welcome back, a final check on the market. there had been some modest declines and that continues right now. dow futures down by 21 points. watch the treasury today, we have seen the 10-year pushed above 3.01%. >> "squawk on the street" is next ♪ >> good monday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer >> a potential white house move to go with tariffs mixed action in europe 10-yr at 301 the president expected to

announce new tariffs on that $200 billion china warning that they'll not play defense >> officials warning the yet to come as the remanence of hurricane florence moved out of the carolinas. >> benioff makes a deal to buy time magazine. the president is likely to announce tariffs on that 200 billion. trying to restart talk to resolve the ongoing trade disputes tariffs have put the u.s. in a new strong bargaining position with billions of dollars and jobs >> empire did see prices paid at

a 76-month high. >> is he right, jim? there is a strange collapse. china, you see apple is down wait a second, that's the next 276 billions >> do we know it is going to be ten? that's speculated in the journal today. >> speculated. >> the president always seem to want to be as tough as he can. when you see the 10%, is that coming more from the administration or at 25 because he says no way i don't know because i am saying in the past you can't guarantee it >> no, i think it could be going to 25. i think he wants to go from the jugglers here and some of the people i talked to here, they're looking at the chinese stock market that had a critical break down it is rolling over they encourage a lot of

ownership in stocks and that turns out to be something that the party can't control or the party have not been able to pop up stocks and the president is right that the economy is strong it has not go through the system yet. that's interesting than the new york number. i have gotten marcus ramon on tonight. huge recreational economy. they really saw the impact there are not a lot of thors and the automarket autos have been sluggish any way. they have to discount because they can't move cars >> the journal is talking about chinese officials telling leadership to step it up by restricting sale materials and equipment and parts to u.s.

manufacture supply chains. do they have leverage there? >> maybe with apple. they're playing the fire because almost all these companies in exception of apple have the ability to switch quickly. sky works solutions is exceptional. anything of power and furniture. gary freedman, a huge builder in china. listen, don't worry about it, we'll be able to build this stuff anyway they have to be careful. there are companies that have deep roots in china but a lot of companies that is like listen, we have been prepared, that's why we are in cambodia and thailand and vietnam >> it is fairly early to assume. it takes 18 to 24 months to move your manufacturing base, an insignificant amount of time >> the more the president rolls

these out in stages, it is muted and giving you more chance to be build elsewhere. i don't know if the president is really grandular >> my sense is he's not. it requires a tremendous amount of time consuming thinking with ceos and that's kind of what the ceos of the wall street journal. the finance guys are saying listen, wall street -- mr. president, we need help. i don't want to go too much into what jaime said because it is facetious. >> "time" did a big piece on how wall street is less invasive where the chinese can go discuss trade concerns that does bring us to diamond making comments to abc of how much credit the president deserves over tr econohe economy >> when president trump elected,

commerce rocketed. that has helped the economy. it is impossible for me to tease out how much but it has helped the economy, just like president obama got the economy much worse. some of it is being reversed so yeah, he takes some credit for that >> you got new numbers on friday, back to a six-month high >> the regulation theme is so hard to nail down. i would tell you from speaking to a lot of businesses, there is a role back of regulation, what they really feel better about, no new regulation, you got a lot of regulations that are not being enforced and under the obama administration, there was a believe thf that there could e regulations. not that i am on a satellite it is all flaring and one of the

things that has happened is that you really are not supposed to be flared. that's rolled back coal has been rolled back. the roll back makes people -- >> coal is that important to th u.s. economy >> i am surprised how many coal and workers have been hired. coal prices have been going up >> what did uma oyou make of th journal piece this morning >> i look at that and i say t the -- they have more cash than in a long time there is only so many things you can do and so many plants that you can built. if we are in the southeast, listen, we are constrained

the power is a huge part of the country. >> first of all, everybody paid the tax on their cash overseas and whatever you generate from here, none, beyond of what you are paying in the u.s. the investment have not necessarily met the pace that perhaps have been fought it would now, you are going the use your cash however you choose to see fit to you will bring it back to so to speak. it does not matter anymore bring it back or not, you pay the tax. >> what's the return of no demand >> you don't need more capacity? the capacity that i am seeing being added are huge investment in oil and gas >> so what's the point >> why would you though? >> there is a lot of stuff, you plan it. so just more buy backs then. >> well, i don't know. do you see these numbers did you hear ups how many people

they have to hire? >> i did >> you don't think that's a sign of ecommerce look at the jet.com article. >> we have time today. >> a lot of it comes down to new warehouses because ecommerce is so powerful. >> yeah. >> ecommerce trade is endless and knowing when to stop it and i have marcus on tonight, it is not expensive to build or lease a warehouse. >> i saw he bought 25,000 shares market >> yes, he did >> he only owns 66,000, is that possible it must be a misprint. >> how many factories can you build at a given time? by the way, i think that people felt that autos were going to pick up. they're not. and housing is going to pick up. >> it is key for housing over the next seven days.

let's switch to florence heavy rainfall resulted in heavy flooding our jackie deangelis is on the ground wilmington, carolina hey jackie >> reporter: good morning to you. i want to focus on the consumer side of things the rain has stopped here and people are out and about in the streets. they want to see what's opened and what's getting back to normal and how they can fix their houses lowe's was opened yesterday selling supplies and the community here is flocking here but the lowe's employees themselves have structural damage from their home and they're coming to work to make sure they can help others getting back to normal this is a community effort and everybody is coming together here, we'll see this in days and weeks of rebuilding in wilmington there is a massive infrastructure problem in this town as well we have to think about it on many different tiers, think of

the interstates that are closed down or the infrastructure or the power plants and the water and sewage and think as you come a tier lower in the community center like this getting it cleaned up so consumers can be out and doing what they need to do and at the residential level within the home communities and we have driven into streets that's cleaned up. when you drive through the back roads, you still see the downed power lines and trees. this flash flooding is going to continue to be a problem over the next couple of days. the cape fear riverer which is where wilmington sits, it is expected to crest over 60 feet the problem is that water bleeds into the streets you don't know where it is going to go. we have seen flash floods have dried up and will drive some where else and we'll find a new one. that's a continuing story line as that rain accumulation and the river starts to sort of figure out what the delicate

balance it the other problem is the rain is supposed to continue it has been intermitten yesterday but it is supposed to rain a little bit later today. the story started last week. it does not seem to be dying down just yet guys >> jackie, we'll watch that and keep track of the rescues and those in shoeelter and without power. hurricanes are more than anything in an economic event. when we come back, bbenioff now. and a lot of news we have not gotten into. back in a moment

marc benioff buying "time"

magazine yesterday benioff tweeted the power of "time" has always been in its unique story telling of the people and issues that affects us all and connect us all. >> mark told me that and obviously "time" magazine is very strong. here is one, it is hugely profitable we don't know the structure. david, i will ask you, what structure did they get were liableability kept >> there is all this loss in opportunities. he and leonard are not going to run it

i think somehow meredith is getting a good deal for $190 million >> they may have jeff bezos bought it for $250 million it is clearly overseeing of a resurgence of publication. so has ben sort of beefing up to the editorial that the washington post have don't know what direction this goes in. the deal itself at meredith bought this public company that had $2 billion market value. it was 1989 when "time" was putting the finishing touch on buying warner brothers it is almost 30 years. it was a giant and an enormous company. and of course more or less completely watched and its faith

turned upside down as a result of digital >> it is possible that you can just make it an old digital edition and save a lot of distribution costs and we have a subscription economy i think meredith is uniquely able to do anything. >> tell me about benioff, what's the purpose behind this? well, i think some of it is preservation and not let it go down >> you know the way some people buying magna carta >> that's a really good point. i have not thought about that and what, you got a call >> let me take mine. dwyane wa

pick up my prescription >> there is definitely a belief that he can make a run of this thing. what we don't notice did benioff took some cost off remember when the new york times was in trouble >> no, failing >> well, i wish any business would fail the way new york times failed >> meredith did not do anything. >> time was never apart of this. it was all about "people" magazine >> yeah. i follow "people" magazine just because i don't know anything about, 50 years of the culture that i don't know. "time," i worked for time. >> you didn't work for henry

>> no, he's very different from benioff. >> yes, but did change the way magazines are written. marc understands the prescription of the economy. i think he's going to make it. he's not trying to make a lot of money. >> he may want to make some. >> or lose little. >> that's hard to say it is losing there is no reason to. why not just say listen, i am going to preserve this thing and demand wears is helping my company. they're making a lot of money. >> i am aware of that. they got a big tower, right? >> biggest in san francisco. >> which we'll hear tonight. >> you want to make the call or i am talking >> go ahead. >> it was important but not that

important. not important enough to interrupt you. >> let's go to break save some time for the "mad dash." we'll get oracle and fedex tonight. there is a look at futures, we'll be back in a minute. this is john van dine with pactel cellular in los angeles. well, welcome to the demo... (danny dichter) in 1989, a new wireless technology was being tested for the first time ever. it allowed more users to connect at the same time, while on the move. other wireless carriers

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welcome back to "squawk on the street," let's get to our first mad dash of the week jim, you and i have been friends for 20 years >> yes, a long time. we spent some time together.

>> i know you, you are not a big user of these cannabis products or the basic ones. >> i was kind of stalled about this >> when you bring up cannabis over and over again, it is clearly because there is money to be made >> they talk about it constantly and that's rob sands he was on the show many times. this morning people are saying coca-cola may be interested in taking a stake in aurora you seal this whole group fly. sales are slow for sodas they bought a company recently if they buy aurora, that's a funded capacity. don't forget, october 17th is when canada goes legal that's the test case i gave a presentation with the green organic dutch which is an

all organic cannabis at the green market on friday which you would absolutely love. obvious, the big one was when canopy got that stake which can make into 55% by consolatitella. it is a gold rush. >> a lot of people are losing money. >> it is about $30 billion the market opportunity according to who runs dutch man. he was in procter & gamble for 25 years and he's running a cannabis company the green organic, no chemicals and pesticides, it is the whole foods of cannabis just in case you are following the industry >> i am because you are. >> don't buy these right before

october 17th, the adoption is very slow. there is a difficult set of laws that still needs to be passed. how do we do with drunk cannabis we don't know yet. we don't know how to test him >> research this morning, craft times gets a lower target at a key firm and people weighing in. we'll check them all right at the bell >> it is closing soon. >> yeah.

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a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible. you are watching cnbc's "squawk on the street. the opening bell in about a minute on this busy monday, watching the recovery out of hurricane florence and waiting on the potential announcement on tariffs out of the white house the cannabis is tossed around like we always talk about. >> i am glad you mentioned that. i should have emphasize that that's the hot button. that does have some different and sometimes what people call psychotic aspects.

cbd is -- it is the one that got nose buds. it is hard to call them out because there is so many ones, cbd is potentially legal cbd got a lot of different uses. the holy grail of cannabis is liquids and that's what people think what these companies are going to spend on. it is medicine and human health and mostly sleeping and also pain animal health and edibles and then tricdrinks the drinks are going to be in a beer form or tea form or coffee form that's how people envision it and don't forget, europe is gigantic this company aurora has very big presentation in europe

>> huge news today at the big board this morning, twilio, we'll talk to jeff lawson and over at the nasdaq is new amsterdam. news on several fronts that elon musk tweets about lodgistic he wi hell instead of public hell. when people first speculated that there is going to be an investment by the saudis, it turns out that there was a parallel discussion going on that's making it the investment they are competitors i do think once again you get this kind of question of this

ability and as demonstrated by his tweets the bond is traded up and finishing high last friday >> it was a good week last week. don't forget about the investigation by the fcc and maybe more on law enforcement when it comes to disclosure. what do you have nothing, i don't have anything specifics. people telling me to keep a continued eye on that and what the board does and does not decide to do i believe there is going to be a key guest on closing bell later today. >> who do you have >> about 4:00. >> kimbell musk is coming on >> board member. >> maybe not an outside board member but someone you can certainly ask questions to >> you are right, that's very big. what that board is going to choose to do if anything of the leadership of the company or

whether you feel an obligation as an independent director to try to do something whether you can. it is obviously hurting the story. there is a huge -- >> there are multiple things that are wrong people at usa today were worried about it i think the big issue now is the competition. people are not talking about this big german companies that make cars that people like. the tariffs in china really hurt teslas the sales in china are bad enormous numbers and tesla has sold out a lot their inventory is not selling a lot more cars than what they have given additional 25%.

that's what it is in china >> can you go back to that situation? in retrospect we fully funded this >> we are not talking about financia financial but something that was not correct and knowingly not correct. >> everybody that bought the stock knowing it is fully funded really terrific. i mean wholly cow. did you ever get snooked >> what else did you got there >> stuff i have not fully reported i am not going to talk about it. >> we can do lulu, close to a record high here 160. target at 200. we admit we are late to the party here the operational over hangs like digital and supply chain have been fixed >> best quarters of all retailers.

they gave it to you and fashion as an integral part. they were really strong and very impressive because they did it without a ceo. can you imagine a company doing without a ceo and putting out the best numbers >> more upgrades as stocks are near record highs, troublesome or not >> it is troublesome for people upgrading it now there is been a note of costco i got a downgrade. there has been four price target and retails have been incredibly strong a lot of retailers peaked last week except for home depot lowe's is really strong in the home area for florence i think they'll be able to capture a huge amount of business a lot of retailers are so much better in ecommerce.

that's been a continual of things walmart was downgraded >> what was downgraded >> walmart that is a mistake. we know they are doing a lot of they thinks right. let's watch lulu but that was and sometimes it is okay to say you miss it. >> we are taking a look at craft times there at the end add "mad dash," maybe a new analyst at morgan stanley >> owe yeh yeah, star >> valuation level for ibita is too high for a company that delivers 1% organic sales growth of last week's six quarters. mma has not occurred

where the pie is shrinking as consumers go to healthier choices. >> he does not like a lot of stuff. >> no. >> those stocks have been creeping up. one of the reason is this continuous sense of some sort of ana. the strongest stock in the segment have been mccormick. by the way, i think tyson could be under pressure. >> surprisingly because he's a young man. >> for personal reasons. >> personal family related reasons and he was only appointed in '16

>> and well thought -thought of right? >> we did not talk about ed greene of the top part of dupont i think a lot of people were thinking that greene is going to run dupont >> executive chairman. the first company out of the chute is the material company and we had last week and of course i was joined by the ceo >> he's using the play book. as soon as the trustructure came out, tide co started performing. >> what dewe start to see the stock? >> next year

they'll reveal the boards of directors and you will have some information and you will be able to make some estimates and that's what has been lacking technology where a lot of people feel already there is going to be a break up and you will be able to make honeywell. he's certain that things are going to be fabulous when they're splitting off turbos and homes. >> more research this morning on morgan stanley china, that'll be important just getting an approval out of the chinese press authorities. >> this deal is supposed to close by september according to gregg hayes. >> you are a believer that they are going to move to a fairly aggressive split of the company. >> makes no sense to hav

have -- what good does it have to have otis elevator and climate control business and now wi you got this gigantic engine business and the aerospace business that's going to overwhelm everything there is few acquisitions left rockwell collins, g.e. was not able to do any acquisitions because of the balance sheet this was the time to make a move >> jim, you mentioned the pressure on shanghai and on all asian stocks really. >> down about 2% and how long with weakness and twitter today. >> there was a twitter note that was devastating. they really came out and said

that the cable course is over. >> that's going take you back to april. >> you don't want to see one of the things hate facebook about it wait a second, they have police and infrastructure, they need humans humans are problem matt ilati >> you mention alibaba's analyst meeting of a two-day affair. >> they're not out of alibaba fully. they're out of yahoo japan now they sell 1.36 billion shares of yahoo japan. they raise about $4.36 million and now they're committing to altaba to purchase the common

stocks in the market and through private transactions as well not too much of the stocks seems to be down by the feedback that it is less pure baba now >> were you stunned by tim armstrong departing? >> no. >> why >> i was not stunned by it >> it is all so excited of what was going to happen with those >> i think strategically, there was a chain of how that property is going to be yule hospitaliutd >> they did believe that business will be important for them and not giving any indication in terms of needing more scales or so-called content. >> i think they really need scales i think there are these companies that's under the radar of internet company like etsy and amazon is trying to offset

the etsy world etsy have been an incredible stock. that's a big theme of this particular market. the over run price targets they take it up and they try to find some new reasons to take it up we well -- >> they cut the rating and left the price targets. >> there is some values added. hey, raising price target and we have to take it down then thermo fisher is a good example. finally we got a chance to buy thermo fisher. these do not work. in this market valuation downgrades do not last year too. >> so well run >> oh, they're so good >> dow is down 25. let's goat bet to bob.

>> happy monday, sort of a flat open the marge inal moving for the market remaining i just want to note that the s&p is half a point from half a percent and shanghai, another down night, we are at 52 week lows i want to put that out there and see what you got that's a major problem we have been seeing this influence of emerging markets. put up the eem verses the smp. basically you can see the emerging market world started diverging in may look at that there it is. the s&p in the orange and the white. that was the rise in the dollar and the start of the tariff and the trade war talks. you see what this has done to the whole emerging market.

here in the u.s. sector, sort of a mix go, eem to the downside once again, some banks marginally on the upside for a change we have not seen that. energy is also up. unusual to the upside, they usually move down on trade talks. there is eem down again here the reason the s&p has not hit new highs. we were heading that direction on friday and banks have simply refused to participate in the valley for several months now. september, big names, wells fargo and comerica, we are up in december but not the banks we keep on talking about banks and 52 weeks high but some of those goes the other way we had the barclays conference last week. we have a problem with flat yield curve and loan growth and

higher deposit costs because rates are up a little and costs more of their deposits overall we are half of a percent of the 52-week highs. if you look at some of the big names and citi and pnc and u.s. bancorp, they are 10% from 52-week lows and not highs nio went public last wednesday, $6.25 kr $6. $6.25 cents. you can see it is down today remember up big last week. guys, back to you. >> bob, thank you very much. checking in on the bond pit today as well with rick santelli >> good morning. >> well, rates continue to march on they have done that pretty much in a very, very low key pace

since about february granted january was a little bit crazy as in many markets one week of twos with e a we are climbing. we did not quite close there we closed underneath it but we are rounding up. if you look at the dollar index, what's fascinating is if you look at the two-day, you can see that today we are down almost half a percent we are back to 94.50 we have the same rally that we took away this morning on friday the reason i bring it up in that fashion is we failed at 95 that's important many traders are looking at that as a neutral line. if we consider what's going on today. we look at the calendar and we think tariffs and we think of some of the data in the u.s. which does not show a big effect at this point. one thing i can tell you that your eyes will show you that if you go back to november of 2014,

the last time that chinese stock market shanghai composite was at current levels and you over lay s&p and you can clearly see this summer as tariffs talk came out that our stock market continue typically prove dramatically actually their stock charmarket did not >> i am not sure how this is going to turn out. if you look at this in china, it must mean something. >> back to you riding on the cloud. shares of twilio, we'll talk with to the ceo to see what's working. mcdonald'ss aowra a ion dngdend apple. back in a minute

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let's get an update on hurricane now tropical storm florence kalee dionne is at headquarters. >> it's the wettest tropical

cyclone for the carolinas on record and there's rainfall totals 20 to 30 inches we'll look at those in a second but also the river levels are at major to record flood stage and they will continue to go up for the next several days. let's look at some rainfall totals we've seen from florence in the carolinas if you look over here, you can see that anywhere from 20 to even more than 30 inches of rain has fallen we did say this is going to be a water storm and that's what we had over the course of the last five days. now moving forward, what we're going to be watching is all that rain, it has to go somewhere and it 4 go into the rivers so you can see all of the different colors there many rivers in south carolina and north carolina either at flood stage or going to major and even record and the rain, yes, it's still coming down in the northern parts of north carolina if you look here, you can see moisture starting to move to the north and east it will be out of here within the next couple of days. >> kalee dionne, thank you

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time for jim and stop trading. >> one of the most questionable groups has been the semiconductor group. that's been because all the money is going into amd. this morning nomura does an about face, goes hold the buy, broadcom gives it a $3 price target and discusses that ca will be good for them, that it's a strategic acquisition. if you want a semiconduct orally, you need this stock to be up 7 or 8 they have a gigantic buyback, you might follow it so watch that stock. >> that thing hit almost 200 not that long ago on worries about that ca deal and you liked it. >> i like ca i like the idea that they can get something through. remember, they need to do deals because that's how they've thrived. i've been trying to get hock on the show i think he'll pull it off. >> on our show >> yes, on your show this show. >> that's not a problem, i imagine? >> no. no and by the way, i don't have

goldman sachs. >> neither do i. >> you don't have it >> no. >> who do you have tonight >> i have joe papa from -- old friend of david from days and marcus lemonis and camping world. i think he's doing a lot of things well with sales people are unhappy with the ebt but he's not. >> when we come back, jdavid kostin

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♪ good morning welcome back to "squawk on the street." i'm carl quintinilla with sara eisen and david faber. dow is down 28 following recovery efforts follow hurricane florence over the weekend and the ten year a shade above three. >> our red map begins with hurricane florence hammering the carolina coast rescue operations are under way as floodwaters continue to rise. we're live on the ground with

the latest. the trade war continues. we'll get an update from the capitol. and is coke getting into cannabis reports swirling the beverage giant looking to infuse cbd in its drinks we'll give you the details straight ahead. first up, we'll follow the latest in the aftermath of hurricane florence flooding now the big threat for parts of coastal carolina. our contessa brewer is live on a ride along with south carolina's highway patrol good morning, contessa >> hey there, carl yeah, we're with the highway patrol and we've just stopped at this exit ramp, 181, where i-95 is shut down and you can see all the way down there's a line of traffic, some of these are big rigs carrying supplies some of them are disaster response teams trying to get to those flood-ravaged areas of north carolina and the problem is right now there's no good way to get there and every single one of these cars has to stop and talk to a state trooper.

trooper bob is with me he's lieutenant bob ferris who is the public information officer. what are these troopers telling drivers as they're getting off of this ramp they can go no further on i-95. >> the local troopers are telling local people where to go but most people want to get to north carolina so we are pushing them on two other routes to get them to charlotte. >> they have to go way around. any sense of how much longer it will take them to get to charlotte which may not be their final destination? >> an extra 20miles south to get them on interstate 20 to get them to charlotte. >> they're having to take a long detour i also know in north carolina the state said please, if you're an out-of-state motorist, don't even come through north carolina what's the option? >> there is no option. we have an interstate flooded. that's why we're encouraging people not to come to this area. >> so we're going to do the ride along. walk we many here's what we know. this is the route we came in

yesterday from myrtle beach. we know it's flooded we'll go check out these areas where we know there are guys trying to get to north carolina. we'll bring that to you live when it happens. even though parts of south carolina are starting to get back to business the airports are largely open in south carolina wilmington area is still very, very flooded people can't get home and it's causing major confusion and a lot of frustration on the ground so i'll bring that to you live as we see these flooded areas, guys. >> contessa, what are the trucks bringing are there shortages of products? are there businesses that have not been able to open because of some of the problems in the supply chain you're talking about? >> yes look, sara, this is a great question the quick answer is i don't exactly know but we've seen walmart delivery trucks, there's been a lot of these walmarts that have been closed down for now multiple days they put many of these -- many closed down by tuesday when the governor first ordered

evacuations and i talked to a guy earlier who is trying to pick up loads of what he called riffraff this is the rocks that are going to be needed to rebuild a csx trainline. there was a train that derailed carrying chemicals he's part of the response team that goes to try to get the tracks back on he can't get to the place to get the rocks and deliver the rocks to north carolina so they can get this track back up and running. this is a real problem for getting commerce moving again. >> and you can see the bottlenecks and congestion behind you contessa, thank you. keep us posted on the ground in south carolina meantime, watching stocks down this morning as trade tensions continue to spook investors. the shanghai index hitting a four-year low. president trump weighing in on the situation this morning on twitter tweeting tariffs have put the u.s. in a strong bargaining position with billions of dollars and jobs flowing into our country and yet cost increases have thus far been almost unnoticeable if

countries will not make fair deals with us, they will be tariffed joining us now at post nine, goldman sachs chief equity strategist david kostin, hard to argue with the president's logic looking at divergent directions for the chinese market and the u.s. market. is he correct to assume this is the negotiatiing power he needs >> first of all, is "tariffed" a verb 12 verb >> he made it a verb. >> and you capitalize it, too. >> and an exclamation point. >> the divergence, the u.s. can be exceptional and go its own way. certainly this year the u.s. market have been strong relative to most emerging markets which have had a difficult time, particularly this quarter. so what's the fundamentals underlying the u.s you've had strong economic data. you've had a remarkable set of earnings period of time. you've had 11% revenue growth and that's a key driver. you've had 25% earnings growth

and 35% increase in cash flow from operations. so if you're looking for what's the driver of why u.s. market has done this well, you've had earnings revisions, moving up as well and the buybacks and corporates have been buying back a lot of stocks so if we're thinking about what are the explanation or explanatory factors for why the u.s. equity market has done very well, the issue of tariffs is a big risk, the two issues we're talking about. >> we've seen this amazing divergence or decoupling how long can that really last? who catches up with whom >> let's think about the fact that the fundamentals, do they underlie or underpin the performance of the u.s. market let's focus on that separately and then focus on what are the issues involving emerging markets in china in particular those are unique in terms of slowing capital investment growth, and some of the concerns about the impact of tariffs. here in the u.s., 80%, 70% to

80% of the revenues of u.s. corporations are domestic so that's really a big issue. clearly the potential input cost inflation is an issue we worry about as a risk on the level of earn it is market is likely to generate so that's the area we focus more again fundamentally on what's happening in the u.s. market. >> i'd love to get to your note because it's getting attention because of the lead, your u.s. weekly kick start. for the first time in ten years, buybacks accounting for the largest share of cash spending by s&p 500 firms because this plays into the criticism of the tax cuts, those who said it would result more in buybacks and actual capx but it's more complex than that when you look at the numbers. >> it's an excellent point for the last 20 years, 19 of those 20 years the number one priority for spending cash in capital america has been capital spending other than 2007, this six-month period, the first half of 2018,

has seen the number one position captured by buybacks but as you pointed out, it's nuanced because the top ten companies are responsible for almost 80% of that growth and overall dollars. groings almost 50% this year relative to a year ago apple is the most prominent, so that's the first observation and then if you look more on the surface on capital spending, capital spending is number two, so still pretty high in terms of the prioritization in terms of how companies are spending money but that's a more broad-based growth and that's up 1%. so -- 19%. so in the last 25 years, you've never had capital spending growth that level. it's been the strongest growth in capital spending so both arguments are correct in terms of what are companies dong with this incremental cash that they have incremental earnings partly

as a result of lower taxes but i would go back to sara's earlier point which is really the story is about 11% revenue growth and companies are generating strong revenue growth and that is what is driving opinion opinion, the market this year. >> i keep thinking back to where the line was flat is the new up. is it still? >> think about that, markets roughly 2900 and my forecast for the end of this year, 2850, delightly down about 1% and look out into 2019, so another 15 months from now, 3,000 so 3,000 would be a modest increase so the near term perhaps pressure we have history going into elections, questions about tariffs, those are the key issues, the fed likely to be raising rates. the goldman sachs economics forecast is six hikes to this

year and four next year so a little more hawkish and those are the risks as we would lay it out. >> is it fair to say the lion's share of the gains in the near term are done? >> in my opinion for this year you're got maybe 1% down side risk-reward and next year the economy is likely to be growing and that's driving earnings and likely to take the market higher but multiple will be pressured because you have higher interest rates and bond yields likely to move above 3%. >> so we've seen the peak when it comes to earnings growth? the growth rate in earnings, 25% earnings growth each of the first two quarters, yes, we're probably seeing that growth rate decelerate but still strong. we're looking for next year around $170 of earnings for the s&p 500. put that in context. this year will be around 159 so that's 7% and since you mentioned tariffs, the down side

should be anywhere from $5 to $10 a share from our baseline forecast and that would be a head wind of margins and higher input costs. >> so we are expecting the president to go through with the next round on $200 billion worth of chinese imports has the market priced that in or do you expect to see a reaction if that goes through >> what's difficult to discern exactly what's implied into the market, our forecast would be perhaps $5 a share at those levels, 10% tariff on $200 billion would be a head wind on modest negative revisions potential. so market probably hasn't priced all that in. >> david kostin, good to check in with you. $3,000 is your target next year.

about 100 points up. >> when we come back, assessing the damage in the wake of hurricane florence we'll talk with fema's deputy associate administrator for insurance plus cloud communications platform twilio celebrating ten years since going public stocks up 250% year to date. jeff lawson will join us as the dow itestsoss wnwhtl i lsedo to nine barely enough time for this man to take a bite of turkey. but for cyber criminals it's plenty of time to launch thousands of attacks. luckily security analysts and watson are on his side. spotting threats faster and protecting his data with the most securely encrypted main frame in the world. it's a smart way to eat lunch in peace. sweet, oblivious peace.

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hurricane florence starts to move out of north carolina the storm settings and rainfall records with swollen rivers already hitting record heights and still rising officials warn the catastrophic flooding would still continue for days joining us this morning is fema's deputy associate administrator for insurance and mitigation and chief executive of the national flood insurance program. thank you for your time this morning. >> thank you, appreciate being on >> people want to be quick to put some dollar figures on the property damage and compare it to katrina or harvey do we have any clue where we're going to wind up >> no, it's too early yet. we have about 135,000 policyholders in the north carolina area and over 200,000 in the south carolina area so with flood depths still being determined which one of our policy olders will be impacted it's still hard to put numbers on the amount of damage to the

national flood insurance program. >> the contours of the damage, though, whether it's automobiles or homes or infrastructure, is that starting to fill itself out? >> well, the national flood insurance program primarily assures residential properties and renters' contents so we'll look at the damage to our policyholders and as the days continue moving forward, we'll be able to start to get the number of claims being submitted and being able to get adjusters out into the field when it's safe and being able to work with policyholders when it's safe for them to be back in their homes so it's still early to start hitting numbers on what the impacts will be but it's going to rank up there with our big events. >> i was going to ask you how you look at this the pictures are devastating i remember seeing similar flooding in harvey in texas last year is this going to be worse than that >> well, again, it's hard to predict but we know that

certainly people that did the right thing and have a flood insurance policy are going to have a road to recovery once the water subsides and they're able to get in there and start repairing. so we like to use these events to encourage people to understand their risks and the consequen consequences just one inch of floodwater can cause $25,000 worth of damage so what we're seeing here is going to be extreme event and policyholders are going to have a lot of damage when they get back to their homes. >> how much are you worried by this expectation that the cresting of the rivers really doesn't come until later today, maybe tomorrow. >> these flood events unfold they're different.

when people get back they have to make sure their property is safe so they can turn off power, turn off the electricity so it's safe to assess the damages people don't need to feel like they need to rush back to start their nfip flood claim journey we've been in touch with insurance kpagsers in the states we've been working with our private insurance company partners we have over 3,000 adjusters ready to respond so we'll be there to help people but the time needs to be right and people need to be safe. >> what resources do you make available for people who don't have flood insurance on their homeowners policy and haven't filed this with the federal government >> that's an excellent point one of the things we've learned over the years, a misunderstanding where people think their homeowner policy may cover them from flood and it doesn't so we need to work as our fema strategic plan is to

build a culture of preparedness, closethat insurance gap, work the whole community partners where it be insurance agents, lenders, community officials and the media to make sure people understand where it can rain it can flood and 98% of the counties in the counties have had a flooding event it's the number one natural disaster year in and year out so we need to be better prepared and understand what our insurance provides and recognize that insurance is the first line of defense when it comes to recovery and resilience for homeowners and for communities. >> finally, are your models suggesting more activity along the atlantic coast as we're halfway through the season >> we keep a close eye on it it's hard to predict that will happen and which storms come up but we'll be ready the nfi pirkp, last year we dea

with a number of storms so nfip policyholders will know they can be treated fairly and have every dollar coming from their policy they purchased >> david, appreciate that very much hope you'll keep us posted on developments in the next few weeks, thanks very much david maurstad. >> absolutely. thank you. when we come back, the ceo of twilio is with us as his company stock soars, up 170% in the past 12 months plus, coca-cola and cannabis is the beverage giant really getting into marijuana-infused drinks we have the details. "squawk on the street" will be right back in fr rns positive, upou pots need a change of scenery?

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let's get to our etf spotlight financials are trying to rebound after underperformance last week. >> just ticking to the upside to start the day. financials have been the focus and over the course of the past week the financial sector is the

second-worst performer within the s&p 500. only real estate has done worse than that span there has been a divergence within the sector where traditional banks are faring worse than, say, insurance companies. now the spdr s&p bank etf that tracks more equally related bank stocks, they're down 2% during that one span. meanwhile, you have to spdr s&p insurance index, that's worth $800 million, it tracks an equally weighted set of insurance companies and that fund is up by about 1.5% during the same span. it's hard to say whether or not there's a larger sector rotation happening relative strength to within the financial s financia.

back over to you guys. >> thank you very much, dom. dom chu. twilio ringing the opening bell, celebrating its ten-year anniversary. stock has soared this past year, 250% the cloud communications platform working with 40,000 clients, names like airbnb, twitch, lyft and uber. for more on the company's strategy and growth, we're joined by ceo jeff law sson, one of the co-founders go. blue. >> go blue indeed. >> what accounts for the strength this year. >> it's the continued success of our platform business model. developers can use twilio to solve a wide variety of problems inside of their companies and how their company communicates with their customers, whether that's voice phone calls, text message alerts, realtime video communications and things like facebook messenger so it's the broad breath of things that developers can build on top of twilio coupled with our usage based pricing model

which aligns our success with our customers' success so we get paid when our customers use twilio more and build things on top of our platform so the combination of the bredadth of things you can build, that platform model has worked so well. >> a good example is uber. helping us users connect with their drivers how big of a customer is uber >> one of our largest but we have lyft, and other ride share companies as well as everything from silicon valley tech companies to "fortune" 500 companies like major banks, insurance companies. we today saw u-haul, every comps getting reinvented because of the power of software and every company realizes they are a digital company. when they do, the software developers working with those

companies bring dwtwilio in. >> i was going to mention whatsapp whatsapp was almost 20% of your total revenues have you managed to spread that out? >> we diversified our revenue substantially so our top ten customers now only represent about 17% so we've diversified our revenue base q 2 we posted 54% year over year growth reaching almost 600 million of annualized revenue. so we're proud of the results both growing topline while diversifying customer base substantially. >> we were working in what had been a significant increase in capital spendings perhaps because of the tax bill. do you think you're a beneficiary of the increased spending year over year? >> i think every company regardless of what they do is always investing in their own

growth so when you think about customer engagement, how a company talks to its customers, that's a source for every company. how you engage with your customers and what they think of those interactions, that is the brand perception and that is the reality of the product delivery that companies have with their customers. >> can you sustain 54% top line growth >> that's a great number, we're proud of it. as numbers get big, it's harder to maintain top line growth but we are proud and we think our business model, the platform business model is a unique business it's not software as a service, not traditional on prem software it's a new kind of software company and because of that model we can sustain a nice expansion rate and growth rates well up into big numbers that said, it's hard to tell how those numbers -- >> how do you measure usage. how was that measured? >> phone calls and text messages and video sessions are measured in gigabytes and our new context

and product is measured in the amount of time the agents spend using it so each one of our products we break down into the fundamental value for our customer customers. >> i hate to ask about other customers but you used to work for aws and citi is arguing maybe they should hide from antitrust concerns how do they color the market >> amazon has been a great partner of ours. we use aws, we help power multiple products they have in the market so we have a great relationship with aws than we have since -- obviously i worked there but we've been a customer of theirs, they've been a customer of ours so it's been a good multifaceted relationship. >> you have some competitors there are others that are trying to do this cisco is one of the big ones what differentiate what is you do for the customers and how are

you winning the business versus them >> twilio is a software company. we were founded by three software companies, we've always used the power of the software to build communications and uses the power of software to scale up and scale down and work everywhere in the world on demand for our customers so compared to customers that are hardware oriented, it's a completely different model and we talk to customers, they want their communications to operate like all of their other software infrastructure does. be able to launch things globally be able to scale up on demand and be agile and experiment with new ideas very quickly like you can do in software think about your mobile apps they're updated constantly while companies need communications to be as agile and flexible as the rest of their software that's what twilio provides in an api that is very quick to get started. a developer can build a prototype in the afternoon and that's something the legacy players can't say.

>> so risk in the next three to five years, is it about a slowdown in the growth of small business is it about marnlts unable to raise capital and invest in small businesses what are they? is it overseas >> we just started to invest abroad it's a relatively new thing for us we've just started still to reach the developers of the world while we're proud of our developer first go to market we've got a few million developers but there's 20 plus million developers in the world. >> as far as secular trends go, they are in our favor. you think about every company becoming a software company and going through digital trance al transformation it's not just about a phone number and phone call, it's about text messaging and chat and facebook messenger and alexa

and new channels coming online every one of those requires companies to figure out what is my strategy? do my customers want to talk to me on new challenges like alexa or facebook and if so, investing in twilio as the platform they build upon lets them access all these different channels with one investment so we feel great about those secular trends. >> that's a whole other conversation congratulations on ten years amazing. good to see you, jeff lawson. >> let's send it to sue herera for a cnbc news update good morning, sue. >> good morning, everyone. here's what's happening. a lawyer for the woman accusing supreme court nominee brett kavanaugh of sexually assaulting her says her client is willing to talk publicly to the senate judiciary committee. kavanaugh called the allegation completely false christine lagarde says a

failure to agree on a brexit deal would caused dire economic consequences she held a news conference with british chancellor of the exchequer phillip hammond in london. >> no deal, i understand that to be a disorderly exit and crash exit that could happen on the last day of march. clearly if that was to happen our assess system that it would have been very dire economic consequences. hong kong and southern china hunkering down sunday as strong winds and heavy rain from typhoon manghkhut battered the coast. the planet's biggest storm of the year has left at least 69 people dead from drownings and landslides over the weekend. you are up to date sara, i'll send it back downtown to you. >> sue, thank you. when we come back, president trump is expected to roll out a fresh batch of tariffs on china. we'll take you live to an

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welcome back to "squawk on the street." i'm sara eisen here with david faber at post nine on the new york stock exchange. let's show you where we stand an hour into the trading session. dow has gone positive, just barely, the s&p still lower by a quarter of a percentage point. you could see six days in a row of gains for the s&p nasdaq hit the hardest down almost a full percent. within the dow it's down to c pt and chevron that are the biggest winners. we follow the latest on the aftermath of hurricane florence. flooding is the big threat for parts of coastal carolina. many businesses in the region will remain closed as they assess the damage.

jackie deangelis is watching that from wilmington, north carolina morning, jackie. >> good morning to you, carl businesses will stay closed today but the big ones like lowe's and walmart are open now because people need supplies they've been inside for a while. they're getting out, you can see they're ornery, some cabin fever after the storm. but we were talking to the folks on this line it's moving in a reasonably nice fashion. about 20 minutes or so one in, one out. the walmart folks are serving them snacks as they're waiting and most of these folks said they did stock up on supplies before the storm they've run out of things and they want to replenish but there is no produce in this store. it's been difficult to manage the supply chain because you really can't get anything in or out right now so they were saying probably about wednesday is when we should get some fresh supplies at this store we spoke to one customer on the line he described his experience with his family. >> we wrote it out and this one,

just the fact that it went on and on and on was the most difficult part the kids have been good. we're without power still so a combination of getting supplies and getting them out of the house is why we're here today. >> so this is one part of the story and that's the consumers, the residents trying to rebuild. that's one teier of the infrastructure problem the second infrastructure problem is when you get to city roads, that subsided the third tear of the infrastructure is larger it's the interstate highways it's the water supply. it's the power plants and the electric utilities so there is still a lot of work to be done, of course people aren't going to stay inside forever, guys. >> is there access to the city i remember wilmington over the weekend was just hard to get into. >> it was hard to get into, sara, and even driving around today, the problem right now is flash flooding some places will subside, places

you saw flood maybe yesterday. there won't be one today but then you'll find another one come along your path and that's the problem, that can be a problem for the next two days, especially if it starts raining again. wilmington got about two feet of rain add that into the river, tad high tide, that creates a storm surge and that's when the floods become a big problem >> governor telling that to nbc over the weekend jackie, rebuilding, i guess, will start as soon as today. jackie deangelis in wilmington, north carolina president trump is expected to announce a fresh round of tariffs on $200 billion worth of chinese goods coming into this country. could come as soon as today. ylan mui is in washington with a look at the companies that stand to lose big if the negotiations sta stall. >> a survey of u.s. companies operating in china found two-thirds of companies are suffering from the initial round

of tariffs on $50 billion in chinese goods. three quarters consider another round of tariffs to be a, quote, strong negative businesses across a wide range of sector are ramping up protests. office depot told the government swivel chairs and upholstered seating would get hit. the proposed tariffs add between $5 and $13 to the price of a $50 chair. the company saying that would do disproportionate harm to its profitability and jeopardize its product offerings. for fitbit, tariffs could drive up retail prices, dampen innovation and push u.s. consumers to push chinese alternatives the company says that shift could have national security implications because fit fit collects so much personal data and intel warning tariffs could slow down the adoption of 5g technology now, china has acknowledged receiving an invitation from the u.s. to resume trade talks they said they welcome the discussion but remain wary of tariffs.

guys, one chinese official framed this in the words of an old proverb saying "kill 1,000 enemies, lose 800 soldiers." translation, nobody wins in a trade war. back over to you. >> i wonder, ylan, the president tweeting out this morning that so far there has been a relatively limited impact on the economy and consumer prices. if we get this next round some companies you pointed out are consumer companies a fitbit, apple calling out impact on an apple watch, whether we'll see this trick into the overall cpi or consumer inflation. >> we're hearing their input prices are already rising. the question is how long can they hold off on passing that increase on to consumers i thought it was interesting that barclay ee's put out a not saying a 20% tariff on chinese goods is now part of their baseline economic scenario and they're estimating that could hit between .2 and .4% off of gdp in the long run. so clearly a major economic

impact could be felt if the second round goes into full effect >> let's see what happens on that front, ylan, thank you. ylan mui in washington when we come back, cannabis and coca-cola? speculation swirling around the beverage giant getting into cbd-infused drinks. we've got the latest on that plus, "time" magazine has a new home and a new high-profile owner. we'll tell you who and why coming up next dow up 23 points don't forget that the past can speak to the future. ♪ ♪ i'm going to be your substitute teacher. don't assume the substitute teacher has nothing to offer... same goes for a neighborhood. don't forget that friendships last longer than any broadway run. mr. president. (laughing) don't settle for your first draft. or your 10th draft. ♪ ♪ you get to create the room where it happens. ♪ ♪ just don't think you have to do it alone. ♪ ♪ the powerful backing of american express. don't live life without it.

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feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. we take you back to south carolina this morning. contessa brewer is near a highway which is flooded i think you're near 301, right,

contessa >> that's right. i'm exactly on 301, carl, and i can stand in the middle of the roadway which is a major thoroughfare to i-95 and it's the way people would be detouring around i-95 which is closed 234 this part of south carolina but you can see what's happening 1 people are pulling the supplies up they need to go to disaster recovery. this truck back here that has th excavator is heading to wilmington they can't get through here's why they come up on 301, they see the road closed signs and the water. look how swiftly the water is going across the roadway here. these guys are taking the excavator to wilmington and looking to help out in disaster recovery and the trooper says we can't have anybody bypassing the barriers even though you're on an important mission why is that? even with the bigger trucks and the higher vehicles that are up high why can't they attempt it? >> right now we don't know how deep this water is we don't know if the roadway has been washed out underneath the roadway bed and you can't tell

unless you're in it. we certainly don't want to risk anyone's life there's other routes around here it will be an inconvenience but don't go around barricades. >> here's the problem, though, they're trying to get wilmington, they're trying to get into these places that desperately need help and you've got these vehicles here's a utility truck that has the big crane and bucket i can see it to the left of the pickup truck with the excavator and these trucks aren't able to bypass this kind of localized flooding is there still a way to get from south carolina to wilmington >> we don't want them risking their lives and emergency personnels' lives to get them. >> we're on a ride along trying to see how the commerce and resources get to where they're needed most. sara >> contessa, thank you for

showing us how these trucks are having a hard time getting through. >> sure are. salesforce ceo marc benioff and his wife lynn benioff buying "time" magazine for $190 million. robert frank joins with us that story and what seems to be a trend now among major ceos of technology companies robert >> david, it's the new philanthropy, tech billionaires buying up storied print media names not just for profit but influence and preserving big names in journalism. marc benioff announcing he and his wife are buying "time" magazine for $190 million. they are buying it as individuals not as part of salesforce and they promise not to be involved in editorial decisions, benioff worth around $6 billion, tweeting yesterday, quote, the power of "time" has always been its unique story telling of the people and issues that affect us all we have deep respect for their organization and honored to be stewards of this iconic brand. it was a big price, the seller, that took over "time" last year.

it's since put up "time" magazine, "fortune," "money" and supportings i "sports illustrated" up for sale the new breed is less "citizen kane" and more bill gates. patrick soon-shiong bought the "l.a. times" this year, laurene powell jobs bought t flick as jeff bezos says when he bought the "washington post," we're not just trying to make money, we think this is important. of course they want a bigger voice. benioff has shied away from criticizing the president but this could make him a target the president has often criticized "time" for negative coverage and covers but praised in the 2016 when they named him person of the year

guys, back to you. >> he's also, that being president trump, critized jeff bezos in particular because the ownership of the "washington post" there, it has not hurt amazon in any way but it seems benioff could open should corporate boards be doing more to rein in ceos

we talk withom t barley, he will weigh in on that coming up in "squawk alley. as one of the nation's largest investors in infrastructure, we don't just help power the american dream, we're part of it. this is our era. this is america's energy era. nextera energy.

welcome back we are seeing some movement to

the down side for the s&p 500. a leg lower in the last five minutes or so. consumer discretionary stocks are the worst performing sector in the s&p 500 so far today in early trading, among leading names to the down side, kohl's, macy's, nordstroms, gap. and amazon off earlier lows, still down 3% on the day, on pace for the worst day, on word of a note saying amazon should split into two companies to avoid regulatory scrutiny. back to you, carl. let's get to chicago for the santelli exchange. good morning, rick >> good morning, carl. the value level future trading value of the dollar, green back, dollar index is a staple of water cooler conversation these days, and many of the reasons are for the same reasons that you see on the front page of a newspaper or top headlines when you go to the internet, whether

it is recalibration of trade from foreign policy standpoint or a trade standpoint. all of this place havoc with the notion the dollar is the reserve currency of the globe. we know this century has undergone many changes, whether the euro currency and its potential ability to crowd out the dollar index in reserve status or new alignments, whether china, japan, russia we know that the reserve currency has certain benefits. maybe one of the big issues is the long term feelings of the benefits in the eyes of those that pay the highest price to give us that benefit right now with the fed raising rates ready to embark on a rate increase, it pays mention to notice if you look at the chart, it is barely up over 2%. we act as though it is up 22%, it played havoc with emerging

markets for reasons not all its own, a useful scapegoat in many ways to think how future value, potential manipulation of currencies and value against the dollar at a time we're all having a friction moment with regard to trade, it is complicated. if you look at the relationship between the chinese stock market and other stock market, it is clear if business is your first front, the signal of what may lie down the road with regard to the big tectonic movements of global finance, one would think the signals would be fast and furious. at this point they're fast and furious and de-emphasizing the importance with respect to our stock market and really emphasizing the impact on china. now, i know that can change and everybody is nervous about using things like the trade deficit and trade. all the conventional wisdom.

i will say those charts are important, anybody that played monopoly should understand if you have direct and indirect foreign investment and large trade deficit in the short picture, it might not be bad in a long picture, you never win monopoly when all of your property is mortgaged. back to you. >> even kids can understand that argument thank you. when we come back, flood waters rise on the carolina coast in the wake of hurricane florence we survey the damage with a former fema director when "squawk alley" starts in a moment dow down 28.

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