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tv   Squawk Box  CNBC  September 16, 2016 6:00am-9:01am EDT

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football" and the game-making history is the first ever to be streamed on twitter. the highlights coming up. it's friday, september 16, 2016, and "squawk box" begins right now. ♪ something binding us together you know live is strong ♪ live from new york where business nerve sleeps, this is "squawk box." good morning, everybody, welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. a positive day on the markets yesterday. actually two days in a row. we are looking aet the markets that are a little bit weaker as we head into a trading day. s&p futures off by eight. nasdaq down 11.5. nikkei closed at 11.5%.
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markets in taiwan, hong kong, and south korea are closed today for a mid-autumn festival which is really a harvest festival which is really related to the full moon which you may have seen on your way in. >> walked in. >> just driving. i saw it as i was driving. >> but it's still summer until september 20 something. >> it is but it's still harvest. >> i got it. >> let's take a look at the european equity markets. you'll see in the early trading there, many of these markets are a little weaker. the dax is down by 0.4% and so is the cac in france. ftse is flat but you can see in italy the decline is 1.5%. crude is down after traders cited the reduction of oil exports from libya's main ports and they talked about delivery to a new pipeline in nigeria. you can see wti haas had a difficult week.
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it's down to 43.32. >> we have august prices out. headlining, cpi expected to jump slightly by 1.4% while the core rate is seen rising. then coming up at 10:00 a.m. we get the first read on september consumer sentiment. today is also quadruple witching day. this happens on the thursday friday of march, june, september, and december with the expiration of stock index futures and options, stock options, single stock futures in the last hour of trading but doesn't necessarily portend one way up or down. the top u.s. justice department asking deutsche bank to pay a $14 billion settlement. for more on the story, let's bring in wilford frost. >> yes, indeed. the u.s. justice department asking the german lender to pay $14 billion to settle mortgage security probes stemming from
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the financial crisis. $14 billion crisis is much larger than expected by both the bank and investors. however, in a statement deutsche says it has, quote, no intent to settle these potential civil claims anywhere near cited. the firm expects that it will lead to an outcome that have settled at turlly lower amounts. this is an issue that all banks have been tied up in. for reference, goldman sachs was initially asked toy pay $15 billion but end up paying $5 billion. deutsche bank has $5.4 billion set aside. it was initially expected to pay $2 billion or $3 billion in fines. it's a reminder of the trouble deutsche bank is in, if they have to raise more capital while trading, it would, of course, be
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hugely dilutdilutive. it comes after the european clawback of tax against apple, of course, the u.s. doing something similar to a european bank. guys. >> wilford, real quick. what is the current handicap on how much they say they will pay. they say they'll pay nothing like the $14 billion number, but if that isn't the number, what's the betting line? >> well, i think, you know, all we've got is this 14 initial that's come out. so 2 to 3 would be in the rage of what had been expected. as long as it's less than 50%. which if the last few bangs go by, it would certainly seem it would be less than 50% and they probably won't have to raise more capital. it's because they're already trading at such a discount to book. the market cap, 18 billion
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euros. the as set base, $1.5 trillion. so they've got a huge mismatch at the moment. so if they have to raise capital, it's hugely, hugely dilutive. >> wilford frost, thank you for that. we continue to talk more about banks because right now the fallout continuing at wells fargo. they're calling for changes after the bank's fake account scandal. meantime massachusetts senator elizabeth warner has harsh words for executives. she was on "power lunch" yesterday. >> there's a serious problem with senior management at wells fargo. we erie talking about them cheating thousands of customers out of money and making millions doing it for the bank. and so the question is about
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senior management. is it the case that they really didn't know what was going on because if they didn't, then this is a bank that's just too big to manage. let's face i. at a community bank, that kind of thing isn't going to happen. at a credit union, that's not going happen. at a modestly sized bank, that's not going happen. now, in the alternative, maybe they did know what's going on, in which case they need to be held responsible for what's going on. they're down after regulators announced what was $185 million fine against the bank last thursday. some people called it immaterial. >> elizabeth warren has a point. this is going to be something that comes out on tuesday when we hear this testimony. but you don't have five years of 1% of your work force getting
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fired over an issue like this and not have something do it. >> put up a false choice between either break the bank up or the ceo goes to jail. i mean there's -- there might be something in between the two options that, yeah, i like when no one knew what the whale was doing obviously. how many employees are there. i know -- >> 100,000. so 5,000 is 5% of the work force. their defense has been that every year -- >> some managers probably knew. >> right. that's the question. the claw backs from the woman who took home $125 million. >> and the various people who have to be between her and the person on the floor or on the phone. >> right, right. >> interesting one. >> do you want to break it up? >> i'm not suggesting you break it up necessarily. >> okay. >> she's -- there's some hyperbole involved. she was so good at flipping
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those. am phones to sydney and london, can now get the iphone 7. >> finally. >> finally. >> finally. >> no, finally am pulls some of its weight and pulls the averages. >> it's been a good week. >> yeah. finally doing something instead of dragging it down. they're made up of people who had already preordered the devices. i can't believe it. they basically said they're sold out. >> did you reorders? >> i did not preorder. >> i'm really surprised. some sold out. this a shot of apple's flag ship store on fifth avenue in new york where the doors will open
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at 8:00 eastern time. apple said it won't report first week sales. it says those numbers are irrelevant. it knows it will sell out. >> i guess they can only make so many every time. >> they can only make so many. they always put out press release saying we sold out. maybe they're always going to sell out given the pure number of people who have these phones rnld & are going to upgrade nairk. >> check it out. shares up to $115.49. president obama will talk with government leaders to talk about the security issues. among those attending former new york mayor michael bloomberg, ibm ceo remehdi. they're punting it to the next president. both donald trump and hillary clinton say they oppose the trade detail, at least as it stands right now. >> the polls get much tighter.
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john harwood joins us now with more. good morning. >> the polls have got an lot tighter. that you're in a close race at the moment with hillary clinton but i want to go over two issues in the last 24 hours that illustrate the improvisational make it up as you go along nature of the donald trump campaign. one on a big emotional issue and one on a narrow issue related to his economic plan that's emotional only to some business organizations. first of all on the birther issue, this is at the core of the charge that donald trump has built his campaign on racism because it questioned the constitution of the length macy. in an interview donald trump was asked whether he accepts that president obama was born in the united states and what he said was this. i don't want to answer that question right now. i'm going answer it at the right time. donald trump has drawn close in the polls as joe mentioned
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because he has not been doing things like this lately. and so after this blew up on news media last night, donald trump's campaign put out a statement saying he no longer believes that president obama was not born in the united states. however, it was put out in the name of a spokesman, not donald trump. donald trump himself refused repeatedly to say it. now, here's the second issue. it has do with his economic plan. he's been campaigning for a year on the idea that he is proposed a single rate for business, both corporations and past organizations that pay taxes under the individual rate system. that is very appealing to small business groups because many small businesses are not organized as corporations. donald trump and his plan yesterday said he was cutting the business rate to 15%. materials on his website said that was the corporate rate. but donald trump's own words said, no, it's a business rate.
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the nfib put out a statement yesterday afternoon saying they declared victory in the case and said we praise donald trump for that single business rate. however, the tax foundation, which is scoring the plan, said that it had gotten signals from the trump campaign that it only applied to corporations. and late last night i talked to the analyst who they've been referring questions to who said somebody is misunderstanding something. this is a $1 trillion discrepancy, because if you give that 15% rate to noncorporation businesses, that takes another nobody can be be certain wait snas a trillion dollar here, there, you're glossing over the
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most important thing that happened. that is on fallon -- i don't know whether you saw this. >> i love that. >> you have never -- >> do you have the video? >> yeah. we're going to show that and show you something you've never done. look at this first. >> i'm not liking the sound of this. go ahead. >> can i mess your hair up? did you say up? >> go ahead. >> yes! donald trump, everybody! >> i don't know if you ever get it. i've had it. it's hurtful of people asking if you wear a toupee, mostly bald people who don't have hair. you have not taken the leaf blower challenge at this point. i wonder if donald trump would
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actually take the leaf blower challenge. that's an industrial-strength leaf blower. that's really the only real proof, i think. are you willing to do that next time you're in here? >> i'm willing to do any time. it's one of the most amusing things of being on television as you said. bald guys sitting at home watching who find it weird that people have hair when -- >> oh, my god. >> -- when they get to middle age. they question whether you have hair. yeah, any time. george stephanopoulos told me once he was in the men's room at an airport and somebody grabbed his hair to try to check. >> you know what? i get out of the airport quick. in and out. if somebody grabs my hair, i figure i'm a goner, i'm not going to live. >> where does that come from? where do they get that? >> i don't know.
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they need to be on a couch horizontally and talk it over with someone, many of them. also hair color, it can't possibly be real. misery loves company. >> gray's real. >> yeah, i know. seinfeld did a thing where there was a support group for george because all of these people were subjected to anti-baldites. >> you know he now has hair. >> costanza? >> yeah. >> can't stand ya -- did he go to the same place as elon musk? >> i don't know. >> there's a guy who's got a recreting hairline. the rockets may not work well but his hairline looks good. john harwell, thank you. >> do you keep the leaf blower equipped under your desk? >> i know where it is. i can get it here. are you going to wart? you've about got to wear the goggles because it's so strong. >> any time, man.
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>> all right, john. see you later. thank you. when we come back, we've got a lot more. samsung recalling galaxy smartphones. we've got the details. all that straight ahead. back in a moment. friday. it's quadruple witching friday. futures and options expiration means heavy trading volume, plus we're day away from the big september meeting. your market strategy session is straight ahead. "squawk box" will be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
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what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.
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♪ everything is awesome xfinity: the future of awesome. stocks to watch today. know ha novavax didn't meet expectations. it did not demonstrate efficacy in preventing the rsv-related disea diseases. >> plunging. it's down 80%. >> 80%. i think that might have been an important drug. that's an understatement. >> let's look at the market cap. >> it was $2 billion. yeah. and oracle earnings and revenue missing wall street estimates. total cloud revenue rose.
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that couldn't make up for softness in its traditional software business. >> and samsung formally recalling 1 million galaxy note 7s in the u.s. they received reports of batteries overheating, 26 burns and 65 cases of property damage. it's on the front page of the journal. >> they did a recall without the consumer product safety commission being involved which means it wasn't as mandatory as when they get involved. it's the first time in the history that a company has recalled something without their cooperation. in the meantime let's take a look at the markets. joining us now is jim more yu m. he's a cnbc contributor. the majority of those gains did come from apple which is having
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its best week since 2011. so its best run in five years. is there broader strength in this rally? >> there's two things adding to the strength. remember, one week ago today goldman was saying there was a 50% chance hike. now yesterday apple's strength was amazing to me. i know they're selling a lot of phones too. that's something a little bit unusual me. i think that was a smaller part of the rally than us taking on the fed. what's interesting to me is we have about 15%, 17% chance of a hike in september but it seems like the market -- everyone's like, the fed's not going tighten. they can't break out of this little range we're in now. if we went below that low for monday, even though we thought the fed wasn't going to tighten, then i would be significantly
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more worried about the stockmarket. right now i think we're kind of in the range waiting for the fed. >> you say waiting for the fed. odds are, like you said, fed futures showing 15% like we assumed there will be a rate hike. if they surprise and hike, what you do think that does, famd they don't hike, does that also have movement because people aren't willing to completely write it off yet? >> there are actually three scenarios. i think on the short term the bottom drops out and i think the fed's competence will be called into question. they had a chance and four different speakers came out and they all talked fairly dovishly. if they hiked and stayed transparent, that would be a short-term disaster for the market. if they don't hike and go with a hawkish tone for the december meesing because they've done that, we swear to got, it's coming up soon -- >> that's why people don't trust them. >> why would we -- if the
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situation dictated a hike, they would hike now. if it -- believe me, soon we're going have 3%, 4% gdp growth. >> your point is the market does what if they don't hike but have very hawkish statements coming out. >> i think they'll stay in this range, maybe get below it and then it's game on. german ten-year yields went negative again. the italian ten-year went negative. my opponent is this. when you take two steps back and look at the world, one of the best things to buy is the u.s. stockmarket especially if they push bausch the hawkish rhetoric. we know they want a hike. the data doesn't dictate it yet. >> the ten year is yields 1.10%. what do you think of that? >> i think there were some people who thought there was going to be a hike. the part that was amazing to me
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was that we talk about there's no correlation between the stocks -- inverse correlation between the stocks and the bonds. but if the stocks really started to cascade low eric i think people would jump into the tenure quickly and push that yield down. i think people thought this was a relatively contained move back and forth. i think at the end of the day when we realize they're not going hike, yields will start to move lower again. >> we should point out the futures have taken a turn even lower. at this point dow futures down by close to 90 points. so we're get back to a triple digit decline as we head into a friday. what do you think of that? >> i think that's something to notice. the fact that we're plummets. 25, 27 takes away from it. those lows were put in when we thought the fed was going to hike. if we go below those lows even after we think the fed's not going to hike. then we have a problem that's more serious. i'm still okay with it.
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right now i think it's position squaring before the fed release. i think like i said before, everybody's kind of says to themselves they ear not going to hike, but in the back of their mind, they're going, can they surprise us? >> oil's not helping. sometimes it's as simple as that. >> oil's not helping but you're talking about an amazing supply story. >> we tell ourselves that. >> i know. >> in the back of everyone's mind it's like, wait a minute. >> yes, but the actual -- the price of oil -- if that's going lower helps more people than it hurts, certainly it hurts people in that business. but if it really is a supply story, i don't see why we have to track it going lower in the stockmarket because overall that would be a deeper story. >> very quickly, what were the lows you were watching? >> 21 is my kind of line in the sand. if it goes below it and feels
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more comfortable, that's when i turn bearish and they there's something more center. >> great to see you. when we come back, the i phone 7 going on sale around the world plus the latest buzz for apple suppliers next. right now as we head to break, take a look at yesterday's s&p winners and losers. >> it was wonderful. >> bravo. >> it was great. >> it was pretty good. >> el, we it wasn't bad. >> there were parts that weren't very good. >> it could have been a lot better. >> didn't like it. >> it was pretty terrible. >> it was awful. >> pretty awful. >> boo. >> boo. ♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant,
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welcome back to "squawk box" here on cnbc, first in business worldwide. let's check out the u.s. equity futures this morning. things have gotten worse as we've watched over the last 30 minutes or so. you can see the dow futures down by about 91 points below fair value. it's been a strong week so far for the markets. to this point the dow had been up 0.7%. the futures now down 97 points. s&p down by 13 and the nasdaq by 21. >> our good friend dom is here. the tech giant isn't alone when it comes to being the only one getting in on the action. as i mention, you're here to tell us all about it. what's going on? >> it's is supply chain. every time we hear apple shares go higher because of the new product cycle organization royn't to look at the whole ecosystem. all the computer chips and wireless devices and everything el. we kind of put together a
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sampling, an app teaser if you will. you look at skyworks. the analogue devices. all these devices. you've seen just this week 15% for sky works, 14% for cirrus logic. all move higher. these preorders. maybe they're huge. apple's not going to tell us the first week's sales numbers but we do know a lot of people say they're going to go out and buy the sri advice if they're going to go out. so if you take look at the whole ecosystem around it, the question is whether or not they will keep the momentum going. there was a lot of pessimism back in terrell summer. remember that when all of these analysts across wall street said, oh, no, the iphone 7 -- >> even last week. there was a lot of pessimism
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with people saying what's differential, with's going to make me buy this. >> yes. it's just the headphone jack. around july 4th, 5th, apple was a $94, $95 stock. even was panicking. analysts downgraded. since then it's been a massive run-up, so all of a sudden everyone who came up, art had a bullish note. he was the only one i read who had one of those bullish surprise snas on a percentage basis, would you be better off owning apple over the past couple of months or would you be better off owning the components? >> it depends on the time frame you're looking at. if you look at apple shares since the summering some of these guys have gone up a lot more. skyworks has been huge. they go down more when apple goes down, they go up when apple goes up. the question for a lot oichb
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vesters is, all right, now that we receive this run-up s this the seller of news event. is it going to be a situation where you say, hey, profits are there, let's take them, but a lot of people say that with apple's iphone, it's going to be about whether or not you see some of that hield demand kind of pick up. so it becomes a bit of an issue. >> dare i say there's more product to come. not just the phone. i'm waiting for the laptop because they may have the power mac -- mac book. >> my wife uses a mac book pro. >> if you're on one of the log nerd sites i'm on, it's coming at christmas. >> joe, you do have one? >> a large face 6 but i don't know why i would want a laptop. why would i want a laptop? >> i still -- >> to write stuff? >> yeah, to write stuff.
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>> i hear you do write stuff. >> i don't even write stuff on a phone. i talk but she says crazy -- she's not the brightest bulb out there. she hears things i say. siri, jesus. >> maybe you mumble that maybe i mumble. >> have you done the whole zero divided by zero thing? >> no. >> ask zero divided by zero. >> can we? >> can we do it here? >> do you want to? >> is it dirty? >> it's not dirty at all. >> i'm afraid i don't know the answer to that, dominic. >> what's zero divided by zero. >> what's zero divided by zero. >> imagine that you have zero cookies and you split them evenly among zero friends. see? it doesn't make sense. cookie monster said it's said there are no cookies and you are sad you have no friends. >> that's pretty good. >> thank you.
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>> you're welcome, dom. >> where'd you get that. >> i think it was my wife who told me what's zero divided by zero. >> there's a whole handful of these ones like that, supposedly. >> that's good. time now for the executive edge. a couple of big money sports stories we're following. twitter getting in on the game. streaming jets/bills after inking a deal with the nfl. it's the first of ten games that are going to be streamed on twitter, thursday night games that will be shown on the site and secondly north carolina could lose millions of dollars both nfc and acc planning to pull games from the state because of the controversial bathroom bill. joining us know joe from washington state university. let's start with -- we'll go in the sequence that we started. where do you watch it -- i
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guess, what? you don't have a tv? why would someone choose to watch it on twitter? i guess if you can't get some of the games in your area, you'd use twigger. well, last night, joe, i was watching both just because i could, right? the nfl benefits in that twitter is global so they're reaching markets all over the world, but also let's realize the nfl has lost a younger audience and with twitter 72% of their users are between 18 and 24. so it's a bigger play for nfl to target the younger audience. >> wow. i understand business new, you know. how can they not watch football? i don't understand why they're not watching football. what are they watching? something where there's no physical contact and no microaggression and they're in the safe zone? >> they're watching drone
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racing. who knows. again, there's a lot of cord cutting as well. with the cord cutting, it's, again, another reason for the nfl to experiment and for fr. twitter's perspective, they can track data. >> how about that second story. that's pretty staggering. what's north carolina -- are they going to dig in their heals? what's going to happen? do you have a feel on that? >> to me it's amazing. i recently wrote on this with the nba all-star game putting out and the nfc and now the acc removing some of their tournaments, now you're talking about conservatively over $150 million lost in new spending from nonresidents and from north carolina residents that are now going to leave the state for an event that they otherwise would have watched in north carolina. >> yeah.
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something's going to give eventually you would think. >> you would think. >> back to the other stoifrmt i can remember -- i think we interviewed roger goodell. he is the custodian of this really shiny little thing that you don't want to break, you know what i mean? the nfl. i mean it's the envy of every other major sports franchise, the revenue is staggering. how does he make sure it's not too many places? if i were nbc, nbc finally gets thursday night, which is a big deal with the job they do on sunday and now people have another place to watch it instead of tv. when is it too many places? >> you know, that's a great question, joe. it just hasn't happened yet. some people were worried about cannibalization when they went to digital and websites. it didn't cannibalize. with social media becoming what it is, why not go the twitter
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route. >> are you excited about the ryder cup? when is that? >> i am excited. i'm going. i'm covering it for "forbes" in two or three weeks and hopefully this year america can win. i was at the medina cup and they had a collapse. >> i remember. they had collapse, but i don't know. those euros had something to do with it, too, and then the guy that put the dagger in the heart put it in the gold medal. i wonder sometimes if they're going to play like a team, they need a coach to play like a team because they're so used to it being an individualized sport. the euro guys seem to gel. >> it's one of the best sporting events, period, to watch. the crowds get emotional. they get into it. players get into it. it's a fantastic event. i can't wait. >> we need one those annoying chants that strikes terror into the heart of the other team,
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that euro thing, you know. it's just horrible to hear because you know that they're coming. i'm afraid to hope. i'm going to hope though. >> bring a bunch of leaf blowers and try to distract them -- patrick, i know we said things about follicly challenged. you have never saiding in. i think you're comfortable in your own skin. it's a diverse world, right? >> i have no choice. patrick, thank you. see you later. >> thanks. stocks to watch ahead of the opening bell. don't miss "squawk box" on monday or any day. hank paulsen will join us to talk about the health of the economy, the fed, and a lot more on monday at 8:00 a.m. eastern. as we head to break, here's a quick check of what's happening on the european markets and they're not looking too flush either, especially the dax. we'll be right back.
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this is a very dangerous setup. you view have high-profile cases, you have unaccountable prosecutors with total immunity who don't worry about the consequences enough anyway of their actions, and you have prized jobs waiting for them with their attachments to these cases. >> that was former hedge fund manager david ganek at our delivering alpha conference talking about the raid that brought down his $4 billion firm. the complete cut is now available at deliveringalpha.com. let's take a look at the equity futures. so far it's been good for the market. dow up 0.7% this week. dow futures indicated down by over 92 points below fair value.
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s&p futures down by 12, the nasdaq down by 18. earlier this week the chairman of mobileye broke his relationship with tesla. tesla said mobileye broke the relationship when they forced h em to stop the program, pay mobileye even more. now, the autopilot system has been under scrutiny, of about, since the death of a tesla driver back in may. so it gets a little bit more intriguing. mobileye is also competing -- is also not only competing with its own anniversary. the service. it's going take looker you to walk way from being involved in major company like tesla, i
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would think. >> yes. the question is always is it a safety thing or is there other pieces to the story. wi will find out. in the meantime, when we come back, the fight against cancer. we're going to tell you why thousands of people are gathering in washington this weekend. "squawk box" returns with this and a lot more in just a moment.
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many people know october is national breast cancer awareness month. but you may not know that this month is child cancer awareness month. many will be gathering for cure fest, a chance to make it a national priority. joining us is senior vice president at aflac which is sponsoring the event. thank you for joining us and doing what you're doing. we always see pink. we know the pink color. we don't know the gold color as well. why do you think that is? >> i think people are closer to people who have had experiences with breast cancer. you tend to know more people who've had that experience than know families who have a child
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going through this terrible disease. >> and why is there -- there seems to be such a disparity between funding for adult cancer versus childhood cancer. >> there is. actually only 4% of federal funding goes to the research and treatment of pediatric cancer in terms of all of the funding that goes toward all cancers in this country. but it's a very complex problem, andrew. it's not a single provider solution. it's going to take grassroots efforts like cure fest this weekend to create awareness and information. it'll also take the health care community coming together to work on solutions in private partnerships and public partnerships. >> how much money are you looking to raise? >> this is not about raising money, this particular event. it is about bringing 250 grassroots organizations together to elevate this conversation into the national dialogue. >> how much of childhood cancer lymphoma versus solid tumors?
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do you know the percentages offhand? >> actually, i'm not an expert in that. i can tell you at the aflac cancer center, we treat 7,000 children a year which is a large number. the numbers are very encouraging, though, joe. >> that's what i mean, yeah. if you look at any part of cancer, it's -- with kids thank god that's where we made progress. i just wonder if there's been any progress after treatment with some of the stuff that works on childhood cancers sometimes later in life it seems to come back on you and you're prone to something later. i just wonder that's another thing you need to do more research on, obviously, to try to familiarate the other you had treatment from the first time around. >> you raise an excellent point. what i can tell you is 30 years ago the fatality rates were at
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70%. now we have an 80% survival rate. in a 40-short year period of time. clearly we have a lot more work to do. that's why aflac is committed to the fight as you guys know. we've talked to you about it before. we donated over $108 million to this cause. and our independent sales agents donate $500,000 every month to the aflac cancer center to help these children and families have the quality of lives they deserve. >> hey, catherine, how did aflac decide this was one of the causes it wanted to support? a lot of businesses make decisions as a company to support certain causes or other causes. can you walk through the process here? >> absolutely, andrew, i'd be delighted. our ceo who you know very well dan amos, 22 years ago was approached for a donation to refurbish at a floor to help
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support pediatric cancer treatment. he was so moved he wrote a $300 check and it hasn't stopped there. it's been a beautiful partnership. and it's so inspiring. if you've had the chance to visit the aflac cancer center, these children are beautiful and these families are absolutely amazing. how could you not want to help and not want to make a difference? >> okay. real quick, tell our viewers how they can help. they can go online, right? >> they can absolutely go online. in fact, on social media if you use the term #duckprints we will donate $2 on your behalf to childhood cancer research and treatment up to $1.5 million. so we encourage your viewers to have a voice and to be able to do that. you can also go to aflac.com for more information. and if you're interested in cure fest this weekend, that website is cure fest usa.org. >> okay. catherine, thank you for the information and the work you're doing. appreciate it. >> thank you. when we come back, some
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stocks to watch. drug maker depomed is preparing to put itself up for sale. pushed the company to look for a deal. last year depomed fought off a deal from horizon pharma. that stock up by 13% this morning. also unilever in talks to buy the honest company. proposed deal values the jessica alba company at a billion dollars. and ge winning a contract from the uk's hinckley point nuclear plant. it will supply equipment. hinckley point is the newest plant in decades. "squawk box" news. a city in belgium is about to open the tap on a two-mile-long pipeline for beer under the city streets. it's an effort to cut down on the noise and wear and tear of
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beer trucks traveling through the cobblestone streets of the evil city. i mean, you know, there's noise from garbage. there's different types of noise. i think this is what you put up with. so i was thinking about the duck prints. the duck is everywhere. almost like the corporate symbol. it goes all the way back to some guy like it's a madison avenue firm. >> it was gilbert gottfried. >> no, not the guy who did it. i'm talking about the guy who created it. the company's name is aflac. some guy was sitting there thinking aflac kind of sounds like a quack. what if we do something with a duck? and you don't remember bewitched but someone said what if -- and it's so simple. aflac. quack. aflac quack. >> it works. >> what could we do for "squawk
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box"? when we come back, get ready. the fed's big september meeting is just days away. we'll talk strategy after the break. the number of units we'll make next month to maximize earnings. that's a projection. no, it's a fact. based on hundreds of proprietary and open data sets folded into a real-time, actionable analytics model. nine. eight. three. five. two. you're not gonna round that up? you don't round up facts. powerful analytics driving decisions for the world's most valuable brands. hewlett packard enterprise.
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awaiting key inflation data and looking forward to the fed. futures indicating a lower open on this quadruple witching friday. what you need to know heading into the weekend straight ahead. biting into the apple iconomy. meanwhile the stock is sitting at a new six-month high. we break down what apple's latest creation could mean for investors. and trump's economic agenda. a closer look at his plan. >> this is the most pro-jobs, pro-family plan put forth perhaps in the history of our
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country. >> plus jimmy fallon going where no other host has gone with donald trump before. >> can i mess your hair up? >> the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." welcome to "squawk box" on cnbc, first in business worldwide. i'm joe kernen. the futures this morning are down. but down less -- not really. they were down over 90 for awhile. it's been up, down, up, down down, up this week. >> for this week, right. but for the week we're actually up for the week for all three major averages. >> only because friday we were down 400 points. and they were up 250. but for september after friday we said it was one of the worst
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months in awhile. so we must still be at best flat for september. >> i don't have month to date numbers. >> nobody's wishing for that but sometimes it just seems to happen. did we play harvest moon yet? >> we're going to a little later. harvest festival in asia so several markets there have been closed. sorkin? >> let's tell you what's going on this hour. deutsche bank shares getting slammed. the u.s. justice department now asking the german lender to pay $14 billion to settle probes stemming from the financial crisis. much larger number than was expected. in a statement deutsche bank says it has no intent to settle the civil claims near the numbers cited. will lead to an outcome similar to those of pure banks which have settled at lower amounts.
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in other corporate news this morning, missing wall street estimates. cloud revenue grew 59% during the latest quarter. that couldn't make up for the softness in its traditional software business. and wrapping up today with a pair of economic reports. august consumer price index at 8:30 a.m. eastern time. then we've got headline cpi. it is expected to edge up slightly. at 10:00 a.m. we're going to get the latest on consumer sentiment. also quadruple witching day. you can mark your calendars. with the expiration of stock index futures and options, stock options, and single stock futures. typically it results in high volume particularly in the last hour of trading. so could get a little exciting around 3:00 today. the fallout continues at wells fargo. activist shareholders filing resolutions calling for changes after the bank's fake account scandal. meantime, massachusetts senator
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elizabeth warren who helped set up the consumer financial protection bureau has some harsh words for wells fargo and its executives. here she is on "power lunch" yesterday. >> there is a serious problem with senior management at wells fargo. look, we're talking about a scandal here that involves thousands of their employees cheating tens of thousands of customers out of money. and making millions of dollars doing it for the bank. and so the question is about senior management. is it the case that they really didn't know what was going on? because if they didn't, then this is a bank that's just too big to manage. let's face it, at a community bank, that kind of thing isn't going to happen. at a credit union, that's not going to happen. at a modstly sized bank, that's not going to happen. the alternative is maybe they did know what was going on in which case they need to be held
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personally responsible. either way, there's a big problem at wells fargo. >> that's just a little taste of what wells fargo ceo john stumpf can expect when he heads to washington on tuesday to testify before congress. you can expect lots of questions like this. by the way, check out shares of wells fargo. down by more than 7% since regulators announced $185 million in fines against the bank last thursday. >> that market cap loss probably, you know, i know senator warren -- love politicians getting involved. but that market cap loss would probably prompt me to make sure that we tighten up the bolts and nuts. >> message received from shareholders on this. >> that was the biggest bank by assets. >> reputational risks. >> 7% times billion --
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>> warren buffett fell to 15th place on the wealthiest list. >> god bless her, but these guys are probably panicked far more because of that. >> but what you say before congress can have an impact on what the rest of america thinks about you. >> as much as -- down about 3.3%. down hardly at all in the beginning. then people realized what was happening and it continued to slide. let's talk markets and next week's fed meeting. joining us now is joshua fineman. peter boockvar is a cnbc contributor. and joe just to answer your question, month to date so far, both the dow and the s&p are down by about 1%. but the nasdaq is up by 0.7%. so you add it all up, and not so bad until we see what happens i guess -- >> well it would have been worse without apple and dow.
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>> so peter, where are we after a couple of weeks of volatility? or maybe a week and a half of volatility after this point? how do you kind of measure all of this and figure out where we stand? >> for me the most relevant market activity over the past month has been the rise in long-term interest rates globally that began in japan almost two months ago when there was hints that the bank of japan would be buying less longer term jgbs in order to steepen because of the pushback from the banks. then draghi obviously did nothing. i think there's a worldwide realization that central banks are running out of room and have gotten such extraordinary pushback in their desire to flatten the yield curve that we're beginning to see steepening. >> there's real damage taking place among pension funds, retirees, amongst savers. anybody who's looking over the long-term. you can't continue to do that in insurance companies too. and zero interest rate environment. >> the implications for global assets which have been medicated
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on very low interest rates are now potentially at risk if the rise in long-term interest rates continues. therefore the bank of japan meeting next week is much more relevant to me than the fed meeting. >> wow. that's an interesting point. josh, you want to pick up on that? it does seem that all of the banks are kind of linked in this together. even if they're not coordinating at this point. they're kind of stuck figuring out what others are doing. because the global implications will have impacts. >> of course one of the factors that's helped hold long-term rates down in the u.s. is what's going on abroad. the very low rate ace broad. absolutely true. that's had some impact, bleeding into the u.s. as far as the fed is concerned, i don't think anybody is expecting the fed to move next week. the expectations have really collapsed. i think it's reflecting weaker tone to recent data. and also fed speak. not sent a clear signal they're intended to move right away.
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i think they're also going to reiterate that they do anticipate if the economy evolves that they will be moving before long. probably before the end of the year. so they're going to keep that alive. but, you know, the markets have kind of been skeptical about the fed for quite a while. i don't know the markets are going to necessarily fully at least buy into that. >> that plays back into peter's concern. if the fed does raise rates, it comes as a shock to the markets and they react badly. >> the market's not fully pricing another rate hike until september 2017. the fed wants to get to 3%. at this pace they'll get there in like 2028. so with respect to the cost of capital, the fed is now irrelevant. libor is up to basis points. that's tightened the cost of capital. and we have to be watching the rise in long-term interest rates. >> that kind of paves the way for the fed. if we're already seeing interest rates rise, then it's not such a big deal if the fed raises
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rates. >> maybe we should blow out the deficit. just do it. we've got david malpass coming up to talk about trump's plan. geez, go to 15%. small business and big business. do the maternity leave. blow it out. that'll get the bond market's attention. >> there's no question. there's no question. >> we won't end up like japan. again, they're like -- it's not working. three years of this and it's not working. blow it out. >> we are seeing some sentiment start to creep in around the world that says monetary policy can't carry the ball all by itself. fiscal policy needs to do more. i think you are starting to see a little bit of that. people talking about maybe fiscal stimulus in the u.s., in europe, in japan. >> the journal says you're not going to -- there's a great line in the last paragraph. you're not going to cure stagnant growth by filling potholes. >> well, they're talking about tax cuts too. just a combination. >> infrastructure has never done
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it. >> infrastructure helped during -- >> multiplier on government spending is about 1.2 when reality it's 0.3. government spending is not going to get you sustainable economic growth. >> then people argue tax cuts, you can't score them dynamically that it hasn't worked when it has worked. >> how much does it work? when you look at trump's plan yesterday, getting us back to gdp of 3.5%. that's a number that caught a lot of attention. the idea of 25 million new jobs would be more than we even created in the '90s. it was reagan and bill clinton who had the best -- >> hope springs eternal. >> it does. but even from the committee to fix the debt campaign says trump gets credit for putting out new numbers. but they don't have the expectations for growth. >> we spent a trillion dollars based on what last time. and what of those forecasts came out about shovel ready products? >> it's easier to get down the
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parkway on the turnpike at this point. >> i don't like potholes. i got a low profile. >> i know you do. >> so peter, again, you're kind of waiting for the market to wake up to this reality. but it's taken an awful long time. >> well, i think the equity market has responded over the past couple weeks on this rising long-term interest rate. we had a couple days of hissy fits when the german 10-year went positive. the japanese 40-year bond yields two months ago was seven basis points. >> wow. 40 years. >> a couple days ago it went up seven basis points. >> so it doubled. >> now it's above 60 basis points now. so there is a change going. >> that's interesting. >> i think we should be watching long-term interest rates around the globe particularly in japan next week nap is the biggest risk to the equity market. >> peter, thank you. joshua, thank you. great to see you both. when we return, it's launch
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day. for the iphone 7. i saw that and i must be hungry. i thought it said lunch day. >> you didn't eat breakfast this morning. >> no. fans are lining up at stores around the globe to get their hands on apple's latest creation. investors sent the stock to a high yesterday. we'll talk all things apple after the break. sorkin better be leading this one. "squawk box" will be right back. coming up, donald trump offering more clarity on his economic plan. >> one of our greatest job creation measures is going to be our 15% business tax rate. >> can he deliver on his policy promises and get america growing again? that debate is straight ahead. "squawk box" will be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.
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welcome back to "squawk box," everyone. we've been watching the futures and on this friday morning, it looks like it could be a little bit of a rough ride into the weekend. at least if you're a bull, dow futures have been down. we have been down by as much as 89 points below fair value. the nasdaq down by 15. up to this point the week to date, the markets major averages had all been in positive territory. we'll see what happens today. take a look at the screen because you are looking at a live shot of the apple store in
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new york city. people waiting in line to be the first on the block to get the new iphone 7. i don't know if we think that's a big line relative to previous years or not. but it's been surging all week. here to discuss all this is the managing director at ubs and our resident apple expert. was that line long enough for you? >> well, you're not going to be able to get the 7 plus at the store today, so i'm not sure the length of the lines matters as it did once upon a time. the mojo has shifted back to apple's direction the last week or so. you've had issues at their top competitor and verizon, the at&t, sprint, t mobile are talking about great preorder numbers. the stock is inexpensive. now we're starting to have some catalyst. >> i'm just curious about this issue of disclosing the unit sales. everybody of course probably loves transparency to some
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degrees. are you happy or unhappy about this change? >> i'd say you always want more data as an analyst. but to be honest, they're so supply constrained for the first couple months that it probably doesn't mean much in terms of the sales. if you're a skeptic you could say expectations for the 7 haven't been high. maybe they want to hide that a bit. >> as an analyst, i mean, do you ever feel bad about yourself? i mean, this is the way we explain it. stock got up to 130. all the analysts were bullish. when we explain it in hindsight, analysts explain it this way. they were bullish at $130. then it went to $90. and got bearish. that caused it to go back. anything you guys say is just -- that's -- you have an important job because we use you to see when the sentiment is overcooked one way or the other. i mean, it's kind of sad, isn't it? >> you can argue that sentiment tends to follow the stock. i think that's human nature.
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that's why we try to do some longer term buildups. looking at how many people are going to upgrade in two years is going to drive the next one. >> where's your price target now? what was the highest it ever was and what was the lowest it ever got to? >> it's $115 right now. >> so are you going to raise it? >> i can't talk about what we might do in the future. we'll take another look at it. but i think we were up at $130 to $150. >> no one knows more about the fundamentals of the business, it's just whether you can translate that into stock price. >> that's not easy to do. >> it's not. >> you've had a shift from growth to value. i think that's finally completed now. so that also has moved the stock. >> we talked about this problem with the samsung battery. do you look and say to yourself there are people who otherwise
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would have bought a samsung note that are now going to buy an iphone 7? >> i think there are probably some of those. it's hard to quantify. it's an important number. a third of what apple shifts are to first time apple customers. >> how much? >> about a third. in some years it's higher than that. it's not just the upgrades. >> when does that slow down? >> we think it's going to slow down now. basically in the june quarter apple told me their new customers were down slightly year over year. we're anticipating down 10% the next two to three years. >> that's just unbelievable to think a third of your customers still being new customers when it seems like everybody has an iphone. >> it's going to change rapidly. it's part of adding china a couple years ago. that's why we have to be careful here. it's encouraging in terms of preorders in the united states. >> what about india? are there other markets that
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aren't saturated at this point? >> there are, but apple's going to have difficulty penetrating those in the short-term. india could be big, but it's not going to be big in the next couple years. >> because they need a cheaper phone? >> i'm not sure they can be selling a much cheaper phone, but yes, it's clearly too expensive for most people there. but they've got a long-term view. so it's going to take time. brazil there's opportunity. but the biggest markets will continue to drive the u.s., china, japan, uk. >> the upgrade cycle. when you heard these numbers from t-moblie and the other folks, was that already built? clearly not not built into the marketplace because the stock has moved as much as it has. as we watched, what do you think happens? >> the t-moblie and sprint numbers were big in terms of multiples of what they've been in the past. but they have much smaller bases. they did say that it's up year over year and better than they expected. verizon said no biggie. we're not seeing any dramatic
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change. we're waiting to see how this plays out over the next few months. but i think at least it's got people thinking more toward the upside where the last 6 to 12 months investors have been thinking to the downside. >> real quick, you saw a watch on the screen there. is that going to be a hot present for christmas or no? >> increasingly it sells during the christmas season. i think they've done a lot of improvements with the new watch. we're probably still a year away from the health monitoring and getting it detached from the phone. but they did put gps into it. it's on its way. >> steven, thank you. >> thank you. >> great to see you. coming up, the nfl arrives on twitter. what one player says about his viewing. and here are the futures you'll see -- are we triple digits yet? no. they've improved a little bit. we may take a look. there they are. down 76. we'll be right back. d aflac pay.
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for the first time in twitter history, nfl fans could live stream thursday night football. twitter broadcasting the game between the jets and the bills worldwide. some viewers did complain about a delay while many seemed to enjoy the experience. pittsburgh steelers running back deangelo williams tweeting it took five seconds watching thursday night football on twit tore know this is the wave of the future. all in five seconds and all nfl games will be on here soon. this is the first of ten games that twitter plans to stream. the jets had to play sunday. i don't really know who they played. >> going to be a sad season.
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>> they played the bengals. >> they lost. but this was rex ryan so -- he always -- >> so many shots of rex ryan last night too. >> he got rid of his thing, right? >> he looks good. he's slim. >> i thought he's back up. >> he looked okay, i thought, yesterday. he had a sweater vest. when we return, donald trump laying out more of his economic plan if he's elected president. we got more on that when we return. later, a start-up that's disrupting the wide world of sports. we're going to speak to the cofounder -- for more than a thirdcount of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture. our team is working to make this technology better, more affordable so it can reduce emissions around the world. that's what we're working on right now. ♪ energy lives here.
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♪ among the stories that are front and center this morning, deutsche bank shares dropping. the u.s. government wants a $14 billion settlement stemming from the financial crisis. in a statement deutsche bank says it has no intention to settle the civil claims anywhere near the number cited. the firm expects that the negotiations they say in their words will lead to an outcome
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similar to those of pure banks which have settled at materially lower discount amounts. that's a huge issue and there's some people wondering if it's tit for tat right after the eu's going after apple for about $14.5 billion. on the economic front today, the august consumer price index is out at 8:30 a.m. eastern time. headline cpi is expected to inch up slightly by 0.1% while the core rate, that's expected to rise 0.2%. samsung formally recalling 1 million gal saxry note 7 phones in the united states. the company received 92 reports of batteries overheating in the country includesing 26 reports of burns and 55 cases of property damage. and president obama is going to be meeting with a group of business and government leaders this morning to discuss the economy and economic benefits of the proposed transpacific partnership trade pact. among those attending, michael
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bloomberg. and ohio governor john kasich. senate majority leader mitch mcconnell said the senate will not vote for the pact this year punting it to the next president. as we talked about ad nauseam oppose that trade deal. on a lighter note, if you didn't say up for fallon last night, you missed jimmy fallon doing something no other tv host has done before with the donald. >> i'm not liking the sound of this. go ahead. >> can i mess your hair up? you say yes? >> go ahead. >> yes! donald trump, everybody! >> i mean, it's attached. there. it's attached there. it's not from here -- you know, people -- and they say that to
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me. i'm sensitive. i'm empathetic to that. donald trump speaking at the economic club of new york yesterday. the republican nominee laying out his plan to boost the economy and reiterating his thoughts on the fed. >> i believe the fed is very political. it's become very political. like many other groups in this country. beyond anything i would have ever thought possible. and so i think you're going have low interest rates until the end of the year. maybe no increase at all. and the market will stay artificially high. and then we're going to have to see what happens after that. but i think it's -- they're not doing the right job. >> joining us now, trump campaign senior economic adviser david malpass and center for economic policy and research codirector dean baker. dean, i want to start quickly with you. i know it's "the wall street journal," but just for argument's sake, let me read this part. hillary clinton's running on the
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status quo. the obama status quo only more of it. higher transfer payments, more taxes on investment, more regulation, and another burst of spending on roads and bridges. at least trump sets a clear contrast with clinton on taxes, regulation, and energy and recognizes that the u.s. economy isn't stagnant because of potholes. i guess this is supply side stuff. are you still of the mind, dean, that we know supply side things just don't work? that it's been proven? >> well, how many times do we have to keep doing this? i'm reminded of the movie "groundhog day." keep waking up and reliving it. we had it under reagan. we had it under george w. bush which was the weakest growth and of course the great crash in '08. we had it in the states. both cutting taxes promising big
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increases. it did doesn't work in theory. it doesn't work in practice. how many times do we have to keep doing this? >> when i think back on the reagan decade, i know it's easy to just say that was a really a decade of really weak growth, but why don't i remember it that way? why do i i remember -- >> i can't account for your memory. i can give you the data. the '80s were worse. people like to cherry pick years. saying if we take the low point of the recession in '82 and stop in '89. i'm not into playing games. i'm an economist. i don't work for a politician. >> that sounded pretty political. hi, joe. good morning. so in -- what they're doing is counting the -- reagan had two recessions because of jimmy carter. and or that was the extended period of malaise leftover from carter. when you put in good policies, you get much faster growth. so trump yesterday said 4%
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growth and 25 million jobs by cutting the corporate tax rate to 15%, by allowing expensing elections for companies, by changing the policies, middle class tax cut. lower income tax cut. the goal is to get the country back to work. we have millions not being counted. so you get an unemployment rate that's artificially low. or that's low when in reality there are a lot of people looking for work that would like to work. that can be done with structural reforms. >> the "ground hog day" analogy, both sides use it, i guess. and they'd say the past eight years with really struggling to get anywhere close to even 2% gdp growth, that those are the policies that hillary clinton wants to double down on. the ones that failed the country for the past eight years. >> well, look at this.
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i -- president obama came in in the middle of the worst downturn since the great depression. i don't think we can argue about that. i know people want to blame him. he turned the economy around. i've been extremely critical to the obama administration. i'd like to see lower growth on employment. but that was pretty damn good. if you contrast that with what came before him, the lack of regulation. and you want to go back to that? that strikes me -- that's groundhog day, i'm sorry. >> we don't have to go back to the past. going forward how do we make the economy better? that's the goal. the way to do that is with a lot of change. "new york times" today, the front page is donald trump change agent. that's why people are going for him. there needs to be a -- and there is a movement to upend washington so that it works
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better for the people. >> let me ask you this question. >> we've tried this. he wants to get rid of regulation. well, we have kids that have drinking water with lead in it because we don't have enough regulation. >> trump is big on public safety. >> that's what happens when you don't have regulation. >> that's litigating the past. so we want a better country. >> let me just ask you a different question about global growth. we had a guest on yesterday who made the argument that effectively global growth is so low and demand globally and here is so low that it may be impossible to actually get the type of growth that anybody's talking about here. that it's a demand story. and by the way, that even if you do lower taxes and do some of these things, that ultimately that doesn't necessarily land in the pocket of new people getting new jobs. it lands in the pocket of people who already either have the jobs or own the companies. >> right.
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>> so mr. trump addressed that with reference to secular stagnation. there's this theory out there that we can't do better than what we're doing. and that's really, i don't think, correct at all. we should try better policies. one of the things to do is make the dollar one of the world's most trustworthy currency. and that can be done with stronger growth, with a better economy, better fiscal structure. and so i really reject the idea that we can't grow faster. what's -- >> i hate to contradict mr. malpa malpass, but his candidate talks the opposite. that's saying the dollar is too high. so take your pick. it could be too high or too low. it cannot be bo et. at least not on this planet. >> we'll have the most trustworthy dollar. the critical thing, it's not really a demand side problem. the problem in the u.s. and i think globally is people simply aren't investing because there's too much uncertainty. >> so david, you sit with trump and talk to him about this
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stuff. so the never trumpers on the right don't believe that he's a true supply cider. in talking to him yesterday that plan someone told me that it looked like 90% of what paul ryan and the other conservatives want to do for corporate taxes and simplifying the tax code and everything else. is he -- do you believe that -- they worry that once he's in, he's going to i don't know do maternity leave and other stuff. does he get it now in your view? >> what i've seen is he listens well and is willing to change as the information changes and has a deep fervent belief and it was transparent yesterday, very clear to the audience that there was a plan to have much faster growth, more jobs, people back to work. >> harwood came on and said that does the 5% rate apply to all business or pass throughs? he said it would be an extra trillion dollars if it did apply to something. how did that get confusing and
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what's the answer to that? >> well, so small businesses are going to get huge benefits from this plan. both in terms of -- there's some options for expensive all of their equipment. that's huge. the top marginal rate goes down to 33%. you know, there's a -- within the tax code there's an ability to elect into a corporate structure. so all of the benefits apply. i've made a list because i can't keep them all straight. remember the estate tax is going to be eliminated. small businesses have this bad problem that they all have to do estate planning because they hope to have a big enough business that they have to worry about it. and so that will be eliminated and that's very helpful. regulatory relief is one of the biggest for small businesses. and trump yesterday was very clear about that. the regulatory industry, the regulation industry that dominates washington will be ended. that's really important for small businesses. >> dean, do you think that our rate is too high?
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the 35% rate? is that holding us back at all with the -- in competing globally? >> we've had this rate for a long time and we've had for much of that period had robust growth. the idea that's the core problem and we have to low tore 15% -- that's a huge -- >> we've had it for a long time but other nations while we've had that have moved lower. >> and as a practical matter we're still at the middle or towards the bottom in terms of our tax take because you have companies like apple that have become adept at claiming the -- >> that's part of the problem. if you bring down the rates overall and strip away any loopholes -- >> simply they're tax gaming. if i could just finish what i'm saying here, you could work that out if you approach with good faith. their ideas they want to get away with paying less in taxes. my view is let's lower the tax rate, get rid of the gimmicks and have more or less the same amount of collect on taxes. if we collect less in taxes, sorry, folks, that means other people will have to pay more.
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that's the way arithmetic works. even if it's not donald trump a's world. >> and just philosophically and it seems like we're arguing about this now and i didn't know we should. but there's a notion that capital is treated better when it's left in the private sector because of the inefficiency of the government. should we not -- is that just a false -- is that just a red herring? is that not true? shouldn't risk takers that are starting businesses and, you know, trying to hire people, trying to succeed in the private sector, is that errant thinking that that's where -- >> i'm not sure you're -- i'm not sure what you're talking about. the idea that businesses somehow can't get by with the current tax rates, that just simply doesn't make sense. we've had higher tax rates and they've done very well. we respect arguing philosophy. we're arguing what is the --
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>> where would -- there must be some number for where to tax a corporation. you wouldn't do 90%, right? >> no, i'm not saying -- >> what number is too high? when would it start -- >> okay. let's go back to what i just said a moment ago. we could have a lower tax rate, get rid of all the loopholes. i don't want to see us collect less in taxes from the corporate sector because that means we'll have to collect more from everyone else. that's the way arithmetic works. >> is there any reason to think that redistribution long-term or just, you know, moving the -- not growing the pie, just splitting it up differently, is there any reason to think that that results in long-term prosperity for everyone? >> well, i don't really know what you're talking about by redistribution. trump zth wants to redistribute upward by having huge tax cuts for wealthy people. no, that will not expand the pie. >> no. so there'll be a -- >> i don't think that's a good idea. no evidence it leads to growth. we've done this experiment many times. it does make rich people richer.
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>> the huge amount of additional income to the middle income from having more jobs, from having more growth. the front cover of "the wall street journal" sitting right here, trump growth to offset tax cuts. that's critical -- >> we've heard that promise endlessly. >> dean, my turn here. >> go for it. >> i just have one question that i want to try to understand. this is the issue raised earlier around the 15% and this $1 trillion. do we have -- i feel like we don't know the answer yet. >> you know, there are -- small businesses can elect to be corporate tax. so there's no holding back for small businesses and they get all the benefits that i mentioned. so -- >> right. and the second piece? >> they're going to much better under this system and that's critical. >> that would include the trillion dollars in loss over a decade. >> everybody's trying to work the numbers around.
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i think the better way to think about it is you get a better tax system and then you get more growth out of it. and so it's going to be very hard for economists to -- >> it's hard to argue dynamic growth, what you're going to see and the benefits that come through. >> no, i don't think that in so our numbers are showing there's a huge benefit from having the lower tax rate -- >> no, but trying to find that benefit and put a number on it is -- >> david, real quick. for our hedge fund viewers on the issue, what's their limit now. >> they go to ordinary income on a lot of their income. so how that's defined, you know, this is going to go with congress there's going to be a big working process. but the point for the public is there's going to be more growth, jobs, and it's going to be a different economy. a change agent is what's happening. >> all right. >> longer conversation. >> david malpass, dean baker, thank you. if i look the obama years are
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better than the reagan years? if i look, i'll be able to see that for sure if i do the background? maybe you need to send me those numbers so i can -- i don't know. >> i was going by decades, if you were going to be serious here. >> the obama recovery is the weakest since the great depression. >> in fairness, the collapse the beginning of the reagan -- >> you're blaming bush for the beginning. >> so it's all, you know -- >> all right. >> we resolved nothing. >> right. we're going to take a quick check on the futures as we head to a break. we're also expecting some key inflation data out an hour from now. traders may see more volatility. today it is quadruple witching friday. more on what we can expect. >> that was not me. calling all sports fans. you love your favorite team but hate shopping for fan gear. well, fan chest may have the answer to keep you on your feet and cheerg louder than ever. the company's cofounder joins us
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to talk about how it's taking over the sports world. stick around for what could be the ultimate sports fan gift. "squawk box" will be right back. remember here at ally, nothing stops us from doing right by our customers. who's with me? i'm in. i'm in. i'm in. i'm in. ♪ ♪ one, two, - wait, wait.
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football season is in full
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swing again. a new start-up is looking to deliver the fan experience from the field to your doorstep. fanchest makes sports themed gift boxes filled with curated gear. the company is the latest to get in on the box trend. oh. you got to start with that, jeff. joining us now is jeff lin, cofounder of fanchest. do you know about the box trend, sorkin? >> i do. we have birch box at our house. >> help me. i know, too, but help for the viewers who don't. >> awesome. thanks for having me. this is awesome. i was on wall street for a long time, so i've been watching you guys for ten years. it's awesome to be here. >> we've been on for 20. >> there you go. so basically my partner dan and i, we noticed the shift you guys were talking about towards curration, convenience. from everything like bark boxes
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with apparel, everything was shifting towards how do i get it easier. nothing existed in sports. and myself being a massive sports fan, big florida gator, we really wondered why that was the case. >> okay. so i would figure jets fans probably already have some of the gear, but i don't have any stuff from really colorado. i'd like some stuff from colorado. so i could get something sent there. i don't have to go to boulder to get it then. >> that's a great point. we have a lot of customers that are away from their home cities and looking for that gear. and not being able to find it. >> so how much of it is local and how much of it is people that might pick a college team or watching march madness and say i like that. i want to get a jersey or something like that? we have about 50% of our customers that are outside of their home areas. >> you still have limited offerings in terms of how many teams you can do? these are -- we just looked at a
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list of the lineups. are you expanding in areas fast? >> we are expanding a lot, actually. we started last year with just one team trying to prove concept and make sure we had market fit. soon after we expanded to seven teams now total. should be adding -- >> how does the licensing work? >> licensing what we do is we're basically a retailer. we're not putting team marks or anything on the chest. we're buying the products from licensed merchandise and so the steams in the leagues get royalties from them. >> it's a lot of women who are buying too. >> it is. surprisingly we have about 65% of our customers are women. and so that was a surprise. >> buying for guys. >> they are. we're taking a lot of that pain out of trying to browse and find that stuff. >> this might cost -- if i want a derek jeter baseball with my gift box, it would be like 800 bucks, right? >> i'll give you a discount for 50 buck ifs you want to buy it today. >> how do i know it's real?
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>> we take that really seriously. there's a coa and we deal with steiner sports and other very long-term companies that have been doing this for awhile to make sure that every item you get from us is licensed and if it's a memorabilia piece, it's -- it has a certificate of authenticity. >> all right, jeff. thank you. >> thanks. when we come back, more on the buzz around apple this morning. then an app that rates convenience stores at gas stations. you know why they do this. everyone's afraid of the hot dog that's been turning on the roller cookers. the ceo will talk to us about it. next. we're good. okay... what if a million people download the new app? we're good. five million? good. we scale on demand. hybrid infrastructure, boom. ok. what if 30 million people download the app? we're not good. we're total heroes.
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coming up, the iphone 7 going on sale worldwide today. more on what the new device means for investors. apple stock hitting a six-month high yesterday. join ugh monday, former treasury secretary hank paulson will be our guest. "squawk box" will be right back. and let me just say that again in case you haven't heard. ic ba, but that is changing. at temenos, with the microsoft cloud, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. everywhere where there's a phone, you have a bank. now a person is able to start a business, and employ somebody for the first time. the microsoft cloud helped us to bring banking to ten million people in just two years. it's transforming our world.
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at business.ny.gov new this morning, bad news for another financial firm. the justice department wants deutsche bank to pay $14 billion to settle a mortgage case. ae apple of the dow's eye shares of the tech giant rallying this week as the new iphone hits store shelves. plus "squawk" hits the runway. donna karan joins us on set as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."
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>> all right. this is the way we want to start the morning on a friday. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we're playing this music today "harvest moon" because the markets in hong kong and china and south korea were closed today for mid-autumn festival. it's a harvest festival. we'll listen to neil young for a bit. dow futures down by about 80 points. s&p futures down by 11. nasdaq down by 18. it's been a rough week for the oil markets which are now down by close to 2% this morning. $43.09. on the verge of falling below the $43. it's 8:00 a.m. on the east coast which means apple stores on the east coast are opening their doors to customers. more on the iphone 7 sales in
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just a moment. today's top corporate story, deutsche bank shares down sharply on news the justice department is asking the german bank to pay $14 billion as part of a mortgage settlement. wilfred frost is covering the story for us. and i don't know if -- have you actually been -- if you tweeted anything on twitter today, wilfred? zbl >> i have, joe, but not on this topic. let me break down the details for you. the figure of $14 billion is much larger than was kbpted by the bank and investors. a statement deutsche bank says it has no intent to settle these civil claims anywhere near the number cited. this is an issue that many banks have been tied up in various times in recent years. figures for the other banks said it would be toward the top of the range. but all of these settlements were above the original amount.
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was asked to pay $15 billion. deutsche not expected to have to pay the full $14 billion. that said, they only have $5.4 billion set aside for litigation expenses including four other cases and had been expected by most analysts to have to pay about $2 billion to $3 billion for this fine. a fine of $3 billion would be similar in terms of percentage relative to issuance of fines paid in recent years. the number of $14 billion is a surprise and hurting the share price today. and also shares of those banks around europe much more so than for example the recent wells fargo scandal stateside has effected shares of other banks. deutsche off around 7%. >> great, wilfred. thank you. we'll see you later. starting today the new iphone 7 is going to be available around the world. you're looking at apple's
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flagship store right now in new york which opened its doors just a couple minutes ago. let's go now across the country to palo alto. that's where we find josh lipton. good morning, josh. >> reporter: good morning, joe. so as you mentioned, today is the day you can get your hands on this. this is the new iphone 7. apple billing this phone as its most advanced yet. so among the new features of this phone, one, it is fast. it's 40% faster than the 6s. it has improved water resistance. you're not going swimming with this phone, but you don't have to worry about spilling some water on it. it has what apple says is the best camera it's ever designed. you could get at least two more hours battery life out of this phone. $649 for the iphone 7.
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$769 for the iphone 7 plus. already apple saying initial quantities of the iphone 7 plus have sold out. as you guys mentioned, investors have been bidding up the stock. it touched a nine-month high this week. and analysts do say this should be the broadest rollout ever for an iphone. the iphone 7 is going to launch in more than 25 countries this week. it's not just the phone today. you can also buy this. this is the new apple watch, what i'm wearing right here. it's faster, it's brighter. water resistant up to 50 meters built-in gps. the team thinks apple so far has sold about 14 million watches generating some $5 billion in sales. guys, back to you. >> all right. thank you. joining us right now is joanna stern tech writer at "the wall street journal." thanks for being here today. >> good to be here. >> so the leadup at least to this new phone was this is not going to be anything all that
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spectacular. you're not going to see anything innovative or all that great. yet we have watched apple shares surge. news that it's going to be sold out but probably also what's happening with sam sung. >> i think when we look at it, iphones and phones have kind of become a commodity. and we all sort of expect we're going to upgrade this thing after two years. some maybe after a year. maybe some after a year and a half. >> some after three years. >> some after three years. yes. the upgrade cycle is getting longer but there's still this huge amount of people that bought the iphone 6 two years ago and their phone has been a little worn down. so they want the latest and greatest and they think it's a good investment because they use their phone all day long every day. >> we had an analyst on earlier who said about a third of their sales of iphone recently have been new users who are buying into it. and that shocked me. i thought that everybody had an iphone. i guess that's the china market. but points out the china market may be hitting saturation numbers. you see less customers coming in
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and that could have an impact. >> over the last couple of years to build premium products. obviously samsung has made some really good phones. the ones that are not exploding, of course. but actually i've heard from a lot of people, people who were thinking of getting the note 7 or bought that note 7, now they're going to get the iphone 7 plus. >> so that's helping -- >> andrew's really impressed with the new phone. he hasn't said anything. >> i'm digging the phone. >> he's loving it. >> this new amazing camera -- or supposedly amazing camera doesn't really work yet because they haven't upgraded the software. the camera works but the idea that you can have -- >> correct, yes. >> -- two levels of focus, if you will and the depth we talked about. it's not on this yesterday. >> if you buy this today, you get the zoom function. you can zoom in. >> this is the one thing that may have me buy the phone. but if it's not working -- >> the second cool feature is in the future it can use both
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cameras to create a depth of field effect. >> the zoom is going to look great. it's great for taking dog photo ifs you can't get close. babies and dogs. >> without doing a full-on infomercial here, these are the head headphones. it's like a jewel box. this is the headphones. get the camera in here. so you open it up like this. >> don't put her headphones in your ears. >> have you put these in your ears already? >> absolutely. but they're clean. >> we're trying to protect you. >> you guys are so nice. >> he's going to put it in his ears. >> when was the last time you cleaned your ears? >> i won't put them in. >> you can put them in. it's okay. i'm going to take the ifb out. >> ear mites. >> and a little noise just came on. because i'm hooked up to this. no. nothing's happening. do i look like a complete -- i
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mean -- >> the worst sound ever made. >> if i say i look like a ding bat, you'll say i always look like a ding bat. >> i think women can pull it off. i like these. i ran with them and they stay in really well and not having cords to run with. they pair well with this. >> oh, you're playing music. wow. >> i'm going to turn it up all the way. >> it got really loud in here. >> i told him to play the worst sound in the world with jim carrey. >> if the take the headphones off, it pauses the music. >> if i put them back in, will it play the music again? >> yes. >> i got some third eye blind. >> this is really private stuff, i mean -- >> all right. >> you know, now the whole world knows i love third eye blind. >> so you're digging this. >> the band has been made up of
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different guys. >> they have. >> so if you have these headphones this will last 24 hours? because they charge in here. >> i had to charge them for a couple days. depends how much music you listen to. those don't come out until october though. those are not out. >> these are in the wild. >> preproduction. >> you have to take a second set of head foehns. you're going to need a second set with a wire to plug into an airplane. >> i flew last week with the phone. that's the thing. you got the lightning headphones and then you start trying to plug into the back of the seat and no go. you've got to lip read. everybody is a silent film, you know? >> you're going to miss this andrew. >> what? >> i'm getting ready to play a good sound for you. the question becomes what does apple have to do with this in order to continue this momentum? >> i think there is a large group of people who are thinking what is next year going to be. >> yeah.
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what is next year going to be? what's the new thing going to be? >> certainly i'm thinking that way. i bought the iphone 6s last year. is this a major leap from that? >> right. a lot of people may be on the fence. >> are you convinced it's going to be bigger. screen to edge, all of this stuff. >> i don't see how apple carries this design into another year. >> and how do you like this? i don't know if you noticed the button here is different. feel it. just try to click on it. it doesn't feel like the normal button. >> yeah. because it's not a button. >> it's not actually a button. >> it clicks. as long as it clicks. >> yeah. >> it's not a mechanical -- what's it called? >> they're force touch. >> that's because of water proofing it, right? >> one comment on the water proofing. don't go swimming with it. i did go swimming with it for an hour or two hours and the phones are fine.
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apple will not cover liquid damage. but i have to say -- >> was that an accident? >> did i swim for two hours by accident? no. >> with the phone? >> yeah, no, i was doing it for the review. for testing. and, you know, it's pretty impressive what they did with the water proofing. water resistance. again, they won't cover it. >> lobe award winner for a series of videos she's done on the wsj website. >> thank you. when we come back, a lot more to talk about. when you head to a gas station -- you should hang out for this because it's a tech thing. you know what you're going to get at the pump. but what about inside? a new app from gas buddy has the answers. we have the details when "squawk box" returns in just a moment. today i am helping people everywhere do what they do... better. i work with startups like alpha modus to predict markets five times more accurately. i am helping tv networks use social data to predict what people want to watch.
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and i worked with marchesa to turn fan feeds into a dress that thinks. hello, my name is watson. working together, we can outthink anything. announcer: don't let salmonella hget funky with your chicken. on average, one in 6 americans will get a foodborne illness this year. so, learn the right temperature to cook each type of meat. keep your family safe at foodsafety.gov. yeah. well, we gotta hand it thto fedex. glasses. they've helped make our e-commerce so easy, and now we're getting all kinds of new customers. i know. can you believe we're getting orders from canada, ireland... this one's going to new zealand. new zealand? psst.
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welcome back to "squawk box," everyone. let's check out the u.s. equity futures. to this point the markets have been up week to date. you can see at this point, though, on a friday morning. futures are a little weaker. we're off our worst levels of the morning. the dow down below 96. and the nasdaq down by 11. amongst some of the stocks to watch today, we have oracle. those shares trading lower after
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earnings and revenue missed the mark. the company was hurt by weakness in its traditional software business. that stock this morning down by just over 3%. perhaps the biggest unknown of any trip to the gas pump is what the station bathroom looks like. but one company's now tapping into its dedicated network of gas price enthusiasts to rate bathroom hygiene as well as other convenience store attributes. joining us now is walt doyle, the ceo of gas buddy. good service, walt. i can ask anything about the convenience stores too? >> thanks for having me. yes, we built a business over the past 15 years, one of the biggest crowd source data platforms around helping a community of users save time and money at the pump. we saved the $350 for the
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average american family. and we noticed that there was a phenomenon going on. in the industry around retail associated to fuel. hundreds of millions of dollars have been pumped into upgrading the c-store which is attached to the fuel station. and as a result consumer behavior has changed. many more people are shopping there not just for quick convenience items but also for healthy foods. fresh foods, lunch, dinner. of course they want to know where that is available. so in our most recent release this week, we opened up a new feature set in gas buddy that allows our users to write reviews, rate the stations. in the first 24 hours, we've had over 25,000 reviews about the various stations. >> have you thought about ryan lochte as a spokesperson? >> yes, in fact, we have. it's funny you should mention
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that. stay tuned. you might see something about that in the near future. >> really? >> that's awesome. because you don't want to -- you know, if it's locked and they get mad when you ask to use it, you want to pick a different place, right? >> i -- you know -- >> rather than tear the poster down. what about -- do you rank the hot dogs and how old they are on the things that are going around and around? that's what i was getting to. i mean, if it's older than a month, i don't want it, i think. >> well, you know, that's what's interesting here. this really is just your parents c-store anymore. when you go into these stations, many of them -- it might not quite be whole foods, but it's not far from it. the consumer behavior has changed. every year $575 billion is spent in the c-store. that's barely trailing grocery and it's quickly catching up on your traditional quick serve restaurant. >> and how do you rank the hygiene in the bathroom? do you have a kind of ranking
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system or something? >> a number of hand washings? icons? >> you need a full body suit to go into some? >> that's what you want to avoid. that's why you've got to use gas buddy. nothing is more frustrating particularly if you're a family and making an important stop along the road trip and the bathroom is terrible. don't stop there. you need to use gas buddy. users rate and review those stations. again, as crowd source information that is supplied by people just -- maybe not just like you but certainly we have over 14 million users on our platform and they rate and review those stations, the lighting, the bathroom, the food. you can make an informed decision where to stop, where to save money at the pump, and also hopefully have a pleasant experience in the store. >> thanks, buddy. we appreciate it. >> thanks for having me. >> you're welcome. still to come this morning, we have breaking economic news. august cpi. the numbers and the instant
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market reaction are still ahead. coming up, "squawk" hits the runway. fashion icon donna karan is here. and she wants to redesign high-end retail. we'll get her take on the future of the industry. "squawk box" will be right back.
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welcome back to "squawk box." new questions this week about
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donald trump's charitable foundation and whether or not he violated nonprofit rules. >> good morning. new york state attorney general investigating the trump foundation in the wake of reports about possible misuse of funds and large outside donations. a "washington post" investigation found between 1987 and 2006 trump game $5.4 million to the charity through the foundation. after 2008 the post said virtually all the foundations giving came from donors other than donald trump. it came from owners of world wrestling entertainment and a ticket broker who gave $1.9 million to the foundation. as for where all that money went, the foundation has given to the police benevolent societies and the aids foundation. but some expenses are coming under fire. the charity gave $12,000 to buy tim tebow's football helmet and they spent $28,000 on a portrait
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of donald trump. now, lawyers say if these don't serve the tax exempt mission of the charity, they could be considered self-dealing. trump recently paid a fine of $25,000 to a group that was related to a gift he gave to a group associated with the election of attorney general pam bondi. that was a clear violation of rules preventing charitable contributions to political campaigns. trump campaigned saying that mr. trump has given away tens of millions to charity and snooidser man is a, quote, partisan hack that has turned a blind eye to the clinton foundation. >> politics with politics polit. politics on all sides of this, right? >> one of the things i was thinking about -- i've covered foundations for a long time. how is it different trump takes in money from some donors then gives it away to his name to the gates foundation and warren buffett -- buffett gives to the
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gates foundation and gives away that money. i don't see what's wrong with that. >> the clinton foundation does too, right? >> yeah, but the clinton foundation is -- the people involved with it still have government jobs. and they still can be thought of to exert some influence in government related conflict. from the start. >> no argument with that. but that was the question with to the attorney general. taking that money and trying to influence -- >> that's the private sector. that's a guy in the private sector trying to get the government to do something. it's not the government shaking down the private sector in an effort to db. >> hold on. i said that i was bothered by some things with the clinton foundation. but you have to be bothered by the bondi situation. >> i don't know enough about that situation. but you know -- >> he paid the fine. there's no question about that. >> but the fine is just an
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irrelevant sort of weird technicality about what bank a account the money came from. the question is the same sort of influence question, if you will, that we're having -- >> trump admitted to that. >> there's the influence buyers and the influence sellers. >> i understand. >> and the whole k street lobbying issue, i know what they are trying to do and it's rampant and it goes on. it's the influence sellers that i'm worried about that are in the position with the government to influence something. i know private sector, people are going to try to get government to do things that they want. that's a given. >> i get it. >> and sneiderman, seriously, this guy. magnetic business cards as ambulances go by. >> robert, thank you. coming up, breaking economic news. the consumer price index next. as we head to the break -- >> we're in new york, aren't we?
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>> we are. >> take a look at u.s. equity futures. stay tuned. "squawk box" will be right back. no one speed... no one way of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $369 a month at your local mercedes-benz dealer.
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we are just a few seconds away from the consumer price index. we've been watching the futures. they have been under a little bit of pressure this morning. let's get straight down to rick santelli. he's standing by at the cme. >> of course we're looking at the cousin of ppi from yesterday. and today's cpi for the month of august, up 0.2% on headline. up 0.3% subtracting food and energy known as core. and if we look at some of these numbers year over year, headline is 1.1% and ex-food and energy is 2.3%. now, this 2.3%, this is the money ball area of this data series. why? because it matches the high for this year which happened in february of 2.3%. but the fascinating issue is if you go back to the last time we had something higher year over
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year you're going back to september of 2008 when it was 2.5%. and this makes how many now? one, two, three, four, five, six, seven, eight, nine. this is the tenth month in a row 2% or higher on year over year core. now, i bring it up because, of course, it isn't the fed's favorite inflation indicator. but it doesn't matter what a favorite is. let's look at the pillar, shall we? stable. okay? stable prices. they are stable. 2% is the arbitrary number they picked. here we are. it's just not necessarily in the same area of numbers that they pay most attention to. i will go on record for the millionth time saying if you want higher inflation rate, they're all somewhat tied at the hip. back to you. >> rick, thank you. steve leisman is here as well. steve, what do you think? >> i think rick's right, first
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of all, that 2% is a random number that the fed has chosen. on the cpi front, the fed is close to meeting it on essentially a core level. ex-food and energy 2.3%. you see acceleration in a couple of areas. you were talking about this the other day, the owners equivalent number which is up 0.3%. it is up 3.3%. that's the proxy for housing costs. that's up 3%. medical care has kind of curiously resumed its rebound here. up 1% -- no, it was flat for awhile and the obamacare folks were touting that as a did benefit -- >> now is the time we can hear about all the premiums going up. >> some of that should be seasoned out. i don't know but it's up 4.9%. you had some stability in medical care.
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longer run average. >> are they averaging it right given the seasonality of it? >> fair enough. but drugs up 1.3%. then you get into things like commodities. i can't find food. i'll find that in a second. that has been relatively stable. i want to check education. unchanged. that's a good thing. and overall services up 0.3%. so you have this basically two components. services have been rising at a higher clip. goods and commodities rising at a relatively lower clip. i don't think any of this is enough to change the balance for this tough call that's been made for next wednesday. you're smiling. >> steve, when energy prices were rising so rapidly, we used to have this argument all the time about whether you look at core or not. the core is just fine, yes, but that assumes that nobody eats anything or fills their gas tank. now i wonder if we should be arguing the same thing that core is not what we should be watching. >> the cost americans actually
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pay if you want to take the all in number is up just 1.1% year over year. >> used to drive me crazy when we didn't include those things. it's money that comes out of the consumer's pocket so it should matter. >> the thing you ask is two different things. the first question is what's happening to americans' cost of living? the other one is how should you set policy. based on what? and overall what the fed has found is if you follow a core rate, you have a better look at what's going on there because we don't have the volatility in there and you're trying to set rates if ar longer time. >> when you're looking at massive trends, they could be all kinds of things. for example, the drought last year in california has played a role. it's working out of the index -- exactly. and i want to show you. look at the fed funds futures if you have that. we follow reuters not usually
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the cme. it was running at 11.4%. i don't know if it's updated since the number came out. and curiously the december possibilities have also fallen. they were up above 50% the last i checked they were down around 41%. the debate whether or not there's even a rate hike this year remains joint here. and i'm not going to talk about airline fares because quayle asked me not to. >> we're unfortunately out of time. >> that's fine. if you don't want to debate it, that's fine. >> maybe we'll do that next week. >> they're down. >> i know. >> they're down. >> i hear you. should be very happy. smile. >> they're down. >> right again, you are. >> we've agreed to disagree on many things. right? that's how we -- >> yes. >> i mean, every marriage. >> have a great weekend, guys. >> thank you, steve. >> have a great weekend. >> the core relationship is
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strong. if we have these other things -- >> core. >> ex-food and energy. >> you're right. okay. let's talk a little food and venture capital this morning. our next guests run one of the hottest venture firms. in just three months they were able to raise over $150 million in funding. they've now invested in some of the biggest new brands in the consumer space today including beverages like bai, high brew coffee, and much more. joining us now are the cofounders. good morning to both of you. >> good morning. >> where does kabou come from? >> it's a pilot's term. it's for ceiling and visibility unlimited. >> it's what we aspire to bring to the companies. >> true branding guys. did you have to hire a firm for that? >> no. my lovely wife came up with that. she's pretty creative. >> what is going on in the food space?
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it feels. >> outside of the bigger companies that may not be spending the same money. is that what's happening? >> correct. the last 30 or 40 years we've been eating food products that we grew up with that were high in bad ingredients and weren't great for you. what's happened now is these large cpg companies which are losing market share year over year while the category is growing are now outsourcing all their innovation to today's entrepreneurs. >> what is that about? why are they outsourcing that innovation? because they have so much it's entrenched business that they don't effectively want to innovate themselves out of? and once they realize that they're behind the game, they have to then go behind somebody else? >> the big brands driezing a slow profitable death. and psychologically, e the two most risk averse people on the planet, fortune 500 ceos and first year mbas. they don't want to "f" it up.
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>> they want to innovate and create -- >> it's much riskier to buy small brands that have proven some level of success out in the market. some level of market validation than it is to go bet hundreds of millions of dollars onto launching a new brand. it doesn't work and maybe you lose your job. >> since you're the experts will you weigh in on the headline of the morning. jessica alba's honest may be selling to unilever for over a billion dollars. >> when you have a market cap the size of unilever. what jessica and her cofounders did is an amazing thing with that business. it's exactly what we're talking about this morning. large companies looking for innovation. and you know, the consumer is smarter now. >> but does it screw it up when you bring a small brand that has cultivated an audience that likes it's not one of these big companies. >> you have mo maintain the authenticity. >> don't mess with the ingredients. >> what happens is these firms
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are leaving the existing team in place and letting it run and adding value where they can. >> just quickly because you know the numbers better than anybody else. on the price, does that make sense? a billion bucks? valuation was a billion seven. >> i'm not close enough to the story. >> what do you think of the defensive motes around these businesses now? people talk about dollar shave club. that's not necessarily your type of business, but it's in your space. just the ability for companies to sort of come out of nowhere and compete against the big guys in a way they never could before. >> i mean, you would think -- there's a couple place where is it becomes defensible. the authenticity of their products. and that's what big companies are starved for. you can't outsource authenticity. creating these brands that have heart, that have soul, that really focus on the quality of their products. a lot of times you would think that a product can't necessarily
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be defensible because these big brands could go throw enough money at it and knock it off. but you'd be amazed that these small companies, the focus they have on quality of product is actually a pretty defensible mode. >> what's the next hottest brand that we don't know about just real quick? >> there's a few of them. there's some massive trends out there. non-dairy plant based is huge. >> like almond milk? >> like almond milk. >> but it's not real milk. >> get used to it. >> it tastes like the real thing. >> but you adjust your taste buds. >> kite hill, they have a patented technology where they have matched biochemistry with traditional cheese making. and they have brie cheese, cream cheese, and yogurts which we brought some for you guys that tastes like real yogurt buzz it's made from almonds. >> we have to leave it there. thanks for coming in this morning.
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>> thanks. >> thank you. when we come back, a fashion icon in the industry joins us in studio. donna karan is here to talk business when "squawk box" returns. man, i'm glad aflac pays cash.
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♪ welcome back, everybody. you see the futures are under a little bit of pressure this morning. new york city's fashion week is wrapping up. one of the big trends this year is the see now, buy now. that whole process if you don't have to wait for months and months. making clothes immediately available for red zone. donna karan has been pushing this model for about a decade. now everybody else is catching up. karan hosted her first fashion week event on tuesday. that was next door to her urban zen boutique. she joins us on set. she is also the creator of the urban zen foundation which
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focuses on culture, well being, and education. thanks for coming in today. >> it's my pleasure. >> so this is a brand new world. let's talk about everybody copying what you've been doing for a long time. you thought it was crazy people would see clothes on the runway that they couldn't buy for months. >> yeah. it made no sense to me. i'm the customer. i design for myself and my friends and i would see something and i'd see it off the runway and want it right now. i'm not going to wear in the heat of the summer, you know, a coat. we'd go traveling around on the waters and see all the boots and the coats. we're in -- particularly right now it's buy now wear now. you see it immediately on i instagr instagram. we need instant gratification, unfortunately. >> what do you think about everybody else copying you? >> i don't think it's a copy. it's something that i believed in for so many years. and people kind of thought i was a little woo woo. but then they realized that it's time to do it. >> how does it change for the
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buyer though? >> okay. >> you need to get the stuff out immediately. they need to make decisions and the bet becomes much more challenging. >> everything else stays the same. >> okay. >> so tomorrow i leave for paris where i show my spring collection to my buyers. >> i see so they see it. >> but nobody else can. you can't put it out there or anything like that. so i felt, you know, being business that the store was kind of going on the downside, the customer has gotten really smart. she wants to have see now wear now. so she's seeing it online and seeing all these amazing shows and she calls and says well i want it. you can't have it. it's not ready for another six months. so if you look at the -- >> it's wasted marketing and advertising. >> it's a waste of money. because they're all talking about it. it's confusing to the customer. they don't know what's going on. particularly the way media is today. so i had to wait until media got
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to here. it had to get to here before they got what i was saying. >> is there any percentage of this that's men that is doing this? i think you could double your whole -- the whole -- have you ever seen anything in a fashion show that said i got to buy that and get it? we just don't do that, do we? >> i see stuff in magazines. >> so would it help with that? i mean, is this the same -- >> well, men in -- i've done men for so many years. >> yeah. >> and again, to me it's wear now buy now. men are a little bit kind of easier. because god bless you and that's why i like designing for you guys, you're not that much of a fashion change. women are a little bit more difficult. i don't see you in print suits so fast. even though they're showing them. you want a great cut suit. does it have three buttons, two buttons, collar a little bit smaller, tie a little bit smaller. >> right. >> because with our uniform here, there's a blue shirt and a tie involved. >> why blue shirts? >> mostly for the camera. >> white kind of washes you out.
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and the stripes are too thick it's too busy. >> you see? >> complicated. >> let's talk about your next project, though, and what you've been working on and everything you're doing with your new urban zen line. this was a huge shift in your life to come up with this. why don't we talk about why -- >> i've always been fi philanthropically driven. i said how do we communicate that to the consumer? people didn't want to know about aids. so i got all the designers together, brought the clothes in and communicated on that way. so it was an entire industry getting together. then i did super saturday. my girlfriend had ovarian cancer, my husband had cancer. how do we bring attention? women love to dress and bring their children.
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so it was an event. super saturday. now going into its 20th year. >> you were hearing things in the dressing room. >> there i was dressing somebody and they said my mother had this and my father had this. all these stories going on. and i realized i wasn't really dressing people. they were addressing them. and the medical system is broken. i mean, completely. you know, we're all dealing with how to deal with the disease particularly in the hospital. my husband had lung cancer. and i had -- it was treated for many years. but nobody was treating him the person. and i've been doing yoga since i was 18 years old. and i realize the power of in-bed yoga, meditation, essential oils. we did a clinical test study on one floor we saved $900,000. now we're at ucla. we're going into columbia presbyterian. and the customer, it's always
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about the customer. you know? she's screaming out i need care. you know, it's not east or west. it's not either/or. but it's and. and education. kids go to school, they're high on god only on god only knows what. we've got to calm them down so the teachers can teach. if they start their day with a quiet meditation, how fantastic that would be. and as far as preservation of culture, it's an obsession of mine. you know, i go around and i travel the world and i have my whole life, and we all used to be have our own distinct kind of look. now everybody looks alike. you know, paris, london, italy, i don't care where we are. and then i belong to president clinton and the clinton global initiative, and it has probably been the biggest inspiration of my life. when haiti happened, the woman running the in was haitian, she said, donna, you've got to do something for haiti.
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i believe not in giving them money but giving them fishing rod. where everybody saw the disaster, i saw the potential of how to rebuild and preserve the culture. so i worked with all the artisans, i had this dream about building a boom boo school that i had seen in bali because i figured devastation of the trees, let's plant bamboo, build a community around bamboo, have health care, education and culture. so i worked with all the artisans there and i create product. and people go, oh, my god, that's from haiti? excuse me, not one more bracelets to end gun violence, haiti. how to teach them this. so i started a school there just recently called the d.o.t., design organizational training with parson school of design. and we take graduates down. and instead of -- even as a designer, had i not gone, you know, when i was sorry 18 on seventh avenue, i want to see the world.
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i want to be exposed. there's so much happening in the world we live in today. >> right. >> we're dealing in a world economy. so i think the conscious consumerism is so vitally important. >> can i ask you one business question before we go? >> sure. that was a business -- >> i know. but this is a different business question which is flst a lot of young designers out there that all want to do what you did eventually, which is to sell your business, potentially, right? >> why? >> because they like to do that, right? that's not the goal? >> no. >> what is it like being owned by lvmh. >> i'm no longer owned by lvmh. >> you're not? >> no, they just sold it. when lvmh bought the company, my husband was dying. i'm sure you're going to appreciate this, we were a public company. not one of my most prized experiences in my life when apples were being thrown at me because we're not quarter by quarter by quarter in the industry as fashion. and we were growing and growing
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and growing our business fantastically well, but partners want to go public. we went public. and my husband was about to die and i said, steven, you cannot leave me in this situation. there's no way, i might not make it. so lvmh and another company came to me and said we'd like to buy your company. >> it was circumstances. >> huh? >> it was circumstances at the time. >> and then somebody approached lvmh with a deal that they could not refuse. >> right. >> and they've just sold it. but at that time when lvmh was buying it, i said, listen, i've done ann klein, i've done donna karan, i've done dkny, this is the wave of the future urbans end. and i have to do it. and i can't not do it. i'm going to do it anyway. i believe in philanthropy and commerce and communication of a community. >> donna, thank you so much for coming in. >> thank you. >> thank you very much. when we come back, jim cramer will join us live from the new york stock exchange.
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in our monday former treasury secretary hank paulson will join us to talk about the health of the economy, the fed and a lot more monday starting at 8:00 a.m. eastern. hey gary, what'd you got here? this bad boy is a mobile trading desk
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let's get a final check on the markets this morning. we've been watching the futures, and they have been under a little bit of pressure. dow futures down by 51 points. s&p futures down by 6. the nasdaq down by 8. this is all coming on a week
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that has been pretty decent for the markets. we'll see how things shape up just on this last oh people witching today too. last volatile day. right now oil prices down by 84 cents sitting right at $43 a barrel. >> just a coincidence you had that. >> enjoy quadruple witching day. have a great weekend, everybody. join us monday. "squawk on the street" begins right now. ♪ everybody dance know ♪ everybody dance now good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. busy day setting up on this last session day of the week. oracles earnings miss, cpi, deutsche, cover it top to bottom. europe seeing some weakness on the back of its banks this morning. core cpi hits tenth month of 2% plus year on

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