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 begin with a new week and

renewed pressure for stocks. futures point to another lower open the key debate has the market taught >> high profile departure from davos. the ceo of jp morgan and a number of others pulling out from a saudi conference. >> sears is filing for bankruptcy, what's next for the company's restructuring efforts. >> stocks are posing their worst week since march earlier on "squawk on the street," david gersttenhaber says he believes the boll k ulke good games i think we have the bulk of the good games

>> you feel at this point we have paid it forward and all these good things that happens have reflected in the stock price market >> i think that's right. it is not so exciting and relative to treasury and free returns this year and with volatility as well >> a lot is going to depend on easte earnings and guidance. >> david made a really good point. he's offialways entertaining. what we heard from charlie evans and jay powell, look, we got to over shoot when we raise rates the end of the cycle, he took to raise a lot of cash. unless you think the feds blink, they realize they got it wrong, they have blink periodically otherwise, david's view is in play i look at the retail sales

number today it is a second one in a row, it is disappointing the consumer price index is not so good. if you have a slowing and the fed ignores theslowing and focuses on things doing better then i think you will have david's view and we may see a peak i don't want to believe that it can't be on hold. >> you mention retail sales number, food and drink is down >> there is a tremendous move not to go out. >> we just asked you the same question >> since when? >> most of the retail of the restaurant companies admit that they had to boost a huge amount of their operation for take out. if you look at grub hub and you see and cavier which is buried in square. we talked about it we got a new place opening up in two weeks. we are figuring out how do you

deal with the cost of the dishwasher of $16 an hour and how do you deal with take out if you just want to drink at the bar. it is the -- >> you don't see those as a reflection of consumer spending of the trend of people wanting to be home >> it is domino's and netflix and the frozen food in isles millennials are the biggest cohearc cohert they just shift what they are now mattis the majority and their taste is different and they don't like to go out you have something that makes them see like you are turning them on. if not, they want a doggie bag and want to send to you.

how fastcan they get the talk faster >> i love the quarter. its gain has slu shrunk again. i hate to keep ongoing back to this end of cycle but people say that's great they're not going to get any better i keep on thinking of all the millennials that they're at it which is really amazing. again, majority cohert in america, they do a lot, you have a paypal that's worth half of

bank of america. does not matter, end of cycle. you have to keep on saying that to yourself. >> is that why we saw relative poor performance verses the results of jp morgan city and wells fargo on friday. >> wells fargo talks about non-bank competition jay jp morgan says things are good but also talked about -- that was jamie dimon being cautious a few weeks ago. >> right they just pulled out of the saudi conference this is the kind of thing that we did not think about saudi is not necessarily, these are hot areas all over the place. pnc is the big disappointer. >> mike mayo is kind of like how i used to treat my kids when i

was like nine. >> the loan growth is two. a year ago quarter is 2.9 and a year before is four plus >> that's what we are talking about. jay powell knows far more than anybody in business because he's the fed chief. he's saying listen, pay no attention to these slowing numbers. things are only going to get slower and we are going to whi inflation now. they'll burn down the village and save it. >> you were being sarcastic. people may not be picking it up there. >> especially not at 9:00. 6:00 in the west i city corp. is 60% overseas these banks are laying on the market and jp morgan opens and one reverses

0.1 is still radically where it was. >> let's hope not. >> end of day. if sentiment is becoming less positive then the market overall is the concern as opposed to the individual stocks are apart of it why is jp morgan going anywhere? >> because they have potential buy backs. these have well multiples. there is got to be some value buyers out there >> although we are sitting here talking about goldman sachs having a low multiple. >> morgan stanley is down by 17. >> they do so well >> nobody cares. >> end of cycle. every minute they turn the lights on they make a ton of money. this market has turned into a

bearish tone like you would not believe. it is incredible when you try to get somebody to buy a stock. they have reasons why it should not be bought with the exception of canopy growth >> yes, people are looking for a return in bud, not a beer company. >> you know what pepsico said? it is rather remarkable how well that business is going to do, the cannabis business. it can't be stop by the fed. >> got some defense mma, is it helping the tone at all? >> you see a bunch of it you got a growing pentagon budget >> these companies are notable that they spend more, a wider percent of revenues than indeed

than do some of their other peers or other defense companies. we are talking about harris and l 3 is getting together. ceo is taking over and he'll be succeeded by the other side. you can see right there, they're talking about $500 million >> i think this is a great deal. >> annual growth and savings returning to customers and cash cps secreted it is 1.3 shares of harris for each share of health you own, if you want to do the math out there. it is a large deal 30 mu$30 billion market cap for company. >> l-3 is less hardware so therefore it had 19 times earnings >> the only real defense stock

that's been doing well is harris you see the president this weekend talking about listen we are not going to and we sold arms and we are not going to let anybody take those orders away we'll find some other way to punish them. he's not going to take it back >> yes, he did >> he recommended a couple of stocks, he recommended lockheed martin and raytheon. >> is he massing on the position >> trump used to do that, too. >> casino business >> look, i am concerned, call me concern. at some point that the fed is going to blink and you are going to have sold every single stock that you thought it was end of cycle. >> did you think they can blink in the face of balance sheet

dolla -- >> jamie dimon, he says the $40 billion per quarter that the fed is cleaning up the balance sheet, he says that's a negative jamie dimon's quarter, all three quarters were great on friday. it is a great quarter. we sit there and we say how does it get from 11 times earnings to say, 12? can't come up with a reason. the market has turned against these stocks markets turn against a lot of stoc stocks we should be aware of that >> sears, chapter 11, we'll go inside the fall of the iconic american brand speaking of retail, stick around with chip wilson, the founder of lululemon. we'll get you the latest between

the saudis and the back and forth with the president sqwkn e re" ometfr post nine, back in a moment. why bother mastering something? because when you want to create an entirely new feeling, the difference between excellence and mastery, is all the difference in the world. introducing the all-new lexus es. a product of mastery. experience amazing at your lexus dealer.

sears is filing for bankruptcy, ahm mid slumping sae the company will close 142 stores before the end of the year in a statement, he said everything i have done as an investor in sears holdings has been the goal of helping the people, lampert says >> real estate, jim, who's going to buy some of these stores? >> we are actually going to do better without sears and he said that himself these sears anchors is depressing to the mall to capitalism getting roifd sid sears is good. the 73,000 people working there.

can i just point out, i know this is contrary view -- >> certainly the shareholder did not have the opportunity to sale >> right >> that made a lot of money, focusing from his ability to monetize from a real estate positive not long from the k-mart/sears deal. >> you had valuation, the company of $9 billion and he sold 18 stores and there are thousands other stores you start to think this is worth it and take the money and buy stocks if you were in it because of the restructuring, you should have made good money. >> i know people believe that would continue to your point we are doing the math and saying 18 pluses the stores >> i guess people felt that home depot has been fooled.

>> he did invest in advertising and stores at some point, its got to go positive it was negative every single quarter. >> remember sears said, jim, this is the wrong metric the only thing i know is that metric >> there was a point where these stores do a lot of cash. we asked isl lampert the next warren buffett when you sell those stores, they look like genijea genius. if if you think eddie -- he turned around k-mart i am just pointing this out. >> it has been downhill for a long time. they had winds of amazon and

growth of online and the internet and competition from walmart and target and everybody else >> some argued that -- sears is a victim of qe >> that's a really good point. i know eddie tried so many different ways to save the company. if you read the stories people would say it is -- he kept on doing things that is bad for sears. i would say eddie lampert has pride. he likes to be a winner and this was an l he's not just sitting there and being happy, hey, i made all this money off of sears. he's saying some of the investors are prominent. >> there has been plenty the question now like toys r' us hoping to reorganization, is it

a possibility that this will not succeed and you have to move to liquidati liquidation. bankruptcy judge has a great deal of power as well, signing off everything the company could do >> because you are so close to christmas. i think they'll feel it and get a boost and they close on january 2nd. that'll be realistic >> you mean the close what >> they could close everything >> eddie does not want that to happen because it is so embarrassing eddie is embarrassed that's not a good thing to keep things alive, he's mortified >> you can go back in 2009, the rhetoric was wow, he blows this. >> running the company from florida all these years. >> and k connecticut in the yact >> we remember it. >> it is hard to run retail when you are on a yacht a retail that's not for rich

people >> k-mart -- i used to go to k-mart in california, listen, my k-mart is starting to look better >> a little antidotal there. >> later on the halftime today, carl icahn, why he's urging shareholders to vote against dell we are back in a moment.

let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online.

we got six minutes before we get started on trading here at the nyc. first trading day of the week. let's talk about our first "mad dash." we are talking about attention to details how can eddie run hedge fund and also run sears >> the ceo of lowe's has brought him in this is the time to buy lowe's because all the attention detail that he brought is going to close the gap between lowe's and home depot i happen to post a picture from lowe's they fixed it up and he's attention to detail guy. that's how you turn around eddie did not have attention to

detail because he did not go to store. marvin will not stop until every store looks good then he'll turn looking for the pro, the probusinepr probusiness went all the way to home depot i believe in marvin. >> he had a ton of a rough go at jc penney. he had another name. >> yes, i don't know they had a hard time finding the ceo. it was doing poorly. marvin left it was doing poorly and the problem with sears, i don't think a lot of people didn't want the ceo. you need a ceo lululemon has no ceo >> we got opening bell coming up we'll talk about defense sateal as well cl ahtohaasaricn tt dell deal. i will have details when we come back

♪ (whistles) ♪ come on. come on, squirt. (dog barking) whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible.

200 days, 2766 is really where we are >> thises a stand that could be made we have to watch bank of america. good quarter and the stock reverses what it tells you it does not matter what they say again, if you start selling right here and you miss the harris, what a deal that was so positive if you miss any sort of blinking by the fed, i think that'll happen when he wilell why did is year it is not the end of the cycle that's a builder of them they miss their quarter very badly on friday and that stock have been cut in half. that's because they could not

find workers >> 28 companies on the s&p has reported so far. about a third of them had their estimates lifted >> that's remarkable >> that's why we are down because when you look at pep sew which had the best so far and the clock is good. the stock is way down. can i just say that wells fargo, i like the quarter of wells. you do have all these non-banks competition coming in. that's the insurance company, there is a lot of non-banks, wells is at an incredible low. they quit themselves incredibly well i think the pnc is struggling, although we got two um grades today. tfts it was a great quarter but this has been a group that did really

good on their quarters when i was reading the quarter this week, i was stunned, there was eight inputs that was what was key by the analys analysts by the big board today, celebrating call of duty endowment to help veterans finding jobs price target goes 89 to 76 if there is a barn burner, that's one of them >> the stock is in half this morning. people don't seem the power when you mix call of duty look at the stocks being killed with battle royal. you should get good numbers and the number from twitch that you can get online that shows you that activists and call duty have been doing well

sometimes people have given up on that. >> give up on what >> video games >> take two is going to be huge and live life-like, too >> and fortnite and i question nvidia which does the great chip for this they got a product between now and this new touring, amd has been going down and part people feel that video games has peaked i don't think the data has peaked we have more peaks than the high peaks region 46 high peaks, i climbed i got to tell you this is like being in the high peak zone. it is not the himalayas. everybody is worried about everything >> sure.

>> take netflix for example, it gets cut and price target cuts by goldman today, 430 and 400 to reflect a rising interest rate environment? does that sound intellectually species? >> rigorous? >> i think that there is a moment on the jp morgan call where marian lakes says listen, the cfo is really smart. it is hard if you listen to that call do you not want to say forget about it you have special situations where jp morgan -- it is not because of the china exposure that we saw a lot of luxury had. it is 11% short. that's a compelling story. the special situation story are compelling we have to be careful because the analyst as bullish as they were six months ago. they are now bearish

>> they did not trim friend as y normally do in the quarter they did not bring their numbers down as they do historically >> you look at sara friar who is so good. we use next door to her house. we like next door. my wife checks next door every morning you should check next door. she leaves square. there are a ton of good people at square. the stock loses 21 a very good cfo but suddenly nobody liked that stuff? >> you sat here many times and talked about how important she was to the company and how great he wa he was >> i did do that >> she's have northern ireland i do think what we got here frankly is the situation where

people lose faith very quickly yes, i did, i had sara on all the time it is not like jack dorsey has improved to be -- he runs square and twitter. that's not lampert running hedge funds and sears, they're different. >> understood. >> the president talked to the who i say a few moments ago with reporters. he talked about a new round of tariffs with the chinese let's listen in. >> number one as you know with pastor brunson, some of you were there and he had a fantastic weekend. he's back home and we love the fact that he's back at home and he's with his family he's a very happy man. he left turkey and he is

extremely thrilled and as i said, really yesterday more than ever that we want to thank turkey and we want to thank president erdogan. i just spoke with the king of saudi arabia who denies any dodge knowledge of what took place in regards to as he said his saudi arabia citizen i asked mike pompeo to get on a plane and go to saudi arabia and other places if necessary which he'll probably will. the king told me that turkey and saudi arabia are working hand in hand very closely on getting to the bottom of what happened. so we'll see what happens. mike pompeo is leaving literally

within a n hour or so he's headed to saudi arabia. we are going to leave nothing uncovered. the king firmly deny any knowledge of it or he did not really know, maybe i don't want to get into his mind it sounded like it could be rogue killers. who knows? >> his was a flat denial >> do you believe him? >> what? >> all i can do is report what he told me and he told me in a firm way that they had no knowledge of it. he said it was very strongly >> well, that was not part of the deal we had no deal with turkey we don't make deals, any deals

for hostages or prisoners, i will tell you that i feel much differently about turkey today than i felt about them two days ago. i have a good feeling of turkey and two days ago, i did not so that helps >> i don't know, we'll try to get to the bottom of it. i can only tell you that his denial to me is just one very relative fast phone call that lasted 20 minutes. his denial to me could not have been stronger. he had no knowledge and it sounded that the crowned prince had no knowledge >> i did say this is very important and the world is watching and talking this is porpt important to get bottom of it he understands that very well.

he did say that he's dealing turkey and they are coming to an agreement and investigating together and i think that's a good thing >> who cares i didn't say that. >> you better read it again. say it >> sorry, a helicopter roaring in the background. not a theory but the denial was very strong. it was not like there was a question in his mind tch, the dl was very, very strong. i hope shoe's running for president because i think that'll be easy. she will destroy our country and make our country into venezuela. i don't want to say bad things

about her because i hope she's one of the people that'll get through the process. it is going to be a long process for the democrats. >> what's your reaction? >> it is a shame when i was growing up, it is a big deal when you look at that whole filing that they did last night. to me is really sad. somebody that's of my generation i will say with that being said, i would imagine some of those great sites that sears had, they really had some dpragreat sitesl be put to good use it has been obviously improperly ran and it is a shame.

i am not taking -- we'll try to find out i am just explaining - look, i am just explaining very easily i think what was told to me a half hour ago the denial was not only a denial, it was very firm we'll check it all out and we'll get to the bottom of it, okay? >> north korea is coming along very well and relationships are very good and a lot of good things will happen it is complicated. we have done things in three or four months that nobody have done in 70 years i think north korea is coming along very well. thank you. i will see you at florida. thank you.

and she did a great job on television the other night i didn't do so bad either. thank you everybody. >> that was the president and if first lady, they're going to make their way to florida and georgia today to look at some of the destruction from hurricane michael. headlines obviously regarding the saudis of the 20 minutes call with the king of khashoggi's disappearance. on sears, improperly run for a long time. >> yeah, look - a lot of common sense on that. i think he knows it. >> the saudi issue is fascinating in terms of some of

the decisions being made by people who were previously part ta pa participating in this. they are enormous and great importance think about black stone, and the infrastructure fund they are in the process. jamie dimon, important relationships there, want to be an under writer for the potential ipo at some point. jp morgan, chairman of ceo, jamie dimon, not going larry fink, black rock, you can go down the list, these are important decisions here unclear of what it is around the ramifications.

this is a high-profile investment conference for the saudis saudi arabia of $45 billion of $100 billion vision fund, both in equity and debt related financing there. soft bank stock prices are down sharply >> not only that but saudi owns $200 billion in treasuries if the president is anger by $80 royal, nobody should change the price or double that figure which is hardly ever done by the saudis >> you accelerate and move to electronics so quickly that -- >> they have to be careful it is one of the reasons why oil and gas are so bad people are now really factoring in the end of the growth of gas

off of electronic. you can say well, that's ridiculous and electronic is so small. anybody is looking at the picture right now, it is ridiculous i would point out david's right. this was davos this conference was davos. >> they call it davos in the deserts. >> i have been watching decisions being made, there is a great deal on the line for them finan financially and they are feeling pressure in other realms as a result of these reports from intelligence that there is videos and audio in the audi embassy that indicates that mr. khashoggi was tortured and dismembered there. >> let's get to eamon javers of what the president said. >> very interesting from the president saying king salman for

20 minutes that salman denied any knowledge and apparent murder or possible murder of the saudi saudi journalist that you guys have been talking about. the president float the idea that it may be rogue killer. he himself is floating that idea and it could be somebody else other than the saudi government who attacked and killed mr. khashoggi. unclear of what happened there whatever the explanation is is going to account for the fact that khashoggi walked in ins st istanbul and did not walk out. the explanation will have to account for whatever happened inside that building the president suggesting that king salman denial is very strong and extended to his son, the effective ruler of that country. the president did not say that he spoke about this directly and did not say he got a denial from

him, carl. >> hall of fame mothank you fort a huge story and dproeigrowing e day. >> yeah, i did want to get to an important development for a story we have been following closely and namely that dispute between dell and holder of dvmt, that's the stock that tracks its holding in vmware. remember i did a story on this a week and a half ago talking about significant opposition to dell's plan to take that company public by ex chichanging stocks sales. those shares were issued at the time dell completed its purchase of emc and they have never done what dell's bankers said they should, namely track and closely the performance of vmware.

they traded a far larger amount than it was forecasted >> icahn indicated that he owes 3% of the shares of dell you can add him to the list. he points out of course the huge discount that is there between where the tracker is and where vmware shares are and his belief is an opportunity for dell pick up $11 billion at the ex tense expense of shareholders. he says that's being the discount he says we should get that $11 billion. that's a simplest way to explain it it is a strong letter from mr. icahn and involving strong language a couple of key points worth to

discuss it if you want some reference poinpoin points, you can go back to my story, the opposition. >> and dell has that right to go public and then buy in the tracker at 20% premium to its trading value over a period of time but, mr. icahn makes a point in his letter saying that's an empty threat he does not believe there will be an ipo from dell. dell over comes the massive of execution challenges of an ipo cram down. knowing that you have to issue a lot more stocks to take in the tracker. he says applicable law will suffocate dell ability his point is delaware law and the fairness standards of delaware law, surely we can hold off to that.

it is why he believes he can tie them up for litigation for years to come. i will tell you some of the banks have given him indication that i shared with you, jim. an serious. jamie dimon was in one of the meetings, moynihan from b of a, these are senior people who don't believe they would take on a large litigation risk if they took dell public, as is its right to do so and then buy in that tracker another is doing nothing that's what you saw there. let's bring that back up icahn also says your idea that you'll do nothing, pull out of the this transaction but won't do another, time goes on we expect dells cyclical business to be stagnant or decline while vm ware's business should continue to grow and become more profitable

you have to move now before vmware accelerates in terms of its appreciation of growth versus dell. and finally a very important development from mr. icahn, he says listen dvmt shareholders, you want more, we all do, but you don't want enough and if you want to sell at a higher price, sell to me, i will put together a competing bid for part of the stake in dvmt. i'm happy to own it and i'll deal with dell he believes -- that is mr. icahn -- that he can buy $10 billion worth of stock to get $11 billion, that being the discount and capture it. very interesting move from mr. icahn. not perhaps unexpected but he has now taken the lead in this opposition that, jim, i talked about to you a couple weeks ago. >> why did michael dell retweet something in my column where he retreats the ceo of vmware who says our vmware customers can

get back to focusing on their business and we make the infrastructure just run. and michael says truly our goal with dell tech solutions, from edge to core to cloud. with michael retweeting in my column he's saying that, doesn't that imply that hey, listen, we don't do anything, we'll just let vmware win why would he retreat that if he doesn't feel that way? >> i don't know. and it's not as if dell has had anything to do with ware investors value dvmt it's traded on its own it's not necessarily their fault. mr. icahn will join scott wapner on half time i'll be a part of that. >> i will, too. >> we'll have an opportunity to -- >> do you want to hijack the show should we hijack scott's show? >> sure. you're going to be on the show, too? >> everybody's in on it. >> let's those the bond pits, change things up rick santelli, what's going on >> it isn't a super volatile

market but that's been the sign of the market. look at one week of 10s, we've dropped. short ends, within three basis points of their cycle highs, but if you go to the long end like that october 1 chart you're looking of 10s, it has been quite steady and we're only eight basis points from our cycle highs. those are seven year and 10s, four year in the 30s look at a year to day to the etf h hyg. it looks like it wants to put in bottoms like we've never seen. if you look at the security side, it's widened from basically the 320 area to 360 as you see there but still very well behaved from a historical perspective. everybody is talking about china. if we look at a chart of dollar versus the yuan, from january of '08, you can see we are in a zone not very far from challenging that level that far back and finally, the dollar index. since june of this year you can see it's toying with 95. traders think that's technically

significant. it's already had intraday violations carl, jim, david, back to you. >> rick, thank you rick santelli. still to come, our exclusive with the outspoken founder of lululemon, chip wilson for the time being, s&p down just about four points, not far from the 200 day and the dow up eight. don't go away.

state of the art technology, makes it brilliant. the visionary lexus nx. lease the 2019 nx 300 for $339 a month for 36 months. experience amazing, at your lexus dealer.

jim, what's on "mad" tonight? >> we have bierman, we have medmen, it will be a big deal. >> we'll watch that, "mad money" tonight at 6:00 p.m. when we come bac ck,hip wilson, founder of lululemon dow is up 15 wicked seduction. these endeavors will rattle your soul... and challenge the contents of your stomach. if that sounds dramatic... it is.

hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.

if you don't like their answer, a moment of joy. a source of inspiration. an act of kindness. an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities. what we deliver by delivering.

welcome back to "squawk on the street." our last bit of breaking news is the august read on business inventories. that's still, of course, the third quarter number up .5, exactly as expected and last month it was revised up 0.7. of course this will give us a little extra horse power in our q3 gdp number when we get it at the end of the month carl, back to you. >> all right, rick, thank you very much. rick santelli. good monday morning, everyone. welcome back to "squawk on the street," i'm carl quintinilla

with morgan brennan and david faber at the new york stock exchange sara has the morning off dow is down 25 points after the worst week since march, obviously. earnings season takes off, watching the president versus the saudis here. sears chapter 11 and more. >> our road map starts with stocks falling as the market tries to recover from last week's steep drop. has the market topped? we'll debate that next. the president says he's sending the secretary of state to saudi arabia within the hour. and what was once america's largest retailer, sears filing for bankruptcy will give you the details. a warming coming in from hedge fund managers who believe the market has topped. listen to "squawk box." >> the outlook for the market in my opinion isn't nearly as good as it was. you probably don't get a peak of substance in the market until the end of 2the economic cycle i

in sight but i think we've had the bulk of good gains. >> you're feeling like at this point we paid it forward all these good things that happened are reflecting in stock prices >> if things work out well, you probably get 3% to 5% out of the market next year but that's not so exciting and it's not that exciting relative to treasury returns and risk-free returns and with volatility as well. a key question now -- is the rally over let's dig in with the chief u.s. equity strategist at credit suisse and brian belski. do you agree that the market has topped >> i couldn't disagree more. it's easy to say there's doom and gloom after the market pulled back by 5% but it's up 30% in the last couple years, earnings are fantastic the business fundamentals are good, the economy is solid, the market is not going up because of speculation, it's going up

because the underlying profit growth is there. that hasn't changed. >> brian, your thoughts? >> hedge funds control the flow with respect to the business on the cell side. jonathan and i have a long history together i don't agree with the client in the comments on "squawk box. all he's doing is saying what consensus is saying and by the way consensus has been wrong since march of '09 in then sense sent need with trying to call the top of the market. i'm just simple kid from minneso minnesota u.s. stocks are the best and most consistent search in the world i know we lover -- it's our job but the job is to make clients'

money and our job is to depict the fundamental conditions in the united states stock market and by the way we think it looks good throwing out this number that stocks will be up 3% to 5% next year is trying to top your book into being more negative. >> we know you guys have been bullish all year long for several years. when do rolling over pmis, housing, autos, now lending, when does that start to weigh on your concerns, never >> it's a great question, carl here's what i would say, so much of our nova scotiaing world has quite frankly become overmacro and we're not looking forward in terms of the forecast. we think numbers are going up. if you're solely focused on rolling over auto sales, by the way, which is a small percentage of u.s. gdp and pmi you're missing what's happening with respect to overall profit

growth, what jonathan talked about being very good, but i think it could be understating heading into 2019 because of the fearful conservative nature of ceo. so here's when i would be nervous, i would be nervous, carl, when people stop talking about the bear market, when people stop talking about the recession and stop trying to prognosticate the end. when everybody is bullish and we're jumping up and down having bull market parades, that's when i'll be worried. >> but we have certain things to be concerned about right now you have earnings season getting under way. we have potential tariff impact and trade risks that a number of companies have already come out and warned about and then, of course, you've got this potentially rising rate environment that we saw last week triggered a reshuffling >> yeah, i think that if we step back from this, here's the story and there's a wall of worry of a long list of things that can go wrong and none of them will

materialize. i think there's a story we aren't talking about which was while the earnings are not peak, they're going to slow. this year we're going to have for than 20% profit growth everyone should know that that's not going to occur again next year our estimates over credit suisse that we'll see 7.5% to 8% profit growth next year, and that will be a really healthy level, it's just not 20 but it's going to seem like deceleration the economy is growing about 3% gdp, next year will be two and a half based on the consensus. will that be good? it will be plenty of fine but i think that will be the story next syria that we're going see deceleration all over the place. but it will still be enough and i think that's the story we're not yet talking about. >> and i know the next question coming out of my mouth, where would you suggest investors be positioned and has that changed at all in terms of your thesis over the next week or so >> it hasn't we like tech longer term as

well we're overweight communication services as well but i think the two sectors that are the least invested where there's the most opportunity there from fundamental upside remain financials we think industrial earnings are way understated. from an institutional perspective, we think our clients are massively underweight financials with the pry two primary themes being commercial banking and wealth management i think there's still a huge rotation out of bonds and into equities that will take place over the next three to five years that no one is talking about. we think that will be a huge profit center for the financial services industry for the next several years. >> your thoughts where should investors be parking their money. >> we're in agreement on the tech basket. we like financials if i'm wheright that the economy slows into '19 and '20 not to a problematic level, the industrials are not the leader that brian says they are and i think that the likes of amazon and online retailing is really crushing the brick-and-mortar

part of the discretionary space and more importantly staples and i think those areas will remain under pressure and you saw the news today on sears. >> well, gentlemen, thanks for joining us today it's the end of an era once the largest retailer in the united states, sears, has now filed for bankruptcy the president weighed in on that announcement a few moments ago. >> it's very sad somebody of my generation, sears roebuck was a big deal it's very sad to see >> big chapter in america. courtney reagan has more. >> after 126 years from its founding sears files for chapter 11 bankruptcy. ceo eddie lampert has been funding operations through a number of complicated financial

engineering maneuvers for years but today's debt payment was finally too much to cover. three weeks ago sears filed with the s.e.c. a way to lower its $5.6 billion in debt to $1.24 billion which then it lowered the interest payments. it would do it by selling off assets by like mort like kenmor converting debt to equity, that obviously doesn't work eddie lampert is standing down as ceo, he will remain as chairman his hedge funds owns 19% of sears so he and his fund together are the largest equity and debt holders the bankruptcy is for reorganization there are many retail restructuring to be done. sears holdings hasn't made money in seven years so shoppers have been complaining of deteriorating sears and kmart stores with often empty shelves and racks for quite a while. and the fall of 2007 sears

holdings had more than 4,061 stores today it has 700 locations as part of the restructuring it will close 142 stores. at its sales peak, sears had more than $53 billion in annual sales. in the most recent fiscal years, sears holding sales totalled $16.7 billion. it's considerably more than the scant market cap today just about $39 million today's youngest shoppers likely have no memory of sears in its heyday as the country's largest retailer older consumers will remember it as key shopping outlets and there's still sears homes that are still standing out there in this country as well carl >> wow unbelievable the catalog was once a thousand pages long crazy. coming up, the outspoken founder of lululemon is with us today. plus, shares of softbank were down overnight investors nervous about the ties between the company and saudi arabia international pressures

mounting we'll go to riyadh for the latest pressure on tech as the ndx is down 1% plus down 1% plus don't go away. that's great. but right now you've got your hands full with your global supply chain. okay, france wants 50,000 front fenders by friday. that's why you work with watson. i analyzed thousands of contracts and detected a discrepancy. it works with procurement systems you already use to help speed up distribution without slowing down your team. frank, tell fred full force on those french fenders. fine. fine. fantastic. for ai that knows your industry, choose watson. hello! the best ai for the job.

oil prices were up in choppy action this morning, although wti is down for the moment the tensions between the u.s. and saudi arabia are growing we're live in riyadh

hi, hadley. >> secretary of state mike pompeo is on his way to riyadh within the hour, we expect him around breakfast time tomorrow and it speaks to the critical point that u.s./saudi relations have reached over the last 24 hours. earlier we heard president trump making some comments going through everyone's mind is how much he's learned from this conversation, let's listen in. >> mike pompeo is leaving literally within an hour or so, he's heading to saudi arabia, we are going to leave nothing uncov uncovered. the king firmly denied any knowledge of it. he didn't really know. maybe -- i don't want to get into his mind but it sounded like me that these could have been rogue killers who knows? we're going try to get to the bottom of it very soon but his

was a flat denial. >> the president say that there could be any number of reasons including rogue killers that led to the disappearance of jamal khashoggi two weeks ago. saudi arabia has been noticeably silent over the last couple of weeks exsent for the last 24 hours when we've seen rapid news out of the kingdom from yesterday. a statement coming out from the government here essentially say ing that any sanctions would be met with greater action. that was walked back slightly by a spokesman from the washington embassy a couple hours later he said when it comes to saudi arabia and the investigation into what happened to mr. khashoggi that he appreciates the united states and other allies taking a back seats and waiting patient ly

we're wait fog hear about the inspection from the saudi consulate in istanbul led by the saudis and turks as well so a lot of news coming out and we'll watch and wait to hear more. carl >> hadley, i'll take it, thank you. hadley gamble reporting on this developing story from riyadh when we come back, a mega deal l 3 and harris merging we have the details. plus more with the ceo of textron, "squawk on the street" will be right back don't go away.

we've got earnings from bank of america you can see what the spdr has been doing let's get over to wilfred frost for more on the earnings >> banks have for the most part delivered decent earnings so far this quarter bank of america today had their strongest net income number ever eps came in at 66 cents ahead of 62 cents estimate and this was down to strong core performance

in their retail bank loans up 3%. deposits up 4% and credit quality remaining strong however, despite positive absolute loan growth, the number was a little behind consensus. if we look at the bank that have reported, the sector-wide loan growth is around 2% which is underhill wi underwhelming. however that hasn't been accompanied by falling credit quality which does encourage bulls out there. over two days since the banks have begun reporting j.p. morgan performed worse. why? well, their revenue while up 5% year over year fell 2% quarter over quarter and they are the ones with the most premium valuation on a price-to-book multiple but all of the banks look cheap on the p multiple relative to the rest of the s&p 500.

going back to the spdr, the xlf is down nearly 5% year to date guys >> thank you wilfred frost. it's the largest defense industry merger ever harris agreeing to combine will 3 in -- with l3. annual sales around $16 billion. in terms of the deal itself this will create a company of over $15 billion. people are saying it's the largest defense merger ever however that is up for debate. it combines communications, electronic warfare, space. it could generate $3 billion in free cash flow and $500 million in cost save within three years $200 million in savings according to the companies to be returned to customers. now, i did catch up with the ceos of both companies to discuss the deal details

the ceo and chairman of l3, bill brown, the ceo and chairman of harris corps, i asked them why they're looking to merge now and harris's brown said in the environment of strong u.s. economy, defense spending coming up, that there's need to deliver more solutions to customers, that requires scale, more spending, a broader set of capabilities and kubasik noting both companies are strong and that this is something of a unique deal given the fact that they're both performing so well as stand-alones. i asked kubasik who said his goal was to create the quote/unquote sixth prime with l3, that this appears to get them on to the trajectory, combined 4% of revenue on r&d, that's by far industry leading they've had positive feedback from the other five primes and that in terms of the biggest opportunities here, harris' brown telling me where the department is moving its

multidomain battle, you have to connect capabilities across the war-fighting domains and by combining these two portfolios it gives both companies together greater opportunities to do just th that f-15s, fighter jets, f-35s, this will give them broader capabilities in terms of things like radio communications for the army and just in terms of the merger it's supposed to close the middle of next year and that said that this makes sense given the fact that these two men have a long standing relationship together. l3 up 11%, harris is up 9% on the deal news. >> well, that's adding to the overall market value nicely. that's a very good and interesting reception so far from the marketplace given those numbers. you said they know each other well it's interesting, morgan merger of equals, they occur but they are not without their own challenges in part what we call social

issues in this case you've got one ceo taking over for two years and the other taking over and a split board of directors but sometimes you can lack vision or leadership do you get a sense as to well how these guys know each other and how much they buy into the combined vision they have for this company >> i get the sense that they -- well, they've known each other for years now and i asked them how long this deal has been in the works and kubasik came on as ceo at l3 in january and as soon as that happened they started having conversations it evolved as those discussions and picked up over the summer and in recent months it became a merger of equals opportunity but they know each other a long time and greatly respect each other for them they feel like a deal makes sense. meantime, phil lebeau is in orlando at the nba showcase

sitting down a special guest hey, phil. >> guys, i'm joined by scott donnelly, the ceo of texttron, a huge day for you as texttron aviation your subsidiary and cessna launched a big deal with net jets, tell us about this deal because in the world of business aviation, this is a wopper, we don't see this very often. >> we've been working with net jet guys on latitude which has been a huge success for both companies. net jet has 75 latitudes in their fleet. we here in the process of building more aircraft. >> 325 airplanes. >> correct so the longitude deal is 175 we're extremely excited about

doing that they'll turn their sales teams on shortly to drive that we would expect to make deliveries next year and introduce that aircraft into the fleet. this is an airplane we've been talking about for a while. we've done the concept design. net jet is fully engaged they're a huge operator in that class of airplanes so to have a partner that brings that experience from pilots, maintainers, crew, help us speck out, super exciting for us. >> what's changed in the corporate jet market to the point where we're seeing a level of optimism that we haven't seen in a long time it's been building was it the fact that the used inventory dropped down to a point where people are saying let me by new? >> i don't think there's any question the main driver is business confidence. if you look at what is happening, much of it driven by the tax cut as well as regulatory reforms, our

customers feel great about where their businesses are so if you'll make a cal allocations decisions and apply that aircraft the way you think about hiring more people and building more buildings, they feel good about where the businesses are. >> let me switch to the defense side you heard about the l3 and harris merger today. do you look at this and say this is what we're going see more of over the next year or two years? whether it's textron or somebody else >> well, i think we've seen consolidationment when y men consolidation. it's difficult today to execute in the defense world without having a good deal of critical mass our customers want to acquire faster, that means more rapid prototyping, that translates to more investment up front on behalf of defense contractors. so if you look at something like we did on the army

so you have to help accelerate acquisition. that's smart for smaller companies to do so we're seeing more driving of critical mass because you need to make that investment up front. >> scott, great to speak with you today. just digging a little bit more on the question phil just asked you and in terms of this deal making we've seen aerospace and defense being northrop grumman buying orbital you have a number of others just in the past year or so are you looking to do deal making yourself. i know a number of analysts have pointed out harris is going to be the stand alone midcap aerospace and defense names now. >> we've been doing small deals and acquiring companies. they don't the critical mass to bring that all the way to the

fruition we're 75% commercial but that strength on the commercial side, that size of the business really helps us to be able too afford to make the kind of investments we've made in the light attack aircraft so we certainly don't feel like, hey, there's a need for us to do that we have the with where all to make investments and compete in the market as we are. >> i know your business is commercial but given the fact that you have to defense component, another big story is everything playing out between the u.s. and saudi arabia in light of the disappearance of that saudi journalist. in terms of arms deals between the u.s. and saudi arabia, what are your expectation there is do you expect that we continue to see those move forward and get put on ice and does that have an impact on textron? >> i think we've already been seeing for the past year where deals that have been consummated were working their way through the system but you haven't seen a lot of new approvals going through.

the politics right now around obviously not unique to this specific incident but if you look at the whole yemeni conflict, that's made it hard to get deals through congress as we stand today so we'll have to see how this plays out but it's safe to assume you won't see many deals happening in the near term. >> scott, one last question before we wrap up the interview here you talked about business confidence but you look at the economy overall here in the u.s., how comfortable are you about what you're seeing and the direction we're heading in >> very comfortable. when you look at what happened around tax cuts, more money staying in the private sector, that's driving investment and hiring and it's -- this is what's critical for the country you look at employment levels, guys are feeling -- where they're feeling their business is going that will drive it and there's no reason to think it will end any time soon. >> scott donnelly ceo of textron joining us on a day where they announce a huge deal for 325

corporate jets. >> thank you, phil phil lebeau. let's send it over to contessa brewer a news update. president trump says he has spoken to the king of saukd who denies any knowledge of what happened to missing journalist jamal khashoggi. he was last seen entering the saudi consulate in istanbul. the president says he's sending mike pompeo to saudi arabia to meet with the king in southwestern france roads swept away as the equivalent of several months of rain fell overnight. look at this, schools closed for the day as you might imagine at least 11 murals in san francisco's clarion alley were defaced with pro-trump and white ring republican slogans over the weekend. vandals painted messages like "make america great again" and "kavanaugh justice for all" over art work prince harry and meghan markle are expecting a child

the two arrived in sydney to begin a 16 day visit to australia, fiji, tonga and new zealand. busy travel itinerary. that's the news update let's go back to carl. >> contessa, thanks so much. when we come back, the outspoken founder of lululemon is with us we'll keep an eye on the markets, interesting spreads between the dow which is almost perfectly flat and the ndx down a full percent "squawk on the street" is back in a moment.

a mixed market dow hanging on the a 19-point gain but the nasdaq leading us lower. tech underperforming the market once again ubs director of floor operations art cashin is here with us at post 9 to talk about what the setup means here good morning.

>> good morning. i think the market had enough of a shock last week. it's like a unanimous a dark room just reaching out to find out which way you can walk and not stumble. i think the techs will continue to underperform. a lot of wild cards out there. t the saudi arabian thing and china out there, though it's not necessarily above the fold on page one. we had an interesting opportunity to name them a currency manipulator and that did not occur so we'll see where we go from here. >> the risks with saudi, how might they manifest themselves if things don't go well. >> there will be a great hew and cry in the dpong nothing else and try to get things up and running. >> it sounds like they're trying to begin to posture this as

perhaps an interrogation gone very, very bad that something happened, he tried to escape and that's when things have carried on the trouble is if we're right about the estimate of the crew of people, that's 15 witnesses or conspirators or whatever you want to call it. so that will be difficult but if you keep watching oil here it is not having a big move. >> what do you make of the retail sales numbers today it came in well below expectations is this a warning sign >> i think people are trying to figure out where to go and what to do. you're coming up on christmas without toys "r" us, without a lot of kmart and sears. >> it is profits

is its guidance? >> it's probably guidance, i would think. the earnings should be good. it looks like people are continuing to beat at least marginal marginally how do they see the holiday season coming up the labor market continues to get tougher. that's in the back of the market's mind. will that put inflationary pressure in there? >> sounds like we might speak again. >> it could be. >> thanks, art art cashin when we come back, controversial lululemon founder chip wilson is with us talking about his explosive new book and the current state of the retail industry just as sears files for bankruptcy "squawk on the street" will be right back don't go away. thdoisp pnt business. so that if your customer needs shoes, & he's got wide feet.

& with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

the lexus ls 500 & ls 500h. ♪ take advantage of great offers on the 2018 ls 500. experience amazing at your lexus dealer.

time to get to the cme group in chicago and rick santelli >> thank you, david. global growth, u.s. has been widespread with the rest of the globe growing faster this divergence doesn't seem to be able to last much longer. is there an issue with the u.s. economy or did volatility get too low and equity positions too big or is the rest of the globe having an influence on our rate of growth? your thoughts? >> i think it's -- the real question is how do you get convergence? one way is for the u.s. to slow down i think it would be nice to see the rest of the world pick up and the difference has been the policy mix, low tax, low regulation, reliance on markets in the u.s other countries could adopt that and we'd see a convergence from

the bottom. >> also, what the politics of italy, germany, what's going on with brexit, all the question marks up in the air in those areas do you think that indeed central bank policy if nothing else could keep this duel speed growth in place for longer >> there are real issues associated with europe and brex brexit the patterns of trade and the taxes associated with the patterns of trade, central banks won't change those they can't dodge them in any way so they'll have to sort out the core fundamentals and bad central bank policy can slow you down they can be put in place as well some pro-growth policies. >> when it comes to what's going on with china and the tariffs, the imf put out statistics that you've written about it seems quite strange to me with the u.s. economy expected to grow in the 2.5% region in china a little over 6% and

looking at the percentage of how those great rates figure into the global growth, their assumption is that 40% of global growth is at risk due to hundreds of billions of dollars of tariffs even though the global economy is tens of trillions. how can you explain that >> i think it's an interesting statistic, theist is going to grow about 3% in their estimate and china a bit above six. that accounts for 40% of all the income gains on the global now, when the u.s. and china get into a trade war and both of their growth rates slow, we think of that as confined to just the u.s. and join but it's not. that's an important part of driving global growth that it will spill over into the emerging markets so there's more at stake in this tariff spat than just the u.s. and china. >> let me interrupt you. aren't global supply chains awfully flexible and able to change

granted not overnight. do you think that type of static number, 40% affected, is real or do you think it could be less? your final thoughts? >> it will change over time. that's the impact affect and people respond to incentives and economics and they will. so it will go down as a result i worry about the permanence of these tariffs. there's evidence the president wants them in place for a long time and that means adjustment has to start happening. >> excellent answer. thank you, dwooug, appreciate it david faber, back to you. >> thank you, rick santelli. coming up, the outspoken founder of lululemon why he's railing against the term "at leisure" and says "everything about clothing bothers me." first, let's send it to john fort and look at what's coming up on "squawk alley. the dow is about break-even

but tech stocks on the nasdaq not doing so hot adobe, sales force, nvidia lower by more than 3%. we'll check in on what's coming up on "squawk alley. obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

california had the worst wildfire season on record. scientists say, our weather is becoming more extreme

and we all have to be better prepared. that's why pg&e is adopting new and additional safety precautions to help us monitor and respond to dangerous weather. hi, i'm allison bagley, a meteorologist with pg&e's community wildfire safety program. we're working now, to enhance our weather forecasting capabilities, building a network of new weather stations to identify when and where extreme wildfire conditions may occur, so we can respond faster and better. we're installing cutting edge technology to provide real-time mapping and tracking of weather patterns. and we use this information in partnership with first responders and california's emergency response systems. to learn more about the community wildfire safety program and how you can help keep your home and community safe, visit pge.com/wildfiresafety

welcome back to "squawk on the street." i'm dominic chu stocks are struggling to find positive territory as has been the case with the latest market pullback technology has been one of the key sectors in focus it's the worst performer of all the sectors in the s&p by a wide margin today today's losses are being left by software and semiconductor related names like adobe, nvidia and kla. sentiment continues to drive the trade in places like tech, com services and consumer discretionary with the nasdaq still trying to find a bounce as it trades below its 200-day moving average tech will be a key sector in the next leg higher or lower in these markets. >> dom, thank you very much. while one retailer files for chapter 11, another continues to rise, that's lululemon stock has soared since its '07 ipo. up 80% this year alone not everyone has been supportive of the latest lululemon management, though

joining us for an exclusive is the always outspoken chip wilson his new book "little stretchy black pants" hits stores tomorrow there's a look at it the unauthorized story of lululemon. can i call it no holds barred because it doesn't look like there's many holds barred. >> i think you get to an age and a wealth where you've got nothing to lose and i think i was always that type of person from the beginning it's impossible to invent without being the person out there in the first place. >> so you go into all kinds of things, m&a discussions that led nowhere in some cases, crazy interview interviews that made news for weeks and months walk us through headlines. m&a. things that might have been. >> i talk about under armour and i think we definitely -- not we, i can't say the board or anybody else but i definitely looked at it i thought it could have been an

amazing thing to put the female part of lululemon together with the masculine part of under armour and we were looking at nike and i wanted to overtake nike and i thought that was pretty astute move at the time. >> in terms of management, an ag at the time. >> in terms of management, you were critical of management there. how do you think about it now, given the stock is up 80% and we have seen a rebound. >> in context to what though this is what i always hear, it is up 80%. but they had five years of quite appalling results. so when you have 80% on top of the number one, i would rather have 20% on top of the number five, so it is all how you put it in context. >> i'll put something in context. lululemon has a $19 billion market value under armor, 8 billion so does limited brands sounds like success. >> but only in comparison in the

limited amount of context you're putting it in. i think lululemon has incredible possibility, especially -- it lost a lot of institutional knowledge in the last 6 or 7 years. if it can get it back, bring back transformational development of people, which was the focus of the company, and really start to understand again what innovation is, what brand is, then i think it's got another $10 billion to gain quite soon >> would it have to pivot to get that or can it do what it has been doing >> i think it has to pivot from the context it has of being metric driven. the thing about people, development, brand, there's nothing more than long term stock price. you look at the last six years, lululemon has done nothing for five years only in the last year has it done something a lot of it has to do with

consumer spending, stock buy back, you know, the trump corporate taxes have been phenomenal, and i think generally that technical apparel is still in the middle of a hundred year cycle. >> you don't seem to want to give any cudos to current management team i guess. some would say that the increase in value in the last year, year and a half was recognized by the market in that time, but was really the result of years of planning of the things you're talking about. >> well, i think what happened is you got into this five year funk, so halfway through i sold half my shares to advent we had to shake up the board because you can't change the ceo without shaking up the board the board was changed up ceo was gone we have a new ceo. i am exceedingly happy he is an athlete.

but lululemon is missing the west coast culture and missing someone who reallyunderstands technical apparel and there's nobody on the board or the ceo that has that. i think that the management underneath is phenomenal and it needs to leverage that >> you use the term technical apparel. you don't like the term athleisure is that true >> no, i think it is totally lame >> why what does it mean to you >> you're the founding father of it >> no, i mean athleisure came about 30 years after i think new york media put that on it. 30 years they missed the trend they kind of like the fashion media put that word on it. if you're on the west coast with nike or lululemon and the technical companies that are there, that's the last thing in the world that it is is leisure. you know, i mean, the whole thing is we come from function first, then make it look good. athleisure is looking good,

trying to make it look athletic. >> we're going into a holiday season with sears in chapter 11, toys r us has had inventory disruption what does that mean? is there revenue base so small it is easily diluted in the sector sears, for instance. >> well, what i really feel in the future of retail is sears is going to create a hell of an opportunity. you're going to have one floor electric gocarting, another that's virtual reality. >> talking repurposing. >> it will be phenomenal these retailers are building condos on top of their land so they can have the people right there. >> do you think people want to live at the mall >> sure. 100% already see it happening in canada, probably because you have more denseness than the u.s. i think stores will be repurposed, spin studios, athletic studios, things that

retailers never wanted before. nutrition. anywhere people have to go. >> sounds like dave andbusters they come to play. >> i don't know who he is, but i'll take your word for it. >> we heard that from some mall operators. back to lululemon for a minute, i hear you talk about direction and vision of the company, would you be interested in going back to the board or are you focusing sights elsewhere >> i definitely have my seat on the board. again, i took my time. i had to make some changes from the background i think the time is now right because it is missing diversity on the board someone that understands brand, product, people development. >> is there a trend in apparel that's budding that new york media hasn't coopted that's going to be important. >> those are things i can't tell you about. there's no point in giving the secrets out. >> at least a hint

there is one, right? one or two >> i think the big thing that got missed in the last five years was mindfulness. lululemon could have owned that and that would have had a 30% lift on the market cap in the last five years if they would have done that what i do notice, i started in surf, snowboard, yoga, mindfulness. every five years, a major social movement comes through that lululemon can connect itself to. i think we're seeing budding ideas of that now, but nothing i can tell you. >> you'll come back? >> sure. love to. >> good to see you >> thanks for having me. >> congratulations on the book "little black stretchy pants." it hits stores tomorrow. congrats. >> thank you so much. we are watching tech stocks selling off a bit, adobe, amazon down 1o t3% we'll get you covered on "squawk alley" starting in a couple of minutes.

♪ ♪ protect sensitive data from millions of kinds of malware, with a cloud that's secure to the core. the ibm cloud. the cloud for smarter business.

the ibm cloud. is taking place right under your nose. but it's not robbers. it's these guys. your bank has been keeping billions of dollars of your interest. that's not right. it's payback time. move your money to an online savings account at ally bank, and for a limited time, get 1% cash back. sign up at ally.com/payback and find out how much you could get back. ally. do it right. ♪ ♪ ♪ ♪ comfort. what we deliver by delivering.

takes more than just investment advice. from insurance to savings to retirement, it takes someone with experience and knowledge who can help me build a complete plan. brian, my certified financial planner™ professional, is committed to working in my best interest. i call it my "comfortable future plan," and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org. it is 10:00 a.m. at sears headquarters in illinois and

here on wall street. "squawk alley" is live ♪ ♪ good monday morning, welcome to "squawk alley." i am john john with morgan brennan and jon fortt at post 9. there's the nasdaq down three-quarters percent tech coming off the worst week take a listen. >> the outlook for the market in my opinion isn't nearly as good as it was. you probably don't g