Transcripts For CNBC Squawk On The Street 20161005 : vimarsa

Pitch as its expected to field acquisition offers this week. And unexpected fireworks from the Vice President ial debate last night. Well look at the highlights and the impact on the campaign. Amazon hitting another alltime high yesterday. Announcing prime reading, which unlocks thousands of kindle books for free. What that means for the industry. But first up, twitter shares rising in the premarket amid some increasing talk about a possible sale of the company. Comes more than a week after david broke the news that twitter has received expressions of interest from a number of Tech Companies that are considering whether to make a bid for the social media company. Little more color being flushed out by some regarding splits on the board between av and dorsey, the role nodas had in sort of driving morale. Yeah, interesting story from bloomberg. Our reporting sort of is where it was, you know, perhaps it is this week as i last reported. There was a formalization, more or less of a process, that was ongoing. The expectation that bids would be therefore received under that process. And the idea of it you would move fairly quickly to figure out whether or not youre going to sell this company. And so what was it last week i was reporting it could come as soon as 30 to 45 days. Well see. Well see what those bids look like if and when they are received. And, you know, jim, i guess the key question continues to be about the company that you spent a lot of time with over the last 24, 48 hours, salesforce, which led my reporting back to almost two weeks ago, i guess. Maybe more. Im losing track here in terms of its interest. But will they follow through . They seem to be getting a decent amount of heat from their own shareholders. Go through any number of notes in the Analyst Community following them saying what are you guys doing. But youve had a lot of time, i would think, as to get a sense of that. And youve already been discussing it for weeks prior to even my reporting of their interests. Look, david, i think that you got to understand, if anything, accelerate if somethings going to happen probably happens this week. Second, i think whats really important when you think about salesforce, you have to think about fidelity, they own 14 , t row, kraft owns almost 2 , these firms i do not think want salesforce to do it. Look at salesforce stock today. This is indicative of what would happen if they would say, hey, pay 29. Which i think its available at. And one of the things you have to recognize is that whoever buys them is going to get killed by them at least for the first or second year. I think all the guidance we see for twitter is too high. I think when they report on the 25th it will be terrible. I think that the company itself has not only lost momentum but people out here are starting to speak about myspace when they discuss it. Meaning that if nothing happens, thats what they degenerate to. However, someone buys them and i dont think there are a lot of bidders at these prices and id certainly like to take disney off the table, i even think at a certain point you have to take alphabet off the table, if you can buy them and turn it into Something Like facebook, its the holy grail, but in the interim its like buying an nfl team with no players that of any note and losing for two years the moment you buy them. Yeah, now, i have to tell you, i mean, people familiar with the situation have indicated in the past that theres value there that at least could be perceived on the part of potential buy thaers is not fully appreciated by the market. That is typical of what you might hear from somebody charged with potentially trying to sell said company, jim. But there is that element to it. You and i have talked about it now for weeks in terms of its not really going to be a number based on earnings per share or even Revenue Growth as much as its going to be on some sort of aspirational goal that you can achieve as a result of taking control of this asset. Yeah. Look, you blow everybody out. You spend 20 billion. You would take a giant hit. You dont have any growth from the company. They havent spent any money to grow the company. We think of this company as a company you watch the nfl with, that is meaningless to the acquirers. I think the acquirers want the information flow, they like data. They want to be able to use Machine Learning and Artificial Intelligence to inform customers what people really want. That is not what twitters been able to accomplish. And i think because it hasnt what happens is if you buy it, all of these large shareholders would just rebel because it wrecks your growth trajectory. And it would even wreck alphabets trajectory if you spend 20 billion. If youre a company the size of salesforce, you have to have other buyers with you, you have to be able to sell some, you cant just buy it and not expect your stock to be cut maybe even by as much as a third. Jim, i want to clarify this comparison to myspace. Youre saying without a bidder they disappear . Thats whats being said . There are people is that what you believe . That was brutal. There are people who believe that twitter literally is a company with no growth and that someone can come in and create a twitter. That this company is so poorly managed that it literally can be duplicated or be forgotten about. Now, i think thats extreme. I think that the idea behind what i think just so you know the myspace analogy has to do with what the fidelities of the world might think theyre buying. And what it means about your core business, which is that you must have no faith in your core business, youre buying a company that could be like myspace, it is going to be an obliteration of your earnings. Now, myspace being that twitter is a disaster for you the way its set up. I got to tell you, i know people at home on twitter dont want to hear this, but it is a disaster. Well, listen, jim, my reporting prior to that september 8th Board Meeting when i focused people on that meeting was in part a result of the boards belief, not quite in things being as bad as youre describing them, but certainly the idea being that are we really going to be able to achieve shareholder value simply going along the course we are given what may be anemic growth rates were going to see. It was not lost on the board. That is why we find ourself at this very juncture right now. Right. The question of course to the point weve been making is where do we end up and where do you end up as a twitter shareholder if in fact they do get bids this week and hopefully well able to educate the market on that at some point. Jim has benioff tonight. I think it has growth like yahoo has growth. Yahoo has growth, of which we realize it ran out. And i think that what most people are concerned about is that its not near growth, it is no growth. It is true that growth has been sometimetymied for six mon. Jim did speak with chris about this very topic. Take a listen to this. Twitter would be complementary to many of those companies. Yes. Theres no doubt about it. It has a unique set of data that nobody else has in the world, and it has it faster than anybody else in the world. Yes. Theyre problem is not the input. Their problem is making it useful and easy and accessible and fun for all their users. And so the good stuff is in there. Theres a lot of junk. So who buys it . Which guy . I dont know of who, but i can see why google i think google has finally flipped a bit from thinking about it not scientific in Computer Science enough to wow thats the worlds best data and if we dont have that our search results wont be as relevant anymore. I can see facebook looking at it saying weve tried to cop it it over and over again, we need it defensively. Microsoft was the first guy who did the revenue deal with us at twitter. He understands well. I dont know about apples ambitions because theyve never been good at social and community, but benioff loves it. It might be too expensive for him. I dont know. Fascinating to listen to you guys go at it, jim. I wonder if you think this idea of facebook buying it being redundant so many overlaps with what theyre trying to do themselves, does that make sense to you . It makes no sense. The only reason you would buy twitter is that for one day you hope to have as much information as a customers facebook would have. Bob iger, if he wants to set his company back to the stone age, he can do it because it wrecks their whole earnings trajectory. I think the problem is exactly as sacca described, which is this is a data company that doesnt know its a data company. Its a company you can mine for what individuals want but instead its a trash talking site about Kim Kardashian and whether the thursday night Football Game is any good. I think that overall when you speak to execs out here offline, what they say is, wow, what a shame. What a shame that these guys cant pull it off. How much would it cost to be able to reignite the company, get rid of everybody . And the answer might be too much for fidelity. Too much for t. Rowe, these are not private companies, these are companies with shareholders. If you want to take your stock down, you buy them now with the idea that maybe three or five years from now you can rival facebook. And by the way three or five years, does that does anyone have that timeframe . I dont think there are a lot of bidders up here because i do believe that you have to accept what it will do to your earnings and what it will do to your stock, which is take it down dramatically. I dont see any other way to be able to express to viewers at home how much pain you would inflict on your current shareholders if you buy this company. Yeah. Wow. Ten minutes on twitter just now fascinating story. Oh, lord. Oh, come on, david. There were fireworks last night oh, lord. Well set aside five minutes. Let carl talk. Go ahead, carl. Mike pence, tim kaine at the debate in virginia last night talked about the economy, National Security, speaking of interrupting each other quite often, heres an exchange where kaine challenges pence to defend donald trump. Six times tonight i have said to governor pence, i cant imagine how you can defend your running mates position on one issue after the next. And in all six cases hes refused to defend well, lets no, no, dont put words in my mouth. All right. And yet, and yet he is asking everybody to vote for somebody that he cannot defend. And i just think that should be underlined gentlemen, lets talk about a lot of discussion about style last night, guys. But its been broadly noted that the real debate thats going to matter in the near future is the one coming sunday night, jim. Yeah, you know, when youre out here, you just hear about two kinds of businesses. Theres the old line business of which everyone accepts the fact that trump is very much a part of that. No ones saying that he doesnt have a business. No ones saying he doesnt know what to do. But they just speak about new businesses and creation of jobs and no zero sum. And, you know, this is they. Theres millions of executives out here, but the guys i was able to connect with in the last say 36 hours just dont understand him as part of what the current economy is. But when i watch us, i mean, obviously he is part of the current economy. Hes about growth, hes about creation and jobs, hes about understanding the way the tax code works. And i think theres contempt. Theres a lot more contempt out here than i thought. I mean, kind of willing to be abjectly contempt. Interesting. Thats a good point of view from out west. Were going to hear what mark cuban told you last night a little bit later on, jim. When we come back, amazon looking to set another record high. Thats not the only reason why bezos might be smiling this morning though. Were going to fill you in. Look at that chart. Take one more look at the premarket as we watch the pound, adp, waiting for ism services in about 45 minutes. Were back in a minute. Sten, whr friends about your job, maybe lets play up the digital part. But its a manufacturing job. Yeah, well ge is doing a lot of cool things digitally to help machines communicate, might want to at least mention that. Im building worldchanging machines. With my two hands. Does that threaten you . No dont be silly. Im just, uh, going to go to chop some wood. With that . Yeah we dont have an ax. Or a fireplace. Good to be prepared. Could you cut the bread . Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Amazon shares rising a day after hitting new alltime highs. The company introducing a new feature called prime reading. It allows prime members to read selected books and magazines at no additional cost, even if they dont own one of amazons kindle reading devices. Meanwhile, bezos topping vanity fairs new establishment list of tech titans, moguls, financiers and entertainers followed by mark zuckerberg, bob iger, elon musk rounding out the top five. Got more aggressive price targets on the sell side this morning, guys. Of course thats nothing new. No. I mean you go ahead, jim. Well, i just think that, i have to tell you, the one company thats not here is the company thats most feared. And its the one were talking about. When you speak about Artificial Intelligence, Machine Learning, everyone admits that with the exception perhaps of facebook, these guys are so far ahead of everybody else. And all the customers in the world who are involved with the total Addressable Market of retail are totally being left behind. And know it. Because amazon is one step ahead of the posse everywhere. David, i got to tell you, when im out here, this is the most feared company on earth. Yeah. Well, they do they innovate at scale. I guess ive been hearing that for a number of years now, jim, but that is apparently a very difficult thing to do well and amazon does it perhaps better than anyone. Im glad to hear you mentioning a. I. Again. That came up yesterday in that google announcement, of course, where they said a. I. s going to be more important than mobile. Remember your assignment is to come back and report on a. I. , jim, and just how long we have before machines take over. Im expecting that in person. Look, a. I. Look, a. I. Is the most talked about topic. It used to be social. It used to be mobile. It used to be cloud. Now its using Artificial Intelligence to mine data. But why are you trying to do it . Because amazon says if you like this, you might like that. That is the ultimate Artificial Intelligence. And Everybody Knows that bezos does it the best. Everybody knows his devices are the best. Everybody thinks that amazon, if they go in and decide to take over a market, well win the market immediately. Ive got to tell you, just the raw reverence that is shown bezos out here, just the belief that this guy figured by the way, its this guy. No one talks about the company. Its like the company doesnt its this guy. And he figured out the most important thing is Machine Learning, trying to figure out what you want. And he succeeded. And everyones trying to play catchup, including facebook, definitely alphabet which i think is very threatened by amazon. But salesforce is trying to give people what they need in order to be able to compete with amazon. And amazon could sell and do anything. You know, carl, ive got to tell you, out here if we were to do the show, the show would be amazon and squawk. We should do the show from out there again. Hes doing half like every other day. Thats true. Just leave him on the air all throughout the day. I do like having him here so i can give him my looks up close and personal. But we should all go. Jim, i just wonder out there if the feeling is that google was pushed by amazon to doing this multipronged hardware, software, google, cloud, vr, pixel enabled phones if amazon is the drives force behind all of that . Yes. Thats it. Hard to push someone around, they found someone who could do it. When it comes to devices, jim, amazon has a somewhat checkered past. Remember the phone . Well, look, i think that amazon is perfectly makes mistakes and then immediately runs from mistakes and cuts its losses. I think alphabets phone actually could make a difference. I wish people would talk more about apple here. But apples viewed as a Device Company and not viewed as a company that mines data. And amazon, this mining data artificial i saw some Virtual Reality stuff last night, augmented reality, Artificial Intelligence, and it just makes me think, okay, we cannot keep up with the machines. We joke about the machines being smarter than we are. Theres no joking out here about it. Im not joking about that. Take a look that ted talk sam harris gave a few weeks ago. Take a look at that. About 14 minutes worth your time on a. I. And the challenges we have ahead of us. This is serious. I mean, we got a little time. Oh, no im not kidding. We dont have any time. Well, we have a little time until theyre able to until they exceed our intelligence. From there we lose control. We got little time. If you look at the data that twitter has and you add Artificial Intelligence, you would see a different company. But we cant think as big as the machines. One of the reasons salesforce calls next program einstein is because einstein was able to simplify the complex and smarter than anybody who ever lived except for the creation which is Artificial Intelligence. That guy van noimen apparently was smart as well. And motzart not a dumbny. Well get cramers mad dash. Our Cambridge Cyber summit kicks off today bringing together top leaders in security, technology and defense. Well discuss how we can combat urgent Cyber Threats and secure americas future. A lot of great guests coming up including Deputy Director of the fbi andrew mccabe. One more look at the premarket just ahead. Rsuit of healthier. It begins from the second were born. Because, healthier doesnt happen all by itself. It needs to be earned every day. Using wellness to keep away illness. And believing a single life can be made better by millions of others. As a Vice President<\/a> ial debate last night. Well look at the highlights and the impact on the campaign. Amazon hitting another alltime high yesterday. Announcing prime reading, which unlocks thousands of kindle books for free. What that means for the industry. But first up, twitter shares rising in the premarket amid some increasing talk about a possible sale of the company. Comes more than a week after david broke the news that twitter has received expressions of interest from a number of Tech Companies<\/a> that are considering whether to make a bid for the social media company. Little more color being flushed out by some regarding splits on the board between av and dorsey, the role nodas had in sort of driving morale. Yeah, interesting story from bloomberg. Our reporting sort of is where it was, you know, perhaps it is this week as i last reported. There was a formalization, more or less of a process, that was ongoing. The expectation that bids would be therefore received under that process. And the idea of it you would move fairly quickly to figure out whether or not youre going to sell this company. And so what was it last week i was reporting it could come as soon as 30 to 45 days. Well see. Well see what those bids look like if and when they are received. And, you know, jim, i guess the key question continues to be about the company that you spent a lot of time with over the last 24, 48 hours, salesforce, which led my reporting back to almost two weeks ago, i guess. Maybe more. Im losing track here in terms of its interest. But will they follow through . They seem to be getting a decent amount of heat from their own shareholders. Go through any number of notes in the Analyst Community<\/a> following them saying what are you guys doing. But youve had a lot of time, i would think, as to get a sense of that. And youve already been discussing it for weeks prior to even my reporting of their interests. Look, david, i think that you got to understand, if anything, accelerate if somethings going to happen probably happens this week. Second, i think whats really important when you think about salesforce, you have to think about fidelity, they own 14 , t row, kraft owns almost 2 , these firms i do not think want salesforce to do it. Look at salesforce stock today. This is indicative of what would happen if they would say, hey, pay 29. Which i think its available at. And one of the things you have to recognize is that whoever buys them is going to get killed by them at least for the first or second year. I think all the guidance we see for twitter is too high. I think when they report on the 25th it will be terrible. I think that the company itself has not only lost momentum but people out here are starting to speak about myspace when they discuss it. Meaning that if nothing happens, thats what they degenerate to. However, someone buys them and i dont think there are a lot of bidders at these prices and id certainly like to take disney off the table, i even think at a certain point you have to take alphabet off the table, if you can buy them and turn it into Something Like<\/a> facebook, its the holy grail, but in the interim its like buying an nfl team with no players that of any note and losing for two years the moment you buy them. Yeah, now, i have to tell you, i mean, people familiar with the situation have indicated in the past that theres value there that at least could be perceived on the part of potential buy thaers is not fully appreciated by the market. That is typical of what you might hear from somebody charged with potentially trying to sell said company, jim. But there is that element to it. You and i have talked about it now for weeks in terms of its not really going to be a number based on earnings per share or even Revenue Growth<\/a> as much as its going to be on some sort of aspirational goal that you can achieve as a result of taking control of this asset. Yeah. Look, you blow everybody out. You spend 20 billion. You would take a giant hit. You dont have any growth from the company. They havent spent any money to grow the company. We think of this company as a company you watch the nfl with, that is meaningless to the acquirers. I think the acquirers want the information flow, they like data. They want to be able to use Machine Learning<\/a> and Artificial Intelligence<\/a> to inform customers what people really want. That is not what twitters been able to accomplish. And i think because it hasnt what happens is if you buy it, all of these large shareholders would just rebel because it wrecks your growth trajectory. And it would even wreck alphabets trajectory if you spend 20 billion. If youre a company the size of salesforce, you have to have other buyers with you, you have to be able to sell some, you cant just buy it and not expect your stock to be cut maybe even by as much as a third. Jim, i want to clarify this comparison to myspace. Youre saying without a bidder they disappear . Thats whats being said . There are people is that what you believe . That was brutal. There are people who believe that twitter literally is a company with no growth and that someone can come in and create a twitter. That this company is so poorly managed that it literally can be duplicated or be forgotten about. Now, i think thats extreme. I think that the idea behind what i think just so you know the myspace analogy has to do with what the fidelities of the world might think theyre buying. And what it means about your core business, which is that you must have no faith in your core business, youre buying a company that could be like myspace, it is going to be an obliteration of your earnings. Now, myspace being that twitter is a disaster for you the way its set up. I got to tell you, i know people at home on twitter dont want to hear this, but it is a disaster. Well, listen, jim, my reporting prior to that september 8th Board Meeting<\/a> when i focused people on that meeting was in part a result of the boards belief, not quite in things being as bad as youre describing them, but certainly the idea being that are we really going to be able to achieve shareholder value simply going along the course we are given what may be anemic growth rates were going to see. It was not lost on the board. That is why we find ourself at this very juncture right now. Right. The question of course to the point weve been making is where do we end up and where do you end up as a twitter shareholder if in fact they do get bids this week and hopefully well able to educate the market on that at some point. Jim has benioff tonight. I think it has growth like yahoo has growth. Yahoo has growth, of which we realize it ran out. And i think that what most people are concerned about is that its not near growth, it is no growth. It is true that growth has been sometimetymied for six mon. Jim did speak with chris about this very topic. Take a listen to this. Twitter would be complementary to many of those companies. Yes. Theres no doubt about it. It has a unique set of data that nobody else has in the world, and it has it faster than anybody else in the world. Yes. Theyre problem is not the input. Their problem is making it useful and easy and accessible and fun for all their users. And so the good stuff is in there. Theres a lot of junk. So who buys it . Which guy . I dont know of who, but i can see why google i think google has finally flipped a bit from thinking about it not scientific in Computer Science<\/a> enough to wow thats the worlds best data and if we dont have that our search results wont be as relevant anymore. I can see facebook looking at it saying weve tried to cop it it over and over again, we need it defensively. Microsoft was the first guy who did the revenue deal with us at twitter. He understands well. I dont know about apples ambitions because theyve never been good at social and community, but benioff loves it. It might be too expensive for him. I dont know. Fascinating to listen to you guys go at it, jim. I wonder if you think this idea of facebook buying it being redundant so many overlaps with what theyre trying to do themselves, does that make sense to you . It makes no sense. The only reason you would buy twitter is that for one day you hope to have as much information as a customers facebook would have. Bob iger, if he wants to set his company back to the stone age, he can do it because it wrecks their whole earnings trajectory. I think the problem is exactly as sacca described, which is this is a data company that doesnt know its a data company. Its a company you can mine for what individuals want but instead its a trash talking site about Kim Kardashian<\/a> and whether the thursday night Football Game<\/a> is any good. I think that overall when you speak to execs out here offline, what they say is, wow, what a shame. What a shame that these guys cant pull it off. How much would it cost to be able to reignite the company, get rid of everybody . And the answer might be too much for fidelity. Too much for t. Rowe, these are not private companies, these are companies with shareholders. If you want to take your stock down, you buy them now with the idea that maybe three or five years from now you can rival facebook. And by the way three or five years, does that does anyone have that timeframe . I dont think there are a lot of bidders up here because i do believe that you have to accept what it will do to your earnings and what it will do to your stock, which is take it down dramatically. I dont see any other way to be able to express to viewers at home how much pain you would inflict on your current shareholders if you buy this company. Yeah. Wow. Ten minutes on twitter just now fascinating story. Oh, lord. Oh, come on, david. There were fireworks last night oh, lord. Well set aside five minutes. Let carl talk. Go ahead, carl. Mike pence, tim kaine at the debate in virginia last night talked about the economy, National Security<\/a>, speaking of interrupting each other quite often, heres an exchange where kaine challenges pence to defend donald trump. Six times tonight i have said to governor pence, i cant imagine how you can defend your running mates position on one issue after the next. And in all six cases hes refused to defend well, lets no, no, dont put words in my mouth. All right. And yet, and yet he is asking everybody to vote for somebody that he cannot defend. And i just think that should be underlined gentlemen, lets talk about a lot of discussion about style last night, guys. But its been broadly noted that the real debate thats going to matter in the near future is the one coming sunday night, jim. Yeah, you know, when youre out here, you just hear about two kinds of businesses. Theres the old line business of which everyone accepts the fact that trump is very much a part of that. No ones saying that he doesnt have a business. No ones saying he doesnt know what to do. But they just speak about new businesses and creation of jobs and no zero sum. And, you know, this is they. Theres millions of executives out here, but the guys i was able to connect with in the last say 36 hours just dont understand him as part of what the current economy is. But when i watch us, i mean, obviously he is part of the current economy. Hes about growth, hes about creation and jobs, hes about understanding the way the tax code works. And i think theres contempt. Theres a lot more contempt out here than i thought. I mean, kind of willing to be abjectly contempt. Interesting. Thats a good point of view from out west. Were going to hear what mark cuban told you last night a little bit later on, jim. When we come back, amazon looking to set another record high. Thats not the only reason why bezos might be smiling this morning though. Were going to fill you in. Look at that chart. Take one more look at the premarket as we watch the pound, adp, waiting for ism services in about 45 minutes. Were back in a minute. Sten, whr friends about your job, maybe lets play up the digital part. But its a manufacturing job. Yeah, well ge is doing a lot of cool things digitally to help machines communicate, might want to at least mention that. Im building worldchanging machines. With my two hands. Does that threaten you . No dont be silly. Im just, uh, going to go to chop some wood. With that . Yeah we dont have an ax. Or a fireplace. Good to be prepared. Could you cut the bread . Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors<\/a> are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Amazon shares rising a day after hitting new alltime highs. The company introducing a new feature called prime reading. It allows prime members to read selected books and magazines at no additional cost, even if they dont own one of amazons kindle reading devices. Meanwhile, bezos topping vanity fairs new establishment list of tech titans, moguls, financiers and entertainers followed by mark zuckerberg, bob iger, elon musk rounding out the top five. Got more aggressive price targets on the sell side this morning, guys. Of course thats nothing new. No. I mean you go ahead, jim. Well, i just think that, i have to tell you, the one company thats not here is the company thats most feared. And its the one were talking about. When you speak about Artificial Intelligence<\/a>, Machine Learning<\/a>, everyone admits that with the exception perhaps of facebook, these guys are so far ahead of everybody else. And all the customers in the world who are involved with the total Addressable Market<\/a> of retail are totally being left behind. And know it. Because amazon is one step ahead of the posse everywhere. David, i got to tell you, when im out here, this is the most feared company on earth. Yeah. Well, they do they innovate at scale. I guess ive been hearing that for a number of years now, jim, but that is apparently a very difficult thing to do well and amazon does it perhaps better than anyone. Im glad to hear you mentioning a. I. Again. That came up yesterday in that google announcement, of course, where they said a. I. s going to be more important than mobile. Remember your assignment is to come back and report on a. I. , jim, and just how long we have before machines take over. Im expecting that in person. Look, a. I. Look, a. I. Is the most talked about topic. It used to be social. It used to be mobile. It used to be cloud. Now its using Artificial Intelligence<\/a> to mine data. But why are you trying to do it . Because amazon says if you like this, you might like that. That is the ultimate Artificial Intelligence<\/a>. And Everybody Knows<\/a> that bezos does it the best. Everybody knows his devices are the best. Everybody thinks that amazon, if they go in and decide to take over a market, well win the market immediately. Ive got to tell you, just the raw reverence that is shown bezos out here, just the belief that this guy figured by the way, its this guy. No one talks about the company. Its like the company doesnt its this guy. And he figured out the most important thing is Machine Learning<\/a>, trying to figure out what you want. And he succeeded. And everyones trying to play catchup, including facebook, definitely alphabet which i think is very threatened by amazon. But salesforce is trying to give people what they need in order to be able to compete with amazon. And amazon could sell and do anything. You know, carl, ive got to tell you, out here if we were to do the show, the show would be amazon and squawk. We should do the show from out there again. Hes doing half like every other day. Thats true. Just leave him on the air all throughout the day. I do like having him here so i can give him my looks up close and personal. But we should all go. Jim, i just wonder out there if the feeling is that google was pushed by amazon to doing this multipronged hardware, software, google, cloud, vr, pixel enabled phones if amazon is the drives force behind all of that . Yes. Thats it. Hard to push someone around, they found someone who could do it. When it comes to devices, jim, amazon has a somewhat checkered past. Remember the phone . Well, look, i think that amazon is perfectly makes mistakes and then immediately runs from mistakes and cuts its losses. I think alphabets phone actually could make a difference. I wish people would talk more about apple here. But apples viewed as a Device Company<\/a> and not viewed as a company that mines data. And amazon, this mining data artificial i saw some Virtual Reality<\/a> stuff last night, augmented reality, Artificial Intelligence<\/a>, and it just makes me think, okay, we cannot keep up with the machines. We joke about the machines being smarter than we are. Theres no joking out here about it. Im not joking about that. Take a look that ted talk sam harris gave a few weeks ago. Take a look at that. About 14 minutes worth your time on a. I. And the challenges we have ahead of us. This is serious. I mean, we got a little time. Oh, no im not kidding. We dont have any time. Well, we have a little time until theyre able to until they exceed our intelligence. From there we lose control. We got little time. If you look at the data that twitter has and you add Artificial Intelligence<\/a>, you would see a different company. But we cant think as big as the machines. One of the reasons salesforce calls next program einstein is because einstein was able to simplify the complex and smarter than anybody who ever lived except for the creation which is Artificial Intelligence<\/a>. That guy van noimen apparently was smart as well. And motzart not a dumbny. Well get cramers mad dash. Our Cambridge Cyber<\/a> summit kicks off today bringing together top leaders in security, technology and defense. Well discuss how we can combat urgent Cyber Threats<\/a> and secure americas future. A lot of great guests coming up including Deputy Director<\/a> of the fbi andrew mccabe. One more look at the premarket just ahead. Rsuit of healthier. It begins from the second were born. Because, healthier doesnt happen all by itself. It needs to be earned every day. Using wellness to keep away illness. And believing a single life can be made better by millions of others. As a Health Services<\/a> and Innovation Company<\/a> optum powers modern healthcare by connecting every part of it. So while the world keeps searching for healthier were here to make healthier happen. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive we have about five and a half minutes before the opening bell, jim. Take it away for our second Cross Country<\/a> mad dash of this week. All right. Weve got the winner for the july 4th battle of the beers, and it is modela corona, which means constellation. David, this is the best consumers packaged good growth you can get. Were talking about 13 organic, okay. This stock will be up huge. The interesting thing about this business is modelo and corona accelerated their growth. This Company Bought<\/a> ballist point which may be the hottest of the craft beers. When you have beer income increasing 27 because of organic growth, you have a stock that could go much higher. Man, i mean, youve seen that chart. Its pretty staggering the move that that stock has made over the last three, four years. Bob sands doesnt make a lot of wrong moves. Today they bought a straight i whiskey company. Ball is point, theyve been able to make that accelerate and growth. Obviously they have the corona and modelo franchise, but whats more important is they have augmented it big. They have taken this thing to the next level. You have wine and spirits growing double digits. The wines that they have bought, which is maomi, prisoner, they are selling like mad on top of opus one. And ive got to tell you this company has just taken consumer packaged Good Companies<\/a> by storm. Its really the only one left that has true double digit growth. And you know how hard that is to find. Yes, it is difficult to find. All right, jim, well talk to you in about four and a half minutes or so. We got the opening bell coming up next. We cant go back to the years of devastating cuts to public education. Exactly why i urge you to vote yes on prop 55. Prop 55 prevents 4 billion in new education cuts without raising taxes on anyone. And theres strict accountability in prop 55. With local control over School Funding<\/a> decisions. And mandatory annual audits guaranteeing the money goes directly to our classrooms. Not to bureaucracy, not to administration. So vote yes on 55. Because it helps our children thrive. When legalizing safe, responsible adult use of marijuana, the most important question is how . By voting yes on prop 64 adults 21 and over could only purchase marijuana at licensed marijuana businesses. And prop 64 bans advertising directed at kids. Requires strict product labeling. Childproof packaging. And bans edibles that appeal to children. Smart provisions to safeguard our families. Learn more about the safeguards at yeson64. Org. Youre watching cnbcs squawk on the street live from the Financial Capital<\/a> of the world. The opening bell in about 90 seconds on this wednesday. A lot of numbers coming our way. We already got adp came in at 154, that was a little below estimates of 165. Well get ism services in about half an hour. Lacquer two times today. The ecb would taper their bond purchases before these scheduled end of qe and what that did to yields. Look, i actually think europe is coming in with the exception of perhaps italy because the Banking System<\/a> much better than people realize. And i think that that presents a lot of dilemmas from those who are just saying, you know what, this thing, europe is spiraling out of control down. Were just not getting that. I think Deutsche Bank<\/a> may be a false tell because of the justice department. We know lots of the banks that are hurting. A lot of people are focused on britain because this pound goes incredibly low. Something were focused on the peso going incredibly low. By the way, that constellation thank you sarah eisen for reminding me because they bring a lot of beer from mexico. We will get to stz in a moment. 10year 1. 69. We keep going back between the 1. 59, 1. 69 range as if it were in a box. Lets get to the opening bell and s p at the bottom of your screen. At the big board, pga golfer Steve Stricker<\/a>, the president s cup u. S. Team captain and National Team<\/a> captain, were going to talk to them in a few moments. Nasdaq Company Blue Buffalo<\/a> celebrating pet adoption campaign. Raising their full year guide, and then buying this distillery, jim, as they continue to move into higher end liquor. Yeah, you know, its funny. I think a lot of people havent heard about high look, i happen to like whiskey. It is one thats not well known, but naomi and prisoner werent well known and look what constellation did to them. They dont like to buy something that Everybody Knows<\/a> and pay up for it. They got high west for under 160 million. They could turn into something that we havent thought about in the same way they picked ballis point and made it into the craft beer people want. I think high west distillery will turn out to be something that we didnt know we wanted. Not that they have Artificial Intelligence<\/a> over constellation, they have rob sands. And rob sands has thought about what were going to be drinking a year ahead. What are we going to be drinking a year ahead . Thats what were going to be drinking . This stuff . Yeah. Look, he figured out pino noir, turns out to be at the right price point to be very strong. Sands figured that out. Im not saying that this is a company that high west isnt somebody we know, im saying its somebody we might know in the future. He will not overpay. Sands is tight fisted. The operating cash flow is really good. Hed rather give it back to the shareholders, but hes been so spoton about what people like to drink, i cannot count him out. Im going to have him on tonight. I really want to find out what he thinks, by the way, not tequila, what he thinks about what the next move is in wine. But obviously he thinks that you got to own a whiskey. And, wow, this is the whiskey that hes chosen. Yeah. We got crude oil just a shade below 50. Got a cat 4 hurricane on its way well, eventually going to make its way very, very close to florida. Depends on what track youre watching. But South Carolina<\/a> moving a Million People<\/a> away from the coast. Theres been some work this morning on what happens to energy when a cat 2 or 3 hurricane hits the continental u. S. Oil and gold up 58 of the time. 63 of the time. This is the imports get cut back dramatically. We saw imports cut back earlier this year. What happens is oil does spike because we have kind of in our own country we kind of feel like were going to pump x at these prices and we know that the saudis are going to Keep Selling Oil<\/a> here. The saudi if the saudi tankers dont arrive even for a week, you get a spike. Does it go back down . I dont know, a lot of people are still short. Theyre betting opec will not be able to pull off whats happening in november. But short term supply and demand balances take oil higher. Guys, did want to get to a potential significant activist campaign thats begun this morning on the part of Elliott Management<\/a> and two subsidiaries its set up. Apparently theyre fans of the old show mash, ones called potter, the other is called blake. Together they own 0. 62 of Samsung Electronics<\/a>, but they issue a public letter today urging a number of things for the company. Now, this is interesting for so many reasons of course. Elliot had tangled with samsung a couple years back if you recall when they were significant owner in a company that samsung owned a large stake in that had made a bid for, they thought the bid was too low. They lost that battle. Samsung eventually bought in what they didnt already own. Now theyre back taking aim at Samsung Electronics<\/a> itself. And that 0. 62 stake is obviously not going to change the balance of power here, but theyre hope is the things theyre proposing, which ill get to in a moment, will galvanize the 60 , roughly 60 , of foreign institutions that own the stock to actually align themselves with the elliott position and potentially line up if they got there to what would be proposals for the annual meeting, which takes place in february and which conceivably if they received a majority of votes would be binding on the company. What are they . Well, samsung itself is a very complex structure as many people may recognize. And they want to try and simplify that structure. They point out that the stock trades at only six times expected one year forward earnings ex cash. And these are their words, suboptimal management and bottom shareholder returns at Samsung Electronics<\/a>. And they say some simple ways to go about doing that would be to restructure the company. There is a 13 stake that Samsung Electronics<\/a> holds that has not been canceled, noncanceled shares they believe if you demerge Samsung Electronics<\/a> and create a hold co, and an op co, you can then create a mechanism for canceling those shares hence a huge buyback of course. You can also pay a onetime dividend. And they want the company to commit itself to returning as much as 75 of Free Cash Flow<\/a> to shareholders in some form, whether it be buybacks or dividend. They also want the company to list on the nasdaq. Point out that it would be one of the Largest Companies<\/a> out there, perhaps the sixth largest in terms of market cap on nasdaq. Simply dont have a lot of freely floating shares out there trading on a basis they feel would be appropriate. And they want samsung to undertake a lot of governance moves. I cant get into the complexity of this because as you might imagine it is somewhat complex. People interested i urge you to take a look at the proposals themselves, jim. But you may say, well, the lee family owns or controls over 31 of the vote. Why are they bothering . But there is a belief here that given the support theyve had in the past from Foreign Ownership<\/a> that they can in fact bring a lot of power to bear here to try to get what they want. Well see how it goes from here, jim. David, i remember kind of a taylor swift situation, bad blood. When i listened to you interview singer not that long ago yeah, it was two years ago paul singer, right. Right. I mean, it was just horrendous. I mean, hes basically talking about this Company Running<\/a> a slam campaign against him, about how the company is not really a company as much as a clan. And i felt that he would just walk away. Obviously this guy doesnt quit. No. He is nothing if not relentless, which ive known is a shared characteristic of a number of people in his position. It will get you far in life being relentless. But thats a story for another day. Specific to samsung well see if the stock reacts, and their focus is on Samsung Electronics<\/a>, but of course youve got all these interlocking businesses that are associated with it. And its not the easiest thing here what theyre proposing, jim, in terms of creating op co and hold co and getting one to buy back shares from another and merging in cnt, thats the one they had the battle over. Well see if they can really gain some traction here with shareholders. But it is certainly going to be something worth watching, especially given the problems theyve been having on operations, as you well know, for what you call i believe dont you call it the fire phone . I think thats how you refer to it. Well, yeah, i mean, the fire phone has clearly been problematic and suboptimal, david. Ill advised release to try to beat apple. And they beat it, but with kind of more of a one of those things when you step on that airplane, it is so clear that the one thing they dont want you to do is fire up your samsung. I mean, its kind of like the kingsford of phones. Yeah, brings new meaning to your phone blowing up, thats for sure. Jim, lets get to bob pisani yeah, you know dows up 84 points. Bob, good morning. Good morning. Nice start. 5to1 advancing to declining stocks, dows up 88 points here. Tell you sectors here whats going on, Energy Stocks<\/a> leading. Weve had oils slowly moving towards 50. Materials and financials stronger. Telecom and all those Interest Rate<\/a> sensitive groups are weak again today. Well talk more about that a little later. Micron was a very interesting story. This has been a monster all throughout the year. The good numbers here, revenues up 11 , consumer and mobile, the dram was strong, price erosion not bad. Problem is they gave above consensus guidance but had an accounting change and appears to account for most of the upward guidance. Momentum saying this is not as great. Take a look at micron, its down a little bit, but its been a monster all year up about 22 . Its benefitted from the enormous product upcycle in semiconductors and the companies that make them. All them doing better as people demand stronger, faster, better chips. Guys had a lot to say about constellation. I just want to again emphasize how strong the numbers. You get organic volumes in beer up 13 , hard to move the dial, wine and spirits up 8 . Thats rather amazing here. And the chart has essentially been straight up for many, many years as the numbers keep putting up numbers like this year after year. Just look at the earnings for the last four or five years. 4. 25 in 2015. Theyre talking about 7 a year from now. Those are the reason that you get this kind of stock moving up on a regular basis like this. Want to talk about etfs for a minute because blackrock filing a big shot across the bow to everybody else. Theyre reducing their expense ratios on a number of their big Core Products<\/a> here. So right now ill give you one example their core s p 500 product is going to be 4. 04 , it was 7 basis points, their competitors at 5 basis points, and the spider, the biggest etf in the world, spider 500 at 9 basis points. 4 basis points is 40 cents for every 1,000 you have invested. Nine is 90 cents. Blackrock is making an effort to be the low cost provider right now. And also has a lot to do with the department of labor regulations about being a fiduciary. Remember, these products are essentially the same. Theres not a lot of difference between them. Its also a fight for the biggest slice of the pie. Blackrock is the biggest provider out there, but theyre in a huge fight with vanguard, state street, invesco and even charles schwab. Fight of the titans now, dow up 90 points. Bob, thank you very much. Bob pisani. Lets get to the bond pits as well, Rick Santelli<\/a> at the cme in chicago. Good morning, rick. Good morning, carl. You know, when we were kids we played the game look at a picture of six things and one thing doesnt fit in. Maybe that one thing right now is the relationship of sovereigns, global sovereigns, and maybe their currency. Which means adjustments are afoot, and that truly is the case. Look at auger 1st staugen augus, didnt driven by the very short end, its the entire curve on the long end particularly. Look at oneweek of 10s moving higher july 1st of 10s, you know where youre wrong if youre long the market looking for lower rates, 1. 73. If we look at gilts for the same period, clearly very similar pattern. Youre offsides if it trades above 90 basis points. But when rates go up, we should see some kind of a currency implication there, right . Look at the pound dollar. Thats not what id consider strong. As a matter of fact, weakest since 85. But lets look at their own backyard considering brexit potential issues ahead. So pound euro doesnt look particularly well, basically weakest level since october, you know, fall of 2011. Lets look at jgbs, shall we . A market that doesnt really fit in, but it makes sense. I mean, who owns these markets . They trade by appointment, we all know what the bank of japan and kuroda and abe have been up to, theyre not worried so much about an upside breakout, but what happens if it trades under minus 10 . You can clearly see its like a plateau. And whats going on with the currency . Well, the dollar yens actually strengthening excuse me, the yen on the dollar yen strengthening. When you see that chart go up, of course the dollar yen, the dollar getting stronger, thats the one currency that somewhat makes sense relative to its 10year yield. So we will pay attention. Theres an adjustment afoot for sure. And many may be offsides because the temperament for low rates seems to be in the rearview mirror. Carl, back to you. Rick, well talk to you in a little bit. Rick santelli in chicago. When we come back, the business of golf. President cup captains nick price, Steve Stricker<\/a> will join us live at post nine. Dows up 90 points led by oil, s p up almost 9 to 2159. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business<\/a> incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov golf fans already looking forward to the next international event, opening bell ringers nick price and Steve Stricker<\/a>, guys, it is great to have both of you. Good to be here. Coming off ryder, so much discussion about the u. S. Taking something back, the rowdy crowds, sort of youth being infused in golf once again. Is that how youre feeling, nick . Yeah, i mean, you know, they had a lot of enthusiasm. I think they did a great job, the task force or whatever, they got together, got the enthusiasm back and the drive in the American Team<\/a> and, you know, the quality of golf i thought was phenomenal. I was fixed on saturday to the screen. It was just birdies flying everywhere. You know, i think just all in all it was the ryder cup needs to change hands. And it needs to do it to keep it exciting. And the same thing as the president s cup, needs to change hands. If it stays onesided, then well slip back into what happened before they changed all the rules. Somebody said humans should not be able to putt like that. I mean, some of those were amazing to watch. And thats sort of what the sport needs, right, steve . Is this sort of just the thriller moment of athletic performance. Yeah, it was incredible to watch. And to be a part of and to watch those guys interact with one another, especially patrick reed and rory mcilroy. You know, it was all in good fun after it was all said and done, you know, they shook hands. They were true gentlemen. But during the competition they were really giving it back to one another. And it was great for tv, great for entertainment. Finally we came out on the right side of things and its great to have the ryder cup back here on u. S. Soil. So how do you balance all of that with average rounds played year on year . Its very hard to find growth. Courses closing. Nike getting out of equipment. What does that mean for the sport . Does it mean anything . Well, you know, when you can show their talents on tv and expose the next generation of golfers to that enthusiasm and that excitement, especially coming from Young Players<\/a> like a rickey fowler, the game is not in great shape, there are organizations working hard to get it going in the right direction, but its always a challenge. Nick, no shortage of talk trash talk even at the ryder cup, i guess. Is that something we should come to expect now in these international competitions, or did it go over the line . You know, its tough. I think one of the things most of Us International<\/a> players play most of our golf here in the u. S. So if you go up against a tiger woods or Phil Mickelson<\/a> or patrick reed or whatever, you know the crowds going to be pulling for your opponent. And were kind of used to that. I think what worries most people is theres always that small percentage of guys in the crowd who really get totally out of hand and start saying really personal things. Which its fine to pull for the other team, i just hope that, you know, if i had one wish now it would be that the guys would have just a little bit of respect for the guys. Make as much noise as you want, stay say what you want within reason. Coming off of the loss of Arnold Palmer<\/a>, nicklaus had an amazing tribute earlier in the week. Yeah. Whos going to take the mantle for that kind of role . Someone who really truly changes the evolution of the sport . Well, i for one would not be sitting here right now if it wasnt for Arnold Palmer<\/a> because he influenced me as a kid and really got me and put professional golf on the map. I mean, i dont know what steve and i kind of prize money wed be playing for right now if it wasnt for arnold. But he set a precedent. And i think that was the greatest thing. He set a precedent for professionalism, the way to conduct yourself on the golf course, the way to conduct yourself in the corporate and business world. He did a very, very good job at that. The bar is set very high, but i see the young guys all following that. They all admire him and know what he did for the game. Were going to miss him a lot. Steve, your thoughts. I mean, people say the only other athlete maybe who influenced the sport as much, maybe jordan, right . And he hadnt played on the pga tour for 40 some years probably, or 40 years. The impact he still had today is incredible. We were all fortunate enough to meet him and experience him and his thoughtfulness, his kindness. He was a true gentleman. Theres player after player wants to emulate Arnold Palmer<\/a> just because of the type of person he was. Predictions for the president s cup, whos going to win . Usa. Thats amazing. That was easy. And i would think you disagree. I think its going to be very close this one. I really do. After what the guys performed, how well they performed in korea last year, you know, were going to be up against the might of the American Team<\/a> and theyre going to be carrying their tails pretty high after hazeltine. Good to see you guys. Thanks, guys. Well get stop trading with jim in just a moment. Dont go away. gasping are you all right . I was in a room full of light. You were there. You were financially secure it was glorious. How do you know that . I work at ally its my job to know about finances. What else did you see . Did i have a speedboat or anything . Toss me back in, ill check. Hes finding out if i have a speedboat nothing stops us from doing right by our customers. Ally. Do it right. Negative on the speedboat. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business<\/a> expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. Great, thats what i said. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Time for cramer and stop trading. Look, i wanted to try to throw cold water on netflix buyout, i dont see anything happening there. I was thinking about talking about micron because they reported good quarter but didnt give good guidance, but its acia, one of the best performing ipos of 2016. They preannounced much better than expected number, optical working a lot being billed out in china. They did 83. 90. Announce a 4. 9 million share addon, it doesnt matter, this is what the institutions want. It is the fastest grower in telecommunications equipment. Very nice, jim. Cuban last night and benioff tonight. Well, we also have you know, we have rob sands, obviously. I want to talk a lot about this acquisition and the kind of growth that theyre seeing. And new relic. Machine learning, Artificial Intelligence<\/a>, augmented reality, Virtual Reality<\/a>, what can i say . This is about getting rid of us and finding things that work better than we do. Davids still afraid. Every day more. Every day more. Be very afraid. We will see you tonight, jim. And hopefully back here very soon. Jim cramer out at one market. When we come back, the Vice President<\/a> of the European Commission<\/a>, well get his take on everything from Deutsche Bank<\/a> to brexit when we come back. Good wednesday morning. Welcome back to squawk on the street. Im Carl Quintanilla<\/a> with sarah eisen, david faber at post nine of the new york stock exchange. Watching the markets in a bit of a range, although treasury yields are interesting to watch. Weve got some data headed our way, adps already on the tape, lacquer this afternoon but lets get to Rick Santelli<\/a> for factory orders and ism services, rick. And durable goods. We have a litany of data points hitting in a second or two. Lets start with whats on first. September ism, the most current read. A big jump here, 57. 1. Remember, last look at 51. 4 was the weakest, the weakest since february of 2010. So 57. 1 is really nice. As a matter of fact, its the high read of the year. Its the highest read since, drum roll please, 58 and change in october of 2015. So almost a year. If we look at factory orders now, and factory orders of course is auger number, its up 0. 2, we were looking down 0. 2, not bad. Lets get to the money ball here, shall we . Durable goods the august final read, the headline number on durable goods is up 0. 1, little better than expected. If you strip out the all important food and energy, its down 0. 2. But heres what i want to look at, the proxy for business spending. Capital goods orders, nondefense ex aircraft, up 0. 9. That isnt too bad. As a matter of fact, up 0. 9 is like the second best read of the year. January was up 2. 4. So thats good news. Lets dig in quickly the ism nonmanufacturing, new orders jumped a handle from 51. 4 to 60. And employment on the ism Service Sector<\/a> considering we had adp a little light today and friday we get the big september report, 57. 2 versus 50. 7. So, listen, the headline number on durables isnt terrific, but i like the capital the order side of it. And shipments actually were a bit surprising. They were down 0. 1. What did the market think . Easy, i see 1. 70 of 10s. Enough said. Carl, back to you. Rick santelli in chicago, thank you very much. Sounds like mester and lacker and others. Rick just mentioned 1. 71 on the 10year, the dollar turned positive against the euro, already at the highest level against the yen since back in september of 2014. So youre seeing the Dollar Strength<\/a> now sorry, september 14th, not september 2014, Dollar Strength<\/a>, higher yields, that adds up to increasing probability that the Federal Reserve<\/a> raises Interest Rate<\/a>s. And those on the fed to your point that are calling for it have the data to back them up. If we continue to see numbers like this, services are the biggest part of the economy. So youll want to see that number jump in that way. Although manufacturing ism also was a warm number. Confidence last couple of weeks a warm number. Question is and nobody believes this, certainly the market doesnt believe it, but whether it puts november into play given all the politics, do they have a duty to take some of this data seriously despite the distractions . Well, they will say it is live. If you ask any fed president , novembers a live meeting. It is november 2nd, it is before the election. But theres no news conference. So while they could add one. They could add one, for sure. But whats the rush to raise Interest Rate<\/a>s . On the other side the doves may argue on the Federal Reserve<\/a>, yes, the datas looking good, but the rest of the world is still moving toward lower Interest Rate<\/a>s and it hasnt exactly been the most exuberant economy in terms of the recovery. No. What did you make of the ecb yesterday . That report . About tapering . Yeah. Report about tapering. Its nothing new. The easy money has to come to an end and the ecb out quickly to deny those reports. Still seemed to have somewhat of an impact on yield. Just a reminer its not going to go on forever. Its not . I guess not though we could have said that in 09 or 10, 11, 12, 13, 14. The music has to end at some point. The interesting point is the stocks are holding firm and rally holding on even as the rate hike odds jump in september. Says biggest beat relative to expectations since last summer, of 15, tied for the largest beat of the expansion so far. So were going to watch that obviously and the reaction closely. Meanwhile, turning to politics. Indiana governor mike pence, virginia senator tim kaine battled it out in the first and only Vice President<\/a> ial candidate debate last night. The two candidates sparred on a number of issues including the economy and National Security<\/a>. Kaine challenged pence to defend some of his running mates past statements. Take a listen. Donald trump during his campaign has called mexicans rapists and criminals, hes called women slobs, pigs, dogs, disgusting. I dont like saying that in front of my wife and my mother. He attacked an indiana born federal judge and said he was unqualified to hear a federal lawsuit because his parents were mexican. He went after john mccain, a p. O. W. , and said he wasnt a hero because hed been captured. He said africanamericans are living in hell. And pe perpetrated this outrageous and bigoted lie that president obama is not a u. S. Citizen. Did you all just hear that . Ours is an insult driven campaign . To be honest with you, if donald trump had said all the things you said he said in the way you said he said them, he still wouldnt have a fraction of the insults that Hillary Clinton<\/a> leveled when she said that half of our supporters were a basket of deplorables. Meanwhile, on economic issues, both candidates sidestepped a question about their plans in the ballooning national debt. According to the committee for a responsible federal budget, the clinton plan would increase the debt by 200 billion. The trump plan by 5. 3 trillion over the next decade. Joining us this morning is crfbs president and former indiana congressman david mcintosh, now president of the club for growth. Good morning to you both. Good to see you. Good morning. Good morning. Maya, so much discussion last night about style and performance. I wonder, what if anything moved the ball forward for you in terms of the economy . Well, it was new that we actually had questions about the debt. Because in the previous debate there hadnt been a single question about fiscal policies and the big challenges facing the country. So it was great because there were questions about the fact both candidates wouldnt put a penny towards the debt, which is projected to continue to grow by over 9 trillion over the next ten years. And much more than that under Donald Trumps<\/a> plan in particular. But both candidates werent willing to have a real direct discussion about any policy changes that they would make to tackle these challenges. Nothing on entitlement reform, spending reforms, even real tax reform that would generate revenues. And we need to take those steps as part of a comprehensive economic plan. So its disappointing that the political debate still shying away from some of the real challenges ahead of us. Yeah, david, just a few weeks left and a lot of the narrative written last night was that we got more attraction on Foreign Policy<\/a> discussion last night than economic. Well, i heard a lot on growth, actually. And i think the tax issue is going to be the key because thats the driver for Economic Growth<\/a>. Clintons plan will cut Economic Growth<\/a> in half and increase taxes so theyll be about 300,000 fewer jobs. Trump plan will increase growth, it will double it to 4 and cut taxes for the middle class. So theres a huge contrast there. And i actually saw pence drive that home when he pointed out to kaine that clintons tax plan would tax the middle class, farmers, Small Business<\/a>men, others across the board and be devastating for people who have lost their jobs in this economy. Yeah, theres the tax policy debate, maya, and then theres this idea of personal taxes which is also getting a lot of attention. I know you dont like to weigh in on the politics here, but you are a tax expert. So well ask you, is this idea that pence repeated from the Trump Campaign<\/a> that the fact that he did not pay taxes as reports indicate in the 90s was smart, is that going to damage him politically or not . Well, i think what it does do back turning to the tax policy angle of it is it makes the case weve known for so long which is we desperately need tax reform. Theres over 1 trillion lost in revenues a year because of the tax expenditures which are deductions, credits and exclusions. Its true you can take advantage of them legally both on the corporate side and the individual side. And it greatly complicates our tax code. It also helped from allowing us to be competitive and help grow the economy. So we desperately need tax reform. On that bigger issue of growth, we also desperately need growth, but we have to be realistic about what growth we can expect. One of the biggest hindrances to growth is excessive debt, which we have right now. But the other challenge we also have is the aging of the population. And as baby boomers are moving into retirement and we fail to reform our entitlement programs, its going to be very difficult to grow the economy. We need to be realistic, and i think claims about doubling growth or unprecedented levels of productivity, again, they act as a free lunch instead of focusing on policy reforms both candidates need to be talking about more. Well, when we balance the budget and actually reduced the debt in the 90s when i was in congress, we did it with a progrowth tax plan. And put a brake on the spending. But it was the stimulus and the growth that let us actually reduce that debt. So its key to watch which of these candidates are focusing on progrowth, which ones want to use the tax code for punitive social measures, taxing people more and having the government increase and providing more funds for it to continue its wild spending habits. I think there was a huge difference interestingly enough the personal tax issue will, i think, lead the American People<\/a> to say, yeah, we get it. Donald trump didnt pay much taxes. Hillary clinton had the foundation, that provided her family a lot of funding. But what are you going to do for my taxes and for my job security . And thats going to turn this campaign, i think, in the last five weeks towards that basic question, whos going to increase Economic Growth<\/a>, whos going to make it better off for middle america. Thats certainly generally how voters make their choices depending on whats happening at home. Maya, david, well see what happens on sunday night. Thanks so much for your time. Thank you very much. Thank you. Weve got some breaking news now from cnbcs Cambridge Cyber<\/a> security summit. Our Andrew Ross Sorkin<\/a> is there with that. Andrew. Hey there. You guys talking about the election, the election also a big topic of conversation right here at the cyber summit here in cambridge. Admiral michael rogers, head of the nsa, was on stage with walter isaacson, and he was asked about the possibility of penetrations and hacking related to the election. I want you to listen to this. Right now as the commander of the United States<\/a> Cyber Command<\/a> director of National Security<\/a> agency do i have the authority to unilaterally access u. S. Systems . No. Cannot do that. In the scenario that you highlight where potentially we might be looking at a penetration, major damage, we have a structure and a process within the government where in this case either state, local or private would approach the government looking for assistance, we both Cyber Command<\/a> and nsa would be part of a broader government effort to provide that. And, guys, you know, we talk about security all the time and frankly how secure or insecure we ultimately all are online, if you want to hear something thats a little chilling, listen to admiral rogers on our own security. Every day were watching major cyber penetrations, theft, extraction of data on a global basis. And were entering a world where literally nothing seems to be beyond the reach or intent of someone out there to try to access it. Often for a variety of purposes. Its all quite chilling, a number of other conversations well be bringing you throughout the day members of the fbi, the doj, corporations as well talking about Cyber Security<\/a>, the connection and role between the government and private sector. And as i mentioned we will bring you those conversations as they happen, guys. Very timely, andrew, thank you very much for bringing us those comments. When we come back, what all the fed talk happening this week tells us about the possible chances of a rate hike in december, or even november as carl mentioned. Stocks are jumping by the way on the latest Economic Data<\/a>. Bonds are selling off. Also we have an exclusive interview with the Vice President<\/a> of the European Commission<\/a> valdis dombrovskis, his take on Deutsche Bank<\/a> brexit and more. He just joined head of the european Financial Stability<\/a> at the eu. Squawk on the street will be right back. Whats Critical Thinking<\/a> like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley weand sustainability goals asool one of our top priorities. Mental i definitely rely on pg e to be an energy advisor. Anything from rebates, to how can we be more efficient . Pg e has a number of programs, to help schools save on energy. When i see a program that fits them, then i bring it to them. With the help of pg e weve been able to save a tremendous amount of energy and a tremendous amount of money. Were able to take those savings and invest it right back into the classroom. Together, were building a better california. Plenty of fed speak and Economic Data<\/a> happening, all ahead of fridays big job report. Our Steve Liesman<\/a> joins us with more, not to mention that data that just hit which is sending yields to multiweek highs here. Thats exactly where i want to start. I was going to start with the fed but then the data came in and its got the market all on edge here. Lets take a look ism services coming in at 57. 1. The importance here, folks, this is 2 for 2. Remember august was weak and now both have come back, hats off to Jim O Sullivan<\/a> at hfe, he pointed me last month to help me reporting that story of thinking of august numbers as an aberration. They have come back, adp a touch soft, trade balance higher than expected should detract a point or two from growth. Heres numbers from friday were looking at adp 154 shy of the estimate of 173, august revised down. Big number on the bottom 170, people might think a touch on the softer side. On to the fed speak, folks, where basically hawkish data, two president s in favor of rate hikes saying the case compelling to raise rates in november if the data comes in as expected. Fed president dennis lacquer saying he would have voted if he had the vote to dissent and raise rates at the prior meeting. And even a dovish guy talking a bit hawkish here Charlie Evans<\/a>, chicago fed president , say if the data cooperate he would, quote unquote, fine. I have forecast where things continue to improve. I do think there will be a rate increase, i think it would be, quote, fine with a december rate hike, sarah. Steve, thank you very much for setting it all up. We want you to stick with us if you would, and also bring Michelle Meyer<\/a> into this conversation head of u. S. Economics at bank of America Merrill<\/a> lynch. Good to see you. Good to see you. It is worth noting that the stock market is now hitting new session highs in the wake of good data and yields jumping. Is that a sign that this market is going to be okay if the fed raises Interest Rate<\/a>s because the economy warrants that . The fed has told us its all data dependent and i think thats how the market should be interpreting it as well. If the data continues to improve, if we get a decent jobs number on friday, the relief in the ism surveys i think helped a lot. And if you dont see some sort of move in financial conditions, thats quite adverse, then i think the fed clearly is setting up for a december hike. They said that in the statement and theyre saying it again in many different speeches. Is this just a bounceback from what was a pretty weak august . Or Something Else<\/a> going on . I think the august data was maybe a little bit of a head fake it seems because september data is coming in a little stronger. Both ism surveys weakened significantly in august and now theyre bouncing back. Perhaps there was some sort of seasonal issue, maybe just the noise in the data. But the good news is that it does look like its improved. If that continues again i think it shows some momentum. Its not spectaculaspectacular. Were not looking for spectacular, were looking for continued expansion. Steve, larry somers on squawk this morning, if evans saying december is fine, what is the extreme doves best argument right now . The extreme doves best argument is this notion of quote unquote room to run. And it is the notion that weve had reasonably strong job growth in that 150,000 to 200,000 per month monthly gains. And the Unemployment Rate<\/a> hasnt declined. This is sending a message to some of the doves that perhaps theres more slack out there in the labor market. I think the other message which larry made and others are making is that we havent seen any inflation and indeed Charlie Evans<\/a> despite his comments hed be fine with december said hed much prefer to see the Inflation Numbers<\/a> going up. And in addition to that you have Inflation Expectations<\/a> kind of lackluster. This has been something informed the feds Decision Making<\/a> for quite some time, which is what people expect inflation to be. And those numbers have been on the weak side suggesting the fed is losing control of the narrative of what people expect when it comes to price gains. Yeah, what do you see on inflation, michelle . Do you think the fact wti oil is back near 50 is going to help . I mean, i think steve is right. Low Inflation Expectations<\/a> coupled with realize inflation coming in weak. We dont have a situation where price pressures are extreme. Were far from that. And i think you can make a case theres still slack in the labor market. The labor Market Participation<\/a> rate has been increasing. I think to me the question is what is the fed looking for in order to justify a rate hike . Theyre not looking for 2 inflation. They just want to see evidence that the economy is continuing to grow, that were not entering a slowdown and theyre going to normalize. Theyre not talking about the cycle as a hiking cycle. Theyre talking about as a normalization process, which means theyre not hiking to fight inflation. The other factor here at play, steve, is the sort of po litization of the fed in a way as a punching bag, but donald trump has really brought that front and center. And theres a meeting right before the election. How do those conversations happen . I know that they try very hard to stay independent. But how do you think it will ultimately impact fed policy and the outlook . They also try very hard, sarah, to convince me and you and the markets that every meeting is live. And its hard to imagine. I mean, its interesting if they wanted not to be political, they probably should have hiked in september to take november definitively off the table. But to me if the data improved the way theyve been improving, point rapid update is running at 2. 6 for the third quarter, maybe take a step down today with the trade numbers by a tick or two, but a pretty decent rebound from the 1 lackluster growth of the first half. Probably do 2. 5 in the third quarter. And if jobs come in okay, then whats the reason for stopping if its not a political reason . And maybe the fed says, you know, its not political because we dont want to favor either candidate but should the election play a role i would suggest not. Ill go a step further, finally to you, michelle, how does your fed policy outlook change if donald trump wins the presidency . I think it depends on what the markets do. So if you have what a lot of strategists are calling for a riskoff move in the market, heightened uncertainty, then i think it makes the job of the Federal Reserve<\/a> a little more difficult and could stop them from hiking in december because they are going to be reacting to external developments. And i would argue that a change in the political environment which could then result in a move in financial conditions would be considered somewhat of a shock. So well see. All right. The nonpolitical answer from the economist. Yeah. Thank you, Michelle Meyer<\/a>, bank of America Merrill<\/a> lynch and Steve Liesman<\/a>. When we come back, hackers target arizonas election system. Well hear from arizonas secretary of state. More ahead on squawk on the street. Dow is up 92 led by goldman. Dow up little over half a percent. Lets send it to Rick Santelli<\/a> at the cme group in chicago with the santelli exchange. Hi again, rick. Good morning. And hello, sarah. And hello especially to my guest today peter schiff. Nobody seems to be identified more with an outlook for gold than peter. Thanks for taking the time, pete. Any time, rick. All right. Gold, i like all the things you write about gold. Heres what i see. We had obviously a big selloff, youre going to tell me why you think that occurred that pushed us to levels we havent seen since brexit june 23rd on a closing basis. But as that chart shows youre probably looking at it had a big jump on the 23rd especially when results came out. Sew it all together for us, peter. Well, i think we hit some sell stocks below 1,300. People are a little uneasy ahead of the jobs report on friday. I know you had somebody from the fed Start Talking<\/a> about rate hikes again. The market still takes all this talk seriously for some reason. They havent figured out the feds game plan. I laid it out over a year ago. Its all about talking about raising rates but not actually doing it. And the reality is even if they do raise rates again, its going to be just as bullish for gold as the last rate hike back in december was. You know, in a couple weeks were going to be getting jolts. S every time we get jolts i look at the number, last look in july was 5,871,000 highest read ever for this series. I try to send to my sources what do you think, and you always get back to me the quickest. What do you say when you do, peter . Well, you have to throw all the jolts numbers out the window because thanks to obamacare you have employers trying to hire parttime workers. And when youre trying to have a parttime workforce, you automatically need a lot more jobs. And jolts does not differentiate between fulltime jobs and parttime jobs. Look at the adp numbers that came out again today. We lost more manufacturing jobs. We replaced them with Service Sector<\/a> jobs. These are higher paying fulltime jobs that we destroy. And we replace them with parttime lower paying Service Sector<\/a> jobs. So a guy who had a good fulltime job before obama was elected, now hes hobbled together three lousy parttime jobs and the president takes credit for creating two jobs. Now, when it comes to my final topic today, im looking at Interest Rate<\/a>s. And i can make three or four cases as to why theyre going up. I think its market logistics, everybody has a lot of positions in the 1. 50s. Were now in the 1. 70s. But theres also the notion that we have run our course with this faux game of propping anvils up with Monetary Policy<\/a> and central planning. Your final thoughts. Well, i think the fed is going to do everything it can to keep Interest Rate<\/a>s artificially low. It has to start by pretending that they could raise them. But theyre real game plan is to cut them again. But eventually the bond market is going to blow up and the fed is going to lose control of the long end because pretty soon the bond markets are going to figure out that weak Economic News<\/a> is bad for bonds because it means more money printing, more inflation. And that is the real enemy of the bond market is the basement of the currency, its a loss of purchasing power. And that bond bubble is going to burst. But i think the dollar bubble is going to burst first and take the bond bubble down with it. Peter, always interesting to get your thoughts there. Thank you for being our guest this wednesday. Sarah, back to you. All right, a lot of bubble talk there. Rick, thank you. When we return, google unveils its first phone made by the Company Inside<\/a> and out. Well break down the pixel impact. Plus, our exclusive interview with the Vice President<\/a> of the European Commission<\/a>. He is also the eus Financial Stability<\/a> chief. Couldnt ask for a better time to talk to this man on Deutsche Bank<\/a> and more straight ahead on squawk on the street. Rsuit of. It begins from the second were born. Because, healthier doesnt happen all by itself. It needs to be earned every day. Using wellness to keep away illness. And believing a single life can be made better by millions of others. As a Health Services<\/a> and Innovation Company<\/a> optum powers modern healthcare by connecting every part of it. So while the world keeps searching for healthier were here to make healthier happen. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person<\/a> . More of a spokes metaphor. Get organized at voya. Com. Bacteria can hide in food and make you ill. Wow announcer but you can keep bacteria from ruining your day with 4 simple steps clean, separate, cook, and chill. The roadchip to food safety starts at foodsafety. Gov. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls<\/a> eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Good morning everyone. Im sue herera, and here is your cnbc news update at this hour. The southeastern coast of the United States<\/a> bracing for hurricane matthew, now a category 3 storm. Officials in floridas ordering residents on Barrier Islands<\/a> to evacuate. And people have been lining up to get gas and travelers cutting their trips short to return home. Heres floridas governor rick scott. Protecting life is the number one priority right now. If matthew directly impacts florida, there will be massive destruction that we havent seen in years. Again, this is a deadly storm approaching our state. The storm now heading for the bahamas. On tuesday it inflicted heavy damage on southwestern haiti with 145mileperhour winds. At least 11 deaths have been reported across the caribbean. The 2016 nobel prize for chemistry going to three men. The men pioneered the design and the synthesis of molecular machines. They will share the 1 million prize. Congratulations to them. Thats the news update this hour. Ill send it back downtown to you, carl. Thank you very much, sue herera. Tech obviously having a very strong run this year. The s p tech sector gaining twice as much as the broader s p so far this year. Stocks like amazon surging to alltime highs. A lot of buzz around google, obviously, after announcing its push into hardware yesterday. Analyzing what may lie ahead for tech in the final quarter of the year, were joined by ken allen, manager of the science and Technology Fund<\/a> at t. Rowe price. Kevin, analyst bcg. Good morning. What did you make, colin . Did it make sense to do something other than what youre best at if youre google . Carl, you have to start with the question, how do you milk a herd after sheep . The answer is you release a new iphone. Is that question going to change at all when you release a pixel thats the exact question i was thinking. Right . So apples got its loyal dominant fans. And thats not going to change by google entering into the high end market. But if you look at the market share with google and android owning 86 , the 14 that they dont have is that high end premium marketplace. So theyre penetrating into it. Theyre only going to sell a handful of these. This is not a threat to apple right now. I may be over a few years, but its nice to see google, which is a software company, pushing into hardware. Ken, you agree with that . I think broadly speaking whats really interesting from googles announcements yesterday is that theyre really starting to open the curtain to all the possibilities that Artificial Intelligence<\/a> and they as i would say the leader in that field can provide. I think its less about whether the hardware specs themselves or the iphone ballpark comparable, and more about what google will do with software and massive computing capabilities and with the massive reach they have with search, with android and with their other apps. So i think its kind of interesting indication of where googles going in the future and the value google has across a number of different competencies. Right. So the question then is, colin, if that can be considered a moonshot. And if thats more compelling than the cheapening of search which has led to obvious downgrades on the street in the last couple weeks. Sure. I think the lead that google has and the intelligence that theyve built in a. I. Is really quite notable. I dont think its fully recognized in the stock right now. And youre seeing their a. I. Capabilities being rolled out across devices. Like ken said, integrated into hardware. Thats going to be a driver over the next five years. When you look at google, you see obviously the maturing search product but still a massive cash cow. Youve got youtube continuing to draw tremendous attention among viewers and a. I. Ability to extend across multiple platforms. If thats really what its about, ken, that a. I. Going front and center for google, where does that make it stack up versus ibm and microsoft and facebook and everyone else in the valley thats working on a. I. . And how are investors valuing it . So its a good question. Only a handful of companies seem to have the Artificial Intelligence<\/a> talent in terms of the engineers and the broadcom puting capabilities to be able to pull this off and contend with someone like google in offering Comparable Services<\/a> in that space. Now, when i think about google relative to many other peers in the broader internet and technology space, google has a. I. , which i think will inform its strengths and make it stronger on its key businesses that it has now. Where i think that theres an interesting parallel to amazon is amazon actually has a second extraordinarily promising and eventually very Large Business<\/a> in Amazon Web Services<\/a>. So amazon i like better than google here. Its one of my favorite names right now despite the stocks very big run because it has the combination of the extraordinary opportunity in ecommerce and Amazon Web Services<\/a> and cloud computing. Cloud is less than 5 of the Overall Technology<\/a> spending market by businesses. So it has a long way to go and huge implications for the space. Really quickly, lets do some tactical q4 work. Ipos are working in the cloud. Yep. Amazon obviously we know what price action has been there. Were coming up on a retail holiday, which always strong quarter, yeah. Can it repeat q3 or not . Tech at large. Absolutely. In fact, apple has an extra quarter. They have benefit of having additional quarter this year, happens once every four years, thats going to help them. Google will benefit from the political campaign, political advertising. We should see another strong q4. Ken, you agree . Is there going to be a chase in the last 60 days of the year . There are a lot of cross currents in the world these days with political actions, with the issues in europe around what the economies may do there, but what i think is real interesting within tech is that many of these companies are innovating so fast and providing such compelling services both on the consumer side where google obviously is more focused and on the enterprise side where Companies Like<\/a> amazon, microsoft and red hat are focused such that theyre making their own rain, so to speak. So i think many of these companies that we like have good runway somewhat irrespective of what happens with economic environments. Yeah. A lot of cross currents to watch. Fascinating space though. Thank you, guys. Ken allen at t. Rowe and collin at bgc. Coming up, we will head to Cambridge Cyber<\/a> summit. Hear from arizonas secretary of state about how she plans to fight a possible hack on her voting systems. And Deutsche Bank<\/a> unrests putting the spotlight on regulating European Commission<\/a>er, well speak with the European Commission<\/a> Vice President<\/a> also charge in r european Financial Stability<\/a>. Dow now up 117. Stay with us. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing<\/a> can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. According to one investment strategist, the market will do much better under one president ial candidate than the other. Who is it and why . You got to go to tradingnation. Cnbc. Com to find out. More squawk on the street coming up. Welcome back to squawk on the street. Our eamon javers is at the cnbc Cambridge Cyber<\/a> summit, and he has a special guest. Eamon. Yeah, hi, david. Fascinating conversation here at the Cambridge Cyber<\/a> summit. Cnbc, m. I. T. And the Aspen Institute<\/a> all coming together today for a day of discussions. Weve got Intelligence Leaders<\/a> here, political leaders all talking about Cyber Security<\/a>, particularly now in the runup to the election, just 33 days away. And im joined here by michele reagan, secretary of state of arizona, and youre one of the few elected officials in the United States<\/a> whos actually faced a Hostile Intelligence Service<\/a> of some kind penetrating your systems. You learned about this in arizona earlier this year. Tell me about the moment where youre going about your daily life and suddenly you realize the russians or somebody is trying to hack into your databases. It was a regular typical day, getting ready to leave for work and was taking my little dog outside before i locked him up for the day. And got a call from my chief of staff. He asked me to sit down. And i you know, thats never a good sign. Right, bad news coming. Right. So what did he tell you . He just said that we were contacted by the fbi and that fbi who monitors the dark web frequently and they noticed on the dark web there was a credential that was for sale, that means a user name and a password. From your systems. It looked like it was from one of our systems that links to the Voter Registration<\/a> database. And so really frightening, scary considering were the in charge of almost 4 Million People<\/a>s personal information when it comes to that database. And then they proceeded to say that, you know, as we dove into it a little more that they thought it was a foreign entity. You know, someone coming from outside of our country. Thats an important point in all of this because theres been so much atri bugs, people saying its vladimir putin, the russians trying to hack into the dnc, election systems around the country. Do you know who hacked into arizona at this point . And can you tell us . Well, at first we didnt know and it didnt matter at that point whether it was somebody two people sitting in, you know, their dorm room or whether it was someone, a foreign entity. But we do know now, we were told that it was most likely russian and that they could trace it most likely back to their most likely. Correct. These guys are out through several servers and jump from ip address to ip address, but at that moment in time the most important thing was what do we do with that database . How do we inspect it . We need to make sure that no information was taken, no information was altered, a virus wasnt inserted into that system. So we had to remove the entire system offline. And that was those were decisions that you had to make, you know, fairly quickly. Right. And, again, when youre not expecting to even hear such things as russian hacker in your job, your daily job. So fast forward to today. Weve got 33 days left until this election. What are you doing in arizona to make sure we have a clean election this fall . What were doing is being very, very vigilant. And were also not saying that everything is aokay perfect, we dont need to check anymore. We got lucky once. Our computer was hacked, but our Voter Registration<\/a> system wasnt. Thats very important to note. But to continue to say that thats always going to be the case would be folly. So what were doing in arizona is were instituting such security protocols like multifactor authentication, different ways to log into our systems. Making sure that all users have new passwords, stronger passwords. That you cant enter things into the entry bars that perhaps are symbols because we know thats how hackers enter in sequel injections into programs. We are almost out of time here, but give me a quick yes or no answer on this. Are you confident that we will have a clean election in november . You know, were going to have a great election absolutely. I mean, theres thats a yes . We dont have a choice. Yes, were going to do everything we can to make sure we have a great election in arizona and around the country. Thats one of the reasons why im here today and speaking up about this. Its a big issue. Michele reagan from arizona, thank you so much for being with us. Thank you. David, ill toss back to you. Such an important conversation here in terms of our strength as a nation, our election system now becoming a weakness here in terms of Cyber Security<\/a> that outsiders can exploit. Its going to be a little bit of a White Knuckle<\/a> time between now and election day, david. Indeed. Want to make sure people are still confident of course most pornltly in the outcome. David, thank you. When we come back, the fate of Deutsche Bank<\/a>, speak to the eus top financial regulators. And tomorrow we have an exclusive interview with former Federal Reserve<\/a> chairman alan greenspan. Dont miss that. Squawk on the street right back after this. Cdw brought i. T. Orchestration to printing, dramatically increasing print security with enterprise printers by hp. Which is great, unless youre a corporate spy. Unsecured printing makes your network vulnerable. Enterprise printers by hp help prevent costly Security Breaches<\/a> that can compromise your network and reputation. So im stuck spying the Old Fashioned<\/a> way. Hey. Im not spying. Secure printing by hp. I. T. Orchestration by cdw. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. 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Well, between Deutsche Bank<\/a> and brexit, theres still a lot of uncertainty right now concerning the Financial System<\/a> in europe. And joining us now in a cnbc exclusive is the Vice President<\/a> of the European Commission<\/a>, valdis dombrovskis. Hes also just recently named the commissioner in charge of Financial Stability<\/a>. Welcome. Good morning. Good to see you. We are all wondering about the health of european Financial Stability<\/a>. How worried should we be . Well, as regards european Financial System<\/a>, in general, it must be said its in much more robust shape than it was before the crisis in terms of capitalization, in terms of liquidity ratios. Also some things which we saw in recent stress tests done by european banking authority. Obviously, some pockets of weakness remain on which we need to still do work. We hear that narrative from the europeans that the banks are in much better shape than the financial crisis, theyre more capitalized, theyve done the stress test, and yet, we also hear the narrative here that our banks are even in better shape, that the u. S. Banks took their medicine in a way that the european banks did not and that theres still a lot of work to do, which is why we have problems like Deutsche Bank<\/a>. How do you respond to that . Well, first of all, this setting up of european banking union, many things have been done in terms of strengthening supervision, in terms of creation of resolution mechanism, but also in terms of requirements as regards capital adequacy and liquidity ratios. And banks have held on already a lot in terms of raising the capital, in terms of insuring liquidity. Now i would say it is a problem which needs to be addressed and which is still there, also measures have been taking its nonperforming loans. And were working intensively with the member its states where the issue is more pronounced and the loans problem. Clearly, that is an issue. How do you see whats happening at Deutsche Bank<\/a> right now . Do you see it as a crisis of confidence or a more dire problem with Deutsche Bank<\/a>s Financial Health<\/a> and capitalization . Well, first, it must be said that as European Commission<\/a>, we are not commenting individual bank cases, and we are not a Bank Supervisor<\/a> to do so. So, i can give you an overall assessment of the Banking System<\/a> in europe, which as i said is overall in much better shape than it was several years ago. You know, some of the lack of confidence in Deutsche Bank<\/a> seems to go back to the lack of confidence in the stress test criteria. Even most recently, the latest round that you just mentioned, there are those who question why the tests ignored greek and portuguese banks or why it didnt include defaults on sovereign debt. Do you really feel like youre doing everything you can to instill confidence through these stress tests that you are administering . Well, as regards to stress test, so the scenarios are set by european banking authority, but it must be said that even taking into account brexit, the adverse scenario which banks have to go through was more severe, significantly more severe than what we had seen just post brexit. But theres been i think this concern over the last many years since the crisis that the european banks have not moved fast enough to really do the Balance Sheet<\/a> repair that was needed, to take the necessary writedowns and really recognize the value or lack thereof of the assets on their Balance Sheet<\/a>. Do you feel that that has happened . Well, this is happening even though its happening at different pace in different member states. There were some countries which actually worked and addressed this problem in a very strong way, like spain, for example. There are countries where this work is still ongoing. Italy is an example, but also there are several measures in terms of setting up a stateguaranteed scheme of secization, of nonperforming loans and also setting up a private fund to deal with nonperforming loans are steps which had already been taken. Do you see the dojs fine of Deutsche Bank<\/a>, original fine at 14 billion, as politically motivated payback for what you at the Current Commission<\/a> ordered apple to do, pay back 14. 5 million in taxes . Well, we cannot comment on u. S. Authorities decisions and also, as you know, negotiations between deutsche and u. S. Authorities are still ongoing and still remains to be seen what the amount of settlement is going to be. Do you think, though, that is a fair fine for misselling mortgagebacked securities, a fair fine that could actually lead to questions about whether the bank can survive without a government bailout . Well, once again, we cannot comment u. S. Authorities decisions. I wanted to also ask you about the bazell amendments. Will you oppose any requirements for Additional Capital<\/a> . First of all, it was worse and the European Union<\/a> is committed to implement our international agreements, and we are coming forward with legitimate proposals to do just that. As regards to next step, its also agreed in bazell that completion of basel iii should not lead to the significant overall increases of capital requirements. So, i guess to sum up the entire conversation, what would you say to a european or american citizen who looked at this, a little more than eight years since Lehman Brothers<\/a> and the financial crisis, where the regulators had been working hard to punish the banks and to improve their Financial Health<\/a>, and here we are possibly on the brink of another situation where were talking about whether the German Government<\/a> needs to come to aid to its biggest bank . Well, to me, all this noise about deutsche seems to be somewhat exaggerated. Overall Banking System<\/a> is in much more robust shape. And also, if you look at the eus economy, eu is already in a for fourth year of economic recovery. And what we are doing now, we are basically looking at the ways to strengthen our recovery by promoting investment, by dealing with structural reforms, while maintaining responsible fiscal policies. A lot of work to do. Thank you for joining us. Thank you. Here at post 9. That is the European Commission<\/a>s Vice President<\/a> , mr. Dombrovskis. He is also the head of european Financial Stability<\/a>, david. All right. Well, that does it for us here on squawk on the street. Squawk alleys coming straight up. Today i am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. Hello, my name is watson. Yeah. Well, we gotta hand it thto fedex. Glasses. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access<\/a> for Small Business<\/a>. Fedex. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business<\/a> incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov good morning its 11 00 a. M. At the cnbc Cambridge Cyber<\/a> summit in boston, massachusetts. 11 00 a. M. On wall street. And squawk alley is live. Im waking up, i feel it in my bones dont make my systems blow welcome to the new age, to the new age welcome to the new age, to the new age, whoa, oh, oh radioactive, radioactive whoa, oh, oh, im radioactive, radioactive welcome to squawk alley for a wednesday. Breaking news. You are looking at a live shot here of blue origin launching a new shepherd to test its escape system in texas. 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