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tv   Squawk on the Street  CNBC  September 20, 2017 9:00am-11:00am EDT

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bone -- >> does your cheek bone vibrate? >> it was using your cheekbone to pick up your voice, oddly enough >> wow >> anyway, quick look at futures as we go but pretty much flat they've been all morning off the trifecta of regular closes yesterday. >> thanks for being here today >> thanks for hanging. happy new year, everybody. >> "squawk on the street." good morning, welcome to "squawk on the street. we're tracking hurricane maria as it hits puerto rico and watching the devastating earthquake in mexico with the death toll over 200. markets, of course, will focus on the fed decision in just a few hours. futures are pretty steady and yields up for seven straight sessions now at 223. our road map begins with a stock
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rally pause. futures are flat as investors await further futures from the feds on its interest plans call it the amazon effect. shares of bed, bath & beyond slashes full-year outlook. the most destructive storm in modern history puerto rico suffering that direct hit from maria. after another day of record highs for stocks, wall street focusing on the fed which wraps up its two-day policy meeting this afternoon the policy statement due at 2:00 followed by the news conference a half hour later. the watch is on to see what the fed will say about reducing its balance sheet. this is the head of the journal's finance section today and that is markets uneasy over fed action as this treasury slump, jim, is now the longest since march. >> yeah, i mean, i think that we're all kind of dealing with the idea that the markets, i looked at that headline and i say, if the markets aren't easy,
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why did we hit a high. dow jones, s&p, nasdaq if for once we're not beholden to what the fed says i want to know about the disposable of their bonds. if they dispose the bond before they raise rates, that's a win they get these good rates. if they say they're going to leave you unnoticed that we're going to do a december hike, that will explain why we had that amazing bank rally. i'm kind of -- a fed meeting and what janet yellen says, but this is one that is not on my screen as being the big black swan. >> really. >> it's been called the meeting of the year. the great unwind beginning the only thing, i mean, people have said that perhaps not as relevant because there will be some turnover potentially in the fed over the next year >> that could be troublesome but one thing we've learned about this fed is that they are very course corrected.
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they understood the tantrum about tapering they're very wise. i would say the biggest hawk, stanley fisher's off look, i'll watch it like everybody else steve liesman will ask the best question and we'll all be riveted and at the end of the day i will say fedex might be -- we're going to come back to being stock-specific, again. i don't think it is that much of a challenge. i'm watching these banks and watching wells fargo yesterday on a slew of bad news the stock went hard. >> which means what? does it send any sort of a signal >> rates are going to go up. >> so, regardless of the bad individual news, the larger picture is positive for banks, therefore, they will respond to it >> right >> i mean, although, who knows we were at below 2-1 on the tenure, what, a couple weeks ago. >> 2-2 we have a little bit of lift
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i do think that it would be amazing to raise rates in the midst of a tragedy, storms i mean, geez it's not -- these are really bad. >> buffett last night said geico had more losses out of harvey than irma. a bunch of other things about the market >> geico, single biggest change that happened. come out with the gm biggest thing was the whole thesis and you've got to check for your car and you have to get a new car because you have to go to work. even faster than what you would get for your home. what do you think, geico, they're already paying geico is in fabulous shape i don't want anybody to think that berkshire isn't at all. there is one little outfit that wasn't, but i'm shocked to hear between catastrophe bonds and how much they had and all the reinsurers this was given the two storms back-to-back, what an industry
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that they had so much money. they're paying >> what do you make of some of the downgrades this week we'll talk about them later. j and j, 3m and then earlier in the week we had nike under armour >> i absolutely felt that the johnson & johnson was way out of bounds and jamie reuben downgraded i read that and i said, are you kidding me valuation stretched. if everything goes right for them, you'll look back and say, why didn't i buy it there. weakness in autos, electronics autos, we just went through why auto could be a problem. i thought that was dead wrong. the 3m i want to buy both those stocks. >> i didn't know they were bogue taken to sell. >> you know, don't take, don't take the great american companies to a sell. just say, listen, i'm not that excited. >> johnson & johnson and 3x are two of my favorite companies with two of my absolute favorite
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ceos and the idea that you're supposed to sell them based on what based on this stretch. you know, on a consumer business that hasn't been that good and on auto, which we know is much stronger than it was no sell i mean, we could have used that, yeah, 2007 could have used that sell. j&j great balance sheet in the world. great organic growth johnson & johnson, sell baby powder >> they sell a lot of other things as in baby powder represents j&j. how you used to talk about it on the trading floor. >> i'm a buyer of baby powder. talk down and say this is -- no, i will send them an e-mail saying, are you kidding me he's a gentleman he's never going to respond to that kind of thing
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i felt aggrieved. >> nothing wrong with being an aggressive analyst i would rather than that these people who just follow everything >> i was reminded of that, you know, kind of that soliloquy of what -- >> is that on the water front or is that -- >> water front >> street car named desire what are you talking about >> i liked the score >> oh, "the godfather. >> did you ever read the book versus the movie >> no. >> i'm going to do a spoiler he dies in the book. it's a horrible book don't read the book. stick with the movie yeah >> wow, all right. a lot of earnings to get to today. fedex, adobe, general mills. shares of bed, bath & beyond really taking a quit its full-year guidance hurt by
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the competition from amazon and others fred smith had interesting it things to say about amazon/whole foods. not seeing it being transformative because it is so hard to deliver groceries. >> been on two boards that were involved with food that was a fabulous conference call i want to buy, buy, buy fedex on this conference call they said the best growth they had in six years, unbelievable put through price increases and nobody thinks they won't stick he has, fred smith in the end has ecommerce comments that made me sit up and say, yes this is what is going on in the world. and just to quote him because i love him so much ecommerce on steroids is going to help their business and there is some quotes about what are you looking at i'm right here >> i'm sorry, i'm looking past you. a lot of tourists. >> there's nothing behind me some quotes about how technology is so strong that they can -- it
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says we are seeing the best year for global trade inyears and h goes on to say that this is the fastest rate growth i have seen since 2011 gdp from the first half of the calendar year. the manufacturing, especially the technology sectors, the key driver of this trend this may have been the most positive conference call general mills, i couldn't stand what they had to say bed, bath & beyond operation operational excellence >> don't move past general mills. i want to talk about general mills. >> they said things were okay and then they imploded >> obviously, bed, bath & beyond is a biggerloser amongst the u.s. consumer is fascinating at how quickly it is happening. >> general mills missed first quarter results. the full-year guidance is still unchanged. down 1% to 2% in overall revenues
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but as we pointed out many times and he talked about a lot the middle of the store, packaged goods, the millennials they don't have any brand loyalty. they want good stuff, not bad stuff. and these bigger companies are not able to move quickly enough and, by the way, nelson would say the same thing goes for p&g. >> we may have to go there later. >> what does this mean for kraft heinz? what does it mean for some of the other? >> north american retail down 5% yogurt down double digits, cereal down 7% then what happens with whole foods and amazon i mean, this was, this release -- i have it right here in my hand the barclays talk that they gave september 7th. where they say, now, i'm going to say because they didn't lower the guidance we remain on track to deliver. we expect organic to decline between 1% and 2%.
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well, they have a lot to make up given the fact that organic sales declined 4%. shouldn't they have signaled that when they spoken september 7th? >> yes >> thank you stocks down 10% already for the year is that enough >> no. no, it's going to be saved by the yield unless janet yellen tells steve liesman in order to knock it down 4% this was a terrible quarter. this is not like, you know, he wouldn't do this >> and then there was bed, bath & beyond we all saw down 13% everyone wants to blame it on amazon i don't think that is fair. >> i think they're living in a dream world there. >> are they? >> decrease as a percent this is from susan, the cfo. decrease as a percentage of sales primarily to an increase in net directed consumer expense. a decrease in merchandise margin, an increase in coupon
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expense resulting from an increase in redemptions. that's kind of their business. >> take a look at a two-year chart on this thing. it is just ugly. >> has opened lower on earnings now. 16 out of 22 reports 16 of 22 it opens lower the nex day. >> this may be the worst buy back ever. >> sometimes on the short side, you look back and you think, that seems so easy should have been easy. these guys are going to lose to amazon >> good balance sheet. people thought -- >> you were also talk about a creeping lbo giving how much they bought back all they bought back way too high >> the balance sheet is still great. but saying there is optionality. that's what i keep saying. the optionality, people have an aum option not to go there >> i mean -- >> some of these restructurings. amazing. >> and the debt load that they
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took on and the initial lbo and the fact that people always want to take their money out. sometimes it is good to sell the private equity thank you. >> i went to 1 kings lane pop up store. i will reveal this in southampton. this is the greatest thing i have ever seen can you scale it can you do more of these the guy says, maybe another. scale. there's no scale to the 1 kings lane pop-up store. as greats at that stuff is as great as that stuff is. i'm not looking at you, i'm talking to you i can do the same game >> someone better across the room >> there was >> when we come back, a company backed by ali bobba and meet th ceo of the firm. we'll hear what she told jim last night on "mad money."
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more "squawk on the street" in a moment people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.
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senator elizabeth warren blasting equifax for that massive data breach. hear what the massachusetts
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senator said to jim last night on "mad money. >> so long as there is no personal responsibility when these big companies breach consumer's trusts, let their data get stolen, cheat their consumers, like they did in the case of wells fargo, then nothing is going to change as long as they can keep collecting their paychecks and they can keep sleeping cozy at night, then we'll have the same kind of thing going on in these big corporations where the customer is at the end of the day. let's face it, stock holders are at the end of the day, too it's all about the executives. if we want change, then we have to hold the executives accountable, period. >> jim, headline for you >> they're going to get away with it. it's done. this is it.minority. there is a piece in the "times" one takes a road more traveled basically just saying campaign
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rhetoric i think she's dead right i can't believe she's going to get away with this hey, listen, the bad guys aren't going to come out and start doing this it is going be a month, two months you want to know what the bad guys can do? go read three-page dissertation from fedex i have to tell you, i think she's very right i think equifax gets it. they keep their heads down, they get away with it the board. i asked her to bring the board for some hearings. she would like to do that. same thing, by the way, with the fed today. anyone ask janet yellen if they should replace the people who runs wells fargo but, you know what, equifax, i don't think it's a left wing or a right wing thing equifax gotcha 100 million people, they got you. i am going to be ready to get a new social one of my friends is applying to get a new social got hacked real bad last week.
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don't know if it's equifax done everything right in her life and someone's her. >> most people are not going to do that. you realize that, right? >> i have a nice -- i'm doing well in life, i'm very lucky but i check my bank balance once a week improving that to checking more than once a week too many people who know too much next thing we know, we have to change our passwords david, you and i will switch passwords. >>en wi no one will know. >> you mentioned wells and what the fed should do with that board. this is what warren told jim about that last night. >> this is the fed's chance to step up and say when you cheat consumers. when you open fake accounts. when you force place insurance on them that they don't need when you charge them money that they don't owe then we, the federal reserve, are going to say those who are
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in charge, those who are responsible are gone >> you think that has any bearing on why it's down slightly >> no. the stock has been a horse because it trades in an etf. i think what's interesting is that she timed her coming on "mad money." there was a house financial services committee issue report yesterday titled did the cfpb let wells fargo beat the rep if you were to calculate a first-year penalty for wells, the penalty could exceed $10 billion. so, in other words, the cfpb knew this and let him off pretty easy and now there is the board of directors how are you guys doing only a couple of the board of directors have been removed. it must be really hard what do you have to do >> equifax and wells fargo can switch boards. like you and i switch passwords. hard to get added to a board >> remember, they have a person at retired ceo of a company that
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told me it was the foremost cybersecurity company in america, citrix, a retired ceo on the board it's sergeant shultz, my friend. do you at least know who sergeant schultz is? >> i do. hogan's heroes >> you think it's gomer -- >> you go to "godfather" references too often >> it's like ridiculous. i mean, it's like -- no. that show does not hold up >> no, it doesn't. >> it's embarrassing >> we'll get cramer's mad dash and have to get to adobe earnings some of the reviews about the apple watch are out and apple has a response to some of those "squawk on the street" is still ahead. kevin kevin kevin kevin
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best logistics getting ready to ring the opening bell six minutes, of course typical these crowds get very loud very loud. not like ali baba going public this is related one of the logistics firm >> turned out to be a great buy. david adobe one of my absolute favorite companies actually lowers the boom on his own experience cloud saying they were below expectations. they used the word disappointing. now, why do they do that he is the most honest executive in the world do not worry about it. it's going to come back and not competitive. large deals that were taking
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longer and the experience cloud. so, let him come down because a very high multiple i understand there is a price to pay to buy this stock because it's not nuls for this stock to sell-off he did use, he did say that it's harder and harder to close on these very big deals adobe is a horse >> why do we think that's the case any reason it's harder and harder. >> more than just the chief digital officers these deals are so big they have to be cleared basically by the ceo. >> it just takes longer. >> yes now, we heard that by the way once from -- and it was a great buying opportunity so, just be aware. the stock, it's actually been a pretty good stock, david i don't know if you noticed. >> i have. >> been pretty good since we told people that this is the level. but, look, let him come in i have been a big adobe fan. >> i think one of the greatest ceos a fabulous cloud-based company really alive with azure which is
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microsoft. some people are disappointed with that catalyst boost i could have said sleep with the fishes i didn't i could have gone there. >> thank you it's all right let's get an opening bell a few minutes from now maybe talk a little microsoft, as well, when we come back on "squawk on the street. i count on my dell small business advisor
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you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in 60 seconds on this wednesday. the fed meeting the highlight of the day and the press conference this afternoon the president, for his part, has a series of meetings at the u.n. today with the king abdullah of jordan, mahmoud abbas of the palestinian authority and theresa may later on this afternoon and egyptian president. so, we'll watch all of that after the address to the general assembly yesterday, jim. but, maybe people will hold their cards close to the vest before 2:00. >> this is one, don't bite on the first move at 2:01, the futures guys come in and wait until you hear the press conference don't do that sudden death thing that people do as soon as you
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see the statement. i find very substantive in the press conference >> there's the opening bell. some cheers for it in advance. s&p at the bottom of your screen is the ali baba logistics company best celebrating its ipo today. we'll talk to the ceo when the stock opens. over at the nasdaq, chicken producer pilgrim's pride so, we'll watch all of this. we'll keep an eye on apple today, jim the journal and some others reviewed the watch and say waterproof is great. but, when you're trying to make a call now that it's untethered from your phone, cell service is unreliable apple has now puot out a statement in response to that when the apple watch series 3 joins u s and may prevent the w
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from using sellier we are investigating a fix for a future software release. >> let's wait for the fix. i cannot wait for the new watch. i love my watch. i have the waterproof thing is a bummer ask i need something, you know, sometimes i sleep so little it doesn't charge because, you know, you put it away and you put it on a charge thing. >> 3 1/2, 4 hours is not enough. >> not enough for you or the watch. >> when they make me take the red eye, red eye, red eye, it is a disaster that's as bad as it gets i love the thing. >> this is the watch that many have been waiting for on the initial, on the initial introduction of the watch. in other words, having the connectivity without needing your phone >> remember, what it is really used for for me is to stop rudeness you know how david was looking away from me when i was talking to him, yeah, that's great, david. i want to say, david, that's
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really interesting i. >> i don't know. my family gives me a hard time for me taking a look at my watch and doing that, too. just to know what time it is what's the problem, dad? you got to go somewhere? >> it's a little more discreet tatu to turn your wrist >> versus you, i'm doing fine, jim, what else is going on >> one time in all these years i happen to look over his shoulder >> but our point is, apple is one of the laggards on the dow, along with 3m and j&j downgraded today. >> they should have downgraded apple pie and the flag >> i'm taking down betsy ross. >> apple >> yeah. >> honest. >> who is going to buy the 8 honestly, who is going to buy the 8? i think the "times" saying buy the 7 or wait for the x. >> that's an interesting question interesting. i do love -- >> what happened to the 9?
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>> you know, that's like the 13th floor on the empire state building. >> all the missing floors in the trump tower. you have a bunch you press and there's no floor there >> i have been trying to take pictures since we opened four years ago, but all they do is look like when you take a picture of the moon. but with this new apple, looks like they're doing a vogue studio there you go but now it's e-mail you're looking at >> yes, i am trying to stay up on things. yesterday was a lot of phone calls. i want to stay up on bed, bath & beyond and gis both we talked about are going to be down >> special k was down badly yesterday. >> and again od. kellogg's down 2%. >> conagra, kohl's, macy's >> one that is down very badly
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western digital. yesterday there was a report, again, in the afternoon saying that western digital was going to get tashiba >> it was wrong. now, it's the consortium for the toshiba business western dig down and they say we continue to have the right to say no given our joint venture when we bought sandisk when it's in place i don't know where they're going to ge. maybe they'll go to the hague. >> can't do it but didn't care. toshiba said they didn't care. my travel trust and allegan down and morgan stanley takes it from a buy to a hold. >> even when they did the native american pride that was an incredible, incredibly interesting deal. >> i first saw it and said he transferred it -- >> it did go up on that.
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but reverse course, again. >> we used to spend a lot of time talking about alergen before we get to general mills because we should hit it again with that weakness what is going on, jim? such the darling of hedge funds and then the government pointed squarely at killing the deal they succeeded in doing that and a harder road despite a successful sale at a huge price. >> but, remember, they got 10% in the stock and then it crumbled >> the acquisition he paid big numbers for small companies. >> people are saying one of these downgrades typically say -- he has to guide down, again. subtle downgrade -- cutting number, cutting number third quarter also a very big court suit i think at a certain point very prematurebut at a certain point, it's just too cheap but we're not at that point.
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>> let's take another look at general mills just because that stock has picked up on the down side goldman sachs this morning saying very things that you said, jim. this comes as something as a surprise risk in the wake of a july analyst day and a conference presentation just a couple weeks ago. >> that's what i said. >> investors reported optimistic commentary organic growth continues to disappoint and margins are under pressure from promotions and higher input costs and the forward remains bleak. bleak for each of these elements >> very bleak call and who said that, davdavid? >> goldman sachs when you say on september 7th remain on traffic to deliver our fiscal 18 targets. september 7, how long ago was that i mean, the quarter was done i don't know that company's got a real credit real credibility gap. >> you'll start seeing a big,
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broader push on tax reform jamie diamon talking about the tax code this morning on cbs >> i think in addition to being overcomplex, just give it a little perspective it's been 30 years since there has been really major tax reform if any of us think back 30 years, no cell phone and no internet that should just tell you about how out of date it is. >> with that, we have putting together a budget resolution that is going to let senator finance put together some tax cuts over ten years. >> you know, fedex would be up they pay very high tax rate, just to mention one company. a lot of retailers pay high tax rate but these guys aren't talking about it fedex won the disappointment down four last night is now up nicely, as it should be. >> on the 25th, we'll see whether we get any real
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specifics out of brady from house ways and means, as has been previously promised or whether it is really not particularly specific. it's unclear how much they want to share publicly because you want to try to keep things moving along without too much interference >> yesterday, there was in the morning there was a repeal and replace and in the evening it was killed as repeal and replace. >> yes >> incredible. united health and centine were down really badly. >> that effort is continuing right? lindsey graham and graham cassidy. >> which got pummeled by jimmy kimmel last night. >> i know. >> jimmy kimmel is going to get a rocket soon. like espn did. by the way, micron, it sounds like it's not a big deal, but i thought this was really important because it's going to send the stock flying. micron pushed today. why? because deutch bank says the regular saling price for flash
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will increase 2% to 3% versus down 4% to 5%. in other words, they were thinking the cycle is over the cycle lives. >> why don't we go to the president with -- >> the president is meeting king abdullah of jordan at the palace hotel. one of several meetings today. >> an ally for a long time and never has the relationship been better than it is right now and we're working together on many problems and some things that aren't problems that are very, very good but we're going to make some of the bad ones turn out good i just want to thank you for everything that you've done in terms of the refugees and taking care of people that, who knows what would have happened without you. so, i want to thank you and i want to thank everybody involved with you and you have done an amazing job. >> mr. president, thank you for having us here and we've met several times this year and i think that just shows the special relationship between our two countries and how closely we
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work together. i'm very grateful for your support to our country in these difficult times and a special bond between our two nations i would also like to extend our condolences on the victims of the hurricanes but, also, how you, the government, the people, the first responders reacted to this crisis i mean, for us sitting on the outside looking at how the americans came together in a difficult time is really example to everybody else and we're very, very grateful for that >> thank you very much. >> and everything we're doing to try to solve our problems. >> i've never seen wins like this in puerto rico you take a look at what is happening there and it's one after another and i think we are doing a good job. i have to say this about the king he is a fine gentleman and very nice man and also a great, great fighter. so, people have to understand that >> also, we're all fighting together we have terrorism around the world, but i think jordan will always stand beside you and your country. >> take care, everybody. thank you. thank you.
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>> mr. president, how do you feel about the reaction -- >> that's the president with king abdullah of jordan. later on, we'll meet with mahmoud abbas, theresa may coming after his address yesterday to the general assembly and blunt language calling kim of north korea rocket man which nikki haley was asked about today and said it worked we are now all talking about korea. >> that's true i have to say someone who has visited jordan, if you haven't been to petrol one of the greatest, incredible miracles of the world and jordan is a fabulous country to visit so, those who were thinking about going to the middle east, check out jordan i'm not just a travel agent for it, they're great friends of ours a lot of industrials leading this morning and the record on the s&p. >> just waiting for it to open here we have a lot of people here, a lot of guests coming here. just opened at $11.48 after
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pricing at $10 so, remember, big hair cut for that let me get to that in a minute here and get to the market opening. they opened it almost immediately at the open, folks here's what's important going on new highs, again, today. some of the material names and commodity stocks are moving a little bit and goldman had an interesting fall on that some of the food stocks are, obviously, getting hit rather bodily the guys talked about the decline in sales over at general mills and you can see some of these food stocks all down right now. kellogg's, but this is not a big surprise, folks. this is a story going on for more than a year now really a couple years. if you looked at the food stocks year to date, all have been down in double digit territory including campbell's and smuckers and the whole group is down there is an etf for that, pbj, peter boid johnson and it's down 5% it has all the food stocks and
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also a lot of the beverage stocks like pepsi and coke not a pure food play that's why iter not down nearly as much. a lot of aluminum stocks are up today. goldman had a note awaiting commodities for the next three months and talk of production cuts in china, which is the biggest market in the world. i think that's moving some of the aluminum stocks. the fed is going to be out the most important thing i heard in the last 24 hours, don't pay too much attention to the dot plots and any individual commentaries because the fed is going to change. three seats are already vacant new chair person in february the fed is going to look very different in six months. five new people, potentially, on there. commentary could look very different short time out i want to go back to best here we had a lot of guests here. they did price the chinese and logistic company and they raised $450 million but, folks, that's a hair cut.
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they were trying to raise up to $869 million that was prior to that and, once again, investors have pushed back. we have seen this so many times this year. saying we don't want to pay the price and they had to lower it this is good news for people who want to go out and buy stuff at the open alibaba announced they'll buy an additional $150 million worth and maybe even at the open they may be part of the reason why they moved up. that's about a third of the deal right there. again, more people in. original owners a little bit more in on the deal, cut the price. the price goes up. would you rather have it priced at 15 and go to 10 or rather have 10 and go to $11.22 i think i'm on the side of the people who are buying this at the open and not the issuers. we had another surprise today. another ipo. a latin american travel company they priced at the high end. we're waiting for this one to open right now they were backed by xpedia you heard about this all
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throughout the year. brazil is hot and issues of corruption in the last three years, but brazil at a three-year high and ewz is what you want to look at. the etf. very high volume recently here and latin american stocks and latin american airlines is what this company is involved in. travel company had been doing very well. some of them might go up over 200% so, the bottom line is, emerging markets have been especially hot and, remember, guys, going to be talking to the ceo but, so far, certainly a successful ipo up $1.50. that's 15% improvement from the open guys, right now the dow is up 4 points back to you. >> thank you, bob. do want to come back to the secondary effects of the story i reported yesterday involving sprint and tmobile and the vigorous talks taking place to
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try to merge the two entities into what would still be the third largest wireless company in the country what is that secondary effect. it involves charter. i did mention it in my reporting yesterday and worth coming back. if you went back as little a month, month and a half ago charter seemingly had an analyst supply of suitors. soft bank being one of them. trying to craft this plan to put together a new company and deutch massive amounts of debt and go out and buy charter at a huge premium and pull in the 70% of it already owned and they're at a premium, as well. it's in the background and i said that yesterday. month and a half ago, you maybe thought verizon had interest still. late last year there was real interest from verizon and pursuing charter and trying to get something done last week i sat down with that
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company's ceo and he made it very clear they're not interested in buying charter in any way finally, altice which back in early august i reported was scrambling to put together a potential bit of its own for charter. why? because it does want to own it if it ever was actually for sale and it feared that soft banks efforts were going to come to fruition in the near term and therefore put pressure on it to be able to have another offer out there for a company long in its sights charter continues to be in altice's sights but having spoken to many people and working on financing for it that that effort is slowed because no urgency any longer for altice to buy charter given soft bank is no longer there and verizon is no longer there and our parent company comcast has no interest in expanding in dist rubugz at this time. if you're out there raising the debt an awful lot, don't forget.
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you may continue in that effort, but you're looking at the longer term now in the next year or two years in which you want to expand dramatically and altice made no secret of that they own the former cablevision but they want to get bigger. cox not for sale still even small names like media com not for sale and charter is the big one. but they don't have to move as quickly any longer it would seem so, those efforts to try to enlist equity beyondcana canadian partners. they don't need to go to them, they need to go to others. will it happen over the next couple years potentially will they get them to roll into some new entity at a higher price with more leverage maybe. will they get all the money they need to raise? possibly will they run it at a better mar margin could be right now it would seem charter
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will deal with the here and now. which is, by the way, when it comes to cable, guys, the news we got from our company the loss of video subs and the concern that comcast and perhaps others are facing increased competition from the likes of at&t uverse and a highly discounted price. what that is going to mean for the continued competition among so-called video subs i don't know the answer to that. both stocks are up today but i wanted to just update. little update. >> again, comcast, obviously, parent company of this network and went from hold to buy on a 10% discount i thought it would have some impact, it didn't. stock has started higher on multiple days and finished lower on multiple days >> charter up 27.5% for this year let's get to the pits and
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ri rick >> many are looking at all markets payer particularly close attention to the treasuries and especially the short end to that end, let's look at the two-year if you started in june, you could clearly see we've moved towards this 140 level matter of fact, what's interesting is we're basically at the highest levels since july but a basis point or two makes a big difference because, basically, july is closing high you see on that chart was around 141. you take that out and we're very close to doing it on a closing bas basis. now, you're popping all the way back because you see on the next chart to october 2008. as we get to the beginning of ending crisis era policy, we see that the markets are starting to trade in areas we haven't seen since the crisis area. if you look at the ten-year, look at june of 2017 because we have a lot of congestion in june we are now above that. if you look at the same time period for boons you could see it's clearly even more above that. 48 to 50 basis points is a big
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area in boons. we're not that far away. foreign exchange may be the biggest battlefield after the press conference today if you look at april of '16 $1.01 the dollar making a comeback and back to brexit level rates are going up and dollar index says, no way, i'm not rallying watch that spread today. carl, jim, david back to you. >> rick, good to have you back thank you very much. "usa today" ed baig will join us to discuss his new review of apple watch series 3 don't go away. stay with me, mr. parker.
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morning. a lot to watch including the track of hurricane maria the president, again, at the yooup tod u.n. today d the fed meeting at 2:00. a lot more "squawk on the street" after the break.
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welcome back to "squawk on the street." annualized rate of 3.5 million units. that is a miss the street was looking for a slight gain. sales up just 0. 2% year over year the fourth drop in home sales and the realtors say it is about high prices and low supply the median home sale price is up 6% year over year because inventory is down so low to just 1.88 million homes for sale. that represents a 4.2 month supply a balanced market is considered a six-month supply of homes for sale 51% of homes on the market sold in less than a month
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now, regionally, sales were way up in the northeast and down 5.7% in the south and realtors say there could have been some slight change dueto houston home sales but, remember, these numbers are based on closed sales contracts signed in june and july. would have been a couple days of closings missed in the houston area investors represented 15% of the market in august that's up from 12% a year ago. first-time home buyers just 31% and that is the lowest in a year carl >> diana with existing numbers thanks welcome back, by the way to "squawk on the street. markets relatively flat, of course, ahead of the fed decision at 2:00 eastern time. for the time being, industrials and energy are leading and we're keeping our eye on the ten-year. >> our road map does start with that devastating earthquake in mexico the death toll continuing to rise and hurricane maria making
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landfall in puerto rico. live reports from both the street keeping a close eye as it unveils the interest rates. we'll speak with the ceo of the chinese logistics firm straight ahead. meantime, as carl had mentioned the s&p 500 reached a record high all ahead of the federal reserve. steve liesman joins us what with what we can expect from today's announcements. steve, good morning. >> good morn welcome to a day in history in the ongoing saga the fed expected to announce it will unwind its $4.5 trillion balance sheet which, as you remember, swollen with treasuries and mortgage-backed securities to drive down interest rates in the crisis will this be, as the feds suggest, as boring as watching paint dry or a potential slow motion train wreck which some are warning about financial
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markets and the economy. here are the two arguments here. on the train wreck side, unforeseen consequences and hurting emerging market debt the fed not in there buying treasury and the treasury issuing more of their stuff. the wrong policy for low-growth environment along with other central banks eventually coming around to tightening steven stanley writes, "with so much excess liquidity sloshing around, the first $100 billion balance sheet reduction may have little effect. eventually the cuts in liquidity will bite. it is slow and gradual and telegraphed. you sell it in better times and it doesn't have as big effect. the balance sheet, in fact, since the fedhasn't been buyin has been declining as a result of public debt outstanding other central banks are still buying and will be for quite some time.
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it is true, the runoff will start slowly it will eventually ramp up according to the fed's plans where it reduces the balance sheet by as much, guys, $50 billion per month. many, melissa, said we'd never get here >> thanks, steve liesman for more, let's bring in tom, as well as jpmorgan anastasia guys, good to have you with us anastasia, i'll start out with you. steve laid out two camps slow motion train wreck -- >> i wouldn't call it boring because it is a historic phase out of stimulus, but that said, we do know what the details are going to be. so, if we think about the phase out from the treasury perspective, you could not reinvest $12 billion over the next two months. that is a pick up in supply that would have to be absorbed by the rest of the public markets, but
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it could be. we are in the camp that rates will rise as a result of that, but now going to be a tape or tantrum experience >> the biggest trade ever put on in the history of man kind and being taken out right now. the biggest part of making a trade is exiting that trade. here we are. in terms of the treasury, we have seen a sharp move in the past few weeks in terms of the ten-year yield we have seen it go up 20 basis points since the first week of september. why shouldn't we be more concerned? why are we so complacent about this >> first of all, i would say caution with that analogy. at the end of the day, 2.50 before they started to drift back up to 2.25. i don't think that is what we are about to embark on the reality for the market is this it's entirely -- what rates do, what ten-year yields do is entirely the function of how much the fed decides to shrink their balance sheet. no one knows the answer right
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now because it is really a function of lcr. where is the demand for reserves coming from? we could see excess reserves go to 400 or as high as a trillion. if you go to the 400 part, but if you get excess reserves down to 400, there is no question the market could react in a dramatic way but that's not our call. we do not expect that the fed will get down that far from an excess perspective the conversation has to revolve around the side of the balance sheet. >> the side of the balance sheet is clearly the issue that matters today and the other issue is inflation the reason nominal yields picked up is because they have been firming. i think tactically speaking, there is more to that trend. i do see that the fed forecast can go from 4.4% to 1.7 by the end of the year and i do find support to that theme. look at oil prices and gasoline
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prices even if you look under neath the service all the disruption we're seeing from the hurricanes now that will result in replacement demand for autos we had an inventory issue with autos which is why used car prices were what they were >> do you think that question of whether or not we're in this structural deflationary environment because of technology, is that question over >> it's not over let me make one point clear. >> i don't think anyone is actually here. >> boards and others have had to respond to it. >> ask yourself what the nonvolatile comparison basically the last two or three years. the things that have driven inflation lower from a headline perspective are their volatile components energy prices. and janet yellen favorite topic, cell phone prices. three or four components that have done all the damage and nonvolatile, which, by the way, 70% of the weight of inflation
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that remains stikingly stable. >> we're still very much in the demographics and technology are weighing on inflation, but tactically speaking, i do see an upside here. that has important implications for the markets this year. if you think about what has worked in the first half of the year, all the weak dollar trades but if you think that inflation firms, if you think that yields nudge higher from here, then you may actually have a rotation into the stronger dollar place through the rest of the year >> so what i would say, sorry, i would say that we buy into that. we've been pushing it for a really long time that will happen no question about that in the near to immediate term, it's very hard to generate a significant inflationary impulse. here's the hlittle thing that markets should be paying attention to wage pressures have mounted. it may not be to the point that people want. but if wage pressures continue to mount, it will get the market to buy into this idea, hey, there is more inflation out there than we believe in short of that outcome, i think
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have a hard time getting out of this range >> tom, anisestasia, thank you so much. don't miss our complete coverage on "power lunch" at 2:00 p.m. eastern. the latest on the recovery efforts in mexico after yesterday's devastating earthquake and then there's hurricane maria making landfall right about now over northern puerto rico. we'll get an update on that when "squawk on the street" continues in a moment. 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.
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the death toll continuing to rise in central mexico following yesterday's powerful 7.1 magnitude earthquake that is a live picture of mexico city we want to get to steve paterson who is there with the latest on these recovery efforts good morning, steve. >> hey, good morning bad news the death toll has just risen from about less than 220 to now 225 confirmed dead after this earthquake we want to show you basically where these increases are happening. one of them is right here in the heart of mexico city you can see this building behind me this used to be an employment agency, six stories. now a pile of ruins. what they're doing is trying to find and locate people that may be alive in there. we do know that people are alive in there we have been speaking to people on the ground here have been telling us their stories about family members, friends who may be trapped in
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there. one woman, in particular, told us about her son and there are many others who are searching for any answers that may come from those rescue teams who are up above those ruins they are pulling people out of there. that is the good news. we have seen one stretch there was 15-minute stretch where they pulled 15 people alive out of there. they pulled 30 people total out of that building alive with 20 more unaccounted for but this is just one story across the city and across this state and region in fact, there is another school, which is a few miles to the south of here with confirmed 21 elementary school students who were trapped and killed when their school collapsed another 30 unaccounted for so, that's horrific situation. this is arduous, heartbreaking, meticulous work these crews are doing and this work will continue as the days and nights go on until they find and locate the people that they're looking for. we'll send it back to you.
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>> difficult story, steve. thank you very much for that orthstoanother story we're monitoring today is puerto rico getting battering by hurricane maria at this hour the strongest storm to hit the island in more than 80 years joining us this morning is former puerto rico governor. good to have you with us this morning. thank you for your time today. >> of course, my pleasure. good morning >> these two storms two weeks of each other what does the future hold for this country over the next few months >> sure. well, puerto rico is a u.s. territory. puerto ricoens a american citizens and fema is on the ground and they are part of the process now. the reconstruction pros. by the same token, there is some of the infrastructure that will require private capital to be invested to bring it back to where it ought to be and i'm speaking specifically about power. and hurricane irma, power went
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off, you know, pretty early and same thing happened with this one. so, i would envision that that will be one of the new developments that we are likely to see in the coming months. >> how difficult will it be, luis, to get tourism back on track. at least to the point prehurricane since that is such a vital part of the puerto rican economy? >> certainly, it is going to be tough. it depends on the extent of the damage and it is impossible at this moment to have a clear assessment of that hotels tend to be pretty strong structures and they are built according to code. but we'll see what happens also with the surroundings and whether the island can come back for this hopefully it will especially because so many other islands that are completely devastated
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puerto rico is actually infrastructure is stronger, actually we were receiving on the island people from other islands after irma in this case, of course, you know, there was a direct hit with a category 4. very strong category 4 hurricane. so, we'll see what happens but i'm hopeful that by, you know, the height of the season starting during the holidays puerto rico will be able to receive those tourists back. >> you mentioned the balance between government aid and private capital. i mean, what are investors supposed to think given the country's well documented fiscal troubles what is the draw >> well, one thing -- if you think about it it should not be related what fema needs to do and will be doing just like it is doing in texas and florida, it will do in puerto rico because puerto rico is part of america. having said that, however, this presents an opportunity
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especially with those that deal with power, water and other, you know, basic finfrastructure an opportunity to look at alternative ways of providing those services and hopefully that opportunity may bring about the participation even of existing creditors so, people need to buy power and need to consume not just power, but water. so, there is a potential there that hopefully will be part of the reconstruction process of the island >> carl had mentioned the investors involved in puerto rico including hedge fund investor, do you believe puerto rico making overtures to investors who are already in the island to maybe further help the island as well as their investments? >> well, there are, indeed, because of the tax situation in
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puerto rico significant investments by different, you know, wealthy individuals and corporations that are likely to, you know, they are invested there already. so, what is likely to happen is that they will just reconstruct if they need to. and a lot of the investments, for example, are in the real estate area. so, those ought to be fully insured. so, there will be some work to be done, if that's necessary but they are insured so, there is really no reason why they would divert the direction they had taken whole sections of the area, which is heavily attractive, you know, tourism area, where there is investment and i am likely to see that that will continue. >> president made some comments about the hurricane season this morning during one of his u.n. meetings and he said on hurricanes, "it's just one after
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another. you're in d.c., but a lot of your family, i think, remains in puerto rico where they're riding out the storm. do you think about the longevity of the residency in that country or anywhere in the caribbean >> well, it's the same as florida. it has its attractions there's a reason why people stay in florida and there's a reason why people stay in puerto rico even though in both cases you're in america, part of the u.s. it's tropical. weather is nicer when it gets cold up here, people think the same thing. i ought to be living further south. and, so, again, things happen. and there's no reason to believe that this will actually impair, you know, further development beyond the island. however, short term, it is going to be very tough and the resilience of our people will be tested >> governor, we're thinking of you and your family, of course,
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and all of puerto rico we really appreciate your time thank you very much. >> we pray that everybody is safe certainly. thank you. >> governor luis as we head to a break, you can take a look. shares of best backed by alibaba just started trading a little while ago and having a very strong open. the ceo will join us on set, next "squawk on the street" will be right back
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at the new york stock exchange today. joining us is the company's founder and ceo johnny chou. nice to have you with us >> thank you >> congratulations, always a big day. investors had been a bit concerned, perhaps, not about the opportunity of growth in the x chinese market, but also incredible competition in that market has it and will it continue to be more competitive? >> well, belief that technology
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with innovative business models can provide consumers with much more comprehensive experiences and services we have given up a tremendous amount of business in supporting the market innovative solutions. so, yeah, the competition is going to be fierce like anything else in the world, but we have great opportunity and also market growing tremendous amount of speed and, if you look at china's consumption going up and middle class in the right market and with great potential so, very exciting. >> i mean, when you look at the overall picture, of course, alibaba's incredible growth and the growth of infrastructure in china and companies like your own that can get goods to people anywhere it is all growing quickly. what are the challenges for you? when you look at the logistics opportunity that still exists in the country? >> the challenges that one growing so rapidly how can you scale up to me the
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market demand to provide a best services so, we continue to invest in the technology and the services. and, second, they, you know, the more and more consumer demands are much more complex now. how can you do innovation and keep up the demand or ahead of the consumer needs and, you know, have them have good experience i think that is two of the biggest challenges >> you talk about having an asset light model. how do you do logistics with an asset light model? >> we are a company that we're building platforms with technology and software platforms and also now c computing. and we allowed a lot of small franchises and our partners enable them to serve better. so, i would just say that we take care of the world, you take care of your customer locally. customer satisfaction and helping tremendous growth in the
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company. >> your ipo is doing quite well. up 16% and downside because of tepid investor response out there. you have more than 20% stake in your company but you take a look at the scene and you have zto, which went public last year and that stock down 24% since going public. there are concerns out there is this a reflection of concern about alibaba's business because they rely so much or a concern about the logistics business in general? >> i cannot really comment on why our peer stock is down my experience is we think tremendous opportunity and market is growing very rapidly second, the alibaba platform empowers a lot of consumer my family and my wife spend a lot of purchase on alibaba platform, but, nevertheless, we get our customer from our consumer directory, even though
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they're on alibaba platforms but we're going to provide services for the murerchants and entrust us that we can take care of their customer better >> investors report that alibaba is not doing well or the sales are down or something, should we be concerned about best? is it a barometer? >> first of all, the market is growing rapidly. i think the past couple years and i think looking forward and still growing rapidly and i believe that alibaba still have great momentum and great company and grow very good but i think we are in a market just started we are still in a marketplace that probably has, you know, smaller market share and market only at 20%, 30% every year annually and by providing better service to our customer with technology and integrated services what we can do is continue to grab market share and also create more needs and demands for our customers. >> how likely do you think it is that the u.s. and china see a
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real trade dispute on a broad level? and would that affect best >> no, i think it's -- right now the economy is so global china, u.s. and china is number one, number two. economy in the world, right? so, i think everybody is going to be better off for the consumers for business and by working together and by everybody working together i think people generally want to work with each other and have to work out some issues i'm very happy and optimistic that things do well and continue to do so >> eclipse what is an export-led economy? >> china is a big country. the middle class has been increased dramatically we still see, i think china for some time every day you feel a strong consumer demand ten years ago i would say, you know, manufacturing export is the engine for the economic
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growth but now more and more i feel that, you know, consumption and the middle class needs and mass consumption is really driving the economy growth so, i think still have a long way to go and i think it's still going to be a greater growth ahead of us. so, we're excited new york stock exchange here. just getting started >> just getting started. a good start the stock up almost 16% this morning. mr. chou, i appreciate your time >> thank you very much thank you for your time. now let's send it over to had sue herrera for an update. >> here's what's happening at this hour. one of the strongest hurricanes to ever hit puerto rico making landfall this morning. officials warning maria with its 155 plus-mile-per-hour winds would decimate the power company's crumbling infrastructure and force the government to rebuild dozens of communities. the death toll rising to 225 from the powerful earthquake
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which hit near mexico city on tuesday. at least 22 children and 2 adults were killed after an elementary school collapsed. a further 30 children and 8 adults remain unaccounted for. u.s. ambassador to the u.n. nikki haley appearing on "today" show defending policy on north korea and the president's comments about the kim regime. >> i think what you saw is the president was responding to north korea's ballistic missile testing and their threats that they are going to reduce the united states to ashes, as well as destroy japan so what you saw was a very firm response to the kim regime that they need to back off and he had the entire international community with him >> that is the news update at this hour. i'm going to send it over to jackie deangeles with the report >> good morning to you, sue. crude oil prices are higher. they're supported after this number up, but not necessarily off the charts here. we have a build in crude oil of about 4.5 billion barrels.
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that was higher than expect. a draw down in gasoline. this is the supportive part of a little bit more than 2 million barrels. these numbers were basically in line with expectations also, basically, what you would expect to see this time of year in line with those seasonal trends and, remember, we're going to see a little extra volatility today as october rolls to november after the close but you can see october's trading a little over $50 a barrel and november contract is about $50.5. let me send it back to you at squawk alley. when we return, massachusetts democratic senator elizabeth warren slamming eq equifax and wells fargo last night. paul atkins will join us in a moment and stocks in a tight arrange ahead of the decision. dow uju t pntisp stwoois. from the hospital, far the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders
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massachusetts democratic senator elizabeth warren joined our own jim cramer on "mad money" and slammed equifax and
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wells fargo and called on the fed and the government that it will not stand for companies that defraud consumers >> if this is the fed's chance to step up and say when you cheat consumers, when you open fake accounts. when you force place insurance on them that they don't need when you charge them money that they don't owe, then we, the federal reserve, are going to say, those who are in charge, those who are responsible, are gone >> joining us this morning, former sec chairen paul atkins and now form of alliance paul, good to have you back, welcome. >> thank you very much thank you for having me. >> i want to get to coins and wells, but on equifax, did you hear warren get more specific about what potential policy responses might be >> no. i mean, you know, this is all sort of breaking here over the
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last week or so. so, i don't know all the facts but, you know, cybersecurity is a very important issue for private companies, but also for the federal governments and i don't know about senator warren. we were colleagues together on oversight panel for tarp we have seen the good, the bad and the ugly with respect to a lot of goings on, you know, wall street and else where. but, with respect to cybersecurity and the federal government itself, you know, has fallen down. the office of personal management lost millions of records or millions of records were hacked into by perhaps the foreign government so, they have my information and, oso, i don't know about all about equifax and what happened. but, certainly, a huge issue that the government needs to be involved in to help protect businesses and consumers and everybody else >> right is it your sense, though, that perhaps they're behind the curve? i mean, you're talking hacks of
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ten of millions of americans and i think a lot of consumers have yet have heard solutions that might prevent this thing from happening in the future. >> yeah. well, again, i guess the investigations that undoubtedly the board of equifax has launched and government oversight, as well, will bring to light, you know, what happened or what were the failures might have been but, again, the whole issue of cybersecurity is larger than just one company it really is a threat to the united states as a whole and i think the government needs to treat it as such and then help private entities bolster their protections. >> paul, if we can switch gears here and talk about initial coin offerings. certainly a hot area of the market there have been about 92 initial and in the second quarter alone they have raised about $800
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million. you know, the way coins go public, though, it looks just like a crowd funding effort. you write a white paper and go online and see if people want to buy these coins and these coins may trade online a lot of these coins, after the first day, they don't trade at all. what should we, what should we do here in the united states to regulate short of a whole sale ban, which they put on in china? >> right well, so, i think, i think the government, you know, is taking steps there. and that's one reason why we've launched this voluntary token alliance where we can get the private sector together and come up with good guidelines for people who are for both people who want to buy into these types of offerings, but also people who will be making those offerings so that they can stay within the boundaries of the law. the sec came out a few weeks ago with a report and i think that shows, you know, a different approach of this administration
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instead of immediately coming down with a hammer they came out with a report basically telling people to stop, look and listen. and be mindful that there are laws that govern these sorts of offerings. it depends, it's very fact intensive. it depends on what exactly is being offered to the public. and if it be an investment and a security, then you need to follow the securities laws if it has to do with commodity sales that drips into what the trading commission looks into, you have to follow those that's where we are with this quilt of regulatory rules that we have in the united states we want to help guide people so that they stay within the boundaries and they don't, inadvertently, cause problems. >> of course, nothing draws attention to bit coin like jamie dimon calling it it a fraud and said he would fire a trader
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caught trading it. i wonder what your reaction is to that and what your reaction to the sec is to that. >> i think, obviously, people have to make their own decisions. a lot of people involved in that marketplace and then other institutions like, evidently, jpmorgan that is not that is why we have a free market for people to make decisions but they need to have good information and decide for themselves whether that's a risk that they want to take or not. so, that's what we have disclosure based securities laws, for example, with respect to investments so that people can try to decide for themselves what their risk tolerance is and how much or if they want to go down that road >> good or bad thing, paul, if there are sec regulations on bit coin would bitcoin go higher or lower in your opinion? >> bitcoin itself is not necessarily a security or an investment so --
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>> on icos but if there were more regulations around icos and if they had to register prior to going public, would that be overall good for the market and, overall good for bitcoin >> so really broad offering that where they're asking anybody to buy into it. that's one thing they're also lots of provisions in the securities laws to try to cut down on the amount of paperwork or disclosures that have to be done, according to, you know, the rules for broad offering if it's offered to people who are, you know, have particular amounts of money as assets that they can risk in the market. there are different rules that apply. so, i think there is a flexibility there that that's where we aim to help people understand if they're going to be making these offerings so that then they don't inadvertently get in trouble with sec or whomever
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so, i think that will ultimately be good for the marketplace because it will add a lot more transparency and a lot more information for people who want to buy into it and that might satisfy some folks, some critics of the marketplace that might otherwise think there is a problem. >> interesting times we live in, paul always good to get your take thanks for the time, again paul atkins down in d.c. reviews are in for apple watch. today mixed reviews for the next generation of the watch. "the times" says it excels even if you don't need cellulacellulr the verge, how much are you willing to pay for a gadget that offers intermittent convenience. apple right now is the biggest laggard on the dow and the company did put out a statement saying there are some examples where it loses connectivity. we are investigating a fix for a future software release. we talked with cramer about the
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degree to which you want technology that close to your person >> wearables it's funny i don't think this is thought of as a break through product and yet it is the largest watch company in the world now >> also speaks to the decline of traditional watches. >> it does and people have been waiting for this in the initial launch of the first watch, of course the idea connectivity whether or not they're having some issues with not have your phone in your pocket while you have the watch on >> the new apple watch being untethered and it cannot be untethered it's gone. what is the point of having it until we get the software fix? also a negative note this morning questioning the level of preorders for the iphone 8 in china and u.s. preorders are lower than they have been for the 6, as well as the 7. so, there is some concerns about just the 8, as well, on top of that watch >> morgan stanley did raise its price target yesterday on a weak
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dollar so, a lot of debate over this stock. >> interesting. as we head to a quick break. let's look at shares of bed, bath & beyond getting hammered that stock down a whopping 15.5%. the retailer cutting its full-year outlook and a quick programming note here. today on the halftime report an exclusive interview with bill ackman the first time he is speaking out about the battle with adp. "squawk on the street" will be right back not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.
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on trading nation what surprise country could he invest a wt t bt ample of a bubble right now?
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let's get to the simi group in chicago >> hi, thank you, melissa. it's second day of two-day fed meeting. a big meeting, maybe historic meeting. we couldn't have a better guest
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for that particular point in time, former fed governor robert heller let's get right into it. i have four i want to go in to what do you think about the rate side of the fed and how things may shake out today and for the remaining meetings for o2017 >> i believe they should be increasing rates the sooner the better. they're way behind the curve on that score so, let's do it fast i doubt that they'll do it this time because of the other issue, the bond issue that we'll be talking about. but, increase rates do it fast >> all right on balance sheet we all know balance sheet reduction. but, you know, the truth of the matter is it's going to be very slow because they are going to continue to buy things that roll out. they're just not going to buy all things that roll out what do you think about the balance sheet issues what will we hear today? >> i think the fed will stick to
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its plan ie, $10 billion every month for the time being and then increase it slowly to $50 billion a month and that's a good process it is predictable. it's orderly and that's what you need in large bond market like that so, i think they are on a good track and, eventually, they'll get it done. >> you know, bob, you were one of the first people along with markoleson, myself, we were all asking about balance sheet, balance sheet and now we're there. another thing that all three of us continued to bring up with many others, of course, ior. interest on reserves is that something that should be looked at or are we just asking too much of the fed in its normalization process? >> i think interest on reserves is a mistake why pay to hold the reserves at the federal reserve. so, in my book, if we get rid of interest on reserves, that would
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be all for the good. can you do all three at the same time increase rates, reduce the balance sheet and get rid of interest and reserves, that's a lot of balls in the air at the same time. but, i think the fed eventuallyy should get rid of interest on reserves >> all right now, the final topic, and i know this is of particular interest to you, we're down under a quorum with three fed governors. being a former fed governor, what does that really mean what logistics are affected? of course, it can end very quickly if somebody is nominated. randy quarles seems to be the man. tell us about the lack of quorum and what it means. >> first of all, randy quarles would be good to add to the board, experience with treasury, you couldn't find a better person for the job being down to three governors means the fed is not able to act
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anymore. i'm not talking about fmoc but federal reserve board itself, both on the regulatory side and as far as monetary policy is concerned. changes in the discount rate have to be approved by the federal reserve board. three governors are not enough it's not a quorum. we are perilously close to that. at the moment we have four sam fisher is resigning in the middle of october, less than four weeks from now. even with four it's very difficult to run the show. if one person is out of town, again, you are immobilized if one person catches the flu, the fed can't act. that is not the way to run an airline. we need a full board there there are plenty of good, excellent candidates for these positions. >> i agree i'm talking to one right now bob heller, thank you for taking the time this fed wednesday. david faber, back to you. >> all right rick santelli. that's right
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no way to run an airline let's send it to jonah look at what's coming up on "squawk alley." >> the new apple watch, did it work the way it's supposed to. people are taking delivery of the watch if they preordered last we're going to have a reviewer who tested the watch at the top of the hour.
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a lot of big earnings movers fedex cut outlook, cyber attack and hurricanes weighed on the profits. the stock turned nicely after the opening moving higher. adobe, bed, beth and beyond are lower. general mills had weak cereal and yogurt cells and bed beth is down it's not performed well for earnings for years. >> those 20% coupons are a few too many in the past few years here fedex reported we are sort of questioning the move lower sharply because a lot of the items that the company took on forecast were these temporary items. cyber attack as well as weather. those were transitory. it does look like, at least this morning, wall street has let that go.
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they are looking past that. >> general mills had been down over 7%. it's come back a bit the continued decline of packaged goods sales in the u.s., changing taste of consumers, particularly millennials who don't have as much brand loyalty as older folks do is breschipressuring cs in terms of organic sales growth they aren't looking for gis, although investors were more positive given their recent comments about the quarter so they surprised them. >> millennials too busy buying those brands they love like nelson said on air yesterday mixed review on apple watch series 3 why one reviewer said it's time to ditch your iphone dow down 4 points.
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the street." top performer sector in somebody at record close.
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ww granger first day. other leaders ww granger and johnson controls up 23%. that's spider industrials ticker xli hitting all-time high in trading earlier today. we'll see if that sticks through the afternoon session. now let's head back downtown for the start of "squawk alley," guys back to you. >> thanks. 8:00 a.m. at amazon in seattle, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good wednesday morning welcome to


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