tv Squawk Box CNBC November 8, 2018 6:00am-9:00am EST
"squawk box. good morning welcome back to "squawk box. i'm andrew ross sorkin with joe kernen and melissa lee is hanging out for all three hours this morning becky is off today look at u.s. equity futures after what was a heck of a day yesterday in the green looks like right now dow would open down off about 40 points. nasdaq looking to open off by 41 points s&p 500 looking to open off by 10 or 11 points right now. let's see what happened overnight in asia after what was an unusually great day for the markets. the nikkei up close to 2%. hang seng up a little bit. shanghai off marginally. let's look at europe overnight you're looking at a bit -- can i call it a mixed picture? most of that is in the red with the exception of the uk with the ftse 100
treasury yields, this is the number that a lot of people are focused on right now you can look at the ten-year at 3.223. >> we're following breaking news out of california. police are reporting at least 11 people are dead after a gunman opened fire at a bar in thousand oaks authorities say the shooter is dead hundreds of people were inside the bar at the time of the shooting the bar was hosting a college night. we'll continue to follow the latest on this story and bring you more as we get it. tesla announcing it has chosen robyn denholm and created a role for her to be the board chair. this is effective immediately. that move coming more than a month after elon musk was forced to step down from the position as part of a settlement with the s.e.c. he had 45 days to do that. denholm is currently the cfo of telstra. she will be leaving that role as part of this once her six-month notice period with the company is up an serve as chair full
time she has been a board member at tesla since 2014 the company is still actively searching for two more independent board members. musk said denholm has extensive experience in the tech and auto industries and made significant contributions while on the board to help tesla become profitable. temporarily she will step off the audit committee during this period there was a controversy with her role at telstra and tesla because -- >> that's confusing. >> no, because of a joint venture marketing agreement they had. >> are you sure this story is true are we mixing the names up >> we're not the real question is what kind of oversight she can provide and the question that comes right to the surface on a day like today is she's been on the board for the past several years during -- >> and has done what >> exactly
if there was an idea this role -- >> it's not a clean break. >> this was an opportunity for tesla to appoint somebody who was going to be a superstar chairman >> that is disqualifying there >> what? that i have to say tesla i'm only saying it like that because you're confused. investors have been talking about is there somebody with operational experience this makes you think that perhaps this is aplace holder of some sort musk is barred as serving as chairman for three years you appoint a caretaker. >> somebody that he trusts >> right >> and won't outshine him. >> flying cars
you want a boeing person there >> no, but somebody with tremendous operational experience just people who have great credentials. >> tomorrow we'll have ron barron on the show i'll be at lincoln center with him. >> you're doing that >> i am. becky does it often. she's out. >> no kidding. >> i'll sit in we'll talk to him about this new job and about what he thinks of tesla. >> it's friday and you're not going to be here >> you should throw a party. i'll be on the tube, but not actively sitting next to you i know you'll miss you >> you know what happens after that, eamon javers weekend coming you watch him do that? all the time on twitter. >> i wait for that i don't relax until i see him do that let's tell you some other news in new york that matters. we've been talking about amazon
hq2, going seblgs pannogle is e office space in new york they will buy or lease an office building at st. john's terminal. let's plan the day out federal reserve policymakers are wrapping up a rare thursday meeting. that will happen today we'll get their latest decision on rates at 2:00 p.m there's no press conference or anything on the earnings front, look for quarterly report cards from discovery, activision blizzard, dropbox and disney disney reports after the bell. we'll hear from bob iger on "closing bell." attorney general jeff sessions handing in his rez zig
anything th resignation under pressure from the president. with more, eamon javers joins us >> good morning. look at the scene last night at the department of justice as jeff sessions walked out of the building for the last time as now former attorney general. there you see sessions following behind him is the man who will replace him, matthew whitaker that's the tall man there with the bald head and the red tie. whitaker is seen as much more of a trump loyalist than even jeff sessions, who was one of the earliest endorsers of the president during the presidential campaign. whitaker was jeff sessions chief of staff now he will be the acting attorney general as such he takes over responsibility for all matters under investigation by the department including the russia investigation and th counsel's investigation. you saw a picture there of
robert mueller's new boss. why is that significant? whitaker has been a critic of the mueller concern -- investigation expressing concern that it is going beyond limits he said mueller is dangerously close to crossing a line and that mueller is not investigate the president's finances or family because the mandate was only to investigate the russia situation. yesterday the president was asked about all of his administration officials and who he could fire and not fire the president expressing just before this news broke of jeff sessions departing, asserting real power here to fire just about anybody he wants >> some say that you could stop allthis by declassifying -- >> i could i could fire everybody right now. i don't want to stop it. politically i don't like
stopping it. it's a disgrace it should have never been started >> the president there suggesting that he doesn't want to stop the mueller investigation by firing people because politically he doesn't like the position that might put him in he says it is a disgrace and that the mueller investigation should have never been started now he has somebody running the mueller investigation who at least outwardly would appear to be more sympathetic to his view than jeff sessions was the president never forgave jeff sessions for recusing himself from the russia matter and allowing it to be handled by rob rosenstein now robert mueller will report to whitaker. back over to you guys. >> okay. eamon javers, just in terms of what you think could take place next and to the extent that it could have an impact -- is there a way to connect this back to the larger story of the economy
and the way things will happen at the justice department? >> i don't think so. the president only disagreed with jeff sessions about one thing, that's the thing that impacted the president personally he didn't disagree with jeff sessions in terms of the way he approached the department of justties ju justice or all the law and order matters. i speculate that whitaker will continue the same line for law enforcement and the u.s. attorneys around the country in terms of all the things that might intersecting with wall street, i don't think you'll see much change here the big change is in terms of the mueller investigation. ultimately whitaker could be the person who decides what to do with the mueller report. mueller is likely to write a report here, but that report is not necessarily public knowledge under the procedures
it just has to be presented to the attorney general as acting attorney general, it would be up to whitaker to decide whether that report should be passed on to congress, released publicly or what should happen to it >> were rumors about rosenstein yesterday. he did have a meeting at the white house. >> we had a rosenstein watch at the white house. people sort of go on high alert sometimes when he goes over there. he does have a lot of regular meetings due to his normal course of business at the white house. >> you know, there's a camera around, so we did hear from chuck schumer, he used the constitutional crisis. he used those two words yesterday. the thing that gets me, he's got 210 days, he could stay. i heard he wasn't -- he hasn't gone through the confirmation process to stay longer than that, right? he's not a -- there's -- none of
this has anything do with business unfortunately >> he would have to be confirmed by the senate. >> but he can do 210 days. that's a long time in this administration, that might be the normal amount of time. >> 10,000 news cycles. >> that may be long enough i'm being moved along. we have to get to two guys about what they may talk about the stock market might go up. might go down. we have to get off of this, bye. >> let's get back to the numbers regarding the stock market after the election dominic chu has more on that. >> talking about the market action over the course of the past day, we have some folks who have a more bullish feel about the markets. materials and consumer discretionary stocks are two of the best performing sectors since the market bottomed out in the later part of october. as you can see, a decent amount of gap between them. 7.5% upside move, 10% upside
move for material stocks since that market bottomed the 30th of october. that's something to watch. we know some of the more defensive sectors out there like utilities have been the laggards out there. only up about 1% in that time span a nice move higher for them over the course of the last week. still only up 1% all sectors higher since those market lows. if you look at some of the stocks that have been on the shopping list for people as they have come off the bottoms that we saw a week and a half ago, it's interesting because we talk about the infrastructure play, bulk materials, they're up semiconductor stocks up 29%. under armour up 26%. martin marietta and caterpillar also up. many of these stocks tied to infrastructure, industrial spending, that i have been some of the biggest winners
we'll see if that tren contind continues. >> let's talk about the markets. joining us is julian emanuel from btig and james liu. >> julian is taking the credit for calling the bottom >> yes, on "fast money." >> we've had a nice bounce you think we're on track now for your year-end 3,000 on the s&p >> you look at this week i don't think any of us can remember an election where everyone was happy with the outcome. you know, there is something to like for democrats, republicans. from our point of view for international investors, a strong signal from the bond market yesterday by yoeld yieldt racing higher like they normally do when you have the stock market stronger than it normally is it's more about not expanding
the budget deficit from additional tax cuts. it's de-risking in the minds of international investors the political situation. the whole checks and balances, whether that turns out to be the case >> i think the power of gridlock is a real thing. we always say gridlock and markets, removal of uncertainty because you don't like elections, then nothing -- no knockout blow on either side, so gridlock, which means whatever trump did with tax reform or whatever the republicans did with tax reform and deregulation is probably going to stay until the next election. >> and the reality is we're back to a point where at least for the next few days or the next few hours we can focus on the micro. the micro is good. earnings are good. the economy is good. valuations are reasonable. >> james, i'm not understanding some of the terminology here
i think you're using it in a different way. you're saying that we're in the late cycle so the wall of worry continues to build compounded by market complacency. so to me that makes no sense at all. because the wall of worry is usually a sign there's not complacency. that's usually good because markets trade higher on the wall of worry they climb the wall of worry, right? the complacency is when you worry about a market break, because people are too confident in their position. you're saying the problem is we have both? what does that mean? the wall of worry is building, the complacency is building how can you have both? >> it's not that complacency is building, it's that investors were complacent. the door is left open for some
pro growth policies, like infrastructure spending. we see with that statement that there is the biggest gap in the cycle between short-term and long-term expectations short-term i think we're all happy with where the market is things are cheaper earnings are still strong. fundamentals look good longer term we are late cycle. there are few people who disagree with that you look at what the fed is doing, where we are with unemployment it's hard to see the cycle extending for several more years. >> are we cheaper? we're back at levels from october 9th. so we're back to the levels where we basically sold off for the month of october can we say we're cheaper or do we have the same valuations as back then and the same worries except that the midterms are over >> you're right. we're not cheap. we're slightly cheaper we pulled back 9% and rebounded after october ended. but i think for most investors the issue is simply where should we be positioned from here so you look at where the
fundamentals are we still think being balanced across equities and fixed income and internationally, that's still the best play. >> how do you measure the length of a cycle if it was purely time, we're late cycle then i think if it was where you're at a point where the fed needs to really raise rates to contain a hot economy, rates seem so low to be late cycle then again, if you look at unemployment, that's late, late, late cycle i'm not sure how you define late cycle and what the most -- what really defines a late cycle. we're also told that things don't die of old age that the fed kills most expansions with rates almost at zero, are we really late cycle >> it's as much art as science finding out where we are on the business cycle you look at dashboard of things.
unemployment is pointing in one direction. we don't look at timing of how long the cycle has been. inflation is around 2% but also accelerating the fact that the fed should continue to raise rates is justified by the rise in inflation. by no means are we overheating just yet the concern is that we've seen this story before. we don't think this time will be different. >> wall of worry -- to be clear, walls of worry are usually good, right? or as worry builds is it bad >> overcoming the wall of worry is good. >> are we late cycle >> we are but think about it, this is the longest bull market on record, but this is also the longest fed rate hike. we've been hiking rates for three years now. the economy has not turned down. the longest cycle ever you look at the country like australia, there's not been a
recession in australia since 1991 we're not saying that will happen here, but as we pointed out there are not that many signs of overheating so late cycle, we could go into extra innings. >> a lot of people are maketalk about china developments, china trade that could affect things >> trump said yesterday there may be something he passes where he gets a few republicans, but all democrats. did you see him say that >> i heard it. >> it just depends on how you blow out the deficit, for tax cuts or what >> thank you james liu and julian emanuel. coming up, a big show ahead
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hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. welcome back samsung hosting a developer conference this week and it announced its much anticipated foldable smartphone. becky tried to call this the flip phone the appeal of the device is that it can fit in a pocket then it can be unfolded to reveal a tablet-sized screen google announced yesterday that their operating device supports
foldable devices so you could have a screen, the physical screen fold, that's what the technological innovation is. >> sounds amazing. >> someone wrote software. trying to figure out how that would work >> when you flip it open it automatically expands. >> i don't know. you know how if you can fold it -- i don't know how it works. you could imagine being in position to write the software for that sooner or later there will be like a crease or something it will break, isn't it? you can't keep folding a screen, can you? >> i don't know. you would think the physical -- it is physically if you walk -- you hurt yourself -- >> the important thing is this is an important change in the form factor of a phone, the likes of which we have not seen
in a long time apple comes out with a new phone every year, it basically looks the same >> if it was very thin and it could turn into an ipad and fit in your pocket, that's big. prince charles says when he is king he will stop speaking out on issues he feels strongly about. i want him to be king then he says some crazy stuff his quote is he's not that stupid not sure the prince has been outspoken on social issues, especially the environment. he said it is nonsense to think he would behave the same way as king as he does as prince. the monarch has a formal role in the formation of governments but no practical political power it has an obligation to remain neutral. the most amazing thing yesterday is who was it who asked --
>> the actress who asked to kiss him. >> right that's amazing >> who was it? >> they had known each other >> emma thompson >> emma has known him since he was a child. >> always wanted to kiss him a great actress. >> prince charles or prince william? >> prince william. >> oh, god, i'm finally meeting you, can i give you a kiss no sorry. >> well, there's protocol. >> that's what i mean. >> he said that would be a bad idea >> after what we found out about when a kiss is okay, when a hug is okay -- >> you mean the training >> yeah. a good-bye welcome back >> something tragic happened in the family or if something good happened >> news you can use. >> yes >> stay in the green. coming up, the big banks
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good morning welcome back to "squawk box. among the stories front and center, fed policymakers wrapping up a rare thursday meeting this afternoon we'll get the latest decision on rates -- rare? i think i should have said rate decision it's not rare it happens every month. oh, i see. so our producers were wanting me to say the word rare, because it's happening on a thursday >> rare rate -- probably should have put both in the other big news on the morning, tesla announcing a replacement for elon musk. robyn denholm is going to be taking over effective immediately in that role the move comes more than a month after elon was forced to step
down from that position after that settlement with the s.e.c. over the funding secured tweet he had 45 days to relinquish that role. and ford will be buying schooler sharing company spin. currently spin operates in 13 cities and college campuses. ford says it wants to expand spin to 100 stisz acities and c. >> i don't get it, you ride the scooter and leave it wherever? >> the scooter craze is big. uber is getting involved, lyft is getting involved. gm has cruz. >> a multibillion dollar valuation. >> turning into an uber-style car fleet in the future.
ford doesn't have anything like this this is their entry. the whole thing makes no sense you say leave it anywhere. >> it's dockless if i had a scooter, i would park it out on time square and wait for somebody else to use it. it could be weeks. >> everyone who goes on one of these scooters says there's something magical about it >> do you need magic when you go to work? >> no instead of biking. >> definitely need a helmet. >> you do. >> yeah. >> any time you're totally -- i don't know >> what? >> i love motorcycles. i know i don't want to have one. it's just you and the suvs >> you need a protective shield around you >> like an air bag and a bunch of metal >> like a bubble >> i'm like a water balloon. if you hit something --. the big issue with these things is the maintenance costs
apparently the maintenance costs is astronomical. >> why because people don't care about them, wear and tear? >> city bike is having this problem. the wear and tear on these bikes is huge. >> if you go to bermuda, everybody wants to be on one of those little things. >> yep >> that's the way you get around you have to think long and hard do you want to do that >> those little windy roads. >> windy roads, bunch of cars, things happen. >> yeah. >> do you wear your socks up to your knees when you're there >> always. >> all right we're continuing -- >> not just there. >> -- our what's working series. how will the fed rate path dictate the direction of the big banks? gerard cass joins us now i think it's appropriate to
start off with maxine waters yesterday we had a rally across the board, underparticipation and under-performance by the regional banks is there something to be concerned about if maxine waters becomes the head of the financial services committee >> you said in a tangible way, so the answer is no. it's a split congress. the senate is still controlled by the republicans when you think back to 2010 when the republicans controlled the house, the senate was controlled by the democrats, the republicans wanted to reform dodd-frank, nothing happened because everything died in the senate yes, she will make some headlines, in terms of in a tangible way affecting the banks, we don't see that happening. >> let's talk intangibles as well a lot of bank investors were hopeful there would be a continuation of the deregulatory push that the administration embarked upon.
could the house financial services committee halt that, grind it to a screeching halt? and/or since they oversee the fed, could they make it more difficult or require the fed in some way to have more oversight of the big banks >> the answer is no. she won't be able to grind it to a halt the regulatory agencies have new heads. these heads were appointed by this administration. all these agencies are moving towards deregulation with proposals offered as recently as last week in changing the asset size of different regulatory banks. as you know, the c-car was changed with the legislation that was passed earlier this year they will present more often to the house finance committee, no doubt about it they will as their concerns, but in terms of rolling back or
halting deregulation, we don't see that happening we didn't see it happening again back in 2010 as long as there's a split congress we don't see major changes coming >> what do you see in terms of potential headwinds? investors are looking ahead thinking maybe there's a headwind for this group. you know, a lot of banks on the eve of the midterms have said, you know, if there is a split congress, they are concerned about their forecasts for the ten-year yield, and implied the yield curve would be flatter how do you interpret the results of the midterms, the impact on the yield curve since that's such a crucial part of the bank trade. >> you're right. the ten-year government bond yield is important to the profitability of the industry. the industry prefers a steeper kev. that will be more influenced by the economic activity of the country. if inflation picks up in 2019, the yield curve should steepen the fed is shrinking its balance
sheet. that also could put upward pressure on the ten-year government bond yield. so i don't think the house will have any influence on the ten-year government bond yield it's more an economic driven event as well as the federal reserve shrinking its balance sheet. that's favorable for the banks over the next 12, 18 months. >> gerard, thank you >> you're welcome. coming up, the countdown to christmas is on. you're right i guess we are it's november. we learn more about walmart's plan for black friday overnight. courtney reagan has the details next. and we'll get ready for the quarterly report card from disney that's due after the bell today. we'll tell you what to look for in that report don't miss a big show tomorrow andrew ross sorkin will be reporting live from the annual baron investment conference in new york ron baron will join us starting
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walmart unveiling its black friday plans overnight courtney reagan has the details. >> walmart is not the first one to give us the black friday plans, but the retailer is headlining the strategy with things like convenience and early access to deals, similar to what target did or is doing walmart is offering almost all of its black friday deals online at the earliest time ever, wednesday november 21st at 10:00 p.m. technically that's before thanksgiving it's also earlier than target's online door busters, those start thanksgiving morning the deals start 6:00 p.m. on thanksgiving day in walmart stores target is moving an hour earlier. they're opening at 5:00 p.m. and staying open an hour later kohl's is opening at 5:00 p.m. as well. walmart is inviting shoppers to come into the store from 4:00 p.m. to 6:00 p.m., they'll give
out free coffee and cookies to amp you up to shop there will be localized store maps on apps, so you know where all those door busters are throughout the store walmart is color coding with things like balloons, employee vests, a lot more electronics, toys, apparel and home shoppers will find checkout easier the retailer also have associates throughout the store checking out shoppers without having to go to the register, like a mobile checkout type. if you want to get a head start, there are 18 black friday deals available now on walmart.com target and kohl's already held their one-day early black friday sales. >> i looked at the walmart app on the way here to look at the black friday deals there's a lot of them. but they're not waving the free shipping the way target and amazon are >> walmart is holding with the
$35 minimum threshold to get the free two-day shipping. target is waiving that >> what does that do to the margin for them? >> i would love if they answered that question. they never detail that out it's something they've done in the past at least it could be a comparable thing to the past year >> all right great. >> courtney, thank you >> you got it. other stocks to watch, qualcomm reporting and beating forecast the revenue outlook for the first quarter is below where analysts are now as it takes a hit from the loss of chip sales to apple that stock down 6% this after apple switched to intel ships for the newest phones, the xr and the xs. shares of tripadvisor are
soaring today. the travel site reported better than expected results in the latest quarter the company was helped by higher revenues in the non-hotel business and lower marketing costs. roku shares are under pressure they reported a smaller quarterly loss, revenue did beat forecasts, but sales of video devices were shy of expectations then the company projected a surprise loss in the holiday quarter. down 12% roku's ceo will join "squawk alley" later this morning on a cnbc exclusive. coming up, the biggest earnings report of the day, disney, we'll tell you what to expect from the quarterly report card that's next. that's my favorite ride. >> small world me, too. >> no. no the -- we'll talk about it >> space mountain? >> before we go to break, a check of what's happening in the european markets
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expected for the third quarter and they warned of a slowdown in macau. we are also watching square third quarter profit topping estimates as it earned more frot earned more from processing payments but the company is forecasting fourth quarter profit as well as margins below analysts' expect las vegases. and strong second quarter results, the video game maker is raising it on the strength on red redemption 2 >> we have that. >> you do? >> yes >> do you play it? >> i don't play it i watch it it's like 80 hours >> apparently, it says the game generated $725 million in sales for the first three days >> good for them and the new chairman of cbs. >> oh, right, yes. >> and he runs take-two. >> that's right. >> he's the chair. >> that's right, he is
>> i've always wondered, by the way, not to speculate too much, but if you were cbs and you ever wanted to get into electronic gaming -- >> i think all the media companies should look at that space, particularly with teams and sponsorship. >> if you ever thought they were going to look like an outside ceo. this could be higher >> although, i think on paper, a disney acquiring a video game maker making more spence because sense because of espn. disney, speaking of, expected to release quarterly results. experts want to hear what's in for the giant, joining me manager of snead management. good morning to you. what are you looking for this afternoon? >> well, in their business, it's really some of the greatest content assets the world's ever
seen, frankly. fox providing even more profitable assets to them. that's really something hard to compete with whether it be another media company or more of the darling, tech crossover we see today. >> let me take a step back since you said these were assets that you said were hard to compete with i can tell you, and we've had conversation that we aired on this program with barry diller, that said disney can't -- nobody can compete with netnetflix. even though they're going to try to do an ott product, whatever they do, they will never be able to reach the kind of scale, he says, of netflix without that scale, the economics of it aren't really as compelling, they say, perhaps as their competitor do you buy into that >> i don't i would greatly disagree with barry diller the reason why, as it pertains
to content in hollywood today it is a small world, okay >> example >> okay. they are good at distributing content. they have a good distribution platform that's the part that diller's right at where he's completely wrong, they cannot produce profitable content. use what your parent company is doing as an example. brian roberts is out buying sky for distribution but he's getting content with that, via sky, sports and news, particularly and then he's going to be able to push the nbcuniversal content across that distribution if you have profitable content, the distribution can be an additive or in terms of segmenting your clients whether ott, cable or et cetera, if you can't produce content, video distribution is like selling groceries. it's a terrible business >> this afternoon, let's just talk about, what numbers are you looking at
and i imagine, what is the one thing you want to hear from bob iger on the phone call >> yeah, just subscriber losses. what are the vps doing, and what are they adding to negate some of that. that's what the street is interested in. and the second thing would, obviously, be where are we getting the finishing out of fox getting purchased. that's what people are interested in being talked about. here's what i don't think is being talked about in this subject which i think is very important which is fox is profitable content what disney did, they circled the wagons on profitable content. and that's something that's very hard to gap right now. whether it be them trying to sell themselves but having too much debt. fox is profitable, they paid 13 time s ebitda for it. we think it's nothing short of them just doing that to make it
to where netflix cannot use an all-stock deal to that themselves it's effectively -- >> so, you mean, defensive or offensive deal >> oh from a short-term perspective, you know, i look at it as, you know, i'll call it an offensive deal >> right >> from a long term, a 20-year perspective, it's defensive. there's just one less company out there that produced profitable content with great assets that cannot be touched. and that is the core problem, that is the core issue in this whole discussion today, is who can do content we own discovery as well this is a great subject. here i am doing your show, i'm a nonpaid actor right now. this is great. this is the most profitable 30 seconds in the last hour of nbc because i don't get paid anything that's exactly what reality television is. reality television is cheap to produce, as when you go to bigger scale, hollywood productions and tv shows, that's
what they do really well and netflix cannot >> cole snead, thank you for making up early and providing this magnificent five minutes of programming. in the meantime, other many practicing you don't want to miss this, disney's ceo bob iger is on "closing bell" for the first time on cnbc -- not for the first time, he's been on this show many times, too. after the company's report that's coming up at 4:00 p.m. eastern time he's got a q rating, too, that's pretty high. straight ahead, a portfolio checkup. we'll take a look at parts of the economy that could be poised to pop up for this month's elections. we'll talk to an equity strategist health stocks and tech check and china effect and on "squawk," having their best days in three weeks
is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year. right before our eyes, aging is unleashing exponential growth... ...in every industry. are you ready? we are. a-a-r-p is teaming up with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for?
market rally, stocks take a breather after jumping 500 points yesterday and a new board takeover for elon musk. plus, china's exports and imports. both increased more than expected last month. what this could signal about the trade war. "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york this is "squawk box. ♪ good morning welcome back to "squawk box"
right here on cnbc we're live he nasdaq market site in times square. i'm andrew ross sorkin, and joe kernin, and melissa lee is sitting in for becky take a look at u.s. equity futures after a big update yesterday. right now, it's not looking in the same direction dow looks like it will open off about, we'll call it 18 point. nasdaq off about 27 points s&p off about 7 1/2 points we're watching three big stories, one at the top of the list the markets, the dow jumping more than 500 points yesterday all s&p sectors closed high tore the fed. the fmic wrapping up a two-day holiday meeting this afternoon due at 2:00 eastern time and three, d.c. drama, president trump forcing jest sessions out as attorney general. and breaking news out of california this morning, there was a shooting, a gunman killed
12 people, including a sheriff's deputy late last night when he opened fire at a bar in thousand oaks, about 40 miles west of los angeles. the shooter is also dead no motive for the shooting is known at this time hundreds of people were inside the bar at the time of the shooting the bar was hosting a college night. we'll have a live report from the scene later in this hour now, to the top corporate headlines this morning tesla has maimed named a new chairperson. she replaces the ceo in that role as part of a settlement currently chief financial office at telstra she's been on the boards at tesla since 2014 a takeover in the communications equipment and services sector comscope is buy buying arris group
arris group is higher by 10% and google is apparently planning a big expansion in new york city. set to buy a 1.3 million square foot building. it would roughly double google's current staffing >> now, to the markets mike santoli joins us. stocks sell off, they rally. these things happen -- >> back 500 points. >> yeah. it's going somewhat textbook but in an accelerated way. >> right >> i mean it seems like this market tends to just sort of rush to that next decision point. and reprises quick what it does tell you, obviously in october, you add that aexacerbaaska exacerbated moving down. take a look at the chart of the
s&p 500. we've gotten back about 60% of the loss from september high to october lows and that line is around the 2800 level. the s&p, we got slightly above it yesterday look at the significance of that this is where the rally fell in early october, also the earlier part of the year all of a sudden, we're at this point where people are saying it's just a mechanical bounce or something more so, there was a technical rescue operation here the 2 1/2-year uptrend was in jeopardy and kind of got saved with the last move i do believe we're up 7% in the last trading days. the rate has been as high as it's been since october 2015 think back to october 2015 big selloff in august. huge comeback to even. went to new highs and then you wobbled lower and the big correction it doesn't mean it's doing that, but i'm just saying it happens in stressed markets that you get
excel ra accelerated moves. >> we're pretty close to that point now. >> exactly the question is has the stock market made its peace with yields at this level because it's done that in stages >> earlier this year >> so, i think that's where we're at right now it's a logical place for the market to pause but i do think it's an improved picture and it looks like that late october low is pretty significant. >> okay. i want to talk about what's going on in washington and its relationship with wall street. wall street focusing on the major story out of washington. that is jeff sessions is out as attorney general from president trump. eamon javers joins us with the latest >> take a look at the scene at the department of justice last night as jeff sessions left the building for the last time as attorney general, after having been removed by president donald trump yesterday. a round of applause there for the outgoing attorney general.
and handshakes take a look at the tall bald man in the red tie that is your new acting attorney general matt whitaker who was jeff sessions chief of staff now installed as acting attorney general. does not have to be confirmed by the senate to take at least, that position temporarily. whitaker is seen to be a skeptic of the mueller investigation the main critics of jeff sessions was he recused himself from overseeing the mueller with potential contacts between the trump campaign and the russians during the 2016 campaign that's what the president was frustrated with jeff sessions about. now, he has an acting attorney general who is a skeptic of the mueller investigation. here's what whitaker wrote in an
op-ed piece last year. mueller has come up to a red line in the russia investigation that he's dangerously close to crossing the argument that he was making there, ultimately was that mueller should not investigate the president's family or his finances he should stick to the issue of russia in 2016 and that anything else would be going beyond the mandate of the special counsel's office for his part, the president of the united states, asserting his authority yesterday. asserting that he has the obligation and the right to fire just about anybody involved in this process that he wants to here's what he said during a raucous press conference in the east room at the white house yesterday. >> you say you can stop all of this >> i could i could fire everybody right now. i don't want to stop it because politically, i don't like stopping it. it's a disgrace. it should never have been
started because there was no crime. >> so the president there offering assurance that he didn't want to stop the investigation because, politically, he doesn't like the consequences for himself of doing that but he may have found the next best solution from his perspective here by installing somebody who is likely to put a skeptical eye on the mueller team and the mueller investigation, as they continue to do their work and we'll wait and see whether mueller issues a final report or not. ultimately, that final report now would go directly to whitaker, guys >> it's a fine point, eamon. and it could be accurate to say he doesn't like the entire mueller investigation at all but i wonder, initially, i thought well he probably doesn't like the scope that's how i would describe it and he doesn't want it to be too big. and again, the idea that trump wanted to declassify how the mueller investigation started. and there could be exculpatory
scope. >> and whitaker argued that it was the scope with trump and russia and he has not recused -- remember, session has to recuse himself because of his meetings with sergey kislyak, the ambassador that meant that sessions will to step out and say i've got a conflict of interest here. whitaker doesn't have that but there are a lot of unknowns here >> eamon, can i ask a question >> sure. >> this is a money question. one of the theories that's been posited. i believe whitaker posited, effectively cutting mueller's budget, in terms of how much they can spend to pursue this investigation. do we have any idea how much they currently spend, it like a monthly run rate that he has, and what would happen to that investigation if you slashed
that budget in half or worse >> that's a good question, andrew i don't have the figures off the top of my head i do know there are allowances made for the mueller investigation in advance i don't think you can sort of turn it off like a spig eot this is the althoughed allotted over time and the department is borrowing a lot of resources from the department of justice and fbi. the fbi budget doesn't go away and i was talking to somebody pretty well informed about this yesterday who said, notice, one of the things that mueller's team has been doing is taking discrete pieces of this and pushing them out to other parts of the department of justice, so the southern district of new york, for example, has gotten a few examples. >> and whitaker would also have the power to curtail it. there are many ways in emergency
room its of curtailing the budget, in terms of reining it in >> right he could be more skeptical and put the clamp on that way. sort of a soft power kind of way, as opposed to the dramatic saturday night massacre situation where the president just tries to shut it down altogether he could try to constrain it and whitaker could be the person to do that >> what about a tweet late today that just says thursday >> thursday is not friday. >> sometimes, friday to me is too close to monday. >> on a late night tweet, eamon should tweet friday. >> you're getting ahead of yourselves >> anticipation friday is sometimes better than friday because it's over so quickly >> friday eve tonight. >> friday eve. >> think about it. think about it >> i'll take that into consideration, i've got a panel of experts that i consult. >> and it's a harmless tweet
that's a way you can do a tweet. no one can disagree with you >> everybody likes the weekend, joe, it's bipartisan >> some of us are working for it's weekend >> see you, guys let's talk about the markets right now. and the chief equity derivative, and our guest host this afternoon. welcome to you both. great to you here for the next two you are hoes jason. in the der rivatives market, you said you saw something unusual they weren't reaching outside for hedges why not? >> for me, the lack that we saw in the derivatives shows two things first, the spike in volatility that we saw was contained to the equities market. we did not see a spike in the bond market, the commodity market and currency market to me that signals that the
october selloff was fundamentally about earnings and earnings risk rather than anything more macro. there was a lot of talk about recession and cycle. >> and the fed >> exactly if those were concerns of driving markets we would see volatility in assets markets, and we didn't. and everyone looks at the vix and s&p, but actually the biggest movers were of the single stock level that's highly unusual. typically, we would see it the other way around the index side would see investors, portfolio, index protection, building up index volatility, we didn't see that again, driven by earnings. >> in terms of volatility spikes, and individual stocks, were they the stocks that had issues and that makes you believe it's a corporate-driven selloff that we saw in october >> exactly it's not really a concern of this year's earnings
all eyes are on next year's earnings everyone is looking towards company guidance, if you look at implied move priced on earnings, this quarter had much larger than typical >> jason, does that drive what you thought about the october selloff? this proves how you view the rest of the year as well if it's true as the options market seems to indicate that it's a corporate-earnings driven event, that concern could remain >> i think it's true i think it is consistent the design in stocks is consistent with the second derivative slowing down. from my point, it shouldn't be surprising that the second derivative, with regard to earnings is slowing down because you had a major event last december which the tax cut even excluding the tax cut this year, earnings growing 14, 15% revenue is growing 8%, 9%.
i'm not particularly worried i think the problems we all have, muscle memory is gone in terms of volatility. if the year were to end today, the s&p would have traded in the most narrow range since 1969 in a typical year, back in 1926, believe or not, the s&p trades in a 26% range high to low as a percentage of the low. this is scary. it doesn't feel good if my opinion, one of the big things that's happening you're transitioning away from a m monetary to other factors. it's going to mean better opportunities for active managers great dispession
>> i mentioned earnings, i do thing it was exacerbated by crowding what we saw, they're in low correlation within the s&p and in areas where we did see high correlation, we did see stress, tech we also saw it in hedge funds, like -- >> faang stocks? >> exactly those stocks traded at extremely high correlation, higher than february that, to me tells me there was definitely pain at the hedge fund level and that exacerbated the move. >> are you saying positioned in the equities derivatives markets in those names to the upside going to your end? >> yeah. predominantly what we saw in the last week or two have been to the upside index level and stock levels i do think people are coming around to the idea maybe the selloff was overdone >> mandy, thank you.
of credit suisse jason is around for the next couple of hours. coming up. and infrastructure spending, former transportation secretary ray lahood is joining us tomorrow on "squawk," you don't want to miss ron baron, we will talk about all things, and yes, his stake in tesla and elon musk stay tuned you're watching cnbc i am a family man.
we're working to make things simple, easy and awesome. well, senate majority leader mitch mcconnell and house minority leader nancy pelosi, for now anyway, have pledged to if you remember forward on infrastructure bill in the next congress for more, let's welcome ray lahood, former u.s. transportation secretary in the obama administration is also the co-chair of building america's future and he always reminds me he's a republican we don't think of you that way, ray. you always remind me of that you try to build credibility so
i don't just discount things that you say, right? >> thank you, joe, for remembering. >> so, it's a different world. mcconnell's talking about it there's a house that might go along with it now, and a president that we never know do you see some possibility for this actually getting some traction near term >> i do, joe and i'll tell you why. i think democrats are ready to pass a pretty big bold bill and pay for it probably raise the gas tax, in order to get a pot of money that can really take care of the 60,000 structurally deficient bridges and interstates that are crumbling and take care of the gateway project in new york which is very, very important and i think once the democrats do that, it will start in the house, and i think the new chairman of the transportation committee, the new chairman of the ways and means committee, where the money has to come
from, peter defazio, transportation, richie neal from boston -- or massachusetts ways and means. i think they're prepared to do something very big the key will be, does president trump get behind this effort in order to persuade republicans in the senate that they're going to have to pass some kind of a revenue raiser to get the money that we need that's so critical for rebuilding america >> so, when mcconnell says he wants to go along with it. and i wonder about the president. whose 80/20 idea was that? who was most set, feeding concrete on 80% private sector partnerships and 20% government. was the republican senate, or was that president trump >> yeah, you don't -- that was president trump. and his team came up with that and that's simply not going to work
look, most states don't have any money. and certainly, local governments don't have any money and if you look at over 50 years, when we built the interstate, it was done with a completely reverse formulation 80 federal, 20 local a pretty good formula. and we did it when the highway trust fund was flushed with mon money. the trust fund, the gas tax hadn't been raised for 25 years. everything else in america has gone up. why not replenish the fund, raise the gas tax and go back to 80/20 which makes more sense, given the states have no money >> you could do that if you get the president on board and a few republicans on board and most of the democrats. and trump opened that up yesterday. >> bingo >> you have to convince him, number one
and then you got to make sure it's not regressive. the gas tax has ways of doing that, i guess. democrats are talking, both sides to some extent, talking about the $21 trillion deficit that we've racked up no one wants to blow that out but you figure you can do it with the gas tax >> you really can. if you raise the gas tax 10 cents a gallon, you get billions of dollars that's a very good start much better than having a highway trust fund that's broke. you can't continue to do what we need to do in america, fix you have the structure and fix the bridges and fill all of the potholes with public partnerships we should do some of that, but there's just not enough. look at the gateway project. a billion dollar project that's absolutely critical for new york and new jersey regions and thousands of people that use
that there are projects like that, all over the country, that are going lacking because there's no money. if president trump gets behind this, boom, bingo. america's a winner and the money doesn't stay in washington it goes to the workers who build the roads. it goes to the engineers who design the roads this money goes back into the pockets of those road builders all over america >> mr. lahood, this is jason trennert, i don't think anyone can disagree with the idea that we need more infrastructure spending especially if you go in and out of laguardia and jfk as i do once a week how much can the tax raise -- >> gas tax >> sorry how much could it race in the context of the $20 trillion economy, could you raise enough money? and in an ideal world, how much
investment would the u.s. really need to do all of the things that you're talking about? i guess the question is, can you raise enough money from the gas tax to really do what you need to do, or it just the idea that you're getting started down this path >> well, look, nothing has happened for 25 years, in terms of raising the gas tax and we need to start somewhere i say ten cents a gallon other people say more. but it's a good start. it's billions of dollars it sends a message to the states that the federal government is serious about getting back into being a good partner and it's a very worth while opportunity. this is where we need to start and it looks like we're positioned now -- if president trudge g trump gets behind it, if his team gets behind it, bingo, i think we're off to a very good start. look we're stalled. we've been stalled
you know america is one big pothole. you know the infrastructure is crumbling. 60,000 structurally deficient bridges just on the interstates. take a ride through the tunnels at the entrances there between new york and new jersey, you know those are falling apart >> your appeal, your video, this is now permanent, and someone can show it to the president and oil is back down to low 60s again. it's never a great time for this but it may not be the worse time anyway, mr. secretary, we appreciate your time today thank you. >> thank you still ahead, stocks to watch. stay tuned you're watching "squawk box. time now for today's aflac trivia question. after turning down a $6 billion offer by google in late 2010, what company went public in november of 2011 for $20 a share? the answer when cnbc "squawk box" continues aflac!? no-good break. gooood break.
shot up 50% in its debut but now trades at just over $3 a share good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square among the stories front and center, the labor department is out with its weekly report on initial jobless claims at 8:30 eastern time economists are looking for 210,000 new claims switzerland's ubs said it expects to be sued by the justice department as early as today over mortgages leading to the financial crisis ubs says it will contest the lawsuit vigorously and shares of monster beverage are tumbling. monster and coca-cola are in a dispute over whether coke's planned release of two energy drinks violates an agreement
back in 2016 monster shares are down 16%. the streaming wars continue. cnbc parent comcast is developing a video streaming set-top box for broadband only customers. the product will allow customers to aggregate streaming apps like netflix, amazon and youtube with a voice-activated remote comcast has not decided how much it's going to charge per month for that device. >> it will be interesting what that device looks like you won't need necessarily the cable service. you will need internet th is that to compete with a roku style, and won't allow amazon on its service. meantime, president trump talked about the oil crisis in the news conference yesterday. he says he wants to make sure that prices don't spike higher
and jackie deangelis joins us with that story. >> good morning, andrew. i'll start you off with a number this morning 11.6 million barrels a day that's where u.s. production is right now. it's higher output than russia it's higher output than saudi arabia did you ever think, guys, that we'd be sitting here saying that it's that kind of production number that is in part due to the shell boom but it's also in part due to the energy policies. and that number is going to keep oil prices lower because it keeps the supply on the high side. the question after the midterms, of course, is, will a democratic house mean they're going to try to undo these policies? will house dems propose their own legislation that will likely resemble obama era policy? the answer is probably yes the president is very cautious even with the iran deal. he wants to punish the iranians but now says it's going to be gradual to keep oil prices in line remember, russia and the saudis
stood to make up from an iran shortfall. that's not going to happen at least not now. and the rebound that we thought we were experiencing could potentially be in jeopardy also means a supply glut could again be an issue this winter. we're trading just a little over $60 a barrel, guys >> inventories have been absolutely climbing. that's what is remarkable. inventories have been on the rise for the seventh straight week at this point >> what happens this time of year, melissa, we see those builds occur typically because demand goes down a bill. there a a bit if investors questioning growth, of course, demand is in question for oil as well. >> all right >> thank you coming up, it's decision day at the fed we're going to talk what the expectations are in the market for what the fed does. stay tuned you're watchi ing "squawk box" cnbc
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no change expected but the fed is widely expected to raise interest rates and joining us chief regulatory officer of cls good morning >> good morning. >> so, we're not going to have an interest rate hike now. the question is are we getting one later this year? and what's going through the minds and what's happening in this meeting in terms of setting themselves up for later and what they're looking at, and what numbers specifically, in terms of growth or lack of growth, do you think is top of mind >> great question. you're right nothing today. probably an increase in december but it's really about next year. so, how do you position yourself and what's the decision you have at this meeting to set yourself up for next year you've got a couple of things. first of all, what's the view of how much slack there is in the economy. the unemployment rate is really low. you know, so there's going to be a discussion again about participation. >> right >> how much labor is there on the sideline that you can bring
back in. that's a key point of correction there's also a very interesting technical question going on because the fed fund rate is at the top end of its range and they're probably going to have a discussion, you know, about whether or not they can do something from the technical side to keep that from bumping up against the top because there is an argument out there that reserves are too tight. there is not much money in the system, which is interesting given how much money is in the system >> how does that conversation break down whose got the power in the room, who is making different arguments and who wins that argument right now >> yeah. we would all love to be a fly on the wall >> you used to be in those meetings. >> yes indeed. you have the chairman. he's going to be the less prominent voice. there is the staff that has the voice. the biggest question is really how much slack there is in the
labor force. you know, are we getting to the point where the unemployment rate is so low that you're actually running out of labor and therefore -- >> well, if you were in that meeting, you would say what? what would you say the numbers would be >> in terms of >> in terms of socking away the market >> my point of view is, actually, we're pretty much close to running out of labor. in the sense it's a very tight labor market the labor market, labor participation is going very, very low at this point you know, and therefore, you are going to be at a point where the data is going to start to slow down, later in the year, later next year, that is by 2020 you're looking at a possible recession which would be ten years of recovery that's not a bad cycle that's actually a pretty good cycle, historically speaking >> can i ask you about the other side of fed policy, which is regulatory policy, as it relates to velocity of money, the stress
test because in my opinion, there's plenty of reserves in the system but one of the things that's been a hindrance, to a certain extent has been that financial regulation has been very tough it looks like randy quarles wants to ease that as a stock market person, that's very important >> you're right about that and where it's showing up is in the medium and smaller-size banks. that's really where they're dialing back the regulations those banks, if you will, the midsize and small lenders, they're the ones that are finding the impact of changes that randy quarles is leading at the fed. among the big banks, they're seeing lessch it the dodd-frank rule is still there. there has been dialback of the vogel rule those aspects. but for the banks, not that much has changed. it may change. and that's something to look forward to because if you're in administration, how many dowels do you have? fiscal policy is off the table
you probably can't do another tax bill but you can push on deregulation some more, you can push on trade some more. >> how much does the china issue get even raised in a situation like this today? >> probably very little. other than in the sense of what's the impact of china, the forecast on the global economy, what's the impact of that in the u.s. forecast. so, in that sense, yes, very much so. i think, you know, in terms of how much will trade, the trade tensions impact the forecast, that probably gets fed in somehow. but that's -- >> the conversation, the whole tariff, the trade war with china impacts china itself which then impacts the global economy, including the united states. particularly the emerging markets. we've seen the impact on emerging markets pushed up dramatically there's a ripple effect? >> you're raising a really great point which is that, you know,
with interest rates heading highhigh higher in the u.s., tighter financial conditions, the first place that will feel that is emerging markets there was a big boom five or six years ago. that's not coming back to haunt them that stress will work its way through the system >> thank you >> thank you >> great to see you. coming up, we're going to have a conversation about health care stocks. jumping this week. we'll tell you about the reasons why, with a well-followed industry analyst and a frequent guest of "squawk." who can help me build a complete plan. brian, my certified financial planner™ professional, is committed to working in my best interest. i call it my "comfortable future plan," and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org.
your company is and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices and stay ahead of opportunities. pnc brings you the resources of one of the nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today. whai tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
health care turned into a big midterm issue, even topping the economy and immigration reform joining us now with a closer look at the sector anna gupta, senior manager of health care services it's only been 48 hours, whatever it is every subject we're talking about, we're doing in the prism of whether president trump is going to work with democrats and i think health care also is something that subject was broached maybe we can do something with the pelosi-run -- speaker pelosi running the house. what would that look like since
the possibility of an outright -- after senator mcc n mccain, i don't think we're going to revisit that. how will we fix that and what there trump do with the stocks? >> stocks made a huge move, right. there's just so much money waiting on sideline, i think it even surprised people who worked through and anticipated what the outcomes would look like it's taken away a lot of the downside risk. and a little bit upside is potentially there. the exchanges divided government so no repeal of double digits. double digit exposure. so it's really an important segment for some of these names. medicaid is an upside story now. so, we have the ballot initiative i don't think that was entirely anticipated. something like 300,000, maybe 500,000 new lives coming in. and kansas coming forward and
expanding. that's a story and another risks taken off the table. they were low probability but the headline risk was there. medicare for all, i doubt that's going to happen. >> and now that we're in this post-election period, has that changed and will president trump be willing to say, all right, it's staying and now let's try to -- because there have been problems with premium increases. you know, cadillac plans, everything else. what does it look like what does the fix look like? >> yeah, firstly, the question is, how much of a fix do we need this year, the premium growth is 3% on average. so, really low and we have, you know, a problem with the marketing and sales the cms has cut back on the spend. and so, the companies that are offering exchange products would like that to go up it's possible that pelosi has some influence on cms policy, as
far as exchanges go. if you look at the margins right now, they're healthy in the midsingle to high-single digits. and with the low premium increases, as low as a market stays stable and you offer maybe on the insurance plans more affordability for those who don't have subsidies, they're a functional market. they're not going to be so big that they actually disrupt the employer market that we thought years ago. >> single payor medicare for all. what happened with the election -- if gillum had been see elected maybe we'd be farther down that road maybe it another stopping point or is that put to bed? >> at least from a legislative standpoint in congress, it's been put to bed. i mean, if the senate had also flipped i would have expected -- >> some of the darling
candidates of the democratic party, that's what they want why has it been put to bed >> firstly, we do have a divided government that's one reason. it is possible but i guess if you actually look at there's about a trillion dollars in health insurance. and does the federal government want to actually pony up, you know, that kind of money >> yes, it does. one person in the federal government wants to. s that one idea that one side has. yeah, they do want to do that. >> so, that's again -- there's a lot of fiscal pressure to be able to accomplish that. secondly, mostly the american populist is happy with it. >> and the stock hasn't changed? >> my stocks continue to be on a huge run humana i think more positive about after this election. >> you do. okay >> what's the upside on your stocks you say they rallied on the
results and there's even an upside so, what's the driver of that from here? >> well, it's not any more about policy policy is off the table. we still have growth and medicare one or two seniors in the next years. medicaid continues to see expansion on privatization and i consolidation. that's a huge piece of managed care, and the deal closing before thanksgiving. so you'll see regional plans starting to get squeezed out of the market and you'll have a new big five, if you will, between united, cvs aetna, united and aetna. >> ana, thank you. on the move. it should be interesting >> a lot more coming up on "squawk box" this morning. some stocks to watch disney among them. it's going to post the quarterly results after the bell today
you don't want to miss this because ceo bob iger is going to join the gang on "closing bell" at 4:00 eastern time stay tuned you're watching "squawk box" right here on cnbc and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.
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i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. some stocks to watch this morning. qualcomm's earning beating forecasts. but economy eathe company's ear
expectations and shares of tripadvisor, take a look the travel site reported better than expected reports in its latest results held in revenue in nonhotel business that stock up over 8% this morning. and roku shares under pressure the maker of video streaming devices reported a smaller reporting loss and the company projecting a surprise loss in the holiday quarter. roku's ceo is going to join "squawk alley" later this morning at 11:20 eastern time. we mentioned this new comcast device in ott or run over the internet without needing a service. and i made a reference of p putting services in place. i was mistakenly under the impression that they weren't allowing amazon on there i was corrected by one of our
very eagle-eyed viewers. thank you for that all brand shares higher. the better than expected performance at its bath and body works unit that stock up 5% and jumped for shares of cardinal health, $1.29 a share beating consensus. revenue coming in above forecasts. that stock up 3.25%. drugmake e drugmake r perrigo seeing a slie this morning coming up, this morning, faang stocks taking off. big move in the nasdaq yesterday. story on the rebound next. first, though, as we head to break, check out the futures right now. the dow jones has now turned positive s&p down a little. nasdaq down about 19 points. stay tuned
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a moment of joy. a source of inspiration. an act of kindness. an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities. what we deliver by delivering. stocks surge post-election rally hoping to wipe out a big chunk of october losses. and the central bank wraps
up the last meeting of the year this afternoon we'll talk to the ceo about how the fed closes out 2018. and the china factor we'll get a check on president trump's trade playbook the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world new york this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernin along with becky quick and andrew ross sorkin >> really. >> melissa, joe, for the record. >> i'm reading -- i've been instructed to read the teleprompter >> except for what you're doing right now. >> chairman and ceo at strategis
investment partner becky is spending some time with family bucket list type thing anyway, the futures right now are indicated positive now up 220 treasury yields after yesterday's move, we did see a move back above 320. and they are now -- almost 3.20 earlier, just below that right now. they sort of moved -- yields move sort of in tandem with the stock market it seems like. >> we've got three big stories we're watching this morning. one at the top of the list the dow closing at their highest levels a day after the voters headed to the polls. two, wall street waiting for today's rate decision. this is also the last time a fed decision is not followed by a
news conference. and three, president trump forcing out attorney general jeff sessions. trump naming sessions' chief of staff acting attorney general. and said he'd nominate a permanent replacement soon some deal news to talk about. communications hardware and software maker arris will be bought by commscope. and one to watch, too, the home builder horton matching profits $1.22 a share. it also raised its share from 12 1/2 cents and we'll get new jobless claims data at the bottom of the hour 210 new claims for the last week, down 4,000 from the week before and we want to get you caught up on that breaking news overnight in california. a gunman killing 12 people, including a sheriff's deputy late last night when he opened fire at a bar in thousand oaks,
about 40 miles west of los angeles. the shooter is also dead no motive is hundreds of people were inside that bar at the time of the shooting the bar was hosting a college night. well get back to the markets. stocks wiping out a big chunk of the market with the rally. dom chu joins us >> hello again, joe. let's talk about how we're away from the record highs, about 5% high away from the s&p 500 remember that we talk about the s&p 500, 2833, a little bit right over there 2833 is important because that represents a 50-day moving average for the s&p. we breezed through that 200. we've gotten back half of the losses that we got during that selloff we saw in october with that turmoil that's something to keep an eye on as we talk about the reasons why
some people are feeling a little more bullish on the situation given the fact we've come well off our lows the number of stocks trading above the 200-day moving average in the s&p 500 turns out a little more than half around 52% of stocks within the s&p 500 of now above their own respective long-term trading averages that's perhaps a bullish sign. something that we've seen constructive moves off the bottoms there. how many stocks off 5% of their 52-week high around 110 of them that's not bad either. meaning there's only ten stocks within 5% of their 52-week lows. we talk about that constructive move off the market in late lows late in october. and the material and consumer discretionaries since the october lows, if you take a look at those particular sectors, they have been the biggest performers i would say with consumer discretionary, amazon has been a huge part of that. it's now reclaimed half of the
losses it's had since its fall from record highs. and utilities continue to be the laggar laggard. as we talk, andrew, about the way markets are setting up if they come off the levels it's a good sign because it's the stocks doing the most leading on the downside and consumers a big part of that back to you, guys. tech stocks taking off during the post midterm surge. with the faang stocks soaring. joining us with what to expect the senior internet analyst. good morning to you. >> good morning. >> what happened yesterday why did this even take place i don't really get it, to be honest with you. >> well, i think it was on the heels of downturn for the faang stocks in general. >> right >> that was one thing. and pretty much anything coming out of the government is negative tour thfor that sector.
you've got privacy concerns. you've got safety of the platforms with the russia probe. you've got net neutrality. >> and antitrust >> and antitrust for sure. and so, you know, with gridlock. you know, congress split, i think people look at that as a sign that it will be hard for any legislative agenda to come through. and almost anything is going to be bad for the sector so i think people are happy that there's gridlock >> do you think there was some expectation that something bad could happen during the elections themselves that were going to impact the cost to a facebook or a twitter or something? and, by the way, if something actually happened that was bad, do you think we would have figured it out by yesterday? i imagine if something actually did take place that was inappropriate or questionables we would hear about that days or weeks from now, maybe months potentially. >> i just think in general, a legislative agenda -- you know, both parties have been critical of the faang stocks, right and they all of a sudden sort of
become a lightning rod of criticism and complaints so, i think the fact that nothing is going to get done is positive the interesting sort of -- you know, kind of side story here is that anything that is going to happen that's going to cause a lot more investment and maybe lower profit sector is going to benefit the big stocks >> why are you so confident that nothing will get done? at the press conference trump said specifically he would like to work with democrats to regulate social media. facebook, we saw an immediate reaction we saw an underperformance in facebook shares yesterday relative to the broader nasdaq facebook really seems to have a problem, on a day where it's the best day in three weeks for the s&p 500 for facebook to rise, granted, it was up a percent but still less than the broader marketi markets. >> it's a fair point and facebook is the one most exposed
to the privacy angle one thing the social media industry and internet industry would like to get federal legislation passed because there are more dangerous bills brewing up in some of the states, including california i think the industry is lobbying hard to get federal legislation passed so that they can apply their resources to be in compliance with. >> this is one of the great ironies of regulation in larger government it tends to benefit the larger companies because they have the rules in their favor i would say going back to antitrust, though, antitrust would not require a movement by the fdc, would not require congress, has nothing really to do with the election yesterday do you have any sense where that is within the administration right now? is that a real risk or is that something that's just being talked about >> yeah. so far in the u.s., you have not seen a big, you know, threat of anti-competitive, you know, legislation or any sort of
trust-busting activity we've definitely seen that in europe you saw two big things in two years in europe. one was privacy laws and making sure consumers were understanding the data they were sharing. all of the companies implemented that globally, that's not really an issue that happens in europe and not in the u.s but there was also any competitive actions taken against some of these companies. and the u.s. has yet to follow suit and i don't think they will, really it could put a damper on m & a activity in the sector there are some things that could make sense in the sector that maybe -- >> like what >> i always thought that google and twitter sort of need each other. >> really. >> like to pass antitrust muster >> well, i think part of the reason it hasn't happened is because they can't get it passed >> why do you think google needs twitter? it used to be this could be a realtime search for google
acce except for the fact that twitter opened up api to google. why buy the cow when you can get the milk >> well, google is integrated. google has zero percent market share in social advertising which is the fastest growing part of the ad market. twitter is good at some things not that great at selling ads. google is really good at selling ads. >> wouldn't you want to pick off snap if you're going that route into social, wouldn't it be more interesting for a google to own a snap, given the visual sort of images of where this -- where the world seems to be headed >> possibly. but i think that snap is firmly in the crosshairs of facebook. and not as good as a user
perspective. >> it's a melting ice cube because it's so small. >> twitter, but snap is under treasure >> good to see you, michael. we're following a horrific story out of southern california this morning a gunman killed 12 people when he opened fire at a bar in thousand oaks. nbc's joe fryer joins us joe. >> reporter: melissa, good morning, the sheriff describes it as a dynamic, tragic and horrific seen here inside the borderline bar and grill here in thousand oaks. we know that 12 victims were shot and killed including a sergeant responding to the scene. we also know the gunman is dead. we do not know how that gunman died so far, he's not been identified and the motive tour tfor the shg is unclear it was an incredibly busy night at this venue.
it's a music venue for dancing hundreds of people were inside the bar when the gunman entered and started fire witnesses describe a chaotic scene. some hiding in the attic, some in restrooms many thought they heard fireworks but then realized it was gunfire. some even said they saw smoke bombs which made it even more chaotic. in the end, 11 people inside the bar were shot and killed within minutes of 911 receiving calls a sheriff from the sheriff's department ron helus was in the area. he responded with a california highway patrol officer within three minutes they heard gunfire sergeant helus decided to enter borderline the sheriff said he was shot multiple times by the gunman the california highway patrol officer was able to grab the officer and pull him out he was taken to the hospital but
sergeant helus did die a short time after at the hospital he was a 29-veteran of the department and leaves behind a wife and son he was planning to retire next year the sergeant said he died a hero investigating what happened on top of the 12 people killed, 10 to 15 people were injured and taken to local hospitals thousand oaks is statistically speaking considered one of the safest places in the entire country. but the sheriff points out even in a safe place like this, something tragic like a mass shooting can happen. back to you, guys. >> what a tragedy. joe fryer, thank you coming up, president trump has called china's president xi his friend we'll lkta about what's next with this fraught trade relationship i am a family man.
i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back to "squawk box. the trade war between the u.s. and china back in focus following the midterms the white house is planning to impose tariffs on all remaining chinese deals if a deal cannot
be reached by the end of the year joining to us discuss where we are in this trade war is rhodium group's daniel rosen daniel, welcome. >> thanks. >> does your view with how president trump proceeds with negotiations change based on the outcome of the midterms? in other words, does he take a harder stance because he's lost the house? what's your view >> it's virtually the only thing that's unlikely to change as a result of the midterms he couldn't have taken a much harder stance than he's already taken. at the same time, there's nothing that the democrats would like to soften up right now. it would be a loser for them to get on the soft side most the team that's managing china policy out of this white house has been building bridges and has an ongoing conversation with the dems. so this is going to be more stable than i think most people expect >> how do you perceive the china trade and the quote/unquote war.
does it have the backing of both the dems and republicans >> when you look at it from the big picture. it was before the election that j.b. pritzker stood up and said we've got a problem. and it's about more than the united states. as we've been waiting for these midterm elections, brussels, berlin, london, paris and others have been moving pretty much in an aligned direction where we've been going >> talk about this, everyone is somehow an irrational actor. there's an emotional component to this both in united states and china. by the way, did anyone see the papers in asia overnight related to the shinzo conference -- in the middle of the conference, say hello to shinzo. i bet he's really liking those tariffs is what he said.
it was sort of a crude little comment about that but the reaction in japan, i mean, people are very angry about that >> yeah. >> and so the question on the china side, that's related, is just how much of this is about losing face versus the actual economics of it? >> face is good. it's gotten folks a long way this year. a lot has shifted beyond what anybody thought could be shifted in terms of the china conversation but we cannot set aside the objective toolbox. doing the trade action, japan, probably the single biggest loser is taiwan. and meanwhile, the big winners are mexico and canada. european union other parts of latin america that are going to take up the slack if we keep on buying the next cheapest product to put under the christmas tree rather than what we've been getting from china
big difference in what our guts want to say and what our minds conclude >> it seems like there was a shift earlier this summer, in terms of saying taking on the entire planet in terms of trade negotiations we did it one at a time and took the temperature down i guess the question is, with regard to the president, do you have any sense -- i think there are people in the administration that are true believers, that ideologues and a president who tends to be a dealmaker, is china different in that regard do you see the president as more as a dealmaker or ideologue? >> i think the betting through 2017, 2018, was that most of what the white house was doing was tactical that this was all designed to soften things up so there could be a grand bargain or grand deal at the end of the day. problem with that, the fundamental reason why not just the united states but so many advanced economies are in such a sour mood with china, is that china's fundamentals which used
to be moving a fairly liberal direction, taking too long but we kind of knew what the long-term drift was, that drift has changed in past couple of years. largely because china hasn't been able to find an easy way forward to implement the big economic changes, internationalize its currency, without involving capital flight, all of those sort of things and until it figures out how to get that big bang done, it's not going to be a model that is convergent there i think we'll get there but it's going to take more pain and scarier times in china before the time is ready. >> i heard an interesting line of thinking that without republicans controlling the house anymore, there won't be any more fiscal stimulus, legislatively. therefore, trump may be willing to have a bargain with china, because that, in effect, would be like fiscal stimulus to the economy. i mean, can you see that happening? >> not sure i get that one
>> you're rolling back tariffs that had been in place, so the net impact is a positive one >> yeah, i guess, the size of our trade deficit would be the biggest factor to consider in terms of what's system timulatid what is not. mostly it's coming out o commodities something like l & g. the problem there from china's perspective you really ready to make yourself beholden to american energy to keep your fires burning through the winter you know, it's going to take some trust-building and fence-mending to get back to a world that china is gent dependn
us >> well, thinks get worse. >> for those, hundreds of billions of dollars of assets in china built for the long run may have to get marked down a little bit if we don't resolve that at the same time, there's a rebuild of our supply chains that might happen in other directions that could be short term good for growth >> you you saw the article about distrust levels. >> 15 bonds just 1,000 basis point spread above u.s. treasuries more than all of the other countries combined >> they need the economy to keep going. >> china's big problem is actually not our white house it's own past sins people s bank of china. >> yeah, it would be tactically useful for the white house to get credit for the headwinds in china. everything that we're asking for, china has to mostly do it
anyway, whether we're asking for it or not. >> daniel rosen of the rhodium group. >> not what we hear. that perspective all the time. coming up, the midterms are history. time to see what president trump has planned for the economy. former counsel austan goolsbee will be joining us next. "squawk box" is coming right back when you finally stop working, will it feel like the end of a journey? or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today.
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we are just seconds away from weekly jobless claims and we want to get over to rick santelli he's standing by at the cme in chicago. sir, you got about three seconds. numbers, please. >> three, two, one -- buzzer please -- and the data says 214,000, which is down 1,000 although, if you have a good memory, you remember it was 214,000 last thursday. indeed it was, we've upgraded that to 215. on continuing claims, just slightly lower, 1.36 million to 1.633 million. the index, getting its mojo back after the markets yesterday, obviously, the equities had a big response to midterms dollar index was hit back a bit. you saw many asian and market
currencies rallying throughout the week against the dollar reversing 2018 trends but it is now back up against 96 which seems to be a litmus test for bull and bear territory. as we, of course, await not necessarily anything with regard to fed action, but the statement offering inclusion at 2019 or for those who think that maybe december is not on the table, probably will dispel some of those thoughts. andrew, back to you. >> rick, thank you we want to get to steve liesman who joins us with more, also an early look at this afternoon's fed decision, steve. at least in terms of this afternoon, i imagine we're not going to be hearing much but curious if these numbers do anything for you >> well, of course, they do something for me a low number of americans filing for jobless claims is a good thing. it speaks to a strong jobless market and economy by the way, since wee been so focused on the election, i haven't had a chance to talk about it, the economy is slowing
but not a slow rate. we will have done 3.6 in the third quarter. and cnbc wrap-ups running 3% in the fourth quarter that's a good quarter. that's a potential up. let's take a look at what the fed expectations are 90% responded saying no rate hikes agreeing with andy there and everybody on the street. a pretty healthy percentage. and there's that 2.5 or 2019, that tells you that pretty much everybody agrees on 2. half say 2, the other half say 3 for 2019 in total. we put it all together, what does that mean, going up for 3 next year. 3 for the year after that. you can see what the fmoc projection is.
a little disagreement on 2020. but, hey, we've got time and 3% is the average. and we did ask people, what about the balance sheet reduction. the fed next year if it stays on track will reduce the balance sheet by $600 billion. we asked folks what's that worth in basis points. 15% said it's less than two. 32% say it's somewhere in the two to three hike range. whatever you think is going to happen, you might go want to add that on to what the balance sheet reduction effect will be on interest rates. one other thing we asked about, why did the recent stock selloff happen and certain about more fed rate hikes was the number one reason there. tariffs concerns in the second place and higher market rates in third place. other factors were the earnings outlook and certain about u.s. and global economic. a couple quick commentaries.
the chief investment officer attaat a a aredent writes in, at the moment, the fed is more concerned about strong employment and wage growth. and then the fed would be wise to pause in 2019 absent clear evidence of higher inflation joe, a range of responses there. in general, they think the gradual rate hikes continue. next year, with two or three and we also the fed reducing the balance sheet by 600 billion next year, joe >> i just wish we knew whether tight labor markets events all the time result in higher markets. >> you know, the vice chair recently said it does not. he said that's not necessarily a definitive thing i think the fed, i think powell
will take clues from claraton, and claraton will take clues from powell. remember, they don't do another one according to markets until march. so, they have a bunch of time to think about the first half of 2019 and they've got the rest of the year to think about how many joe, you didn't want to make a dome and dome comment, do you? do you want to pass on that? >> i'll pass on it >> kind of you >> that is a beautiful dome. >> and the capitol >> i feel better that you made that joke. it would not have been a morning to have -- >> you know, steve, maybe it's different this time in terms of innovation, technology, automation >> you know, i think a disservice, you know what, folks, stuff is different this time we have this global world now, it's well to remember, you know, despite the tariffs, you know, protection and resources are global in a way they never were
before your ability to go online, through a couple clicks and get some stuff brought over is much easier now than it ever was. by the way, joe, there's one other thing that we haven't talked about which we don't get a chance to talk about is people's mind-set on inflation if you see an outside price, joe, whoa, that should cost ten bucks, it's 20 bucks what is your ability to go online and not pay the higher price? >> well, we've imported a lot of disinflation, too, i think so it will be nice to keep things going there's no reason to stop it from going if it wasn't for inflation. >> i don't want to end this on a controversial note but part of that mind-set is the open trading environment that we have and we can talk to the extent at which this administration is lilting that and whether or not, you know, we end up doing some damage to that whole global supply chain that exists there through the current trading regime
>> well, steve, the one thing i think is we have to give more credence or potential for the supply side of the tax cuts to work because if you get the capital spending response that was really designed to come out of the tax cut, productivity which has been largely absent during this -- during this expansion, could keep growth stronger and inflation lower for a longer period of time so, i just say, we have a different point of view, which is to say, there's a chance we're more like in the fifth inning of the business cycle than the seventh inning. again, if the tax cut works as intended >> that's not different from my point of view. i think we can have a good impact from the tax cut. i think the thing i debate every morning is how much effect we could have we did see business and equipment spending overall slowing in the third quarter part of what you're saying, jason is, or what i'm saying leads a little bit against that
which is goes don't really care where they build stuff these days there's some advantage to being in the united states and even more advantage now but they have built stuff everywhere and the extent to which there was supply out there may attenuate how much we have in terms of a response in the corporate spending side. >> so, okay, steve, dome and domer. >> are you reading a tweet there, joe >> nope, reading from the director >> which director? >> paul. >> in addition to being and calling the shots right and switching cameras and everything else, he writes material for me. >> no. >> and he's ready with that shot, dome and domer sorry. but if you got a complaint -- >> i'll bring it to the new producer >> he's not new. he knows exactly what to do here that was perfect thanks that was a good one, right, steve? >> i agree, i agree. especially because it was new and fresh and not the same old
joke that you've been saying for 16 years now >> is that all anyway, time flies >> have a great day, joe >> okay. austan goolsbee, professor of the school of business and former chairman, economic adviser to president obama we we talk about all of that, we missed you on friday i wonder what your guess would have been -- remember when you were always sort of low on the jobs numbers you were always right, though. and that was a big number. would your guess have been a number that big on friday? >> it wasn't that it would be that big, i thought it was going to be bigger, you know, because we were going to have some rebound. first of all, i can't get past -- i'm going to give you credit, joe, because all of those horrible jokes that you've used all of this time, someone was writing them for you i didn't realize that. i would have blamed that person. i thought i was just blaming
you. >> you know that plausible liability is big you know, as a former government-type. you've got to fall back on that whenever you can, if you can are we at a point where your long sought-after wage gains are really going to be a reality or will that be self-corrective or self-defeating? >> i hope it's not self-defeating we're supposed to have wage gains every year and then one quarter, ands, oh, we got to shut down this growth rate because it's too big. i hope that we're moving into a period where wage gains are going to be bigger for ordinary workers, not just overall in the economy, concentrated on one sector or one group of people. but i'm not sure i'm not sure we're going to have to see we certainly didn't see it in the previous quarter so, we got one good quarter. >> you think the fed -- you think the fed is not too hot,
not too cold, just right in terms of inflationary expectations? we were just having that conversation or does one follow the other tight markets, inflation is right around the corner? >> they clearly have in their mind that they follow one another. and they feel like, oh, we better charge ahead. there's imminent danger in place, we better charge ahead. and i think the economy's going pretty well. but there's certainly things like big trade war or, you know, slowdown of the stimulus part of the tax cut that could make the growth rate not as impressive as maybe what the fed thinks and if so, they might be a little on the aggressive side. >> what do you make of the midterms? i saw some of your comments that this will -- actually, it can be a positive in terms of a house -- some of what you called the president's worst impulses could be harnessed, and that
would leave some of the good impulses and it could be a positive >> yeah, well, look, joe, i've always taken you not as a partisan guy but as a conservative >> that's very generous of you, austan >> i think it's true he's more objective in his beliefs. he's not just going to do what the republicans have said. >> unlike a lot of people on the other side, by the way >> but the thing is, i thought you would agree with the market, joe. clearly, the market wants there to be a check on the president and yesterday is say perfect example. if the democrats are in congress, you're not going to go fire the attorney general and put in a kind of a henchman-type to be in charge -- >> to be in charge of the investigation. >> because they would be all over them. >> you're not going to do it with sasse there's a lot of republicans
r mitt romney is not going for that either. >> you say that, but we have two years -- >> the president told us, by the way, that the market was supposed to drop like a stone. >> yeah, that's what i'm saying. >> it was the behavior >> he didn't say that. he didn't say that, he said if we lost both >> okay. >> let's be honest, setting that aside, into believing that the stock market would fall but it went up. >> what do you think would have happened if they lost the senate >> if they lost the senate i think it would be tougher. >> with the academic, we're going to have some counterfactual argument what would have happened. the market likes the control >> it did. and yesterday you heard and it was interesting i thought, he didn't even want to win it slightly he said, to have like a two republican advantage in the
house because they have the same power that jeff flake or whatever and he said it's better, and this could be better for getting something done, because it has to be generated by democrats and he sounded amenable to certain things i don't know if he is or not he acted like he'd work on health care and infrastructure or something with the democrats. >> yeah, i think he did sound like that. i think it's got two things working against it and actually the market doesn't think that they're going to do very much. and they might be what part of they view as the upside scenario the two thing works against it, number one, that's kind of a 1994 model, bill clinton loses the house and senate and then he says, okay, let's start making some deals the senate cannot agree with what the house is going to do, i don't think the president will be able to triangulate
because they've got to pass any bill through the senate. and the senate has turned itself to being less moderate and more extreme. >> austin goan goolsbee, univer professor. appreciate it. you don't want to go back and look at positions of what's going to happen when people are elected, andrew. you saw what happened when trump was elected. don't hold the president to it don't hold the president to it it wasn't even what he said. he said if they lost the house and senate >> go back and look at the language you can actually go back and look at my language. >> many people have. many people have >> you'll see a big distinction. coming up when we return, markets rally off midterm elections. rk'singoing to talk about the maet fal chapter of 2018 and see how this book comes to an end when we come back in a moment alpha seems more elusive today.
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then i need to get if i'm into character. santa, ♪ ho ho ho this is christmas, baby ♪ [ groans ] dude, how many candy canes did you eat? [ mumbles ] that's hurtful. let's get you caught up on the markets at this hour joining us now, david bianco, welcome. >> good morning. >> yesterday's rally on the dow, were you a buyer >> yes, we think there's more to come the midterm elections has something for everyone something for joe, something for andrew and we think the market got oversold when it approached those corrections back in october.
i think the s&p is going to be 2100 by the end of the year, early january. but i don't think we get above 3,000 before we get more clarity on the tariffs >> that implies that the level will be there because we're at levels that we've been at beginning of october >> think that the dip are too high we think investors are going to take their expectations to it's s&p from 10% to about 5% that's still not enough to justify ape. if you look at the fourth quarter results, $42 and change. the s&p is doing about $170 with annualized earnings right now. that's a 16.5% multiple on the earnings at the moment >> what are you viewing for 2019 >> 172 >> or the gap, 173 >> yeah, we're in the same
ballpark 5%, 6% growth. taking a look at the top, it says if the rally resumes to the characteristic that it had rallied in october >> yes we were of the view that >> octobers have nothing to do with growth to value rotation. it was simply a beta sell off. we are overweight tech, communication services, health care and financials. >> what is your version of tech? >> information technology? >> information communication technology. technology into communication services sector. i'm overweight communication services and under weight telecom. >> were you this bullish about tech and communication services in particular 48 hours ago versus today we lost the leadership before the sell off in october.
has the damage been reversed >> we were bullish on growth stocks in general. we continue to believe that growth stocks will outperform value stocks. i don't think they lost their leadership. we think growth stocks were the last stocks to fall down. certain things sensitive to trade and industrials. the last thing to fall down were the big tektitech titans. >> let me ask you about that, financials. keep looking for that to work, what is going to be -- it should work. the valuations are attractive. you have possibility of consolidation within the sector. why isn't it working in your view >> there are a view reasons. the curve has been flattening. people fear there is pressure to
raise dividends. i think what is happening is that investors realize that growth is slowing and interest rates will grind upward. there is still debate about how much the fed hikes in 2019. the fed is going to hike in our view in december, still hike once or twice more. the big banks will make more money. their dividend growth will be strong. i'm overweight financials and under weight energy. >> as people start dimming their hopes for economic growth in the outyears, are you worried that the yield curve flattens >> i expect the yield curve and particularly feld funds rate to go essentially completely flat. >> in our view it would be a signal that the fed has gotten to neutral. >> thank you. let's get down to the new
york stock exchange. jim cramer joins us now after the move yesterday. if it was down 500, i think we would have heard a lot more about it. we talked about it a little. i didn't really see it in the mainstream that much. >> you're so right. i didn't see it at all. i thought it was a great move except for a lot of energy as your previous guest said. i thought it was a significant move because it brought back a lot of stocks. amazon was up 117 and no one cared. i remember when amazon was down 117. it's asymmetrical. i think people need to start recognizing that a lot of stocks are people doing really well. >> it's partly human nature. house is not burning. just the headlines are much bigger. >> dog bites man.
i'll take 117 points to amazon any day. yesterday it said we have a democracy going. i know the press conference is a little wild. let's focus on other things. steve liesman's survey is interesting because people are saying things are slowing. listen, we are starting to think about slow down. the only person who seems to not think about slow down is jay powell. the fact is a lot of the stock market is really down because a lot of the economy is going to go down, but not the fast growers. i like your previous guest's theory on those. >> i ask you, i loved it when i ask you about what we should watch in apple. is there anything problematic with disney tonight? >> i think that they're going to have to spend a lot of money to get where they want to be next year. could it be a down year in 2019 with spending?
yes. is it worth the spend? they are doing the great acquisition. there will be people who are against it. the people say wait a second. i can look through 2019. this is serving a lot of long term problems. i think you hold through disney. >> jim, whatever kind of number -- great american -- but the question i have is in terms of how are you going to measure disney's success 12 or 18 months out from now relative to whatever spending you think will take place to build the library that they will use on the otc service? >> that is a great question. i look at it and i say can we have -- can we measure success by what kind of programming they give on over the top.
we just got to have -- i don't know. is that 300 million. sometimes it is just a leap of faith. you have to believe in the quality of the product or you don't. those who don't will sell it tomorrow, i think. >> because years ago we had greenfield on. we were talking about how much better netflix was going to do than disney. i thought disney was headed right to 150. >> we might have to go to 108 before 150. >> i heard rupert wanted disney over comcast because it is $150 stock. >> here is what you need to know, if it is going for 150 i think he would run for president. >> we'll see you in a couple minutes. the final word from our guest host.
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trainer and correct my colleague who said that the president said the stock market was based on the house and the senate. absolutely 100% wrong. time stamped on twitter 7:33 a.m. october 30, the stock market is up massively since the election. people want tosee what happens after mid terms. if you want your stocks to go down i strongly suggest you voting democratic. he was absolutely clear on what he said. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." coming off the best post mid term election rally in nearly 40 years, futures steady. fed decision today at 2:00. europe