Good wednesday morning welcome to squawk alley. Im Carl Quintanilla sara eisen is here as well the dow is down 59 points following the best day since april. And techs best day in just over a week nasdaq is now lower for four of the past five trading days for more on all of this, we are joined by the chief Investment Officer john rutledge. Good morning, carl. You put more credence on the action yesterday or today, john . I think the risk is the thing you have to watch out for. So i guess that means today. And it is really event risk. Event risk is something investors dont think about very much, but it is like lifting a dumbbell big left, big right, nothing in the middle so you have good economics, bad Politics Around the world, and then its adding up to a lot of risk and makes me want to be cautious. You take risk on or off here . Were keeping risk on, carl our opinion is this is not uncommon over the last 8 1 2 to 9 years. This has been the most remarkable process of recovery, now normalization. There is risk, but it amounts to price discovery, which will create volatility, which will be more like normal volatility if we ever get to that. So at this point, we would be more focused at holding the risk that we have in looking for opportunity. If we get any cheaper prices nearterm. So john rutledge, what should the folks at home do if theyre rebalancing the 401 k s . Dealing with stocks in the portfolio, you say prices are too high and theres huge risk, does that mean going more into Precious Metals . Shifting some into asia . What should they do . Well, its a strange market out there. You know, youve got pretty darn good economic fundamentals growth here is good except autos. A enthe revenues are rising 5 , which is good for debt service and good growth in the emerging markets in china a little bit of growth in europe and japan. And uk, i feel better than most about the uk so that part is pretty good. Inflation is firming, labor market, et cetera. The Political Risk is the real issue. I dont mean whether you like or dont like the president what i mean is there could be events here, i dont think price a tax cut is priced into the market. I dont think a big negative event is priced in the market. So that makes me want to hold cash in the event theres a negative event and so from my personal portfolio 30 cash would be defensive. Well talk about the neckive events that the president put firmly on the radar, which is a potential Government Shutdown if they dont pass a budget by the end of september he threatened they have to include the wall or else shut the government down. We have been there, done that, for the markets, moderate declines, what, half a percent to 1 . Is there any time to think this will be different . I dont think so, sara. I remember in 2013, as i recall, the government was shut down for two weeks. And then it was Warren Buffett on cnbc who embarrassed the people who were stalling things in washington. Just said, we havent default on our debt in 235 years, this is no time to stop. People talked and got through it i think if we have a shutdown, i think it will be relatively short. And i think especially the fact that were coming into a Midterm Election next year, you dont want to be on the side that causes the government time to come close to defaulting on its debt or shuts the government down to an extent to damage the economy. Zero risk this is political theater. To get people scared enough to support spending money youre in line with mcconnell, he said zero chance of a shutdown. Well, whether it shuts down or not, as john said, it would be just a little bit and who cares. Basically the debt is good, they are doing this for marketing purposes, so this is not a big story. Its a smaller story. So which Political Risks then are you referring to that youre so worried about well, theres a things go wrong for the white house. Think of russia investigations theres a tax bill that could happen thats not priced in. Theres a healthcare bill not priced in that could happen and go the other way theres foreign policy, north korea, china, middle east, afghanistan, iraq, syria, iran, name your list, all of those are things that you could have a thing happen overnight, you wake up in the morning, you say, holy cow, i wish i had known this yesterday. Those are big spikey event risks. And those are the things you just cant forecast. Mcconnell said zero chance of a default, not the shut down but if we get close and markets got jittery, you would essentially go shopping. Yeah, dont forget, in 2013, the s p 500 was up 29 it was up for that year. It was up around 32 with dividends reinvested and thats with a Government Shutdown in the fall we had a taper tantrum by the bond market that took yields from 1. 69 in may of that year to 3. 02 by december the resilience, i believe, is in this market relative to improving fundamentals economically and on the corporate level. And with a Global Economic recovery that is less deniable every day. This Political Risk that you bring up, john, its interesting to look at it from the investor lens and just how serious to take one statement to the next we saw, for instance, after the afghanistan speech, the takeaway was the bark is worse than the bite the policy doesnt necessarily match up with the harsh and fiery rhetoric. It was a barking speech thats right. So are investors used to what we saw last night . Or should it make them jittery i think the jitters will go both ways. Thats not the real risk, the big event is that, oh, gee, we have a new president thats not impossible. Or the uk is throwing out brexit and we have a new story there. But the risk we havent talked about is the market has not priced in rising interest rate, risk to speak of, or inflation risk which makes some real estate assets more attractive than they otherwise would be theres still opportunities for that and people dont remember, when i was in the white house in 1981, before you were born thats true reporter the 30year bond was 15. 5 . If you owned a 30year coupon until today, you made 100 times your money i can remember talking to clients who were dfiduciaries of the bond if you would buy the treasury at 13 , they would say, no, thanks, johnny, we know the fed will tank and Interest Rates are going up from here and that wasnt the trend at all. They are dragging their feet on the other direction but these rates are too low. Any final predictions on what we get out of jackson hole or nothing at all . I think you get warm fuzzy speeches the governors here are worried more about the little slowing in autos and the like so i dont think you get an aggressive speech. Central bankers dont do warm and fuzzy, john. They do academic and wonky. For another day, well talk about that the academic input into the fed has caused rate problems so for another day yes as we con template who the next fed chair could be. As fed president s jump on and off twitter. I love that transparency. Thanks very much. Good to see you. Thank you pleasure. Getting news from the world of golf, scott wagner is back at hq with big news. Big news. Billy payne, the chairman of the Augusta National golf club is retiring today, effective october 16th hes the second longest chairman having assumed that role in may 2016 overseeing a number of key initiatives, as you know, most notably the inclusion of women for the first condoleeza rice was invited there in 2012. He will be succeeded by fred ridley, the first to have play in the masters tournament, having done in 76, 77 and 78. Billy payne brought the olympics to atlanta i retire knowing it is simply the right thing to do. And at the right moment to open the door and invite someone new to be called upon to lead, bring forth new ideas and craft a new vision that will honor our founders and serve the game of golf for many years to come. So billy payne retires as the second longestserving chairman of the Augusta National golf club carl, a new face and certainly will be interesting in butler cabin now after the masters crowns its winner sitting there in butler cabin with a new face along with jim nantz every year. That is literally a change in eras sco scott, thank you walmart is taking on amazon with a little help from google well bring you up to speed on that blake irving is retiring as the ceo of godaddy hell join us in a first on cnbc interview. Then later samsung is unveiling the new galaxy 8 smartphone in new york city at this hour. What that means for the brand and apples upcoming iphone when squawk alley retnsur walmart has a new answer to amazon and the alexa voice ordering system. Courtney reagan is back at hq with the story and it involves google courtney reporter walmart launched a number of innovative programs from employees dropping off orders to shoppers on their way home, to pick up discount, now the largest retailer is bringing out a big partner to take on amazon, google so next month shoppers will be able to order hundreds of thousands of items from walmart with just voice commands using googles assistant the best case is for reordering by linking your walmart account to google, the assistant will have your complete order history, allowing consumers to order Peanut Butter instead of jif creamy 16 ounce, for instance grocery order will be added to some locations or the ability to pick up orders in the store for a pickup discount, if eligible i asked the walmart ceo what the financial opportunity is with Artificial Intelligence ordering, but he doesnt expect massive volume flowing through right away, but did say, quote, one day as the experience improves and as Artificial Intelligence continues to get bett better, i do see this as being a primary way for consumers to shop under certain conditions, under certain use cases. Now, walmart isnt the only retailer partnering with google, however. Around 40 retailers including amazons whole foods, costco and target are already Google Express retailers. So since february, shoppers have been able to use google home voice for ordering walmart is the first, however, to link accounts for past purchasing history but Google Express general manager Brian Elliott tells me theres nothing exclusive about the Walmart Partnership and the account linking saying google is open to any partner to make shopping easier, even amazon walmart is the first to link the accounts carl can i just ask you one question, courtney as an amazon prime user, is there any edge in shifting over to the Google Walmart system do you get anything extra or different . Is it lower prices whats the opportunity there i mean, not that walmart has disclosed at this point, no. Right now, if you use amazons alexa, you cant ordser on walmart. From the home assistant, you can order in some places including walmart. But next year they willed a in some of the options that are already available for online orders and a number of different places like the pickup discount, if its an item eligible for that, thats not going to be right away right now hundreds of thousands of orders when it launches, but eventually they will add more products so they are kind of putting out the products they think may be most popular, particularly those reorder items. Court, thank you very much. For more on this, well bring in the managing director at Capital Markets and the managing director with raymond james. Guys, good morning, good to see you both. Good morning, how are ya . How will we measure whether this is working and how much its working for walmart well, i think youll measure it through the continued growth of ecommerce and the growth of walmarts revenue. So thats the way that youre going to see it. And thats the way it will get disclosed as part of the disclosure event i was just going to say, i mean, were watching the numbers already, but how do we know whether this new partnership with google and the entry into voice shopping is making additional delta well, i think i agree with marks comment we saw on shoptalk in january the real beginning of voice. And so far mobile has been where its been growing, but i think over the foreseeable future, youll see more voice ordering and that will be the new mobile as you go down the next five to ten years. So i think its something that i asked at that time at shoptalk, whether walmart would be involved in voice. And i was basically told stay tuned. And now the stay tuned as happened today ed, how does this change the landscape for small and midsized retailers . I mean, they were already facing pressure from amazon i suppose they could have bought ads on google before, but why should they if walmart and others are going to get most paid for nation status well, one thing that has been really interesting with walmart and amazon is their focus on marketplace. So they have enabled a lot of the very small retailers to have a great Online Presence through marketplace. This was one of walmarts key growth areas so i dont know if i agree i think were in an environment where clearly amazon and walmart are duking it out, but they are developing ecosystems to allow some of the smaller players to thrive ed, as the amazon i agree with that ed, i want to ask you, does jeff bezos have anything to worry about when he sees this announcement hes very customer focused and talks a lot about the five and tenyear view. Three to four years ago, it was clear amazon was the undisputed leader in retail and now you have a walmart that is incredibly aggressive with innovating they are clearly following amazons moves and in some areas become more aggressive than amazon its gone from a one person leading the pack to a twohorse race but as someone who covers walmart, do you agree with the assertion . More innovative than amazon . Well, i think in some respects, yes. The discount and store discount is something that amazon cant do one thing that i think is a little different on this particular issue is that in late september when it begins, it will be walmart items that will be available for ordering. It wont be the marketplace orders or items at this point in time that may get added many the future, but not at this point in time i think walmart is showing significant willingness to innovate the idea of the employee delivering, thats right now only in three stores and there are some significant hurdles to be overcome to get that to be done, but they are looking for any way that they can to innovate and really help the consumer with convenience and, as always, with walmart, with price so budd, does this take the phantom antitrust pressure to some degree off amazon i mean, there are rumors that there could be some kind of case built against amazon, but if you have google and walmart teaming up and adding the instore element, does that help amazons case that actually theres plenty of competition out there . Well, i think theres always plenty of competition. I cant answer the question on antitrust well have to let others who have more expertise in that particular area answer that. But i think that it certainly is a competitive and hyper competitive market as we wrote in the most recent note. And walmarts doing a lot to make sure that there are, they are working to satisfy the customer in store and online thats an area right now that amazon cant compete with. And i think were seeing it in the accounts, which are terrific now for 12 consecutive quarters for walmart. And the traffic has been consecutively up for 11 of the quarters thats just a terrific indication of walmart u. S. And for the stock, walmart u. S. Is critical. Absolutely. Fascinating to watch these giants start to join hands budd, ed, appreciate your time, thanks, guys. Thank you thank you still to come on the show, weve got Details Behind blake irvings announcement that he is retiring as ceo of godaddy at the end of the year. He joins us, next, in a first on cnbc interview and well take you live to Samsung Galaxy 8s event happening in midtown manhattan today. This is the successor to the recalled galaxy note 7 and were expecting announcements around the voice assistant. Well fill you in on the details. More ahead on squawk alley. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if. There was a single site. Where you could find the. Right hotel for you at the best price . There is. Because tripadvisor now compares. Prices from over 200 booking. Sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Welcome back to squawk alley. Godaddy announced that their ceo is retiring at the end of the year naming scott wagner as his replacement. Joining us now in a first on cnbc interview, outgoing godaddy ceo blake irving blake, good to see you. Good to see you, john so ipo is in april 2015, the stock is up better than 60 yeah, 2015, the stock is up better than 60 since then is this retirement for you or is this a pause before another ceo gig . Well, you know, shoot, really, ive spent 35 years in tech ive been married for 32 years my wife is definitely on the short end of the shrift on that. So spending time with her and actually knocking off the bucket list is something thats really important to us. And we really havent had time to do it so were going to do that. Its really a confluence of where the business is, too because the business as you said, weve grown, the stock value of the company, doubled revenues, doubled earnings, more than double the cash flow, it just feels like the momentum the company is on right now, john, is just really positive. We have assembled a great team scott wagner, who has been the guy ive been tagteaming this company with for five years now, is just ready to step into this role and its a perfect time for me to, i think, move on to what is next for me and to have scott move into the position and hes ready and i think the companys in the perfect position to move on that you dealt with plenty of controversy in your tenure, not only godaddys image before you took over, grace hopper stuff, but recently around all of this racial uprising and tension, some White Supremacists who had been using your site, you decided to take down their web pages in essence and push them to go host somewhere else. How important is that sort of, i dont know whether you call it