Transcripts For CNBC Squawk Box 20240713

Someone thought there was a method to this madness we are back on the first floor you should watch this show just to see what goes on on times square take my word for it, there is stuff that goes on out there you dont want to miss you got to be 18 for some of this stuff we are ready to go. Brand new set. It is good to be here. We thank everyone for the love beautiful coloring and lights nothing was spared in terms of money for this. Look at this it looks like we are going to take off here. An elon musk designed set. We have that Federal Reserve Board Meeting coming up. Well hear that decision in a couple of hours. In the meantime, you are watching the futures dow indicated up by about 14 points nasdaq by about one point. Nasdaq up about one point. We touched a high yesterday and gave it back a little bit. Still looking at the s p a couple of points off the alltime high. Dow futures indicated up by 16 looking at the treasury market, still looking at the 10year yielding up to 1. 83 something well be watching so closely as we get ready to hear from the Federal Reserve and continue to get this flow of earnings coming in ge is reporting there is usually a 7 30 report the estimate for ge is about 11 cents a share on revenue of 22. 927 billion that came in with earnings adjusted that is better than anticipated. You are looking at revenues. They are also talking about industrial organic growth and Margin Expansion company raising the Free Cash Flow out look. This time from zero to 2 billion. Backlog at 386 billion. Organic Revenue Growth up to 7 . Two notes on analysts some still apparently have baker hues in their estimates. It is worth noting that ge is reporting the discontinuing operations when you are doing apples for apples. Reflecting another quarter of progress the Margin Expansion and cash amid the macrouncertainty. They say we are raising the out look even with external head winds and tariffs. We are holding to the outlook. Much more work to do. Reduced income from moving baker hues much more work to do. Stocks up about 6 stocks are up. Ge has reported as a dow no longer a dow component. 79 billion market cap under 100. Almost a midcap at this point. Thats not a large cap we can report the next piece breathlessly at t says it will launch new streaming service in may at a higher price point than disney and apple. Hbo max will cost 15 a month. Exact same price as a regular hbo subscription triple of the new Apple Service and disney offering movies and shows from hbo as well as Warner Library including friends and Big Bang Theory and dc movies and will be the streaming home of south park it will launch with a new 10episodes game of thrones prequel. Hbo announcing it will not pick up a separate prequel that was going to be starring naomi wats. It is materially more than apple. Having said that, the amount of content is materially more than what youll get on disney and specifically apple because they dont have the library at 15, it forces the issue for ska cable operators. It is very hard for cable operator whether charter or comcast to say, we are not going to take this i imagine the goal over time will be to collect as many people into this as possible and hope it becomes a this or a netflix. You also have disney that is a big challenger especially if you are a family with kids the question is, how many do you sign up for . I think if you are a family, youll do a disney and then is it a netflix versus hbo max . We have peacock coming that will be free. I wonder whether hulu gets pushed out if we are playing an either or game netflix, i understand. Because hbo, people already have it but then it makes it so much harder for hulu. The big issue is where the content is down the road with netflix, you can turn it off any month. I dont think anybody knows where to price this. Right now, you are right you can turn right out at any given month. What will happen over time like with disney, they are saying buy in for a year. They have introductory offers that never last. A couple of quarters under their belt. Youve seen that with netflix. If youve got the content, people will show up and pay. 3 or 5, they look introductory a lot of people saying profits you dont want to maximize those. You want to try to get to the point of ee las tisity where people will keep it and at least have some margins. The real question to me on hbo, how many more people will get hbo because of the bigger library . That seems to be what was sticky what they had paid for to keep inhouse from as much as we no about the netflix viewership aside from these big releases then you have people come on and say you dont need any library. You just need a handful of shows people feel they are addicted to later on, well be joined by barry diller at 8 00 a. M. Eastern time well learn more about hbo max when david sits down with john stankey coming up at 10 30 a. M this news of the two game of thrones guys and bailing out of star wars. Big news for my son. I said to you, there is a backlash against those creators. I think they are brilliant no doubt. He mentioned some stuff that happens on game of thrones. The guy who becomes king stop. Everybody has seen it you havent seen it returning for round two of grilling about safety. Talking with senators and people who were at that hearing yesterday. Concern over the companys 737 max jet. It was a little surreal. Opening remarks before the committee, he apologized to the family members of the families that died in those two crashes on behalf of myself and the boeing company, we are sorry, deeply and truly sorry as a husband and father myself, im heartbroken by your losses much more as alluded to on the boeing earnings at the bottom of the hour coming up, adp, gdp and the fed. Well get you ready. And later dont miss our exclusive interview with barry diller the spin off on his companys dating business. Well be right back. The world is built for you. So why isnt it all about you when it comes to your money . So. Whats on your mind . We are a 97yearold firm built for right now. Edward jones. Its time for investing to feel individual. Welcome back, everybody an early read on the jobs data at 8 30, our first look at third quart quarter gdp. And looking to the fed decision. And it is earnings season. Dom, i feel like we have hit our stride we are just about half way to earnings season. We have themes developing. Not unlike some of those seen in previous seasons this week rolls on this week, north of 40 Companies Reporting their results. Particular focus will be april the closing bell with the likes of apple and facebook and starbucks in there as well those three companies the headliners today the first read on the initial iphone 11 sales. Take a look at the score card. Interesting development here about half the Companies Reported in the s p. 16 miss every other Company Reports earnings will decline just shy of 2 and revenues will be up at 3. 5 you look at the movement, the Earnings Growth has been generated. Health care has seen a 7 growth rate real estate will be a 4 Earnings Growth gainer utilities will grow. Those are the ones and lets talk about the market implications roughly unofficially october 15, these are the sectors that have done the best since that time. Health care is up 5 in that span so far. Financials and materials up 3 and the ledger so far have been some of the more defensive sectors like utilities well watch to see if those play out. Health care, financials, materials are the best performing sectors so far this earnings season. Back over to you thank you lets talk more about the quality of earnings. Whether we can continue to lift the markets. Joining us for that, are you 80 sure we are bottoming in terms of these metrics you have a lot of numbers you Pay Attention to do you have a high degree level of confidence . I do. About 80 sure earnings have bottomed and you point out more importantly, you can see it in revenue that you say companies cant gain revenue like they can with earnings. Thats right, i focused on revenues quite a long time if you see revenues beating expectations that is strong. Youve got 9 growth amazon is an example of that theyve all been reporting decent growth. Telling me theyve made the adjustment to the 2014 to 2016 25 increase to the weighted dollar. Honeywell in particular, they produce and they are affected. Is this a momentary calm could they get worse or is this a new normal if the trade talks and negotiations were to deteriorate much further and had a shock that left the whole global economy, that would be a different story. Based on what has happened so far, it is a big deal. A big drag on china. But in the u. S. , not nearly as much but the main channel it worked through was the confidence channel you had a stock and the flow theyll assume they remain in place. Unless there is additional tariffs, companies will normalize. Confidence starts to rebound then we move on from there im in the position or of the view that unless things deteriorate further well see that acceleration. We are not at 5 we are at four. Well be close if we get that recovery and Business Confidence and spending will tick up, well get back to five you think the Regulatory Environment has been sort of held back and that will insert itself and we are in good shape. The trends in that are pretty robust you had return on equity capped the entire 10 until the Third Quarter of last year the u. S. Banking system is profitable there is an interesting dynamic in that as well. You may have seen mnuchin gave an interview yesterday saying, that isnt the core of the repo problem. Thats how they should be fixing it you werent a math major, where you . No. Son of an engineer he points out that 10 level was crucial. Only then do you see things trade above book value where are we . We are at 12 thats good too this is an Inflection Point. What does that mean for the s p . Is that the new high thats why we are at new highs. The rate of change matters for the multiples. Last year, growth was peeking. This year, it is troughing and reflecting back up expanding and markets will go higher it is likely youll see Earnings Growth go and the market will have discounted it even when the fed says it will hold later. Hold on, we got an Inflection Point and a new set. We are here and ready for positive action. You are going to hear positive news from the fed with the potential. It is not about the fed andrew, the rates arent what matter what caused the melt down a year ago was globally synchro the fed is about to pump 600 billion in the reserve that money is not going to go to just fix the plumbing. It will work its way out into the system the dollar probably goes down as a result that losens trade credit the whole global trade recession should end the market telling you it should end. Autos are rallying in japan and germany. Sweden and germany are outperforming the rest of europe there are two kinds of people in the world those who blame the recent slow down on the fed being too tight or on trump trade wars you are making the case that it is both . In the Fourth Quarter of laelast year, it was global. My whole thesis of this year is that it was an echo of 87. And in 88, the market spent the whole year recovering because the fed responded to it. You had a trade war under way then too reagan put 100 million tariff on semiconductors then okay. Thank you. Appreciate it. We got a story. Your story you appreciate this stuff too. A hands on review of apples new air pods pro hes going to tell us why the Noise Cancellation may be a game changer and why they may or may not fit in joes hears when we come back. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Um houston, weve had a problem problems. Its human nature to hate problems. But why is that . After all, problems inspire us to mend things, bend things, make things better. To rewrite the rule books, the history books, and future books. Thats why so many people work with ibm, on everything from city traffic to ocean plastic. From new schools, to new energy. From flight delays to food safety. The problems even got us to the moon and back on one tank of gas. And who knows where theyll take us next. Welcome back to squawk box this morning Big Tech Companies are fighting for your ears. Amazon is out with new echo buds and apple Just Launched the new air pod pros weve talked about these a lot you have both. I have this one. I have old school. Which are still great and you also have to solve for joes ear issues i think these will work there are three different buds now. Noise canceling is the thing then there is a transparency mode so if you want to allow the outside noise in say if you are on a subway and you need to hear are these as good or better than in ear bose on an airplane. I carry these around by day but for those road warriors watching us, then i carry the bose for a plane i am the same way im flying this thursday out to seattle. So far, they do have the noise canceling that works well blocking out all the noise you know when you turn on bose and it blasts you and almost feels like you have a head cold. This has a vent that blocks that out. In terms of the health of your ear your health as you walk around new york city whackialkig around your phone and you can hear nothing i am with you but they do have this transition mode these are going to be in your ear always these have a much smaller stem harder to hang on to these the controls are different. You squeeze them to turn on the different modes. You can put different ends on them there is three different tips did you put these in your ear already. You might have heard, shes a germophobe it will walk you through in set up to let you know how good the seal is. They are 3. 99 to replace them. How do they compare to these . Not as attractive i just didnt find them to be as high quality the case is chin si. It uses microusb instead of lightening that doesnt seem like a big deal but most people dont carry this cord. That also has wireless charging. I didnt find that very comfortable. One pro, you can talk to alexa you could say alexa, shell come up the way siri does one thing for amazon is to put alexa everywhere these are 129 versus 250 you are saying but they are not as good. You can distinguish between fashionable to unfashionable yes they are totally goofy least bad least dorky. I like that they shortened the arm. I think it is important so you dont drop it, lose it well talk about this i want to hear about your airplane right ge shares rising after the companys earnings and revenue beat expectations. Check that out now as you see the shares gained almost 7 at almost 9. 70 a share. Well 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 using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. When you look at the world, what do you see . Where others see chaos, we see patterns. Connections. Relationships. When you use location technology, you can see where things happen, before they happen. With esri location technology, you can see what others cant. Good morning. We are in our new home on the floor of the Nasdaq Marketsite take a look at u. S. Equity futures at this hour the dow looks like it would open up higher. Nasdaq looking to open about two points higher and the s p looking like a margin of green there for now. A couple of pieces of Corporate News a Top Executive at juul filed a lawsuit saying the company knowingly sold tainted or old products to retailers. He claims the company charged the suppliers 7 million for providing tainted liquid he also says the company sold old product without labeling dates and said that the company retaliated against him just adds to the whole story and concerns around vaping 100 . Not the same story but you need to worry about everything you use obviously, maybe in this case, was this a false positive Johnson Johnson shares are rising they say they retested baby powder and found no signs of asbestos in one lot which prompted a voluntary recall of 33,000 two Third Party Labs conducted 15 tests and found no asbestos the thing that jumps out at me is that they bought it on line i wonder about the sourcing. It could be tampered with it could be tainted theyve had experience with that do you have that big nypd, new yorks finest . I cant really see it the wide shot you can see you got the hard rock thats cool. That is nice not in the close up, just in the wide shot. Getting used to our new home. Getting 5used to it what do we think about the arms on the new chairs . I like it karl, how is the gut . When can i breath. Just so people know, the camera adds at least 10 pounds. 12. 12. Ive been checking twitter havent seen anything yet. Now you are egging them on. You have you have nothing in one of your legs and you store everything there you are so svelt thank you ill take a compliment i was saying too skinny this is why we have to move on bayer shares jump. Now says the number of lawsuits related to roundup weed killer has jumped to 43,000 shares up about 2. 1 this morning. Coming up, big day for earnings we have a fed decision today well get you up to speed ahead of the earnings bell we dont want to miss the media interview to talk about media wars and streaming landscape stay tuned heronnbe cc. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Cool. You should be mad that this is your daily commute. You should be mad at people 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. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Welcome back. Weve been watching shares of General Electric reported quarterly profit on an adjusted basis of 15 cents a share. Revenue came in above what the street was expecting ge raised its full year Free Cash Flow forecast saying the capital unit remains on track to reduce capital this year with us our guests what did you think, scott . I know you had a buy on this before im relieved. We didnt really know walking into the quarter always good for an analyst. Phew im relieved with ge it is not been the best quarter for industrials. It is a tough economy. They are the largest supplier to boeing this is a tough environment. The numbers look clean they look good you not only have a buy rating on it you own this stock too yes, i own it would you buy more base ond this report today . Yes, i would. If you could look out to the years, i believe the stock will be in the midteens we were thinking maybe 50 cents. Maybe closer to 70 cents next year, 80 to 90. In you have a little bit of luck, maybe there is upside from there. Lets talk broadly about what weve seen from the industrials. Larry nap was here and he thinks this is the bottom i think the market has been telling you Something Like that. It is plausible that Third Quarter is the bottom. The way the stocks have been reacting to news theyve declined every excuse to sell off broadly thats been mostly the cade ans to this quarter. We are more than hoping, kind of expecting that this might be the worst. American exports at large but after what you saw yesterday and you know there is a tougher dose coming today from the house, how do you factor that in in terms of when you are expecting to see the 737 max brought back this is hard. Watching the testimony yesterday watching the families it is terrible. These are front and Center Companies on the debate. Weve had four earnings cuts ge has had eight of the laft 12 quarters have been miserable you findly string together a couple of those in a row with the boeing situation in terms of production interruptions, with the strike and the tariffs. You have mulligans all over the place. Im looking at how the street kind of digests that information. It seems like you are going to get a pass at that level mike, good to see you does denis keep his job thats above my pay grade he had a tough day yesterday. Below my pay grade. I dont think okay. So we are Digging Deeper he cant probably. Coming up, boeing ceo grilled. That stock climbing throughout the day. Well break down the performance and bring you todays grilling in the house announcer still to come, Economic Data that could move the markets. First, an early read on jobs friday well get adp early read and a report card on the economy instant reaction coming up at 8 30 it was sophies big day. By the way, shes the next mozart. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Senator, again, i support taking a hard look at the delegated im not asking you for a hard look im asking you for a commitment here because you have the opportunity to make things right. Im reading these things, im not a pilot, im not an Aerospace Engineer and yet im scratching my head going, whoa, something really wrong happened. You knew a whole lot why didnt you react faster . Youve not been telling this committee the whole truth. Time and again, this is my frustration, boeing has not told the whole truth to this committee and to the families and to the people looking at this. Youre the ceo. The buck stops with you. Did you read this document and how did your team not put it in front of you, run in with their hair on fire saying, weve got a real problem here . That was boeing ceo Dennis Muilenburg on capitol hill yesterday facing questions from senators on the grounded 737 max jets hes set to testify again in front of the house transportation and Infrastructure Committee later today. Joining us to talk about what this could mean for the company and his leadership, eric desenhall, and ron epstein, Research Analyst at bank of america. Eric, im going to go to you first. Does dennis survive . Well, theres a lot more we have to see. Look, you have to understand what a congressional hearing is and isnt. It is not a fact finding milgs, it is political theater where the objective is to take a witch into the Salem Village town square and stone that witch. If you are the ceo, you have two objectives such as muilenburg, number one, is to survive your beating without saying something profoundly stupid. And number two, to come across as a basically decent person whos trying there is no other objective. It is simply when we train people to deal with these things, we always tell them, you are not going to do deliver a zinging point and solve the problem in the hearing your goal is to simply survive it, thats it. Hey, eric, i just want to push back on this. Youre talking about a situation where 346 people died. Thats right. Not in one plane crash, they died in two. It was the company not acting faster between the first and second that allowed the second to happen. I dont dispute that. Ted cruz was very effective when he drilled down and asked him, Dennis Muilenburg, what he knew, when he knew it. Finally got out of him that he himself had not talked to the pilot who had those earlier problems with the Flight Simulator or with the mcas still unclear exactly what happened there. I think that was damaging in itself because it showed that Dennis Muilenburg himself has not gone ahead and tried to figure out what happened and what went wrong. Its one thing to say you are very sorry but if you are in charge of following up and figuring out what happened, he doesnt know because he hasnt spoken with the principle people involved with this. What i come back to is what is the achievable objective, not Media Training this is a forum owned by the senate this is not a forum owned by the person under fire and so a lot of what happens is the pundant class, the media has an expectation of what you can achieve in a congressional hearing. More broadly, i think youre right, but what the solution is going to be is beyond what the hearing is i mean, for example, one of the things ive seen is a lot of comparisons to bp which is not a great comparison, but i said on this very show when that happened, plug the leak, clean the mess, compensate the community. The minute that leak was plugged, that story fell out of the news. Eric, i want to go to ron for a second as someone who looks at this as a company and a stock, do you want him to be running this company right now, Dennis Muilenburg you have to ask that question, whats the Broader Market want . And the share price has been, you know, very resilient through the whole period. Do you think thats a function of him . Do you think thats a function of the company, its legacy and what people look at as the future how much of that is about Dennis Muilenburg, the balance between wanting somebody whos been there, who knows everybody versus the transition of bringing somebody in but maybe having more trust with the public, having more trust with regulators i think actually dennis and his team are a big part of it. Thats the question yeah. I think the street thinks so for sure, right . If you look at the change in the companys financials under his tenure, its been pretty remarkable, right . Everybody today values boeing on its cash flow generation and under denniss tenure and his teams tenure, its not just him, their ability to generate Free Cash Flow has gone up markedly. You dont think if you look at where the stock is today would there be if he left the company, would the stock go up or down that day thats thats a great question how do i answer this one if you were a betting man because weve got to get to commercial would the stock go up or down that day my guess is the stock would go down that day because people would think theres more going on behind the scenes than just what we know. Ron, thank you. Eric, thank you, appreciate it. When we return, our guest host for the rest of the show on this special morning, Mohamed El Erian. You wont want to miss what he has to say ahead of the big fed decision later today well be right back. Each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Zwree sigs day for the fed what it means for your portfolio. Boeing heads back to capitol hill and in the United States we trust. A bipartisan bill looks to preserve the federal trust fund. Senators mitt romney and joe manchin are behind it. Both will join us first as the second hour of squawk box begins right now. Good morning welcome to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. Welcome to our new set on the ground here in beautiful a little bit rainy time square this morning, guys were back with the world. Were back with a roundtable where we can actually have a real discussion. No ping pong i get to look at. Joe right in the eyes. Both of us. Becky doesnt have to do the umpire referee situation maybe when well see each others reactions well be more empathetic. Ha the feeling. I know you both too well. Can i ask you a question . You can ask me many questions. This is time square out here. It is. Is the New York Times doing all of this construction what is this when is that going to be gone . Theyre hoping by the end of the year theyre putting in safety you know those big things the ballasts for so that thats it. Its going to be another year. No, i dont think its going to be a year all right elmo will be back and all of that stuff all the fun stuff for the kids lets show you u. S. Equity futures at this hour thats what the kids want to see. Lets show you where the dow is standing right now as we speak up about 23 points youre looking at the nasdaq up about 5 points s p 500 just marginally up right now. Lets get you caught up to date on whats happening we have some headlines for you at this hour General Electric shares are up premarket trading. Ge reported adjusted quarterly profits of 15 cents a share. That was 4 cents above estimates. Revenue coming in better than the street expected. Ge raised the Free Cash Flow forecast for the year. The stock is up by 4. 5 . Weve seen it up by 6. 5 well continue to watch it as we get closer to the opening bell the stock is trading at 9. 48. At t will launch the hbo Max Streaming Service at a lower price than man expected. It will cost under 15 a month as it seeks to compete with netflix, disney and apple. John stankey will be a guest on squawk on the street coming up at 10 a. M. Eastern time. David faber will be sitting down with him two key economic reports are up this morning. Adps october report will show that the u. S. Economy added 100,000 private sector jobs. That comes out at 8 15 and 15 minutes later well get a look at Third Quarter gdp that will show a 1. 6 annual growth rate. The fed will wrap up its twoday meeting that happens later this afternoon Steve Liesman joins us from washington with the latest steve. Reporter good morning, andrew the stars look like theyre aligned by a rate cut from the fed followed by a shift policy that will make the next move less automatic lets take a look at the pr probabiliti probabilities. 94 of a rate cut in october followed by only a 21 probability of another one coming in december you have to go all the way out to april, which is through several contracts. Not great data but a 56 probability of another rate cut coming all the way out in april, which is to say the markets undecided about when or if another cut is coming. Barclays writing ahead of this, we think chairman powell will emphasize that the committee is moving away from insurance driven easing towards an emphasis on data dependence and meeting to meeting Decision Making some possible improvement in the trade talks along with the fed believing it will provide a lot of new stimulus to the economy and an end to Balance Sheet reduction. It would appear to want to see have some time to see what effect all of that has, the data since the last meeting has been mixed take a look. Gdp, its gotten weaker. We were at a 2 cnbc rapid update now its 1. 6 unemployment has gotten better it has improved. Payroll growth a bit weaker. Inflation pretty much unchanged. What does look different about the attempt by the fed to gain some flexibility is the market looks ready to give it to them at least for a little while, andrew thank you for that. Joining us right now, for more on the fed and the markets, chief u. S. Economist at s P Global Ratings and our guest host Mohamed El Erian. Heres my question, lets assume that the market gets what it wants today in terms of cut but doesnt get what it wants in terms of the guidance Going Forward. What happens so i think we are going to get whats called a hawkish cut, which is exactly as steve said theyll cut but theyll say we are going data dependent. Right. Reduce the emphasis on an insurance cut. I think the market will live with that. Live with that . Live with that down . Live with that up . It will be a flat day . I dont think its going to be a big surprise. You have to understand if you look at all the indicators, market indicators, there is no justification for a rate cut the curve has normalized equities are very near alltime highs. The trade issue is less threatening right now. Brexit is less threatening right now. The dollar has weakened. It is very hard to justify a rate cut from an economic perspective. What the fed is doing is validating the markets. I do think the feds going to move but not today i think theyre likely going to move were saying in december. Dont move today . Yeah. In which case the market does what theyre not going to be happy about it but are markets happy no, i dont think theyll like it in terms of whats behind it, i agree with what mohamed said i would add that inflation is warming up if you look at cpi core, its 2. 4 you have even seen core personal consumption expenses deflator up a bit, 1. 8 getting closer to the 2 line. I think that might give a reason for the fed to hold off. The fed is rather divided. You already have two who voted against the quote cut and i suspect they will be even louder i think the fed is going to ask for patience and i think powell is going to ask for patience. I dont think youre totally wrong. Over the past few weeks Steve Liesman has reported and so many others have tried to suggest that inside the fed theres this massive debate, which i think is a signaling tactic to the extent that people are being open with reporters about where they stand. The markets expectations is 90 cut. I agree with her in terms of what the fed should do the fed should not cut it should wait but in terms of what the fed will do, i would be amazed if this fed well, thats the worry. Are the markets wagging the fed. Thats a real concern. The way i look at it, it would make more sense if they did their one cut in december and see what happens between now and then but they didnt tell the markets that they didnt convey that enough i think theyre going to be in a position of saying, okay, wed better take the cut now because if we wait, well get the temper tantrum, well cut in december but then its going to look like we caved to them i would say a number of fed members, you have i guess its president from chicago, charlie evans, has talked about hes comfortable with where they are. Youve heard dallas fed president kaplan also say, you know, i was okay with the cuts but, you know, i think hes also sitting on the fence again, we have two votes that were against it. I dont think the fed knows what theyre going to do today. One of the votes against it was because he wanted much deeper cuts. That was bullard. Fed president bullard. He said im okay with 25. For years, mohamed, you have been frustrated that the fed was unable to handoff the baton to the congress or for fiscal measures we have less going on there than ever because its all focused on one. Theyre not even going to get usmca so why dont you if you cant get a handoff from the fed, why are you frustrated that theyre continuing to support things when youre not getting the cooperation you were hoping for from the fiscal side of things other than markets and asset prices, i dont know what theyre supporting theyre not supporting the real economy. Ten years we supported markets to get the wealth effect we werelooking for. Ight. Look at the ecb. We dont want to go there. Are you sure it wont work at the ecb . Theres a delay and things are looking better because of the ecb. What is starting to look worse is what negative Interest Rates is doing to a marketbased economy. It eats away at the integrity. Are you seeing that where are you seeing it . The banks, with less provision of longterm protection you see it with the Household Center saving more they are saving more at negative rates. Youre seeing it in terms of bad resource allocation. Youre seeing it in terms of zombie activities. All right does the significance of being the first guest host on this news set, has that sunk in to you yet . Are we ever going to hear you complain say you dont get enough respect, enough love . Has it sunk in that you get two hours on the very first day . Who do we go to . Who do we ask . Who do we bring out here to highlight, Mohamed El Erian. Since the email only arrived on friday i suspect someone else was asked and i am delighted. We didnt know when we were going to launch. I am delighted. Nice to have you here as well. Im going to get a chair out there to watch thats whats going to happen dont wear those headphones where you cant hear whats going on around you. Coming up coming up, more rolling blackouts are planned today in california. Some of the strongest winds since 2007 are expected today fueling some dangerous wildfires in california. Jane wells has a preview, its so scary, the pictures, jane i hope youre okay reporter yeah, thanks. The winds are starting to kick up we could see gusts of 80 miles an hour today and we have new information on not only what caused this fire but a huge fire down here last year, both involving utility compans. Ie well have that information when squawk returns she wanted a roommate to help with the cooking. But she wanted someone who loves cats. So, we got griswalda. Dinners almost ready. But one thing we could both agree on was getting geico to help with our renters insurance. Yeah, switching and saving was really easy drink it all up. Good could have used a little salt. Visit geico. Com and see how easy saving on renters insurance can be. Welcome back, everybody. California winds that have fueled wooiildfires have promptd mass power shutdowns jane wells joins us. Good morning reporter hi, becky this is still the getty fire area theyre concerned that as these winds pick up today maybe theres some still smoldering embers in these destroyed houses which could come across and get houses which are not burned yet, but we have a bunch of new information now. This is covered by Los Angeles Department of water and power, which does not turn off the power preemptively and as we got video of some of the power inspectors coming through this neighborhood yesterday, investigators now believe this fire may have been started by a dwp power line which was knocked down by a tree branch, but were also getting bigger news about a bigger fire last year, the woolsey fire desfroid 1600 homes, killed 3 people Edison International said it could be liable for that fire. There is evidence and we believe it is likely we could be associated with the ignition of the woolsey fire final determination would only be made during lengthy and complex litigation reporter that sent shares down after hours edison is saying the 1. 8 million reserves are enough. Pg e popped yesterday. Meantime, Going Forward governor newsome created a bill to create a Massive Wildfire fund. And so that the Utility Companies can dip into it for if they have acted prudently. Well, whats prudent turning off the power in advance. Thats why this is happening and finally this being l. A. , the most famous person still under evacuation was tracked down at basketball practice. I talked to my wife a little bit. I havent been in fire drills since seventh grade. Challenging to get my family and my kids and everybody having to evacuate at such a rapid rate. Not much time to really think about what you can do, youve just got to get out and get to safety reporter thousands still evacuated and, by the way, lebron sent a taco truck to help feed the firefighters. Guys. Jane, whats today todays wednesday. Its going to calm down a little, right . Reporter no. No, worse reporter we have a red fire we have a well, allegedly tomorrow mid morning. Tomorrow . Reporter yeah, red flag warnings at the same time we also have a frost warning which never happens. You have a frost warning and a red flag warning its a very weird thing. Jane, hi. In addition to the human tragedies, im hearing from friends that Insurance Companies are becoming very hesitant to renew home insurances and those who do are doubling the price. Are you hearing the same thing reporter im not hearing that yet but, you know, mohamed, last year we had so it was a for farmers and allstate and state farm it was a big deal, and more and more people are having to get into whats called the fair plan, as you know, if theyre built up against this open space. This fair plan is sort of an insurance of last resort provided by the state but which is funded by Insurance Companies which is funded by you and me. So i think youre going to see more and more people on a fair plan just because, yeah, it seems untenable at this point. But whats amazing to me is the fires so far this year have not been as bad as last year in terms of damage and destruction and nobodys died. You can possibly credit the technology and the apps with people with the authorities telling people to evacuate and this year people actually are evacuating as opposed to last year. Jane, all right thank you. Youve been reporting for us all day out there, jane. Be careful. Gas and electric utility giant Southern Company reporting 1. 34 a share. Was above consensus estimates. 1. 14. Joining us is tom fanning, Southern Company chairman, president and ceo. Lets start quickly with your numbers. Give us highlights quickly, tom, and well talk about the situation that jane was just talking about with pg e. How are the numbers . Are you happy . Yeah, joe, great. Terrific quarter the revenue thing you mentioned is really a benefit to customers. A lot of our revenue is tied up in a pass through fuel costs and gas prices are super low represents about half the energy we generate right now so that benefit was passed along so really all in all a good quarter. About half of our significant exceed dance of guidance was really due to weather. The other half was due to kind of a continuing benefit of tax reform and o m discipline. So, tom, as a utility ceo, you know how to manage Southern Company manage the utility. So you probably have a pretty good idea of what happened out at pg e. I dont know if youve seen more private sector type newspapers, like the wall street journal has really taken the politicians to task for whats happening out at pg e and less so pg e saying pg e was responding to mandates from california regulators about renewables, how much had to be solar so they havent really built out the infrastructure that they should have because they had to focus on all of these green initiatives and thats whats causing this would you have managed it differently . Or do you have an opinion on whether thats the case . Yeah. Boy, thats a complex question heres what i will say about it, you know our hearts and prayers go out to these folks for the customers right. Everybody working the fire, everything else. Heres the deal. We have to think more in this nation not about reliability, which is how this industry has been kind of run for over 100 years and more about resilience. In other words, how does my system operate during unusual conditions over the weekend weve been on the phone and working with pg e. We had a big ceo call. This industry has an enormous history of mutual assistance and so as an industry were all pulling together to see what we can do to help pg e. When you think about the political, legal, Regulatory Framework of california, it is exceedingly complex and certainly is different than what i would say is more of a business friendly environment here in the southeast. So that does compound the issue. What weve got to do right now somehow is put all of that aside and get about restoring the power and helping the people be safe. Forest management so the state now threatening to take over the utility and critics would say that, you know, the mismanagement by regulators out there are whats causing the problem in the first place. Yeah, joe, i think, look. You kind of hit the nail on the head i think the company is acting appropriately with the environment they find themselves in theyre kind of a function of the legal, regulatory, political, the whole deal. I cant blame pg e for what theyre doing. Theyre doing everything they can with the best of their judgment lets just get through it and get the power back on and help the folks be safe. Tom, the governor has very actively started calling for people who bid on these assets to come in and maybe step in he asked specifically for a warren buffet and Berkshire Hathaway to step in and make a bid for these things and would like them to take them over. Would you be interested in taking over these power plants does it make sense is it a situation youd like to be you know, its almost like the broader economy weve talked about in the past where business loves certainty, you know . Well invest longterm capital if we see kind of calm waters to invest in. I think that californias not in that situation right now sure, there may be some people that want to come in and speculate on how this thing bes going to turn out but, boy, there are a lot of more cards to be turned over before, i think, youll get credible longterm investors in this sector over there. Tom, separately we had a congressman on yesterday from california who seemed to suggest it should be taken over by the state and that these should be run by the state. Does that make sense to you . Because i was sort of pushing is there a Public Private partnership . How do you feel about the private sector being there this was a democrat by the way making these comments but well, look, i think this issue transcends politics. In other words, what would public power do differently than what pacific gas and electric is doing . I think anybody is going to be operating as a function of the environment they find themselves in, political, regulatory wise, et cetera. You know, i think bill johnson, the ceo of pg e are doing everything they know to reasonably do to take care of the situation. All right thank you, tom you bet always good being with you guys. Okay. Thanks. Coming up when we return, boeing ceo Dennis Muilenburg heading back to the hill today for another round of testimony what you can expect in todays grilling well talk about it next right here on squawk. Time now for todays aflac trivia question. John adams was born on this day in what year the answerhecnssqwk bo continues ou on campus for the official visit. Aflac coach saban, how is aflacs Program Different from Health Insurance . Well aflac gives you money directly, for things Health Insurance doesnt cover. Aflac we put together a little highlight reel for you. Heres aflac helping you with your deductible. Copays. Out of pocket costs. You look good paying bills. Get to know us at aflac. Com you should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. 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Partner with pgim, the Global Investment management businesses of prudential. Good morning and welcome back to squawk box on cnbc boeing ceo Dennis Muilenburg heading back to capitol hill today. Hell face another grilling after yesterdays testimony and phil lebeau joins us now with more on the boeing 737 max fallout and, i dont know, i dont know how well he slept last night probably, phil, after yesterday. I wouldnt want to go back. Reporter no, and i dont think he is looking forward to it he knows whats coming up. Yesterday was brutal, especially the last half of the Senate Commerce Committee Hearing because it was one senator after another just hammering muilenburg and boeing about the 737 max. Those pilots never had a chance these loved ones never had a chance they were in flying coffins. I would walk before i was getting on a 737 max i would walk. Youre the ceo. The buck stops with you. Did you read this document and how did your team not put it in front of you, run in with their hair on fire saying, weve got a real problem here . Now most of those were commentaries, if you will, as opposed to specific questions for Dennis Muilenburg, but when he was asked about what happened with the max, how did this take place . What is boeing doing to make sure that this doesnt happen again . He said time and again, look, safety is at the core of what boeing does. There are changes that are being made to the 737 max so that it doesnt happen again today guys, im not sure that that resonated much with the senators who were listening to Dennis Muilenburg yesterday take a look at shares. He goes in front of the House Transportation Committee today, and in some ways this may be even tougher than yesterday because there are a number of representatives, their staffs have been doing investigations looking into the max and they have been waiting for this opportunity to talk lecture beat up Dennis Muilenburg again, that happens a little bit later on this morning. All right, phil thanks continue along these lines here with one of the senators that was actually there yesterday that grilled boeing ceo Dennis Muilenburg marcia blackburn, you were able to hear or see some of the sound we ran from yesterday. Yes. Senator, it got pretty contentious. It was contentious, and appropriately so we had many of the family members of the victims and we have to bear in mind, 346 people lost their lives, and from the testimony that we heard yesterday it appears that boeing tried to go in and manipulate or rig the system in order to speed a product to the marketplace they knew that there were problems with this they knew that the alert system had not been working properly. They said they were going to move to fixing that in 2020, but much of this was shielded from the faa regulators and you had a couple of the chief technical pilots actually talk about jedi mind tricking and the regulators and keeping information from them. Incredibly disappointing, and i have no doubt that what youll see in the house today is many of those members are going to pick up on questions that some of us asked and did not get complete answers to and continue to press for those answers no doubt. And weve seen the house as compared to the senate so we have a pretty good idea right. Of what to expect, senator. Over 400 trying to make a name for themselves or however many versus the senate. Let me ask you this. Boeing is making the case that the expertise of their engineers is essential when dealing with the faa and that its actually additive to the overall safety considerations when were introducing a new jet. Critics would say theres a conflict there because youre boeing and faa is too incestuous its not objecttive enough is there a middle ground we need to strike for using the expertise of the people who designed the plane and the regulators deciding whether its safe yeah. You know, there is indeed a proper balance that is there and this is part of our concern. Was there too cozy a relationship and did these technical pilots, these test pilots feel as if they could manipulate the system in other words question. I think youll see this approached in the house today. Why was that simulator not embodying that exact mcas system that has become the focus and the problem that all of this is centered around . Did they have those exact team of engineers and also with the simulator as they were working this through, why did they only use highly experienced pilots and not pilots from a variety of expertise . And a variety of number of flying hours and then the other thing i think youre going to see is why was the ceo not read into all of these documents until just recently and i even asked him yesterday, has he yet been read in to all of these documents and seen everything senator, you long called in Many Industries for greater deregulation as opposed to regulation. Yes. You now look at this particular situation would you call for greater regulation greater and more strict rules around how the faa operates . How the Airlines Operate what we need to do is realize that consumers do not have the opportunity to go to the airport and look at all of the planes lined up on the tarmac and say, im going to take that plane whether its airbus or boeing or whatever they schedule a flight and they get on that plane and they trust that that plane is going to be safe if there is a coziness and if there has become an understanding or a perception or a thinking that a system can be rigged or that perception exists now, senator. Are you going to call for greater, stricter rules . Were going to call for cleaning up the system and being certain that all of the flying public, the American Public and then those around the globe, are going to be safe safety is a top priority and i really took issue with mr. Muilenburg saying they did not sell safety. Safety is a top priority senator, thank you. Thank you appreciate it. Your morning movers. Mohamed el erians market call coming up. At the top of the hour, media legend and billionaire barry diller is going to join us for an extended interview. Squawk returns after this. Lets get to dom chu. Busy day. Lets check out shares of young brands or tupperware tupperware brands down by 24 . Missed on earnings those shares moving. Well talk about other shares on the move yum brands is off about 5 this is the Parent Company of taco bell, kfc and pizza hut its lower there by around 5 shares on volume it had weaker than expected growth at kfc. Then well end on shares of garr min higher by 5 1500 shares. This is Navigation Systems and fitness wearables. It showed stronger Profit Margins which is leading all of it to raise its full year forecast they all saw gains led by aviation and fitness those units, guys, both had sales rise by around 28 , joe. Garr min is doing pretty well. Back over to you. Lets get back to our guest host, Mohamed El Erian doesnt want the fed to cut. Does that mean you think were in a pretty good economic environment as a backdrop to equities or fair value two separate things i dont think the fed should cut. They will cut. Id rather they keep the ammunition dry i worry about future financial stability. When it comes to the markets, i think you have to respect the talgs. The path of least resistance is higher that is being powered by two things one fewer concerns about the policy outlook thats why theyre calling a bottom to the global weakening but thats what the call is out there. Two, theres an underpinning of strong corporate earnings. So i think you have to respect that technical and move up in quality as the markets give you that opportunity you dont think respecting the credibles in the credit markets is behind some of the feds accommodation here you dont think theyre trying to get in sync with the rest of the world and the yield curve . Just for saving ammunition you dont think they should cut . Its normalized. So even based on strength of the dollar, whatever, you think the dollar has weakened. Everything is in equilibrium . No. I think if you look since the last fmoc meeting, what theyve worried about has improved. This is purely about not taking the air out of the stock market its purely about not repeating the Fourth Quarter of last year because it took the air out of the markets and so some degree i would say out of Business Confidence, too, maybe not Consumer Confidence but Business Confidence. If you could take the air out of the market without raising concerns about the functioning of markets and without raising concerns about spill back to the economy, i would say, yeah, do it but people are worried i mean, the fed is worried and the Fourth Quarter was a wakeup call for them, be careful because the spillbacks from the markets are significant. When was the last time you talked about the rico market yesterday we talked a little bit about it. Yesterday do you feel better about no, i feel a lot worse. Its taken a lot longer to normalize. What youre getting is bits of illiquidity and that is telling you that certain sectors are over stretched very important signal there. It sends the wrong signal to ease no, it sends the signal to the fed you better ease, you better ease. Were putting in a ton of liquidity that way that will make its way to asset prices and were lowering rates. I have to think about you and where youve come from you do switch once in a while. You move around. No, i think as the data evolves and the facts change, you have to respect the technicals i mean, respect the technicals. Okay. We will have more from mohamed throughout the show. Coming up, senator mitt romney, really yeah, and senator joe manchin are working together on something. New legislation unveiled earlier this week to preserve federal trust funds. First on cnbc interview is straight ahead then barry diller live who better to talk about the streaming wars than to talk tech under fire as well the fed, were not that far from where he resides and works so its nice of him to opst by. Hell be on set. Squawk box will be right back. Were carvana, the company who invented car vending machines and buying a car 100 online. Now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein bars. Try lemon cake. Pure protein bars. 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. Thbecause with nband after thleague pass on xfinityr. You can watch the out of market games you want all season long. And with the allnew xfinity sports zone, you get everything nba all in one place even notifications about your favorite teams. Watch the dropped dimes, monster blocks, and showstopping dunks. Plus get instant access to your teams with the power of your voice. Thats simple, easy, awesome. Say Nba League Pass into your voice remote to upgrade for a great low price or go online today. Welcome back, everybody. A Bipartisan Group of legislators are trying to prevent short falls on trust funds. Lets welcome senator mitt romney and senator joe manchin they are cosponsors of the trust act. Senators, thank you for being with us today. Thanks for having us. First of all, its nice to see a little bit of bipartisanship on capitol hill today. Im imagining you dont see too much of that what led you to Work Together with other republicans and democrats to come up with this what is this legislation as former governors, we had to work every day with a budget. We had to make sure we balanced our budget our financial people would come to us on a daily or weekly basis and make adjustments we dont see any of that concern here so in the last budget act we just voted on what we voted against, both of us did, we had four governors, two democrats, two republicans. We can do better we need to sit down and face our problems and face the future what were put passing on to our children is unsustainable. We have a series of trust funds. If you ever want to see a balanced budget, get out of debt, you have to deal with this if you want to save social security, medicare, the Highway Trust Fund and the other trust funds, you want to save those programs and save those trust funds from financial ryauin, we have to make adjustments now what weve put together is lets put together a rescue committee fortyfive trust funds and find a way to get them in balance in a 75year period. Its going to take a bipartisan effort. It takes a majority of senators working in a bipartisan way to understand that we need to do something and do it as quickly as possible. Social security, we may get to 2032, 2035 maybe before it starts being depleted and people will be cut automatically 20, 30 or more, but then you have medicare which is going to run out of funds by 2026 and the trust fund something needs to be done this is not that far away. Were accumulating more debt than ever before since world war ii. Its been ten years since Simpson Bowles was put together. Am i wrong to think that this sounds very much like a similar sort of effort it is in many respects it has the same aim, which is to bring fiscal sanity to washington and to begin to make some changes now so that we dont have to cut programs down the road but the difference between this and Simpson Bowles perhaps is that, one, we go automatically to a vote, all right this doesnt have to go through a process that keeps it from getting to the floor two, instead of taking on all of the trust funds in one single task force, instead this bipartisan, bicameral effort is going to be divided between each one of the five trust funds. So one group looking at social security, another committee looking at medicare, another looking at the Highway Trust Fund, another looking at the pension guarantee trust fund so all of these are looked at individually and then if the group can come together in a bipartisan basis, it comes out of privileged basis to the floor for a vote we think on that basis were going to be able to tackle some of these longterm problems that weve been facing. When i first got to the senate Bowles Simpson was bold and large, if you will i liked it i liked the process. When you look back at bowles in 1997, he put together a budget within john kasey and they were able to balance the budget and have surpluses from 1997 to 2001 these people, they have a grasp for this we looked at it. It was tough this was the right thing at that time. Senators, why though does it seem like fiscal sanity is so out of vogue in washington right now, both on the democratic side there seems to be an effort to spend money we dont have and frankly on the republican side there seems to be an effort to spend money that we dont have and were seeing it in terms of the deficits in which you are so aware of. Were not in vogue. Were out of vogue were not going to be in the magazine any time soon. You know, if you recognize, you know, that todd young whos a member of leadership on the republican side, an original cosponsor, kirsten cinema we have a good deal of folks who have signed on and said, look, we have to tackle this on a bipartisan basis were not saying what the answer is were not telling them what they have to come to. Were saying this is a process that finally saves social security, not just for current retirees, but for the coming generations. The same thing with medicare, the Highway Trust Fund. We have a lively Campaign Going on for the highest office in the land, the president of the United States, 2020 election you havent heard one candidate, not one candidate speak about the financial conditions, the deficits were incurring and basically what were passing onto the future generations and the trust funds being in dire jeopardy youre not hearing one person talking. On top of that, im not hearing the media ask one question concerning what is your position on the financial conditions of our country. No one seems to care when mitt and i got together on this i thought it was a great idea and great thing for former governors to take on because we have had to be responsible. Senators, we care here. Yeah. We just got you just god asked the question by the great Andrew Ross Sorkin. Dont take that offensive. Were not running for president , thats the difference. What i was going to ask is a separate question. Because both of you are in the senate, where do you really stand on this impeachment issue at this very moment . And ill start with senator romney whats your official position at this point well, i am probably going to become a juror, if you will, in this process and as a result of that im doing my very best to keep an open mind be and im going to wait to make any comments on any evidence until we see all the evidence and the facts are laid out. What do you make of your peers . Weve had many peers, especially in the Republican Party where weve asked this question and they say they could not they could not vote for impeachment most of them it sounds like dont even want to see the evidence, frankly. Well, i want to see the facts and everybody makes their own decision i respect my colleagues. They have the capacity to make their own decisions, but in my view its time for me to stay silent on impeachment until the process is done. Senator, with what you know now in terms of what does go to the level of an Impeachable Offense, if it was an implied quid pro quo, trying to have ukraine investigate joe biden, does that rise to the level of an Impeachable Offense in your view right now, senator romney for me to respond to that would violate what i just said which is im going to keep a completely open mind until we get all the facts in and then ill make that judgment. Good answer do you second that, senator manchin . Yeah. I think basically people are wanting some of our colleagues on the senate have jumped in and had a resolution our dear friend lindsey graham, which we think the world of and respect. Basically its not our job to tell the house how to do their job. The constitution is very clear let them do what theyre going to do. Let them see the evidence. We will be the jurors. They better have the evidence that goes with it. If they dont, its not conclusive, it will be hard for anybody to vote. Senator manchin, from your home state, and there are times when youre not in lock step with the democratic party, is it possible you might vote quite often. Quite often is it possible you would theyd need you in addition to 20 republicans im not going to be counting from what counts in, does your vote make a difference ive never looked at my vote in that manner. Ive always looked at my vote based on could i go home and explain it does it make sense is the evidence there, conclusive i want to make sure i make the right decision so im not jumping. People are making assumptions whether they like or dont like the president. Theyre coming to conclusions before theyve seen anything because they dont want to go through an impeachment trial or whatever this is not easy stuff and its very difficult for our country to be going through it, but if youre going to preserve the democracy we have, the constitution if you believe in that and the rule of law, this is the process. Senators, thank you for being with us this morning. Thank you. We appreciate it very, very much. Before we head to break, take a quick check on markets right now. Looking at the dow looks like it would open up 23 points higher. We are back in just a moment. When we return, media legend and billionaire barry diller weighs in on the economy, the fed and the future of business on the web thats next right here in squawk box. Breaking Economic News the adp report and the first read on gdp. Lets make a deal. And our newsmaker of the morning, iac chairman barry diller joins us right here on set as the final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc and our new set our new look new music, new lighting. Live on a diet. Live at the Nasdaq Market site in time square all of these side shots. Back fat im joe kernen along with becky quick and Andrew Ross Sorkin everybodys eating breakfast. U. S. Equities eggs and bacon. Can i talk about the futures . I see everything you do now you know that . I see that. Youre across from me. Oh, yes before you were on a rake. We were on barry diller. Now were on a triangle. But were hoping theres more empathy for each others positions. I think until you get more politically correct thats not going to happen. Barry diller is here. Probably introduce him in a moment. U. S. Equity futures at this hour are slightly positive once again. As weve been pointing out, close to new highs on the s p. Im going to read this as fast as possible so we can get to barry todays top stories, General Electric posted better than expected revenue higher prices for Aircraft Parts and by stronger volume for the Health Care Business shares rising on the news. We had been up by as much as 6. 5 now it came back a little bit. Actually, up by over 7 . Fiat chrysler and frances pew g peugot are in talks. They are expected to meet and talk about that deal. Now to our special guest, media mogul barry diller is here the former chief of fox, paramount pictures, chairman of iac. Hes built whats become a 20 billion Internet Technology conglomerate. Why do you forget Expedia Expedia we have a chart here, let me see if i can find the chart. Do you know if you invested 1 in iac when you first joined. Youd have 1 today. If you had a dollar today s p you would have 8. Warren buffet, you would have 12 if you were berkshire investor and if you were iac investor you would have 22. There you have it. Stop. You can stop right now. We can call it a day. We have about 100 issues we want to talk to you about. We have the streaming wars, china, whats going on in washington with internet companies, we have whats going on with match. Com. Let me start with streaming for a second i dont know if youve followed whats gone on with hbo max . Yes. Yesterday with the big announcement and their plans i remember when we sat together about a year ago we were talking about netflix and you had a position where you thought actually that most of all of these competitors couldnt compete with netflix you saw what hbo max put out apple is now out. Yeah. Can this work the question is, what does work mean . You know, the thing is that for the last basically 100 years before the invaders from the north, meaning netflix and amazon came into the Media Business, the Media Business was controlled literally for that long, long period by essentially six companies. And when netflix and amazon began with different business models, in fact they totally took away the hedge money from all of these companies and they i dont think theyll ever get it back now of course what they want to do is compete and of course, you know, they should but theyre competing against an all theyre competing against an already built machine and i dont think that theyre ever going to actually compete with netflix. Doesnt mean that, for instance, disney, which i think bob iger, you know, such guts and determination and pushing everything on the table, i think disney has a good play because and i think, by the way, the question is how many subscribers does it take times x dollars to equal the massive costs that are now taking place . Because those costs are literally insane three Television Programs, three episodes of 20 each Television Programs will cost a billion dollars today. Right hard so its hard to compete. So of course theyre trying. They want to get it back. David favor is going to talk to john stankey later today. Ah. Sorry you said youre sorry. No, i dont mean that no. If you were randall stevenson, do you think were going to look five years from now at the at t time warner merger and say this was a good idea this was a terrible tragedy . It is not my business to do that i think that i think everybody other than disney has a very, very tough hand. The only one that i think of them all thats got a good play, its not simply because im sitting in their house, but i think comcast nbc, its much less risky its much more conservative but its ad supported and so it doesnt have to really compete and try to grab subscribers away in a rich subscriber market. What about apple, will that work well, i dont know. Their feet are very kind of dangling slightly in the water actually, the thing is i think they should get back to fixing the iphone before i came on here my iphone torch was lit and it took three producers to turn it off. Me, too, after the new i0s the new operating system. Glitches. So anyway. So apple. Everybody i mean, theyre not charging what these things cost right now, right well, no. You cant spend as i say, itll change if youre a producer, make any deal you can in the next six months. If i was a talented writer, shouldnt i move out to hollywood . Immediately. Tonight. Im not but you are youre trying to send me away immediately. A talented writer. Of course i mean, thats great though its great for consumers because they get tons and tons of stuff but, you know, the talent market is finite. You think the window is closing . Oh, it will close in. Look, when the bills start getting paid and these Public Companies have to announce losses because these losses by definition have to be in the billions theres no way around it okay, their Business Plan for them, i would presume internally, makes sense because they think theyve got to compete but the truth is i dont think they all really have to do so, not in the same way. Not on a concept of literally trying to equal netflix whos spending without any question will quadruple anybody els. But theyre looking at a dwindling ice cube thinking we have to be where the consumers are. They want to get it back. Cant blame them. I want to pivot to talk a little bit about social media. I know you followed what was taking place in washington yes. Last week with facebook and Mark Zuckerberg. His position that he wants to allow political advertising on facebook and not only allow it, but allow it such that you can say effectively as a politician whatever you want. What do you think . Well, heres the thing. Hes right not only is he right, its against the law on broadcast television you cannot censor political advertising. Did you know that . Even if its a lie . Doesnt matter. You cant censor it. By the way, how are you going to prove a lie . Given most of these commercials in negative advertising are filled with exaggerations and things i think Mark Zuckerberg is completely right hes become this poster boy. I actually think of all the services, of all these big monopolies stick services, facebook is really the most benign facebook does not compete with the dvertisers. Let me read you the New York Times today the internet barons have ignored the weaponization of free media which is turning the free press into a house of mirrors where citizens can no longer cognitively discern fact from fiction. Thank you, tom. What are you going to do about it seriously. Here is the thing. You cannot look, were at the very early days of this kind of bull horn that anybody can use for any purpose so theres just tons of stuff out there. You know, to indict these people who are in charge of these systems by the way, theyre not you know, believe me, the one thing they dont want is this huge dpraft raft on them oi responsibilities i think facebook has spent billions of dollars to try and tame this. Everyone would want to tame it it aint easy to do. When you see Elizabeth Warren take out an ad thats factually false to prove that its doable are we now going to get into truth in terms of political positioni positioning . Youre a big boy. Are you going to get hurt by this i dont believe what i read im a big boy. I can take it. I dont want mark deciding whether i can handle it or not. He cant. He cant. He cant ride herd over that. Its just the way it is. If i tell you the election date is a different date and the location youre supposed to go somebody is going to get it right. Come on. Yes, its very hard to discern things, but by the way, you one of the reasons you choose what you take in, what you read, et cetera, is because one hopes youve done a little Due Diligence and you think that theyre fair and balanced, been so damaged by those guys down the road. Fair and balanced is still a good thing. You think so . Its not tainted forever. Theyre english words. They dont own them. Well, i think its proprietary. Okay. God, thats horrible nothing is fair and balanced separately, the other thing i wanted to ask you about now in this digital age, weve had a number of ipos this year. Yes. There seems to be a huge disconnect between the private market valuations and the Public Market valuations because zsh. Theres a good reason for that. Two proteges from uber and foley at peloton. Yeah. What do you think of all of this when you have a bunch of guys sitting in a room like you would be sitting in a room and you decide to sell stock to some elite people in your company, you can make up any figure you want if somebody will take it, by the way, theyre all engaged to take because they know theres another round coming thats going to juice it even higher, it bears no whatever iota to reality. If you have people making up values in a room and then you take it to Public Market and Public Market says, no, were not doing that its obvious barry its a rigged process anyway so the process is rigged well, of course thats the ipo process did it work better this time . In some cases i like the direct listing thats a really good idea. Auctions were tried by google and it worked and i think they could work, too. The thing is, youre in this situation where you go on a road show to, quote, fill a book and then the banker that youve signed wants to drive the price lower because he thinks that those people will give him money for other things so he doesnt care about his i shouldnt say this but, i mean, he cares about his client but not as much and the result is that, you know, Companies Often when they go public, as youve seen, for instance, facebook got in all sorts of nightmare trouble because they sold it essentially too high, right . The truth is that they argued for the high price, it dropped afterwards, but its way past that the whole business is if you were 30 again and would you go out to hollywood . Do you have the skill set to become barry diller in this day and age do you think would you like to try . Is it exciting is it daunting would i no well is there too much no, i wouldnt because truly there this this technical kind of move on to hollywood has really changed everything. Its changed the ground. I wouldnt want to do it. So i dont im sure of course there are opportunities, et cetera, but you used to be able to basically own your programming. Now netflix, amazon say, were buying your programming outright you get nothing whether its a success or a failure so you cant do the things that people did in those olden times, which is built asset values because, for instance, you own the simpsons you owned a part of the simpsons jay brooks who produced the simpsons has probably made billions of dollars, the most profitable series on television, because its after life was so valuable thats over. Can you hold that thought adp numbers are out. Steve, why dont you take it away tell us what you have. 125,000, becky, adp payrolls coming in for the month of october at 125,000 bit stronger than 100,000. Quite a bit stronger than the nonfarm payroll of 5,000 supposed to be reported by the bls on friday. September revised down from 43,000 to 93,000 down more on that. Services sector, 138,000 right there. Moving on looking at size, every size business gained jobs there. The most by medium inside the small is a small number there the 1 to 20, they did minus 12,000 quick look at jobs in industry, education, health, never a surprise trade and transportation, 32,000 up mining, construction and manufacturing down hasnt happened since march of 2016 and before the recession in 2009 thats when we had bigtime declines in all of those three sectors. Back to you guys. Great thanks were in the media we love media so much. Could we do those lets do those later. Having you here is great whats your favorite thing to watch at night what top three things . Do you sit and watch last night i watched katherine the great with helen muron. Not that great a show but helen muir i literally she would have been irritated with me because i literally watched i kept rerunning scenes because to watch her perform was just a joy. Because theres a lot to watch and im always looking for things what do you do you watch us in the morning . Yeah. You do . Well, i dont know if i watch you but there you are in the background every once in a while, you know, i see thats as good as its going to get. And it perks up. I have a totally different question for you. Yes, sir. Which is one of the things we talk about this and you see it on this show all the time a conversation about wealth in america and this sort of big wealth debate yes. That you know so much about. Yes, i have heard you talk about that. Youve been very critical of President Trump over time, on this show and elsewhere, but im curious what you think of Elizabeth Warren, if she is the frontrunner well, i think if you take her at her word, if this country wants to be kind of socialism somewhat light but not that light, done and done im not so sure based upon things i read, but i dont read well enough here, that you can take her at her word she might be moving at some point once she gets into it more centered she kind of moved around the dial a bit i gather. But if you take her at her word, god for bid, it would be bad and so what but, by the way, ive been tested by my friends which said, okay, it comes down to that moment, trump or her yeah. You know, i was going to say my dog or him but the truth is, you know, my dog would do you only have one dog no, i have three. Which one theyre all your children. Of course no, so really what would you do id vet for her. Youd vote for her . We have to he we cannot its one thing for this accident to have happened, you know, this election of him that happened, the confluence of odd events if we reaffirm that, if we actually actively knowing what we know reaffirm that, i i think the youretalking about character then because youre not talking about results . Im absolutely talking about character. The results im talking about standards, character, decency, all of those values that have been blown, and so i think nothing else matters. You think hillary would have had higher character and higher values absolutely. Really . For sure. And the clintons have demonstrated that in the past . Look, lets do this he was a good president. Then youre back to talking about trump actually in terms of what hes accomplished, unemployment, stock market. Are we going to get into no, i dont know. What is a good president fidelity or no, not going there. What are we going to do talk about the end result, you say clinton was a good president and accomplished good things. Yes, i do think so. Character wise no, no, no. With both of them. I am fine with the character of president clinton and Hillary Clinton and the truth is that the Clinton Foundation has raised a ton of money and done a number of really great things which, by the way, it continues to do. The problem is is that bill clinton was never a great manager executive and he made some managerial mistakes, but by the way, even now after all these investigations and everything, the Clinton Foundation has never been found to do evil work, bad work, et cetera and no, but things kind of dried up once it was clear she wasnt going to be president. There was a reason every middle eastern country gave a lot of money to the Clinton Foundation. That doesnt have to do anything with when they took the money. Thats in dispute. How much actually went to causes. What do you think it went to . Do you believe are you going to go into this conspiracy thing . Come on fair and balanced thats not fair and balanced. Thats ridiculous. Let me ask you about match. Com. Youre spinning off match. Com like you do. Yes. Build great companies, build them up. Thats our little model what do you see next . Because i cant imagine that you spin out match without saying, heres the next big thing. Here where im pouring things in. You have 4 or 5 million in cash ia iac is there we spin them off we get down to very little opportunity theres always opportunity. You want to buy it now . One of the things fascinating me you have control. You go against. Not sure. You have the transactions it will have a class dog. And, therefore, whats the point . I also dont want its a responsibility you have a company and you have enough responsibility. I dont find a way of dual stock. What the dual class stock does and the instances. What it generally is is it allows you to take the long view there are so many instances of that it is overall a very good thing. For early stage company. You wont move left i said i would either do that if he comes back on the set, you will be around im not so sure can we agree on this . Sweet dogs. Wow, those are scary. David dillner, the one and only thank you for coming in. Enjoyed it. Congratulations on your new digs. Stuff. He has us on but doesnt watch, what was that comment you sort of watch. By the way, dont you think many anyway, you are there got some. We have a sound bite on the adp employment report. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Still to come, more Economic News thats when squawk box comes right back you should be mad that this is your daily commute. You should be mad at people 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. Welcome back to squawk box. Breaking news. Our first look at Third Quarter gdp. Were expecting a number thats, well, roughly around 1. 6 we ended up with more, 1. 9 1. 9 on our first glimpse and this isnt far away, 1 10 difference from the last quarter which was up 2 . Lets look at personal consumption, shall we . Solid number, 2. 9. Why do i say solid expecting the number in 2. 5 camp we were amazed at some of our last looks in the last quarter, 4. 6. 2. 9 isnt bad. If we look at the price index, 1. 7. Thats a moderating number from 2. 4 in the rearview mirror. Expectations, its also a bit light. Finally, personal Consumption Expenditure quarter over quarter, you can say many like to look at this one exactly as expected at 2. 2. But it is actually 3 10 hotter than our last look the only hotter number there the response in the marketplace has not been large but i do see yields moving to the up side it was for all practical purposes against expectations and a lot of the naysayers, it really is better than expected of course, the fmoc decision will be the big ticket item on the day but well have many more trading minutes before we get there, becky back to you. All right, rick thank you very much. Lets get reaction from Steve Liesman. Steves on the phone, mark zandi is here and Mohamed El Erian what do you think . Of these numbers, a little better than expected do you think things are picking up i think there was too much pessimism and all of this talk of recession and what you see is that the household sector is doing fine i think that personal consumption number that steve just cited is really important it is driving the economy. Steve, i know you were on the phone a second ago what does the fed do in terms of these numbers that are just out today . Does that go into their calculus of what they do in terms of whether or not to cut today . Reporter sure. I dont think it changes their attitude what they are looking for is an economy thats slowed down towards trend. I kind of agre mohamed im he not sure how we got from an expected and logical slowdown into sort of certainty over recession. I was never in that camp this 1. 9 here, i think you can look at this table of numbers and you can tell the story of the u. S. Economy very simply a strong economy, a strong consumer that is detracted from buy weak business. The Business Investment numbers were negative. Not as negative in some cases as they had been. Some cases more negative Business Investment overall down 3 structuress down 15 the intellectual Property Number where theyre tracking the Software Spending was up 6. 6 and strong Government Spending as well. Not as strong as the prior quarter but still up pretty good, 3. 4 on federal down from 8 in the prior quarter. Its a very simple economy, one that could really turn around to the 2. 5 range, 2. 3, 2. 5 if we could solve the trade problem and turn around the Business Investment. Mark, lets talk about the adp number better than expected 125,000 jobs thats better than the 100,000 consensus estimates. What was happening here . I think theres some confusion around how adp accounts for the strike, the gm strike it does not. It does not account for the strike bls says that the strike cost gm 47,000 jobs. Then theres other indirect jobs that were affected my sense is that accounting for the strike, the adp number would come in around 65,000. What does that tell us about fridays number potentially, government jobs number i think its going to come around 65,000. I dont think were going to get any government jobs. Census is probably laying off people id say 65 k i think underlying job growth is distracting and its around 125 k which is barely enough if it goes further, unemployment will rise. Thats why recession is so high. Were right on the cusp of seeing unemployment increase once unemployment increases even from a low level, thats the fodder for recession. Vicky, lets add this up and pretend you have a vote on the fmoc what would you say i would say definitely were going to cut today the question is what happens Going Forward. That, i would argue, is basically, you know, very directly tied essentially to the trend that weve been seeing in growth so were talking about the gdp numbers better than expected, consumers holding up the simple point i would make is that if you look at the trend and whats been happening over the last 12 months, we are going down i would argue that, you know, the markets are sort of priced for a quick rebound. I would say a lot of people given where the markets are talking about a quick rebound but, you know, its 12month trend. I think its kind of a bolt view to say that we are going to stop here and turn around. Thats exactly right. If you go back a year ago, average monthly job growth was 225,000. Say were now 100, 125 k its been cut in half. All of the trend lines are for slowing growth why would we expect it to pick up maybe the president decides were not going to escalate the war but i doubt hes going to deescalate the war. As long as that uncertainty is out there businesses remain very cautious. The outplayer was 200 plus. That was an outplayer for this stage of the cycle we had a guest earlier on that certainly surprised me by saying that that house call is no cut today. No cut. I was stunned because like you, i think the fed has no choice but to cut. Yeah. And i think theyll keep cutting until, you know so theyll keep cutting validate the market. So market doesnt really have much priced in for december currently. Sure, sure. Yes. And i think it happens sooner because i think all you know, like i said, the trend has been do down its not obvious maybe well get a pause because, you know, when the trend is down you get data on both sides of the trend and it i would actually argue that the risk is actually down side because we got a couple of numbers that were, you know, better basically. Thats pretty bearish. Mohamed, you agree you think thats what theyre going to do but you dont think its what they should do. Not because of what theyre saying, im more optimistic for the economy. They shouldnt cut rates . I dont think they should cut rates. I dont think the economy needs it, i dont think its effective and, c, every indicator has to agree. The yield curve, market levels so but all the economic retail sales i would rather they keep that ammunition for later on. You know, if someone said this is like target practice. You really want to use this on target practice . That gdp number is pretty good well, i think from their perspective it makes a lot of sense to be out in front of a slowing economy, make sure it doesnt slow anymore once the dynamics take hold, no matter what they do, they wont be able to stop it. Once you use recession, you lose me. Slow down, im with you. Recession is very mohamed, there is very little difference from an economy thats growing from 1. 5 to 2 to recession. Unemployment begins to rise. Bad things happen. So we are right on the edge. Thats stall speed. Stall speed is not 1. 9 . I hear the floor. That means rick has something to say. Reporter mohamed, the one big elephant in the room, youve written about it, think about the european rates, the handoff in the control their schatz is at five month highs, rallying for three months in terms of yields and we dont even know if theres policy changes. Just the notion that global central banking has finally seen this little light go on and eventually the big lights going to go on that the policies arent working, theyre detrimental to the Banking System and when your Banking System gets sick your economy sputters, isnt that some underlying pressure that the fed should Pay Attention to is they waste this quarter point decrease were most likely going to get yes, rick youve heard me say before the minute you look at the ecb its not that policy is ineffective, it is actually harmful for the longterm stability of the economy. Its undermining the financial sector, its undermining the provision of longterm protection services. Its allowing zombie firms to survive. It is contributing to resource misallocation. On top of all of that were seeing an increase in the Savings Rates in germany people are compensating for lower rates. I dont understand why it is wed want to follow the path of the ecb. We want to avoid that. Can i push back on that lets make a distinction whats going on in europe which is very different than whats happening in the United States of america. Lower rates matter here and you can already see that in the Housing Market housing was flat six months ago, down, home sales, housing construction, house price growth weve seen a revival in the housing. Its adding to Economic Growth very sensitive Mortgage Rates moved up or down around 4 , makes all the difference in the world. Targeting asset prices it could be the wealth effect as well these take time to move through the system im sorry. Whats the lag on the decreases . The lags on the drops in the overnight rate, theres a lag there. To think that all of the housing response is due to this recent wave of cuts when we have the wealth effect in stocks, the reversal of the Fourth Quarter disaster in the economy and the markets at the end of last year, theres a lot of other reasons that housing is picking up, and i do understand the psychological notion of the fed easing, but in the grand scheme of things, the central bank here has to realize that their reach just isnt what it used to be and they really need to hold on to their bullets. Gentlemen, we are out of time i want to thank all of you for your time. Good to see you. Rick, steve, mark, bingy a lot more coming up on squawk. Big tech might be under fire from regulators, but these stocks are not apple shares up 55 this year. Facebook stock is up 45 both Companies Set to report after the bell mike santoli joins us with three in twah ensquawk box comes right back. Wi welcome back to squawk box. Apple and facebook is posting quarterly close. Mike santoli is back yes, andrew going to get some tech earnings after the close. We are going to before the price, the powell pause. Assuming we do get the third 25 basis point rate cut in four months and then a signal of a pause, how will the markets react . The pattern has been the market has backed off after almost every call facebook will say its the fourth of the traditional fang stocks they all beat on headline earnings the market found something they do not like so much underneath the top line they have sold off a little bit. See what facebook has. Then apple obviously been a very strong stock. What they say about projected sales for the current quarter, the holiday quarter, is probably going to be the main thing that investors fixate on. Take a look at the stock of apple since october third, that was the prior peek right here. 232 big dump guided down into early january and then this has been a very,very, very nice up turn backed off by 2 yesterday the stock itself has dragged sentiment in a more positive direction. It was a much more cautious streak i do think people are going to believe again. All right mike santoli, thanks joining us now to talk tech stocks, paul minks, Portfolio Manager of the Wireless Fund paul, theres a raging debate about growth versus value. Whenever you talk growth it always includes fang, tech, things like that are the best days gone or do you ride that horse into the future . I think to a limited extent you ride that horse into the future i think you have to have some of these stocks, but with the pop year to date and some of the fangs at least i think some of them are at least somewhat overvalued at this point so what you do is you wait until you absorb the quarterly earnings, see what the fundamentals are, recheck the valuation. But i think theyre now more holds and maybe even if they continue to spike up maybe better sells than they are buys. There must be if you beat the bushes there must be suppliers or other areas of technology that are undiscovered that you could at least participate in what you see without, you know, buying the major names that have all i guess already reflect all of this positive sentiment do you have a lot that youre looking at there, paul where would you go yeah. Im most interested right now with the impending term probably in six to nine months in the semiconductor industry, within the tech sector. So i would have a portfolio tilted in favor of the Semiconductor Stocks and not necessarily out of the fangs but make sure that youre not over weight the bench mack at this point in the fang names. Yeah. So is it fang is a monolog. You dont have a preference . You have a sell on any or neutral whats your favorite out of those five yeah, i think im neutral on the group. My favorite out of all of them, and over time it might become a better buy because the stock has reacted negatively is amazon its not a valuation call. You cant possibly make a valuation call with that stock, however, i feel there are more old School Industries that can disintermediate. It has the greater growing market than the rest of the group. If you were to worry about washington or regulation, is it bipartisan would one party or the other be less likely to rock the or upset the apple cart out in Silicon Valley thats an excellent question. You know, its not really to me between the democrats and the republicans, its we have to resolve and i dont know when its going to be i cant possibly predict this problem with the chinese and the tariff and trade because a lot of folks dont realize that particularly within hardware, semiconductors and other components within the Technology Sector is the supply chain is very intertwined and with the chinese and other asian partners and the americans and so we have to resolve that. So when it comes to political and geopolitical variables, thats what im looking at most closely. Paul meeks, thanks. Any comments, mike no. I would just say when it comes to faang, only alphabet is near the all time high. Amazon, netflix, facebook are pretty much nearly double digit so it seems like the market has absorbed that. Theres a new elite that maybe microsoft and visa and these other stocks that have had a similar profile but theyre not really in the acronym. Very good thank you. Mike santoli. Some news just coming in moments ago. Former secretary of state and former exxon Ceo Rex Tillerson arrived at the New York County courthouse he is expected to testify in the new york versus exxon trial over Climate Change we will bring you the coverage of that trial throughout the day but, again, thats Rex Tillerson arriving at the courthouse in new york. Right now lets get down to the New York Stock Exchange. Jim cramer joins us. Jim, you guys have john stankey coming up today. Yes. We had barry diller just a short moment ago if you miszed it, barry said disney is likely to take on al nbc strategy with peacock is smart, different because it is advertise based. What do you think . I was struck by the amount of money it takes to do these things you listen to apple tonight, i think apple it is the one everyone is betting against now. One program that ran, the reviews were negative and the stock dropped five points. More to tim cook than just one show maybe the show is actually good, but, yeah, look, i never disagree with barry. I met barry, he doesnt remember me, in 1978 when i was covering hollywood for the covering homicide for the l. A. Examiner you dont bet against him. Hes solid i recommend his stock for 150 points hes going to be right i dont disagree with him. And ill sound smart when it all plays out. What do you expect to hear from john stankey . Stankey is hes being interviewed, david i think it will be promotional i wish there were more to that i think att is a fabulous stock here i hope he talks about elliott. What those guys are doing. It may be something he doesnt necessarily want to talk about, but, geez, you got elliott on board, pushing and pushing and pushing, theyre relentless and relentlessness will drive that stock to 60. I think the stock is going higher. Speak to that you think it is going to 60 and getting to 60 how . I was talking to somebody yesterday, we were talking about how the statement from att and the support from elliott seemed at odds or not at odds but surprising given it didnt seem like it got them that far, somebody else is saying, look, you get two board seats, they push it, because they now forced att to create these expectations around what theyre forecasting, how you get there means they might have to do some breakups and splitoffs and things that they otherwise didnt want to do. I think youre right. And youre not going it like my answer it is actually the kind of answer that is wall street but it is go to be multiple expansion. I think a higher multiple on these guys theyre in the as dumb as they used to be i know thats kind of a but got some truth to it they did a lot of dumb things. I think by themselves they would admit that now i think theyre not going to do a lot of dumb things and getting out of the things that are asterisks for them theyre going to be smart. A Smart Company gets a higher multiple lets give it five buck earning power. I think thats possible. And then everyone will say, what was i doing not buying that stock with the one of the best yields around im not saying stankey is a side show im saying that these guys might be able to handle the entertainment assets better. It is an exciting story. It is one of most exciting stories out there. Went from being really boring to andintrigued by. There is a lot here. And i think these guys have a lot to unlock. This is a great one to follow and great one to own. Jim, thank you. Well see you in a few minutes but great to see you on mad money, dont miss the ceos of trex and wing stock. Both talking to jim. Stay tuned youre watching squawk box on cnbc welcome back, everybody. Our guest host today, Mohamed Elerian at allianz and former ceo of pimco were looking at the market, s p sitting at a brandnew high. Longer term, though, you have some concerns about the structural things out there. What do you think . Shortterm i think we have enough momentum. I dont think policies are going to derail. I dont think earnings are going to derail. Longer term, i dont have an answer to, have we pressed the pause button on globalization, are we going to doe glob ing tie what happens when Central Banks run out of emission. We dont know. Three, europe is a mess and will get a lot weaker that will contribute to more political hollowing out of the center when i look beyond the next few months, there is an unusual uncertainty and thats why i think the right trade here is it ride the wave, but go up in quality in doing so. What do you mean go up in quality . So sell the companies with less strong Balance Sheets and emphasize resilience continue to move up the credit curve. You think it is going to get rougher riding from here i think it will get more volatile the big uncertainties, maybe that resolves in the right way but you still got exposure in the high quality names, but if they dont, the lower quality names are going to get hit really hard. We have the fomc meeting coming later today, this announcement out there you have Christine Lagarde taking over at the ecb she has big shoes to fill and shes a different person than mario draghi was what happens what is the upside and Downside Potential . I think she is the right person to take over. She has strong support in terms of the economics she is able to take on a brief, like, ive seen no one before, sheworks extremely hard. She has a better chance to convince europe to do the right thing, the big policy handoff, than to convince governments to take i think her task is very difficult, very challenging. But she is well suited for that task if she does that, does that mean that our fed can stop lowering rates and eventually raise rates again . Look, our fed is being driven mainly by the perception of what happens if they can fund the markets. The markets are holding the fed hostage, okay. And last year when the fed tried to go its own way, the markets held it back completely. I dont think that lesson is going to dissipate anytime soon. It seems to me jay powell would like to shake some of that, he wants to say dont expect it again. Right and when he came in a redux of the market from last december. He came in he tried to break the codependence, he did. And it was going relatively well as the fed is normalizing, a number of communication slips and then the market had the massive tantrum. And then we had the 180. We are still in that world i want to thank you so much for being with us today on our first day in this new set. Fantastic guest host final check on the markets, if the s p were to open where it is now, i think it would be close to a new high. Gave back a little bit yesterday, from an all time high were right on the cusp of another one. Join us tomorrow, we liked it here well be back here tomorrow. And congratulations to squawk box on their new set. Welcome to squawk on the street. Im scott wapner with jim cramer live from the New York Stock Exchange carl is on assignment, hes going to be back later fire squawk alley. Well have an exclusive with the warner media ceo john stankey, lo