Transcripts For CNBC Squawk Box 20150916

John harwood caught up with her earlier this week. Well bring you that conversation later this hour. First lets get to the markets this morning. We have seen a lot less volatility since people have been waiting to see what the fed does this week. You can see that the futures are relatively flat. Dow futures down 3 points. S p futures off by 2. We started yesterday down 50 in the morning and ended up 250. You have been talking about more than 400 points during the day. A lot of people are waiting to see what happens. Thats one of the reasons people say lets get it out of the way. A lot of stuff. He thinks theres a crash coming. He thinks there a crash worse than 2008. He says already. And that it pushes people into causing the buy back stock and inflate their stock price. Causes emerging markets. The feds exples sit. He thinks theres a reckoning. He says that theres a reckoning to come thats going to be worse than the financial crisis as a function of easy Monetary Policy. Right. But i dont know where it is. I dont know what the dislocation is. Lets get you caught up on the other big stories were watching this morning. The fed will begin its two day policy meeting this morning. Big question is will the central bank raise rates for the first time in nine years. U. S. Interest rate futures are indicating a 29 chance of that move. Thats up from 23 late monday. People always watching volatility and volatility has not, even in the past day and a half just stays where some people think maybe theres a better chance. In Global Market news chinese stocks jumping in the final 15 minutes or trading. Its pointed to suspected intervention from beijing. Government getting involved. We have breaking deal news. This is huge breaking deal news. Sab miller confirming that inbev plans to make an acquisition proposal. The board noting recent press speculation but no formal offer has been received. It plans to review any proposal and respond for its part confirming it made an approach to sab millers board regarding a combination of those two companies and never wanted to give up the deal making. First he does kraft deal and the heinz deal and back to beers. May not be doing mondelez. Is that something that we get antitrust regulators. You dont worry about this like in health care. Theyre already huge. But all the brands when they got together it was like all of those brands will be under now you put miller in with budweiser . This could be worse. I dont know what the ramifications are but could be worse in terms of beer, couldnt it . I think theres whos left . Heineken i believe. Craft piers and japanese beers. Its still a very bizarrely fragmented business. Who is corona. Distributed by one of the biggies. Why dont you know what that is . I dont know the i thought you were the most interesting man in the world. You should know all of these things. Whats that . Boston beer, yeah. Heres the problem is that the beer business is a very fragmented business. If you actually look at it collectively its not a growing business as growing as it should be and most of the big growing beers are all the small guys these days. Leave it to beaver. Do you remember him . No. Is he the kid that was always sucking up to june. No, that was eddie haskel that either became a porn star or cop in los angeles. Or porn star cop. Okay. Just to put it into perspective and you are right, they have 22 of the worlds market share. 50 of the u. S. Market share. Thats actually a very big number. What about sab miller. Hang on, ill get you that number too. They need to get together to cut expenses from making nonalcoholic beer. No one ever buys it. 15 i dont know if thats a global heres the market share that comes up i think for Global Market share. 29 . So youre talking about putting 1 and 3 together to become three times as big as the number two player. There is other Corporate News. I dont know how to read this. It kind of just depressed me about old tech. 30,000 jobs. Hold on. One addition because an email came in from somebody. Somebody that you find out stuff from. You never know. You always make calls. I want to put something on the table for you. Hurry up. They would likely have to sell miller and they would sell miller back to coors. You asked the question. And miller light is big not really miller as much anymore. You know who was drinking miller light yesterday on our set no less. Rooster. Rooster was. How about hp . This is 30,000 jobs. Cutting up to 30,000 jobs in the enterprise business. The tech giant is adjusting to declining demand. Hp is going to split into two publicly listed companies this year as you know and try to capitalize on something other than pcs. The cloud, 3d printing and other places but revenue here down from 130 billion a couple of years ago down to Something Like 110 now and meg whitman is indicating maybe the pain is close to being over but shes going to be talking to squawk on the street sometimes after 9 00. And the uaw and Fiat Chrysler reached a tentative labor contract. The deal covers 40,000 workers and the auto maker ceo says the controversial two tier pay system will go away overtime. It also addresses how to Curb Health Care cost and the idea is said to be broadly part of that pact and apple is rolling out its ios 9 update today. It will take less space on your device than the previous one. Now will it come automatically it will say do you want to do ios 9 . It will have the whole thing where it says number one. You cant get rid of it unless you do it. Unless you do it. But my understanding is it was going to be staggered today so some people that that update is going to show up earlier in the day, later in the day some people might show up tomorrow. Its because they dont want everybody having to download it at one time. The battery saving low power mode. Yes. Youre supposed to gain at least an hour. Thats value. Its the one thing i complain about. Its the one product feature wrong with the phone. It runs out of battery. Talk about all of these things with not a hint of irony that your life is controlled by Something Like this. It can make your life better if your stupid phone doesnt go out an hour quicker so you can hit more dislikes and hurting people on facebook. Now thats going to be part of it too. How much Mental Energy do you have to expend in a given day thinking about whether the battery is about to run out. Because i dont let it go below 80 . I go no, you cant use the charger. Ill at 79. Think about that. If you could remove that issue out of your head. You get gas every day too. Thats because prices might be going up. A 6 digit pass code and smarter siri searches. Thats a low bar. The new operating system will let users download third party software. Well talk more about apple including the highlights from tim cooks appearance which we all stayed up for on the late show with Steven Colbert just about 15 minutes. None of us saw that, did we . No. What about the debate tonight . Does it start at 9 00 . Starts at 8 00 i was told. Thats good. Earlier is better. But does it go to 10 00 . Probably and then a postgame show. I assume youll get a cooler and get everybody out ahead of the thing. Do a little tailgating. Its big. Youre like hilary you wont even see a word of it. No. Actually hillary is going to come over to the house and were going to watch it together. Is she going to bring her childhood pictures. She was cute. Shes really cute. She is genuine. Not the only candidate to be trying to spin things though. I dont see other candidates showing pictures of rick perry. They get a lot of play. When you reboot the 5th time, you know, were going to show a genuine nice person. Your pal hugh, what do you think hes going to do . Hes very fair and people know that he is likely to ask anyone this questions that are worth asking, not worrying about what the consequences of asking them are. Do you know much about him . Hes good. And they want that. He has those outlined in the republican party. They want him. The thing i was asking you was i was shocked that this in the new york times, your paper, that more republicans see you think all republicans will vote for hilary because of trump. The republicans you know i cant vote for trump im voting to hillary. He has said that. The republicans that you know are going to vote for hillary because of trump. At the bitter end at the bitter end yeah, right. Did you see, like 40 are now seeing trump as the potential winner. And carson got the big shot. Same with him both nonconventional candidates. Maybe if they pick bernie sanders. Hes coming over for dinner too. Lets get to other Corporate News this morning. Comcast is creating a New Enterprise services unit. Broadband, wifi and ethernet and other services to other companies. Comcast is of course the Parent Company of nbc universal. Sab miller and bud not the only deal news this morning. Also dental supply maker is buying Sirona Dental Systems for 5. 6 billion. It works out to 98. 60 a share for shareholders. That would be a discount to yesterdays closing price. Also shares of starz getting a boost this morning in talks that theyre in talk to buy the network. Theres been speculation about a buyout for more than a year now. Heres what we got. Microsoft announcing it would increase its Quarterly Dividend by 16 to 36 cents a share. Its up on that news. Thats interesting. What does it yield now . We always like to add a little perspective. But we never do. Yield now is 2. 8 . What did you say . A 16 increase . So that give gets it above 3 . Through i dont have it. Fed ex is increasing its shipping rates for its ground, freight and express services by 5 . Changes are effective in early january. Set to post Quarterly Results before the bell this morning. Of course well bring you that news and one more stock to watch this morning, united natural foods. Shares rising after the natural and organic foods distributor posted better than expected Quarterly Results. Seems like the rest of the world is there to some extent. Europe seems to be catching up with what happened in china. Does anyone believe that . Its a carbon copy, a cookie cutter in china of what we have seen in the last five minutes. But those 1 moves and three quarter percent moves following a great session yesterday on wall street, this is supposed to be a really positive week for stocks historically and lets take a quick look and youll see what im talking about. Up almost 5 . Figure at a what that would be here. It would be like 900 points so thats a big move in shanghai. Take a quick look at oil. Its now 4540. Now were up to almost 23. Were still at the highest yield above germany and spain and italy and obviously japan and i dont know what this says about what janet yellen is likely to do. They both have whats janet going to do. On the day of another president ial debate. Its early. That will probably change. Did we look at gold . I didnt see what gold is doing. Im ready to take gold is ready to make a move. Im ready to take it off our master run down. And try to come up with something to say about that every day. Its like putting the boe and ceb. Boe, unchanged. As expected. Obviously theres a number of market watchers starting to ask whether the market could have rallied itself into a rate hike. Joining us with more on this is the global Strategic Advisor at pimco. I said that right, correct . Your last name . Perfect. Welcome. Good to see you. Also phil who is global head at fixed income strategy at jp morgan private bank. Lets Start Talking about what they said this week. You think theres less than a 50 chance that the fed will raise rates. It moves up and down. Theyre obviously very atuned to global developments. A lot of volatility in global stocks and you heard jon williams last week San Francisco hiking. Do you think the market stabilizing a bit and coming back to some strength has been part of the reason that people despite that you dont think that theyll raise rates this time . We dont think theyre going to move this time. We think its going to move out to december or even january and much like rich said a big issue is international and especially emerging market which is is hurting china and the stronger dollar is putting a lot of pressure down there. Are you okay with that . About emerging markets. About them not raising rates. I wish they would. Do you know what can happen between now and december and now and january. Its only two months does it really matter but think of the things that could again cause them to delay this. Couldnt you get on the board . It could be the markets here and the markets in china. It could be the migrants, it could be anything that could cause it not to be a time to do it again and every month theres so many things that can derail plans to do it. But its two things. One do they move but its also where are they saying were going. So i think the market is taking some comfort from that. If that were the case wouldnt they look foolish for having raised rates. The quarter doesnt matter. I dont know. Or does it . Thats what the guy wrote about is every other time around the world. But thats the point of the journals lead editorial. Youre trapped an every time you delay another reason comes up where you cant get out and if rand paul is even 10 right about its inflating certain things. Not regular inflation but if theres bad behavior. If theres moral hazard being created. Well it isnt quite as bad as 07 or 08. There was no supervision. They werent all over the banks back then. But we didnt know that in 2007. Its not as bad as it was the previous time and it was as bad. And maybe other places that arent regulated. The regular issue here is janet yellen likes to say shes data dependent but thats not a Monetary Policy. Youre raising that point. You get fluctuate in foreign he i wasties its hard to sense what is the reaction function of the fed and what will be that path . The fact that yellen has not spoken in two months is also important to this. The fed will face a challenge whenever they hike of communicating what the strategy is. We have a range of opinions on the committee and it wont be enough just to say were data dependent. You can look at the Unemployment Rate and say thats crazy. You need to raise right now but inflation is not near what the fed would like to see in terms of inflation. But he did make a point of saying theres good reason to think theyll hit their inflation target. We may disagree but thats the communication we need from this fed. What are they looking at . What judgments are they forming on that . Theyre looking at the Unemployment Rate rather than the inflation rate. Its really their future indicator. Why wouldnt they raise now if thats the case . They should for domestic reasons but it comes back to international and thats what dudly was talking about two weeks ago when he was waffling on the move. What do you tell people to do in the meantime . The market seems confused as to whats going to happen here. Where would you tell people to put their money . One thing is certain, rates arent going back to historical levels. Theyre very connecticut ttaine long period of time. Theres a lot of debt at the market levels. That will keep growth depressed. Testimony graphic issues and then imported disinflation and all of those are keeping a lid on inflation which is going to keep a lid on Interest Rates. Youd tell people to look for alternative places to invest and push out to get yield which is why we worry about all of this creating the sort of bubbles that we have been discussing this morning . Yeah but we always fight the last battle. The last battle was that the financial actors caused a lot of the problems. If you look at banks right now, theyre so tightly regulated and have so much more tangible capital. We dont say the banks because mismanagement by the federal government caused it last time and its causing it this time. At the banks. Both times you can find both times you can find macro policy. Yeah. Some people still point to and not everybody i still think thats a revisionist narrative. In hindsight we say it was citigroup and jp morgan and goal man sacks. I think it was fanny and freddie. Home ownership. Thats regulation. Yeah. I think the other challenge here as well, it wasnt that long agatha the fed and yellen were talking about frothe in market shares. Identified them. But theres less now. Another issue with the fed foe cousin on markets is you go back and forth in a pingpong match. So obviously a challenge to communicate. Gentlemen, thank you both. That was they stayed at zero a year after she saw the froth. Time to go. Interesting thing is that fisher writes a lot of people are saying if they raise rates thats going to cause more income because people would just Bank Deposits and cds will have more income coming in. Its a crazy world. Its the liberals that dont want the fed to raise and its causing income inequality and the liberals dont want to get off the income inequality. The fed has been a trickle down wealth inflation. When we come back, a big day for apple. An update on its operating system and that includes for the first time, joe youre going to love this, ad blocking for mobile devices. I love that. Plus ceo tim cook. He stayed up late last night. Heres a funny moment from his time with Steven Colbert. I asked siri in a tweet to come up with questions for you. What nobody knows is yall did it. Theres questions for tim cook on siri that anyone in the world can access but nobody knew they were there. So id like to do one right now, okay, if we have a moment here, can i have siri ask a question . What should i ask tim cook . Do me a favor, ask him when im going to get a raise. [ applause ] i had elon musk on and then the ceo of uber. When he was here he said you know apple is work on a driverless car. I read that. So he has already given it away. You guys arent big on secrets. Tell me about it. Come on. Cats out of the bag. Here, ill video tape you while you talk about it. We look at a number of things along the way and we decide to put our energies in a few of those. Theyre doing it. Okay. We kind of have the i warned them about the convergence of business and entertainment. It might not be as good. Although you had a good skit you came up with yourself. I did but when people ask me who is your most interesting guest on the history of squawk box, we have buffet and gates and all of those but when i say Richard Simmons or shatner, goldie hahn. Or the walking dead people, i always say steven the best business guest probably isnt as good as Charlie Sheen or Lindsey Lohan might pull up her shirt. Winning. The dlist celebrity most likely and i think i mean, i dont want to give steven any tips. I hope he loses badly to fallon but so im not going to say what you should do. Stick with the business guests. Good idea. Joining us now is recode Senior Editor and i just said i cant imagine one of my kids putting something on facebook that they think is really cool and getting a bunch of dislikes. This is like a hater this is the perfect opportunity. Will they do this . Its been requested for a long time. By the haters . Not so much by the haters but when somebody says they broke their leg, sometimes you wish you could dislike it its going to be used to trash people. Maybe we can make more kids in high school feel bad about themselves. Bullying but theyre going to put it on news items. I thought they were going to come up with another word because part of it was to be able to express empathy. The migrant crisis and you saw an article or somebody died and you were reading an obituary. You dont want to say you like the obituary. But no matter what you call it, it can be used. Its not like i dont like cocacola and a like pepsi or whatever. Cant you do a sympathy button. Empathy button. Sorry about that. Im sorry to hear that. Maybe its a support button. Maybe, yeah. I like that. Thats not bad. So now we havent had tim cook on recently. Is this the right move . Hell probably get easier questions on a late night show. We didnt learn any new great things and i stayed up to watch. You did . I did and im here. How are you feeling . A little tired. Yeah, no. And the conversation if you watch it was kind of sprinkled with scripted bits and im a letterman fan. Youre a recode guy but if you were the media guy what are we to glean from the first week with the uber guy, the apple guy, and who was the third one. What do you make of that . Should we feel good about ourselves . Weve been right all along that if youre cool and intellectual you interview Business Leaders . Yeah. Well, how come fallon, j jay leno very rarely had i dont think the interviews have been all that interesting. Tech guys are are interesting for me. But youre going to set up awkward moments. It was awkward with tim last night. He enjoys the spotlight every once in awhile. Much more than steve jobs did. Hes unbelievable in a normal setting. Hes a wonderful guy and really interesting but not in the entertainment business. Hes missing that sense of timing and that sort of thing that you would typically get. So is colbert though. So is colbert because going from one scripted bit to a conversation and back to a scripted bit. Feels awkward. How have the ratings held up . The next day fallon had basically one win and then he was clobbered. Does that make you nervous . There but for the grace of god. Probably shouldnt throw stones. Look at the glass we hear. I hear you cant break it. People in glass houses. Be careful. But iphone sales better than ever before . They sell off in the stock unjustified you think . Ive been watching apple stock for 15 or 20 years now and there was a lot of anxiety around china and everybody was assuming if the chinese economy was going to blow up apple was going to blow upright along with it. 25 or 27 of his business is in china now which is a new thing so that kind of exposure gives worry. Its no reason about that. But clearly the demand is going to hold up. At least thats what we saw the early indications of that over the weekend. That iphone 6s plus the bigger one sold out just like that. Already three to four weeks within a day. At this point if you buy apple you have to think they continue to gain market in iphones. The market share in iphones. You dont buy it for tv, you dont buy it for cars. Its all about the phone. Yeah. They better stay the most innovative smartphone company. Yeah and theyre pushing the envelope a lot. More people have android phones but then theres only one vendor for ios phones. Who are you going to buy are you excited about the extra hour . Id like to get an extra hour of sleep every night. You and me both. Do you like the hour . I have been waiting for this upgrade. What about the car . I dont know about the car. I think they will no, he was asked about the car but theres a lot of reports recently that theyre building or doing something in some location a couple of miles away. Some secret location. Im sure they have works on a lot of things. Apple always had skunk works on stuff. I remember in 2002 we were hearing rumors about Intel Computers that apple was working with which was a big deal when they finally announced it in 2005 and that i think i believe tim when he says it that they experiment with a lot of things and figure out whats going to work and throw some resources behind it. Thanks for coming in. You bet. Great to see you. When we come back this morning, Awkward Family Photos. We all have at least a few but now a museum is putting them on display. We have that story when squawk box comes right back. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box. An exhibit for the awkward photo award that you wish you werent in can now be seen in a museum by 200 of the cringe worthy pictures went on display this week at the museum. Museum operators inspired by the Awkward Family Photos website decided to put this on display because of the variety. The exhibit expected to run through november 15th. So run, dont walk to check that exhibit out. The things they put on the internet that gets you to click all the way through. Is squawkward on the internet . Should be. Sometimes were going for it on purr. I dont think colbert does do it on purpose. Sometimes we dont do it on purpose either. Coming up, republican president ial hopefuls ready to square off on stage, among the candidates Carly Fiorina and well hear from her in one of John Harwoods speak easy segments which we love and well do that when squawk box comes right back. Which allergy . Eees. Bees . Eese. Trees . Eese. Xerox helps hospitals use Electronic Health records so doctors provide more personalized care. Cheese . Cheese patient care can work better. With xerox. Thats it. How was your commute . Good. Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Welcome back to squawk box, everybody. Ahead of tonights gop debate john harwood sat down with carly fiornia. First of all, congratulations on making the big debate. Are you looking forward to giving donald trump a massive headache. Well, mr. Trump is going to hear a lot from me. Thank you. You said ill stack up my Business Career against his any day of the week. Donald trump and are in total different businesses. Hes in the entertainment business. In my business we had to report our results and i could be held criminally liable. I think he said everybody does it. In term of inflating the value. Actually everybody doesnt do it. Because if i had done it i could have gone to jail. Those are his standards. My standards i think are what the American People appreciate. One thing that some of my fren friends at hp covered you said she carried herself as a politician when she was a ceo. Controlled . On message . I dont know what they mean by that but as the chief executive of a company yes i stayed on message. Not because i was a politician but i believed what i was saying and we executed what i said we would. When you were in that job did you entertain the idea that eventually you would do that . No, no. The day my firing became public i got many, many phone calls. One of them came from president george w. Bush who wanted me to come into his administration. And that wasnt something i was prepared to do. I needed a rest if nothing else. Many dont have a fix on where you come from on some of the policy issues. More tax cuts or more deficit reduction. See i think republicans have been talking about this in the wrong way forever. Im not in favor of revenue neutral tax reform im in favor of revenue reducing tax reform. We talk about entitlement reform every election and tax reform every election and nothing happens. There are binders full of great conservative ideas on how to reform Social Security and entitlements and well never get to it because the Political Class cant challenge the status quo to ever get to it. Do you think privatization is a useful structural reform to make or would you not do that . Im not prepared to go to the American People and talk to them about how were going to reform Social Security and medicare until i can demonstrate to them that the government can execute with excellence, serve the people that pay for it with excellence. Now that is a dodge worthy of a very good politician. Its not a dodge. I am deadly serious. Carly fiorina thats going to be a big star tonight at the debate. Well see what she has to say. I wonder if theyll talk about her business experience. Im not going to credit her or blame her for this but on a day when hewlettpackard is cutting another 30,000 people. The worst ceo business experience is head and shoulders above the best political experience that most of these other people have. At least youve made some decisions. I want to give her a lot of credit for the ad yesterday which we all loved, right . That was a great ad. The response to donald trump saying look at that face. Look at that face. When we come back, we got a lot more to talk about including whether theres an ipo melt down going on right now. The number of deals right now is down almost 39 . But first heres a look back at this date in history. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. Youre the marketing geniuses, what do you have planned . Wow. Impressive. Its even a little dangerous. Yes skycam . Every guest gets a highlight reel. A highlight of what . voice straining not gonna sugar coat it. This ones not my favorite. To see a great idea go to courtyard. Com for your chance to wake up in the stadium on super bowl sunday. Courtyard. Official hotel of the nfl. The ice is nice, but i miss the bubbles. Not the same without bubbles. Tonight, its stowed away here. All Million Dollar inventors. Its been a tough year so far for the market. A new report out this morning showing that the amount of deals over the past eight months decreased by 389 , compared to the same quarter last year. Breaking down the find and what it means is americas ipo leader, jackie kelly. Good morning. Good morning. So, well, we know its down. The question that i have is depending on what happens to the fe fed, do you imagine its even more down the rest of the year or not . I think were anticipating well work our way through the fed issue fairly quickly and, therefore, hopefully the markets pick up by the end of the year. Volatility which is killing us right now, and it killed us earlier this year. Its back again. So so holdupw many ipos are on runway . Well, we had a lot in the pipeline, fortunately, unfortunately. When the jobs app was created, a created a filing process, and unfortunately, we scratch our heads how many are in the pipeline today. With that said, were working with tons of them, theres no slow down in interest in Companies Going public right now. And how many unicorns are out there . These sort of billion Dollar Companies who want to go public, but is there a window in which they are all looking, thinking, you know, the plan to go public now, and if we dont, well have to somehow find money in the private market, and can we fine the same type or amount of money . We have over a hundred unicorns right now, around the world, most sit in the u. S. The great news for unicorns, theres so much cash on sidelines right now, and so many continue to grab the cash to keep moving them along that even if our markets are slow and rocky and maybe they dont get out exactly in the time frame they want to, you know, if they need extra cashings its out there. Theres a piece in vanity fair about a bubble taking place in the unicorn economy, and all will go bust, which is what a bubble does. Do you see that . I dont think so. The companies are more mature than the last tech bubble. That said, the great news is private funds are going into the companies right now, which is what should be happening outside the Public Market. Unicorn, the name means rare, and there have known before in the history of the world a hundred unicorns at one time. You need a new word. Now, the other thing that we think for the ipo zz, we think we can get through the fed thing fairly quickly, that implies that they are going to do something at some point. This is part of the problem of what people are pointing to. If we dont do september, they dont get through it fairly quickly unless december is fairly quickly . They help you if theyd get off and do one i think probably clarity around this would help. There wont be until that happens, and we expect to get through it quickly. Its been nine year since they raised. Yeah, yeah. You know, were comfortable, arent we, in this situation . You know, you say well get through it quickly, that imply events raise. We dont know if we know that. Realistically, we think you wish they would, dont you . I think eventually uncertain until they do. True, true, absolutely, so, i mean, i think that we all know that at some point, Interest Rates are rising, clarity when it is going to happen would be great for the markets, and just to know, so one other question about the ipo market, specifically the private market valuations and whether they hold up in the Public Markets, which is to say a lot of the private market valuations have been established in part by public investors so a lot of these prices and others that historically did not touch the stuff jumped in and propped up the companies and valuations in the private market, but the question is will they translate in the Public Market . Right. We say if the valuations are this high and these investors are coming in at this point, is there still a market . Absolutely. I mean, i think there are so many investors sitting on the sidelines wishing to get into the deals that do not have access to them. Still . Still, still, absolutely. They dont look at the 50 billion saying its making no sense . Its pricing and positioning at the time of dealing so i think theres definitely a lot of interest in these. I dont think we should worry too much about that. You dont think any of the stuff is overplayed at all . Im surprised theres no skepticism about the valuations in that number of valuations are established with all sorts of protections and other things that mean that the valuation unto itself may not be real. Well, i mean, i think valuations are really high in some of these deals, but its a finite group, and what we dont have visibility to is those of us outside the inner circle is what the potential of the companies is, and where they are going to scale and grow and what they are going to become, like, five to ten years from now, so, you know, i think theres a lot of smart people looking at us saying the valuations are worth it. Jackie, thank you for coming on. Thank you. This mornings top story including the deer story, and planning a proposal for sab miller. Plus, veteran market strategist, david garth is here, and believe it or not, he brought a list or two or maybe he has lists . On the second list, is this, and third list is this, and each list has ten things and theres three lists. Anyway, things hes watching ahead of the big fed meeting. He always brings us something too. Oftentimes. Like baked goods. Baked goods, exactly. Stay tuned, youre watching squawk box on cnbc, first in business worldwide. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Market alert, stocks soaring, the big bank turning to help in china, if more emergency Government Intervention on the way . Breaking this morning, a potential beer deal in the works between ab and sab miller. Details straight ahead. Fed announcing a rate hike. Wait, scratch that, fedex announcing a rate hike. The companys Quarterly Report expected this hour and bring you the numbers soon they hit the tape. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. The fed kicking off the policy meeting today, and the countdown to tomorrows rate announcement. We have new data from the fed survey, that in a minute, but, first, your morning headlines. Heres whats going on. Breaking news at this hour, the top Brewing Companies exploring a deal, sab miller confirming that inbev plans to make a deal, and they add no formal offer has been received, saying they plan to review any proposal in respond. Inbev made an approach to sabmillers board regarding the two companies, and we were talking earlier, you made the appointment about antitrust issues iss issues, and likely sabmiller would be sold back to coors to make the deal work and make the regulars prove it. In addition, Global Market news, chinese stocks jumping in the final 15 minutes of trading, market watchers pointing to suspected intervention here, and equities at this hour, ahead of the fed speak meeting today, looking up, but lets call it marginally up across the board. Dow looks to open 25 points higher, and s p up by a point. In political news, debate night for the gop. The stage is set at the Reagan Library in california. The main Event Features 11 president ial hopeful, and trump in the middle of the stage, and theres a new addition from the last debate, Carly Fiorina joins the group. Why you would have to assume they want the deal so much they let miller go for a price so attractive that coors cant pass it up . Unless theyve already had why are they are willing partner to help the deal go through when competitively its helping a competitor . Let the regulars block the deal . No. Why cant we just assume coorsments miller . The question is, have they had the conversations . I suspect i think the back panels for all the deals have begun. That almost sounds like collusion. You know, if you yeah, well take miller from you, allow you to pass muster with regular late s. Ill give you 50 cents on the dollar for himiller to get your other deal done. I think you should done the advisory team. Like, oh, how do you know they are interested . I know things. Oh, you do know things . I know things. So you know that coors i know theres things going on that that is youre drunk. I think you had a few beers. You do . A lot of coffee. You found out when you said it this morning, between then and now send me your emails. I cannot turn over my emails. Even under fear of jail. Yes, thank you. Now im going to jail. Were a day away from the feds decision on Interest Rates, and its time for the new results from the exclusive cnbc fed survey. Steve leisman has the details. Big news in the fed survey, first time in five years weve been doing this, respondents see a rate hike in the month of the survey. Hes the numbers, 49 of plurality say, yes, the Federal Reserve will announce a rate hike tomorrow. Thats unchanged from the august survey, and 43 say, no, thats done with most of that showing up in the theyre not sure or they dont know. Lets look at the timeline. You see a little bit of a difference here. First, the prior, remember, in the midst of all the market turmoil, the fears about china, they had push it ahead, that first rate hike to january. Now its dialled back to, it says here, november, and thats the avenue. The median, however, a solid september with 26 saying that they are going to hike rates, and you see the whole timelines been pushed back or push earlier here. The Balance Sheet declined, september 2016, now is seeing in august 2016. Over my shoulder here, when will the feds stop hiking rates . Had been in the Third Quarter of 018, been brought back. And though you can see its brought shallower to 2. 69. Take a wide view of the whole thing, the whole timeline as markets settled down, pushed earlier for wall street and part of the Federal Reserve is concerned. Look at the path of the funds rate. We started here, back in august 2014, when we first started asking on the year. 89 is the end for 2015, and 2 for 2016, and now look where we are now. We dialled back about a whole percentage point for 2016 and about 5060 basis points for 2015. Still seeing very low, but beginning tomorrow. Pnc writes in response to the survey, its time for the fomc to start bringing Monetary Policy slow le out of its selfindeuced coma in response to vital signs for the u. S. Economy. Another says, this is a long drum roll, time to take a shot, and another says, for the sake of credibility, we think one hike is in the cards this year, likely in december. Joe, thats what we have here. 49 of the 51 respondents say its time for the Federal Reserve to hike. Steve, i wont minimize that because its the first time its happened, and i think a plurality won an election here once with a third party candidate, but its 50 50. I mean, you add the 5 in, the other idiots, and the, oh, i dont know, you know, and youre always going to have them. Who are those people . Add those guys to the 44, and its 50 50. Nobody knows, right . I dont remember going into such a moe mentous meeting. I wrote a column as to whether or not yellen is at fault here for failing to lead here. Its been 63 days since shes last spoken. Youre the second person that said that. Is she in a shes speaking, right, not just ordering things at a restaurant. You know, shes thinking. Shes not spoken publicly. Just so you know, you would agree, joe, that sending the deputies out to duke it out is classic leadership. Except for at some point, you got to come in and break the tie. Buck stops here, thats right. She has to have thought that this is a better way to do it, let the meeting decide, let the committee decide, and come out, defend the committees decision. Do you think its more or less likely they raise, the idea shes not been out there guiding the market . It is a very weak, but it is the sole reason why i think they will not hike is that yellen has not prepared the markets by giving a speech. My thought its a weak reason. You might as well surprise us on the actual day of the meeting and let that be the surprise time instead of surprising us two weeks before the meeting, three weeks before the meeting. The markets going to be surprised at some point. The idea of, you know, holing hands and making sure theres no surprise on the announcement, well, at some point, you have to left them know. A good point, becky, thinking about it the way the policymakers do, which is the only thing i truly think they care about which is what is the best way to the best policy outcome for the economy . If its giving a little hint earlier, given the market time to prepare or surprising them on the actual day, i guess you could its a tossup very much the way results are a tossup. See the citi Group Reports base case now for 2016 is a global slow down, global recession because of china . I did see that. If they dont do it this time and then who knows about december, and in the next year, the global recession comes about, its an election year, thats not a great time to raise. Honestly, just get on board like the field goal in the Third Quarter, just you cant get to 40 if you dont get to three first on the field goal. Right. Joe, i my opinion on what you said is if i was a policymaker and looking as a base case of a global slow down in 2016, i would not hike now. Thats not what i would do, but the work ive done and work from many other folks is that china is not going to determine u. S. Outcomes. It is, in fact, the United States economy that determines chinese outcomes. Well, i pity the chinese then. Anyway, thank you, steve. Sure. The feds decision dominating market chatter. The guest host the next two hours, david, among other things, independent consultant, and Senior Adviser at Morgan Stanley wealth management. You brought us stuff. Joseph cookies. I brought you cookies and a summery speesh ch from 1994. Thats 21 years ago. Boil down to 28 points. Two pages for you. Elementary its in your bag. Worldly wisdom, just financial its excellent. Is there everything, though, about living life, or just mostly investing. He doesnt get into lifestyle things. I find it troubling when the bet is moved from data dependent to market dependent, and, basically, the hurt going into hibernation, not speaking for 63 days, that extends to the period of the august 11th devaluation of the chinese indicating that things were maybe more uncertain and instable. You see people dropping their forecasts right and left now, barclays came down to 6 for next year. My thought is, and billing on your comments and steves comments, my thought is if youre going to have a global slow down now, build some powder now that you could then drop rates. Right. I agree. Thats the old argument, like, its like saying, like, why would you let an infection get worse so that the medicine, you know, can start it right away, give the medicine as early as you can before its worse. Thats the argument that people would make on the other side. Inflation low, dollar high. Raise rates, the dollar is up further. Okay. Inflation is low, but one of her favorite measures is job openings and it was up 5 to 5. 7 Million People looking for jobs, which is the highest in the 18 years since they created that report. That is a number that she looks at very carefully, that is the perceived wisdom. I think thats something that might go into the equation. Its amazing its on this hook of 51 49, and your plurality thing, it was 1992, ross perot, basically elected you know who with only 43 of the vote. I dont remember who that is. Bill clinton. Yes. He took 8 of the vote. I still see a very, you know, im the wrong i see when clinton does this, i initially, for some reason, and thats bad, bad that i still think of bill . Sometimes i do. Because youre old. [ laughter ] because im old oh, no, no, its Hillary Clinton now. Its confusing if they are both elected president. Then its both president. She wont go vp, will she . I would doubt it, but who knows. She was secretary of state for president obama. He could be roving secretary or roving is the wrong word for bill, but roving secretary anyway. This is i mean, this is you got other lists. I got a list. This is davids they are right here. This is a list thats 28 long. You got these memorized . This is mine. Get your open. Good stuff in there, though, and arguing for buying great companies, and he says if you can find a company that earns 1518 on capital, even if you buy at a high price and hold it for a long time, you earn 15 . Buy a 6 , earn on capital, no matter the price bought at, you earn 6 on your money over a few decades. That is one of the big things. Secondly, dont keep trading in and out of the market. He says if you can postpone paying the taxes, youre final amount of money that youve earned goes from 17,000 to 43,000. Making three times more if you avoid getting clipped paying the capital gains, joe. We have to take a break. Someones tweeting, remember greenspan, he always told us there was a briefcase indicator. We dont have anything like that. With bernanke either. He never raised rates, did he . Its been nine years since weve raised rates. Is that true, in his tenure, never raised rates, did he . Has to be true by definition. Yeah. Thats weird. Thats weird. Anyway, okay. Theres a party coming up. I know youll be there. I saw theres a party coming up. Hes going to be having a bit of the party on our set, by the way. Oh, good. Coming up, president obama talking to Business Leaders in a f few hours, and john lungren will join us on what to kphear from e president , and plus, squawk plat number Portfolio Manager has picks to survive the market turmoil. We return in just a moment. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Only glucerna has carbsteady, diabetes, steady is exciting. Clinically proven to help minimize blood sugar spikes. So you stay steady ahead. Welcome back, president obama set to appear before Business Leaders in hours at a quarterly meeting at the round table, ceos can ask questions, voice kerns, and the looming prospect of a government shut down. Our guest will be one in the room, John Lundgren joining us from washington this morning. John, great to see you this morning. Thanks, becky, good to be with you, although, remotely. What do you plan on asking the president today . Normally, when they speak to the business round table, he speaks, we listen. Its always a Good Opportunity to hear whats on his mind. Questions, dhthough, from the Business Leaders are first and foremost the immediacy of the government shutdown, prospects for sequester, and why thats unproductive. The other topics are likely tax reform, ability to get anything done before november of 2016, infrastructure, and then i would say an easy one is reauthorization of the xm bank. It seems to be bipartisan, doesnt cost the taxpayers any money. Its we think it would be a good thing, i would say, most of the folks in the Business Community would feel that way, and i think those three things are probably on everyones mind. We want to know where the president stands on those issues. John, just think that was interesting the way you said that. Was it said without malice what you just said, that you got a president that comes in with you guys, and he doesnt want to hear from you, doesnt want to hear questions, but tells you how it is. This is a gentleman that was never in the private sector, community activist, never held a job in the private sector. Was it said without malice that you are lectured to about the way things are, and he doesnt want to hear any questions or any feedback . To me, that just sounded, you know no, joe, thats not fair. Were first of all, its a privilege to hear the president and hear it firsthand. You have to honor the institution, i understand that, and youre respectful, and thats find. You dont see any merit to what im saying, though . No, theres no question that president obama will want to make it clear to the Business Leaders whats on his agenda, what he would like us to do to advance that agenda, but i think its unfair to say hes not willing to at least entertain you said he didnt want questions. No. Yeah, you said, he comes in, says how it is. Joe, thats what you said, joe, i said normally he speaks first, and we listen, and we have the opportunity to ask questions, and my sense of the questions are around infrastructure, tax reform, and xm bank, and sequester shut down, those are high on everyones agenda. John, i know youre in a quiet period right now and cant talk specifics in the financials, but, obviously, you can talk about the trends youre seeing around the globe. Sure, sure. Earlier this year in a conference call, you said when it comes to china, theres a deceleration in the market. What are you saying now. All emerging markets, becky, not unique to china, 50 of other sales outside the u. S. Are doing fine. Housing starts are at about an eight year high. That, of course, helps our business or a big portion of it. The emerging markets in general, latin america as well as china, but china in particular, where the distributors, credibility is an issue, and the channels are full the product in many cases. As that sells through, with an inability for customers in the markets to finance their inventories, that does become an issue, and i think that, in part, has led to the slow down thats been so well publicized in the last several months. Why do you think theres been a lack of credit in some of the markets, and what happens if the fed raises rates . I dont think the lack of credit in the markets has much to do with our fed raising the rates. I think, you know, a 25point basis increase is not going to move the world, whether it does. Obviously, it makes the dollar stro stronger, making it more difficult for american exporters, and that being said, i think uncertainty of when rates will be raised if rates will be raised, those are justify sets as long as it becomes clear. I truly dont think the feds giving a lot of thought to credit availability, my opinion, in china and in the emerging markets as it thinks about its solution. Its thinking about global economies in january, obviously, unemployment in the u. S. And other places. John, i love the way youre able to go toetotoe with joe and trade punches with him, and you stay smiling and stay standing. My question for you is on the 28th, xi will be in washington and microsoft in seattle and i want to ask you about Cyber Security spying. What are you and the other members going to ask the president about what we can do to keep them out of sony, target, and other places records . Im not sure that well get into that with the president. Its, obviously, something that is of incredible importance to every american company, and those conversations are going on on both sides of the atlantic. Not a plug, but my wife, the executive chairman of the u. S. Chamber is in china now with tom donahue, and im sure thats what they are discussing with the chinese leaders to plant seeds for what the president and others will be able to talk about with them when they are here. Right now, it seems to be fairly onesided. I think thats fair to say. Its a huge concern. Were trying to keep the Playing Field level to say the least. John, theres a question, actually, about the group of ceos meeting with president xi at the same time or days apart when the president is meeting with him giving him a hard time about the Cyber Security issues, and whether theres a good cop, bad cop thing going on and the appropriateness of that. The president on one side says theres a problem thats difficult, and at the same time, theres a group of ceos on the other side who may not be. I dont think theres any i will not be part of that group of ceos, but im hard pressed to believe that despite the fact that China Remains a very important market for so many u. S. Businesses that theres anybody in the audience that wouldnt support taking a relatively tough stance, bad cop, if you will, with the president when hes here. John, i want to thank you for the time today. Thank you, becky. Good to be with you. Great to see you. All right, coming up, and, you know, i know all those guys on the round table, and they not john, they may say Different Things when they are not on camera than what they say off the record about, and its been six years of that, what they hear when they go there and the irony of being there as they hear from no one even in the administration had a private sector job. The u. S. Department charged with protecting Government Computers is vulnerable to Cyber Attacks according to a new audit. Details next. Time now for todays aflac trivia question. Who was the first president to have solar panels installed on the roof of the white house . The answer when cnbcs squawk box continues. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. T11 intelligent driverassist systems. It recognizes pedestrians and alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Now the answer to todays trivia question. Who was the first president to have solar panels installed on the roof of the white house . The answer . Jimmy carter in 1979. Welcome back to squawk box, everyone, and hp is cutting up to 30,000 additional jobs in an enterprise business, that is in addition to the 55,000 job cuts previously announced. The tech giant is adjusting to declining demand. Hp will split into two publicly listed companies later this yearment dont miss meg whitman on later this morning. Fedex is increasing shipping rating by an average of 5 , set to post results later this hour. The department of Homeland Security saying Information Systems are vulnerable to a cyber attack, and they found security lapses in internal websites used by the secret service, immigration, and customs enforcement, they requested programs for the agencies blame short term budget allocations. When we return, sounding the alarm on markets saying chinas greatest new import to the world is volatility. As we head to break right now, look at the rally in asian stocks overnight. Shanghai up by 4. 9 , a big rebound after declines from the day before. Waiting for fedex and a lot of times people immediately say, oh, its a proxy for the economy, and the numbers are bad. But a lot of times fedex has volatile numbers, not a lot of quarterly guidance. It gives year guidance. The adjusted earnings per share at fedex was 2. 12 with the estimate at 2. 46. They reported, i guess, a gap number of 2. 42, still 4 cents blow, but normally we use adjusted, well below 2. 12. Revenue also below expectations, but not by a large that large of an amount. 12. 3 billion, and i think the street was looking for 12. 5 or so going in. Now, for adjusted net for the year, the company is talking about 1040 to 1090, and the street at 1082. The high end of the guidance is above the 1082 that the street is looking for, making me think that a lot of times its lumpiness in the quarters. Although, there are comments from fred smith here weaker than expected economic conditions. And operating costs of federfedex grounds and higher selfinsurance costs they talked about, and the operating costs at fedex ground. Ive seen this stock down premarket and seen it go up three. I dont know whats going to happen, but the stock, just looking at the overall industry and Economic Growth conditions, what it says about it, because we use that for a proxy for those things, they say that the new outlook is lowered primarily because of weaker ltl less than truckload industry demand and higher than expected insurance reserves. Wonder if you break it down on the internal versus external stuff on that, how that would come. Now, lets see, it says justness. They are some of them are using 2. 42, i dont know. Usually you use adjusted unless otherwise but i dont trust wire services. You know, well talk to analyst who should know at the top of the hour, but that looks like a big miss, down seven or eight points. A miss is as good as 1. 6 kilometers. What . A miss is good as a mile. A miss is good as 1. 6 kilometers. You, youre weird. Thats metric for you, joseph. All right. I got it. I got it. Im used to you by now. We have a guest, our next guest, and might be doing this whole interview in mandarin when were done. Consulting financial global firms how to invest in china for a decade, and says Foreign Investor Confidence is eroding, and we thought the government stepped into the market in the past 24 hours, Peter Alexander is on the set, and good morning. Wait a minute, the adjusted was a year ago they put on the original wires when they said it was 2. 12 a year ago, so it is 2. 42, 4 cents below. Look at the fedex chart one more time. People process that, if that changes the opinion. Its down. Right. You might expect that to pick up a little bit. Well, well see. Wire copy being wrong, its not the only place youll see it, a lot of places that go. Right. Check it out. Down 4 . Well continue to watch it. Okay. Were going to return to the conversation real quick on china. You were here from china from china, correct. You speak mandarin . I speak mandarin. You want to do the interview in mandarin . [ speaking in mandarin ] it might be related to china in other ways, but because youre on the ground in china right now yeah . Are we overestimating the problems in china, underestimating . Thats the question because its a binary question. Some of the smartest people in the world, economists, strategis strategists, you name it, it falls off the cliff or its the next best Growth Market for everybody. For us, its amazing nobodys taking the time to strip out all the noise, which is what we do as an organization. We do the analysis, work with the client, forget about hyperbole on either end andens the implications of what happened. What is happening . Right now, what is happening you have exactly what everybody called for five or six years ago, move from export driven market to one thats consumption driven. If anyone thought that would happen overnight without bumps in the road, were fooling ourselves, going for the process now, and its working, but there are significant slow downs. Cuts. Yes. Its a slow down. Of course its going to slow down, and they wanted it to slow from 13 that was unsustainable and driven by excess debt, and i think the world would take in a heart beat, moving towards more consumpti consumption. Its not just shanghai and beijing, anywhere in the country, second and third tier cities, look at iphones, General Motors, all the western companies, and its chinese built. You have domestic as well. For the product. Going to be a slowdown, but its going through a period that i think people look back in a decade as being one of the most important periods in chinas development. You have a positive spin on this. We have one on semiregularly, and do you buy the argument, though, theres more systemic problems in china . Well, first of all, i dont want to be baited, but i will say this. Theres how many arguments on china over the last, six, seven, eight years. First, housing was going to cost the collapse. Trust me, housing is doing well. Then too much debt, well, that has not worked out. Theres still debt, and its not put the market down. He continues, and its not just himself, but tons of, i think, Hedge Fund Managers and other economists, theres what originally started in a Cottage Industry in 2008 and 2009 is now a massive industry of who calls chinas collapse. Chinas done nothing but disappoint on numbers that people said they are going to be able to do and what they will be recalibrated down to reflect. By definition how can if theres no failures, none of the staterun companies can ever fail. If nothing fails, how can you possibly weed out under performers and excess and over capacity and i dont know, seems like its going to come home to roost unless you think state planning can be a way to run an economy. So, again, this goes back to the binary issue, which either the state companies do well or dont do well. Our argument as companies have try to reposition, whether they do it well or not is unknown. You have had the entire private industry, whether its on the tech side or consumption side grow in tandem so now i believe the actual gdp figures for Economic Growth come more from private firms than public firms. You make the argument, also, at the same time that youre putting what i say a positive spin on things, that the government is making things worse . No. What were saying is that the perspective of what the government had to do to step in led to major discrepancies or concerns among investors globally of should i be in there . You think they are warranted or not warranted . Absolutely p ch labsolutely. China is not for everybody. Thats clear. The most recent export is what . Volatility and deflation. Okay. We can argue that. I want to talk about from the investors stand point. If the market effectively closes for five days like earlier this summer, i cant unwine the position i have. If i cant unwind, i dont want to be in the market because it could happen again. Its a confidence issue. Heres the thing, everyone talks of china being the second largest economy, but the second largest equity and Third Largest fixed income market. China has to be part of everyones discussions, and thats what is missing. I dont think they are writing it off, but saying theres a question mark about what that economys going to look like in the next couple years, a question mark on when you look at whats happening, for example, to Companies Like valuations because of the growth rates because theres skepticism about. Look at the United States, its short termed in terms of what they look for in terms of delivery that they overlook the longer term outlook. Look at General Motors in 96, the year i arrived in china, everyone rode bikes, no cars on the road, and i think by the Global Financial crisis, its the most valuable asset. If you take a ten year time horizon, you can do well in china. Problem is everyones focused on the day in, day out. In new york, everyone was in cars, now everyone has city bikes now, and as china got more capitalistic, you elect ed deblasio. I did not. The city did. I just live here. Peter, the world is looking for a big move from china. Yep. Come in at the end of the play and everything is resolved. Tell us what to look for on the monetary and or especially the physical front from china to make everybody more bullish, thats one of the two piecines they are looking for. The other is for the fed to be easy, not tight. Those are two things. Dont expect china to do anything that is a big bang or something that comes out that will automatically tell everybody, look, theres clarity. We have clients saying, well do more in china once its clear. When we have clarity, well do it. Argument to them, well, youll be waiting a long time. Its a very incremental approach. Tria triangulate the knowledge and have institutional knowledge. Thats why we break, and the reason im in new york is because of 20 years of experience being able to explain whats beginning on in china, so if youre looking for that one holy grail, if you will, oh, its now, we feel fine, its not going to happen. You have to look at all of the piecemeal issues and say, im going to make an educated guess and move in this direction. Never been to china, and people who have been there, you, i dont know, i think theres a weird indoctrination that goes on while youre there. Its called experience. Thats the problem. Okay. Peter, thank you. No torture . Not yet. Not that im aware of. When we come back, portfolio plays for volatile markets, google down 3 , and microsoft down 6 . Those are the companies that platinum Portfolio Managers talk about, and an winblad is joining us on whether to buy on the dip. Shes joining us next. The tech sector has seen selloffs, and winblad is the cofounder and managing partner, and, by the way, ranked third in the platinum portfolio, up 9 year to date, and, ann, great to see you, thank you for joining us. Hey, good morning. Hey, we had a lot of people with serious concerns about technology, and theres been a big selloff, a lot of the major stocks that we watch every day have sold off. You look through those and think theres potentially good buys for some of these stocks that have dipped, microsoft, down 6 . What do you think . Well, i deaf in thely think that the Enterprise Software sector, microsoft includes, are companies to buy on the dip, certainly, you would have been well rewarded bying sales force on the dip before dreamforce before 160,000 people descended upon San Francisco this week. I think companies are undergoing a major Digital Transformation and these knew and vibrant Enterprise Software companies, calling microsoft more vibrant these days, are poised for tremendous growth. What do you think the market misunderstanding . What are the selloffs there, what have they not understood about whats happening . I think Enterprise Software companies, as a whole, are hard to understand. They are viewed as more like plumbing than the more glamorous direct consumer stocks, and people understand fitbit more than sales force, and it really requires someone to be a student of the sector. In terms of a cop funfusing stock, another one, hewlett packard, another 30,000 layoffs in addition to those already announced. What do you think about those decisions and those within the arena . Well, i do think there are some long term incumbents, hp among them, that for quite some time, will be in transition before they are Growth Stocks like the newer entrance, workday, new relics, sales force, and microsofts looking more like a new entrance with both its growth in the cloud and their acquisitions, and their partnerships in industry. Are you investing in microsoft . Have you bought shares . Yes. You have . And you added to the positions because of what youve seen recently . Yes. Ann, we had a discussion earlier in technology, is, you know, when you watch it over the years, its always staggers to me the way that household names literally disappear like digital equipment or for Something Like that, and microsoft, when you talk about microsoft, thats old tech, i dont know what that makes ibm at this point, older old tech. Is ibm headed under a hundred billion in market cap at some point, do you think . At some day, theres only so many turn arounds, do you have an opinion on ibm whether they successfully orchestrate a role in the 21st century thats a leading role . Well, ibm is really two companies. They are both a Software Company and Systems Integrator so think censure plus microsoft, and its hard to understand the dynamics of how it works. They sell to the top 1 companies. Their revenue acquisition is very different than a sales force or a workday or even a mic microsoft for that matter. I do think that they are working very hard to focus on some of the more vibrant categories, analytic with watson, and much more on partnerships and industry. Were seeing ibm in the valley much more these days than we have before, and they are a company that always has currency to do acquisitions should they choose to make big and small acquisitions simultaneously. Its a big shift in turn, so it cant turn as fast as others. So that was a maybe, i guess . Thats kind of a maybe. And id love to talk to you about more issues, hope to have you back soon. Thank you very much for being with us today. Oh, youre welcome, thanks. See, i have my own facts behind that, sort of confirmed what i said earlier. Ann knows her stuff. She does. Doing this for a decade. I may go home and watch this, and say, oh, that stuff. Coming up, fedex reporting a miss minutes ago, not as big as dow jones told us at first, though. Not to throw them under the bus, but its still down. Its not helped. Im watson. And today hundreds of companies are putting me to work. Im teaching watson to help your vet speak dog. Youre a dog, right . Im teaching watson to help you make healthy choices. Im teaching watson to help design a vacation around your personality. Dont judge. Im teaching watson to answer endless questions. How big is infinity . Where do babies come from . Why cant i have chocolate for breakfast . Im watson and im ready to work with you. Welcome back. Dow looks like it would open up by 32 points. We did get some complicated news from fedex talking about in a bit. When we return, the earnings numbers, and well dig in the report with an analyst and break them down for us next. Later, the last piece of inflation data the fed has to consider before tomorrows Interest Rate decision. Were going to be getting cpi at 8 30 eastern time. Dont miss it. We return in a moment. Excellent looking below the surface, researching a hunch. And making a decision you are type e. Time for a change of menu. Research and invest from any website. With e trades browser trading. E trade. Opportunity is everywhere. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Fedex delivering shipping despite higher fuel prices, inside the numbers and what you will pay to ship gifts this holiday season. Ho, ho, ho. No breaking news on the economy the last check minutes away, and is your portfolio ready . What you need to know ahead of the open is just ahead. And meg whit mans move to cut jobs, and why hewlettpackard is cutting jobs before splitting into two companies, the stock down 25 in the last year, and will a leaner hp bring back investors . Debating that as the time hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box on cnbc, first in business worldwide, and youre coming along, so excited. Trying. Were counting down to the big fed decision. You are channelling me on some of your thats awesome. A little bit. You cant help it. Too strong a personality. A decision the central bankers gather to begin a twoday policy meeting in washington. U. S. Interest rate futures now indicate a 29 chance of the rate hike happening now, the first one in nine years, up from 23 late monday. We have people on earlier saying theres background noise in the 29 that is actually higher. Someone made that case yesterday, than what they are actually talking about. 29 what . 29 of chance that they raise in september, but remember the person on yesterday saying its not actually 929, but theres all kinds of conditions associated with that, and i dont know. I dont know what that may not be were 49 on our survey. Yeah. And 41 said no, and then 5 of the economists said whats the fed. Those are theuys we should get rid of, right . Okay. Yes, sir. Anyway other stories were talking about today, Anheuser Busch plans to make an offer to buy sabmiller, no proposals sent yet, and we talk about the antitrust issues, how the thing might break, whether sabmiller has to sell miller or leasing the u. S. Portion back to coors. Could be a lot of components of a transaction to get it across the finish line. Market watchers points suspected intervention from beijing. At home, Mortgage Applications dropping 7 in the latest week, the average week covering 4 as has for most of the year. Since the s p 500 hit a ten month low last month. The dow transportation average is now up over 9 , the most among the major u. S. Indexes, but fedexlikely to weigh on transportation today, missing estimates with inflation earnings, trimming the outlook, and joining us now to talk about it, covering fedex with avondale partners. Looks like a miss, bigger than you thought . No. Its slight miss, absolutely have that right, but what probably weighs on the stock more importantly they lowered full year guidance by a full 20 cents bringing the entire range down to well, the range is now, what, 10. 40. This is their first fiscal quarter. They cited weaker manufacturing globally is the big reason. How much do you think whats the implication, theres a surcharge in november that they are going to put into effect. They have higher rates coming in january. We have this tnt deal that has to close. Theres a lot of moving pieces in this. Well, those could be very positive to the upside, and i would point out their Profit Improvement plan is taking hold in the mar ggins up over three points, making Real Progress there. Youre right, the yield increase this is what they call a dim weight. You cant ship a huge box full of pillows of air and expect to pay only a pound because it weighs a pound if you ship a huge box, they ask you to pay more. Thats fair, and it will change shipping behavior. What about the competitor . Ups is looking for dim weight increase because of a dimensional weight increase, we received packages from amazon or whomever in which you open the box and theres the one little thing you ordered, and its surrounded by the pillows of air. Well, those fill up trucks, but they dont weigh out. All of those fedex trailers, they weigh out. This is aiding and addressing that issue. Donald, from a valuation perspective, what does the stock trade at . We think the next 12 months, this is a 200 stock because we expect all the work done in the Profit Improvement plan com continues to bear fruit, steal market on the ground from ups, which they did, theyre ground volume up 4 in a quarter, and most comparable from ups was up 1 . They are continuing to eat ups lunch on the ground market, and we expect a better consumer this fall than weve seen in a number of seasons as they are able to spend that dividend from lower cost of commute, lower cost of running your house. What are consumers missing then . Well, you know 50 discount right now. Its going down absolutely, absolutely. You know, talking about 150 stock moved to 200 in 12 months, thats true. Heres why. All of the transports have been down, rails, trucks, air freight. Really, only the rails have seen significant volume decline and significant cuts in the earnings estimates. The trucks have been actually increasing their estimates slightly, and here, just a 20 cents trim in what is an 11 estimate is minor. It is a trim, absolutely, but its a minor trim, and as they beat, and they are set to beat throughout the rest of the year, i think the stock can outperform. Okay. Leaving it there, donald, thank you. Oh, my pleasure. So we got the fed is not until tomorrow, but they are starting to deliberate and think about the day, but the president ial debate, the republican one, is tonight set to occur in simi valley, a beautiful number one, simi valley is a beautiful place, and not as much traffic as south of there, and located there on a clear day, and there are more clear days up there than in l. A. , but its a beautiful place, the Reagan Library. Reporter looking forward to when the sun comes up to see it better. We got rain out here, which they have not had in Southern California in a while, so everybody can thank, of course, the National Press for bringing the rain with us to cover this debate. Were going to have a very, very interesting session. You guys saw that speak easy conversation with Carly Fiorina where she previewed the way shes going to come after donald trump and i would expect that jeb bush and others on the stage will do the same. Dynamics of the linemen are that bush is standing next to trump. Carly fiorina will not, so not as easy for carly as otherwise if she were standing there to go right at him. I saw yesterday someone asked jeb about whether he was going to be tough and push back, and, i dont know, it hes a really nice man. I dont know if you saw that clip, if you doubt it, you just wait. The way he said it, youre never going to be, like, someone that you i dont know. Hes got to be himself. You know, hopefully hes not going to change. Contactually right. Exactly right. Hes got to showcase strengths he has, and im not sure the darts of, you know, political judo are his strength. Policy is his strength, but he has to find a way to kind of marry the strength with what hes got to do to trump and figure out how to get back to being the alpha male in the race which everybody expected he would be, and, of course, you got others. Ben carson has been coming on very strong in these national polls, another nonpolitician, and very quiet spoken guy. Hes going to stay in character too, you know, and ben carsons lately started taking the low energy stuff from donald trump that trump used against jeb bush, and ben carsons response is, well, loud doesnt mean high energy, and i think if i could operate on peoples brains for 12 hours at a time, i have the energy, and i think most people nod their heads to that. Yeah, he started going up after the first very soft spoken, leaning forward to listen to what dr. Carson was saying. Theres more than one way to impress people. Crazy thing about it, joe yeah . The crazy thing about it is that we had the first debate, i thought, many other people thought marco rubio was extremely effective in the debate, communicating very well, very positive conservative vision. He was pronounced by many people the winner of the debate. What happened to him in the polls since the debate, which had a huge audience, hes gone backwards. Right. As a part of that, i wonder what the media picks up on too, john. Carly fiorina was seen as a winner, talked about again and again and picked up by the media as a result. The media influencing things or is it how effective theyre campaigns are . Reporter well, i think, of course the Media Exposure makes the difference, but when you got a record audience on fox news watching that debate, you got the republican constituency locked in really seeing these people for an extended period of time. I think there are limits to how much the media can move that audience. They are reacting to what they are seeing. They are getting it not just on, you know, television and what joe likes to call the mainstream media. Mainstream. Reporter talk radio, which is very influential in conservative politics. There are many sources information, but they are seeing their stuff. Remember chris or rand paul, that was, like, just uncomfortable when you get that, you know, when youre trying to be that tough and mean. Remember that exchange . That was not great either. Meanwhile reporter you tell me, what does Chris Christie have to do to get attention . I know. We have the walker report, six more pieces today on scott walkers did you see it . There are on twitter, like, my god, its the walker report. They have to change their name from politico, i dont know. See ya. Reporter everybody wants to be first with the o pitch rare, but the problem is sometimes the patients not dead. Right. They sit up in the coffin. Thatll give you a start at a funeral. That happened recently. Reporter i know. Thank you, john. Reporter you bet. When we come back, gathering for the much anticipated meeting, mark yusko says the fed is trapped and that it will not raise rates this year. Hell explain next. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Woman when a student understands a concept for the first time. Man when the students get it. Man their eyes get big, the lightbulb pops on. Woman i got it, i think i got it they light up. Its like magic. Woman this is not just a job. Woman the rewards i get are. Priceless. Man we help kids grow, and thats part of the rush of teaching. Narrator the california teachers association. Educators who know quality Public Schools make a better california for all of us. Hedge funds firing back, and the founding argues that strategies used in his firm and elsewhere are not to blame for the wild market swings saying its by assets that go down in relation to those that went up, so we keep allegations constant. This behavior would tend to smooth market movements rather than exacerbate them. Wellknown investors pointed fingers saying the bridgewater strategy was behind the summers volatility. The founder of the university of north carolinas Endowment Management company, mark yusko, the ceo of the capital management. Great to you here. Thank you for having me back. Some of the strategies are really kind of leading to much of the volatility seen this summer. What do you think . Leverage leads to volatility, and, yes, i agree with rays point, that, yes, hes buying things that go down, sell things that go up. But when you delever unexpectedly, you increase volatili volatility. I side with lee on that one. Deciding with lee in terms of the idea you buy unexpectedly, market moves out there, trying to be longer term a little less volatile well, lee said that these strategies, risk strategies, were increasing volatility, and i think they calm volatility in normal markets, but at market extremes, they tend to exacerbate volatility because they deleverage quickly. Going back to portfolio insurance in 1987. Youre on lees side. Yes. Talk about markets and why the feds painted in a corner, damned if they do or if they dont. Were painted in a window. Channelling byron at the beginning of the year, and one of the surprises that the fed would not raise rates at the beginning of the year, then we thought in march, then june, then september. Now its tomorrow. I think they are stuck. If they raise, people say, well, its going to crash equities because multiples are going to compress because the discount rate goes up. If they dont raise, people say, oh, my god, is it really that terrible out there . Headed over a cliff, a recession, is china beating the world . I think they are stuck. What i think they should do, but no ones asking me, raise 3 , get back to normal raise to 3 overnight . Overnight. Rel reload the give un. The average businessman does not care. You said it last time i was on, they dont care about 25 points. But 300 points might get people scared. Yeah. Everythings based off the core rate, trim down the margin, i was talking to the makeup people this morning, paid 7 , kids pay 7 on student loans, 7 in a 0 world . If the core rate was 3, just decrease the increment by 4, its still 7. The problem is that all of the loans made and additional loans from that go up by that much more. You dont think 300 moves overnight shocks the market . I think it would, but i also think it would send a message of confidence in saying that the economys strong. It can handle normal Interest Rates. Think about history, 100plus years of history, the short term rate is equal to the nominal gdp growth rate, nominal gdp is 3 . 4 is still that. Talk about rays doing to marketssells abru abruptly, that move i cant imagine would create anything but outcabsolute chaos. The short end is up 70, 80 points, five years up, 1. 5, the ten year over 2. The ten year and 30 year, they actually were to go down, you know, the flattening of the yield curve, people are nervous about that, flatter curve, a sign of recession, but recessions are not evil. I mean, you need them to clean out the Bad Companies and they are not evil unless you lose your job in the recession. Well, that in my mind, normal functioning markets have to let the Strong Companies survive and the Weak Companies go away, and thats the way capitalism works, and its better if we let that happen. I think this artificial period of rates has been very harmful. What it does, its like water behind pipes. Hold it back, hold it back, when it releases, its going to be much worse. Although, theres an argument of never getting into the kwa quantitative easing, and i understand that, having said that, though, most say gradual return allows things to get back to normal with less dislocation. I just think its an interesting thought experiment to say, hey, whats normal . Where should it be, but gradual works. In terms of what you like right now, what youre watching, what do you think strategies work in this incredibly low rate environment . Look. You know, back in june, we talk about this, and i said being hedged this year was going to be great. I think 20002002 period, that three year period, is a 20152017, to is a 2000 2. 0. 2000 thought of as the bad year, but it was not. 2001 was down 11 . 2002 was the tough year, post recessi recession, down 22 . I think being hedged for the next three years is really important. This year, hedge funds beat long. Yeah. In fact our hedged fund, long term equity fund, is up 6. 8 year to date after august which is pretty good. Facebook introduced this not like button. What do you not like . Really dont like traditional fixed income. I think that replacing that exposure with more absolute return strategy, Market Neutral strategies, or arbitrage strategies makes a lot of sen. I think the average investor looking at bonds here at a 2 yield, you know thats the return for 10 years, not very attractive. Traditional bonds dont like really really dont like the highly valued u. S. Equities, so i think theres a lot of companies in the u. S. Selling at 25, 26, 27 times earnings in a 0 Interest Rate world. Thats too expensive. We like japan the best in the developed world, japan, the u. S. , and in a market we dont like, starting to get cheap enough where we nose around. We have not liked them, but we hit the not like button earlier this year, but now they are cheap so looking interesting again. Mark, thank you. Thank you. Coming up, marijuana smokers in colorado get a tax break today. Details minutes away, plus, a check on inflation cpi data minutes later. The numbers in the Market Reaction just ahead. Youre watching squawk box on cnbc, first in business worldwide. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Welcome back. Were 100 million homes are on the market, few selling, and some drop in price. More now with cnbcs wealth editor, robert frank. The ultimate bubble indicators for luxury reality, Million Dollar listings piling up, they get attention, but no buyers. Theres 20 homes in the u. S. Priced at 100 million or more. Last year, three sold, and this year, not a single sale in the u. S. Of 100 million or more. Brokers say the sellers are detached from the realities of the market and very few properties in the world are worth nine figures. The latest is this 8 acre waterfront estate in long island, 13 bedrooms, 35 bathrooms, indoor lazy river, a two story builtin doll house, wine room, courts, and a private pier for your 200 foot yacht. Price tag, 100 million. This 82 ranch in colorado is on the market called Elk Mountain Lodge with 15,000 square feet of space, cabins, basketball court, at 100 million, and some of them are cutting prices, jeff green cut 46 million from his aat a time now at 149, the most expensive still is 500 million estate in california. Again, a big bubble indicator when 500 million for a house. There you have it. There it is. Coming up, the last bit of inflation data the fed considers before tomorrows rate announcement, cpi minutes away, look at u. S. Equity features. When a moment spontaneously turns romantic, why pause to take a pill . And why stop what youre doing to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use. Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back. Breaking news. What do you have . August cpi. Consumer price index. The headline number matches expectations exactly down. 10 as well as the core stripping out the all important food and energy up. 10 matching expectations as our year over year up. 20, and year over year core over 1. 8, you can argue 1. 8 is up. 10 of expectations, but matches the last look. No surprises here. Maybe the topic of discussion on a day like today ought to be what happened in japan . Downgrades, what they have been doing for years and how their lack of inflation may be a strategic to save strategies that may be a common denominator of the common strategies of europe and the United States at this point in time. Maybe the big news continues to be Interest Rates, whether youre looking at the short end, most closely aligned with the fed, med curve r or long end with a big movement to sell, looking at thing like overnight repo rates and financing aspects of leverage that change and pointing fingers at each. Cooperman pointing fingers at ray for volatility, but maybe its the easy money strategies that are really at the epicenter of the problem. Back to you. Yeah. All right. Rick, i wish it was today, its not. Its tomorrow. I dont know. Steve liesman is here, and, steve, you expect janet yellen will speak at some appointmepoi least to colleagues . How long has been it been . As of tomorrow, 63 days since a public speech. Can i play economic jeopardy with andrew . Yeah. Does he need to answer in the form of a question . Andrew . Yes, sir. The biggest drop in todays cpi was what . The biggest drop in cpi. What . Do it in the form of a question. Yeah. The answer is, what is gasoline. Forget it. What is airline prices. Second biggest drop in cpi, what is airline fares, andrew . Down 3. 1 after a 6. 5 decline. Feds see this, year over year, running at 1. 8 on the core, and so its, obviously, pce number is little bit lower, so its going to see stable inflation outside of the volatile Energy Sector where gasoline prices fell 4. 1 . A little more from the fed survey. Joe talked about janet yellen not talking. Markets divided on whether she talks more. 64 said they talk too much. 34 say yellen does not talk enough, and the other says the amount is just right. Half say its just not enough. Is the market ready for a rate hike . Lets look at this. 56 say that discounted stock market of a rate hike, 60 say the bond market discounted rate hike. Vehicolatility to come there. The comment from our survey from asset advisers said, some will ask how the subdued economic and inflation backdrop justifies a fed hike, a better question is what justifies a 0 Interest Rate policy . Joe . All right. Steve, lets add another Economic Voice to the conversation. Brian, Senior Investment strategi strategist, and i like to take it to the extreme. I hope for 300 basis points as our last guess. Am i disappointed . Id like to see what the move in the dollar would be on 300 points. King dollar. All of our wealth goes up when the dollar goes up. Youd start to see the United States import a lot of deflation into the country as we have been, and those can spiral. I dont think the feds going to do anything this week. I think, you know, as far as those graphics you talked about is how much the fed is talking, how much they should be talking, we would be lined up and would have heard messages by now to have expectations of a rate hike this week. Liesman, is he gone . I want to throw to brian the question that becky asked, which is, whats the difference in the day that you surprise the market . Does it matter in a speech two weeks before the meeting or at the meeting . Whats the difference . What central bank policy, youre right, any time theres a move, theres disruption in markets, but expectations are key. We live in a world with deflation their forces, u. S. Import prices are down, we continue to have foreign currencies deappreciating versus the u. S. Dollar, and this is deflation their, and raising rates now shocking the market during what i call an expansion and sacrificing growth by raising rates is not appropriate policy. Steve, youre right. Any time you see a change in policy, youll siee disruption n the market, and this is the latest correction in u. S. Markets has been, but to raise rates with inflation below the feds comfort zone, with growth not accelerating around the world whats the downside . Well, it depends on what the guidance is. Say the guidance is we do it today, but we may not do it for a long time. I dont think theres a downside to that. I think expectations matter, right . They have not size up the market for that. If you came into this year how can you side with the market properly . Meaning how so we had a big rally in the dollar. That rally in the dollar moderated some against the bigger developed trading partners. If you raise Interest Rates now after not expected, youll see another move in the dollar. If you say 25 basis points, not going to do anything for a long period of time, im okay with that. But raising Interest Rates and setting the expectation of continuous moves at a time when inflations below the comfort zone really continuous moves. Steve, if people are stupid enough to be on the wrong side of a trade, its caveat, and i dont think you cant do anything because, oh, you were not clear enough, you cant surprise me. The people cant use their open brains to decide to get out of a trade . Its not that. What im talking about is the expectations of it. So when you look at whats the market . The market didnt say this, its not fair. Expectations matter with central banking, and raise the expectations of moves and Interest Rates, when the dollar rallies corporate profitability suffers, and then wage suffers, demand suffers, and thats how you potentially spiral. Joe, raising Interest Rates in a world of excess demand is not a risk. Raising Interest Rates in a world of excess supply is risky. We saw that in the United States decades ago in the 30s, and japan in the 1990s, and we saw the United States trying to take away fiscal stimulus. We saw a fiscal drag in 2013, for a slow down, and we have to dollar stronger based on our superior Economic Performance . You cant stay at 0 to ensure that the Economic Performance is not reflected in the currency. Come what may. Tell them to get their tell europe to get rid of the structural impediments to growth they have. We dont stay at 0 so we dont so currency does not go up because they cant run a country. Dollar rallied. People think it continues for good reason. People think it comets for good reason. If you Inflation Expectations are Inflation Expectations are key, moves Monetary Policy, rate of expectations if you start to raise Interest Rates now during a slow growth environment with deflation their forces in the United States, its not appropriate policy. The question is not are low rates appropriate, everyone agrees they are. Look at the fed survey, everybody looks at the fed stopping at 2. 7 , the low, but the question is, what is the right low rate for the environment . The quote earlier from john is this notion of how do you justify 0 when you do 2. 5 . You have unemployment at 5. 1 . Yes, we need low rates. The expansion is tentive, but maybe zero is not the right low rate. Maybe not, but i worry about short term rates go up, long term rates rally amid weaker expectations, floattening the yield curve, and thats disconcerning. We have to stop. Steve says they are going. Plurality. Yep. You know, get comfortable with that. Wait for it. Its going to happen. Were stuck. Do it. Get on the board. Dovish. Do it with a dovish toee isi. Meg whitman looking to make hp leaner and meaner. Ahead of the planned split, what investors take away from the move. Talking about that next. Take a look at shares of hp over the past year, down 25 . Isnt it beautiful when things just come together . Build a beautiful website with squarespace. Hey hi our cloud its a platform based on awesomeization really . Can it keep our data where it needs to be no matter what country were in . Integrate with our systems to help keep transactions secure . Combine Customer Data with likes, tweets, the weather, to predict trends . That would be awesome. Tote . Now theres a cloud that understands business. Now theres the ibm cloud. Prge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Welcome back, hp cutti 25,0 people, remitting 10 of the total work force as a plan to save 2. 7 billion in annual costs. Joining us now to talk about it, the Senior Research analyst covering ip solutions and networking at robert w. Baird saying hp should be a more focused company, and david faber is interviewing hps Ceo Meg Whitman coming up on squawk on the street. Let me start here. Actually, let me starting with david, if i could, for one second. Sure. David, which is this, is this the end of a cutting . Is this was this just was this always part of the plan, an easier way to do it right before this split, do you think . You know, meg whitman says that it is the end of the cutting. This is the final restructuring, if you will, andrew, but one has to wonder, i do think that when she came in to run the company a number of years ago, four or more years ago at this point, it was a bloated cost structure with, what, 360,000 employees, and looked at that saying this is one area we have to work on, and how do yo go about doing that . They cut 55,000 jobs in three years as part of the restructuring, and now another 30,000 from the company she is going to be running, right . So 250,000 employees going in down to 220,000, and perhaps theyll do hiring, butt i think that was a key thing, how do we rewrite the cost structure to get margins where they need to be and where we can think about getting back to growth. Why now, though, why not a year or two or three years ago . Well, they have been cutting jobs at hp for temperature years so this is going on a long time, and i you would rather do it as you say all at once and get it over with and move forward, but this is the rapid change in i. T. , whether youre hp or gm or walmart, theres so much disruption for legacy company, and they made up for poor m a decisions, and they have been forced to right size the company. And your expectation is the same thing i asked david, do you think this is the end . I would be surprised. I think this is the last major cut well see for a long time, but, again, given that rapid change of i. T. And the size of hp, and some is shifting jobs from high cost geographies like the u. S. To low cost geographies in india for the services division. I think this is the last large cut for a few years. Everyone, of course, has blamed hp and questioned whether this split unto itself is going to refocus the company. Would you buy the stock right now at this price . So were neutral on the stock, but we see some of parts opportunity into the november 1st split. Challenges at hp are captured in the multiple today. Look at Hp Enterprise against the likely comps, cisco or ibm, cisco net app, and anything against comps on that side, there is upside to the stock from here. Well see if investors are excited enough about thatted t anything. The big debate coming up tonight, Carly Fiorina, i was looking on twitter, somebody said that this is still her mess, ten years later, 100,000 jobs have been lost. Do we hold her responsible . Shouldnt i just ask you that question, andrew . You wrote about it extensively. I get to ask the questions in this case. You do, really . Even of me . Even of you. All right, all right. Partially, yeah. Ill go partially. Whats the analyst have to say, i dont know. Yeah, the same, partially. The compact acquisition was not strategically sound, but theres been so many other things happen, autonomy, palm, ebs, you cant blame that all on carly. Shes probably not responsible for the demise of the pc single handedly, i mean right. You know . Its been tough. All the Old Tech Companies are tough. Faber . Yes . Has anyone on air wished you a happy 20th squawk box anniversary . No. Its coming. Its coming. Hes going to join us at some point. Thats why im doing that right now. Happy 20th thank you. Squawk box anniversary. It is coming. Were not ignoring it. Youre coming to the party, you got the inviation . I did. Having throw back thursday. Youre going to be on. Looking forward to it. This begs to question, do you remember the days when the fed chairman would tell squawk viewers what he planned to do by the briefcase . Sure. He would always signal a move. Briefcase indicator. The briefcase indicator. What i also remember, it was such a different time, joe, that greenspan crossed the street in the middle of traffic with nobody around him, no security, nothing, just crossing the street. Talk about transparency that its increased. Really . He used to stuff the briefcase or not stuff it. We used to know, for sure. I think we do you remember some of the stuff we used to do . I think we got a shot i actually went and visited that was long ago. I probably i got the briefcase, and i had it stuffed, and i remember hi. Im alan greenspan, how are you . [ laughter ] that guy. I want that guy. Ill never forget that guy. I said, hi, im alan greenspan, and he is still somewhere, probably, still around somewhere. He said, what . Like so many viewers, like, what an idiot, looked at me, and that was what his im alan greenspan. Hey, it could happen, joe. Fed chairman, why not. I dont know. Its a good life after squawk box. Yeah. All right. When is Throwback Thursday . Youre asking me. In a couple weeks. All right. Jason, thank you, david, you got any color, by the way, on the big beer deal . Lots. Hear from you in a bit . A lot. Meg whitman joining us, a huge potential deal, and sab and all things that may go on. A lot of things have to take place. Certainly are, including the time clock. More on that. Well talk soon. Thank you. Why you laughed. Ive never seen you laugh. Never seen me laugh . At something you said . Or done. Or done. Laughing at the expression . The whole thing. That was pretty good. Thank you. When we return, that guys, like, im on tv. Stocks breaking for a liftoff, and jim cramer joins us on the west coast at a look at what investors should expect where is he . At the debate . When we return. Is he . Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Everyone loves the picture i posted of you. At t reminds you it can wait. Francisco today. Jim, you probably heard, you know, the guy that fired carly came back and said she was great ceo. Weird. We were talking about the compact acquisition. In hindsight, pcs were in a long sickening decline when that started. Was that a horrific acquisition or was it something that was sort of 50 50 for hewlett . Would it be in better shape now if there wasnt that acquisition . It was horrific because they could have gone all server, more software. Lets not forget they also tried to do consulting, that wasnt so great. They tried consumer in the 20 years of squawk box, its been going the wrong way. Squawk box or hewlett . No, the 20th anniversary. 12 billion for autonomy. That was not a carly jimmy was that a carly acquisition . 2011 is when it was done. She didnt do it. Whats that . Every acquisition has been bad. Compaq was hers. To watch a tech company decline, its almost like theres all new tech. Its almost like the rule rather than the exception. Nobody is still here that was here 30 years ago and strong. Really. Youre so right, but they got trapped in an arms race between dell and hewlettpackard about who was number one in an industry where they never saw it would be your cell phone that mattered. I think only the visionaries who recognized the world was going mobile, social, artificial intelligence, thats what you needed. They missed it. But, you know what . So did microsoft. Thats what im saying. My point earlier, even bad ceo experience is better than the rest of the clowns with no ceo experience. Wow, you used the word clown. Thats usually my word. Happy anniversary. Jim, youll join us, too. He was there from the beginning. You must have been there at year 20, werent you . Uh, 19, but it was different. It blew up who was the leader in journalism, and its you guys. Thanks, jim. Youre a squawker as well. Were all squawkers. More squawk after this. Kind of like shopping hungry equals overshopping. An accounting error in colorado is paying off for marijuana growers today. No taxes will be paid on marijuana today, and that means big bargains and likely big crowds for pot retailers. The tax break is happening because colorados pot Tax Collections exceeded projections last year. Under the state constitution, the accounting error triggers an automatic suspension of any new taxes. The taxes revert back to 25 tomorrow. Speaking of pot, before we say goodbye to david, what are the three key things that you supposedly have for it said three, i thought you had five. Sure. Joe, one is the message today. Pay attention to the feds message. Whether they raise or not. 13 meetings between now and the end of the year. Next year. That means maybe about 5 raises if they can give you some sense there. Secondly, be selective. Its time to start trimming in junk bonds, in Master Limited partnerships. Get rid of them. Number three, commodities. Theyre not going to do well for a while. Stay away from them, but be prepared for a spike in oil prices due to geopolitical concerns. 40 seconds. Number four, europe and japan, japan first, restructuring, growth story, Asset Allocation shift story. And go with whats working. Stay home. Home builders, home furnishings, building materials, distillers, footwear and toys. Those are the things go with. All of that in under the wire. You did. Thank you, everybody. Thank you. Look at that. You got five more of these . Yeah. I can slowly say our thanks to david darst. Thank you. Join us tomorrow. Squawk on the street begins right now. Good wednesday morning. Welcome to squawk on the street, im Carl Quintanilla with david faber. Cramer is in San Francisco for the dream force contest. Steady premarket as the fed meeting gets underway. Plenty to chew on including fedex earnings, mma news, the president on the economy, china rallied nearly 5 in the final hour of trade. Japan gets a