Transcripts For CNBC Squawk Box 20160928

Shanghai composite down by a third of a percent. In europe, already seeing that there are some advances there with the dax up by 0. 9 . Cac in france up by 0. . Ftse up 0. 6 . Watching treasury prices. Tenyear yield on the treasury hit another two week low. We have been keeping an eye on crude oil prices. Yesterday down by nearly 3 , settled at 44. 67. This morning a gain of 20 cents to 44. 87. In political news, a stop gap spending bill that would prevent a Government Shutdown this weekend has stalled in the senate. A number of democrats voted against the measure because it does not provide money to fix Drinking Water problems in flint, michigan. Some republicans opposed the bill because of lack of zika funding, and oversight of the internet. Senate leaders said they would exemplmroplore an alternative. And John Williams argues the u. S. Economy can hahnal a rate hike, its hard to justify rates being so low. Williams addressed fears that a hike would cause volatility. He said an easy way to convince markets of something is doing it. Today we will hear from janet yellen testifying before the House Financial Services committee. That is at 10 00 eastern time on Bank Supervision and regulation. Also hearing today from the president s of minneapolis, st. Louis, chicago, cleveland, kansas city Federal Reserve banks. As for economic data. August durable goods at 8 30 eastern time. Pay checks and blackberry reporting earnings before the opening bell. That was for John Williams. You know, that was Indiana Jones this heroic, courageous swashbuckling guy. He goes in and handles things without fear. This guy just raises rates without fear. No. Yeah. Im thinking if you didnt realize it was John Williams it was like we were playing that for a fed guy. That is so ironic to play courageous as a longterm viewer of the show, people know why. I know if we played it every time someone from the fed talks, it would with the action that were seeing . This fecless hand wringing. I was going to Say Something else. I was thinking about the market. The s p is 2160. This has been like paint drying for the last three, four, five months. I dont know what will move it before the election. I cant imagine. Nothing. Nothing. Probably not. I dont know how i feel about it. I dont know whether earnings are improving, whether gdp is going up. Thats the market action, how most players feel. We heard about oil prices. You read the journal, shale produce verse weathered this fine. Theyre switching it back on. Speaking of earnings, shares of nike are trading lower. The athletic apparelmaker posting better than expected earnings in the latest quarter but slowing demand for the future orders number of sneakers and apparel was a drag. Nike has been losing ground to addidas and under armour and is seeing weakness in its basketball division. Mark parker defended the company on the earnings call. Its a great time to be in the business of sports. As a market leader, this is a great time to be nike. Were on the front end of all this growth, a driving force behype tb behind the expanding market. We not only see the upside across the landscape, we have the scale and skill to act on it. To the sure about that hipster beard. Shares of nike down 14 . This is the worst dow component. It is . The worst performing dow come poechbt f component for the year. The headline for that is it was a dow component. Because i had forgotten. The biggest apparelmaker in the world. I knew that. Visa. Visas there . News just breaking, air bag maker takata is reportedly in talks with the Justice Department to resolve allegations of criminal criminal wrongdoing. U. S. Officials are said to be considering various charges against the japanese company. Of course this is in connection with its handling of the faulty air bags linked to 14 deaths and more than 100 injuries. We do have other news that broke overnight. Former israeli Prime Minister shimon peres died at the age of 93 in tel aviv. His death comes two weeks after he suffered a stroke. Back in 1994, peres won the Nobel Peace Prize for his role in negotiating peace according with the palestinians. Well have more on the life of the statesman coming up in a bit. Wells fargo ceo john stumpf is forfeiting millions of dollars, and wilfred frost joins us with more on that. Thanks. Thats right. 41 million to be precise. The bank also announcing last night that the companys independent directors launched an investigation into the companys Retail Banking practices, and that former head carrie tolsted will forfeit about 19 million. This was announced by Steven Sanger late last night. Of course the decision comes some time after the issues were first discovered by the bank a couple years ago. Some weeks after it became Public Knowledge that the fines were announced, 185 billion to be precise. The timing making it intentional to come out before lawmakers quiz mr. Stumpf again, which begins tomorrow. That issue of executive claw backs has been crucial. So theyre trying to preempt that. Speaking late last night in a statement, the head democrat on the Senate Committee making it clear that this was a step in the right direction. But there are many more questions to be answered. Many unanswered questions, he says. Those unanswered questions, no doubt, will be on the agenda for the House Finance committee, which will be grilling mr. Stumpf tomorrow. You know, this is we talked about this a lot, i know you and andrew were talking about it a moment ago, these are the type of things that would have helped much more if he did this a week ago before he went in front of the Senate Committee. The blistering responses from both sides of the aisle stepped up the pressure in terms of coming up with a significant response to show the pain was felt at the top levels as well. Answer ligbsolutely right. Not just a week ago, but three weeks ago if they could have announced the frine was coming r two years ago when he first became aware of the issues. They could have gotten ahead of this. The size, 41 million, is huge. I think its 25 of the compensation hes taken in in his 35 years at the bank. This is not a small number. This is not some little number. No, but probably necessary, he thinks, to hold on to his job. As you say, this has not been managed well from a pr perspective. Thats the question, will this and his performance tomorrow be enough to stop the momentum of what has been a massive snowballing negative pr issue for them . I talked to sources on both sides of this last night for quite some time on the phone. Fascinating part about this, just sort of looking through the headlines, the idea that the independent members of the board feel theyre furious with john stumpf. Thats whats really going on. They think they were kept completely in the dark about this. On the over side, if youre in the john stumpf camp, you think the board knew exactly what was going on and youre being thrown under the bus. But the true sense of acrimony led to this as much as the upcoming hearing. You said the john stumpf camp of things. So hes not on board with these measures . Lets do it this way, this was not this did not start as john stumpfs idea. That will create a problem, too. If that narrative is out there, if this is not john stumpf realizing and recognizing i think now john stumpf recognizes and realizes his job is on the line. I wouldnt suggest to you that john stumpf if you read the press release, it says that john stumpf agreed to this as if he theres sort of an implication he went to the board and said, guys, i screwed this up. Thats not what happened here. Thats an important narrative. If it seems like hes not contrite over this and still is not going along the way, even these big moves Holeman Jenkins points out maybe the person in charming of the compensation, maybe she hit certain mile stones, but it didnt add to the profits of the bank. It had nothing to do with stumpfs pay going up. The 41 million is punitive that has nothing to do with claw backs. It was something stumpf touted, crossselling, they can make it more profitable as a result. On the bottom line numbers it didnt, but this was a huge issue where he had over 5,000 employees you could say the aura of wells fargo doing everything right helped with the stock price trading at a premium. If you look at the wells fargo board, all good people, but relatively weak compared to other boards, they they didnt need to be. The bank had a sterling reputation. When this first came out, john stumpf told everybody this was a small piece of the puzzle. He tried to say this was effectively a big nothing. Avert your eyes, dont worry. Clearly that strategy and even thinking about how what was going on didnt work. Now i think the board is embarrassed by this. I think there is an important thats why youre seeing acrimony if you really understand whats going on behind the scenes. Thats whats happening. Thats an important story line that will impact what happens. Whether he keeps his job or not is another question. Even if this is enough to keep his job, the outstanding issue is the employees. Thats going to probably be the focus of the questions tomorrow. Theres two lawsuits gathering pace in california and a Labor Department investigation. Thats the big question outstanding for the company as opposed to stu opposed to stumpfs tenure, on whether employees were forced to work longer hours. The ones following the rules, not opening fraudulent accounts, trying to keep up with the sales goals that were incredibly ambitious. Theres two lawsuits, one from those sorts of people, and ones from people who were fired and feel they were mistreated in being fired in the first place because they were following the pressure around the company. So that could still hurt the bank, the fines and claw backs much more about the potential tenures of the people at the top. I hope youre not as a uk individual, i hope youre not trying to lower our the reputation of banks here, bankers, pay, everything to the level of the uk. Bankers over there are one step below bookies and just just over here its different. Do not try to take us all the way down to how, you know, most people in the uk view the bankers. Youre doing a good job already, i think. I didnt know if that was a question or a statement, but, no, im well aware in the uk how much even tougher the pr image is. But i think youre all over this. Thats why we put new charge of this. Mr. Stumpf led to a lot of heat on his part for misdealing with this issue. I remember poor bob dimon over there. He had to go out, he had to be in disguise just to go have dinner. Worouldnt eat like we do. Person, more mr. Fred goodwin, he was really victimized by the press for a long time. Former head of rbs. Bob dimon also. He got a lot of heat, too. Thank you, sir. Pleasure. See you in a bit. Shares of Deutsche Bank rallying in europe. Thats because the firm is selling its abby life business for 1. 2 billion. Earlier this morning a german newspaper reported that berlin would rescue Deutsche Bank in what theyre calling the worst Case Scenario shares initially moved higher, but signaled potentially lower fines for Deutsche Bank than the 14 billion initially mentioned. Thats one of those banks. This is one of the riskiest banks still out there. People talked about how overleveraged they are. Here they are. All right. Well, staying with financial issues, janet yellen is set to testify on the hill later this morning. President ial hopeful donald trump attacked janet yellen for the delay, the feds delay in hiking rates. Joining us is the chief investment strategist from raymond james, and jay ablin. So, lets start with you. Youre not particularly excited about either valuations or prospects necessarily. You think i kind of i hate to use the word colloquialism, neh neh. But its not something youre not sitting here thinking this market is ready to go to 28,000 any time soon. I think if fundamentals were to improve they would. The good news is analysts are expecting revenues to increase year over year this quarter. Hopefully well see earnings follow along. Its a slow and steady process. If you look out at the economy, im not sure where a lot of the big revenue increases will come from. And so weve got a stretch valuation thanks in large part to this fed safety net out there. Im reading fundamentals are improving slightly. Momentum, eh, kind of positive. You know, theres things that are relatively cheap in eamericaemerging markets. None of this stuff sounds exciting what do we need to get through . We need the fundmentals to improve. Thats why youre here, to tell us whether they will improve or not. Yeah. I guess in terms of visibility, i dont see going back to 3 , 4 sales growth unless we could get some inflation. If inflation moves higher and Interest Rates lag, you know, that could be the catalyst for a move higher. Im not suggesting were in a bubble or anything, but we just need to continue to push this monetary situation. The only other thing we could do, looking to japan for this, is if they start Monetary Policy makers get involved in fiscal policy. If it happens there and the world doesnt blow up in japan, then, you know, perhaps other policymakers can start helicoptering money in their countries. Jeff, listening to that youre more bullish or less bullish on the u. S. Stock market . I think the u. S. Stock market is transitioning from an Interest Rate driven secular bull market to an earnings bull market. That will be quite apparent as you go over the next 12 months. When you look at Third Quarter and Fourth Quarter earnings comparisons year of year, they will be quite sunny. I do think that valuations are not all that stretched. If you believe s ps bottomup operating earnings estimate for next year is correct. Jeff, relative improvement based on energy issues, not being tough comparisons anymore, just relative improvement that youre talking about as they drop off and as we go past four quarters, thats enough to make you think that earnings are really improving . Or just sort of we dont have those headwinds, so its a bit better because were not looking at that, but still nothing gang busters. Weve been waiting so long for that year where gdp and corporate profits suddenly recover robustly. Weve not seen it. We never see it it seems like. I dont know if you will see it robustly. But at the margin you will see it improve. I think the Pension Funds are going to come to the realization with the low fixed income yields that the only way they can get to their targets of 7 , 7. 5 is through dividend paying equities. I think youll see the big switch is going to happen over the next 12 months, the flow of funds into equities. 7 . They better do some stuff on the side. What is that thing we own with the football fantasy . Theyll have to do the draft. 7 . That seems seems positive in the rest of the world. 1 , if its up instead of actually paying, its good. I cant imagine 7. They better lower expectations to 4 , 3. 5 , 4 . Yeah. But the targets tend to be somewhere between never do it. 6. 5 to 7 . Here i am, i used to disagree with people and say we deserve more than 7 . Now im not sure we can get that. Good luck with that. Financials are cheap. There are parts of the market that are not cheap. Wells fargo are you recommending wells fargo . Am i recommending wells fargo . Im recommending financials in general. I would say buy them all. All right. It will work its way out in the wash. Okay. Gentlemen, thank you. All right. Fanduel. Fanduel. Fanduel. Fanduel. Yeah. When we come back, the debate setting a viewership record. The numbers and the political fallout after this. Squawk box will be right back. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. A Record Number of people tuned in to watch the debate between Hillary Clinton and donald trump. Neilsen said 84 Million People tuned in, which tops the 80 million for the debate between jimmy carter an Ronald Reagan in 1980. That does not include the number of people watching the debate online, via streaming. John harwood is back in washington with more on the aftermath from that great debate. Everybody is sort of breaking down what happened in the debate, whats going to happen next. You had donald trump coming out on fox yesterday and saying some of the questions had been unfair. That he thought he had done fine. He renewed the criticism of the Miss Universe beauty pageant winner, that Hillary Clinton poked him with in the debate. That the Clinton Campaign came out with an ad. Donald trump also put out a tweet citing online polls including ours, users survey, saying that he had won the debate. He went to a rally in florida heres how he assessed the situation. The American People rendered their verdict. The post debate polls, as i said to you, were so great. Now, donald trump also, his campaign announced, he raised 18 million in the 24 hours after the debate. All of that is positive. However you have to weigh that against the widespread criticism he got from political analysts in both parties, significant republicans thinking he had not helped his cause. Did he have two more debates to go. Nobody expects the polls to move in a dramatic way from this. Opinions are very well baked into the cake. But donald trump seems to be inclined, at least according to some advisers, to maybe do a little bit more preparation for the second encounter, which will come in early october. On friday, by the way, theres an interruption from the campaign trail for Hillary Clinton who is going to join president obama and her husband at the funeral of shimon peres of israel. And i have to say, even though thats a completely unplanned event, the sight of Hillary Clinton with other World Leaders at that event is an image that her campaign will be happy to contrast with donald trump. Shes trying to run as the person, of course who is more president ial than donald trump. I find it some of it depressing, just in terms of the issues that are front an center. It takes me back to a pre9 11 mentality. So i cant just blame it on social media for the things we focus on. I remember chandra levy, everything was 24 hours a day. And then all of a sudden those planes came out of nowhere t refocused everything we think about on much more important things. Was that Miss Universe pageant was that a long time ago . Wa it was a long time ago. Then i think about the positives Hillary Clinton did glean from the debate were mostly putting trump on the defensive about things that are may or may not be important to everybodys daily lives. You know, we didnt i dont know anything more about immigration, security, just all the things that we always promise that were going to talk issues, we never do i even say the front page the lead story in the New York Times is about Miss Universe. Trump didnt help himself yesterday. I know that. The whole thing i find just i guess im hoping for a better something thats not going to happen. I think social media added to it. People are much more willing to say crass things. They do it anonymously. He does say crass things. He does. Everybody in the world says crass things. Not everybody in the world says crass things. Part of the appeal the twitter feed says crass things. He says crass things, people are willing to say more crass things. Then on the other side you cant trigger something on a College Campus now. We have gone too far the other way. When i think about Hillary Clintons best moments, even if i wanted to find her best moments, theyre not where im saying wow, thats a great idea. Its just shes joe . Go ahead much. How about trigger warnings for the next debate . Yeah, i guess we need them all the time to make sure nobody is ever offended again in our lives. I better watch out. I got a hairtrigger. Thanks, harwood. Coming up, amazons shipping plans may be more ambitious than anyone thought. Fedex and u. P. S. That story next. A new read on chinas economy. The independent china beige book doesnt rely on Government Data well get the first look at the new numbers straight ahead. Welcome back to squawk box on cnbc. U. S. Equity futures at this hour, im telling you, when i was coming in, they were up 20 points. But i think its without the no, no, fair value wasnt it today. John leland is here. Its moved. What . Hes here. Its gone down . China. Let me tell you this first, ab inbev and sabmiller, horrible names, both. Shareholders approved the 103 billion takeover deal. I hope with some of that 103 billion they pay someone to come up with a name. Regulators signed off. The combined entity will produce nearly a third of the worlds beer. I think, andrew, thats not on antitrust grounds, just on in case something happened. They were not able to produce that third, thats too much power in the hands of one organization. A third of the worlds beer . With such an important product . Think if something happen ed. Call the regulators. You have the connections there. Amazon may have a secret plan to beef up its shipping network to replace fedex and u. P. S. Amazon aims to build a full Scale Logistics Network that will ship products from its site as well as products from other retailers. Some amazon executives are calling the plan con sometime the city. The journal says amazon has been testing deliveries in los angeles, miami, chicago, and hired a form uber executive to head the Global Logistics unit. In the beginning everybody said this was an effort to put pressure on u. P. S. And fedex and lower prices, but this is another project. I had one of these vans pull up at my house yesterday and hand deliver some things. If you look at amazons financials, theres a reason for this. Its been an increasing number in just how much it costs for shipping every year. Last year, 10. 8 of sales. But this is a capital intensive way to do it it is, but when it comes to world domination, i wouldnt put anything past amazon. I get it, when its such a massive part of your cost structure, i understand why they would want to have other options. Lets talk more about politics and how its been playing out when we look around the globe. Donald trump charging at the president ial debate that china is using the u. S. As a piggy bank to rebuild itself but that country is facing economic problems of its own, including what might not be such a stable economy. Leland miller joins us, ceo of china beige book international. You have new numbers, not government statistics, what you put together yourself to see whats happening with china. What have you found . All you have been hearing is stable stable stable. The last week every single headline has stability in it. You will see that in the pmis and other data sources. People who focus on manufacturing, they focus on a property bubble. They say things are well enough. Theyre very intent on creating this narrative around stability. When you look at our data now, the headline number looks relatively stable, underneath the surface things are not in great shape. Like what . What are some examples of things that are concerning when you dig deeper . Profits are weaker. Cash flow is weaker. Thats a major problem. But the real dynamic here is that this growth, this quarter, was led by the old economy. Manufacturing doing well. Property doing well, commodities doing well, another leat least surface, services not doing well, transports. Does that mean the Chinese Consumer is losing confidence . Does speak to the Chinese Consumer. One major mistake is people look at alibaba, they say thats doing well. The Chinese Consumer must be in good shape. Alibaba is not the retail sector. Ecommerce is not the retail sector. What people are underappreciating is how much ecommerce is vulturing growth from the traditional bricks and mortars. As long as you have that, the sector is not in trouble. This is one quarter of weaker data, but not the same engine that everyone sees when they look at alibaba. What drives consumer c confidence in china . Heres its headlines, perceived risks. I feel thats more closely managed in china. Whats driving it . Foreign policy. People look at the macro outlook, but when you look at how the economy will look Going Forward, people are wondering is there loser policy Going Forward . The right types of firms what will the currency look like, are the chinese going to do do something they shouldnt like they did last august, last january. So i think theyre looking at how much the government is intent on keeping stability up. That sounds like a high level problem, high level issue. You can understand how some of the wealthiest chinese are concerned. What youre telling me with these numbers, sounds like its trickling down to every level of the economy. Something happened on the back end of 2015. There was an Inflection Point in terms of the way the chinese look at their economy. They cut down on bribery. Thats a good thing. A good thing but a shortterm and medium term problem. So they are look to the eyes of the government, how much will the government need to keep this narrative of super strong growth. When they see the government faltering were polls that suggested that the chinese liked donald trump. They think hes a strong negotiator, and that that appeals to them. How do they feel today about the two candidates . We spoke about this before. I maintain my view that the chinese would rather see donald trump as president. Hillary is a known. They dont like her. Donald is threatening a trade war, thats not good, but at the same time, some other things he said, tear down the postwar security structure in asia, limit our relationship with japan and korea. Lets not focus on trade agreements out there. This is music to the chinese ears. I think they would be happier with trump than clinton. Mixed views. Its interesting. Thanks for coming in. Pleasure. Coming up, the underdog of undershirts. Tommy john taking on big underwear in a david versus goliath situation. The companys founder joins us next to talk about getting a foot hold in an established industry. As we go to break, look at whats happening in european markets. Announcer theyll test you. Try to break your will. But however loud the loudness gets. However many cheese puffs may fly. Youre the driver. The one in control. Stand firm. Just wait. [click] and move only when you hear the click that says theyre buckled in for the drive. Never give up till they buckle up. Tommy john the disruptive underwe underwear, as its founders call it, they continue to fight off competitors. The ceo, tom paterson is here with us on set. We talked about this company before. I wear these undershirts. Joe, you wear an undershirt . Of course. Of course you do. Do you care about your regular dress shirts or just exactly. These are expensive undershirts. These are great. I wear them every day, i love them. Heres what i want to know, a couple years ago, i wrote an essay dont know if you remember this. I do. About how much i love these undershirts. One thing i said in the article, i said they were prohibitively expensive, which they are. 40, right . They are. I said i wished that Warren Buffetts fro buffetts fruit of the loom knocked them off and made them cheaper. Now theyre trying to do it. Theyre trying to rip you off. I should be happy about this theyre not as good. I checked them out. What has it done to the business . I think competition is great. The mens undergarment category is a 4. 1 billion category in the u. S. Alone. Mens undershirts 1. 3 billion category. We have the first u. S. Patent on our undershirt. We will never be the cheapest but dollar for dollar we provided the best value. This undershirt goes low. Most undershirts, they come up, bunch up, they make you look a little fat. Not good. The reason why i always liked these undershirts, they are almost like my wife calls them party dresses. He just called mens underwar undergarments, had i was uncomfortable about. But these stay low, the untuck part. How do you get that patent . Its a utility patent. Our new video online, the what is the patent cover . Is it the length . Material . Its a utility patent. It combines the length, multi directional stretch fabric. You put it on, put luggage in an airplane, it stays in place. Can you call up fruit of the loom and say you owe me a licensing fee . Im not joking. You have to protect this patent. I dont understand how that patent works. The length of a tshirt is patentable . It is. It is. Like the utility of the product, once you put it on, it stays in place. The functionality is what its tied to. Have you found others that are now infringing on the patent . Not that we found out yet. But you have to protect the patent which means you have to go over all these undershirt companies. We pride ourselves on continuing to innovate, focusing on delivering the consumer a better product. I think patents do things to protect the business, but you have to move, continue to evolve. For a 40 undershirt, it is a great undershirt, you cant understand the value component. How much does it cost you to make . You dont want to say . I need to ask these things. Less. Yes. Im trying to understand the margin. Why dont you buy fruit of the loom anymore . Why do you wear tommy john . It does something you cant get from other brands. That is true. Why did you start wearing undershirts in. Because the lights in here are very hot. You dont want to sweat through the shirt. The exciting thing is men underwear is one of the only categories undergarments. That has continued to grow year over year. It shows customers voting for quality and value. How much does it cost to put the show on . What do you think we charge advertisers . What if someone asked you that that an unfair question . This is my contribution to this i have gotten some new undershirts. I notice when i put on the dress shirt, there are creases and overlaps on the undershirt that i can see through on this shirt. I find myself reaching look in the mirror, reaching up, smoothing it out so theyre not there. Thats been my recent problem. I guess i wouldnt have that with my 40 tommy john. Wouldnt have it. If the market shows, look, we came out selling our millionth undershi undershirt . Isnt that amazing . When we first met him three years ago, a little company. There is a market for this. The consumer is voting up, trading up. Are you going to go public in is there an eventual sale . There are no plans to go public. If youre having the opportunity to go public or not, its a great opportunity to have. Were focused on making profit. Has anybody reached out to buy you . We get inquiries often. But weve raised 2 million to date. Thats the thing one of the exciting things were proud about. We hardly raised any money compared to what were doing in revenue. When you look at the market today, a lot of companies have raised more money than revenue. Its not easy. By brands take a long time to build. Have you sued theres tommy john surgery, too. They use that, too. They had it first, didnt they . So were a registered trademark with the brand. Nobody can ive not are they allowed to use tommy johns surgery . No. My middle name is john. Undershirts and surgery, we have to refocus. Undershirt surgery. Exciting to see a company like this grow. You got a big, weird thing going on with mens you just do. I like the undershirts. Nothing excites you like this. Its nice. Coming up he needs residuals. Political fallout from the debate. Free underwear. No. We have a big lineup to talk about. The candidates plans for the economy. First democratic senator chris coons, and then wall street journalist holman jenkins. And then John Barrasso and what he expects to hear in the next president ial debate. This is me, using a wrench to build a jet engine. Well we thought ge programmed machines to talk. Ge is an Industrial Company that actually builds worldchanging machines. Machines that can talk to each other digitally. Hello . They dont talk to each other like that, ricky. Shhhh, youll anger it. He looks a little ticked off now. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Time now to explore some of the best cities for Small Business. Today were headed down i95 from the big apple to the city of brotherly love. Kate rogers joins us now from philadelphia. Hi, kate. Reporter hey there. Good morning, joe. Startups like revzilla are ramping up here. They sell motor part accessories online and here in philly. They have more than 1 million customers. Whats amazing about that, they havent taken any outside funding. Theyve boot strapped the entire operation and market heavily on youtube posting the professional product demos and reviews for their subscribers. They say launches here in the city of brotherly love which is a top 20 location for Small Business growth has shown them what its like to be part of a community. Philadelphia is a unique mix where you have a personal touch and feel, you can be part of the community, but you dont get lost in the community where people really support each other. Reporter and joe, i know you and i are huge sons of anarchy fans so ill see if i can hook us up for discounts on motorcycle equipment. Really weird that you said that because i went back to it yesterday. I didnt quite finish. And i finished better call saul. Second season. No, first season. Didnt really love it. So i went back to season seven, episode four. Im almost done. But then im going to need something. And you are recommending to me reporter all right. When youre done, were going to have to have a tv club review. The voice. Becky said the voice. Reporter thank you, becky im loving the voice. If alicia keys is watching, i want to hang out. And i like miley cyrus on it. I love the voice. Im talking Something Like narcos or something. Some drama. Homeland. Theres drama on the voice. Blake was really mixing it up last night. Its an nbc show. I know that. Its great. I love it. I have time for other things. Hows that . I need a serial after you watch the voice. Im watching bloodline too. But do you have anything else . Did you finish the night of . Of course. I couldnt make it through. Theyre not up to terms of production and lighting. Youre planing about im not complaining. Its cheaper production. I was going to Say Something to take you down the wrong path. I didnt think think it was up to par. When we come back this morning, after we finish figuring out what the next thing were going to watch is, weve got new housing data due out at the top of the hour. Weekly Mortgage Apps just moments away. Plus john brown is here to talk about the rift between business and society. Well get his take on that and the scandal at wells fargo. Squawk box will be right back. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. 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. A developing story. Wells fargo ceo john stumpf is temporarily foregoing his salary as they look into practices. Lord john brown is here to discuss that. The interview straight ahead. Is trump ready to lead the nation . Questions rising on both sides of the aisle after the debail. Holman jenkins is here to explain why voters will have to decide between a very flawed outsider and a very flawed insider. And squawk box is ready for takeoff. Neil Degrasse Tyson is here to talk about putting people on mars. Buckle up. The next hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. This is our new music. This is for neil Degrasse Tyson and space. He uses this . We do. Talking about space. Were going to do that consonant vowel thing you always do. The thing that teaches you about vowels. Im just a bill up on capitol hill. School house rock. Theyre great. Look at the futures. The dow up 11. 70. And then the nasdaq up 1. 75. We were down 300 on friday and monday. So i dont know. Ever since the last five or when we started getting some volatility, its been triple digit days up and down but were where we started. Right. Same story, just more dramatic moves on a daily basis. Like running in place. Frantically in a rocking chair. Theres a good reason for that. People arent sure which way the economy is headed. Theyre not sure which way the fed is headed. When are we ever sure which way the economy is headed or the fed is head snd. If you had to bet right now, which way would you go . Up or down . On the market . Yeah. I always fall back on you dont short a dull market. And i fall back on when i started in the brokerage business, its 780. Its now as long as youre not worried about making a profit. It usually eventually is going to go up. Unless you live in japan. What do you say, becky . I agree with the longterm strategy of it. I wouldnt try and place bets on a daytoday or weektoweek or monthtomonth basis. But i need it to go up for college funds. Ive fully funded the other three kids for the year. And this one you cant do it until you get a Social Security card. This guy is not in any rush. Speak for yourself. I got to do the opposite today. I dont feel like coming in some mornings. Lets get you caught up on business headlines. Were watching shares of Deutsche Bank as News Headlines swirl. Told the german newspaper that the bank did not need a Capital Increase or government assistance despite the prospect of a multibilliondollar u. S. Fine. But a second paper says the german finance minister was working on a contingency aid plan for the bank. Now the bank has denied such a plan is in the works. If you like fed speak, todays your day. Janet yellen testifying before a panel. Starts at 10 00 eastern time. No less than five fed president s have public appearances today. Including mester, bullard. Just out, the latest data on mortgage applications. Falling 0. 7 last week. But refinancing activity fell. The average 30year Mortgage Rate now fell four basis points to 3. 66 . All right. Shares of nike today are trading lower. Posting better than expected earnings and revenue in the latest quarter. Slowing demand in future orders of sneakers and apparel is a drag on the stock. Shares down 3 in the premarket down 9 over the past 52 weeks. And Sears Holding is teaming up with uber for its Customer Loyalty program. Riders who link their uber accounts with sears shop your way plan now can get up to 2 in points for every trip. New uber drivers who sign up can earn up to a thousand dollars in points. Also tyson foods is recalling more than 130,000 pounds of Chicken Nuggets that are sold primarily at costco after some customers found small pieces of hard, white plastic in the product. The recall is for 5 pound bags of tyson fully cooked panko Chicken Nuggets. And sonic said fourth quartquart quarter will come in lower than estimates. Falling 15 so far this year. Some breaking news overnight if you are just waking up this morning, former israeli Prime Minister shimon peres has died in tel aviv. Back in 1994, peres won the Nobel Peace Prize for his role in negotiating a peace deal with the palestinians. They will hold a state funeral for him on friday in israel. Preventing a Government Shutdown this weekend has now stalled in the senate. Failed a procedural vote 4555. A number of democrats voted against the measure because it doesnt provide money to fix Drinking Water issues in flint, michigan. And some members on the other side opposed for Different Reasons that varied for issues for lacking funding on zika and oversight of the internet. Senate leaders said they would explore alternatives to avoid a shutdown. Thats what i was going to say earlier when i forgot. Theres got to be a better way to do this government stuff. I mean, you wonder why theyre at like 9 . Approval rating. Zika, xm bank, control the internet, flint water. Its all got to be in one thing and voted on all at the same time . Why . Why . Why . Who thought of that . How would you run a business like that . If you had to wow would not. But this is a sign of how things have stalled in congress no, its not just that. Why have that as the method to do it anyway . Its stupid, but they have not been able to balance the budget. The way were doing it is bound to fail. And bound to be stuck in the mud. Theres ways they dont think individually they could get the votes. Every time you try to do something, one of the 400 or 500 in one body, they stick something on at the end that someone else doesnt like and it doesnt get done. Look. This needs to be dealt with. Okay . Agreed. Im not going to argue with you on that. I agree. Its frustrating. Yes, it is. Turning now to the president ial race, we are just 40 days away from the moment of truth in the president ial election. Hillary clinton and donald trump are running neck and neck in the latest quinnipiac poll. Joining us to talk more about the race and whats at stake is delaware senator and Hillary Clinton supporter chris coons. Thank you for being here today. Thank you, becky. We are just 40 days away from the election, but we are only three or four days away from the government running out of money. I think it caught a lot of people off guard that this bill didnt make it through the senate yesterday and we are suddenly looking at a potential Government Shutdown this weekend. First of all, how did you vote on the bill . I voted against the procedural motion yesterday because, frankly, we have had months and months in which the republican majority could have and should have addressed the zika crisis or addressed flints water challenges. We have water problems, Water Quality problems not just in the city of flint but across the country. And president obama asked for for more than a billion dollars to address zika back in the spring. The fact that the republican majority in the house did not send us bills months ago that funded these two priorities was why a number of democrats me included opposed moving forward with our continuing resolution that would fund the government for the next couple of weeks until we come back from the election break. Its been a huge frustration for a lot of people, myself included, that we havent seen things like the zika funding, things for flint water. But youre willing to shut down the government over this . Frankly, if were not able to do our jobs as members of congress, then we shouldnt be proceeding with the government. This is the sort of moment that democrats have been saying we would get to this point for months and months. I have got teenagers. I dont know if youve got children. You get to a point, becky, where you said were going to have a problem, were going to have a disagreement. Weve got to resolve this. And eventually you have to put your foot down and say its just unacceptable for us to have thousands of cases of children poisoned by lead in their water, of pregnant women suffering from zika without taking responsible steps to address it. So what do you think the odds are of a Government Shutdown . Is this i think theyre very low. Becky, i think the odds are very low because frankly the last time the republican majority shut down the government of the United States for 17 days, they were hammered by the electorate. Because they control the congress. They control the house and the senate. And our inability to come to a positive resolution on these basic Public Health issues are something i dont think theyre going to risk this close to a general election. Lets step back from partisan politics for a moment. Every time we get into this, it does lead to a lot of finger pointing. What do you think got us to the point we are talking about a Government Shutdown potentially every year where people cant work across the aisle for things that seem like they are very clear issues that are of importance to the American Public at large. What happened . Well, becky, partly weve got a lack of a positive relationship of trust between our leadership. Weve also got a lack of a process here in the senate whereby the republican majority can move over the objections of a small minority. Theres a small number of senators holding up progress on our appropriations process. But because of the rules of the senate, we get to the point any one can object and that prevents us from moving forward. I continue to work with republicans and get bills passed. The president signed two bills that i helped author with a republican cosponsor. One in july, one in august. And im optimistic another one i did will be signed into law this week. There are senators republican and democrat continuing to Work Together. Literally just before this shot began, senator gardner of colorado walked by and i told him im going to join him as a cosponsor in a bill were introducing this week. So there is positive work being done here. But when it comes to fundamental budget issues, we still remain pretty far apart. Think about how hard it is to grasp that we dont have a functioning export import bank. Thats really because theres one senator who refuses to allow members of the xm bank to be taken in. Which senator is there . Senator shelby. It sounds there are still some cordial relationships. The American Public would love to hear more about that. Lets get back to partisan politics at this point as much as i hate to do it. We ares facing an election that has been a very bitterly fought election. A very uncivil election in a lot of ways. A lot of people in america is up in arms about this. Half of america is not going to be happy no matter what happens in 40 days. How do you deal when partisanship is running so high and whatever happens in this election is not going to resolve that . You mentioned just a few minutes ago the volatility in the stock market over recent days, the volatility over recent weeks. And i think thats because when the average american looks at donald trump, when the average investor or Business Leader looks at donald trump, they dont know what his plans are or policy would be. I watched closely the debate between secretary clinton and donald trump monday night. I came away thinking hes frankly unprepared for the role. That by temperament and policy proposals he is just simply unstudied, unlearned, and unprepared. Is that what you thought going into the debate though . It reinforced a strong impression i already had. Im on the Foreign Relations committee, becky. Things he has said about our nato alliance, about our potential future relationships with other countries, his stance toward putin and russia have all struck me as ill informed and potentially dangerous positions. Cnbc was reporting this morning that not one ceo of fortune 100 companies is publicly supporting donald trump. I think that was a wall street journal story from the weekend. I think that says something about whether or not hes laying forward the kind of plans that would lead to the sort of predictable future, the sort of positive agenda for growth for this country that would be embraced by those who lead the largest companies. If he does win the election, how do you work with him and the other side . This gets us back to this point of government that is much more divided than one that can potentially work across the aisle and get things done. Thats right. Becky, ive worked hard to build real relationships, positive relationships with republican colleagues in the house and senate. Just yesterday i had lunch with a House Republican from pennsylvania. With whom i had traveled to Eastern Europe this summer. Thats part of how we can begin to bridge this divide that is so sharp in this body. But frankly the American People also need to hire folks for the congress through this election who want to get things done. Who want to listen to each other rather than just giving partisan speec speeches and threatening to shut down the government. I think its time for the American People to send us a message to Work Together to get this business done. Sorry we went a little off topic for what you were expecting but we appreciate your time and playing along. When we return, john brown is going to join us. Well ask him about john stumpf and leading a company through bad times in the public eye. If you recall, he was at the helm of bp when that explosion happened and raised safety concerns. Hes also the one that expanded the company and guided the merger with rival amoco. Remember that . Wow. Speaking of oil, check out the price of crude this morning. Back in a moment. At boll and Branch Welcome back to squawk box this morning. Vice President Joe Biden writing an oped this morning titled how shortterm so much in stocks puts executive focus on share price instead of the long run. Wells fargo announcing it will be clawing back millions from ceo john stumpf following that sale scandal. Its the latest controversy amid public outrage. Joining us now to talk about that is lord john browne executive chairman and ceo of bp. He was at the company during that city refinery explosion in 2007. So hes dealt with crisis before. And hes author of connect how companies succeed in engaging radically with society. Great to have you here. Good to be here. I want to talk abouting to you about this joe biden piece. Its interesting. But you look at whats happening at wells fargo having lived there your own crisis, if you will. What are they doing well, i was about to say what are they doing wrong . But is there anything theyre doing right at the moment . Its a matter i think of how theyre operating in totality. Seems to me when things go wrong, whether it is in wells fargo or bp or pfizer, lots of little bits and pieces everywhere. Its when people lose the plot. They have activities that dont tie with their core purpose and theyre not engaging really engaging people with the right incentives. If youre the ceo and now you have this situation where theyre doing the clawbacks, he went to the hill already, had a tough time. Should of he resign snd should of he i was making the argument had they done anything two weeks ago they wouldnt be the same spot. I dont know if thats true. When crises occur, you have to move quickly. Then youve got to suffer the right amount of retribution and give the right amount of contrition so people see youve taken seriously what youve done and hurt society. That makes it sound like a game almost. That you have to appear contrite and look like youre doing pit. Thats what i wonder about the situation with wells fargo. If he had said this a week ago and come up with a lot of these issues, thats one thing. Andrew on his own reporting has found that potentially this is a board thats making him do that. If thats the case, it doesnt read true, doesnt feel like contrition. It has to be authentic contrition. People really have to do things. And if he feels its up to him and the board if he feels that he can no longer serve, then he should resign. Let me ask a compensation question given the joe biden piece. It says executives are being compensated too much in stock. Right . We over the past 20 years people said skin in the game. Rather than pay people cash, we need to actually give them stock so theyre aligned with shareholders. Now weve decided i dont know if weve decided but joe biden has decided that actually this has been a great mistake and an overstep burden of proof do you land on it. Well, its a balance matter. This started with Stock Options being awarded to executives so i think there is a reason for very Senior Executives to have stock as part of compensation. But locked up for a good enough time so that they can actually see the results of their activity. But remembering that its more than just their activity that affects the price of shares. Tell us about this book. What does it mean when you say to engage radically with society, that Companies Need to do this . Quite simply, to engage on societys terms. Not just on the corporate terms. So in everything, a strategy, an operation is to look at all the people involved and actually engage them in what youre doing. But not just say this is heres my plan, this is what were going to do, isnt it a good idea . Which is what a lot of people do. Go back and say what should we be doing and take that into account in formulating your plan. But how do you prioritize your constituency. Meaning are the shareholders still your top constituency . The group youre talking about is a much larger group. Yes. But my point here, i think, is that if you engage all of them, theres a very high probability to increasing the value of the firm and increasing actually the operating profit of the firm by getting everyone aligned. Thats what happens. Lord john browne thank you for coming in this morning. Coming up, tiger woods gets kicked out of a Ryder Cup Team photo. Thats not as awful as it sounds. Well tell you why. Details after the break. Squawk box will be right back. Man, im glad aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . 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Whoooo for people with hearing loss, visit sprintrelay. Com. Thats it. I didnt think id be right. I dont know. Tiger woods is a part of the Ryder Cup Team as a captain but not a player. When it came to the team photo, he was kicked out of the picture. The official photo features the 12 golfers who have been selected or qualified for the team. And the 14 time major champion had to be awkwardly shuffled out of the picture. He was invited they had to tell him that. Oh geez. He was invited back for the extended team photo. And i dont maybe i dont need a new tv show this weekend really. Because that starts on friday. Golf. Ryder cup golf. And already davis love said this is the best team ever assembled. And then johnny said the euro team is the Worst Team Ever assembled. So maybe we stand a chance this time. Theres trash talk on both sides. When you think about it, look who they have Henrik Stenson who just won. They have justin rose well be right back. Space, the final frontier. Or is it . Astrophysicist, koz molgs, author, and really cool guy neil Degrasse Tyson joins us for some star talk. Squawk box spanning the universe and kicking asteroids. Were back after a quick break. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Sick of getting gouged for limited data . Introducing tmobile one. One price, all unlimited for everyone. Get 4 lines for 35 per month each with unlimited 4g lte data. Switch today. Welcome back, everybody. Among the stories front and center this morning, a busy morning for blackberry. The Company Reported a break even quarter compared to expectations of a 5 cents a share loss. Revenue, however, was below the forecast. And the Company Also Announced that its chief Financial Officer is departing for personal reasons. Stocks up 6 . Read into that whatever you want in terms of why. Takata is reportedly in settlement talks with the u. S. Government to resolve potential criminal charges. That is according to the wall street journal. The talks are said to center around the handling of the faulty air bags. Those air bags are linked to 14 deaths and more than a hundred injuries. And we are watching the price of crude oil once again this morning. Wtis been adding to earlier gains on optimistic comments about a production deal coming out of the informal opec meeting in algeria. If youve been watching this, its on again, off again, and skeptics about whether a deal like this could be pulled off. Right now wti is up by about 66 cents to 45. 31. Mondays debate showed a contrast in this next guests view of a very flawed outsider versus a very flawed insider. Holman jenkins doesnt come on enough. But comes on more than he used to. Good to see you. He pens the twice weekly Business World column for the journal. He joins us now. Are you with this is entitled the donald abides. Are you a big lebowski fan . I love it. So this is a take off of the dude abides, i think. I had a guess what kind of a drink at a bar mitzvah over the weekend . A white russian. A white russian. How about a Shirley Temple . Is that in the big lebowski . No. Its what you have at a bar mitzvah if youre a kid. Anyway. Its fattening and you shouldnt have it. I read it and one of the quotes is the pervasive in politics is something that we should all assume is going to be there. Donald trump has untruths. Theres up truths that Elizabeth Warren started one. And people use them for their own ends. Sure. Of all the things that caused the crisis, to say its trickle down of course it didnt enter her mind at all to see if it was a meaningful. Of course its not. Just said it because it worked. And you dont cut any slack to mr. Trump at all in this either. Because theres untruths left and right and some of them dont even get him anywhere in your view. Yeah. Do they matter is the question you ask yourself. People have been listening to trump do this for a year now. Everybody knows the things he says arent true and they dont care. As somebody put it, people try to take trump seriously not literal literally. He does focus on issues that working class people care about which is immigration and trade. Who knows what hes going to do, but he is communicating to those people that hes on their side. Thats something hillary did not do in this debate. Of all the opportunities she had, she didnt reach out to his followers at all. The deplorable leading the deplorabl deplorables. People think Hillary Clinton talked a lot of policy. Whey take away from it is a huge frustration that now were on to a Miss Universe, that we got to thatll take three or four days for the news cycle to get past that along with the birther and tax stuff. We didnt talk anything about the issues facing the country on monday night, i dont think. None of them. Thats right. And hillary likes it that way. She wants donald to be disqualified on the fact that 20 years ago he said a tasteless thing. Donald trump doubled down on it yesterday. Hes not helping himself with trying to get this out of the headlines. Hes saying yes, i did say that and i had a reason to. But the whole idea of a beauty pageant is antiquated and probably should be they should be shelved because the whole point of it is that check it out. I know. That theyre thin people with superficial looks. But hes not helping himself. 20 years ago if you won it on the basis of whatever the parameters were back then and then you totally it just reads so wrong today. I know. But in this day and age, any type of beauty pageant by definition is, you know, not a safe zone. And its a trigger event for anyone involved. They probably shouldnt even have them. I really cant believe we still have them. I agree. Wasting time on talking here we are talking about it right here. Well, for hillary to talk about her whole wish list is a waste of time. It doesnt deal with the realism shes going to face a Republican Congress which is not going to vote for anything that she wants. Does she care if she gets anything she wants . She wants to be president. Thats all. Maybe. She spent 30 seconds saying if i have to face a Republican Congress, heres what we can move together to. That would have meant more. A few times trump agreed with her. When it came to gun control, a few issues. Child care. Right. Theres a couple points where i thought wow theyre admitting that they are on the same page and it started with trump. Yeah. And trump also mentioned he was against republicans on certain issues. Do you think its going no. If its over and you liked trump before, you like him after. If you liked hillary before, you like hillary after. And we keep talking about these other voters. I dont believe that the undecided people exist at this point of the game. They dont like either of them. That i agree there are people who dont like either. But i think they must lean one way or the other. No . There are a bunch of people who would like to vote for trump but i dont think can bring themselves to do it. Something between now and november 8th might move some people in his camp. I dont know. It could be a terrorist attack. It could be a good speech he gives. Do you think theres another group of people who cant bring themselves are trying to vote for hillary but cant . Those people will vote for hillary because they have something to lose in this economy. Thats why shes going to win in the end because shes the safe hand and trump has not shown those people who have something to lose youre still convinced of that. Im not so sure. Is that a statement on where the American People are, that there are more haves than have nots right now . Even at the depths of the crisis, 95 of us still had a job and were doing pretty well. You know . Theres a whole bunch of people who have been left out and things are going to get worse if we dont change course. Right now the balance of people are people who have something to lose. I dont know what to blame whether its social media, the internet, the overall media. But we focus on a lot of frivolous things. I said earlier you werent here, but i go back to shondra leavy until a couple of planes hit. And now i watch comey when we squeeze isis and the spread across the world. They want chemical weapons and all this. There are things facing us that we dont have any idea that are going to be a lot. If trump became president , youll be glad we aired out the overweight beauty queen because you want that out before the white house. Speaking of not about speaking of overweight. But if he were on the ticket . I dont think he can be in the ticket or the administration now. Right. Why does trump want to bring that into his administration . He doesnt need it. You say hillarys going to win though. 70 . I would think so, yeah. And i think its the fear of the unknown. If donald can cure a little bit of that. He is not a crazy man. Hes not going to get in there and do destructive things. Hes a sensible business person. I think if he can cure that impression in the minds of waiverers, he could do a lot better. He could make it close. All right, holman. Thank you. Well see you the dude abides. Theres a lot of and we lost itd be hard to do a remake. Theres no Philip Seymour hoffman. The actual lebowski is gone. He just died a couple weeks ago. Julianne moore. Shes still around. And jeff bridges. Would you want to see it . No. I think that would be a sacrilege. Im going to abide with that as well. Good to see you. Thanks. Coming up when we return, squawk heads to space. Elon musk laying out his plan to get people to mars and the price tag. And neil Degrasse Tyson joins us. Squawk box light years ahead of the competition. Were right back in just a moment. Welcome back to squawk box this morning. Elon musk presenting spacexs plans to colonize mars. This is the interplanetary transport system. And right now optimistic costs per person, 10 billion. Thats with a b. But musk does plan to drive down costs, he says, by making everything reusable and sending as many as 200 people permission. The goal, a price tag comparable to buying a home. The very first flights would be fairly expensive. But the architecture allows for a cost per ticket of less than 200,000. Maybe as little as 100,000 over time depending upon how much mass a person takes. Musk says it needs to be fun and exciting to get people to go. So cabins, restaurants, and movies will be included on the space shuttle. I think the first flights should be cheaper. Thats where youre really risking things. Yes. We are squawking in the stars this morning. Neil Degrasse Tyson out with a new episode of star talk nap is the themed late night show on national geographic. And the First National science themed show. People like hope solo, whoopi goldberg, jay leno. Neil Degrasse Tyson joining us. When will you get han solo . Hes a tough booking. Especially now. Oh, hes dead. I forgot that. Youre going to have to go real fast and go back in time because i think hes dead. Spoiler alert. After the fact. Neil, thanks for being here today. Sure thanks. I love coming on. Its good to be here. I say this as by the way, i have to say the little bit where elon musk said the cost is dependent on how much you want to bring with you. He wasnt talking about mass of the person. It was the same thing i thought. I think hes saying if you bring luggage. If you want to bring an extra pound of Something Else, take a pound off your belly or your butt. Im reading between the line there is. Thats what i heard too. Every pound counts. Right now its 10,000 a pound to orbit. So maybe he is talking about how much you weigh too. Yeah. You want to trim your belly and butt before you go. For sure. Lets talk about star talk. Look, i say this as a nerd myself, but i think this is the rise of nerd culture. People love this stuff. They want to hear the science. They want to hear how things work. Yeah. And the success of star talk is not the only thing out there. Go to comiccon and there are hundreds of thousands of people that show up. Yes theyre dressing like clingons or whatever, but they do know the difference between most of them. Nearly all of them. One of my fears is weve been visited by aliens but they accidentally landed during comiccon and nobody noticed. And they wandered down the street. And went unremarked upon. What weve done is merged science and pop culture. Thats why my im the host. Im the scientist and my guests are hardly ever scientists. Theyre people from pop culture. When you do that, then you can come in with a pop culture scaffold and we clad the scaffold with it and then you go home with a deeper preex of all the ways science touching your life. Although the woman from Big Bang Theory she is a scientist. She not only is a neuroscientist, she plays one on television. That was fun to speak to her about her arc of trajectory. Because she went she was an actress before she went back to school and then got her ph. D. In neuroscience. That was fun to speak with her about this. People want the real story with the science on things. If you look at all the movies weve seen recently whether its the martian or Something Else or interstellar or gravity. Which one of these is the most rooted in reality . Can i boast far minute . The author of this movie mars is andy ware. Hes an engineer. Hes writing the story about how mark is going to survive bringing his scientific and engineering wit to this task. And what he said was when he was writing the story, he was imagining that i was looking over his shoulder. What would tyson say . Nope, i got to get it right because tyson might tweet about this. I think were in a time we can celebrate the urge that creative people have to get things scientifically right. I think its a new era in which people are recognizing the value and role of science in our lives but more importantly in our civilization. Two elon musk questions. Any chance were living in a simulation as he described . Yeah. I think this idea came forth back in the 1990s. It was a philosopher, forgive me ive forgotten his name. Thought as Computing Power like were living in the matrix. Im getting there. I got this. I got this. So if you have tremendous Computing Power, you can simulate everything that could occur. Including the neurosynaptic firings. Whats to stop yourself from thinking the characters you created are themselves real. If you created this world and the world has built into it a pseudofree will, maybe they will say i want to create a simulation. They create a simulation within the simulation. Step back and ask how many total worlds will there out there . Theres only one real world and Everything Else is a simulation. Which are you likely to be in . Im in the real world. The rest of us are simulations to you. Is it possible im a character in somebody elses simulation in a video game. And were all just think about it. If you play mario, there he is jumping and going off a cliff and coming back. There are laws of physics that apply in that world that dont match these laws of physics. Its still a mystery why we have these laws and not others. Id rather the two of us live to singularity where we could somehow download everything onto hardware where we could be immortal. I dont think were in a simulation now. I have a concern about that. Not a concern, a thought. If we were able to sort of upload our brains into the silicon based computers, will that still be us is the question. I know. You wake up every morning and you are you and youre not anybody else. But you are you even if you had an identical twin with identical dna. Youre still you. I thought of all this. It almost makes you religious because we wonder whether we can do the soul too. Whether that seven grams or whatever it is, if we can download that. Then you come back to being a scientist that maybe believes in god is even possible. If theres evidence, scientists would be all over it. And so its why religion is called faith. Because otherwise you just call it evidence. Most people dont you know, for faith you might use almost a dichotomy of light. Its a wave and a particle. So i can be a scientist but also have faith. Tons of people do. In fact, is it a 40 of western scientists would claim belief in a personal god. I would say if something looks so amazing it implies a creator, there probably was one. But anyway but consider that there are things that look completely amazing until we learned how they worked. Then we moved on. I got to tell you being pregnant right now, it opens your eyes in ways you think this cant be a coincidence. Just watching the process. We know how you got pregnant. What do you mean coincidence . The miracle of life and being able to grow that and watching that happen especially when youre looking at ultrasounds. More of a miracle when we dont understand it fully. Thats all im saying. I think its more miraculous. Knowing the martian had some basis in fact, i definitely dont want to go there. Thats an important doubling back on the elon musk story. If you go to mars and youre living in an earth habitat in a space suit, youre not youre putting earth on mars. Youre not actually living on mars in that sense. That thing he lived on in mars or ritzcarlton turks and caicos. Im thinking somebody had to think however skeptical i am, im glad somebodys out there thinking this stuff up. Because otherwise tomorrow never comes. Straight up question though. Is elon musk a realist or is he is pied piper . Elon musk is tony stark. No, i hes putting his money where his mouth is. So if he was just out there just writing books and just talking about it, talk is cheap. But if youre a multibillionaire and youre building spaceships and youve got engineers you hired to do so, you got to listen to this guy. And these frontiers that he talks about, the biggest one hes trying to breach is the cost of access to space. Something youre doing in a governmental Large Program way reducing costs becomes less of a priority than just getting it done at all. He wants to make a business out of it. I love it. Got to move forward, but its a lot nicer here than any of the planets we know about. Well, thats true. But its nicer on the base of a mountain than at the top of mt. Everest. Doesnt stop people from climbing. Would you go to mars on a mission . After a few Million People went. Im not the one that would be putting my life at risk to say ive been to mars. I would look at the data first. And i would want elon musk to send his family first on the first mission. Richard branson told us he didnt want to go up on the first flight either. When people Start Talking that way but as an astrophysicist when nasa says were going into space, thats like the distance from here to boston just vertically. And on a school room globe, its only 3 8 of an inch. There it is. Its a book. Were loving it. Loving the universe. Check it out. Dont forget to check out star talk on the nat geo channel. Everything you need to know and neil, thank you for coming in. Love having these chats with you. Thanks for having me here. Got a future on qvc there. Squawk returns in just a moment. Still to come at the top of the hour, she has been called the most powerful woman in new york city. We have a power broker with us. Shes going to be talking brexit and the impact of the election. Stick around. Download the new app . Were good. Five million . Good. We scale on demand. Hybrid infrastructure, boom. Ok. What if 30 Million People download the app . Were not good. Were total heroes. Scale on demand with the Number One Company in cloud infrastructure. Hewlett packard enterprise. Weve just been hearing youre a digital company, yet here you are building a jet engine. Well, ge is digital and industrial. Like Peanut Butter and jelly. Yeah. Ham and cheese. Cops and robbers. Yeah. Nachos and karate. Ahh. Not that one so much. The rest were really good. Socks and shoes. Ok, ricky. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Yeah. Well, we gotta hand it thto fedex. Glasses. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access for Small Business. Fedex. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. New this morning, wells fargo ceo john stumpf forfeits millions as a Company Launches a probe. Your money, your vote. Hillary clinton and donald trump duke it out on the economy at the most watched debate ever. Stephen ross is here to talk business and politics. Plus not so fast, a new survey finding customers arent ready for a selfdriving revolution. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. See if the futures have changed. Im interested. Oh well. Theyre up. Theyre up almost nine points. Im actually interested. No, i am. Because weve been going up, down, up, down. We were right where weve been for like the last year. 18,000. Were somewhere around there. 17,500 to 18,500. One of these days somethings going to happen. Could be today. S p basically unchanged. Nasdaq up three. Oil prices are up. They werent up a lot earlier. Well take a quick look. Among the reasons, the production deal coming out of the opec meeting in algeria. Up just under 1 . But again, our Brilliant Oil strategists have said that were in a trading range between 40 and 50. Theyve been right. Theyre right. Were at 45. Nike posting better than expected earnings and revenue. But with nike, you look at future orders. Always. And they were up less than expected 7 resulted in the dow component down 2 . And its the worst since january 1st in the dow . I just read this last night. That its the worst performing dow component this year. Really . Ill go look it up, but thats what i read last night in one of our notes. You did . Yeah. Ill find it. In other corporate news, wells fargos independent directors are launching an investigation into the companys Retail Banking practices and ceo john stumpf will forfeit 41 million in equity awards, stock he had following the banks recent sales scandal. Im wrong. Its second worst behind disney. I read it last night, but Somebody Just corrected me. They did . Okay. Andrew, you know a lot more about this wells fargo thing than we just said. You were on the phone talking about it. Its sad. But i was trying to understand what was going on. With the board and with john. And why they not only formed this independent group but how we got to this place completely. Theres some acrimony they theres a whole sort of a back and forth going on here. That is kind of thats your kind of thing. Wait a second. I did read this last night. According to the story, it is. Im going to run the numbers on both of these. Weve got to get to the bottom of this. Sorry. A little obsessive. There is another financial giant in the headlines this morning. Wilfred frost joins us with what is running Deutsche Bank. Good morning. Good morning again. Becky, lets have a look at sum up the recent moves. So first off we got a onemonth chart. Shares fell a couple of weeks ago because of news of a doj find that was expected beating way larger, potentially way larger than analysts had thought. That was the fall two weeks ago. We then stabilized last week before falling sharply on monday. Lets look at the oneweek charts. Coming sharply as you see. That was on news of a story in a german newspaper that a, the bank had reached out to the government for state support. And b, it had been denied to them. Largely discounted now. We then stabilized yesterday including a nice rise intraday. That a doj official had said when banks are open and they selfclose, they get a better overall fine. Deutsche bank wasnt mentioned specifically, however investors took it to be positive news. Very nice move at the open today. Up some 3 . If we come to the intraday chart which is here, nice move of the open up 3 . That was on news that they sold a subsidiary for 1 billion euros. A nice boost for the capital because they said in the newspaper article this morning that they have never reached out for state support and also that doj find would be smaller than expected. Almost wiping out all of todays intraday 3 move. That was when it was reported in a headline coming in tomorrows papers that they had reached out and there was going to be a government bailout. That quickly discounted by both the bank and the finance ministry saying that no discussions were taking place about a potential bailout. So were back up some 3 today. Lets sum it up and look at the full year chart. Still down sharply some 52 year to date. The initial move january february. Both capital concerns and profitability concerns. The most recent moves, much more focused on the capital position. A rally of 3 relative to small declines. We wont see bigger rallies that the doj find is smaller than the muted 14 billion. All right, wilfred. Keep an eye on that. A lot of spent a lot of time talking about two banks. Wells fargo and Deutsche Bank. Elsewhere, the this is new i think. A missile went down that brought down mh16 was brought from russia. Missile struck a boeing 777 flying from amsterdam to kuala lumpur and it killed 298 people. Moscow maintained it was shot down by the u crakrainian milit. Lets talk some other stuff. Weve got news makers at this hour. Guest host Mary Ann Tighe is here. And stephen ross, chairman of related companies the owner of me Miami Dolphins and the gym i go to equinox. Thats very important. I may become a tier four member. Its very expensive too. Dont you have a trainer . I do have a trainer. Why dont you dop that . I do. A guy named nick. Hey. A guy named nick. Hes great. Does he hurt you . No. Hes supposed to hurt you. If you go to equinox, that will change. Can we just talk politics and real estate together . Which is im curious whether you think that this political season has had any effect on the real estate market. Youre in the midst of all the big capital flows. Have you this is a man spending how many billion dollars building the arts . Have you felt any impact at all from the political season . Not really. I mean, right now you can look at the markets and i dont think you can really correlate that to the political season. I mean, today the market is a little flat. And i think probably the Office Leasing market is a little flat at these times. People arent making those kind of decisions. Now, is that because of politics or because of the economy . But do you have a view there is a view that the election unto itself slows the economy down. Things just sort of people press the pause button. Mergers are slower, the financial markets. Right . I would say thats probably true. Yes. I would say we feel it and i think particularly given the nature of this election where the positions are so extreme that no one knows really whats coming, you know this better as well as we do that uncertainty is always a negative feature. The other thing thats happened on commercial real estate, the high end has gotten hit. But its starting to trickle it feels like all the way down. Its very strong at the you know, the middle part of the market, the lower end of the market. The lower end is still pretty high in relation to anywhere else. Today in new york which would be the highest prices anywhere else. Like 1500 to 2,000 a foot. That is very strong. So the middle market is in new york is very strong. Theres probably a little overbuilding in the larger apartments. And theres probably more apartments over 10 million and above than theres ever been before. But the market, you know, its in that area its pretty flat. You know, the thing and steve sort built his career on affordable housing. I was in brooklyn day before yesterday and affordable complex george kline park towers building. Theyve had a thousand applications for every one apartment. I mean, so its really about price. And i think the way youve adjusted the hudson yards pricing has been reflective of the fact its not going to be a Billionaires Row situation. I want to ask this question. We talk about Interest Rates all the time and how low they are and whether its creating bubbles. When you look at all of the buildings at least whats going on in this city, do you say to yourself this was in large part of a remarkable low Interest Rate policy and whether that is creating a bubble of some sort . Well, i mean, theres a lot of i mean, developers will build if they have the cash. And its really the availability of money. So today theres been a lot of availability of money. Theres been a lot of interest in real estate because people are looking for yield. And they think they can get it in real estate. So theres been a lot of, you know, rental construction across the country especially in new york. So i think the rental markets a little soft. I think itll catch up. Because there really is a demand there. But i think its more the availability of money and real estate in terms of development not necessarily, you know, purchasing. Whats going on in miami . Miami is an area that is really kind of overbuilt at this point in time. The condos. But the difference this time is that it is the buyers who really have put up most of the money. Not the banks. So what will get hurt are really the buyers, you know, anticipating that their prices would continue to appreciate. So miami is well overbuilt in terms of condos. You know, the question is those buyers have 50 to 60 deposits already in. So theyre not going to forfeit typically. And the banks arent going to lose any money. So itll be absorbed over a longer period of time. Everybodys going to be trying to rent them. Is the threat of zika doing anything to business down there . Are people going to games . Are people wearing deet . Its really hurting miami right now. Its one part of the country where they already discovered zika and its there. If you talk to people in the hotel business, theyre suffering tremendously in all of the future availability. Its there. Lets put it that way. So i think its something really to be concerned about. Can we get you to weigh in on the election . You know donald trump. I think the most important youre a real estate guy. Right. I know donald. I mean, to me the most important thing is whos going to have congress. You know . Because i think we really need a government thats divided twoo between the republicans and the democrats. Being a republican i think the most important selection they retain the house and possibly the senate. And i think if we have that, well have a balanced government and be able to really continue to flourish as a country. So if the democrats take the house and the senate, were really going to need trump to balance what you just said . I dont think that could happen. Okay. Thats what you said. We need divided. If the republicans lose the house and the senate you need trump to compete it thats right. But i think its more likely the republicans will retain the house and the senate. You just said you were republican. Who are you supporting . For president . I mean, living in new york, my vote doesnt really matter. Trump is going to win new york. Im really spending my money and my time in the country retain at least the house if not the senate. Does that mean youre not supporting trump . I didnt say that. Doesnt really matter. You still think its a its profound that well known people that have lots of customers on both sides of the aisle are hesitant to say anything about trump. You think any fortune 100 ceo is able to back trump . Lets get into something thats less controversial. But i like donald. Shes got 11. Lets talk about Something Else less controversial. What do you think about kaepernick and taking a knee . I respect what he did. You know . He really raised the conversation in this country that needs to happen. You know . And i think, you know, today i think its good that people are really talking about things people wouldnt otherwise be talking about. Its something we have to be concerned with. And the way you have to do it, its unfortunate that it takes controversy to create something. I was very much i think thats a good conversation to have. What . What . What are you looking at me . I think because he is a very public person. Hes got a company that hes got to say the right things. I really believe in this. I set up a nonprofit called rise. It was really the Ross Institute in sports for equality and working across the country to deal with racism. We set that up a year ago. We have commissioners of all the sports and Sports Networks as part of it to deal with this issue. Because sports is the one area that is really where there is equality. And if people look up to sports, the role models, i think we can create change with sports. I think its an important thing. When are we going to be able to hang out can we do a show at the yards . When is it going to be up and running . Well open the retail and the plaza in fall of 18. Great to see you. And of course Mary Ann Tighe is the guest host for thes re of the hour. Lets take a look at the worst performing dow component for the year. Heres where the confusion steps in. Nike is as of this morning down by 13 . 13. 6 for year to date. Disney was down 12. 45 . Now nike is the worst performing dow component of the year. Mystery solved. Thats where we stand. When we come back, your money your vote. The first president ial debate breaking the records as the most watched in u. S. History. Both Hillary Clinton and donald trump are declaring themselves the winner. Well talk to senator John Barrasso after this break. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Why dont you let me. And me. Help you out . Youre gonna hear what i say. I love taking stuff apart and building new things out of it. Anne pals my most advanced annedroid. [gasps] this is awesome. Oh anne you havent seen anything yet. Announcer give your Cardboard Box another life. Narrator it wasnt that long ago. Years of devastating cutbacks to our schools. 30,000 teachers laid off. Class sizes increased. Art and music programs cut. We cant ever go back. Ryan ruelas so vote yes on proposition 55. Reagan duncan prop 55 prevents 4 billion in new cuts to our schools. Letty munozgonzalez simply by maintaining the current tax rate on the wealthiest californians. Ryan ruelas no new education cuts, and no new taxes. Reagan duncan vote yes on 55. Sarah morgan to help our children thrive. Were less than two weeks away from the next faceoff between president ial candidates Hillary Clinton and donald trump. Trump saying after monday nights debate he might not take it so easy on his opponent in the next showdown. Joining us now senator John Barrasso who has endorsed donald trump. Weve cynically talked about, you know, we can argue about the winner, the loser, who looked better, who put the person on the defensive. But i still think, senator, that maybe the 80 Million People that watched are the real loser because we didnt talk about anything. We didnt talk about how to fix any of the problems that face the country right now. We spent more time on, you know, these superferlous issues. Its frustrating for the viewing public. I will tell you when i watched the debate, i think when trump focuses on jobs and getting people back to work on the economy, making sure we have a strong and healthy economy and National Security in terms of Energy Security Border Security he does the best. Because this is a change election. Its change versus more of the same. I didnt hear Hillary Clinton say anything that was any different from what heshes bee saying over the last 30 years. The American People dont need another four years like the last eight years. Im looking for a president that i can put on the president s desk conservative legislation to move the country forward. I believe donald trump will sign that legislation. Im concerned Hillary Clinton will veto the things i think will help our country grow. Weve had a you know, it takes a guest that comes in here jack welch was on last week with a point by point comparison of eight different areas and the proposals from trump, the proposals from clinton. And the differences could not be more stark. And yet none of them, i dont think, were really highlighted to anybody on monday night. Well, i agree with you. You know, i chaired the Platform Committee at the Republican National convention. And when you take a look at the republican platform versus the democratic platform, the republicans talk about growing the economy. The democrats had nothing about growth. They had a lot about income redistribution. And they had a lot about new regulations and putting unelected bureaucrats in charge and harming energy in this country. I think theres a huge difference and we have opportunities to continue to make that point. I think donald trump will do that in the next debate which is a town hall style debate. Senator, youve talked a lot about your worries about the national debt, about entitlements and things of that sort. And one of the things ive been trying to understand around the trump plan which yearly is trying to address growth in this country but i have yet to find an academic, an economist, a nonpartisan on either side that looks at that plan and says that we dont end up with 1 trillion to Something Like 5 trillion of Additional Debt over the next ten years. Even with dynamic scoring, its very hard to make that number look great. How do you think about that . I think about really tax policy, regulations that continue to stifle growth in this country. If you look at the wall street journal editorial for today, for the fifth year in a row and it talks about another win for the cowboys. Wyoming has been rated for the fifth year in a row the best Business Climate in terms of taxes. Its a great place. And we know how to do it right. Limited government, lower taxes. Dont spend all the money, balance your budget every year. I think those are things that are a winning combination. I think when donald trump talks about growing the economy, talks about eliminating so many of the regulations that stifle our ability to grow the economy, i think those are winning messages that the American People will embrace. Do you think the math is wrong . Meaning if i told you at the end of ten years youre going to end up with 5 trillion worth of debt or under the Hillary Clinton plan youd have little growth but end up 200 billion of debt which is the way its currently being scored. Which would be a more palatable version to you . You can look at the issues of scoring. When you look at what we need to do at the tidal waves that continue to come at us, Social Security and medicare. Until we really fundamentally do the kind of entitlement reform we need in this country, were going to continue to add to the debt. The Amount Congress has to control spending is very limited. Because of the mandatory spending concerns that are already out there. So we have to Work Together to get that done. You would have thought we could have done it with barack obama and the white house and the republicans in charge on capitol hill. Barack obama wanted none of it. He wanted 1 trillion for extra revenue in government to do any tax reform and welfare reform, entitlement reform. And we did not get that job done. So if president obama added 10 trillion in debt in eight years, is 5 trillion thats less than 10 trillion, isnt it . Have i got that right . Are my numbers right . It is less. It is less. All right. You okay with that 10 trillion . Not thrilled by it, but given hold on. Given where we were . Okay. Oh context matters. Yeah, we needed that trillion spent on the union pension. Anyway. Yeah. All the shovel ready that was shovel ready. Ill tell you. There was a lot of shoveling going on. By percentage basis, its come down. Thank you, senator. Say goodbye to the senator. Thank you, senator. Car companies are doubling down on the future of selfdriving cars. But most drivers are hoping that technology stays in the slow lane. We will explain when squawk box returns. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade coming up, breaking economic data. Well bring the numbers in the instant Market Reaction if there is any. Now that fedex has helped us simplify our ecommerce, we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Sharing a ten by ten room,ng threestruggling. Nding, i rent this place and then i started home sharing. My roommates help out all the time. They are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. I was able to take three months off to take car of my family during a family tragedy. The extra income that i get from airbnb has been a huge impact in my life. Were just seconds away, seven to be exact, now six. From august durable goods. Rick santelli standing by at the cme in chicago. Rick, the numbers, please. All right. The august preliminary read on durable goods unchanged. Were looking for down number so unchanged actually in this instance is better than expectations. Our last measurement that tried to peg this was 4. 4 it now stands at 3. 6 . Lets do the exes shall we . Very close to what we were looking for. And we lost 0. 2 to 1. 1 on our last look. Lets get to the important stuff. Business spending. Capital investment potentially. Capital goods orders nondefense aircraft, much better than the down 0. 1 we were looking. Me we gave it back. And if we look at orders, down 0. 4 . That is definitely about a half a percent less than we were looking for. And also minus 5 . These dont instill lots of confidence in me. Were unchanged on the 10year. We continue to monitor all that is negative in europe. Of course theyre negative out to the 10year. Two year option today. Went off the lowest yield, the most negative yield. And we continue to monitor Deutsche Bank which is definitely the canary in the coal mine for really wrong headed policies. You need banks, you need the transmission. Unless you can set up new ones. Markets are for setting up new ones. Various ways to finance. But for the most the banks are needed. And they need some capital. And policy certainly isnt putting an extra euro in any of their pockets. Back to the gang. Okay, rick. Thanks. Steve leisman is standing by listening at cnbc headquarters. I assume you have a good reason for not being here, steve. You got other stuff to do . You know, its always better to be sitting on the set for, you know, just so you can take the grief before you sit down in the commercial breaks. To enjoy our moments together when were not on air, dont we . Its so much nicer to be there, joe, all the time. Its just much nicer to be there. Dripping with sarcasm. There are reasons, joe. Ki get to those is it a fed thing . Its a fed thing. Its a fed thing. Doing my job over here. But lets talk about the number here. The story is that Investment Capital investment in this country has been in a pretty strong slump. And what you have is even a 0. 6 on the i love the way rick says that. Nondefense good exaircraft. Thats not enough to turn that around. And the conversation as to why business spending is in the slump its in has barely been joined. There was some discussion and debate the other night. We do need to think about that. When you talk about things that wour the fed, the decline in productivity which is probably linked to the decline in business and Capital Spending in this country. Its lukly a major culprit. Going through the new orders numbers here. Unchanged. Extransportation, down 0. 04 . Many of them are negative. Computers down 5. 8 . Transportation up 0. 6 . Anyway, its going to take several sustained months of this number being higher for anyone to think that either the manufacturing slump in this country and or the overall Business Investment slump has come to an end. All right, steve. Said something earlier i thought was fun new. If youre a true fed speak addict, todays a big day. Its a huge day. Yeah. And i was wondering, what other things would we know about someone whos a real addict for fed speak . And then i thought about you. Because thats a weird thing to be addicted to. Hes a fed head and a deadhead. Nothing ever happens. They just talk. Blah blah blah blah blah. I mean, if youre interested in that every day, you have issues, dont you . Nothing ever happens, but the market keeps reacting. And the market keeps moving on every single whisper. I would be very happy, joe, to get out of this what do you want to call it . Hamster wheel were on here. Roach motel. Something like that. I think youre 100 right. Actually 200 right if you were possible to point out we keep talking about it, nothing ever happens. If the market didnt keep reacting to it, we wouldnt keep talking about it. Yeah, you would. Well, maybe. Maybe to myself or to somebody. Id call you up on the phone, joe. But i want to tell you something which is very important, joe. All right. Tomorrow morning from kansas city we will have esther george. Thats cool. I will be at a very cool Conference Tomorrow on minority banking and the issues surrounding that tomorrow at 8 30. And were going to come to there from kansas city. Weve been waiting for esther george. Very excited. And you joe becky im sure would be. But joe, im sure fed speak is what youre after. And its the missouri side, right . We were there, are ebb . No. We were in st. Louis. Not all midwestern cities are the same. You remember the arch . I remember the mcdonalds under the arch. Thats where we used to stop all the time if we were good. Theres no arch in kansas city. Good steaks though. Bring a couple back. Thats a good idea. Barbecue. Steve is also a fisherman. Its patient which is why hes good for following the fed too. Youre right. Theyre both very boring. Or very interesting as long as youre patient. Our guest host this morning is Mary Ann Tighe. She knows everything happening with real estate in this area. We focus on the numbers here a lot. We look at the economic numbers. They tell us a bit of a picture. I think whats really happening on the ground is a better definition of whats happening. Youve seen whats been happening in real estate here. Were trying to figure out if this is a Strong Economy or not from where you sit how does it play out . It shakes out in many different ways. For example, the Retail Real Estate market is hurting. This cant be a surprise to anybody because retail isnt reinventing itself. So in certain sections of the city like madison avenue classic retail environment, youre seeing for sale signs all over the place. If you go downtown, if you go to brooklyn, youll see that retail is growing there because its trying to accommodate new waves of population that are coming all over. On the other hand, the Office Market is strong. It weve hit rents that are record rents in all of the submarkets of manhattan and weve invented a fourth submarket. Its extraordinary to see that we went from 14 million square feet of office space to 50 million square feet in brooklyn. But regardless were seeing a growth probably now of flattening, but we dont see anything suggesting decline because one of the other things thats happening is old office stock coming off the market and being made into apartment buildings. And at the right price, steve ross was talking about it. At the right price, everything rents, everything sells. In new york. At the right price. Do you think theres too much inventory . I think theres too much high end inventory. Its going to take awhile for that to burn off. But as he observed in the price range, its selling. Should we all buy real estate in queens, by the way . They say that. Thats the new thing. Heres what i say about queens. I have a colleague of mine saying Long Island City, Long Island City right now. I say it will boom in the next cycle. Whenever we have a correction and come back, thats the logical place. Because thats where land will be affordable. Everywhere else its hard to buy a piece of land at numbers that make sense. Mary ann is our guest host. Shell be with us for the rest of the morning. Coming up, s. L. Green is here. Were going to get his case on Luxury Property and building trends. Squawk box will return in a moment. This woman owns this house, with new cabinets from this shop, with handles designed here, made here, shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back to squawk box thorn this morning. Lets take a look at stocks to watch. At t downgraded at ubs who said Earnings Growth is slowing. Also tempur sealy cuts outlook. Thats confusing. You said tempur sealy and then said Mattress Company nap is a separate company from tempur sealy. Thats the mattress firm. No Firm Mattress sold by the who does the number bed . Meanwhile fill it up with air or whatever. You see that story . Down 21 . Tempur sealy. Yeah. It was not a huge miss, but, man, talk about a volatile trade with some of these things. That is weird. Back to where it was. Down 21 because it said it was going to be down slightly. Uhoh. Theyre moving us on. Theyre sick of mattress talks in the control room. Okay. This must be better. Banking on the selfdriving revolution. A survey we should just skip selfdriving cars. Go to the selfdriving drones. Right . Selfflying drones. Selfflying drones. Why even bother, right . Why bother with the selfdriving cars . I want to be beamed in. I want to skip that whole thing. Beaming is even better. Ive done that before. Ive seen it on tv. Anyway, survey by kelly blue book finds consumers are still skeptical of autonomous vehicles. 80 of those polls said that humans should always have the option to drive themselves. 64 expressed the need to be in control of their car. 1 3 of respondents said they would never buy a fully autonomous vehicle. Companies like google, ford, or uber are working on selfdriving. People remember that one incident where the guy didnt even brake going into the side of a truck at 60 miles an hour. Only a few months ago. Were not going to forget about that soon. Everybody has a vision of just sitting there not really paying attention and not even slowing down when you see that. Heres a question quick. 36,000 fatalities in america each year from cars. Right. What number does it have to be lower that you would accept it . Its the computer thats going to make the mistake. Its 36,000 versus how many people driving how many miles. One fatalities or two fay itllties. Im saying if i had to get the number down to 5,000 a year, thats great. But if i tell you the computer makes the mistake, then its wrong. Because we all think were better drivers. Thats the calculus. Plus its when the computer decides to start killing you. Touche. They dont need us. Youve heard watsons voice. You hear the voice on those commercials . They make it so nice. That guys not nice. Real estate is on the rise as weve been talking about this morning. Especially here in new york city where commercial properties grow in high demand. Mark holliday is joining us ceo of s. L. Green corporation. Our guest host of course is Mary Ann Tighe. Mark, weve been talking a bit about the commercial properties. And whats been happening. Mary ann just gave us a brief synopsis of whats been happening. But what do you see . You can look at two fronts. On the leasing side, we expected a lit of a slowdown in 2016. But that hasnt really materialized. Were having one of our best years ever to our surprise and to our high expectations. 2. 7 comment about marc and leasing. When he speaks, his company does basically 250 leases in manhattan. We do a lease every business day. We have over a thousand tenants in the city. We span the spectrum from the very affordable end of rents up to 100 a foot and over. We have 28 million centered inmin manhatt manhattan. And as i said 2. 7 million square feet leased to date. I expect to go over 3 million square feet for the year which would make it one of the best two or three years in our history. You expected things to slow down this year. Why and why has that not materialized . Well, back in december there was a so it was a reflection of the stock market . Well, i would say the economic factors. Not just the stock market. I think a lot of Real Estate Investors watched the stock market but a lot of Real Estate Investors watched the fundamentals. For me the fundamentals start and end with job growth. In new york city, weve had extraordinary job growth since 2010 adding a hundred thousand private sector jobs annually to a record almost 3. 8 million private sector jobs now. But for commercial landlords and commercial brokers like mary ann, we care about our office jobs. Weve been adding about 25,000 jobs annually. Thats 3 million to 5 million square feet of absorption. Is this something youve been seeing in new york . New york city traditionally outperforms almost all other u. S. Markets. And thats because we have 400 million square feet of real estate in this city. Thats more than the next five cbds in this country combined. Cbds. Commercial business districts. Combined. So this market really sets the standard in terms of attracting foreign capital and serving as a home for fortune 500 Companies Like no other city in this country. Both of you, what do you make of the trend of employees now working in offices where they come in with their laptops. They dont really have their own desks. You can actually consolidate a lot more people in a particular space so they may not be taking up as much floor space as they used to. Youre building a building now thats designed for exactly that. Ill say two things. One, as a landlord i love it. Everybody thinks densification. The act of putting more people in the same amount of space to lower cost per employee. I think its very healthy. Its what businesses ought to be doing. Good for the business, bad for you though. Not really bad for me. As long as i have job growth, what ive got is still enough demand to keep vacancy levels below 10 . And with that were able to have healthy diversified job base in the city that isnt any longer relying on the financial sector. New york for too long has relied on the financial sector. We now have a diverse job base with technology, advertising, media, health care, education. All high demand sectors of this economy. Picking up the slack for what used to be a finance driven market. In response to that, what were building is the most iconic special Development Project that midtown has seen and i think will see in the foreseeable future right in the center of midtown at 42nd street. Adjacent to grand central. Its going to have interconnections down into the system connecting to five different modes of subway transit. Metro north, westchester, stanford, and soon to be Long Island Railroad completing the spur thats going to put another 160,000 communities a day into grand central. And well have a development thats really a blueprint for the 21st century. Can i Say Something about the desification . One thing people dont correlate is when you bring more people onto a floor, older buildings cant sustain it. The elevators dont work. The bathrooms dont work. The air conditioning doesnt work. You actually are seeing a migration to newer, more expensive, high level space. They may make the space denser, but at the end of the day you actually need a different environment to support it. Thats why new construction actually is even though its significantly more expensive rentwise than existing buildings, thats why new construction is attracting more in the city. Its really the Value Proposition that tenants want. In older buildings because in older buildings you cant get what we deliver in a building like one vanderbilt, 16 1 2 foot slabtolab. All these elements enhance the Employee Work experience where they want to come and work and they get 85 daylight, natural light, which you cant achieve in older buildings. Marc, thank you so much for coming in today. Thank you very much. Go to a Cocktail Party talk about 16 foot slabtoslab. Let me tell you another thing the tradeoff is as much as theyre getting less space, theyre loading up on the amenities. No, i like that. 16 foot slabtoslab. Knowledge of the Capital Markets is in addition to Everything Else, hes one of the biggest lenders in the city. Talk about Interest Rates and real estate. There are no Interest Rates. Thats the problem. But we need real estate price cap rate 4. 5 . Jim cramer, you got to mike up. Stay with us for a second. Then well take this off and rip your suit joining us from new york stock exchange, jim cramer coming up. Squawk box will be right back. Okay, so whats our latest data say . Our customer is a 21yearold female. Heavily into basketball. Wait. Data just changed. Now shes into disc sports. Ah, no shes not. Since when . Since now. Shes into tai chi. She found disc sports too stressful. Hold on. Let me ask you this. Whats she gonna like six months from now . Who do we have on aerial karate . Steve. Steve. Steve. And alexis. Uh, no. Just steve. Just steve. Just steve. Live business, powered by sap. When you run live, you run simple. Lets get down to the new york stock exchange. Jim cramer joins us now. Jim, what are you anything to extrapolate from nike, or is it under armour . I think when you look at nike, nikes in a bit of denial, i felt, in terms of what happened in the u. S. They really continue to say, listen, performance and innovation will equal better sales, but those sales were not that good. That wasnt any real growth. I think you play it with foot locker because its not clear if its with under armour or reignited adidas with stan smith. It is a little retro stan smith. But foot locker wins in this situation. And i think nike has to change its narrative a bit. Nike acted as if it was a great quarter. But people know better. And i think that mark is sensational but do a little soul search about what happened in domestic. I thought i picked under armour to talk about. I didnt even is adidas a real . Theyre resurresurgence . Yeah, adidas is back. Really . Yeah, look, nike was amazing in asia, china, in europe fantastic, i know nike has a lot of expectations in these futures orders. They did try to dispel the notion futures orders should be what should be your focus. In the end, this was a quarter that they had a lot of things going for them and still didnt make them a lot of money. A lot of right basketball shoes. And i just felt that upon further reflection this is a company that stalled right now. And theyve got to fix domestic. And i dont know how theyre going to do it because i know foot locker is pitting all of these against each other. Theres just a lot of share being taken influx, nike did not explain well what happened this quarter. Jim, we got to go. See you at 9 00 flat, 9 00 a. M. Sharp. Not flat, sharps and flats. Anyway, program note, dont miss an exclusive interview with imf manager Christine Lagarde on squawk on the street. That will be at 11 45 eastern. Thats squawk alley, isnt it . Any way, squawk box will be right back. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Welcome back. Our guest is mary ann thieg thrilled to have her for the past hour. Do you want to give us a little bit of prediction of where things will go in the next year . I think youll see commercial rents be flatten, relatively stable. I think youre going to see the new construction gobbled up. I think youre going to see developments slow because land prices are too high. And i think its going to be awhile before retail recovers. Are Interest Rates going to go up . You know better than i about real estate, but the realty is Interest Rates have to go up significantly to Impact Real Estate in any meaningful way. Dr. Hidalgo. But im saying hes your significant other. Yes. Anything he can do with this . Let me say what he would say to me at this moment if david were sitting in the room. By the way, senator barrasso and my husband are dear friends from undergraduate and medical school. He called my husband every year on his birthday. You know what he would say to me . He would say, dr. Ty, ill call the new england journal of medicine is and let them know what your insight is. Anyway, great having you. Say hi to him for me. I dont want anyone to know if im going to see him. Make sure you join us tomorrow. Squawk on the street is coming up next. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. The major indices not too far from fair value this morning as we await janet yellen on the hill at no fewer than four of her colleagues set to speak today as well. Europes positive as deutsches ceo tries to reassu