well, we have no time but did not matter i went through the 21 top, that's the only one that's worth it make sure you join us tomorrow, "squawk on the street" is next ♪ goodwednesday morning, welcome to "squawk on the street," i am carl quintanilla with melissa lee, cramer and david are off today. futures are remaining the same u.s. candidates stock resumes. the president will visit some areas hit by florence here

our road map begins with trade tensions china will quote, "out last america in a trade war." shares of tilray soars the market now >> new pressure for tesla, ceo elon musk, the investigation into the electric car maker. >> futures are off the highs this morning investors shrugging off those trade tensions between china and the u.s. china insists to out last the u.s. in a trade war. we have the 10-yr yield close to 3% and hitting its highest levels since may we saw gunlach tweeting on the 30 financial media is not paying

attention. >> it was comforting to the markets, i would imagine to hear the premier of china coming out and say we are not going to choose the route that so many people afraid of and the valuation of yuan. you have to wonder the bond market who's the buyer here of u.s. treasury? the fed is not and foreign country is not either. china for the fourth month is the net seller you have to wonder who's going to pop rop up the market? >> it is interesting because that makes all kinds of sense and a few weeks ago, we are in the 280s 10-yr is a field at 275 or 285 or whatever it is. the market sort of making its peaks with two more rate hikes this year. a general lift and risk appetite around the world, the dollar is

down and the yen is down you are willing to take morris k. it does not seem about that what's interesting about gunlach's call was back in the spring, he says it is going to accelerate higher. the mark doet does not seem the accelerate higher but just finding new levels right now >> china arguing their options are dwindling as they are running out of ways of things to put levies they're not going to target u.s. supply chain >> definitely. >> we could certainly see that it would be cutting their nose off despite to drive the price of treasury lower. that's the sothings that china a

do there are some surveys that's been done that expressed concerns that they have been feeling this sort of impact. >> 70% of the company surveyed, right? >> exactly they are feeling some sort of pressure whether getting licenses or things like that soft ways trying to retaliate against the u.s. are being felt already. >> i wonder if the market going to say thinks going to be a cold trade war. we are rewriting the rules right now and also not making depressi aggressive moves we'll get chinese goods with tariffs coming behind this one the market that we are living of this anthropologipossibility foi or eight months. $30 trillion stock market, you can't run the numbers through,

wow, this is the game changer. >> jack ma yesterday saying this could go on for 20 years a good friend of the show says there will be no return to normal or post trump given the bipartisan concerns of china ea's rise, that's the new status quo of economic disentanglement, trying to undo seven years of supply chain that we built >> on the china side, you have china 2025, you got companies like alibaba, we'll talk about them in a bit. their investor reading says they're going to invest and billing their own chip specifically for a.i., that's going to be enormous that's an enormous capital investment that's the u.s. for a long time dominated. alibaba has depockets that could destruct a lot of the players.

>> exactly well, president trump is heading to north carolina this morning to assess the damage of florence the president is set to depart washington more than 50,000 people remain in shelters and more than 200,000 customers are without power. category one hurricane, we'll take you there live, we are looking at some of the devastating pictures that we are seeing of the flooding across the region we are getting reports about all the damage and not just the property like structures or the ones you are seeing but also the livestock. >> unbelievable number on the livestock. 5500 hogs, 3 million poultry birds. i didn't realize they raise 9% of u.s. chicken for meat this gets lost in the rush to cover infrastructure and

obviously human life a lot of farmers will have to catch up on what were lost >> it is a tremendous destruction. you can't replace it some where else obviously coause and effect. and we are seeing stories of now easy options for people. >> that area are mostly single family homes the flooding they don't have that many apartment complex. >> we'll watch the president's travel later on this morning we got to talk to canada cannabis stock of tilray continues to soar. last night on "mad money," the ceo told jim that alcohol company should capitalize on cannabis >> i think all the alcohol companies need to enter this

industry it is a great hedge for them whether you are an alcohol company or an investor it is a global opportunity our intend is to build a company that dominates part of this $150 billion industry. i think you will see multi billion dollar company, we don't want to partner avi, we want to build it >> they're zeroing in on best buy just to pick one name. as a lot of people wondering whether we are in a weird, silly season here. is this about a completely new market opening up in four weeks? >> i think that analyst, i think if you are trying to construct any sort of model at this point for this emerging industry, that's going to be a tough thing to do. there is an interesting quote in this article that was out yesterday of evaluations of cannabis stocks.

if you have to stick your head in the model, this company looks too expensive based on earnings and sales. throw valuation out the window, it does not matter what they make or hourw much they make >> it is all about the perceive side of the overall opportunity as cannabis as an ingredient or pharmaceutical or everything else that's out there and limited number of stocks that seem like they're able to play >> particularly in the u.s. and investors can only invest in the u.s. stocks. we are also getting reports out of the national post that aurora are looking through for that reason investors may be expose to cannabis >> aurora had the halt yesterday. coke admitted their interested >> so the strategic value may be

for a lot of early companies that are kind of have some kind of stakes in the ground and with tilray, he calls it a $150 billion reserve new that math does not work well it is a little bit out there >> by the way, that's close to session high in the premarket, went public in july of '17 of 800% >> by the way, they tweeted this morning. yes, we are short and holding a manageable position. they're sticking by their guns they like tilray initially but they did not like it on valuation. >> more on apple, the new product and the stock and tim cook's performance let's take another look of the futures here s&p is by 100 and much more

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the white house's latest

round of china's tariffs it is a sign of the tech giant political sway in washington that could continue political tension becoming a head wind joining us is jeffery kvaal. thank you very much. >> happy to be here. >> tim cook as a trump's whisperer quoting people that he lobby the president personally for these exemptions how much credence do you put in that and how much does it matter >> well, i am hardly a trade expert per se and i was not in the room i was observed that there are some incentives to keep the iphones off the list iphones are super popular here and they would be unfortunate for a lot of us paying more and

conversely on china side iphone production there supports many jobs and certainly hundreds of the thousands and perhaps over a million >> so how are you modelling this exemption and how does it affect your outlook on earnings and what happens if things change? >> well, seems to be a fluid situation. things very well could change. like apple itself, we are optimistic that cooler heads will prevail in the trade tensions but certainly is a risk that we have to worry about for our 2019 projections >> what would be some of the g signals you would be looking for in terms of delivery time to see if there is any disruption what are the signals right now in terms of the new class of

iphone and things like that? >> that's a good question. the new iphone should have regular availability that's unlike the iphone 10 when it launched last year apple is constrain on the production out of the gig. apple has many on day one but it should ramp quickly. what we'll be able to do is watch the shipment time that we can all see on the verizon at&t websi website. >> what sorts of indications are you getting for the demand for the apple watch. >> it seems good and it is early though and we don't have the ability to check that with the iphone itself. i am optimistic of the watch in general. the watch series three sold well

last year. they'll tell us specifically about the watch but they'll tell us about non-phones. >> jeffery kvaal talking apple this morning >> when we come back, we'll count down to the opening bell and take another look at the market here, nikkei over gain, three straight gains of 1% "squawk on the street" is back in a moment.

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about ten minutes before the opening bell here on wall street >> we are not seeing much of a bid today. >> well, it has been a tough year for that tradition because the market was way, way up, you may not be profitable. i think things don't work out too well this year i think that people will be coming more and more convinced that both sides in the u.s. china trade war needs a deal trump would love to get one before the election. i think he wants the get one from keeping this economy

moving particularly he's got to try to stay face and get it done. xi can't look like he's yielding to the united states >> a deal of what? a deal on ip nobody knows what the deal is. >> no, i think it would not be completely said. i think trump would be satisfied if he can improve the general deficit and china needs it because the whole basis of their growth militarily and everything else is the economy and they can't afford the risk. shanghai markets are up a couple of days ago. did you see risk appetite coming back a little bit and the bond yields we have the 7-yr above 10% and g

does it look like we dpgot some kind of a velocity there or the trading range stuff? >> we'll be waiting to see they could get an area of break out here pretty shortly. the initial response to an incremental move up which is what we have seen is that the financial tend to like it and the rest of the market is satisfied. i think it would pop too readily may spook the market everybody is into the fact that we'll get a rate increase next week and possibly, probably one in december. that's not 100% certain. it looks like it is going to be a series of rate hikes i think the market may want to rethink that >> so nothing in the bond yield moving higher that brightens >> not quite yet if they got above 3 a/24 perc3/t

then i would be concerned there. >> you mentioned financials, a bit of a lagger. >> you are right, we have seen a bit of a rotation here and the fang stock starting the look a little bruised and battered and facebook has been punched around pretty good. the financials are coming along and the regional banks were looking better yesterday's rally looked terrific price wise and the breath was -- >> jp morgan yesterday wrote a note arguing you should rotate out and take on the non-dollar assets is that a common view? >> it is a very uncommon view.

i think if you ask most guys out here of shifting a portfolio from that matter, you would get a u first. >> the point is that it is created by physical stimulus and we see both of those things coming off but you don't think that's a reason to start questioning where we are in u.s. stocks >> i am not entirely sure. i can't see that stocks away are that much better the emerging markets have not really stabilized yet. we have to wait and see what's going on we have trouble in some banks in india now. so, i think the emerging market would keep me worried here >> art cashin, great to see you. >> opening bell is just 5.5 >> opening bell is just 5.5 minutes away.

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on a busy wednesday morning. nikkei to a six-month high shanghai putting the back-to-back rally and as we continue to watch trade and cannabis we covered today and the president is heading to north carolina which we'll hear from in a moement, there is a look at the futures. >> the fact that you see the dollars coming off its highs show that there is not going to be this panic response at this stage. that to me is a biggest risk creating this global growth fear, china hard landing okay, we got past that, now where are we we are kind of hovering in zone right herine of a lot of push/pull. >> i think today you are talking

about the financials with the 10-yr at 3.50% and if the financial actually respond. this is their time to respond in terms of financial moving higher >> it should be although every time people got concerned of the yield curve between the 2-yr and the 10-yr. it is the over night rate against the 2-yr fed funds are going up by the end of the year and the 2-yr seems to be stuck here what does it mean? >> we are also watching netflix. fang was sort of challenged yesterday. the price is to $420 they say a number of other things to launch the recent hire of the former disn

disn disney exec as we are seeing netflix shares by 1 plus a percent. >> let's look at the opening bell here. at the big board celebrating acceleron over in the nasdaq melissa mentioned the price target hike of netflix up to 420 to 360 and the news that sky and netflix are joining forces to create a streaming package as we watch sky with a little bit of an interesting news. >> what's interesting as we talk so much of the coming sector shift that's going to create a new kind of communication service sector of the old and media. is a lot of the old media stocks and cable stocks have been beaten up. you see a lot of people

wondering when you have the sector and facebook and google are too much of it if it is going to flow into some of the others or suggest the whole ecosystem looks healthy right now. >> speaking of google and facebook amazon will be number three in the digital ad market in the united states, nowhere near 37% share for google or 21 for facebook 4% displaces for other company like oath had more consumer when they start a search for the product. don't go to google first they go strategy to amazon >> i do that >> you got all these third party sellers especially bidding higher for the key war >> it is interesting they're going to advertising and saying we can get you a hyper relevant set of eye balls. >> who's morree relevant

>> you get surveys and rankings of it being more and more relied on, the search particularly to purchase something, this is on the eve of jeff sessions meeting on a lot of the state attorney generals next week so whether or not the company is too big >> you remember mark mace note this week at citi that in the coming years, they should split. does it argue that you are breaking up between google and facebook with a powerful new entrance to advertising. it is a complicated question >> people are being receptive of banking with amazon. >> speaking of retail, we should mention this study which sees sales for the holiday. last year we did five for the entire holiday going into january. we are bringing you to about

$1.1 trillion in sales there is a separate study out. not clear if their methodology match up >> i feel like it is too early to talk about the holiday season i don't want to think about it but we are getting more and more analyst reports of the holiday season overall video game stocks, they're going to be really well set up for the holiday season already we are seeing the rush sort of positioning yourself ahead of the expected. >> less than 100 days. >> less than 50 days to the elections. that's within the market's attention span trying to figure out how things are going to go >> no more than 100. >> that's where nominal gdp is 5% is kind of what the economy is doing on the top line >> sure. >> you wonder with apple products with the asp everyone

higher, will that take a bigger bite of the holiday sales? >> right >> that every year and is apple robbing from the sales of sweaters and scooters because iphones are so expensive that's something we'll stoort thi start to think about and the asp is higher than what wall street is thinking. >> by the way, mike jack, he's going to transition next year. he was on "squawk" this morning. when do we get 30% of electrified part of the share of the market jackson repliied 10 or 20 years and how much of that is tesla and jackson answered that would be something the established dealer network autosector people are still having it out for tesla. >> i think it is hard for

anybody to use it in the autobusiness to think about it you are talking about company of individual plants that produce multiples of what tesla is struggling to do a dealer network is based on the financing. it is a different model all together i feel the mental adjustment is difficult to a direct soul and a strong brand name and limited spl supply right now >> we'll have more on tesla when kay kelly from the new york times joining us the stock is down by a % right n now. >> it is off the lows, it is down about half a percent. >> we'll continue to watch these cannabis names and with the caveat of their $20 million revenues you have to pay attention to that 34% gained >> there is a 2019 consensus

revenue for tilray >> how many am analysts are covering tilray? >> three >> exactly >> that goes to your lira point. there is so many thingsen known. >> exa >> reports of the new york post, that star board has taken a sizable position in the casino name along with a lot of the other activist investors out there. >> taking ting you to the presit speak to reporters a few moments ago before he heads to north carolina >> the rivers are cresting we'll say hello to the people who are working so hard and i think it will be an incredible day. we'll be coming back in about 6:00 or 7:00 tonight

well, it would seem that the fbi does not do that they investigated about six times before and it seems that they don't do that well, i would let the senators take their course and they're doing a good job they have given tremendous amount of time and they postponed the major hearing and really they're hurting somebody's life very badly it is very unfair i think as you know just brett kavanaugh has been treated very tough and his family it is a very unfair thing of what's going on. we'll see -- i do think this, they have given it a lot of time and really it is up to the senate i really rely on them. i think they're going to do a

good job i really want to see her i would want to see what she has to say i want to give it all the time they need, they have already given it time and delayed the major hearing. look, when i first decided to run, everybody said the single most important thing you do is the supreme court justice. we heard that many times before about a president. i would say this, i think he's an extraordinary man he's a man of great intellect as i have been telling you. he has an unblemished record this is a tough thing for thhim and his family we want to get it over with and at the same time we want to give it a tremendous amount of time if she shows up, that would be wonderful, if she does not show

up, that would be unfortunate. >> you don't have an attorney general? >> i am disappointed in the attorney general for a number of reasons. we have an attorney general, i am disappointed in the attorney general for many reasons and you understand that. we are looking at a lot of different things i have a great cabinet we have the greatest economy ever in the history of our country. we are happy with the way things are running generally speaking i don't think we ever had an economy like this. somebody from the reagan's white house says this is one of the greatest economy we are very happy. i can't hear you well, the fbi has been very involved and they know brett kavanaugh very well.

they have been investigating six times and investigated for this hearing. look, if she shows up and makes a credible showing, that'll be very interesting and we'll have to make a decision but i can only say that he's such an outstanding man, very hard for me to imagine that anything happened we had good news from north and south korea. they met and we had some great responses. i got a tremendous letter from kim jong-un, as you know it was delivered three day ago. we are making tremendous progress with respects to north korea. prior to becoming president, looks like we were going to war with north korea and now we have gotten a lot of progress and we got our prisoners back and our remains back they helicoptcontinue to come i

lot of tremendous things very importantly, no missiles testing and nuclear testings they want to put a bid for the olympics we have a lot of good things going. prior to my coming to office, a lot of people thought we were going, inevitable that we were going to war in north korea, and now with our relationships, at least on a personal basis, they are very good. it has very much calmed down >> we'll see what he's looking at he's calm and i am calm. we'll see what happens no, i am not because if he's honest and he is and i think he's going to tell -- as long as he tells the truth, it is 100% he was with ronald rye begeaganr

mccain or bob dole or many, many people that's what he did and paul manafort was with me for a short period of time he did a good job. i was happy with the job he did. i will tell you this, i believe that he'll tell the truth. if he tells the truth, no problem. i don't want to talk about it now. we want to be able to take what we can handle. well, i have to see what she has to say i have given her the a lot of time and the senators have given her a lot of time. we continue to give her a lot of team we held up the whole hearing what i don't like is that

senator feinstein had this letter for a period of like three months from july -- maybe even before that why didn't senator feinstein bring this up with judge brett kavanaugh. the democrats knew about the letter and she was showing it to democrats. why did they wait until everything is finished and bring it up. that does not look good. i will see you in north carolina thank you very much. >> that's the president on his way to north carolina. one of the questions about brett kavanaugh, the president says it is up to the senate how to handle the allegations and saying it is hard for me to imagine anything happened and referencing an interview that he gave to the hill about jeff sessions in which he told the hill i don't have an attorney general and reiterated that he's disappointed in the attorney

general for many reasons eamon javers is at the white house. >> good morning. the president is taking a two-prong strategy approach on the nomination of the supreme court. the white house insisted all week that what they want is this allegation of sexually assault to be thoroughly investigated for the accuser to have her opportunity to tell the story and the senate to take some time with this to get it right. they suggest they don't want to prejudge the situation they want to hear all the facts before the senate makes a decision that's one approach to it. the president simultaneously suggesting that he believes brett kavanaugh's denial here that he was ever involved in a sexually assault situation back in high school which he stands accused of the president is saying it is hard for me to imagine anything happened in terms of that sexually assault allegation. the president emphasizing how difficult this has been for kavanaugh and his family on the one hand, the white house

is taking a hands off approach saying this is up to the nate and nate -- senate and we want the process to run its course. the president is clearly signaling here that he supports brett kavanaugh and he believes his denial so far. >> we'll see what he says in north carolina busy day for the president when we come back, legal and financial pressure growing for tesla. new details of the investigation in the electric car maker and elon musk. as we go to break, take a look at the 10-yr at 3067 now and the dow crawls in 1% of its all times highs. we'll be back in a moment. this is john, and i'm with pactel cellular in los angeles.

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joining us to break all of that down kay kelly of "the new york times. >> great to see you. >> yes, what's the lead today? do you think it is about the subpoenas? >> the justice department inquiry is a significant development. the fact that the fcc investigation although civil and nature is seeming to be broader than people realized it is significant. goldman sachs and silver lake were advising and likely to be an investor. it is interesting they did not simply request the information because probably those players would have given over if asked the subpoena tells you there is

a degree of gravity there and i am speculating here maybe it made it easier to share the documents because they can say to musk that look, we have no choice. violated those agreements. >> exactly right so perhaps there were optics there, although i don't know how that message would have been conveyed to the s.e.c. or whether they deduced it. >> in terms of this inquiry broadening out, into what areas? is it a matter of timing and nature of the disclosures? does it stretch into other areas of corporate behavior and what musk has done? >> i asked this question when i was reporting the story and one thing i wondered about what was the that musk not only tweeted about funding secured when that wasn't nailed down but he tweeted about having advisers engage when they were not officially engaged was that a part of the

investigation? the answer is it maybe but it appears the s.e.c. is focused on the august 7 funding security tweet. there were to my understanding kind of more casual informal conversations going on with bankers and silver lake during that time period and afterwards. although the engagement of,say goldman sachs, did not happen until august 15 so my sense is that the s.e.c. investigators want to know what those advisers knew regarding that funding secured idea perhaps when they were engaged is also at issue but that's part of the broader question. >> i would think the civil case is a much lower bar than a criminal case being brought by the doj. the doj would have to prove something much more devious as opposed to just reckless. >> that's right. that would be my guess i should say at the "times" we have not said it's a criminal investigation in nature at the doj, although almost certainly it is. i don't know why they would open up a parallel civil case to what

the s.e.c. is doing. but you would think that the need to show intent to defraud or other breaking of the law in terms of putting the tweet together we've done reporting on it, we know there were conversations with the saudi sovereign wealth fund and good feelings about the point of investment. whether they wanted to take the whole company private or be a key player it seemed that weren't ready to go as musk telegraphed but thab they were interested there's a lot of gray there. >> interesting we had kimbal musk, board member, on the air he didn't seem terribly bothered investors don't seem bothered. >> the model three production numbers will be the most significant material event for that group that we'll see on october 30 when they talk about their third quarter.

but to our knowledge the board seems quite confident in musk. they shot down any idea he was going to take a leave of absence. even the search for a number two to help him out which we reported on, they have done reshuffling amid departures but the idea that they need a sheryl sandberg to come in seems to be quieted for now so i don't know if this investigation will shake that confidence. you would think they have to be talking about expanding the board, bringing on more independent directors, what they can do to help elon be more effective and less exhausted but it's not clear that's happening. i don't know. >> is there any way to say it's narrowly focused on musk's behavior in other words, the company itself is not under investigation. >> the company, the board and musk received subpoenas, we know that, as did goldman and silver lake and maybe others so i think

the company is going to be part of this investigation, senior executives, others that may have been part of that conversation with the saudi public investment fund, i don't know whether it was just musk or others as well so i'm sure that will be part of the examination so it will seem what his intention was will be the key questions. has to be one of the richest corporate stories right now just in terms of news there's a lot there. kate, thanks as we head to break, let's look at the vix, we are looking at the vix trading near four-week lows, 1197 is the current level. "squawk on the strt"ilbe rit ck ghbaphone rings ] [ client ] - hey maya. hey! you still thinking about opening your own shop? every day. i think there are some ways to help keep you on track. and closer to home. edward jones grew to a trillion dollars in assets under care, by thinking about your goals as much as you do.

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a road map starts with trade fears easing on wall street. boeing and goldman getting stocks a boost markets at session highs. the president travels to assess the damage from hurricane florence we'll take you live to north carolina this hour. and ten years after the financial crisis, an argument the next downturn could surprise us and watch the fed for the next trigger. with stocks at session highs, dow up triple digits, s&p 500 up straight. investors seem to be shrugging off trade concerns so let's bring in the senior global strategist at wells fargo and brian bellski, chief investment strategist scott, i'll start off with you we're watching the ten-year yield right now tick close to 3.07%. at what point in your view do you think we should start getting concern that this could be a head wind for markets >> it's crawled over 3%. our fixed income team is looking for three to three and a half at the end of the year so i don't think three was the line in the

sand a year and a half ago the market may have thought that. but if you really started to climb up over 3.25%, that might be a little bit of a head wind but the thing you have to think about it is interest rates are higher because we have only slightly higher inflation and better economic growth so it makes sense to me that the ten-year yield is higher. >> brian, we're making a lot out about investors breathing a sigh of relief over the trade skirmishes because china says it won't devalue the written writt -- renminbi, but do we have more certainty than we had 24 hours ago in terms of how far this goes >> yes and no, melissa i think the certainties and realities china really can't do anything have come to light and i think investors are embracing that and maybe understanding it because they heard it. we're in one of those needs with

respect to the market and nobody believes it until they see it and hear it, they think that's why stocks have rallied so strongly the majority of institutional investors were excessively negative in the third quarter, now they're chasing stocks at the end of the quart we are respect to performance and quite frankly that's still some near-term sometime of strategy we don't like but from a longer term perspective markets are still in their bull run and scott is spot on with respect to treasuries but we would caution people to not throw out a number and worry more about the tra secretary of interest rates and the economy and most importantly the trajectory of not only gdp growth but earnings growth. >> but decelerating. what about that, brian >> i would say this -- if you take a look at the numbers that -- on a trailing quarterly basis, carl, for the next four quarters, obviously you have

tougher comps relative to 2018, '18 versus '17 you had easier comps but at 1%, let's just say, back at the envelope where numbers are right now, that's roughly double average earnings growth since 1990. so i think people are making a mountain out of a molehill everybody is trying to pick the top. i think that's the wrong thing to be doing. i think we should be embracing double-digit growth and by the way we can make a case that double-digit earnings growth, let's say in the mid-teens, is too low because the majority of companies in america, especially from the industrial side, have not increased their cap x which we think is going to be a primary and major theme in 2019 and 2020. >> right one thing they've been spending money on instead is buybacks more money spent there than on cap x. does that flip >> carl, i have to agree with brian on this one as well. most companies just because the

tax rate has changed or the confidence is high, you don't frequently see companies just dive in and go on an all out cap x binge, they want to see sales growth which we have had good revenue growth i think it will continue to be good and that's what these companies need to see and i think what you'll see is cap x as we move through the balance of this year and next year you'll see that broaden out because remember companies didn't do much cap x for ten years so they need to catch up they're doing that but i think we'll get the incremental boost as revenue numbers continue to be good. >> just taking from your position here, the market itself in the last three months had taken on this defensive tone even though the indexes did really well. it seems maybe like in the last couple weeks that's releasing a little bit but if that were the case, we had the bank index up 1.5%, it

looks like it will get all its underperformance back in one day, but would you not think overseas markets have more power to recover towards the u.s. if in fact we have a safer picture? >> well, i think this, mike. i think the financial part of it is very important because we've been kind of speed dating financials, we haven't been committing to financials we bought them around the corner and sold them and now we're buying them because we need the performance with respect to portfolios i think there's dry powder overseas to come back to america because quite frankly global investors left the united states at the end of last year up 21% went to emerging markets in europe, they've lost elfa and the fundamental certainty is very ambiguous so the certainty and consistency of the u.s. earnings is a place to be so i would not be surprised if we see a continued meltup post-earnings and post the rhetoric and noise

after the midterm elections. >> guys, i'll leave it there thanks so much for joining us. scott wren, brian belski. the president goes to north carolina to assess the damage of hurricane florence more than 15,000 people remain in shelters, thousands without power remain across the state. seema modi is live in one hard hit community. good morning, seema. >> good morning, carl. the death toll increased to 37 the damage to homes, buildings and public infrastructure is extensive. the damage occurred on infrastructure costs has reached to 30 to $40 billion we are here in new bern, population of 30,000, this is the crown jewel, the county conference center which houses conferences, gal las, weddings and as you can see it suffered major wreckage and massive flooding here's pall krisby, what's the main task at hand?

>> we are working on drying the building main objectives are to take out any wet unsalvageable materials and get the place ready for reconstruction and a deep cleaning prior to getting them back in? >> how long until this conference center is fully operational? >> might be a month, month and a half we'll have it dried up and ready for reconstruction in two weeks. >> reporter: how is this damage compared to other hurricanes >> all of them are different but they've escaped a lot in downtown everything has wet basements and main floors but it will come back. >> reporter: thank you so much it's one of many centers across the region suffering from major flooding residents in north carolina anxiously awaiting president trump's arrival at cherry point just about 20 minutes away from here, become to you guys. >> seema, thank you very much. we'll await the president's arrival. when we come back, the continuing fallout from the federal probe of elon mucsk's going private tweet.

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shares are up fractionally phil lebeau joins with us the latest. >> they seem to have settled out after taking a hit in the middle of the day yesterday and trading down 3.5%. here is the latest in terms of the doj probe of tesla you saw kate kelly on about 15, 20 minutes ago talking about the fact that goldman and silver lake have been subpoenaed. the focus is on elon musk's tweet in august when he said thinking about taking the company private, funding secured. tesla said yesterday it has provided documents and went out of its way to say we don't believe this is a formal investigation, all by saying we haven't received a subpoena, elts but financial institutions dealing with elon musk are being questioned as well so when you look back to august 7, look how the stock has reacted since then and i've had a number of people who said how come this stock isn't further under pressure keep in mind, we're a week and a

half out before we get the q 3 delivery numbers and early indications is that they're likely to be better than people originally forecast so that is why you're seeing that support around that $285 level. >> phil, thanks. phil he bow in chicago. >> teen yea-- ten year's after leman's collapse, a new op-ed talks about how the next down turn will surprise us the author writes, quote, the trigger to watch is the united states federal reserve he joins us to talk about his piece. thanks for the time today. >> good to be back, thanks. >> we've had people worry about the levels of corporate debt and the face of rising rate environment. how is your argument different from that? >> the main point i'm making is that we're conditioned to

thinking that financial markets reflect the underlying economic reality. what i'm trying to say in this piece is that now the tail wags the dog. the size of global financial markets is 360% of global gdp and if you go back to the lehman episode i can argue that what was a garden variety housing crisis really became something bigger once the markets started to melt down so the entire point i'm trying to make is that the side of global markets or share of global gdp is larger and rather than thinking markets are reflecting economic reality, we have to take into account that financial markets are driving economic activity and if something happens to the financial markets, that blowback will be severe for the u.s. and global economy. >> so is it a recessionary call? if so, are you looking for a severe recession and when >> the idea is to say that any

time the fed starts raising interest rates, typically after about two or three years you need to be cautious. even in 2004 when the fed started raising interest rates some people found it cautious but it takes a while for this to play out in technical terms, once we get above the neutral grade on the fed funds rate, the risks certainly begin to increase. no economists thinks we'll have a recession before the end of 2020 i think the risks are going up over time and by next year when the real estate funds rate is above a hundred basis points the rinkings increase materially of something going wrong and the blowback comes from the financial markets not the other way around that something goes wrong in the economy and that affects the financial markets. i think it could work the other way around and it possibly did

even in 2008. >> so how will that recession compare to the last, then? >> the last recession i think was a 100-year flood so in terms of the fact that that is not the semi-plait we should look at we got a very severe recession but it's entirely possible to have a garden-variety recession as well going forward. the two main points i make in the on said is one that financial markets are so big that they are the one which is drive economic activity and the second point, the source of trouble is likely to come from somewhere else and not the place which has been regulated so everyone thinks that oh because the banks are more regulated, the housing market and household sector is in better shape, that's fine. that was the source of the 2008 recession. this time sources lie elsewhere. as you mentioned at the top of the program, it could possibly be the corporate bond market or even china i think the big increase in debt

globally which is taking place has taken place in china so those are the two places i'm watching out and the trigger is when the main central bank raises interest rates, typically when the real fed funds rate turns positive and becomes close to 100 odd basis points, that's when you end up getting problems for the global economy and financial markets which would possibly lead the next downturn. >> so next week the fed is almost certainly going to raise interest rates, put out a statement. chair powell will have a press conference how would you like to see the fedex press the possibility that they have to look at things differently? what perspective are you saying they should take right now in terms of how they behave and how they convey their intentions for the next few quarters? >> i mean, the slight good news is that both powell and some of his other members are beginning to talk about the fact that we need to look at financial stability much more. the fed's traditional mandate has been inflation

if you look at the previous downturn which have taken place in the u.s., they weren't an inflation problem so just saying that inflation is stable won't be enough. looking at financial stability, looking at asset price inflation very much in the mix has to be part of the fed framework. the current is the fact that because financial markets have become so big it's very difficult for them to start targeting financial markets from now onward but i think what i would like the fed to do much more is to acknowledge that asset price inflation is as insidious as consumer price inflation. that's the framework the fed has to move to and we're already seeing signs of that which should have been the case much earlier is the point i make in the op-ed given the fact that the last few recessions have been caused more by asset price deflation rather than something happening to consumer prices >> right not to throw a weird curveball, but do you believe that pockets of froth, as some argue in bitcoin, and today it's a lot about cannabis, have any

reflection on what -- the framework you're working on? >> yes, somewhat i think even the emerging markets selloff that we have seen it always happens that the weakest in the herd are the one which is first get taken out so i think we have already seen signs of that so that's very much part of my narrative. and the strongest get taken out much later so the fact that we're still seeing the emerging markets, seeing the argentina and turkeys get taken out, that is reflecting that we are at the mature stage of the global economic cycle, in particular to do with the fed's tightening and it always ends up three to four years after the fed tightens there are always dead bodies that float to the surface and i think we're seeing the signs of that, including what you suggested just now. >> ruchir, your piece gets a lot of attention today people should read it. appreciate you expanding on it on our air ruchir sharma of morgan stanley. >> thanks a lot.

goldman sachs moving to a session high in a report the bank is nearing a deal to spin off its simon app, the bank's latest bid to profit in its internal technology. the three-year-old online service sells complex financial products to retail investors the deal would value the app at roughly $100 million j.p. more gone, barleys, credit suisse, wells fargo and prudential are among the names in advanced talks the take place in this business we watch the shares up by 1.6%. >> goldman kind of trying to make some hay with this fintech revolution, create an industry utility, maybe, for this type of application. also reminds you of amazon, right? you have some kind of internally developed technology, let's see if it's a business so $100 million isn't moving the needle on an $8 billion. it's an interesting move. >> and they would argue they are an engineering company to a large degree and solomon just a couple weeks away from taking the helm. when we come back, morgan brennan with a big exclusive

with a lot of focus on space from investment to the military, the secretary of the air force, heather wilson, is with us at 11:00 a.m. eastern time. we'll get another check on the major averages dow getting support but the s&p has gone red and a lot of fang is in the reaseld wl. when you're on the course, nothing is predictable. that's why you have to be ready for anything. the same goes for your data. an apc micro data center solution orchestrated by the experts at cdw provides certainty that your critical infrastructure will deliver the performance you expect, and the ongoing support your business needs. so you're ready for anything. certainty when you need it by apc. it orchestration by cdw. adults are just kids with much, much better toys.

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time for our etf spotlight dominic chu is back at hc looking at what's riding tilray's new high. >> hard to come up with words that describe the kind of trading action we have seen in these cannabis-related stocks but no doubt marijuana-related issues are on a lot of radars today at least on cnbc.com, some top red stories are related to tilray after jim cramer's interview with tilray's ceo on "mad money" last night the massive upside move in tilray and other marijuana-related stocks are leading some to question whether a correction or worse is coming down the line. outside of those individual stocks or depository receipts of foreign companies traded in the u.s. there are not a lot of ways to take a view, positive or

negative one method being used is called the etf mg alternative harvest fund the ticker there, no surprise, mj it has around $600 million in asset according to the fund manager. tilray, canopy growth and kronos group are the three most heavily weighted stocks, each has a 10% weighting so far 39 stocks in the total portfolio. a key thing to keep in mind with volatile things like the cannabis ones and the ones tide to marijuana are technical factors like short covering or options-related expiration other activities could have a big effect on that price up or down a good idea to tread cautiously or seek the advice of a financial adviser before dipping your toes into these stocks. back over to you guys. >> interesting the commentary surrounding cannabis stocks is similar to what we saw in terms of bitcoin and carl had a good point on with our strategist,

that this might say something about the markets when we see markets close to record highs, we're seeing people stretch for these higher-valued -- perceived to be high growth pockets. >> not just that, melissa. i've been listening to your conversations and conversations that i've had with other market participants as well has likened it not only to the cryptocurrency bitcoin and that phenomenon we saw over the peak period last winter but in some ways to the dotcom boom back in the late 1990s and 2,000s with regard to companies. the expectations those companies can produce growth in some massive way. there are always fundamental drivers behind why stocks go higher but in this case here, i mean, within just about a month or so you look at the price action for these stocks, especially tilray, it's hard to say even the fundamental backers of marijuana and cannabis can't say this is a fundamentally driven price move, i don't believe anyway. >> dom, thanks, dom chu back at headquarters.

when we come back, china responding to the president's imposition of tariffs. we'll get you up to speed. plus, a new record showing amazon is the number three ad platform overtaking microsoft and thoa my name is chris hughes

and i am a certified arborist for pg&e. i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work, we work hard to protect the environment. getting the job done safely,

so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. so the environment is there for my kids and future generations. together, we're building a better california. good morning, everyone, i'm sue herera here's your cnbc news update at this hour. north korea says it will abolish its key missile facilities in the presence of foreign experts, a gesture likely aimed at reviving the faltering talks with washington. separately, kim jong-un has promised to visit seoul, that would make him the first north korean leader to visit the south korean capital since the peninsula was divided in 1945. sony is betting on a blast from the past. that company announcing a retro-style gaming console called the playstation classic

modeled after its original playstation. it will debut in december right before christmas at $100 and come pre-loaded with 20 games. united airlines overhauling the boarding process to make the gate area less congested the airline is reducing boarding lines from five to two and urging travelers to wait until their boarding group is called to line up and j.d. power is out with its airport satisfaction study the best overall rating went to california's john wayne airport, it serves orange county, california it edged out the buffalo niagra international airport. the worst airport in north america? you guessed it new york's laguardia second-lowest, right in our backyard, new jersey's newark liberty. though i have to say it's getting better that's the news update guys, back down to you carl. >> surprising no one, sue. thank you very much. >> exactly, right? >> sue herera. welcome back to "squawk on the street," i'm carl quintinilla along with melissa

lee and mike santoli the dow is up 147 but a lot of actions centered along the dow industrials. china's prime minister out today defending the world trade order and slamming unilateral moves to change it. eunice yoon has more >> reporter: china's premier spoke at the world economic forum today. he didn't directly address the escalating trade war with the united states or even mention president trump's name instead he referenced concerns of rising protectionism and repeated china's promises to open up the economy and give foreign investors fair treatment. on the currency, li said china would not actively weaken the yuan to help exporters or engage in competitive currency devaluations but would keep the yuan stable. what was also missing was any recognition of china's contribution to the rising protectionism among its trading partners the state media had its typical

strident response saying china will outlast the tariff war, emerge stronger, and it's not afraid of president trump's, what they called, extreme measures one commentary in the communist party run people's daily argued that president trump's trade action doesn't necessarily impede china's own economic agenda the people's daily said china will instead use the trade dispute as an opportunity to replace imports, promote localization, or develop export-oriented advanced manufacturing. what often gets lost in who wins or loses a trade war is that a big part of china's made in china 2025 strategy is to develop its own home-grown technologies and industries and to rely less on foreign technologies so that's what the piece is highlighting, that china could be better off in the long run because it wants to develop its own technologies for the future. eunice yoon, cnbc business news, beijing. >> eunice, thank you for that. certainly no doubt about their

aspirations. problem is, at what point are they able to make their own 7:37 better than boeing's >> they have made a plane. i don't know if it's better than boeing. >> that's the key. >> that's to be seen certainly and investments in the chin sector and technology is going alibaba said they are making ai chips for cloud computing and that is a push to alleviate or reduce reliance on foreign-made chips. that's what jack ma said four months ago as the company was ramping up its investments in chip makers specifically we don't want to depend on the u.s. what if they stop selling. >> andwhat degree can the old tools of stimulating the economy buffer whatever export slowdown is there. that's where the market fixates. is china okay? does it look wobbly or not therefore markets can be okay. we also have to kind of get to this point of feeling like, you

know, the whole trade issue can add friction to global supply chains it can be a net negative maybe it will create pockets of inflation and all those things can be true and still not be that big a deal. it can be something absorbed >> absolutely. certainly that's the hope among some. speaking of china and alibaba as melissa said, it was four years ago today that alibaba made its wall street debut at the big board, the chinese e-commerce giant led by ma went public with what became the largest ipo in history, $25 billion. back then, he joined us at post nine and talked about his vision for the company. >> we hope in next 15 years the world changes because of us. we want to be bigger than walmart, we want to be bigger -- it's not the size. we want to learn from walmart. they changed the business last century. and we hope 15 years later they say this is a company like microsoft, like ibm, like walmart. they change.

>> alibaba has more than doubled its ipo price of $60 a share market cap of $400 billion, that's above walmart's $280 billion although we know what happened to the share price since the middle 60 the summer. >> more than 20% off its high but, you know, also maybe half the way to microsoft if you're looking at market cap benchmarks. >> microsoft is an interesting comparison to make but for him to say ibm at the time you have to wonder if you could take that back at that point and say we want to be a company like amazon because certainly they are increasingly more along the profiles of an amazon with their video, with their cloud services, et cetera. >> and interestingly, from day one, tremendous skepticism about the model, about the financials, about the reported numbers, all of it and it hasn't impeded the wealth creation, the growth and value of it. >> all the complaints about transparency andboard structure. we get a fresh chinese ipo here at the big board

xyf, x financials at 65% at the opening. if cramer were here his point would be if you want to take the trade war up a notch, you would put lifts on the chinese's ability to go public in this country. >> we get a report on ten cent reducing the size of its planned music ipo in new york? meanwhile, the president arrives at the marine corps air station at cherry point. he's going to spend the day surveying the damage from hurricane florence state officials say more than 15,000 people remain in shelters thousands or more still without power and that is six days after florence made landfall and still not until -- we still are expecting some rivers to crest as late as this weekend. we'll get you any development there is as the president arrives. dow is up 150.

one unlikely dow stock is soaring in the face of a brewing trade war. we'll tell you the name and how

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the president arriving at the marine corps air station at cherry point in north carolina he's scheduled to spend the day surveying the damage if hurricane florence and we expect to hear from him shortly he made remarks to reporters before he left the white house eamon javers and john harwood in washington watching as we watch to see his comments on whether it's kavanaugh or north korea/south korea or the actual recovery from florence itself. >> that's right. the president appeared in a conversational mood as he left the white house taking requests from reporters on the south lawn here we'll see a very different phase of the presidency. he has two jobs. he is the executive in charge of the federal government's response to the hurricane so there is a tactical and practical component to this in

terms of meeting with the officials on the ground or handling the conditions to the hurricane. this is a job for the president in terms of showing empathy and emotion and relating to people who have been victimized by the hurricane. people who have had a very, very tough week and they would like to hear from their president so there's an emotional component to this and also a logistical and tactical component and the president will have the opportunity to demonstrate both sets of skills here today, carl. >> mark mizjak served as the shelter director at fema thank you for your time. >> glad to be here. >> we've had a couple days to survey the flooding and response what kind of grade would you give the government? >> i will say the federal government's response has been strong we were lucky in regards to the fact that wind damage was reduce

bud all the things redetectived about inland flooding was significant but fema has showed up in force, national guard, corps of engineers, swift water rescue teams and state and local responses have been tremendous competent. >> and there are real lessons learned in what happened in fema recognizing supply chain logistics are very important. >> fema has a learning organization they pride themselves on taking lessons learned from every event they interacted with and they understand the sensitivities regarding the supply chain issued they had on the island to be fair it's not the same of event. island challenges are different than those in the continental united states but we've heard no complaints about lack of life sustaining supplies. >> ands where the process at now? i guess if you're quarterbacking

the response at this stage, you said it mostly had the impact we expected but what are the main fronts you think are trying to be found >> ongoing now will be a lot of damage assessment to be able to fine tune what programs are offered to help communities and individuals recover from the event so certainly damage assessment as well as moving into the recovery stage. getting people into more sustainable housing solutions and looking at what that path forward is to what is the new normal in north carolina, south carolina and certainly potentially virginia and even pennsylvania. >> what could the housing solutions be, mark this is an area that has many, many single family homes, more so than apartment complex which is would have been more suitable to perhaps sustain the damages from the hurricane and house people in a dense area.

>> fema's programs are flexible to begin with based on the authorities in the stafford act. they have become increasingly more flexible both after hurricane sandy and in the 2017 season in addition to normal financial assistance for rental assistance while a home is being made habitable, they have a capped dollar amount to make repairs to the home itself. so there are some of the no non-financial forms of assistance always available, whether mobile homes or travel trailers but you'll see a lot of pushes for people getting to a sustainable form of housing sooner and i think those kind of sweep repair programs are a big step in that direction. >> interesting john harwood joins us as well. how does the response to florence coincide with other

elements on his agenda like trade, the economy, national security and this week potential changes to the judiciary >> i think the kavanaugh issue is uppermost in the president's mind in terms of those other agenda items right now because he has this issue of the allegation, whether or not there's going to be an fbi investigation, whether or not christine -- dr. ford is going to testify before the judiciary committee on monday, whether brett kavanaugh will, all of that is something that the administration is trying to salvage. the president this morning repeated his belief that brett kavanaugh is a good man who doesn't deserve what's going on and that he wants to hear from the accuser, very challenging for senate republicans as you noted, the turmoil surrounding trade conflict with china is something that has the

potential to roil markets even though it hasn't done so already. >> john and mark, we expect the president to make some remarks we'll take a short break and try to bring tse thoo you in full in a couple moments dow is up 183. your muscles look good, but we should be seeing more range of motion.

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work and that great ability.

we're joined also by secretary neils neilsen, director mulvaney and fema administrator long. administrator, great job the planning that went into this is beyond belief so i just want to thank i also want to thank some great friends of mine and very talented people that love this state. they love all our states, i think we can say, and that's senator richard burr, where's richard? thank you very much. you have great representatives senator thom tillis, thank you where's thom thank you, thom. lindsey graham lindsey? what happened? oh, look at lindsey. lindsey, do you want to pull up a chair? what happened to you

come on, pull up a chair, but lindsey has been great and tim scott. where's tim? i don't know, i feel and we've had a lot of help from congress in all fairness we're ready and they're ready to do whatever we have to do to make this perfect and that means unfortunately the money will be a lot, but it's going to come as fast as you need it. we're going to take care of everybody. hurricane florence was one of the most powerful storms ever to hit the carolinas, one of the most powerful and devastating storms ever to hit our country to the families who have lost loved ones, america grieves with you and our hearts break for you. god bless you. we will never forget your loss we will never leave your side.

we're with you all the way to all those impacted by this terrible storm, our entire american family is with you and ready to help. you will recover most importantly we give thanks to the incredible first responders, including sheriffs, police officers, firefighters, our great cajun navy they're all over the place i put them -- i put them up online and everybody loved them. everybody loved it but they put themselves, all of them, in harm's way. and what they have done to save precious lives of our citizens has been nothing short of incredible nearly 20,000 federal and military personnelare supporting the response efforts along with southeast coast, including brave men and women of north carolina and the national guard. now, of course we're going to south carolina right after this

and they have been incredible. i know you've worked and coordinated very well also, governor, with south carolina. that's been a really great partnership. together with state and local first responders, they have assisted and rescued more than 3,000 people, so we want to thank you. i will say i've been watching the coast guard with all of the helicopters lifting people off rooftops it's been an incredible job you've done again. we appreciate it thank you very much. more than 1.6 million meals have been delivered to north carolina and more than 400,000 are ready in south carolina as soon as they are requested so we're standing by with 400,000 meals in south carolina. crews have restored power to over 1.2 million customers already in north and south carolina and the power is starting to go on as soon as the water goes down. they're meeting the demand incredibly well, so i want to

thank the power companies and all of the federal workers, but we have to also thank some of the power companies because they have been very responsive. as soon as that water goes down, for the most part people have power. in moments of despair, we witnessed the true character of the american people. so true. citizens all across our country rally together to rescue the stranded, to protect the innocent, and to restore hope to families who have experienced tremendous and unbearable loss i want to thank all of the people here today, a very special group of people, a very talented group of people and we love working with you it's an honor to work with you we've done a real job and we've got to continue to do that real job because another phase is coming in right now and we're going to meet that phase just like we met phase one. so, governor, again, thank you

very much. i appreciate it. and to everybody, thank you very much and whatever we have to do at the federal level, we will be there, and you know that 100%. secretary nielsen, please. >> first i wanted to start by thanking you with your leadership things you've done so quickly to respond -- >> there's the president in north carolina talking about the recovery to hurricane florence keeping it pretty straight eamon javers, anything you heard in there >> reporter: the president is making the case these people have had a very tough week but praising the first responders and local political officials for their response in handling the storm which obviously could have been much worse in terms of damage, human and propertywise the president is going to south carolina he said after this, but what we don't know actually is what the president is going to be doing the rest of the day we know he's going to be on the ground there for a while and you see kirstjen nielsen, brock long, the fema administrator with the president now we assume he'll be with some of

those officials the rest of the day. he'll be making some other stops but we don't know what those stops will be. obviously there are two tracks here one is to organize and command the response from the federal government side and then also to meet with some of the people who have been affected by the storm, some of the human tragedy that's impacted this area i think you can expect to see the president do some of that later today, but we don't know exactly where he's going after he leaves this marine air station. >> john harwood, what did you make of the president's comments >> well, he's plainly concerned. he showed that in tweets last evening about the perception that his administration is on top of this. he sent out a couple of tweets last night saying we've done a great job, but the democrats are going to lie about what we did and try to paint it as a disaster he's feeling the effects of some of the coverage of hurricane maria last year that affected puerto rico so negatively, so he's trying to establish, no,

we're doing a good job this time interestingly, in north carolina, it's a democratic governor and so he walked alongside the democratic governor, roy cooper, as he left air force one and went to this event and praised governor cooper in his remarks. so he's looking to make sure nobody gets the impression that the administration has come up short. >> john, obviously we'll listen for any more developments out of the president's -- in his words and his actions as we continue to watch not just the recovery but the damage -- estimates to the damage which have sort of been all over the map. some have tried to calculate the damage from florence as exceeding that of katrina or harvey, but it will take weeks or months to put a final tally on the replacement cycle for cars we've already talked about ag today. but hurricanes are always an economic event usually hurting gdp in the beginning but then stimulating activity in the wake of it

the dow is up 175. "squawk alley" starts in a couple of minutes.

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good morning it's 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ good wednesday morning welcome to "squawk alley." the market is up 167