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tv   Squawk on the Street  CNBC  September 18, 2019 9:00am-11:00am EDT

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all right, want to thank ken langone for being with us this morning. always a pleasure. come back soon. >> i sure will. >> lots more to talk about next time and a lot happening today. make sure you're watching to hear what happens with the fed decision see you tomorrow with delivering alpha. now it is time for "squawk on the street." ♪ good morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the dow is up 9 in the past ten days fed decision at 2:00 repo squeeze quiets down new york fed operation for a second day today europe is green. uk inflation disappoints oil down as the saudis give more intel on the attacks and the president orders treasury to
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increase sanctions on iran road map begins with watching the fed. investors expect the second rate cut in a decade. stocks mostly lower ahead of the open. >> fedex is falling this morning. shares down in the premarket over trade worries policy uncertainty, of course, as well continuing to weigh on the delivery giant >> and right idea, wrong approach, house speaker nancy pelosi sitting down with jim you'll hear what she had to say about the president's china trade strategy as we said, a few moments ago, the president tweets, i've just instructed the secretary of the treasury to substantially increase sanctions on the country of iran. so nice that our country is now energy independent the u.s. is in better shape than ever before, strongest military by far, biggest economy, no longer even close, number one in energy, maga equals kag. the story is going to be about the attacks and what else the saudis can tell us about it as aramco had that statement out yesterday. >> right i think we have to -- we're following the saudis' lead here.
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we're not leadership i can't wait to see what happens when joe interviews vice president pence and tries ies tn him down have we ceded our foreign policy to a foreign country >> are you asking me that question >> unless you're on the podcast, the answer is yes. >> yeah, i don't know if that is the case i don't think so >> okay. >> we are very -- >> i don't know what -- look, i think most of us would say don't we already have every sanction imaginable i guess you can do a food blockade or something. >> that's what i wondered. what is left >> what we did to germany -- >> not under sanction when it comes to iran. >> food. food embargo >> really? food >> hey >> stalin did it >> treasury doesn't have -- >> we did it world war i
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food embargoes have been done, it is not the way our democracy approaches things, but we did help put a food embargo in germany. i'm trying to think of sanctions. i'm out of sanctions i'm out of short of doing something militarily, i don't know what you do next. >> certainly doesn't sound like he's going to be meeting rehani anytime soon they expect production to be back by the end of the month they said that not a single shipment to a customer has been or will be missed. >> what happened here is extraordinary. the president is dead right. we have so much oil here, we're keeping the price of oil down. every time our producers get more money, they do more drilling, the drilling rig count is down pretty substantially this year. but the production is up because of the technology. so what you have, you now got points coming in that will be right into the area where we can
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ship. these are happening right now. and not only are we energy independent, on the continent at basis, but we don't know what to do with it right now the market is taking it. >> right now there is no excess capacity in the market though either, with the saudis being down. >> but we have excess capacity just started just looking at it, just this morning, the pipeline just got through. the more ships you have, the more supply. >> i saw one report yesterday, capital economics said if you had outright conflict in the middle east, 150 by year end you think that's possible? >> really? that's off base. the petroleum reserve, which we do not need to put out and what we're doing in the permian would make it so you could actually -- i think that it could go up substantially, but if it went up substantially, we have never been in a position where we can turn on a switch and start producing oil. i am now believing --
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>> pushback on this whole capacity thing you're saying i got to tell you. >> pushback? there is a 2 million a day barrel coming -- opening now you can do crude by -- the permian is going to add 4 million barrels a day in three years. >> that's not right now. >> well, okay. let me just -- let's play -- let me play devil's advocate you are the devil in this. the five year curve is 50/50 to me it was 50/50 too the day this happened where we thought they would be offline for months and the five year never jumped that's not because of them, it is because of us >> okay. >> it is us. >> isn't that more about demand than supply? >> when the city of san jose says we're not allowing any more buildings to use natural gas, you say we are declining in our use dramatically
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the chinese economy is not that strong only if the president makes it so that the -- the cafe standards go up an we don't use california would there be a chance that we are going to continue to use oil the way we do now >> he is trying to do that >> he is >> trying to lower the standards. >> no oil company that i talked to or auto company that i talked to agrees with the president. >> no. it is a fascinating story. separate from that one and yesterday you had the move on california's inability now to regulate its own air saying it is part of -- i'm sure it will end up in the supreme court. >> it will but, are remember, the previous administrations have all felt it was right that state rights when it comes to energy and the environment. but i think that -- i don't think people -- i was with a company the other day, and they're -- because they want to be carbon neutral, they are putting -- going utilities and saying, let's put up windmills, solar. this is happening so much faster than anybody thought
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the president is trying to keep coal in the equation i deal with the top five utilities. not one of them owns coal. you can't bring it back if the utilities won't do it. >> you can't >> those plants -- jimmy carter's plants, saudi arabia of coal, 40 years is the maximum length of those plants guess what year it is? >> 40 years. >> this is a big change. people are just not understanding, when you have the tenth largest city, we're not going to let you put natural gas, that means the bridge fuel is gone. people don't want nat gas. >> right. >> it is amazing. >> we'll keep our eye on energy, a story today, oil down more than a buck. fedex the other big story, down in the premarket, company posts a quarterly miss cuts guidance, trade tensions pressuring the global economy, the drop in business from
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amazon fred smith weighed in on u.s. and china trade policy on the earnings call last night >> there is no company and no person that has been more vocal in our opposition to the trade policies that we are pursuing. now, to be fair, i think it is not just the u.s., i think china is also pursuing bad trade policy >> people have been posting charts for a while now, global trade and fedex stock. it is not encouraging. >> it is worse since -- talking about global trade volumes decline year over year, first decline since 2009, chairman powell and also fred smith, at a certain point, says, look, country, everybody is whistling past the graveyard about the u.s. consumer and u.s. economy versus what is going on globally basically, implying, we're going to import that slowdown, particularly industrial. i know steve liesman, i was
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listening to little stevie, he was saying, there is no real reason to cut. well, if you read -- fred smith is a top flight economist, we had kudlow and cramer, larry kudlow, chief economic adviser, this is the most dispiriting call about the economy that i've heard in a very long time. >> it is interesting, guys, 24 hours ago, we were talking about randall stephenson presenting at the gold monday saks conference not far from here. we focused on the things having to do with at&t. the most interesting comments, i had a chance to go back and read them, very similar to what mr. smi smith is talking about at at&t, the biggest thing he follows is business investments, number one indicator, and it is flashing yellow. not red, but yellow. whether it is china or the u.s. embassy, mexico trade agreement, mr. stevenson went on to say it shouldn't surprise anybody business investments start
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slowing down, that's exactly what we're seeing. he's hopeful as they get new election season they'll get more motivation, get something done but definitely slowing down, you can't have that kind of slowdown in business investment and not find its way into the consumer >> largest phone companies -- >> at&t has -- >> largest freight forwarder millions of pieces every day united states. i would -- versus the commerce figures, these -- stephenson is for better or worse someone who really can have a view >> he sees the numbers >> fred smith -- >> he's echoing if not actually -- >> yeah. >> not echoing -- >> he knows how many pieces of fedex went out yesterday and the day before he's questioned and they're very -- there is a rebellion on the call $900 million miss, how can you keep forecasting wrong, when is europe going to be integrated, how could you be so wrong about china? >> the guidance is infamously
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wrong. it has been that way for years. >> somebody said you've been wrong for so many different quarters i'm a fred smith apologist yes, reduction guidance from christian weatherby at citi, talks about how you've been so wrong about it, let me tell you something, christian weatherby at citi, you don't want to be fred smith he has the hardest job in the world. there is no deal with china. let's put those back, could be a deal with china -- i don't envy him. sister, mother, sister, mother >> others say, jim, we had the biggest supply shock in oil we had in years and stocks did nothing they're not counting on a global recession. >> it is not about fuel. i like fred so much. i didn't like the fact that he said that amazon was doing 1.3% in the beginning -- at the end of january and we find out 1.3% was
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lucrative. now money had to pour into to get the amazon ask is hard very interesting really interesting insight about amazon when i knew these, i say e-commerce is growing so fast. let's throw adobe in, growing so fast, but now a lot of competition. i think adobe, which had a dispiriting couple of lines, not all. they beat the quarter. i think that underlying tension is maybe sales force going against them we're seeing, boom, boom, boom, everywhere, fedex, u.p.s., got to worry about u.p.s got to worry about the united states postal office, worry about dhl, amazon. i was worried. he got me very worried david, be afraid be very afraid >> i do fell el as though he's n making this call for some time now and nothing is that much worse. >> you sound like the analyst community. community. >> you've never said something -- >> you're like the community
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this is -- some community. you want to be in that community, a community of jackals. >> we did get at least two downgrades from bmo and deutsche. >> i don't know what -- why did you believe? right? the fault is in bmo and deutsche, not in the stars >> talk to the deutsche analyst the next hour. >> really? >> meanwhile, jim had a big interview on "mad money" with the speaker of the house, nancy pelosi here is what she told jim about u.s./china trade. >> do you know what the trade deficit is now over $5 billion a week. >> a week? >> a week. it went from $5 billion. so we have the american consumer has subsidized the -- both the middle class and china that cannot be ignored but they cannot continue to violate our trade relationship i think president had to do something about it i'm not sure he wechbt tnt the t
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way. we should have done it multilaterally with the e umt aeu and the u.s. whatever path you want to take to improve the trade relationship, do not empower the other side to hurt your farmers and consumers. >> the power of president trump, which i am not, i would reach out to her today, she is far more on the president's page in terms of the need to protect the working person in a very practical way versus the leading candidates, no joe biden, elizabeth warren, numbers keep showing that senator warren is surging and surging. i think she said, listen, pretty likely to get a u.s. mca deal. i think that -- and i also think that she is, as tough on china as he is, but she wants it to be done and coordinated with germany, with our so-called allies the problem is they don't want to play. they need to do too much business fred smith would tell you, the reason why germany is doing poorly, we're hurting chinnia.
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germany doesn't do something fiscally which they're not going to do because of hyperinflation and -- >> savings rate, new data on the savings rate in german consumers up, way up. >> 1920s mode. we know what happened in the '30s they don't want to do the prelude to the '30s. i think speaker pelosi offered many olive branches within the context of the president is a little unruly, doesn't like the way that he treated -- the fed chief. >> get it out of your head. >> i'm trying. it is like -- >> do not use the nicknames. >> i would mention that -- i said, doesn't seem to call you by names and she goes, no. >> yes he needs her maybe more than anyone get cramer's mad dash, count down to the opening bell in a moment look at the premarket here,
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we'll talk about the fed, this repo operation today, and the ongoing number of guidedowns we have gotten, adobe, fedex, corning and the past few days. back in a moment orlando isn't just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. it's a competition for the talent. employees need more than just a paycheck. you definitely want to take advantage of all the benefits you can get. 2/3 of employees said that the workplace is an important source for personal savings and protection solutions. the workplace should be a source of financial security. keeping your people happy is what keeps your people. that's financial wellness. put your employees on a path to financial wellness with prudential. tv aas many safety features powas the rx, the new...... the lexus rx has met its match..
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♪ all right. with about 11 minutes to go before we get opening bell on what we like to call hump day, middle of the week, remember, let's get to a mad dash, adobe mentioned it briefly, let's come back. >> he's built adobe into the powerhouse it is if you're creative and want to be on the web, if you have commerce and want to be on the web, you cannot live without adobe. he made an acquisition this time last year, mar quetta. there were issues if it has been fully integrated or not. a couple of comments they septembkept they admitted their bookings did not meet their expectations and their consulting services were disappointing. people sell in this thing, they have a november 4th analyst meeting. if they correct, course correct,
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which i'm confidesure he will d happened in 2017, they had a problem, in the september quarter, they -- there was a brief guide down if you look back on the chart, one of the great buy moments those throwing away adobe will be surprised that november 4th he'll fix the problems he always does he's that good. >> i don't know if we get a five year look here we talk about value creation and benefits of hooking your wagon to a ceo whose vision you believe in, there it is. >> there were people on -- one of my favorite analysts, heather belini from goldman, raises a question if there is more competition. this company is head to head against sales force. a series of acquisitions that marc benioff made that you are to believe there is an axis and ally group and he's alive with
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satya nadella at microsoft there is no doubt, these guys are not friends, they may be friends for -- >> stock down, disappointed a lot of investors this year so far. >> the fact is it did have a great last year, so -- you know what, david, we have to go >> we do we have to go. we have an open bell, of course. one more look, by the way, at futures as we get ready for the opening bell, nine minutes from now. more from post nine coming your wa y. ♪ you spend days researching bed sheets. and weeks picking a dog bed. so why would you settle for just any bank? just do what you do with everything else. ask the internet! ask your friends. ask your co workers. we're pretty sure they'll send you over to us. because we're not just a bank. we're an ally. ally, this is pamela how can i help you?
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dollar we expect more intel on the attacks from the saudis today. we'll get the opening bell in about six minutes.
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you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in over three minutes. busy morning we covered fedex and oil. the fed will be the other big story today, decision at 2:00, press conference with chair powell at 2:30 we'll look for questions about the balance sheet today, jim, after the new york fed intervenes in the repo market for the second straight day. i think the effective federal funds rate is the high end, maybe exceeding the high end of the range. >> has to be a better explanation than the cryptic stuff. >> what is going on? open at 350, traded to 500, and then in the 4s and drifted to the low 3s, now high 2s. still above the top of the fed fund range and, i mean, what does it all say? what does it mean? >> just --
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>> another ten years they intervened in this way. >> if the economy weren't as strong, i think we would be sitting here worried that someone had a problem funding. but it is not that kind of environment. >> it is not this is not the crisis this is not where nobody would believe anybody or take anybody else's collateral except for huge number. >> look, i think we need a simple explanation, has to be one. if i were the person who asked the question first, it would be the first person first question i ask what is going on. >> yeah. >> if he's evasive, that would be a big mistake we need to know. if it is innocent, well, great, let's hear it. >> others like gundlach say it is a precursor to a reexpansion of the balance sheet call it qe if you want, but it is going to stop this ricshrink. >> and we'll hear on scott wapner's show ahead of when the -- ahead when the fed chief speaks so a lot of conjecture i think scott's show may control
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trading between 12:00 and 1:00 as it has every time he has gundlach, every time >> will he get a question? >> if he doesn't, what are they doing? you can tell every boss, you go ask this, everybody has someone in their ear, hey, listen, ask that question, no one else asked it that's the kind of thing bosses do it will get done. >> never hear from bosses, thank in thankfully. >> no? they tell you to ask that question. >> after retail sales were strong, we had industrial production yesterday, housing starts today, 12 year high. >> i was just reading the release from the people who write about housing from the housing industry, the mortgage industry, this is -- they're saying it is directly having to do -- this is joe con, who i like, low mortgage rates, strong job market convince home builders to ram p up production
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in august. this is what we have been waiting for and it is happening. we have been some supply constraint this is positive i'm not going to spin this negative people like to spin things negative no this is positive >> wait until 2:00 to see that the fed says about today and the future there is the opening bell and the s&p 500. at the big board today, city growers, nonprofit, introducing farm based learning in urban environments at the nasdaq, igm biosciences, focused on the treatment of cancer patients. we'll look to fdx to show us what the market believes about trade now. >> people will say, watch u.p.s. do people believe it is fedex execution, which means you buy u.p.s. or people believe that fred smith has got the ceo has a good read on the economy, which you would sell u.p.s though the domestic -- the domestic individual, the domestic consumer market is just
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on fire. because of all of the different -- everyone doing e-commerce they had to add dollar general depots u.p.s. down 3, interesting market has spoken. >> can you blame them when fedex has a quarter like it did? fedex down 11.5. >> the quarter was a suboptimal quarter. >> it was. >> the stock is back to levels that it hasn't seen since 2016 >> business is not that -- you often talked about the plane issue, holy cow. they got to retire the giant fleets >> airplane, right, or actual -- airline as opposed to -- >> airline of very easy to handle customers they don't want anything they don't want soft drink, don't want movies. they're happy to sit there >> how many years is fred smith the ceo of this company?
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>> since the civil war since the civil war. >> i think fred, he would lake that line. speaking of airlines, southwest does reiterate their q 3 guidance 3 to 5, jim they were just upgraded on friday as we know. >> think about gary kelly, he had a terrible tragedy, right? one of his planes. he's the largest supermax guy, right, the max is him. right. he has the most of those a lot of people feel he's the most levered in areas that had the worst weather and he's the best he's just the best stock is up 20%. this is gary kelly -- gary kelly is so self-effacing. it is not me, my team gets a job done, but he is remarkable and you got to hand it to him. there are a lot of good airline executives, but gary kelly is the dean. >> he is usually comes on with us
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>> he'll be back, i'm sure. >> i'm sure he will. >> some of the technicians looking at charts of airlines say we have been in the tight range, and then it is poised to break out to the upside. >> look, i'm a big fibanachi believer find that in pine cones, shells, naturally found, it is a mathematician came up with it, febanachi, not lee naonardo dicaprio i went to lunch in a church that was done by michelangelo but fibanachi works. i used the fib queen on my show and it rarely has been wrong that's an encouraging thing. we have been dealing with are the transports going to confirm, not confirm, confirm by the way, fred smith tips his hat to old dominion at one point, in a ramble
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>> i think 1971. >> 1971? >> ceo since 1971. can we get a list of the longest serving ceos. >> let me pop that up. >> warren buffett has to be on that list. wexler >> i think so. >> that's three. you got any? >> to i hado i have any? >> longest serving ceos. >> thinking. >> media -- >> i don't think so. >> i think that -- look, he didn't the wright brothers, the wright brothers were earlier than fred smith. >> still -- are they co-ceos. >> they invented the airplane. they were earlier than fred smith. >> got it. >> meantime, whirlpool and stanley black & decker gave cut over a key >> doing well yesterday.
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can't you let a couple of stocks go up for a couple days. have to slash them geez, whirlpool started to move up, breaking out >> valuation calls on the past week on dick's got one i think jpm, buckingham. a nice run. >> look, it is good -- there is a declared victory sense that makes sense. so i'm not going to go against that >> what is your general rule, 20% gain, you ring some register. >> take something off the table. this is an uncertain market. if the fed says the wrong thing today, if the fed says -- you ought to talk abouted my size corre midsize correction i'm not -- he should not take his cue from the stock market. anybody who thinks he should is wrong. they can come see me in wind work, i visited, that's my high school reunion the bond market is saying cut. it is the bond market, which is,
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of course, much bigger and saying cut, cut, cut, you're way off, you raised rates too far. too fast i agree with the bond market, i agree with president trump >> there has been some good chart work done on global rate hikes in the past year and how they overshot. right? they did not allow the global economy to gain enough -- escape velocity >> where is the inflation? fedex is not able to raise price and has to marginally raise prices but there is -- there is a deflationary component a note about walmart today walmart continues to create deflation in the system. all of the cloud kings deflation in the system. the gig economy, deflation in the system >> yes >> the gig economy >> no, you're right. all inflationary aspects. >> it is shocking that you can have this unemployment level and have -- >> a president who constantly said, no inflation, in inflation, lower
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>>-like at wa >> look at walmart's stock costco i have a friend who got a car at costco, for a fraction of what it costs at a car dealer costco has everything. they sell everything they don't just sell lobster dip. >> they do mortgages hot dogs rotisserie chicken i don't know about cars. >> great place to get your eyeglasses >> yes >> i just find costco is just an exhilarating experience. >> it is >> exhilarating experience you've never been to a costco. >> speaking of some of the momentum names, jim -- he's never shopped -- i bet you guys have a card. i bet you -- how much do you want to bet he's not a member? do you have a -- gold star member or black card. >> i don't have a -- >> my wife is -- >> i don't have room i don't need a seven pound thing
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of ketchup. >> you need 12 houses. >> i guess when you're jim cramer. >> when a morning for some of these, yum, chipotle, darden menu innovation, but crazy, isn't it >> let's face it, you know, a lot of this craze started when popeye's, i used to call them popeye's, popeye's started this chicken sandwich now we have chicken sandwiches galore kfc, yum, the chicken sandwich craze. craze. all the restaurant chains are doing fabulously that's a sign that the consumer is spending. not saying they are -- >> the prospect of higher gas prices, modestly higher. >> cracker barrel, great quarter. on the interstate. i think it says that gasoline prices are not going to get too elevated the restaurant business is on fire a lot of it also -- they have been able to develop and
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actually make money now. on the door dashes, the door dashes helped everybody other than domino's, which had its own delivery system. so it has been -- it has become positive and additive for a lot of companies to have delivery. that's shocking. >> big battle there in terms of grubhub and door dash, door dash, of course, important recipient of money from softbank. >> and the question is, back to wework and uber and underperformance there, you wonder about vision fund too and their continued ability to fund losing -- money losing operations >> right that's what they do. >> they're wiping out everybody. they bought caviar their extension. they represent almost every restaurant also very aggressive one day on barsen miguel, it
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says we're use them, we're using caviar, not door dash, door dash bought caviar. they took a huge percentage of money out of you we have a bar. i need people to get in. >> and uber eats still losing money, right >> yeah. did you see on the 5 this morning, courtney reagan did a segment about neuman >> the ft has this piece that during the webcast yesterday he admitted he needed to learn some lessons about running public companies that his personality played a role in this ipo delay. >> he mentioned the word humble. >> people hope he feels that way, it would help. >> you don't think he has remorse? >> i haven't spoken to mr. neuman i look forward to talking to him at some point, privately, publicly, or both. >> he's funny, you know. >> he's a very charismatic man >> totally. >> you don't found and create a
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company like that without having a lot of talent. >> i find him spell binding. >> a lot of people frustrated with him, i can tell you, inside and outside, some frustration in terms of his unwillingness to listen absent by saying he's been humbled, maybe he listens more those who perhaps can impart some valuable advice and they're able to get this thing going next time. we'll see. i don't know they're going to be able to. i don't -- >> i know, but -- >> very difficult. we'll see what the numbers look like. >> tim cook has great humility this morning web bush comes out drum rolling into friday's iphone 11 launch, talking about china being the star, preorder activity in china in the all important china region that is roughly -- roughly double a year ago. would that not shock you if it turns out china is twice as strong because they lowered price? that's incredible. and that's friday launch is very, very exciting. i'm excited. i may pick one up.
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get one, david i think you can put it -- my wife put it -- the near divorce we have when my wife put it in the washing machine, apparently these will solve a lot of spousal problem. they can get wet and longer battery life did you ever put it through and that whole rice bag thing, that's a joke. >> i never put my iphone in the dishwasher no >> the washing machine >> the washing machine. >> she had no remorse. she said i shouldn't have left it in my pants we went to a counselor >> longest serving ceos, what we get. leslie wexner, warren buffett, smith has come and gone, so he may not be on that list. and then a couple of your buddies, lynn shifer, stanley bergman. >> stanley bergman, that's henry shine. >> i knew the actual -- >> michael mygraph michael miller from philadelphia philadelphia's own philadelphia's own costco indeed has an auto
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program. car buying made easy, new vehicles may i suggest that you go to costco with me on friday, it will blow your mind. we'll use two cards. that's what we have to use two cards. you can get one of those orange door things, what is that on the road, that you see -- >> i would do that. >> you leake ike to go? >> yes >> you need to get a card first. >> worst day for fedex since 2008 it bob pisani. >> down, but could be worse. apple, pfizer, merck, some of the consumer names helping out we're back to the old slower global growth story, doo ue to fedex. transports are the weakest far and away banks, energy, metals and mining, there is your global cyclical type names, utilities holding up better, reits holding up better, consumer staples, looks like early part of september right now.
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for the transports, as carl mentioned, fedex down 11%. u.p.s., and you see, the logistics guys, jb hunt, expediters, some of the truckers, not surprising i agree with jim, a rather dispiriting report we saw overall from them. here what i want to point out with fedex, this is the canary in the coal mine we knew about this back in the early part of 2018 that's how far this stock has gone it was 30% off of its highs going into today now it is 40% off of its highs this was not something that the people were astonished about what was amazing, this ey lowerd the numbers for the 2020 estimates. that's what's got even more people throwing in the towel the earnings coming down for several years. this has not come as a shock people were surprised that they still kept lowering the numbers. even after it happened here. we have a lot of pessimism
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i know that fred smith made comments the global economy. and i think that certainly there is something to all that but, remember something, i know there is execution issues with fedex. he's not imagining things. the duke university has a survey out, they do this several times a year, cfos, major cfos q4 2020, 67% they're not extreme numbers, but they're unusually high, certainly in the last ten years. this pessimism to yesterday in the global fund manager survey that merrill lynch does, that's very high for fund managers. they're usually more optimistic. why is everybody so pessimistic? the duke university report cited the usual suspects trade wars, specifically germany again, being flat to negative growth and a lot of the fund managers felt that german stimulus would be the number one
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thing you can do to help the global stock market. that's how important that is that's what christine lagarde is probably engaged in. china slowing down you got a lot of issues here my point is fred smith is not imagining things when he says there is really something going on in slower global growth u.s. is strong china is weak. europe is weak a little bit of inflation, it is a tough call here. street wants more rate cuts. just move on, finish with the ipos, still coming out important thing is we got one today, dental supply company, looks pricey in the middle of the range, $22 remember what happened last week with similar company, having a very, very tough time of it overall. we'll keep an eye, the fed will be the big story today it is a very, very little tough needle to thread here satisfying the markets. back to you. >> thank you very much, bob. to the bond pits, can't keep your eye off that one today. rick santelli at the cme in chicago. good morning, rick.
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>> good morning, carl. fed day today and volatility we saw in short-term funding, it really does underscore how all the world is fully leveraged, fully margined, fully packed, all the dollars fully accounted for, all the fx forwards to satisfy the future cash flows, so when you get the short-term squeezes, it starts to feed on itself all the way into forward rates and various investors globally that need to confer to dollars. it had settled done a bit, but most likely will set the stage for today's fed meeting. maybe in the statement, but should enter into the q & a. we have gone from data dependent to day trading to think any central banks will be preemptive is kind of scary just talk to any chart and see how his act rcuracy compared toe fed and nobody has a crystal ball friday, a big spike up in
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interest rates four day charts of two year, we have gone from 180 to 168. also remember we had some big low yield drops in early august. look for 10s they reached up to 190 if you open the chart up to the end of july, remember, we eased on the 31st of july. you'll see that in between that meeting and now, 10s reached 145. then reached 190 and here we sit at 176 i guess the point is, there has been a lot of volatility sparked by ecb changeover and, of course what our fed will do, they get a joint of other central banks or impede the negative rates ash the globe. bund yields, same point to the end of july. minus 71s, low cycle low it is their all time low close currently hovering right around minus 47 to 48 and finally, let's lack at what's going on with the dollar index. look at the spike on the left of the chart, that was fed day.
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we're close to the same levels this is all about the dollar and how everybody needs more of them carl, jim, david, back to you. >> more clear and a long time, thanks, rick. still to come, former chief white house economic adviser jason furman does he think the fed is on the right track when it comes to rates and do they truly have control of the pricing ban dow down 50 points back to 2996 delivering alpha strategy from leading alpha generators, direct access to policymakers and government leaders, on september 19th, see who's calling the shots now. go to delivering to attend this year's blockbuster event. >> you will come away with ideas that you can put to work immediately. >> plus, special guest vice president mike pence talks economy and trade war impact reserve your spot now at
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let's look at transports on pace for their worst day since
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let's get to jim and stop trading. >> ralph the dog is happy, but investors still chewing over concerns great piece by jeffries talking about how chewy has valuations that are too high. the market is really pushing back on companies that are trying to grow really fast that are not worried about profitability and chewy is one of those chewy is a great client, but some who use the auto pay, the auto pay is great, but when you're building a business and really try to grow it fast and the market is unforgiving, this is what happens. all-time low. >> they at least got public. >> they did get public i wonder if they're humble those 24 words that don't belong in the same sentence newman humble >> hard to imagine him feeling any other way, jim what's on mad tonight? >> we have three
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cronos. >> altria owns a bunch of that. >> you really are on your game agco and then tech data which is the supermarket of technology. we've got to find out what things are really slowing. cronos is a company, they own a brand of cannabis. >> vote online. >> stop it buffalo was still good i use buffalo. >> and altria, which is, man, ever since the heat turned up on e-cigs, they've had some trouble. >> dow's down 65 don't go away. employees need more than just a paycheck. you definitely want to take advantage of all the benefits you can get. 2/3 of employees said that the workplace is an important source for personal savings and protection solutions.
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. good wednesday morning welcome back to "squawk on the street." i'm carl with morgan and david dow down 60. obviously fedex is a point of focus this morning as we watch the transports waiting for the fed, watching saudi oil as well.
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>> yeah. transports are down 1.6% after that really rough earnings report from fedex. our road map starts with that company failing to deliver shares sinking after missing on earnings we'll dig through those fedex numbers next. plus the fed's in focus. what investors should be watching ahead of today's decision and the news conference. more troubles for juul a house panel threatening to support the e i've integrity maker. >> just a few hours away from that key fed decision. steve leishman joins us to talk about what we might expect from both the decision and the press conference and some discussions about the repo operation. >> this fed announcement is taking place amid pressure on the central bank among turmoil on the fed's own fed funds market there is pressure from other central banks bilike the ecb, pressure from markets. if they don't get not just a cut, but the kind of cut they want and of course there's pressure nearly daily from the
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president of the united states so the question is do we get a hawkish cut which is just future cuts are limited or a dovish 25-base point cut which is more to come. goldman sachs writing we continue to expect the fymc to deliver a third and final 25-base point cut in october, a 75-base point total realignment of the policy rate appears to be roughly the mid cycle adjustment following the '90s template. a moderate response to moderate concerns about growth risks and soft inflation i don't honestly know if the market will be satisfied with that of course, there's pressure from the president. we asked the cnbc fed survey what impact this has on the fed. 5% say it makes monetary policy tighter. 52% say no effect. 36% say it in fact makes monetary policy looser art hogan one of many who wrote in on this topic says saying the u.s. economy is doing great and we need lower rates makes as
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much sense as saying i feel great, take me to the hospital the fed came in with the second injection into the lending market in as many days the $75 billion operation was oversubscribed at $80 billion suggesting perhaps the fed didn't do enough and may have to do even more tomorrow. but the rate that they place the money at was close to the fed's target rate. this comes a day after a crunch -- could not hit the target of setting the rate been 2 and 2 1/4. this does not, i heard you talking earlier, appear to be a credit related concern this is about getting the right amount of excess reserves in the new regime that's out there for regular regulatory regime as well as what's coming from the tereasur.
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>> when they say permanent open market praeoperations, does tha sound likely to you? >> they may have to do it. there's been some criticism of the new york fed for not seeing this coming. you had a lousy trade on monday. they came in on tuesday after most of the trade had been placed and couldn't place all the liquidity they were offering so it didn't seem like the fed knew how the dealers were working or how the providers of credit were operating their books. they came in this morning and did it almost an hour earlier than they did it earlier, so that seemed to help a little bit. i would guess they're going to come tomorrow and another idea that's out there is instead of doing these overnight injections, do them over two weeks. all this sets up a little bit ominously. if you think about kind of disruptions to the market, carl, the month end is one thing the quarter end is another and the year end is another. we're coming up on year end.
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there's a lot of people who are worried they're not going to be able to finance their instruments for year end, so that's where we're going to get potentially some stickiness in the market. >> steve, we'll be talking to you all day long steve leishman on fed day. joining us now chairman jason furman now profess over of the practice of economic policy at harvard. welcome back good to see you again. >> good to be here >> how much has this repo squeeze clouded the picture this week >> i don't think this is a big marker of economic importance. i think this is more about the plumbing of the monetary system. it's something, you know, the new york fed needs to figure out how to handle, a little bit of extra uncertainty, but i don't think it's of lasting macro consequence. >> we do deserve this explanation from powell today on it, don't we >> absolutely.
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the markets need to know this matters to the markets they need to understand what's going on, how we can make sure it's dealt with differently in the future, but if i ask what the growth rate is going to be in the fourth quarter, where the unemployment rate is going to end the year, it doesn't affect those things >> jason, given the fact it does seem to be from a market perspective that we're going to get some sort of rate cut later today, what camp do you fall in? do you think it's a hawkish cut or do you think that we get some commentary that signals the fed is more concerned about the economic outlook moving forward? >> my own preference, and i'm going to bet that they do what i think is right, which is always a dangerous thing to do with the fed, is that they end up in a neutral stem they cut rates by 25 basis points but they say, you know, inflation has been a bit higher. wage growth has been a bit higher
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they're going to need some material change in the data to cut rates again. that based on where we are now, where the data is right now, it's not that you should expect another cut is coming this year. >> steve, we saw crude oil spike up after those saudi attacks over the weekend and it's largely come back down how -- i guess how key do you think that will be to this discussion from the fed later today? >> i said steve. >> steve, yes. >> i don't think that oil plays the role that it once did, certainly not in the '70s where we imported the vast bulk of the oil that we used back then i don't think the fed is going to be very concerned about inflation coming from higher oil prices i think i'm probably going to be more concerned about the uncertainty of what's going on in the middle east picking up on what jason is
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saying, the data does not well support a rate cut today but the global outlook perhaps does the trade war, the global economic weakness, fold in what's happening with oil in the middle east right now, and you can make a case for a rate cut can you make a case to say we're in the middle of an easing cycle rather than the mid cycle adjustment which is what goldman success expects. >> fedex, fred smith in their conference call yesterday, randall stevenson in an investment conference of at&t talking about their focus on business investment, the uncertainty that's been brought to bare by china and even though free trade agreement with mexico as well and wondering when and if it creeps into the consumer side is it a concern to you as well, the continued lack of growth there or decline in business investment >> yeah. i mean, you look at business investment which fell in the last quarter
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the pace over the last six quarters has slowed relative to what we saw before that. there's no question that uncertainty is a big part of that that's because businesses are forward looking. as steve said, the economy is quite good now in terms of where the unemployment rate is businesses are looking ahead as they're making their decision. consumers are looking backward they're saying do i have a job, do i have a paycheck at some point this uncertainty will start to show up in the jobs numbers it will start to show up in the pay numbers. and then it hits consumers and that would be a much bigger deal for the economy if and when that happens. >> steve, how much firepower is there in another insurance cut or even a series of further insurance cuts from the fed right now? i ask that because if consumers and businesses are feeling uncertain in this environment and are now expecting to see rates go lower and stay lower for longer, i wonder how much it
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can actually spur lending and more economic activity in general? >> i think you ask a good question i don't think that there's very much in a quarter point i think there's more negative in the fed not doing something than there is positive in the fed doing it so the positive comes almost -- very much from the fed avoiding the negative outcomes that would happen if the market sold off here and if you got the sense that the fed was not on top of what was happening in the markets here so you'd also probably get a strength earning of the dollar that could hurt exporters further. i think there's more to be gained by the fed doing this than there is to be lost by them not doing this i think ultimately a quarter here, a quarter there, it's not going to make a big deal housing was good i'm interested to know how much of housing today was a response to lower interest rates and lower mortgage rates, so that's the kind of positive you could
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possibly get from the economy through the interest rate sensitive sectors. >> finally, jason, when you look at housing starts today, 12 year high, retail sales, ip three times the estimate, have you been impressed with the macro as it comes in the last two weeks >> yeah. i mean, the last two weeks have been good. in general this is a very strong economy. you look at the macro data it looks fine. it's just that the fed's recalibrating around a different view of the neutral interest rate and worried about what might happen in the future we haven't seen all the effects of the tariffs we haven't seen all the effects of the global slowdown i don't think oil will have a big impact on the economy, but who knows where it goes, who knows the impact this is all recalibration, forward looking. i think that's a good thing. i just don't think we'll need to do much more of it after today as long as the macro data holds up the way it has.
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>> all right jason, thanks for the guidance steve, we'll talk to you soon. when we come back right here, fedex is falling, of course shares are down sharply. this on the company's earnings miss we will discuss that quarter next and there are more bans for juul we're going to discuss the latest hurdles it is e-cig maker is making including the potential subpoena "squawk on the street" will be right back servicenow put our workflows in the cloud. this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you.
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. welcome back to "squawk on the street." fedex earnings flop. stocks down 13% right now. shares of the shipping giant fall after the company missed quarterly earnings estimates and lowered its full year guidance for fiscal year 2020 joining us now with more is deutsch bank research analyst who downgraded his holdings and lowered his price target thanks for joining us. walk us through your downgrade and why. >> thanks, morgan, for having me for us we've been defenders of fedex and shares for as long as i can remember and yesterday was a real thesis changer from our part on one side like you said, the guidance the company gave was about 20% below the consensus, so that was obviously concerning, but more critical and more structural in our opinion is the lack of
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realization by the company management to, you know, to basically address the fact that a lot of the issues in the safety today is a reflection of management misexecution over the last several years we think until the management team realizes that, is less defensive about their performance, only then can they start righting the ship. that's really what structurally caused us to move to the sidelines and downgrade our rating. >> that really gets at a key question on the heels of these earnings and that is how much of the headwinds, how much of the challenges we're seeing at fedex are really a symptom of the global economic backdrop and all of the slowing in trade headwinds that we've been seeing and how much of them are company specific >> we think the majority is company specific the company made an acquisition as you know very well. at&t express was hit by a cyber attack and at&t we believe is impaired in its value as a
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result of that attack. to be fair, in the domestic side of the business, e-commerce continues to grow. the problem with that is that brings on density challenges and capital investments that drive precash flow much lower. so i would say the majority of companies specific and of course, you know, fedex is not immune to what's happening in industrial production, what's happening to global trade, and you can see that in some of the statistics with respect to their international priority volumes that are flattening out, the yield in international priority which is a very high profitable segment for them is actually down over the last couple quarters clearly i don't want to say it's 100% company specific, but i do think that we do think here at deutsch bank the majority of it is company specific. >> when you criticize management and some of the misses on execution over the last year and a half or so, are you calling for changes within the "c"
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suite? >> well, you know, certainly we've seen a lot of management turnover at fedex specifically in their international business, so i think some of that is going on i think what we are calling for is a more rigorous assessment of the return profile of the business and a more rigorous assessment of the returns on invested capital given capex the percentage of sales is still very high. this is a $40 billion market cap company that is barely free cash flow positive. when the stock is down 13% to $150 and say it's a buying opportunity, we would caution fedex trades that have left them a fraction of a free cash flow yield that's quite expensive when you look at it from that lens. >> well, i'm curious listening to you, what changed here? you were positive for a long time when i say that, i don't mean
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this quarter i mean over time did something change in terms of the way they do their business or is it execution on the part of management? >> yeah. that's a fair question we've been positive. prior to the tax reform, the stock was at 180, went to 290. the tnt acquisition, it was a $7 billion revenue company doing a 4% operating margin and the hope was they integrate tnt in europe, that 4% operating margin could get to 10% through synergy and onlian upgrade translates to earnings and equity value. it's not their fault they were hit by a cyber attack. that is not their fault, but the reality is as a result of that cyber a track stronger players in europe mainly ups and deutsch bank were able to take significant market share it's going to be very difficult in our opinion for fedex to, you
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know accident f know, fix the issues of tnt given the fact they haven't integrated markets more than two years after the acquisition, they haven't finished the integration of those companies. >> thank you for joining us today on the heels of these earnings and your downgrade as well we didn't get to amazon. we've got to leave it there. we're getting to breaking news out of d.c the ceo economic outlook survey with those results. >> the latest sur vie shows ceos downgrading their forecast for the economy. the members now expect u.s. growth to clock in at 2.3% for the year that's compared to their previous estimate of 2.6%. the vrt blamed the broader slowdown in global growth for the downgrade assessment
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they blamed it on the trade war and more than half of ceos said that sales took a hit. a third said that there's been a damper on hiring now, the outlook for sales, capital investment and hiring over the next six months, those also all declined. the economic index dropped 10.3 points to 79.2 that number is below the historical average but still signals growth ahead now, in a statement vrt president josh bolton said that u.s. businesses have their foot poised above the brake and they're even tapping the brake periodically he said uncertainty is preventing the full potential of the economy from being unleashed. guys, vrt chairman jamie diamond will be speaking to reporters in just a little bit and we'll let you know what he says. back over to you. >> in terms of these comments and this sentiment, how different is it than what i guess we started the year with >> so what we found is that the
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ceo outlook has remained relatively steady. it went up in the previous quarter, but then went down this quarter, but we found that the overall index of the economic outlook which looks forward for the next six months, that has declined for six consecutive quarters you're seeing a slowdown and sort of a tempering of expectations, but there is still confidence that the underlying trajectory of the economy is still for growth >> thank you we're just one day away from cnbc's delivering alpha investor summit leslie pickenjo joins us. >> you've got more than $16 t l trillion worth of the debt it seems to increasingly whip saw the market tomorrow lesions of investors, politicians and executives will
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convene to discuss these issues and what it means for your portfolio. we'll hear from vice president mike pence, sec chairman will kick off the event and josh harris will close it down. other speakers include pmg ceo and nelson peltz who spoke in a proxy fight, they will sit down with jam krader. also mary erdoes overseeing nearly a trillion dollars in assets and there will be a panel on how to do goodbye investing well cnbc coverage will begin first thing tomorrow and will continue throughout the day, guys. >> leslie, thank you can't wait for tomorrow. quick programming note as we go to break, do not miss the bond king on the halftime later today a cnbc exclusive at
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12:30 eastern time, a day after he said he expects the fed to resume the balance sheet, quote, pretty soon. more "squawk on the street" when we come back dow is down 40 - [spokesman] if you've tried college but never finished,
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not a good day for juul. now facing a potential subpoena from a house panel joining us with the latest. >> carl, new this morning congress is threatening to support juul on the grounds that the company is not cooperating in a congressional probe into the e cigarette maker's role in the teen vaping epidemic juul's record is woefully inadequate and appears to directly contradict the sworn testimony of your co-founder and chief product officer at our hearing in july. at that hearing he said the company is fully cooperating with the committee lawmakers have asked for various documents including a list of schools receiving funding from juul and the contract between juul and altria. subcommittee chair says juul has not produced some of those documents the panel is seeking juul has until october 1st to produce those documents.
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this development follows last night's news that new york become the first state to enact a ban on flavored e-cigarettes. california has also cracked down on e-cigs this week. it will be going after counterfeits and is launching a public information campaign on the dangers of vaping. juul has hedged its portfolio by rapidly expanding internationally, but there's also been setbacks in that area this week. china halted sales of juul products this week just days after the company launched in that country which has about one third of the world's smokers and india has banned the sale of ecigarett e-cigarettes in that country. >> companies used to policy risk and developed economies like the u.s. and europe, but with some of the -- with the promise of some of these international markets goes away, that's going to be a much different story. >> it sure will. juul is currently in 19
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countries or at least before china it was in 18 countries, so china is right now out of the mix. china and india account for more than a third, about 40% of the world's smokers, so it's a huge opportunity, especially considering the risks in the u.s. regulatory wise. >> i realize we're in early days in terms of all kinds of research and data around e-cigarettes and vaping, but i wonder could there be a potential blow back when you see these types of bans? you've got folks addicted or hooked on the idea of vaping they're going to find a way to do it if they really want to and does this make the blake market all the more formidable? >> that's a really great question and that's something that's a big argument that juul is making is that products like theirs helps people who are hooked on regular combustible cigarettes transition off of those cigarettes in new york, for instance, they actually didn't include menthol in the ban saying that -- and
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they're looking at that over the couple weeks, they could include that over the couple weeks, saying that menthol e cigarette do help people transition and you might expect blow back on that and that is the art they are making. >> thank you. it's time now for our etf spotlight. we're taking a look at oil ticker xle along with oil and g gas, both continuing to trade low this morning after breaking a two day win streak, xop coming off the worst day since mid august down 7% since just yesterday morning. wti crude also retreating this morning after president trump said he ordered the treasury department to, quote, substantially increase sanctions in iran. it's been an amazing spike in crude and all of the energy related stocks and etfs and
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really now spike down. probably couldn't have imagined seeing something play out quite this much volatility quite this fast just a couple years ago. >> it's a continued story we're watching closely given the latest tweet from the president this morning as well involving more sanctions apparently on iran for now let's send it over to sue herera and get a news update. >> thank you so much here's what's happening at this hour, everyone president trump says he is naming state department hostage negotiator robert o'brien as his new national security adviser op it comes a week after -- o'brien was among five candidates trump said were under consideration. iranian president rouhani said saudi arabia should see the attack on its oil facilities as a warning to end the mini war. he did not address the u.s. and saudi allegations that iran was behind the attack.
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the leader of isreal's blue and white party talking to reporters as he left his home. his party is dead locked with prime minister netanyahu's party after the repeat election. and tropical depression imelda making its way through southeast texas bringing heavy rain and flooding to parts of houston. police say the city's pump simply couldn't keep up with all the rain and that caused the flooding in a very short period of time. that heavy rain is expected to continue through tomorrow. you're up to date. that's the news update this hour david, i'll send it back downtown to you. >> thank you, sue. when we come back right here, president trump looking to roll back california's power to implement stricter emission standards. we're going to speak to former chrysler ceo bwhen "squawk on th street" returns.
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the white house expected to revoke california's authority to set the stricter auto emission standards. phil lebeau joins us. >> this will play out over the next couple months, but this is what it's all about, whether or not california has the triet set fuel economy standards the standards that were written in 2012 go all the way through 2024 and they're pretty ambitious. california wants to bring that standard down to about 50 miles per gallon the trump administration wants it to be lower and is threatening an anti-trust investigation into automakers working with california. here's senator amy klobuchar yesterday talking about this move by the trump administration >> a letter from the epa and the department of transportation to the california air resources board only bolsters the perception that this antitrust investigation is part of a broader effort to buy the
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administration to promote its preferred emission standard and bully those who get in the way >> here are the four automakers that last month reached an agreement with the state of california on new fuel economy standards that are scheduled to go in effect all the way through 2024 the bottom line is this, guys. this will play out over the next several months in two steps. first the trump administration will try to revoke california's right to set its own laws and rules in terms of regulations and then it will say here's the one national standard we want for fuel economy standards going through 2024 back to you. >> phil, thank you so how could that impact automakers that struck an emissions deal already with california we're joined by the former ceo of chrysler, home depot, ge power. you've got a lot of jobs, by the way, bob you're a busy man. take me back to chrysler and your experience there and how you would sort of deal with something like this.
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we all know ceos want certainty and they seem to be willing to go along with california or at least some of them how would you view this at this point were you running one of these automakers >> it's a great question back in 2007, '08, and '09 california kind of dictated what the emission standards would be as it would relate to miles per gallons call the cafe standards. we took great exceptions to that that california was kind of the tail bagging twagging the dog. they set what we thought were pretty outragous standards you could only make a fleet of small suvs and the rest would have to be cars. i tried to convey the customer determines what they're going to buy, not what we make available. i saw it as a hardship when california was imposing on the
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rest of the country what the fuel emissions and fuel standards would be every company has voluntarily done a tremendous job by putting in smart technology, electronic brakes, electronic accelerators, et cetera, to reduce the drag on the engine to get more fuel efficiency i think they've made tremendous progress, but to impose these unrealistic and high impact cost things on the automakers that are then passed on to consumer, it's just not the right thing to do >> so then, bob, does the trump administration have a point targeting california's authority here >> well, i think they do i mean, i think we should have one national standard that isn't dictated by one state as opposed to imposing that on the rest of the states i think there should be a good meeting of the minds, come to the table, and agree on what's appropriate using the best available technology assuming there's going to be advances in technology, and i'm not
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suggesting we stay where we are. we should continue to improve gas mileage efficiency, but the thing is right now with gas prices where they are, the u.s. consumer likes big they like trucks they like suvs but would impose the whole society moving to a smaller more efficient vehicle will be gas prices so i think there's got to be a really effective compromise between the administration, the automakers in california and get this arbitrary fight off the table. >> as you know, bob, the administration has proposed standards far below what the obama administration was -- had put in place and california's are a bit below where the obama administration was again, you've got at least four or five of the major auts ying go with california, because we think other states may follow. it's the largest single market
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for automobiles in the united states by far and we'll just focus on that. you don't seem to think that's a good strategy. >> no. i don't. even when the first cafe standards came into play, there were off ramps we kind of new at the time that while they set this, you know, very aggressive goal, we may not have been able to reach it and there were going to be off ramps relative to how you calculate that fuel efficiency on your fleet relative to the size of the cars or trucks included, not included, is there a separate standard for them. i think there's still a lot of work to be had i don't think we should let california not only dictate the fuel efficiency, but then they're really dictating the type of automobile that the u.s. consumer would be able to be able to purchase >> change it up a bit for a minute here. the strike amongst gm workers, again, based on your experience, give me your sense here in terms of where you think this goes and
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whether they have a point. >> well, it's unfortunate, many of the things that we had to do back in '0'07 and i was fortuna to work with the president of the uaw at the time and he understood the realities of the environment we were in, so i think this is ill-timed for the uaw to take on general motors now. if you look at it, general motors has a pretty good inventory position the dealers have a fairly good inventory position if you think about what transpires now in addition to the wages reduction, in addition to health care costs being picked up by the uaw, my sense would be hey, continue to talk, but continue to work it seems to me financially the uaw workers would be better off. the union would be better off to continue to be -- they're at the table anyway why not continue to work in a
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cooperative way and hammer through these issues we did it before without a strike i think you can do it now. i think it's ill -timed you're looking at the economy, the adjusted rates coming down you're getting into the holiday season the employees, ie consumers will be concerned i think it was ill-timed to do this at this time. >> the flip side of that, ill-timed, the flip side is we're in this incredibly tight labor market as well, right? i just wonder from a worker standpoint, if not now, then when i guess off of that, how do you think the rest of not only the auto industry but other manufacturing workers at other companies are watching this unfold >> well, i think a lot of the things that we put in place relative to having a temporary worker and temporary employee that will allow you to adjust much more quickly as opposed to rolling through the entire seniority list when you had to
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affect volume change, which is going on now second, we introduced a two-tier system where entry level employees would be paid at a certain entry level rate and then they would be able to gradually move up to the existing rates i think there were a lot of benefits on both sides that would encourage re-employment as opposed to exporting employment so that we could stay competitive here in the u.s., keep jobs here in the u.s., and i'd hate to see that deteriorate. i mean, let's not forget what we learned during that downturn and proactively try to see if there's area we can improve on it i'm sure mary and the gm team are working on that. it doesn't benefit either party to take a strike it's easy to announce the strike or take a -- it's always much more challenging to get both people back into the shop. that's been my experience over 40 some years. >> bob, we appreciate you sharing some of your opinions and thoughts based on that experience thank you. >> okay. thank you very much.
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as we go to break, take a look at shares of adobe moving slower on soft guidance. down about 2.5%. the company did beat estimates for the quarter but also saying they see growth slowing in the key digital media business stock is still up more than 20% through the year re" teth bake "squawk on th stetafr isre come on. [ cars honking ] it's so late. yay. it fights traffic. no parking. -i told you. oh, a spot! hold on. it fights tension. seriously, did you take my phone? passenger light on. it even fights...fighting. innovation that keeps people together. the 2020 glc. lease the glc 300 suv for just $479 a month at your local mercedes-benz dealer. (classical music playing throughout)
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fed chair powell's first remarks on power lunch today, 2:00 p.m. eastern on cnbc. it could be about to get worse for the worst performing s&p 500 stock this year. find out more on trading nations more "squawk on the street" is coming up. as a struggling actor,
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i need all the breaks that i can get. at liberty butchemel... cut. liberty mu... line? cut. liberty mutual customizes your car insurance so you only pay for what you need. cut. liberty m... am i allowed to riff? what if i come out of the water? liberty biberty... cut. we'll dub it. liberty mutual customizes your car insurance so you only pay for what you need. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ let's get to the cme group in chicago. >> thanks, carl, good morning. i'd like to welcome my guest, vincent reinhart let's get right into it. in your writing, you reference the dot plots, the economic summaries of all the individuals that make up the fed you know, is this a good idea to
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stress the crystal ball approach when we have the data and dependent approach which seems to always get thrown overboard the minute the markets seem to want more from the fed >> the summary of economic projections was a problematic exercise from the beginning. that's been 40 years when they were talking about just the economic forecast. to be even more specific about rates and put individual dots since 2012 has been a real problem. why? because it makes you focus on the divergence within the community. this is a great example. if there are one more dot for a quarter -- extra quarter point, markets will converge to that. if there's one fewer dot, markets will converge to the other thing. if the fed's data is dependent and makes decisions meeting by meeting, they don't have to tell us what they think they'll do in 2020 or 2021.
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>> vincent, i think it's a lot like discovery in the legal profession the more things you throw out there, the more complicated and more everybody digs into them. just making the pursuit of transparency almost impossible how would you change that or is it too late with regard to the fed and the dots >> it's always hard to take something back because you'll get complaints saying you're now covering things up, you're reducing the amount of information available. i think they should be more explicit about how contingent they are on the outlook. they can give near term guidance essentially the tilt we see more reasons to lower interest rates than raise them in the near term and then just describe how they think the economy is going and the general direction of policy. the dots are just way more specific than anybody's understanding of the economy >> not only that, let's all be
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honest here. the track record of the dot plots has not been spectacular by any stretch we're almost out of time one other picture i would like to weigh in on and that is the global picture are central banks particularly ours going to end up having to be more coordinated with more c, because it's quite obvious their policies affect our economy. your final thought. >> it's not coordination, it's emulation. what jay powell found was when he was raising rates, other central banks were willing to sit back and let the dollar appreciate when he got into the easing mode, other central banks eased with him so their currencies wouldn't appreciate. that actually lessened the financial accommodation powell provided so i don't think we're ever going to get into coordinating monetary policy. the best we can do is share information and try to get other central banks away from this fear of floating trust markets a little more. >> excellent vincent, always interesting to
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hear your opinions let's see what they do today david faber, back to you. >> thank you, rick rick santelli. let's send it over to jon fortt for a look at what's coming up on "squawk alley." it's the new high school sport, video games there's a company that set up a league that's going nationwide called play vs just raised $50 million. we've got the founder and ceo coming up on "squawk alley."
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presidential candidate elizabeth warren's economic advisers targeting charitable giving with new taxes. our robert frank joins us to explain, i guess, robert. >> good morning. the two economists who helped elizabeth warren create that wealth tax are now pushing for a tax on charitable giving the two at the university of california berkeley say as part of any new wealth tax, certain types of charity should be taxed to curb abuses the first is private foundations. they have about $850 billion in assets right now so bill gates, for instance, would be taxed on his $100 billion in personal wealth along with the more than $40 billion that he has in the bill and melinda gates foundation
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that would include money given to that foundation by warren buffett. the second would be donor advised funds. they hold $110 billion the economists say people who give to donor advised funds or foundations, they still control that money until it's distributed to charities so, quote, such wealth constitutes individual power and, therefore, it makes sense to make that wealth taxable now, warren has not said publicly specifically how charity would be handled in her wealth tax she has proposed 2% on wealth over $50 million, 3% on wealth over a billion estimating it would raise $200 billion a year. without a new tax treatment on certain charities, these economists say the rich could divert their fortunes, hide that wealth and, therefore, shield it from the irs so you had to kind of close that loophole with this idea of taxing charitable giving guys. >> yeah, but robert, the money is still going into a foundation or a donor fund that is going to
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ending up with a charity. >> absolutely. >> it's not going for some profitable investment. >> no, no. and, yes, it will sit there for a long time, maybe decades, maybe hundreds of years. but you're absolutely right. that's why those on the other side say this is a ridiculous idea giving is what sets apart america from lots of other countries, especially because of the taxin sent i'ves and so therefore it's a bad idea. they're looking at it from the perspective how do we protect the revenue that we could get from this new wealth tax and so much could leak into charity earlier than it otherwise would have so, therefore, you have to stop it. you're absolutely right and that is a criticism >> good back and forth between you going on earlier this morning. tomorrow is a big day on "squawk on the street. on top of our delivering alpha coverage, nba legend kobe bryant will join us and discuss his latest investment venture, the companies and ceos that he's backing and the fellow superstar athletes that he is teaming up
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with. when we come back, we'll take a look at the first reviews for the new apple watch, having gotten a couple of phone reviews this week. dow is down 60, 29, 98
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good morning it is 10:00 a.m. at fedex headquarters in memphis, tennessee, it's 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪ good wednesday morning, welcome to "squawk alley." the dow is down some 61 points we'll start with the streamers today. netflix,


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