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tv   Squawk on the Street  CNBC  August 31, 2016 9:00am-11:01am EDT

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credentials that aren't $200,000 but a few hundred dollars that will immediately get you a job. >> want to thank you for your time. gives everybody a lot to think about and appreciate you being here. >> thank you. >> that does it for us today. michele, brian, thank you for being here. >> went from one to three also. >> check him out later. >> that does it for us. time for "squawk on the street." ♪ good morning, and welcome to "squawk on the street." i'm david faber along with jim cramer. we are live from the new york stock exchange. carl quintanilla has the day off. a look at futures this morning as we head towards the hump day as we like to call it here. mike mike mike. down as you see right there on the dow and the s&p and the nasdaq as well. european markets let's check them out. do we include italy and spain today? no. just the big three for you. there's france, germany and, of
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course, the uk down ever so slightly. 10-year note yield hanging around what has been and continues to be that let's call it 1.58 level. crude oil down after a move up a bit over the last couple days. although yeah, we've been around the 46 level for a little bit. >> it's been a level where when we get to 50, a lot of the oil producers sell a lot of futures and that's because they can -- that's a lot of debt payments. they sell futures and capture. get back to 40. and then you see more cessation of rig count but rig count up 30% this year. low base. but rig count, it's very big since the oil took out the 50 level that one day. >> i'm sure we'll get to more on oil and gas a bit later in the program. our road map starts with the last trading day of august, that's today. it's been a flat month. things could be ramping up in september. apple's $14.5 billion tax bill
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from the european commission is stirring up a lot of global concerns. we're going to take a look at what may be far reaching ripple effects and the punches being thrown by one ceo of an irish company. and donald trump set to meet with the president of mexico today ahead of his highly anticipated speech on immigration. the state of global trade, what may hang in the balance, certainly worth discussing. with two days to go before the key employment report data from adp shows the private sector added 177,000 jobs this month. as we enter the final trading day of august, the s&p and the dow, clinging to gains for this month while the nasdaq is up a little more than 1%, both the other averages as you see barely. could change. does it matter what august is up or down as we head into september. >> only because sometimes you give back what you move up in august because august is a vacuum month or so few companies that report, but hope springs eternal in the month of august. look at the banks, they've been
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up. why? they're not telling you everything. people are presuming that fed raises you're fine. get the numbers, think what was i thinking. technology tends to preannounce. one of the reasons september was weak. a lot feel july movement, august movement and discover hey maybe wasn't so hot and the companies feel like they're compelled to come out. >> now as you mentioned financials, of course, that has been the leader at least, they make up about 3%. you've talked about the banks a number times over the past couple days as being a key. >> look at what trades. a lot of people should be looking at the ticker underneath us before the market opens. a couple takeover stocks that tend to go up and people taking bank of america not waiting for bank of america to open. that is a strong sign. when you see that bid underneath before while we're discussing things before we even get to the bell. >> right. >> that's why i knew bank of america was moving. saw it being taken from 415 to 15 and before the marked opened.
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those are aggressive buyers. >> expecting that there is going to be another rate hike in the near term and therefore we might start to establish some of that interest margin at this institutions. >> exactly. people looking at the 10-year not realizing the banks aren't allowed to fool around with the 10-year or at all with these regulators. they got to invest at the 30 days. regulators don't let them fool around with that stuff and don't let them do two year paper. >> utilities were weak and -- which is not unexpected. and then telecom, telecom again is so dominant by verizon and at&t and ctl, century link. very weak. it's a dearth of companies. >> the yield plays, utility and to your point verizon at&t which carry significant dividend, all -- both getting hurt and health care the end of the month, concern about backlash from raising prices and what would happen. >> tevin, mylan.
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>> mylan in particular. >> let's not forget, we're at a very unforgiving time for health care because they've had such great price increases. >> they have. i mean especially when raising the price of a device. that is the case with mylan with the epipen. the drug came off patent 30 years ago. epinephrine was marketed in 1906 so you know. >> these devices are dosing. when you try to make a compound, okay, say you go to a pharmacy and they make compounds, very few companies make compounds, very hard to find. in new york like four or five drug stores that make compounds. the question is you have to do the dosing yourself. so -- because they'll give you a hypodermic needle which has a plast plastic, you'll try to figure out how much to pull back out of this, and you know, it's very -- >> that's where the patents are. on the device not the drug. >> when we try to make a high per dermic needle we tend to miss. that's why the dosing is automatic.
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if you and i sat down with three kids from cal tech, two from harvard and a guy from stanford we could do this in a nano second. i would like a tv ad, the fda to set up an ad these devices are simple to make but we who try to dose ourselves don't think about it. when i've tried to dose it is -- i miss, i miss, i miss. >> okay. >> but the fda should understand look i would rather have a somewhat faulty device than do it ourselves which is what they know everybody does. they refuse to admit. where's peggy hamburg, former head of fda she was fabulous. >> today do we continue to see this movement in terms of utilities and telecom, yield plays perhaps getting hit a bit, the banks continuing to perk up as a result of hopes that the fed gives us a raise, maybe even as soon as september. >> momentum going into that and there's a belief that this behind the market theory, use the instance of today'ses ul ta
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salon, palo alto, mixed sectors, palo alto delivered a good quarter, one of the conference calls i like, dropped the bomb, the stock up 5 in after hours to down 5 and give guidance before the q&a and guidance was not what people wanted. there was a significant desell, that raymond james would go from buy to hold, the stock getting killed, there is without a doubt to me a lot to like about this, the number one cyber security company, hard to find companies that give you 33% growth in cash flow margins, 35 to 40, that's actually best of anything, kind of literally you have to go to workday to find something like that. but the guide was a little bit below and look what happens enyou a company that sells at a high multiple. >> that's right. to your point yesterday on ul ta. 42 times. you've got to prove it every day. >> rare that hair salon, cosmetic, beauty parlor and cyber security come together in
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one whole piece. >> it's incredible. >> but that's what you should do if your -- >> that is one of your many talents bringing all of that together. >> in september, we haven't seen -- we've seen significant moves typically in that month. 2015 we were down 2.6%. of course back in '08 down 9%. but we've seen some big up months as well up 8% in '10. haven't seen a month of september in some time where we moved less than 2.5% one way or the other no talk about why. three reasons. first is tech, tends to preannounce. because july and august stocks creep up. europe on a half scale in july and august. second is stocks tend to -- they reflect the absence of cate ta points and move up. a lot of people. but the people come in the 18 comes back after vacation. watching the position. the 18 comes back from east hampton throwing the big fund-raiser for hillary clinton,
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raised $20 billion in the hamptons, come back and say wait a second, these stocks are too high and fear the preannouncements. most important thing is people have to understand, october we're scared about because there are big declines so people then like to sell ahead of october. even though october is a good month and you know i talk about the lock inn factor. when a hedge fund up 20%, 25% one of the things your partners never mind september, october, november, december you go to the movies. lock it in. >> i can't name a hedge fund up that amount. i can barely name a hedge fund out performing the broader market. the hedge funds are severely lagging it would seem. >> once again. >> as are most active managers by the way to be fair. 77% according to -- so they should be working. in fact, none of them should be at the beach. none of them. they should all be pounding it tout to get returns. >> you can buy a house in egypt, whatever, i mean you've got those streaks out there that are -- >> lily pond lane, remember that
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one. that's the big one. lily pond. want to be on lily ponds. very nice or further lane. number of our guests have homes on further lane. >> i felt like -- >> some of them are watching us right now. >> papers -- i had no papers to be on further lane. >> you got to have papers. >> have to have papers. >> made stone. >> i was there. >> david the world has changed. this is not 1982. okay. why can't we stay there, dad. well, there's reasons. tell me, dad. >> let's get to ireland. >> yeah. let's do that. ireland's cabinet set to discuss an appeal to the european union after it ruled apple has to pay it $14.5 billion in back taxes to ireland after the ruling many conservative lawmakers furious, some raising the spector of an irish exit from the eu. the irish prime minister calling it, quote, an unprecedented situation. and jim, as we thought and perhaps discussed yesterday, there are broader ramifications
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here in terms of what the eu's move means having taken place retroactively they're looking for pots of money wherever they can find it. >> we did not have a typical group of ceos add to the chorus of tim cook because they're afraid. i think they're afraid. listen right now this lay low, maybe they won't come after us. >> interestingly, our treasury, the white house, and others in our government have said, what are you doing? >> right. >> and have questioned strong words the eu's move here. >> amazing that merckcle has not tried to take directly from our treasury. remember eu, you have to think merkel. this is like a juncker state, when they got three boats and the commoners get one. the eu is a juncker state for merkel. most recognize it's germany driving the bus there. >> right. yesterday we had a conversation with the irish finance minister who said there was no special deal given to apple even though
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it does pay perhaps as little as 1%. >> better than nothing. >> i suppose. i suppose. >> i do wonder, jack lew, going to be speaking today and come out forcefully against this, when they acted retroactively to change the laws as they dealt with inversions on pfizer and allergen. >> no, david, nothing changed. >> yeah, right. >> wasn't that in some ways -- >> there he is. >> isn't that in some way -- >> the same. delivering alpha told me without a doubt you could not do -- look i go back and -- >> you target one deal in particular, mr. lew claims, of course, that is not the case but it was. >> and brent saunders will tell you the ceo of allergen they moved the goal posts. >> no doubt. >> and -- >> fully indicates -- now who advised them on it and they went specifically for that deal. >> you do? >> isn't that setting a precedence in the sense that the eu said okay, they can kill something that way. go after something retroactively
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also. >> the pot calling the kettle. you do retroactive. look at what you did with allergen. i don't think they're sophisticated than would require tremendous amount of googling. >> michael o'leary, i don't know if you had him on the ceo of the irish discount ryan air calls the eu tax ruling on apple bizarre. at a news conference he said, quote, frankly the irish government should turn around shouldn't appeal the decision, just write a letter to europe and tell them to politely you know what off. >> was that oliver wendell like chief justice, brandeis who said bleep off. >> that was swiften. >> i don't know. >> come on, guys. it's a government. the eu is a government. it's, obviously, so powerful that a major power had to get out of it because they feared that the eu was placing workers there. i mean, look, eu is off the rails. but we treat it with great respect. >> it has significant
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implications for a lot of multinational corporations whether you're a monsanto bayer trying to work out a deal and think about the anti-trust implications in the eu for that transaction given what they've done. >> i mean brian cra sap itch, i went to an intel open in his factory in dublin, i was an intel hawk, went to see it. one of the wonders of the world. they got a great deal. >> right. >> maybe it's time to reopen the deal. >> do some factory tours and things. i think that would be fun. >> i did a factory tour of dell. >> do a show from the tesla -- the floor of the tesla factory. >> saturday, nobody there, because it's saturday. >> right, nice. >> coming up a lot more on today's movers in the final trading day of august and tomorrow night at 10:00, make sure to watch the premier of "ground zero rising freedom versus fear" reported by my colleague right here mr. cramer. it's an original cnbc
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documentary giving you an unprecedented look inside the redevelopment of the world trade center which is finally near completion. >> yeah. >> we'll have a preview this hour. more "squawk on the street" live from post nine when we return.
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republican presidential candidate donald trump will be visiting with mexican president enrique pena nieto hours before trump is set to deliver a speech on his immigration policies. the president of mexico invited the democratic candidate hillary clinton to visit with him. should be an interesting meeting one would expect. you've talked for quite some time, in fact long before mr. trump made it a key part of his campaign about mexican manufacturing, given you've had a home there for some time and the automobile industry and what it's meant down in terms of jobs. >> in the time since i've been there seven years, 500,000 d approximately 500,000 cars built in the state i'm in. the state is a place where you got $3 workforce, push control orders and don't forget health care paid for. education paid for. no unions. $3 an hour.
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cheapest place on earth. much cheaper than china or anywhere in the world and union pacific trunk line that runs through the town which is filled with cars every day three times a year and trump not that popular in town on january 1st, my wife turned and says there's someone shooting outside. you've got to go outside. they're shooting. i go outside they're shooting donald trump dolls, to ring in the new year. it's not exactly -- >> i would think it would be hostile territory if anything comes out of this meeting today. >> the mexicans are gracious. speak one nation, sounds like i'm being prejudicial. >> if there was a trump presidency what effect would it have on trade to mexico and would it be beneficial or not beneficial when commit to both jobs and the financial markets? >> countries, a lot of banks have done an analysis of this saying that actually could be neutral but the problem is that the price differential for every industry is such that, you know, i'm next to a factory for ppg
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and harman and bmw factory, benz factory, toyota and these places, they can't make their cars in the united states but remember, the town that i'm in, versus detroit, it's equal distance to l.a. to new york. so there's no reason why you should make cars so to speak and it's a safe area, well educated population, unemployment rate very low. i mean if you look at the facts and say why do they build their plants in mexico and not south carolina, the answer is, as easy to get the planes there as south carolina. there's no tariff. such a windfall for business and this is a windfall for mexican workers against american workers. i don't think anyone would disagree. it's been incredible. the areas that i frequent in mexico have blossomed over nafta and the areas that have been hurt by and a half ta in this country have fallen by the wayside. that's just -- that's just everybody knows it. it's not talked about.
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>> yeah. >> cheapest place on earth to build, mexico, because of the peso. >> all right. up next we will get back to stocks, we'll have jim's mad dash and count you down to the opening bell. another look at futures as we do that for you. we're set for what would appear to be a lower open. more "squawk on the street" from the nyse straight ahead. thiss myetirement. ani net tireof it. are you tily preparo retire? an your ver ting retirgretirett with e*ade. i' ves and a vested investor in vts signp etradcom and t up tx red d llar insor nsts.*tre,wherinveste and invest in vestst.. oan ordary expece into eraordinary one. get great ofrs at the lexus goen oortuni s ses event. lease 2016 es 350 r $329 a mon for6 monthso eraordinary one.
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and 'lmakeour t month's paen ♪
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wire. anplants a face. no oneil sewhat theer opoin n do youbusiss. 6:30 before the opening bell here on a wednesday. where are we headed in the mad dash. >> rare you see an initiation, just an outright sell, an under
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weight. jpmorgan comes out today with i regard a devastating piece saying listen everything is slowing, company lax visible growth, traffic distribution are going down. david, this is a [ inaudible ] there's no way i would own this if i read this. i would say sell baidu. it's not like google is coming in, we know that. this is a really a piece that just says that even the government is not favoring these guys and i want to ask you a question. the government when they say that -- what can government do to search? i guess they can block it? there's no free speech over there. >> there isn't. as you know in china they can do anything they want. >> the party is -- >> we still think of them as being hey, how does the election go, how is the primary in beijing. >> you to keep them -- kind of keep them in an embrace in some way. >> like do to a tightening of the on-line ads regulatory
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environment. i mean that is -- don't want to see that. i mean, that means that basically if you're in baidu you're thinking it's fine if the government decides to take a profit margin, government can cuts the numbers. cutting numbers, communist party. like chip overhang, cutting numbers, food price fighting, cutting numbers, pr. >> do we have any sense as to jpmorgan's success or lack thereof in terms of predicting the movement of this stock? >> i would have to ask joe. is joe on? what does he say about this here. >> the eighth army saying about this is. >> we have an opening bell after this. stay with us on "squawk on the street." as a supervisor at pg&e, it's my job to protect public safety,
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keeping the power lines clear, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california.
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell ringing a minute and a half from now. we talked a lot at the opening of the show, jim, about the coming month of september, what we may expect and seen so far in august.
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what today sort of holds for you the key to this market? >> it's going to be wells fargo. if they can get through 50 without any news, wells fargo some would argue some of the worst oil portfolio, when oil was higher, wells has this big mortgage business if we get a good employment number it will help it but people feel the mortgage business will be hurt by higher rates. >> loans to oil and gas companies. people understand. that's the assets on the balance sheet that may have deteriorated as a result of the inability of those companies to repay those loans. >> they went in late. the ceo happened to run the denver office during a big decline in a previous oil bust. listen they own the mortgage market. if you think the housing numbers, sales are going to be good later today if you think that housing remains very strong because of job growth, it's the one to own. the buffet factor. >> it is. >> i'm watching that go through 50 it's monumental. that is a one big cap stock to be moving like this.
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>> and it is. big cap still is, by the way. the market cap of wells fargo, $255 billion. >> people don't realize. a gigantic bank. gigantic company. >> the biggest right now. larger than jpmorgan. opening bell for this wednesday. s&p 500, back to the cnbc real-time exchange. composing itself. >> that's a cloud. >> right. >> company for life sciences doing well. i have mark ben kneeoff the original cloud -- >> i want to talk about that. >> at the big board ringing the opening bell center for social innovation celebrating the opening of the women's lab to benefit girls and women around the world. at the nasdaq, affects networks, celebrating the third season of his show "you're the worst." >> i watch everything but i haven't watched that. >> i have not seen that. >> what are you watching right now? i'm on "strike back" season three. >> i'm still working on the hbo show in the night -- the night
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off. >> i got away. watched four shows. >> we watched the profit on cnbc. i got to tell you, marcus, love that guy. >> you are a great -- you are a house man. >> i am not a homer. love that show. >> everybody cries. it's unbelievable. he gets everybody crying. love him. >> there you go. >> i'm telling you. >> we do it on demand too. watch all the ads. it's fine. we're a comcast/cnbc family. come on. >> talk -- absolutely. >> i know you're speechless. you're speechless. watch it. it's great. >> let's talk about some of the moves in the market here. i wanted to start off, jim, with a deal that we got some word of yesterday involving potentially po dash getting together in a merger of equals and would create a canadian champion and previously when po dash was the subject of a hostile from bhp.
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>> yeah. >> the canadian government, saskatchewan in particular said we're not letting that happen. but in this case one would imagine there would be much more open to the idea. what i will tell you is, it's early days. bloomberg, to be fair, reported the story yesterday but also said it could be very quick and very soon. that is not the read i'm getting. but, in fact, it's early days in terms of the negotiations between the two companies that are focused on a merger of equals between the two fertilizer companies. agram has the retail presence, potash is about potash. >> it would be brilliant. >> brilliant deal. >> social issues in these things. it's going to be weeks before we
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>> the farmers love that. fertilizer is nat gas and nat gas is cheap cheap cheap. >> you know, social issues that being who's going to run the company can become a key part of any negotiation about a merger of equals. in this case similar cultures see if they get to the finish line. we want to come back to stocks we're watching but first get to emon javers following treasury secretary jack lew made strong comments with apple's tax deese dispute with the european union. >> yeah, that's right. jack lew speaking at the brookings institution interviewed by "the wall street journal" davids weal, he asked lew if he thought u.s. companies were being unfairly targeted by the eu, in light of this $14
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billion apple/eu tax bill issue that broke in the news yesterday. here's part of what jack lew had to say. >> our concern with the european commission action is that it is using state aid theory to make tax law. it is doing it in a way that is retroactive and that overrides national tax law authority in our view. and we think that it undermines the environment in europe for international business because it creates uncertainty that ultimately will not be good for the european economy. as, you know, the head of the u.s. tax agency, i've been concerned that it reflects an attempt to reach in to the u.s. tax base to tax income that ought to be taxed in the united states. >> and guys, lew also said that he tlings u.s. companies are being targeted by eu authorities in terms of how they go about prosecuting these particular tax cases. and he said he's got a warning to u.s. ceos saying he warns not
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just to focus on minimizing their taxes but more on doing the right thing. so a very complicated dance here diplomatically, politically and economically here for the united states and the european union. guys? >> those are strong words from the treasury secretary. who's been criticized in the past for doing some of the same things. jim and i were talking about pfizer and allergen in particular, you followed inversions as well, those are strong words. >> yeah. look, i mean jack lew views this very much as the european union trying to reach into the u.s. tax base. i mean so this is a turf war and it's about dollars and cents as much as anything else and a lot of legal principles thrown around here. but you're talking about $14 billion and who's going to get it and not get it. >> right. eamon javers from washington, thank you. >> makes a point. people on twitter saying that's all it's about, who gets the money which is clear that it will be, although by the way, there's no certainty we're getting the money because it's sitting over there.
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>> right, right. >> and when will it come back. of course all these companies, $2 trillion, waiting for that time that perhaps will be more advantageous tax rate on their overseas profits. >> well look -- >> to bring back. >> a broken system worldwide. broken system worldwide. we talk a lot about tpp. we should be talking about look democrats and republicans, republicans always insist on a comprehensive no way you can do comprehensive. that's saying no. democrats haven't -- >> if you're going to do corporate tax reform do it all. and so then where do you end up and how hard is that to get done. >> meanwhile, you know, corporate tax is about lobbyists down there getting exceptions in the rule. corporate tax code is gigantic because of the exceptions. real estate kind of exempt so to speak. >> yeah. yeah. carried interest. don't get me started on that. >> oh, please. please. i mean, hedge fund managers pay less than everybody. >> and p/e guys and real estate. >> but they give more campaign
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money. isn't that right? >> when you were running a hedge fund you weren't doing long-term gains anyway because you were whipping them around so much. >> half the portfolio. well, we did. >> yeah. >> but you see 24% versus 8% on the s&p. >> it's completely wrong when i sit down with guys and ladies so much wealthier than anybody you can imagine they sit there and go i'm paying 50 plus percent and you're paying what? what? >> it's a big scam. they got away with it. >> got away with it for so long. >> steve schwarzman alone that man is powerful. what he can do. >> look, i'm not going to -- it's nuts but they give a lot of money so, therefore, it's like the drug industry gives a lot of money. i call it congressional mind share. the lawyers told me to call it that. >> don't you love that. mind share. always words. words people have a lot of them. >> talk about viacom briefly, philippe dauman leaving as the company's chairman in 14 days,
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september 13th, steps down as the executive chairman of viacom, already of course stepped down as ceo selling stock as you might expect he would, 22nd and 23rd of august, $17.8 million worth, 24th and 25th, $10.6 million, 26th and 29th, $31 million worth of stock, jim. he walks out doors with a $72 million severance package. and, of course, he's already sold some or made some $400 million roughly in income from stock options and salary. >> in that whole viacom tussle, did anyone ever mention the stock did terribly but the ceo has made a lot of money. >> it has been mentioned. >> why do ceos in entertainment make more than anybody else? >> that's a great question. >> is that just -- i -- >> once you get one up there then everybody looks at their peer group and then you compare the peer group and compensation consultants come in and say pay
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him that. >> people don't understand how corporate america works. >> consultant comes in and tell them what you will be paying. >> he makes x you make x. >> of course you have to pay less or more when they leave. that guy and this guy. malone is happy to pay his people. i've talked to him. wait a second i paid him based on the stock appreciation over time. but you can do this with the stock and make a fortune over here. >> you did a carl icahn imitation for john. >> no. >> you said -- >> sounded like carl icahn. >> i don't have a malone in me. >> can you do carl icahn talking about ackman. >> that would be so good. >> when we come back from commercial i demand you do it. >> i haven't spoken to carl in a while. >> he comes on at 12:00 that's a problem. only speaks once a day. >> can only listen to him then. >> on wapner show. >> to the broader markets. who do we have joining us on the floor? dom chu. take us -- take it away and tell us what is moving this morning. >> you guys hit so many big stories this morning.
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talk a little bit about just the way that things are setting up for the last trading day of the month, the last day of the month overall, and we've had some still waters and that goes without saying and seen very little trading action in terms of volumes all month. maybe that could all change, remember under card number one today with the adp jobs report, number two jobless claims tomorrow non-farm payrolls coming up. you can see we're seeing at least maybe fractional losses to start the day off. we'll check out what's happening now also with the sectors leading overall. you can see a little bit of movement. we know that financials and energy have been among the leaders on a month to day basis, banks, telecoms, consumer discretionary moving as traders maybe jockey for position given what's happened with the adp numbers as well. take a look at the 10-year yield we're on the verge of having the biggest monthly gain in 10-year yield moving up the interest rates higher for the first time in over a year. the last time we saw this kind of a move well back in 2015, so
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that's going to play out in today's trade as well. interest rate sensitive sectors will be a focus for a lot of traders given the fact that we have the jobs number coming out on friday. one other place i want to focus your attention on is the idea that we could be seeing some tea leaves, maybe a leading indicator and that is to take a look at the outperformance of two key parts of the market versus the broader market. first of all, the small cap stocks. the russell 2,000 index, etf, you can see on a month to date basis up by over 2%. versus the 0. 2% gain for the spider etf there. people focus on for some parts at least the transportation complex. the dow jones transportation etf up about 0.8% versus the dow you can see there, which is pretty much just around flat. that etf for the month to date basis. as we talk a little bit about the still waters the markets churning, we saw early this morning about a 24% probability
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according to the fed funds watch tool about a september rate hike. we heard, of course, yesterday on "fast money" mohammad el erian saying it would be 60 to 80% chance of a september rate hike if we get a strong jobs number on friday. all of these eyes will be on whether or not the number there is. the adp i'm not sure was enough to move the needle. a neutral read so far. we'll see with the jobless claims tomorrow and big number on friday. >> thank you very much, dom. jim, i know later on "mad money" you have ben kneeoff coming on. >> yes. >> salesforce reporting after the bell. >> yeah. look, there's a terrific piece in "forbes" cover story about how he will introduce einstein, new form of -- he always says [ inaudible ] dream force which is the first actually first full week of october and i think that this is a quarter that historically a lot of people speculate is a slower quarter. mark spends a couple months in hawaii, first started the quarter in japan living in japan for a while. i have been a backer of this company since 2008. >> you have.
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>> like to do. i think we will see an okay number. but the stock has under performed which is what's interesting. >> looking at a research node, implied guidance up 13 to 17% growth. also people looking for additional color on management's multiyear vision given disclosures related to large scale m&a. this a note this morning from i'm not sure what firm. >> i got to ask about that. >> i mean -- >> right there for linkedin and then came out with the bizarre saying wait a second we didn't know the process had ended. clearly he wants to continue and they've been aggressive in doing sdmeels nine figure deals, want to hear about deals up against oracle and sap, want to hear about international deals. but the essence of what marc benioff does is introduce new products for the cloud and done well, deal with amazon last time. not talk about. >> and speaking of earnings next week we'll start to hear from the likes of hpe, for example. meg whitman will join us. >> i'm looking for a very big quarter for from them.
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>> really? >> i think they're doing a lot of things right, taking sair from a lot of people -- share from people and try to reconfigure the company and brings out tremendous value. she's done a fantastic job. way too much time talking about politics and not enough time talking about a fabulous business person she is. >> meg whitman joins us each quarter. we have chicago pmi coming out. rick santelli and check in with him on that number. rick? >> hi. before we get to the number, of course, let's look at the market. we have about a minute. if you look at a one week of 10s friday seems to be a bit of a distant memory. all matureries within one basis points of unchanged. all about foreign exchange. one week of dollar index, friday joe biden, st -- janet yellen and stan fisher were part of the move. let's break it down and look at how the euro looks on the one-week chart. similar as the mirror image to the dollar index. most are paying attention to the dollar/yen.
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one week of dollar/yen, it definitely was a spark in terms of the notion of putting the dollar traders in the box at least on their position with possibilities of a fed tightening. i don't really personally think it's going to happen. and if you open the chart up to january of 2013, gives you a much better perspective on the dollar/yen. we're looking for august readon chicago purchasing manager survey. a miss. 51.5. looking for a close number closer to the mid 50s. 51.5 the weakest read since sub-50 that was may when 49.3. last month just from a sequential standpoint was 55.8. very quickly, as everybody continues to handicap and look at cme website for the fed fund permission the best aganalogy, take your best fantasy football
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guy, put him in a room and see how much worse he does then when he has all the things. that's the way trying to handicap a market driven by central banks versus fundamentals. put any percentage you want on it it's fantasy land. david, back to you. >> okay. thank you very much. mr. santelli. >> wow. >> coming up the revitalization of the world trade center site. a preview of the new cnbc documentary "ground zero rising freedom versus fear" reported by jim cramer when we return. no matter where you go. you want an perience that feels highlyersonazed. wi wson on the ibm cud, travel compaes like wayblazer caapply cognitive analytics to social data
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15 years after the 9/11 attacks much of the world trade center has been rebuilt and is open for business. jim cramer reports in a new cnbc documentary some people are drawn to the site while others still avoid it. chris and jake are co-founders of might, a digital news site aimed at millennials. they just signed a 10-year lease for the entire 82nd floor.
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>> wow. i think it will do. >> they came not just for the views. but because of what happened here. >> 9/11 has been a watershed moment for this generation, my peers and the opportunity to go downtown and to be part of the rebirth of that neighborhood that a lot of people have done an incredible job with i think is an honor for us. >> interesting to take a look. of course it's taken a long time but it is finally there. >> right. this is a story about -- i came in from it, not to too personalize, i was fearful of the site. what happened there. down here in the day. few blocks. and then i realized i was too fearful but everyone has to make up their own minds. everyone should go. first of all everyone should go to the museum. >> and the memorial. >> very touching. >> and the memorial. is just beautiful. >> beautiful. >> when you try to decide here, commerce versus as david says, gettysburg. our gettysburg. editor of "the new yorker." i hope you enjoy it.
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i want -- it's very personal. the documentary is personal in the sense that you -- the people involved all -- it was not a unusual job. you saw gentlemen, they run a website, whether employees wanted to go. took a pilgrimage and took a look. >> an incredible building too. >> it is. look i want people to watch it, obviously. >> yeah. there's a lot going on there. why we had to spend over $4 billion on a rail station penn station. >> it's too expensive. but i also come back and say it's some people it's a wondrous place. >> right. >> a wondrous place that 16 acres. >> well. be sure to watch tonight, ground -- >> tomorrow night. >> oh, okay. thank you. "ground zero". >> documentary airing. >> you said comcast has good programming at 10. >> tomorrow night.
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>> tune in same time same place. >> we have good stuff on. >> i know we do. >> we have something on lebron james is the executive producer. >> cleveland. >> i saw the mark cuban for dinner recently. >> did you? >> it was like man, you're on shark tank, 19 to 21-year-old women number one -- >> stop trading is great. >> thank you very much. >> you're welcome. >> 10:00 a.m. >> that's big. big. people like wait a second i have to catch that. it's coming up after this.
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zliv look from ft. lauderdale florida where the first commercial flight from u.s. to cuba since 1961 is about to take off. a jetblue flight heading to santa clara, cuba, as relations have thawed in a significant way and trade has resumed to a certain extent between our country and cuba including commercial flights. >> there you go. >> david, got to talk about palo alto. >> let's do it. stop trading and talk about palo alto. >> 16-point swing since the market closed last night. they talk about a lot of wins and they talk about their
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platform, which is that they are the way to go. they actually by the way talk about a couple of wins from cisco which competes trying to get a quote from cisco. listen, we don't comment on wins but they have a business in there. what i wonder is, has the field got son crowded or -- gotten so crowded or the company being conservative. >> set it for me for a second. did they disappoint? >> no. >> the guidance, the high multiple. >> pure guidance because boy, i'll tell you they had a munster quarter. >> okay. >> but i want to point this out because when you have a score of 45% and switching to a cloud business that's a fabulous number. am i saying buy the stock. i'm saying look out high multiple stocks. this was a good quarter. >> do they have a tradition of -- >> being conservative. people have turned against this group because you don't hear about high-profile corporate hackings. and yet we know they happen. >> right. >> and they are just not -- i don't want to say hushed up but not talked about.
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if you felt that this group was coming back i have no problem telling you to buy palo alto, a very good quarter and well run company. >> what's coming up on mad, benioff and mu nose. >> united, the biggest stock on the s&p gain list yesterday and a lot is because of kirby from american. oscar is done. came from csx, they've improved a lot of their metrics. at the same time david, travel is being hurt strong dollar, and yes, fears of terrorism. too much talk of fear had will. >> i'll be watching. great guest lineup for late august. >> how did you make that happen? >> my staff makes me look good every day. every day my staff and makeup come to play. who knows what i would be without makeup and staff. >> i don't want to imgyp. >> pathetic guy doing the show from my garden where my german johnson tomatoes came in and they are huge. >> maybe your old car.
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>> living in your car still. >> coming up -- >> ford fairmont. >> former irs commissioner mark everson hear his unique perspective regarding the eu tax penalty on apple and fast money halftime report chairman lee cooperman going to join those guys at noon. hegarywhat are yodoing? oh hey john,'m ecting ourra hegarywhat so we n she our amazing inowledg oh hthat's's great idea, y n'ts ecting ourra whe you n share straes id en actualrade arket profonals and thousands of oth traders i know. your brain td myrabere c mm bluebry?
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tap intohe kedge of other traders on thiswim. at tdmeritre.
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good morning. welcome back to "squawk on the street." i'm david faber with sara eisen and mike santoli live from post nine at the new york stock exchange. carl quintanilla has the day off today. a quick look at the markets we did start down on the session. as you see, on all the broader markets and as well on that key commodity being oil, wti, down about 0.7%. >> our road map for the hour begins with the final trading day of august. so will september be a forgettable month for the market or one to remember? david? >> plus donald trump is heading to mexico, meeting with president enrique pena nieto the latest and a look at that big immigration speech. >> and apple's $14.5 billion tax
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bill, we'll speak with former irs commissioner mark everson his take on the tech giant's next steps forward. >> a live look right now, fort lauderdale, florida, where the very first commercial flight from the u.s. to cuba since 1961 is about to take off. there it is. making its way down the runway. heading to santa clara, cuba. guys, the flight started at only 99 bucks per one-way ticket. which goes with the sort of jetblue pricing. >> short hop like here to philadelphia. >> it's quick. it's quick. i would highly recommend it. i was there about 20 years ago, it was great. great history in havana. >> not just getting nice sun but really see interesting architecture, and all sorts of stuff. we've been down there as a network. >> oh, yeah. michele's done a lot of reporting. >> many times. >> diplomatic opening of the obama administration with cuba. an there it is. a moment in history. moving along, treasury secretary
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jack lew speaking this morning at the brookings institution, eamon javers joins us from washington with the highlights and he did address the apple tax ruling. >> yeah. that was the sort of elephant in the room this morning, the question of apple's $14.5 billion irish tax bill and the eu's role in all that vis-a-vis an american corporation. here's jack lew a few moments ago at the brookings institution talking about his reaction to what the eu has decided here. >> what i don't think is right is for these issues to be addressed in a way that undermines the spirit of economic cooperation, and that is inconsistent with well established principles of tax law. >> but at the same time, the treasury secretary is frustrated with the eu and european tax law and also frustrated to some extent with american ceos in terms of tax evasion, avoidance, whatever you want to call it, and also this issue of tax inversions. here's what he said about u.s. ceos. >> i've said to many ceos, that
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you need to be more careful when you think about only maximizing tax advantage because there is a real impact on reputation and the environment for business when you have issues like companies that avoid taxation. >> now lew said that tax inversions may be legal but he said they are wrong. he also said the administration has sort of a blueprint for u.s. tax reform that they're ready to move on. he thinks that's a bipartisan proposal but guys, i have to tell you, the log jam here in washington continues to roll on with an election looming, the end of the obama administration, there's no real practical chance for a massive tax deal any time in the next several months until a new administration comes in in january. u. u.s. companies will continue to face the same global tax regime they've been facing for several years now. >> keeping what is as much as $2 trillion overseas which many see as an opportunity to figure out
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a way to bring back. they're waiting for some opportunity that will afford them a lesser tax rate that is in place. >> that's sort of the carrot for the u.s. congress. members of congress or some members of congress look at that money and say boy, wouldn't that be great to pull at least some of that back to the u.s. so there's an incentive to do tax reform in a way to get companies to repatriate that companies but companies are waiting to see what the offer is that's on the table. they will not move it back until they feel they is have a pretty good deal. >> thank you very much for the latest on lew's comments on apple. looking at the broader markets here, stocks are relatively flat on this final trading day for the month of august. the s&p 500 down less than 0.2%. the financials though stay strong. tech and energy as well. sectors that led during the month while monetary policy continues to steer market sebts sentiment. more where investors should focus as we look ahead to
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september, the chiefs u.s. strategist at citigroup and jeremy at ubs wealth management research americas good morning to you both. thanks for joining us. >> good morning. >> tobias, start with the adp report on private sector jobs and another solid showing this morning. are we at the point where friday's jobs report takes on such great importance that a bad number or a good number, could sway the federal reserve to hike or not in the month of september? >> well if you listen to what vice chair fisher and chairperson yellen said over the past few days, they are looking for incremental data points that would stronger economic activity and feel more willing to consider the rate hike. we could debate, our firm view is probably december, there's a lot of people that think they wouldn't do it in december because the elections are coming up. the data seems to be moving in the right direction for the fed and why you're seeing areas like financials, energy and tech doing better and more defensive
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dividend yielding stories fading the last seven, eight weeks. >> do you stick with that strategy and are you framing your sector recommendations based on what the fed is going to do? >> well we're not necessarily focusing on the fed's actions but more of the bond yields tick up as the economic data is more supportive for that. that's been our view the last several months. it's not a new perspective to stick with that. what our issue is right now more about the market not running away from us. market is a little ahead of our target price for year end and you will see a lot of rotation in the market unless about the aggregate s&p levels. >> yeah. jeremy, that is perhaps the real story of the month of august flat to positive month for the s&p which would be six in a row. beneath that the sector performance, leadership from financials and technology and industrials and energy, do you stick with that strategy? is that sustainable for the rest of the year? >> i think that the sector rotation that we've seen over the past couple of months is
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going to continue largely the defensive sectors that led the market higher in the first six months of the year, largely based on the fact that the 10-year treasury fell from 2.25 to bow below 1.5%, that trade is over. the utilities, telecom, consumer staple sectors, sectors that benefited because of the decline in interest rates and trading still even after their modest underperformance over the past couple months are still all trading at expensive valuations. i think they continue to lag the market as the economy continues to prove that it's the economic expansion is durable. i think the rotation into cyclicals may be more nuanced than the current leadership of the financials and energy, though. you want to look for sec stores that have lagged over the last couple months where there's good economic fundamentals and good profit forecasts such as technology, which currently trades still below a market multiple, and i think consumer discretionary. the consumer discretionary sector on a relative basis to the market is trading at the
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cheapest in the last ten years given the strength of the consumer there's good opportunities from the consumer discretionary space. >> tobias, if you feel as if the market perhaps has run a little' head of itself or where it ought to be, where is the challenge to these levels going to come from, do you think? are we getting too confident in pricing in the strong patch for the economy? do you think the high yield market which has been very supportive might be vulnerable? what areas do you look for a surprise? >> so, i think there are a couple areas. september generally is a tough month. it's an odd quarter in the third quarter. you have the holidays in the u.s., in july, as people take vacations, august europe pretty much down, and it becomes a one month quarter. why companies don't have great handle on the earnings. so it could be some earnings disappointment the driver there. i also suspect that it's not necessarily the bond yields story because one of the things that happened in the bond market the high yield bond market the energy sector got pummeled last year and they've been able to refinance at better rates and
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the equity market and raise over $24 billion to kind of if you like improve their balance sheets. so i don't think it's necessarily a credit phenomenon. certainly geopolitical issues to worry about and things like ta. i'm concerned there seems to be more concerned about vulnerable in market. interest stock correlations down at low levels suggest market vulnerability and i think some of those not so safe defensives anymore because of the valuations that jeremy highlight ready a problem. the one thing i have to say jeremy and i talk a lot, we probably have less of a bullish view on the consumer discretionary view than he does, find a little difference in our perspective, we like media within consumer discretionary but that's pretty much the only group. >> would you agree with tobias, that's where you disagree on consumer discretionary and the market looks vulnerable here looking at the sentiment indicators? >> i'm not overly worried about complacency in the market. i think complacency is hard to measure and broadly the market
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responds positively over the next three to six months not just in the month of september given the improvements that we're likely to see in earnings. the real story over the next six months is going to be we've gone from, you know, flat to negative earnings to flat to positive earnings and the outlook for 2017 is we're going to see a continued immovements in the earnings picture as we start to lapse some of the different comparison for energy, the multiple nationals within the s&p 500 struggling with the strength of the dollar, that's all fading. given the, you know, the stronger economic momentum, the gdp the atlanta fed is saying that it's tracking at about 3.5%, we are expecting to see just a pick-up in overall mood of the economic backdrop that should continue to underpin u.s. equities. >> the dollar did have its first monthly gain since may so we'll see if that continues. we'll leave it there. thank you for the preview of the month and are early year ahead. tobias of citi and jeremy from
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ubs. >> thanks. >> when we come back, donald trump gearing up for his president mexico ahead of his immigration speech tonight. this is the last trading day of the month looking at your calendar. take a look at the sector laggards for august. see them right there. utilities, telecom, health care, we have a lot more ahead on "squawk on the street."
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just hours before delivering a major immigration policy
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speech in arizona tonight, donald trump is making a surprise trip to mexico to meet with the country's president as the gop nominee continues his pledge to make mexico pay for a new border wall, something president pena nieto says he will never do. joining us to discuss this, veteran democratic strategist and clinton campaign surrogate david goodfriend and cnbc contributor former political director to president george w. bush sara feigen. gom to you both. >> good morning. >> clearly the wall and this question of what to do with undocumented workers is very important politically, but let's not ignore the economic of this situation. the council on foreign relations says 14 million american jobs are tied to nafta. does president -- does donald trump if elected president still intend to rip it up and i just wonder how much that's going to frame the conversation with the mexican president today? >> well, i think it's a great question and all of these questions that donald trump is
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going to allegedly address with the mexican president, are going to only raise more questions for donald trump. did the mexican president agree to pay for the wall. did he agree to revise nafta. and we know what the answer is going to be. the president of mexico is very unpopular he has no choice but to, you know, poke his finger at the quote/unquote ugly american. this is a very high risk high reward situation for donald trump and how he plays it will be very interesting to watch. >> david, i guess the hope from his campaign and in doing this is that it makes him look presidential, he's going to meet with another president and present his vision before he does so for the american public. and will that work? >> no, it won't. and i think my republican colleague sara laid out why. i think donald trump has put himself in a box where he will alienate his most ar dent supporters if he softens his position on immigration and he will have a very hard time
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convincing anyone that he doesn't believe the things he's already been saying, that 16 million people, including children and u.s. citizens, should be deported, a wall should be built and paid for by mexico. hard to back off of that. because this is a business network out of respect for your audience i want to point out that economists have come down with some very, very salient observations about immigration policy. and doug, the republican former adviser to john mccain, the former head of the congressional budget office, has said that trump's immigration policies are quote utterly unworkable. the cbo has found that positive immigration reform like what we saw proposed by the gang of eight in congress would increase economic output as much as over 3% by 2023 over 5% by 20 -- that's a business economic rationale for immigration reform. >> donald trump has said in recent days that he is not going to change his position. he's going to continue to come
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out hard in this speech. his advisors though have been portraying a very different tale over the last two weeks and when you put together the body of commentary by the trump organization, it sounds a lot like what george w. bush proposed back when he was president and parts of what the gang of eight proposed. i don't think he's going to end up there. >> yeah. >> but the -- the efforts of the last two weeks i think are only going to cause more confusion unless he has some, you know, very big moment in mexico city and then goes and gives a very clear speech with a lot of surrogate potential outside of the speech. >> right. >> david, you know, you attempted to bring some of the views of economists into this debate and there's the other point that folks have made which is that even focus on the immigration issue does not seem in tune with what the facts are in terms of volumes of net
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migration from mexico to the united states. it peaked years ago. is this campaign at all susceptible to actually refocusing attention on some of the realities as opposed to the issues that have just been kind of portrayed as being paramount right now. >> is the trump campaign capable of focusing on reality. >> both sides. >> okay. okay. fair enough. so you're right. you used the right term i think, net immip m i gration. if we account for people who have moved back to their home countries then in effect the net immigration seems rather flat to negative currently as compared to the previous years. but i think it's safe to say that in a political general election season, be what trump appears to be doing is to try to use people's worst fears and to play on those fears, that is if you're feeling economically harmed it's not your fault. it's them. them the immigrants. them the minorities, them somebody else. that's a cynical way of appealing to somebody's fears. well founded fears.
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most of the gains in the economic recovery have not been enjoyed by the majority of middle class workers. they've been enjoyed by the people at the top 1% and that is a real problem. i just think that donald trump is trying to -- >> that's an excellent point. very excellent point and when you think about the conversation on immigration over the last three weeks or so, two weeks, there's almost to way donald trump can really win tonight because of this so many shifting positions. what he can do and what will be very important for him do is adjust his tone. i think there are a lot of moderate republicans who would like to see him say characterizing all people of a race in one fashion is wrong and he should address that and say you know, not all the people coming from mexico are rapists and criminals. a lot of people who just want to feed their family and want a better life and he should acknowledge that. he may do more good for himself by doing that than getting involved in all the policy
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machinations. >> david, i want to bring the conversation finally back to trade again. yes, immigration is an important economic issue, but mexico is one of the top three import and export markets for this country and i'm not sure that hillary clinton's position on trade is very clear either. she opposes tpp, of course with our asian trading partners, hasn't really said much about nafta, but certainly her husband has been involved and she was involved in the obama administration in actually creating tpp. so why isn't she speaking out more about the importance of trade and what she has planned? >> well, from my view, she has articulated a clear view of good trade deal versus a bad trade deal. you're right. i worked for president clinton in the second term and he was the proponent and the cigna tore of the nafta agreement. many of the things that opponents of nafta predicted have come true. we've learned as a nation about how to promote trade and low
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cost goods for consumers but how not to give away the farm so to speak when it comes to employment and wages in our country. i think what you see is an evolution of the democratic party on trade, particularly manifested in tpp where you have differences within the democratic party on this. the president supports it. members of congress and hillary clinton against it. what we see happening here a differentiation between trade agreements that promote growth under the common theory of growth through trade, but also that protect domestic interest such as employment. that's important. >> got to leave it there. we can talk more and we will throughout the course of this campaign. david and sara, we'll see what comes out of this meeting of the minds today. >> thank you. >> all right. as we head to break let's take a look at the dow leaders for the month of august as we get ready to head into september. merck in the top spot with goldman sachs and jpmorgan right behind. stay with us. you're watching "squawk on the street."
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one of the largest real estate research firms costar is using a low flying spy plane to test the housing market.
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diana olick joins us from reagan national airport with more on this. hello, diana. >> hi, mike. it's a spy in the sky. no joke. that is a military-grade reconnaissance plane with a high-tech video platform just like those used over iraq and afghanistan. but it's not the government watching. it's a publicly traded real estate information company costar which invested millions in data mining and is already seeing big returns. >> we typically collect twice as much under construction activity as any of our competitors. and that can be as much as hundreds of thousands of apartment units that we know about that no one else knows about. >> now just gathering construction data on one city like baltimore used to take costar a year on the ground. now they can do it in three days from the air. the data is invaluable to developers and landlords who need to know where the competition is in the market.
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it also helps banks who might be lending to those developers know if the property will be able to sustain occupancy and rent from apartments to offices and even to farmland the system can track projects in a way old-fashioned government permitting offices cannot. >> what is this screen telling you? >> the green dots are telling me this is information costar knows about construction. >> now the next frontier for costar is the residential market as home builders ramp up production this kind of data is a gold mine. guys, back to you. >> all right. thank you very much. diana olick. well coming up, former irs commissioner mark everson on what apple tax ruling means for u.s. technology companies doing business overseas which is most of them. tomorrow at 10:00 p.m. eastern watch the premier of "ground zero rising freedom versus fear" reported by our own jim cramer. "squawk on the street" will be right back. tenologies
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good morning. i'm sue herera. your cnbc news update. secretary of state john kerry and secretary of commerce penny pritts ker meeting with india's prime minister and other officials in new delhi. tuesday the u.s. and india announce an agreement to boost counterterrorism cooperation. >> jetblue the first american airline with regularly scheduled flights to cuba since 1961. the flight took off from fort lauderdale just about 30 minutes ago bound for santa clara. residents of hawaii's big island reporting for hurricane madeleine. stacking sandbags on the highways. the national weather service says hurricane conditions are expected within the next 36 hours. and bruce springsteen has done it again. last fight's concert in his home state of new jersey lasted for just over four hours, breaking his record for the longest show in the u.s. set just last thursday. springsteen telling his fans his
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three recent shows in the meadowlands were, quote, most enjoyable. i guess for him and for everybody. that's the news update this hour. send it over to bertha coombs with the eia inventory report. >> good morning, sue. we have bearish inventory report this morning on the heels of what the api reported last night. we've got crude inventories rising 2.3 million barrels, the estimate had been somewhere in the range of about a million, 1.5. gasoline we saw a smaller draw down than analysts had anticipated and smaller than what we saw from the api last night. 691,000. what people had really been concerned about had been an outsized increase in distill late inventories. this is a somewhat bearish number. the interesting thing is we're not getting any boost really from the tropical depression that is in the gulf and has shut in some gulf of mexico
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production. however, if we take a look at nat gas that's the real outlier this morning. nat gas is rising as traders are looking at a revised forecast for hot weather continuing well into next week. david, if you want to wear those white pants after labor day, it's going to be hot enough to do so. back to you. >> how did you know he wanted that? >> don't have any white pants. and would never wear them. i don't think. >> neffer? >> not me. not me, bertha. >> come on. >> i can't pull off white pants. white shorts maybe. not all the way down. >> keep the shorts then. >> all right. >> thank you. bertha comombs. jack could speaking out in the last hour. >> what i don't think is right is for the issues to be addressed in a way that undermines the spirit of economic cooperation and that is inconsistent with well established principles of tax laws. >> here for what comes next mark, the former irs
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commissioner, vice chairman of alliance group. secretary lew seems to be saying the eu overstepped its authorities, we have the irish finance minister on with us who said the same. do you agree? >> i do. let me just say this, thanks for having me. at athe li alooints group we help them pay their fair share. there is an issue about how much tax the large businesses are paying, but this is not the way to get at it. and i'm troubled by this. i think it's a step backward going after tax abuses on a couple levels. one, as people have said, using anti-trust provisions to try and force the hand of authorities. that's troubling to me. the other is the retrospective nature of this. weigh in and say going forward ireland has to change its laws and slug it out. that would make a little more sense.
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the idea of the eu and their so-called authority in this area, that is quite tenuous. there's a host of problems here that really set us quite far backwards. >> do you believe that there are ramifications more broadly for this from the eu and for u.s. corporations than simply apple? >> oh, i certainly do. i mean this is a watershed moment where i think you have a he got a real overreach. i was with a senior treasury official, not the secretary, and the obama administration has been pretty aggressive in using the tax code but even they were stunned by this. >> well, yeah. and secretary lew used very strong language in that interview from earlier today. i mean, what is jur sense if you have any, in terms of what the process is going to be from here? we know they're challenging it. it could be years. does it set precedent while being challenged? >> i think what it does is, it will cause corporations to be much more careful when they make
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investments. and they're going to look particularly at europe. this makes europe much less attractive in certain regards i would suggest. the other thing, going back to when i was the commissioner, we formed something called the joint international tax shelter information center where governments would try to work together to understand what a large taxpayer how they were dealing with certain issues. this challenges that cooperation that has been building very much so because of a third party can suddenly come in and upset the apple cart, why should the countries cooperate? a lot of problems here. and i think that what it does, the one silver lightning here may be there is a consensus that we need to do more to get after american competitiveness on our corporations overseas. this may really get congress to take a good look at it come the new year. >> yeah. i mean i guess that would get at one of the puzzling features of this which is that the united states is opposing this particular move, but they're
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kind of saying no those profits that apple keeps overseas are ours to not tax until brought overseas and still creates this limbo state for most of those international profits that companies like apple are able to keep out of the country? >> yeah. people have been saying it's a fight about the money. i don't think it's a fight about the money. it's a fight about the rule of law and who has the authority to impose the tax. i don't think the eu does. >> i mean, one of the criticisms in the treasury statement yesterday, was that the eu is not sticking to international tax law but is there an international tax law? isn't it the corporation goes to which ever government it can most favorably negotiate a tax policy playing governments against each other? >> well, corporations like apple and ge famously shop and that is why we need to reform our tax code. but the eu sort of is sitting on
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top of this and trying to rewrite the rules in the individual nation states. that is really going to be quite disruptive and i think very troubling. >> well you mentioned at the outset, though, your belief that while this is a separate issue, there are a lot of corporations figuring out a lot of ways to perhaps not pay what they should. i don't want to put words in your mouth. apple if you read the senate subcommittee permanent subcommittee on investigations from a few years ago, all the different ways they've moved the intellectual property to a certain place and don't seem to have any tax jurisdiction on their foreign profits at all, virtually paying nothing. >> i -- it's a real issue. as i said at alliant we work with hundreds of companies across the country they're paying plenty of tax. we need to get a balance here. we want american businesses be competitive at the same time, they need to pay their fair share. this should be a top priority. i'm a little disappointed we haven't had more conversation
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about this in the current election. >> yeah. that's a good point. i wonder as somebody who ran the irs just your thoughts about the ability of congress to take on this task of corporate tax reform which many say needs to be linked to individual tax reform? i mean do you think it could ever really happen? >> the difficulty is that congressmen and senators get elected because they carve out a separate deal for their constituencies and if you make meaningful reforms you is v to make changes where there's pain and that's tough for congress to do. dave camp and kevin blady were working hard on this issue you mentioned. you need to have continuity in the system treating corporations and businesses that are partnership or sole proprietorships should all be treated equally. i've said tax simplification means consistent treatment of consistent economic events. >> yeah. appreciate your insights. thank you. >> thank you. >> mark everson, former irs
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commissioner and vice chairman of the allian group. >> when we come back sheila bair her take on fdic funds climbing and financials here making a move higher. the last trading day of the month. take a look at where the s&p stands in terms of the laggards for the month. bristol-myers, dollar general, free port, and others. the dow down about 55 points on this last trading day of the month. more "squawk on the street" straight ahead. se wils. wat yoare a ce competir. i' heardt. i havenalyd ur ggesmatcs. rlly? when dn a pot, you servan a 5 tim moren other. u d lich. i not. watsonth'sn custize pretty impresser data. you ght y i thserena wlis lolo-bascognitive system h, w'. watsonth'sn custize pretty impresser data.
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according to one top technical analysts five signs point to gains for the stoek. he will break them down at tradingnation.cnbc.com. more "squawk on the street."
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this car itreliner 200 miles per hour. to w, every llisecd 200 tter s per hour. both on the trk anthousas of mil ay.200 tter s per hour. wi of car fr virtually raanywre. crical inrmion out every brakes are garm. confirmed, daniel yoneed to oloubrak. ununtoodbrake biask 2icks. vi thee agility to have speed precision. it to the cme group in chicago. rick santelli has the santelli exchange. hi, rick. >> thank you. we do, we have sheila bair.
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i remember bob pisani in credit crisis days used to call sheila the rock star of finance based on how many used to crowd around her on the floor of the exchange. you were the former chairperson of the the fdic during one of the most tumultuous times in my lifetime for sure. we wake up and open up "the wall street journal" and what do we see fdic fund, reached its 1.15% threshhold, lowest problem in terms of banks in seven years. give me not only your thoughts but show us how much progress has been made in your opinion since the days where it seemed like you were closing an institution about every hour? >> yeah. so those were challenging times. when i first came to the fdic in june of 2006 the first ig did was to raise premiums. not popular for banks. even then we realized we didn't have sufficient reserves to get through a cycle and there were legal restraints that prohibited
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us in the past from doing that. so we never -- i'm very proud of the fact we made it through the crisis never having to borrow from the treasury department. on a cash flow basis we stayed cash positive and it's great they're well over $70 billion because that's an important threshold and they're building that buffer up. if we get into another cycle and we always get into some kind of cycle there's plenty of money to draw from. that was good news. >> when i look at that threshold of 1.15%, it seems low but it isn't. give me your thoughts. many would look at that and say wow, you know, there's a lot of leverage going on there, but it isn't about the leverage perception. >> no. it's really not. so a couple of things. so the equity capital of the entire banking industry is there for loss absorption. that stands in front of our losses. and also people need to understand when a bank fails we get the assets so it's not like
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we're just writing a big check paying off deposits. we get the assets we can sell off and typically sold those in whole bank transactions when banks failed. it's almost like working capital you need in that fund but it is, it looks like, you know, trillions of dollars in insured deposits, $77 billion in a reserve fund looks low but again, the entire capital banking industry is in front of the fdic for loss absorption and we' choir the assets when a -- acquire the assets when a bank fails. >> those watching that may be investing in banks, and even those that may be considering smaller banks, do the premiums that will subside and start to shrink, will they make a difference to the performance of banks, small, medium and large? >> it's still -- deposit insurance is still very, very n inexpensive given the benefit it
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has. i'm glad they will be able to give premium relief to community banks now and larger banks once they get to a higher level, but no, it's not -- it's not what i would say material in terms of a bank's profitability. so it's good news in the sense that it shows that the industry itself was strong enough to recapitalize the deposit insurance fund but relief on premiums i don't think it's a huge driver of profitability at all. >> finally n our last half minute, mid october we get money market reform. we, obviously, are now in stronger hands, but is there any issues that make you worry about the reforms we've already seen a rather large exodus from some of the money market funds. your final thoughts? >> >> well i am worried about it. my view the simplest easiest thing is remove the fiction of a stable, money market funds or
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mutual funds. the shares should be marked on what the assets are worth. they had a complicated thing, if it's prime it floats, government or retail doesn't float. one of the worse things they did put on fees of the abilities to impose fees which basically says we're going to stop money market fund runs denying people access to their money or making it more expensive to get their money. i do worry about it. you're seeing movement in government funds because they still have doing resources to government financing versus private corporate finances in the short term. so i do -- i am concerned that this is not working as well as it might have and we just a simple go to a floating and be done with it. >> i know. you know, simple is always best especially -- >> simple is better. that's right. >> absolutely. thank you so much. back to you, sara. >> rick, thank you. coming up -- be sure to catch this one.
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noon eastern time on the halftime report, omega adviser's chairman lee cooperman joining scott and the gang, that's an exclusive interview on the markets on this final trading day of august where the s&p has just gone negative for the month, but check him out, after the break, our million dollar home series is back and that means the star of "million dollar listings" ryan serhant is on the floor making his way to the set.
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cnbc's little dollar home series is back. pacing off to first the best bang for your buck between two milli multimillion dollar properties. take a look. >> in the heart of south beach the spectacular penthouse unfolds over 1700 square feet with 12 foot windows lighting up every room. sustainable natural finishes. there's two bedrooms and two bathrooms. the master has a large walk in
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closet and bath with a soaking tub and a shower that glows and steps from the bed is a spacious terrace with views of the lush miami scenery. what will sell this place? it has all the perks of a 5 star hotel. priority access to the roof top bar pool and spa. the most withdrew anemic part about the building is its south beach's only eco friendly and sustainable building which means you can live fabulously but not feel guilty about it. it's $3,800,000. >> just steps from the ocean in miami's neighborhood this sun soaked condo is 2400 square feet. 2 bedrooms, 2.5 baths. the spacious master bath includes an infinity tub and spa shower. walk in closet. gourmet kitchen flows into an open family room and den with designer finishes and you can step outside on to three private
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terraces offering expansive ocean views. my favorite part, it's at the st. regis resort which means it comes with five star amenities including butler service, spa and room service provided by john george restaurant. it's waterfront luxury for $4 million. >> with us now is ryan. he is the star of bravo's million dollar listing new york. first of all, they're both beautiful. i would live in either. prefer beach chic. but what's going on down there. >> miami market is strong. not as strong as it was because you have less interest from foreign buyers. we were talking about it that it effected them coming everywhere. especially to florida. it gets more and more expensive
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and you have prices year over year down about 21% and you have inventory year over year about 32% and that sets the stage for us. now we have two five star resorts. they're five star resorts and lots of amenities and both about $4 million. it comes down to do you want something brand, brand new? or a safe bet that's been lucks shs and then it comes down to location where you want to be. it's the upper east side and what do you guys think? >> beach chic is west villagey. >> it's priced per square foot. that's at a higher price. 1700 square feet. >> correct. >> it's about 3.84. 1700 square feet but still a 2 bedroom, two bathroom. so you're paying less per
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bedroom which is important. which unit has the most bang for their buck, where you'll see the most appreciation and most value overtime we can't just look at price per square foot. >> what about price for the services? >> they're incomparable. >> they're five star resorts. you have elevator entry into the apartments and at the one hotel you have tesla car service when you want it. >> what other factors are you looking at to determine what makes it a better deal? >> future growth. if i have a buyer that said i have $4 million and i want to buy a two bedroom may may where am i going? what's newer and what's a penthouse and as people trend further south, my winner here the best bang for the buck is peach chic.
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>> i agree. >> it looks cooler anyway. >> you talk about people going south, having been to cue pa 20 years ago and seeing what's going on there -- >> not going to cuba. >> i know but havana will that ever become a competitor to southern florida for some of this money or is that just an impossible. beautiful beaches there. very cheap. >> beautiful beaches in a lot of places. there's a lot of ocean in the world but i think that florida is still part of the writes and big drawing factor. >> good news. it's one of the best this year which means the buyers should come back. >> they are started so. slowly but surely. >> always good to see you and we'll see you again in power lunch with the next round of the competition. you can always visit facebook.com/cnbc to watch all the homes come peting today. now over to john fort with what's coming up next on squawk alley. >> a week ahead of the new
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iphone launch, walt joins us to take a look at apple's innovation record over the past five years and also waves, is it edging into uber territory taking a page from the chinese competitors? and then finally viva ceo joins us. stock is up 6% today. more than 50% over the last 12 moss. all that and more coming up on squawk alley.
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good morning. 8:00 a.m. in google headquaters in california. 11:00 a.m. here on wall street and squawk alley is live. ♪ good wednesday morning. welcome to squawk alley. john fort and mike santolli with me. also

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