Transcripts For CNBC Squawk Box 20150914 : vimarsana.com

Announcement come thursday, thats a twoday meeting, wednesday and thursday. You can see ahead of that the dow futures look like theyre up ahead 36 points. S p up by 4, nasdaq up by 15. We have a couple of big market stories were watching this morning. Disappointing Economic Data. Fixed Asset Investment industrial producing falling short of estimates. Retail sales did come in stronger than expected. Shanghai composite closing down nearly 3 . Volatile session shows that the index is dropping as much as 7 at one point. In other news out of china, government announcing that excuse me, government officials announcing that beijing will work to reform its own huge state owned enterprises and introduce mixed ownership. And in europe today interior ministers are meeting to talk about the migrant crisis and how countries can share new arrivals. Germany temporarily introducing Border Controls saying the move is urgently needed for reasons of security and to curb the large number of migrants. They stopped trains from austria moving into germany. Couldnt help think we were right on that track only a couple months ago going from munich to salisbury and vienna. Amazing. In Corporate News today apple is currently selling out the new iphones, 6s. In china. Ricoh suggests a man is stronger in china than other areas areas in the united states. It tracks the back order status of the models. It shows the wait time for the big screen iphone 6s plus is now running at three to four weeks. Apple traditionally releases first weekend sales on the monday after a launch so we could hear something from the Company Later this morning. Google hiring an Auto Industry veteran to run its driverless car unit. Don krafcik will take the job. He is aide t hes the president of automotive pricing true car. Google says the man whos been the head of the selfdriving car Program Since 2009 will continue overseeing the project as its technical lead. I want to skip the selfdriving car. We were talking with our producer. Go straight to the hovercrafts. You still have to sit there and, you know, sort of monitor things, right . Yeah. I would think so. I read a study somewhere, the selfdriving cars youre more likely to get sick in it. Good for you. Thats what got my radar screen. Oh, yeah, that would be an issue. Could there ever be a situation where it was more likely for you to get motion sick . Yes. When im driving im fine. When im not driving i have issues. Thats the deal. If youre paying attention to the road something mentally clicks in. Bmw, their ads on tv, what does that look like . When its no longer showing somebody or even somebody this way when youre drivingm. T youll see how relaxing it is. The thing that scarce me, oh, no, its out of control. Youre like this. Moving. Its not happening. The stories scare you. Youre hurdling towards a bridge abutment, nothings working, youre hitting the brakes, thats not working. How, please, dont. Im sorry, dave. Youre going to have a hard time with it. They will be able to enforce speed limits. That there. Who goes 55 . People that will go 55 cause accidents. They do. You have read the article, i know we have to move on, that the google cars all of the time there have been accidents its because but because they follow the rules. Because they actually stop at a stop sign. Because they have a really hard time at four stops when every car is trying to edge out. Right. Somebody has to go first. You know the rules. Yes, its the person to your right. Car on the right. Im sure you dont know. Clueless. Theres a certain amount of but i get totally mad. Come on. Ill act like im going to run into them and beep. Youre kidding me . That astounds me. I could never imagine you doing that. People do that. They come up im there waiting. Theyll do the pause stop and then start right away as if theyre you know. No, no, no, no. Nothings worse than the left lane slow driver. Yeah. Yeah. No, i like the left lane. I always drive in it. I go 50 and im what bothers me are the trucks that say no passing on the right. Then stay in the right hand lanes. Truckers are in general truckers are good. In general except for that. A lot of times theyll be in the middle lane and some say dont pass me on the right. Get to right. You notice a truck thats a penske or a reider, some idiot that rented it. The pros know what theyre doing. Lets talk about barons. It says the shares of alibaba could lose another 50 of the value. Another reason they cite, chinas struggling economy a huge issue. Theyre citing increasing competition and the companys culture and governance. Alibabas stock is trading 25 chtd time from analysts. It says the number should be 15 times the multiple of ebay. Now theyre posting a letter to barrons editor. They say it contains factual inaccuracies and the conclusions the reporter draws are misleading. A millennial is sitting right here, i dont remember which millennial, and i had a big argument. Were you here . Alibaba. You get 40 revenue. But they made like a penny and the valuation is like 800 gazillion dollars and but if youre going to buy growth. Ive seen this movie before. Huh . Youve seen this movie before. I said, okay, im sorry. I know im not young and dont understand. The only question i have is whether you treat it like amazon or not. Nobodys treating it like amazon. Why, because it begins with an a . Because theyre very much in similar businesses. Just trying to get market share. For some reason weve given jeff bezos a pass on earnings. They have the same ability to deliver retail goods to consumers. Theyre closer to ebay. Thats what i mean. They have better earnings. Theyre growing much faster. A lot of it is b2b. Business to business. Components, things like that with alibaba, no . Thats another piece. Not nearly as retail as its a faster growing of ebay. Then they dont use u. S. Accounting. All the numbers are thats very true. Its not state run. Like you saw all the news on i dont know what theyre going to do with the state owned. They could appear. Youre taking their word for a lot of stuff. I thought there were higher requirements if you were listed here versus being listed in shanghai. I wouldnt there are but you have to believe that somehow the listing officials understand the numbers. They dont have the same accounts . Technically they do but, you know, anderson im not saying err theyre there. I think we better move on. Facebook is working on a new app to support 360 views. It will allow people to change viewing perspectives by tilting their devices. You remember how facebook bought okay cue luce for 2 billion last year. This is something that could play off of that. Where are we on this whole, you know what im talking about, this whole Virtual Reality, you know what i mean . That part of the Virtual Reality . Yeah. You know. Very unfamiliar. Okay. I know what youre where youre going. It didnt take you long to figure it out. Thats not happening yet. The technology is not moving forward quickly because of its adoption. I am not aware of that. It will eventually. Ill do a little work to find out. In the meantime, lets tell you about deal news. Shire considering options for baxalta. Shire is weighing putting cash into shareholders hands sooner. Shire has an unsolicited Stock Holding last month at 36 billion based on shires stock price at the time. The lack of cash was to maintain the tax status. Shire promised a Share Buy Back program after the close of that deal. Also Solera Holdings going higher. They were bought for 3. 7 billion. Thats a 13 premium to fridays closing price. Let us check on the markets this morning. We had a huge horrific selloff in china but were okay. So far off 55 points or so on the session. That has to do with europe taking it in stride with what we saw even further east. The dow jones up 54. The s p up 56 and a half. Europe is mixed. Italy and greece trading earlier. Look at the asian markets. Theres shanghai which is down 3 . It was i think worse. I think it pared its losses going into the close which indicates there may have been government support. We cant check on a daily basis. It was worse than that earlier. Going to be talking to a couple of oil guys today. We decided oil was something we wanted to look at especially with the fed meeting this week. 44. 66 now on wti. Lets look at the ten year. Did you guys read the journal piece . Talking about how many Different Countries have failed . Tried to raise rates. It was the eurozone, sweden. It was ugly. India. Stanley fisher and israel. Israel did it. He left and within a couple of months it was back down. All the way down ten basis points who we had on and who defended his moves. Talking about it there. Theres the euro at 113. Quoting draghi. All right. We have been waiting for the feds big september meeting on Interest Rates. Weve been talking about it a lot. During our squawk 20th anniversary kickoff last week two of the Biggest Hedge Fund titans had differing views. Heres what david tepper and bill ackman had to say. Im not as bullish as i could. I have problems with Earnings Growth, i have problems with multiples. I have all kinds of problems. I cant call myself a bull. Im a little more bullish than mr. Tepper. I think the stock market on next year estimates is something less than 15 times earnings. So which one is right . Joining us to weigh in is jason trenner. He is with strategis partners and phil orlando. Welcome. Whose side would you take on this . More bullish, more bearish . I like ackman. The way were looking at market is weve rolled forward to next years earnings. That puts us at 14 times earnings. Given 1. 2 inflation and 2. 2 treasury yield, thats cheap. You made the point earlier, phil, what were seeing is a correction. Weve seen a correction since then. Right. Is the market stajding still . Companys profits kind of pick up. Youre not worried about the profits being picked up . No, im not. I think it was exacerbated by the china concerns. Thats why we had the 11 or 12 correction but i think much like 2013, weve seen the taper tantrum then. Now were already pricing in the fed beginning to normalize policy. Once we actually rip the band aid off were going to be in okay shape. Jason, how about you . This is a bs answer, id say they could be right. Youve been on before. Yes. No, listen, i think if youve had a longer term time horizon im much more in line with mr. Ackman. I think if its a shorter term, until the fed is out of the way, until you get some idea whether china is going through a hard landing whats a short term and whats a long term . Short term is over the next two or three months. Wouldnt surprise me. Last time i was on we talked about the chance that you could reach the prior low but i will say this. The moment the fed tightens i believe a low will be put in within 48 hours. I would be an aggressive buyer of the market. Because you think theres going to be a massive devaluation a massive correction . I dont think there would be. I think that its out of the way. I think that uncertainty is out of the way. I think it would be accompanied by such dovish language on the part of the fed that you would realize that janet yellen is not going to derail the recovery and, again by the way, just to be clear, were taking sound bites and were chopping it up. Tepper did say if the market sold off he would be a buyer. Hes more in cash now than he had been before. If things sold off he would be a buyer. Listen, the difference perhaps between the other times when the Central Banks had to tighten and ease, auto sales in august were 18 million units. U. S. Economy, if it cant withstand a 25 basis point increase in Interest Rates we have other problems and we should look at ore policies, fiscal regulatory trade. Sorkin, did you do any kind of homework this weekend . What kind of homework . New york times, sunday, business section, the thing not the gretchen morganson piece. I did read dsh. Did you know that stock option compensation for ceos is what causes product recalls. Definitely connected the dots. No. This is exactly whats going to be involved with the fed in terms of paying banks to hold reserves so they dont make loans and you drain some out of the system. Its very expensive and weve never done it before. Spending more money. Not just raising rates 1 4 points but all the unwinding. Its unchartered territory how it actually works but its going to be expensive. The treasury is used to the fed shipping half a trillion dollars. Theyre not going to get anything. Its going to cost money to keep people from it was a hard article to read. Did you read the whole thing . I did. Did you . I read it. I was finally saying, what am i doing to get through this. Theres the other debate that dividends, do you know about this, the banks have to buy certain bonds that get dividends. Separate article that came out this morning. Theres a lot of things that are going to go away. Other than going up a quarter point. Around the world the reserves, did you read some of this . One brick is what they used to hold. Its a five Story Building of reserves now. Excess reserves that the banks dont need to have right now. The fed has always wanted to pay interest on excess reserves. The reason it was put in place is it was thought too expensive before they quinn it tupled thee of the Balance Sheet. Jason, you also said that you think the market will rebound and bounce off the lows 48 hours after the fed moves. I was trying to figure out no matter what the fed does this week, its a disappointment to wall street. If they raise rates, theyll be half the market thats disappointed. If they dont raise rates it will be half a market thats disappointed. What do they know that we dont . Thats the risk. The raise in Interest Rates typically has a knee jerk reaction down. Those investors will be disappointed. If the fed doesnt, the thought process is, well, what do they know that we dont know in terms of Economic Growth or Earnings Growth. If you dont move now, when are you possibly going to move . Exactly. In terms of what we refer to as the apology tour. Over the last 60 years or so a normal fed fund raise is 5 rate. Were talking about getting to 1 next year and yellen stopping at that point. That 1 given the complexity and size of the u. S. Economy is not going to derail Economic Growth, corporate earnings and share markets. The market has to get over with 1 4 points here. What do you think happens this week . How does the market react . I agree. I think were looking at a retest on the lows. Somewhere in that 18. 20 to 18. 70 neighborhood. Then were going higher. I would love to see the market rip as we get into the back end of this year and next year. We get this behind us and we start to focus on resumption of Economic Growth, resumption of Earnings Growth. Bill, jason, thank you guys both for coming in. Thank you. Did you read the botswana article . What . Botswana. I dont think i did. No trophy hunting anymore. Right. So no ones making any money or what used to be very lucrative for a lot of people and the Lion Population has grown so much now that people are scared. All the goats. Anything on the periphery of the villages getting eaten. The crops, so many elephants getting run over by the elephants. It was in the new york times. I was proud. Wellread gentleman. Got to look through it. I know youre going to buy it but sort of im a he doesnt have to buy it . No, he doesnt have to buy it. You know what they say do you not get it free. You can wire it or read it. I am a subscriber. Do you have to pay for it or do you get it free for working here . I have free electronic, 50 off. I dont know what the deal is. Something lying that. Squawk gets political. New poll numbers coming in from the battleground states of iowa and new hampshire. Plus a donald trump jimmy Fallon Exchange going viral. First, as we head to break, heres a look back on this day in history. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Its huge, huge, huge, huge, huge. That helps. That was donald trump obviously joining Jimmie Fallon on the tonight show on friday. I love that squint, and it is a good squint. Jimmy had that down, too. The huge, the way he drags that out as well. That was pretty good. Always helps to be selfdeprecating, john harwood joins us this morning as we get ready for this weeks big gop debate. That works a lot, doesnt it . Especially for someone that, you know, they have criticized as having a big ego. Thats what critics say. It always helps to make fun of yourself. I think its going to be huge this week. Huge. The cnn debate on wednesday. Its really a moment where i think were going to get a faster pace from these candidates. I sat down yesterday in manchester, new hampshire, with Carly Fiorina whos made the big stage. Were going to have a speaking interview that rolls out wednesday morning. She is ready to go at donald trump and i think the other candidates are as well. This is the time to engage. Theres a significant difference between august and september in the mind set of campaigns. I think youll see that. If it appears that everybody is ganging up on donald trump, what does that do to his numbers . Everything weve predicted about his numbers has been wrong so far. Im going to hesitate to make a prediction. The post abc poll that is out today donald trump has 33 nationally. Think about this. 33 for trump. 20 for ben carson. Thats more than half the republican field landing on those two guys. Tells you something about how people in the Republican Party are feeling about politicians who are in office already. Big challenge for marco rubio, jeb bush, scott walker, chris christie, others to try to step up and make the case for why they deserve to be in the finals. John, squik ll ll lly qui the other side. Bernie sanders up and i dont know whether the primary matters. The server deal, the mickey mouse firm that did the server. They said as far as they know, nothing was wiped with a cloth or otherwise. I cant figure out whether thats good or bad. I thought that was good for Hillary Clinton because it means there was no nothing diabolical happening or is it bad because it means all those emails are retrievable at this point and were going to see whats in there . Well, i guess that judgment turns on whether you think theres anything super secret and spooky in those emails. I tend to doubt that. You know, she turned over workrelated emails. She made a judgment about that. She deleted the personal ones. Was her judgment any different than those of any other Public Officials who does personal email on a different treats it differently than official . To me the relevant questions go that the investigation is ongoing, well determine, a, was the server that she maintained more vulnerable than the nonclassified state server which would have been the alternative if she did as people would urge to do and use the state email. Secondly, if it was more vulnerable, was it, in fact, hacked. Yeah. The third is were giving a lot of attention to information thats classified either formally or later or something that the information was classified by intelligence agencies. A lot of that is endemic to the culture of state departments. The question i think the fbi will look at is was the Clinton State Department more lax in dealing with information than other state departments . The answer is not necessarily obvious because the issue of spillage of classified information getting into nonclassified system is one that exists all the time and but they monitor. So im eager to see what that review shows. A lot of interest. John, i have a separate one. Want to go back to the donald for a moment. This is on business and ceos. Over the weekend he was on face the nation. He called for pay for ceos disgraceful. The ceo of macys, they had a relationship or macys had a relationship with donald trump with the ties and everything that ended. Does that work for donald trump . I mean, heres a guy who is a Business Executive who likes to argue all the time that hes worth 10 billion, has been paid well, is a wonderful negotiator yet then he is denigrating the pay of his ceos and many of his friends. I think its an interesting tactic, donald trump. He is hes been trying to tap into a lite bit the sense of ordinary americans, that tles a something askew in our system with people at the top making too much. Hes going after the hedge fund people, saying theyre paper pushers who dont pay their taxes. The ceo thing is interesting. Im imagining that he makes a distinction between entrepreneurs like himself and people who are Running Companies who he would liken to bureaucrats. I think that dynamic is going to be the undertone of Carly Fiorina and donald trump on the stage. She was a ceo of a public company. He a real estate entrepreneur who is very flamboyant. I think theres going to be a lot of sparks in that dialogue. He said he wouldnt try to do anything about it, its up to boards. Boards are too many times in the pocket of the ceo. I dont know whether thats true. That was pure you know why i picked terry on that one. That had totally to do with the macys. Because they canned him. Exactly. But the donald everythings personal with donald trump. Hell take it. Knows who attack him, he says, be warned. The wall street journal today, if you attack him, you will fall. Hes been saying that for a while. Thats good. Well, i be warned. I guess we should be trembling in advance of our debate in boulder on october 28th. Maybe the question rubs him the wrong way. Politico has written eight pieces on scott walker and his demise. Have you noticed that . I got it on twitter. Its been like, do you understand na . Is it an antiunion, prounion thing . I think politico should just merge with Huffington Post and get it over with. Thats where they are, admit it. Im in sympathy with your sentiment, joe. I think people are eager in theres so much Political Press out there. Everybodys trying to come up with a sharp, fresh angle. Before while the campaigns going on, somebodys struggling, they want to write the obituary before the guys dead. Scott walker. Twitter makes it worse. Thats right. Scott walker is going through a difficult period. Everything unfortunate has never been thought of before. You know what they say. Our new news story is only reporting. Got to being. Sorry. See ya. Thanks. When we come back this morning, Stephen Colbert turns to siri for some advice. Well tell you his question and answer from his siri watch after this. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. We heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . 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Its like almost ran i said, you know what, were not going to get a great picture. You can drive up top. You cant up there. Riddle me this, batman. Yeah. Youre in the youre in a plane. Youre in the bathroom on a plane. Food comes. Do you eat the food off of the toilet seat or off the tray table . Why would you be whats the segue . Do you eat off the tray table no, i dont eat off off the toilet seat. Bacteria. Tray table and a new study has eight times the bacteria. You know, i would toilet seat. How can that be. Its in the post. They wash the bathrooms. They never wash the tray tables. If you were the first person to be to be on a plane. To eat off the toilet seat, yes. But after the first persons already been in there you guys are both no. What i will say. You know what a germophobe i am. Thats why i did the story. I was so freaked about everything. I brought purell in for everything, including the tray tables. Ive gotten over it. Do you know what is worse than the tray table . Floor . Drinking fountain. Oh, yuck. Why . All in the new york post. These are just things that never get cleaned. You know whats worst . Never put anything in the pocket. They stuff nasty you put kleenex down there. You put tissue down there . Not not not used ones but some people. I take them out of the bag, the peanut m and ms, thats where i save them. All right. I am doing another one that crepes me out. Gummy bears. If you didnt have enough reasons to not go to a Movie Theater these days, much more comfortable to see things, eat with your whole family there. Turns out there is a time square huge Movie Theater that apparently has bed bugs which i didnt even know you could get at a Movie Theater. Bed bugs. There have been five people who come through who have reports. Amc is closing down a section of it to get rid of it. I didnt know it was possible. Heres pictures. The woman posting the bites on her arm. Are the time square Movie Theaters that giuliani and bloomberg closed down. Are they back now that dide blao has done a great job of cleaning up the city. If you dont have a full i no longer frequent them. Im unfamiliar. Im unfamiliar. Thats not soda. That is soda. No, thats not. It is. It might be but its mixed even though amc has this problem. They have the best Movie Theater, they have flatbed seats. One quick story because we have to go. Mr. Cook, tim cook, ceo of apple. Get your siri out, Stephen Colbert says get your siri out because he will be on col birth. A tweet. There you have it. Siri, put apple ceo tim cook on my calendar. Does he not have access to the ratings of Business News organizations . Is he colanic. Calanic. Whatever. What else . Then he had elon musk. Now hes got Stanley Fisher and jim bullard next week in a knock down dragout comedy routine and then wait. Then the cfo of wells fargo is going to be joining him. All guests we love having on our air. We love them because were business. You know, i guess its hes so cerebral. Hes a really smart dude. He likes what we like. He better make this interesting. See about that. Coming up when we return, oil prices down a bit this morning, but this weeks fed meeting could be a big game changer. We have that story when squawk box returns after this. And why stop what youre doing to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use. Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Oil prices tumbling down 20 in the last three months. You are on again today. Again and again. Lets bring in john kelnof at again capital and cnbc contributor. Once we sign you up, youre ours. Once youre on squawk box he predicted crude falling in the 20 range. Goldman sachs now, i think thats what killed us. They said it could drop to the same level as well. Briefly had a nice snap back eye. I dont know what that indicates. It gained 25 . Yeah, it was wild. Why . Its the volatility youre seeing around all the markets. It was like, uhoh, we were wrong about how much is in storage here, were wrong about how much were producing. The slightest thing can go up 25 or down 25. You know how in commodities, the herd gets to one side or the other. Yeah. The oil market got heavily short. When the data point came out of the weekly government report about the u. S. Production coming down, yeah, people panicked and bought it up in a big way. Temporarily. Chances are slim we get into the 20s, arent they . I would put it 40 . No kidding. Really that high . Yeah. Yeah. What would happen to economies of oil, you know, economies that depend solely on oil for income . I cant imagine the social ramifications of that. We could have a war. Well, yeah, potentially. Theres a lot going on in the world on that front. There are countries that are better protected for this. Brazil, for example, disaster. Venezuela, even iran. Saudis they take care of their people with oil revenue. Yes. The saudis have socked a lot away. I think theres still a lot of runway for them to hold on and grind through this. What youre seeing, the damage that was being brought not socially but in the u. S. Oil companies, theres a good story in the wall street journal about the big right downs that are still to come on that front. So theyre getting wrung out. That was part of some stabilization last week, joe, that the u. S. Production is coming down faster than even i thought. Its down to about 9. 1 billion barrels a day. Weve cut about 400,000 barrels a day now already. Yeah. So its that 20, thats why i put it at 40 . I was more confident be about it last time than when i was on with you guys. I think this is starting to correct. Deflation can be insidious in japan, whatever you want to call it when it takes hold. This is not great for, you know, if youre looking for at least, you know, some nascent inflation for the world. This is a serious problem. But when does the positive aspect actually filter through the Global Economy . This is like a tax cut for the plan. A 50 expense cut for what we spend to run things. When doesnt that ever translate into a markup in global . It does soon. Specifically when you think of japan, china. Plastic. Our own petrochemical sector is booming. Thats a great job creator with great paying jobs. Consumer goods should be bought up. I think its going to be great. You see back to school, big halloween, big holidays. I saw 1. 83 a gallon on route 17. You can fill your jeep up for 25 bucks now. Would the world be wed be kicking ass if we had 500 a barrel oil. Then we, whoa, were all growing at 8 now. Youve seen the deleterious effects of that. But the opposite should be positive at some point. I think its working its way through. Whats happened over the past several years is that the one booming area in a bad economy was the commodities sector as it got built out to supply china in what was thought of insatiable demand. The relief to the manufacturing and consumer in the end has to far outweigh the damage that the commodity sector is now bringing to the data point. Do you think its masking things . Would the consumer be in much worse shape if we didnt have it . Absolutely. I definitely think that. Everything from, you know, vacations and consumer spending. If the fed raises rates and oil prices pick up . Whats that . What if the fed races rates and oil prices pick up . It will be a double khameneiy. The other thing were watching is the whole trouble in the middle east. Russian military presence being built up in syria. You know, sort of a i dont know exactly how to calculate that in yet, but its a worry that we could have a theater of war there again and that would send prices shooting up. You know, its a very delicate balance. All right. John. When we come back this morning, auto sales finally could a labor strike threaten detroits come back. Uaws latest move when squawk box returns. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Its more than a nits reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Takeand. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] vo wit runs on optimism. Un on . Its what sparks ideas. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Snainsatiable. Welcome back to squawk box. Uaw is gearing up for a walk off as the unions contract gets set to expire after today. The target of those walkoffs could be a surprise. Phil lebeau has morn that story. Reporter good morning. Fiat chrysler was picked yesterday by uaw as the lead or target company in contract negotiations. Doesnt mean there will definitely be a contract with Fiat Chrysler before gm and ford. The current contract expires at 11 59 this evening. However lets keep in mind that the contract can be extended daybyday so its likely well not see people walking out and going on strike tomorrow. Its possible. But unlikely at this point. When you look at the uaw what they are looking for in this current contract two things stand out. First of all as they began formal contract negotiations and there was the hand shake between the head of the uaw and ceos of the big three, this head of the uaw made it clear they are looking for an increase in their hourly wages. For many of the uaw members they have not had raises in seven years. The other issue, two tier workers, remember as part of the bail out that was introduced back in 2009, the uaw agreed to allow the big three to hire a certain percentage of workers coming in at a lower tier, basically 15 to 18 depending on the job versus 28 hour. Thats been helpful for chrysler, 45 of its workforce now lower tier workers, there you see the percentage of ford and gm at 20 according to the center for automotive research. For Fiat Chrysler two things are front and center. Obviously the uaw wants higher wages, some type of a pay increase and they also want to see either elimination of lower tier workers or certainly a much lower rate in terms of how many of those workers are being hired at Fiat Chrysler. The contract expires at midnight tonight but doesnt mean well see a strike or walk out tomorrow at any of the plants that are run by the big three. Guys, back to you. When is the last time we had a walk out where people left the factory floor in the middle of the day . Reporter i think it was 2007, 2006. Contract right before the bailout. It was almost a symbolic strike. It was just outside of detroit. I think it was the gm plant. Its been a long time since weve seen sort of that vitriolic were going on a strike and inflict pain on a particular automaker. Phil any idea how many bacterial colony forming units per square inch on an airplane tray table . 2155. Reporter you learn something every day. Versus bathrooms 70. Because they dont clean the tray tables because of the turnover between flights is quick. Good news no fecal anywhere. Risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. The countdown to this weeks fed decision is on. Well breakdown the odds of a rate hike and tell you which stocks are most vulnerable if Interest Rates do indeed go up. Government shutdown is looming. Congress has less than three weeks to pass a spending bill. Pat toomey will tell us if a compromise is possible. Apple ceo tim cook planning a victory lap on colbert this week. Details straight ahead as the second hour of squawk box starts now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide, im joe kernen along with becky quick and Andrew Ross Sorkin. We have started the countdown with the feds Interest Rate decision and its on. That announcement coming on thursday. U. S. Equity futures at this hour are indicated up about 50 points or so on the dow, up six on the s p. Nasdaq indicated up almost 20. Overseas in europe there was some green but nothing that great. A third of a point really in germany, france and ftse. Italy and greece are down. And in asia, we are seeing not great results, hang seng its okay. Japan was down almost 2 . Shanghai almost 3 . Shaking that off and headed higher. Lets tell you what else is going on. In europe interior ministers are meeting to talk about the migrant crisis and how countries can share new arrivals. In germany they are temporarily introducing Border Control saying the move is your gently needed for reasons of security teen curb the number of migrants. Germanys vice chancellor says the country can expect 1 million migrants this year. In the u. S. Swiftly spreading wildfires are now destroying hundreds of homes in Northern California over the weekend. The houses of residents fled middletown, california. Officials are calling it the valley fire. Now the most destructive of dozens of fire that ravaged the western u. S. This summer. Gas prices have plummeted, dropping 20 cents per gallon. Average price of gas is 2. 44 per gallon. Crude oil prices increased slightly but refiners and retailers cut gasoline prices to compete with volume sales. Summer grade fuel will end across much of the country so production will be cheaper for most refineries. In Corporate News apple is selling out its new iphone 6 s in china. Early data suggests demand is stronger in china than most regions of the world including the united states. Based on information from an iphone inventory blog that tracks the back order status. It shows the wait times for 6s and china is running three to four weeks. Apple traditionally releases first weekend sales on monday after the first weekend of a launch. If we dont hear from them today apples ceo tim cook will be on the late show with steven colbert. Were watching shares of alibaba. The stock could lose another 5 of its value. Chinas struggling economy, increasing competition in e commerce and more scrutiny of the companys culture and governance. Its trading at 25 times its earning estimates and argues the number should be closer to 15 times. That would be the multiple of ebay. Now alibaba is fighting back and posting a letter complaining about that story. Alibaba spokesman said the article contains factual inaccuracies and says conclusions the reporter draws is misleading. It is crunch time for the fed. Well be getting the latest Interest Rate decision later this week. Don chu joins us now. Reporter always going be the ones that pay bigger dividends than bonds over certain periods of time. If you talk about this idea that utilities, the s p utilities index down 12 so far on a yeartodate basis as these Interest Rate concerns start to fester among traders and investors, as Interest Rates go up or threat of Interest Rates going up comes to the marketplace, the relative attractiveness for the dividend yields for telecom stocks, utility stocks they lag a bit. Utilities very much a to dulles. Take a look at other reasons why were watching this. Leading this years decline so far, pg and e, southern company, nrg, down with some of their value. So far on a yeartodate basis to give you and idea how bad it is, close to 30 stocks in the overall s p utility index. Only two are positive on a yeartodate positive and thats Agl Resources and tico energy. They are m and a targets. Interest rate story is playing very well out right now in utility stocks certainly ones to watch given the fact that the fed could move later on this week. Back to you. You hear . Holy cow. I heard it here. Its weird. Im hearing him in both ears. Dom, come on over. But lets bring in another voice into the discussion. Tom lee fund strike global adviser founder and head of research is here. If they go, do you think theology go . I think its still something people dont know. I would be surprised if it happened this week. Is it possible theres some type of immediate dislocation, scary y2k blow up scenario . Is that possible . I mean clearly thats what people are worried about. I mean youve seen turbulence at times when the fed makes its first move. If this is the 50s, low inflation, low growth environment it would be seen as a reflation signal and back then it was a bullish outcome for stocks. You saw that around the world rate hikes when they are done too soon they reverse with egg on face like six months later because the economy doesnt cooperate. Will that happen here . That would be the worst thing to see almost a decade of no rate hikes. You get one. Because were stuck here. Trying to get out and we cant. I think investors especially between now and year end want stability. If the fund does put things on hold they prefer to say, hear the fed say we wont have the door open until next year. Joe, its interesting because we talk about all these ideas they could affect the economy overall. When you talk about some of the moves happening in the markets here in the united states, and you start to telegraph certain things. Theres still a number of strategists out there think you got cyclicals like industries, financials that are poised to do relatively better than the other ones out there. Is there still a case to be made that those particular stocks can still out perform . We had a huge bull run. We had a market triple since the loss. Isnt about time we slowed down a bit just to say maybe for a few months reconsolidate and Everything Else in the marketplace. I dont know if thats the time now. I think in the last month a lot of people who were bullish and buy the dips have now gone into this indecision camp, right. For the reasons you describe which is lets see how this thing gets resolved. I think theres bullish things developing, though, for instance i think Dollar Strength which was hurting the industrials and tech is not a head wind early next year it becomes a tail wind. Oil is now at this sort of pivot point where if prices stabilize here or start to rise thats actually a bullish development. Both from an Energy Perspective and its already a level thats helping consumers. And i think sentiment which hasnt mattered in the last month is so bad that i think were better positioned for good news than bad. Hes been good, andrew, with just overall market calls. Right. Im willing to give you a special dispensation to ask him the question, to ask him the apple question . No. The bottom question . Yes. Bottom in. If not, when . I will say some things are telling us some things that you look for to say bottom is in are usually small caps, outperforming. Almost always turn up one day to two weeks before the actual bottoms in. Is that happening . Small caps bottomed versus the s p on the 24th of august. You hear that . See you might get an answer. What about schiller . Im saying have you heard someone say did anyone see the schiller numbers. Did you hear people are getting negative. That means the stock market goes down. When negative sentiment rises its bottom. Usually thats the case. Hes an academic. Okay. Exactly. I rest my case. I would just say that theres a ton of stuff. You talk about these confidence indices and Everything Else. They are tangible numbers that will come out in a few weeks. Earning season kick off again. We always have this kind of catalyst. I would just say the one concern that a lot of traders are having right now earnings have been growing but been slowing down. So the change, rate of change of that particular move is starting to get to a point where we may have, maybe, low expectations but still flat to no Earnings Growth to maybe negative, right . Thats is going to be the big concern. I think its correct to say earnings from energy a drag. They have been a drag. The drag is shrinking. Earnings because of the dollar, dollar was so strong it really hit industrials and tech. Thats going to become a tail wind. I think you have two groups that you might see better comps coming out in the next couple of quarters. You have to remember even if earnings generated from china is plateauing or flattening, really, earnings related to u. S. Investment spending are just beginning to accelerate. Housing data has been good. Look at the builder. I dont think that you would necessarily have to say earnings will keep slowing to zero. I think theres undercurrents that could cause earnings to reaccelerate. If youre not 75 or 80, do you just stay the course, buy stocks every month or whatever and not worry necessarily about thats buffets deal. If you really believe inflation is higher five years from now or even two years, equities are a great investment. And i on the know if that means in the next month they are great. I do think in the next three months and six months and 12 months they will return basically better than historical averages when we just had a pretty big correction with fed sentiment. The bottom, andrew, no one knows but small caps are telling us something else. Not 75, lets go 85 to 90. 90 to 95 for when you were all living longer. Im going higher and higher when a person need not if youre getting closer to retirement thats why i said 90. Im not working that long. You may. Well see. How old was andy rooney. Who just got signed on the fourth hour of today. Regis. You go. Larry king, looking for a vehicle for his come back. Mike wallace. I dont think any of them are working because they have to. They are working because they love it. Like us. I think it keeps you young. I would be bored. If i didnt work i would be bored. Im always looking for something. It doesnt matter how, how lame or boring what the desk gives you. You always are up. Have you noticed that. I try. Do you. I try. You always pull it off. I try. Its very kind of you guys to say that but i dont always pull it off. Yes, you do. Coming up when we return the clock is ticking for congress to pass a spending bill. Pat toomey will join us next on the legislative agenda. Oil prices hurting drillers but Tanker Companies are doing big business. And football is back. We have the highlights from a wild week in the nfl. Stick around in just a moment. Its more than the cloud. Its security and flexibility. Its where great ideas and vital data are stored. With centurylink you get advanced Technology Solutions from a trusted it partner. Including cloud and hosting services all backed by an industry leading Broadband Network and people committed to helping you grow your business. You get a company thats more than just the sum of its parts. Centurylink. Your link to whats next. I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back to squawk box. Take a look at futures. Dow is opening up seven points higher. S p looking to open up hire and nasdaq opening up 16 points high sneerp were less than three weeks away from the governments funding deadline of october 1st. Thats when Congress Needs to pass a spending bill or face a shut down. Joining me now is pat toomey. Thanks for being here. What do you think . Are we likely to have a shutdown or not because Mitch Mcconnell said weve seen it play out before and it never ends well for republicans. Its unlikely well see a shutdown. Well get a short Term Extension of law and a negotiated period to agree on spending levels for next year, the basic standoff has been that we passed the budget earlier this year, republicans did and we want to increase defense spending above the level of the caps, the democrats said if you do that we want dollar for dollar increase. Thats why we have the standoff. And planned parenthood. Thats an overlay. How does that get resolved im not sure. I think it will be resolved. Ill tell you one thing, one of the lessons i hope we take away from this its not a good idea to treat Government Spending as an on off switch. We need to find a way, fund the government in incorrectment, divide it into individual Appropriations Bills and pass them one at a time. Then if you have a fight or the interior or appropriation fight you have a fight over that. Seems you would have a fight over every single issue. Someone would have a special interest on one side or the other. The individual appropriation bills came out of the Appropriations Committee with bipartisan votes over the course of this past sum per so clearly there was bipartisan support including at funding levels that your democratic friends say are unacceptable. Easier to get along with colleagues in a small group. Once you cast that vote and on record supporting it its hard to reverse that on the senate floor. Theres things both sides like in any appropriations bill. It makes more sense to have the opportunity to amend. Theres a wing of your party that says, you know, you got obamacare, zero republican votes. Iran deal. Zero republican votes. All these executive actions. All of this getting thrown right in your face at you a and forefathers put the power of the purse in a position where that was the last resort rogue actions taken by the executive branch. Of course youll battle they didnt have the media back in our forefathers. Youll get hammered. If you shut down the government you cant use that power any more because youll get cast in a negative tone by mainstream media. Its a power we cant give up. Its been given up. My suggestion is you divide youve given it up. If its all treated as a single monolith thats on or off that wouldnt work. Whats your slug. Separate health and Human Services . Theres 13 appropriation bills. Theres that. Theres the interior bill that funds the epa and on down the line. If you were looking at health and Human Services which is where the planned parenthood issue is now youre talking about defunding the cdc, fda but defunding medicare, medicaid and programs for families with children. Medicare and medicaid are auto pilot. The funding, administration for children and families which takes care of the most abused children and people in the worst positions and i dont think that would play. Theres an awful lot thats on auto pilot that gets funned whether you have an appropriations bill or not. At some point we have to challenge an administration thats exceeding its Legal Authority and implementing an agenda thats completely inconsistent with congressional intent. What has Mitch Mcconnell and other leadership have said . From what ive heard from what they had to say they want to get this resolved. Thats why my prediction is well get a short Term Extension of current policy and during this, i dont know whether thats three months or six months, during that period there will be a negotiated settlement with the other side which will presumably cover the process by which well fund the government for next two years. Youre on the banking and finance committee as well. We have the Federal Reserve making a decision this week. What do you think they will do . I think we should move to normalizing Interest Rates a long, long time ago. This is a very unhealthy exercise weve seen to be six years after a crisis and still have zero Interest Rates. Have to be distortions being created in this process. So, i would hope we would begin the process of normalizing. Im not optimizing. Lets say they move the fund rates thats an incredible Monetary Policy. I just think we need to get back to normal and sooner its long overdue. Do you endorse anybody yet . Not in the president ial race. What do you think about the tax plans of the president thus far . Havent had a chance to drill down deeply into these. Im aware of some of the highlights of jeb bushs plan. I think thats the right direction. The key thing, of course, much lower marginal rates. Thats how you solve all kinds of problems with our tax code. International piece driven ultimately by marginal rates that are too high. Would you be prepared to vote for donald trump if hes your nominee. Ill be supporting the republican nominee whoever it is. I think its unlikely it will be donald trump. Youll get somebody some day to say no. I wanted to get him on record. Your a supporter of donald trump . I havent picked any candidate. Will you support Bernie Sanders if he becomes the nominee . Are you a supporter of bernie sand sners will you support bernie sand sners will you . Im not if you were are a journalist, Bernie Sanders, a socialist would you support Bernie Sanders. I cant pick somebody. See thats what it feels like. Thank you very much. Thats what it feels like. For every democrat donald trump, a republican has Bernie Sanders. Coming up news coming out of the American Airlines, mistakenly flew an uncertified plane from l. A. To hawaii. Details next. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep it all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberry apple scones smell about done. Ahh, youre good. I like to bake. Add new Business Services with at t and get up to 500 in total savings. Welcome back. Some news coming out yesterday that American Airlines accidentally flew plane from l. A. To hawaii that wasnt certified to make long flights over water. This mistake happened last month. A spokesman for American Airlines said the company notified the faa as soon as they realized what happened. Does it involve like floatation stuff . It doesnt involve landing stuff, right . Or air worthiness. Is it the distance you have without landing that it needs to be certified for . Its the water. Im sure the flight worthiness of the plane is any less than one over land. Land or water it doesnt matter. A couple of times you dont want to hear oops. One when the dentist has his hands in your mouth. Or in a Republican Debate. Very well. Very good. Did you see i like rick perry. I do too. Someone tweeted that he said go on when he released his glasses into the wind. Remember he put those on. Go on. I dont need you any more. Youre sad and releasing. Look thats another think that trump called a week or two ago he he was getting out of the race and he denied it. Three and a half term governor. Am these things on his resume, one word oops in the debate. Defines his career. When we come back this morning its a good time to be in the crude oil tanker business. Industry has seen big profits and outlook for the rest of the year could mean for big bucks for floating aisle. Theres a big report coming up next. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Box, everybody. Lets tell you whats making headlines. First up, shares of solaria holdings getting a boost. Vista is buying it for 55. 85 in cash. About 3. 7 billion. Shier is considering options for sweetening its offer for baxalta. They want to put cash in hands sooner. And bank of america is worried about letting moynihan vote. The stept 22nd shareholder tally could go either way. Did you see barney frank . Coming out saying prime should keep both roles given dodding frank. He said that he was very helpful in terms much getting the sbc passed. He thinks hes turned the company around. As far as he can tell theres never really any difference, any connection between splitting those two worlds or not when you look at the success of the company. I dont know if you guys have seen this, how far seen this commercial . Ive seen lots of them. Theres one where we used to play this all the time for steve liesman. This is the one called europe. You had a poster of europe in your bedroom. Was it asia. You had a poster of asia. Anyway they actually have maybe we have it. Okay. Check it out. We do have it. The final countdown the final countdown that actually is europe. That is the band europe. Maybe we can get them to come play for steve. Europe singing the final countdown. Final countdown the feds rate decision, that was a big build up. That announcement coming on thursday. Here, youll see. Tanker markets. You screwed the whole thing up. Tanker market has had a profitable year and industry is poised for big gains between now and january. I think i want eye of the tiger. I was thinking about the song i want. Who sings eye of the tiger . Survivor. New Katy Perry Tiger thing. I dont know. War. Im very unhip with the pop divas these days. Anyway lets talk about crude specifically lets talk about crude tankers because in the first half of 2015 rates were very large crude carriers that carry up to 2 Million Barrels of oil peaked. By recent rates plunged 70 as demand slowed down ahead of refinery maintenance season. Even now the industry gauge the baltic dirty tanker index is down 26 for the year. Analysts say with crude below 50 this sector could experience the best Fourth Quarter since 2008. That as china builds up crude reserves despite a slowing economy to take advantage of higher refining margins. Whether citigroup says rates are rebounding up from their august low and with fuel costs low thats a tail wind for earnings and unlimited earnings for new ships coming online next year this could bode well for stocks like euronav, Nordic American Tanker and dht maritime. Other names, Teekay Tankers and tsakos energy. Another potential positive if iran sanctions are lifted there cube boost. There you go. Crude tankers. We have to find something oil and Energy Related for my song. Not final countdown. Our thanks to morgan. Stick around you can play in this next for more on the Energy Markets were joined by steven short founder and editor of the short report. Good morning to you. Good morning. How are you . You just heard that report. I want to get your reaction to what Goldman Sachs put out last friday with this idea that somehow barrel could go down to 20. You buy that . Well, same goldman that a year ago was telling us oil would average 100 a barrel this time around. Just because they give their opinion on this market doesnt mean we can or will go. The key word here is we could go. Absolutely. Lets address the fundamentals. In the here and for you from a seasonal perspective the pull back in demand from refinery maintenance season is increasing the pull back of a margin 2005 to one. That will only last towards halloween. After that production will dont pull back. Right now we have blood flowing in the street in the american oil patch. 70,000 job cuts up through august. Now when the banks get through with their credit redeterminations next month and equity for the ep dries up that blood rushing down the street right now will be a gusher. Then when you juxtapose that with Global Demand look whats happened in the past year. China has installed itself, the peoples bank of china as the Worlds Largest specialist firm. The majority of the economic sectors in the g7, the brics and ashanti gears have been contracting. No coincidence that correlates to the pull back in industrial metals. Pullbacks in commodities is the canary in the coal mine that something is not right on the Global Economic scale. Bottom line it for us. After all that im still a little confused. Which way is oil going . No. Im painting the scenario for supply will continue to out last demand and, therefore, yes the template is cleared for lower prices. Ive been a bear for the last 13 months. Im still bearish on a longer term basis. Weve broken the 40 barrel. We can test the 32, 40 low we saw at the depths of the great recession. We get down that low we can break the 30 barrel between now and Fourth Quarter. Im a little bit curious when you talk about the fact supply will out pace demand. I spent some time in the oil patch in midland, texas a couple of weeks ago. One thing im hearing if oil stays this low well see potentially a dramatic snap back in terms of supply and whats coming out of the ground coming in to next year. What are your thoughts on that here in north america . Certainly, when we talk about Oil Production here and the pull back in the enp this is solely a north american story right now. When you start to look at the larger picture which is obviously what we have to do in oil market were looking at now the largest chasm between sunni and saudi opec. Well fight saudi and iran to maintain or continue to grow their market share. If youre saudi not only do you have to fight for your market share you have no interest in financing Irans Nuclear Weapons Program and from a longer term basis this is ultimately good for the oil patch down the road because what has been the biggest threat to oil over the past five years . Of course the growth of alternative fuels. So by keeping oil prices in that 50 range which money is being able, can you make money at that point, you keep the entrant barriers for alternatives high. Supply will continue to get oil to the market. And, again, we look at china, when we look at the g7, when we look at q3 gdp united states, the fed is only forecast a 1. 2 growth. So things are drying up here. Why . Because things around the globe are challenged at this point. So i suspect that demand will remain subservient to the growth in supply through 2016. Steven well leave the conversation. We appreciate your time and perspective this morning. Sure. Thanks. Sports. Sports over the weekend, was there . A little bit. Unlike just a little bit. Coming up your squawk sports weekend wrap up. I saw every minute of those friday matches. Every one of those mens semifinals. Serenas was interesting. Highlights from the nfl. Cant wait to talk this guy about jaimes and marcus. And a clash between djokovic and federer. Amazing these matches turn on one or two points. Unbelievable. Well be right back. vo me . I dont just wait for a moment. I watch for the perfect moment. The one nobody else sees. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Which means you can watch movies while youre on the move. Sitcoms, while you sit on those. And even fargo, in fargo binge, while you lose weight and enjoy a good cliffhanger while you hang from a. Why am i yelling . The revolution will not only be televised. The revolution will be mobilized. Introducing the all in one plan. Only from directv and at t. Big weekend of nfl action. Some big wins, big upsets and start of what could be a big career for a rookie qb. Here with a recap, host of nbc. Com sport matters and nbc sports senior vice president. I was thinking, rob, like wow. So big sunday night game. Jets or giants, cowboys. Oh, no, they are competing with tennis. Tennis fans i dont know necessarily are i was at the u. S. Open last night and there were a lot of people gathered around tvs trying to watch the giants game. Theres some overlap. Quite a sports night. Does the quarterback have time to think if i take a sack and it hurts that i run down 40 seconds i think youre talking about the play last night where eli manning throws the ball on third down inside the cowboys 10 yard line so he doesnt get hit. He end up stopping the clock and giving the cowboys a lot more time to come back. Tony romo gets plenty of time. 80 seconds to march down the field. At the end of the day thats a coaching thing because thats got be communicated before you go out on the field, before the play that listen you do not throw an incomplete pass. Throw to an open receiver for the touchdown or take the sack. You cant do what they did there and that gave romo plenty of time to march down the field. Exciting finish. It did. Not here in new york. I was reading the recap, i wasnt able to watch it. So marcus threw an incomplete pass than touchdown. Yes. Then jaimes got the ball and threw a touchdown to the other team. Exactly. Two Amazing Things happen. Jaimes winston first quarterback since brett favre to throw a pick six on his first pass ever. Thats an incredible thing to come to the nfl, your first pass is picked off for a touchdown. Mariota throws four touchdowns in his first game in nfl. So quite a debut for mariota. Winston, he said all the right things afterwards but a rough way to get going. Every sport has a deal too. That was ugly. A bad team. He came in. I like the way the jets looked too. Its better they are separate. Rex ryan was a problem. If he can do well in buffalo. Hes got a lot of excitement going in buffalo. A lot of people thought they would be better this year. They got a win out of home game. He has a tattoo on his leg. Lets talk tennis. I was getting to. If there wasnt a djokovic, federer would have 22 majors by now. You cant do it that way. You cant. Djokovic is the best. Djokovic is clearly the best in the world. Federer had as good of a look as hell get at another major. He didnt lose a set before last night. He comes in not having lost a set. Was playing great. Djokovic is so what happens with djokovic hes so good defensively. He gets to everything. That other players start pressing start going for winners they shouldnt be going for. Thats what happened to federer last night. I want to ask a business question. Hes a tv Business Media guy, this is the first year that the finals have aired on espn as opposed to cbs. And espn paid a fortune for these reits. So my question is this year from a ratings perspective are a lot more people going to watch on espn or lot less people. Its an interesting issue. You look at the u. S. Open or rather the masters, they are on cbs and they dont care about how much money they get. They just want the exposure. Is this good or bad for tennis. A couple of things. First of all venus versus serena on espn last week did a 4. 8 overnight rating which is the biggest tennis rating weve seen in many years. Over and above the mens finals on cbs for years and years. This was a blowout rating they did with venus and serena last week. We dont know last nights numbers. Theres a rain delay for three hours. That match didnt start until 7 00. Espn probably got hurt because they went up against a football game. But cbs was not they would have hated that last night. That would have gone into their primetime and a miserable situation. Espn was pretty happy in a way to have that match slide back. Bigger audience later. But had to face nfl. Espn is clearly a good partner of the usta. Happy to have everything in one place. Well see how the audience numbers stack up at the end of the day. Long term better for tennis not to be on the network . Network versus cable isnt the distance. I dont think it makes a difference. Mcenroy is the best. His brother. And chrissy. How great was she . Their talent choices were great. Im a fan. We had chris everet do it. It wasnt i didnt miss i liked it. I knew it wasnt switching back and forth. They kept putting lower third, the baltimorekansas city baseball game is not who was watching the baltimorekansas city baseball game. Okay. There are some baseball fans. Kansas city is in first place. Djokovic versus federer. A tough night to draw baseball. Seattle loss . Seattle lost overtime. Lynch in overtime they needed one yard on fourth down to extend the overtime. They give the ball to lynch. He gets stopped. So they try to run this time. He done get the yard. And that ends the game. That ends the game. So seattle ends up losing their opener in overtime. Notre dame went from unbeatable texas, they looked terrible. They pulled it out. They pulled it out. What else have begot . Listen, i think you got college. Washington state. Yes. Rutgers lost. What is this i know. They won the week before. I hope that money going to that conference you knew you were going to play you knew you were going to have to play these teams. I dont have to get on the field. You have a bunch of team i would call in sick. Plenty much teams still alive in the playoff. I think nfl first week is always, tough to figure out. Bengals. Whats real, whats not real. You got to look at opponents. Look who the jets are playing. Look who the bengals are playing. Is this real . Does this mean anything . Well look back on this at six, seven weeks they had a weak opening opponent. They asked miss america from georgia whether tom brady cheated and she said yes. How controversial. Its that or world peace, right . Have you seen the insurance ad of that . Ill tell you about it. I wont mention it on air. Great to see you. Always a pleasure. When we come back some big movers ahead of the opening bell. Later iphone preorder data showing stronger than expected demand, especially in china. Well talking to an analyst about the numbers. Good. How was your commute . Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Thank you for calling. Well be with you shortly. Yeah right. Xerox Predictive Analytics help companies provide a better and faster customer experience. Hello mr. Kent. Can i rebook your flight . Im here Customer Care can work better. With xerox. Wait im here mr. Kent i was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Lets look at a couple of stocks to watch this morning. Raptor pharmaceuticals is getting hit hard. The company is discontinuing or might discontinue development of an experimental liver drug after it failed to meet the main goal in a second midstage study. H r block was downgraded from neutral to buy. Its being upgraded to buy at Goldman Sachs. Nokia was added. Valuation, synergy and capital return are attractive. Marvell downgraded to equal weight at morgan stanley. Marvell is owned by have to be marvell. Cites an investigation into accounting issues that was announced on friday. So no tv. You could watch tv but youre i was at dinner. Big family dinner. What if there was a tv at the side, like in the corner. One of my cousins was running off to check the scores here and there but coming up is that kosher thats probably not kosher but we won in other sports. Coming up the countdown to thursdays fed decision is on former treasure secretary under secretary john taylor say they should raise rates. The key question is will they. Tune in to squawk to find out the answer. Well be back in a moment. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Fed ache. I got a headache this big. What investors can expect and where you should be putting fwhoerng after the big decision. Our market panel is ready to share their investing thoughts. John taylor. Cashing in on the catwalk. Why wait for designs to hit the store when you can buy them off the runway. How the cofounder is disrupting the world of fashion. Could mark cuban crush donald trump in the race for the white house. The billionaire emailing cnbc some cheeky comments about the race. We have those comments as the final hour of squawk box begins right now. The final countdown live from the most powerful city in the world, new york. This is squawk box. Welcome back to squawk box right here on cnbc first in business worldwide. Im Andrew Ross Sorkin with becky quick and joe kernen. Were less than 90 minutes away from the opening bell on wall street. Take a look at the futures. Things have been up and down. Well call things relatively up. Dow moved from negative to positive. Same thing on s p 500. Nasdaq looks to open higher about 8. 5 points hire fup look whats going on in europe, we have a marginal down arrow across the board and then take a look at oil prices at the moment. Well put that board around and youll see whats going on. Wti crude, 44. 41 but a couple of investors and analysts saying that number is going down. Goldman sachs with the scary call of things going down to 20 a barrel. Lets get you caught up on other stories. Robert schiller says growing number of investors believe u. S. Stocks are overvalued. The Nobel Prize Winning economist argues this creates the risk of a significant bear market. However, tom lee told us a bottom in stocks may be in place. Some things you look for to say bottom is in are usually small caps out performing. Almost always turn up one day to two weeks before the actual bottoms in. Is that happening . Small caps bombed versus s p on 24th of august. Disappointing Economic Data out of china put pressure on stocks there overnight. In the meantime government officials there announcing beijing will work to reform its Stateowned Enterprises and introduce what they call mixed ownership. Shanghai composite closing down by 3 . The index dropped as much as 7 at one point before coming back. Barons says alibaba could lose another 50 of the value. The stock is trading about 25 times the average earns estimate from analysts and argues that number should be closer to 15 times like the multiple of ebay. Now alibaba is fighting back posting a letter to barrons editor. He says the article contains factual inaccuracies and selective use of certain information and the conclusions the reporter draws is misleading. The letter is five pages. Its good. There were parts that were compelling. Hard to say which side is right. We are just two days away from what could be the most highlyanticipated fed decision on Interest Rates in over a decade. Joining us right now to give us their perspective is michele girl regard chief u. S. Economist at rbs. Michele, tell me what you think will happen. Will they raise rates . Looks like were having some problems hearing michele. Michele you must be able to hear us. Give us a moment. Ed we made the argument or i made the argument no matter what happens the market is going to be dissatisfied with what the fed does. That you got half the market. Basically a split. There hasnt been clear telegraphing. No matter what happens half the market will be disappointed. From purely the markets point of view best thing is to raise rates but simultaneously say they are done for the rest of 2015. So you would satisfy the people that to see some kind of an increase but at the same time give some certainty about the future course of rates which that uncertainty is causing most of the angst. I have a hard time thinking the fed will saying were one and done. They dont want to box themselves in. They can hedge a little bit unless theres some extraordinary data. I think you want to give, being a great if the fed could give a little bit of certainty of what the course might be over the course of the next couple of months and then well say in 2016 revisit the data and determine what the future course would be. Where do you think they are focusing or what data points are they focusing on. Job numbers have been very good. Auto sales have been very good. Things on the other side of the ledger the main thing is that inflation is still well below their target and isnt moving towards it. So i think thats the focus of their attention. Also i think its fair to say from various comments though they are considered the global consideration. They do consider whats happening in the market. Not a primary but a secondary one. They made it clear they think of a lot of different things. Most important is whats the labor Market Conditions which is getting much better and then whats inflation. Inflation has stayed low and looks like its dropping. Were still working on michele. Ed, just in terms of the market we had a lot of people who have come on and talked about things in the last week. Last week, we could be looking at a huge change thats taking place. Reserves are starting to dry up after pouring in for a long time. That could be almost a generational type of shift. I agree and disagree. First of all that selling of treasuries by china and brazil which basically what youre talking about, hes correct but theres enough demand from baby boomers and institutions that serve them to soak up that demand. Baby boomers are going to be buying as much as china is selling . If you look at the numbers theres trillions of dollars outside of the united states. Not all of that will be sold. Look at the price. If you would think that the sales which are already taking place by china and brazil would have an impact were still about 2. 2 . Theres plenty of demand for high quality Long Duration assets and i think theres some concern about what earnings will do. We know margins are quite high. Growth is close to zero. Earnings growth is expected to rebound but rebound is based on Energy Earnings rebounding. You probably will see a market while were still in a Global Market but the pace will be significantly slow over the next couple of years than last several years. What do you think about the markets evaluation with the correction, with the pull back. I think stocks are pretty fairly valued here. I think youll see, again, were still in a bull market but the pace will be more like kind of 7 total return not double digits weve seen or double digits weve seen in the last 0e years. You still buy on dips and you hold off in between . What weve been doing right now, we did buy is this a dip we did buy a little bit. Not tremendous. But we did buy. My portfolios today were around benchmark weights for stocks. Were not being tremendously aggressive. Theres not a tremendous amount of conviction on our part based on slower Earnings Growth. At the same time i think well still see stock prices rise. Are you on benchmark evaluations for things like stocks . For things like bonds . What about cash . I hold a little bit more cash than i normally would and thats partially because if you do get reaction from the fed and whats happening in china i want dry powder to put to work as we did that day when the dow opened 1,000. We were buying that morning. Ed i want to thank you very much for coming in. Our apologies to michelle g ira rd. When we come back this morning you like what you see on the catwalk. Vogue contributing editor has created a fashion paradise for those who cant wait for it to hit the stores. You have to pay up. A woman joins us after the break to explain that. Rose gold is the hot color right now for apples latest iphone. Well talk preorder numbers and how long i want will take for you to get the latest versions. Squawk box will be right back. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Welcome back to squawk box this morning opinion new York Fashion Week is full in swing bringing the spring collections of designers to runways and luxury retailer offers right off the runway looks to the shopping carts of coveted High Net Worth shoppers. We have the cofounder here and vogue contributing editor. Welcome. Thanks for having me. Tell me about this company. You can buy stuff you can watch it on the runway and go online and buy it. Absolutely. Used to be fashion week was reserved for a small elite few Department Store buyers, magazine editors, maybe actress, socialites. And it was really closed off to the rest of the world. So what we did we enabled our customers sit front row, see everything that goes down the runway and preorder it. I thought they werent trying to sell a lot of the stuff. Obviously they would like to sell a lot of the stuff into the right people. Absolutely will help them do that. Are they thinking this will help their sales and stuff they make for runway actually whats interesting it gives a really interesting end customer feedback. Our customers are responding saying what they are like, whats working. So immediately the designers know what went down the runway and customers are responding. Sounds theres an analog digital component. Youre putting your customers in the seats. In the proverbial seat. Proverbial front row by watching online. Watching online and preordering online. What is the cheapest garment youre selling . We found our niche. Were doing high luxury. During fashion week our average order is around 7800. For 7800 you would think at a certain price point there would be a dynamic at which you would actually want to thereabout. You would think. I would love to say i was surprised. I know how the luxury customer shops and there are certain things she cant get anywhere else. If it means putting 50 deposit down and waypointing for that item to be produced for you and delivered to you, its something she cant get anywhere else. You say that people are immediately saying what they like, the designers get instant access to that. Im guessing people say what they dont like. Some things sit on the side and get no fraction, no response. Our customers are savvy and its interesting they really pick up on whats good. If its a great collection or a new designer we see them responding. When i say there are things on the runway that i think are for sale i imagine there are certain pieces that are show pieces that arent necessarily the things they expect the guy at saks to put on the floor. A lot of things youll see going down runway people go who will wear natural . You with embellish, really high fashion items. Those are the ones that yes wouldnt get produced unless our customer specifically requested it. Who are your customers . Are they new york . China. Its international. We ship internally. Shes either working, wife, 36 years old, has multiple addresses. Usually around the world. Speaks multiple languages. And is really interested in things she cannot get anywhere else. Does she put the order in or assistant . It depends. Weve seen everything. Weve seen 300,000 sales done over text message wow. How many customers do you have . How much money can i ask . I know its a private company. It is a private company. With 7800 average order value, were definitely, were five years old. Were going to turn a profit in the near future. Were very successful. Always planning on staying in this niche or in terms of growing business. Absolutely. Do you have to go down market at all . I refuse. Our customers no one else is servicing her online especially in the high fashion area. This is really our niche. Its where we belong. Its where im obsessed. Selfish file question. We always call the customer her are there any mens clopting. Were able to make things in specific sizes. So whether a swoom large size or has a small shoe we can accommodate her. Yes. Weve had ostrich shoes made in mens sizes. Weve done special things. Youre so involved and engaged in this interview its like fascinating. Like the sports guy. To see you that engaged, we need to book more things like this for you. Exactly. What were interested in. Ostrich what . Ostrich skin trend. Up immediately want to bury your head do you think fed Interest Rates will go up and down with the hem lines isnt that how they determine. Thats good. What are they down. Coming down. A correction. Okay. Thank you. Appreciate it. Thank you. Coming up, facebook, can you actually get i would like to those are like happening places the front row of those place. But shes only getting i can get you in. You like the watch. I can get you in. You want to touch for 7800. Facebook wants to bring Virtual Reality to your smartphone. That story is next. Economics Professor John taylor on why now is the time for the fed to move on Interest Rates. Later is mark cuban thinking of following in the donalds foot steps why he says he can beat the republican businessman and Hillary Clinton, meanwhile take a look at futures right now. And they are now down. They were up 50 earlier now down 18. Been a turn around. Well be right back. Im watson. And today hundreds of companies are putting me to work. Im teaching watson to help your vet speak dog. Youre a dog, right . Im teaching watson to help you make healthy choices. Im teaching watson to help design a vacation around your personality. Dont judge. Im teaching watson to answer endless questions. How big is infinity . Where do babies come from . Why cant i have chocolate for breakfast . Im watson and im ready to work with you. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Me interviewing me, thats what i call a great idea. [ laughter ] of course its a great idea, we thought of it. [ laughter ] are you ready for the Republican Debate . Its really going to be a big debate but im always ready. Its not just big, its huge huge, huge, huge, huge, huge. [ laughter ]. [ applause ]. That was donald trump joining jimmy fallon on the tonight show. Friday the video going viral. In other political News Donald Trump blasting high ceo pay as a joke calling it a disgrace. Heres what he had to say on face the nation yesterday. Its a shame and its disgraceful and sometimes the boards rule but i would say its less than 10 . And you see these guys making these enormous amounts of money. Its a total and complete joke. Its complicated. Is there anyone else that can tell face the nation or meet the press im calling you on phone and youll be happy. Im not coming in your studio. You want me im going attorney. Thats as good as it will get. Okay mr. Trump whatever you say. Unbelievable. Isnt it . He did go on, though, on the tonight show. Yes. If he started calling in i would Say Something else. What do you make of the comments. He says great stuff all the time. Its very positive. Its very populace. Among liberals they love the pope now and liberals love the stuff donald says. When it comes around to it, all the liberals will convert to catholicism instead of atheism and they are going to vote the more you see donald behind a podium with the American Flag behind him the more president ial he looks. The more he reads the ceo pay issue. Youre right more president ial he looks. More sanderslike or president ial more Bernie Sanders. No comment. Lets talk about the fed and focus this week. Joining us once again is michele gerard. I hope this is working. Lets try this one more time. What do you think the fed will do. Up and ed covered a lot. I thought very much along the lines of what you discussed. We think they will end up going but try to shall that that could be it for the year. You raised a very good point, becky. It isnt like they are going to come out and say thats it guys were done. But i do think that they can ren fo reinforce the point that rate hikes are not on a predetermined path. They will raise the question assuming another rate hike in december may be too soon they may do that, for example, the dot plots may show that the majority of them feel that one hike this year is appropriate. So i think i think fed would rather be in a position of even though it will be painful to hike to talk soothingly to the markets perhaps for the rest of this year as opposed to not going but then we have to have this hanging over our head for the next three months. The journal lays out a good piece today that describes the central bank tried to raise rates in the last several years and have stumbled and had to give up along the way. They pointed to the ecb, they point to israel, they point to sweden. There were a number of missteps with Central Banks that tried to do this. Are these missteps or just going to be how this cycle ends up playing out for many Central Banks as they emerge from a period of prolonged accommodation. Were so used to when we have hiking cycles we go off. When we have easing cycles we go down. This is a very different circumstance. It wouldnt surprise me at all if you get not the set step path of higher Interest Rates but you get a move and then maybe no move for six months and then maybe another move. At some point the fed has to reverse. I think its going to look this whole cycle. Reverse . Thats what the ecb had to do. Exactly. I dont know in the end if that necessarily means that making the move up was wrong. In the ecbs case it looks like that. But this fed has to respond to evolving situations. They have to be as forward looking as they can. I do think as we talk about sitting at zero most of us feel probably not correct. I know its not going show itself in inflation but in other ways i think this misallocation of resources because rates are too low is problematic and thats what i think bubbles in places. Or maybe youre not seeing proper economic decisions being made. People arent investing in technology, for example, because they are encouraging shareholder friendly activities because the equity market has been such a beneficiary. Again, these are things that we dont know now but fundamentally i think is why i would like to see the fed begin to move rates off the zero ground. We dont need emergency rates any more and i think the economy can handle it. What you just laid out is a case for more volatility, not knowing whats happening, being in unchartered territory, not knowing if were going six months without a rate hike or reversal. That sounds like a lot more volatility. It may be. May ultimately be that way. Doesnt necessarily have to be. Lets face it, rate hikes are not nearly as fun to execute as easing Monetary Policy but the fed has to step up and do the right thing in here and i think if they show leadership and confidence then the markets are going to ultimately be in a much better shape. The fed cannot be beholding to markets. Michele thank you. Coming up we have the countdown. Economics professor and information treasury secretary for International Affairs john taylor will join us after the break. With centurylink as your trusted technology partner, you get an industry leading Broadband Network and cloud and hosting services. Centurylink. Your link to whats next. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Everyone. Heres what in our headlines. Big political news out of australia. Ruling liberal party votering out tony abbott as prime minister. Long time rival winning the role. I met him years ago. I covered the olympics in sydney, australia and went kayaking with him in the sydney harbor. Youre kidding. Goldman sachs vice chairman. Lets tell you about Corporate News. Check out shares of raptor pharma. They may discontinue development of its experimental liver drug after it failed to meet the main goal in a second midstage study. Gas prices plunging. The average price of a gallon of regular unleaded is now down 27 cents a gallon. Nations average 2. 44. Weve been talking about facebook. Bringing a virtual app to let users change viewing aspect. Its in stages of development. Mark zuckerberg has called servir tall reality the next executing platform. A year ago facebook made that big bet on the Virtual Reality head set. Markets are waiting to see if central bank will raise Interest Rates or not. John taylor says now is the time to move and he joins us now to tell us why and i think its similar to some of your reasons you high liked in the past, professor. And in guess is it overstating it to say you think were already behind the curve in terms of normalizing rates . No, i dont think its overstating it. Ive been arguing we should be normalizing, getting back to policies that work pretty well. I think the economy is ready for that. Of course, theres always worries about turbulence as it moves. You heard a lot about that in the last few weeks. But if not now when . I think basically be good for the economy again, looking for short run turbulence. But theres been so much discussion and so much back and forth at this point i think it wouldnt be a good idea to postpone it any further. Im sure that you dont need to read the journal or the article in the journal today to know that in the past few years the results of countries that have raised rates, it has not been hasnt worked out in most cases and they had to bring rates back down. Do we have a different situation here if we knew we were going to do that we shouldnt raise them, i guess, right . Yeah. I think one of the reasons the fed has delayed is they are concerned about having to move back again. Always a concern for a policymaker, you move in one direction and you got to back off of that. That could happen but i dont think so. Actually in some sense if we were back to a more normal Monetary Policy there would be more flexibility if the economy does weaken again. But the macro fundamental indicators its about time and i think the debate really is more whether the turbulence in the last few weeks coming out of china and other parts of the world, is a reason to slow down on this. A lot of people argue thats why you see so much disagreement within the fomc at this point. If you keep delaying, always going to be a reason to delay. Always a reason to postpone, then you dont do it at all and i think that would be more disruptive to the economy. Looking at the global savings glut whatever you want to call it, whatever larry somers, whatever term you want to use, do we have to recalibrate what normal is in terms of what normalizing rates at this point is. Nobody thinks they will go back to 5 , 6 , 7 or any time soon. I think its a good debate to be having. I dont see the reason. Were also way below that, no matter how you do the calculations. Getting back to a more predictable context, in the discussion how we should be going, its good, its healthy. I dont think its a reason to delay. By the way i think part of this debate about long rates has to do with the socalled secular stagnation. Is the economy in a funk . Well never get back to high growth. In disagree with that. I think a good change in policy will heed to higher growth. To some extent its part that. Getting back to the kind of policy that worked quite well in the 80ss and 90s until recently. The sheer size of the Balance Sheet and Balance Sheets around the world or money that has been, you know, not necessarily it isnt in the system yet but ready to go if people were to borrow it, is it going to be a problem technically to try to sop Southern Plains of that up. Will it be expensive for the Federal Reserve to do that . They are going to have to pay more interest on reserves to the banks. Theres a lot of reserves. They have this other method the overnight repo trying to help them with that. Until the Balance Sheet does return to more normal levels it will be a while they have to use these other methods like paying interest on reserves. We dont know how it will work. They have to do that in the meantime and they are talking about it. Thats good. They are describing how its actually going to work, some of the mechanics the markets need to know about. They said theyve never done it and ready to work and prime vice. In read that and should i take solace in that . We know exactly go ahead. Its been a concern of the global Balance Sheet how well get back. They laid it out. They looked at it. They experimented. They have some experience back in 2008 when the rate was moving down. Now its going to be moving up. Ate little different. I think it will be fine. But they have to do it. They have to make the decision and well see what the reaction is to that. I think ultimately it will be a positive and continue with this until they do bring down the Balance Sheet again. Hem lines are headed lower. In the past that means a down market. Now im worried. I got a lot of things to worry about now. Right . In the past. Weird loud lipstick. Weird its coinciding with the first move with fed. John taylor, thank you. Dont know if you have it in your quiver. Thats another thing to consider. See you. Thank you. When we return, preorders of the new iphone. And mark cuban on the race for the white house. How he would run a campaign and what he thinks of donald trump and Hillary Clinton. Squawk box will be right back. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. I. Welcome back to squawk box. Apple ceo tim cook will ahear on the late show with steven colbert. Colbert announcing that news via twitter showing the guest wearing his apple watch. Siri put apple ceo tim cook on my calendar for tuesday september 15th. Oh, and come up with some questions to ask him. Put apple pie on my menu list. Im never using her again. You think its getting better. Lets see if we can do it. Siri, ten questions for apple ceo. We need a question for tim cook. Im sorry im afraid i cant answer. The interview will be cooks first appearance on the Late Night Network talk show circuit. Also we should tell you about apples latest iphone. Apples latest iphone is available for preorder over the weekend. Josh lipton joins us with the details. Josh, good morning to you. Reporter apple investors this morning waking up waiting to hear how those preorder. We just got some color for apple. Leapt me read you customer response apple saying to the iphone 6s and 6s plus has been extremely positive and preorders this weekend were very strong around the world. Were on pace apple saying to beat last years 10 million unit first Weekend Record when the new iphones go on sale september 25th. As many customers knows apple went on to say online demand for iphone 6s has been strong and exceeded our forecast for preorder period. Were not getting the same number we did last year. Apple said last year they got 4 million for 6 and 6 plus in 24 hours. That was a new record. Theres a lot of bullishness on the street about this weekend about this launch. I was talking to pipers, an apple bull. These preorders benefitted from new tail winds. One the launch of more countries. China this year, new zealand. Also carriers. At ts and verizons incentivize people to upgrade every year. Its not just a headline. It gives you some indication how this 6s and 6s plus is being received. Thats the biggest question for investors with these new cameras, faster, improved camera in these phones. Thats going to really be the big issue for investors. Will that be enough to really move grow iphone units in december and quarters ahead . Guys back to you. Josh thank you for that. Lets bring in the managing director at bti research. Is it enough to get people excited . Doesnt seem like its enough from a hype standpoint but from functionality how people use siri and touch i. D. Or 3d touch. Huge piece. On the cover business week last week about this. Really talks about how much time and money was spent to build this technology. They seem to make the point its a subtle technology not talg that would force somebody to run out and buy it. Josh talked about that in a video or in an interview. What he said also is its going to change how people use the iphone. Its true. One of these things youll use every time. Youll access your apps more quickly. It will save you time. Thats the thing people care about. I got to say im surprised with these numbers. Its going to be interesting to see how investors react. Apple could have said nothing or they could have put out a hard number that compared 4 million, 24 hours last year to whatever they did over 24 hours this year. They didnt do either one. Last year they opened up with 10 Different Countries. This year they have 12. They headed new zealand and china. We would have expected that the numbers, they would be on pace to beat last years Opening Weekend numbers. I dont even think they are comparing preorders to preorders. They are saying based on preorder our first weekend of sales will be at least as good or probably better than last year youre saying its not apples to apples. They are not saying a lot with this release. Maybe they dont want to set that precedent. Who knows what first weekend sales are. Last year it started on thursday night. Because of the late labor day it started on friday. They have to wait through tend of monday to find out what the number will be. They are talking about they are on pace so that first weekend of actual sales. Were talking late in the month, what is it september 26th. Yep. September 25th. Projecting out to there what numbers will be. They are not counting preorders. Preorder number how representative is that in terms of what the fall and into the Christmas Season will look like. If its huge out of the gate take that number over the total number of pops and the ratio is such a minimum as far as what they end up selling in december hard to draw any type of correlation. Hasnt bean year where its up and down. To say it was down this year and ended up to be huge quarter. Other thing people focus on this thing sold out. Over twitter oh, my god phones are Still Available but the reality is they were available for several days last year. Its not like these sell out in minutes or hours. I want to ask you about apple tv and the watch. The watch has not sold tremendously well thus far. We dont think that. You dont have one. Its not sold sold tremendously well compared over tory other wearable app. Until he gets one its a failure. Thats not what im saying. You going to write a blog given the price point of watch and apple tv that that becomes one of the Great Holiday gifts of the season. Do you buy that argument as a watch . It could be. Go prowas supposed to be holiday gift. It sold a couple of million units. I dont know what a holiday gift drives you. The watch will be doing well. People are buying the phone if your significant other got the 6s, 6s plus what am i going to get them for christmas. Get them the watch. I also think that with this watch os 2 update coming out in a few days theres some things they need to get right with that. Apple tells me they have been working on some things like the apps. Working on tweaks to get it faster and complaints its usually slow using external apps. The weather which is a built in app thats slow for me. Pretty consistently. Its faster for me to take out the phone and tap the weather app than get it on the watch. Things like that you want to work better. Walk us through your concerns to the extent you have them about china right now and apple and their market share. My skeconcern is i dont kno. Im not an expert on china. When the stock market took a dive and cook came out and said everything is fine thats great but until we actually see the numbers flow through its hard to know how a person in china is perceiving buying a phone. Its more expensive there than here because of the taxes. China is extremely important for apple but also important is the fact that apple is building out its retail store base aggressively despite worries people have. They are investing in the future there. They are launching this phone in china at the same time this year is important for them. So probably for investors its the long game, apples long game in china. How often do you switch pretty much never. How many bands you got . I have two. How often do you switch . I dont switch any more. In used to switch. You buy the me . No. Look at this. Do i look like im there . You do. Yes, you do. Cook put his reputation on the line by sending cramer the email saying china is fine. If the numbers dont deliver through thats his reputation thats on the line. Secondly to see the chinese, you know, theres a report saying sales were out in china, thats another positive sign but, again, it doesnt flow through then it will create more uncertainty. Thank you. Appreciate it. Coming up next when we return in mark cubans words i crush trump the billionaire telling cnbc how he would structure his campaign plus thoughts he would structure his campaign, thoughts on Hillary Clinton and more. Check out the futures right now at this hour. Youre looking at a mixed picture. Dow looks like it will open low lower marginally. News this morning. A New Washington post poll finds that Hillary Clinton and donald trump are separated by a threepoint margin. 46 of registered voters chose clinton, 43 chose trump. The republican candidate also hit the stage wednesday night ahead of their next debate. Trump is leading ben carson and jeb bush. Mark cuban telling cnbc he would crush a donald trump if they were to run head to head. At the end of this, we have donald trump, mark cuban. If you could just update whether kanye said anything, or any other people that might be i havent decided yet. Larry kudlow may do something with the senate. Everyone can be a superstar in hollywood. But not everyone is a billionaire. Mark cuban said he has no plans to run for office but hes been inspired by this donald trump campaign. He thinks trump is somebody who has broken all the old rules and you dont have to have a perfect past to run for political office. He said the idea of a president ial campaign is a fun idea to toss around. Heres what he told me. Look at some of his quotes that we have up on cnbc. Com. He said if we have a three comma p otust would not take long before the office humbled him or her. He also said if he was matched up against Hillary Clinton or donald trump, he said he would beat them. He said if i ran as a dem, i know i could beat Hillary Clinton. If it was me versus trump, i could crush him. Heres the issues on mark cubans mind. Important to him are the idea of income inequality. He would want do something about that. Do something about college debt as well as overly complex taxes. And cybersecurity and broken equity markets are key, as he thinks about what this country needs to be doing going forward. He said the equity markets are being taken over by stock market hackers. To me, all of this sort of brings up this important question in american politics now, which is that if donald trump has done nothing else, my guess is that what hes done here is sent a signal to other billionaires across the country that you dont have to sit on the sidelines. You dont have to be a donor or a fundraiser or somebody rallying support for your favorite candidate. You can cut out the middle man and run yourself. My guess is well see more billionaires running in 2020 than in 2016. Ross perot ran. Pat paulson ran. He didnt get far. Perot i remember. Perot was spoiler. He made a big difference. He made a difference as a spoiler. Not as a potential president. He made a difference in who got elected. Howard schultz. With the resources, and cuban says with the arrogance, he might want to look at this and say i can do this. Difference between running and getting elected. Big difference. When we come back, scary statistics on student debt. A shocking number of people defaulting on loans. Details next. Plus our 20th anniversary of squawk box continues. Well mark the milestone for the show for all you trivia fans out there. Check out these names from back in 1995. These are companies that went public the same year that squawk box launched. Stick around. Excellent looking below the surface, researching a hunch. And making a decision you are type e. Time for a change of menu. Research and invest from any website. With e trades browser trading. E trade. Opportunity is everywhere. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Hey hi our cloud its a platform based on awesomeization really . Can it keep our data where it needs to be no matter what country were in . Integrate with our systems to help keep transactions secure . Combine Customer Data with likes, tweets, the weather, to predict trends . That would be awesome. Tote . Now theres a cloud that understands business. Now theres the ibm cloud. Its more than a nits reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youreree to focus on growing your business. Centurylink. Your link to whats next. Welcome back. Its no secret that student debt is becoming a huge issue in the country. Now the wall street journal is analyzing data. The paper finds that more than half the students at 347 schools defaulted on loans or failed to pay back anything after seven years. Many of the students went to for profit schools. Students in those schools received 2. 2 billion in federal loans last year. Our 20th anniversary celebration continues tomorrow. Well have a conversation on the future of College Education with administrators from georgia town, arizona state, also former senator bob kerry. Thats tomorrow. Join us for that. Squawk on the street is next. Dont say it, well sound old. Good morning. Welcome to squawk on the street. Im carl quintanilla, with michelle car ruuso cabrera join us. The bulls will try to build on the do youws best week. Europe is having a slightly beer