Transcripts For CNBC Squawk Box 20240713

Economists do most dont showing you where things are standing now three and a half hours before the opening bell. Looking at a dow that would open just about 11 points higher and nasdaq looks like it would open down going to china quick but showing you treasury yields. The 10year note at 1. 766. Joe mentioned, breaking overnight, the operatest rate of china slowing to the slowest pace in 30 years that may explain some is of what we are seeing here eunice un is now in beijing where tim cook is. Thats right. First getting to the numbers i think you can compare that policymakers will unveil more soon Third Quarter numbers missed coming in at 6 . That is because of the demand overseas and at home the september numbers rebounded. Most said those are something you usually see. They are more concerned about sluggish demand weighing on the out look of the economy. The more optimistic bureau saying china faced a big downward pressure. Planning to front load some local government bonds those will move up from 2020 to 2019 that will help keep chinas economy steady in the Fourth Quarter and beyond tim cook, yes, he is in town actually featured on state tv. He was attending an event along with the Vice President. Cook is a board member at that university often does come to china for the event. Separately, the market regulator posted that the chief of the market regulator ended up meeting with tim cook. According to the regulator, the two spoke about expanding investment as well as the importance of protecting Consumer Rights. Only about a week ago that apple was criticized here for its seeming support for an app which hong kong protesters were using to track the police. That app has been pulled there is a lot of controversy around this decision okay. Eunice thank you for that i know what apple did relative to that app. Apple and tim have not been anymore outspoken on this issue. I imagine theyve been very quiet in the way many nba players have been quiet. Here. Cook has not said anything wecalled apple they declined to comment on his visit at all on social media, there hasnt been a whole lot about his visit. This is different from the latest from the nba. It was pretty interesting. Youll probably talk about it later, adam silver was quite vocal saying the Chinese Government ended up pressuring them to try to get darryl morey fired. In fact firing back at that today. Unusual saying they in fact did not make such a demand silver wasnt very truthful. I was alerted on a groundbreaking twitter site at yoon tv. Only yoon get it adam silver could have maybe he paraphrased what they were saying or summarized what they were saying but you are telling me there is nothing to what hes saying that the chinese came out, Foreign Ministry said in no way did they tell them to fire darryl morey difficult to say. He hasnt said which officials he spoke to. Foreign Ministry Said they spoke to Relevant Department there are a lot of layers. It is not clear who he spoke to. It is difficult to know. Maybe lebron told them to fire him related to that, a lot of ceos you talk to especially u. S. Ceos say they get messages with air quotes from the Chinese Government it is not always direct. What do you think that means it is often indirect. Yeah, one of the big complaints among American Companies is there might be some reform but there is another agency that does something or says something as a warning if they dont want to expand in a different area, they will warn them theyll find different ways about being warns without being outright warned by the government it is not so direct. That is a big complaint a lot have thank you your thoughts on how this changes the game the game or the gdp data . I sort of feel bad for these players that the press is giving them a gotcha. They are there to play basketball stick with the gdp. Basketball is more interesting. On the gdp side. The trend is lower no question about that the trend is lower we called it low gear in the past, you said it might be 2 . The thing about china. Two problems one, theyve got structural issues second, theyve got very bad demographics because of the one child policy theyve overinflated and had exportled growth. To me, china has some real problems i dont see that turning in any way higher that could be a real phase one, two and three right . Not only that it could push them harder. There is this common view that china can wait out the administration the democrats have been silent it seems to be equally as tough. It is more complex than people believe. You any if democrats were to win in the white house and more that they would actually put more tariffs on the country . I remind people that 25 across the board is chuck schumer. 100 . The dynamics have changed between biden and warren i would say shes tripling joe biden now. That is totally different dynamic for china. You look at some of the stuff he said about china and the stuff going on he might have been their best friend i dont know if you believe all that warren comes out with either i dont see u. S. china trade policy changing in a way where it is going to go back to premarch 18. I dont see us going back to that old platform. Are we Strong Enough to be less global . A couple of things, exports to the share are relatively low. Number one, number two, when people look at the tariffs, it is a huge mistake. If you look at the businesstobusiness side of the economy. Total output is close to 40 trillion it is literally a pittance i think people have grossly overguessed on that. We are going to move on continuing with some trade news. New u. S. Tariffs kick in on 7. 5 billion worth of goods from the eu products such as cheese and whiskey. Facing about 25 the Trump Administration stating earlier after the World Trade Organization gave it permission to do so this at t stuff is interesting well have a little arm chair quarterbacking at t shares go hire after they talk with Elliott Management about changes. We reported last month on the show that elliott disclosed a stake. Sources say elliott is pushing for Strategic Review of assets this includes direct tv. On october 9, at t agreed to sell nearly 2 billion worth of assets in the caribbean. At t delaying earnings for next year while it continues talks on that report. Sources say a deal could be reached by the end of october. The question is, who will show up on the board. Is this one seat or two seats . If you do get one or two people on the board, does that really mean that will be a true effort to then spin off and set and go to the real review of these or does that buy at t more time with the current strategy. By the way, at t will tell you their current strategy compared to the other that doesnt look nearly as positive thats a positive at this point. That was in the low 30s. That yield is still pretty rich. If you go back further, it will affect verizon and others. They are trying to pay down debt and digest all those acquisitions that looks like it is going on pretty well. How much do investors expect will happen as a result. You can see the spike there in early august to september when p that really moved. We will endender to get randall on 5. 4 even at these levels, you got nothing in your world. No. All high yields. You think it is not great. Negative i hope the u. S. Doesnt go negative 5 is pretty meaty you actually made money in principal. Coming up, ceo of snap on here to talk about the tool business, impact of the trade war and his companys report a look the the winners and losers specifically in the dow here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Wisconsin based tool maker snapon topped expectations. Company blaming unfavorable currency conditions. Welcome to nick, their ceo who just returned from china currency has gotten weaker people talk about tariff and currency we have to manage over that. The pound and the euro and the sec and the canadian dollar. Currently hit us for 6 cents in the quarter. Cars are getting more complex. You have to communicate to technicians to wield them effectively. We have to train them. So vesting in training to communicate the power of the product. Sales were interesting tale of two areas. U. S. Up okay europe, down for our business, it seems like a tale of two cities uk, germany, nordic countries down any effect of the gm strike not for us. We sell down treatment to the technicians. I think that may have had an effect on some of the indices. Part of the concessions labor wanted was a guarantee that as cars become simpler if they do go electric that you wont need nearly as many people. Why wouldnt snapon look like a completely different company. Every time the cars change, we have to sell people a new set of tools a lot of what needs repair today is electronic, not mechanic. Do you hire people to write code no. Youve got to recalibrate it you change a battery, you have to reprogram the car the motor, you have to reprogram things there is a lot of technician time forthis the laptop for cars we are selling that analyze and guide them through this. The internal come busson engine becomes less prevalent. If you look at demand, electronic cars arent as much demand you dont sound very woke on this. If the president said, we are going to electronic cars in five years and completely in ten years, i would kiss him. You need a whole change over it is not going to happen tomorrow i dont think it creates that much of a threat no threat. Wed be happy. For near term, if it starts to go into the marketplace, well have the engines, electric and hybrids forever. When the hybrids come on, you need a special set of tools in there. They need insulating tools. Are you paying people more . Is. We pay people more, more since 2009 is there pressure now a little. Snapon, is a great place to work who wouldnt want to work in a place where people put a wrench in the hands of their new born because they believe the first thing a child touches will impact their life forever. The working men and women of america think snapon if you need to hire someone, can you find them. We can find them. We are in wisconsin. It is a fairly good target rich environment. We are sprnd spending time we have an attraction for people with snapon who will win in wisconsin they are trump people in august, i was with them deplorable. One of the reason is. These people are woke. They are woke to the woke they realize and this happened in the last election. Egging on im curious they became aware, the same things dismissive, demeaning things about working men and women was one of the last forms of bigotry in america but straight bigotry, they were cool with well, okay. Look you go through the bar i ride through a bar in russell, wisconsin ever day you go in that bar and hear a lot of things. You think those are going to happen, i dont think so i will say his focus on american jobs as the primary goal ads opposed to sacrificesing interest i believe that is true. I would like to see whoever the president is to focus on jobs. Often times especially in the democratic party, unfortunately, there is so much focus, that it makes it hard. I think democrats are very focused on jobs. My guys would say this. They are looking for somebody talking about how to expand the pie. When i hear that, you say, im not going to get any of that pie. Economic pie my favorite is ras berry lemon i buy into that. I do feel better now thank you, nick sort of. Coming up, delayed again. Saudi aramco, hitting the brakes on their ipo you read that from the prompt ever well tell you why and later Mark Zuckerberg is fighting back against demands that they fact check political ads. We are back in just a moment but were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Theres one thing you can be sure of. Theyre changing by the nanosecond. 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Some Fund Managers had been frustrated by clarity disclosure and transparency has always been the issue. Taking place on the local exchange do they need . They need our dough . They are trying to credentialize the company and capture valuation of at least 1. 5 trillion hoping on the end of the year, they can come to new york or london or elsewhere to raise the money probably was not affected by wework is that what is happening here i would think so. People have gotten more skiddish, i think. People have been skiddish because of so many embedded issues still got to raise money and how free and easy the money is i can do that in regular markets. You buy an ipo so if you price it for the guys getting in, you dont start with that loss coming up, get ready for the trading day ahead. A look at what could impact your money. Talking market volatily and more from the white house first a look at todays winners and losers that was wonderful. Great that was good. Not so bad. It could have been better it was bad. Terrible. Boo through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Pacifica ted goin oneighbor yes. Takin it off road Station Wagon . You know its an suv i know for fact your suv does not suck. Why is that . It aint got that vacuum in the back we got to go. Vacuum in the back, hallelujah welcome back. You are watching squawk box. Live from the Nasdaq Marketsite in times square. Good morning. Welcome back u. S. Equity futures after we got a little bit of a i dont know how well describe that dow looks like it would open up three points higher. Lets tell you who is going on today. A lot wael hear. Cocacola earnings will be out at 7 00 a. M. American express at 7 30 and some planned events from dallas, kansas city, minneapolis fed president. And the vice chair will be speaking as well people will be watching and waiting. Especially some of the things steve leaseman has been reported a hold on any kind of action former bond king, bill gross will join the gang today never holding back at 2 15 eastern time set your dvrs and mark your calendar coming up, well get you ready for the market open and reter dont miss our guest host he on squawk box on cnbc 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. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Weather it is trade or brexit or more uncertain geopolitical environment, the overall nature of global growth, still okay still solid. On some of these issues, if we got a trade deal and if we did make progress on brexit here, that could swing it back quickly. No question when i talk to ceos, they are a little more concerned. That was goldman sach ceo david solomon. Joining us now drew mattis, key Market Strategist at meet life and david bonson, founder and ceo of the bonson group. Showing in the third and Fourth Quarter huge gains almost 31 at one pointer. 17 . End of 2018, we flat lined for next year, you are looking at 9 9. 1, 14 earnings per share. Are you saying this is bullish or not im saying for next year, if it doesnt happen, bulls will need a new thesis that requires you to believe i believe this and thought it was bullish. Are you saying it sets up the market for disappointment . What would make them come back is if you dont get a trade war done i am bullish in a sense that there are pockets of value there. The chart we dont have but we are talking about shows that markets discount in advance. Can you lower this guys chair, please. You are talking down to me like look at this all i can say, yes, sir. No, sir. Come on, mac. How is that . I feel right sized. You want all the guests to be lower. I thought we were going to grow the pie we are talking about earnings acceleration and hes shrinking me in the share. Bottle line answer is that the market has priced in a lot of very good news that will not likely get better. It could be worse. Really quick, what about positioning . I hear what you you are saying investors are completely under weighted stocks. Overflows have gone into bonds there seems to be a lot of bad news priced in i think there is a sentiment issue. People are still afraid of a shoe dropping. Which shoe . The first shoe or another dropped. It gave people an excuse we have seen it in the c suite with businesses holding back also with multiples. Youve never seen this delta i dont really like that break down we Want Companies that are growing, that are out of value to us, the growers are were you can pick a spot. How is the world looking to you . The consumer looks great and so the consumer lacks great. We are looking at brexit. Doesnt even have to be a good resolution you cant price in a lot of these risks now. As long as we get resolution, that will be a positive. The u. S. Economy is not going anywhere but somewhere good. What do you think about rates . My view is that rates should be moving higher by any definition, they probably should probably shouldnt be cutting rates in my opinion. Swr. We are cutting rates. Im not sure if that makes anyone else nervous. The lower rate isnt helping, it is hurting keeping companies in business that shouldnt be in business. Keeping productivity and wages lower. Low Interest Rates are negative that makes you believe you need to lower rates further thats how you get into that situation and where the your zone used to be you want people to think, i dont need to be worried you dont see that wage increase it sounds like you were going back to the days when we were worried about inflation. I wouldnt be worried about inflation. Everyone else thinks there is no inflation. If you talk to people, they are like, inflation is dead. Inflation is 20 basis points below the feds target. The federal reserve, they also werent targeting having 2 to begin with. I agree, it isnt the inflation but the malinvestment. Weve got 10 years with qe, infinity we are still 20 basis points below. The qe infinity and negative enough Interest Rates. People thought based that ond the result are on the higher side do we know that . Appears to be you brought me all of that stuff. I wasnt expecting that. I think the earnings of 2020 will largely depend and then also the election. Did he pull himself up. Im way out of my pay grade i couldnt figure out that chair. Thank you coming up, shouldntioundingn china. And bringing you reporting numbers. The report and reaction on wall steet and more announcer todays big number, 1. 9 billion. Thats how many servings of the beverage brand are consumed every day globally beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Fidelity now has zero commissions for online u. S. Equity trades and etfs. And fidelity also offers zero account fees for brokerage accounts, plus zero minimums to open an account. And only fidelity offers four zero Expense Ratio index funds directly to investors. With all of those zeros, there are zero reasons to invest anywhere else. Fidelity. So maybe ill win saved by zero facebooks light touch on policing political ads. We are at another crossroads. We can continue to stand for Free Expression, understanding its messiness but believing that the long Journey Towards greater progress requires confronting ideas that challenge us or we can decide that the cost is simply too great and i am here today because i believe that we must continue to stand for Free Expression joining us right now to discuss this and more, Joanne Lipman and meghan morse is here. Im going to start with the distinguished fellow nice to see you. Nice to see you theres been a lot of critique of this you go on twitter, i dont know if you call them trolls or not, people were sort of unhappy with this speech. Were you happy with this speech . I was not on twitter but i will tell you i actually think this speech was dangerous. Dangerous i do. I do he was making a lot of false equivalencies. He was saying we need Free Expression versus say china which censors false expression it was a false equivalency he was making reference to Martin Luther king, free speech, vietnam war protests but the issue we have is that facebook has come out and said that we will not fact check political ads which means we will allow politicians to lie, to spread misinformation, to spread hatred that is very, very different than the Free Expression that allows political protests, right . Theres nobody out there who is saying in the United States who is saying that we want to stifle Free Expression of political viewpoints, but what hes saying is we are going to allow lying and misinformation. I think theres quite a few College Campuses that stifle political viewpoints right now what he said right there sounded awfully almost like a given to me maybe there are false equivalencies in what he was saying and you pointed some of them out, but what he said right there, that was well written and i wouldnt take issue with anything he said. Its not what he said right there. Its what he said afterward. You would want to err on the side of, you know, were all big boys and big girls we can see things that we dont like the opposite is that the eco chamber. Were all living in our own words. You mentioned twitter. Twitter is successful yeah, but here, he cited Martin Luther king. Right Martin Luther Kings Daughter went on twitter and said i heard Mark Zuckerbergs Free Expression speech in which he referenced my father id like them to understand. These campaigns created an atmosphere for his assassination. Right and thats my point, which is that what he is talking about is not Free Expression of political ideas. What its doing is allowing sort of the hatred, the lies, the that sort of misinformation that we were trying to crack down on in the 2016 election you dont think someone yesterday used the horse left the barn i used, you know toothpaste is out of the tube. Is the toothpaste out of the tube lets not forget a couple of years ago back in 2016, Mark Zuckerberg was learning mandarin and thinking about entering the Chinese Market and even considering a tool for speech suppression. A tool that could be used by third parties to prohibit certain facebook posts before they were even posted. Going beyond just a moderating role for facebook. So this is a calculated move at a certain point in time but this has not been facebooks m. O. For the last couple of years. He was willing to freedom of speech now but when the markets indicated that sounds like the nba thing. I hear what youre saying how do you go about doing it i mean, this whole issue about fake news, people manipulating facts. Im not either pro or antifacebook. How would they even go about doing what youd propose assuming that they were trying to sort of arbitrate whats fact and dsh. I think this is a wonderful question i think, joe, youre getting to the heart of the real question about facebook, which is should facebook be considered a publisher . If it is considered a publisher it becomes responsible for the content and legally liable for the content that it that it publishes. Currently it is not considered a publisher. Its considered more like telephone you would like it to be a publisher . That would solve the problem. Eunice asked me, you guys are talking about facebook what did you just say . You just went off. We just went off the air. Because of what you just said. Thats interesting. Its fine. Cnbc went off because of what you were saying theres no problem over there. Its fine. My goal is to be moderate. Its what she wants here. This is a longer debate it was nice to have both of you. We have to go to a commercial, if you can imagine that. Joanne and meghan, thank you joe, thank you. Thank you guys. For sitting with us for the hour and keeping the peace coming up, Barry Sternlicht is our guest wow, look at him what a gait. I get it all the time. Have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. 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We wrap up the week with two major reports, cocacola and American Express the markets straight ahead. Is capitalism in crisis . The president of the Ford Foundation shares his solution. Plus guest host Barry Sternlicht the second hour of squawk box begins right now live from the beating heart of business, new york. This is squawk box. Good morning welcome to squawk box rear height other cnbc on a friday morning. Were live at the Nasdaq Market site in times square im Andrew Ross Sorkin with joe kernen. Becky is off we have Barry Sternlicht youre not going to hold back. Youre going to tell us everything whats he got to lose good morning, vietnam. Hes loaded hes ripped. Take a look at he wants to move us on. This is interesting. Dow looks like it would open up 20 points higher. S p 500 up close to well call it 2 points right now. We have some earnings, joe, that are just crossing. We do the wires cocacola, which is if aim he not mistaken, a dow component. Adjusted 56 cents a share right in line. Revenue of 9. 5 billion. Slightly above consensus theres a lot of metrics to look at with coke to delve into case volume around the planet obviously but so far up about 2 in premarket trading. So at first plush looks pretty good get much more detail these just crossed the tape. Were expecting them right at 7 00 and they came right on time lets get to our guest coast, Barry Sternlicht, sternwood capit capital. Hes a board member at Invitation Homes as well when you wake up and you think, wow, this is a big opportunity for me, to be our best host on the flagship morning show business morning show, what do you bring to us that you absolutely need to say do you have something that you absolutely want to get across . First i get to sit between these two titans. Missing becky. Becky is somewhere where im sure shes happy. Happy place, right here. You know, having friday off is. Lets start. Where do we start i listen to your show all the time i listen to leon on wednesday. Disagree with anything he said well, okay. Theres a couple points. I mean, i think everybody wants universal health care. I think its great idea but the problem with the program is it didnt adjust the cost of health care when you talk about taxing the wealthy and the rich, i think a lot of people said ill pay more taxes. I feel the same way, but i think its the same issue. Its how do they use the revenues would you allow this government in this form to continue to tax and tax and tax . We have a trillion dollar deficit, right but the issue is the use i mean, we dont use our resources very well in this country. So we have, you know, a Defense Budget thats seven times the or more than the next seven countries combined. Yeah. And we have an Education System thats ranked 37 in the world. I mean, we would if we could feel like our money, our tax revenues were used in a smart way, i mean, the country really needs a ceo at this point in time the country needs somebody to say, these are our key objectives, this is what were trying to accomplish we have an 800, 7 700 billion Defense Budget we have 52,000 troops in asia. We have 35,000 troops in germany. We had 500, 1,000 in syria you arent saving money moving them out you certainly arent going to start a war on the german border right now. So i think youre a billionaire, right been rumored to be so. Lee pointed out that as a billionaire he still works six months from january to the end of june, he covers his government. Yeah. Bill and then he works for himself for the rest of the time. Hes married hes working for his wife half the time. He lives in florida i think i moved to florida. Do you are you are you a person that pays less in taxes than no. I pay full taxes. Youre at 50 or above. Yeah, whatever the federal tax is. Should that marginal rate go up or should it be better spent. It could go up if it was better spent. He wants to close the loopholes. Let me ask you a different question so i agree with you, that you want the money to be better spent. We all want the money to be better spent it is being misspent every single day right. You just said that you would like to have a ceo be president right now. Yeah. Yeah so my question to you is heres the issue absolutely, by the way. You have President Trump who is a ceo i dont know if youre saying youre supporting that by the way, Lee Cooperman is not supportive of President Trump. He is a supporter not his deportment but a lot of the things hes done he said that again and again and again. His deportment sure. But he doesnt hes not a supporter of President Trump having said that, clearly you look at the democratic field right now and it is not a group of ceos. Right. So what do you do so, you know, i what do you do you have a big problem, right . 43 of the voter block is independent and doesnt have a party. So as the independents grow because the moderates move to the middle which is where the majority of the country is, theres nobody representing whats left in the two two parties which are the ones that hold the stage there are extremists on both sides. 48 , 25 , democrat, 27 republican 46 lost in space. I dont have anywhere to go. The extremes are so far apart, you know, i am not a socialist, right. I will never vote for i mean, this nonsense that Bernie Sanders throws out is completely ridiculous its ridiculous and theres no system in the world you can look at that has ever worked like that it wont work. I mean, actually, most of the countries that started there, maybe russia, they went to vodka before they went to health care, right . These countries, they dont function well. Russia is a tiny little economy. Its smaller than by the way, russia spends less money on defense than france. So we dont have to worry about russia really. We spend ten times what russia spends. You think we take some money from the defense and spend it elsewhere. If were going to spend it on education we need to get more for what we get. You dont get the outcome we spend a ton on health care and we have terrible outcomes. Countries like france, their Health Care System is ranked in the top five they spent 1 5 of what we spent. Right. If youre a ceo, you benchmark against the best in class in each vertical, education, health care, you start over all the money that were spending, what do we need to do . Think about our military, it was built before we we had technology. Unless you think Michael Bloomberg is coming, i dont know i totally support you know i supported howard schultz. So without without one of those candidates and jeb bush by the way. What do you think happens . Where i dont think you know whats going to happen. I really dont know whats going to happen. I think you have the possibility of a wholly an alliance of kids around the environment, which is a big issue for me, not for joe. Right. The environments a huge issue for me c o21 n is not a huge issue. Dont tell me what my issues are. Co2, relax. Climate crisis. You live in florida, barry you better move. Its been really nice weather. You said it was terrible in scotland you were just there. It wasnt great but you were just there changes his tune. Look, i think how is the economy . Somebody has to represent the middle im a little worried about the left looking like its going to come to the middle and going far left if its elected i think between kids, women and minorities, trump could create a problem for himself. Its going to be who votes they came out in the mid terms, the kids, they didnt come out for the president ial election. They come out, you dont know. If its state by state, you dont know whats going to happen you dont even know who the candidate is going to be there are some democrats i think i could support. Like . Buttigieg. Buttigieg. I think hes smart. Hell figure it out. He seems like a good guy hes pretty hes impressive he is if you look at his actual policies, theyre not moderate. But i cant tell what hes doing. Theyre not making it up. You dont know how theyd govern. They have to win the nomination look, i agree with some of donalds policies. Not 100 i think his situation the issue is, you know, we talk about the middle. Everybody always thinks theyre in the middle, right it seems like we often talk about this idea that people are fiscally conservative and socially liberal and that is the majority of the country. When you look at these polls its actually i dont know if i believe the polls, but the polls suggest the on perfect t cisi city opposite we can do it during the commercial break its sort of a phenomenon you have businesses everywhere i want to hear how theyre doing. Are they okay . Slowing down. Slowing down . Yeah. Much more from barry. Two hours. That may move the futures down well see what barrys companies i dont think so. The futures are looking marginally up. S p 500 up by 2 points, nasdaq down a little over 2 points. Dow up 20. Barry sternlicht for the next two hours. Still to come, Quarterly Results from dow component American Express the numbers and market reaction. And then Asia Society Policy Institute President and former australia Prime Minister kevin rudd is our guest. Well talk geo politics, china and your investments squawk box returns after a break. Will it feel like the wheend of a journey . P working, or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. President trump will host the 2020 g7 summit at one of his own resorts. Robert frank is here. Of all President Trumps properties, doral is the biggest money maker by far more than twice the revenue of his Washington Hotel more than four times maralago. Doral is 76 million last year thats flat from 2017 according to federal disclosure filings. Revenues have fallen by more than 1 3 since 2016. Trump bought the 650 acre property near the miami airport out of bankruptcy in 2012 for 150 million he borrowed 125 from deutsch bank and planned extensive renovations. Now it has 643 rooms and a golf course nick named the blue monster. The Trump Organization saying we are excited to have been asked to host the 2020 g7 summit at Trump National doral the company did not comment on dorals current financials Mick Mulvaney saying it was chosen after a nationwide search it will be done, quote, at cost so the president will not profit june in miami is a slow month, off season there dorals occupancy rates below 40 . One potential problem, doral only has two president ial suites and you have seven heads of state. Where does putin stay, if macron theyll argue about who gets the best room . Theyre going to now call the president to ask for the better room exactly before we get into an argument, we have a better solution. Sea island. Which is where they had it before all the problems would go away also solve the in terms of disclosure, i have played the blue monster, i liked it i played with dick anderson, the great miami dolphin. Great guy, great golfer. He was on the team that went undefeated that year last time its happened. Barry, youre a get hotelier. Youre in miami. Two questions for you. One, is this a good venue relative to all the venues in the United States . Secondly, it is very close to it is very close to it is very close to the miami airport. How do you operate a commercial airport given the security perimeter thats very close to the miami airport. Look, youre landing on the golf course when youre landing in miami. You know miami logistically whats that going to be like i mean, its easy access to the airport, i suppose i hadnt even thought about the security issue. You havent used that airport in 30 years. No, i do. Private terminal thats the other side of the airport. You know, it is an issue sea island doesnt have that issue. Its difficult to access so its better security. We used to own sea island so im plugging for phil lynch that owns it. There are a lot of places like the broadmore and other areas that are probably fantastic locations. What is it, the homestead in virginia those are really great places for an event i mean, miami is very dense. Yeah. That is a very dense area of florida so walters here the emoluments, this is a clear i mean, its glaring. You dont have to make a profit to be sort of going against the grain of what our forefathers put that clause in there for this wreaks and looks bad and looks like selfdealing and whether it is or not, i would urge him to reconsider. Absolutely. The founders put in the emoluments clause, two of them, the profit. You dont need to make a profit even poor ben franklin when he came back from england and he was trying to do his expenses, they were checking it out. They just wanted to make sure that it never smelled like people were profiting. And its the president in particular thats in the constitution that you dont want that why does he need to do this hes got enough on his plate. The second clause says the president cant derive any salary the president ial or domestic clause thats the one in article 2 is the one youre talking about, which goes directly to the president. But you dont need to read the constitution to know this smells like high heaven you know and he doesnt need to because his properties are down in value. He is not being enriched by being president. Hes probably losing money biden did get enriched and obama did get enriched scotland resort. Stupid move. And he does it every weekend. Doesnt need to do it. Its part of a pattern that i find almost reality tv astonishing, which is he does things and then so openly and brazen, mulvaney said, yeah, there was a quid pro quo. Policies in the past with administrations that aid has been tied to policies and in this case it was a corruption policy which included looking for the server in the ukraine. All im saying is whenever he gets them, okay, you think i asked ukraine to do something, ill publicly ask china to do something. Its weird. Remember when trump put everything in a trust and he had the big stacks of papers eric trump said weve never mixed business with our business with government we will never do that. Here we are by the way, thats why a lot of people voted for trump. They thought the whole thing was a swamp in washington. Right there was a whole lot of selfdealing i know people on this panel who felt that way. Why would trump go there if this is why his let me turn that around to say im not sure that trump supporters, people who are part of his base no, they like this. Look at this, even those who voted for him saying they wanted to get rid of the swamp and say i cant vote for him anymore because of it. All i can say someone you know. By the way, i think it stinks, too. I think most people on this panel think it stinks. But we dont have to go around trying to take everybodys temperature. I think if people think about it, hes selfdealing. There is an appeal, i have to admit this to some extent, he doesnt care what people in the media are going to say about it. There are times when thats a benefit, there are times when its not youre almost like really, come get there are times when i agree thats what hes doing now. Times where thats appealing and times where its stupid. Did you read the New York Times today. Where i dont think i read that, no probably not you may have had a moment its a left wing no, i read that online. He said the same thing a year ago. He said but it was serious. It was a lot stronger now. It was about syria. No, it was about republican four star general just grabbing the admiral by the arm and saying trump is leading us into real trouble here. This is a guy who has admiral, you know him, buy know him hes not some left wing. This is the first time hes im saying to andrews point. More and more people i think are saying, wait a minute, enoughs enough enoughs enough. This was kind of fun and can i ask you a separate question he doesnt need to lose all of his followers he won by 80,000 votes. Back to what barry was talking about though given the polarization of even the democratic party, which is itself split in many ways, do you think that this this kind of thing changes the dynamic such that actually it benefits the democrats in some kind of meaningful way good democratic candidate could use this very effectively. Id say if i were a democrat running i would put in the top three things, you talk about the economy, but you talk about corruption you say, hey, hey, we dont like all of this selfdealing, this mess do you think democrats can run on the economy no. I think its going to be a problem. Ill disagree with you guys i think they can in the sense that were running a trillion dollar deficit. Kind of hard to make that case no i guess so. Cant we lit at this gate this in a little over a year we can lit at this gate that, we can lit at this gate quid pro quo. There will be a vote coming anyone who doesnt like doral, any of this stuff, they can vote in november. Let me ask you this about the arc of history if, in fact, its litigated and the president wins a second term, does that effectively does that change the character of the country meaning all of these issues hes talking about. Use it pretty strongly that you can break the rules. Its where youre sitting there are some people that think the character of the country wasnt helped in previous administrations, whether its w, obama, whomever you want to take about. The character of this country is really good people play by the rules they believe in honesty. That is true you know that from everybody youve had. I can go back and name some administrations. Im not talking about every, you know, politician you want to pick im talking normal people in this country, the rules apply to me i believe in institutions. I believe that you ought to stay in the rules this guy, if he gets away with this, it changes the character like andrew said. If you are totally fair on when you got all your nickers twisted up, the Clinton Foundation and what was happening the entire eight years rises right to this level at least. At least. The Clinton Foundation. Because you said the character of the country is going to be changed. It wasnt changed them his wife just ran and almost won time now for todays aflac trivia question. On this day in 1867, the u. S. Purchased alaska from russia for how much the answer when cnbcs squawk box continues the aflac progra. Aflac coach saban we have Health Insurance. Did Health Insurance pay for everything . No, we still have bills. Aflac gives you money directly to help with those. Aflac and your deductibles, knee brace, whatever you choose. Aflac sounds like a winner. Umhum. Umhum. We try. Get help with expenses Health Insurance doesnt cover. Get to know us at. Duck aflac dot com tell him were flexible. Dont worry. My dutch is ok. Just ok . Tell him we need this merger. 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Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Weve got earnings out just right now from American Expression earning 2 point 2. 08 a share. We have a lot coming up on squawk box in a moment when we return, the question of the morning, is capitalism in crisis i think we can say the answer is yes, but weve got some answers about it now Ford Foundation president whats that . Is it the answer is yes. Theres a question mark. But you just answered it. Take out the question mark then. Darren walker will be here, one of the best to discuss this very topic his plan to have a topic work for many and not the few that interview after the break. Then were going to head to the front lines in hong kong ahead of another round of big protests for the weekend the latest from asias Financial Hub coming up right here on squawk when we ruretn. Heading into retirement you want to follow your passions rather than worry about how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. It protects your family while providing longterm care coverage, should you need it. So you can explore all the Amazing Things ahead. Talk to your advisor about brighthouse smartcare. Brighthouse financial. Build for whats ahead℠ bits not acceptabled or nothing. And its definitely not close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry. In the world. Lease the gla 250 suv for just 329 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Is capitalism in crisis . Question mark. I say no andrew already answered yes. Thats what makes obviously the world go around. Our next guest pepped a piece in this months issue of fast money. Eric walker is here. Starwood capitals Barry Sternlicht darryl, you run the Ford Foundation its philanthropic a lot of philanthropy comes from guys and gals that succeed in the private sector i would start with that. The other thing is i would agree with you on this, if you look at inequality of opportunity in the United States, thats what we want to fix and thats what were talking about here were not talking about simple redistribution if we want to do that and we want the government to help us do that, i would think capitalism has to be the engine that supplies the tax revenues to the government which allows us to equalize opportunity so i dont think were really talking about capitalism and changing that. I think were talking about ways of equalizing opportunity. Have i got that wrong . Well, i think we are talking about the American Dream the American Dream has been made possible by a capitalist system that has produced shared prosperity right. So people like me who start out with being the first to go to college, a grandfather who was basically illiterate, today im certainly in the 1 . That was made possible because we had an economy that made it possible for me to receive an education, to have scholarships provided by private philanthropists and then to work in a market that rewarded me for my entrepreneurship and my hard work. All sounds good so far. The challenge the challenge the challenge today is that that mobility escalator that i got on, and that probably most of you got on, has stopped and, in fact, that American Dream as we know it, which was the echb have i of the world, is no longer the envy of the world. In fact, United States has fallen behind other industrialized nations in terms of economic mobility if you want the American Dream today, you ought to move to canada because canada is doing better than the United States on economic mobility. Why is that still have a capitalistic system in canada. Indeed. Exactly. They have a capitalist system and they are doing better than us in providing opportunity. You want to work around the edges of capitalism. I want to challenge capitalism to do what it is supposed to do. What broke . This sounds like it has to do more with tax policy than capitalism itself. The relationship in a democratic capitalist system is always one of the relationship between Public Policy and the markets. Thats our system. Okay. But i still dont understand how youre not saying that you want to pursue a different system you want to change tax policy and work the capitalist system so it equalizes opportunity again . Yes. What do we do whats the answer . We do have to talk about tax policy. Thats all were talking about. Thats not all were talking about because at the end of the day opportunity isnt enough if we have a system where there is bias, where there is discrimination. That has nothing to do with capitalism. It doesnt have anything to do with capitalism, but it does have something to do with Public Policy and the system in which we construct it. Our whole question is is capitalism in crisis. To my my mind the question isnt is capitalism in crisis, its is the American Dream still possible. Thats a totally what went wrong you wont answer the question. You say america is far more interested in discrimination is a better nation than it was 100 years ago. Absolutely. We have affirmative action, all of these programs. Where did it go off the railness your mind . I certainly think that weve got some policies that were designed into the system that have made it harder for people to get on that mobility escalator. The deterioration of Public Schools . Exactly Public Schools a criminal Justice System that ensnares too many people of color. There are a number of ways in which we have in our system, ways that reduce opportunity so it is both the policies that produce these outcomes and it is the culture that enables the policies and that, in fact, reaffirms some of the discriminatory patterns that we all know exist in our society. Ill go even further. Are you ready for this i guess so. No, no, if you think about what hes saying, this actually does have to do with capitalism and the power and influence of american corporations, if you go and look at the political donations of american corporations from the treasuries of these companies, im talking about america, you look at who they historically support, they historically support republicans and republican governors associations and the like. If you look at the concept at the positions that those people have taken, theyre often making theyre often supporting those individuals because of tax policy and things that will benefit the company but the other related policies that those individuals have actually dont help with the bias issue with the sustainability issue with protecting lgbt rights, with all of those other things, theyre actually the antithesis of that. If you think about the money being spent in that way and the influence that has, meanwhile, you have the Ford Foundation also has influence, right . You give money to all sorts of different organizations, too. We dont get political contributions but we support organizations that have an opinion about policy so, for example, what happened to those Profit Sharing plans for workers . My grandfather had a third grade education. He worked as a porter for an oil company down in texas where im from, but when he retired because of the Profit Sharing program of that company, he retired with enough stock to live a life of dignity today those programs dont exist anymore. What happened to those programs . Why do we not have employee Profit Sharing programs anymore . That used to be a featurfeature. That was part of the Public Policy, the private policy, corporate policy that made it possible. What happens if i said to you that part of this issue what happens if i said to you im going to go in a totally different direction. What if i told you the American Dream was an historical aberration the mobility and what were talking about, the mobility that took place between the 40s, 50s, 60s, 70s was a leave it to beaver dream where there was plentiful outcomes of all, when you look in the 1980s and the wages start to stagnate and you say, why did this start to happen, is it because the American Dream is dead or is it because for 50 years after world war ii the rest of the world was completely out of business, we were a monopoly power with monopoly rents we could afford to lift boats in ways that were almost artificial and come 1980 when wages start to stagnate, japan, germany, the rest of the world comes online if you will and all of a sudden were now competing with them. And were exporting them our manufacturing, right my father ran a factory in norwalk, connecticut they make flashlights. Walmart says i want to make it for 2 he cant make it with his immigrant work force, all carded, by the way, so he went to hong kong first trip to hopping congress, found a chinese manufacturer because walmart wanted i think about this walmart has 1. 5 million workers. Theyre 1 of the work force they manufacture these goods because we consumers wanted to buy our nike sneakers for 100 for the last 30 years. We kept exporting it to lower labor markets. Im taking to heart exactly what you said i was thinking about people express which none of us remember yes, we do. They had this great stock sharing program. I started Starwood Hotels i wanted to give stock to all the housekeepers which i did. I realized they didnt value it. They sold the stock because they needed the extra money then your stock goes down. Theyre unhappy. So and i look at peoples express when the stock was going up, it was the greatest story in the world. When it started to fall apart, everyone felt disenfranchised for some factors that were probably beyond their control. Its a very complicated situation. Like activists try to get companies to maximize their cash flows. Theyre supported by the Pension Funds like Ford Foundation im sure you have hedge funds. Im sure you have equities we have to maximize profits. I think the new Business Roundtable discussion around the multiple stakeholders is actually pushing capitalism in the right way. Got a asset at the table today i think thats great. They rejected the idea of shareholder primacy and talked very specifically about stakeholder paradigm which includes, of course, shareholders at the top but what about workers, customers, the communities where you live and work all of these stakeholders have to be given some say so its only the activists, only the shareholders, were always going to be extracting from the company the value that might go to other stakeholders. Just have to be a successful, Thriving Company to do all of the philanthropic, good deeds that you want to do. A longterm Shareholder Base that rewards that as opposed to guys who want you to make an extra three cents that quarter they know what they can cut. We built decisions that need to be made at times where youd rather if 20 of the work force because of whatever happens externally needs to be let go to keep the company solvent, its better than 100 of the people losing their jobs with a bankruptcy. I would agree with that. Its going to look like youre not satisfying the worker the stakeholder in that case when theres times where capitalism can be darwinian to some extent but weve learned even Creative Destruction is going to dislocate people and its heartbreaking to watch sometimes it has to be done for the good of everybody. So we im in the real estate business and we have google ratings of our apartment complexes. There are trip advisory ratings of our hotels. There should be a metric for shareholders that care to Rate Companies on this diverse scoreca scorecard, not just their roe. It might be their philanthropy, their you think institutions would care. Its called just capital. Im friends with paul. It does what you said so we shareholders, Institutional Capital will reward the best companies . Really interesting. Two years ago American Airlines announced that they were going to be giving more of their profits to employees and they immediately got hit by wall street yeah. And so their stock went down when they announced that they were going to share more of their profits with employees we also need to separate crony capitalism and corporatism from what capitalism really espouses in its core what it really espouses is that, you know, that the means of production is better served when its left in the private sector. And thats really all it says. All of these other ancillary things, some of it is anticapitalism, crony capitalism corporations controlling, you know, through lobbying controlling the government thats not what that wasnt what adam smith had in mind, youre absolutely right. No. Thats why i think the answer is is it in crisis no, i think every generation needs to be educated on the benefits and how what really if you look at how the world has changed since you were able to own an idea back in whatever it was, the 17th century, once Property Rights and being able to benefit from your own success, once that became something you could do, thats when you saw incomes rise. Every generation has a challenge and the challenge of our generation is inequality and if we continue to have the levels of inequality that we have in this country, it is going to be harmful for our longterm the last 2 1 2 years, the 5,000 raise plus 1,000 from the tax cut, george w. Bush eight years, 400 increase barack obama, eight years, 1,000 increase. It has gone up 6,000 in 2 1 2 years. Were trying there are some positive things that can happen organically. There are absolutely some positive things. And at least were going to redistribute opportunity, not just move the balance sheet. We need more opportunity in this country. Right we need to redistribute opportunity. Darren, thank you. And they should have the g7 at sea island. All of these people with solutions. Some agreement. Weve got both of these things fixed. Finally in agreement. People on twitter are on both sides. Im looking to censor some of these. Coming up, former australia Prime Minister kevin rudd joins us to discuss trade, the hong kong protests and the brewing debate about the g7 meeting at doral currently. Well see. Squawk box will be right back. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Pacifica ted goin oneighbor yes. Takin it off road Station Wagon . You know its an suv i know for fact your suv does not suck. Why is that . It aint got that vacuum in the back we got to go. Vacuum in the back, hallelujah here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Hong kong bracing for more protests joining is Janice Mackie frayer. What can you tell us reporter tonight there were thousands of people forming a human chain wearing facemasks despite the ban on facemasks that was imposed here two weeks ago. The big one though is coming on sunday the group that organized the protests back in june that drew 1 and 2 Million People to the streets, having another protest. Police today announced they were not authorizing it it will be an illegal gathering in the eyes of police but it hasnt stopped people in the past and its not expected to stop them on sunday. The rejection though came as the groups leader is in hospital recovering from an attack, a mob of assailants beating them with hammers. This is the second time that hes been attacked since the protests began here over four months ago and were still seeing the backlash reverberating for the nba over that single tweet by a Team Executive in support of the protests here. Yesterday adam silver, the nba commissioner, had said that he was asked by chinas government to fire darryl morey over that tweet. Today chinas government through the Foreign Ministry is saying we made no such requests now it may seem like minutia, but this back and forth of accusations with the nba does matter first of all, because of the significant losses that the mba is facing in the Chinese Market. This is a 4 billion business for them in main line china. Also, the wider implications about exactly how far reaching chinas domestic censorship is now transcending borders to go far beyond its own country and how thats going to impact the way American Companies can do business in china. So these things continue to brew as we head into what could be another turbulent weekend here andrew thank you for that report we appreciate it for a closer look at hong kong, u. S. China trade talks and more, i want to welcome kevin rudd, the former Prime Minister of australia. Good morning to you. Good to be here. Is this improving at all . What should the u. S. Be doing . Obviously with hong kong, its bumping along frankly, its not escalating its basically as unstable as its been but i think the bottom line is this, if this remains the situation on the street in hong kong, there are no real incentives for beijing to militarily intervene by sending in the army or the paramilitaries. Does that mean this continues for six months, a year whats the whats the time line i dont think in beijing there is a particular time line. If theres a concern in beijing its whether this radically escalates. Like if you start seeing bombs being used and the rest. Otherwise, xi jinping moves in, it becomes his problem in world opinion, no longer carrie lams problem, apart from the fact that i remember what happened in tiananmen in 1989 where china faced economic sanctions from the world. How do you see this impacting the trade talks at this point . All i can talk about is beijings perspective. I think in china these things are held in two different boxes. Theyre not connected we often try to connect them i dont think thats the case if you are looking at the world from xi jinpings perspective, whats he concerned about . Apart from the continuing survival of the economy. If you look at other its south of that. Therefore, thats his number one concern. So hong kong from his perspective is a pain in the you know where. Yeah. But main game is the economy and the trade talks with washington. So how much leverage, therefore, does president does the president President Trump have more leverage over him as a result of this declining economy or is president xi sitting there with impeachment talks and all of the rest in washington, as we said, with his popcorn waiting and with this other view that maybe you try to wait it out for a year does that help you with democrats, by the way, depending if you get Elizabeth Warren, theres a view that she would take a harder stance i reckon both of these guys are saying, youre in more trouble than i am. Sometimes this u. S. china relationship on trade reminds me of a series i used to watch. The road runner. Its like wylieb. Coyote they both got to the cliff and said, expletive, thats a long way down and they decided to push the pause button. Normally wylie, as you know, goes screaming over the cliff. This is a fourweek pause. Lets see what happens in san diego. On balance i think theyll get a, quote, phase one deal all of the hard stuff is in phase two. The bottom line, theyve decided not to accelerate the trade war further. Kevin, thank you. Good to be here. Appreciate it come on back. In fact, well be right back because weve got to go to break immediately. Stay with us. Still to come, Barry Sternlicht sounds off on Elizabeth Warrens wealth tax. Plus, the ceo of wd40 joins us to talk about Quarterly Results, the state of the union and the many uses for the petroleumbased product. Stay tuned, youre watching squawk box right here on cnbc. [phone ringing] how are we doing . Fabulous. I wonder how the firms doing without its fearless leader. You sure you want to leave that all behind . Yeah. Stay restless, with the icon that does the same. The new rx crafted by lexus. Lease the 2020 rx 350 all wheel drive for 439 month for 36 months. Experience amazing at your lexus dealer. Earnings central dow components cocacola and American Express posting Quarterly Results and theyre giving us key insights into the health of the consumer. The china challenge. The country says it grew 6 in the last quarter, slower than expected. Those stories plus this mornings top headlines as the third hour of squawk box begins right now live from the most powerful city in the world, new york. This is squawk box. Good morning and welcome to squawk box here on cnbc. Live from the Nasdaq Market site in times square. Im joe kernen along with Andrew Ross Sorkin. Becky is off today oh, Barry Sternlicht is here. Still here. Still here. Staying right in the middle no, hes with you i mean hes with me. Kind of cool. You get to his point and then you can sort of not worry about not making it anymore. Start divvying it up starwood chairman Barry Sternlicht u. S. Equities up 39 points snas dak s p up and treasuries backed up a little bit im waiting for 1776 i know that there never was an American Dream, but i still get a little misty when i see that number 1776. I think its a great country. Were at 1. 769 at this point, andrew no american exceptionalism i wish someone had told me i got so patriotic. Its not a right, its something we have to fight for every day. You said it never existed thats what makes me sad. What never existed, the American Dream there was a moment where we really could accelerate. Anyway still pretty good got a good system. Hes wrong because im wrong for a different reason false narrative. Im living the dream. Happy to debate. We have some headlines to bring you. Just crossing in the past hour, cocacola posting earnings in line with estimate, revenue organic growth topping expectations take a look at the shares up about 2. 5 American Express beating the street on the top and the bottom lines. The company said more people used cards to shop and pay bills. Those shares right now also popping about 2 both of those companies sort of helping things move higher i know were going to talk to barry in a little bit, who has sounds like some more negative views of where the economy is stands but well get to them in just a second. Now really back to politics okay lets do it. No, back to taxes okay. Now lets do taxes. Lets go to taxes. Yeah. Thats something we need to talk about a study important to investors, robert frank is back with a look at Elizabeth Warrens plan to tax wealth and a tax thats important to Barry Sternlicht, too. It is, and a florida resident one of the Biggest Challenges for sanders, warren wealth tax, whoever it is going to be, how to value the personal wealth thats tied to a volatile stock. Reed hastings would have paid wealth taxes of 120 million when hes worth 4 billion. Today he would pay 30 million less because of that netflix stock drop warrens advisors said that wealth under her plan would be calculated on a persons net worth at the end of the year so its date based, presumably december 31st. Accountants and tax lawyers say that means Company Founders and ceos could talk down their stock price at the end of the year and talk it back up in january to reduce that tax bill and stocks could suffer, of course, because executives and founders would need to sell stock in december to pay that tax. Why . Lets say jeff bezos would be owing more than 3 billion in wealth taxes this year under warrens plan and more than 8 billion under sanders plan of course he would need to sell millions of shares to pay that tax. The other problem is you have it harold hamm was worth 19 billion last year and because his stock price is less he would pay 300 million less in taxes. He has that going for him. Thats the craziest idea ever you get a rebate when your stock falls down theyre going to give you a credit of 300 billion because you lost all of your money thats one of the issues. Its very simple date based if it goes down, by the following year you pay a lower wealth tax, but wealth is volatile today and so the revenues that they project on this are going to swing wildly they do already with income, but the idea that the wealth tax is going to generate in warrens case, 200 billion a year as a steady state, you build programs off that, what happens when the stock market falls or when you have these wild swings. The programs go out of business, i suppose. You know, its the issue of inequality income inequality is such a major issue. This isnt a great solution. The best solution is to bring the bottom up. Again, we talked about it at the top of the show. You can increase the tax rates on the wealthy in which i think wed line up and agree to if we could sequester all of this revenue in a bucket and say, lets figure out how to direct it with a return on invooesment, right . We want to help education. We want to fix the Public School systems. We want to do all of this stuff, and let us do it well form a consortium of the top maybe some people inherited their wealth, right . Other people have made their wealth yeah. But, i mean, if we could put all of that money and direct it to causes that we thought mentoring the private to public partnerships, teaching kids, creating jobs, skill training, you know, robin hood is dear to my heart the Biggest Charity in new york. We fight poverty i chaired the organization were doing our Investment Conference which im supposed to get a pitch in for please buy your tickets. Its a great lineup. We need to help educate the population and then the government has a persuasion. They get to tax higher incomes of tens of millions of americans, not three right right. Thats sustainable. The other part is not a sustainable program. Your issue earlier was the deficit anyway. Right. All the taxes youre raising you have earmarked for entitlements anyway. Right trillion dollar deficit. Whos going to talk about theres been three democratic debates. Right entitlements, which we talk about all the time, hasnt come up. No, i know. Nobodys talked about it. Its going to bankrupt the country. One of the issues thats gotten people fired up is warrens economist, sanders economist, same two guys, pay a lower rate than the rest of americans. Thats not true. But do you really know what your effective tax rate is yes, i do. What is it . 39 whatever the the top marginal rate on a federal level is 37 . Thats what im paying. You probably pay more in addition with that with local property taxes in florida. 100 sales tax everything. You dont know what your effective rate but i would also say slightly lower because i give a lot of money away. Its slightly lower because Starwood Capital is a partnership. A lot is capital gain as opposed to ordinary income. Im guessing its lower than 37 because a lot is taxed at 23. 7 . Thats the government trying to induce longterm investment you dont think all of this talk is so ridiculous about the government just did the Opportunity Zone this was an interesting idea and concept and were doing it yeah. But theres a fatal flaw that the government designed. Whats that individuals, mom and dad, shes not a billionaire, god bless her. Shes very together. She cant put cash into that program. You only can put gains you have to put gains. Who have gains, rich people . Why not make that available to the common man i want to put 10,000 in this real estate and help my neighborhood you cant do that, you have to have gains. If we need revenues to do all of the programs to lift up the bottom, theres all this wealth and the middle. Theres all of this wealth that has not been taxed. It will get through step up and everything else. Dont you think all of this wealth thats being passed up should be subject to taxes again, i go back to i dont think the government is efficient at all, federal government, right . So i think if youre running when i ran Starwood Hotels, our revenue is 1. 6 billion before 9 11, it fell to 911. No one approached it that im in crisis you have a trillion dollar deficit. Youre in crisis at the federal level. Its not just add more money to the top. Its how do you use it. Incentive question for you. Yes, sir. If i got rid of 1031 exchange. I think you should get rid of them. Youre ready to get rid of them yes. If i did a progressive Capital Gains rate on you . I would be okay. Okay . I go to lets go back to what we have to get done at the federal level. Right. Lets zero baseline the federal government like we would any company and then figure out lets match our revenues against what we need to do for the nation, improvements in health care, education, then you can tax me tax me by the way, im going to run to give you more money. Just to be clear, what do you think of a wealth tax versus higher income taxes . I think it hasnt really i mean, a relt tax, do you think its crazy, do you think its a good idea i think its a crazy idea kind of. The because the wealthy would avoid it or because you think it would create too many disincentiv disincentives . Increasing Capital Gains tax rates i think is or valuing your business. They would have to value your business impossible. Which is a private business. Impossible. Youre going to empower a lot of accountants. They will be the biggest, Fastest Growing industry its almost an impossible thing to do. I dont see how you do it. Off stock prices we dont make our stocks go up or down, right investors do. Right. Thats sort of a weird concept. I dont know thats a complicated one. To be continued thank you, robert. Thank you. Coming up when we return, the ceo of wd40 on his companys business, greasing the wheels get it plus what it tells us about the state of the economy dont forget to subscribe to our new podcast. You can find it on apple podcast, favorite podcast app. Subscribe today. If youiss many of the show its great to listen. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Welcome back to squawk box. Wd40 projecting better than expected sales give a fiscal outlook thats below wall street estimates. Joining us to talk about the quarter and outlook is gary rudd good good to have you on to understand the state of the economy. We have a guest host in Barry Sternlicht who is giving us a bit of pessimism about the state of the consumer. Is that what youre saying its a jump the economy is not so perfect. Gary, where do you land . Good day, andrew. Nice to be with you. Because were across multiple trade channels, were not seeing any evidence yet that there is any significant change in our end users so its steady as she goes. In terms of region, in terms of when you look around the world, is there one pocket that you think is remarkably stronger than another then . We had great growth last year in europe. The u. K. In transaction currencys, pounds, was growing 14 . France about the same. We grew in local currencies in china in the year around 16 we had a little softness in latin america, some political stuff going on down there in argentina and a little bit of a slowing in mexico, but overall we were pretty happy with a Constant Currency growth of 6 in revenue and net income was up 7 over the prior year and were guiding next year for Revenue Growth of 3 to 7 so were at a steady strak our job is to make the blue and yellow can with the red top more available. Your stock down 5 . What do you think investors are seeing or not seeing that they should i think they probably reacted to the quarter due to the tax charge that we had we took an 8. 7 million reserve, which if you look at the headline it says that our quarter net was down 60 it was because we had a huge reserve for taxes that was a reversal of a benefit that we recorded when the tax and jobs tax came out against the toll tax. It had nothing to do with our actual revenue or the state of our business were in great shape weve got people who get up every day, go to work, feel safe, make a contribution at something bigger than themselves, learn something new, go home happy. Its the people in our company that make a difference if you take care of your people, they take care of your customers and your customers take care of their shareholders we have great people. What cant you use wd40 on thats the real question. Probably not on your sore limbs although people do it, right, gary . They shouldnt please dont do that. Please dont do that cbd cream you can use for that. Can you smoke it . You cant smoke it thank you. Honestly, cbd im going to tell andrew what wd40 stands for water displacement it was the 40th attempt. The guy was trying to build something for the aerospace industry, develop something. It was water displacement. It worked on the 40th attempt. Am i right, gaarry or am i right . Go to the top of the class, joe. Learn something new. Something totally useless. No, its not now useless. Garry, thank you. Youre welcome. Good day you have used it, right of course, i actually just used it. You can hit something from eight feet away. Unbelievable we had a yes, people do that. We had a door that he does that. I use wd40. 20 years ago . Thats true a while ago. For your staff. Of thousands apple ceo tim cook is in china. Ela he tell you why. A live report from beijing coming up when squawk box comes back and to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Apple ceo tim cook is in china meeting with the countrys market regulator eunice yoon joins us live with the headlines. Hello again, only yoon tv. Reporter thank you very much, joe. Actually, are you joe squawk on twitter . Im either joe squawk or squawk joe a lot of people i dont want what im seeing today. Reporter sorry outed you. Anyway, moving on to tim cook. So tim cook showed up in beijing and in fact he was featured on state tvs primetime show tonight where he along with other members of the Ching Hua University board for the economic and Management School were sitting at the great hall of the people, which is a major government uilding, for an important one on one or not one on one but an important meeting with the Vice President of china. So in that meeting the Vice President was talking a lot about the importance of china and cc tv was reporting that cook and other executives congratulated the government and expressed their willingness to deepen cooperation with china. Hao bei hook is a board member of the school he comes to china for the events he also met with the chief of the market regulator and the regulator had said in a statement that the two discussed apple and protecting Consumer Rights apple was roundly criticized for an app that hong kong protestors were using to track police that app has been pulled from the app store. Were going to get back to walter two lane professor cnbc contributor, Barry Sternlicht is still here so many things with tim cook over there, the nba, its crazy. What do you make of it you have to navigate china. Tim cook is deft at navigating trump and china. I thought adam silver handled it well when i was young and traveling in china, i remember going to cashgar. I was in a cafe and the kids were on the internet i tried to type up time magazine, cnn, it was blocked one of them elbows me, boom, time and cnn we go through proxy servers in hong kong that the centers are clueless about we thought then that the internet with spread this notion of free flow of information and would change the chinese system. Whats happening now is the chinese system is changing the nature of the internet im surprised at that. Thats not the way it was supposed to work. No, exactly you have to worry about what we wish for though could a totally open china succeed immediately in the world . No. I teach a class at tulane about the digital revolution we were talking about this everybody is upset how china is using cameras to track people going into mosques and reading their emails a student from china was in the class. He speaks up and he says, no, be careful what you wish for, just what you said, joe we have to do that and we have to make sure that the wigars arent starting a revolution the class said, thats horrible. Theyre using it to keep the communist party in power yeah, my parents are members of the communist party. Why do you think i got to go to tulane you dont understand that our system cant be based on this open theyll throw theyll throw flowers at us when we liberate iraq, walter. But the broad idea that engagement, which has been the strategy for all of this team, the idea that tim cook is over there in business, Steve Schwarzman is doing the equivalent of a rhodes scholarship. Right. All of that is supposed to bend the arc of history or bend the arc of chinese history towards either a more open society, and the question is is that a viable and working strategy or is all of this a lesson that thats actually a failure. All of this is a lesson that thats if not a total failure is not destined for success we really thought that engagement in the business, engagement in the internet, that you could not have a thriving economy without the free flow of information, that the internet was going to open up new ideas it was going to bend the arc of history towards what we would call individual liberty. Done again. Not a foregone conclusion. Blacked out again. Blacked out again blacked out earlier in china. We want to pivot the conversation explain that to me. You can tell right away that china i hear from people. We can see were broadcasting in china right now. I know that. We might not be we can see when the blackout happens. This is a company thats very sensitive in china and that is tiktok i want to show you facebook ceo Mark Zuckerberg had to say about that company yesterday. He was at georgetown and this is what he said while our Services Like whats app are used by protestors and activists everywhere due to strong encryption and privacy protections, on tiktok the chinese app growing quickly around the world, mentions of these same protests are censored, even here in the u. S is that the internet that we want so this is one of the reasons why we dont operate facebook, instagram or our other services in china. You know, its i want to come back to a bigger issue which is i think it came up a couple weekends ago. Andrew and i were at the same conference are we really headed to deglobalization . Thats a problem. We thought that the internet, the free chain of information that will change the arc of growth in this country and across the globe the weird thing is its hard to have a nonglobal internet. Meaning you can put up walls, you can do different things, but it doesnt you know, the internet is almost one of those technologies that does bend the arc of history towards globalization. The interesting thing of Mark Zuckerberg saying that is, you know, with tiktok and its sister in china is that were facing the other side of it here where facebook is saying, well, should we try to censor political ads of Elizabeth Warren or something donald trump does . I dont think any system has got this right its a very you know how hard this is going to be . I love this quote. Somebody said if data is the new oil then chinas the new opec. Theyre going to collect so much information in health but on their people, right . They will have leading companies in ai in the world because theyll have the most oil, the most data. U. S. Will be somewhere second and europe will be forgotten about, in a museum. Europe is in another extreme that its privacy almost neuralgia at which point they wont be able to have the data that people need. In areas Like Health Care you want that data if you shouldnt think that would be politically used in other areas it has tremendous impact i look at our companies, we talk about this naive idea that the world should decouple. 60 of the s ps are off shore, international. Youre going to change the pe multipleless in the equities market because of a populus move to not allow the free flow of capitalism across borders. The biggest market in the world for companies is the middle class chinese consumers. The nba thats why adam silver is doing what hes doing. What is he doing . I actually think hes navigating it pretty well i agree with that the fact that they want to stay close to china, because its a huge growth market. Hes saying were not going to back down for our values, not going to fire the general manager. See how well that works. If he fired a guy for that, just not firing that guy but im just saying a lot of people were cowtaued it comes from the imperial china empire there are many grades including how far youre going to prostate your way down. Go ahead. Diffusion the question is how much we should be selfcensoring ourselves so that we air in china, for example lebron james, self censoring call it cowtaoing. Steve kerr. Thats never really that attractive of a state to be in when youre kneeling and your nose is pressed to the ground and i think in the end historys going to judge the people who dont cowtao a lot better. Watch google play. This is not new. Google pulled out i think around 2009 to into 2016 they moved out because they were censoring every result on google search. Do you think they regret that yes thats why its a complicated situation. Thats the interesting part if youre going to take this position on china, how do you feel about doing business in russia germany. You can go down the line. Nkts yeah. Youre going, barry, to saudi arabia now yeah. Yeah. I think cowtaoing to the saudis is not great either how do you balance that . Because i think iran is the real issue frankly and its a really bad issue, iran im all with trump on iran, 100 im saying the saudis have different and even the germans. They dont allow you to talk Holocaust Denial or certain things so each certainly the this is going to get worse. You know how bad this is going to be . You know about the quality of video streaming and fake video and take you know, and perfect photographs . Theyre going to i dont know how its going to work theyre going to be people are going to say things about companies with videos about people dying, when theyre using their product. Theyll be front running the trade. How are we going to do this . Im interested in what facebook is going to be doing. Now a said, dont just look after your business interests and the engagement, figure out what youre going to do with the deep state figure out what youre going to do with an Elizabeth Warren ad thats not true or donald trump ad were entering a new age there are bad actors, right, all over the world so i dont know how whenthey have access to fake video, its going to be fascinating for the world. Thank you be happy. Wd40, you put it on the outside of the glass that way it holds. A lot of different uses oo fishing lures. If you fly fish or red fish, fly fish. You cant its not recommended. But that is something people do. I dont know anybe way ben guy Petroleum Product dont put Petroleum Products zsh. Im in the cbd cream. I know. Menthol Barry Sternlicht isoi t gngo weigh in on the wework saga. Stay tuned welcome back to squawk box. All week wework has been holding internal discussions over which Financial Rescue package to take in order to keep the company up and running. Executives debating whether to go with a 5 billion life line or to sell a controlling stake to softbank. Were likely to know the fate of those two offers by monday my understanding is that actually the final submissions are going to be coming in today to we work for them to analyze want to show you what coo david salman from Goldman Sachs said about his firms role in trying to lead or be one of the lead underwriters ipo. He was lead write to jpmorgan. Our job is not to be the rule maker for what the Public Markets accept or dont accept in terms of governance value, et cetera it is our job to try to something over time what we think makes sense for investors and for markets broadly. Theres been a lot of focus on markets. I think the ipo is pivoting and getting focused on growth with a path to profitability. I think as theres been focus on growth at all costs theres been a more lax approach than i personally think is appropriate around governance. I think thats getting corrected a little bit. Barry sternlicht, youre in this business. Youre in this world in a big way. I remember, i want to out you on this, i think early on you were not necessarily a believer in the wework model and then over time you became more of a believer in the wework model i want to understand where you are now. Im a little conflicted ill talk about what i can first of all, its a business. Whats your conflict so we understand were involved. Youre involved in the situation . Yeah. I think i think its i think its a real company, a mutual business. There are other companies in the space. I will be interview fleem frpeo the company. What they did to the mortgage market, if youre a mortgage company, you want to get 10,000 feet, 20,000 feet, you want to sign a lisa agreement. Took a 10 year, 30 year note and cut it into little pieces. At scale which wework had, thats an interesting business any one company leading they wont all leave. Even in a recession because the reason you took that space was you didnt want to sign a tenyear deal. You werent sure you were going to have 50 people or 500 people. How much of this this company got a little off the rails. Its so funny. Just like a Hotel Business when i was running starwood our team would say id need a hotel in ethiopia. Id say why. We want people in our system i said, were not going to make any money there. I skipped that let them go to ethiopia with someone else weworks approach was well capture that enterprise tenant wherever salesforce, amazon, wherever will be there for them. Thats not profitable for wework i think maybe it would have worked at the end game very capital intensive i will say, you havent talked about the economy in general when tech hit real estate all hell broke loose. What do you mean by that . These valuations and the model, its worth 20 billion, 40 billion, 47 billion, its foreign us to real estate guys we like cash flow. We like growth we like return on equity we return Investors Capital first so this coming in, this tech wave hitting real estate tech which is super hot vertical today is really a crazy thing and valuations have gone these arent software companies. Right therefore what could this company be worth thats a fundamental question right now. Obviously not 47 billion. When . Likely not lets say in the next year or two. Lets talk about Something Else in venture. In the old days these companies the vcs had a rule. They werent marking their up rounds today its common place. This is the smoking your own supply idea . You had one of our friends who used to come on squawk box said it was a ponzi scheme if we are the only guy buying our stock, is it really worth that people pointed out softbank was the last investor at 20, 40, 47. Is it really worth 47 . They were marking their own book. You had Goldman Sachs, jpmorgan, Morgan Stanley come to adam neumann and say, look, we think we can bring this 60 billion, 80 billion one of the firms said upwards of 100 billion. Goldman was pretty good what went wrong i think he got bad advice or he was able to get governance situation was an easy way to derail it. The governance stuff if you come out at a high valuation, you stack the deck in your favor, not against yourself right i think the scale of the losses and the cash flow needs, you never want to be the guy you never want to have to get money. When you look at these two offers, it may be that youre part of the jpmorgan bid it sounds like potentially, i say that because you look at what jpmorgan is trying to do they should stick with wework to save them. No question were talking about the role of these different terms. There was an enabling factor in some of this at the same time you cant cut and run. This is a client of theirs they have other client money they have to put them in the best position. Meantime you have masa on the other side who has to rescue what hes done already or theres as the visionary that he is, he i think believes in the core mission and business model. Unlike some of the tech darlings, this company at its core makes money there is but you have to cut the overhead fairly significantly. And because it was built for hyper growth and that is too capital intensive. You have to build for steady growth, not hyper growth i think its fairly obvious if you go through the public financials and the s1, youll see that i think i cant tell you what its worth im not going to go there. I will say that unlike some companies that are public that dont make money at the ebitda line, if you cut the overhead theres a profitable business at some level. Right. You have to reshape the company. Maybe you go Companies Like indust industryius are in ten markets, not 60 locations in 180 countries. I think its a bellwether. I think for the if youre going to see the bubble in the world, because i look at what would cause the next recession its definitely not real estate. Were relatively fine. We over build here and there a little bit the Housing Market is coming along, looking great multis are fine. Hotels are soft but theres a lot of supply. Office is good and venture is a mess i mean, i think venture is really youre going to look back and say, what were we thinking will adam neumann given all of the collateralized shares and everything be able to make it out ahead of the game . I hope hell be fine ive known him since 2014. I hope he comes out okay okay. To be continued. Thank you, barry. Time for this mornings stock movers that means dom chu is going to join us, who has who this week has had his alarm clock set earlier than ours. Im listening doubly today, by the way, dom. Well, you know, if we had other earnings news out i would try to kind of maybe ill just address it to you next time, andrew some of this mornings early highlights we have unofficial week one of earnings season. Cocacola share, 2. 5 up you have half a million shares of volumes posted in earnings that match estimates sales came in better than forecast so did the key measure of sales growth coke is benefitting from demand for healthier sodas, low calorie drinks those shares on the move shares of American Express up around 2 . Up 100,000 shares. The Financial Services company best known for credit cards, profits and revenues helped along by better trends in consumer spending. Those shares up. End on shares of Kansas City Southern higher by around 5 , on around 10,000 shares of premarket volume. The rail operator helped on shipment of chemicals and petroleumrelated products especially to mexico that helped offset drops in auto shipments as we wrap things up here. Well drop those down. Take a look at earnings season 63 companies have reported in the s p. 83 have beaten analyst estimates. That means if every other Company Reports as expected according to refinetive, youll see an earnings drop by 2. 9 revenues if all Companies Report as expected will go up by 3. 2 thats how we stand. Well tally up the numbers and well have a new scorecard on monday back over to you. Lets continue running through earnings season. So far mike santoli is here. We had a discussion some carts showing big gains, 18 flat, 19, then a reacceleration to high Single Digits next year. Right. Is that what is playing out its still on track i mean, this is really the Third Quarter in a row where youve had a similar profile where estimates are cut severely going into reporting season. 82 of Companies Beating right now. Theyre not beating the Third Quarter estimates that stood on june 30th. A down quarter legitimately its nip and tuck for this quarter. I dont think its that important. If you took energy out, its essentially positive is this the trough are we giving any credence the trough next year or is it up next year whats the estimate for next year its 8ish 8 to 9 or so right now. By the way, i dont think the market right now is priced as if thats in the bag, right thats the key thing they always come down on the overhead basis interestingly the parts of the market getting most relief when you look at the banks, global industrials when they report less bad than feared numbers have been the areas that have lagged youre getting a little bit of a push pull within the market. The kind of stocks, the defensive stocks that kept the market afloat through the late summer period when we were downgrading growth expectations are probably going to have to take a pause look at Procter Gamble down a few percent Nothing Happened with the business it ran up a lot. Now people find an excuse to buy Union Pacific or something on its numbers or the banks which all traded well off their results. All right thats it for you . Thanks for i think so. My next stop. Next stop were just one stop along the santoli train. When does your weekend start . Not until six. Eight hours or so, nine. Coming up when we return, why the fed could pause rate cuts. That story from Steve Liesman in just a minute. Plus, Barry Sternlicht on what this would all mean for investors. Back in just a moment. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. I am totally blind. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. Welcome back to squawk. A flurry of fed speak as they try to figure out what the central bank is going to do next Steve Liesman is joining us now. Hes been reporting on all this for the last couple of days with some pretty new and interesting insights. Well, andrew, by the end of today, what you hear is what youre going to get from the fed. The fed starts its quiet period leading up to the october 29th and 30th meeting richard clarity will talk on the economy. And monetary policy. Hes going to affirm the markets view of a coming rate cut, the odds on bet in 83 probability, or push back to gain a divided fed some flexibility, perhaps to pause it at this meeting or the next one here is our running track, we call it making the cut, where everybody stands, you have this substantial group that is kind of in the middle, in the well see camp the voters are highlighted there in orange and then you got two that are saying, you know what, we dont meet the cut, two on the other side lets cut and cut some more. Durable goods, ecb will meet as well but one problem for the fed, a lot of the stuff they need to make this decision, the critical events and data happen either on the day of or after the meeting. Take a look. October 29th is day one of the meeting. Consumer confidence not a big deal the next day, when theyre supposed to put out their decision in the morning, you get adp, and gdp the day after that, the ism manufacturing which started this whole scare about a recession, that comes out the next day. You get the jobs report. And then the most critical thing that xi and trump meeting in chile which we believe will happen the fed could start to price in a much weaker economy. If they succeed, you see a big head wind could possibly lay down i want to turn to barry, one of the questions that is out there among fed officials, would cutting Interest Rates really help the economy at this point gosh no. Youre in this business that is supposed to be the most sensitive, supposed to care the most if the fed cuts rates, what would happen in the real estate business if they cut rates would sky scrapers start going up, skylines around the country . No, this is more perception no businessman is making a decision off a quarter point on short end of the curve, right . The ten year is 176. Why is the tenyear 176 . German bund is, what, negative 40 basis points in the 17 trillion of negative debt. Our rates are being pulled down. Trump is the big beneficiary of this personal business or his as a politician. As a politician it helped the u. S. Economy, the weaker dollar would help if they lower rates, it will help bring the dollar down that will help the exports if anybody takes our goods no s an. Wouldnt the ecb cut more i think the ecb is realizing this isnt helping them that much it is not leading to you feel differently than yesterday when you felt they might pause . No, no. Ecb is done think the fed is considering a pause. I think it is likely theyre going to cut but after that, they stop. I guess if i had to guess, one cut and then they stop stop. I do think that all this talk about the fed and donald beating up the chairman, it is not the story. The Business Decisions are being made on the fiveyear, the sevenyear, the tenyear from another standpoint, the other side of this, some folks are really concerned that you keep bringing down rates, you create all these excesses and bubbles. You look at cap rates in the real estate business, do you look at your brethren over there making certain decisions to buy stuff . And it makes you worry that theyre dramatically overpaying because theyre reaching for yield . My brethren over wear in the real estate business. The level of lending has been very, very disciplined throughout this cycle. Nobody is borrowing 90 . The banks arent letting you things we look really good, real estate looks really good versus treasuries. Were a yield instrument and, you know, inflation ever shows up again in the history of mankind, were a big inflation hedge. You get that for free. So the real estate sector, which is the best performing sector in the s p this year, pretty close, it is a yield proxy, right it is good, but the markets are relatively Healthy People are nervous theyre not building tons. Theyre not overpaying . Well, theyre not overpaying, if you think rates stay low for a long time. I do think they will i think we have come to the conclusion that actually cap rates could fall not rise i think, you know, buying in the last year, we bought 10 billion of assets and we think we look at our portfolio, i shouldnt be able to earn the returns in property im getting relative to the other Asset Classes were taking. Were going to get to jim cramer down to jim, earnings, we got coke today, jim, but just overall what do you think . Earnings living up to expectations to keep the market where it is . Yeah, not as bad as feared. If larry kudlow is right, i think we get maybe a trade deal and in canada and mexico, really terrific for a lot of companies. You see how well ksu did with that right now, i think maybe there is movement in china i dont see the bear case and i know that i was listening to steve about rate cut ford motors talking about 2 billion would be better for the consumer if you get a rate cut why not believe them why not believe a lot of the companies i deal with that said, listen, we get a rate cut, not just psychological, but a lot of different rates, a lot of different loans are priced off the fed funds rate lets not say it doesnt mean anything it has been huge for housing, huge. One thing so interesting, two things, the Consumer Confidence numbers are huge and co numbers are terrible everyone is going to be completely petrified to make a capital decision first nine months of next year. History is no guide for next year the investors conference is the 28th, not next monday. David solomon, paul jones, robert lighthizer, all featured. Please support fighting poverty in new york and join us and buy your tickets love, love, love, youre the best. Not even charging you for the ad. It is not for profit. Reat. Squawk box will be right back. Thank you sometimes, the pressures of todays world can make it tough to take care of yourself. But natures bounty has innovative ways to help you maintain balance and help keep you active and wellrested. Because hey, tomorrows coming up fast. Natures bounty. Because youre better off healthy. Natures bounty. Im off to college. Im worried about my parents retirement. Dont worry. Voya helps them to and through retirement. Dealing with todays expenses. While helping plan, invest and protect for the future. So theyll be okay . I think theyll be fine. Voya. Helping you to and through retirement. Were out of time. Thanks to Barry Sternlicht and Andrew Ross Sorkin squawk on the street is next i Just Got Paid i Just Got Paid good friday morning. Welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Futures are steady as we wrap up the first big week of q3 earnings coke and amex look good. Downgrades of caterpillar, macys and others. Big weekend ahead for the uk as parliament meets in a special session to talk brexit ten year 175, four fed