really there to do fiscal policy. If theres one thing he can do its grand strategy and its arguable that we havent had a coherent strategy since president obama entered the white house. There was a period when the strategy was just not to be george w. Bush and now were into more dangerous territory when i think the president is trying somehow to make friends with americas enemies, iran, cuba, maybe now even russia. Its extraordinary to find him asking the iranians and the russians to help him sort out syria and alienating traditional allies. He havent asked russia for help. That was russia moving maybe you didnt hear the president s speech at the un. He began by criticizing russia and iran and china and said by the way can we Work Together on the problem with syria. Donald trump the entertainer in your mind on 60 minutes said on isis, well let putin deal with it and well just come in right behind. If only life were that easy. We have a massively complex problem in syria. The company is breaking up. We hesitated about whether we wanted assad to stay or go. We decided he should go and then we did nothing to achieve it. We have done nothing to help before or since. Sometimes doing nothing can be as consequential as doing something. More people lost their lives as a result of no intervention. But kissinger would have argued we shouldnt intervene in a major way. His was helping the allies not become the worlds policemen. How would he handle the syrian situation . If one goes back to the arab spring, it was a mistake to let any of these states fall into revolution, particularly egypt and we entered a period of great uncertainty in the middle east. How many states were going to fall to revolution. I think that question is still open. How would we stand to be able to do that . I dont think it was up to the United States to decide how things turned out in egypt but in the syrian case we said we would quite likes assad to go ad were not going to do anything about it and we watched the secular opposition get wiped out and that place taken by Islamic State and i think from that perspective it was the worst of all worlds. We wished for a resolution and it didnt happen. We look at a world map and we think these are nations but for most of human humanity they were not nations. They were the persian empire, how do you see it playing out . Because when i talk to my 11yearold daughter about whats going on in the middle east shes asking when will it be fixed . Iraq was created out of provinces and most of what we see is a legacy of the First World War and how they reassembled the region. Whats interesting now is the borders created at that time are being defaced and the most striking way in which this is happening is iraq and syria are disse discentigrating. Should they have ever been created . If we allow the states to fail, we need to have something credible in their place because the absence of the state, say, in the case of libya as well as syria and increasingly iraq, creates vacuums of power into which really dangerous revolutionary forces can penetrate and iz lalic staslami the ability to get more statelike the longer we mess around. Is that an argument for putting boots on the ground. Absolutely. I dont think you can defeat isis from the air and thats going to have to be recognized. Nor can the United States act unilaterally. Although president obama said were not doing the deal youre proposing. Its probably the best way forward little though we like cooperating with the russians. Would you say theres another war with american troops in the middle east in the next ten years . Likely. The entire region is descending rapidly into high levels of violence. We had 20 years of pretty Peaceful World after the cold war. Since 2010 violence has exploded. Terrorist incidents up by a factor of four. Its a much more dangerous world and its only going to get more so. Whats happening to the u. S. Empire . I called it that in a book pub hi published in 2004. I was very skeptical about the process when the u. S. Went into iraq. This remains an empire in denial. A super power that doesnt want to do long material commitments. Going back to the book, as i read through what he wrote about vietnam in the 1960s its an american pathology im afraid. The book is called the idealist. Its volume one because you have to start reading now because by the time youre finished hopefully youll have volume 2 out. If youre a slow reader. Coming up on squawk box, twitter suggesting it might expand its 140 character limit, ie become book. That story next. And later on, dont miss imf managing director christine lagarde. Shell join squawk alley as part of a cnbc exclusive. We run toward the worst quarter for the markets since 2011. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. singing you wouldnt haul a load without checking your clearance. So why would you invest without checking brokercheck . Check your broker with brokercheck. Welcome back, everybody. Were in chairs taking a look at stories that caught our attention. Business insider story jumped out at me today. A professor was kicked off of a airplane just last week. Fairly routine situation when flights are overbooked. Usually for drunken brawls though. He was not engaged in a drunken brawl. They usually try to get somebody for 400 who will agree to fly later. What i just found out was andrew was on the plane. I have more insight into this. So the deal was that everybody was jumping on this plane and they definitely overbooked the plane. They tried to actually run an auction for the seats early. Meaning 500 to get off. They start at 600. I dont know if we were off the record or not. I actually said to them how much do you think it goes for because i had been on a flight that ultimately went to 1,800 to get people off the plane. Kicked them off for less than that it sounds like. I said to him, how much do you think this ticket should go for . He says 50 grand. He said what would you go for. I said 4. For 4,000, no black out, id do it. But i didnt. Anyway, we all got on the plane including him. So it wasnt that. It was that there was a problem with it was too hot or something and there was a wait issue. This happens all the time. Then they decided they needed to take two people off but they screwed up because there were two women behind us that should have never been put on the plane and they were giggling why not. I have say to united. They made a mistake. There was something very strange that actually did take place that i dont know enough about it. Thats a tease. I just know that there were these two people that got on the plane that shouldnt have been put on the plane by accident. There was ten empty seats and then put a whole new slew of people. They brought new people on the plane and then magically somehow all of a sudden he was there. Maybe they were going standby. There was a lot going on except that everybody kept screaming at the aten daents saying he won a noble prize people. Whats wrong with you . Some people tweeted out about it and that was the whole story. I dont know. I feel terrible for them. He came over to me as he was leaving and he said they picked me after we had our whole conversation. So by the way the two of them were paid 2,700 to get off the flight but they say that didnt cover their cost for alternate arrangements they had to make to get back. Thats true. So a couple of takeaways, number one, united continues its winning ways. Number two, maybe the Noble Committee should add a guarentee of never getting bumped off a flight. Its just an added incentive to try harder. There should be status or something with the noble prize i think. Thats completely elitist. Somebody has to get kicked off. I love the fact that he said i bought the cheapest ticket. Good for him. They treat you differly. Ive had experiences where they treat you differently if you buy through a third party. I dont know about that. They wanted to bump me off of a flight to nantucket the other day because of my weight. That was embarrassing. Im always in the back. How tall are you . How tall . 64. Youre not a heavy guy, youre a tall guy. Im also heavy but thank you for that. Im going to retire now. So twitter apparently reports and some others suggesting that twitter may look to expand beyond its 140 character limit. Thats just one of the ideas coming from either jack dorsey or others of the company guys. I dont know what you think. No, i dont want anymore. That sort of makes it book or a blogging platform. Then it all of a sudden becomes like instagram. It moves toward instagram. Ironically i tweeted this out the other day. People are going to say youre a hypocrite because you tweeted this out. The new apple news app is really good and instead of just being a newsstand you can aggregate the feeds and topics and create a time line which to me looks a whole lot like twitter but without the interaction. So if youre not interested in the interaction we are because this is our business. Dont you want people to point out the article thats interesting. Im not saying its for everybody, but if youre just looking for a news feed, if you want to go on and scroll through and not have to deal with the stuff it may be a viable alternative. What do you think about 140 characters plus . You can do it. As long as its out of the news feed. Wrote want that news feed to be any longer with individuals who are writing much more than 140 characters. 17 reasons oxygen is great. Now you can list all 17. Youre up. Coming up, the streets reaction to costcos latest Quarterly Results. Theyre rolling out. Plus what costco tells us about the state of the american consumer. But as we head to break lets get a check on currencies at this hour. Futures are indicating a so lli open for stocks. Were back right after this. Welcome back. Right now its time for the squawk planner. At 8 15 eastern time this morning we get the jobs report. 90 minutes later well be look at september chicago pmi. This is a number well be watching closely. Also Quarterly Results from Constellation Brands and the container store. Costco posting a mixed quarter by some measures. Sales were hurt by lower fuel prices. Remember they sell gas and the stronger dollar. Joining us to break it all down is brian, maybe when you look at the consensus you can say it wasnt good before you saw it coming on air. It is a good quarter. Theres noise giving currency fluctuate and gas prices. But remember with costco they print out sales. The real key is strength in Gross Margins which is a reflection of lower gas prices they beat on the earnings line. Members did come in below the wall street consensus. That does not concern you . No, theres probably just some mixed forecast in there that a consistent line item. You look at the Retail Sector in general and we have been waiting for now the better part of the year because were waiting the 12 month year for gas and oil price collapses. They sell gas too. Are they getting any benefit you can see from consumer spending. Not the retail sales of gasoline itself but are they getting any benefit to the consumer from it . Its an interesting question and good one. Its tough to say with costco. They benefit less from lower gas prices. One of the keys is costco is one of the few retailers out there that consistently put out positive graphic numbers. Maybe gas prices are helping but i think its overall the strength in the costco model but i think were starting to see some benefits of lower gas pric prices, particularly the auto zones of the world. We have been waiting with macys because you think its playing out with ways it hasnt in the past. Im not a clothing expert. We have clothing experts on our team. Theres problems that go beyond gas prices and youre not seeing the benefit in Clothing Sales not because of gas prices but because of on going fashion misses. I wonder if its fashion misses or people would just rather have the greatest fashion accessory which is the new iphone. The phone rather than the latest hot jeans. The phone is the greatest accessory we have right now. Is costco the best stock you cover . From a recommendation and moneymaking perspective . Its top. I come on the show to talk about home depot, as far as high quality, well Read Companies right now theyre the top. Thanks. Thank you. See you soon. Revolutionizing how people want tv. The ceo of tivo unveiling the new product and its really cool. First as we head to a break. Check out oil prices. Stay tuned. Youre watching squawk box on cnbc. First in business worldwide. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive they speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. Welcome back, the federal Communications Commission considering breaking the grip of companies over tv set boxes, saying it would benefit the consumer by not only lowering costs, but boosting functionality bringing all streaming and Video Services into one device. Joining us now is tivos president and ceo tom rogers, old friend of cnbc and described as the founding executive of cnbc these days . I think thats fair. Ive not been here this early since we turned it on the first day 26 years ago, but its great to be here, thank you. Congratulations on the new box. Explain to us what this new box does because one of the things thats, you know, we talked about apple tv all the time and what that is going to do, but this box, from all the reviews, people think this is, like, the Second Coming of the golden age of television. So many things it does that apple tv does not do. What tivo is about is speed. Getting you to and through your programmi programming as fast as you can. Theres skip mode which perfects fast forward. Get to the pod, click the button, get to the plot, three to four minutes. You had that a long time ago creating problems. This is not before. This is not holding the button, you dont deal with what we call commercial overshootage or premature playage when you get the fine motor skills done. Those are normalities people suffer from all over america. Its a big problem in every househo household. This solves it. You have partnerships with content providers, dont they hate you . Not at all, remember, what we do with tivo bolt, a unified entertainment system. So many people are abandoning free over the air television and cable channels. Why . Because nay dont like commercial breaks. So what this does is give people control to stay with the traditional tv. We know with dvr behavior people still watch a lot of commercials, even though they have the aiblt to fast forward. We know even with this, theyll still get a lot of kmerls coming through. Thats a whole lot better way in terms of Holding People to traditional tv than abandoning it all together for streaming services that have no ads at all. When i watch the ads, its when i forget to fast forward. That happens all the time. All the time. How do you think about apple tv . Because thats how we think of the next round of television. Apple tv gets you netflix and hulu and cnbc. Tivvo does that, but apple tv does not bring the traditional channels, video on demand, and putting it all together into a single way. They talk about universal search. If you define the universe as venus, mars, and pluto, thats universal search. They dont have the entirety of the Television World to search across. We do that. Moreover, with apple tv, you cant get rid of the cable box. You can get rid of the t box, get sets, save yourself 40 bucks a month in equipment charges for the average cable operator, and you get great cable service. You get the streaming world, you put it all together, save money, and the key is saving time. Is there a big up front cost . Apple may not do the same thing, and the new one is 150 or Something Like this, but your price points are 300. Thats one closer to 00 400, right . The price point is 299, includes your annual fee up front all included, and remember, impair that against what you get rid of. The amount of money you can save on your cable bill when you bring that in and own your equipment, not to mention a vastly better experience, but what bolt is really about is saving you incredible amount of time. We have two modes, not only the skip mode for commercial breaks, but something called quick mode allowing you to watch any program that youve recorded 30 faster with Pitch Perfect audio, so for the award shows, golf matches, anything. How do content providers get paid, then . I like having a paycheck. I dont like commercials, so its a weird internal quandary, i skip forward, but i need and want to get paid. Well, first of all, its not going to affect news channels or sports channels. This is 20 channels is prime time entertainment, which is really where the frustration occurs. Someone creates the content. As i said, whats happening, the Biggest Issue facing the traditional Media Industry are people abandoning viewing and finding streaming services that have no ads at all. We know people fast forward, but they get frustrated, and if we can give them a way that gives them the ability to have control, they are going to stay with the television. Look what happened when the original dvr and fast forwarding came about. They adopted with measurements. The world did not go away. What is happening now is they are actually abandoning commercial television and fleeing to adfree tv and streaming services, but this holding them to the channel because the issue of premature playage will not be the one that frustrates them. Thank you, tom. Great to see you. The next name of the fantasy football team, premature play ya age. Im excited about this. Nfl tv is on apple tv now, you can watch it on the minute the game is over. You can watch any Football Game you want to on tivo. Tom, great to see you. You too. When we come back this morning, more of todays top stories, plus, a Dynamic Market duo joins us to prepare for the last day of the quarter, a lousy quarter so far. Counting down to fridays job report. Thats why at t is giving you 50 more data. Thats 15 gigs of data for the price of 10. Because the more data you have, the better. And right now at at t get 300 credit for every line you switch when you trade in a smartphone and buy any smartphone on at t next. Stocks in china reporting a loss since early 2008, and top strategists from jpmorgan and blackrock talk uncertainty and where to put the money now. Springer buys a controlling stake in Business Insider, the chairman and ceo here to talk about the Digital Media buy and asking him if theres other acquisitions on the radar. Gop front runner donald trump has a problem with forbes calculation of the net worth. I like the people at forbes, they dont know a lot of the things i own. A look at John Harwoods speak easy conversation with trump on how much money the billionaire has. Do you agree its a lot . Yes, its a lot. Thats the second hour of squawk box that begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to cnbc, first in business, and it is the final trading day in september, the Third Quarter, and its not pretty, all three indexes poised to post the worst quarter since 2011, but this morning, u. S. Equity futures indicate a higher opening on wall street, the dow could be 200 points higher now, and s p would open up 23 points higher, and nasdaq close to 60 points higher. In asia, we have green arrows there as well. Japan rose more than 2. 5 , and hang seng gained. The chinese composite logged its worst quarter since 2008. First up, the senate, then the house, expected to pass a stopgap spending bill to avert a Government Shutdown by midnight. Thats the deadline. The majority leader say Congressional Republican leaders in the white house will begin talks on a twoyear budget deal. More on the story at 7 30 a. M. Eastern time when david walker joins us. Also on todays watch list, the september adp employment report due at 8 15, less than an hour from now. Forecasters say that the economy added 200,000 private sector jobs. They are viewed as a key indicator ahead of the jobs report. Also, the east coast bracing for wet weather today. Flood watches issued from maine to North Carolina and hurricane could make matters worse. Its still about 250 to 300 miles from the bahamas, and the storms path is hard to predict, but the northeast u. S. Could be in the path. Regardless of the direction or strength, the forecasters say the storm is a big rainmaker this weekend. Kicking off the last day of the trading month, quarter, and calendar quarter by counting down to the big jobs number on friday. For more on what wall street should expect in the fall, this is the chief u. S. Economist at jp morgan chase, and paul, senior managing portfolio at blackrock. Good morning. What do we expect from adp today but the jobs number friday . Is it enough to you know where im going with this the f word, push the fed into action. Last three months, we averaged 225,000 jobs a month. We think itll be similar this month, consensus at 200,000. I think either number probably wouldnt be enough to get them do go at the late october meeting. They have shown some hesitancy to move without scheduled press conferences, but they are on track to lift off in september. We say its the allimportant jobs number it is. The market has not moved on three years on the allimportant jobs number. Still, the economys where it is from an up employment perspective because of the fed. Does it matter as much as it used to . Is inflation now the story . Deflation . Youre not going to learn about inflation between now and december. You know you have a lot of pass through through lower import prices in the system, and so what yellen said, at least, you know, what she said two weeks ago, was that further improvement in the job market would bolster her confidence to overcome low inflation ratings. One of the people who agree with the fed, not raising rates, constantly point to say the Unemployment Rate is under reporting the real situation on jobs in america at this point anyway. Do you think the jobs number are accurate . Is that a true reflection of the jobs market today . Theres slack thats not capturing the Unemployment Rate. People work parttime for economic reasons, participation may be low, but most on the committee have said that, you know, the Unemployment Rate is the single best indicator of the labor market, so there are some slack, but as long as its coming down, were moving in the right direction. Paul, its like the viewers and listeners, dealing with the rain in the north east, thinking, gosh, all the stuff, what do i do . Yes. So, the recent selloff, i think, created opportunities. Its also, i think, revealed what the markets are thinking about. From our point of view, you know, the last quarter has been the volatility there has been three things. One, worries about growth, two, worries about leverage, and, three, worries about liquidity. We need clarity on one of those to see the market move higher. On the growth front, obviously, chinas the biggest driver here. The rest of the world is growing pretty well. On the leverage front, look at the stocks selling off in the last quarter, the biggest common factor across them is the fact they all have higher leverage. Glencore is a great example of that, volatility there, and on the third piece, the liquidity, its really about the fed, and thats something you brought up earlier, its about the fed and the fact that weve seen huge amount of liquidity come out from shadow easing, from dollars. Ill push back just a bit, paul. I hear what youre saying, and glencore is a unique case. Theres 12 dow components which are down more than 20 from the highs of last year. They are in bear markets. Yeah. Walmart, for example, is among them. 12 names in bear market territory. Whats walmart have to do with leverage . Wasnt it a beneficiary of the low gas price talk weve been saying . Yeah. You bring up the consumer stocks in particular, and thats actually a place where weve been pretty bearish most of the year and suddenly turned pretty positive, so one thing i mentioned in the past that we track is internal search activity as a approximaproxy fo consumers buy. Theres been a turn around in june and july of what consumers are searching for in the u. S. In particular and its long stocks in apparel companies. Interesting, because of the haircut taken or fundamental structural change in wages in the economy . No. Its more driven on what we see the consumer actually doing, so people have expected higher consumption based on lower gas prices, improving payrolls, and that higher consumption has not materialized for most of the year. Now that were seeing the shift in online activity, thats a great forecaster of that consumption starting to show up. You know, mike, i always say the stock market is not the economy. Its not. They are very big differences between the two. Some people say, though, yeah, youre sort of right, but its also a leading indicator, supposed to discount what we expect. If the stock market is discounting what we expect from the economy, were doomed. Well, whats the old saying . That the stock market predicted six of the ten last recessions. Acting like were going in a recession domestically and or globally, do you see that . No. Not domestically. Globally, theres certain large economies in recession right now. The data from japan, they are in a technical secession, brazil certainly is, and most of, you know, taiwan, a lot of asia looks like it could be in recessi recession. The u. S. , the data we very recent data suggests were continuing to grow pretty decently here, so it doesnt look like were being dragged into recession, in part, because the consumer has been doing so well, offsetting the drag weve been seeing from exports. Overall, the picture looks good, but, obviously, the stock market reflects not only corporate activity here in the u. S. , but overseas, so its not i wouldnt read that as simple barometer. What was the last time the globe went in recession, and america was not affected at all by it . 98. Oh. Russian default. Its hard to say whats a global recession, but trade growth among partners was negative for a few quarters then whereas now its running 2 . Glencore, some say its europes lehman, an enron moment. Do you ascribe that much value to it . I dont. Everybody wants to find and identify whats the next black swan. Thats incredibly hard to do. Looking at, obviously, Going Forward as the economy turns or if and when the economy turns, the credit cycle turns, they talk about higher default rates. Thats the reality as part of the cycle. I dont see a Systemic Risk now from glencore. You know, whats more important for us, though, are opportunities that this china pessimism is creating, and right now, australia, we think, is the best places to play that. Theres strong Business Sentiment in australian ceos, and cfos, we mine through all the comments around the world right now, and australian ceos are bullish on whats going on. People usually describe australia as a proxy for china construction, but theres more going on there than people give it credit for. Guys, thank you. Have a great day. Thank you. Fashion and retail icon, ralph lauren, stepping aside from the company he built. We have the succession story. Good morning. Reporter it is interesting; end of the era, the companys founder, ralph lauren, landed the reigns to a new leader. At 76 years old, hes executive chairman and chief creative officer, but he is handing the ceo spot handed to the man in the foe tor. This is stephen larson, leading old navy for three years, achieving record results, building the brand so successfully, they said old navy is the template for transforming gap and banana republic. Prior to that, he was with hm for 15 years. It is a loss for gap, but could be a win for ralph lauren, trading at lows not since seen 2011, struggling with head winds and dwipdling Tourist Spending at home and pressures abroad. Now, in a press release, ralph lauren said, quote, the job is to think always about the future of the company and how to move it forward. Stephen larson is exceptionally talented and will bring the company a fresh and global perspecti perspective. Now all the pieces are in place to position business for continued growth. I will add this is not rare to sprit the role of creative officer or creative director and a ceo. Many Fashion Companies do it. Michael kors is one of them. Most physicifashion partnership overtime that are successful are one of them. Long term, does it mean ralph lauren will not be there . His son is there, who is on the board. Yes. I dont know what it portends. Reporter it appears he will be involved as long as he can. It doesnt look like hes trying to step aside, but seems like a smart move. His business is struggling a little bit, and i think that mr. Lawrences forte, of course, design and fashion itself, bringing in someone who is a proven leader transforming another business that has fashion experience. Stephen larson is its a big loss for the gap, i believe. Does the mix shift, though . Whereas ralph lauren spent 18 months spending a lot of money to go really upscale, the stuff theyve built, a lounge, and expensive things. Do they decide they go further down scale with the polo brand or Something Else to make it up in volume . Reporter i dont think so. Whats unique about ralph lauren is they have many tiers of merchandise, so you can find ralph lauren merchandise or polo merchandise, whatever the brand is at anything from t. J. Maxx up to madison avenue. They have been very successful in not oversaturating the brand, but maintaining premium merchandise for those who pay for it. Its an interesting move, and i think its a pretty smart move on behalf of ralph lauren. Bad news for the gap . Youre not kidding, i dont know that you saw it, but the downgrades are rolling out. Ubs cut it to sells. Downgraded game and upgraded ralph lauren off the move. The contributor said elvis left the building, so they hated the gap on this. Look at shares of gap this morning, down 7 . Larson spoke at gaps last analyst day, a very interesting guy with a lot of good perspective on fashion and the consumer and, i mean, it felt like i was back in Business School listens to, like, a Brand Marketing professor, very interesting, and hes a smart man, so i think ralph lauren is lucky to have him. Thank you. Thanks. When we come back this morning, german publish er buyig a control in Business Insider. This is Axel Springer, the chairman and ceo, joining us next on the squawk set to talk about the companys big appetite for Digital Media. Donald trump taking issue with forbess calculation of his net worth. No surprise there. John har woods speak easy interview with the front runner. A look at political options on the table to avoid political shutdown. Well be right back. Welcome back. Futures in the green in a big way, dow would be 190 points higher now, and s p at 23 points higher, and nasdaq looks 60 points higher. An 88 stake bought in Business Insider, and with this acquisition, hell own 97 of Business Insider, the remaining stake held by the amazon founder. The ceo of Axel Springer joining us now. People are looking at this as a big push into a media market that you have not played in. Why this move, why now . Well, you see, Axel Springer implemented a radical Transformation Strategy in order to be a leading digital publisher. We achieved the goal in europe, we have the number one, we want to go beyond europe and the u. S. Market is the biggest and most attractive media market in the world. Theres tremendous opportunities, and clearly Business Insider is a first big step. We have made smaller investments in aussie and now this and mike. Com, and we have acquired living media, but those were the first learning steps, Business Insider is a big step. You just missed out on the Financial Times at the last minute swooped up by another entity. That did not seem like it fit in with this. What was that part of the strategy, and did that lead you to this purchase . We were not interested in the Financial Times because it is not newspaper. We were interested, although it is a newspaper, it is a unique brand, it has a great content quality and already pretty successful in digital, 40 of the revenues are coming from digital, so we saw potential for a digital global brand, but it was a negotiation that we invested first in Business Insider with a minority, thought we could bring things together, but we are very happy with Business Insider. Whats the next step . Whats the plan . Change it . Let it run as it has been, or plans to boost it . One of the success factors of the Acquisition Strategies that we rely on entrepreneurial independence. We have a tool box of Business Insider may use, but we will not interfe interfere. Its a fascinating time, a pivotal change of time in media landscape, companies appearing, new stars arising. Some of the new players being it vox media, or vice, Huffington Post, or Business Insider, were the next big Media Companies, and we want to transform and help to grow Business Insider into one of the players. Can you help justify the valuation . So weve seen huge numbers both on buzz feed, vox, and Business Insider. Businesses that historically have not been profitable or not profitable yet. How do you look at this at 400 million and say, for a company thats 0 in terms of profit category that youre going to get to at least the current valuation, let alone, i assume, you think of the cost of capital and think to yourself, this thing has to be worth a lot more later. You see, Media Companies that were not famous for overpaying for assets, and then, basically, not running them well and destroying them value. We worked hard on a reputation to be price disciplined. Weve not done a lot of deals because we thought too expensive. In the case of the Digital Media assets, its interesting. Three years ago, nobody believed in content as a business on the web. It was totally unsexy, and now since a couple years, it changed, people like market reason invested, and now everybody looked at it, and we have a valuation. Is it already a bubble . Overpaid . Is it just the beginning . In a couple years, companys are multibillion companies, Business Insider has the potential to grow, growth figures tremendous, between 70100 growth, and we see a threestep approach. First, you grow the reach. Then you try to monetize the reach. That is something that Business Insider has already very successfully done. Then you focus on profits. Had Business Insider invested in tech insider, in new products, they would already reach break even in 2015 and make a significant profit into 16. There is a proven business model, but we focus on next years growth, and in a couple years, people will say, well, just 390 Million Dollars . That was a reasonable price. How much broader do you think the brand ultimately has to become . You talked about it being insider, them building out tech insider. A lot of stuff on Business Insider is not so much about business anymore. Its on video, whats the best title or the shoes, this or that. How do you see it Huffington Post long term . I discussed it with henry, a strong leader and clear views and fully share them. You see, Business Insider, as every brand needs a clear focus, people have to know what it stands for, and Business Insider stands for very serious, very profound, very investigative, news breaking business reporting on the one hand, on the other hand, they have a way to prevent topics with a slightly entertaining twist. Business insider, is, in a way, the world of business with a smile. I think thats wonderful. They have to keep that, but beyond that, they can, of course, establish new channels that have a certain link to the world of business, but focus on topics like tech, finance, and other issues, and the broader umbrella brand, the insider. Are there other acquisitions as well as in the space, or is this going to tie you up for a while . We are very ambitious. We really want to be a leading, if possible, the leading digital publisher. We have made several steps in the United States. We are going to announce today another investment, a minority investment, and thrillist is a lifestyle platform for Lifestyle Content for millennials. Just announcing that right now . Actually, im sharing that with you. Im a journalist, youre a journalist. Thank you. Thrillist sort of, you know, lexicon would be one of the top five reasons that you invested in thrillist because what their site is for people who dont know are the 12 burgers to try in new york right now. I think it is a very wonderful mix of information on restaurants, on traveling, on lifestyle products, and the main reason why we invested in is the founder. Hes convinced us, and were very much focused on people when we make decisions. Same with Business Insider. The key factor for the investment. Whats the investment . How much are you putting in . Please understand it will be announced and explained during the day. Ill share basic information, but not many details at this point. Okay. How long are you tied up for . How critical . First of all, he signed a package to increase financial exposure so its a lot more than he used to be exposed, so he is a real internuentrepreneur, and signed a deal that is basically incentivizing him for ten years, which is unusual. For ten years . Ten years. Its a true project. We see it as a long term thing. We really want to grow Business Insider into being Global Business brand, and i think we are prepared for that. Will you have a similar tieup with ben . That is we are minority investor in thrillist, so theres nothing comparable at this moment. Thank you. Thank you very much for joining us. Well see more of you. With pleasure. Thank you. Come on back, that was fun. Coming up, the tesla model x unveiled the first model of the suv delivered last night. A look at the design and the rather hefty price tag coming up. Time now for todays aflac trivia question. When it comes to wall street slang, what is the meaning of the acronym kippers . The answer when cnbcs squawk box continues. Aflaaac. Aaaaflaaaac. Someones sandbagging. Id be tired too. He paid my claim in one day when i got hurt. One day . Serious hustle. Serious duck. In just one day, we process, approve and pay. One day pay, only from aflac. Ah when a moment turns romantic why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Now the answer to todays afl aflac trivia question. When it comes to wall street slang, whats the meaning of the ak in addition kippers. Kids in parents pockets eroding retirement savings. Welcome back here on cnbc, first in business worldwide. Stories front and center this hour, Mortgage Applications dropped. There had been a surge in the prior period. Amtrak will charge fees for excess baggage like airplanes. Starting tomorrow, if you carry more than personal items and carryon item, 150 pounds, they are a little more, you are fined 20 per item over the limits. Not weighed in the same way, but nonetheless. Target is matching online prices with two dozen web rivals like amazon and wallmart. Com. Until now, they only price matched at its stores. What amtrak should do is charge a fine for people who sit in the aisle and pretend when you get on the train in a later stop because they dont want you to sit next to them. Thats a Power Movement dont give that way. Apparently andrew does this. Youre that guy. Tesla delivered the first model test electric suv. Heres t heres the price, are you sitting . 144,000 is the peak price. It seats 7 people, goes 250 miles on a single charge, and the ceo estimates that 25,000 customers have already preordered the crossover, and if you order now, husk says it will take, get this, eight to 12 months to get your vehicle. You know, the real power play, though . A baby. Nobody sits next to you. I got one. On the train. Telling you, bring the baby. My son. It works. Another power move. Police in colorado say a person put a jar full of likely gasoline into a Wells Fargo Bank drop off, and if you believe this, it was lit on fire, the result, a ball of fire, caught on security camera. Despite how bad it looks, the suspect not only got the bag, but ride off on a bike. Woah. Thats a bizarre story. Speaking of police activity, a swarm of honey bees took a Police Cruiser on an oklahoma interstate hostage. They trapped him inside the car, and a truck carrying the bees crashed on its side spilling the bees over, all over the interstate, and motorists ran into bees a half mile away from the incident. Coming up, when we return, forbes says donald trump is worth 4. 5 billion. Trump says, of course, they are wrong, by more than 5 billion. The businessman turned politician sat down with john harwood to explain. The countdown to the Government Shutdown is still on, oh, maybe, hopefully not happening this time around. Maybe december. David walker, taxes ranger is joining us, the odds of a compromise before the deadline. Well talk about it. Before we break, u. S. Equity futures, dow opening now over 200 points higher when the market opens. Were back in a moment. Welcome back on a rainy wednesday. Check out the new People Magazine cover titled at home with the trumps, the gop president ial front runner speaks with our own john harwood in the latest edition of the speak easy series. Welcome on set. John . We talked about the new Forbes Magazine estimate of his wealth coming out to less than half of what donald trump said. He said forbes didnt know what they were talking aboutment take a listen. I read this morning youre a 4. 5 billion man. Fine. Where . In forbes. Okay. What do you think of the list . Number one, im a private company. They dont know the assets very well. I think they are very good people. I like the people at forbes. They dont know a lot of the things i own. I dont think they give my any value for brand, and the brand is very valuele. Im doing deals right now. When i leave you, im signing a deal thats a phenomena, hundreds of millions of dollars in value, all because of my brand, and they give you no value for brand, which i think is fine. You think they are wrong . They have assets i have that they dont know i have because im private. If they value me at 4. 5 billion, and im sure they said im liquid because im extremely liquid not ordinary person, a billion dollars anyone needs in life, but if you spend 100 million by their assessment, thats a third of your cash. If i spend how much . A hundred million on your campaign. They are wrong, but i have a lot of cash. If i had, i think, im not going to go and tell you what cash i have, but i have hundreds of millions of dollars of cash. They said, like 800, and their assessment is 325. I dont know what it is. Do you agree its a lot snf. Yes, its a lot. I think we can all agree that 327 Million Dollars is a lot of cash, but, as you saw there, donald trump was a little subdued in reacting to forbes, taking some of the advice that he should tone it down. Im amazed because in the past when either publications or authors have tried to tag his wealth at less than he thinks it is, hes been difficult. Theres been lawsuits. Well roll out the rest of it tomorrow and well see a slightly different tone, id say, from frump. Okay. John, stay here. We have a lot more to talk about. Right now, david walker, former u. S. Controller general, strategic Senior Adviser for pricewaterhousecoopers. Well talk about the government shut down, but talk about mr. Trump and what john talked about, and what he put out with e tax policy lately. Hes done it a lot of years. What do you think of the plan . Well, look, im all for tax reform, simplify the tax code, eliminate a lot of the special tax preferences, but theres a new fourletter word to remember in politics. Its called math. The numbers dont work. They end up resulting in a significant reduction in projected revenues, significant increase in the deficit, so the question is, how are you going to pay for it . There are certain thicks that can be done to increase growth increasing revenue, but we have a structural deficit. Weve got to be able to reform mandatory spending, Social Security, medicare, medicaid, the Affordable Care act, we got to rationalize defense spending and do other things, and we need the candidates to come out and talk about those things because they dont add up. Whats wrong with trumps plan equated with bushs plan, the similar plan in a lot of ways, just in terms of lowering rates, thinking that, you know, bush has told us he thinks its dynamic to bring in growth in that way. Thats correct. Theres a difference between what jeb bush said about his plan and what donald trump said. Bush acknowledged that youve got to do something on spending side, do something with mandatory spending in order to make numbers work. What we have to focus on is not defici deficits, not debt, we have to focus on debt to gdp. Thats what matters. Frankly, we ought to get rid of the stupid debt ceiling limit. Were the only major industrialized nation that has one. Did you tell ted cruz that . I dont know, i dont know that hed listen if i told him. We have to get rid of that, go to a constitutional debt to gdp limit, revise our budget process. Do you realize that only four times in 64 years has the Congress Passed Appropriations Bills on time . Four times. In 64 years. Thats an fminus. Becky, one thing on trump, in fairness to trump, he does acknowledge there needs to be cuts and will be cuts. The question is, where are they, and how many can you come up with . Hes not touching medicaid, medicare, Social Security. He wants to build up the military. When he gave a press kovrconfer the other day describes how he would cut the government, he talked about expensive hammers, waste, fraud, and abuse. He talks about education, but theres not that much money in expensive hammers and the education. And talks about obamacare, how he would basically expand to a universal health care system, essentially. Taxed by republicans for repealing obamacare and replace it with bigger obamacare. Exactly. The problem is is if you take defense off the table, okay, if you take Social Security says he can have a stronger military for less money. Thats true. I think thats true. Thats part of simpsonbowles saying the same thing. Absolutely. Take Social Security, medicaid, medicare off the table, all right, forget it. Forget it. Not credible. On its face. Dont need to hear anymore. 70 of Government Spending is medicaid, medicare, and defense. That leaves you 30 , that leaves you to the fda, no poisonous food, Early Childhood care couple air Traffic Controllers in there too. When we need, although youre on the train today, but you get the point, everything is now a sacred cow. Where do you cut . The government spends 10 billion a day. Right. 10 billion a day. In 1912, the federal government was 2 of the economy. Now its 20 . In 1912, the federal government controlled 97 of spending. Now it controls 32 . The disease is the 68 thats on auto pilot, and the 1 preponderate 2 that reference back door spending. Restructure the 68 , and you have to deal with the 1. 2 trillion in back door spending, and focus on getting debt to gdp down to 60 by 2035. Talk about the Government Shutdown. Looks to be something in reach before midnight tonight, just pushing it down the road when you have the next deadline coming up on some of the budget spending, but also the debt ceiling that well have in the mean time. What happens . Well, they are delaying the crisis rather than avoiding the crisis, and hopefully well avoid one. December 11th looking like an agreement for a clean, continuing resolution, which basically means you fund at last years levels until december 11th. You got appropriation bills. Deal with the debt ceiling limit. Deal with the transportation bill. Decide what to do with some of the other side shows like planned parenthood, et cetera, may have strong opinions on that, but you have to resolve it, and thats going to have to happen over the next several months. By the way, they do this without john boehner. Right. But remember that boehners got a month to serve. He doesnt want to leave Kevin Mccarthy a dirty barn. Hes cleaning up the barn. We heard from president obama friday when boehner announced it, throwing out the ideas of long term issues to work on, but that would require boehner crossing party lines and violating the rule and working with democrats. Yes. I think he will do that. I think part of john boehner saying see you later to the institution and the Republican Caucus is to say as a favor to the Republican Party because its counter productive to shut down the government, im going to put a deal on the floor and pass it with some republican and some democratic votes. I think thats the way he wants to go out. How far down do you get . What do you think they accomplish between now and then . Well, the list of things on the list are a budget deal that gets through the 20 16 election. Debt limit through the 2016 election. Some sort of a deal on infrastructure, and i think thats basically it. The only congressional issue in october is the highway bill. Thats the only sort of action enforcing issue in congress. Lets not forget the last time we had a debt ceiling showdown, okay, not the c. R. Budget stuff, thats every year becoming what the definite of insanity is, doing the same thing, expecting a different outcome, that was 20 11, and, david, the result of that, you remember that as a downgrade in the u. S. Credit rating. We cant afford higher borrowing costs because then you spend money for nothing, right . Goes out the door to somebody else. I dont think well have that again because both Mitch Mcconnell and john boehner and Kevin Mccarthy are determined. They know that that would hurt their party in the president ial election, which is the most important thing on the plate. You were right. The biggest risk is Interest Rate risk. Our Interest Rates are at or near historical lows, still adding debt, Interest Rates will go up. The question is how much, and how fast. And what do you get for interest . Nothing. Right . A nice way of putting it. David, thank you. Pleasure. John, see you in a bit. Im going to use that. Great company in detroit. Making bikes and watches. Yeah. Home made, american made, detroit made. Big movers ahead of the opening bell, lest of stocks to watch on this rainy wednesday, and lightning owner announce a 20 Million Investment in health and Wellness Technology for his companys development in tampa. Talking about that and maybe if there should be a hockey team in vegas. Yeah. Stick around. N the internet of things. What were recommending as your consultants. The new consultants are here. Its not just big data, its bigger data. Were beta testing the new wearable interface. Xerox believes finding the right solution shouldnt be so much work. By engineering a better way for people, process and technology to Work Together. Work can work better. With xerox. They speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. A look at stocks to watch this morning, shares getting slammed, security and storage provider missing sales expectation missing guidance, and comscore boosting today after announcing a deal to buy Media Analytics firm, rent track, and rent track jumping on t t the news. When we return, jeff, now funding a wellness district in tam tampa, florida, first of its kind, a city, a development focused on the health of the occupants. Think clear air, clean water, and walkways. Jeff is joining us here to explain in a moment. Welcome back. After making a name for himself in the investment world, jeff vinik is the man with Big Development plans in the Clinton Global Initiative, vinik announced his partnership to bill, the worlds first well certified city in tampa, but if he builds it, will the tenants come . Thats the question. Hes Strategic Partners owner of the Tampa Bay Lightning hockey team and ran the fund for years. Thank you for being here. My pleasure. Whats it mean to have a well certified city . Glad you asked. Were building a live, work, play district in tampa. We have an incredible blank canvas of 40 acres downtown surrounded by water on three sides, building a 500 key hotel, one or two Office Buildings, university of south Florida School of medicine, heart health institute, 200,000 feet of retail, office, retail entertainment, and bring a museum of science to downtown, 200 units, and were working on this together. Now, Clinton Global Initiative yesterday, bill clinton on stage with myself, the mayor of tampa, ro robby and cascade announced were developing the worlds first well certified district. Well certification is for the habitants of the buildings, lead certification for the Energy Environmental efficiency of buildings. Not only are we pursuing well certification for the buildings within the district, but we are pursuing well certification for the entire district, which is things like low idling speed vehicles and lots of bike paths and green spaces and dog parks and water features and publ art. A great endeavor to make tampa at the front of wellness on a worldwide basis. Because i never heard of it, who does the certification . Delos is the name of the Company Working on it. I was joined bethem yesterday. Fantastic company. They already have tens of millions of feet of Office Buildings in their pipeline, and like reid, which certifies and puts the blessing on buildings in terms of their environmental efficiency, they have over a hundred factors in terms of making buildings well. These are tangibly, medically proven benefits that the inhas been tapts of the buildings get leading to productivity savings, a better workplace. You can recruit employees better, you can retain employees better. What they are doing is absolutely fantastic. I think this is i think what the company is doing is going to be a movement. I think they are going to be one of the hot Growth Companies of the next five, 10, 20 years. Because you mentioned high Growth Companies, tell us what you think is going ton in the marketplace right now. Youre the investor people listened to for many, many years. I dont know if they should. I spend time in hockey and real estate and family foundation, but, you know, its hard to predict the short term. Nobody knows whats going to happen in the short term. Could be volatile, but i think intermediate and long term, the economys in good shape, the markets are just fine. Optimistic intermediate and long term, frankly, you know, obviously, the markets under pressure. I dont see in the 2009 scenario, because i think the country is in good shape, theres excess in a few areas, but its not extreme by any means, and our Financial Systems in great shape. Im a bull long term. Youre not worried about china, europe . Yeah. Im worried, plenty of things to worry about. Worried about that, but, by the way, theres a lot of people worried about that. Huge amount of pessimism right now. The economy is solid. Were going to persevere. We lead the world in entrepreneurialism, creativity, our outlook is fantastic. Jeff, a followup on what you said. You said this are excesses in places. Where do you see that . In the low Interest Rate, areas that are inflated in real estate, perhaps private ceo si valuations are inflated, but its minor. Think about the late 2000s, housing was the area of excess. That class was the biggest in the world cuts across consumers and individuals, and the Banking System was overleveraged. Thats when you have severe problems, when you have these areas of excess with the Banking System where the capital is never better, profits are fantastic, you dont get in trouble with that going on. Yeah, you could have a hiccup or a down market for a while. The economy could slow down, but im not worried about it long term. Well do great. Okay. Quick question, would you support expansion to quebec city and or las vegas . Ill vet that with the other owners. We have great opportunities out there as you mentioned, las vegas, quebec city, vetting that now and take facts into account and make a decision when the time is right. Oeg. Fair enough. Jeff, thank you. My pleasure. Great to see you. When we come back this morning, early read own fridays jobs numbers, the adp private payroll report in less than 20 minutes time. Mark is joining us on set for the data giving a projection for the numbers. Stick around, well be right back. What do you got to offer us today . Balance transfer thats my game bank you never heard of, thats my name haa thank you. Uh, next. Watch me make your Interest Rate. Disappear. Theres gotta be a better way to find the right card. Whatever kind youre searching for, creditcards. Com lets you compare hundreds of cards to find the one thats right for you. Just search, compare, and apply at creditcards. Com. A one, a two, a three percent cash back its been a september not to remember for your money, end of the worst quarter for stocks since 2011. Will todays adp report lift the markets, and whats in store in the final three months of the year . Well break it down straight ahead. Republican president ial candidate and new jersey governor, Chris Christie grabbing big endorsements in iowa. Is this the beginning of the surge hes been waiting for, and can he climb out of the donalds long shadow . Hes joining us right here on set. Plus, its coming to a road near you, tesla unveiled the model suv bringing an end to three years of delays. Details on how much youll pay to open the cool doors. Coming up, the final hour of squawk box starts right now. Live from the most powerful city in the world, new york. This is squawk box. Welcome back here on cnbc, first in business worldwide, and Brian Sullivan is in for joe kernan. Wall street looking good this morning, looking better before, looked to open up 200 points higher on the dow, and now 173 points higher, nasdaq looking 170 points higher, and nasdaq 54 points higher. Whats going on in europe at this hour . Looking at there, as it flips there, there you go, green arrows in a big way across the board, dax up 2. 5 , and the cac up, and ftse is up by 1. 2 . Stories that investors are talking about this morning. Mortgage applications dropped 6. 7 in the latest week. There was a surge in the prior period. Ralph lauren is stepping down as ceo of the company that he founded. Hell lead the design team, though, and serve as executive chairman. You need more than 140 characters to express yourself . Recode reports that twitter could expand a character limit with a new product. They are trying to improve user growth. Karl icahn screaming from the rooftops saying stocks are way overpriced, and hes got a laundry list of fear factors keeping him up at night from massive bubbles fueled by the fed by financially engineered buybacks and debt offerings by the companies and dysfunction in washington. Layer that on top of troubles in china, and the biotech sectors with a problem, and thats a scarry start to a new quarter. Talking about the fear factors, david blitzer, committee of the s p and dow jones indexes. Good morning. Good morning to you as well. Mr. Icahn doing the best to worry the masses yesterday. Are you worried . Not as much as he is, but a little worried. I want to point out the thing to be concerned about is debt levels. Yes, some of that comes from low Interest Rates, but if you look way back to the tech boom and bust, that recession was mild. It was not that much debt built up, most in the stock market where you cant borrow more than half the value on margin. The next time around, there was a huge of amount of debt built up in houses. People have been buying houses, no money down, 100 leverage, and that really was severely damaged. Its debt to worry about, but a lot of the other things appointmented out, buybacks, the tax system, the on and on, the arguments have merit, and some changes are probably long overdue. The only beef i have with the dealt argument, i get the number is high, and you can point to that and even growing Consumer Credit right now, david, but at least debt Service Levels because of low Interest Rates seem more mangle than last time. Debt Service Levels are not only mangle, but record lows for individuals, and individuals did a good job of reasyringing leverages. Uncle sam did a less good job, and you have corporations which ought to be investing in a lot of money because they are sitting on cash, but as pointed out, all they do is buy back their stock, which makings them look pretty, but that does not get the economy going. They not doing investing, and thats the point. On top of that, a lot of the buybacks, reducing to the solution caused by options and Employee Stock options and other equity linked compensation so but probably the tax issue is bigger than any of those. Do you blame, though, activists like carl icahn for the phenomena of buybacks and dividends and all the things hes now talking about in large part getting ahead of activists anxious they will come. Are they pushed to do it or they worried the activist is going to push them to do it . Well, im sure first of all, the companies blame carl, and, yes, theres a certain amount of hes got religion maybe is what it amounts to. What amused me the most, i think, in among the things ive read on cnbc yesterday was he wants to hang on to the apple stock. Apple was voted the extreme case in a human buyback, but instead of fronting it with all the money they have overseas, which they have to pay taxes on, they go and issue bonds in the United States giving them a tax break, so thats i dont know if that once, twice, three dips, but its strange. Its an argument for revising the tax policy. Absolutely. Insentives like this that are set up. I dont blame a company for taking advantage of the system thats set up that way. I think thats right, but carls trying to take the high road. Theres noise on the high road. Hes clearly taking the high road. To his credit, i will say, people think that carl and a lot of the act viss are very thoesh term activated, and if you look at the managed hedge funds the Holding Period is months and years rather than day. Its a very strange phenomena in talking about corporate govern nans, role of activists, and managed funds. All of this. The ultimate case may be people who, you know, make a living by being short, and theyll hold for a long time through, you know, fire and brimstone to hang on. They have a long Holding Period in a lot of conviction. Even though the rest of the world doesnt like them. David, going back to the macromarkets, you look at the stats, right, about when we have this bad an august, we rally into the end of the year. Most buybacks happen in november and december. Maybe companies are trying to gain their stock for whatever reason, do you see a Market Recovery going into year end . Can we get to a flat dow . Thats a gain of 10 by the end of the year. Well, i think its you need more than people just taking buybacks or Something Like that. We the economy itself, 350 miles away or further than now, the economy looks reasonably good. We have very solid growth, continued rise in housing prices and the rest of the housing sectors improving. I think you could see that come through, and so on, and so you still have to get everybody to sort of come to grips with oil, which, eventually, goes off a little bit, but were not going to 115 bucks any time soon, could see improvement, but, you know, youre going to need a big catalyst to get going, and theres too much anxiety to be guaranteed of anything. Well take it as highly unlikely. You got it. David, thank you. A programming note, tune into day four of the halftime report, because scott walker is speaking live to carl icahn. Questions we had, scot and the team can put to him and see how he responds. Looking forward to that. Unicorns expanding with a combined valuation of 450 billion, saying the rise of private billion dollar startups is a good thing for Public Tech Companies like amazon and facebook. Mark is here, the man behind that report, the lead tech analyst at rbc capital markets. Most people, or conventional wisdom says theres a disconnect in the private markets and Public Markets now when you look at the uniforms, people say they are overvalued and nobody marked them down. You take another approach to this . I guess, look, theres a hundred unicorns globely, some overvalued, some undervalued like in the Public Markets. Whats important, in the Consumer Internet space, its not different now, but its a heck of a lot better than it was 15 years ago, 2000, 2001. The end markets, number of users, advertising dollars are ten times what they were back then. Theres more opportunity. Should be more investment. Some goes to private investment, others is public. I want more to be public, more opportunities for public investors to invest in some of the plays. Right. What do you think of price and fidelity and blackrock which have begun to invest in some of these unicorns in small ways. If youre a public investor, should you be trying to get access to these unicorns that way . Does that make sense to you . The right answer without talking about the clients, the right answer is that there are large opportunities created by the spread of smart phones, infrastructure costs thanks to amazon web services, and rise of the new use cases. We just went through a multicity blitz by the pope where we saw massive rises in Hotel Occupancy rates, but pricing was low because of the rise of air bnb. Some are disruptive and helpful to consumers, and you want to play off that. Some of the companies will be around the next five to ten years and deserve multimegacap status. Do you believe the valuations are real, meaning a 50 billion uber valuation holds up in the Public Markets . No. The reason i ask, the answer go for it. You said no. No. The way they are structured, preferences in there, and you also have, theres not nearly as much transparency by nature in the private markets as you have in the Public Markets. I dont think many assets would trade at those values in the Public Markets. Doesnt mean they dont deserve, in some cases, high multiples, especially given the Growth Prospects and in robust market caps. There are dying unicorns, they have not died yet, but they are out there, slowly on the way. Are there companies you worry about failing . You mean unicorpse . Im going to use that. There you go. Look, they cant be unique, unicorns are unique. If theres a hundred of them, they are not unique. Theres players in there not around, and a lot of the investors in these have to get used to something, the down round, which, in other instances is an ipo. When does the m a kick . I thought, for example, drop box, for example, not public, would be a great candidate for or a likely candidate for microsoft, a company you covered in the years. Yeah. Weve seen a substantial rise in m a in the Consumer Internet sector. Its been greater this last year than in any in the last five years and expect to see a rise, especially in the private markets. Mark, thank you. Thanks, andrew. Have you considered the trotting dead . The trotting dead . Nice. Joe likes the walking dead. Great to see you. Thank you for that one. Youre welcome. Breaking news on the jobs front, private payroll data released, we have the numbers, and mark zandi up after the break. My name is mark amann. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back, everybody, futures indicated sharply higher this morning. Dow up 185 points above fair value, s p futures up by 22. We do have breaking news on the jobs front. That adp private payroll data is just now hitting the wires, and Steve Liesman is here. Thank you. Reporting the nonforeign payroll, private ones, anyway, up 200,000 in september, spot on with the forecast. They did revise down august by 4,000 to 186,000. Bottom line, this is the Third Straight monthly increase weve had in the adp private payrolls. Theres the good sector up 12,000, talking about that in a second. Services up 188,000. The estimate for friday is 200,000. Could be plus or minus 10,000 either way depending on what the government does. I want to look at jobs by industry. An interesting story here. Construction up by 35,000. Theres manufacturing, challenged by some of the export problems weve had with weak overseas growth, challenged by the strong dollar. Down by 15,000. It looks like the Home Building industry is kind of offsetting whats happening in the manufacturing industry. Also, manufacturing is hurt by whats going on with the mining business and oil business. Real quickly, looking at size, Large Businesses over 500, employees have been sort of challenged recently, but they came on strong in the months, up 106,000. The Small Businesses are the ones who are lagging a little bit, among the gainers. Construction jobs and a Large Corporation are ones hiring this month, becky . Okay. Steve, stay with us. You sound sick, how do you feel . Feel great, becky. Okay. Great to hear. Stay with us, mark zandi is with us here as well. Mark, no super huge surprises in the numbers, but what jumps out at you . The koiconsistency. Getting 200k plus for two, two and a half years now. No change. The only weakness is energy related, which is no surprise, losing 100,000 jobs in the energy sectorme mentsector. Weakness in manufacturing related to trade, but this is a machine, the job market pumping out a lot of jobs. Mark, whats the risk in the steady growth, anything coming down the pipe that could put that at risk . Sure. I mean, first thing i say, though, this feels drk i hate using the word momentum, but it feels like this has a lot of momentum, and the most positive recent development as you said, this huge increase in the number of open job positions. 5. 7 all time high. Going three years ago, thats 3. 8 million. 2 million increase. Thats unbelievable. You mentioned the jolt in the job survey. Jolts are better than the payroll other adp going to what you talked about. Right. The most interesting thing about the job openings, its very highly correlated leading into wage growth. Makes sense. In terms of risk, its overseas. I mean, thats where the, you know, where the threat is. Steve, you wanted to talk more about goods . Well, you know, i think mark was alluding to this, people misunderstand the dinism of the american economy. We do 200,000 jobs a month despite the apocalypse in the Energy Industry everybody thought would be the apocalypse in the overall economy. Whats happened is we have other sectors in the economy that have taken over for it. I dont know if thats related, but this idea that construction added 35,000 jobs, and, by the way, its been a laggard for a long time, and now you have an energy losing 100,000. Theres been decent job reports from texas, something im looking into it, but texas is weathering it, which is a state that had a lot to lose, and i think brian knows about that. App interesting point on trade, where all the weakness is coming from, global trade, that really nails gdp, you know, the value of the things we produce. Doesnt hurt jobs nearly as much because the key link is through manufacturing, and manufacturing is very productive. We lose manufacturing jobs in trade, but its not having a big impact on the job market. Can i followup on steves point . Because one year ago, i was in midland, texas, and i talked about, reported on the risk of the decline in the price of oil, and, you know, people said, got all kinds of nice names called because here the thing, 23 of all new jobs created in america in the last five years come from texas, which is 9 of the population. Its been an outsized growth, midland with the highest per kappa increase of any zip code. Is that right . Yeah. Overall, 21 an hour to start in a restaurant in midland. Theres an oil risk to the economy that will you way the consumer benefit of lower gas prices. Some say we are wrong. Its not true, brian. Thank you. Listen the data shows that not to be true. I hope im wrong, steve. What we did is do what people do very often, which is you see the threat in front of you, and you can say, yeah, lets sell Oil Companies because oil prices are down, and if brings down the dow, and nobody can really see the benefits because it shows up in pennies in costco, in pennies in walmart, and department stores, and, yes, we had strong consumer spending, but its not through the roof in part because the extra money from oil is not going to goods, but services. A simple way to answer it is were, our country, is still a lar Large Consumer net of energy. If you produce more, you benefit from it. The negatives up front, people nailed by this is cutting, rationalizing, and pulling back. Thats what weve seen in the first half of the year, but steves right. Going forward, were seeing the benefit through higher consumer spending, but its in the pennies, not in the billions of dollars. Mark, going back to the job openings again, jack welsh joined us last week, what he sees in the labor market, the private equity firm, talking to the ceos of 32 companies before, and nobodys having trouble hiring at this point. This is not a job market reflective of what you see in the jobs numbers. The only places they see trouble is maybe when it comes to engineering jobs or Something Like that, but its not a market where he thinks its really an employees market at this point. I would disagree. I mean, thats antedotal. Mine is different. I hire a lot of people and having a hard time. Thats why i asked. I work with a lot of companies, and they are having increasing difficulty. Were in transition here with some slack. We have a lot of people that are working part time and would like to work full time. People stepped out, will step in. Theres slack, but you create 200k per month, that absorbs quickly. Do the math by summer, june, july, august, almost every business will have a problem. Heres a prediction for you. A year and a half from now, election day, were going to have a the problem is not unemployment. Its going to be a significant lack of labor. Quickly, for the first time, said the skill shortage issue is more widespread. Before they had said we have a skill shortage in selected industries, and it seems like when you want the best workers across industries, thats getting harder and harder to find, much more widespread than previously stated. All right. Well, when child care costs 40,000 a year, who blames anybody who step out of the work force when you have to make 50,000 to break even. Why would anyone work . Thats absolutely true. Thats a hot spot there. Thank you so much, by the way, feel better, dont breathe on anybody while there. Doing great. Yep, yep, yep. Ill send you the cough drops. Mark, take care. Okay. Flood alert on the east coast, how much rain is expected . Details when we return, and lawmakers seeking answers to soaring drug prices, a hot button issue for washington and main street. Is there an easy fix . Whats it mean for the wallet . Find out in a bit. Plus, republican president ial candidate, chrchri Chris Christie gets endored by key iowans. Thats at 8 40 eastern time. You dont want to miss it. Back in a moment. So whats your news . I got a job ill be programming at ge. Oh i got a job too, at zazzies. friends gasp the app where you put fruit hats on animals . I love that guys, ill be writing code that helps machines communicate. interrupting i just zazzied you. phone vibrates look at it friends giggle i can do dogs, hamsters, guinea pigs. You name it. Im going to transform the way the world works. proudly i programmed that hat. And i can do casaba melons. Ill be helping turbines power cities. I put a turbine on a cat. friends ooh and ahh i can make hospitals run more efficiently. This isnt a competition it is a soggy couple days along the east coast. Rain falls in west virginia, look at that, its the river creeping above the banks, a low lying areas are covered in water. Levels continuing to rise and worried water will cover roadways. To all my fellow friends, avoid the river. Dad, if you are watching, the bike ride we planned on in maryland might be off, im hoping, because im not in shape. Wishful thinking. My dad will still want to do it. 5th straight, by the way. 7 a years old. Good for him. Awesome. Do it if he wants to. I know. Hurricane joaquin is threatening the sea board, and too early to see if it hits the city, but rain is considered likely friday to sunday, if it makes a hit, it could be worse, and those who survived 2012 are preparing for the worst just in case. There could be Emergency Operations friday and praepared for addition until 911 operators. Everyone is ready because they dont want to be unprepared. The storms maximized sustained winds are 70 Miles Per Hour as it turns to the bahamas. Andrew . The center of American Progress joining us, revising Hillary Clintons campaign on health care issues, asking if Drug Companies should be required to invest a portion of the revenue to research in effort to keep prices down. As we head to break, look at u. S. Equity futures right now, dow opening up 187 points higherment back in a moment. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . They thought they had the worst song on the planet. Please. One of them. Melting. Oh. September in the Third Quarter wrapup today, and investors want to say good riddance, a small world in a world of small returns. Dom c hrhu . You have to find one sector that found did well. Utilities is the obvious choice there. Looking at the reset with a final trading day to go with this month and quarter, the dow industrials holding up relatively well, blue chips down 3 . S p down 4. 5 , and the nasdaq composite pacing declines down 5. 5 . In that order, holding up well. In the sec sore performers, so far this month, utilities, again, up by a percent. Consumer staples down marginally, but a relative outperformer, and this side, Energy Materials down 910 for the month. See what happens today. Look at one other part here, look at the quarter, again, the dow industrials and the s p kind of in that same realm, down 8. 59 here for the quarter and nasdaq down 9. 5 . As for the sectors that have done well, deja vu all over again. Utilities, again, the only positive sector so far quarter to date. Consumer staples down 23 . Relative out performers there. And materials and energy, down 1920 , and, of course, becky, everyone is watching biotech stocks. They looked like they would post a nice gain, bounce off the bottom yesterday, only to give all the gains away. It closed negative for the eighth straight time. You can see here in the extended hours, up 23 , premarket, but, again, year to date, down 2 . Now, eight straight days, this will be a Battle Ground to see whether or not the markets can hold up here, not because they are a huge part of it, but because they have been a high profile contributor to the gains here seen. Back to you guys. Dom, thank you very much. Sure. In the meantime, the b biotech etf is down 20 since Hillary Clinton said she would tackle price gouging in the Prescription Drug market. Last week on the show, they said this about the plan. A look at what the center for American Progress put out last week, thats a guide to what Hillary Clinton would do with a lot of advisers working there with proposals for explicit price controls on drugs where government with certified bodies set price targets and penalize those who set above the target. Thats a good idea of what shed do if elected. Joining us now to refute the claims is the center of American Progress, and neera, what do you think . Thats inaccurate. We have proposed, and Hillary Clinton also proposed something called a Research Innovation target, a Research Innovation fund that incentivizes Drug Companies to do what they say they want to do, which is spend their resources to invest in innovation. I mean, right now, many Drug Companies, not most, are spending more really on markets than on innovation investments, so this is actually just saying we should actually have a system like we have with Health Insurance which is ensure that Drug Companies are investing in innovation, and they are not just spending money on marketing that is really driving a lot of the cuts in the health care system. Last year, Prescription Drug costs were doubled every other aspect of the health care sector. Its really creating Health Care Inflation and really record costs to consumers. This is a hot button topic. Weve been talking a lot about the sparks of the ceo of the company, martin, who, you know, weve said on the program, hes a liar and a fraud, that one bad actor who really went out to kind of price gouge after taking over a Market Making sure no one else steps into this, jacking up prices by 5500 overnight. Thats a bad actor. I dont know that thats reflective of the industry. Theres bad players, but i think a lot of the players in the industry are trying to innovate, and thats an expensive proposition. Absolutely. It is an expense evidence proposition. We want pharmaceutical companies to continue to innovate. We want them to invest in research, but we are finding the pharmaceutical companies are actually investing a lot more in marketing for drugs that are just not that much more effective than whats on the market today. Talking about extended release versions of the drugs that allows them to keep patents for longer . Well, the truth is, you know, the problem we have with pharmaceuticals is Social Security not a free market right now. Theres near monopolies for drugs, right . Theres a drug out there that its the only drug that a person needs to survive. Sure. Its different from other markets. But scott made the point that the reason you wound up with the drugs in situations like that, orphan drugs, no one else enters the market, is because too much regulation is on it. In order to apply for it, can cost 1 million, but now its 20 million in some cases, keeping others from getting into the market from go ahead to make the drug. It stops the competition effectively. Well, the challenge we have now is that we have a lot of drugs, and we dont really have a good way of assessing their values, so that is actually another proposal we purport. We need systems, private Sector Systems to actually analyze value of drugs. What we see is a lot of pharmaceutical company, not all, but a lot of pharmaceutical companies are spending a lot of money on creating a drug that does not do much better than existing drugs, but they spend a lot on marketing. Near that what you mentioned is more concerning to me than the first idea you threw out. The idea of creating a panel thats going to decide how much can and you cant charge for drugs sounds like it would be something that would squash innovation. What are you talking about . No. Im saying that, for example, theres a private sector entity right now its name is basically described as its called iserve, but what it does is serve whether one drug is more effective than another through all medical evaluations, so that we understand not, like, insurers understand, but they understand the value of Prescription Drugs, whether, i mean, today, we spend a lot of money on is that already happening, what are you suggesting we do in addition to it . Base pricing off government for Government Funds deciding how much to pay for these things on something that already exists. What are you saying . We need information for more and more drugs. We dont have a way to compare effectiveness of drugs, we need a private sector, but we have to analyze the valg of tue. Its not like a regular market. We dont actually you know, when you have a computer, you can evaluate whether its more effective than another computer or some other product. We dont do that with drugs. Thats a challenge. We want actually make this more like a market so you can actually understand and assess the value of drugs, which we dont do today. Medicare, big purchaser, cant say no to any drug. Reimburses for every drug prescribed, and thats causing a lot of inflation in the system. You know, the thing that concerns me, though, i understand when you look at a situation, like, this, the drug we just talked about, with the ceo from last week, the thing that sparked this entire argument, but when you Start Talking about new innovative drugs for Something Like cancer, Something Like diabetes, some of the drugs, it costs an awful lot of money to go ahead and do the research, do the innovation to take risks on the drugs that may or may not work out, in fact, most of the time do not work out, and i worry tamping down on the innovation. How do you ensure through the talk, and the biosector hit so hard as a result of the comments coming out, and House Democrats Holding Hearings to look into whats happening. It spooked the market. How do you not kill innovation as a result . Thats why, actually, we should have proposals that incentivize innovation. Say, companies, first of all, we give research tax credits. We have the nih. We believe we have to increase investments in the National Institutes of health as they do research that the biopharma industry is doing, those are great things. The proposal in that regard says Incentivize Research over things like marketing. We all agree this has been a leading industry in the United States. We want to maintain it, but at the same time, 77 of americans, republicans, independents, and democrats think costs are too high. We have to address that. All right. Neera, thank you for joining us. Thank you. I thought that was fantastic. I want to tell you. Sorry. I want more time, get them back at another point. In studio, would be fun. Scott here too. There are issues with regulations that created some of the problems. All right. When we return, new jersey governor and president ial candidate, Chris Christie is joining us with key endorsements in iowa. The big interview in minutes. To see the new tesla model x, we have more video and talk about its price tag. Its all coming up on squawk box, stick around. Youre watching squawk box on cnbc, first in business worldwide. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Porsche production chief oliver bloom named the new ceo of the volkswagen unite. Now, he replaces the ceo of the Parent Company of volkswagen. Thats after replacing Martin Winterkor in the wake of the emission skap dcandal. I feel like this is the starting line for the move nick. Gaining ground in iowa, the governor is joining us now to talk jobs, the economy, and more. You are gaining in iowa, but in the larger conversation, when you look at the polls, you know where you are relative to everybody else. Yeah. I dont really care. You dont care . Why should i . I mean, its september 30th. You know, if election day were october 1st, id be worried, but, i mean, weve finished youre an nfl fan, andrew, its week three of the nfl. We have to go through the regular season and playoffs other than the super bowl before anybody votes. How many ups and downs will jets fans have in that period of time . Theres going to be ups . Yeah. There will be for the jets, yes. Theyll be ups. Are you writing off donald trump, writing off carly and rubio . They are at the top in the polls. Right, mark was in singling digits, so, i mean, all the sudden, hes a juggernaut at nine . The polls are five. Im at four. Hes at nine. It doesnt make a difference. Now, you know, trump and carson are higher. They are the only ones consistently in double digits. Just everybody relax. National polls mean nothing at this point. With scott walker out, whats it do for you . Helps fund raising for sure because were both conservative republican governors through the rga base, it helps fund raising, and it keeps, and narrows the field. Anything that narrows the field, while youre standing, you know, makes it better. From a money ball perspective, just explain to us sort of how much money you think you need and everybody needs, and where are the inflection points so we understand where these moments are going to come where people say, i cant do it anymore, or i can, and how much you need to get to the point . The big point is to meet the needs of the staff and travel and make sure you have money that you can start to buy advertising. Thats what matters. Not many people are advertising now. You see the super pacs advertising, but the campaigns themselves, few are advertising themselves right now. What you need to be looking at is you got to pay for the staff. You got to be able to pay for the travel. Thats where the water campaign, you know, aparentally fell down without having the money any longer to pay travel. Same for rick perry. That determines it right now. January and february, thats more money in january and february and beyond for the campaigns for advertising and super pacs need money to advertise add well. Brushing off the polls, but looking at iowa and new hampshire, what do you have to do in the two states to feel like this is real and this is gone . Do well in both. You have to. Top three, top two . Depends. I think its a little broader than it used to be, becky, because of home people are in it. Right . Three tickets from iowa, but theres more now because, you know, if you still, lets say theres 15 people, you know, theres just more people who are going to move on naturally. You have food well. What happened yesterday, folks who flew to new jersey four years ago to get me to run for president. I said no. They surveyed the rest of the field for 16, looked at the message we have out, the campaign we run, and they came back to us, and i think thats hard after someone asks you to the prom and you say no, for them to come to the next prom and ask again, thats a good thing showing you that you have a campaign thats competitive in iowa and well be competitive in new hampshire. Boehners resignation means what about the country and most importantly for your party . For the country, its a reflection how frustrated america is with congress. Weve tried it three ways now, right . Over seven years. A fully democratic congress, split, and now fully republican. Each one a failure. For the guys whos been the leader of the Republican Party through that entire period, that reflects americas angry at congress. Rightfully so. They have not done any of the things, and they have not done a thing they said they would do. Tax reform, president s desk, make him veto it. At least theres parameters for what the republicans and democrats believe in. Change the way you have to run or a candidate thats remotely close to the center, does he not have a chance anymore . No. Its not about center right. Its about effectiveness or ineffectiveness, and what the American People dont put up with, and thats why governorments to be the nominee of the party. No one from washington will be. When do surprises implode . They are waiting for trump and or carson to implode. They have not. Gosh, relax. Donald trumps been in the race for, what, 90 days . 90 days. I mean, thats thats all lets relax. That would be a massive implosion to implode in 90 days for anybody. Donald is a savvy media presence. Whats surprising to you, carson or trumps ascension . Oh, probably carson. Donalds a star. Hes a celebrity. Are we surprised that in the middle of the summer when everybodys looking for entertainment that people turn to donald . I mean, im not surprised that that happened, and im not surprised given hes been on television for decades that a lot of people know him say, okay, give him a look. Thats what they are doing. Few people right now are committing to anyone. Outside the political world. People are still shopping. Carson surprises me more because hes much more low key presence, and that surprises me more, but hes a very good guy. I got to know him over time. I like him. Hes a nice guy, very bright, so, you know, but that surprised me more. What about Carly Fiorina . Dont know her all that well. I dont know what to make of her career at hp, and at lucent before that. Seems to be, at best, a mixed bag. I dont know necessarily how that qualifies to be president of the United States, but were going to see. You seem to be ive been following you for a long time. It has gotten more antagonistic your message lately with the dear d. C. You are striking out and hitting hard at this point. Is that a Fair Assessment . Yeah, because im getting frustrated now. Last year i was out there as chairman of the republican governors association, trying to elect republican governors, did so successfully. When i was out there, i had Senate Candidates ask me, would you do an event for me . I said yes almost all the time. I worked hard for these folk, and theyre doing nothing. So im frustrated. People are writing to congress. There will be heavily editing answers. I know youre concerned about the kids at home. I spoke with bill clinton this week and asked what he thought of biden. He said he loves biden, loved him for a long time. Loved him all the way back to talking about robert borg. What does that tell you . It tells me that the clintons play for keeps. This is their last chance to get free Public Housing again. And theyre going to work as hard as they can to get it. Thats a quote that will be used, i think. Thats a good line. Have you used it before . No. I just made it up right here on the spot. You know why . Because you inspire me, andrew. Has to be the worlds most expensive free Public Housing. I think truman said it was the crown jewel of the penal system. Definitely expensive free Public Housing. Im glad i inspire you. Come back. You bet we will. Cnbc will be hosting the next Republican Debate on october 28th at the university of colorado boulder. When we come back, well hear from jim cramer from the new york stock exchange. The futures indicating a much higher opening for the stock exchange. Stick around. The Gillette Mach 3 turbo still feels better after 10 shaves than a disposable on its first. Mach 3 blades have twice the coatings. For a closer shave with zero redness. Get an incredible experience shave after shave after shave. Gillette. The best a man can get. Lets get down to the new york stock exchange. Jim cramer joins us. Jim, i know youve been bearish on whats been happening in the market lately, but i think you are saying we may be getting close to an end . 1,000 dow points maybe we could go down. I think the s p down 6 more. The issue is mutual funds ended their fiscal year yesterday. They finished dumping. We have a plan for volkswagen. A lot of black holes being filled. Dont like the market, but have to be cognizant that its come down. Jim, thank you very much. Tesla ceo elon musk putting on a big show to roll out the first model x. Phil lebeau joins us now. Without a doubt, the most talked about feature on the model x, the falcon wing doors. This was the scene last night in fremont, california when elon musk delivered the first five model s suvs, part of the founder series, essentially a limited edition number. 132,000 for each. They have 22,000 reservations. People who have said i want one of these model xs. If you placed an order today for a model x, 8 to 12 months out before you get it. The big question now for investorses and for tess lashgs the ramp up of production of the model x. Well be here all day long with more on the model x and the future of that ramp up in production. Back to you. Phil, thank you very much. Brian, thank you very much for being here yesterday and today. Been great having you. We know, power lunch, later today. 2 00 eastern. That does it. Tune in. A lot of coffee between now and then. Thanks for having me. That does it for us today. Right now its time for squawk on the street. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. Sometimes they just drop in. Always obvious. 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. So wi got a job ews . Ill be programming at ge. Oh i got a job too, at zazzies. friends gasp the app where you put fruit hats on animals . I love that guys, ill be writing code that helps machines communicate. interrupting i just zazzied you. phone vibrates look at it friends giggle i can do dogs, hamsters, guinea pigs. You name it. Im going to transform the way the world works. proudly i programmed that hat. And i can do casaba melons. Ill be helping turbines power cities. I put a turbine on a cat. friends ooh and ahh i can make hospitals run more efficiently. This isnt a competition good wednesday morning. Welcome to squawk on the street. Im carl quintanilla, with jim cramer, carl faber at the new york stock exchange. Final day of september, final day of q3, the pre market is higher. We had good action in asia over night, despite weak industrial output. Europe is higher by 2 . Watch oil, it is lower. A reminder to keep your eye on any opening rally. Our road map begins with a retail legend stepping down as the house bearing his name. But an unexpected casualty is a rival clothing company. And costco earnings beating estimates but a strong dollar is not helping when it comes to revenue. And tesla rolling out its fully electric suv. If youre in the market it will cost you. Potentially elon musk also. Futures are up sharply. Helped in
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