Transcripts For CNBC Squawk Box 20150918

And andrew ross sorkin. Well talk about the fed and the Market Reaction in a moment. But first, check this out everybody. Close friend of the show. Jordan spieth hitting a hole in one. Yes it happened on par 3. The par 3 2nd at conway farms golf club. Thats in lake forest illinois. One bounce off the run on to the green and right into the bottom of the cup. Wow. Okay. Lets get you caught up on the market news in the morning. Got to love that. U. S. Equity futures at this hour after the feds decision not to move. Janet yellen and the feds. It is a group. And hes not even complaining. Hes not complaining. Dow looks like it would open down about 55 points right now. Just broke up to 57 points. S p 500 down 7. 5 points as well and the nasdaq open off about 17 points. The fed of course, were doing it again. Were doing it every day. What if they had raised what would the markets have done. No idea. 110 points to 7yearold 0 Interest Rate policy. Market odds for december hike still above 60 . But rbs suggesting that markets are currently pricing the first full rate rise for march and the expert of the morning was here. So a cheer went up among fed reporters when they didnt hike because we have a job for another 30 days as well. Markets forced themselves to put the decision in the rearview mirror. If not now then when . The fed focussing on the risk of market volatility and Global Economic weakness on the u. S. Economy outlook. Trouble that could take months to work through the u. S. Economic data. So many months that four of the 17 members dont see a rate hike until next year or later. Thats double the prior number. But fed chair janet yellen said, you know what, it wont be that long. Were getting closer and the labor market has improved and as i said in the past we dont want to wait until we fully met both of our objectives to begin the process of tightening policy given the lags in the operation of Monetary Policy. More or less markets are still betting on a hike this year. We did a flash cnbc fed survey. We got 40 responses in the time after the decision came out. 64 still believe theres a hike this year. Have the monthly break down. Ill get that to you in the next hour. 80 before the meeting. But what she just set is a much higher bar than people realize. You can be at the right unemployment levels but if your other objective is watching inflation. Were far from near the inflationary targets, if we have to actually hit those targets before they raise thats a bigger issue. You put your finger on the issue which is theres this downdraft, we know this, Everybody Knows this, of a deflati deflationary coming from abroad. Weakness overseas. And the stronger dollar is a big part of that thats going to reduce the headline Inflation Numbers over the next several months. That was the question i asked her and she said well were going to wait a little bit and i dont know what a little bit is. Heres some of the commentary we got. The fed was true to the requirements of its policy statements because of what becky was just saying. They are not going to hit that 2 inflation target for awhile. So much for preemptive as opposed to reactive Monetary Policy. Im hanging up my fed watching spurs. This yellen fed just wont hike rates ever. That exasperation widespread yesterday with the main criticism that theyre concentrating too much on overseas but yellen and all Voting Members except jeff clearly prefer to see if thats true in reality rather than just in the forecast. Didnt one person want more accommodation . We dont know for sure but some person actually put in negative rates. Wonder why we have a problem. But were going to have a chance to ask this stuff on monday. We want to do a tease, we have jim on set here. That will be good. He hopefully, people say, theres a disagreement as to whether some of what the fed is doing is actually selffulfilling in terms of slow growth and putting a damper on Business Investment. David makes this point again in the journal today that if youre going to decide who gets credit and who doesnt, everybody else stays at zero and buys back stock and doesnt do Business Investment youre cultivating a slow growth environment and reacting to the slow growth environment by staying at zero. It cultivates a slow growth environment and then you stay at zero even longer. Theres been articles that its like a little strange there that there might be some bells and n inscents and cutlike meditation and yoga. Cameras is what they do have. He said the next move would be qe. So im trying to think of who might end up being right. It could be santelli that said they wont raise until 17. They said it again yesterday that this fed wont i was hoping that they would be i was hoping wow, theyre good. Theyre going to do what needs to be done. They surprised me though. I thought if they didnt raise yesterday they would come out and say its going to happen very soon but all the commentary i heard from yellen is wow this is more dovish than i expected. Some people said a dovish hold. I thought a hawkish hold. But things arent so bad they couldnt have done it. October, remember when things happen in october in the past. Things happen in october. If theres another theyre going to look ridiculous if they raised and gave it back in october. Yeah but it didnt go up yesterday. It was down 60. What if theres a tremor. What if that was a preshock. What if what we saw with china was the beginning of in october we do have a market break. Then theyre smart not to do it. Not if its the reason that its happening. But thats where the debate is. I dont see how higher Interest Rates are something that would something might always be happening down the road. Lets get peter in here. What i understand the most is the inflation and not being near the inflationary target. But if you grew up you never thought the inflation target was put in to get to it from below the target. You always thought price stability you thought the feds role was to keep the dollar from devaluing. But you have the opposite concern. Its a very different world. I want to know what everybody thinks about the political implications though . Thats going to play. I read yesterday that it would hurt the democrat ifs they stay at zero. Theres two ways to look at it. Its either going to hurt the democrats and if you think theyre now going to raise in 16 and you actually believe that janet yellen was some kind of plant for the democrats you would think she would really have to hang until 17. He said now it wont be until 17. But the market may end uptightening different places. Joining us now chief u. S. Economist. Did we intro you yet. Quickly, yes, im here. They moved the prompter. At the top i did. Hes our guest host today. Im beside myself. Is that a good name . Its perfect. The monetary policies on this circular feedback loop. So after qe1 ended stocks fell. After qe2 ended stocks fell. When they hinted at the end that they were going to taper stocks fell. When qe3 actually ended stocks fell. A month before the feds may raise Interest Rates stocks fall and then janet yellen says the tightening of financial conditions are not going to get us to tighten when theyre the center of the tightening of financial conditions. Theres a pattern they dont see. Its always Something Else thats causing the issues and not them themselves and i think thats a treadmill they dont seem willing to get off and the dollar strengthens so they may raise Interest Rates and that causes problems in emerging markets and the whole argument, cpi, core cpi is running. 6 . They say we dont Pay Attention to core cpi anymore. Its pce. They would have raised rates a year ago. So its driving Monetary Policy. I wonder if the line following of the 2 inflation target is good for us in the long run because you know you may be able to eventually hit it but its going to be difficult in the world of global disinflation and the price you end up paying is maybe that you create another set of imbalances in a real economy or Financial Market somewhere and we go through another boom bust cycle and asset prices that ends up in deflation. So to me i think its better outcome and closer to price stability that the alternative scenario is we end up with another asset bubble. 30 or 40 years the u. S. Always grew about 50 faster than europe because of their structural imbalances and their embrace of an entitlement state or welfare state and now they continue to reap what they have sewn with Slower Growth and we say the world isnt growing and here were probably okay but were going to base our Monetary Policy on the disinflation that they have created over there and the slow growth theyve created over there. The alternative is basing your Monetary Policy on forecasts of bad things that could not have happened over the course of 7 or 8 years. Think about when they launch those rockets after cape canaveral. If you have a little tiny thing that goes wrong or a glitch, you scrub the whole lift off and the metaphor works in that this is really lift off were talking about in that youre extra, extra careful because the down side is the rocket blows up and they went forward and they were on their way toward hiking rates and its this blow up in china. Remember what we have been talking about. The impact of market volatility and the impact of the slow down in china, thats all we have been talking about. The market was down by a thousand points. It scared everybody. It was this crazy overinflated stock market were talking about. The chinese economy is probably still growing at 60 or whatever. Lets find out if thats true. Lets just make sure that thats right. Before we go up a quarter point. No, you misread that a little bit. The impact on china in the u. S. Economy is as limited as it used to be. Hoping for a different result, this is where we are after this accommodation. All of this accommodation is not the right medicine. What if its counter productive. Its not only that its a hindrance but i have a long list of why zero Interest Rate policy is a hindrance to growth and bad policy. If Interest Rates went up whats going to happen to the Housing Market . Well one of the problems with the Housing Market is the first time household who has a choice of renting or buying. Home prices have been rising well above the rate of income growth. If Interest Rates went up a little bit maybe the cost of financing it go down. Make it more affordable to buy a home. Right now theyre priced out. Theyre paying 4 or 5 on rent because home prices are rising 6 to 7. If Interest Rates went up maybe the home price would go down and they could better afford to buy that home. Was there actually a quote yesterday . Did yellen really say hopefully we wont get trapped here forever . Something like that. Really . I think the quote was its my belief we wont be at zero forever. I could actually find it. Its my belief that maybe we wont have to go to negative Interest Rates. Maybe. Were not talking about that today is what i think she said. My concern is if this was really a delay from six weeks, three months, i would have no problem. My concern is that Something Else will deter them in december and then you get into seasonal, you know, weakness in q1 and we could very well find ourselves at the june meeting still at zero, Unemployment Rate, 4. 8 or possibly lower and at that point, the tightening cycle is not going to be gradual and my concern, again is you are probably going to get another leg up in asset prices and then you risk potentially a more disorderly correction. I would also follow up on what steve said because the sell off in equities really spread from the u. S. The day after the fomc minutes come out and they were all over the place so i would argue a lot of this volatility in the markets is not just about china. Its about policy uncertainty and the fed is contributing to that to some extent. It could give them, this latest move, down 60 yesterday. October is coming. Who knows what happens and theres going to be positive things on terngs front to help stocks. October has been a scary month in the past. We could have a break that disallows any move in december and pushes it out. But theyre sort of adding to it. Some of those concerns wouldnt be quite as strong. I felt like there was a real chance they were going to do this in october but they were pushing that quite a bit further back. They may be part of the problem. Thats where we disagree. Im ready for that understanding and i get what peter is saying because clearly Interest Rates arbitrage the cost of the underlying asset. We see that in the student loan world as a person sending a kid to college not too long from now and all the financing thats available is clearly having an ill pact on that. I agree with you on that peter but if the issue is savers versus investors or savers versus borrowers i fail to see how raising rates helps in that regard, but its just an honest difference of opinion i guess. Raising rates is a stimulus package to the 10 trillion sitting there in savings accounts yielding 0. If people got 1 on that money thats 100 billion of extra income into peoples pockets. Particularly retireees that arent getting that much. 1 . God forbid. Its never a good stay to stop. Its was luke 23 34, father forgive them for they do not know what theyre doing. Thats how i feel this morning. Right here. Quoting verse, man, im out of that. Im not in that game. Coming up, youll be here peter. Thank you. Coming up i really dont think they know. You wont believe what former president was caught on the kiss cam at a baseball game last night. What . W . I guess, right . And could a trip from la to vegas soon be as fast as a high speed train . That story and how the chinese are part of that next. Who was he kissing though . That was the question . You werent going to say it. Thats good. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back. It may soon be easier to get from los angeles to las vegas. Theyre going to help build a high speed railing between these two cities. Estimates suggest the project could be worth 5 billion. The deal comes days before chinese president makes his first visit to the United States next week. Quite the buzz story this morning. Ron perlman now quitting the board of carnigie hall. He wrote a letter to trustees accusing the artistic director of a lack of transparency and criticizing the board for failing oversight. He was the chosen successor. There seems to have been some very strange things, a prize that was going to be given supposedly and ron claiming theres a conflict of interest and that the board was allowing this and either shouldnt have allowed it or should have hired a board to do it but the worst part for the institution if youre a new yorker or somebody that cares about the arts is ron perelman has been a great benefactor to this institution. Now that hes leaving it, might not be such a beneficiary. Might be a key point about whether this is the buzz story of the morning. If you are a new york, right . If you are a 1 er in new york and you care about stuff like this. Im telling you, people are going what the and who is you just went through a im only in new jersey. Im only 15 miles from here. You dont even know what im talking about . I didnt know it was a big buzz story of the morning. You werent buzzing about it . Within the sort of we know exactly what within youre talking about. Its you. Anyway. And then this to you will be what that was to me. Is this Jordan Spieth maybe not. The second highest ranking official at fifa is being placed on immediate leave. Hes under investigation involving the black market sale of tickets. Den very broncos beating poor kansas city in a way they havent done before. I dont know how many in a row this is in kansas city. Its horrific in youre a chiefs fan. 3124. Peyton manning throwing a 19 yard touchdown pass to tie the game with 36 seconds left and then on the next play, he scooped up a fumble and ran 21 yards for the winning touchdown and scored just nine seconds later after the last one and there was no overtime and anyway thats what happened. And now, to baseball, former president jimmy carter is the one kissing his wife rosalynn at the braves game. The moment was caught on kiss cam. How many have we got . 41 . We got w. We got jimmy carter. And we got bill clinton. And we said which one was caught on a kiss cam. Is obama a baseball fan . I dont think so. But we said former president. Youre rushing things. I know with you thats not Wishful Thinking in this case. Lets get back to the markets. The dollar falling on the feds decision to keep rates unchanged. Hes the managing director at bk asset management. This tells us the fed is paying even more attention to the dollar than we suspected. If theyre using the inflation argument and the lack of inflation as the reason theyre not doing that the dollar plays a role in that. She said the dollar is a concern. It does have an impact. I was thinking about this whole thing on the way here and something struck me that is interesting. If you buy their economic argument that everybody at this table agrees there is no hike in the foreseeable future, i wonder if a lot of this was simply because they were afraid of the budget battle coming up. I think, you know, one of the things that she talked about in the press conference that went completely unnoticed was she said it would be much i forget, less than unhelpful or incredibly unfortunate. What i think they want to see is that macro event pass by. They didnt want to have them hike a rate and have the Government Shutdown which would create a massive argument event. She did say the shutdown did not enter their discussion. She didnt acknowledge that they talked about it. If there was a shutdown we were all the way up at a quarter point. I dont know what might happen. We could be down at 2,000 points. Think about at a half point . We can go to zero. They actually go green light a hike in september. Theyre not going to go away. Youre not going to get inflation. Everybody is talking about employment is high. It doesnt matter. Medium income is lower. It could go to zero and the fed wouldnt care about hiking rates at this point. I thought they would be more aggressive and say it was a close call. We thought about it. Were not going to do it now. Were waiting to see the fall out from china but by going into such detail on all the Different Things that have not met their standards its much further off. Either that or that was just simply cover for them to basically not do anything right now so that they could i think they clearly want to go to normalization. Its not because they have to. I disagree with peter completely that we need a rate hike right now. I dont think we do. But they want to go into normalized Monetary Policy. One of the interesting things is once you go into qe we havent had a single historical incident. Its like quick sand. Japan tried two times, failed, sweden tried, failed, its going to be a very interesting challenge to see if they could normalize and then more importantly its not the first hike. Its whether theyll be able to continue the hikes Going Forward that will be the interesting question for the market. At this point, where are you betting . Yesterday we saw the dollar weaken. And you saw today this morning europe is selling dollars again. Real money is starting to come in. You see the dollar weaken for a couple of a percent just as a reaction to this because theyll clearly not be doing anything for the near term but i think the market is going to take it away. I dont think theyre quite buying this whole idea that theres going to be no rate hike for the foreseeable future. Lets say there is. Is the dollar rally over . If theres a rate hike . No. No, if theres no rate hike. I dont see, maybe stationary but i dont see any huge gains in the dollar if there is no rate hike. Approximate if they dont raise rates is the dollar strike selling off now. Yeah. The dollar is starting to sell off and they will continue. They will continue. The market right now is sort of doing a wait and see. They want to see if theyre serious about holding off and dont hold up and they see it. Thank you. Thank you. Coming up when we return, the question of the morning, the week, the month, the year, will the fed ever raise rates again . It never ends. A former central bank staffer is going to join us right after the break. [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage, or major disaster, when you need us most, were there. State farm. Were a force of nature, too. Welcome back to squawk box here on cnbc. The fed says its worried about global weakness. He is International Head of Regulatory Affairs and of course a former executive Vice President at the new york fed. Is that what you were expecting . Its not what i was hoping for but it is what i expected. I have been thinking for a long time that they should begin the process of normalization. This is a good time to start. We have been in recover for six years. Growth is okay. A lot of the to me the indicators are look good so you have to start sometime but this say fed thats been very dovish the whole time. They have softened the comments that your guests made at this point earlier about how they found excuses and reasons to wait and this is a fed that is dovish and they want to be absolutely sure. Of course how do you assure them everything is aligned in order to do that so, you know, we have been in this for several years, right . The exit strategy talk began in 2010. Its been five years. And so here we are and were still finding reasons to wait. Your expectation on that. So weve had one small piece of the exit which is the taper and even that took a long time to actually get to. The actual lifting of rates, right, we have been here now for seven years. Were now looking at 2016 since i agree with the points. October is off your table. December is off your table . October is off the stabtable lots of reasons. Whats going to change from what they talked about yesterday . Is china going to start to pick up suddenly . Are we going to get an easing of volatility in the emerging markets . Probably not. Septemberoctober tends to hard on emerging markets. We find out that it doesnt have the effect here that the worst Case Scenario might otherwise portend. Its interesting because in 199798 the fed marked down the forecast because of the asian crisis. It lowered Commodity Prices and all the capital inflows came in and lowered longterm Interest Rates. The forecast was way off. So its interesting that this was a similar situation that has been used to justify sort of not moving. If it is were down over 100 right now. If it is 16, why isnt it really 17 . Look you have worked inside the fed. Dont you think they people like to say its always about the economics and its about the numbers but you dont think there will be political pressures . Interesting, one of the dots is already in 2017. But actually that part i dont find compelling. I dont think the fed looks at the president ial calendar and says we cant tighten because of politics. We can go back and look at history. Maybe when someone is running for reelection i can see it but its up in the air. Like if the president had another four years you could see them being pressured. They got mad at greenspan for raising rates. I dont see that thats going to be an issue that will hold them back but the issue that will is low inflation. Some of these other points raised over the last couple of years, ultimately the hand hasnt been forced. Dont we know they now also watch the stock market in the United States. We sure know that they watch the stock market. Theyre down 130 today. After not moving. One of the things fisher had said just a couple of weeks agatha volatility was something that he was focused on. That was something that made him anxious but coming into this past week t volatility has gone down because people thought there was at least a chance. Do you think it changes next year when the composition of the voting numbers changes . Its a good question and at the margin but ultimately probably not because the one vote that matters is janet yellen. 2017 he gets a vote. He probably thinks theyre not going to raise rates until 2017. But, i mean, ultimately its the chairperson that sets the tone. That sets the policy. Everybody else will support, you know, certainly the vice chairs job is to support the chair. If board itself, the board of governors tens to support the chair and you have your majority and janet yellen is a very good economist but she believes that you really want to make sure and push the economy as far as you can as long as the Unemployment Rate is, quote, too high, or participation is insufficient. So here we are. I dont see how enough changes for them to move by december. So were looking at the same factors. Somebody said to me when is the fed going to raise rates. The answer is the same for the last five years. Six months from now. Why does she think things will change . Policy has been the same. Does she have her fingers crossed that all of a sudden the u. S. Economy is going to respond. Great question and their estimates of potential growth have come down. Its take an while but they have come down so right now with a 2 potential growth estimate and unemployment having come down, in a sense there has been a response. Its been a slow response. A painfully slow response but some response and now theyre waiting for the other angle to kick in which is an upward tilt in inflation. Is that going to happen in the next few months with oil under 50. I dont think so. Thank you for coming in this morning. When we come back today, apple users reporting problems saying that their devices passed after attempting to upload the new operating system. Futures are continuing to get weaker during the course of this morning. Dow futures down by 127 points below fair value. S p futures down by 161 points here and nasdaq off by 37. Stay tund. You are watching squawk box on cnbc. First in business worldwide. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. The internet of things. What were recommending as your consultants. The new consultants are here. Its not just big data, its bigger data. Were beta testing the new wearable interface. Xerox believes finding the right solution shouldnt be so much work. By engineering a better way for people, process and technology to work together. Work can work better. With xerox. I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. A significant number of apple customers including joe kernen reporting mobile devices crashed after attempting to upload the new ios 9 operating system. Many of these reports are linked to older models of iphones and ipads. Coming up well continue our conversation about iphones and ipads. 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Chase for business. 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 . The 306 horsepower lexus gs. Experience the next vel of performance, and theres no going back. Lease the 2015 gs 350 with complimentary Navigation System for these terms. See your lexus dealer. Welcome back to squawk box this morning. Now to our news maker of the hour. The ceo of sprint is at the table. I dont think weve ever had you here like physically here. First time. Thank you for coming and waking up early with us. We did see you a couple of weeks ago when you announced the forever plan and were all trying to get a sense of where that plan stands and what youre seeing and also, more importantly. Now that the iphone is out or is about to be released to the wild, what sales look like and whether youre actually able to shift some of this stuff because we keep hearing about a lot of delays coming up. In terms of being able to get this device. Yeah so, were incredibly excited about iphone forever. Its the fastest adoption product weve ever had. About 90 of our customers walking in are getting a iphone forever. Its the first product that allows you to get an iphone every single time an iphone comes out. So everybody is usually so mad when an iphone launches because not a lot of people can get it. Most people are on their contract with a traditional character. We put together one that every single time from now on, forever, any time theres an iphone you show up at a sprint store and drop off your old iphone and pick up a new one. I still dont know why the other 10 are not getting it but im working on that. Iphones are going to be ready. 9 25. In the morning, 8 00 a. M. There will be people lined up outside our stores and then we have our 600 direct to you cars delivering iphones all over the United States. One thing we also heard from am is they were trying to get rid of their contracts too so they would be able to offer iphones for 30s a month. Should bethink of this as renting the at the device. Apple is 32. Right. Ours is 15. Your changed your price. Most people have an old phone laying around and as long as you deliver a phone your price will be 15. How much can you get for that phone . If i hand you an old phone, what is that phone worth to you . Anywhere from 1 to 500. Not a lot of people can afford a 700 phone but if you get an iphone today nobody knows its use. Everybody thinks its new and nobody knows you bought a used iphone and theres a huge market for iphones. But dto the point about renting the advice, did they pa package . Well, depends. Sprints plan is 35. If you add, thats 50 unlimited voice, text, and a good amount of data and pretty much a new iphone every single time. Your stock was hit hard this week after s p downgraded your ratings. Theyre concerned about a lot of things, how competitive the u. S. Market is when it comes to this areen are arena, and the debt. What do you say about the report . First, a couple things, our stock performed well, up 50 last month. So a 5 drop, thats fine when your stock grew 50 . As it relates to debt, weve been very clear that we have the proper equity in order for us to meet our obligations and told everybody we dont plan to go to debt market or equity market. We are working with our majority shareholders, soft bank, in order to minimize the cash usage of assets by setting a Leasing Company, meaning we lease the phone when we get it and lease to consumers. The fastest way to burn cash in this business is in the phone business by leasing phones, and what weve done is now by having a Leasing Company thats lease side to us, we have pretty much been able to neutralize that, so we feel very good about our liquidity and able to meet obligations. What about the cost of building out the network. What happens when nothing change in the business, as a matter of fact, look at trends of the business, everyone think business is going the right way, gaining customers, and so that, we respect, you know, what they say, and, you know, we are focusing on the turn around of sprint and we have a line of sight to meet our obligations. Talking about the only ga obligations, you are building up the network, a huge compensatory damag damages. Its into next year . No, no, this year. What we said, this year has been and will be the highest cash burden. How much you spending this year in terms of struck . 5 million, and we plan to spend 5 billion in the next three years, but sprint that has 35 million in revenue and generated over 7 billion so we feel very good that with the source of liquidity that we have we are able to build a great network, pay obligations, and do it without how much is that compared to what verizon spends in a year or at and t . They spend more than us, i think about 80 more than what we do, and the reason why is they have a lot more customers than we do today, and they have a they have capacity because a lot of customers, and they cover the United States. We cover smaller portion of the u. S. Just like the ceo, they spend a little more, 80 . I like how those go. Spend a lot more. Twice our size, so therefore, its in good context. A little more, 80 , a little more is 10 or 20 . You would expect to respect i just like the way, it was natural, i was not listening that close yeah, i can figure that out. Isnt 80 more than half, i think . Yeah. Well, they are twice our size. I understand. 5 billion is a lot for sprint. A humge amount. Im behind on the story. The guy in the trench coat walking in central park always gave me the creeps. Its dark, on the bridge. No commercials yet . No, we are staying away from those. I heard about central park. He wouldnt go in central park. He was Walking Around alone in a trench coat, and then, you know, his legs were there were no socks. Or pant legs. The other thing to ask about quickly is cuba, veer rrizon sa they are going to cuba. What are you doing . We are the second carrier to sign an interagreement and we will be there at the same time as the verizon market. How big a market is it . Its the market everybodys talking about, the place we all want to vacation soon. Really . They need to spend 5 billion on infrastructure down there . Nice to go to a place thats not had infrastructure for a while. Its a bit different. Right, probably. Back to the iphone for a second. Yes . Thinking about the margin on this program youre thinking, relatively to how you sold it before and relative to other others sold it before, is the margin up or down or playing the game at this point . The market in this case is neutral. We collect money from customers for an average of 15 months. Some customers do not go the day after the iphone is launched, and, therefore, theres a secondary market, the hand sets are refurbished, and as a matter of fact, we look at us as neutral to positive, but what i think it does is create customers for life. Think about it. If you never have to worry about getting the newest iphone. We see customers that signed up for programs like this in the past, you create customers that want to be with you forever. Theres no contract, right . Well, youre signing a lease contract for the time you have your phone. Theres no service contract. You know, you can, you know, you can walk in and out by your device. No. If i wanted to switch over to, dare i say another operator, at any point, i could . You will fulfill your lease obligation. How long is the lease then . 20 months. It is 20 months, but i flip the phone. Every year. Great to see you this morning. Thank you. Appreciate it. And, peter, thank you for being the guest host this hour. It was great, thank you. More top stories of the morning including the u. S. Futures under increasing pressure throughout the morning. Dow down by triple digits. Plus, a special conversation on the future of health care. We will be joined by the ceos of aetna and novis health systems, and later, squawk is political. Chris christie takes time off from the trail to join us on set. Stay tuned, two hours of squawk box still to come. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. 20 years of power, money, and mayhem. Of unprecedented access. Let me lean back a second. And 20 years of bringing wall street to main street. Buying unexpectedly, the market moves are out there. Now time for the next 20. Health care spending is expected to grow to over 20 of the u. S. Economy, and the government n foots the bill for half the cost, and today, we tackle the Health Care Challenges the country faces from health costs improving end of life care. Aetna ceo is here, and Cardinal Health ceo, and a nova ceo, Knox Singleton. This sing of 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, everybody, this is cnbc, first in business worldwide. I cant believe this song is 20 years old. Im becky quick. Well tackle the Health Care Challenges in the next 20 years, but first, joe has todays top story. I do . You do. In case you missed it, the rates are staying at 0 again. U. S. Equity features at this hour, thank god they did not raise because we were down 60 yesterday and 12 2. Can you imagine if they went up a quarter . This is the best we get. So now what . The countdown is on, october 28th is the next day that lucy cues up the football for Charlie Brown to pull it away and hell fall flat on his ass like our economy. Steve leisman joining us now. Who is liucy in the metaphor there . Yellen. And were all Charlie Brown. You might be pig pen not for any other reason other than that grateful pianist who died . Ill take that one anyway. Reset the liftoff clock, folks, after an aborted rate launch, they zeroed the clock out again, raising rates, when or if it happens, and i asked the fed chair yesterday, how long will it take for all the Global Economic weakness and financial volatility to clear through the u. S. Economic data . There will always be uncertainty. We cant expect that uncertainty to be fully resolved, but in light of the developments that we have seen and the impacts on Financial Markets, we want to take a little bit more time to evaluate the likely impacts on the United States. A little bit more time. A survey conducted after the announcement thanks to our Vice President holding operations, he found that 64 still see a rate hike this year. Heres the monthly breakdown, i promised in the last hour, 40 responsibilities, 56 put it in december, and 46 in 15, and remainder, 36 sometime thereafter with january and march being top candidates for next year. Some of the commentary we got this morning, jpmorgan thinks three more months of labor improvement stiffens the spine to wait for perfect conditions. Wells fargo says we are looking for a token hike in december to get the normalization ball rolling, and hank smith says, we are now pushing that out to early 17. The global uncertainties cited are not clearing up any time soon, and the fed wont hike ahead of elections next fall. The fed doesnt buy anything from waiting. If a rate hike hangs over the market every meeting, that provides no obvious stimulus or economic benefit. This idea of resetting the clock, i dont think its healthy your everyone. Take it off the table for an extended period of time or in the words of nike, just do it. Agree. The additional confusion leads to all kinds of probably just people freezing up and not knowing what to do. People calling the two year, you get benefit from rates if they are low for a while, but look at the oscillation of the two year over this period of time. 68, 69 basis points is that mark. When its above that, the market counts on a hike, and if not, and you can see it dropped yesterday, up at 80 the day before, 80 basis appointment, and that volatility does not provide any kind of stimulus. Okay. Steve. Fine. Youre the messenger. Youre the messenger. For more on the fed and Market Reaction, lets bring in mike ryan, ubs chief investment strategist. Mike, do you remember the point in time when we became much more concerned, i think, globally and what we do with our own Interest Rates here . I guess its. A gradual move towards globalization in all aspects of our life, but i just dont remember in the old days i remember William Miller messing up. And volker was a hero, and i dont ever remember making sure every corner of the world, including the island of cyprus or the tide baht or the shanghai stock market i dont think they had one. I dont remember when this kept us from doing something here. Yeah, i agree. When did that change . Because theres no such thing as app isolate event anymore. If it happens one place, it happens everywhere. The fed cant be, you know, basically kind of cavalier about what they do. Going back to the football metaphor, joe, and borrow another one, talking about quarterbacking. I borrowed that one, by the way. Okay. This is about quarterbacking, where i think ill give janet yelp kudos as a creative quarterback. A couple things to do as a quarterback. You want to be environmentally da adaptive, and manning survive because of that. You have to use all tools at your exposure, but not just focused on the line of sight. Its peripheral vision as well. Fed is focused on feedback loops from some of the global dislocations coming back to haunt the u. S. Economy in terms of stabilizing growth or so you prefer to inflat rather than deflate the ball . Theres no question. I think what the fed, again, i still think they go. I think they go in december. Thats my view here, but i do think right now that what the fed is really focused on is making sure that this deflation cycle does not reignite again. This was what Central Banks were obsessed about. We dont want that to rekindle. If you were a run of the mill bureaucrat, you know, i guess it would be boring. I mean, im not saying theres any eagle involved with in, but being the fed chair, youre thought of as the most powerful person person in the world after the u. S. President. Now it makes sense. The fed, i feel like, is involved in every aspect of our economy, the slightest fine tuning, which i dont remember that being the case either. I thought they would keep a stable currency, do a couple things, you know, work around at the margin to do things, and instead now, their involved with the training wheels of every aspect of our lives. The fed does this because of a lack of leadership in washington, but others say they enable the lack of leadership in washington to replace the Monetary Policy to try to prop up the fiscal policy. Right. We argued with david cody yesterday about whether the president s got enough credit for averting a depression. I mean, we have the fed there every step of the way with qe 1, 2, 3, and 4. Theres a lot of credit to go around. The point you make, joe, the fed stiffens the bridge here. There was a period in the crisis and recession where there was a complete collapse in demand. We didnt see the leadership we had to see. The fed took a step. Its hard for the fed to seamlessly step back. They have to do it in a gradual, pragmatic matter. They are trying that now. With steve, i was in the camp of just get it over with, show the process, show its to the going to ripple through markets. In fact, its a first constructive step in validating we got to a point where were past the crisis. Joe, be careful of the world you wish for. The world you talk about when we didnt worry about china was a world when china was not a large open economy moving towards some form of capitalism. When markets were not open in asia, when we had a world not connected the way it is. Im the last person against globalization or not create and that creates possibility for fed and policy, means were much more reactive. Taking upon themselves, but thats an excuse to be more important in everyones lives. Steve, that right there is your thank you very much, thank you very much. Thank you very much for yesterday. The world is thats a good thing for america at the end of the day. Where would we be if it was up a quarter, the uncertainty removed. I agree with you on that. What if theres a notion things are not cleaning, in china, theres companies you cant fail. If you cant fail, you cant succeed. Theres no price discovery. Back to the argument that was the same argument in the 30s with the liquidationists. Let the market clear and fall off, were better off. It was the decision were not better off that way. Keeping the market from the worst excesses is a valid role for a central bank. I dont like it. Everybody goes back to the way they screwed up in the 30s as if avoiding that, as if theres similarities. I dont know if there were or not, and, therefore, we need to always be walking on egg shells. A quarter point. A quarter point from 0. A quarter point from 20. Its the symbolic fact. It means the fed is beginning the process of resetting rates. We have not seen a hike in 9 years, the shows been on 20 years, halfway through the show is the last time we saw a rate hike. Oh, my gosh. Wow. Think about that. Yeah. For half of your show, nobodys talked about a rate hike. Incredible. Isnt it better for us to pay back all our debts and everything . Wouldnt it be better to abolish Interest Rates and stay at 0. If theres no downside, why wouldnt we . Theres got to be a downside, otherwise just outlaw everything above 0. There has to be a cost of capital. Theres not right now. Well, there is, but they are charged 0. Doesnt mean banks have cost of. Theres a process of normalizing rates, and its a sign of a healthy economy. Its a sign that growth dynamics are improving and deflation pressures are evading. You have to do it deliberate ri to get there. Im not saying they shouldnt get there, but they have to do it in a deliberate and pragmatic matter. Thank you, mike ryan, and liesman, thank you. [ laughter ] on nothing to thank. Thank you very little. I do my best, joe. You know . You do. I hope they appreciate. On monday, James Bullard is our host at 7 00 a. M. Eastern. A Voting Member next year. And by the time hes here, ill be okay with this. You think . The weekend just going to relax . A couple margaritas . Kpgtly. Thank you, gentlemen. When we come back this morning, over each of the nine years, Health Spending outpaces Economic Growth by 1. 1 , the Biggest Challenges facing our country right now, and were going to tackle the problem with three leaders in the Health Care Industry. Aetnas ceo, and Cardinal Healths ceo, and inovas ceo, and our conversation on health care for the next 20 years begins next. Stick around. I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back to squawk box on cnbc. The futures this morning after ms. Yellen decided not to do anything, dow down 155 points, nasdaq 42 points off, and s p 500 looking to open down around 20 points about now. Welcome back again, everybody. Todays conversation for the next 20 years dives into the fu future of health care, soaring costs, consolidatioconsolidatio. We have a trio of ceos joining us for a prognosis of the industry. Mark bertolini joined in 2003, one of the greatest leaders named by fortune, and has over 46 million companies, and george bart joined the giant in 2008, the company ranked no. 26 on fortune 500, and this year, its acquired ten companies, and Knox Singleton, the ceo of inova health systems, network of hospitals, outpatient services, and assisted care Centers Services 2 Million People a year, and knox was inducted into the washington business hall of fame in 2009. Gentlemen, welcome to all of you. Its really great to have you here. Plenty of problems that are facing the Health Care Industry right know, but, mark, you used a very interesting status tists. Our and Health Care System wasting 800 billion a year. We think we are better in doing this, but explain the number. Where is the waste . Well, the iom, a study back in 2009, said 30 of Health Care Expenses are wasted on redundancy, 25 is the administrative things we do in billing and fraud and abuse, et cetera. On billing, itself, on the ad mrg, the other 75 is around how care is rendered, and its fragmented and redundant, and the lack of interoperateability among providers in the Health Care System drives that cost. How do you tackle that . Well, first of all, we have to change the way we pay for health care. Right now, we pay on a feeforservice basis. Still . Still. Still . Still, still. I thought that changed. Its changing, right, and its not. It takes awhile, and part of the partnership that knox and i have with our two companies is to beginning to make that change. But that drives all of that billing in administrative costs. Didnt you try decapitation and that stuff . That blew up in the 1990s because we didnt have the information. I slept through the 90s, globalization, and all that, like rip van winkel or something. Talk about the partnership, knox. How are you two working on this, and whats the plan . How far along are you . Well, weve launched a company about 18, 20 months ago at this point, and its been a phenomenal success. It really grew faster than anticipated, and were in the process now of expanding it into the rest of our region. Whats it do . Well, its basically a marriage of the traditional competencies seen in insurance and payer companies and the competencies providers brought to the occasion. We are good at connecting patients with the new economic model that exceeded fee forservice looking at global payment, you have the ability to manage that care for the right treatment at the right time. You avoid the duplication weve had in the past and basically rewarded for prevention and mitigating avoiding disease. That Company Really takes our ability to directly connect with the patient with the ability of payers to directly connect with the employer, to connect with the patient as app employee often and administer claims and policies and competencies we do not necessarily have. It is that methlding of the ris bearing component of care with the delivery of care, which really is the new model, and its the only thing that with the new incentives around payment that are going to bend the cost curve and really incentivize the best quality, the best Patient Experience and best value for the system. Lets talk about data. Mark pointed out we didnt have the capability and the systems to really fix thing back in the 90s. Now we have it, but at points, you hear stories that make it sound dreadful in terms of what the doctors deal with. 100,000 different codes to learn to figure out how to get paid . It is a tough time for doctors administratively, no question. The 90s was decapitation without data. Heres a set fee, amount paid, use it wisely. Right. I think the world were moving towards is one where we can say we know what the outcome that were looking for is supposed to look like, which is good health measured over a period of time. I think that that is going to help us. We are struck between worlds right now. In fact, we have a world thats partly fee for service and a world thats moving towards this model which is for value. Cms recently or hhs said they want 80 of payment models to be in some kind of amoulternate sym or a values based system. We see this push, seeing it even on lower extremity, cms had proposals on lower extremity payments, bundles for outcomes of care. I think well start seeing new models of parents tied to value basis. I think models are in process, and over the next 20 years, thats something well move towards. One last thing about the waste talked about earlier. We have hot spots in the system where we have huge waste, and one is transition of care. That moment, for example, that moment of discharge is a critical moment. You know, where does that patient go, how are they followed up, and so as cardinal, we have taken some steps to work in that area, so we have, if you heat mapped whats going on in health care, there are certain areas of waste that are attack differently by different parts. Visiting nurses or do they go to long term care, assisted living, or do they go home with a followup nurse . Those decisions are very important because whats happened very frequently is the patients wind up being readm readmitted to the hospital creating additional cascade of Health Issues and cost. So the ideal situation is the patient wants to home, but they cant without an assisted followup in. I think many can. I think many can. Looking to the future, if you look at the demographic, were going to we have a 11 Million People over the age of 80 today. Thats what i was going to ask. Its going to double . When does that peak . Around 2025 its going to be about double. Right . I dont know how you handle it. Yeah. I dont. You know, my age, im getting up there. I take no pills except like a vitamin or something, and i see when when does that really start to kick in . If you exercise every day, when are you sure youre going to need care . 75, 80 . Its a logistical issue more than how do we, in the community, get people, technology, and the patient to the home . Thats the best place to provide it. The models we create, what we create with inova is a Community Based Health Care System where that system is taking care of people in that Community Based on their needs so as the demographic gets older you better hurry, doubling in 2025. To 2030, sure. Over 80. Over 80. Theres 11,000 people retiring every day now. Imagine 20 Million People over the age of 80. We made a move to acquire the majority position of the nava health. At the moment of discharge, they direct based on data, whats the ideal setting for the patient, long term care, assisted living, going home with nursing followup. This is, again, a critical moment in the system, which is where do we send the patients and the best way to care for them. Any type of care at 75 is not going to catch on, is it . No. I dont think thats a useful technique. The minute youre 75, wow, that was a stupid idea. Were hurdling towards that. Hurdling is the word, breakfast every hour, as i say, i know. Whats that it seems like. But when the other thing to ask, and this is a question, is improvements in diet, and im not sure a lot of this that weve seen that is sort of putting positive improvements, is that adding more than exercise, an active lifestyle . Active lifestyle is much more important. Some of the diet fads are bad. Sitting is the new smoking. It is, right . If you sit for so long, you have to get up and move around. We sit here for three hours. I was just thinking that. Its like having three cigarettes. Sitting for three hours is like three cigarettes . Yes. Get up how often . Every hour. During the commercial, we have to get up. Walk around, get we should be sitting on the big balls too. Then your postures like this and strengthen the curve. Nobodimeny menwants to watch weaving back and fort. But to the diet question, it feels like were having a shift, no everywhere in the world or in the United States, but how much of an impact . Obesity is a pandemic we have not got our arms around. People are getting heavier and heavier and heavier, and if we dont do something about it that might not be solved by changing its lifestyle and diet and what you put inside your body impacts you. You need to understand it. The genomics movement, what knox and his team do, what you put into the body, how it affects you personally has an effect. I see a natural path that tells me what foods create sensitivity in my digestic tract, and that impacts me. Does aetna cover Something Like that . Yes, they do. If i wanted to do that . Yes. Whats the cost to do that . Its cheaper than treating diabetes. Im an aetna client. I am too. I may go in for the service. Tell me what causes problems with the digestive track. Were all different, but what sensitivity to your gut to foods you adjust. Tell me which ones. Its up to you. I bet theres 15 of the people have the same thing. Its up to you personally. Twinkies are not good. Roll those out. The data is not fully in. Time for todays aflacs trivia question. Which team won the super bowl in 1995. The answer when dcnbc continues. 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. 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. When youre not confident you have complete visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. At ts Innovative Solutions connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. Now the answer to todays aflac trivia question. Which team won the super bowl in 1995 . The answer . The San Francisco 49ers. Welcome back to squawk box, and were sitting now after getting up about being toll about the three hours. Among the stories this hour, heres whats going on. Apple is getting a win in the legal battle with samsung, a federal Court Appeals ruling that apple should have been granted injunction banning samsung from selling software using apples patents featured. Features used in the iphone, and you press that thing across, and address books, and spelling verifications. The case now goes back to Federal District court where it will be reconsidered. Other apple news, mobile devices have crashed including joes after attempting the new ios 9 system. Many complaining. Many of the reports are linked to older models of iphones and ipads, and rookie mistake. You got to wake a week or two until the upgrade. Theres always growing pains. Upgrade in two weeks. New york citys Pension System votes to strip bank of americas ceo of his chairman title. The new york fund holds more than 25 million shares and joins other major funds like calpers in support of the split between the chairman and ceo roles. The shareholder vote is next tuesday. Watching for that, and they strongly disagree with separating the role, and ken will discuss it all. When we return, continuing the conversation about health care, Controversial Health care discussion about end of life care. Well ask our panel of experts how doctors and insurers can better treat the 5 of the population that drive 50 of the costs. Back in a moment. Joe, becky, and andrew, all the best beyond this 20, go on to the next, 30, 40, 50 years. Happy birthday, squawk box. 20 years is Pretty Amazing in anything, especially in television, so happy, happy birthday, squawk box, you are awesome. Happy birthday, congratulations on 20 great years. Well, sir. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent, i plan to retire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. Talking about the future of health care this morning. One of the most controversial aspects, end of life care, and we were just talk about dr. Manuel, sparked a debate on the issue last year with an article called why i hope to die at 75. I dont like reading this. The obamacare architect writes in part, they live longer, but likely to be more incapacitated. That does not sound desirable, and that makes my obamacare plan actually will be able to pay for it if everyone does this. He didnt say that. I said that. Reading between the lines. Controversial question and growing area of genetic testing to detect health care before it happens. We have to introduce our ceo, mark bertolini, and george barrett, and Knox Singleton. We were talking about the money we wasted, and one of the most exciting, you know, we see the genome, and i was hoping wed get more therapeutics by now. It takes a long time to go, obviously, from a lab bench into a patient setting, but one thing we should be able to do is do a lot more in preventative medicine if you can find things that predispose someone to a chronic illness. I dont know how much progress were making or how much illness is not environmental, not all based on the genome, but the part that is, we should be able to save a lot of money by preventing people from getting sick in the first place. Well, i dont know about 75, but my prediction is that were going to be hurdling towards 100 and the number of people over 65, the traditional definition of seniorhood is going to go dramatically. Its going to be partly driven by the genomic revolution because your ability to predict is the ability to prevent whether its diabetes, whether its stroke, heart disease, cancer. Today, its a new field you point out, but it is blooming rapidly, and that whole predi predictivipredic predictive capability wired in your genome is the map docs use particularly as you get older in incidence of cancer, stroke, and heart disease. Thats whats taking people now. You start dodging those bullets, youre going to see meaningful expansion in the life expectancy. The other thank drives that is we just talked about the new incentive to basically manage health or Optimize Health rather than just treat illness. Thats going to drive an increasing number of seniors into chronic disease management programs. We have a very acute care driven system. In other words, you have to get sick and have a crisis, go to the emergency room, go to the hospital. The most excepensive interactio anywhere in the Health Care System, and that happens over and over again because no one is engaging the often no ones engaging the family and patient, empowering the patient to care for themselves. As you see more seniors get providers, payers incentivized to stay out of the hospital and emergency rooms, frankly a way to manage their own health, that is going to dramatically improve the quality of life and the survi surviv survive ability of diseases. What about alzheimers . Alzheimers is a later code to crack. They tell me that the progress there is slower than in other areas, but they are making progress. I predict within ten years, within actually far less than ten years, youll actually not be able to just see it coming, but youll be able to do something about it. There are therapies now that have some impact on that, but mostly its still a disease that you can detect whats coming, but not change it. That is changing. Every month there are about a dozen new drugs that are targeted for specific diseases and some in development are around alzheimers and dementiarelated issues. Scary piece weeks ago about i mean, its not out of question, dirty surgical instruments in procedures could spread alzheimers, something never thought of. It was a small study, and i dont know if theres validity to the study, but maybe not purely genetic. However, the complexity, as you know, its a mixture of genes and environment. Nature versus nurture will never be settled because its not settleable, and we dont know how much is jegenes or environment, right . In all these things. Dont we say you said were ten years away. Were always ten years away from something, right . I mean, youve only lived three ten year periods. You dont we have a much better idea about whats ten years is not a long time. In ten years from now no, this is going to happen. I remember this time dna sequencing, the front page articles, and everyone thought the world would change. Here we are. Im saying it takes longer than ten years. In fairness, the pace has been quick. I mean, feels like its quickened in five years. Asked us ten years ago whether wed have a cure for hep c, i dont know that we would have said yes, and we do. The pace feels to be quickening. Theres things about knowledge. It does all the things the guys have described, it also allows us to think about studying a drug to study the patients likely responder, and so part of what we had historically studying drugs is this problem of using a drug for a broad audience where its effective for a small group, and weve not. Able to identify likely responders. The ability to target responders is one thing, but i was meeting with someone the other day, they were talking about premature births. Theres data that we can collect that theres a genomic propensity towards premature births. That would be a huge breakthrough to do things in that area m i thi. I think the yes gnome igs, big data and biology is a powerful concoction i think. On that point, the premature birth costs society like the number 3 cost, total cost to society. At inova, we got the biggest the biggest collection of whole gene sequences for motherfather and babies associated with studying and the biggest study around preterm birth. Think about who is interest the in that, Want Department of defense, hugely interested in that. They own every developmental issue that is associated with the baby thats born for the lifetime. I dont understand what youre saying. What are you talking about . If you could predict which mothers are going to be at high risk, and you prevent a premature birth how . Prevent them from having a baby or what . No. By knowing who is at risk, theres a variety of ways you can dramatically reduce risk of having by Constant Care along the way . But the issue is its an expensive intervention so you cant apply that to say 100 out of 100 women with knowing that the incidents of premature birth is low. If you could target who has the issues. These 10 , they will have 90 of the low birth weight babies, and now you could intensively manage those pregnancies and say reduce by 50 or 80 the unhappy consequences of that premature birth. Sure. Each of those could be 10, 15, 20 million lifetime social liabilities. That is the promise as you point out, the challenge. Were probably the leading we probably got the biggest data, all driven by the data. Mounds of genomic data embedded in that is the answer, they are convinced to that question, but how long is it going to take to find it . A lot of people looking, a lot of people analyzing the data, but it is its the roi for that or alzheimers if you could both identify it. With premature birth, we know what to do about it. Wi we can mitigate the problem. With alzheimers, its much less of a treatable condition. That doesnt sound like a genetic thing, the premature birth. They could have different physiology in a way thats not determine only by genes. Its both. Its both, yeah. Its a combination of the data about their physiological plus genetic. Theres a social component as well. It also im sure. Its powerful, the emerging the, the predictors we are seeing are really most po powerful ones is all three components, not just genes or social indicators or just your physiological ties, but the three combined. Exactly. All right. Well continue. Well continue the conversation, and coming up, more from the panel of Health Care Experts and ask what health care looks like 20 years from now or ten years from now. At the top of the hour, new jersey governor christie is joining us on set to talk about the debate, its performance, and, of course, the donald. Back in a moment. Why pause to take a pill when a moment spontaneously turns romantic . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. 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Com welcome back to first in business worldwide, among the stories front and center this morning, shares of adobe under pressure, warning the Current Quarter earnings and revenue, stock down by 2. 25 . Announcing 7. 5 billion buy back plan, and rising the dividend by 12 to 38 cents a share, giving the yield now at 3. 2 , stock up by over 1 . When we come back, well ask our panel of ceos what health care looks like in 20 years. Squawks 20th anniversary celebration comets right after this break. Its intelligent enough to warn of danger from virtually anywhere. Its been smashed, dropped and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken, rattled and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. The cold. And dragged through the mud. Introducing the allnew mercedesbenz gle. Its where brains meet brawn. vo wit runs on optimism. Un on . Its what sparks ideas. Moves the world forward. 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Youre in the major piece of of. Like politics, health cares local. Look at the local market area where theres still plenty of competition, you know, consolidation is about medical advantage, and theres 28 new Medicare Advantage plans in the last five years, more than half of them are hospital based. I think the competition really needs to be based on whats going on in each community and whats best for that community. Right. Not whats happening in the National Brand names, which well have 13 of the market on the commercial side of the market after the merger. I want to read you something. This is from the American Academy of family physicians. Seldom does consolidation equal return in costs for customer, and leveraging of rates and more than not, consolidation increases costs, reduces options for customer, and we believe this will hold true in the Health Insurance market too. What do you say to that . Under an old economic model. Talking about fee for Service Rates forever, it wont work. Consolidation wont help. Talking about changing the payment model and developing relationships like weve done with inova, then you have a different model that works economically. If its about fee for service and smash mouth negotiation between provide everies and Health Insurance plans, consolidation makes the discussions harder and outcomes. Have you talked to him at all about this before you wrote these in the column in the Health Care Industry . Did you put down what he said, how he explains its not the same economic model it used to be. Was that in your piece that you wrote . I you talk, but you dont put his contention. I know. I think we included the contention. The issue is the transition cost and how long this is your chance. The transition cost only matters where you bring organizations together to provide that different economic model works, and inova has incredible possibilities to care for the local community, and we have intellectual property, and when you share that versus use it gep each other, going on in the current system, you get better results. They have the same data we do, we rely on the care we dont get in the middle, and ultimately, the care is for affordable, and, you know, with our product, its a 50 50 joint venture, the price in the market place is 15 the boast k best competitor. Sanders leads in some states in the polls, and his plan is universal health care. What happens if thats the case . I think we should have the debate. Lets talk about single payer universal health care. If the American Public mewants that, we have to find a way to get there. All right. Everybody should have health care coverage. Weve been supportive of that and guaranteeing the issue, individual mandates since 2003 and 2004. Everyone should have access to health care. We have to find the right system at the Community Level with the local hospital system, its about keeping my doctor and hospital, not about keeping my insurance company. If you do, as you get it, obamacare, whatever, once youre headed that direction, mergers are the only way to affect the cost savings. I very much made that comment. You did. You read the coal lull. You get my blood boiling, i cant read them, andrew. I have three hours of listening to the column, im going to sit in my free time and read the columns . Guys, thank you. Thank you for a great conversation. Appreciate it very much. Great. Good to see you. Coming up i have a hard time not banging my head. Chris christie here to talk about the debate performance, saying it was good, and certainly maybe helps him regain some of the momentum, and the white house, plus, home depot cofounder weighs in on the feds decision and the economy. Hes never shy about speaking his mind. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. 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. 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. 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. Fedache continues, and the fed holds off on rates. Will they remain holding as they decode the decision or cheer easy money . Debating that straight ahead. Race for the white house heating up, president ial candidate Chris Christie talks Economic Growth, tax reform, and political concerns shaking investors. What he wants to change if he gets the nod as commander in chief. The battle to keep ryan as a chairman and ceo. Ken langone sounds off on why the right man is for both jobs 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. I made it happy birthday, ken. Welcome back, everybody, this is cnbc, first in business worldwide. We are just about 90 minutes away from the opening bell on wall street. Check this out. The day after the fed decides not to raise Interest Rates, we are looking at the dow down 182 points, and s p off by 23 and nasdaq off by 50. The markets in europe at this hour, by the way, the numbers have been getting worse through the morning. You can see this playing out in germany as well. The dax down 2. 8 , and the ftse down by 1. 4 . The stories we are talking about today. The future markets right now pricing a 6 0 chance of december rate hike after janet yellen and company pulled steady yesterday citing global uncertainty, and jamie dimon says its a speed dump bump, and china growth is not big trouble for other economy, and verizon says they will begin offering roaming service in cuba next week. Earlier this morning, sprint ceo said his company follows suit 2 Million People from cubas population have cell phones. Moves this morning, adobe beat by 4 cents, and 54 cents a share. Its strong increase in subscribers for Creative Cloud software suite, however, the company gave a lower than expected forecast for the Current Quarter, and that forecast was worse than expected current earnings. La quinta says by mutual agreement, chief Financial Officer will service as interim ceo while the Hotel Operator searchines for a permanent replacement. Lets get to governor kristie and our guest host, ken langone, home depot cofounder, called chri christies biggest backer four years ago or so. In fact, the other night was fabulous. Congratulatio congratulations. Thank you. Hes in. Hell tell the world as it is. I enjoyed that debate. Maybe there was over the top stuff, and maybe it was, you know, maybe what are you talking about . Maybe too many people, maybe it was too long. When im not on the other side, obviously, in all cases, but i think theres a lot of talent on the stage. There was a lot of talent on the stage, and thats what i emphasized, you know, we have our opponents not on the stage, our opponents are in new york. We have to focus on what we need to be doing here to win back the presidency. I have no interest in being the republican nominee and losing in november 2016, but running to be president of the United States, and those in the stage going after each other that that only diminishes us, and we have plenty to fire at obama and Hillary Clinton, dont waste ammo on each other. Im watching at home now, a lot, and donald trump gave another speech last night, and some Cable Networks cut out, and some stay with him no matter how long he talks. Thats the way it is today in todays environment for whatever reason. Hes intertaentertaining, a can with a lot of support, but thats, you know, all the trump questions, 44 of the questions reinvolved around trump. I dont know whether you complain about that or just say its the way, you know, it is what it is. For me, it is what what is. I dont complain about it. Its for the moment. This is for the moment. Lets remember, right now, four years ago, rick perry was 40 . Four years later, out of the race for the second time. You know, politics is a very volatile business, and the people who are rewarded are the people who are steady and strong, know what they believe in, know who they are, and can speak to the concerns of the American People. I dont worry about this stuff now. The way the polls are now, if the election was held tomorrow, as i said before, everyone would be stunned. Like watching futures this morning, down 180 points, but we dont know where it ends at 4 00. We are talking where this ends in july of 2016. The same guy who captivated republicans four years ago, same guy, and along the way, i dont know was it the embrace . Was it the embrace . No, no. There was a hurricane, and you got to get out there that was for the state of new jersey that you joe needed the federal governments help. The message four years ago was simple and clear. Im not your garden variety politici politician. The American People are fed up with politics. A year ago, the call i got, we got to raise money for this senate guy and this, and if we do that, we control the senate and youll see how things change. We won the senate, and nothing has changed. He says stuff a week and a half ago on television, the answer to the problem is term limits. Send them home. Let them have a say in Health Insurance that everybody else has with obamacare, have a say in pensions. This is a a damn sorry, i shouldnt do that on television. This is a scam. This is a scam. The American People say it was much of what trump is, hes different. Thats what that was incredible attraction four years ago. Right. Everybody looked at chris and said, you know what, hes not a garden variety politician, and hes still not. People have said that some of your niche that you are going out, certain part of the republican party, that donald trump has taken some of that and a blunt spoken person, someone to shape things up. He can have it right now. Nobodys voting yet. Ill take it back when people are ready to vote. I think, you know, thats why in politics, you have to be par patient. Its the hardest thing for a guy like me. Im used to pushing and pushing. I live in a state, as you know, im an outsider every day as a republican. The fact is that you got to be patient. I will do my work, working hard, and for people who dont like you, they think thats whistling past the graveyard, and people who support you like ken supports me, we know this will come around, but its going to take time. Governor, asking you, republicans have a problem with women. You looked at the last election, mitt romney won the male vote, and youre a straight talker, your greatest strengths. The other night on stage talking to carly, you said you interrupted everybody else, and not me. One persons strong tough talking is another persons rude. Any blowback from that . No, in fact, she was being rude. Listen, you know what the key is to attracting female voters is to speak to them and talk to them the way you do to male voters. You dont want to be treated any differently on set because youre a woman. True. Carly is not treated differently by me on the debate stage because shes a woman, and she wouldnt want it. Believe me, in the same sequence, i said the same to casic, im not done yet. Nobody asks me about saying that to john, right . Well, believe me, Carly Fiorina is up there competing hard to be the nominee, so am i. She interrupts me, ill say it. She ran every everybody wednesday night. Lets face it. She interrupted everybody. There were tread marks on peoples faces every time Carly Fiorina ran them over. They let it happen. Its not happening to me. By the way, on the female vote, he lost the vote in 2012, and in new jersey, i got 36 of the female vote because i treat women the same way i treat men. I tell them the truth, and thats what they want to hear. Becky. Yeah . Question for you. Yeah. If the only reason you are there because youre a woman, how would you feel about that . Terrible. So would i. Carly fiorina, shes repositioned herself. She starts out probably most Political Company in america, the old at t. It was all politics. Move from this subsidiary to that. Its whoever you know. She blows out, its a mess. She goes to hp, she was fired because she made a mess. One guy comes out, and now the guy changed his mind. Im a great president. Of course, hedging the bet now. Shes done nothing of any consequence in business. Oh, she likes to tell us, i was a secretary, and now im a ceo or i was a ceo, a discredited ceo, twice. All right, come on, joe. I made the argument weeks back, and you what do you mean you all you did was pair it what jeff said. You defended her. Heres what i see. You pointed out what everyone knew, the team increased revenue by buying another company. All you pointed out. You were able im saying any ceo experience, even if they didnt if they didnt make all the right decisions as a ceo, at least its better than the guy we have right now. The guy we have right now, to rise from a secretary to a ceo and technology, i dont know if anyone could have saved hp. They are still having problems. A job by the New York Times just to write off a cap dat because no, no, look. Look. I agree with you in that regard. Okay. But, look one by one, youll do a hit job on all republican candidates, eventually. A wrote a complimentary peiee on jeb bush. In my mind, shes playing when the guy win, he makes me secretary of commerce, but now lets get to jeb bush, though. Are you going to are you going to defend promoting chris, are you going to talk negatively about the other candidates . Not at all. What about jeb bush . You asked for the hurdle. I think hes a wonderful gentleman. Okay. There. As far as youll go. A business question. Jeb bush came out, trump as come out, and Hillary Clinton came out all to try to eliminate the tax on carried interest, the Capital Gains treatment. Where are you on that . Listen, i think were talking about the wrong things. We put out our plan, and the fact theyre talking about a mip skew amount of money, its sin bollism. You know it, i know it in the large breath of this. Absolutely. What our plan said is eliminate all loopholes and deductions other than the Home Mortgage reduction, bring top rate down to 28 , bottom rate 8 , everyone does taxes in 15 minutes, and they fair the system is fair. The middle class in the country feels like the tax system is rigged against them, and they feel that way because it is. So lets take away all the rating away from it. This other stuff is playing around the edges or when huckabee said, eliminate congressional pension. Well, nobodys in favor of congressional pensions, im not, but thats this much on a problem thats this big. Talk about what the real problems are, and the problems with donalds and everybody elses is twofold. One, it doesnt fix anything. Two, the fact is they are going after symbolism. Fix the real problem. Tax system is rigged. Its not good. Its not good for the economy. Fix that. Lets stop looking to see who is focused on the rich because that makes good headlines. Thats what Hillary Clinton does. Its not what real people who understand the economy do. Yeah. Hillary clinton was never a ceo. What did you hear carlys quote the other night, how to stop a democrat . Name one accomplishment for Hillary Clinton . Going to write that column . You got ken here supporting governor christie so hes going to, you know, that im trying to be apolitical here. I have a business question. You asked everyone here, would you let trump or carly ever run a business . They claim to be business people. Right. Its a reasonable question to ask another business person to invest in their business. They are running to be a Decision Maker this d. C. Making the market that because of their business experience maybe any experience is good. Thats fine. Its good. Whats the saying about when you ignore past experiences . Thats insanity, you do the same thing expecting different results. Look. People generally dont change. They just get older. Okay. We didnt elect a former ceo recently. No. Guess what, if we do . Itll be the worst thing in the world. The bigger problem is the American People, what changed with Carly Fiorina . Good appearances on television. Wait a minute, so if i go to equity, give me somebody to look like the president of the United States, they look great too. Lets get down to what needs to be he made tough calls in jersey. In hostile environment with his believes, and he got it done. Your rate fell in new jersey. It has. You continue to hear, and we have a tough environment in new jersey. First to admit it. I wish we could lower taxes more, but the fact is, i beat more tax increases more than anyone in history. Our unemployment is 5. 7 in a tough environment. Talk to business folks there, new jerseys tax environment is still difficult. Its much better off than when was when i became governor, and it would have been much worse if you had a democrat as governor. In a normal election, people would look at your record or look at casics record and you would be in the double digits. Absolutely. In this environment, its ben carson, a neurosurgeon a good man. Right. But this is a strange, unprecedented period in terms of it is. Maybe on the republican side. Bernie sanders after rick perry fell, the hurricane rose, and the ceo got michelle bachman. It doesnt go beyond the outsider, the nonpolitician, at least in the republican party. Heres heres where it happens. It is a testimony of this president and this congress. Right. You know, people, and what ken said before is right because ken knows i was running around the country last year to elect governors, and every time i was in a state with a senate race, they wanted me to raise money for the incumbent republican senator, and i did. Now we have 54 republican senators, what have they done . We dont have nothing. Lets put real republican tax reform on the president s desk and make him veto it. Lets repeal, replace obamacare with a market based solution. Let him veto it. Instead now its not enough, we need 60. Well, do something you know what . You grab 95 of the people in the street there, they never heard of the word before much less understand what it means, and in my office, i said to john boehner, do away with closure, pass 100 bills, send them to the white house, let them beat him. Put closure in. You got majority control. Its that simple. They have not. Why not . They are career positions, and im not rocking the boat. Im going to play my game. Playing out of fearme mentfe. The republican senator, they are playing on fear. They dont want to eliminate the filibuster because, oh, well be in the minority and watch the filibuster. How about you got the majority. Lets do something with it while you have it. Absolutely. Thats what i dont get, and thats dwr wwhy i was asked a yr two ago, would i point myself to the United States senate . I would rather commit suicide than be a United States senator. I could not bear every day going to work and getting nothing done. Nothing. Thats why the American People are frustrated and why they, at the moment, our parties are looking to outsider. Thats right. Thats it. While youre here, this is the business question. All right. Its about another guest who we have a lot who probably wont be a guest for quite a while is jeff, united ceo, and this whole debate about whether he bribed them or dave sampson bribed him. Do you know about it . No. And the fact is we dont know, okay, andrew . This is another interesting, you know, New York Times approach to the problem. Nobody knows. Nobody knows what went on. Right. Nobody knows whether anything went on. Yet in our accuse first and apologize later society, we indict and convict people in the public medium before anything happens. They are doing that to jeff, to david sampson. Im not participating in that. No, i dont know anything about conversations they had. Its an independent authority. The Port Authority is an independent authority. Cuomo and i appoint people to it, but were not sitting there trying to figure out whats going on downtown, and so we do the best we can with that, but, no, i dont know what went on there. Ill tell you this, lets not jump to conclusions about things. I learned that as a prosecutor. Theres facts, prove out the facts. Well see. By the way, we dont know all the reasons they fired jeff. We have no idea. Not that good compared to the other allies, serious integration problems. Nobody knows. The intrigue of whats going on in board rooms would make what happened on that stage wednesday night look like, you know, tiddleywinks. I know one of the publications you work for love to do that, especially when it concerns me. You know what . They were wrong 18 months ago on the bridge stuff when they did that. I have not got an apology yet about that. They had me off to jail if i would read your newspaper, so, you know, now im running for president of the United States. There is a solution to that. Whats that . Not reading it. I dont. And i cancelled my subscription personally. Called the 800 number. Very efficient. Acknowledge page one is the oped. Its all oped at this point. Oh. The more i see you, the more i like you. How can you be where you are politically . Im nowhere politically. Isnt that the beauty of it . The 1 er. Im just asking the questions straight. You know that. I empathize with you, andrew, i do. Its a difficult situation for you, i understand. The match saturday, walking past you, and elaine said theres two of the nicest people we know. I said, yeah, too bad his heads screwed up. [ laughter ] this is great. Governor great to see you. You never thought you had a thing you loved having me here. Right. Looks at me as a refuge sitting next to ken. Its great. Thank you, again, and were going to cnbcs debate is in october. Who is doing that . Who are the moderators . I dont know. Thats the intrigue of nbc . All i can tell you its in boulder. I understand. Im going to go out there early. You and i should go out early, and do what . To be able to elevate ourselves. Get wasted. Do not do that before the debate. Ill say this, we have to adjust to the altitude. I have to be ready. You dont want me to have altitude sickness in the debate. No, ill be ready. I think joes the moderator of the debate. Who the hell else would be the moderator of the debate . Andrew . Hes out there, im walking off the stage. Good night, everybody, thank you. Itll be great. Anyway, great to have you, youll be here, right . Hes staying around. Happy birthday. Hes a host. Your age is the new 50, by the way. Guess what, i made a promise to myself im going to make it to 101 because thats when my granddaughter graduates from high school, and im going to be there. Okay. You better. Damn right i am. I got in that gym this morning and pumped iron this morning. Im doing it. Unbelievable. Im happy to be back. Thank you, all. Go easy on them. You know the way. Ken, thats not going to happen. Bank of america shareholders will be asked to vote on the fate of brians roll, remain both the chairman and ceo . You bet kens got a view on that, and, you know, he likes to hold back. Well have to pull it out of him. Take a look at futures right now, in the red, dow is opening 190 points. More data means more freedom to do. Whatever. Thats why at t is giving you 50 more data. Thats 15 gigs of data for the price of 10. Because the more data you have, the better. And right now at at t get 300 credit for every line you switch when you trade in a smartphone and buy any smartphone on at t next. Today, the fed did not move, should you . Strategic plays for your strategic plays for your portfolio to put odds in your 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. Welcome back. Futures right now turned decidedly negative in a very bad way. The dows opening down at 190 points, and s p down, and nasdaq 50 points right now. The dollar pleasure impacts gold prices as well. The Precious Metals hitting a two week high this morning. Come iing up after the brea back to ken langone with views as bank of america takes on Pension Funds, splitting the chairman and ceo role brian is in . Hes in the spotlight, and ken langone makes the case hes the man for both jobs. That and more when we return. I wake up to squawk box, not just me, but most people i know in finance. Tell me what. If i hear a story breaking, its a great chance to clarify. I dial the control room, and they know my voice. He called in the show. You cant write the script to the show. Happy birthday, squawk box, its a great show. I want to be on the 40th anniversary show, book me, will ya . Welcome back. New york citys 165 billion pension fund will vote to strip Brian Moynihan of his chairman title, and they will vote on september 22nd, next tuesday, and changes gave him the additional job that moved on data by shareholders back in 2009 acquiring independent chair, and ken langone holds both bank of america stocks and supporter of moynihan in both titles, why . Look, back to basics, performance numbers by Pension Funds and Money Managers is driven by the right bet. Now, if they are short, they want them to go down. If you own stock long, you want them to go up, and those are the numbers used in determining who should manage money. I think Brian Moynihan took on a very challenging situation, and i think because the person, his humility, his focus, his leadership qualities, people in that bank love that man. Hes done a great job of restoring a culture that was badly bruised, great job. And guess what . He deserves both jobs, but this is not who defers the job, but iss and in league with theupon controlled Pension Funds. Who controls the new york city Pension Funds . The union. Who controls calpers . The union. Understand what the fight is about. Its about burnishing iss and louis brands. You wake up saying im paying these guys advising fees, what are they doing . Its described on one side as political in the argument you made, and on the other side political . Political in that whether its unions or calpers or iss trying to burnish something, and on the other hand, its ego. The argument the flip side of the argument is its why does why does one person need to be the chairman and the ceo . How much of a disservice do you do to the business if they are separated . Lets go playing devils advocate. And thats fair. Go in the makeup of a void. You dont worry about a League Director or chairman if theres at least one perp in the room who raises his hand and says, i dont like this or i dont understand it or this has got to stop. Now, he may not get renominated, but thats okay. He did his job while there. Heres part of your problem in america today. To be, quote, politically correct in structures of boards, were taking people that probably never made more than 150,000 a year in their life, going on three corporate boards, and they will make a Million Dollars in total. Ill make you a bet of any odds you want, thats the last person thats going to raise his or her hand and rock the boat. Guess what . They dont want not to be reelected. What im telling you is they are least independent, if not more independent. The guy that you want in that room is a guy that says, i dont care what you do to me, and i dont understand it. Somebody who owns a large stake of the company too. One of the reasons im never going on corporate boards unless i knew i had skin in the game, and, by the way, louis and iss could do a good thing. There are a lot of companies in america that desperately need to throw the rascals out. One name. And i just made 33 of my money in a month. Id rather be lucky thus far. Who is that . Conico conway, take out the directors they added this year, three, the average tenure previous was ten year. It was number one in business ten years ago. Its now last. I knew it couldnt go on. Here was a case, had they done research, wait, guys, look at the stockholders here. Lets do some work. It was obvious you needed a change in management. Guess what happened . As i said, luck has got to be smart. A week ago, xpo shows up to pay you 37 a share. To the extent there are certain investors arguing bank of america made the decision to give the title back was madeup laterally. Theres a larger question about democracy in the world of capitalism, right . Isnt that what this is . When you get down to it. It was the handling of it. This was a binding owners of the business. Thats what it should be about. There would not be a problem if not for the binding shareholde shareholders. It gave iss and louis a chance to stir it up. Look what they do to you guys. Forget about how well he restored the company. He was an enormous icon in bank of america. This man did a fabulous job. Im not arguing the merits of 97 of S P Companies have one, do them both. The Biggest Issue is the structure of the board. Who in the room . When you go to a board meeting, if youre management, go to it like the dentist. Youre going to get pain, but hopefully when done youre better. Too many boards are docile, passive. This notion of a League Director, bonny hill succeeded me as director of depot. Bonny does not need a title to be one of the greatest Corporate Directors ive ever known. When bonny doesnt understand or disagrees on something, she does not sit there like a wall flower. She raised her hand and raised h hell. Not how i do, i make people angry, but she makes people like her, shes smart and has no trouble asking the right question. This is all noise. Really . We like you. We like you. Sometimes. Oh, you well, no, no, after all this, we actually we have we have a thing. We are around the mediterranean together. Okay. This is the issue, and this is where it happens. This man did an incredible job under unusually difficult circumstances, and the mode for the fight has nothing to do with whats right. Ken is still with us, a lot more to talk about, up next, what investors should be taking away from yesterdays fed decision, and, plus, will the october meeting spook investors even more when they wonder what they do that time around too . Check out the futures, dow is under pressure. Dow down 200 points in the premarket. S p futures look to open down by 25 points, and the nasdaq down by 53. Stek around. Well be right back. Everyone loves the picture i posted of you. At t reminds you it can wait. Happy birthday, squawk box. Happy birthday. Happy birthday. Congratulations to the squawk box on their 20th anniversary. Happy birthday, squawk box. I love this show, no ones yelling at anybody, everybodys rational and thinking. I look forward to the another 20 years of mutual collaboration. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Welcome back, everybody. Take a look. The u. S. Equity futures this morning are down sharply. In fact, were sitting near the lows of the session, dow down by 200 points this morning, and s p futures off by 22, and this is all happening the day after the fed decided not to raise rates. The dollars down as welt. Gold prices hitting a two week high. Joining us is Barbara Reinhart of Private Banking america and, of course, ken langone with us for 40 minutes. I cant believe its been 40 minutes and we have not asked what you think about the fed not raising rates yesterday. What happened . Nothing happened. They looked at the economy, its tepid. They have to raise rates, its unnatural to get money for nothing, and people are paying a price. Retirees, distorting the economy by making it 0. Not making it better, distorting it. I hope they saw it in september. I think they will go sooner than december. You assume they agree with you on what youre saying. They dont. I think they are clueless. Im not assuming they are agreeing with me, but i think the market will react to them in a much more positive way. I agree. Drop, get it done. You know, the people that enable the fed say, look, the markets down 200, thank god they didnt raise rates, wow, not they didnt raise it, were down 200, wow, if they raised them, down down 200, it would have been a wrong move. A quarter point. I know. I know. The bigger issue is how quick are they going to get rates up to a realistic level . That is what we have to get to. They got to start on that, that first step is the first step of a 3,000 mile journey. Barbara, you think they raise this year . There are a significantly fewer analysts who are now thinking theyll do it this year at all. We think they raise rates and think they will do so in december. The reason that we have taken the october meeting off the tail at the moment because theres not a lot of data that the fed gets between now and the october meeting. It seems like they set a higher bar than anticipated. Looking at inflation, and inflation is nowhere near the target, i dont know what gets us there between now and two months from now potentially. Weve seen the dollar a little weaker today, but thats not enough. A couple things to think about in the cop text of what the fed did yesterday. Linkages are what they cited, and the linkages that transpyred because of the stronger dollar translated into weakness in the emerging markets, and the dollar up 8 versus many market currencies, its been far stronger, a very difficult hurdle for companies in the emerging markets to set, and paying back the debt in u. S. Dollars. Its a very set financial linkage they had yesterday. And were you surprised by what happened . We were somewhat surprised. We thought the fed was going to go in september meeting, but our view on equities and strategy is unchanged. We found that the inability of the market to be able to retrace twothirds off their late august lows is somewhat of a weakening technical picture, so we think equities, indeed, are vulnerable at this appointmepoint, which i hold our higher than normal cap position. Ken, what do you think of the markets right now . Im not good at macro. I look at companies. I study them. I do believe that Interest Rates, they got to break the ice. Sooner rather than later will be better for all of us, including the equity markets over the long term. You below that because it shows faith in the American Economy . No. I believe it because its unnatch hall to say hes money, and, oh, by the way, you owe me nothing. Were creating distortions. Were doing unnatural things, and were going to get unnatural results. Getting no benefit. At this point, we dont know what the negative consequences are. Think of the poor people that are retired that are living on fixed income that are living on income off their 401 k s. The people that own assets are stealing the money from the savers that would have gotten the money otherwise, would have been going there, instead its going to do corporate s shenanigans. Liberals do not want to raise rates, but they complain about income inequality. This president did one thing, got jimmy carter out of the south in terms of who was the worst president. Thats only four years. And hes seven. The fact of the matter is the poor people have done worse. Right. In the last seven years. Connect the dots. I cant believe how good ive done because thank god i had the benefit of owning things. People that bought things from me did not pay any cost of the money. Its unnatural. Talk the talk about the merger. Dont just connect the dots. Dont walk the walk. Forget about virtual on the front end, dont look at the policies end up doing to the people they try to help. We need term limits in the worst way. Im telling you, if we get a congress and a house and a senate where they go home every once in awhile automatically, watch the game change. Ken, thank you so much for being here, a pleasure. Barbara, thank you. Nice to meet you. Nice to meet you too. Next, jim cramer in the fed conversation. He agrees, as you know worried about home depot, by the way. [ piercing sound ] daddy lets play sorry kids. Feeling dead on your feet . Ive been on my feet all day. Dr. Scholls massaging gel insoles have a unique gel wave design for outrageous comfort that helps you feel more energized. Dr. Scholls. Feel the energy i was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. All right. Lets look at some key matchups this sunday. The 49ers take on the steelers. The patriots face the bills, the cowboyseagles, and the patriots look to bounce back against the green bay packers. Jim cramer, out in san diego. Youre at sales force . Sales force, dream force, we will talk about netflix. Its difficult not to spend time with him if you want to figure out whats going on. If they had raised yesterday, you think the markets would be down more or do you think they wouldnt be down 200 . I think theyd probably be down 400, 500. I heard ken speak about home depot. We forget that main street does get jitters from fed Interest Rates. Theyre going to happen when the rates rise. I think we want to lose dont want to lose sight of the fact that the market moved up about 250 dow points in anticipation. Youll give back that. There were so many people, as Steve Liesman said, 50 of the people were going to be on the wrong side of the trade. They have to undue that trade, which means the market goes lower, but not as low as if they raised. Yep. All right. I love listening to ken. Can i say hi to ken . Ken, thank you, home depot, thank you for ktelling me that game stop was a winner. I was able to save people money. 44 of the shares were sold short. Ken, how wrong are those people . Why did he leave early . I dont know why he left. Ken left . You just missed him. Oh, hes the most fun guest we have. Isnt he . Thats all right. I love him. I love listening to him. I learned so much from him. I actually we will pass along so gamestop and what was the other one, jim . Home depot. Gamestop in the 30s, i thought it was a sitting duck. He came on this cross talk and said jim, revise your thinking about game stop. Took the file home, did much more work on it, told people to buy it. Quick ten points. Jim, where are you . Im let me see where my mug says. Cnbc at one market. Very nice. See the bridge behind you. All right, jim. This is 72 hours of no sleep. Can you believe how good these makeup people are . They are. They are. We know that firsthand here. They do their best with us. With me. In San Francisco, its the most fun place to be. All right. San francisco is fabulous. It is. Its great. Thank you. See you in a couple. When we come back, the stories that have you buzzing this friday, and talking about ron perlman, and comments in your keep squawking segment. At mfs Investment Management, we 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. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Welcome back. Its time to keep squawking. Getting political this morning. New jersey governor Chris Christie stopped by our set earlier this hour along with home depots cofounder. Lots of squawk fans tweeting about the conversation. Holly fernandez says she is anxious for poll results after the debate. She tweets hope the country supports someone that has a pulse like his. The other buzz story of the morning everybody is talking about it. All the 1 . Most of our guests might be talking about it. And you. Ron perlman is quitting the board of carnegie hall. Its been an ongoing fight among the leaders of that institution. Earlier this week perlman wrote a letter accusing the artistic director of a lack of transparency and the board failing to provide oversight. Less than a year later, the whole thing has blown up. Who you are saying hi to . People. Just waving. Just waving. May soon be easier to get from los angeles to las vegas. Chinas crrc signing a deal with u. S. Partner express west to help build a high speed rail link between the two cities. Estimates suggest that the project could be worth 5 billion. The deal comes days before chinas president will be here, make his first visit to the u. S. Look like a nice train. Like a magnet train . Those two cities they can go back and forth. Should be joined together. You think . The vast moral waste land that just kidding. That is las vegas . Or l. A. Or l. A. I love l. A. If youre on uber now, theres you can click vegas. Come pick me up and take me to vegas. There are special suvs that will take you to vegas. Special suvs. I dont know why i thought of it, is there uber yet in cuba . Not yet. Not yet. Im imagine one of those cars, like a 54 chevy picks you up. Isnt that they might not allow that certain model years they require. You cant pick anybody up in cuber. You cant pick somebody up in an old but if thats all they got. They wont take you. Check this out quickly. You cant get anywhere. Nasa releasing new images of pluto. Thats goofy. Thats not pluto. That gave nasa new High Definition data from the outer edge of the solar system. Do you know the difference between pluto and goofy . Goofy talks. I think pluto is goofys dog. No, hes mickeys dog. Okay. Youre close. Been a wonderful week. It has. Nothing has changed. I apologize. Have a good weekend. Youre very kind. At least i got the apology and its on camera. Joining us now squawk on the street begins right now. Good friday morning, im squawk on the street. Im carl quintanilla. Cramer is at one market in San Francisco as the dream force conference wraps up. Stocks around the world reassessing Global Growth as the feds dovish presentation yesterday happened. A lot to happen as we get into the weakest part of september after some quadruple witching. Bonds and oil worth