october, only four months are the eyes on the 15th the middle day ides of october. 2018 "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. take a look at u.s. equity futures. we are seeing red arrows dow futures down by 105 points right now. s&p futures indicated to open 13 nasdaq off by another 60 points. this comes after the worst weekly declines we've seen ford dow, s&p 500 and nasdaq since march last week. we did see some strong gains on friday but that was not enough to make up for what we had seen earlier in the week. right now you're looking at the

s&p 500 and the dow down 6%. nasdaq is off by 8%. if you look at the russell 2000, it is firmly in correction territory. still down 11% from the highs that it set back in august. take a look at what happened overnight in asia. additional pressure there as well shanghai composite down by 1.5%. stocks in hong kong, the hang seng down by 1 1/3%. nikkei down by almost 1.9% also if you look at what's happening in some of the early trading taking place in europe now, a mixed picture there dax and germany up by 1/3 of a percentage point the cac is slightly lower. ftse is relatively flat. italy a little higher and spain is flat, too take a look at treasury yields this morning last year the ten-year treasury ended the week at 3.14%. sitting just above that that yield at 3.152%. the big bankruptcy news of the morning. sears holding, parent company of sears and k-mart, filing for

chapter 11 this morning succumbing to a mountain of debt and failure to adapt to a retail changing landscape they faced $143 million debt payment today. sears will close 142 money losing stores. that's going to happen by the end of the year with liquidation sales expected to begin soon that's in addition to the 46 stores that are expected to be shut by next month the company has roughly 700 sears and k-mart stores and employees, about 70,000 people sears controlling shareholder eddie lampert will step down and his hedge fund esl investments is in talks to provide $300 million worth of investing in a statement lampert says he will continue for sears to emerge from bankruptcy stronger saying everything i have done as an investor has been with the goal of helping the company and the people succeed sears stock down 10% in the

premarket. fallen 90% this year sad story. the company's market cap below $50 million. i remember when eddie lampert was, a, on the cover of "business week magazine. i remember when sears merged with k-mart. if he was a genius, he had a plan at the time, look at the stories, the headlines it was extraordinary i'm not sure there was ever a plan. >> no one said sears and k-mart? i mean -- >> the whole -- >> jumping together? >> even for the last decade i think there's been this stance among investors that there's some strategy here that we're missing. >> i think it's been a while. >> what does that say about k-mart. >> what do they say about k-mart >> rain man? >> no, i don't think anyone thought, wow, what a merger of great retailers. it was going to always be a struggle and it never -- i don't

know if there was an answer. i remember so long ago, you remember martinez. he came in and tried to -- he did for a while. >> did okay for a while. even jcpenney, these legacy retailers, especially -- bad enough just in the general world of other retailers versus the other ones and then you throw amazon in. >> the bigger problem with this sears story, the bigger implications, what are going to happen to any of the b and c level malls that have sears as their main anchor tenant when you lose an anchor tenant you lose 25 to 30% of your traffic. you are talking about more malls, more stores, more communities that are going to be impacted beyond the sears company itself again, 700 stores. i think eddie lampert thinks that would be incredible.

>> wasn't it a real estate play for him? >> a lot of the real estate has been unloaded to seratage. >> the real estate had sears stores built on it k-mart, back then it was a race to the bottom. where would you rather go five or ten years ago, would you say i'm going to sears or k-mart. >> k-mart had a worse reputation, too. >> the technology, i mean, if you looked back at any of their cash registers, even a few years ago they were still using cash registers from the 1980s sears at least had some power brands they've owned many are being siphoned off. >> the only guy that did like k-mart was rain man. >> and then we found out from tom cruise that it wasn't a great place. place to buy underwear. >> hanes. >> hanes 34. >> gone the same way as k-mart >> news in the biggest defense merger ever, harris corp and l3 merging in a $15 billion deal topping the boeing/mcdonnell

douglas merger in 1997 which is interesting because it must have been in 1997 dollars because it seemed like that would be a much bigger deal. hai harrison going to pay around the journal acts like it makes perfect sense and we're dealing with strong defense budgets. if we were cutting back on defense they would be merging to deal with the smaller budgets. so it works either way, right? what is the rationale for this because now things are flush in the defense sector so now it makes sense to get together? or do they get together when -- >> ahead of. >> for rationalization. >> it's an all stock deal. >> just the way rephrased it this one they're getting together because it's -- >> strong environment. >> strong environment versus --

so it works. you can see the investment bankers. i think they -- >> keeping it going? >> yeah. investment bankers, oh, yeah, you've got to merge. business is terrible business is great. you've got more coming you have a lot going on with this. >> i do. i have a lot of things going on. i want to bring you breaking news right now larry fink, the latest executive of black rock -- >> he's late. >> -- pulling out of the conference at -- that's scheduled for next week in saudi arabia larry fink joining jamie dimon of jpmorgan who announced last night that he would be canceling his trip this all because of the disappearance and reported death of jamal khashoggi bill ford said they wouldn't attend this is after the gentleman from uber said he wouldn't attend and a number of media organizations. we talked about my own trey

trevails hadley gamble joins us. >> reporter: it's been a rapidly moving 24 hours from riyadh. the message finally seems to be that the kingdom refuses to be bullied. this response was in part not just tot disappearance of jamal khashoggi but it was also directed at president trump saying there could be serious repercussions if the kingdom is found to have been involved in the disappearance of mr. khashoggi. in a statement that came out and said if any actions weren, there would be retaliatory they said they appreciate that the united states and other allies have been understanding about the need for a thorough investigation into the disappearance of mr. khashoggi, but of course we have seen the kingdom largely silent over the last two weeks that's had major repercussions

for the markets. yesterday the saudi to dowel was off. it closed down 3.5%. it's made back some losses but this has had, of course, implications for oil we've seen the oil at 1% it's m a major impact on what's going to happen in a few days with this davos in the desert. we've seen several international ceos deciding with the ceo of ford and uber as well. as i say, in the last 24 hours at least some movement in terms of trying to address the situation. >> hadley gamble in riyadh this morning, guys. i spent the week end on the telephone, lots of communications between a number of executives. larry fink, jamie dimon and steve schwartzman tried to find a way to either effectively have this event canceled or

postponed. they reached out to steven mnuchin, the treasury secretary at one point they reached out to the head of pif, the head of the public investment fund to say, look it's going to be putting us in this very complicated discussion it's like a saudi standoff my understanding is according to sources larry fink had called saudi yesterday and said we plan to pull out. in fact, my understanding is all three were going to pull out together we're still waiting on steven schwartzman. the idea was to give them 12 hours to postpone it they, of course, have not done that, at least as of yet we'll see if they ultimately do that there's a question of who's

supposed to take leadership. whether steven mnuchin could have said his attendance was conditional. that gives u.s. companies guidance and direction n. this case none of that happened. >> what was mnuchin's response over the weekend he was here on "squawk box" on friday and said at that point unless other developments kind of came his way, he would still plan on going. >> he continued with that through last evening it has been diluted a bit. we should also say christine lagarde commented on this. >> from the imf. >> she said part of her job and responsibility she felt was to go pulled out. >> she might have it

the idea that they're put into the position of dare i say moral leadership or if you want to call it in a vacuum in washington the president did have some tough language in a "60 minutes" interview on saudi arabia and what's happening there i want you to listen to it. >> i think the imf is still in there. >> they're still in there. listen to what trump had to say. frump made these comments, taped, i think, on thursday. this is rf olicking the people of saudi arabia. >> what are your options let's say they did, what are your options would you consider imposing sanctions as a bipartisan group of senators can propose? >> it depends on what the sanction is. i'll give you an example they are ordering military weapons. everybody in the world wanted that order russia wanted it, china wanted it, we wanted it we got it. >> so would you cut that off >> well, i'll tell you what i don't want to do

boeing, lockheed, raytheon, all these companies, i don't want to hurt jobs. i don't want to lose an order like that. there are other ways of punishing, to use a word that's a pretty harsh word, but it's true. >> tell everybody what's at stake here you know -- >> be well, there's a lot at stake. there's a lot at stake and maybe especially so because this man was a reporter something you'll be surprised to hear me say that, something really terrible and disgusting about that if that were the case so we're going to have to see. we're going to get to the bottom of it and there will be severe punishment >> and, of course, saudi arabia coming out with a statement after that segment ran before the segment ran because some of the clips have run before saying they would put things into perspective. it puts jamie diamond in a

difficult place. jamie dimon has 80 employees in that country currently blackrock manages an enormous amount of money for the country, the same thing with these stones some people say this whole thing is hypocritical. clearly u.s. companies have, done business before >> this is so overt ly obvious in turkey we know what goes on we understand. if you saw the interview last night, lesley stahl read a complete list of things kim jong-un has done in the last five years for the gotcha part of that interview with how you could say that you love kim

jong-un. she was very effective >> i apologize sources telling us that steven schwartzman has now officially canceled his trip. steven schwartzman, jamie dimon. >> when i look to see the market implications i went to market watch. first i thought, okay, let's hype this. call of the day, don't rule out $400 a barrel oil. i looked to see if this was a journalist saying it it's not they're citing the general manager. don't rule out 1 to 200, then they doubled it to put 400 so it could be in the headline for market watch which is the way things work. where are we today

>> that would be their effective lever. who's got the tapes? now i'm hearing people have heard the tapes -- or have heard people who have heard the tapes but no one's actually heard the tapes. is it a -- an abduction gone wrong? were they sent there to hit the guy? we don't know anything at this point. >> we don't know that's the thing that has made it difficult for all of these executives because here's people that say innocent until proven guilty. do you want to wait for the answer you're back. it was guilty until proven innocent we changed that for you guys but for the saudis -- they don't even live here and you're giving them the --

>> make up your mind make up your mind. >> here's the question put aside the ceos the question is what's the u.s. government supposed to do. it's complicated. >> no, it isn't. trump was actually right about boeing, lockheed jobs, all of that u.s. interests, to have a foil against -- iran we know we don't like some of the stuff. >> but it's just the latest in a series of things that saudi arabia has done. they probably thought they could do this without a response. >> now i'm seeing in hindsight and they're pointing out the other side >> this very same conference last year within a week or two of you leave. >> 100%. >> cut up and put in a suitcase with a bone saw. >> i think people have turned a

blind eye to the golden sword. >> there were 19 hijackers where do you think they were from the oil that -- the sword of damaclese that hangs over our head has always been us. we always look the other way. >> you remember when the crown prince came to the united states he was vetted by all of these things clearly at least as of now, we don't know the details of where it will land, the question i have is these ceos are having to step up and make their own sort of moral decisions and then the question is, what's the -- are they the representative of american values? is the president supposed to be? what is supposed to happen >> see what happens as we get a little more. >> the rule of law and the way we do things here, it's not like

that everywhere else putin, yeah, but but. yeah, okay, i didn't like that guy. or kim jong-un, his brother or brother-in-law, fed to the dogs. >> his uncle. >> whatever. but you know what i mean and the human -- the things that go on still in this world in the 21st -- is it the 21st century, is that where we're at >> yes. breaking news developing dell technologies carl icahn he has an 8.3% stake in shares that track dell's investment in vm wear. he's urging -- it currently sells for $94 a share but it's worth 144. dell's proposed pieout would be occurring at what he calls bargain basement prices. he's at it again >> uh-huh.

>> the original terms of the transaction viewed $900. how are you, eamon >> i'm good, becky lesley stahl asked him where he's going with his china trade agenda and whether or not with these tariffs that he's put in place he's trying to push the chinese into a depression. hear what the president said >> i told president xi we cannot continue to have china take $500 billion a year out of the united states in the form of trade and other things so far i put 25% on steel dumping and aluminum dumping >> but they've retaliated. >> they can retaliate.

they don't have enough ammunition to retaliate. we do $100 billion with them they do $531 billion with us although they're down 32% in four months, which is 1929. >> that's what i'm asking. >> no, i don't want that i want them to negotiate a fair deal for us. i want -- we checked the shanghai index, guys don't find any indexes that are down 32% in four months as the president said the chinese market is down over the year relatively significantly. also the president was asked that, he resisted given examples of mistakes. he did say his key mistake was not starting the trade did he have silt. he said he should have gotten

started earlier on but he was taking time to get to know some of the leaders the president in a reflective mood and combative reflective mood it was a big mistake i made near term. >> i think the presidency has an opportunity for him to be on the broadcast networks he's been taking a lot of questions. >> i know that i actually think he did end up looking good compared to the condescending, prosecutorial style of the interviewer let's talk more about the markets and economy. joining us, chris retzler. scott brown, chief economist at raymond james. scott, start with you to get an overall. small caps, needham, going to live in that micro universe that we're going to get to in a

second overall down again this morning. do you think it's a week like lars week. we've gone true a period of low volatility in the markets. typically that ends with a period of turmoil where you get some readjustment, a lot of back and forth. there is the fear of the future. what's causing the downturn? it's not really anything but it's everything. there's a whole launtd dri list of concerns about the economy. it's fear of the future even though everything looks good. >> people pointed out that last week could either be seen as the

beginning of something significant in terms of the market pulling back or it could be towards the end of what we're seeing as far as the stealth selloff. 5% in two days in the dow will get your attention what was it, 4% for the week total? those are small numbers still. we get a lot of bang for our buck now in terms of ringing outcome place sense si because a thousand points used to send like a lot now it's 3 or 4%. >> the strange thing, i get calls about the recession. part of that is you have to have some news to report. we were going to get this back and forth where the numbers still look pretty good the economy still looks pretty good in the second half of this year there's that worry off and on about what's going to happen 2019. >> we have nothing to fear but fear itself?

shnchts something like that. year' never due for a recession. the fact that the expansion has been long doesn't mean we're due. if enough people believe we will have one it could become self-fulfilling. >> small caps gave us an indication of what was coming last night. >> well, we always get ikts sited. they're the customers and partners of small caps what we're going to listen to from ceos is their perspectives, their investments and what they're going to do which should then help the small cap area one area is the high yield it hasn't completely lapped. which right now we think is quite healthy. we also agree, we don't see a

recession on the horizon >> i thought this was supposed to be the year for the small caps if you're having concerns about trade and a lot of these other issues, these would be the companies that would be immune from that. >> one would think so. what we've also seen is the fed while raising rates has been allowing volatility to come back into the marketplace thereby pes are being compressed and that's masking some of the underlying growth that we're getting from tax reform and other deregulation which we think will benefit companies, have a tail wind maybe not as much as we saw in the first half of this year. we have a very pro business administration that we think is going to continue into next year. >> probably. >> don't know what's going to happen in congress. >> right >> but we'll have a strong leader. >> 80% 80%. >> 80% that republicans keep the house.

80% -- >> if you take the house there's not a lot -- you can do a lot of investigating. don't really do anything >> no. >> nothing happens but nothing gets reversed either. >> executive orders like the last guy used. >> yeah. yeah he lived by the sword. live by the pen, die by the pen. sorkin, the public prosecute ore see who's responsible here how did you investigate something that you might have theoretically -- >> i mean, do you take it seriously? usually there's phone calls. >> all of the conversations i've had both with business executives and our own political leaders think there's going to be i don't want to say a white wash but some effort to come up with a story that somehow protects the crown prince. >> we're going to talk more about this in a moment these developments with michelle caruso carrera

she'll be joining us right here on set [ upbeat music ]

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steven schwartzman of blackstone have pulled out of the saudi futures investment conference. it's a big deal because there effectively was a standoff over the weekend between those gentlemen along with jamie dimon who also dropped out last night about whether they were going to go, what it's going to mean between the relationship between those companies and the united states -- rather, those companies and saudi arabia as well as the country, the united states and saudi arabia, so a lot going on. >> joining us to talk about it all is michelle caruso-cabrera this has been a slow motion kind of issue to watch and see the fallout from it all. >> yeah. it's very interesting to see all of it. my immediate reaction is they've always been terrible human rights abusers in saudi arabia, right? it was this that pushed everyone too far but, remember, they have executed many, many people for reasons that are not clear to anybody.

there are women dissidents who are in prison in the wake of the protests last year or what they claim were protests who were pushing for women to be able to drive. i mean, there's so many things the u.s. historically has done a lot of business relations with human rights abusers we do business in china. >> which is why this may come as a huge surprise. >> exactly think of all of the things he's done already if this is, indeed, true, he takes the prime minister of lebanon, kidnaps him, puts him on national television and forces him to resign he puts these women in prison. he's done all kinds of things so why wouldn't he think if, indeed, he and the country are responsible for this that he couldn't do this >> why >> i think it's because we have a very high regard for journalists in this country. some people may not believe that, but we are protected by the first amendment. we beat out guns, right?

and journalists are held in a different regard in other countries. also, he's not quite a full journalist, right? he was very connected with the previous regime, previous power structure in the country you could say he worked possibly as a spy i mean, it's a little more ambiguous than what you and i -- what i used to full-time think about davos in the -- you know what we do in davos the implications from a business peck spekttive on a jpmorgan, bla blackrock, blackstone, do they look at this and say, i can't do business with these people anymore? if everybody drops out of -- this has been a show of power, who has the power. >> right. >> that's what this is about,

it's a demonstration of power. so what happens next given the statements that he made just over the weekend related to the comments that president trump made and saying that he would retaliate himself if we, for example, were to put tariffs on that country >> so i think that the saudis for years are used to getting what they want because they have so much money, right and so you put up with a lot a lot of these individuals have probably put up with a lot i would think that a lot of these individuals are relieved to not be going because i don't know what your experience is in the last year, andrew, but they're always incredibly late they rearrange things 10,000 times. they expect you to bow down to them no matter what's going to happen because they have so much money, because the prince is going to be in town so now they have -- wow, we don't have to go to this thing, which maybe is a complete and total farce

when you sit there and listen to these panels about how the government is going to grow this huge city in the desert from scratch. most of these guys internally roll their eyes and say, please, give me a break. >> how do we approach this as a country in terms of, you know, our strategic interests at least. iraq -- >> iran. >> iran and -- >> that's a very different question than what he asked. >> and also in terms of, you know, you heard -- i mean, trump's very honest talking about the impact that other people wanted to sell. isn't it $200 billion -- and it's not about money but it's about our interests in the middle east. >> right. >> and who's -- how do you pick who's worse in terms of human rights abuses? >> so you're asking me a completely different question. andrew asked me -- >> you've got to pick someone. >> i know. i get that what's in the best interests of the united states. that is why i think thus far

steven mnuchin has not pulled out because it's a much more ambiguous question, right? the u.s. government has allies that are human rights abusers, that's the fact of the matter, right? >> right >> who are you going to, quote, unquote, do business with in terms of this administration has made a choice. do we prefer saudi arabia over iran the previous administration chose iran over saudi arabia. >> the question is why this one event has -- >> i'm curious as well. >> a crucible for what side you're on. >> timing. i'm curious as well because there's a list of human rights abuses with this country, right? >> yes >> and others. >> oh, yeah. yeah absolutely that we court. that we are very willing to do business with. >> not everybody is -- not everybody is davos minded. >> even the davos people aren't davos minded. >> while we're there, they are while we're there they are it's very -- we're very global

and all of the current thinking and renaissance people they do. >> thank you. >> michelle, thank you >> davos man. >> a seat back at the table. davos man in the snow, not the deserts. meanwhile, when we come back get ready for the trading day ahead. we have a look at the market, plus, shoe start up allbirds has a new round of funding the ceo is going to join us next each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

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bank earnings are on deck. we are expecting bank of america to report in the next few minutes. we'll bring you the numbers and the reaction on wall street. when it comes to data, we'll be getting september reads at 8:30 a.m. eastern time on the corporate agenda, jill soltau takes over as ceo of jcpenney take a look at the u.s. equity futures after a down week last week the worst for the dow and s&p 500 and nasdaq since march you're going to see right now there are red arrows once again. dow futures indicated down 116 points s&p futures down by 14 our next guest company just cleared a new round of funding with plans to expand in the u.s. and over seas. want to welcome alburg's co-founder and co-ceo. great to see you you're wearing the shoes your which version are you wearing? >> merino wool

>> tree. >> which >> tree runners. >> tell us about this. you just raised a bunch of new money. what are you going to do with the money? >> two big things. we have had a really successful start to the company we created a product a lot of people gravitated to sold a million pair of shoes so we're now at this juncture where we see a huge opportunity in front of us and the investment areas we need to make are in places like new materials development, which is pretty costly to make brand-new fibers and brand-new polymers for the bottom of shoes and put this into a fantastic product we're investing a lot into r&d >> you just raised 50 348d

in total you've raised $57 millio -- $75 million? >> let's go to the story everybody makes sneakers how did you think your sneaker was going to be somehow different and that it was going to catch on in the way that it has? >> the honest answer is that my wife talked to my co-founder tim's wife and tim had a wonderful idea he was struggling a little bit she said, call joey. i talked to him and he said, you have an amazing idea he had a shoe prototype. i thought people were going to love it. >> why did you think that? didn't you say to yourself, nike could do this? adidas could do this >> there's two things. one is everyone is kind of doing the same thing and fighting over here so it's super competitive people are putting logos on shoes. they're making it flashy and they're not recognizing that people are using shoes differently today. people are using them throughout their day in a much longer

period working on the mobile phone. as apparel has casualized. lululemon is a great example of a company that has driven casual across the deck. we saw that shoes haven't kept up with that there was a big market need for a shoe that carried you through outyour day. hence, needed to be comfortable. >> great idea. what's your competitive move what keeps others from copying you? >> tons of people are copying us we knew that would happen. we didn't expect it to happen so fast we have dozens of copy cats. now some of the big companies are doing what i would call inspired by us products, which is fantastic it says we're doing something really well. and they recognize a market need that we hit in this category we created. so the only thing we can do, we've been doing it from the beginning, is just keep innovating and try to cannibalize our own sales. not be worried about the fact that we might launch something and lose a little bit from one of our flagships. >> you and so many direct to

consumer new entrants have received what i might describe as tech valuations i mean, valuations that historically would not be ascribed to a fashion retailer, and i'm thinking of the warby parkers. you're trying to get into the bricks and mortar. >> yeah. >> what makes the valuations that have been ascribed to these companies make sense given that to a large degree they look like what might be classic companies? >> you know, i think it's one fundamental dynamic. if you look at the shoe industry, 100% of the shoe industry is driven by a wholesale model. every manufacturer and brand make a certain cost and they give a huge chunk to the retailer, then there's that price that the consumer pays if we skip that part, we can take that extra room in the cost structure and invest it into a much higher quality product sold at a much lower price. that gives us an amazing opportunity to stock tons of value in our product our product was made -- the

first one with merino wool was made with material used in a $9,000 suit and we packed it into a $90 shoe that you can get at albirds.com >> do you think this is long term >> we've always been building this as an independent company. >> okay. >> everything we need to do to be a shoe company from product development, manufacturing we put it together. >> great story congratulations. >> thank you very much looking forward to the next step. >> thanks. coming up, bank of america expected to report in the xtne few minutes. we'll bring you the numbers and reaction on wall street when we return

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in an opinion piece published yesterday the general manager of al arabiya television said if the price of oil reached 80 angered president trump, no one should rule out the price jumping to $100 or $200 or thisn opinion not a representation, investors still have to think about these risks. last week there were some reasons for crude to move lower. the stock market hit speed bumps, the relationship between oil prices and perceived demand slowdown add to that the u.s. producing 11.2 million barrels a day and the notion of a supply crunch seems less likely. that doesn't mean oil is going to go lower this week. there are still threats of iran sanctions november 4th now the possibility of sanctions on saudi arabia. remember the middle east is a tinderbox. that's how it's often described when these events start to ignite, you see prices rise

quickly. >> 400 seems -- >> that seems a little high. >> that's even higher than the goldman sachs superspike they didn't call for that long. >> could you imagine a scenario mbs says shut it down? >> if they were found to have something to do with khashoggi's disappearance and they are embarrassed and go toe-to-toe with the president, anything could happen >> jackie, thank you coming up, another big weekend for a villain at the box office we'll tell you how much "venom" brought in that's next. as we head to break, here's a check on what's happening in the european markets right now 's mixed little green, little red it's like christmas. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't.

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bank of america just reporting. wilfred frost has the numbers. >> yes, indeed revenue is fractionally ahead $22.8 billion. that's up 8% year over year. expectation was $22.7 billion. eps at 66 cents is up 43% year over year. the expectation was 62 cents so ahead on both of those. still down about half a percent. on friday we did see jpmorgan

come out early and beat but sell off by the end of the day. why was that people questioned whether we had peak earnings for the banks and we did see jpmorgan while revenue grew year over year, it fell 2% quarter over quarter this hasn't happened for bank of america. if you look into the individual lines, most of the core parts look pretty good deposits up, loans up. overall down half a prt ercent the premarket. >> wilf, thank you coming up, our guest host mohamed -eanelri he'll join us in a moment. on at. oh really? thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible.

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international pressure mounting on saudi arabia following the disappearance of a saudi journalist we're live in riyadh with the details. plus market reaction from guest host mohamed el-erian. washington comes to wall street senator pat toomey is here with reaction to the president's "60 minutes" interview last night. plus an iconic retailer closing its doors. those stories and more corporate headlines as the second hour of "squawk box" begins right now. live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc we are live in times square. i'm becky quick along with joe kernen and andrew ross sorkin. you are going to see that red arrows are coming along this

morning despite the losses we'd seen last week, there's not a rebound at this point. friday we did see a return, but last week was the worst week since late march right now the dows indicated down by 114 points nasdaq off by 60 investor carl icahn is out with a letter this morning urging shareholders of the buyout those are the shares the software maker vmware. icahn has accumulated that right now it looks like those shares are up by about 1%. blackrock's larry fink and steve schwarzman are the latest to pull out of the saudi arabia investment conference. this comes after the disappearance of journalist jamal khashoggkhashoggi. there's more on that in just a

moment sears will close another 142 stores before the end of the year and begin liquidation sales. ceo eddie lampert will remain as chairman bank of america releasing results just moments ago want to get over to wilfred frost who joins us now >> so just a recap as i mentioned just before the break, the eps was a beat 66 cents against expectation of 62 cents. revenue came in line at $22.8 billion fractionally ahead if we look into the individual lines, the core part of course the retail bank. all of that looks pretty steady and strong loans up 3%. deposits up 4% and credit quality looks pretty good overall, provisions for credit losses fell $118 million to $116 million for the quarter. that core part of the retail

bank -- trading revenue pretty much as much as expected jpmorgan's the fixed income performance better which is what we expected. go back to that point i made about the fact of whether the earnings hit high levels that's up 4.5% compared to a year ago jpmorgan still ahead of them at 17%. can they still squeeze out more. with the efficiency ratio again, they keep it under control it was down half a percent it's up about half a percent now. >> all right, wilf thanks for that. it's your busy time of the year. who's left >> we've got morgan stanley and

goldman sachs tomorrow that'll be interesting to watch. i think the trading performance has seen quite a lot of differentiation. so they could separate themselves from the group a bit more and it could be more stock specific opposed to the theme of the quarter. >> all right so we'll see you tomorrow. >> you will, indeed. >> okay good as we mentioned, more high profile executives are pulling out of a conference in saudi arabia following the disappearance and reported death of jamal khashoggi steve schwarzman, jamie dimon, bill ford will all now not be attending. we're joined now in riyadh with more hadley, good morning again good afternoon >> reporter: good morning, joe this is a story that could have implications for u.s./saudi relations. over the last hour we've been

hearing new developments apparently a joint saudi/turkish investigation will go to the saudi consulate in istanbul today. and also announced that there will be an investigation internally into the disappearance of jamal khashoggi. this is a government that's been silent over the last couple of weeks. yesterday in a statement the saudi government was hitting back against comments saying that any actions or sanctions that could be taken against the kingdom will result in greater actions from the kingdom in retaliatory measures later in the day, there was a tweet from the spokesman from the washington embassy saying they prevent that the united states and other countries, other allies are really giving them time to find out the actual results. you can see the speculation is having an effect not only on oil markets but internal markets as well

ahead of the statements, they closed at 3.5% down for the day. today they've been back up a lot of concern obviously not just in saudi arabia, but regionally as well about what this could really mean for the future of saudi arabia saudi arabia, of course, it's the region's largest economy i have to tell you having covered the saudi story for the last ten years or so, i've never seen it moving quite like this guys >> okay. hadley, appreciate that report also want to bring you some new news on this issue as we reported, earlier this morning larry fink dropping out along with steve schwarzman and jamie dimon late last night. all of that after a series of phone calls among those three men and steven mnuchin at one point trying to get him to make his appearance conditional or try to postpone the event. also calls to saudi arabia to have the event postponed trying to make it face saving for everybody. i'm told there's at least a half

dozen other executives planning this morning that they will also be stepping off the stage. of course the one biggest name that has yet to make a decision, i'm told, is masasan of softbank the ceo of uber which also had a direct investment from saudi arabia and by the way a government representative on his board decided last week he would not be attending masanan may be the last chess piece in all this. there are even questions in the kingdom about whether they will be forced to cancel the event -- >> you have no executives left it's basically masasan and steven mnuchin >> yet to drop out my understanding on the coverage is important my understanding is that news

organizatio organizations, i believe including our own will cover the event if it still happens. the issue with media organizations including my own involvement in all of this was about being a strategic partner of the forum which is effectively being a strategic partner of the government and working effectively in my case and other journalists as moderators on the stage. that's different than coverage in a reportial way the question is whether you were going to be able to have those kind of candid conversations on the stage in that way. so lots going on back and forth and all this but it has become this sort of very strange crucible for who is in power and what that dynamic and relationship is going to look like. actually, mohamed el-erian is right here what do you think of this whole situation? >> i think up to about an hour ago, business leaders had no choice but to say they're not going. and it's interesting, it's the u.s. business leaders. the europeans have been much

more quiet after what was announced an hour ago, i think business leaders are going to be split. in my own case, i was invited a few months ago i couldn't go because of a sq j schedule conflict. i know the people i talked to were very torn but most of them felt that they had to say something. >> and you're saying the announcement in the last hour, which announcement >> that there will be an internal investigation that they saudis are now saying we're going to take this serious and look into it >> do you think they're taking it seriously or this is when you announce some kind of story that insulates the crown prince from all of this and in fact could you even make the argument that the united states has slow walked this situation in large part because of the relationship that they have had and because of all of these geopolitical issues >> it's not a surprise that they slow walked it

i think on the investigation you have to wait it will be different this time around there's certainly intense pressure and that's unusual. so we're going to see. >> my understanding what a lot were hoping for was for mnuchin or the administration to say we're not going to go until and unless we receive new facts which suggest something very different. like, that rather than suggesting we will go unless we hear facts that are materially different. >> in business, you always want a cover, right and if the government can give you that cover, that's why you report on the phone calls. it will be much easier or alternatively have them postpone it. neither of these things happened and the pressure is immense. >> let's say you hear a tape that has mbs or one of his people talking about this before it happened.

then, you know, we've seen the pictures of the 15 guys on the jets and everything. so let's say that they actually are unable to totally refute that they had anything to do with it? what if they were to say, okay, it went horribly wrong this wasn't supposed to happen we wanted to bring him back, talk to him. whatever you know, we wanted him tocome back on the jet alive and talk to him >> that's why they brought a bone saw >> that's another thing that we don't know then you're saying there's no -- what if they said we're sorry. what if they said it was regrettable and it won't happen again? >> if that's the case, they should have said that already. >> if that's not the case and they are guilty and complicit, then what do we do then? >> look. there's other people who believe that turkey in this instance has its own motivation turkey and its relationship with iran there's lots of things going on here that's why it's a delicate dance.

i have a difficult question to ask you. you said you couldn't go because of a scheduling conflict if you didn't have the scheduling conflict, what do you think you would have done at this point >> certainly last week i wouldn't have gone i wouldn't have gone this week, i think the investigation is going to be interesting to see what comes out. what i find fascinating is the market reaction. it's not that much you're talking about the major oil producer yet oil prices are up less than half a percent. so the market is -- >> meaning what? is the market saying the saudis will not be able to stop selling because it will hurt them more than it will hurt anybody else >> basically it's saying this thing is not going to be a big deal so it's interesting because the commentary is going to be a big deal the market is saying yeah, somehow of a higher risk premium but not that much. >> what do you think the risk is for the u.s. companies like the blackstones and blackrocks and jp mohr g prks mjp morgans and their

relationships long-term and uber and everybody else who said they won't go if all don't go, do the relationships stay intact or the crown prince says we're going to move our money >> for the business leader if they decide not to go and then others go. let's see how it evolves that's why there was so much hesitation people waited and waited >> let's change the subject. you're sounding too good, i'm going to change the subject. what about the markets from last week you've been pretty bullish >> you and i have been waiting for a long time for this transition away from liquidity-driven markets which is a nice short-term boost but it's not fundamentals. the minute we make that transition to fundamentals,

three things happen. first, the fundamentals are divergence the u.s. is doing much better than the rest of the world second, there's a whole host of uncertainties. i mean, i've never seen a statement out of the imf meetings with so many uncertainties there. finally, let's not forget the liquidity is soothing. so for me, it is no surprise that we've seen this volatility. but over the long-term, i'd rather have a fundamental-driven market than a liquidity-driven market >> you think fundamentals eventually take over so the downside is limited for our markets here >> i think the u.s. out-performs both in the way -- >> are we down 15? >> so that question and the question of how much risk you should take ultimately is a call on the convergence do you think the convergence happens to the rest of the world or does the rest of the world pick up? that's a policy question

you have to look at what they're doing. there's nothing predistinned about a convergence coming down. >> your recession prediction about when that is possible -- >> i don't understand those who are saying recession next year or the year after. you've got three engines of growth kicking in at the same time government spending, household income higher, business investment higher. top get a recession with all these drivers kicking in, you need a major policy mistake from offside. these are big engines at the same time. >> all right mohamed, thanks. want to get your latest update on china too you remember your percentages? you were 15% great like a reagan moment you were 65% -- >> 60% >> 60% business as usual and 25% --

>> and you remembered. >> i do. but i don't know if you saw over the weekend -- and it was obvious from pence's speech, but the journal had a good piece over the weekend and kevin warsh talked about it, hearing from people. this is a cold war and could get longer >> the longer this continues, the more it goes from an economic issue to a national security issue if it becomes a national security issue, it's harder to solve. >> meaning we're not going to take anything made in china? >> no. we're going to look at this relationship not in terms of just trade, we're going to look at it in a much more holistic way. >> thanks. we just heard from bank of america posting better than expected earnings and revenue. joining us right now to talk about what we've seen to this point in earnings season is jeff hard he is principal at o'neil. bank of america strong earnings.

let's do a takeaway on the numbers you just saw including their return on tangible and equity numbers too >> i think these are solid results. the 66 cents versus 61, 62 expectations, a big part of that is credit. not that credit quality improvement isn't nice, but the market will kind of discount some net interest income was better than expected. and on the margins, we'd like to see better loan growth but the earning margin -- >> they were up 4%, right? >> correct which was, you know, a little light of what we were hoping to see. but then that interest margin was better by a basis point. it helps to kind of, i think, calm fears a little bit of some of the pricing pressures building out there >> jeff, explain -- i'm sorry. go ahead >> nope. go ahead >> explain what's happening overall with the bank stocks

because you would expect that as we've seen interest rates start to climb, this would be a better time for the financials. that hasn't really worked to the case >> it's a very good environment right now for bank and financial earnings, right? credit is probably as good as we've seen it. banks are efficient. there's a lot of good things to like what i think's weighing on the stocks here isn't so much what the current environment is but what's the environment going to be next year what are they going to do for an encore what's it going to take to have a step up in earnings? so many things are good right now. i think the answer is -- or the potential answer is economic growth i mean, the banks are kind of a prompter on the economy because they fund the economy. history would suggest we should see loan growth. that should paint a good picture for earnings next year you know, we certainly haven't seen enough of that yet to date.

i think investors are a little skeptical that next year is going to be better than it was expected to be >> for anybody who's looking for recession, the banks aren't seeing it. if you look at the provisions for credit losses that we saw from bank of america today, that we saw from jpmorgan, they're taking the numbers down. if you're looking at that, they don't see it on the horizon. >> we're not hearing there's some deterioration we're hearing things remain really good. the key with long interest rates going up is, what's driving it this is kind of gdp growth driven and qe factors in some but the longer term rates are being driven by the right reasons. >> jeff, thanks for your time. >> good to be on when we come back, a lot going on in the nation's capital this week. we will talk business and much more with senator pat toomey that's after this break. later, after last week's slide, can the markets rebound this week this morning, doesn't look like

it at least not so far. let's check out the futures. you'll see it right now. dow's down by only by about 78 points s&p futures by ten the nasdaq off by 45 place, the xfinity xfi gateway.

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. welcome back, everybody. president trump touching on the topics of both china and saudi arabia last night on "60 minutes. >> i have a great chemistry, also, with president xi of china. i don't know that that's necessarily going to continue. i told president xi we cannot continue to have china take $500 billion a year out of the united states in the form of trade and other things >> and how -- >> and i said we can't do that and we're not going to do that anymore. >> joining us now to talk about these hot button issues and much more is senator pat toomey of pennsylvania senator, thank you for being with us this morning >> thanks for having me. >> we have so many things we could talk about but let's start with trade issues >> okay. >> we have nafta that has just been put together. this is a deal that i think you were pretty relieved that we saw

trilateral >> i think that's the single biggest virtue of this agreement. at least it ends for now hopefully the downward spiral of a trade war with our biggest trading partners if you look at the specific changes to the agreement, they're small and mostly negative you know, putting a sun set provision is a bad idea if you ask me defeats the purpose of a continent-wide free trade zone >> i thought it was supposed to prevent it from allowing it in china and other countries that were sneaking through. >> they're really designed to require a certain minimum -- to put a quota on mexican cars is what it is >> when we heard from wilbur ross an others, their point was china was sneaking a lot of components into mexico and thereby getting around some -- >> i don't think that's what it was about.

so as i say, there are rules that will require a certain amount of components to be made in high wage countries and there are limits even if you come ply with that, quotas we didn't get rid of the 232 tariffs on steel and aluminum i thought were going to go away. >> the sunset's not as bad as it could have been. >> much of this is not as bad as we thought it would be the rolling six years in theory that gets added to the end of a 16-year agreement, it's pretty much there all three countries have to anonymously agree that they're going to tack on that period of time i think that creates a dangerous dynamic of brinksmanship and negotiating for who knows what having said all that, this requires implementing legislation in congress. and that's an opportunity for us to take a look and to perhaps

tweak this in ways that don't require more negotiations. and there are good things. better intellectual property protection a little bit of access to the canadian dairy market. there are some good things, as well, but on balance it's better than it might have been. >> let's talk about china. the president did reference that last night the the "60 minutes" interview. he said he called it a battle in the past but would call it a skirmish now >> it's a significant skirmish if it's just a skirmish. very broad now with the threat for much more. sometimes i think in washington a lot of folks conflate discreet ideas that are not really sort of well thought through. so for instance, we have -- i think it's pretty clear -- pretty systematic theft of

property and by which american ip gets taken. i think that's hugely problematic. that's theft, right? then we have the president talks about the trade deficit, per seeing with and character iizesi in a way that makes it sound like it's theft when, in fact, i don't think that's the case at all. then you have the geo politics of assertive china especially in southeast asia i'm not convinced that we have a holistic approach here >> although steven mnuchin was on "squawk box" on friday and he said the two parts are the forced transfer of technology and the forced joint ventures. >> yeah. i totally agree. here's the thing you and i both know if we got a complete agreement from the chinese, that those practices were going to come to an end tomorrow, we'd still have a big trade deficit with china at some point we've still got to

be clear what are we insisting here >> so you'd be on board for some of the egregious issues we just talked about >> on the theft of forcing joint ventures that share information, all of those things i think are absolutely outside the norm and demand an aggressive response. but the fact that my constituents can buy affordable t-shirts made in chinese factories, that does not strike me as nearly the same magnitude. >> you are concerned, though, you're working with lighthizer right now to try to get exemptions for many of your constituents >> absolutely. >> how many companies? >> many dozens we have been looking at companies that use products subject to the tariffs or retaliation. specifically there are a lot of companies that buy a particular widget you just can't get anywhere else to their specs in

a timely fashion because this is the supply chain they've developed. so it's really problematic for a lot of pennsylvania companies. >> senator, i want to thank you for your time today. we appreciate seeing you >> thanks for having me. coming up, much more on the developing story of saudi arabia and companies around the world more high-profile executives pulling out of an investment conference there here are the futures right now, up a bit down 65 on the dow after a bit of a rebound on the week we'll be right back.

good morning welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center, we're going to get retail sales in an hour's time expecting a jump of 0.7% for the month. that would be an increase from august harris and l3 technologies are merging. that would beat the combination of boeing and macdonald douglas. of course that was 20 years ago. "venom" topping the weekend

box office for the second straight week. taking in $35.7 million. it remained number one despite a 50% drop in sales from the prior weekend. coming up when we return, we're going to talk monday morning markets and find out if this market can bounce back after last week's slide. plus a brexit deal, sit on the way? we're going to get a live report from london and talk global markets. take a look at u.s. equity futures at this hour dow off about 64 points. back in a moment your brain natuy begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

♪ last week's selloff exposing some -- is that what we're calling it some imbalances in the market. but is there enough of a flush to refresh the markets and it's attempt at a recovery? like a toilet flush? what kind of -- >> a little cleansing is what we're thinking about >> that's one way to look at it. mike santoli joins us now. >> a lot of this was lining up all of the stuff being to the

downside, you could say friday afternoons a little pickup bouncing where the market had to bounce if it was going to prevent people thinking like it was unhinged to the downside i think it was impressive without being perfectly convincing that that was any kind of important downside i'm looking at the direction of where the path of greatest frustration might be from here i don't necessarily think a rally making friday is the one maybe too many of us are looking at earnings season coming around or looking at seasonality turning positive feeling as if the market is going to get bailed out. i kind of doubt that's going to be as neat and tidy as that. however, i've been working on this since early this year looking at 2014 as a rough anl y ji for this. where you had a melt-up market low volatility look at 2014's chart that's now we have 2014's chart you had a february pullback.

in 2014, though, you did have this ebola-fed pullback that nobody knew where it came from you came from there and made a new high >> that's another 300 points by the end of the year. >> what's that >> that's another 300 points >> yeah. you were flat for the year in mid-october. there's been a similar cadence here in october. back then a lot of the fears turned out to be kind of nothing. you didn't really have to fear about earnings it was a cheaper market back then rates were lower >> so the question is is it real fears this time or are we hyping up >> you don't want to make that bet, but also recognize that the credit markets are fine. the credit markets right now are not saying anything nasty is going on in the economy. the market can find its way. chopping lower would be the way to get greater extremes and sentiment. >> so you said -- if i remember your words, you said friday's

bounce was impressive but not perfectly convincing what is perfectly convincing in your mind? >> it was not particularly broad. it also felt as if because we got through the 2:30 to 3:00 p.m. period where we did not see a rush of mechanical selling as everybody feared, it was a lift into the weekend also the friday february 9th was an intraday low. that day we had a rally into the weekend. we thought maybe it was over then and you still chopped lower. all those things fit in the mix. >> let's bring a couple guys in the mix. chris mamani is here, richard bernstein. are we giving you a middle initial? you don't want one you're listening to mr. santoli. you watched what happened late last week. is he right? >> well, i don't know what's going to happen in the short run.

but i know in the long run markets are going up the drivers are essentially the same inflation remains relatively mode modest >> what would -- what was the panic last week? >> it was a bunch of things coming together. which is rates being significantly higher as a result of fed loose talk in my opinion. and the impact of tariffs. none of these things are good, in my opinion. but if you have a two, three, five-year investment horizon, it's going up. it's five more years >> five more years mark that down five more years. the bull run lasts for another five years >> yes >> mr. bernstein, what'd you do last week with your money? >> we actually did nothing >> nothing >> nothing we did nothing we're not short-term traders, so

we did nothing and i say that proudly because i don't think -- i think day-to-day movements are mostly noise. but to get to your point, there's always a balance between earnings and interest rates. in the short-term, that can get out of whack i think we saw that in the last few weeks where interest rates spiked more than people thought. and we haven't yet seen the kmenz rat gains in earnings. it's what is going to cause interest rates to go up. we haven't seen that so we don't see a rally in the market from the earnings side which i think is going to be quite good again then i think you have a lot to talk about right now i think it's noise back and forth i will say this as i've said many times, i think people's expectations for nominal growth are way too low. the 10-year is going to go a lot higher than people think >> krishna has made a bold call on this program. five more years --

>> talking about growth now? >> i've always said i thought nominal growth is going to -- >> you don't remember our last conversation >> you wouldn't let me finish a sentence. >> so what are you thinking for growth then? >> the keyword is nominal. nominal growth is going to be stronger than people think >> all right life is relative >> can i have a number >> no, i don't -- i don't forecast those things. >> all right >> i'll go back to the five-year call here. which is to say people always say in the seventh or eighth inning, five years puts you into serious extra innings. how do you get there >> yes and the reason for that is simple until inflation manifest itself in a meaningful way, i don't think things change. and i think what mohamed is talking about earlier, convergence slowing down -- it's more for ore tor kal thing people talking about 2019, 2020. but the point i'm trying to make

is if inflation remains where it is, i think we will have a much longer run than what people are talking. >> they'll say in that case we should switch out of the u.s. and go to emerging markets >> of course >> and therefore switch out of the u.s. to emerging markets that have underperformed the u.s. by 20 percentage points >> absolutely. from a valuation standpoint, emerging markets are the cheapest asset class at the moment if you believe that this cycle is going to last a lot longer than what people are anticipating, i think emerging markets in particular and international equities in general are probably where you want to be >> what i wonder about is whether these transitions or rotations if they're going to happen happen in a happy, gentle market on the fly. right? it seems to me, no i think a lot of people looked to last week and say, finally the rotation into value. exactly. this is what it looks like 54% of the market is growth.

if you want to take a chunk out of that, it's on the floor for awhile >> people always forget. volatility signals a change in regime the fundamentals going into a period of volatility are different than those coming out. >> all right richard bernstein and krishna memani, thank you. when we return, could a brexit deal be reached this week a live report from london ahead of the eu summit straight ahead. check out the european markets at this hour we're going to hear from guest host mohamed el-erian about investing abroad as well and he's very muted about the i ts was excited. he's like -- i guess you've just been scarred you're scarred sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now?

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the european union and the uk are close to a brexit deal heading into wednesday's eu summit which is right at the heart of the eu with all the technocrats, unelected bureaucrats. steve sedgwick joins us now with more i said that for you, how are you? >> reporter: i'm very good,

actually but i think your read into me might have been out of date. we were close to a deal. and now i'm not sure we are. seriously. things have moved very quickly when we booked this outside broadcast, you have to do a little bit of planning sometimes, we thought we were doing it because we were close to a brexit deal when we got here today, it looks like we're no closer -- if anything, we might have gone backwards a bit. a little o is -- of the language has gotten more technical. and the key issue which they're still floundering over is the border between the republic of ireland. and what the eu suggests is maybe we can treat northern ireland as a special jurisdiction and it could be subject to eu rules whereas the british are saying under no circumstances can that happen as well of course there's a slim majority for mrs. may's government

so she has to have the backing of the northern irish. i don't think we're closer to a deal the timeline is definitely slipping back to you. >> thank you very much let's talk europe and global investing with mohamed el-erian. we're definitely going to talk brexit before we do, you set yourself up with this >> i know. because joe said we haven't mentioned the jets and i was there yesterday. we were celebrating 50 years of a championship so joe namath was there. we won how often am i on "squawk" after "a," the jets win, and they're 0.500? it never happened. i have to mark this stage. >> bernstein has tickets too both of you, you're very muted i think it's just you've seen this -- you haven't really seen 0.500 recently. >> the beginning of each season we do.

>> okay. so then you're just afraid to embrace it >> of course i'm afraid to embrace it i've been beaten up so many times. >> because you're very muted i thought it looked great yesterday. that was a pretty good team. >> trouble is the patriots looked even better >> at least you get a chance to wear the green today >> i was so nervous. >> a few years ago the biggest thing was the butt fumble. darnold does not look -- and i never thought the last guy was going to pan out i really think this guy. >> you mean mark sanchez >> but this looks like it might work it's early, but, you know, i watched yesterday. i can't believe it

>> i couldn't possibly comment >> you're scared >> of course i'm scared. >> there are times he held off where he didn't throw into real trouble. >> i'm told by a little bird you're a redskins fan out of nowhere. can you explain? >> i'm looking for a home. i'm not jumping on the bengals wagon. >> with that ownership >> i like the quarterback there. i don't know maybe i'll be a rams fan they look good >> but how about the jets? come on. there's room >> you're right. you're right i feel bad for eli let's talk about brexit. what do you think about the implications at this point >> so what steef save said, it' about national british politics. this is much less to do with relationship with europe and how does a conservative government navigate through something that could potentially be split right

in half. >> not just split what's happening back in london, but also what do you do with ireland? >> that's exactly it the other thing that happened over the weekend were elections in bavaria which signals that mrs. merkel has less support those of us hoping europe was getting their act together were looking to joint leadership to take us further up that doesn't look good so europe is challenged from the west so it's hard for europe to get its act together it needs to complete or progress on its union they haven't done banking union completely you cannot have a monetary union based just on the ecb. >> part of the theory at least i thought the theory was coming from the eu that they had to be tough in these negotiations so in one would want to take this

path is that still the case >> that's certainly what they think. but nationalism is spreading on the east of the eu you see this with poland, with hungary. >> talk about italy. >> italy is another big ne that's why when we come to investing implication,i'm much more cautious than krishna this is the time to buy stocks and hope for a rebound if you look at the list of risks, they expose the rest of the world much more. >> which means what? you would stay in u.s. stocks? >> if i do the switch that everybody wants to, i would think of what investors call dollars at risk. i wouldn't go dollar for dollar. i would go dollar for -- and keep the rest in short-term fixed income okay because the risk profile is completely different >> thank you he'll be with us for the rest of the program. coming up, stocks to watch

ahead of the opening bell on wall street. then top of the hour, have we seen a peak in economic growth we have david gerstenhaber heoes gon the market with his market picks and much more "squawk" returns in a moment place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. let's take a look at stocks to watch this morning. activision is optimistic about the growth of digital revenue for all activision's call of

duty video games all of them. ralph lauren was upgraded at jpmorgan the earnings are going to accelerate to low to mid-teens compared to a decline it saw in recent years and broadcom's received final european union antitrust clearance for ca technologies. that deal will close by november 5th. and listen up, everybody burger king has been voted the fastest drive-thru chain of 2018 >> because no one's there. >> according to a magazine survey the survey is based on the time you order your food to the moment you receive it at the window >> dunkin' comes in second to wendy and taco bell >> chick-fil-a, they have this system have you been? >> yeah. but i don't go through the drive-thru.

>> they have this system where you have to start on the other side to get in the line that goes all the way around -- >> because it's so good. >> that's what i mean. burger king, they're like the maytag repairman no one wants that weird spray that they spray on the -- what what's wrong >> nothing no, no the smoke? >> yeah. the smokey spray -- right? >> i think so. >> you know what i horoscope said we're going to finish each other's sentences today. >> it's happening. >> and i shouldn't think you're doing it for any deceptive reason which would normally be why you agree with me, right >> no. all right. we will be back in just a moment a lot more coming up on "squawk box. we will be talking about what happened in saudi overnight. big deal there and what it means to the markets, what it means to oil prices, and so much more then we're going to talk about the economic and profit growth

that may or may not be ahead with david gergenhaber he will be going on the market with his market picks and so much more. big hour ahead in just a momt.en

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. global market alert. another week, another selloff. pointing a a drop for the dow. many executives dropping out of saudi arabia summit the ceos at jpmorgan, blackrock not going. plus the end of an era at sears. filing for bankruptcy this morning as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin our guest host this morning mohamed el-erian he had the jets jacket -- this is what i'm talking about. you had it on but you don't feel

confident enough to leave it on. so you're just very suspect of the 0.500 -- we'll talk. i don't want to put you on the spot here. >> right >> it's right here >> the futures right now are indicated lower than they've been down all day. but now only 35 points on the dow after kind of a -- it was a little bit tepid for the rebound last week, but there were three, four, five times it looked like it was going to go negative. and it didn't. it stayed up but after losing what was it 800 plus 500, whatever losing 1,300 points or so. treasury yields at this hour haven't done much since they were up in the mid-3.2 range on the 10-year. now 3.16%. weird the way -- when they go up, the market goes down, then the yields come down adds people go back into bonds it's this perverse self-correcting mechanism.

meantime, couple big stories to tell you about this morning jpmorgan ceo and blackrock ceo not going to be attending the summit in saudi arabia next yeek the three men spent the weekend trying to get the conference postponed. they reached out to steven mnuchin trying to press them to postpone at least another half dozen executives are expected to bow out later today. meantime, the saudi king has ordered an internal investigation of that case involving the disappearance of journalist jamal khashoggi it's raising some questions about what u.s. companies are supposed to do and what the relationship is looking like carl icahn urging voters to vote against the buyout of dvmt

shares those are the shares that track the investment in software maker vmware icahn said he accused dell of trying to buy the shares at a bargain basement price this is happening all over -- it's like deja vu. don't miss carl icahn. he's live on "the halftime report" today. i suppose he'll have words for michael dell sears filing for bankruptcy protection that happened overnight. they will close another 142 stores before the end of the year eddie lampert is stepping down as ceo but will remain as chairman among today's top stocks to watch, we've got bank of america. earnings and revenue topping forecast the bottom line was helped by lower interest rates here's word from the last hour

>> a big part of that is credit if not the credit quality improvement isn't nice, but lower credit costs i mean, net interest income was better than expected would like to see better loan growth and deposit growth, but the earnings margin was solid. >> shares up to $28.70 this morning. stocks trying to regain footing after last week's selloff. joining us now is david gurs gerstenhaber only managing family money at this point that's all i'm doing you have a jason at argonaut >> we don't have a jason. >> have you fleeced any clients? >> no. >> so it is good to see you.

ten days ago you thought the market looked vulnerable so you've done well. you have not covered -- >> we haven't. it's gotten down to pretty much where i thought it would get in terms of the hard break. the thought was that interest rates were going up quickly. we'd had that view and starting to crimp i thought it peaked in the second quarter of this year and that we would see a progressive deceleration. >> you made money in short interest rates too >> we did. >> how did you do that >> well, we were short the front end of the yield curve primarily. i thought that was much more interesting. that's gone up as well as everybody knows. but looking back a year, the fed was radically mispriced in my opinion. it seemed economic growth was strong the fed indicated they wanted to tighten and the market didn't believe it there's been a significant repricing at the front end, but not yet as much as i think is

necessary. i think the fed still goes multiple times next year they're going to go in december. and they're doing that against a background of slowing economic growth and slowing profit growth so the outlook for the market in my opinion isn't nearly as good as it was. you don't get a peak of substance in the market until the economic cycle is in sight traditionally that's how it worked but i think we've had the bulk of the big gains >> you feel at this point we've paid it forward. all these good things that happened are already reflected in prices. >> that's probably right you get 3% to 5% out of the market next year but that's not so exciting and it's not that exciting relative to risk free returns this year with volatility as well. >> david, just to put a fine point on that, when you say the economic growth is going to slow, you're still looking for growth, right? you're still looking for an economy to continue to grow maybe just not at the pace it

has at this point? >> unquestionably, that's correct. >> the fed will be raising for the right reasons because the economy continues to grow. >> very much the right reasons we have effectively zero interest rates given where the inflation rate is. inflation is probably creeping up in my opinion given what we're likely to see on wages at this point we'll keep going i think things had become a bit bubbly in that respect also. >> just two things which i don't think the market has fully grasped. one is they will focus on the level of growth, not the end of growth and two, that financial stability is going to be more important than in the past >> you're talking from the fed >> i don't think the market has fully comprehended this enough why do you think >> look, there's been a lot of liquidity in the system. there's been a lot of excitement about the tax cut. profit growth on the surface has been extremely powerful.

a substantial amount of that came from the reduction in taxes. we're going to see much less moving forward the rest of the world has slowed as you know. and latin america isn't doing particularly well at this point either so some of the boosts that had existed when we were all talking about synchronized global growth a year ago aren't really there to that extent now >> why aren't you saying that means the possibility of a fed mistake goes up and therefore the fed will not likely deliver on what it's signalled >> well, the fed always goes too long in their tightening cycles. in my opinion, they're always late to get started and they're always excessive in what they do now maybe they'll get it right this time and have a softer landing. but they've got certain issues they need to face. wage gains running at 3% and the labor market is extremely tight at this point.

the likelihood that wages continue to accelerate from here is pretty good >> did you cover your shorts in the short end of the -- >> i have not. it's not nearly as interesting as it was, but it's still interesting. >> much different than when you put those on you think they're getting close to where they should should they stop now >> no, i don't think they should stop now i think if they stop now, you'll get excesses in the financials there's excesses in the credit markets at this point. spreads are very, very narrow. there's been a significant amount of debt issued by the corporate sector >> just in terms of what this all means, if you think other economies are slowing more rapidly, we have a series of guests who think the emerging markets or international markets are better placed. if you're seeing growth slow everywhere, would you make that case the assets have gotten quite

cheap. >> i say to myself, the fed is raising interest rates growth is slowing. and liquidity conditions are going to tighten and oil prices are going up. that's not normally a good environment for emerging markets. maybe they'll be right, but i'd rather wait. i think we need to be prepared for lower rates of return on financial assets than people have been used to for awhile this is your pay it forward comment to a certain extent. the likelihood of substantive returns is good there. i don't think you're going to get the big gains -- >> is that an argument for a bank account >> well, it's an argument for

having more catch at this point. the leadership in the market was tech and the leadership appears to be broken there are problems in technology as well. >> tough to go to 1 trillion isn't it >> it is if you look at what's going on in europe, they're after these tech companies >> from the privacy -- >> what's that >> how much lower do you think it will go >> the big tech companies? >> yeah. >> i don't want to forecast a substantial break from here. we've had a good break already but i think it may be difficult for them to resume leadership rapidly given what's happened. they still are growing more rapidly than others in the market you've already seen a shift prior to the break into health care which is traditionally late cycle leadership away from some

of the tech companies. which the market still likes but the broad leadership from tech i think is not going to be nearly as powerful as it was >> speak to the process. is it a slow grind down? or is it a tipping point >> well, i think we reached a tipping point. i'm not predicting a bear market at this point. i want to be very clear about that you don't normally get that until you see the end of the economic cycle i think real interest rates are too low for us to forecast the end of the economic cycle. you've lost housing as a driver and autos as a driver. those are interest-sensitive sectors. but the rest of the economy is ticking over pretty well global growth is okay. decelerating from peak and we've had downgrades in those forecasts, but the idea that we're going to see a rescission at this point, i think is not

reasonable so asset markets ought to hold together but they won't be as exciting. >> when are you going to cover those puts -- >> they're put spreads >> how much lower on the -- >> not much lower from here. i need to evaluate that. i don't want to make too bold -- >> you think today or tomorrow >> could be. >> but not the short-term. >> no. definitely not >> all right david gergen has beur gerstenhau he's very involved very engaged, i would say. anyway, thanks >> when we come bab, a lot more. kevin rudd is going to join us on the set he says this year will mark a turning point in relations between the u.s. and china we'll find out whether that's a good or bad thing. first as we head to a break, check out oil prices right now wti at $71.91. stay tuned you're watching "squawk" right here on cnbc

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unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. president trump not backing down on his tough china trade policy >> i have a great chemistry, also, with president xi of china.

i don't know that that's necessarily going to continue. i told president xi we cannot continue to have china take $500 billion a year out of the eyewitness in the form of trade and other things >> and how -- >> and i said we can't do that and we're not going to do that anymore. >> joining us now is former australian prime minister kevin rudd who is also the president of the asia society policy institute. what do you think? we teased this you think we're at an inflection point with our relationship with china. where does it go from here >> look at the evidence. new national defense strategy, but i think the big one around vice president pence's speech -- >> about the cold war. >> yeah. he didn't use the word cold war and i'm glad he didn't but a formal declaration of the transition from engagement to what they call a new period of

strategic competition. so my question is simply this. whether it's the economy or the rest of it, frankly it is a big inflection point for the future. >> was that just a threat though or was it something you'd seen before >> there are four major strategic documents and decisions coming out of the trump administration certainly in beijing when i sat down to have a think about this over the summer, something has changed here deeply. it's not just the republicans. democrats lining up with a new thought against china. then you see business doing much of the same. so it is a big shift how the trade dispute which we've been talking about in recent sessions on this program unfold in december is a separate matter may find a tactical resolution

but the strategic nature is changing. >> pab that's not a surprise when you realize china's the second largest economy and has been trying to assert its influence over the region. >> xi has gone back to some -- almost -- i don't know all the way back to the little red book, but certainly different than, you know, his more recent predecessors that it's hard line again. have you -- is that sflu hatrue have you noticed that? would you characterize it that way? >> xi jingping is much more of a nationalist than i've seen any of his predecessors being. secondly, he's more ideological. if you speak to i was in china a few times over the summer and you speak to firms about the influence of the party now in relation to normal commercial activity, it's bigger now than it's been in decades so that's happening.

but as becky said before, there's also a structural factor at work. china is just big. there's a structural dynamic which starts to occur which is a natural competition begins to occur. that's unfolding but this one has the added tinge of having both ideological and national components to it. it's going to take very careful management i hope we can land this trade thing in the meantime, but there's a broader thing happening. >> we're supposed to get this fixed before the midmidterms this sounds like it could go ten years. so much for november 6th deadline for making up with china. >> i think that one a slid a little bit there have been three efforts. >> november 6th, 2025. >> there have been three efforts in the last six months to try to land this thing. all of them ultimately came to nothing. partly because the chinese

offered too little then you had deep disagreement in the white house between the different groups of hard-liners, middleliners, and softliners on beijing. i still think we've got one more big -- quickly given your previous softening of the economy to land this thing >> your first set of statements refer to the two poles in the economy. and the middle ground between two poles is pretty hard when both of them are that big. your second statement seems to suggest that maybe within that regime change, you can get someone pressing the button. where are you between the two? do we get a pause button or do we get all the volatility that comes with? >> i think we get both, my

friend and it's going to be an untidy mix. all the evidence i see is is big shift in the tonality and content between everything from washington and beijing but also for the world. given the size of these two not just economies but militaries. but the second thing up the middle of that you may see the beginning of a tactical accommodation on the trade question why? the chinese are hurting. it's impacting trump has correctly called it in terms of this being a bigger effect on china. but i imagine the u.s. side is seeing global softening to some extent >> we had pat toomey here and mnuchin on friday. both said what needs to happen is the end of forced technology transfer and the end of forced joint ventures for american companies setting up business in china. are those things likely to come? >> inc. what will be on the

table will be the effort to reduce the deficit if you're asking what i think they're looking at, i think what they're looking at -- the second box is what do you do about forced technology transfer and what do you do about intellectual property and china's industry policy giving its high-technologies sector a huge -- time finite. maybe three, six months. and then to go back to mohamed's point, i think that becomes the grounds for friction on this >> you think there's any chance chinese start to dump u.s. treasuries >> no. >> none? >> it's not in their self-interest to do so don't appeal to the chinese in terms of -- >> we got to hear about it basically every day.

that column, right you wrote a column -- >> i did about a week or two ago. i'm just re-raising the question not saying we're going to do it. >> i finally saw why i saw you had written it. >> the chinese are softening on it but dump, that's not the question. >> they've been lightening for years. they can buy some german booze for -- >> prime minister, rudd, thank you very much. coming up, raisas etl leat 8:30 stay tuned ♪ ♪ ♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too u.s. bank - the power of possible.

coming up, we've got breaking economic news on the consumer upgrades. we'll talk to top analysts about twitter and snap stay tuned you're watching "squawk box" right here on cnbc the sun comes up, the sun goes down. you run those miles, squeeze the toothpaste from the bottom and floss to set a good example. you fine tune the proposal,

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♪ there's a reason for that. brian weiser, he'll be on. rick santelli has the retail sales. what are that i? >> up 0.1% this is definitely much lower than the up 0.5% to 0.6% we were expecting. strip out autos, that's min minus 0.5% moves to unchanged the number that we insert into the other further down the pipeline economic releases is the control group number

and that's up 0.5% which actually is a pretty solid number we were expecting up 0.4%. so the control number that synthesizes all of the components, not bad. our october read on empire is at 21.1%. that follows 19% 21.1% is the weakest since 19% the response in the market, not much we're we continue to digest obviously all of last week's equity volatility andrew, back to you. >> thank you, rick appreciate it very much. steve liesman is here on the set standing by reading the numbers. >> i'm puzzled by this number. by most accounts the consumer should be doing very well. there are more jobs out there. there are moderately higher wages. it was an expectation of a 0.7%.

gas station sales were down. you he did kleined in department stores down 0.8% but a surge in non-store retailers, aka internet folks. as rick correctly pointed out, the input into the gdp number at 0.5% is very healthy. i'm trying to figure out where that came from >> how closely does the fed watch this number? >> they're going to watch this number it's going to be a piece of it they're going to wonder, you know, one of the surgeoconcerns here -- and this was spoken at length last week, the idea that higher interest rates causing some to go higher. and the counter to that i've made is the employment numbers are healthy, wage numbers are healthy. and the optimism numbers are super healthy.

in fact, i'm going to segue right now. why don't we come back to that number our all america survey i thought we had hit the records before it turns out we can go higher still. take a look at the first graphic here 48% of the public, an all-time high for this survey this survey has been around -- joe's been making fun of this survey for ten-plus years. with the same exact jokes. >> the nfl ratings, the all-america, tmuch better job environment. >> joe, i'm going to hire another guy for you to get better material. but it is the material i have to work with so i work with it. in any event -- >> your economist jokes have been banned. >> they have been by previous management so unclear how new management would deal with my old economic jokes. anyway, 48% of the public say they are optimistic now and for the future and that's an all-time high. 30% are pessimistic now and for

the future and you can see how much that's up since the election. there is a tangible consequential event here from the election i'll show you what's happened by party. this is what's interesting just work with me on this. the red of the republicans, the blue are the democrats, green are independents one out of five dems are now optimistic for the future. that's higher than the republicans had when they were -- when the democrats were in office. independents also are higher now than when obama was in office. and republicans are more optimistic than when the democrats were -- that's how you get these numbers here now i want to show you something with consequence for business which is wage expectations which are wage expectations? anyway, another all-time high. i wish i had a gold star all the the all-time highs you can see what happened to wage expectations in the

recession. >> look at the time period we're talking about. not surprising that expectations would be greater than that >> right but the consequence -- >> because you're going back to the crash. >> the consequence when the employee comes in and wants a raise, you can see the expectations are higher. how does all this mean for president trump's approval rating he went down overall and we'll talk about this during the day does not work well for the president and the republican party. but the economy works well for him. to have a majority approving his handling of the economy. i will say our pollsters very cautiously -- because what we show here is only a six-point advantage in the generic ballot for democrats over republicans and that's not a lot

they should be higher. they'recautioning this is not wave election in the making. they point out you need lousy numbers on the economy to have a wave election or a lot of pessimism about the economy. they're not saying dems won't take the house, but a wave election they don't see. one of the things we've seen and there's a lot of people who have concerns about the president's temperament willing to look through that because of his handling of the economy. >> are you counting on the millennials to get out and vote for your blue wave >> it's not my blue wave, joe. it may be your red wave but not my blue wave >> yeah. i know everybody sees that. but in general do you think they're doing -- >> no. it'd be silly to do that. >> but i'm worried about the blue wave. i'm worried that you're not going -- you know, they could be on their phone or experiencing something somewhere.

you know, what are those things? hover boarding somewhere i don't know >> the problem that the democrats have to my mind is what i've been talking about for a long time which is you have positive economic numbers and you don't really have a response from the democrats in that regard rug right? >> i think it's funny. 7% of democrats are positive about the future what was it? >> 22% >> oh, okay. positive about the economy >> now and for the future. >> you've got to be pretty -- you've got to really be rooted in ideology to not be positive about the economy at this point, don't you? >> i think there's some portion of the public, joe, for whom the economic boom is not reaching. i think that's a piece of it >> yeah. but that's gotten better for eight years that was more prevalent than it is now >> joe, it's not clear to me that the current growth is one that has not -- i'll put it in

the positive i think the current growth is one that is likely to increase inequality than any of the other growth >> even though people can say i want to leave this job and can get another one? you think that's true, el-erian? don't you think this is better across the board >> i think the 22% is more about sustainability people say this is a sugar high. >> boy, this is the longest sugar high in history. >> let me point out one thing very quickly which is all of economic views are filtered to some extent through the political prism today. >> i just want to break in donald trump is awake and on twitter this morning and has some news. he just said, just spoke to the king of saudi arabia who denies any knowledge of what may have happened to our saudi arabian citizen. i'm immediately sending our

secretary of state to meet with king >> what dhaoes that mean? >> we also know that secretary of the treasury steven mnuchin planning to be in saudi arabia next week for this financial conference that so many business executives including jamie dimon and steven schwarzman all canceled their plans to be at. that statement he said friday when leaving the white house saying he was going to talk to the king and he now apparently has. meantime, want to swing -- steve, you got something quick >> real quick i want to mention this it's restaurant and bars that had a huge decline i don't know if maybe there might have been some storm effects in these numbers here. so we'll be looking at and through and about these numbers. >> meantime, let's head over to phil lebeau. he's got some news this morning from the private aviation sector phil lebeau, good morning from

orlando. >> reporter: good morning. this is a fun year to be down here at the national business aviation association's annual con frengs there's a lot of optimism and orders that will be announced. they announced this morning the sess ya, it has inked a deal with net jets. 175 super mid-size citation longitude planes 150 hemisphere planes. if you look at the book price and we realize nothing ever sells at book price. but the book price, $9.5 billion. take a look at shares of textron. this happens to move with defense stocks because it's so heavily oriented through defense business we're going to talk to the ceo of textron he'll be here in orlando

we'll talk to him at 10:00 a.m. about this deal and what's happening in the defense business will we see more consolidation, how it might impact textron. all of that come up at 10:00 back to you. >> phil, thank you for that. is that nicer than your wheels >> yeah, i did have a -- phil, i can't believe this is the biggest merger ever. >> it was. it was 20 years ago when macdouglas did it. >> reporter: it was 20 years ago, joe >> it doesn't seem that big compared to those mergers in aerospace. >> reporter: i understand what you're saying. >> good. what is that behind you? did you mention it >> reporter: that's the cessna longitude. if you got a cool $24 million, joe, it's yours. >> that's all you need a citation

all you need, andrew unless you have a lot of friends. well, you might. >> it's harder to land the big plane in aspen >> that's what i'm saying. a citation ten how much is that, phil never mind if i have to ask, i can't afford it >> okay. we got to go coming up when we return, tech analyst brian weiser on snapchat's parent company. why he thinks they may want to go private you're watching "squawk" on cnbc packaging for restaurants. and we've grown substantially. so i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. that's right, $36,000. which i used to offer health insurance to my employees. my unlimited 2% cash back is more than just a perk, it's our healthcare. can i say it? what's in your wallet?

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♪ welcome back to "squawk box. our next guest has a provocative idea says that snap could go private if it can't figure out how to keep people on snapchat. joining us with his findings is brian weiser at pivotal research group. that's why we had the music playing for weezer anyway, brian, tell us about this idea of yours and why you think it could be a reality. >> well, i think it's just a possibility to consider. i think that, you know, a $10 billion valuation that doesn't seem crazy considering how many companies out there are private and could be, you know -- it just suggests how much capital is available out there and that if the stock fell far

enough, i think that is something you'd want to consider it doesn't feel like a natural candidate for a straight-up acquisition. investors thought something like google or amazon could just buy them i think it's more likely that a situation that would feel like it's not going private would make much more sense i don't know that it would make sense without him running it and it doesn't make sense really as part of a subsidiary of a larger company again, i think there have been much transactions out there at that kind of level of capital where it doesn't seem like an unrealistic assumption my bigger point was if the business suffers, this is something to consider. >> i want to take the opposite side of your argument. take a company like this private is going to require some form of debt financing i imagine unless you think it's

all equity, that's a separate issue. then if you clearly look at the finances of the company, it would be very hard to make the argument given it is not making money. >> no, no. i am suggesting all equity i'm just suggesting is there a cyber wealth funds who would be willing to put $10 billion into this maybe not all the $10 billion. there are different partners who would participate. it's an area to consider >> so brian, i share skepticism that was just expressed. >> i'm sorry i respect the heck out of brian. this is not one we agree on. >> in addition what would snap do when it's private you're saying if snap is private, this is what it could do

what would that list be? >> listen. there are believers in snap. the reality is this is one of relatively small numbers of scaled digital properties. there are positive trends to look to just as there are negative trends to look to everyone's been focused on the negative i'm just saying there could be a supplier of capital out there. and that's my bigger point >> let me ask you a different question i know you have this idea about going private. which i accept you have that view my separate question is a potential takeover target for another company that potentially would have a synergistic value that could bring advertising onto the platform to expand its reach? >> i would think more of something like comcast something like a tyros would make more since. let's look back at when salesforce was looking to take

over twitter it was to give twitter an environment around which twitter could find its footing get timing out of the public sphere that was the idea. obviously it didn't go anywhere. because salesforce shareholders hates that but there were enough companies where $10 billion is not a crazy amount of capital. let's also be clear. this is not the primary thesis i'm arguing here i'm just saying that if there's a floor to value, there's some value at which there would be a buyer. >> okay. brian, i think it's a larger debate we appreciate your time, your perspective. it's something to at least think about. brian weiser at pivotal. when we come back, jim cramer will join us live from the new york stock exchange. check out the futures this morning. we started down triple digits for the dow. now down by about 63 points. s&p futures off by six, the nasdaq by 26 "squawk box" will be right back.

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>> you don't get a peak of the substance in the market.

i think we had the bulk of the good games >> yeah, you are feeling like at this point that we paid it forward and we got a lot of all these good things have happened reflected in stock prices. >> i think that's right. if things work out well, you probably got 3% or 5% out of the mark next year >> that's not so exciting. with volatility as well. >> that was david gersen in the last hour. let's get down to the new york stock exchange with jim cramer what's questionable throughout the question that's the way it worked, it tested unchanged so many times after the market action. did you think that was a solid day on friday? did it build a base or we go more to do >> i think our problem, what david were saying that a lot of

people feel that the economy peaked because the fed made it peaked each day, an analyst or research structure, okay, i want to see the number at the end of the cycle. it is hard not to say it is the end of the cycle i wish we did not have a fed mandated slow down but that's what we got. i understand labor's tight we often take numbers down because the fed is telling you to take numbers down and that's why it was difficult to be bullish. >> the fed always shoots in terms of tightening. well, are they already there well, not yet and you say they always do so they eventually will >> they're doing the right thing and being aggressive and that's what's needed. all this is really bad for

stocks it may be good for - >> how about bank of america >> i thought bank of america's quarters were good and they're making a lot of money of checking deposits and big operations within. but, i think the wrap is going to be in recycle you can't extrapolate the numbers so there is going to be slowing loan growth and a lot of competition. i think people said that stock was over it really just got clogged on loan growth. we need to see that the fed is more dated independence. if they are, every one of these stocks are a buy >> did you get a new dog >> i got bob marley. repeal canada prohibition on

wednesday. >> would you recommend everybody to have a rescue dog i can't imagine not having a dog. >> i can't imagine either. i think dogs are funny and important. when you look at it and think that it is about to be killed is a little too much. i like to say kill than put to sleep. that's what they do a lot of the so-called i don't know what you want to call them, pounds or whatever when they drop them off, they kill them. it is expensive to run a pet now. how much it cost to go to a vet? it is all cash this stuff is going to be killed this week >> is it wrong to like some dogs more than some people? i feel guilty. >> they ask for so little. they never talk back, what a pleasure and give them treats. you don't have to hear about it. >> they never fake >> they know

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thanks for being here. folks, that does it for us today, make sure you keep an eye on things after the decline we saw last week. there are red arrows thi morning. right now it is time for "squawk on the street. ♪ good monday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber. earnings season has lift off chapter 11, the saudis responded to the president the dow and futures are down 32. europe is slightly green china and japan is down nearly 23%. retail sales were surprisingly soft we