Transcripts For CNBC Squawk On The Street 20240713

Road map begins with china trade concerns, retails biggest sales decline in seven months, corporate earnings in focus. B of a rallying on a beat, futures point to a muted open. Capitalism under fire a bit democratic president ial hopefuls square off and taking aim at big business and personal wealth. And billionaire marc benioff will join us at post nine. Well talk tech regulation, capitalism, ipos and who he is eyeing in the 2020 race. Stocks are on track for a modest open a day after the dow close the above 27 k for the first time in almost a month s p finished shy of 3,000. B of a beats the street with quarterly results. On the economic front, retail sales were down. 3 in september. Revisions were better. Gas stations down. 7 people say maybe this has to do with gas prices. Perhaps it does when i take a look at what is going on, if you read between the lines with bank of america, which is just a gigantic bank, gigantic consumer bank, talking about 5. 7 growth in Consumer Spending year to date. I wonder whether these retail numbers are accurate i tended to wanted to believe in them, but i find it hard to believe that you can have bank of america showing this level of growth, bank of america is, i think, representative of our country. Versus the retail sales. Maybe the retail sales do not capture what they used to in the numbers. Because thats a tremendous disparity, gasoline or no. Hard to believe. You would like to see the changing metrics, how they go about measuring given the significant change in place of how people buy things. Theyre counting for online and things of that nature. Theyre not missing that. Are they . I dont know lets see what the adobe numbers are. Adobe keeps track of all commerce, keeping ecom. I think ecom is harder to track. There are so many different i was and outlets that companies that you buy things from, when you look at it is almost like thats a mall number mall number plus club. Look at target, look at walmart, look at amazon, look at costco, look at home depot, youre seeing spending, the best in years. Why is that how can you those are, you know, market share dynamics, potentially at work we were doing prints of. Of. 4,. 5,. 8, all summer long. I know that there is a propensity to believe that what you saw last night, what you see in the papers is cutting back spending, but jpmorgan had an exceptional number yesterday for Consumer Spending and talking about, you know, a gigantic talking about, like, gigantic amount of Consumer Spend goldman not as important but goldman had tremendous numbers on the credit card they would argue theyre a big factor, not wealth spending was pretty darn good citi spending was good i struggle to find of the companies i follow anything that is anywhere near that retail sales number, retailers or banks. I dont know how to rectify. I cant i just cant reconcile. I cannot reconcile these numbers. And i know that we can listen to people who in the previous show who talked about Federal Reserve and commerce department, get the numbers. I deal with the reality of bottoms up, bottoms up is much better than that number. Yes, you can back out sears and kmart, i dont care. You can also say these are real numbers im giving you. The real numbers require making a mosaic of what is going on and the mosaic involves banking and retail to a level that i cant ignore yeah. All fair this morning, an interesting dynamic in the research that ive noticed, jim, im sure you too, there seems to be analysts who want to temper the prospects for Growth Companies yes. You mentioned adoeb why i be of their numbers the downgrade from citi, workday over at evercore, a lot of positives, but Adoption Remains an evolution, not yet a revolution morgan stanley, tougher road to large opportunity on slack they also take a breather on service now. And im just wondering, is there an underlying tone here that perception of growth changing . We have been talking about it, but now maybe it is there is no perception, hours worked has fallen, wage growth rolling over, the payroll average is ounsel dowdown this is not coming out of nowhere. How can walmart be challenging all time highs bill gross would say, what, a quarter of the gains this year have been because of falling rates . Well, ill take whatever i can get. I do worry what david is talking about, the idea that the companies that sell at 30, 40, 50 times earnings are really falling, falling and back up what you said, david, the workday number price target, slowing human capital, moderating the core business, when you look at adobe, talking about their commerce business, simply not being that commerce business, huge part of the business. Service now, youre back trying to reconcile microsoft and be buying microsoft. It is the sass companies we have benioff. We do the stock has not done particularly well, trades well below the group, undervalued many would say what do you do to fix that, right . Well, ive got it tell you this market likes the lowest multiple stocks, with the exception of the autos look at micron, loves micron, 43, 43 they like Texas Instruments. J j, sells at 15 times earnings it loves Jpmorgan Citi worth noting, very important yeah. Meanwhile, got to keep one eye on the debates last night. Healthcare breaking a big tech, taxing the wealthy heres how senator Elizabeth Warren defended her plan to tax the wealthiest americans. I really am shocked at the notion that anyone thinks im punitive look, i dont have a beef with billionaires my problem is you made a fortune in america, you had a great idea, you got out and worked for it, good for you but you built that fortune in america, i guarantee it, you built it in part getting your goods to market on roads and bridges all of us helped pay for. You built it at least in part protected by police and firefighters all of us help pay the salaries for all im saying is you make it to the top, the top of. 1 of 1 , pitch in two cents so every other kid in america has a chance to make it. Thats what this is about. Jim, you were, i would say fired up on twitter last night and this morning. I just feel they got to distinguish between what i thought was reasonable socalled assault on billionaires, one of them was up there, versus this rhetoric about prosecutions of drug executives. They mentioned j j, want to prosecute alex gorsky . Thats a show trial. Show trial j j, Great American company. I heard it astonished okay, break up the banks the government put together the banks. Do we need to break up the banks . Bank of america too powerful we have so many more banks in this country than any other country. It is remarkable big tech, mark zuckerberg, he is a pinata amazon, how do you like the way that Elizabeth Warren quoted the 47 amazon, versus saying that walmart never got near destroying Small Business like this i think Amazon Web Services powers Small Business. I think that the rhetoric about attacking the companies that we follow, versus a very reasonable negotiation with the billionaires, who should give money back, versus giving it back charity, these are two different things, but when i heard j j, i said this is america. Cant prosecute alex gorsky criminally for what for 1 of opioid, which was all prescribed is that the way our country is headed should point out as well this morning there is a lot of different news s on potential opioid settlements, with distributors, talking about teva, close to a potential settleme settlement, j j involved, separately from what they were talking about last night, but important for the performance of the stocks i wonder if some of this goes back to the lack of prosecution during the banking most definitely by the way, that did come up, which is the idea we dropped the ball against the people who really almost wrecked our country. It is going to be a great discussion of marc benioff i agree with you, this is a rear guard assault on what should have happened. And there are executives i want to mention names who i thought should have been criminally prosecuted, but got but stated, they did skate that justice department, Obama Justice department failed. And you know there are books written about how they fail. I just felt i finished and said, geez, i really like a lot of these candidates, but they have got to stop talking about how business is the center of all evil business is the greatest platform for change today. They probably will stop, once we get past were in the primary season. I know. Look, i think it is interesting that Bernie Sanders is a socialist. What do i socialist what do i expect rhetoric hes a capitalist hes a stated socialist, like, you know, the great socialist of france during the i live in a communist i have a house in a communist regime in italy. Communist. Called a commune it is different. They come in, they tell you what to spend, what to do, they take your money and say, hey, what did you think . What did you think it is communist for heavens sake socialist is a little bit better at least they dont tell me what crop i need to grow. It is not as though were not going to have a debate coming up in this election about sort of the future of capitalism mr. Benioff will speak to that he does in his book as well. Do you think senator warren is against capitalism . No. I dont either. I do think she wants change in the substantial way so interesting too i met a couple of people who were her students at upenn law school, and they are she was their favorite, and theyre, like, we dont know who this person is. People at harvard the Consumer Protection bureau, very important. People i know are from texas, people i no he frknow from harve say great professor, in terms of reasoned analysis. Maybe you have to do this to get the nomination a lot of people say, i said i was at a party last night, will she move right, will she move right, will she move right she cant tack right when Bernie Sanders is out there raising a ton of money thats exactly what is happening. Meanwhile, the reaction this morning, Lee Cooperman on squawk saying the market has another leg up left in it. Maybe 10 over six months. But did talk about the risk of a president warren and sanders listen to that. If the president resorts to another round of tariffs that probably increase the probability of recession, and if we have a recession, the market drops, at least 25 . If Elizabeth Warren is elected president , in my opinion, market drops 25 . Bernie sanders, same thing all right, so echoing what he said at delivering alpha a fu weeks ago. Right Bernie Sanders, if you read his platform, one of the first things he says is a trillion dollars in buybacks, thats got to end if you look at the numbers of citi, the numbers of bank of america, when they bought back a gigantic amount, you look at the numbers from jpmorgan, the first thing you say is the biggest reason why they made so much money is the buybacks. Johnson johnson, gigantic buyback f that ends, i understand what lee is talking about. You still have dividends, but as also lee talked about how the stock market is really the residence of rich people so once again, thats a continual theme. And therefore it is almost like they wish it would go down that means that you cut a check to the government for what you made in the market and thats about it right well, the runup in the 90s helped with the budget deficit, given the Capital Gains taxes. Yes, it did. Many of us have come back to that perhaps as being a more favorable way to go about trying to deal with income inequality, which continues to worsen and is driving so many of these different debates. Wouldnt it just be so simple to say, look, lets go back to where i know Elizabeth Warren dances around this, lets go back to ordinary Capital Gains taxes the same i havent been in a ton of regimes where Capital Gains, 84, they changed the law, that was ronald reagan. I agree with you, i think these guys are all overcompensating, trying to make it so they dont win the billionaires vote they wont get bezos vote what theyre look at again to reference benioff, im hyping this interview, talking about 27 people who own the world 27 half the country owns no stock or mutual funds at all well, i mean most people cant get past the 400 emergency bill. Should we go back to lenin . Lenin was not a part of our history. Were planning and really equalizing things. I dont know what we go back to, but no. The People United will never be defeated. When we come back, well get cramers mad dash, count down to the opening bell also ahead, a include thclue ont nights jeopardy. And sales force chairman and coceo marc benioff out with a new book, take a look at the futures here, well get to amazon, adobe, ual and big night with netflix and ibm dont go away. This is the age of expression. But shouldnt somebody be listening . So. Lets talk. Were built for hearing whats important to you, one to one. Edward jones. Its time for investing to feel individual. This piece is talking yeah . So what do you see . I see an unbelievable opportunity. I see bestinclass platforms and education. I see awardwinning service, and a trade desk full of experts, available to answer your toughest questions. And i see it with zero commissions on online trades. I like what youre seeing. Its beautiful, isnt it . Yeah. Td ameritrade now offers zero commissions on online trades. Go on and take the money and run go on take the money and run go on take the money and run always like the whistle there. Steve miller. Steve miller. And not the guy who not the guy, yes not the one dealing with purdue pharma. The space cowboys, the man who speaks to the lets get to a mad dash for also what we call hump day at squawk on the street. Yes united airlines. Okay, keeping with this notion you brought up the high multiple stocks are really under a big assault. This is a low multiple stock it roared an incredible number, they have 389 million shares, five years ago, 257 now. Remember the days when they had the issue shares constantly, doing so poorly. Traffic up 1. 9 . They raise numbers, they could earn about 1050, now 11 and a quarter, 12. 25 the buyback is 50 lower than where the stock is so oscar munoz just a fantastic interview, with phil lebeau this morning. This one has to be bought. And look, the max came up. 737 max. You can argue it is distorting everybodys numbers and fuel is higher david, this is a really inexpensive stock versus say workday, versus service now. Thats what those stocks, the money is coming out of those and looking for a home this is one of the homes thats an important trend that we have been noting for some time. Also wondering whether or not it is going to reverse itself it usually does. Growth somehow finds a way. The numbers are extraordinary, we say what the hell were we thinking dumping these stocks those are stocks that are momentum these are not momentum stocks. There is so much money that is pegged to momentum, but the momentum guys saturated with louse banking stock yesterday is they all kind of say there is still a window that is open, but they talk about wework, goldmans call was about 80 million exposure listen, theyre numbers when it came to underwriting equities, were not great. No. I think were the window is not as open as these guys say. I remember that from my french class. Here we go. Yes, some people call me maurice. They call me maurice because i speak we have a lot more songs from the spinning deejays at hq on squawk on the street and the opening bell i am totally blind. And non24 can throw my days and nights out of sync, keeping me from the things i love to do. Talk to your doctor, and call 8442142424. Bank earnings continue were watching the brexit discussions in brussels. Reaction to the debate you got china, more fed speak and data today the opening bell is in about six minutes. The biggest challenge of. Owning and running a Small Business is finding the right people. In hiring our first recruiter, we decided to post a job on linkedin. They had to have worked. At a recruiter firm and be bilingual. When we saw ana marias profile. She had a ton of experience in hr. The interview went really well. And she seemed like someone who could really sell mckenzie to perspective employees. We found the best person to find the best person for us. Post a job today at linkedin. Com grow ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in three and a half minutes busy day that is so good to have cramer back at the desk because people have been asking some big questions, the ten year back to 175. What does this do . Is it this a p g market or they have gotten hit, you talk about the 120s to 117, i think everything is day to day there is a propensity to try to go for lower multiple over high. I want to correct something i said last week about apple in terms of the back order watch, not being out of it, im confusing anecdotally back order, up at apple store last night to try to clarify things there are certain products that are on back order. And that is surprising when i speak to the managers there, last night, the 11, there are certain 11s on back order. Again, i dont want to i want to i dont want to conflate back order with out of back order meaning you cant many stores we cant get in new york and brooklyn. I should not have generalized that way but then again, look at the stock. The stock is reflecting that the 11 is a huge hit just a huge hit. And it is also reflecting the watch is doing better. It is reflecting service revenue. But, look, starbucks, throwing stuff at starbucks in hong kong. Who knows what will happen but abbott apple is a great example of what i regard as being a low multiple stock that is getting a higher multiple and workday,bushry, gave a lot not to love about workday. I said in my game plan that workday would have a good conference, good session there an and i was wrong. Mixed takeaways from the workday analyst meeting, right, jim . You got a couple you got a downgrade today, talked about it earlier. But it is also getting lumped in with the overall you can see the stock. Lack of love for growth yeah. Lets buy growth look, when we look at the growth of bank of america, you can just Consumer Spend, 5. 7 , versus 2 gdp, almost triple. I would rather own that stock than i would workday i never thought i would say that the multiples are insanely low for the banks. I guess the multiples reflect perfection on this software as a service stock. People seem to prefer oracle which is in the claymation death match with marc benioff who well have on the show. Look at the crm stock over the course of last year t has n not been a good performer. Over time, without a doubt, you want to have owned the stock. How about the difference between microns and sty wo s a solutions. Ever since micron reported and plummeted and came back up, it has been the clarion call to own the semis. Lets not forget my dog. Look at my dog. There is a you see my dog in. It shows you how it leveled off over the last couple of years. Yeah. I still would rather be long that than bethlehem steel, which doesnt exist anymore. I just think that the classic manufacturing stocks deserve to be down and yet theyre coming back, deere is breaking out, those dont really mack a lke ao sense to me. The oktas are coming down. The high multiple is come down a deal in the making. There is the opening bell and the s p 500, the cnbc real Time Exchange at the big board, new york magazine, celebrating the 2 16r9 annual new york taste culinary event taking place on monday at the nasdaq, vir, clinical stage immuneology company. A company, tech data, deal talk from apollo at 130. I had tech data on a month ago that company is on fire. That is ridiculous you wont get that for 130 lets watch that that is a very inexpensive stock. Thats a supermarket of tech they handle everything anything you need, wholesaler. I dont know if they have nvidia im picking nvidia, thats my dog. Im aware, yes. What is your dogs name is your dog Texas Instruments . No, scoop what . Scoop why dont you call him slack . Hes an underperformer do you see the goldman conference call, solomon is talking he talks about direct listing and how it is questionable no kidding questionable how about horrible. Not good for his business mr. Gurley would have some benchmark, bill gurley, the proselytizin listings other than Elizabeth Warren, who else has that gig going . Bernie sanders was he back to bernie. Bernie is, like, i was waiting for him to say, listen, stocks must fall 25 in my regime just raise the Capital Gains and youll accomplish what you want. He really, again, we dont want show trials of executives. It is too darkness, arthur kosler, stalin lets go back to something discussed during the debates talk about the stock market ramifications for all of the different news about potential opioid litigation settlement. Im all over that. That were hearing about. The drug distributors, here im talking about mckesson, cardinal health, the three big distributors in talks to settle for 18 billion according to a number of reports. Dont have this confirmed. This is relying on the journal i think in this story. You got teva as well, potentially trying to settle you got the ohio trial about to begin jury selection, i think today, nice start as soon as early next week. And thats where you got a lot of these cases consolidated, remember, with all the plaintiffs, which are not just states here, but municipalities, local governments as well, that have been so hard hit by this horrible crisis that has gripped our country for the last ten years. Separately you got purdue pharma, which filed bankruptcy and is trying to get the states, all the state oz on board with its planned offer. And j j also, which you follow so closely, jim, also trying to pursue that. See the judge said he did the math wrong in the other case, they awarded them 500 something million and lowered it by 107 million. 4 billion number, j j cannot be confirmed make that really clear. 4 billion. That they might pay in a settlement, not be confirmed by anybody. I dont know where it got, maybe it is true, maybe it is not. The Missouri Court that awarded gigantic sum on the talc litigation the court above it has been really in favor of j j. The appeals court. I want to emphasize that you see those gigantic verdicts, where the plaintiffs win, they tend not to win as big when gets to the earnings were terrific. It is the first time the medical device segment was good. I have to tell you it is they talked about the plaintiffs, 4 million to fine plaintiffs, more than a 30 billion industry. I would love to own stock in a Plaintiff Law Firm youre not allowed to in this country, but, wow. Those guys are making a killing. Yeah. Here is another Company Making a killing, doing really well, Growth Company huawei doesnt trade. Just pointing it out steve bannon so far this ban doesnt seem to be 24 year over year increase in revenues at huawei they seem to be getting what they need. Thats a great point you bring up there is a moment in an upgrade about nvidia yesterday, talking about nvidia, not able to really sell in as much as they would like. The price target to 250. They talked about i went out to see jensen huang, he was talking about being able to mimic voice and it was really incredible i came on, i said, you know, this is when you can say get out of town. And it is able to recognize that it doesnt mean, david, you must go over to camden, new jersey, it means, hey, the computer can actually he doesnt like that natural language processing. Natural language. Go jump in a lake, david you dont go to happy birth day Angela Lansbury today. Oh, my. 94. 94. She was wearing that card, that queen, wow language processing, bamle argues this is the next chapter in ai. Were going to rapid rate, there is an interesting new yorker article on this very subject as well this week about google and it is able to finish sentences bank of america because of ai and what is going on. Theyre a huge number of people using bank of america voice. Right send money this way, send money that way the advance, it is way beyond moors law. Nvidia is moors law a long time ago. It is frightening to me. Here is gee pie a fu minuew s ago, imagine what would happen if we let Chinese Companies equipment into americas 5g networks. I know that there is a fantastic were not putting huawei out of business. 25 , 24. 5 growth. Want to buy stock in that brian doing a terrific special about Rare Earth Minerals and how Rare Earth Minerals go into our defense thats suboptimal. Thats suboptimal situation. Yes were going to are to make them less rare. Do you think that russia is a greater opponent to our country than china i think do i yeah, you im asking you on jeopardy both significant foes, certain areas, russians more so in our face in terms of geopolitics. Fill in pretty quickly there. There is a book they moved in very quickly. There is we can ask benioff, am i endless in my hype for that hes discussed privately the notion of of what the chinese could do to us, if they decided, boom, you know what, were going to make it so that were in the defense, were doing all the things meanwhile, if youre talking to your if youre talking, you know your pc hears you now, right the chinese have been bugging my chinese since i did the documentary eight years ago. How could they not . Yeah. They have me fully they should, david. You are they should be all over how about lebron. China mentioned four times in the debate last night. Four times thats pretty light coverage for what some argue is the existential story for two countries in the next generation. Yeah. Theyre not really up to speed on everything when it comes to knowledge of china do you have any thoughts, by the way, on where we stand in terms of the actual talks and whether or not phase one is going to happen or theyre going to follow through on this 50 billion number of agricultural purchases . Did you know theyre in the house going to put through a hong kong resolution the way they did and adam silver, hong kong resolution, the nba commissioner, you know, i got a book from marc benioff called ghost fleet. Which talked about the idea of china really influencing all of our military in a nefarious way. I never forgot it. It always scared me. I know we have a million things to talk about, with marc benioff, including underperformance of the stock, i think that he scared the bejesus out of me with this book he told me to read marc is everywhere right now there was a by the way, the book is sold out so sold out. Long time reporter for the wall street journal, went over to sales force and the cowriter on this. One of the reasons it is such a good read with jim stewarts a lot of people who are really deep state seems to be sold out by elton john. I think it is great that how about farrow. Theyre reading books still ereader didnt become the threat everybody thought. I know people read their books on kindles it tempered. I like to read books. I think people are back reading books after a hiatus the millennials, busy camping, taking cruises, taking picks on instagram, they seem to be reading. It is astonishing. Maybe some bookstores that they can actually buy these books in a couple of other news stories i wanted to hit, mgm not doing much of anything they announced a large deal. 4. 25 billion and then theyre going to lease back the bellagio blackstone the largest single owner of real estate out there for the most part. And that is something that had been anticipated by the market place and so you see not much of a response there, at least in terms of the significant divestiture for that vicci properties did that already. Good return. It happened already. Mgm i think has to get in the game in a very big way thats this will help theyre raising a decent amount of money they can allocate towards newer efforts in different areas. I think that there will be tremendous gambling on fantasy yeah. Yeah. All right, guys were down 17, holding 29. 90 to bob pisani. Hey, bob. Good morning. Mixed open, but the banks are helping and theyre saying the right things about the consumer. Thats the most important thing. Lets look at the sectors today. Bank, kbe to the upside. Most reporting on the upside today. Materials sort of mixed elsewhere, healthcare. Tech is weaker some of the Software Stocks are a little weaker, adobe, downgrade over at citi sales force, autodesk a little on the weak Side Software that is the weak part of tech here the banks, today, numbers were mostly really good overall again. Bank of america, pnc, u. S. Bancorp, trading up. Comerica flat here remember the u. S. Consumer, the linchpin of the global economy, if they go south, everything goes south and generally very positive comments on the consumer we saw that yesterday with jpmorgan look at pnc, long growth was strong in commercial and Consumer Sectors u. S. Bancorp loan and deposit growth solid, their words. Mortgage revenues, they singled out, were robust thats their words this is a big Midwestern Bank here average loan growth has been good as well remember last year we were talking about average loan growth, 2 i use the word anemic a lot to describe it last year. It is better bank of america, pnc, comerica, u. S. Bancorp, 4 to 6 , average loan growth, mix of commercial and consumer year over year, these are good numbers. And i think thats important then we have the other side of the coin, which was retail sales today. Got the september number i dont know what to make of this i dont know if anybody else does the numbers were surprisingly weak, particularly for building and materials that have been strong, food and beverage okay, and nonstore online down i dont know what to make of that my sense is this is probably an outlier. I think we need to see more data some people have advanced the idea that the purchase pulled for due to tariffs, maybe, i dont know august, remember, a lot of recession talk in august Consumer Confidence was weaker that may have impacted retail sales. Overall, retail sales are up 4. 1 year over year. Those are good the second best month of the year august had really good back to school sales it seemed to me i dont know i think we should sit and wait for more data. It is not impacting the retailers if you look. This is either side of positive or negative for all the big guys that matter, walmarts, targets, ross stores, look, tiffany, gap, this is either side of positive or negative. So this data is not impacting retail sales today well keep an eye on that. The dow down 16 points back to you. Bob, thanks rates still a story. To Rick Santelli at the cme. Good morning, rick. Good morning, carl. Rates continue to be a bigger story outside of the u. S. To some extent. Now do keep in mind, the yield curve continues to steepen maturities down a couple of basis points long end unchanged looking at one week chart of 10s, you can see we have been climbing, now it is a bit flat over the last couple of days, but we did close above 175 if you open the chart up to early july, you can see that 175 had some closes to Pay Attention to but the big level through this really is the 190 level. If you look at one week of bunds, you can see more aggressive from a percentage basis. Now hovering on the north side of minus 40, hovering around minus 39 basis points. That is the best closing level should it close under 40 since the 26th of july, well call it a couple and a half months and you can see on this july chart, last time we were at this level. And if we continue to monitor why rates are moving up more aggressively in europe, it is most likely has a lot to do with policies of the past and potential changes to the policies for the future under christine lagarde. There is a lot of work being done in the u. S. About negative Interest Rates, San Francisco study quoted in todays journal, but to the end of the day, like qe, i think the fed is protesting a bit too much, they could find all the research they want on negative rates, countries that have suffered through it and indeed suffering seems to be the operative word finally, brexit talk is it going to hatch before the 31st well, many believe so, the market sort of believes so look at one week of the pound versus the dollar. It is best level since midmay carl, jim, david, back to you. All right, were going to watch those headlines too coming out of brussels. If you did miss last nights addition of jeopardy, a moment that is worthy of your attention. Listen very closely to the clue. Tv morning shows for 400. The road in the title of cnbcs squawk on the street is this one, and they cover the day there from the opening bell. What is wall street yes it is cool to hear trebek same the name of our show. It sure is. Look i got thrown by road. What i love being part of the firment. It is good good thing. They are they always theyre fans they watch. How can they not be look at what were throwing at people were triple threat people, song, right, we can dance, we can act, there isnt anything we cant do were Fred Astaire Fred Astaire had to do everything he did very thoughtful person. What year was your appearance thats a great question got to be at least six years ago now. No, more than that. Maybe more . Oh, my god. There is jabbar. Taller than dana. Thats not necessarily clear. What knocked you out . What did you get wrong one thing wrong. What . But i won it was the hebrew word for day you missed a hebrewword yeah it was embarrassing that really is. I got Everything Else right. Good. Thats the way to play it. Yeah, im looking forward to coming back one day. Love you. Yeah. Yeah. Nice when we come back, the interview of the day, marc benioff with us here on set of sales for. Well talk ipos to capitalism to china. Dow down 28 to start this wednesday. Dont go away. Tell him were flexible. Dont worry. My dutch is ok. Just ok . Tell him we need this merger. Its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. But in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Later this morning on squawk under armour ceo kevin plank and Sir Richard Branson as they unveil some new material regarding intergalactic travel dow is down 33 well get with stop trading in a minute time for jim at stop trading. Bank of america, i wonder if this is the tech company very close by the way, bank of america, with that sales force, but were going to have marc benioff on dont read the book now. And one of the reasons i really like this is its a Warren Buffett story. He has chosen to buy this one more than the others he has bought so much and the company has bought so much, he has to petition to buy over 10 . Its his endorsement is really paramount on why i think the stock goes to 35. What do you think buffett sees i think he sees a company driven by technology that is winning over not just millennials but all ages because there are too many people. I think he sees this i know that this is, by the way, the 11 i know that i tried to get the super 11 they were out of it. But there is just one store. Theyre not doing that well. But i do think that the excellence with which theyre posting Technology Means a great deal it can save a lot of money and the consumer likes it. Berkshire owns a lot of apple too. Its only up 2. 7 . It has not been a good year. Years of underperformance for the single greatest investor why did you bring that up end on a negative note. Im just here to deliver the message. Tim cook, no innovation whatsoever thats why i took a picture of my wife and it was crystal keer and clear. Theres no innovation whatsoever and its too bad. There has been work done on apple and what comes next. If you look at the chart, its kind of flattened out over the last couple years. Id like to see what patents were awarded at huawei a stall on patents innovation, theres so much innovation happening at apple. Theres an hour and a half wait at the 24hour store, at least there was last night i want to qualify that other than that the stock is the greatest performer of our life. You didnt do a stop trading. Did we miss it hes going to stick around. After the close we may get to cbs viacom proxy. Im not going anywhere. Were bumping into our own show. Jim is not going anywhere because sales forces marc benioff is going to be here at post nine in a moment. Did you know that americans that bought gold in 2005 quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. Money reserve announces the Immediate Release of u. S. Governmentissued solid gold coins for the incredible price on your screen. These Gold American eagles are official gold coins of the United States and are being sold for the price on your screen. Pick up the phone and call americas gold authority, u. S. Money reserve. With nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u. S. Money reserve is one of the most dependable gold distributors in america. [narrator] today the u. S. Money reserve is releasing official Gold American eagle coins at cost for the incredible price on your screen. These governmentissued gold coins are official u. S. Legal tender made from solid gold mined here in america and fully backed by the United States government for their gold weight, purity, and content. Do not delay, call now to purchase your Gold American eagles for the amazing price on your screen. Gold is now on sale at prices unseen in years and this year could be one of the greatest goldbuying opportunities of all time call now while vault inventory remains. As one of the largest u. S. Gold coin distributors in the country, the u. S. Money reserve has proudly served hundreds of thousands of clients worldwide. Dont wait another minute, call now to purchase your American Eagle coins at cost for the amazing price on your screen. Good wednesday morning welcome back to squawk on the street. Im carl with jim cramer and david. Jim is going to stay here as we talk to marc benioff in a few moments. Dow close to session lows. Dow is down 58 as weve gotten a ton of data and are about to get more. Lets get to our road map retail seeing its biggest sales decline in seven months. Could be a sign that consumer economy is cracking. Billionaires duty what allibaba thinks of the responsibility for the wealthy. In just a few moments, sales force chairman and coceo marc benioff will join us here at post nine. Hes got a new book out. Well talk about the changing face of capitalism and maybe about sales force itself. Lets get inventories with rick our august read on business inventories is a goose egg unchanged. We are expecting a number up around. 2 and last months revised downward to only up. 3 just to give you context, this is the second unchanged of the year the first was in march to find a negative number which is infrequent in this series, you have to go back to april of 2017 it really isnt a terrific number carl, back to you. All right, rick were going to go to diana. Thats right, carl. Builder sentiment jumped three points on the National Association of home builder index. Thats the highest since january of 2018 and beat expectations. Anything above 50 is positive. Builders are pointing to lower Mortgage Rates the average rate on the 30year fix is now well over a full percentage point lower than it was a year ago the tight supply of exiting homes for sale is also helping builders the indexs three component Sales Conditions rose, sales expectations jumped 6 points and buyer traffic rose 4 points to 54 builder confidence rose in all regions and is now highest in the west and the south back to you guys as she said, as lenar hits a 1. 5 year high. Theres two economies brian made this point again and again. Theres the part of the economy, lets just say its even up, maybe as much of a third that is industrial which certainly jives with what we heard, but ive got to tell you, the consumer is much, much stronger. Kind of confirms that versus ri ricks which confirms the other side housing is just the beginning of retail once you buy a house, you go to raw stores you do go to tjx you go to home depot. Go to sherman williams. Rgc goes to 625. I think lowes is having a terrific quarter everything that goes into a house, into building just a wardrobe, dont forget dollar tree and dollar general. You dont go to sears. You dont have to workday either, obviously. Workday suffering today people havent been going to sears for a long time which is why we dont talk about sears. When i was in mexico, they were going to sears like it was going out of style its incredible. Sears, mexico. I like liverpool but i do think this confirmatory of what weve been saying over and over, we have an economy that is serviced the Service Economy is not being hurt by china. The manufacturing economy is being hurt by china. Anything that is involved, i still think the president s all these things in order to be able to make it so we have more time to get out of china that a dont do an ag buy the president will feel completely betrayed this is what happened in argentina. Hes going to look foolish he doesnt like to look foolish. No. And he never admits that the 50 billion target is a big one for the Agricultural Products our high was 29 billion in a given year. They need corn. They need pigs pigs are 75 a pig. Theyre dealing with a lot of african swine problems in china for their own pig population totally agree. Meantime youve got politics to watch as well the president ial candidates on the democratic side taking the stage in their fourth debate kayla is live once again from westerville, ohio with some of the highlights good morning, carl p it was the largest debate stage in history candidates were treating her as a clear front runner putting warren on the defensive as her plans repeatedly came under attack here is one exchange on the idea that both senator warren and senator Bernie Sanders have espoused that accumulated wealth should be taxed. My question is not why do bernie and i support a wealth tax. Its why is it does everyone else on this stage think it is more important to pro fetect billionaires than it is to invest in an entire generation of americans. I want to give a reality check here to elizabeth, because no one on this stage wants to protect billionaires, not even the billionaire wants to protect billionaires we just have different approaches senator Amy Klobuchar there among moderates arguing that the existing tax code should be reformed instead both she and south bend mayor pete bjugstad received high marks for several viral moments where they challenged the partys current policy direction. They each got about 13 minutes of screen time Vice President joe biden got about 17 minutes senator warren got 23 minutes. That was the most of any candidate, but that was partly because she was tasked with responding to so much criticism. It was on a wide variety of topics from withdrawing troops from the middle east, breaking up Big Tech Companies which andrew yang said that wont work and a host of other issues, including whether she would suspend President Trumps twitter account asked by senator kamala harris. She didnt say yes, she didnt say no but she said she preferred regulation instead there was a remarkable moment where Vice President biden called by his old title basically just attacked everybody with just the notion of how much it would cost to go single paider. It would bankrupt our country. I know this is something that many people Many Democrats want how out of season is bidens talk about not going for single payer . Because he really wanted to draw the line to distinguish himself from everybody else. Reporter well, hes done that in debates previously, jim. I think what was interesting this time was that biden had company. He has previously sought to double down on the Affordable Care act biden is the closest to that law and he believes that it works and that the public option needs to be expanded this time around he had buttigieg, he had klobuchar, he had orourke and a handful of others that were backing him on this more moderate approach really creating this divide in the party of those who believe that you should have that structural big change to the way that the entire economy functions and those saying you just need to reinforce the existing infrastructure and make it better. Its going to cost a little bit more, but were not going to be dishonest with voters about where that money is going to come from. Kayla, carl mentioned earlier i think china only came up four times in the conversation last night. I just wanted to come to you on something youve covered more closely than the debates which is china trade a lot of talk this morning, the journal doing a piece on agricultural promises in terms of what theyre going to purchase anything to share with us in terms of expectation there is or how important that will be that they actually hit that 50 billion mark and can they . Reporter well, i think there are questions about exactly what the structure is, david, of that purchase even the president in the oval office says it will be up to 40, up to 50 billion. It seems like some of those details were still being worked out and the treasury secretary seemed to allude to that earlier this week as well. Theres a suggestion that the purchases would be over a two year time frame meaning that china could essentially stale back or scale up those purchases depending on how relations with the u. S. Are going certainly china is coming off of a win in washington with this deescalation they had been buying a lot of Agricultural Products last week in the lead up to that announcement perhaps theyre hitting the pause button well see what detail we can get there. Kay larks la, so much to get. Meantime, alibabas founder speaking at the forbes global ceo conference in singapore touching on a variety of subjects including the duty of being a billionaire. We have 1 billion. Thats not your money. Thats the societys trust they believe you can spend the money better than the others you have to spend money in a smart better way so i told bill and Warren Buffett i want to use the money to create more jobs. I want to use this money to do the things that is more than just giving the money. Answering some large questions which im sure well address with benioff in a few. He couldnt be more on point i think. You want to put food on the dinner table and you want to give health care and i think that jack ma is totally right in understanding the typical american who is about to go bankrupt because of health care. Anyone whos tried to find a policy in areas where there used to be obamacare where people would write insurance, a lot of people who are not who cant get it because the companies arent writing anymore he has a great understanding of the weakness of the american system that is terrific listen, id love to you know, i had an opportunity to sit down with him through the years any number of times and hes always fascinating to listen to. No longer the chairman of alibaba. It was last month when he stepped down as the companys chairman hes really so 50ed jack, if youre out there anytime when we return, we also have someone else to hear from, chairman and coceo marc benioff. Were going to talk about his okndo nyth tngerhi to discuss i would say on point oped this week, our next guest says the capitalism was, quote, dead. Wow. Theres been horrifying inequality because of capitalism that needs to be fix ped joining Us Sales Force chairman and coceo marc benioff who is out with a new book. By the way, which is sold out. This is a business book that is sold out thats a great tribute to you. Random house needs to start printing more copies i hope theyre listen. Theyre going to be listen figure we say capitalism is broken, capitalism dead. Last night i heard capitalist under attack as ive never heard it before. It made me think if its dead, there are two visions. Theres your vision, which is to resurrect it and make business debate platform and social change and theres another vision which is that the government has to step in because the billionaires have screwed it up so badly i think both are probably right, actually. But we do. We need a new capitalism we need a capitalism thats more fair, more exquitablquitable, me sustainable that values not just all shareholders, but also all stake da stakeholders it can be very exciting for everybody. I do worry that in the vacuum of what youre talking about, i heard last night about big tech having to be broken up simply because its got tremendous power. Not even that the power has been used unwisely, but where are you when it comes down to breaking up facebook, breaking up amazon, breaking up alphabet arent these Great American companies that hire a lot of people you know how i feel facebook has been like cigarettes its addicting and bad for you theyre after your kids. Thats not fair people can change, mark. Look at the political ads that are going on. Not a commitment to trust and truth. And now theyre on co mingling the data of all the acquisitions facebook probably should be broken up because theyre using these assets in a way to furthe manipulate people. There needs to be change it hasnt happened fast enough you can watch that great documentary on netflix, the great hack i dont know if you watched that, but it really lays out how thats happened. You know they just unplugged 50,000 partners because they were all doing the same thing. So i think change does need to come to some of these companies. Well, ive got to tell you that to hear you talk about it, basically just says its not the first time weve talked about it. No. That was january, 2018. This is an old narrative for me. Do you think that Amazon Web Services, 47 of the market is too powerful no, i dont, because youre dealing with amonopoly called microsoft. There is a Consent Decree against microsoft. You have many platforms that are out in the marketplace today were still battling very much, you know, the monopoly that is microsoft. Thats a major issue for all tech companies, the largest and the most Important Company in the Technology Industry for all players is to watch what microsoft is doing because of their traditional practices. There is still a Consent Decree out there on them. Youve been talking for some time about and thats the new capitalism, jim, which is that we have to value all stakeholders its yrnt a weve had a great return at share source 35 since i was first here, right there in 2004. If you bought our stock, thats a 3,500 return, but i had a great stake haaholder weve given 40,000 to nonprofits and ngos for free running on our service and were a net zero company, fully renewable by 2025. Thats our stakeholder return. We issue a stakeholder return. And i think thats something the s. E. C. Can do, by the way. They can put i mention that in my oped. They can put, you know, that into the regulations that companies should mention who their stakeholders are and what theyre doing for others, not just themselves. You anticipated my next question and actually answered it before i was able to finish it. Good. Now ill do the next one. Which is about the growing of esg. We hear about it youre talking about ste stakeholders and how you measure your progress. My question was going to be what are the metrics . How do you measure this given it is growing in importance we hear about it all the time now from real money, not just sort of, you know, a broad sense that theres interest in it, but people who want to put dollars behind it. Well, my peers certainly do and i talked to the largest ceos in the world yesterday i was in munich, germany, with the Largest Company in germany, with their ceo. They have a Major Program into place just as we do, just as many others do i was in london on monday. I see the same thing throughout europe its probably happening faster there. The United Nations Sustainable Development goals are the 17 core initiatives that are laid out by the u. N. Of how were trying to improve the state of the world. And companies should have to report how theyre doing against those goals. That just makes complete sense to me. If were not all in to improving the state of the world, what are we all into . Did you believe the business round table when they changed their statement, or do you think as some do that it was really more of just kind of talk to get on the right side of the politics of it the business round table has said exactly the same thing. The purpose of the corporation is to value stakeholders as important as shareholders. That the traditional Milton Freedman concept that is only about the shareholder, that the ceos only job is to maximize shareholder return is dead that capitalism is dead. But a new capitalism is emerging and you can see it through the largest and most Important Companies on the planet which is the business round table and the business council, the international ibc which is part of the World Economic forum all say the same thing, which is we need to value all stakeholders and all shareholders when i say stakeholders, what do i mean our employees, our customers, our partners but i am from San Francisco. We have a horrible homeless problem there. The homeless are a stake daholdr for me thats why i was fighting for proposition c, a tax on ourself. We have to deal with the homeless situation in situation. As the largest employer in San Francisco, im not focussed on that, if they arent one of my key stake daholders, what is if your orientation is just about making money, youre not going to hang out long as the ceo or founder of the company. If not, then what . Your board fires you your sales drop . What is the consequence of running afoul . You can see that in my industry which is for ceos who do not take this approach. They are really at risk and they can be extremely vulnerable especially during Economic Times that become turbulent. I gave that statement at techcrunch i had just come from our Public Schools that day we had just given 70 million to our Public Schools thats happened over seven years. Weve adopted 107 Public Schools. Ive adopted one personally. I was there. A i was at my Public School which is in San Francisco giving a speech not a speech to people like you or jim im giving a speech to kids. Im looking in their eyes and i said yeah, you know what these are my stakeholders. If these arent my stakeholders whor who is again, here i am in San Francisco. If im not thinking about the Public Schools in San Francisco, what am i doing wrong . I need to be thinking about the Public Schools, the homeless and i also need to be thinking about not just profit, but plan it i need to be thinking about the planet, what are my emissions. That is part of the new world. That gets back to davids question on what about the Sustainable Development goals in the u. N. That is the connectivity thats the map we can lay it out, then we can measure. If we can measure it, we can have impact. We all know that we understand how to do that. Jim i know has to finish, but theres shareholders listening to you who are probably going what are you talking about you seem to be abandons what i would want which is you focused on improving the profitability of this company. Are you worried you freak some of these people out and what do they say to you when they hear that if theyre not on board with your view this is how to improve the profitability of a company this is how to make a great company. This is how to have a company that customers want to do business with, that attracts employees, that develops partnerships, that integrates local communities, that saves the planet this is about having a great company. And look at our company. Look at our financial return since we went public right here in 2004. Look at how we rank against everyone else over the last same 15 year period im sure youll see were in the very top echelon ill tell you how we did it. We valued stakeholders as much as shareholders. For ceos who only focus on shareholders, let them be warned they will not be ceos very long. Okay. Lets switch bits here, mark i know that thats been a great principle of yours many in the valley simply despise the president of the United States. They would rather not be in the same room with him others feel its a hobsons choice and they have to try to work together. Where are you in the continuum jim, i have been through now ive been ceo of sales force 21 years i have been through a lot of president s and a lot of administrations. Okay these administrations keep changing my values do not change. The principles of sales force do not change our fundamental Value Proposition to our customers, building a customer 360, helping them to know their customers better and connect with them in a whole new way does not change. So thats what i do every day. I focus on my customers. I focus on creating a great company. And where i can help the Administration Even in this administration, helping with Work Force Development i just signed the workers pledge i think we have to be reskilling workers. We have to be repairing them for the Fourth Industrial Revolution thats a critical part of whats going on today our industry has been very successful witness the ai witness the robots witness also the new biotechnology. Also witness that theres a fifth Industrial Revolution coming which is the youth of the world are coming to take that technology and to truly improve the state of the world let me parse marc benioff. For the longest time you talked about how business is the best force of change. Now youve changed to its a platform like your own product subtle difference . Meaningful difference . Because to me it is. To me what youre saying is hey, listen, its out there, go paint the canvas before you wanted to paints the canvas this is why i wrote the book trail blazer, jim. This is why i wrote the book that were launching today yes, sales force is a platform, the greatest platform for change, but so is david. So is carl, and jim, so are you. So is this network are we not all platforms for change what our work does matters what we do with our lives matters. What we do moment to moment matters. We need to be con shoscious of t thats the point we are all platforms for change. And yes, sales force is, but business really is the greatest platform for change and thats why i wrote the book what else matter system that we have to go because mark is going to be interviewed by me for mad money and ive actually of course ripped out a lot of the pages because there are many fine points that must be discussed. Well have to get you another book. Absolutely. My bosh random house needs to start printing more books. Thank you, marc benioff, chairman and coceo. Thank you for having me i appreciate it. Absolutely. Well take a break as jim and mark get ready to do more as youll see tonight on mad money. Jim, thanks. Get a check on the markets dow is down 44 back in a moment good morning, everyone im sue herera heres your cnbc news update turkey a minister telling the Turkish Parliament that he would convey to u. S. Officials that no sanctions are threats are acceptable and will not affect turkeys resolve in its military action in syria. He was speaking ahead of visits by Vice President pence and secretary of state pompeo who are trying to reach a ceasefire deal shouting furiously pro democracy lawmakers foiled a second attempt by hong kongs leader to deliver her annual policy speech. Chief executive carrie lamb walked out twice at least two were killed when a car bomb detonated in eastern afghanistan. 26 people including 20 children were injured in that attack. The children were jinside a nearby mosque. Back here at home, the Washington Nationals are moving on to the world series after beating the st. Louis cardinals 74 to sweep their National League championship series and the last time a world series was played in washington was back in 1933 you are up to date thats the news update carl, i will send it back downtown to. Sue, thank you very much. Time for our etf spotlight taking a look at chips, the smh moving a bit lower after coming off that record high in yesterdays rally. Sector on pace for its best year since 09 gaining more than 40 . A number of top holdings are under pressure including broad cam regarding the eu, intel and Texas Instruments. Nvidia and qualcomm are bucking the down trend. When we come back, is it time to buy the banks . Why one investor thinks yes when squawk on the street returns the imf downgrading its outlook for the worlds economy citing the ongoing trade war with china meantime President Trump saying just now the china trade deal probably wont be signed until he meets chinas leader xi in chile. So where do you put your money if youre an investor . Joining us now, the oakmark funds Portfolio Energy bill nygren always good to have you. The banks reported over the last couple of days and im told that you actually may think theres an opportunity there in terms of the value. I think theres a big disconnect in the market right now, david, between where Companies Mike electric utilities are being valued Something Like 20 times earnings and a typical bank that may be eight or nine times earnings through a long period of history, those two industries tend to trade at about the same pe multiple. The banks are growing the top line theyre improving efficiency net income is growing faster than revenues. Most of them are repurchasing Something Like 10 of their shares additionally pay a dividend yield thats greater than what you can get in the fixed income Market Investors instead are enamored by the electric utilities i think taking massive valuation risk in return for not being exposed to much concern about earnings estimates getting cut whenever there are trade war concerns or recession fears coming up. The tradeoff of long term risk and we have always wanted a valuation tail wind behind us and are willing to take on the short term risk to obtain that. Right the Interest Rate picture and forecast wouldnt necessarily seem particularly good right now if youre a bank that interest margin which is always a focus, bill, would seem to be potentially pressured. Well, you know, the banks basically have a deal with their customers that they dont give them as much Interest Income as they can around on a Treasury Bill that Business Model gets challenged if we go down to a zero Interest Rate environment at the levels were at now, some of the companies that we own like capital one and allied financial, theyre basically internet banks that dont have the large Branch Structure costs that the larger banks have theyre offering competitive Interest Rates today theyre still putting their money to work at on high return loans we think the environment is actually a competitive plus for them for the larger banks, like a bank america, if we went to a zero Interest Rate environment, theyd have to change their Business Model theyre providing valuable services to their customers and theyre not going to do that for free aisive seen commentary if t 10year yield crosses 18 maybe you do see a larger breakdown in the names weve seen that have outperformed so long does that make sense and where do you think the line is on the yield . I dont have a good idea of where that line is exactly, but i was watching earlier this morning when one of my heroes Lee Cooperman was on and he was talking about how he thinks a better level for longterm bonds today more representative of whats going on in the economy would be at the 4 level the stock markets reasonably valued even if that does happen to bonds and i would agree with that any move toward that 4 level i think would be a big negative for the fixed income substitute or safety stocks bill, i know beyond banks youve been a fan in the past, at least, of names such as apple, i believe where else are you seeing value right now . It does appear that value is more in vogue again as opposed to paying those high multiples for Growth Stocks. I think weve had four days in a row of outperformance im not going to call that a victory yet. Its been a long slog for Value Investors because as you know, the lower Interest Rates get, the more valuable the future is. At the extreme, if discount rates are zero, the future is worth infinity thats way better for Growth Stocks than it is for value. But one of the areas where we found value is trying to take advantage of investors overreaction to Political Risk in the last quarter, one of the names we added in oakmark was humana very successful of medicaid provider insurance one of the most popular products for customers, it saves the government money and they can price it at a level they make money. Its win, win, win and sustainable earnings best. Stock grows at twice the market. Sells at less than a market multiple its down about a third in the last year because of concerns of political environment, potential medicare for all and abolishing private Health Insurance but i think one of the things investors dont do very well is think about all the combined probabilities of what has to happen does Elizabeth Warren win, does she not pivot to the center, does she then beat donald trump, do the democrats keep the house, do they flip the senate, are they united enough to pass medicare for all when most americans are happy with their health care . And then even if they do all that, do they abolish a program that saves the government money and the customers love it . We dont think thats a one in three chance we think by the time you combine all those things its a low single digit probability and we get a chance to take advantage of investors overreacting to fear that doesnt mean youre not going to have a lot of gut checks going interest iowa and New Hampshire and the series of more primary debates early next year absolutely true, but as longterm value managers who have been doing this our whole careers, were used to those gut checks being a value manager means standing in front of shortterm news flow and trying to invest in the way that you think makes the most sense for a 5 to 7 year time frame that rarely puts you in a comfortable position relative to short term news. Yeah. Although i know wore did on humana, very much of what you said may end up being true and it certainly may not be a point of which humana is forced out of business, but they could still be forced into more difficult territory, couldnt they, bill if in fact you do get a warren presidency or a democrat and you keep at least control of the house . Certainly theres always the possibility that anybody dealing with the government, whether its in the health care space, defense space, that they could be put in a more difficult position what gives us comfort here is how much money the government saves with each person who signs up for medicare advantage. And the fact that the government benefits from humana being a successful business, for us its part of Sustainable Investing is trying to invest in companies where its not just the company that wins, but the customers win as well and in this case the government whos being somewhat displaced by humana also wins because humana can provide the service cheaper. One last thing, bill. Just broadly on the indices, bears keep bringing up narrowing breadth, pitiful volume and flows out of equities that you have to go back a decade to see Something Like that. Do you believe retail is going to act as a drag if in fact the sheer levels do go up . You mean Retail Investors act as a drag . Yeah. Just given the stance theyve taken, given flows i mean, unfortunately the history of Retail Investors is that they tend to be going the wrong direction and looking back thinking what do i wish i hadnt owned over the past year and putting that money into what they wish they had owned so i would view the flowing out of equity, if anything, as more of a contrary indicator and a, you know, strong suggestion that we arent seeing the kind of excitement levels that are typical of bull market peaks we dont think the valuations are typical of bull market peaks. We dont think the investor excitement is typical of bull market peaks and certainly alternative investments such as the fixed income market arent offering anything thats at all competitive with equity returns. So were pretty happy about where were at right maybe youll get more than four days of outperformance of value. Always appreciate your coming on thanks for joining us. Thanks and i hope youre right. Still to come this morning, dont miss a big interview with sir Richard Brandon is under armours kevin plank in the meantime, some of those headlines from the president regarding the papering, socalled papering of the trade deal, phase one, has lted e ifth market dow is down 35 now in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. [spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu netflix is about to report earnings and two traders say this could be the moment of truth. Find out me oron tradingnation. Cnbc. Com getting some breaking news regarding the fed and charles evans. Well get to Steve Leishman for that. Carl, thanks. Charles evans, chicago fed president who is a voter this year is forecasting no more rate cut this is year, but hes keeping an open mind to the possibility that additional rate cuts will be needed. That said, hes said Interest Rate policies close to the right place and the economy is generally in good shape. But a big sort of section in that regard, he does endorsing the Federal Reserve acting aggressively and does support cutting rates if risks increase and he says the risks out there right now require diligent attention. The october fed fund futures have an 85 probability of a rate cut built in. But looking at december, theyve kind of dialed that out and now theyre looking for another rate cut, say, by march there are some people, i dont think evans is at a point he would descent in the fed decides to cut rates, but hes r twith e forecast of those who say no more rate cut this is year. Really quick, were you thrown by the drop in retail sales . You know, i kind of expected it, actually i think there was a big buildup in august and im kind of siding with some of the folks who think maybe there was a an increase in consumer in august consumer sales because of the tariffs. Maybe people front ran those tariffs and decided to do some buying then before the tariffs took effect. Im going to have to look at october, if theres any real consumer weakness. This may be a bounce down from the august bounce up weve been talking for a while about whether the consumer really knows the trade war is going on. I know. I questioned some of the its a good question. Rosenberg in particular about the people pulling back. I think most people dont have any idea whats going on, frankly. Well, you know, that said, we do poll about tariffs and other people do poll and we find awareness reasonably high. I think that the people who say they dont know about the tariffs policies or the trade war are in the 10 to 20 numbers, but those arent especially high dont knows or unshoor wh unsure when it comes to the trade war. I will say it is unusual to take that action ahead in august, but rational expectations would say if you know prices are going up, you would buy now. Yeah. Youre right thats interesting keep me up on those poll numbers. Thank you, steve lets get to the cme group now and Rick Santelli who joins us with the santelli change. Thanks, david i like to welcome my fx expert, mark chandler. Mark, welcome. Lets get right into it. Steve leishman with breaking news about the fed, maybe one of the most dubbish not looking so much more aggressively on the easing policy. While the dollar over the last couple weeks has dropped over a quarter of a cent. Is there a connection here it certainly seems that most of the bad global news the last year has been associated with a strong dollar. Is a weak dollar making availability of liquidity and dollar readily available to investors . I think that neither strong nor weak dollar is good for the u. S. It depends where we are in the Business Cycle when the economy is strong we want a stronger dollar i think the surs econou. S. Econ slowing down we prefer a is that because of multi nationals . Whats the reasoning when we start to slow down a weaker dollar is better and aim your answer towards much of the impact of dollar funding that was so tight not too long ago. So i think the reason we want a weak dollar when the economy is weakening is consistent with Monetary Policy. The Central Banks was tightening last year and so we wanted a stronger dollar. Otherwise, it takes away it undermines what the fed is doing. I dont think that the dollar in the Foreign Exchange market has much to do with the tightness in the market in the u. S. I think thats a plumbing issue while the dollar is really more of a Monetary Policy discussion. Well, it certainly certainlyo me that the fed when they talk about this is not qe is really addressing exactly what were talking about. Isnt it in large part the availability of dollars . Dollars in the form of reserves. Were talking about a different problem here thats the shortage of dollars theres a shortage of people who want to participate. Large banks want to participate for variation reasons having to do with regulations and the amount of demand to do with the u. S. Treasury auctions so there are separate dollar funding issues from the Dollar Foreign Exchange value but i agree that both of them are challenges for policy makers right now. Okay. Now, when i look up, theres a lot more differentiation going on in the Foreign Exchange markets. Sure. The yen is basically a fivemonth low against the dollar the pound is at a fivemonth high, the euro at a onemonth high is this starting to free up and get back to a more normal Exchange Market in your opinion . These are still early days. Im in the camp that says, rick, the dollar has been part of a tenyear bull market until we get positive, constructive news from europe and japan, the dollar will weaken a little bit based on u. S. Macro fundamentals. You know, if the big story for 2019 is that this is the year of the strong consumer, your final thoughts on the notion, why would you want less purchasing power for the people that are doing the heavy lifting in the u. S. Economy right now . Yeah, no, you raise a good point. The problem here is that most americans, most of the things that we buy are services, not goods. It just so happens that we have outsourced the production of consumer goods abroad. I dont see that the u. S. Consumer has really weakened in the face of a strong dollar, despite the softness that we saw in this mornings u. S. Sales number the u. S. Consumer with a strong dollar has done very well. Excellent mark chandler, thank you for your thoughts. Well have you back after the next fed meeting to see how policy is affected david, back to you. Okay, thank you, Rick Santelli now time to sending it over to jon fortt to get a look at whats coming up. Weve got two former cisco executives who have a startup coming out that they say could upend the cloud market llien to them make their case and ask some questions coming up on squawk alley. Rah t how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. 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Were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. Welcome back to squawk on the street. Im dominic chu. Stocks are slightly lower but we are at the highs of the session. The s p 500 is pretty much flat. Just around half the sectors give or take in positive territory. One of the notable outperformers is that Consumer Discretionary sector, the second best performer so far today slightly higher on the day despite septembers unexpected decline in retail sales which fell for the first time in seven months regardless, those retailers like capri holdings, advanced auto parts, macys, all among the names leading that sector higher that sector the fourth best performing sector so far in 2019 its up about 2 to 3 above the overall s p 500. Now, i will send it back downtown to you guys, carl, at the new york stock exchange. All right, dom, thank you very much. That financials component obviously adding to yesterdays strength is one thing thats helping lift overall sentiment as dom said, the dow down only 17 continuing to look for headlines regarding progress in brexit negotiations in brussels and of course the president making some comments in the oval not too long ago when we come back, dont miss a first on cnbc interview with under armours kevin plank and Sir Richard Branson when squawk alley starts in three minutes ah come on lets hide in the attic. No. In the basement. Why cant we just get in the running car . Are you crazy . Lets hide behind the chainsaws. Smart. Yeah. Ok. If youre in a horror movie, you make poor decisions. Its what you do. This was a good idea. Shhhh. Im being quiet. Youre breathing on me if you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Lets go to the cemetery im not really a, i thought wall street guy. Ns. Whats the hesitation . 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