Transcripts For CNBC Squawk Box 20240714

Points after a rally that saw all of the major averages up do you up by 227 points. S p up by 21 nasdaq up about a percent at 85 points a lot of people muling through and looking at some deescalation it still continued but let up a little bit trade looks like a sidelined issue or better. Much much lower but rising that made people feel like they didnt have enough exposure. The dow is up around 2,000. Russell 2000 is up first it is a catch up and then lets see how far we can stretch it overnight, with the headlines of the latest concessions, the s p futures shot up. We are up six or so percent. If we wanted to, we couldnt make new lows or deals it is fairly far away. You are in this zone. You have a cushion below you see the 10year 1. 726 it is good. It is good it is good always a good side, bad side of things. In asia, we did see the president tweeting about postponing tariffs sang high composite ended up in europe, if you look at what is happening there, right now, markets have barely budged there. Waiting to see what happens next President Trump tweeting overnight, set to delay tariffs by two weeks it is significant but the two weeks we know how quickly time passes. It puts pressure on those talks. October, i just get nervous about october every year with stocks they are going to have their anniversary in china it could be a totally different october or, there could be some reason for it to be a typical october. With the market octobers are horrible always a good bottom futures rallied they thought great, futures will shoot to the high. The pattern has been, they do something but dont promise anything after that. A dispointing response it is all in the mix a gesture ever good will and china is responding this morning. Eunice, it has been a week and a half those phone calls that may or may not have happened. Over turs began then, it seems like we have evidence there was some type of thauing on both sides. What is your twitter thing again . yoon tv only yoon tv. A really good one i try to get you hundreds of followers every time you come on i dont know what good it is, anyway thank you china thanks President Trump for this good will gesture beijing does welcome this olive branch to recap, President Trump tweeted that decision was made at the request of the vice premier and due to the fact that the peoples republic of china will be celebrating their 70th an verse on october 1. The delay from the 1st to the 15th is like what you were talking about. Not necessarily so meaningful and would be appreciated by beijing, which considers october 1 as a very important day. Wouldnt want to see any distractions to add to the positive at moss fe atmosphere, companies here have started making inquiries at pricing in products like pork and soybeans even so, longtime china watchers say the fundamental differences between the two sides are still really big also, what was interesting today, people were joking about an old chinese saying, which is, what you cant avoid on the 1st, you cant avoid on the 15th. The meaning, if something is meant to happen, it is going to happen on social media, this probably means the october tariffs and conflict with the United States. Guys say that again. What you can avoid on the 1st . What can you avoid yeah. We can the can down the road on everything. The way it came up was about debt collection. In china, can you try to avoid somebody on the 1st and not pay your bills but on the 15th, you cant avoid paying now it is being used for these tariffs. I can meditate on that eunice, i think. Welcome to the town of onehanded clapping. Im going to think about that. I think it is like this that works. People that dont want to clap have you ever been to a place where they snap fingers . I think thats edgy that goes back to the folk clubs. Thank you, eunice the trade war isnt the only market catalyst today. Mario draghi expected to release a package i cant help it. At the top of the show, it said could make President Trump green with enviy to what my viewers say. If you are already orange, what would you turn to . P maybe green and orange like the irish flag lets ask hans, you are bullish . Kind of friendly towards stocks . You dont like emerging markets much why . Thats right given the strength of the dollar, which has been remarkable, the better bet is in developed markets and the u. S. Its a bit of a change for me. I think it reflects the vesting you are dialing with the circumstances in fronts of you whether valuation or the like. Hank, when you look everywhere, i think you sort of if you try to factor all the different variables, both of them could be trending maybe we dont go as far, hank youve got maybe some signals that trade gets settled one way or another yes look, it is a perfect set up politically. Trump is getting several rate cuts so the Interest Rate environment has improved he can come to a trade agreement what really matters is that this subject get off the table. Certainty replaces uncertainty that will allow Business Confidence in 2020 to pick up and you have the potential for the economy to start to accelerate in 2020 which sets up perfectly for the fall 2000 election interesting how you say that. Makes me feel kind of dirty. Doesnt matter whether we do anything with china or get anything lets get it done so the market goes up and let china take over the world in 2025. Wouldnt it make more sense to say lets hold out and actually accomplish something thats the other view point trump see ises this conflict as beneficial to his campaign thats cynical. What about trying to do whats right for the United States and citizens is that totally wrong that we should let him steel stuff and not have a fair Playing Field . Joe, strictly from an economic standpoint, what is best for the United States is no tariffs. If we eliminated all tariffs, things would be much stronger. I dont know. If you look at the hawkish view point on china i want us to do well economically i want gdp to go back up, unemployment too the case cant be made that this might be the time that you address some of this stuff what do you think, hans. I dont think well make any durable or significant improvements this is sort of falling into the cold war equivalent with trade thank you on that thank you hanz and hank. See you guys later when we come back, ipos likely to be a hot topic smile direct club prepares for a debut. There is a big truck out here for smile direct right in front of us. B budweiser takes another shot at the ipo in asia. Dont miss our interview with Steven Mnuchin thats coming up home depot leading the way, up by 1 . Johnson johnson is a baby company. But were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. Go where my baby lives from tb[ growl ]olle srn good boy. Hey. Hey. You must be stevens phone. Know whos on your network and control who shouldnt be with xfinity xfi. Simple. Easy. Awesome. There were tsunamis fourtin the world. And once they happened, we were in a major hurry to get to those regions to provide aid and support. It was very humbling to be able to help out all those people. Its my dream now to go into clean energy and whatever the next new fuel source is, thats where i want to be. I want to be on the front lines of implementation. Welcome back we are remembering the life of oil tycoon, t. Boone pickens he died yesterday at the age of 91 a frequent guest, Brian Sullivan takes a look at his life i dont view myself as a work a holic because i love to work known as t. Boone pickens the corporate take overfrom texas. To friends, he was just boone. Born in oklahoma in 1928, a businessman from the start when i was 12, goit my first newspaper job. I always had money after that in my pocket. It was a good feeling. He graduated from Oklahoma State university with a degree in geology he started his own company Mesa Petroleum with just 2,500 he spent years personally drilling for oil he took mesa public and realized the power of stock turning from geology to corporate finance, he became one of the first socalled corporate raiders. Creating a playbook to be followed by others take a small stake in a company, pressure it to sell itself and become very rich in the process. I would be foolish to tell you we lost in a deal where we made 500 million. Also an advocate for share holder rights. Remember, the stock holder holds the company and the management is the employee in 1997, at the same of 68, pickens started his investment firm, bp capital it was a nearly total flop at first but a huge bet on natural gas in 2000 set off a run to a billion dollar fortune he made America Energy independent. We havent done a thing to lower our dependancy on foreign oil. He created a Company Called Clean Energy Fuels he donated 500 billion to his almar where the Football Team now plays in the Boone Pickens stadium. He bought and moved his childhood home from oklahoma to the texas ranch and started to drill a new oil well there in 2016 i always said id go out in a box. A lasting memorial to a full life lived squawk viewers know him as a frequent guest boone was somebody who was always curious, always learning, always flexible. I think thats why he never considered it work as people get older, they get set in their ways and think what they know is what they know and nobody would tell them otherwise. Boon was always looking for the next big thing he was known as the oil man. He said, call me the gas man, wind man he thought there would be peek oil and changed his mind because he realized fraking was coming he would always go big hed make a few billion, lose a few billion. I remember everything about boone when i was a stock broker at merle in 1981, boone began his whole mesa saga. I remember telling my clients. Mesa mlp, it was paying like 8 or 9 . It was not like a regular dividend he would argue, he went after city service, gulf oil, unical all companies bigger. Yes this happened there. And then i got to meet him and know him he was really an endearing, sweet guy. You could bust his stones a little he would look closely at what you were saying. He was a student as well as a teacher and constantly learning along the way. That is an amazing sign when somebody is adaptable. What is unique, is nobody else had the parallel life and then the share holder advocate who brought about the 70s and 80s. Hes right. Management teams are the employees. He was right to point all of those things out he was on the cover of Time Magazine right there in the middle of all the action in the 80s until 1987 then, a whole new life i got to know him on a completely different level and not just an oil man but also looking to alternative fuels. Water too. Did you know he thought about running for president in 1988. He was a backer of many candidates thats a life welllived. By time we knew him, he was in his 60s. Sk i went to china with him when he was in 70s. I went to china with he and his wife at the time i spoke to Warren Buffett about him yesterday. He said, they grow big personalities in texas, none could top boone. I was never with him that wasnt fun. I think that is what everybody could say. I had break fast with him about a year ago even after some of the effects of the stroke, he was still busting the chops. He loved the cowboys and osu. Texas a m didnt renew his scholarship. As a result, he went to osu, so they got the 500 billion. Texas a m sts lithat as one of the biggest mistakes of time we will miss him as a struggling actor, i need all the breaks that i can get. At liberty butchemel. Cut. Liberty mu. Line . Cut. Liberty mutual customizes your Car Insurance so you only pay for what you need. Cut. Liberty m. Am i allowed to riff . What if i come out of the water . Liberty biberty. Cut. Well dub it. Liberty mutual customizes your Car Insurance so you only pay for what you need. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Time for the executive edge. Well start with some corporate stories. Watching shares of oracle. Ceo mark hurd taking a medical leave of absence they wouldnt be more specific founder and chairman handle his responsibilities reporting First Quarter profits and revenues slightly below. Shares fell after the announcement but mostly recovering losses now down just over half a percent. Groupon facing pressure from investors. It could be considering a tiup with yelp. From the debut in 2011 has fallen yelp is valued at nearly 2. 5 billion budweisers ipo in asia and treasury secretary Steven Mnuchin will join us to talk china trade. Right now, a look at yesterdays s p 500 winners and losers through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Were changing whats possible every single day. With technology that helps you offer shoppers a better experience. Take your companys app. We can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. And now, applying for credit can happen in a flash. That way, more people can start shopping with you on the spot, wherever they are. Hows that for changing whats possible . Welcome back. You have watching squawk box live from the Nasdaq Market site in time square good morning, u. S. Equity futures up again last night, they were up triple digits we held on to a 50point gain after six Straight Days up for the do you the nasdaq which had been weak up s p up as well lse set to reject the 36. 6 billion hong kong bid. Wiping out some 1 billion of market value as asian investors got a chance to adjust the unsolicited bid for the lse. And ab inbev revives the plan and what would have been the Worlds Largest ipo. The brewer scaled down the offering the ipo is set to take place before the end of september, which is less than three weeks left andrew is not here today but he has a report that says the leaders of 125 companies will send a letter today urging expansion of background checks of firearm sales and stronger red flag laws. Among the companies that signed this letter, levi, twitter, air b b and more when we come back, the government cracks down on e cigarettes and later this morning, treasury commissioner Steven Mnuchin coming up at 8 00 a. M. You are watching squawk box on cnbc i can shine, i can shine, i can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. Welcome back, the Trump Administration preparing to crack down on flavored vaping products sorry to tell you about that eamon. Something else you like to do, maybe . Joining us now with more this will not affect my life one iota the idea is that these flavored products are too tempting and appealing to children that are being brought in this the vaping wave in huge numbers. It is alarming the idea is to roll back a waiver the fda had given under the obama and extended under trump that would allow the marketing and sale of these products theyll allow the Tobacco Products to stay a lot of smokers use these products to try to wean themselves off cigarettes in theory to stop smoking they say that is a good thing. They want to stop the piece of this that seems to be aimed at or appealing to children here is how the president talked about it yesterday we are looking at vaping very strongly it is very dangerous children have died people have died the acting commissioner is something who is a true expert as much as somebody can be an expert on a new subject. Well have Important Information come out shortly the president saying there well have some strong rules and regulations. The fda releasing information that the specifics are not being released it will be a while here before we know how this will play out the administration signaling here, it has to go after the flavored e cigarettes on the market weve been talking about this for a while. I think what caught everyones attention is just how much of an issue this has become for High School Kids. Something like 25 of High School Kids have used it in the past month or so going back to when i was growing up and trying to stop kids from smoking. Candy flavored Tobacco Products marketed to teenagers. Maybe they deny that if someone were to tell you about this, it sounds like something you would see on snl glass in a bag remember the days they were stamping out the ads like joe camel. This is that times x we are in the back to School Season a lot of parents are really focused on this. A lot of the Initiative Came from melania trump, whose son barron is in school now. I see this with my own kids who report back. It is a scarey thing you wonder how are these products everywhere when five years ago, they seemed not to exist. Joining us now to talk more about the crack down off e cigarettes, the congressman who accused juul of breaking the law and advertising. Congressman, thank you for joining us what was your point . What would you like to see happen it is one thing for adults to perhaps vape, it is another thing all together for the industry to target our youth there are two aspects of this that are very alarming one is that 20 of High Schoolers and 5 of middle schoolers are vaping, which makes it an epidemic hundreds of hundreds of people are hospitals with severe respiratory illnesses, most of them youth six people have died im very glad the white house took a step yesterday. They cited our investigation and hearing. But more needs to be done. Some of the picks and stories have been incredibly disturbing. You mention the numbers. But the hundreds of others you look at the stories and there is an 18yearold High School Athlete being told his lungs look like the lungs of a 70yearold. What is there the fda is not already doing . I think there are multiple things that need to be done. First, it is good the fda is banning these e cigarettes from the market we should probably put that in legislation and make that law. Im very concerned about the very high nicotine levels. The amount of nicotine in one pod is more than one pack. You can imagine, they get hooked for a lifetime my wife and i are parents of a high schooler and middle schooler so this is personally alarming Scott Gottlieb has spoken to us over a year on these issues it sounds like juul is pulling back from some is of these Marketing Strategies it is kind of already out there. What next . There are questions being raised, why is this the only vice being targeted. It sounds like many of the problems from the latest research is caused by unregulated vaping issues. Nout just the ones being sold in the stores but it is hard to distinguish between them you are right i think juul and others let the marketing genie out of the bottle regardless whether they stopped last fall to target youth with social media and influencers. Juul has 80 of the market theyve dominated this market and continue to do so. The rise in youth vaping has been linked to the rise in their business third and final point, addressing what you said, is i think the entire market needs to be cracked down upon not just juul but also the black market vapors. One sign is that they asked everyone to stop vaping especially if they are not vaping now they didnt limit to a certain device or a certain companys device they just dont know the cause of these mystery illnesseswhic can are a crisis right now this seems like a bipartisan issue. What kind of support are you receiving on this . Thats right i have to tell you when i was home for the august recess, constituents across party lines were up in arms. This is not a partisan issue our children are not for sale. You cant target them for vaping they are off limits. Weve leave it on that strong message. Congressman, thank you for your time thank you coming up, smile directs first trade is on the way. More expected next week. They are right outside and they tried stop me on the way in here. I smiled at some guy and they said, here, i can help you the guy across the street was knocking on my window. A quick check at whats happening in european markets. We have some green in some places two out of three well be right back. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Smile direct club is set to begin trading on the nasdaq in just a few hours joining us right now with his expectations with that and the rest of the ipo market, a lot of deals slated for this fall, john elton at gray croft. We should mention gray cost is invested in the we company and the real real so john cannot comment on those companies thank you for joining us hi. Clearly the ipo market as a whole remains open even if its maybe kind of discriminating because we all know about some companies that are deciding whether they can get the valuation they want. Whats the general tone for you are and whats the formula for when the deal in this environment is going to work well, youre seeing a variety of companies that are going public today smile direct club is obviously in the health care you have Companies Like data dog which are much more technical. And i would say overall its just great to see a relatively healthy ipo market people are scouring each individual name and having tough questions. But overall there is an optimism the companies are getting public its good for the country, good for investors. I think in general its a positive environment has it not been a little bit of a collision of, you know, heres what kind of Silicon Valley Venture Capital world thinks these companies are worth and the Public Market saying yes or no . Im wondering if there is a rethink going on or strictly business by business i think all of this is very name by name, but yes, i think there is, you know, you keep hearing about the latest private equity round, an ipo and if there is a discrepancy between those pricing. You know, its kind of friction. You know, years ago i joked that ipos were the new down round right luckily were not seeing that any more although in the individual names that can happen. But i think, again, overall, while in one name it might go down, one name it might go up. Sure. I think its a healthy thing. Its good for private investors, its good for public investors so there is not the same momentum to try and push up valuation rounds privately because its going to lead to embarrassment. And if youre the ones pushing it up, youre going to get egg on your face when this comes to an exit strategy in the form of an ipo i mean, for us, we want to build longterm Healthy Companies that are sustainable and when were investing, there is a no concept of pushing the valuation up thats not good for us right right if you want to build longterm enduring companies, they have to do well in Public Markets. Were proud of that. Thats something that we care about. We care about it even when Companies Get acquired by other companies. So, you know, any time i hear this like oh, the vcs are trying to get out were locked up, too. Am i wrong to think that there was this momentum that was out there that if you didnt do a deal at a price, somebody else would, and maybe thats died down to . Extent say bad actors pushing things up again, this isnt unique to private markets. I would say the tone in general in the Economy Today is a lile. There is the trade question which we talked about last time that could flip to the positive but now its those kinds of things are weighing on the general economy. Thats affecting valuations in the private world. Its affecting valuations in the public world i think in latestage preipo rounds, i would imagine those are much more Difficult Conversations today. The rule has been in terms of how the ipos have performed and what the market really latches onto is. The more a Company Looks like pure software, the better the market seems to like it. If its a little more of a kind of hardware consumer play like smile direct, i think you can say this is a great brand of franchise. We just dont know how big the market is going to be, we dont know how it scales does that make sense at this point . And i think it kind of bears on peloton, too, how muchof it is technology company, how much of it is not. Software companies are interesting. Theyre high margin recurring businesses that have a lot of scale. Data dog is a perfect example of that two french founders in new york with three new york ipos with peloton we and data dog, so were kind of having a moment in new york which is really exciting but thats a perfect example of a Software Company you see financials, its got incredible leverage the founders have built a really Incredible Company and peloton, you know, is interesting because youre right, it combines some software, combines media, combines hardware. And i think what were seeing now is that innovation is spreading into areas because a lot of like the things you think software would have been disrupted at this point, now its seeping into other areas. The macro on that is, you know, working out has become the new religion, religion in general is on the decline and working out is massive uptick as people are trying to live healthier lives and youre seeing that in pelotons number also. You have i think the interesting analog between peloton itself where you have a membership i think the retention rate is in the mid 90s. People users rates are healthy. People love it theyre subscribing. It has Software Like elements. Theyre the apple of the category i own one of the bikes its a really well designed bike the software is the u. I. Is great. That kind of stuff is subtle, but its very difficult to disrupt. Theres lots of bikes out there, but there have been lots of bikes out there ever since they started. Right john foley, the founder, is still very involved. I think hes going to continue pushing innovation they rolled out this treadmill i tried the treadmill. Its not incredible the best treadmill youll ever be on. Right so i think peloton is an interesting unique animal that has those crossover element apple to category, high use and good experience. General profits go to the premium brand in a space smile direct, were sort of the Premium Company some people call candid, that only uses orthodontists. One of the things that smile direct has been, you know, has had issues on one of the questions about. So weve sort of taken a different approach, have a higher end product and i think with peloton and candid and those kinds of companies, if you have a premium brand, i think the bulk of profits just like apple has it in the smartphone category john, thanks a lot. Thanks for having me. When we come back, were going to be talking to former fda commissioner scott gottleib. He will join us in the next hour to talk more about the Trump Administrations crackdown on flavored vaping products, what he thinks are causing the lung illnesses weve heard about. First, though, the guest host the next hour is media mogul Robert Johnson where is he hes coming hes right in the wings. I see him right here were going to tk altrade, trump, the economy and much more ual customizes your Car Insurance, so you only pay for what you need. Wow. Thanks, zoltar. How can i ever repay you . Maybe you could free zoltar . Thanks, lady. Taxi only pay for what you need. Liberty. Liberty. Liberty. Liberty. I cowe can do theyour screening at her house. Hi. This is the man thats going to check your eyes grandma. Cognizant ai solutions are helping Healthcare Companies advance diagnostics and prevent blindness in patients with diabetes. Everything looks good. You have beautiful eyes. Announcer live from the beating heart of business, new york this is squawk box. Good morning, everybody welcome back to squawk box here on cnbc im becky quick along with joe kernen and mike santoli. Futures have been indicated up dow has seen six days in a row of gains got the dow now above 27,000 and the s p back above 3,000 right now were indicated up one more time. Dow futures up 50 points, s p futures up 3 1 2 and nasdaq up 24 a number of signs this morning of decreasing trade tensions between the u. S. And china. As we noted President Trump delayed the imposition of some new china tariffs as a good will gesture. Initially chinese Officials Say Chinese Companies have started inquiring for purchases of u. S. Agricultural goods all of this coming ahead of planned meeting between the u. S. And china in early october a key moment for the markets is less than 45 minutes away. The European Central bank will issue a policy statement following the conclusion of its meeting. Investors are expecting the ecb to announce new stimulus measures and General Electric has received 2. 7 billion in net proceeds from the sale of shares in baker hughes. Sale makes ge now a minority shareholder in the Oil Field Services company, cutting its stake from 58 to 30 . Ge sold its shares at 21. 50 a share. Retail news, walmart is rolling out a limited Grocery Subscription Service it will cost 98 a year for same day delivery and will be available in 200 markets around the country. Smile direct club pricing its ipo at 23 a share above the expected range the deal values the company which sells clear teeth aligners, theyre called, at about 9 billion smile direct shares are expected to begin trading later today on the nasdaq under the symbol sdc. I think they could have come up with Something Better than that. Smile direct club. If youre on the nasdaq grin. Yeah, yeah, theres a lot that a missed opportunity but do not miss the companys cfo and cofounder live on squawk on the street after the companys first its a nasdaq stock . Yeah. All right andrew is not here today, but he does have a new report in the New York Times that says the leaders of 145 companies will send a letter to Senate Leaders today urging an expansion of background checks to all firearms sales, and stronger red flag laws those are laws that would allow courts to temporarily ban guns for people who are considered atrisk of violence. Among the companies that signed, levi strauss, twitter, uber, lyft, airbnb, gap and bain capital. Democratic president ial hopefuls will be facing off in houston tonight. Kayla is there and she joins us with a preview good morning reporter good morning, becky. You could see fire on the stage tonight, the two front runners, joe biden and Elizabeth Warren take the stage together for the first time where biden is expected to criticize the spate of policy plans warren has released as impractical. Here at Texas Southern university, a historically black university, the 650 students in the audience care about the job market that looms large as the word recession is talked about more frequently, even despite steady growth in the economy. Here in texas, unemployment has bested the national average, but democrats see an opportunity in the white liberal voters who moved here for jobs in the tech and energy space energy has flourished under the Trump Administration due to deregulation, but it could come under fire tonight with all of these candidates having taken a pledge not to take money from the fossil fuel industry and fresh off of events where theyve talked climate change. Also health care is expected to figure prominently, and then firearms candidates have praised walmarts move, but said it doesnt go far enough. And beto orourke and cory booker have also come out with plans that would require people owning assault weapons to have the government buy them back now, orourke has seen a surge in his campaign here in texas after relaunching it in the wake of two Mass Shootings in the state. Here in texas, he is the second candidate in the polls behind joe biden, so we will see whether he has that home turf advantage tonight in houston guys, back to you. All right, kayla, thanks. We have a guest host, look forward to this morning for a while. Back in july, billionaire Business Leader Robert Johnson who supported Hillary Clinton in the 2016 election told cnbcs hadley gamble, the economy is doing great. And he gave President Trump a lot of that credit i think the economy is doing an absolutely great. And its particularly reaching into populations that heretofore had very bad problems in terms of jobs, unemployment, and the opportunities that come with full employment. So africanamerican unemployment is at its lowest level i give President Trump and i said this before on squawk box, i give the president a lot of credit for moving the economy in a positive direction thats benefiting a large number of americans. I think the tax cuts clearly helped stimulate the economy i think Business People have a a little bit more confidence in the way the economy is going trump responded with a tweet reconfirming what johnson said about the economy, tax cuts and jobs and the president added, thank you, robert. One of our great Business Leaders. So welcome, bob, today its great to have you here. Thanks. First thing i would ask that might be most, you know, relatable to our viewers, is the economy do you still see it the same way because weve had a lot of recession fears of late. Instead of getting into the politics of it im not going to define what a recession is the economists can do that you know what it means but the real issue for me, and i said this on the interview you just showed, for African Americans, the trend continues to be favorable. The more African Americans have been in the workplace in the last cycle, more africanamerican women are getting hired in the workplace and the Unemployment Rate has drifted downward historical levels yeah. So when you look at all of that and you say where is that coming from, and its coming from Business People hiring more minorities, that means theyre doing very well in terms of investment, in new plant equipment, and in growth and, therefore, in people and when you see more minorities getting jobs, you know, there used to be the old saying, when White America catches a cold, africanamericans get pneumonia. Its going the opposite way now. White unemployment is going down, africanamerican unemployment is going down thats a plusplus that you cant argue with and as i said earlier, i give the president credit for doing positive things. And when i see a president doing positive things, particularly for African Americans, what i do is go back to that particular leader and say, youve done this what else can you do and the president has responded to me i met with him less than two weeks ago on an issue that also focuses on the issue of wealth and Economic Opportunity for African Americans. Its called retirement African Americans lag way behind White Americans in retirement savings. So i went to the Labor Department, the Trump Administration to get them to implement and approve a policy called auto portability of 401 k account simply what it means, guys, when you change jobs, if your 401 k can go along with you, you retain that 401 k account and its growth you dont pay taxes if you cash out. Unfortunately, African Americans compared to White Americans cash out at a rate of about 60 that means millions of dollars or lowwage workers, people who have 5,000 or less, are leaving the system and African Americans and hispanic americans are suffering from not having sufficient retirement savings, which also leads to the wealth gap that exists between white and african america. The president and jared have been supportive of this, and im asking ive asked the business round table, which as you know, changed a little bit they argued that a company now should look beyond just the shareholders, but look to a broad array of stakeholders including the community and other individuals, other organizations, to join with me in making auto portability a national policy. If you do that if you do that, if the president does this, and hes supporting this and calling the record keepers, the van guards, the fidelities, to come together and implement this program which the Labor Department has given a legal exemption so theres no liability in terms of acting as a fiduciary as you move 401 k accounts if this happens, literally trillions of dollars overall for all americans will go into the retirement system and stay hopefully. And more importantly, close to 600 million to a billion dollars of retirement wealth will be retained by minority, africanamerican, hispanic americans. Its a positive thing to do explain whats different. I thought i could take my 401 k with me now. Whats different about this . You have the knowledge youre moving from job a to job b and you know youre going to do that if somebody doesnt say, becky, i can also make sure that when you move from job a your 401 k will follow make it easier for me make it easier. You have options you have to rollover. You can take the cash, you can demand to take the cash. What happens is unfortunately, as i said earlier, African Americans and hispanic americans take the cash. Is it because they dont know to roll it over . Is it because they dont have savings and maybe they need the cash its probably a history of lack of savings. You dont have the wemt. You have to have some money to save the other is that its complicated. But once what we do at the retirement clearinghouse, which manages our auto portability, dont make any decisions until we explain to you what your options are. Right and just that notice of theres a way to save money in your 401 k program by not doing anything rash, that changes the dynamics and the behavior. Its simple. All we need is the large record keepers and the corporations right to say to the record keepers, look, under my 401 k policy which all companies have, implement auto portability, save literally hundreds of millions of dollars for lowsincome wage workers, billions of dollars are there Tax Implications . I assume when someone cashes out there are taxes that are incurred thats the double hit you lose obviously appreciation of t of the 401 k . Do you think Elizabeth Warren would be as amenable to this proposal as President Trump . Im just wondering whether immediately youd hear theres the tax gets paid eventually anyway. What is it netnet ill tell you this. The one good thing about auto portability, Elizabeth Warren was one of the original signers of a letter that we gave to the Labor Department back when the Obama Administration was in power saying auto portability is a good thing this is bipartisan weve got a group of 11 senators led by senator tim scott from South Carolina on board with this from the republican side. And then weve got people from the democratic side, one is Elizabeth Warren so theres no reason why see, this is one thing i like about what the president is doing, is that if you can bring private business in this case a minority company and the government to look at a policy that would benefit African Americans or hispanic americans or lowwage workers and say, hey, you come to us with a proposal that makes sense for workers and we can remove or regulatory impediment, and the end result is better economic benefits for americans, thats the kind of governing philosophy from economic standpoint that i like thats what President Trump is doing. So did you get push back from your comments in paris would you say mushback is a word here you are again saying the same stuff i got more exposure from this than i ever thought would happen because, again, when i did this with hadley, the correspondent, it was 6 00 a. M. In paris. Im thinking its a great shot, eiffel tower. It was pretty cool who is up at 1 00 a. M. In the u. S. Youre a democrat, a lifelong democrat under any circumstances would you support the reelection of President Trump in 2020 . Yeah, i dont say who i support in public. Is it possible . Well, ill tell you what i will say what i will do in 1971 when the Congressional Black Caucus was founded, the Congressional Black Caucus said their philosophy is africanamerican voters black voters black voters should have no permanent friends, no permanent enemies, just permanent interest and i would say to either the Democratic Party or the Republican Party, at a time when everything now is identity politics yep youre hispanic, youre lgbtq, youre this, youre that, women, men, all those things its time for African Americans to think in terms of their permanent interests, not being an appendage to either party either democrats or republican so i would invite and the democrats will argue, hey, were already friends with African Americans, they love us, they give us the vote thats a logical argument based on the facts what i would say to the Republican Party and to President Trump he talks to me and ill tell him this that heres what i would do. I would call African Americans who wanted to do it to come to a white house meeting with the president and other members of the Republican Party to say, look, come to us, not as friends necessarily, but not as enemies, but come to me and tell me what your permanent interest for African Americans, some 40 million African Americans in the country are. And if i listen to it and i can address some of those permanent interests, maybe we can be friends ormaybe we will just b in a relationship that we continue to look at issues but i dont think its fundamentally in the best interest of African Americans to be locked up in one party, particularly in an environment where everything is zero sum game because you get taken for granted . Thats the only thing business is competition. If youre a consumer, you want to have company a selling you and company b because youre going to get the best results. Same thing to me in politics, and i think for too long African Americans have failed to recognize that they can be we can be not they, we can be the balance of power in party. When people are talking about getting rid of the electoral college, people vote by numbers of majority vote youve got a huge voting block that can shift this way or that way. You can horse trade. I think what the Congressional Black Caucus said in 71 should be the philosophy for African Americans today. No permanent friends, no permanent enemies, just permanent interests. Okay, bob will be with us for the rest of the hour thank you. 77 and coming up, one of the Worlds Largest hedge funds making a big announcement this morning. Well get the details in just a few minutes. And later, the Trump Administration plans to ban flavored ecigarettes. Well hear from former fda commissioner dr. Scott gottleib. U wchg ed yoreatinsquawk box on cnbc who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Still to come, one of the Worlds Largest hedge funds is rebranding leslie picker will bring us special interviews squawk box will be right back. Announcer time now for todays aflac trivia question. The first Penny Press Newspaper appeared in september of 1833. What was it called sw wn bc uassqwk box continues coach saban we have Health Insurance. Did Health Insurance pay for everything . No, we still have bills. Aflac gives you money directly to help with those. Aflac and your deductibles, knee brace, whatever you choose. Aflac sounds like a winner. Umhum. Umhum. We try. Get help with expenses Health Insurance doesnt cover. Get to know us at. Duck aflac dot com i can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. Announcer now the answer to todays aflac trivia question. The first Penny Press Newspaper appeared in september of 1833. What was it called the answer, the new york sun one of the Worlds Largest hedge funds is announcing a name shea change as part of a rebranding effort following scandals and management turmoil. Leslie picker joins us now with a exclusive interview. Leslie hey, mike thank you so much. And, rob schaeffer, the c. E. O. , thank you for joining us oz if paid charges to pay for the settlement charges thats the firm that went through profile and management struggles to which you ultimately became c. E. O. A year and a half ago now the name change to skup or why the name change . Is it to put the past behind you . I think its really the final touch on a series of changes and events that have happened at this firm, leslie. I think to understand that as you say, you have to have some perspective on the firm. The firm was founded 25 years ago by dan ack who was one of the real icons of the alternative Asset Management business, and he built a tremendously successful firm the firm has been known to have great consistent Investment Performance throughout its history which is something were proud of to this day as you say, the firm went through a difficult period we had a regulatory issue in 2014 which we settled with the government in 2016, and i think events like that can destroy firms or firms can learn from those things and have the humility and the wherewithal to change and i think weve made material changes to our firm. We have, i believe, a first rate risk and compliance infrastructure today and we have evolved. You know, when you think about dans retirement in 2018, transition from a founder is always a tricky thing to do. The good news for us really was that we had a really deep bench of talent in this organization and i think the real secret sauce is the fact that these people have all grown up here. If you look at the people who are running the firm today, theyve had 10 to 20 years of working together in this firm. They know the culture. They understand the risk process here so i think thats been fairly seamless but when you put it all together and you put the things behind us that we needed to put behind us and really have the new set of leaders in the seats, we fel mark the moment it made sense to change the name. So daniel ack is not involved any more with sculptor hes a shareholder but no longer involved n. Management of the firm there are hedge funds these days that wouldnt have been able to successfully pivot from the founder as the head of the firm since youve been in the tide has shifted. Youve been able to stem the outflow performances much better than your peers. It seems like the business is turning around what do you think is the key to succession in the hedge fund industry, especially as others you convert to Family Offices or shutdown altogether i think our performance has been consistent throughout our history. And i think we continue to evolve our process but i think the key for us is really been, number one, to have those people who as i said grew up in this organization and Work Together and preserve that continuity the second piece is really just focusing the organization. So when we think about what we are, the simple question i asked when i got here, what are we good at . Where can we demonstrate alpha and derive returns for shareholders thats three areas the multi strategy business, credit business and real estate business and i think a lot of alternative Asset Management firms are Asset Management firms in general have a tendency to be asset gatherers and they tend to try to basically get as much assets as they can we would rather be a bit more disciplined about that and stick to our knitting and stick to the areas we actually believe we have demonstrated, you know, the ability to drive performance and believe we can continue to do so sculptor is a rarity in the industry do you think a lot of that discipline and change was driven by the fact you are publicly traded and it was kind of a necessity . You didnt really have the option to close your doors no, i dont know that i would say that id say, look, we are a Public Company and we are very focused on driving shareholder value to do that its about executing the plan no one here is declaring victory. I think we have a Clear Strategy i have a lot of confidence in the people who are leading the Organization Today and if we can do what i believe were capable of doing, that is going to drive Investment Performance. That Investment Performance is going to drive growth in our platform, and i think over time that will certainly manifest itself in the share price. Speaking of growth within your underlying strategy, i was surprised in my research to learn that credit is actually twothirds of your assets under management these days. Multistrategy about a third of your assets and management these days how durable is credit in this current environment . Why do you think multi strat is relative to your overall we have grown a credit platform the team underneath him, we have real capability both in performing credit as well as nonperforming credit we also express, you know, credit within our real estate platform as well as within the multi strat itself in terms of multi strat, i would say if you think about the environment the last ten years, weve been in an environment where youve had low volatility, low rates, and massively inflating asset prices and that is really behooved investors to be a pure risk on strategies anything from passive to private equity if you have been long this market, you have made a lot of money. The notion of a hedge fund that hedges out risk as a multi strat would do, has by definition generally on an absolute basis under performed those strategies but the real question that i would ask investors and i do ask investors is, okay, thats the last ten years what about the next five not that anybody has a crystal ball i certainly dont. But when i think about that, if there is more volatility and there is less of a one directional market, the idea of Something Like a multi strat that preserves capital on the downside and participates on the up side, i think is a very sensible place to have money u. And for us weve got global scale. Weve got capability across these asset classes. So i like our chances. All right bob shafir, c. E. O. Of sculptor thank you for joining us today back to you guys leslie, thank you when we return, the ecb set to announce new measures to sure up the european other economy well get reaction at 7 45 eastern time and then dr. Scott gottleib will join us to discuss the push to take flavored ecigarette products off the market. Right now, though, as we head to eqtyutes u. Look at the. S ui fur so you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty were changing whats possible. For instance, we know how your customers shop. And what theyve already purchased. Like this lamp. And we use those insights to show you what they might consider buying next. Midcentury modern, nice. That way, you can keep sending them offers for the perfect products. And that keeps them coming back. Hows that for changing whats possible . Liberty mutual customizes your Car Insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. The markets bracing for another round of stimulus from the ecb. That announcement is just minutes away and at the top of the hour treasury secretary Steven Mnuchin joins us to discuss y ade, the state of the econom and much more. Squawk box will be right back. Thats why your cash automatically goes into a Money Market Fund when you open a new account. And fidelitys rate is higher than e trades, td ameritrades, even 9 times more than schwabs. Plus only fidelity has zero account fees and zero minimums for retail brokerage and retirement accounts. Just another reminder of the value youll only find at fidelity. Open an account today. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, talk to your advisor or consultant for investment risks and information. Well, lets get to don chu, that time of day lets look at this mornings Market Movers whats up . Good morning, joe among analyst calls, caterpillar, the shares are down fractionally just around 3,000 shares premarket volume. The Construction Equipment giant gets downgraded by analysts at wells fargo from market perform to prior outperform. Price target 143, it used to be 150. They are taking advantage of strength to lighten areas like fees they say construction demand in the u. S. Will slow down. Then you have shares of pay pal up fractionally 5,000 shares premarket volume payment processor gets upgraded by analystcanaccord. 1 18 from a prior 110. They like among other things better macro conditions for payment volumes and an attractive entry given pull back in shares. They call pay pal a payments juggernaut shares of abbvie, the Biopharmaceutical Company gets upgraded to buy at ubs from neutral. The price target is from 79 to 85 they say purchase offaler began forms a new company that will be a Free Cash Flow machine so, becky, those shares going up one and a third percent at this stage. Don, thank you. Good to see you. Good to see you lets get back to our guest host this morning, founder and chairman bob johnson who is a cnbc contributor bob, youre a media mogul, founder of b. E. T youve been in this content business a very long time. What do you make of all the moves that are happening right now . You know, weve been talking about apple getting into the streaming business 4. 99. At t is doing it, comcast is doing it, everybody is doing it. What do you think . Including us, im back in it. We have remember a year, year and a half ago, did an agreement strategic merger, if you will, with abc amc, excuse me, amc networks headed by josh sapan. And we took two streaming services one is acorn tv, which does british mysteries and dramas, and urban movie channel targeted to the African Americans much like i did with b. E. T. And then eventually with amc and the theory behind streaming makes sense if you can create a brand that appeals to a distinct target audience. I think those kind of platforms can grow and survive in fact, thats why we invested in it and why we believe in it on the other hand, when you get to this broad, huge Network Offering multiplicity of content of all types that are out there, all of those companies cant survive because all the direct all the direct streaming services cant survive because the customer is going to be put in the position that when i was in the cable industry, we resisted all the time, everything was a la carte. That the customer was going to come in and say, i want to buy espn, i want to buy usa networks they dont think like that. They want somebody to curate in order to be the top curator, youve got to have a brand youve got to have a target. And youve got to have a lot of content. But everybody cant be in that position you know, i agree with you. There is going to be at some point the customer is going to say, i want three of these, not 20 of these. You go to a smorgasbord or buffet and get everything. You pick the things you like and you tend to stay with them thats where i think when the rubber meets the road, i dont know its also beginning to show up already now in the pricing, you know with apple at 4. 99 . Apple at 4. 99 some services will find their way in pricing or wont find traction in terms of pressure on everybody else, does netflix suffer at this point do you see them as a competitor or distinct outside entity thats made its way into the home what i would say about netflix, netflix has created that mind moat that people sort of its the default place you go for somebody to curate content for you. And i think as long as they can maintain price a price ratio that people are willing to pay for and continue to deliver compelling content because they had, as i said, that moat around peoples mind when you think of streaming, what do you immediately think of its netflix people think of it as a documentary when you go to it, you see everything and they keep moving it around in sort of a marketing way to make you think youre getting new stuff, but youre getting the same stuff and so thats good so theyve their management has been able to manage that relationship with the consumer the other companies are going to have to find that, and thats not ease hey to do. When youre selling people a lot of content stuff they know they can get other places all right, robert, stay with us we have some time left wish we had more time. Breaking news from europe. Market breaking for otr anhe bracing, hoping. Well get details after the break. Well be right back. 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Weve got some breaking news expected out of the European Central bank on Interest Rates the potential for an additional cut there maybe some additional stimulus the bigger question is what will that mean for the Federal Reserve which is meeting here next week. Very quickly take a look at whats been happening with the futures and lets get to Steve Liesman. We dont have the news yet, becky, but we are looking for. 1 to. 2. Here it is breaking right now. Give me a second here to call this up. Its a long statement here Interest Rates on the main refinancing operation on the market lending remain unchanged. Hold on a second ecb cuts rates on deposit facility at. Minus. 5 we had a 10 to 20 basis point margin out there of expectations the ecb also saying that the rate on the other units remains unchanged. Trying to see if there is any other Additional Information here positive facility decreased by 10 thats the main news im getting here from these wire flashes here, becky. It now expects Interest Rates to remain at the the present or lower levels until it is seeing inflation robust converge. New stuff there. To a level sufficiently close to but below 2 within its projections. Just reading the headlines here. Net purchases will be restarted heres the qe part of it under at a monthly pace of 20 euros as from november 1, little bit maybe on the light side ive seen numbers as high as 30. Of course, some people were taking off of the hawkish comments that were made, and they were saying it could be zero so they did get, im going to say more or less, what they wanted here. Yeah, heres one headline, steve. They are saying the rates are going to stay at present or lower levels at least until inflation appears to converge to the targets. Low rates and continued low rates. Remember he said whatever it takes. So there is the what, a qe cut, a qe increase, an Interest Rate cut. Some Forward Guidance which becky just read, thats another tool you just pointed out there, becky. Thats important there Interest Rates in each operation will not be set will now be is the set at a average rate level applied. Technical stuff. I think thats the main news here, becky. Youve got the cut im trying to take a look here at the markets not seeing much let me take a look at the twoyear, 165. We were at 166, so a basis point off there, not much. 172 on the 10, were at 173. Not a big reaction i think what happened over time, becky, is that the market got way ahead of itself in terms of expectations for the ecb there were some comments that brought it back down now i think it has come in more or less at expectation there is some resistance on the board from the typical Monetary Policy hawks that have been out there, but then you had like the fini fini finnish ecb member i think were okay here. This does not dramatically change the pressure on the Federal Reserve here to do what everybody expects its going to do, which is to cut by a quarter point, with the question being, what happens down the road is there more cutting to come from the ecb, does that then put additional pressure on the Federal Reserve. Thank you it does seem like coming in right at the somewhat more muted expectation for the level of expect asian, its meant to help the banks, european banks have been rallying with this announcement with that expectation. It does seem as if markets are absorbing it okay. Its certainly not, i guess, a up side dovish surprise some people were positioned for mike, i think its worth pointing out what the debate is out there. The debate is out there, how much more will additional or greater negative Interest Rates really help . With the big question that you reach a point where you start to go down the slope of the curve, where you start to hurt the bank so much in terms of their ability to lend that ultimately you end up hurting the economy overall. And theres a lot of speculation that the European Central bank may be at or near that point steve, thank you. Pleasure. Okay. Lets move on here to dr. Gottleib tobacco stocks taking a hit after the white house announces a possible ban on ecigarettes President Trump said while vaping is big business, we need to protect our children. Vaping has become a very big business, as i understand it, like a giant business in a very short period of time but we cant allow people to get sick, and we cant have our youth be so affected the National Youth Tobacco Survey found that ecigarette use increased among High School Students by 78 between 2017 and 2018 joining us now former fda commissioner and cnbc contributor dr. Scott gottleib worse in 2019, i think, too. These numbers are staggering right this is we do live in a place where we have a lot of freedom, and im sure that most people before you start doing things like this, you think long and hard about it. But this is the right action at this point, right, scott well, we have to do something. There is a 78 increase in youth vaping products from 2017 to 2018 the 2018 national Tobacco Survey showed 78 increase. That was on my watch in the 2019 survey which fda has access to right now, it showed greater than 25 increase. So thats a 25 increase on top of a 78 increase. You have fully 5 million kids using vaping products. There are only 8 million adults using them so almost as many kids using these products as adults at this point so it really requires some action trying to eliminate the flavors is one option. You have to take steps to try to reduce the appeal and access the kids have to these products. Another option would have been to eliminate the cartridge base products in the market, products like juul. Thats what the kids find most accessible and frankly most appealing are these cartridge based disposable types of products just wonder, you know, with altec knowledge angie, the latest idea is lets before the horse has left the stable, lets get on top of this so were at 5 million now. We should do this before its 15 million, right these were all introduced without any thought as to whether its okay or not, right . And now here we are at five. I mean, is it urgent, scott, do you think . Well, it is urgent. The unfortunate thing is these products can be helpful in helping currently addicted adult smokers transition from combustible cigarettes not less safe, but less harmful they are less harmful than combustible tobacco. It can come at an expense of addicting kids to nicotine getting off this exactly it doesnt make any sense when we put forward some policies related to vaping, we also put forward regulation to combustible cigarettes to make it less attractive to smokers. Ban menthol and combustible tobacco. Those regulations need to move forward as well simultaneous to putting restrictions on the ecigarettes so we dont tilt the favor back to tobacco for adults trying to quit tobacco. Unfortunately this problem, this crisis, this epidemic was created by one product, juul in 2019 Tobacco Survey, were going to identifiably have data on how many kids are using juul. We put into the survey, what products are kids using when that full data set is out, were going it know how many kids are actually using juul as opposed to other brands. There was a hint in a warning letter the fda issued to juul accusing them frankly of withholding information from the agency there was a hint in that letter that suggested that its a very high number. That the agency knows a High Percentage of kids who are vaping are using the juul product. Bob, you have a private equity, you have a lot of investments. Did you consider this business as a viable one . And do you have a different view at this point . Well, its interesting. Approximately i guess three to five years ago i think its closer to five, when this whole idea of ecigarettes was coming out and my private equity guys looked at it as a way to invest in a startup business it was sold at that time as the doctor was saying, as the alternative to people who were smoking combustible cigarettes and, of course, African Americans are heavy consumers of cigarette smoking and suffer some of the consequence. And so the argument was lets create and invest in this thing which had, quoteunquote at that time, the perception of good qualities and, therefore, getting in on a startup industry to me, you know, i never smoked. I never smoked in my entire life when i thought about it and they presented it, and they presented a very Good Business model i said, guys, were going to pass on this one because i felt that somewhere down the line even though the argument was by the time there is a big concern, the Big Tobacco Companies would buy out the ecigarette world. And, you know, youll get a good return but there was something about it that made me say, were going to pass on this it just wasnt something that i wanted to have my name i mean, the company, rlg private equity i didnt want to have my name associated with cigarettes, whether they were ecigarettes or vaping cigarettes or whatever and we passed on it. And 20 20 hindsight, we made the right decision and looked for other places to put our money. But the challenge of the Society Today is, as you pointed out, joe, is that, you know, in a Free Market Society and a market of free of liberty and free expression, its hard with new technologies coming around for the government to make the proper decision as to what is available to the public in their own personal interest and what the government should regulate almost in a paternalistic way. Right thats a difficult equation, but its going to be an equation were going to have to solve Going Forward or else were going to have all kinds of problems like this coming to the market place we all think about prohibition and we think about whats happening with cannabis right now. Society has to make some decisions here right but remember, these products were on the market out of an exercise of Enforcement Discretion by the food and Drug Administration these products are technically illegal under the current law. Fda has allowed these products to continue to be sold as a result of they can help adult smokers quit cigarettes. The Vaping Stores with the open tank vaping systems, those big contrans with the large batteries actually do cater to a large audience by banning flavors youre going to disadvantage stores those Vaping Stores and the open tank systems as well as cartridge base systems one consideration might have been to remove the enforcement like juul and blue and enjoy take those products off the market, require them to file oply indications like theyre obligate today do under the law, but allow Vaping Stores continue to sell to a you dulgts. That might be something the agency is considering. That might be something we had on the table when we were looking at the policies. Scott, thank you. Always great to see you. Well check in with you soon we also want to thank bob johnson for spending the hour with us. Its been great. Please come back soon. Will do, guys thank you when we return, treasury secretary Steven Mnuchin is our guest. That news making interview after the break. Also the futures after the ecb rate decision. Looks like additional stimulus on the way, but anything out of whack with what the market was expecting. Dow futures up 80 points were a mating the news m. Nderence that starts at 8 30 a. A well bring you the highlights as well you should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. And now for their service to the community, we present limu emu doug with this key to the city. [ applause ] its an honor to tell you that Liberty Mutual customizes your Car Insurance so you only pay for what you need. And now we need to get back to work. [ applause and band playing ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Some good will in the trade war. President trump announcing a brief delay in tariff increases. Treasury secretary Steven Mnuchin will join us live. An industry on edge the Trump Administration preparing a ban on flavored ecigarettes what the move could mean for the big business of vaping and protecting the house. Protect this house. Under armour facing an increasingly tough market place and some key trade uncertainties. We have a live interview with the c. E. O. And coo of the Company Coming up as the identifiable hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Good morning, welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square im joe kernen along with becky quick and mike santoli the futures this morning indicated higher again i think that would be 7 straight sessions, up about 86 points on the dow, s p up 9, nasdaq indicated up 46. Treasury yields, the ten year is currently at 1. 68. So a little higher than that yesterday. The 30 year well above well above. 2. 61 . Some of the news in the last little while explains that bond move here are some top stories investors will be talking about today. European central bank announcing a rate cut in the last hour. It will cut its deposit rate from negative. 4 to negative. 5 also a new bond buying program, qe 20 billion euros a month. You see the euro reacting there to the downside, under 110 to the dollar also take a look at the ten year german bund yield. Thats more deemply negative at 0. 64 just about. Thats a response to the ecb the Trump Administration in the meantime placing a ban on youth vaping finalizing guidance to remove all nontobacco flavors including mint from the market in 30 Days Companies could potentially reintroduce flavored products later but theyd have to get approval from the fda. Purdue pharma the maker of oxycontin has agreed to settle 2000 lawsuits filed by states and local governments. It could cost purdue and its owners between 10 and 12 billion. The company is expected to file for bankruptcy not alltel the states are suing as part of the tentative agreement. President trump announcing a brief delay of tariff increases that were set to hit at the beginning of next month. In a pair of tweets last night, President Trump said the move was a gesture of good will joining to us talk about this, the latest in the u. S. china trade negotiations and much more, treasury secretary Steven Mnuchin. Thanks for being with us today good morning. Its great to be with you. Mr. Secretary, earlier we heard from china, Chinese Ministry saying they are considering some moves, too, such as resuming purchases of u. S. Pork. How would you describe the state of trade talks between the two countries right now . Well, i think you know weve had a series of principal level conversations. We have a deputies meeting planned in the next two weeks where the chinese will be coming here and theyll be working on material and advance, the vice premiere coming here beginning of october to meet with the ambassador lighthizer and my several. We look forward to making progress the next few weeks. What happened the last time you went to china . Seemed like that was a very brief trip well, i think as you know, we went to shanghai there was a real significance to them of us being in shanghai, and the shanghai agreement with kissinger. We clearly didnt make the progress we wanted to, and we look forward to when theyre coming here that there is real negotiation and real Forward Movement is that why the president is putting these tariffs off, but only by a couple weeks, moving it from october 1st to october 15th there really has to be some substance that takes place in those meetings in order for that to get pushed off or put back off . Well, the president delayed it because of a request from the vice premiere. The optics of us raising the tariffs on october 1st, which is their 70th anniversary, caused them grave concern on the symbolism. And as a sign of good gesture, the president honored that request and delayed the tariffs. There is a report from the wall street journal just this morning suggesting that china is looking to try and narrow the scope of these negotiations to only trade matters they would like to put thornier National Security issues as a separate track in an attempt to try and make some progress what do you say to that . Im not going to comment on the specifics of our negotiations since i dont think that will be helpful but what i would say is weve been focused on many issues. I think you know when we were on our way to an agreement, there are seven chapters and our number one concern is really around intellectual property, forced joint ventures, and making sure we have a level Playing Field on trade fair to say, though, that huawei and hong kong would be issues that would not be on the table . Well, hong kong is definitely not on the table that is an issue for the secretary of state to deal with. Thats not a trade issue i think you know the president has urged restraint and wants to make sure there is a peaceful solution to that but that is definitely not part of trade i know you dont want to get into the deep details of whats happened here. When we saw the last trip that you and ambassador lighthizer made to beijing, it seemed like it was a very abrupt departure, and i guess i wonder what would it take to really feel like youre making progress this time around when they come here to the United States . Do you have a guideline that seems to you to say, okay, if we can make some progress on this front, then it shows that we can move further down the road well, it wasnt an abrupt departure. And i know some of the reporting was that we left early i think we left 15 minutes early, and really that was on our way to a commercial flight but we expected that to be a short trip but i would saywe did not make nearly as much progress as we wanted, and thats part of the reason why were having deputylevel meetings in advance of our principal level meetings to make sure that the necessary work is done in advance of this trip we dont want a trip thats just a series of discussions. We want to make meaningful progress so, secretary, there is a notion that the president could make a deat was kind of a deal doesnt accomplish as much as maybe weve stated that we want to accomplish. And im sure that it could be done with the idea that we really are accomplishing a lot im just wondering, how long do you think we engage in what some might even call brink man ship you have a kmaechinese economy thats weaker than what we know, they have an impetus and we have an election coming up in 2020 do you think the president would ever make a deal that is sort of watered down just to get it off the table before the election . Or are we in this to pass november of 2020 if necessary . The president is correct, h could do a deal any time, but he wants to do a good deal. Let me remind you, these discussions have been going on 2 1 2 years, from the first meeting with of President Trump and president xi, there was an acknowledgment from the chinese they would redo the negotiation. The president wants a deal thats good for u. S. Companies and u. S. Workers not just an ag buy or, you know, a couple half measures a lot of people on wall street, guys are trying to figure out whats going to happen thats their base case, is that something is going to happen that maybe pushes things past the next election, for lack of a better term, kicks the can down the road for a next term, whomever is president at that point. Thats not going to happen he will go the president will go to the mat this time around to get to these type of concessions that he wants for america . Well, the president is a negotiator, and he is prepared to keep these tariffs in place hes prepared to raise tariffs if we need to raise tariffs. So this president is taking on an issue thats been going on for 20 years so this isnt an election issue. Hes trying to do the right thing for American Companies and the American Public. And we need to rebalance this relationship, and they acknowledge it so if china comes here with a proposal that makes sense, we will consider it we will take it to the president. And again, im cautiously optimistic i take the chinese in good faith that they want to come here with a deal now, as it relates to agriculture, we expect and we want them to buy agriculture we view that as a personal attack on our farmers. They need our agriculture, and theyve always bought our agriculture. So this isnt about just selling them soybeans, but we want to sell them soybeans i want to be clear our farmers and our fishermen are important to us. Mr. Secretary, you note its a negotiation. I wonder, is there anything that the United States is prepared to offeror concede, aside from the eventual removal of tariffs under the right circumstances. Has the chinese side asked for anything aside from the removal of tariffs how does it go both ways in this negotiation . There are things that the chinese have asked for besides taking off the tariffs, certain things that they want. Theyve been on the table. Weve negotiated that with our issues i dont want to go into the specifics of the negotiation, but there have been very good twoway dialogue and as ive mentioned, the governor of the peoples bank of china, my expectation is he will be coming for the trip also. We will be having a specific discussion around currency and currency manipulation. Ive already had discussions with the imf i think you know thats another concern of ours. Should we skip the strong dollar question, mr. Secretary you can try no, no. No, no, i dont want to waste your time. How about the negative Interest Rate question . As treasury secretary, do you ever foresee that happening in our bond market here would it be a positive, in your view, if we had negative rates in the United States would you worry about mal investor no cost of capital and what happens when you get in doesnt seem to be working too well in europe do you think thats something we should hope for or expect in the United States . Well, i will comment on europe given my longstanding policy as treasury secretary, i wont comment on the fed and issues here. In europe, im not surprised that mario lowered rates the market expected that even though clearly europe has slowed down significantly, i think negative rates in europe are concerning for them for two reasons. One, its very hard for banks to make money in negative Interest Rates. And if banks cant make money, its hard to have a good economy. Number two, i wouldnt be surprised if a lot of people start selling foreign bonds at negative rates and buying u. S. Treasuries, which would have the impact of narrowing those spreads. I know you dont want to comment on the fed the president tweeted yesterday he would like to see, i think he called them the boneheads at the fed lowering Interest Rates. I think he did Say Something that is under your purview, the longer term borrowing we can do in the United States with lower rates. I know that is an issue you opened up for discussion, longterm borrowing for u. S. Treasuries where does that stand and when might we see longer than 30year bonds issued by the u. S. Treasury well, this is something i have talked about over the last two years, and it is something we are very seriously considering. Were looking at a 50year bond, what we would call an ultra long bond we think there is some demand for it and thats something well very seriously consider for next year there are Technology Issues we need to make sure we have in place, there are market issues we would do this in a way that if there is demand, its something that we would meet i personally think it would be a good thing to expand the u. S. s borrowing capabilities a and although our job is not to market time rates, i would say its quite attractive for us to extend and derisk the u. S. Treasury borrowing so were also looking at extending the weighted average maturity of the treasury borrowings to derisk this for the u. S. People. One of the criticisms of that idea of going very long term with issuance, mr. Secretary, has just been that its hard to think that the United States could issue enough very longterm debt at very low rates to make much of a difference in the overall borrowing cost, especially since the 30year right now, 2. 15, presumably youre paying much more every year over those 50 years than you would on the shorter end well, were going to look at what would be the spread of the 50year to the 30year, and we would only issue if we thought we could do it at an appropriate spread but innovation is important thing. When the treasury started tips, it was a Small Program and people said the same thing is there really going to be enough demand . I think innovation for the u. S. Treasury is important. And as i said, this is somewhat market oriented. So if there is market demand, this is something were seriously considering. Weve reached out to the Treasury Borrowing Committee weve reached out beyond that to investors. Well start speaking to foreign governments. And its not on the table for this year, but it is something very seriously on the table were looking at doing next year secretary mnuchin, on tuesday you testified before congress and laid out some of the plans for freddie and fannie, what you expect at this point i have seen notes circulating this morning that they expect that the sweep, the profitacry h of their profits, they expect that could end by september 30th is that overly optimistic or something you might think might happen well, thats something the fhfa and we are working on we are actively negotiating an amendment. Our objective is to get it done by the end of the month. Let me comment, what we would be doing is allowing fannie mae and freddie mac to increase capital. That is an important step on the way to recapitalizing them what we are negotiating is making sure the taxpayers receive proper compensation for that delay but let me just also comment, we are very focused on housing reform we appreciated the opportunity to testify before the senate i was very pleased there was a lot of bipartisan support for many of the issues issues like affordable housing, which is very important in this country, making sure we have more affordable housing. So this is going to be a big priority of ours we want to make sure that fannie and freddie dont stay for another 11 years in conservatorship and go through another period where they put the taxpayers at risk. I cant believe it, mr. Secretary. I thought we were done with the dollar discussion, and then the president just tweeted and i have to read it to you anyway, European Central bank acting quickly, cut rate ten basis points theyre trying and succeeding in depreciating the euro against the very capital all four letters are capitalized there, strong dollar hurting u. S. Exports and the fed sits and sits and sits. They get paid to borrow money while we are paying interest im just wondering whether you feel some pressure to maybe not continue the strong dollar policy that all treasury secretaries seem to always have in the back of their mind. I mean, the president is telling you almost overtly that the dollar is too strong telling us well, the only comment i would make is weve been focused on a stable dollar, and thats something over the long term, a stable dollar is important to the u. S. Government. But i understand the president s concerns we talk about them all the time. And there is a lot of validity to the things that hes saying are there times weve heard recently about the president s relationship with some of the people in the administration where he likes to hear dissent, but only to a certain point. How do you handle that relationship about the dollar . What would you tell him today about whether the dollar should be depreciated well, thats a nice try im not going to tell you what i tell him, but i would say ive known the president over 15 years. Ive always felt completely comfortable telling him what i think. Ive been in meetings with the president both on National Security issues, Economic Issues and others he loves to hear peoples opinions at the end of the day hes the president , the elected official and hell make the final decision secretary mnuchin, just back to the freddie and fannie negotiations that are taking place right now. We did have diana olick who was watching your testimony at the Senate Banking committee tuesday. You were asked several times if President Trump approved of the treasury plan to do this you said at that point, i dont know have you heard back from him does he approve of the plan youre moving forward with let me clarify, he does approve. It was a technical question i wasnt sure at the time i said we delivered it. I didnt know tech incomely he had approved it. They confirmed it yesterday and im happy to say he approved the plan the more important issue is were going to do things either administratively or were going to work with congress. And working with congress is our first choice, and were going to make sure we spend the next 90 days senator kennedy said he thinks that the committee should markup a bill and i agree with him completely lets make sure that on a bipartisan basis we see what can be done on, on legislation and its an important issue for the American Public and the treasury it has been a busy week, probably like every week in washington i know on tuesday you and secretary of state pompeo also unveiled some new sanctions on terror groups and financiers is the president going to meet with rouhani to negotiate . I just wonder what the impact of some of these additional sanctions you unveiled will be as of now, theres no plan for the president to meet with him, although the president has said that he is prepared to meet with no conditions i would say there were some stories yesterday in regards to sanctions. Let me just clarify this that secretary pompeo, i and the rest of the National Security team are executing on a maximum pressure strategy with iran. Theres no question its working. We have cut off their money, and thats the reason why if they do come back to the negotiating table, theyre coming back and again, no different than china. If the president can get the right deal that hes talked about, well negotiate with iran if not, were continue the maximum Pressure Campaign which is working you know, as the first real c. E. O. Businessman in the white house, the president knows how to have people he wants working for him and knows how to get rid of people he doesnt want around youve probably seen on other News Networks theyll put up a list of people who have left youre surviving youve been there a long time on the island could you see yourself being part of the second term if the president were elected, mr. Secretary . Yes, i said before the expectation is the president will be reelected. I think its because of the economy and what he has delivered and his Foreign Policy and if the president wants me to serve a second term, im here. So, santoli, who is the longest running secretary . Has anyone served eight years . I think you have to go back its 13 years. I think its who was i believe the third secretary. So its been a long time im not breaking his record, i can assure you dont give people more fodder so youre thinking you might serve for the president for 13 years . Now the third and fourth term are going to come back in. Is that what youre proposing now . Dont start that as of now i dont think he expects to have a third or fourth term. If the American People want it, i guess hed consider it oh, my god. Anyway hes saying that with a smile. Im obviously joking. Yes, you are. Before we let you go, the president has also brought up the idea of slashing payroll taxes. He said that was something theyd consider, but its not on the table right now. Where do you stand in terms of coming up with that plan or implementing with one . As reported we had a good session in the oval office he is not considering cutting payroll taxes. Well call it tax cuts 2. 0 which would require legislation, something i think well roll out later this year, beginning of next year. The president is focused on things that are going to create growth that will have tax cuts for small and medium size businesses and incentives and the middle class so unlike his competition, this president wants to grow the economy and make sure that we have tax cuts for the middle class and that they benefit. Would it address things that werent addressed in tax cuts 1. 0 or would it fix things that were maybe maybe on the hindsight werent as good . What would the basis of tax cuts 2. 0 be all of the above. Secretary mnuchin, thank you. We do appreciate your time its always good to see you. Great to see you, too thank you. Coming up, a special interview with two retail heavy hitters. Courtney reagan is here with a preview. Hi, courtney hey there, joe. Here we are in the under armour brand house in new york city were going to sit down with c. E. O. Kevin plank and chief operating officer patrick. Were going to talk about the consumer, talk about tariffs, talk about strategy and lle ottion, maybe a little coegfoball if we have time thats when squawk box returns. Y independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. It is already working in cities like tokyo. Welcome back to squawk box. Uber and lyft say they wont reclassify their drivers as employees despite a new bill that was just passed in california that legislation is designed to give socalled gig workers things like minimum wage and overtime by calling them employees rather than contractors. Ubers top lawyer says the bill only gives companies a higher bar to prove workers are true contractors. And hes confident his company can clear that hurdle. New tariffs on everything from clothing to shoes are just the latest hurdle facing retailers. Recently Courtney Reagan joins us now with a pair of special guests who are navigating their company through the difficult market courtney hi, good morning to you, joe. I am here at under armour in new york city. Its a brand house store, the west field world trade center. C. E. O. Kevin plank and coofrisk. We had Steven Mnuchin talking about a lot of things including tariffs. Since we heard from you last during Earnings Call, there have been new tariffs that have been imposed. This list 4 a and 4 b on clothing, shoes, socks what does that mean for under armour, kevin, when it comes to the cost margins and ultimately the prices that we would pay in a store like this . Thanks, courtney. We wanted to come have this conversation because this is a brandnew transformation thats been moving from defense to offense and as part of that transformation, so much we did was setting ourselves up for the future in large part to be credited to our Operations Team for actually making china as not a place were going to feel that great of an effect its great. With the current tariffs, were actually not being affected much at all only 10 comes to the u. S. From china. Were okay you figured out other mitigation tactics we have like kevin said, going from defense to offense, we feel this is a quiver in our arrow right now. Youre in year three of a threeyear turn around you have lowered inventory, north american sales havent stabilized as much as youd hope you hired a new north american president. So, patrick, is this a symbol that maybe something needs to change with the north american strategy well, i think, you know, six months ago we came out and laid out a plan that really is over 20 quarters. Were two quarters into that plan were confident with that plan but any plan needs a great leader we think we have hired that great leader right now in stephanie. Stephanie is going to start on monday shes got great merchandising experience, great proven leadership talent. And we also think she is going to be, you know, that growth mindset we need for north america. Were excited about what lies ahead. Kevin, youve talked about getting a louder voice with your brand and with your brand messaging. Obviously under armour is founded on performance some have pointed to an opportunity, though, in athleisure that perhaps youve missed to take the opportunity to use your product for more of a street wear. Is that something you want to move into with your innovations and your transformation . So, when were doing it right it means were a Quiet Company and really loud brand. Thats some when we say getting on offense, youre going to start to see and feel that from us listen, weve heard all the reads on athleisure, what it means, are you in or not lets be Crystal Clear weve identified our consumer, we call the focus performer. That is a mindset the consumer has. When theyre thinking about what they wear, what they do with under armour, theres no heres performance and heres athleisure it is all performance. Without beauty there is no performance. Imagine product. The thing that makes it under armour, you look, you see an under armour product, this incredible talent im wearing, yes, im plugging uae. Com. Thats a really cool sweater next, what is it id say its under armour. If the next question out of your mouth is under armour, whats it do were the whats it do brand it can breathe and repel and keep the cold out. That idea of innovation, everything we do, thats what the dna of the brand thats what the consumer knows when they buy under armour it is something making them better so thats what and who we are. Thats what drives through so patrick, are these innovations getting customers to come into the stores this store is not an outlet store. 90 of your physical direct to Consumer Stores are. Traffic in north america and traffic was an issue last quarter. That was something that pressured the result are the innovations driving traffic in the stores . You know, one of the interesting things we talked about in the plan that i mentioned before that we talked about at our investor day, were going to continue to build more direct to consumer, more full price direct consumer here in north america Going Forward. We believe thats one way to drive our innovation, to make sure the consumer is able to come into stores like this and actually see the innovation that were driving. Were going to couple that with great messaging, becoming a louder brand thats really what youre going to see as you turn the corner from 19 to 20. Under armour doing best playing offense. How do you see the consumer, kevin . We see the consumer as the linchpin holding the economy together seeing other points of weakness, what are you seeing . 70 of your business is still here we continue to see it through the lens ever upped of under ar. The consumer is looking for massive value or quality what we find is when we deliver innovation, hover platform, the sweater, the consumer is looking and saying, well buy there. The beautiful thing about being in sport is football is going to be played in the fall, baseball in the spring. Lacrosse, et cetera. So sport has this luxury in our industry that, you know, we have a tendency to endure it doesnt guarantee you a thing, but i think with our brand in particular its one that when we deliver the right product, the right price the right time were going to win. Were a little bit shielded from that i think in sport. But i mean, our perspective is the opportunity basically sits in our hands so we love controlling our own destiny and youll continue to watch us do that we are extremely excited about the innovation pipeline we have coming up great pipeline with great messaging and actually turning on the loudness as we think a res piece f recipe for success Going Forward. Obviously wholesale is a big seller for you you sell in department stores, mall based Dicks Sporting Goods. Some are malls, some arent. How are your brands selling in those locations when traffic to the malls are pressured . That was a little bit lost in our Earnings Call. We were talking about wholesale. One of the great things is we see now as some of our old inventory is going off the shelves, were putting new inventory in, new innovation and new messaging, its really resonating with the consumer like we said, we see were a little more optimistic about our wholesale business than we first thought this year. I think youre seeing that shake out that happened three years ago, through 2016 that we felt in our industry especially. The strong would survive and we knew that. Youve got terrific partners that are Dicks Sporting Goods is dictating a tempo thats what we like to say about our business as well the success were seeing in our wholesale business gives us confidence one of the things weve learned is how we segment, how we differentiate. How wholesale differs from our own retail stores. This is one of 1200 stores we have around the world now. One of the things we declared on the last Earnings Call well have close to 24, 2,500 stores in the next five years that commitment to understanding retail is one of the things we think is going to make us a better wholesale partner as well were equally distributed in both of them what about your business on amazon. Com, you are a first party vendor for amazon. Is that going well for you how do you feel when it comes to competitive questions surrounding amazons business . Thats a great question were focused on the consumer. Our job is to understand how the consumer moves through their purchase journey today most searches start online so its important for us to be there. The balance of what we do and how we distribute will continue to evolve as the consumer evolves. Our aim is to really stay focused on what the consumer is doing and follow the consumer. Thats important to us kevin, do you want to add anything this world is changing so fast patrick now here, over two years, july 11, 2017, and just watching that partnership builds let me tell you how under armour works, the transformation, the transition from being the next level brand. Our job is to meet the consumer wherever they want to transact making sure were there right product, right price, right time were seeing amazon has been a part of that but our strategy is also making sure our own ecommerce, our partners own ecommerce, making sure were doing a great job with them, that segmented product. It should be special, when you buy under armour it should be special. Thats where that uniqueness is we want to make sure we offer that on our own website, giving people a reason to come shop our brand. Very quickly before we go here, we have some news out of can have the state senate has at least a profrmd the idea that College Athletes may accept compensation right now you do sponsorships, ucla, berkeley would you look at going after superstar athletes instead of an entire Athletic Program . Does that make sense for under armour i cant speak to that we have two great partner schools like cal and ucla. A massive deal in california we are a values led company. The first one says love athletes we absolutely love athletes. We recognize how much value that athletes are generated for some institutions and as a part of that, you know, the classic quid pro quo has been the college education. Im someone who benefited having been a student athlete at university of maryland i think there are athletes driving incredible value for the institutions and frankly they should be fairly compensated im not sure that is exactly the case today we look forward in support and that drives again to we back the athlete. We want them to make sure there is an even keel that takes place there. Got it. Thank you very much for joining us and bringing us into the brand house here today in new york city. Thank you send it back to you guys in the studio courtney, thank you very much we have some breaking Economic Data during that interview initial jobless claims were down 15,000, the latest week to 204,000. Consumer price index rose 0. 1 percentage points, that met expectations the core cpi was up at 2. 4 annualized rate, thats a little on the heavy side. This all as the Federal Reserve coming under fire from President Trump again yesterday. He said Interest Rates should go to zero and then called fed leaders boneheads and this comes during a season of falling rates. With j. P. Morgan jamie dimon saying his bank is preparing for zero itself. Joining us with her perspective on the feds path, sarah harass kin, former deputy secretary so, great to see you just quickly, reaction to this cpi number more or lesson target on the headline number, but a little bit heavy, a little bit to the high side on the core number is this even filtering much into the feds immediate equation on what they are deciding to do next week . I would say i would say no the day to day movement is something that the fed is going to be kind of wary of. What the fed is going to stay focused on is the longer term trends, where the Inflation Numbers are going, where the employment numbers are going, what the health is of the labor market and, of course, financial stability. So the longerterm trends are what the fed is focused on and thats what theyre going to keep their eyes on as they go into this next set of meetings given that the longerterm trends by definition dont change that often, you expect the fed is going to give the quarter point cut that the market has now priced in for next week . And then what . What would the message be and what should it be thereafter right so the fed, as you know, is facing an economy that is strong, but is slowing so we are seeing some flat lining in the Manufacturing Sector we are seeing a lot of trade tension and trade volatility, waiting to see how those trade issues spill into consumer sentiment. Of course, the consumer piece is very important here because the contribution of consumer of consumption to growth is very high so waiting to see, really, how these effects in trade and in manufacturing are going to affect overall consumption is something that the fed is going to have its eyes on. And, of course, you know, continued issues regarding the low inflation rate, and the fact that the price level has not gone to the 2 level that the fed has, has set for itself as a symmetric target we mentioned the president s continued sort of Public Campaign to get rates lower and lower and lower, pressure on the fed to do so how do you think at this point that plays inside the Committee Room obviously fed officials, chairman jay powell have said all the standard things how they dont think about politics or policy or pressure from outside. However, i wondered if the president saying that rates should be zero or below is so far from what the fed is actually considering in the moment that its almost easier for the fed to say, fine, well cut rates if we see the conditions for that because it doesnt seem as if theyre bending to any particular political pressure, if the political pressure is to go to zero right, right. So theres all these ways to do this reverse psychology. You have such, you know, enormous and unceasing pressure coming from the white house on fed policy but heres the thing the fed is doing its best to really screen this out theyre going to screen out the noise as best as they can. The problem, of course, is that the president isnt doing th economy any favors with this kind of talk ultimately we dont want people to lose confidence in one of the very important tools that our congress has set up, which is Monetary Policy. Its important that the fed stay credible the noise coming from the president is really counterproductive to that, and ultimately to the economy and to Economic Performance so it is, it is problematic to have discussions, particularly of discussions of tools that, you know, really are not fully understood, where studies have not been fully conducted or have been conclusive, which isnt to say that the fed doesnt consider these tools because, of course, the fed is considering everything, and will consider everything should circumstances warrant. Thank you very much appreciate it. Coming up, a live update on the ecbs decision earlier this morning to cut Interest Rates. Well bring you the headlines. And well talk stocks as the dow and the s p sit less than 1 now below alltime highs stay tuned youre wchg quk xn cnbcsawbo o is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Classical Music playing throughout hour 36 in the stakeout. As soon as the homeowners arrive, well inform them that Liberty Mutual customizes home insurance, so theyll only pay for what they need. Your turn to keep watch, limu. Wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Welcome back to squawk box, everybody. The futures this morning have been higher all through the course of the morning. First on the idea that some of the deescalation could be taking place between china and the United States. But then also on some of the other things weve heard along the way, including the latest numbers we just got on the data points dow futures right now up 67 points s p futures up 9 nasdaq up 355. European Central Bank President mario draghi is speaking now they announced they are cutting a key rate Steve Liesman joins us with an update steve. Thank you, becky. What he said so far is the weakness that hes highlighted in the european economies. He said incoming information indicates more protracted weakness of the euro area economy than previously projected. He talked about the persistence of Downside Risk to the economy, talked about muted inflationary pressures. He had earlier said that the ecb remains ready to adjust all instruments and it adjusted a bunch of them this morning well talk about it in a ekd is. He talked about uncertainty of geopolitical factors and uncertainty of markets 1 ecb growth this year, 2 next year, both of those are lower than previously projected. As for what was done they lowered the refinance rate, increased quantitative easing. Becky pointed out more Forward Guidance at these rates it will go lower until we get or the ecb gets the inflation target that it desires, which is close to 2 . Joe . All right, steve. Thank you. Guess who is here, liesman who is that sri kumar oh, man, why am i here and hes there im going to go listen to draghi i think you should listen to sri. Ill be back. Joe, would you write down what he says for me send me an email actually there is a way of watching the show, not live, steve. Im going to send you the details on that. Oh, really . Is there like its going to be is there a technology for that thats the scary thing. This is all recorded it really scares me. Get to that when you get a chance thanks for coming so, we bounced we bounced off the 140, those low yields on the ten year for people that dont know, when was that, 2 1 2 years ago you said were going back below 2 . Youve been saying this for a while because for a lot of i think demographic reasons and global reasons, but i think you said we could go to 1 and below on the ten year. So is this a brief respite from the continuation of a downward trend in yields . Joe, i think that is very much it. We have had bounces before there were times when i had to explain on twitter repeatedly that when the ten year yield went up, i was still expecting it at that time to go below 2 and i think the current bounce is no different. I think there is a lot of optimism based both on the trade expectations as well as for the fed cutting Interest Rates but you just now this morning, you saw two big influences on the ten year yield one, you saw the ecb rate cut and the openended bund purchase which you spoke about a few minutes ago. That is pulling the u. S. Yields down i think that is going to cost whats the other one . The other one, all three of you, you, becky and mike, made move market. I was watching it in the green room as secretary mnuchin was speaking about the possibility of a 50year bond. The yields went up for the tenyear and 30year i dont if anything, that is going to spoil my forecast it is issuance of a 50year bond and 100year bond which i dont think the market will have an appetite for so, i was going to ask you, with you saying were going to resume the downward move, whether that portends bad things for our domestic economy but the things youre talking about are europe or at least Global Factors except for the 50 year bond. But thats also sort of a global phenomenon, too, because rates everywhere are bringing rates here to those levels where we can do a 50year, right . Youre not saying our economy is ready to slow in a meaningful way that will bring the lower yields or you are saying that i am saying that. That is something domestically. Quite a while. The difference, joe, what happened with the ecb and all of your interview with secretary mnuchin, those are the new developments today and they are adding on to the pressure that i talked about to the extent the 50year bond remains just a hope for the government and it is not a reality, i think the yields continue to go down because inflationary expectations wont pick up and real growth is slowing. Lets bring in another tweet from the president President Trump this morning tweeting just in the last minute or so, it is expected that china will be buying large amounts much our Agricultural Products no explanation on this, no talk if there is something, a phone call or anything thats happened, or if this is just laying the groundwork for the negotiations that are set to begin next month it may well be the latter, becky. We have heard expectation of big purchases in the past. The hopes have not materialized and i dont think the situation is any different the concessions that were made on both sides, the u. S. Side and chinese side, is to alleviate pain to the respective populations. It was not meant to be a truce on the trade war right china is hurting and u. S. Farmers are hurting, and that is what its supposed to do this is not a resolution of the trade fight at all sri, your bearish outlook on the domestic economy wouldnt seem to be requisite for lower rates because your entire move that youve forecast a year and a half ago has been with better gdp than we had prior to that, lower unemployment than weve had in many, many years, and we still dropped from where we thought we were going above 3 to where we were below 1 1 2 in very positive Economic Times in this, the next leg down will be accompanied by a weaker economy, in your view . Does it have to be that, or could they continue to go down and still have a better economy here relative to the rest of the world . Even when i first said that to you, joe, two or two and a half years ago, a weak economy was the basis of it. It didnt happen. Well, other than the sugar high that we got from the yearend 2017 tax cut, the growth was it went up because of the tax cut and we are slowing again the question is, how how do you 3. 5 unemployment look at the Participation Rate okay. Youre looking, Participation Rate has not returned ticking up to 2007 highs. They never with the baby boomers. No, even if you look at the 25 to 54yearolds not affected by demography, that figure hasnt gone back to the pre its improved in the last two years. It has improved, yes. But 11 years after the recovery has begun, our Participation Rate so whats our problem we have all the stimulus are we being dragged down by the rest of the world . You need more immigration of skilled young individuals who bring both a mouth and two hands and helping to help with gdp. That will help. You also need something for worker training. You need more skill creation this is what we learned from the german experience of 2003. Instead, what we are doing is to repeat the japanese, european situation, neither of which has paid off germany is at zero. Why do we want to repeat what they did that is more recently if we look at where they were in 2003, they came roaring back for all these years until the most recent it helps when you have your currency controlled by economies that have a multi speed economies. I think i could do pretty well as germany, too, if i didnt have the mark any more but then the big improvement for germany happened at the early years of the eurozone being created. We are talking about 2003 to 2008 that they improved. And thats just not happening yet, joe okay. All right, so where are we going, below one or just to one on the tenyear . I would just say one. Im not looking for a negative rate bounced off one floor twice, 3 1 2 years apart, some of those chart readers are saying thats a real bottom. Well see. I think 1. 4, we are going well below 1. 4 and the reason i say that, mike, is im looking for the german yield which went down sharply or whatever you call more negative rate is going down today as a result of the ecb move and as joe talked about, the recession signs as they become more apparent in germany, i think youre going to see that going down and when you have the spread so wide between germany and the United States, thats going to take the u. S. Tenyear down. Becky will tell you, we dont like people that pick bottoms around here. Right . Am i right in that case, ill mention that it was Rick Santelli who has been saying that youre not going to take me seriously. I was kidding around slee shri, that you can thank you lets get down to the new york stock exchange. Jim cramer joins us right now, jim, you you ive been watching you. What you tweeted three hours ago, i want to pull up a full screen of what you said. Three hours am, jim tweeted this spx futures were up huge last night after the reprieve on the next round of tariffs. We are now back to earth and really overbought. Then we hear from the president making it sound at if what he has giveth, he has taken away in terms of what we expect from these negotiations yeah. Look, the president is not about soybeans i think the chinese are using the olds model which is if we throw the United States a bone about buying some pork of whey, then everything will be terrific and its back to the m. O the press is not playing it that way at all i think the chinese continue to misread our president. I wish he would Start Talking about the idea that maybe hong kong shouldnt be able to buy the lse or talk about how we dont want any more listings of Chinese Companies. So the chinese just misread, misread, misread, but the Mainstream Media continues to think that trump is baffled by the chinese. Its the opposite way. Jim, while youre here, i was hoping we could get your thoughts on Boone Pickens. Great Business Leader and more importantly, just a great man. Yeah. One of the things, i heard your comments yesterday, we all know him as a guy who always brought a smile to your face he was iconic and ironic in the last decade, he chose to be one of the funniest people ive ever interviewed. He always had some kind of whiticism about other people that were in the same business but he loved our country and really believed we could be independent. Would he not love what the eia is saying right now. It wasnt helped by the government it was all because of american ingenuity. How about how charitable he was. When you see the amount of money he gave to Oklahoma State, he moved a house back there and will be buried back there. His parents house. If every school had a backer line boone, we would have such a great educational system in this country. I brought it up this morning, but texas a m, thats where he went for his first year of school he played on the Basketball Team there. He had a scholarship of 25 a month. They did not renew that scholarship. He went and went to osu and as a result osu got the 500 million. Texas a m has listed that as one of their biggest mistakes of all time he had number 13. You see that in that jersey, 13, a bad number but theres nothing like boone hes a total american original im glad you and brian have done such great coverage. People need to know this man this man represented a real thesis which is america is going to be powerful in manager, lets help it along. By the way, dont miss our first on cnbc interview a little later with the cfo and cofounder of smile direct club. The company is set to see its first public trade after the opening bell this special interview will immediately follow that. Stay tuned South Carolina will squawk box will be right back a final check of the markets, is dow is up, 67 points yields are down when the yields is up, stocks are up so bond yields down today. And i guess we are getting close to alltime highs. Less than a percentage point away previously, sometimes, then, the president thinks, were back to alltime highs put the pressure on put the puddle to the metal on the chinese the euro, if youre worried about a strong dollar, theres the tenyear quickly take a look at the euro. We dont have much time left im going to have to say goodbye santoli, youre not here tomorrow no. Im not here tomorrow. Thank you make sure you join us tomorrow squawk on the street is next good thursday morning. Im carl quintanilla, with david faber and jim creamer on squawk on the street. In over a year, some good will gestures on trade from both china and the u. S. The president says