Now theyre back downtown for the start of squawk alley. Hi, karm all right seem yashgs thank you very much. Good morning it is 8 00 a. M. In newport, oregon the First North American city in the path to have days total eclipse. Its 11 00 a. M. On wall street squawk alley is live. Good mo. Welcome to squawk alley. Were at post 9 on the New York Stock Exchange jon fortt has the morning off. The dow is down off the lows we did see some pressure this morning, particularly on stocks in the nasdaq continuing to underperform that index coming off a four week losing streak mid morning here, sarah, we won wondered whether we would test the lows the vix didnt manage to spike. That made somebody moderate selling pressure after two weeks of decline a lot of people also talking about the rustle 2000 index of small caps underforemaning down four straight weeks in a row. Now also for the year, a lot of people saw that as the trump trade. The Smaller Companies that would really benefit from lower corporate taxes, for instance. As it relates to technology, it is still the winningest group for the s p 500 for the year up 20 as a sector in terms of Information Technology and its been an interesting story here that weve covered on squawk alley. Best performing stocks so far of the year, best performing earnings, no question about it something we saw during the obama era as well. The mood in washington is changed a little bit towards these Tech Companies and its unclear whether youre starting to see it reflected in the stocks right now youre seeing a Broader Market pullback and theret big winners. Lets bring in bob macknamee. How are you, carl not bad. Happy Solar Eclipse day im excited about it. You know, it doesnt happen every day. Only 71 here. Youre right about that quarter to date, roger, facebook is up 10 netflix is up 10 amazon and google down 1 to 2. What is happening here in this environment, there is so much uncertainty about just politics, trade that for me its really hard to tell. I think in the case of google, obviously there have been internal Company Dynamic thats have been a challenge w amazon, the stock had a monster run. So to me, the notion that investors would take a pause on any of these stocks makes a lot of sense you know my position i like the stocks better than anything else in the market. But im very cautious about the market and so none of this catches me by surprise. I just think that were in one of those environments where uncertainty should be causing the market to be cautious. It hasnt been until the last couple weeks i think if investors take a serious pause here across this group and across others that is no surprise at all is it, i mean, its kind of hard to argue, isnt it roger that there are fundamental businesses are the trajectory is changing meaningfully . At least across the board. I can understand if youre nervous about geopolitics and maybe you raise some cash. But does it reflect something inside of the companies thats different . I dont see it, carl. I mean, i look inside amazon in particular and i see a company thats hitting on every cylinder i look inside google and, you know, its a little harder to tell whats going on there because they have so much money going into these new initiatives. I look inside whether its apple, facebook, you know, you see very, very positive dynamics at least relative to the economy as a whole inside all of the stocks so the fact that they led the market over the last couple of years strikes me as being, you know, exactly what you would expect and i dont see any fundamental shift in any of them again, as you point out a moment ago, the question were dealing with is overall market sentiment. I wonder though, the google dismissal of that software engineer, that wrote that controversial memo on female equality, the fact they jumped on them as they suppress free speech and the fact that big tech has now taken a stance against the president s response to charlottesville did it that already when it came to the travel ban on immigration. Important issues that it feels like tech has been a little bit more vocal on. You said thats not necessarily a threat to the stock price or in terms of policy do you still feel that way as these cases and instances pile up i do, sarah the reason i do is because these are global stocks. Theyre owned by people all around the world i think the number of people who feel like defending the president is something that they would apply to their stock portfolio is not large enough to move these stocks more foreign a few minutes at a time. I think people will make lots of noise. I do think that when trump come out and says something awful about amazon, i understand why the stock moves for a day. But i dont think over time that fear will overcome greed the way i think about this is fear is transitory and greed is permanent. As a consequence in, the long run, stocks will come back again, day to day, week to week, who knows . But, you know, over the long run, the fundamentals are going to work out and drive the stocks i think on all of these the fund ammals are significantly better than the economy as a whole. Can the president paint himself as pro business . And the Republican Party for that matter if increasingly there are tweets and jabs against amazon and some of the other companies for their size and their influence . I mean, to be clear, i dont know how this guy paints himself as pro anything other than, you know, essentially white nationalism. You know, he has been really disruptive to our trading relationships in mexico, our trading relationships in canada. Hes also made lots of bad noise about trading relationships with china. You know, he has pretended like hes contributed a lot to job growth when, in fact, he has not. You know, i think he threatened a lot of people. I dont see how any of that is pro business at all. And to me, businesses need stability. They need the rule of law. And as long as we have a president of the United States who flouts the rule of law, i think thats a tremendous threat to Financial Assets of all kinds. Frankly, to all kinds of assets. The rule of law is essential to property i mean, you cant have property without a rule of law. Thats funny you mention it i dont think hell get away with it. He talks that game and thats bad. As were talking, they posted a piece on linkedin. Not addressing this president s specifically but writes im concerned about growing internal and external conflict leading to impaired government efficiency he says im watching how conflict is handled as a guide and im not encouraged it sounds sort of like what youve been saying for a while welcome to the party. No, i mean, look, ray is an incredibly smart man hes been doing this for a very long time. And an extraordinarily high level. And, you know, i think were at this point now where if you are if your job is to manage a business or your job is to manage a portfolio and you see what is clearly chaos going on in the white house, theres no way to spin that i mean, theres no good way to spin it. You can spin it until youre blue in the face none of it makes any sense i mean what would be really nice is could we just have one calm, quiet week and then after that a second calm, quiet week . I mean nobody believes thats going to happen. And, you know, until we finally put an end to this, i think the markets are essentially going to be riding on a knife edge of fear that could translate into lower stock prices and that makes me incredibly nervous. What about the private market we talk a lot about faang and the impact on the public companies. Is the shifting mood in washington toward technology and the other factors the points about division influencing anything youre seeing in the valley when it comes to fundraising and startup, innovation, activity its a great question the problem in at least with respect to the Venture Capital industry right now is they got all wound up around the unicorns and they thought that the traditional rules of finance were suspended and they could keep the companies private essentially for ever and mark them up as though they were as valuable as companies in the Dow Jones Industrial average. That did not work. It turned out the companies they were doing that were in fact not as advance the as they thought they were. The valuations were wildly too high the other problem you have in the Venture Capital industry is that google and facebook in particular are essentially choking off the oxygen for startups because they control access to new customers. So the whole classes of startup opportunities that are not going to be fulfilled because theres no way to grow your audience and for me, thats a very, very significant problem for entrepreneurship in the technology industry. You know, i think there will be sectors in which people can move around, facebook and around google but right now the things that people have put a lot of energy into are being blocked by them and you see this every day in snap i mean if a company at snap scale is getting crushed by facebook, you know, its going to be super, super hard for the little startups to get any traction finally, roger, elan musk is joining 100 leading ai experts calling on the un to prevent the development and use of killer robots once developed, lethal autonomous weapons will permit Armed Conflict to be fought at a scale greater than ever. We do not have long to act once this pandoras box is opened, it will be hard to close. What is he talking about, roger . Well, you know, so, carl, i think that the significance of the statement, you know, look, i dont know that much about, you know, where warfare is going but i do know this we have in this country had at least for the last ten or 15 years an almost irrational belief that technology always winds up doing good. Its a lot easier to do good things in technology to do good takes tremendous discipline and effort over long periods of time. Can you do bad more or less overnight. I think what elan is talking about here is that once you start applying Automated Technology to weaponry, horrific things are likely. I suspect that is true the point i would make is that i think bad things are already happening. I think weve talked about this once before. The issue of facebook and google has Artificial Intelligence and the fact that companies in many ways have lost control and that a lot of really difficult, bad things are going on in terms of addiction, in terms of what happens in our election and brexit and you look at these things and you say to yourself, its really time for the country to step back and have a conversation about what is the appropriate role of technology what are the limits to what were going to allow foam do and how are we going to make sure that society jobs, people, and livelihoods are protected. If they develop robots with lethal capabilities, what you could argue that would reduce human casualties and that would be a good thing. Well, it would be if all they did is aim at the other robots but if those things are applied to populations, you know, think about this with automobiles. Right . We never thought of automobiles as terrorist weapons once you start applying them that way theyre really terrifying thats the issue its going to be super hard to control how bad people use that technology once its developed that bad people are unlikely to observe the rules. And, you know, that theres a lot of history suggesting that that fear is legitimate. And my one observation to elan musk and others is, hey, im with you on the robot thing. Lets now also apply to the things that are here and now roger, good to see you. Well see you next time. Roger mcnamee joining us now to our Solar Eclipse jane wells are where theyre nearing the start of the eclipse. Whats the update, jane . Sarah, were 53 minutes away from the startst eclipse which will begin here in oregon. You can see the campers here there is a long line to the portable toilets People Get Ready here at solar town, a cam ground 20,000 people camped here last night. Theyll start to gather in this field here to watch the eclipse. If you look at the nasa map, it starts in oregon it will take four hours for the whole eclipse to get across the country. Totality, the total eclipse will last about 90 minutes inside that period. So theres been this whole migration of people trying to be in the zone of totality. In fact, here yesterday in madris, it took four hours to drive the last two miles into this campground. This is the first coast to coast eclipse we had in a century. The first only u. S. Eclipse we had since 1778, two years after our own brexit, and some people are saying that theyre willing to do anything to say i was there. No matter what the cost. How long you have been planning to come here . Well, for me, its ten years. I went from British Virgin islands to the uk and then i flew to l. A. And to las vegas, seattle, here. We all have matching goody bags and theyre all customized. We were Walking Around the fest today looking like a bunch of High Schoolers on their field trip. How much money you have spent to be here i dont really know i dont really want to know to be fair. Probably 500 worth it . Totally worth it. All right now america being the capital of capitalism, everyone trying to capitalize on this event we have the krispy kreme donuts that are special, the plane flight for the eclipse, the mitsubishi eclipse ads this one is my favorite. On august 21st, kri keeta will move the moon in frontst sun to create an enormous fiery Yellow Banana in the sky chaquita banana. All right, i dont know if its all bananas but its funny. Challenger gray and christmas predicts productivity in the u. S. Will drop 750 million. If they have these, theyll want to go outside and look at the eclipse. Back to you. Thats a good one with the banana they should have just made it a holiday. Hostess snacks sent the efficiently snack of the eclipse. Everyone is trying to get in on this, jane they sure are including the pot industry, i might add. They have a special type of bud they are selling here and special bongs which have all the phases of the eclipse on it. 60. Its a steal well be watching your hits later in the day to see whether that never mind well see you soon when we come back, Steve Bannons white house exit and its impact on the markets in the president s agenda then new reports on who can possibly take the reigns at Uber Kara Swisher is coming up. Dow made its way back to the fl le. Ba in a moment more reshuffling in the white house inner circle after Steve Bannons ousting, carl icahn stepping down and treasury secretary Steve Mnuchin respond to critics he defended the president. Joining us to talk about this more and the whole agenda is terry hanes, head of political analysis and ed mills, senior financial policy analyst ed, feels like for the markets the next biggy, september 29th do we really have to worry about the treasury defaulting on its debt when republicans control three houses of government well, you still need 60 votes in the senate. And thats whats going to make this a fight we always have brinkmanship around debt ceiling fights we always have brinkmanship around government funding fights what makes this difficult is democrats look at republicans and see that theyre a bit on the ropes politically. And theyre not necessarily going to want to give them the easy vote out of this. Theres a lot of republicans who also want to have spending cuts as part of the government funding who might want to have additional things added on to the debt limit vote. And democrats, thats a nonstarter so the votes are there but its always going to happen right at the end teary, has the president s willingness to attack various senators by name engafrdangered that i dont think so at all senators by now certainly take this as par for the course and, you know, more importantly, i mean theyre not going to decide to do Something Different on the debt ceiling or on spending based on what some trump tweet is bottom line is spending gets done, the debt ceiling gets done and the way they always get done there is you know, republicans, of course, are the divisions are well reported upon democratic divisions are also very real and have been there since before the 2016 elections made them obvious. What you got is a coalition of centrists essentially who want things to move forward thats the way its going to go. In that context, general kelly ousting bannon on friday is a positive because it moves things back towards the establishment towards trump accomplishments and towards in getting things moving again so all thats to the good. A positive towards what youre talking the legislative agenda being able to raise the debt ceiling, keep the government open and maybe even get some tax reform done before the end of the year . How optimistic are you im very optimistic that we get spending done. Im very optimistic that we get debt ceiling done. What you have there is a clear alignment of congressional leaders on both sides. Wanting to get things done combined with the president now but more firmly in the establishment cam weapon general kelly wanting to puch things and treasury secretary mnuchin wanting to make sure the debt ceiling gets done. That is very positive. The strategies and tactics today are not known. Fwhaut always the case that is always the case to the last minute. That makes some good points about the tactics there. On tax reform, we still remain at 50 were still and thats a two part call. We remain positive that the fiscal 2018 budget gets done and thats purely up to congress it has nothing to do with trump. They then instruct tax writers to move forward. And then were still at 70 the tax reform gets done so today followed by positive on tax reform, yes. Ed, if terry is right, it sounds like people might be overestimating bannons external influence by way of breitbart. Do you agree well, yeah. I think that at a certain point breitbart could help, you know, if they attack too much, it starts marginalizing them. Then you see the middle come together a lot of times what you need out of congress is to kind of look at the extremes, push them aside and have the middle legislate. Certainly for some members of