tv Squawk Box CNBC December 3, 2018 6:00am-9:00am EST
live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box," everyone this is cnbc and we are live from the nasdaq market site in times square i'm becky kernen along with mike santoli and joe kernen it's great to see you. >> thanks for having me. >> we have lots to talk about. check out the futures. they are up sharply because of what happened at the g 20 this weekend. you'll see that the dow futures are up by 470 points this comes after a big week last week dow was up 5.2%. the s&p 500 is up 45 points. the nasdaq is indicated up by
165. big week for the nasdaq last week, it was up 5.6% take a look at what happened the markets moved especially in china. shanghai composite up and go with the hang seng the nikkei was up by 1%. take a look at what's been happening in european equities green arrows and the germany the dax is up by 2.5%. cac in france up and stocks in italy up, too. take a look at what's been happening in the treasury market the 10 year is yielding 3.03%. still very close to that 3% level, the 3% handle little bit higher than last week at 3.013%. crude prices climbing on the trade truce. going to say that all day. a number of other headlines.
qatar announced hours ago plans to pull out of opec on january 1st. nobody knows how to pronounce it. >> qatar >> for years it was qatar. >> now it's qatar. after more than -- no, after more than half a century they've been in opec qatar is one of opec's smallest oil producers with you bun of the largest oil producers of lng, liquefied natural gas. the move represents a strategic change and is not politically motivated. other stories helping to boost this saudi arabia and russia extended their deal to manage the market. in addition, canada's largest producing province announced it would force producers to cut output by nearly 9%. opec will meet in vienna later this week. the world is remembering former president george h.w. bush who died friday night at
his home in houston. his death came eight months after his wife of 73 years, barbara bush he served as a two term congressman, ambassador to the united nations, chairman of the rnc, director of the cia and vice president under ronald regan. he was 94 years old. spokesman jim mcgrath tweeted this photo of sully in front of the president's casket president trump has ordered the federal government to close wednesday out of respect for president bush major u.s. markets will also be closed on wednesday. back to today's top story though we have full team coverage of the u.s. and china's 90 day trade cease-fire eunice yoon is standing by in beijing with reaction in china et cete let's begin with eamon javers. i didn't see the weekend tweet
when did you do that >> i put it out on friday night our time in buenos aires they're two hours ahead of the east coast it might have been confusing. >> did you let your hair down? were you -- >> i did not tango there was no dancing. >> nothing with you -- >> there was -- >> you could have some fun down there? >> there was some red wine consumed there was some steak eaten we went to a steak place where the waiter comes out and serves the steak and he cuts it with a spoon with your plate to show you how tender it is fabulous >> you know everybody has a phone now, right >> yes. >> you real -- so it's a different world, eamon just so you know that. you can be on video -- that's all i'm telling you. i've got a strict morality illicit -- >> black market videos of me eating meat in buenos aires, i can live with that. >> people laughing at you everywhere. >> i can live with that.
let me tell you what we learned on saturday night. in buenos aires, the big set piece at the g20 was the saturday night dinner between president trump and president shipping jinping they ended up with a trump trade truce. here's what we know. the united states is agreeing to hold off on the tariff rate increases that were scheduled for january 1st. they're also going to hold off on the additional $267 billion in tariffs that the president has been talking about as sort of a cajole here he's not going to impose those the negotiations are going to continue this is more dialogue going forward. the united states says that's for a 90 day period. the chinese are silent on how long the negotiations are going to last. the chinese say they're going to purchase product from the united states the u.s. says it will be in certain industries it's an unspecified amount of product. the u.s. calls it a very substantial set of purchases coming from the u.s. side.
they're going to crack down on fentanyl sales in terms of the opioid epidemic. the president hammering home that point over the weekend as well then in this tweet this morning or late last night we saw the president saying china is going to reduce 40% tariff on cars he says china has agreed to reduce tariffs currently the tariff is 40%. that tweet coming in at 11:00 p.m. here in washington, d.c here's the president at the dinner with xi jinping describing the relationship between the two countries as they sat down for dinner in buenos aires >> the relationship is very special, the relationship that i have with president xi and i think that is going to be a very primary reason why we'll probably end up getting something that will be good for china and good for the united states >> so, joe, on friday in ban niece aries they talked about the prospect of a kwishy
positive, if you will, in terms of the negotiation the rhetoric holding off on the tariffs but a little bit squishy in terms of where things are going to head, how long are the negotiations going to take, what is the prospect for the negotiations that seems to be sort of where we landed. it's positive but there's some squishiness in the sense we don't know where these negotiations are headed or exactly how long except the u.s. says 90 days at least to start, joe. >> yeah. we're going to agree to talk the issues were too complicated to get a resolution and dinner. >> to complicate today do over dinner too complicated to do in 90 days >> who knows progress was made. >> somewhere between 90 days and 20 years. >> right. >> is what -- >> there's a range there's a range there. >> look at the markets they didn't expect it. >> 2%.
>> who knows whether it holds out. >> big debate whether this was going to be good for the markets. a lot of debate on our air if they get something that's kick the can down the road. if that's good enough. >> we'll drag that one out remember with the e.u., we said that six times a day. >> i've said that about a million times in washington covering all of those debt ceiling showdowns. a lot of can kicking going on. >> we used to use that for bernanke, kicking the can down the road you have a tie with bernanke >> i think i do have one of those. >> i've got a lot of those with different motifs. >> trump and xi both did some can kicking in buenos aires. that gives them politically some room, economically some room you can tell the markets like this wall street seems to be reacting positively it will give them opportunity to go back to the table behind the
scenes and get something done more substantive this takes pressure off. >> 5% the dow was up last week that's a big move. eamon, thank you maybe santa claus is thinking about rallying >> supposed to be the week after. >> last week we made up the gains from the week before. >> but it put us back up for the year it could go either way let's get to eunice yoon live in beijing. good day, eunice >> reporter: yeah, joe you guys are talking about the 90-day deadline. the people in the chinese business community said the 90 day deadline isn't so important because at the end of the day the chinese can request for an extension. so they're being very hopeful that china would ask for an extension and eventually the chinese would get what they wanted all along which is dialogue negotiators are expecting to sit down and hash out some of the unresolved issues at the foreign
ministry today the foreign ministry officer told reporters that they would work towards removing all tariffs as instructed by president trump and president xi this eventual removal of all tariffs is one outcome that's being played up here in china and hasn't even been mentioned by the white house so according to the white house greeting, the talks are going to be focused on some of the u.s. demands, such as forced technology transfers, cyber theft as well as nontariff barriers other practices which washington has said that beijing does and that are unfair. however, those terms like forced technology transfer haven't even appeared much at all in the chinese state press. instead, the chinese state media has been saying that the focus of the discussions are going to be on opening up china's markets and boosting imports based on the needs of the chinese market and its people also missing from some of the
discussion here, again, the 90-day deadline but also the idea that the tariffs could actually pick up again but to 25% if this whole thing doesn't really work out. now the other updates that i wanted to tell you about for the trade deal, qualcomm dismissed the idea that nxp deal could be revived and also the foreign ministry did react to president trump's tweet on the car tariff saying that china could be reducing car tariffs the foreign ministry said that the two sides have reached mutual agreement in areas like tariffs. last week the foreign ministry pointed out that china has a 40% tariff on cars because the u.s. got the 25% tariff on cars so actually they said that if they didn't have that u.s. tariff it would only be 15% and i think it really shows that tension that we see between the
two sides. >> okay. who's your main -- i don't want a chinese car. who's -- what's the big name over there in beijing for the car maker? >> well, there are a lot of big names but one that you should probably be aware of is long joe auto it makes a car called the trumpxi. they don't want to have that name they have been looking at that and they said in 2019 they want to push into the u.s. market knew what's been going on the company has said they might most pope that effort to 2020 but it still the is a car company that you should be aware of. >> if you say so it wasn't the tariffs keeping me
from ordering one of those, i guess. >> i hope it didn't spoil the surprise i bought one for my wife. >> volvo now -- >> i don't want one of those a little better. i've seen some that aren't quite as -- they're okay >> thinking about aesthetically? >> yeah. yeah boxy >> boxy. >> anyway, thanks, eunice. grasso -- >> yeah, i'm here. >> when do institutional sales start during the day are they going on right now? >> yeah. >> stewart frankel, everyone is over there, what do we do? what do we do? he's the director but is there nothing happening at stewart frankel here >> it's always happening. >> directing the institutional sales how can that go on -- >> they're listening to the television. >> do you see me on my computer right now? >> are you doing it now? >> i might be but i'm not. >> multi-tasking all the institutional sales go
through you? >> through my partners and myself that's the beauty. if one spern out, others -- >> we haven't talked about this. >> no. we cover 50 to 55 of the biggest global institutions, we cover them as a team we're elbow to elbow on the floor of the exchange and we bring our trading desk down to the floor. >> it's positioning. all positioning. people are caught off guard, not really off guard they want to see exactly what came out of this now we'll go from a trade truce to a 90 day war. you'll see the headlines coming out for the next 90 days probably not as positive as you see them today i will be using this as an ability to sell the market versus buy it. >> trump trade truce it's like -- >> so easy, right? >> flows right off the at this point tip of your tongue. >> no, like anchor practice.
rain and sane. >> stewart frankel -- >> no one has any idea what we do. >> i know. they're cheering on the trading floor. they don't know what to do without you there. >> what do you think we should do >> i don't know. >> he'll be back he's only on until 7:30. >> then you're on at 5. >> i have some time. >> things come to a grinding halt at 5:00 p.m. >> you should know the markets by then. things dry up after 4. we'll talk more with steve in a moment. in the meantime, we have the publisher of the well known newsletter, bill bishop. thank you very much for being here we have been talking about the market's knee-jerk reaction to this we've been talking about how people think, okay, this is a quick situation where a lot of people, including the traders, got what they wanted on this what are the longer term implications >> good morning. thanks for having me i like the three ts, trump trade
truce. i think this is a 90-day pause it isn't really clear how we get past the real structural issues so i think what we've done is, as you've said earlier, we've kicked the can down the road both sides can declare a win from the chinese perspective this is an ideal outcome because some of the pressure short term is reduced the chinese love to talk they've been having dialogue with the u.s they will work every possible lever they can to find ways to lobby down any sort of potential 58 negative outcomes as eunice said earlier, there should nobody doubt that the u.s. will request an extension and they'll get it. >> that's what eunice said that jumped out the most. if they seek an extension and get an extension, do we wind up in a situation where the chinese are always hoping not only to
talk but drag things out you lose momentum. it's harder to get back to the point where you put feet to the fire is that the end game >> that's exactly right. it's analogous to say the maximum pressure hits north korea. now it's difficult to keep the momentum going you're going to see the same thing with the pressure on the chinese. to president trump's credit, i think he has pushed this issue with the chinese more than any of his predecessors. he has diagnosed many of the problems you can argue with the prescriptions in the tariffs now the question is has the u.s. lost momentum. will the chinese be able to drag it out and ultimately, remember, this 90-day extension gets the u.s. and china past two holidays, christmas and the lunar holiday in china
when this ends we're at the start of the presidential election season. what are the pressures going to be that says president trump needs to layoff on the threatened tariffs or other actions. >> what does success look like >> that's a great question i don't think that's well-defined ultimately some of the demands that the u.s. have made which are very reasonable from the u.s. perspective really cuts to the heart of the chinese system and in some ways pose an existential problem for the chinese party and its rule ultimately its success often depends on which contingency you're talking about success is a cease fire and they have to live with the daily drift and up or down and meeting and i think ultimately it's not realistic to expect that the chinese are going to meet all
u.s. demands certainly that they're not going to make any of the structural changes that the u.s. is demanding. >> bill, i want to thank you for joining us today >> thanks for having me. >> bill bishop coming up, reaction to the trump trade truce. the cease-fire between the u.s. and china, we'll run through the biggest premarket movers moving these three biggest dow gainers. apple is up a lot. first, remembering president george h.w. bush, 41 we're going to take a look at his legacy as a public servant next ♪ there's no place like home ♪
welcome back president george herbert walker bush passed away friday night at his houston home this week the nation will remember his life and legacy poppy bush was cut from different cloth. he was made of a material we rarely see nowadays. shot down over the pacific in world war ii bush's lifelong regret was losing two men on that mission others would want to make him a hero but bush was then and forever a person who would prefer to deflect praise than to bask in it after doing his bit, he would say, they fled greenwich, connecticut, and the shadow of his prominent father to find
their destiny in texas bush was the quintessential good guy, community and service minded, a straight arrow the kind of guy you'd want as your congressman, and he became one. his career in politics was marked by several failed campaigns but he was quick to rejoin the fray and to take jobs which seemed not to be spring boards to something better. >> we've got to go to work. >> bush was ambitious but he was also imbued with that old school american value of paying your dues service and hard work were their own rewards. that, he felt, should be resume enough for someone who aspired to be president. >> for a better america, nor an endless enduring dream and a thousand points of light >> tooting his own horn was an act he wasn't good at nor did he want to be america's success in the first gulf war catapulted his approval
ratings to record highs, but as the economy faultered, bush was blamed for its failure the public perception that he was out of touch fueled in part by the media's infatuation by bill clinton was unfair. he was a man with unfinished business but out of a job yet bitterness or any impulse to criticize his successor were out of bounds as far as he was concerned. over the years many would tell him how much he was missed, words he appreciated but wasn't hungry for seems like people like him don't come around much anymore president trump has declared wednesday a national day of mourning u.s. financial markets will be closed for the day good piece on "60 minutes" last night. >> yeah. >> he was -- his son 4rks , 43,
mentioned that criticism did bother him and criticism of 43 bothers the father. >> it bothers you more when you hear criticism of your kids. >> i remember the criticism from the, for lack of a better term, mainstream media the whole wimp factor. the guy went through 58 missions and with his wings on fire finished the last mission and was in the waters for four hours, shark infested waters you know, guys reading the news would read -- how is that possible and he got labeled is he strong enough or is he -- >> perception is reality and -- >> and you remember prior to trump the most vilified hated president was w. by nature now they look back on him, wow, maybe he wasn't -- i don't know. you've just got to keep your
wits about you when you see the way things are portrayed whether late night or -- i don't know. >> do the research yourself. >> do the research yourself. when i did do some research, i talked about it -- gave a little talk and i looked up some of the stuff that happened to h.w some of the people that were captured in those waters, their captors ate their livers there was unbelievable things happening in world war ii and this guy went head long into t 18 years old on his birthday youngest fighter pilot ever. >> greatest generation last president of the greatest generation. >> if i get on a small jet, i'm like, i don't know i'm nervous. connecting flights 58 combat missions. >> it shows spending eight years as vice president through ragan just created this image of him as somebody who was going along for the ride which was obviously m contrast to the life he lived
before that. >> i also remember, you know, bank roth. you got 19%. >> split that vote. >> bill clinton was elected with 43% of the popular vote. 19% went to ross perot for what what was that about for him? >> it was the anti-bush vote it was the first original anti-establishment they wanted a -- >> he deserved a second term the other thing is, he blamed greenspan for a lot of the slowdown in the economy. unbelievable. >> thinhistory doesn't repeat il and we'll be talking much more about president bush throughout this week. when we come back though, spark therapeutics releasing ne data on the hemophilia treatment. the company's ceo joins us next to talk about the drug and the slide in the company's stock down more than 17% this year right now though as we head to a
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keeps their trade war from escalating and part of a new effort to bridge differences the cease-fire is here for 90 days there is room for an extension let's take a look at the u.s. equity futures you'll see right now dow futures indicated up by 450 points on this news. s&p futures up by 41 the nasdaq up by 156 it comes after big gains last week in the market in europe french president macron ordering his prime minister to have talks with demonstrators. rioters turned central paris into a battle zone the unrest started after backlash with the fuel tax height and has spread. qatar announcing hours ago that it plans to pull out of opec on january 1st of next year after more than half a century in that group. qatar is one of opec's smallest oil producers but one of the largest producers of liquified
natural gas. the country's minister says it represents a strategic change and is not politically motivated. there are questions about what this means for the broader opec structure that you can see this morning, wti up by about 4.25% this comes after both saudi arabia and russia have made moves to say that they will continue to keep a tap on things, keep close eye on things we heard from a canadian province saying it would be cu back a little bit, too, in terms of production. >> the united states is out producing russia and saudi arabia. >> right >> moot point. >> the path of crude seems to me to still be lower. how much of this is the trade issue? but you have global growth slowing so it's not going to be a consumption issue. it's the supply/demand thing seems like we're over supplied. >> once again we have the supply news but we have the fed not hiking like it was going to, theoretically. theoretically and the tariffs were put on hold so two of the dampers for global growth both got taken care of.
>> oil is trading with stocks. >> right >> at this point at these levels bitcoin up this morning. probably >> is it it's got to be every risk asset has to be up. if you look at the names that have gotten us here, the large cap tech names, those names will all be up, apples, facebooks, amazons. look at large cap chinese stocks alibaba, that should be in the sweet spot if this will be a real resolution. >> this is down. >> wow >> broken. 4,000. >> maybe brian kelly is selling it today. >> maybe that might do it that might do it a number of companies -- a number of companies presenting data for gene therapy at the american society of hematology joining us is the ceo, one of the leading companies in gene therapy treatment. jeffrey razzo of spark therapeutics good to see you this morning a lot of promise in this technology and you're one of the companies pioneering the wave.
but the elephant in the room is you have the most expensive treatment on the planet. it's $425,000 per eye for a gene therapy for a problem in retinal cells. so if you get both eyes done it's $850,000 but it cures blindness for people that are actually in that position. but we would like to hear how you get to that number, jeff >> well, what i would say, first of all, thanks again for having me on this morning this has been an extremely important year for us here at spark therapeutics just actually a week or so ago we received approval in europe for our drug which is the one you were just referencing. >> yes. >> which that will now be carried forward by our partners outside the united states in navardis and we will continue to supply the drug to them. in the united states we announced earlier this year, as
you said, a price point for a1 therapy that has the potential to be long lasting if not lifelong that price you referenced is for a single payment we have had an incredible year of execution around that launch. this is the first gene therapy ever launched for a genetic disease. we've already shipped 42 viles we've had a very strong year around the execution of that therapy. we're already seeing 85% in the commercial side, 85% of covered lives already have positive coverage for that therapy. that's in large part not only due to the results we've seen in the trials for that therapy but also the innovative ways we've gone about proposing to be paid for that therapy which we can speak more about. >> just trying -- for people that might not be able to connect the dots between how much it costs to develop a treatment like this and maybe
they can't realize that you might use the proceeds to innovate other, you know, either life saving or life altering treatments, it just sounds like a lot. without insurance or the average person that would need this, nobody could come up with $850,000 or at least a very small percentage of people would be able to afford it it almost sounds like you're taking advantage of the insurance companies to people who don't understand the way -- you know, the cost of developing something like this. how do you justify it? >> well, what i would say is that you're bringing up the concerns around access that we certainly had as we were getting closer to the approval in the united states last year. and so when we launched the drug earlier this year we not only announced a price point but we announced two innovative payment and distribution models that went alongside that price. one of those is a way in which
we can cut out a lot of the additional costs that are inherent in supplying drugs in the united states, and the second was that we proposed to stand behind the product and provide rebates back if it wasn't showing initial efficacy or it wasn't showing, importantly, continued efficacy out as far as three years. so between those proposals and the strength of the data that we've shown, again, we've had a fairly strong year around execution showing the launch of that therapy patients are getting access, 85% of commercial insurers are covering those more than half of government pairs are covering that as well. that's a lot of progress in a very short period of time. to your point, this year has also been about the progress we are making in investing in other areas, in other diseases including hemophilia.
>> right. >> we have three product candidates in hemophilia one in a study in hemophilia b that's in a phase 3 program that pfizer is running and two in hemophilia a, one that we presented the data on yesterday at the american society of hematology meeting that is moving towards a phase 3 trial and then a third one that we announced last month that we intend to develop in the patient population that has inhibitors in the hemophilia a space. >> is there room for you, biomarin, is it true they're a few months ahead in terms of the hemophilia a treatment is there enough -- there's room for both -- both drugs i guess, huh? unmet medical need >> yeah. this is -- i mean, this is a very large market. i think it's a very attractive one for gene therapy generally because what you're talking about trying to do is to provide the normal functional copy, the
healthy copy of the gene in this case to cells in the liver and allow the liver to essentially produce the protein had in this case factor 8 that the markets are missing. this is large enough for multiple players importantly, this is a market that patients are certainly not optimally served but they have solutions today. what we've heard from the medical community and patients, they're certainly going to look for what is best in class. so we continue to strive to focus on the safety of the candidates we've been developing and shared really important unique findings yesterday around some of the safety profiles of our therapy which are different from what has been shown in other studies and also, look, our gel is to have persistent stable levels. >> you emphasized the one time treatment so much that your stock symbol is o-n-c-e.
stock was almost 100 now 42 and that has to do with timing on some of these i think hemophilia products, does it not? is that how you would attribute to the pull back in the shares >> yeah. i think people are looking to try to determine how the hemophilia market is going to play out years from now. i certainly understand that. however, what i would say is, again, as i mentioned at the outset, we are still the only company that has launched a gene therapy for a genetic disease in the united states. we have a product candidate moving into phase three towards phase three in hemophilia a. we have built a set of capabilities that are still unique to the industry we are supplying drugs for novardis and have launched a gene therapy in the u.s. our long-term prospects continue to be strong.
>> jeffrey amarazo, spark therapeutic symbol on-n-c-eo-n-. thank you. >> thanks forge for having me. reacting to the trade war cease-fire then coming up at 7:30, we'll talk to tom farley and at 8:00 a.m., our newsmaker will be u.s. treasury secretary, steven mnuchin stay tuned, you're watching "squawk box" on cnbc
mom. ♪ time now for the executive edge we're focused today on the big stories driving oil prices higher brian sullivan joins us from cnbc head quarters hey, brian. >> huge jump on oil prices keep in mind, we're still at 50 bucks. don't make too much of it. up nearly 5% in oil. a couple of reasons. we have the opec meeting in austria as well as the opec plus, as they call it, which is saudi arabia plus russia that is on friday.
many think that is, quote, the real meeting, if you will. we are expected to get a cut at that meeting anywhere from 500,000 to maybe 1.3 million barrels a day. the bigger headlines though as you eluded to is long-time opec member qatar is going to leave opec at the beginning of the year they've been in since 1961, guys they were the first non-original member to join you had five original members. they joined the next year in 1961 they're one of the smaller ones for oil. about 2% of opec output but they are the world's biggest producer of gas they're leaving -- their story is that they're leaving more to focus on gas they've been under kind of a trade and economic embargo from saudi arabia dating back two years because of alleged ties to iran having been to a couple of these opec meetings when you have qatar and saudi arabia in the room, it is a little bit -- you know, you can cut it with a
knife. qatar saying it's going to leave opec at the beginning of the year taking opec down from 16 members to 15. so maybe you have a slight sign of a fracture in the cartel. >> yeah, brian we did show the dramatic move down in natural gas. obviously that seems to be the reflex of the markets on that news. >> they want to ramp up from 77 to about 110 in b.c. basically the measure of volume there. qatar wants to raise up -- remember, they're doing a lot of deals in the u.s we were in corpus christi talking about liquefied natural gas. golden path which is an exxon golden petroleum connick could he phillips which is in the planning qatar petroleum will be 71% of that deal. they've been investing in lng. many will see this as a political move qatar has been on the outs with saudi arabia and a few others. they're using their muscle saying if you're with them, you're not with us
qatar is saying good-bye this could be their final ever opec meeting add a little bit of drama thursday and the opec plus meeting friday and cnbc will be there. >> thank you, brian sullivan. coming up, much more on the day's big movers after president trump and china's esenshpridt ia gre -- president xi agreed to a cease-fire we'll see how the tech names are reacting that's next. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...
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apple shares down 22% from their 52-week high hit on october 3rd. during that time president trump threatened new tariffs to chinese products the stock now rebounding after the trade war cease-fire over the weekend. here to talk tech is dan ives from wedbush securities. great to see you this morning. >> great to be here. >> i guess the question of how much relief we might get for apple and other big tech stocks is a function of how much they were depressed by the trade war fears. where does that number lie >> it was a moment for apple and tech in particular look, we believe this is really -- it could be about 200 bips off growth in terms of the tech sector. in terms of apple specifically, in our opinion about $10 into
the stock was sort of baked in here based on a worst case tariff then you could see the stock rebound from here. it was white knuckles going into this weekend >> right now what we -- what do you think the reaction is going to be? it's a reprieve, we don't have to worry about it for a little while? >> i think at this point, it's a reprieve i think investors are kind of viewing a little more background noise in terms of the 10% tariff that trump threw out i think if you look at the ultimate demand going to the december quarter but for tech and for apple in particular, i mean, this was a goldilocks scenario. given what was baked in and it was just the bad news continued to happen. in our opinion, worst case it was going to take about 3% to 7% off of apple's profits in 2019 you bake that back into how the stock can go up now. squ
ultimately that extra 10% would be a gut punch to apple. >> the backdrop is the fundamental story. is it -- are the best days for apple over forget the tariffs right now that is something that had to happen or is never going to happen what's the stumt stofundamental? >> i think the best days are in the rearview mirror. i think you're seeing investors and the street set expectations in terms of iphone growth and what is going to be on the quiver in terms of services. but ultimately if you look at transparency, that's been a big dagger in the stock here. as we get through this period which in our opinion is probably the most negative we've seen in three to four years. >> so you think it's been overdone >> i think it's overdone you'll see the tariffs sort of rebound today. but fundamentally, there's still a lot of wood to chop.
for cook and apple to prove that, okay, iphone's at a 2% or 5% growth, asp is going to increase and specifically it's about china. demand that's the key that's what's been sfointing so far. >> holidays, is it a big deal right now? we're not going to get specific iphone sales from apple. is it make or break? >> it's still make or break. even though they're not giving iphone units, it's make or break in terms of seeing where the supply demand barrier hits in terms of going to the december and march quarter. i think right now street's looking at a units down 3%, 5%, 7% if holidays don't go as expected, then you look at 10% desell this is still a make or break holiday for apple. >> all right dan, thanks very much. dan ives of wedbush. when we come back, ceos
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history? the possibility and what this means for oil prices straight ahead. plus remembering the life and legacy of george h.w. bush one of the president's friends will join us with his reflections as the second hour of "squawk box" begins right now. live from the beating heart of business, new york, this is "squawk box. good morning and welcome back to "squawk box" on cnbc i'm joe kernen along with becky quick and mike santoli andrew is off today. dow futures up 426 points on the morning. we were up over 500 at one point. nice move. not 2% really on the dow, but it certainly is a big number after a 5% gain in the dow last week
>> we are watching three big stories this morning one, the u.s. and china agree to trade truce. steven mnuchin will be our special guest coming up at 8:00 eastern to talk all about this story two, auto stocks are soaring in european trading this morning. a tweet from president trump reads, china has agreed to reduce and remove tariffs on cars coming into china from the united states. german auto stocks are on track for their best day in two years as people read this into the potential for being tariffs coming down across the board or the threat of additional tariffs. and here are the three big u.s. auto stocks in premarket trading. take a look. you're going to see gm is up by 3.6% ford up by 2% and chrysler up by 2.1% and our third top story this morning, oil qatar announcing hours ago it
plans to pull out of opec on ja january 1st after more than a century. saudi arabia and russia agreeing to extend their deal to manage the market canada's largest producing province says it will force producers to cut output by 9%. as a result wti up by 4.2% we've got some breaking deals. next star media group is buying tribune media. there you can see tribune up almost 10% corporate leaders trying to make sense in the latest development in the trade fight the business round table says in its words it's encouraged by the result of the weekend's talks. the group is, again, in their words hopeful this will lead to both important reforms in china
and a de-escalation in trade tensions between the u.s. and china. joining us now, chairman and ceo of snap-on thanks for joining us. >> glad to be here >> you use domestic steel, domestic aluminum. >> yes so it doesn't affect us. although the prices of those have gone up 20% to 25% last year and already this year 20% to 25% so we've had to offset it. we're good at that >> you also manufacture a lot of times where you sell >> we do that and 80% of what we sell off those trucks everybody sees in america, we have 495 of them, that's made right here in america. so we're kind of a made in america guy. but we still have some exposure to tariffs in terms of stuff we buy, in terms of components, in terms of finished goods that we might not make things like compressors and so on so you see that kind of thing. >> you're happy with the news over the weekend
>> better than the eye with a sharp stick. i've heard people say, you know, it's kicking the can down the road i think you've heard that on these shows so far i think there's some of that, but i would say if i was speaking for the national association of manufacturers, we would say that this is an inflection point in the negotiations so far the discussions have been tighter and tighter. and this has been the first backoff. what you see -- i think if you're a manufacturer and look at this, you say china has predatory practices around ip and other things then you see the tariffs as a kind of prod to get that finished it's a balance so the idea you have an inflection point is a positive >> you said it can affect you. your prices have gone up on steel and aluminum you are behind what the president was trying to do, though, i feel if you agree with the -- >> sure. >> unfair trade practices --
quoting you. you didn't say this. you're mad as hell and you're not going to take it >> i think that was network. >> but you did say unfair trade practices are a clear threat to our economic trajectory. >> sure. >> so you -- you didn't say what the hell are you doing you think that this was a -- something that -- >> no. i think this was a time in which the president seemed to get response from china. last time i was on this show had i gotten back. i think there's an unrest in china, worry in china -- unrest is probably a wrong word but there's a worry in china i think there's an effect on this for snap-on, we think we can manage all this because we have a culture of reducing costs. i was just in a factory last week in tennessee. spent a week on the floor with factory workers driving down costs. that's been able to offset some of that. there's another thing. so if you're buying stuff from
china, you extract that if you can. then there are other places. if you really get stuck, you can resource to places like taiwan and so we're not shaking in our boots over the outcome of this >> having said that, though, what do manufacturers in general want to see come out of this would they be happy if we just made this inflection point, get to another side and maybe it's some sort of a victory but nothing major and we walk away and go back to it? >> i'm dating myself now, but i suppose that's the $64,000 question what is the balance between those things i think manufacturers saw this as a chance to push china in the right direction. i think we'd be disappointed if we didn't get some kind of movement on this that movement would be unspecified, i think we think that the president is doing the right things and we kind of expect he would do this. because he seems to be uniquely able to negotiate these kinds of things now, i think it's hard to walk away from the world's largest market
i mean, automobiles, what are they selling 28,000 automobiles you wouldn't want to walk away from that sort of thing. but we like the engagement at this time. >> you need to know what you're doing. if i gave you an application to work at snap-on, i don't have the technical expertise, i don't know >> i don't know. you went to m.i.t., you probably have some. >> i'm worried i might not -- my skills might not match up. >> we can train you, though, joe. >> you've been at the forefront of trying to do that and match job skills with the jobs because there's a half a million jobs that aren't -- >> open. they're going to be 2 million by the year 2025. and part of the problem is, one, matching the skills to the jobs. so getting the schools to match their curriculum we have an organization called the national coalition of certification centers. we're doing business with 450
schools trying to give them snap-on certifications where they have stackable credentials and people can look at it and say these guys with weld, these guys can use diagnostics matching what the marketplace wants. the other thing is, boy. signing up for technical jobs now is a -- like signing up for the consolation prize. there are people -- there was an article in "the new york times" saying the teche in silicon valley are the working class of the future. it's true. 90% of america say that manufacturing is crucial to their future only 30% want their kids to be in it. and so part of this has to do with a kind of pr program to convince people that these are great jobs these provide the ability to keep your families warm and safe and dry and they bring pride and
dignity. >> part of the pushback have been from people who saw these jobs disappear >> no kidding. part of the -- >> how do you convince people these jobs are here to stay and it's a career? >> somebody gets an idea, you need workers to be the amplifiers you're in a competition with the world now. and upscale the american workforce allows you to win that competition. the other thing about it, though, i suppose is it's on business itself. one of the disadvantages of saying that employees are crucial. and we say employees are crucial because we have such a complex product line on occasion you have to act like it so you can't just lay them off one of the things -- to bring it back to the tricariffs, the fir thing we would look at would be how to reuse our people. we spent so much time making them better. so much time >> that's the message people are
hearing with gm closing these plants what does that mean for somebody who's been counting on these jobs >> i have to say that when i was in tennessee and i must have talked to 50 people there, they're all positive about the economy. they don't care about tariffs. they don't care about the congress they're worried somewhat about gm they think the economy's positive, but they wonder what gm means to them i don't fault gm >> you understand why businesse do this. >> snap-on doesn't see that because everything we make we kind of are okay we make in the markets where we sell and secondly, we don't need to adopt new technology or retool technology like they said. because the new technology is diagnostics. and we already have the best >> are you paying more people money? are they asking for more is there wage inflation? >> there's always wage inflation. we've been play 3% wages since the inflation.
>> you don't have to pay up for technical people yet, they're not -- >> a guy like me wouldn't say that on this show. it would say our people are underpaid. we pay pretty well >> i think of you as a blue collar ceo were you talking about gamma minus people >> you went to m.i.t >> i did read it but is there anything below gamma minus? what's a journalism major? >> i would never think of you that way you're trainable if you're a gamma minus, you can come to snap-on and find dignity. >> or keep doing a lot of soma anyway, thank, nick pinchuk. we have breaking news.
glaxosmithkline is buyi ining tasaro the u.s. cancer drug developer they do say they expect the acquisition to be accretive by 2022 they say they will buy the impacted -- it will impact adjusted eps for the first two years my mid to single high digit percentages. i just mentioned, this is a stock we started talking about last week. tesaro >> when you see these types of deals, people want to use this as a sign of the bottom in the overall market where people think that there is actually something accretive they should be buying in the overall market. this obviously on a day like today is only helpful. it's more of a tail wind and we'll see more of it >> but if you look at that chart, the stock lost
two-thirds >> $5.1 billion is the total price tag for it glaxosmithkline says it will back its dividend policy tesaro shares up by 58%. but as mike mentioned, building back up after losing a lot of ground we will continue to keep an eye on this. when we come back, remembering the life and legacy of george h.w. bush. one of his personal friends and former senator will join us with his reflection "squawk box" back after this ♪ there's no place like home ♪
♪ mom. ♪ our nation is going to remember the legacy of george herbert walker bush this week. he passed away this friday night at his houston home. >> reporter: from the heart of texas to the beaches of maine, the tributes are mounting. >> i think he's a -- one of the best we've ever had, really. >> reporter: final preparations now underway for the fond farewell to president george herbert walker bush. james baker visited him the day
he died. >> and he looked up, he opened both eyes. he looked at me. he said, where we going? i said, we're going to heaven. and he said that's where i want to go. >> reporter: mr. bush's last words spoken by phone to his son, i love you too. the 41st president honored today not just as a statesman but as a father and neighbor. the houston symphony payi ining tribute to his love of colorful socks. >> he would treat everyone in houston with the same amount of love and respect he loved houston >> reporter: dick cheney worked as his defense secretary >> not by brute force. not by threats not by taking advantage of, you know, dancing on the berlin wall as it came down. it was masterfully handled >> reporter: on monday air force one will move his casket to washington where it will lie in the state capitol.
he'll then be flown back to texas and buried on the ground of his library and presidential museum ann boykin had been here before, but today was different. >> it was tough. and i thought of my dad. he lived a long life and he accomplished a lot of great things it's kind of the end of an era >> reporter: the era of the greatest generation gone but not forgotten. >> and president trump has declared wednesday a national day of mourning. the nyse and the nasdaq will close as a tribute joining us right now is former u.s. senator judd gregg he was a life-long friend of the president. thank you for being here today >> thank you >> i think you worked on every campaign that president bush ever ran what can you tell us about the man and about the leader >> very special person, obviously. all these tributes that have come in have stressed his grace
and dignity. but he was also tough. i mean, he was resilient he lost elections and came back. he made very difficult decisions, and he made them aggress i havely he didn't back down from them. so he was a very strong individual as well as just having a unique niceness about him that you couldn't help but like >> i was thinking about you last night and just thinking about how you have also brought a lot of that same civility. i just wonder what lessons you learned from him along the way >> well, from he and my father, to be honest with you. they both went to yale they were both cia people. they were both in politics but they had a dignity about them they didn't demand that you acknowledge them as being special. in fact, just the opposite if you did that, they would just pooh-pooh it and they just wanted to do a job of serving people. service was what it was all about. and they loved it. i mean, president bush just
really enjoyed politics. and the game, so to say, of getting elected and doing good things for people. he just -- he was an enthusiast about making america a better place. and of course he was so good at describing america as the best place. >> in his presidential campaign, he stayed at your home, didn't he, when he was there? >> actually, when he was still an asterisk in 1979, 1978, she and barbara bush lived with my parents at their house in new hampshire. every morning he would get up and my father would get up, they would get in the station wagon the two of them and drive around to rotaries. i think barbara bush was probably in many kitchens in new hampshire. she was doing han by work on a rug she was making and they were just down to earth people he was willing to go anywhere,
do anything, and meet anyone to get the message out he could do a good job as president. and it was successful. he went on to be vice president and president. >> senator, you mentioned it was not a straight shot up he definitely had setbacks as every politician does along the way. maybe the most difficult of those was after saying, read my lips no new taxes. what did that mean for his bid tr a second presidential term? >> it cost him the presidency, there's no question about it you had a movement within the conservative -- really hard core conservatives in the primary then you had ross perot come into the race as a populist anti-washington establishment candidate. if ross perot did not run, george bush would have been re-elected it was just that simple.
the reason ross perot got the energy was the break in the republican party caused by the read my lips situation he got terrible staff advice, in my opinion they had that meeting at the air force base they cut a deal where they raise taxes. and somebody should have said to the president, this isn't what we were going to do. we shouldn't do this unfortunately somebody said go ahead and do it. as a result, he lost the confidence of a certain segment of the party and that led to ross perot getting in the race. that led to his defeat >> senator, what do you think his legacy will be >> it's going to be a lot of things it's going to be he fought a war as dick cheney said or maybe jim baker, the way it should be fought and he got out
and brought that transition to a russia where it was re-established as a democracy. and he did it without conflict and did it in a way that maintained the respect for the russian people which was very important. on a personal note, he was what you should be as a person. be gracious. if you lose one, move on to the next one >> senator gregg, want to thank you for your time today. >> thank you, becky. >> former senator judd gregg coming up, this morning's top market stories and headlines driving the dow futures up nearly 500 points at one time. up about 425 right now and then at the top of the hour -- next hour, our news maker will talk all things trade and the economy with treasury
>> thank you, sir. >> got issues to deal with the aforementioned -- >> correcting action >> all the institutional sales >> let's see if the gains in the market hold. i would suggest that these next couple of days aregoing to be crucial for the market going into year end. but i would be a seller of this move >> and santoli, 2800 on the s&p. >> about where we stopped in the futures. we'll see. long way to go to the open >> thanks, steve when we come back, former nyse boss tom farley is here s,'re going to talk market global trade, the economy, and much more. ♪ ♪ ♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too
u.s. bank - the power of possible. 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.
indicated up about 422 points right now. the nasdaq, nice gain there. technology as you would imagine would lead things higher apple would be expected to maybe help there s&p is indicated up 36 where does that put it that puts it right at 26 >> just above 28 a couple times it stalled out there last month or so >> eamon javrs is back he joins us from washington with headlines from this weekend's big u.s./china trade meeting you look well rested did you have one of those pods in the plane, eamon? you know, where it goes back all the way? >> no. but we did get a lie flat seat. >> that's what i mean. >> not an enclosed pods on
emirates flights. >> no. i just mean if you can go flat, you can -- do d you put those things on? >> i did not i read a book. >> you did finally. that's excellent >> final, that's right >> you finish it >> it's an 11-hour flight. it's further south than you think. it's a long way away it's unusual traveling to south america. for me, i'm used to going east/west. when you're north/south you're not far off in terms of the time zone. >> you got some color. you're looking good. >> we were up there in the sun all day on friday and thursday but look the main thing that happened over the weekend was this dinner between president trump and xi jingping it was a fascinating face-to-face session here's what we know about the deal of what they agreed to. the top brass in both sides on the table there. what we know about the deal is that the united states says it's not going to increase tariff rates on january 1st
it's going to hold off on that additional $267 billion in tariffs that the president had been threatening the negotiations are going to continue the u.s. says that's for a 90 day period, but the chinese side doesn't mention that period. not clear exactly when we might get an extension not clear on exactly what they're going to purchase or how much, but clearly some cash investment is coming the chinese side has also promised to crack down on fentanyl sales that's important given the opioid epidemic here in the united states. and last night, we're getting more details about this even as the evening went on. at 11:00 last night president trump put a tweet out with additional details saying the chinese are going to reduce their 40% tariffs on cars. he says china has agreed to reduce and remove tariffs on cars coming into china from the u.s. currently the tariff is 40%. here's just a sense of the warm
feelings and good rhetoric we got from that table. >> the relationship i have with president xi is very special and i think that is going to be a very primary reason why we'll probably end up get something that will be good for china and good for the united states >> so there are a few discrepancies between the china side's description of this deal and the u.s. side description. the chinese, for example, say the u.s. decided to allow chinese students unfettered access to the united states. united states side didn't mention that the chinese side not mentioning the 90-day deadline the u.s. is mentioning so a little bit of talking past each other here in these two statements but the bottom line here, joe, is it's a trade truce for now. negotiations continue. and in 90 days or at some point early next year, they're going to reach a decision-making point of whether to continue the talks or whether trump and his administration are going to go back to this idea of imposing those tariffs. >> a lot of stuff to talk to
mnuchin about. >> that should be a fascinating conversation >> because lighthizer did everything else. and on this malpass was the point man. is that going to continue that way? and some of the -- some of the really hard things are nothing's changed with the really hard things i just wonder, you know, what happens over the next 90 days and who's leading our negotiations >> here's a question -- >> who's leading our negotiations >> we don't know exactly i mean, lighthizer is the u.s. trade representative so presumably he's the point person but, you know, who at a staff level is there great question for mnuchin if you get a chance, joe. so much was made about peter navarro attending that dinner. and that picture, you can see him at the end of the table. i'd love to know from mnuchin whether navarro said anything at that dinner. what remarks did he make specifically
he is viewed as the most hawkishihawkis hawkish -- there you see him next to john kelly chief of staff. did he say anything and what did he say he's the most hawkish guy? >> i confirmed he said pass the salt at one point. >> can i have more water >> or wuss he sort of effectively muzzled or was he just there to show he was there and not participating? so much of the nuance is fascinating to me. we don't have a real readout from the room. >> was larry sitting there >> i didn't see him, no. >> we were wondering about that. >> so what is he on the seating chart? i don't know >> we don't know all right. all right, eamon javers, thank you. i guess i could ask -- i got other things i want to ask him too. >> i'm sure you have a good list already. add that one tothe bottom if there's time >> all right our guest host for the rest of the morning is tom farley, chairman and ceo of farpoint
also the former president of the new york stock exchange. >> good to see you guys. >> let's talk quickly about the market's reaction today to these trade talks over the weekend obviously coming into this, if we get any good news the market will take off on that. dow futures up by 450 points what does that tell you as somebody who's anold hand watching these in the morning? >> coming into last monday, we were worried about the fed being on autopilot and this kind of trade dispute spiraling into something horrible so now a week later, the fed is not an autopilot it looks to me like the start of a muddle through strategy on trade. kind of echoing what transpired in europe. so the markets love that i saw some predictions over the weekend the markets could open up 2%, 5%. this could be a 10% rally. in reality, i think this is a nice reaction. i think the market is generally saying let's see what happens
four weeks from now, six weeks from now, eight weeks from now because we could still have some real economic issues if this goes south in february or march. >> also it seems like the magnitude of the move today is really just a measure of how defensively were people positioned before him? >> exactly >> you mentioned last week you had a big tension release with the market up 5% or 6% >> let's not lose sight. this is the first trading day of december these are the highest asset prices in history for the first trading day of december here in the u.s. by a long ways and the dow this morning is a couple percent off its all-time high so things have been very good. they're priced very well there has been heightened volatility but by and large -- >> it's a good reminder. with today's open, let's say the s&p opened here. i think the total return is like 7% for the year for the s&p with dividends. >> doesn't feel like that. >> it doesn't at all >> it doesn't. got given what we've seen, the
turmoil and volatility the last eight weeks or so. tom, you are now at farpoint that's a special purpose acquisition company. you've been telling us the last time you were here this volatility had been great for you because you're in the market looking for companies for sale and volatility scares people >> even more so in the four weeks since i saw you, becky people have gotten more and more scared it's correlated with the vix people who held assets were very much buyers or holders now they've kind of flipped to we want to hold it or think about selling it people are nervous i'm not sure they're entirely justified in why they're nervous, i actually feel really good about where we sit right now. but the opportunities that i'm seeing have increased dramatically just the the past four weeks >> what industries are we talking? across the board >> for me it's in tech in general, though, i like this rally is broad based if you look at friday, some companies that hit their all-time highs, delta, abbott, vm
you've got tech, headache, airlines it's very, very broad based. in my case, i'm only looking narrowly at financial technology. >> the idea that sellers are kind of a little more eeg tore get out there at this point, does that go away if we've now removed the two big issues facing the markets one was the fed continuing to raise aggressively the second was trade talks if we actually deal with some of these tariffs. what that was going to mean. if we've taken both those issues off the table in the span of a week, what does that mean to potential unease out there >> the answer to your question is yes if we had indeed taken those issues off the table but we have not. i mean, when you read the list of what the u.s. hopes to accomplish in the next three months, we're not going to accomplish it. we're just not it's things that are going to take ten years to negotiate, not three months so the question will be what will we accomplish in three months with respect to our relationship to china. i suspect it will be something,
but it won't feel that substantial. >> there wasn't the immediate sort of, you know, eyebrow raising and pushback on when we said we may not -- when we try to do business over there, we may not just sign off on everything your companies ask for us and supposedly that was a little bit of a thaw there. because they're all state owned, half of them so they're not going to say come on in without bringing us your technology, without letting us have a 50/50 stake how are you going to get to that point? and is there a willingness for china to really change on that that's one of -- >> not until they have -- >> it's one of those ten-year things >> once they get through the 2025, 2030 plan. >> and things they use to prevent us -- >> i would say you guys have been very supportive of the u.s.'s hard-line strategy over the last six months with respect to china i, too, have been supportive but i've been nervous, frankly,
about what the negative implications could be. it does feel to me that we have the upper hand it does feel to me like we have the leverage we had to take on china at some point to make sure it was a level playing field. and up to this point, at least, it feels like it was the right time now let's hope we can have wisdom and see our way through. >> did you see the fentanyl issue? that was new to me. >> no, i didn't. >> what the hell are they sending that poison over here for? i mean, they're not -- that's one way i might -- if i decided i was going to win by 2030, that might be one way of doing it right? that had to be dealt with. you know, that stuff is like -- if there's some here, i don't even want to be on the desk. i don't know >> there's a lot to accomplish >> well, i'm glad that happened as well. anyway -- but i didn't even realize that >> i didn't. >> and that was pushed as part of pit coming up, chip stocks are among the biggest movers this morning. the trade truce, the big driver.
tech stocks rising this morning following the u.s./china trade truce. joining us now is tim lesko at granite investment advisers. >> >> do you have a sound bite for us we'll take it? we don't know how much we're going to get but at this point it's welcomed even if it's a start in a more friendly negotiation or something. can we say that, do you think? >> i think we can at least say we have more friendly negotiations and we can at least say perhaps the world isn't coming unclglued as the market seems to tell us over the last two months most of these companies had problems with their cost of goods as well as global demand for their product. so it was really a double whammy we'd like to see resolved. >> hey this just hit. it's funny, i don't know if they're actually watching us or what i was just asking eamon -- i'm not kidding. malpass had been in the negotiations so navarro just saying on --
this is on the wires, white house adviser navarro says u.s. trade rep robert lighthizer will be in charge of the negotiations with china over the next 90 days so that's a little different because he wasn't. it was malpass before that supposedly jared kushner has been pushing for lighthizer more i don't know whether that makes it -- lighthizer's tough he's been critical in the last week or two. i don't know what should we hope to accomplish even if we went to zero on tariffs on both sides, you still got the way you got to do joint ventures and you got the intellectual property theft. can that be done in 90 days? >> 90 days might be a short window, but it seems to us that you basically have two leaders that want to save face and both want to come out with a win for their own political purposes
and they're going to leave the details to the people that do these kind of negotiations and it may take longer than 90 days, but end of the day they're both going to claim a victory. and a good negotiation says both sides probably lost a little >> yeah. we got rogoff -- ken rogoff coming on later. i'm going to ask him about chess, about this magnus carlson guy. because rogoff was a grand master but he's also talking about what's really scary are high interest rates he thought that maybe the fed is liable to do or does or doesn't do is at least or more important than the china talks when you think about it, all the debt we have globally right now a quarter point really does increase costs to everyone involved, right? >> well, certainly you have some of the strongest balance sheets they're less levered to concerns about higher interest rates. but higher interest rates have been flavoring this entire
discussion whether it's stronger dollar issues with trade. whether it's weakening global economies. dollar denominated debt overseas the strength of u.s. rates really has put kind of a move over the market and created a lot of fear. >> so tech would be more sensitive to china than interest rates. you can't really talk about either in a video camera consume is your point. >> you can't, but call it the strong tech companies. microsoft, intel, apple that have a ton of cash on their balance sheet don't need to go to public markets. it's those fueling on cheap debt finding out it matters in the stock market and if debt is more expensive, it's going to be harder to grow businesses >> so we were garden variety correction then we were end of cycle bear
market where are we now do you think? >> well if you look at the broad based nature of the rally last week and what we're seeing today is a little bit more of a risk on, all boats are rising kind of market so i don't think we can say this is the real change in what's been going on all year you're seeing some of those high fliers get most bang for the buck in this negotiation hard to say we're not in what was a correction in a bull market we'd like to see more rotation to value we talk about companies that have stronger balance sheets they deserve a little bit more credit, maybe, than some of the highest fliers >> so you're lucky you're in new hampshire because you can use that granite, so solid is your company solid like that? the financials and the advice? >> well, of course when we started -- when we renamed our firm, every street name in the u.s. was taken we had to pick what we wanted to be >> i like it
and you're in new hampshire. tim lesko, did you know that you knew that. tim lesko at granite investment advisers he said it was broad as well. >> that was my one value add of the day. >> the morning is young. got a lot to come with tom when we come back, oil prices rising this morning before what could be the most interesting opec meeting in recent memory. we havthe orwh "uae sty ensqwk box" comes right back. hould be g more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it eado what'best for , every step of the way. you may need more physical therapy. ugh...am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies lead with digital.
oil prices rising this morning. brian sullivan joining us from cnbc hq with some big headlines. actually a lot of different strands of this story moving both crude oil and natural gas today. >> looks like fracking pipes there's a bunch that go into it. pick your headline here. you've got the opec meeting on thursday then the saudis and russians, that's on friday opec is expected to reverse what they did in june probably cut production by 1.2 million to 1.4 million per day qatar is going to drop out of opec in the new year they're not the founding members, but the first member outside of the founding members. they say they want to focus more on natural gas anybody you talk to would say it's probably on political pressure they don't like being bullied by
the saudis so qatar is out. also we haven't talked about this much. alberta, the canadian province, they're ordering their producers to cut output by about 9%. honestly, i had no idea they even had the power to do that. so you got a canada cut, opec likely cut, qatar cutting and running. >> so it seems like you have all these forces that are being marshalled here to defend something around $50 in wti right now. was this all kind of in the market right now that we were going to get a supply response >> that was in the market. but here's the question i can't answer i'm sure we'll have smart people on this network all day long is the qatar news bearish or bullish? they're about 2% of the output they've been drawing down their oil production because they're focusing more.
i don't think that's going to impact the calculus. remember about a month ago it was reported the saudis had at least looked at a report of what the world would look like without opec is this a small fracture in what will be the undoing long-term? that is really the question. it's a triumveret right now. we are the swing producer. we've more than doubled our production in a decade there's a lot of intrigue heading into that meeting. >> all right, brian. thank you very much. brian sullivan when we come back, our news maker of the morning steven mnuchin he will injo us live when "squawk box" returns
ed . a pause in the trade war president trump and china's president agreeing to a 90-day truce in the brewing trade conflict between the two countries. and president trump now tweeting that china has agreed to reduce tariffs on american cars treasury secretary steven mnuchin joins us in just minutes to tell us what this weekend's
agreement means. the market reaction. futures showing big gains for the major indexes following the trade truce. we'll tell you what's moving ahead of the opening bell. and qatar says no to opec. the middle east oil and gas producer vowing to quit the energy cartel on january 1st the final hour of "squawk box" begins right now 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 kernen along with becky quick and mike santoli the futures indicated now up about 431 points treasury yields are at about 3%, 3.05%. don't adjust your set. tom farley of the new york stock exchange is here at the nasdaq but he's no longer there he's actually making some real
money now at a spac. and we welcome you here. the real money is as a cnbc contributor. because you're one of those as well we'll talk to you in a second. we have mnuchin coming up. did you realize that >> i'm looking
forward to it meanwhile, president trump just tweeting about this weekend's agreement at the g20 he writes, my meeting in ar argentina with president xi kwhouchbz an extraordinary one zbroords thing -- much to gain if and when a deal is completed. level the field. joining us now is our "squawk" news maker of the morning. steven mnuchin mr. treasury secretary, it's great to have you on today and the first question i was going to ask you was who's going to lead the negotiations peter navarro just said it's going to be lighthizer we put that up because it was a wire
can you confirm hthat is it going to be mr. lighthizer for the next 90 days leading things >> first of all, great to be with you i think it's clear president trump is going to be the one who leads the negotiations and the team will be an inexclusive team it's been a partnership of myself, ambassador lighthizer, larry kudlow from the white house, wilbur ross, and peter. so this will be a team that is very inclusive we also have people from agriculture and energy there's a lot of work to do. this will be a real agreement. i think one of the things that's very important is there was very specific understanding between president trump and president xi and now it's the team's job to turn this into a real agreement that will have deliverables, dates, and real commitments. >> one of the things that a lot of the articles are pointing out, mr. treasury secretary, was there really was a change in tone leading up to the meeting, a lot of our officials, you and others
had been very critical of china. and china in the same way pushing back on whether anything would really change. was there a tangible difference in the tone that you could pick up at the dinner >> i think so. you know, we had several meetings in advance of the dinner but the final agreement was clearly an agreement between the two leaders. and there were no decisions made until the two leaders met. but this was the first time that we have a commitment from them that this was a real agreement there'll be nonstructural issues there'll be issues on intellectusble intellectual property, i r -- ip, cyber technology we're very clear in we've got a lot of work to do over the next 90 days to now document that >> here's another -- i happen to be looking at the journal. everybody's writing a bunch of conjecture, obviously.
as far as china opening up markets to us, the point is made that in the past, talk is cheap. they've never lived up to it this time around, china is willing to put in place mechanism to open up markets to us what does that look like and are really confident this time they'll follow through? it might be a trust but verify time situation again >> i'm very hopeful we can turn this into a real agreement the president has made very clear that there's a pause, but if we don't have a real agreement, the tariffs will go -- will increase. and he can always contemplate more but there was clearly a very genuine offer from president xi to president trump to make sure they opened up their markets to u.s. companies this will be the biggest single opportunity for economic growth for u.s. companies and u.s. workers. so i think this is a big
difference >> i think the president -- i heard that the offer for buying farm products was received very well by him. in fact, he's just tweeting about that i don't know if you saw this mr. secretary. probably not farmers will be a very big and fast beneficiary of our deal with china they intend to start purchasing agricultural product immediately. we make the finest and cleanest product in the world that is what china wants farmers, i love you. did we not know that -- was that actually a surprise when president xi offered that up as president trump said, the overall number needs to be looked at. energy is a very important part. we've got to build a lot of lng capabilities in terms of infrastructure but there's going to be big long-term commitments on lng
we specifically talk about the alaska project which has over 200 years. we talk about industrial products they put on the table an offer of over $1.2 trillion in additional commitments, but the details of that need to be negotiated this isn't just about buying things this about opening up markets. those are issues to the president. >> these structural issues are ones you mention every time you're on our program. it's something u.s. businesses are concerned about. in 90 days, that seems an awful lot to lift. and a lot of ground to cover in trying to figure out what's going on we already heard from a few people this morning who are suggesting that in 90 days it's not likely to have any agreement on those issues and the chinese would look for an extension of
the trade truce. what happens in 90 days if we don't have a firm commitment on some of those issues you mentioned? >> i think president trump was very clear we need to have real progress over these 90 days you're right, there are over 142 different issues that we're focused on so every single one may not be final iessed in the first phase. but he expects there's going to be real progress and i think we'll know very soon whether we have an overall agreement that we can document this was a commitment between the two presidents let me add two other important issues china agreed to make a significant change on classifying fentanyl that was very important to president trump. that is going to be an enormous lifesaver in the united states i think you know how concerned president trump is on fentanyl and as important the commitment on north korea there is a very strong
commitment a between the two presidents to work together. so this is something that is very important pompeo has done an amazing job in leading this effort >> that's great. we can talk more about this. but just back to the idea if we don't have concrete progress on some of those very tough issues to try to tackle, would you see an extension at that point if you feel we've made progress and how do you protect the idea that suggested the chinese love to talk, they never go up with these thingsen is there an outdate that you look at and think we need to have something concrete at this time? >> we absolutely need to have something concrete over these 90 days there was a significant commitment from both leaders on what needs to be done over the 90 days and instructions to both teams to negotiate and turn this
into a real agreement with specific action items, deliverables, and time frames. this is not going to be something where there's swrus soft commitments that get kicked down the road. but i want to emphasize this was the first time i've seen the two leaders have very, very specific discussions. we had a dinner for close to three hours on this. and we will be reporting to him weekly on the progress if not, daily. >> mr. secretary, tom farley great to be with you gain. i was just telling our co-host at the break, we took a tough chance on china. high wire -- one question i'm wondering. the market is up 500 points today. if there was no progress, it may have been down a thousand points you grew up around markets your father is a markets luminary are you sitting there before having that dinner thinking to
yourself, hey, markets could get really haywire, or markets could really increase whether it's the s&p or the dow does that factor into your thinking because it's such a visible score card >> i think what factors really into our thinking is economic growth and we've been very clear in a major priority of this administration is to create economic growth of 3% or higher. that's always been a combination of what was tax reform, tax cuts trade's also been a big component of this. look, there's a lot of volatility i would say one of the big differences today is electronic trading and the volcker rule where people can principle things you get more volatility in both directions but we are focused on creating great opportunities for u.s. companies and u.s. workers and we're absolutely conscious if we get this right, this is a big increase in growth in the united states.
jobs in the united states, exports. i mean, this is the first time i could see a clear path of slinking this trade deficit to zero over a strategic time period that's real >> mr. secretary, has the president ever expressed any dissatisfaction about your recommendation of jay powell to be chairman directly to you? i know you saw some of the conjecture in the past couple of weeks about that was it -- did he mention it directly to you? did you hear about it? is there any voracity to any of the reports? >> i think i'm always going to be careful about private conversations between the president and myself but i think as i've said before of course there are issues we great on there are issues we don't agree on i respect he is the president. he was elected and these are his decisions.
i will continue to give him advice and i think the president was pleased with the speech last week >> i was going to ask you that before the speech it was -- i can't think of a single -- i don't remember the quote something like i can't think of a single thing i liked then it was i like that speech he found something so he was gratified by the speech that was more dovish. >> i will tell you he liked the speech i will also say, jay powell's got a difficult job. he was left with a gigantic portfolio that was increased over $4 trillion in the previous administration that he's trying to right siess we had interest rates of zero for way too long to try to help the obama economy and it didn't do much. he was left with the hard work to try to normalize rates and stabilize a portfolio so that he has the fire power if the
econo economy slows down >> there were reports that you had been asking what people thought of the idea of reducing the balance sheet rather than raising interest rates any thoughts on whthat >> in private conversations that people repeat what i say but i did ask them -- because there's obviously two tools for monetary policy. one is the portfolio one is short-term interest rates. i did solicit views. as i solicit views on lots of things the whole purpose of the treasury borrowing committee is to give feedback to the treasury they do a terrific job i think it's unfortunate that people feel compelled to walk out of rooms with private conversations and speak to the press. >> don't you love the way people write things, mr. treasury secretary? it does give us something to talk about though. that the president sort of
gauges the stock market as a report card on how he's doing as president. he doesn't like it when it goes down do you at some point actually have to hear from him what the heck are you doing stock market is going down does he blame you when the market doesn't go up have you heard anything like that i read that that happened. >> let me just say that's absolutely not the case. i speak to the president almost every day. we speak on different issues theed. understands. he was a great businessman before this. of course he understands z these stock market volatility ppz now, the z faktz that z these market is u -- is up since the election, of course the president understands the market goes up a thousand, the market goes down a thousand. we do want to create great opportunities for u.s. companies
and u.s. workers and that's what we've been doing and will continue to do. >> we've also heard he views some of the gains in the market not necessarily as house money, but maybe this is the time to deal with some of the trade inequities whether it's china or europe or wherever, that we have some leeway given how the markets have done. do you think that is in the back of his mind that he thinks there is house money to play with in terms of addressing some of the global issues now that the market's up so much? >>. >> i think as you know on the china issue, the president's been talking about this way before he ran for president. and this is a major issue for him. again, i think this was a breakthrough moment for the two presidents reaching this agreement. so the president is not concerned on where the stock market is on any one given day and isn't going to be focused on
that although i tell you he does watch the stock market but the president is determined to continue to move forward on our economic path. and i think this was a great breakthrough and now the two teams have a lot of work to turn this into a real agreement. >> mr. secretary, when we look at the list of open items to negotiate with china, it's extensive. and it's going to take longer than three months. tech transfers, goods purchased, so on and so forth is there a sense we're going to see within three months if china is really truly coming to the table, actively negotiating on these issues and then we can kick the can, extend it. which is to say we see the movement in the next three months or else we're going back to our prior negotiating strategy >> i see it a little bit differently. we've been working on this for a last year and a half
i think there's no question the president's tariff strategy has worked this is the first time they've responded on very, very specific issues i think the fact we're back at the table and more importantly is the first time we've had an agreement between the two presidents it was very specific this was a three-hour dinner that went through very, very specific issues that are agreed. and now it's our turn to turn it into a document on the two teams. again, there could be a fazed in approach this is not about kicking the can down the road, but there are certain issues they can deliver in the short-term. there are certain issues that may take a little bit longer to kick in. and the president will deal with the tariffs accordingly. all he's done at the moment is put a hold on increasing tariffs. he has all the tools in the tool box. but again, i would emphasize
this was a huge difference from anything i've seen in the last year and a half. >> you mentioned earlier that the various elements of the administration's economic program, tax reform, deregulation, and of course trade as being a component but going into 2019, is trade the wunl principle right now there's less talk of tax cuts 2.0. what else is there on the agenda from your perspective? >> let me just start on taxes. although we passed tax reform, with the treasury we're in the process of churning out over 80 different regulations and giving people specific guidance so things like opportunity zones which are a big part of the tax cut, i think they'll kick in in a big way. i think many have continued to look for specific regulations to get clear guidance i think you'll see capital investment continue to pick up next year on the tax front regulatory relief. we're going to continue to work.
i can tell you on the financial front with the regulators and i know my other partners in the cabinet will continue to work on issues i think energy is an enormous opportunity of growth in the u.s. economy i think the fact we just signed the deal with mexico and canada and you heard the president determine determined this will guess passed i expect this will quickly be passed in the new congress we continue to negotiate with europe ambassador lighthizer is leading discussions with japan one of the major issues that was discussed at the g 20 is wto reform we are determined to make sure there is free and fair reciprocal trade with rules that are enforced >> mr. secretary, we have another tweet. i just want to ask you something
quickly though if there was conjecture, peter navarro is going to be at the dinner, not going to be at the dinner he was at the dinner but was he vocal did he say anything? is his point of view less out in front than it had been in the past >> i think this has been a bit exaggerated. the internal politics. of course we have a diverse economic team. peter is an important part of that team. he has been an important part since the campaign peter came to china with us. peter came on the trip with us he was in every single meeting we had with the president. of course different people have different points of view on specifics. we all reflect that to the president. so i have a great picture of peter and i thumbs up on air force one. if i can find it from the
professional photographer, i'll tweet it for all of you. >> excellent if you do is that, i'll like it and retweet it the president just said and i just saw someone said he said/she said. >> melissa lee said that >> very clever but the president tweeted again, president xi and i have had a strong and personal relationship he and i are the only two people who can bring about massive change on trade and far beyond a solution for north korea is a great thing for china and all. we appreciate all of your time today, mr. secretary you're fielding all these questions. i got to ask you whether you favor a weak dollar again at this point remember that one? that was the one that got you last time. i'm not going to ask you that. >> i do remember that one. i'm going to say no comment on the dollar but thank you. and thanks for giving me advice
not to comment on it >> you want to talk about interest rates while you're here >> yeah. we already talked about powell >> but interest rates themselves are they too high? >> that's a good one that is an interesting perspective. you know, i will ask you that. do you think we're near neutrals a thit point maybe one more hike and that would put us near neutral in what would be a big shift from the last 20 years on what a neutral interest rate would be >> i won't comment on it specifically, but what i will say is what i think is very important coming from the fed. this is from jay powell as well as other fed governors is they are data oriented. they're not relying upon, you know, super secret models and stars and things like that they're going to react to numbers. so i think that jay's comments, obviously, that we're close to neutral are important. but i also can tell you i know they're looking at the data. so this is not like a previous fed that just, you know, has
numbers that they're looking at and making decisions regardless. the fact that oil prices have come down is important i know we'll all be looking forward to the december 18th meeting. >> we're going to leave it there. we appreciate all of your time and giving us access to these subjects appreciate it. i think it's a pretty interesting day for china and the united states. you know, fingers crossed
that something good happens for both companies from this. >> you know what i love about him? i like when you ask him about things, he says i don't like that people are talking but
confirming, yeah, i did say that >> which also indicates he doesn't really hate fielding those questions. otherwise he'd just get mad and shut us off. >> oh, we -- >> which is a bad thing to do to us because then we're just going to keep trying to ask the water cooler questions i didn't know where i was going. i was ready to go back to things that happened a year ago just for the heck of it >> he doesn't need a script. >> no. he doesn't all right. let's get some reaction to what we just heard from secretary mnuchin. joining us now is former australian prime minister kevin rudd he is the president of the asia society policy institute sir, thank you very much for being here you just heard what treasury secretary mnuchin had to say on these fronts your takeaway as somebody who knows china very well and who has been watching these trade talks very closely >> my first takeaway is secretary mnuchin is one of the best poker faces in politics it's pretty good
i think what you said is right, becky. he gives you a little around the side on the way through. on deep questions over their economic policy which frankly they've resisted putting right on the table for a long, long time and the second is i think given the nature of his team as we know, mnuchin, kudlow, lighthizer, navarro, he's effective effectively marshalled by where the chinese don't know which side they're going to come out on i was in china a week ago just before the buenos aires summit talking to our chinese friends and i've got to say all credit to president trump and i'm often critical of president trump on various questions. he has brought about a deep level of anxiety in beijing about where this thing can land.
but the bottom line is this deal in buenos aires has bought us time i think joe said this earlier on this morning somewhere on this program. that we still don't know what they're going to produce so it's great. we don't have what i would think would have been a catastrophic market reaction if there was an implosion in buenos aires this morning. but my friends tell me this is one huge expectation to deliver even heads of agreement on the five categories of stuff to be done here. >> i think i just heard secretary mnuchin say they reserve the right to extend the three months if they see positive progress. >> which is what the chinese would love, right? >> very much so. but to be frank, these are hard things number one, what are you going to do to bring the deficit down by that's trump's mess arge to his base that's important and i think that's near to an agreement. mind you, watch out if you're an
australian lng producer, or qatar. i think we're about to see a big american entry two, the actual tariff reform that is taking the rate in china down and exchange for what from the united states. open question. those are big areas of technical work but they are doable. the three which i think are much more problematic, what do you do on ip protection what do you do on forced technology transfer? and state policy supporting china's stated strategy of obtaining the commanding heights in technology by 2030. those three are hard and those i would think would be put into a second structural box which may then go beyond the 90 days >> kevin, you just said something that hadn't occurred to me at this point. just in terms of what the chinese would like from us in exchange for bringing down some
of those tariffs i mean, what do they want? because i think what we've kind of come at this thinking is we don't want them there anymore and we shouldn't have to give up for that but you bring up an interesting point. what's the tit for tat in that situation? >> well, as i've said on this program once or twice before, the chinese have politics too. that is, their domestic politics even in a one-party state. you get no votes from the table for being nice to america this morning. in fact, you get a negative vote for it so therefore you've got to construct politics domestically in china that works for them what's the general american tax rate at the moment 3 3.8% china is about 9.8%. different in agriculture higher here, lower there, and lower in manufacturing so could you begin to engineer an outcome which over time brought the chinese general protection rate down to zero in exchange for america headed in a similar direction. farm lobbies in both countries would complain but i don't think you'll see an
unilateral offer from the chinese. i think in constructing the politics of how this works in china, this 90 days for me is interesting. how are they going to make this work domestically? they have a slowing economy at home private sector has lost business confidence partly because of the trade war, but primarily other structural factors in china including the impact of deleveraging within the economy. but the reformers are looking if ar trade liberalization message to relieve and reboot market based reforms to further promote growth this gives them three months to further develop that political and policy narrative within the country. and maybe xi jingping finds his way to davos in january and then announces some huge position on trade. not just for the united states but for the world. maybe that's in the back of their mind who knows. >> kevin, you were a g20 chief
executive, if you will you know china better than anyone i remember you stunning a group at the nyse with your fluent mandarin i'm curious. do you think we've taken the right approach with respect to china? knowing what you know now, this very tough aggressive approach do you think it's been good or bad? >> on the economics and trade, i've said consistently on this program it's been the right approach my criticism in the past is what is the president's landing point. and we begin to see the outline of the landing point there's no good having an economic trade war that catapults you into a war with a no gain for anyone we continue to see -- which points to a fazed implementation over time. if i were an american, thus far
i'd will happen a pi with the outcome. of course the 90 day -- any softening in the economy comes next march and does he therefore have enough economic head room to play tough with the chinese come february/march if the economy here is still strong and markets are robust. if the negotiators with lighthizer don't produce a good outcome. and of course by february/march, president trump would also know how his domestic political stocks are going the chinese think these things through in the terms of the final negotiating hand >> i wonder if it's going to be all smiles and cooperation and positive comments or whether he could be upset by something and flame tweet xi or china again. and we all know how he likes to negotiate. and 90 day, it seems like if
it's not going well, he could theoretically say he's going back on everything to get him to move again the 90 days, i have no idea what to expect. >> i actually agree. if i was in markets, i wouldn't be popping champagne corks just yet. i think there is a ways to go yet. i think there'll be a lot of this, a lot of that. but i think mnuchin's response to the lighthizer comment about who will lead the negotiations was fascinating. mnuchin says a team. but i think i thipresident trum bought himself political head room as well to know what other factors he has to bring into the frame. >> mnuchin's first answer to that question was president trump will be leading the negotiations >> that's right.
>> which is probably the right answer to give mr. prime minister, thank you very much. >> good to be with you >> kevin rudd again, the former prime minister of australia. and the head of the asia society policy institute all right. a deluge, it says here, of commentary coming out of this weekend's g20 summit and no shortage of takes on what's next for the u.s. and china. here to help us hack through the weeds is cnbc senior economics reporter steve liesman you got a machete, steve >> always, joe and it's sharpened as well but let me just tell you the commentary really wide ranging on one hand we leaf the worst has been avoided lack of surprise by some folks that the two leaders found a way to kick the can down the road. it's what they expected. and finally there's hope out there that maybe we are closer to resolving trade issues. you can see some of that, perhaps, in the market trade this morning
morgan stanley writing, there's modest upside risks to global growth now particularly for china because of this weekend's development. evercore iss writes, there's little efld that the two countries are on the same page on timetable and issues. national retail federation also hopes this 90-day tariff pause will lead to a positive resolution that removes tariffs altogether and pantheon says we expect markets now to take the idea of a march rate hike more seriously again. goldman sachs writes, no concrete progress on the other important issue of market access, ipr protection, cyber attacks, and forced technology transfer they don't say what the probability is of some deal. they're up in the wake of this deal 83% chance for december. a bit more for june. and a bit more for october
and why is that? well, because what we learned last week is just how concerned the federal reserve is about the trade issue. in fact, if you head their minutes or listen to their talk, it's their number one concern. and what we're watching and learning now is the way trade and the fed are working together here and maybe if the president does well on this trade issue, it could clear the way for more rate hikes next year >> interesting all right, steve liesman thank you for that we're going to get some more insight here joining us now a harvard university professor of economics and public policy. he's also the former president of the imf and a frequent guest on "squawk box." you know the chess questions are coming you were a bona fide grand master at chess that gave it up because it's too crazy and addicting. and i was just reading -- did you know all this about him? every year you get a letter from
another grand master that says how can i quit because it's just so all-consuming, i think. >> well, it's very addictive although i prefer kids play it to video games >> that's true >> now, i also know that you -- you know, you're a recovering chess addict, but you can't help yourself did you look at any of the games that magnus carlson played in the recent tournament? >> so the recent world chess championship match was maybe the most important one in five and a half decades. >> see what i mean >> and a phenomenal match. there was an american fabiano who was tearing up the chess world. and magnus was worried about playing him. basically it went to the chess equivalent of a shootout in football and magnus prevailed but fabiano will be back >> why did carlson forfeit game 12 when he was winning >> look at you playing along you know this stuff? >> i almost wonder, was he playing with him like i'm going to beat you in sudden death tomorrow? >> you're invited back
>> he was getting nervous. he was sort of losing his nerves at the end also i think he felt very confident again in the chess equivalent of a shootout he was going to win >> that's like a 360 dunk. i'm winning. you have this game i'll take you tomorrow. >> with that said, why would you not take this guy's word for economic issues? i would. you know, if you can play chess at that level, i need to know. so are we at neutral and if so, what changed in this world to put us at neutral >> it's changed a lot. it's just like you were in this spaceship and it shook up all over and you don't know where you are. the fed i think it's deliberately running the economy hot. i don't think they think we're at neutral but we've been going so slow for so long. we don't know people coming into the labor force, business is reluctant to invest. i think the consensus is let's let it go. we haven't seen inflation in ages
let's see what happens but, no. i don't think that >> do you have a definitive answer on what's going on with global inflation and why that seems to be -- is it different now? is it technology is it demographics what the hell is it? what is it >> i think economy economists don't know it'll be interesting we're not going to be able to rein it in again and there's a lot that say expectations are so slow to change i mean, a little bit of it is central bank credibility we've got to get independence. but this will be an interesting experiment to see what happens >> you had written some stuff earlier this year just about the idea that after a recession like this we're not going to see behavior change for a long time.
is that employers too? they're not going to want to overextend, hire too many people when they've just been through this painful experience where they had to lay people off and let factories close? >> well, i think unemployment things are going pretty well we're at a level of unemployment we didn't imagine was possible i think it undoes some of the good that people have done people are nervous they don't know what's next. >> there is an argument you -- the way a business today would deal with growth. >> there's a measurement issue with capital spending. there's a measurement issue with output the gdp was designed in the days when you could count the number of tractors and houses and a lot of the output today is hard to measure. hard to measure investment
hard to measure output but we can measure the interest rate it's clear there's been sort of quite a bit a push down which we think of as more saving than investment >> you also have talked about what to expect from china. their greatest asset of labor is people but eventually it was going to slow down. i think the big question is how will they manage it? they depend so much on the high housing prices they depend so much on the construction which is much larger than ours at the peak and so how they're going to manage it with so many vacant apartments, overpriced houses, it's a big question mark and especially if they can't depend on exports as much which they can't
even without trump, they can't because you keep growing faster than everyone else and eventually there's nobody to export to. >> so we're at what? $21 trillion, wherever we are. we have an unbelievable economy. we can handle debt in the past 37 you put on the unfunded liabilities we don't talk about anymore. do you lose sleep with that? or are you thinking about -- >> sorry to keep saying this, but nobody knows i do think it also depends on how you fund it. so we are funding at a short maturity so if interest rates did rise, not the central scenario, but if they did rise, it could get uncomfortable quickly. no, the u.s. -- my thesis adviser said capital markets give the u.s. enough rope to tie around its neck several times before it hangs itself i think we got a ways to go. >> all right
ken rogoff when's the last time you played a complete game? >> exhibition game against magnus carlson in 2012 my last one. >> did you try >> i tried very hard >> and >> it was a draw >> wow i love talking about that. >> that's a mike drop. >> we have three hours thank you. >> thank you very much >> thanks to harvard's ken rogoff and i see you're interested in that >> yeah. didn't know you were a chess guy. did you study game 12? >> i did not, but i'm not awful. i know how to do a few things. i was going to ask more. like, where was -- were erthe points in certain games where you went, oh, my god -
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morning. >> thank you >> big reaction this morning in the futures. up by over 400 points. about 416 points right now was this what you expected given the news we heard from the g20 >> i don't think there was any real expectations out there. you're trying to predict what these strong personalities are going to do, but i think it reflects a huge change in the narrative here i think going into it, it was pretty much an inevitability that trade wars were going to escalate now we're going the other direction. i think it's clear that china is motivated to avoid that next step in escalation i think that's a huge shift. and i think that from here it's not going to -- probably not going to get resolved over the next 90 days but i think directionally, it's a huge sea shift for where estimates are going to go. >> that being said, as a catalyst we might have seen what it's going to do for the markets through the rest of the year it's really more a matter of how people positioned, what we think about in terms of how the first quarter is going to shape up for growth and the rest of it.
>> i think if you think about it, just over the last month or so, the key concerns for the market have been trade wars, oil, and the other issues that have been weighing and the fed. we've been resolving all those issues now westbound it's not off the table. but i think going forward given where the market is down today, tells you there's more fear out there than optimism. which i think i think there's a lot of runway for the market to go higher. even if you think this is going to drag on for six to nine months >> so all of that together, we don't know where it's going. what would you be doing and betting? steve grasso told us he'd be selling every one of these >> for people that want to know what this is going to look like, look at the new nafta agreement.
up until the 11th hour you were getting jabs from both countries. nobody had noidea where it was going to go. then we got a deal >> once that was struck, it stopped being a market issue now we have this thing with 90 days it's where are we in the cycle >> i don't think it's been struck and second of all, if you look at the other concern out there, global growth. this morning we got the wave of pmi numbers. i can't name a major region that actually went down in the latest round. so i think a lot of the concerns -- there's no all clear signal here. but i think at the same time, you know, the fear out there in the market was everything was nonstop going the wrong direction. now we're getting news on the fed. we're getting news on oil. we're getting news on trade and global growth. that's all positive. and i think that in our view, it really hasn't been about the fundamentals it's been more about fear. which is actually a bullish sign i just look at overall investor optimism people have written off the cycle. pretty much every major firm on wall street are calling for a
peak on the markets. that's not how bull markets end. i think that is -- if anything, that's probably the biggest reason to be bullish here. >> you just said you're not giving the all clear and then proceeded to give us the all clear. why is it not the all clear? what's the downside here >> on the fed, the fed's going to react to the news one thing we use is inflation probably -- oil is going to weigh on the headline inflation number but we think it's going to rise from here. that's going to put more pressure on the fed to rise over the course of this cycle secondly on trade, i mean, again, we're really talking about these really strong personalities. and it's going to not feel very good until we get that deal just like it was the case with the new nafta agreement. and on oil, you know, there's a lot of geopolitical concerns there. i think if you look at japan, while the pmis were good, the underlie k growth story there is not that good. i think it's going to be very choppy, but the fear is the recession is around the corner and we just didn't see any of that in the cards.
i think in the near term, that, you know, people have to price out the huge negativity in the markets. then we can get back to what's the next 6 to 12 months going to look like after that which is essentially an end to this bull market >> hey, dan. thanks a lot good to see you. >> thanks. >> dan suzuki of richard bernstein advisers when we return, jim cramer live from the new york stock exchange good to get his comments on the weekend's developments here are the futures right now 425 or so on the dow we'll be right back. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards
i will tell you he likes the speech jay powell got a difficult job because he was left with a gigantic portfolio that was increased over $4 trillion in the prooefr yous administration that he's trying to right side. and he was left with the hard work to try to normalize rate and stabilize the portfolio so he has the fire power if the economy slows down to choose the economy. >> that was steven mnuchin on "squawk box" talking about the president's reaction of the fed of jay powell speaking last week that's one thing to talk about, jim. tom farley is here and first
thing he said was he pointed out your position on china i mean -- you are not normally lonely, you have a great wife and china. you were really lonely in terms of your position on china for months and months. you were one of those people that said this needs to be done and it is going to be tough tariffs and there were not many like you >> just to follow up that thought then i followed up by saying you have been right all along. >> thank you, tom. appreciate it. thank you, joe the problems are twofold the chinese have not been truth full when it comes to stealing or bogus adventures. those are more important than tariffs. i am glad lighthizer is negotiating. what was the matter with that? i know your previous guest was
saying that nobody expects next year to be an up year. why is that true we run out and analyze the tax breaks it did not seem to be prudence whether lighthizer negotiates a good deal or not, i don't know secretary mnuchin was terrific on the show. we can't give it away. let's hope the chinese mean business because if they don't, we'll see the 25 >> so you don't like markets that are up like this first thing in the morning >> no. if the market had been down on friday, i would have felt better a lot of people feel there was something that was known and some people know what was going to happen and the president taking a less hard line position those people are going to flip the only thing that really do
change is if you have a chance to be able to have a couple of months to move your supply change out of china, that's something to cheer for a bunch of upgrades. those were obvious, they can go higher and move the market nc t i like apple very much but, that's the stock that everybody wants to sell. let's see what happens >> that means someone is going to downgrade tomorrow >> yeah, there it is thanks jim, we'll see you in a couple of minutes >> thank you, tom. >> tomorrow don't miss on all-star "squawk box" line ups all-star "squawk box" line ups jim paulsen and carson is the fund built to sell blockt
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perso persona. very in qu-- he wanted to learn everything about the market. he cares deeply of the job he's doing. that showed through today. he has to have that poker face it was fun having him on in general, i am optimistic with the market i agree with our last guest that things could go all right here we need to buckle up come february and january for now the time is pretty good. >> as anyone who associates with donald trump, he got many critics. i have seen bad treasurer. >> that narrows it down. >> the other was a railroad. >> he's also being artful in
staying out of donald trump cross hairs. he's doing a good job there as well >> tom farley, thank you very much it was great to have you >> mike, am i going to see you tomorrow >> i am. >> that does it for us today, make sure you join us tomorrow, right now it is time for "squawk on the street. ♪ good monday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer u.s. and china agreed to hold off tariffs for 90 days. big day today, president burn will be laid to rest and oil is back to a bid of 53. u.s./china agreed to hold off