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tv   Squawk on the Street  CNBC  September 26, 2016 9:00am-11:01am EDT

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the futures have been under some pressure. right now dow futures still down by about 81 points. below fair value, s&p futures off by 9, nasdaq down by 26. europe reflecting the same story with a lot of red arrows there as well. >> well, we'll know what happens by tomorrow, right? and we'll be here. so after tonight make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures are weak to start the morning as we're 12 hours away from the first presidential debate. tonight at hofstra considered by some to be the most critical moment of the campaign so far. europe is down on more concern about deutsche, the degree to which it could depend on assistance from germany's government. watch for oil headlines today. that opec meeting today and tomorrow. our road map begins with clinton and trump facing off in their first debate tonight. we'll look at what to expect.
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twitter stock under a bit of pressure this morning. company getting downgrade to underperform from oppenheimer. we'll give you the latest on that potential deal for twitter. share of deutsche hitting record low on fears a looming $14 billion fine from the u.s. will force a capital increase. reports say angela amerimerkel not step in with any state aid. but first, the first presidential debate between donald trump and hillary clinton. could mark a turning point in the race for the white house. many national polls showing candidates in a dead heat. be sure to watch cnbc's debate coverage tonight 9:00 eastern time. jim, we talk a lot about how the market is synthesizing politics. this is a new chapter now starting now. >> there's this undercurrent going on now. i've got john harwood here, so i always defer, but this trump is more thoughtful trump. i don't know if that's true. i also know roger ailes resigned certain point from fox and
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roger's -- i'd always like to hear how much he's really involved, but if he is calm, if he doesn't throw anything, i think there will be american people who say, hey, maybe i misread this guy. and that's what i think is in the air. >> all right. but what about getting any sort of sense to the nuts and bolts of some of his policies? you don't think people care? you think all he has to do is show up and be calm and that will be enough? >> i don't think people are reading -- no, there's an ethos to what he's talking about. if he stops talking about it's going to transcend because he'll be less of a wild man. again, john's here. when you talk about business propositions, there was a nice spirited discussion this morning with andrew and joe. kind of a little different, little more kind of like little trash talk, more cincinnati bengal like. and one of the conclusions was where are the people who are rich who are business people who are supporting trump? and it was kind of interesting because they have the top 100
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givers, they're not trump people. that was very much an issue because where are they? and if they're really for hillary, is that bad for hillary? >> joe was the vontes -- in that exchange. >> that was my point. there were some personal paths. >> that's typical. >> look, this is a big moment in the campaign. some real drama ahead for a huge television audience tonight. it's going to be at hofstra university. i think we've got a picture, some video of the theater where this is going to take place, moderated of course by our colleague lester holt of "nbc nightly news." if you look at debate history, there's a lot of debate about debates. whether they've been decisive element in any presidential campaign. but let's run through some of the ones that get talked about the most. first of all 1960, the first nationally televised debates john f. kennedy met with richard nixon. and richard nixon was sweating. he wasn't as handsome as john f. kennedy. that was believed to be a moment where john kennedy sort of
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passed the threshold, moved ahead. can never sort out all the factors involved in a presidential debate. but that seemed to help john f. kennedy. 1980 ronald reagan against jimmy carter. that was the sole debate they had that year. and ronald reagan was talking to a country that was very discontented, kind of like the country is discontent now. jimmy carter was the incumbent, the president was trying to paint ronald reagan as an unacceptable alternative, a frightening alternative, by reassuring the american people ronald reagan crossed a threshold that accelerated his momentum. he won that election easily. then you go ahead to the -- some of the recent elections that we've had. 2012 mitt romney facing president obama, he made significant progress in the polls after that first debate, but it proved to be a short lived bump. it consolidated republican support, didn't get him over the top. the same thing happened with john kerry in 2004, even walter
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mondale in 1994 against ronald reagan. made progress in the first debate, but it didn't work. now, the closest analog the trump campaign may be hoping to emulate is 2000 when al gore faced off against george w. bush. you had a country that was at peace, that was reasonably prosperous. al gore was steeped in policy, long federal career both in the congress as well as eight years as vice president. he clearly knew more about federal issues than george w. bush. but the dominant impression that emerged from that encounter was that al gore was a little overbearing, a little condescending and george bush was more likable. that clearly eroded some of the advantage that al gore had reaped from his successionful conventi convention. and of course it was very tight. gore won the popular vote, did not become president. >> so your point tonight is less about policy and more about just
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measuring a candidate personally? >> well, i think voters take the measure of who's a potential president. so i think jim has part of it, which is what's your demeanor, what's your bearing. the pugnacious donald trump has not played well with a crowd of voters that he needs, college-educated white women, college-educated whites in general. but i think, david also makes a valid point, which is donald trump to win those voters needs to show some fluency, some command of issues. he's not going to match hillary clinton. he's not going to know as much as hillary clinton. but he's got to show that he's serious to get that critical quantum of voters that he needs. he is close to hillary clinton. but he's behind. he needs more people than he's got right now. >> and how important will it be in terms of calling him out if and when he says things that are not true? the press seems to be more willing to do lately. >> full page story in "the
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washington post." >> i did, yes. >> that's been the entire working the refs back and forth between the two campaigns. clinton campaign saying lester holt needs to call out donald trump for saying things that aren't true. trump campaign saying not the role of the press. debate commission sort of backing up the trump campaign. janet brown was on television yesterday and say the moderator's not supposed to be the encyclopedia. there are degrees to it. you can't do it all the time. you're not a third contestant up there. but you do have to try to keep -- help viewers understand what is true. and i think lester will do that. >> also some discussion this morning about how social media has changed the way we digest these events. the idea being the first 30 minutes are so crucial because the narrative gets written and then gets spun continually for the remainder -- >> exactly right. the first -- the opening couple of questions, the body language of the candidates, the content of their answers is going to
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start shaping reaction in realtime. you know, in the past we've talked about how al gore and george bush -- al gore may have won the debate on points, but he lost it in the spin room afterwards when people were -- republicans very skillfully made the case he was kind of a jerk. and that took hold. "saturday night live" did a devastating depiction of him, but that happened after the debate. tonight's going to happen during the debate. >> i can't wait to hear your guys' take on, i remember very closely the carter-reagan debate. i remember talking with my family. and we thought that reagan was like gold water and that maybe he was off the reservation. that he was certainly not presidential. who was an actor, and you left the debate and you said, holy cow, he's a humorous man with some sort of charisma. >> there you go again. the great line. >> there you go again. we all talked about that. the democrats in the room all
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talked about that and felt ashamed about their support of carter because they were clearly dealing with someone in re beon reagan who was much more exciting. >> he had more grounding than donald trump has. but donald trump in the age of reality television has got a star quality that has served him pretty well. >> absolutely. >> this will be exciting. >> 9:00 tonight. john, we'll see you then. >> you bet. >> don't forget our coverage right here on cnbc. and other news, pivoting to banks, deutsche lows on fears they'll have to face $14 billion fine. germany's largest lender says capital raising is not an issue and has never asked for government help. and then published reports say goldman will cut a quarter of investment banking jobs in asia amid a slowdown in m&a. but a lot of discussion this morning about what a reasonable fine for d.b. could be.
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>> i think -- let's compare this with j.p. morgan $13 billion in justice. jamie dimon, i'm not saying anyone was a wizard at seeing things coming. but he had $28 billion in reserves going into negotiations. deutsche bank for many years did not think this could ever lead to anything big. so if you look at the reserves, they're dramatically smaller. >> about six, as i recall. >> yeah. you had to pay those fines. and i was looking through about when you had to pay them. were they staggered? >> right. >> no. you had to write a check. i think that's part of the worry. deutsche bank came in with a very different lowball offer. and the problem is that if you go back over the way these were litigated previously, everyone knew, don't say anything to the press. deutsche bank has been as naive as i think some would say wells fargo's been. they don't know the power of government. >> they're not dealing from a position of strength. we've talked often over the last few years about holes in the
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balance sheet. others have wondered. it is incredible to look at the balance sheet of this bank versus market cap in terms of, a, one is enormous and the other is so small. but if the german government is not going to come to its aid, does it have the wherewithal to understand the pressures from not just regulatory fines but more importantly eroding assets on its balance sheet? or is it taking moves it needs to? >> good question. one thing about the justice department the last go around, tony west, who's now the general council of pepsico, looked at the reserves. he looked at what they could pay and he arrived at a figure. now, tony's moved on. he's quite an accomplished fella. but they're looking at the reserves of deutsche bank. and deutsche bank played its hand all wrong again. deutsche bank in 2010, 2011 said, listen, it's america. they play fair. now, they play fair, but there were populists, they're not
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gone. in the end it came down to how much can we bang them for and still not have big layoffs. here i don't think the government cares how much deutsche bank stays or goes. >> that's a good point. good angle, jim. we'll cover more later. when we come back, latest on twitter after david reported the company is closer to a sale. down today on a downgrade. we'll talk about that. take another rolook at the premarket. one week left in september, one week left in q-3, already the least volatile month in years. more squawk after a short break. . orchestration to printing, dramatically increasing print security with enterprise printers by hp. which is great, unless you're a corporate spy. unsecured printing makes your network vulnerable. enterprise printers by hp help prevent costly security breaches
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well, twitter shares are down this morning after oppenheimer downgraded the company to underperform citing decreasing engagement. the stock also they say overvalued compared to its peers. of course that's all fundamentals. but right now we're really dealing more with who wants to buy it and how much they're willing to pay and how much competition there may be to buy twitter. i can tell you at this point after of course all reporting on
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friday is simply that when that occurs, in other words when everything gets out there the way it has, typically advisors and the company and its board usually like to try and accelerate things. and that most likely is the case. so, guys, if it was on a timetable x, now it's y, being shorter. let's get the interest, let's get the bids in, let's figure it out and get moving one way or the other. >> it's highly unusual to read so much about someone, marc benio benioff, just determined to buy it and see the stock go down very big. and have it play out in the media to some degree. >> yeah. >> that's never been the way to get something cheaper. >> no, but then the question becomes and many people are trying to figure out what is the willingness of mr. benioff's part as salesforce ceo what is he willing to pay and for that much how much is google willing to pay. >> google have a lot stronger balance sheet.
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>> lot stronger balance sheet. people do the math and say, well, salesforce, issue 19% of it in stock by the way of their own stock to get a deal done. that's the level you have to be below if you don't want to have a vote, according to rules right here. and then lever up the balance sheet to four times, which wouldn't be that bad. they could get it done. you could get to 26. the oppenheimer analyst talking about their 17 number, you know, based on where they see ebitda for '17. at 13 times 17 estimates ebitda they get a target price of $17 on twitter. but if you go to a 20 multiple, which was paid for linkedin, you get closer to $26 which by the way was the ipo price. >> yes. >> but some of their engagement down 9 in august, mobile uniques up 10 versus snapchat 77. >> yeah, it's been tough. i know that the company continues to pin it anecdotally on things like the nfl. and it's really not about that.
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i've tried to educate people. it's not about a given event and how it's covered. it's about growth. >> which is why you move to potentially saying let's see what we can get out there because we don't have the growth. but we may have value in a certain way to a salesforce that is not something that you're necessarily going to fully understand from the fundamentals. >> this is a customer relations play. but it's such an expensive one that you better be game, set, match if you buy it. and that's part of the problem. people keep saying to me benioff's out of things to do so he's doing this. marc's not out of things to do. marc sees this company in a different light. he just doesn't see it the way it is, which is, oh, let's talk about the debates tonight and the real donald trump. he's seeing it as a way for proctor & gamble to stay in touch -- remember, clorox was using twitter to find out where to send clorox during the h -- >> to your point that's a big number to pay for that. >> that is big. >> there's also someone joked on
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friday that benioff is like the guy swiping right on tndr like on every photo. you don't buy that? >> no, he's a little more clever than that. i think he's trying to see how much his stock gets hit if he did this. he cares passionately about the stock. remember, the quarter itself was not that good. and where do i come up with that analysis? benioff who said it on "mad money." this man plays with more of an open hand than pretty much everyone. but we are going into dream force next week, so there's going to be a bit of a blackout where dream force is going to be focused on einstein, which is artificial intelligence. but the artificial intelligence really dovetails with twitter. again, the notion of trying to figure out where a customer is going. zuckerberg thought about that. of course steve jobs thought about that before everyone. marc benioff studied with larry ellison, he's not throwing away money the way people think he's going to. >> we may get more clarity. hopefully i can bring it in the
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next few -- >> you sure brought it on friday. don't you love press reports? david faber's press reports did this. what is that about? it's like press reports break the spanish-american war. >> no, it was hearst. >> we'll get countdown to the bell in a couple minutes, a busy week, nike earnings on deck, pepsi, carnival, a lot of housing, a lot of fed speak. we'll talk about all of that after a short break. what powers the digital world. communication. that's why a cutting edge university counts on centurylink to keep their global campus connected. and why a pro football team chose us to deliver fiber-enabled broadband to more than 65,000 fans. and why a leading car brand counts on us to keep their dealer network streamlined and nimble. businesses count on communication, and communication counts on centurylink.
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now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business.
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half minutes before we get started with trading here. we like to check research typically during the mad dash, especially when you think it's salient. >> there's a very se remembcere analyst made a series of calls rather remarkable. with foot locker, what he's come back with is foot locker goes to overweight, big price target -- i'm sorry, he's liked foot locker the whole way, but he kind of agrees with nike ahead of tomorrow when the nike reports. now, this is important, why? this is about increased competition from adidas. he also has somewhat negative things about vf corp., but he's like this for a long time. i think people have to recognize this was a battle between nike and under armour, which under armour is woefully smaller than nike, but adidas came back. with the stan smith shoe. when you get management and they come in after you've had this long run of one company, it kind of takes you by surprise. it's a little bit like disney where suddenly we hear espn
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where people are -- obviously the stock is not doing good, but the idea something wrong with this senior growth company has a lot of people rattled. and you'll be more rattled if you read matthew's piece. very smart. >> that's a gutsy call a day ahead of earnings. >> yeah. i mean, i typically feel that when someone does that there's a level of conviction. why not wait until after? it wouldn't have harmed anything. but i think matthew just felt that this research that dictated he had to come out. there are a little more coincidence saying a call about nike more about a call of how you should own foot locker because that's the winner whether it's nike, adidas, under armour, because the quarter was excellent. they said some things about the linearity of the call going forward at finish line, but nike's had a long run, let it cool. >> all right. well, we're going to have that
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to keep an eye on this morning in addition to shares of yahoo. we heard from tim armstrong, one of the architects of verizon to buy earlier on "squawk box." listen to what he had to say about that huge breach that took place more recently. more right after this. hey gary, what'd you got here?
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell set to ring in two minutes. presidential debate tonight, busy week full of fed speak, key earnings, final week of the quarter, jim. earnings season is going to start soon and already looks for down. >> i think that would matter more in a world where we weren't able to analyze certain sectors. now, they did point out that oil had been an issue. they think oil is going to be less. the price of oil has had far less to do with the companies that have cheap oil in the ground being able to make money. that's going to run out this
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quarter. so you're not going to see that going our way. i do think by the way technology will surprise to the upside. banks will be flat. retail has been quite weak. health care is all over the map. i saw this morning pfizer coming out. and i didn't quite understand why they felt they had to come out and say we're not splitting in two. it had not been a focus. but that's a kind of thing that a lot of people feel these big pharma companies are no longer really growth engines when it comes to earnings. >> i know. >> i have to agree with that. >> that is a big story, fairly big story, right? there had been this expectation not that it was going to happen tomorrow, but that they would certainly if they had done the allergan deal was also expected. now they're happier together. >> yeah. yes. i thought that was very interesting. but i do feel the consumer got funk in the month of august. we haven't figured out. >> the average move for september over the past ten
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years is 4.4%. >> an election year, earnings all over the map and no real volatility, vix so low. all this very surprising. >> there's the opening bell and the s&p at the bottom of your screen. guggenheim funds investment advisors ringing the bell down here this morning celebrating the launch of its total return bond etf over the nasdaq cogint celebrating its rebranding. >> yeah. some of these companies, that'd be very exciting. i keep seeing new companies ringing the bell. and i'm -- you know, i try to keep track as many companies as possible. wow, we really have so many companies. we kind of have too many companies. i want to put something right to david. we have companies that were formed and came out of the great recession and started doing well. they're being snapped up. this philadelphia company got a very interesting bid from a german company this weekend. and it's just kind of like, well
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why go buy this company? and i think there are a lot of companies that foreigners think are very undervalued here. maybe put back to you, monsanto gets upgraded from sell to hold bayer bid, why are european companies suddenly taking a liking to us given the fact the dollar is so strong? >> it's a good question. and i don't have one answer for you other than the buyers as in bayer monsanto or looking for the same thing they're always looking for over here. these are the large european companies we're typically talking about, champions in their own industry, in their own continent. and they're looking for top line growth the way everybody else is. and they're willing to withstand the dollar in order to do it. don't forget their borrowing rates are so extraordinarily low that that makes up for any hit from the dollar and then some. >> right. >> not to mention we've
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mentioned this strange thing where the ecb is truly buying some of the bonds being issued to finance some of these deals. which is just extraordinary. >> we've also said of the three biggest deals of the year, all foreign buyers shopping in the u.s. >> you have -- yes. it's interesting, a lot of those are very weak currencies. if the mexicans start buying our companies, you'll know because the peso is 20-to-1, five or six years ago it was 12-to-1. might be a lot of focus of the debate tonight, i know mark fields has said routinely from forbes, not like taking jobs away but with a 20-to-1 talking about by far the cheapest workers in the world. very educated workforce. >> interesting you mention monsanto because the stock is well below the level it inhabited when the deal was announced when it was around 108. we're talking 128 deal.
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well, it's all about the concern about antitrust that we had talked about many times here both here in the u.s. and in the eu. what's margreth vestager going to say, marketing tell the competition committee and on and on and on. got an upgrade today. >> very significant. i think one of the reasons i want to circle back is there's a bid underneath. a lot of people afraid to short, a lot of people afraid to leave because with the succession of very big companies, the acquisitions have just continued. and there've been global acquisitions. i bring up the philadelphia company this was the old prompted put too much debt on it, came out without a lot of debt, reorganized and had good earnings and, bingo, gets taken away. >> as we head into the last quarter of the year i can tell you the chatter i get from bankers and everybody else involved in the merger and acquisition industry is things are pretty good. they're not 2015 levels, which was record.
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but they're pretty strong. in terms of things we may see prior to year end. >> i still expect a huge number of deals in the technology, semiconductor area because there are too many companies competing for a few clients' work and they have to merge in order to be stronger and have some price heft against their customers. >> in the meantime chevron and exxon the only dow components in the green with the index down 100. this meeting again in algiers, with the saudis pushing, you don't buy it. >> algerian minister said, pumping more -- saudis aren't idiots. they know as soon as they give up that share, america will take it. they're exporting a huge amount to us, and these other countries will take it. the saudis are going to have a very big deal, very big ipo. and the saudis don't -- there's just so much influx, but the one thing that's not influx is the saudis cutting back. according to algeria they'd be cutting back almost 500,000
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barrels a day. that would make no economic sense for the saudis to do. what does make sense is you keep talking oil up and make little money each day. can you imagine if we were able to talk up prices for whatever we were making? like if every day frito-lay came out say tomorrow -- you might want to buy ahead of tomorrow -- no. only these guys can get away with it. the algerian minister convinced a lot of people this weekend. look at that, oil was down almost 4% on friday. these guys can -- no one has less credibility than an oil minister. and no one gets treated with more regal like way by the press than an oil minister. david, if i were an oil minister, i would tell you, you know what, i know you don't think that it's early in the nfl season, but i bought the super bowl tickets. and you might say, hey, cramer says eagles going to the super bowl so therefore it could happen. i don't know anything. >> well, given that performance yesterday. >> well, that was howie roseman
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who is the deal maker of the year because he got wentz for us. >> you got a quarterback for the next 15 years. that's a good thing. >> thank you very much. let's talk yahoo. stock down another 6%. as we said many times, yahoo moves to a large extent on the movement in alibaba. but that did change today and more so on friday after we got news of this huge breach that had taken place. where cashed and -- cash passwords and user names had been taken. not conceivably used for anything. also encrypted passwords. but the question is did verizon know? when did they know? and what does it mean for their deal to buy the core business of yahoo? on friday i reported of course that they had only found out it was fairly recently after the deal was announced that they brought in a firm to do some
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forensic analysis on an alleged hack that actually didn't take place. and then these guys found the hack from 2014 and a number of database files that had been copied back then. again, the key to the movement in stock is does this mean maybe there's going to be a material adverse change? doesn't appear that's the case as of yet. at least in speaking to the lawyers and bankers involved. but here's tim armstrong, the guy who's going to run yahoo when and if it gets bought by verizon, on where things stand right now. >> one of the terms of the contract is that they hadn't had a serious -- that there were no data breaches. and i guess contractually are you allowed to go back? what does the contract say? >> you know, i think on both sides the contract has very good protections just in terms of, you know, going through that type of a process on a sale process. i would say, look, there's incredibly smart people on both sides. our interest level is protecting consumers, protecting verizon
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shareholders, making sure that yahoo if the deal goes through that we have a great relationship with yahoo on the way through. and we're at such an early stage on this that i just think if we comment on anything right now, a, it wouldn't be accurate. and, b, this is one of those cases where it's a cause for methodical walk through. >> calmer heads. >> yes. >> all right. there you go. >> there are companies that do nothing but try to figure this stuff out. >> right. >> there are some you call in early. there's some that you are it's already too late. i was surprised at that comment because i thought they should completely have this thing. >> they want to see if there's any impact on yahoo's business. i think that's also part of the comment, let's see where it goes. because if you see a dramatic falloff in yahoo subscribers then for example, conceivably if you're verizon you can say wait a minute the economic fundamentals are not the same. >> i think it was erotic, where was a dramatic falloff of online
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business, david? america online. >> yes. >> so, i mean, tim armstrong can uniquely manage any falloff of yahoo. >> yes. he had no comment on twitter by the way. >> no comment. >> he didn't say benioff's paying 24? >> no, he didn't go into -- >> benioff, i talked about 20 seconds -- does that give you any price talk. he's not saying it. and, you know, the tweet that we referenced, was a personal tweet. >> yes. >> when everyone thinks there's nothing such as personal, it's all business. >> yes. speaking of business, chevron the only dow component that's green. we're down 144 in the 10-year back below 1.6. let's get to dom which you chu floor. >> you hit a lot of key topics overall floor traders talking about the idea we're seeing a little action here in terms of the overall stock market. perhaps it's a good thing as we head towards the end of the month. a historically volatile month for stocks.
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we do see the fractional losses for the major indices except the nasdaq getting out with the dow down about 140 points. if you look at the way the sector story is playing out, what's interesting because of the fed and everything also around interest rates, utilitys had been a month-to-date winner, but in today's trading session as you pointed out because of the oil price story and everything else with opec, energy stocks are the outperformers, only sector in the green today, materials outperformers as well. the notable laggards, tech and financials, people don't like to see that the two biggest sectors in the s&p 500 maybe lagging behind here on an otherwise down day. certainly we'll see if volumes validate that. also take a look what's happening elsewhere with the market because there are some interesting moves happening with regard to volatility overall. we did see that volatility kind of spike higher heading into the fed meeting. all of a sudden it collapsed. and then you saw perhaps that move higher in volatility right now. that's going to be one of those things we're going to watch for sure. the other piece of color i want
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to add from the floor down here, guys, just about every other person i've spoken to on the way in and out of the trading floor today has talked about the idea that the debate's going to be a huge watch tonight. everyone here is talking about what that's going to entail. and every question i've gotten so far from traders down here is what are you expecting. i don't know what to expect and that's why i'll be watching tonight. still, that's going to be a huge deal. floor traders at the new york stock exchange, guys, they're a small part of the financial industry as a whole, the population there. but still, throughout the course of the day i'm going to be trying to figure out, carl, what these guys are thinking, what they want to hear and what they think could be a game changer in terms of how they feel they're going to vote, guys. back over to you. >> we'll see what happens at 9:00, dom, thanks for that. let's get to the bond pits and talk about the aforementioned 10-year, rick santelli. >> hey, carl. no surprise with traders on this floor as a two-day chart of 10s as we've slipped in yield.
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how far have we slipped? exactly where we're supposed to slip to. look at a start of august 1st. we are now welcome to the august range. every day in august but one settled within 1.50s and now we're back in the 1.50s. it makes sense. this is a key area. the fact of the matter is we didn't trade through the 1.75. we're back down to the very much overtraded sideways range from august. now everything's marked rather clearly, according to the technicians. you want to watch 1.72 to 1.75 above. and any violation of that bottom at 1.45 and anything under 1.50 below us. remember the all-time low yield closed around 1.35. if you look at a july 1st start to the japanese government bonds, there's one thing that should jump out at you. the fact is that we are not at zero. okay. that's the peg. and of course the market just doesn't ever seem to want to cooperate with the bank of japan
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on any level, even the dollar/yen flirting with 100 today flies in the face of what currency's doing as an export economy, getting stronger. because actually it dovetails with that. but what doesn't dovetail is the fact the currency's getting stronger when the bank of japan's doing everything to make it weaker. and finally, let's look at the dollar index chart starting on 8/1. so many still use the talk of 2015, strong dollar, strong dollar, strong dollar. it's not a strong dollar. we've been pretty much down on the year other than the beginning of the year with the dollar index. and traders think 94 to 94.50 is the big line you're supposed to watch below the market. but they don't think we're going to violate it any time soon because unlike the dollar/yen, the euro relationship which really measures the bulk of the dollar index has been a little more tame with respect to its strength against the dollar. carl, back to you. >> all right, rick, talk to you soon. rick santelli in chicago. when we come back, what do undecided voters want to hear
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from the candidates in tonight's debate? a strategist will tell us what participants in his focus group are saying. be sure to watch cnbc's coverage of the debate tonight 9:00 eastern time. the dow down 139 and the s&p back to 2150. my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? [baby talk]
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a battle brewing in the light beer space. take a look at this new ad campaign from miller coors taking a shot as rival anheuser-busch inbev. >> bud light says raise one to right now, so right not raise the right one? miller lite has more taste and half the carbs. >> comes as the sale of light beer continues to fall. market share for light beer down 32% from a peak of 35.5% back in '07. much of that decline actually comes from bud light where sales
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have fallen for the past ten quarters. why is that? >> geez, you know what, a lot of this is what constellation has done, stz. they've got a double digit beer grower in modelo and corona and i think they've taken a lot of people by surprise because they were off the radar screen. of course somehow people identify bud's not going to like what i have to say, but i think craft beer versus bud, you know, bud became goliath. and the craft beers play this angle very much. we are not bud. we are not bud. and, you know, the craft beer movement is a far more powerful movement than people realize particularly as craft beers get recognized by each state that allows them to sell beer at a bar. so, i mean, be careful, bud. you're vulnerable. vulnerable. big cash flow. >> yeah. speaking of drinks, there's a drink named for a man we're mourning today. the world is mourning the loss of golfing legend arnold palmer. he died yesterday at the age of
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87. won 62 titles on the pga tour including seven majors, four masters. credited with boosting golf's popularity as a spectator sport. was awarded the presidential medal of freedom and the congressional gold medal. so many things to talk about. his rivalry with nicklaus. >> there are two reactions. one is we started watching golf in my house with this guy. but second, this guy's a businessman. and he was really i think the first sports business person. the first guy to be able to say, listen, we're going to take the, you know, take our market, take what is rightfully ours because people watch us, we're going to make money. and that was a revolution. >> also taking the game from this country club patrician angle into a mass market, arnie's army. the cover of "time" being
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tweeted again today from 1960. >> i know that we not only started following golf at our house, but we decided to go see a match. go to white marsh, which was an open. we always thought it was a rich people game. absolutely right. suddenly it was like, wow, we're still drinking arnold palmers. we don't drink the arnold palmer that i often hear about, the, you know, lemonade, ice tea, we tend to augment it. but that may just be our house. i don't know. >> gone at 87. "squawk on the street" will be right back. whether it's bringing cutting-edge wifi to 35,000 fans...
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or keeping a hotel's guests connected. businesses count on communication, and communication counts on centurylink.
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time for cramer and stop trading. >> i was going to talk about the secondary, but some things came up this morning. smith & wesson on a loss, i bring that up because tonight i'll be watching the debate and that's very much a trump stock. and little -- very much overlooked downgrade by drexel about disney about hold and nba pressure and cord cutting. won't go away, but also talks about shanghai losses. shanghai is -- you don't think
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about it as shanghai losses, but volume very light. >> threw twx in there as well. >> they did. similar challenges. what i'd say is disney seems luckless -- >> what's the thesis on the nba though? >> step up costs. >> yeah. i know that advice it's not nearly as important as the actual cord cutting. >> and of course shanghai's been a huge success even though -- >> right. that's why i thought that's the wrong spin. let's take a longer view. but i think people are piling on now at disney. i think it's a 15-yard taunt, frankly. i'm going to take it on the kick. >> we mentioned target earlier. the president is leaving after just a couple of months, four months after the promotion. >> i think people have to recognize that target is searching for what went wrong in the last couple quarters. and that was a very big hire. and i think one of the things that went wrong, sorry, guys, is walmart. no one thought of walmart as the way it's become.
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we didn't think that walmart a year and a half ago was embraced with anything other than turmoil. and now i think it's embraced with strategy. and doug mcmillan has done some remarkable things there. of course amazon, i don't know amazon's down today big target boost. i get buy amazon, buy it. they can't be stopped right now. >> cowen takes to 960. they say 46 million prime members. >> talk about echo being a multibillion dollar -- amazon is very tough for anyone to reckon with. you've got to be like burlington -- i saw a nice upgrade for the old burlington stores. burlington coat factory. you have to be so off price as to be able to come in under amazon. amazon's also part of the problem with food. there's just -- i don't know, if i had to go up against amazon every day, i would say, you know, maybe i switch industries and go into the auto industry. it's easier. >> let's hope they don't go into the tv anchor business. >> oh, indeed. >> what's on mad tonight? >> we have a company, visalign,
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these are the easy braces, so to speak. >> they're everywhere. >> everywhere. i mean, i had braces. my mom would say, you can get a milk shake. it was the most painful thing in the world. this is what people used now. when i first heard i said i don't want them. who uses invisalign. and then you see the numbers -- don't look at me like that. >> just checking to see if you got them. >> i'm done turning to you because -- >> what do you mean? >> because i get the kind of heisman, the subtle heisman. but it's called like this. this is your own heisman. >> is that what i do? >> yeah. >> come on. >> terrible towel to wipe that face off. a lot of terrible towels left in the stands there yesterday. >> oh, my gosh. >> you don't have braces. >> see you tonight, jim. "mad money" 6:00 p.m. >> good luck tonight. you'll do fabulous. >> see what happens at 9:00. watch the market dow's down 139
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as we count down to the presidential debate in 11 hours and 3 minutes.
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good monday morning. i'm carl quintanilla along with david faber. sarah eisen is off today. dow down 139 on the heels of weakness in european banks. watching for debate tonight at 9:00 eastern time. but in the meantime let's get to some economic data. rick santelli's got that. rick. >> yes. we're looking at the august read for new home sales. and it is down 7.6%. that's actually kind of close to what we were expecting. 609,000 seasonally adjusted annualized units. last month originally released 654,000 was the best reits since the fall of '07. it was upgraded a bit to 659,000, which gives you your minus 7.6%. let's get the shovel out and dig deeper into the detail of this report. for that we're going to go to diana olick in our d.c. office.
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diana. >> not unexpected. we did expect some giveback from july because july we saw that big 12% jump. we have a 4.6 month supply of new homes for sale. that's better than in july where we had only 4.3. and we need that supply right now because supply of existing homes for sale is at record lows. the price $284,000 the median price of a newly built home in august. that's down 5.4%. and for buyers that's good news. it may also be a shift in the mix because we are seeing the builders start to look at that entry level buyer again. they weren't in the market. they have come back to the market because there's so little for sale right now. builders, again, turning toward that entry level buyer, not as much as we'd like to see. but to see that price come down to 5.4% is good news for the buyers getting in there. and, again, to see supply rates we just need more housing starts. but this number as you said right along expectations. back to you. >> diana. thank you for that.
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diana olick and rick santelli. donald trump and hillary clinton getting ready to go head-to-head tonight in the first presidential debate. our john harwood is with us at post nine for what we can expect to hear from the two candidates and what the fallout may be, john. >> carl, we've talked in the last hour about the debate over the impact of debates. let's take a look at some of the past events that have shaped our understanding of these events. first of all, 1960. you had richard nixon and john f. kennedy. richard nixson was better looking, wasn't sweating as much as richard nixon. may have helped a little bit. evidence isn't clear. 1980, jimmy carter unpopular democratic presidential. ronald reagan running against him. jimmy carter was trying to depict ronald reagan as an unsafe alternative. ronald reagan in fact showed that he was up to the job and was a reassuring presence for voters. that may have helped him, but again, he had momentum before that debate. then you had 2012. mitt romney was debating president obama.
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my mitt romney had not consolidated all the republican vote, had a very strong first debate against president obama. he did consolidate it. moved ahead in the polls. but as in some other cases that were comparable, that lead didn't last. that advantage that he had didn't last. same thing happened to john kerry. but here's one where it may have made a difference. talking about 2000 when al gore incumbent democratic vice president was debating texas governor george w. bush. al gore knew a lot about federal policy, was very experienced in it. george w. bush came from texas, was burdened with the reputation of somebody who didn't know a lot of details. but guess what? george w. bush came across as more likable, especially in the post debate spin, which influenced the polls. so take a look at this full screen of the polling evidence from that race. before the first debate al gore went in he had an 8 percentage point lead over george w. bush. after that first debate they
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were tied. even though the night of the debate respondents thought gore won, in the news conference bush was portrayed as winner. then after the second debate, george w. bush took a two-point lead. after the third debate, he took a four-point lead. in the end al gore got more votes than george w. bush, but those debates clearly reset the race and gave george bush a head of steam which may have been what allowed him to survive that election, survive florida and become president, carl. >> that's a good curtain raiser on tonight, john. one topic concerning the economic tax plans, joining us to talk about that chairman and ceo of the federal savings bank, and former senior economic advisor to vice president biden, cnbc contributor jared bernstein. gentlemen, good morning to you both. >> good morning. >> steve, i wonder if the examples that john provides if there's an analog for tonight that you're using in your head. >> well, i think all of john's points as usual are spot-on.
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i think the important thing is that the american people as a whole are really going to get to see the guy that gets up every day, works his tail off, laces up his running shoes and runs. i can tell you from a guy that tries to keep pace with him, it's an enduring and exciting task. i think people are going to see he's the kind of clear eyed leader that will lead us out of our challenges. >> does his demeanor need to be different than what he had in the primaries. axelrod wrote over the weekend, ride in on the horse that got you here. >> there's the donald trump that is really being exposed and then there's the sound bite donald trump. and i think we're going to see the whole donald trump unedited tonight. and i think the american people are going to appreciate that, enjoy it and like it. >> steve, i'd like to ask you and jared both to comment on one particular issue that hasn't gotten a heck of a lot of attention in the race but may get some tonight. committee for responsible federal budget came out with a study that showed that hillary clinton had basically paid for her promises.
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she would add $20 billion a year to the deficit. but the donald trump would add $530 billion a year to the deficit because of the size of his tax cut. how important is that? >> first of all, i've stated i believe that's fuzzy math. for a guy that works with math every day and has for over 22 years, i can tell you i've got real questions there. but when i talk about the way we pay for this, these plans, this growth, our fight out of the economy. the math is simple. you talk about tax, trade, energy and deregulation. add 75 basis points for tax reduction, add 75 basis points for the reduction in deregulation, up to potentially $3 trillion, add another 1%, you're not only 3.5% total growth in gdp and paying for all of the programs that mr. trump has talked about, if we can get to 4%, we're actually paying down the national debt. that's really exciting. >> does that make any sense to you? >> no, not really. in fact, that sounds like was it george bush who called it fuzzy
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math? that's super fuzzy math. look, you can't -- you simply can't cut $5 trillion in taxes over ten years, that's the estimate of what donald trump's tax plan do. and cross your fingers and hope to make it down -- make it back with the kind of supply side trickle down fairy dust the republicans have sprinkled over their tax plans now for decades. and i think the key thing here is that tonight both candidates are going to be competing for a kind of voter in the middle of the economic scale who feels like this economy has left them behind. and if hillary clinton has a chance to scrutinize the plan that you just heard being defended, it will reveal that this is a plan that not only leaves middle class voters behind, but according to some new research out over the weekend actually raises the tax bill on low income families because it gets rid of the personal exemption, which is actually a big deal for some low income families, especially
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single moms. so i think the more substance we get into on tax plans it's going to help candidate clinton. >> i'm trying to do the odds about whether or not dynamic scoring gets mentioned tonight. >> right. >> and how politically potent that is for people who are just now turning to the race. >> with all due respect to my colleague on the other end of the headset as it were, i didn't study music and social work, i've been running businesses. i'm an entrepreneur. i employ hundreds and hundreds of people from a self-started business. i am the person -- >> let's talk numbers. >> i am the person who is actually an example of coming from nothing, being a main street guy, not a wall street guy with all due respect to this wonderful location we're in today. you know, strapping -- starting a business by strapping up my boot straps as it were and actually moving to action. doing exactly what mr. trump is talking about through small business tax cutting, through deregulation, have you applied for a home loan in the last three to five years? i can tell you as one of the largest privately held federally
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chartered banks that one of the issues in america it is an absolute nightmare. you better bring a phone book of paper with you. spur first time home buyers we just heard a moment ago how recurring sales are off 5.4%. that's the market we need to inspire and the market we need to grow. >> jared, let me ask you about an issue we haven't talked about yet. hillary clinton the other day proposed a higher estate tax for the largest estates, right? >> right. >> a 65% rate for couples estates of $1 billion or more and a sliding scale going down. is that a vulnerability for her because he will say you're raising tacraise ing taxes, or get rid of the tax that would tax your children? >> i think the latter. and let me just say what you heard between me and my colleague is a microcosm of what you're going to hear tonight. i'm dolling out hard numbers, evidence, facts about what's
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going on and he's imputing my college degree. that may work in a debate, but i think especially in a context like this where people are actually concerned about the facts of the case, we need to look at the numbers. now, it is the case that donald trump eliminates the estate tax. okay, that's on the books. the estate tax effects the top 0.2% of estates. again, another hard number. you want to talk about who got a college degree where? i can do it all day. you want to talk about hard numbers, talk about numbers that actually effect people, this is a $4 billion tax cut for trump's own family. >> couldn't disagree more. if you want to talk about real americans, i'm talking about middle and lower class americans. take the average family, duel income -- >> they don't pay the estate tax. >> no, not estate tax, but look real life, $50,000 a year income, if you have $8,000 in child care, you're going to pay 35% less personal income tax. if you make $75,000, pay $10,000 in child care through his tax break you're going to pay 30%
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less personal income tax. that makes an enormous difference. >> is that a liability for trump? >> i don't think it is. i think the estate tax clearly states he doesn't want double taxation. taxation from when you pay tax on your business and then retaxed again when you die. i don't think anyone would disagree that double taxation is wrong. i agree this might be a little bit of a preset to what you may see in a brawl tonight. but i think overall, look, there's a lot, a lot, a lot in common here. what we have to focus on is moving america forward and moving this economy forward and do that through the four-point plan of tax, trade, energy and deregulation. >> i think he makes a fair point in terms of the people that very small group of people who claim the estate tax -- who have to pay the estate tax at the top of the scale. they will very much appreciate having it eliminated. and if that's the kind of folks you're targeting, then i think this helps them. and it's actually the opposite of hillary clinton who is only increasing taxes on people above $250,000. and that by the way is how she
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avoids adding $5 trillion to the debt over ten years. now, those are very much value decisions. we finally in this little conversation have actually gotten to critical distinctions between what trump does and what clinton does. >> yes. >> we'll just have to see whether voters respond better to kind of a plan that actually reaches out and tries to help the middle class and one of the old trickle down kinds of ideas that mostly cuts taxes for those at the very top. >> a tax cut for all americans is not a trickledown for all americans. >> this is a good -- sets us up nicely for tonight. steve, jared, appreciate your time very much. >> thank you. >> thank you. >> of course, tonight the presidential debate 9:00 p.m. eastern time. coverage begins at 9:00 right here on cnbc. well, coming up, shares of do deutsche bank getting hit on concerns about capital, more trouble also perhaps for wells fargo. the ceo at least getting ready to head back to capitol hill. plus, your money, your vote. what investors will need to watch for in tonight's debate. we're going to discuss that.
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a lot more "squawk on the street." stay with us. whether it's connecting one of the world's most innovative campuses. or bringing wifi to 65,000 fans. businesses count on communication, and communication counts on centurylink. but the best place to start is in the forest. kubo: i spy something beginning with..."s" beetle: snow. kubo: no. beetle: snow covered trees. monkey: nothing to do with snow. narrator: head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. kubo: wow! narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: come on, this way. narrator: visit to find the closest forest or park to you.
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could result
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my name is valerie decker and i'm a troubleman for pg&e. i am a first responder to emergencies 24 hours a day, everyday of the year. my children and my family are on my mind when i'm working all the time. my neighbors are here, my friends and family live here, so it's important for me to respond as quickly as possible and get the power back on. it's an amazing feeling turning those lights back on. be informed about outages in your area. sign up for outage alerts at together, we're building a better california. deutsche bank shares on lows that a $14 billion fine will force a capital increase. reports say angela merkel will not step in with any german aid for the bank. and more bad news as well for wells fargo, potentially.
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some former employees following a class action lawsuit. ceo john stumpf expected back on the hot seat before the house financial services committee, that is due on thursday. for more on the state of the banks, we're joined by paul miller, head of financial institutions research at fbr and j lee. let me begin with you on deutsche bank, how much worse can it get for these guys? when you look at market cap versus the size of their balance sheet, it's a staggering, staggering difference. is as bad as it's going to get now? or is it going to get worse? >> you know, i don't cover deutsche bank, so i really don't have an opinion about that. >> all right. i hear you. how about you, do you cover deutsche bank at all ju yun li. >> i don't cover them directly. i don't think the fine size will be as large as the $14 billion being reported. >> how large do you think it will be?
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>> i don't think we've put out any kind of speculation on that fact. but we don't believe it will be as large as the $14 billion that's being quoted in the media. >> all right. well, given we're not going to get incisight on deutsche bank, let's move to wells fargo. does this drip, drip, drip, if you will, of bad news have an impact on the stock price? >> i think it does have an impact on the stock price. it's going to continue to have an impact on the stock price until the board makes some type of action here. it seems like the board is not making any action, which is i think going to cause continued pressure on the stock on the downside. and i don't think it's going to be that much better for them in front of the house as it was in the senate last week. hopefully stumpf is better prepared going into this. but, you know, i just think this is going to get worse before it gets better at this point. >> joon lee, interest rates may go up, wells fargo conceivably amongst many other banks would actually benefit from net interest margin. is that something that you are
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taking to your view overall of the sector? >> yes, absolutely. i mean, i think for now clearly with the disappointing news from the fed recently, i think, you know, i think many of the banks were sort of banking on more rate rises this year and hasn't materialized. a lower for longer is going to prevail for quite some time. but any uptick in rates will certainly help their net interest margins as we move forward. >> and, paul, back to wells for a moment. you know, a lot of people questioning whether or not mr. stumpf can continue to lead that bank. do you have an opinion? and do you believe a change in leadership might end up being a positive? >> i think a change in leadership will be a positive at this point. is for the simple fact i think that's what the regulators want. at this point i think that's what investors want. they want to move this behind. they want to turn that page as long as stumpf is there it's hard to turn the page. that's going to help the stock tremendously when the board or
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decision comes out of there and stumpf moves on. >> sorry, we're out of time already. but thanks to you both. paul miller of course head of financial institutions research at fbr and joon-yung lee head of financials at fitch. >> thank you. oil moving up the session highs although shares overall in the red under pressure as banks and energy stocks continue to fall while investors await the debate tonight. for more on the markets this morning joining us is david lebavits. guys, good morning to you both. >> good morning. >> david, i'm wondering with the debate tonight have you been thinking about ideas to hedge a victory in either column? >> our view is that the biggest risk that the election poses is one of uncertainty. and our concern is that the building uncertainty over these next few months ends up effecting consumer spending. but our view is that both candidates are a little more pro-growth than their predecessors so we think the
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risk to the economy is to the upside regardless of who finds themselves in office. we think a little more government spending would be a tailwind for growth. we're not terribly concerned. we think a balanced portfolio makes sense. maintain exposure to core fixed income because our view is treasuries will still provide that hedge. but we also see an improving growth outlook. we think it doesn't make sense to get rid of your risk assets at least not at the current juncture. >> are you suggesting that sort of home buyers, consumers, freeze into place for the next six weeks? what effect would that have on q-3 gdp? >> i think q-3 gdp for the most part is in the books at this point. our biggest concern is with respect to the fourth quarter. i think the threat that the election really poses is that consumers begin to get a little nervous. consumers then begin to retrench and an economy which is 70% con sumgs that has impacts on top line growth particularly when investment is lackluster, you're in the middle of an inventory cycle. the consumer is what's keeping us in play right now. so i think the risk is directed towards that part of the economy. >> jason, you agree with that?
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and what does that do to that narrative of the second half recovery from the first half we weakness? >> well, you know, we been in this mindset that we're basically in this slow growth expansion. and the presidential election really doesn't change that. everybody kind of keeps bringing up different worries along the way. we're in the seventh year. growth is too slow. stocks are too expensive. and yet we kind of keep on plodding on with the market continually moving up and gdp continuing to move up. we think the presidential elections are yet another instance of that. the reality of it is the presidential elections when you look at them the pattern in the markets around them, there are a lot of noise. we tend to get concerns that pop up. we tend to get some market dislocations in sectors, and then they reverse over the next six to nine months afterwards as people basically realize, okay, that was just an election for this one piece of the overall
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legislative/political process. and there's all these other pieces that basically counteract that. that's the truth here, whether we end up with one or the other president, the reality is they're going to be faced by a fairly strong oppositional congress in either way and going to have a hard time getting through the more dramatic policies that are the big game changers. >> hey, david, it's john harwood. i've gt a question for you. you talked about uncertainty over the outcome of the election. but when you think about either hillary clinton or donald trump in the oval office, which one do you think brings about -- brings with them greater uncertainty going forward once the inauguration occurs? >> so my immediate reaction would be that trump brings with him greater uncertainty. mostly because hillary clinton is a known quantity. there we can basically expect at least four more years of what we've had over the past eight. so i think that just not knowing as much about trump's plan, you
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know, presents him as the greater source of uncertainty. however, i would agree with what my colleague said. we should take a step back and everybody gets really wrapped up in what's going to happen in november. who's going to get elected president. they're going to be faced with gridlock in washington because my guess is whoever takes the white house congress is going to go the other way. and so, you know, gridlock in washington historically has been good for the markets. and if that's the outcome, i actually think risk assets aren't terribly vulnerable. >> finally, jason, barclays put out a chart today various instruments and their correlation to the impride probability, brent and s&p with the lowest, does that make sense to you? >> i think the dollar does. he has put out a kind of anti-globalism dollar sort of message every once in a while, you know, kind of u.s. centric message. i don't know if that makes sense longer term, again because the likelihood of him being able to
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influence those policies to the degree the market assumes right now is probably a lot lower in reality and therefore probably would move the other way once we get past the elections. >> we'll see what happens tonight. gentlemen, appreciate that very much. david lebovitz at j.p. morgan and jason pride at glen meade. when we return, a wild ride for twitter shares, falling today at least amidst a downgrade this morning after that more than 20% gain on friday. we'll give you a look at where the stock could be headed and where the sales process stands when we come back. cdw brought i.t. orchestration to growing businesses across the city, increasing productivity like never before, which is amazing, unless you're a barista. cdw implemented dell poweredge servers with intel xeon processors to allow people to work from anywhere, so lucky me. so nobody wants coffee?! hey, can i get a couple copies? enhanced mobility by dell. i.t. orchestration by cdw.
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contact your health plan for the latest information. both twitter and facebook shares down this morning. on friday reported twitter was engaged in sales talks. this morning i reported that those talks may be accelerated as a result of of course becoming public. let's bring in senior analyst at cowen and company. john, let's start with twitter. everybody weighing in with what they think it's worth. always difficult to know in these kinds of situations, but certainly when one looks at the fundamentals some analysts are coming out saying, man, that's a stretch to say it could be worth
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as much as call it mid 20s. where are you? >> yeah, we're actually at a $13 price target. i mean, the fundamentals -- i don't disagree on the fundamentals. the fundamentals are weak. decelerating in q-3, we have revenue estimated to be down in q-4. they're not growing users or engagement growth and they're also have been trouble pressing up ad load. so that leads to kind of slowing advertising growth. so the fundamentals are weak. but, you know, if you have interested multiple companies that would be interested in the asset, then, you know, maybe they can get somewhere around these levels or above. it will just depend on the interest. and, you know, when i look at it for the companies in my universe, i cover alphabet and facebook, et cetera. for alphabet or google it doesn't make sense with me because they have multiple deals with twitter, multiple deals with double click and also kind of running tweets through some search terms.
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and also i'm not sure if investors would like a google acquisition of twitter, at least from investors that i've talked to. basically they have $70 billion in cash on their balance sheet. $30 billion in the u.s. they would use a chunk of that to buy twitter, maybe a buyback or other acquisitions. i think investors would be more comfortable with. >> yeah, that's interesting to get that perspective. of course, in part the board as i reported was moved to consider a sale when interests came in as a result of those deteriorating fundamentals you describe hence if in fact they don't sell one would imagine a lot of air between here and there but unclear to know where it's going to end up. let's move onto facebook. that stock did suffer a bit on friday on this news about the change or at least reporting metrics that weren't quite accurate to their advertisers. long term impact from that at all? >> no. no long term impact. they miscalculated on a metric
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that was not billable for advertisers. it's very early for video for facebook. it's a huge -- it's probably the biggest initiative at the company right now. i think increasingly over time the feed is going to be more video oriented. and, you know, i don't think it will be a problem. it's a little blip in the road, but not a long term issue at all for the company. >> yeah. and there's one very different than twitter at least what i find, john, is people say the multiple actually seems very reasonable given the growth rate. do you agree? >> yeah, totally. i mean, we've seen multiple compression for facebook this year despite the runup in the stock. i mean, if you look at it, facebook's growing. they'll grow revenue two or three times what google is. and the multiple disparity, it's wide, but come in. we like facebook. we have a $150 target price on facebook. we think the runway is clear to get there. you know, we like obviously the video and they just have a lot
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of good things going on fundamentally at the company. >> i'm told you cover snapchat, so to speak, even though it's not a public company. is that true? and if so, why? >> we look at it. it's obviously an important player in the social -- whole social media spectrum. so we've looked at it. i've seen the company in recently. things are going well there. they have 150 million daily active users. it really resonates the platform with the younger demos. i think they're doing 10 billion plus video views a day. people spending 25 million a day on average. it's an important platform. i kind of look at it as half messaging and half, kind of, video or, you know, video content. so it's dechtly an important platform going forward. and the company's doing great. >> and finally, i guess we'll end with amazon. you put a lot of pages out on that recently. what motivated you to write amazon dominates primetime?
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and what conclusions can we take from it in 20 seconds? >> yeah. so prime subs are accelerating at scale in the u.s. we have a proprietary data stream going back four years that suggest 49 million u.s. prime members. and we think that tam is about 60 million remaining in the u.s. half of those actually bought goods in august. so we think the conversion will be high. and the runway is clear for much higher prime membership over time for the company. and prime's really just changing industry dynamics both in retail and media. it's an incredible mote for amazon. we're super up on amazon. >> i'm going to make sure to give it a read as well. john, thanks for hitting so many different stocks in a short amount of time. >> thank you. when we come back -- actually, send it to susan lee with a quick market flash. >> hi, carl, energy among the only -- in fact the only major
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sector of the s&p 500 trading higher today on the back of rallying crude prices up over 3% at this point. so the top energy gainers chesapeake, murphy oil, and this activity being driven by higher crude off the opec meeting taking place in algeria. producers are trying really hard to work at a plan to try to limit output. back to you. >> susan, thanks. when we come back, hillary clinton, donald trump getting ready to face-off for the first time in tonight's presidential debate. what will be the message from the candidates? make sure to tune in tonight. watch cnbc's coverage beginning at 9:00 p.m. eastern time.
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good morning everyone. i'm sue herera. here is your cnbc news update at this hour. houston police say a gunman who shot and wounded nine people has been shot and killed by police. one of the wounded is in critical condition. police say the gunman was a lawyer and that there apparently was an issue with his law firm.
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spanish police have arrested two moroccan men accused of supporting islamic militants. spanish officials say one of the men was planning on joining isis in syria to be trained before then returning to europe to take part in an attack. a wildfire that started in northern california yesterday has quickly spread. the so-called sawmill fire is only 10% contained as of last night. about 240 firefighters from nine agencies are fighting that blaze. evacuation orders have been put in place. and the golfing world is mourning the death of legendary golfer arnold palmer. he died last night from complications of heart issues. the king brought golf to the masses winning more than 90 tournaments including seven majors. he was 87 years old. that is the cnbc news update this hour. carl, back down to you. quite a life, sue. thank you very much. our sue herera. it is proving to be the must-watch political event of the season. hillary clinton and donald trump squaring off tonight in their first one-on-one primetime
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debate. with polls showing an increasingly tight race, both candidates are vying for the undecideds. so just what are those voters hoping to hear tonight? for more this morning we're joined by veteran political strategist, the ceo of clark street strategies and former bush and reagan advisor. guys, good morning. >> good morning. >> good to be here. >> you were with us a few weeks ago. you said clinton has so much invested in trump being unhinged in this debate that it's easy for him to jump over that bar. do you feel the same way now? >> is that to me, i'm sorry, carl? >> yeah, ed. >> yeah, i think the expectations trump has the easier job tonight. he has to not blither. he has to look somewhat informed. he has to look somewhat poised. hillary, on the other hand, has got to do everything right. i think you may be in a situation where whoever talks the most tonight loses. hillary has got to diminish the notion that she's rehearsed, that she is just a version of
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more of the same without the excitement. obama part three. and that's going to be tough for her to present herself as an agent of change. trump's got to say he's not dangerous change. he has the easier job. >> let me ask a question and have chris react to it as well. how has it changed the task facing the candidates that the undecided voters that both sides are targeting are college-educated men and women, college-educated whites in particular, which is not the base that donald trump built in the primary campaign. does he have to do something different because those are the voters he needs to reach right now? >> i think his base is more committed to him than hillary's is committed to her in this sense. trump has got to appeal to marginal republican voters who traditionally vote republican that want to vote republican who are concerned about his temperament and his knowledge.
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so that's the hurdle he has tonight. on the other hand, hillary had to move to the left. she had to tamp down a bernie sanders insurgency from the left. and if she starts to move to the right, then she looks disingenuous and runs the risk of low turnout. she's going to get the bulk of the democratic vote. she has to worry about the raw numbers in some of the democratic constituencies in suppressing turnout by lackluster debate performances and a lackluster campaign. >> chris? >> well, this is a tough one to read in terms of this debate because they both have, i think, some challenges. and i would argue trump probably has far greater ones. we did a focus group in florida with undecided voters. and what we found was, you know, these are two candidates that are kind of drowning in a sea of negati negativity. they don't want debate of 90 minutes of back and forth personal attacks. what they want to see is a s
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substantive debate with real details and specifics about where these two candidates are going to take the country. if you watch donald trump over the primary and general election season, specifics in details amongst some of the more complex issues is not his strength. he's never been in the situation before where he's one-on-one. and that i think poses a serious challenge. if he goes in there and simply just is nice, that is not really going to be enough to move voters. the demographic that you're talking about, the 15% or 20% depending on the state i would call undecided or soft leaners, they want to hear more than just rhetoric where saying i'm going to make america great again and again and again. you've got to be more detailed. i think the challenge for secretary clinton she has all the policy knowledge in the world. if this were a resume contest this election would be over. she's got to present an impassioned clear vision that speaks to the frustrations and anger that people feel out there. and if -- the one thing that i
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think donald trump has done well, he has tapped that anger and frustration. and at a minimum he's won some people over. but those blocks of folks that are still undecided, those are the ones that are going to be really key tonight. i know the bases are going to be waiting for the punches to be thrown and giggling at every right hook. but the reality is it's the undecideds that are going to decide this election especially in those key states that we're seeing today whether it's pennsylvania or colorado that have really tightened up. >> yeah. i would disagree with that. >> ed, go ahead. >> well, i was going to say i don't disagree with that. i just think hillary has the tougher challenge. she's got to present herself as something of a change agent. this is a change election. and she's got to present herself as something more than the status quo, defending the status quo. that's going to be hard for her to do. trump, on the other hand, has to dial change back a little bit. he's got to be changed. it's not reckless or ignorant. >> but i would say the one thing that trump has that is a huge hurdle for him to climb, or
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climb over, one of the things that folks have repeatedly said when we've done these focus groups is, you know, they're tired of his offensive rhetoric. it's really put them in a bad place with these voters -- or put him in a bad place with these voters. he's got to address that. and my guess is he will not. he's probably going to get asked a question about that indirectly or in response from secretary clinton. and he's got to address that. and even worse, if he crosses a line tonight and he says something that is offensive, there is no place to hide. it is a 90-minute no commercial debate. it is thunder dome politics. one of them is going to come out of here with some degree of momentum, arguably. but it is going to be serious challenge for someone like donald trump who's never done this before. >> yeah. but i wonder if that's the one thing trump is ready for is temperament questions and temperament tone. what i worry about, i'm not really a trump supporter, but if
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i were coaching trump i would more worry about a what is aleppo moment, i would worry about him not knowing what the knew clear triad, not knowing the difference between medicare and medicaid. >> i wonder, ed, whether attitude at this point surpasses policy aptitude. i mean, we saw what that did for johnson on msnbc, but does that matter for him? >> i think it does. i think it does. this is a three-debate vat stra. so if the first debate for trump is just about tone and tenor, he's got two more debates to sort of tamp down his knowledge of the issues, geography, other things that need to reassure people that he is sufficiently informed and equipped to be president. >> you know, here's what i would say to that. i think here's the real danger, i think, for donald trump. it is tone no question. people are going to be looking at that to see how he treats hillary, is he respectful in tone. i mean, everyone's going to be
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looking for the temperament. but here's the reality and everybody remembers at least if they're old enough the ford comment about eastern europe. or the rick perry forgetting about the third piece of his strategy of government change. those moments when they happen become the defining moments of a debate. and trump, i think, faces a real hurdle. listen, even the smartest person in the world has a difficult time remembering every possible detail. but when you go into a debate lacking basic fundamental knowledge about how government works, public policy, those become a problem. if the moderator asks a pointed question, how would you deal with the knew clear triad? maybe that's not going to be a question, but if he's asked something that pointed, how does donald trump respond when he doesn't know what the triad is? >> ed, let me ask you one last question. >> sure. >> i'm pretty sure chris is supporting hillary clinton. you said you're not really a trump supporter.
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who do you want to win the election? >> well, i'm a non-supporter at this point. i've never said never trump. i've been waiting for trump. maybe he'll come through tonight. maybe not. >> ed rogers, chris kofinis, guys, thanks so much. we'll be watching tonight at 9:00. catch coverage first presidential debate on cnbc. pfizer one of the biggest losers in the dow. it's falling after announcing it is decided not to split into two companies. much more ahead on "squawk on the street." stay with us. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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only at td ameritrade. is a rocky month ahead for health care stocks? goldman sachs says yes, and they have an idea for how to profit. get the full story at more "squawk on the street" coming up.
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rick. >> thank you, and good morning, david. good morning to my first guest of the week, peter boockvar, thanks for taking the time, peter. >> thanks for having me, rick. >> all right. it's hard for me not to see kind of what's shaping up to be a big issue regarding central bank policy. and i'm referring to deutsche bank. you know, there's a debate now, is it a lehman moment or not with deutsche bank. to me, if you're having that discussion at all, it's kind of like a lehman moment. your thoughts on the situation? >> well, it is on one hand because it's obviously the biggest german bank and it's their monster bank. it's the monster bank of europe in a way. it's not necessarily a lehman moment because we have to assume that the german government in some way will bail them out. but i think it gets to the larger picture of the destruction of the profitability and economics of banking in this modern day regulatory and central bank world we're in. >> oh, i completely agree. and that's where i want to go. you're on the right road.
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we got off on the right exit. you know, if you look at it in real macro over simplified terms, everything central bankers are trying to do to help a problem that janet yellen and company now don't think they can fix because it isn't isn't cyclical, it's structural issues, in the end these negative rates draghi is dealing with aren't going to be healthy for deutsche bank, they aren't going to be healthy for any bank, so in the end they are creating a different problem that's going to have to be fixed in the future and i'm not sure angela merkel is going to have the political currency to deal with this. your thought? >> certainly not before the 2017 election, but let's break down negative interest rates. it is a tax on capital. so every day they are bleeding the european banks. now, european banks are trying or scrambling to offset that tax by at least raising their cost to capital on others, but most of them can't get away with that, so every day they are basically handing money over to
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the european central bank and then draghi says it's not my problem you're not making money, it's because we have too many banks, so the crux of the problem is monetary policy, it's the yield curve, and what's merkel going to do about it, shovel more cash into a capitalized bank, but unless central bank policy changed, the economics of the banking business won't change either. >> you know, my final issue to bring up is, now this intersection even gets more crowded with vehicles, think basel 3, there's been a boat load of squawking on raising capital requirements. i don't think they are going to be able to deal with the issues of basel 3. what's that mean in the grand scheme of things, your final comment. >> the central banks are crushing profitability. politicians are saying european banks have to make more money and provide a bigger cushion, but they are having difficulty because of the damage to their business model, so how do you
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raise more capital if your profits are declining? i mean, it's inherent conflict because i think people don't fully understand the damage that central bankers are doing. certainly, politicians don't, so i think they need to get into a room together and explain to each other how they can somehow mesh this together, but inherently it's impossible. >> yeah, boy, i'll tell you what, with policy implementers like this, who needs a lehman moment? policy itself is turning out to be its own little crisis. peter, thank you. >> slow moving train wreck. >> exactly. david, back to you. >> all right, thank you very much, rick santelli. as we head to break, take a look where stocks are trading. you can see we are down on all the broad averages right now. by the way, quick programming note. make sure to catch our coverage of the first presidential debate of the 2016 election kicking off right here on cnbc at 9:00 p.m. eastern time. we have a lot more ahead for you on "squawk on the street". what powers the digital world? communication.
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here's a look at the energy
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sector and real estate. only s&p sectors in the green today on a down day for the markets. halliburton up, wti is up. interesting to note the broader market is down, that is not a correlation we've seen, when wti has been up, the market very often has followed, and likewise on the way down. not so today. all right, john, i don't know, about ten hours, i think, judging from the countdown clock. the polls are tightening, what are you going to be looking for this evening? >> each candidate has a challenge. donald trump faces an electorate that most of them think he doesn't have the temperament, kpeens to be president. he has an enthusiastic following, though. hillary clinton doesn't have the enthusiasm. she needs to generate some traction. david plouffe said this morning this night tonight is 75% of the rest of the election, big moment for both of these candidates. >> i know you'll be there at hofstra, john, and joining us throughout the day and evening. thanks to john harwood for joining us here on "squawk on the street." be sure to catch the
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presidential debate 9:00 p.m. eastern time is when it all starts. now a look at what's coming up on "squawk alley." john? >> good morning. we're going to be watching snapchat making big waves in the social media world with its spectacle, a piece of hardware. also the ceo of roku with an update on the streaming marketplace, what next there, and which candidate is best for tech. we will dig into actual policy coming up on "squawk alley". ♪
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good morning, it is 11:00 a.m. at hofstra university in hempstead, new york, the site of tonight's first presidential debate and "squawk alley" is live. welcome to "squawk alley" for monday


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