"squawk box" begins now. ♪ >> live from new york where business never sleeps, this is "squawk box. good morning 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. let's look at the u.s. equity futures. it's friday. we have had two wild weeks where we have been watching things this morning you will see the dow futures are indicated up by 33 points. s&p up by 3 1/2. nasdaq up by 18. anything could happen. big losses that we saw yesterday with the dow off 327 points. the s&p down by over 40. nasdaq lower yesterday by 157. even with those losses from yesterday, you are still looking at the dow and s&p up for the week the nasdaq just below break even wow. we will talk about what's happening.

s&p has been down 9 out of the last 11 days guess what anniversary it is today? >> 31st anniversary of the stock crash. that was a volatile october but this is the most volatile october in a while >> i was under my desk i was answering the phone. no, he doesn't work here >> you joke about that were you really? >> i wasn't doing that it was a traumatic day i think i had a client who had a big bond position. he was long bonds. and he was down couple hundred thousand dollars before that day, that morning, that was the one guy i was happy to hear from bonds were up three points like 200 basis points. all of a sudden he went from being down to being in the money. it was weird

you probably looked at it historically, but dow components were trading at $4, $5 stocks that were $30, $40, they were down in low single digits that was the equivalent of 6,000 points today in one day. >> one session >> it was that whole week. you were seeing losses that you couldn't believe you thought it's got to bound here >> happy 31st anniversary. >> seems like there would have to be a black swan >> couldn't happen in one day again, could it? the type of things that would cause that would be a horrible dirty bomb >> let's not think about that. let's talk about what's happening in europe now. early trading is taking place there. you will see right now down across the board dax is the biggest -- i take

that back. the cac is down by 1%. dax down by 0.7% ftse flat. stocks are weaker in thely and spain. both off by more than 1% the ten-year here is yielding 3.17%. a bit lower than yesterday let's talk about big news out of china overnight the country posting its weakest gdp growth figures since the first quarter of 2009. but stocks there rallied after officials unveiled new measures to support the markets all of this an overlay to the larger conversation between the united states and china. eunice yoon joins us from beijing. eunice >> thank you very much these numbers were highly anticipated because it was the first time that investors and economists would be able to get a sense as to whether or not the trade war was having an effect on the chinese economy it looks as though there's some evidence

to suggest it's already starting to begin so the q3 gdp expanded by 6.5% it missed expectations, but what is interesting is the exports. exports for the quarter look surprisingly strong. but industrial production continued to decline and dropped in september by 5.8% manufacturers have been front-loading shipments because they want to get ahead of the tariffs. the fact that the factory orders were weaker suggests that that pop in the exports is only temporary. despite the economic slowdown that we're seeing, the stock markets rallied at the close that's because top financial officials were coming out in support of the stock market. the chiefs of the central bank, banking regulator as well as the securities commission all were talking about how the poor performance of the stock market has very little to do with

economic fundamentals. they also announced various measures to get more funds including private equity to invest in the stock market in addition to that, the vice premiere, who has been the right-handyman of president xi jinping on the economy and the one in charge of the whole trade discussions with the u.s., he weighed in as well saying that the u.s./china trade war has had some impact on market sentiment, but that the u.s. and china are in touch he also said that he's been following what foreign institutional investors have been saying. he says that he agrees with what -- he says what they're saying and that is longer-term all of this selloff in the stock market here is actually good for the chinese stock markets. and that this is a good investment opportunity >> okay. eunice yoon, thank you can i ask one question

in terms of the overlay, in terms of what this means to the relationship with the u.s., in terms of the leverage, if you will in this larger trade negotiation, how do you think this will play where you are or at night where you are and in washington >> are you talking about the economic slowdown? >> yes >> right now a lot of chinese officials are concerned about the way the economy is going the numbers today make things much more complicated for policymakers we're seeing they want to have a slowdown they've been trying to deleverage on the other hand they're facing a -- what a lot of people here believe will be a protracted trade war that will last into next year. there's a lot of concern as to just how many measures they

could put in place before you start having issues which they saw back in 2009 after the financial crisis they've been very careful and moving ahead to safeguard the economy because they do see a lot of issues with the way the economy is going >> eunice yoon, appreciate it. our top corporate story, elon musk tweeting last night that tesla's launching a less expensive version of the model 3. he said just released lower cost midrange tesla model 3 and super simple new order page. it starts at $35,000 the new option comes with the same battery pack as the long-range model three but uses fewer cells.

this is all a journey for them as they try to get to that $35,000 base model musk tweeted that the new version will actually cost about $35,000 after factory and federal and state tax credits. and the true cost of ownership is closer to 31,000 after the gas savings. you can start ordering the midrange model 3 now and delivery takes 6 to 10 weeks but to be eligible for the full federal tax credit you must take delivery by the end of the year. under u.s. rules the tax credit will be phased out once an automaker sells 200,000 electric cars tesla just hit that mark in july good news is they're doing well in terms of how many they sold, the bad news is you lose the credit >> getting down to $35,000 range

is only happening in california because of their higher taxes. if you pull forward the sales for this year, what happens to next year's sales. if you talk about the affordability of the tax credits we have for another two months -- >> but i think the strategy is they're hoping by 2019 they'll be able to lore twer the price n their own. >> it's the same battery but they're not using all the cells? is it cheaper for them to manufacture if you don't use all the cells? or are they doing this so they don't cannibalize the sales of the higher product >> i believe there are less sales in this actual pack which is different than the model s. for that they had a long-range battery and a short-range battery. in that case they flipped a switch so you would have the battery in the car, they could turn it on and off and pay more for that.

>> does this cost more to manufacturer >> i believe in this case it's less there's a battery issue and some other additions that are added on >> there's a few of them around. there's the one i like, which i see every other car where i live is that model s. those are everywhere it's a handsome car. >> it's a beautiful car. >> then there's another one that looks like the pontiac as tech or someone made a mistake in the design i don't know >> with the wings? >> yeah. >> i love that >> ugh, looks like a prius >> no. no >> and now there's this one, which is in between. >> this is one level lower >> but in terms of style >> okay. it resembles a wannabe, or just

an accord or a generic -- >> but the marketplace -- >> i know. but they're fast they're electric i understand it. i'm not, wow, i got to have that the s is like that this one is not. it's utilitarian it's not a -- >> that's kind of the goal >> maybe before it was a real i want that emotional thing. >> that's the key. they have to continue to lure in the people for the aspirational thing. also they have to sell to the masse masses >> just trying to get to one place to the next. >> an update on amazon's search for its hq2. executives have made a new round of visits to several of the 20

finalists for its $5 billion project. is boston still in the running >> i thought everyone is talking virginia, virginia, virginia isn't that where everybody is -- >> focused on urban sites including new york city, newark, new jersey, chicago. amazon also followed up with miami and washington, d.c. some cities including raleigh, north carolina have not heard from the retail giant for months it will be interesting we're waiting for this we're waiting for the lottery. >> i will buy you a ticket tonight. >> fine. >> i bought $10 worth. i'll sell it to you for $20. >> fine. i told andrew, that gentleman we had on yesterday, chris hughes after he said he was lucky, after listening to his ideas, i realized how lucky he had been

now i think you can win the lottery. if he has a half billion dollars, it is possible to win >> i have $10 worth of tickets that i will sell you for $20 now. >> you will sell me some >> not if you want it. >> no, i don't want it >> stocks to watch, paypal's third quarter profit beat forecasts. venmo their peer to peer payment app had revenue rising 78% shares of paypal are up almost 8% american express topped forecasts and it is raising its outlook for the year that's one stock i remember vividly from 1987. it got down to about $4 or something. did you look at that, santoli? >> the whole list. the way the screen looked. i think everything was red, but the numbers were all single

digits american express citing a stronger economy for a 10% jump in card spending. and dow dupont will be under pressure with the company taking a 4. billion charge last quarter to write down the value of its agriculture business hit by weak sales in north and south america. >> mike santoli joins us now with a look at some key levels in the markets >> we're not back down to the lows we finished last night on the s&p 500 about half a percent about where we closed monday we have a year to date chart of the s&p 500 that shows last week's low what is interesting is how much time the market is spending this year whipping above and below that level

2740 is where the most volume has taken place. you know, there's a big argument going on in the market around general level of value for the market earnings has not been a help all year it's a premise. it's not at this point yet a catalyst maybe after we get out of earnings season that will round into shape so what to watch now if it's going to be some kind of a retest of those lows, this is not unusual activity this is how it always happens when you have a big shock like last week. you have these rallies, air pockets, anxiety a lot of emotional trading and technical trading. i think that's where we're at now. the rest of the world, shanghai in a bear market the german market is down 15% from its highs a lot of that stuff that was a brag is still there. >> shanghai down 28%

>> down 28 from the highs. all the world markets don't look that great by the way, the nasdaq was down 2% yesterday so a lot of times this year when we had a back off in the market the big tech stocks were going up for whatever reason people were hiding out in those stocks right now i think we're in this mode you want to see if we do get these further selloffs, see if there is less intensity. the volatility index did not get up yesterday where it got up to last week. it is all, according to cadence of anxious october trading trying to see if there's a low in the area. >> it is looking like garden variety things we've seen before >> it's almost to the point where you want to say -- >> it can't be that. it seemed like we were at 9

begb the beginning of something, but we were oversold, towards the end of it perhaps. >> the down side is if all you got was a bounce, it's not great, but you want to see how it unfolds from here i talked about that 2014 analogy, the year-to-date performance of the s&p really mapped very well to 2014 the year before 2013 and 2017 were similar that would be the upside cases, we've basically seen the worst and it's up from here >> let's continued this conversation we are bringing in simeon hymane and ed keon. which of these cases is most likely in your opinion >> i can't figure out a reason to ignore the strong earnings

growth we're about a fifth of the way through this earnings season we're where we were last season, 22% earnings growth. we're trading 15 times 2019. i don't see how you ignore that. interest rates are still low enough, those multiples are reasonably attractive. maybe not a catalyst but more than a floor >> that's a great point. if you're looking at 15 times 2019 earnings, that is kind of hard to ignore that would you factor in as most important? >> i did buy some stock late yesterday afternoon. there's a good chance we work higher from here earnings have been extremely good there's a change in consensus, i think. the worries about the fed going too far are perhaps a bit more acute now than a few weeks ago i still think at the end of the day the fed will not go far. we will slide into a glide path of lower growth. i don't think inflation will be a big problem.

i think u.s. stocks are the most attractive class >> you pointed out the idea we were already in a stealth correction there were a few tech high fliers holding everybody up. what happens if those stocks roll over? >> that's what we're essentially seeing now not that everything else is going down, but if there's some kind of rotation or a change in positioning that happens, this is how it happens. it doesn't just happen with the index staying still. or it's a jagged leadership. i don't think it's -- the nasdaq has not completely given up that status as being the leadership spot it's much more fractured than before if you looked at the big ten in the nasdaq, you have wildly different performance. they're not at all trading as a group, which in a way is good. apple and microsoft held up well you have seen facebook have steep corrections. >> ed, what were you buying yesterday? >> just s&p 500 futures. trying to get broad market

exposure >> you think that's still the way to play it so many people have said that's not the way to make gains. >> i think you can still do fine if you're on the broad market. if you can make a good call in financials or technology, that's great. but to have broad market exposure in a period of uncertainty is not a bad way to proceed. >> simeon, if you think we're headed up, what do you buy >> on the smaller side, with the trade wars top of mind, small caps have an opportunity to come back >> russell 2000 is in correction territory. >> in a selloff like this beta rules. increased volatility of small cap comes to the fore. the quality side of small cap can give you some of the protection from the trade wars, but not all the downside of that leverage and interest rate sensitivity. >> gentlemen, thank you for coming in. coming up when we return, a lot coming up on "squawk."

we'll talk to the ceo of snap-on tools about steel and aluminum tariffs. first tonight is the next mega millions drawing the jackpot has grown to 9$970 million. $30 million away from $1 billion. frank holland what do you have coming up? >> coming up, the drawing is tonight. everybody is getting excited we'll have some fun. we'll show you what your chances are of winning that money. that's coming up after the break. every investor should ask questions.

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[ neighing ] ♪ [ sigh ] it's bring your own phone, not pony. so i could have taken the bus? yeah. bring your phone. switch your carrier. save hundreds a year with xfinity mobile. plus get $100 back when you bring in an eligible phone. call, click, or visit a store today. . welcome back lotto fever has gripped the nation with the powerball and mega millions games topping 1$14 billion if you win both. frank holland joins us from new jersey with $2 and a dream i got to see him i ran into him in person at hq yesterday. good morning >> good morning. good to see you. i got my ticket here you said it all right there.

mega millions madness is sweeping the nation as more and more people continue to play, like this guy behind me. this jackpot will grow and grow more right now it's at 970 million, but it could grow up to $1 billion. if it seems like these jackpots are getting bigger every year, they are last year mega millions redid their formula so more people would play, but you have less chance of winning that big money. so if you are wondering what your odds are. they are 1 in 302 million. technically, a high school kid on their way to school this morning, getting on the bus or walking to school right now have a better chance of getting drafted to play in the nba, the nfl or major league baseball than you have of winning the mega millions. here's some other odds you have a better chance of marrying a millionaire 1 in 215 pretty good. getting struck by lightning, 1 in 1 million and you have a better chance of being elected president.

one in about 32.6 million. americans spend about $230 per year on lottery tickets, just like these no one is stopping everyone wants to get their chance at that billion dollar payoff if you win, you have to think you're not really getting $1 billion. today it's 970 million the one-time cash payout is 548 million. after taxes, about 300 million some people would say only 300 million, i wouldn't. think about what you could get for that money as far as corporate shares and stock, you could get a fraction of amazon you could buy two 737s from boeing, but only a fraction of that company or a small piece of starbucks. in the big scheme of things, how much money is that depends on who you are >> frank, i have seen a lot of comparisons. you're 100 times more likely to get killed by a vending machine,

like when you buy a bag of potato chips the thing that gets me, i looked up the scariest diseases that are so rare but so bad you know, your extremities fall off. it's like 1,000 times more likely to get that so it's like tempting fate asking for some horrible, fatal disease. painful, agonizing disease just leave well enough alone life is good you won't win this thing give those back. >> joe, you're kind of a glass half empty person. >> no i'm not. >> i'm getting this ticket >> i'm always glass half full. i don't know >> it's not that full today. >> it's a tax on the stupid. >> i won't buy you a ticket. andrew and becky, i will take care of you guys >> i appreciate it >> tax on the stupid >> i'm buying lunch or something

after we win or maybe more than that. >> still after we win. >> yes >> after you win 300 million, you'll by everybody lunch? >> that's the best i can do. i'm generous frank, one question. >> just us not the whole staff. >> we have a viewer who wants to know, i don't know if you'll know the answer to this question, is there a business that operates the -- i know the states operate the lottery, but behind the lottery is there a business that is operating all of this? >> i spoke to lottery people, they say it's a consortium of the states that do it together beyond that i didn't get an answer if i get the 300 million, i'll open up a company, do the research and come back and talk to you >> thanks. i love frank we'll enjoy the spoils of our winnings together. >> i'm willing to double your take, but you pay me $50 now, if

you win, i'll double your take on the lottery i will >> how are you going to do that. >> i'll fig ure it out i'll borrow it you give me 50 now, i promise to double it. you'll get 100% return sound good >> i think that's a good deal but i don't think you're good for the money. that's the problem coming up, china's gdp sunk to the weakest level since 2009 but stocks rallied it's like buffett. you know how many times he goes out and insures those hole-in-ones pay me 10,000, i'll give you 1 million. nobody does that >> he actually has the money >> that's true. >> later we'll talk about the impact of tariffs, the ceo of snap-on tools will join us at 6:50 a.m here's a look at yesterday's s&p

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another big announcement on twitter. this time it's a new car musk tweeting out the details of a lower cost midrange model 3. musk says it will cost $35,000 after tax rebates in california. also shares of paypal seeing a huge pop in the premarket. the company posting better than expected third quarter results, that includes a surge for its venmo app. we have to start venmo'ing each other. and aig tumbling the company expects its catastrophe losses to be higher than expected. the losses are from several weather related events, including typhoons in japan and hurricane florence here. aig down about 4%. dow looking to open higher, about 77 points higher s&p 500 up about 8 points. nasdaq futures opening up about

40 points higher. concerns about italy's budget back in focus for the global markets willem marx has an update from brussels good morning good morning so, the start of this week the italians sent a budget plan to the authorities in brussels. pretty quickly it became clear that the european commission wasn't happy about it. they set these rules in place since the eurozone crisis and they were thinking the italians might be willing to break some of those rules yesterday the commissioner for the final affairs in brussels traveled to roam ame and said te italians you are spending too much money and using growth assumptions that have not been independently verified and we have real concerns about this tell us what you will do to change things. tell us how you will alleviate these concerns the italians will send a response on monday that bond yield has jumped over the last couple of days in

response to some of these uncertainties. over the next few weeks we could see a conflict emerge between these two parties. >> willem marx, thank you very much we'll watch this closely in china, i wish we knew -- you know, exactly if this was a real number. it would still be the envy of us if we could do it. weakest gdp growth since the financial crisis third quarter gdp at 6.5% it was 6.7% in the prior quarter. stocks ralg rallied after new measures were announced. this is something cramer has been talking about joining us to react to the report is john rutledge with global investment firm safinad we keep hearing that be the envy of any country is it really 6.5%?

how much of that is investment from the government that's not really going to pay off? how much of it is organic and real that we could -- that we could be admiring and how much is sort of femoral or whatever word you want to use >> i would use the phrase kentucky windage numbers in china always have a certain amount of plus or ni ne minus around them. the problem is it's always been that way 6.6 is like saying the shortest guy in the nba, it's still a huge number. but truth is it's slowing. it's masking, i think, a much bigger problem developing. the owners of businesses that i know and investors in china are deciding that the trade war with the u.s. is morphing into a longer-term cold war of sorts.

and that it's not going to go away when the tariffs go away, if they do which means that right now if you try to go to vietnam and book a hotel room, they're all full of chinese guys moving their business there's a huge manufacturing relocation what's interesting to me, joe, there was an increase in foreign direct investment, which means foreign companies bringing plants into china. but there was a capital outflow at same time, so investors are also worried about the currency. so what's the deal with the fdi increase it's that in the early days of china american companies went there to assemble stuff to ship back here to sell. now 6.5% gdp growth plus 3% price growth means the average income of a person in the city in china is rising 9%, 9.5%, 10% a year so u.s. companies going in there now to produce things to sell to

chinese middle class guys, not so much to ship back here anymore. it's quite a complicated game happening. there's serious weakening happening in the economy there >> is there -- we heard about keeping factories open, keeping people employed even before this slowdown is there a lot of excess capacity that china has now? when does that come home to roost? even in a controlled economy, it just -- >> the excess capacity is a big deal, especially in the -- i would think the materials sector more than the manufacturing sector >> what about real estate and everything else? it seems like the last thing china needs is a slowdown. they already had -- they had already maybe done some things, playing it forward, if you will. >> yeah. they clearly don't want a slowdown they don't enjoy a slowdown.

real estate swings hot and cold in china in terms of prices it's been hotter than cold every over ovet year the stock market has been trashed, of course the decline in incomes is not good another problem they got, there's actually a swine flu outbreak in china. they pay a lot of attention to urban consumers and rural consumers because traditionally peasant revolts come from the country. so you have now a huge problem of raising and growing the pork. pork prices have increased about a third this year. and the stuff from the u.s. is now being tariffed so that's probably a more sensitive item than the speed of the economy right now. >> john, we're both young guys >> absolutely. >> and live expectancy will continue to go up. will we live to see the end of this trade war or cold war with -- this could go on how

long do you think? >> god, joe, i decided a long time ago that the single biggest question for the future safety of my children is whether china and the u.s. end up as friends or enemies so i have literally been there 100 times trying to do things to bring communications together between these two places it's going the rock wwrong way . the wrong way here with our own issues, but it's going the wrong way in china, too, with the rise of xi and his power base you know, china is now right around the same size as the u.s. economy. so we're more natural rivals than we were before. the cost of being -- of not getting along is higher. the danger of not getting along is higher. so what i keep hoping for is people to get to know each other well enough so that they can actually sit down and try to sort things out. there are at the base of it

human beings in both places. ideally you would like everybody to get along they're not going to make short-term gains on the trade thing. the best thing you could hope for are two things one is some improvement on intellectual property protection, which would be very nice in china. the other is u.s. companies in china that are there now to produce products for local consumption have been treated badly. that's the equivalent of the tariffs is messing around with u.s. companies there two-thirds of chinese exports outside are done by foreign firms, firms from the u.s. and europe who have brought in production capabilities. so it's very tricky and very dangerous situation. i hope we live long enough to see this go the right way. but right now it's not looking very positive. >> all right i mean, in a perfect world we would be selling a bunch of stuff to them, they would be

selling stuff to us. >> absolutely. >> we'll see hope springs eternal >> cross our fingers >> let's get through the lottery thing first. a lot of people here might win that >> you bet >> we won't have to worry quite as much about this other stuff thanks if i'm not here monday, you know why when we come back, global industrial companies were hit hard during yesterday's selloff. toolmaker snap-on dropped nearly 9% we'll talk to the company's ceo nick pinchuk straight ahead. coming up at the top of the hour, procter & gamble cfo jon moeller will join us as we head to break, a look at the biggest premarket winners and losers in the dow. right now disney leading the way after it was upgraded at barclays to overweight we'll talk more about that when we come back you're watching "squawk box" on cnbc

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big industrial conglomerates honeywell earning $2.03 a share for the third quarter. revenue also topping forecasts honeywell says it saw strong growth in areas like warehouse automation and aerospace that stock is up by 3.2% coming up when we return, we'll talk to the ceo of snap-on tools about the company's quarter and the effect of the steel and aluminum tariffs and finding skilled workers. that conversation after the break. as we head to break, a quick check on what's happening in european markets right now red arrows in france and germany. the ftse 100 is up at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes,

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welcome back to "squawk box. of the key earnings reports this week, a penny shy of analyst estimates. still snap rose within 17% year over year. the stock, though, down sharply yesterday. want to talk about all this and more joining us now is snappon ceo.

>> great to see you. >> let's talk about -- there's some good -- can i call it mixed? >> mixed >> you'll take mixed >> i wouldn't say the market reaction was mixed, you know, but it was down a bit. >> let me ask you this we have two things going on. margin was great the tax cuts clearly helped the company. but then at the same time sales seem to be down marginally so what's going on there and what is that sort of -- put that in the stew and mix it up >> if you look about -- the thing is, it was a tale of a couple of some great news and some weaker news for example, the commercial industrial business which, snappon outside the garage was up 6% and profitability was the highest ever then you look at the tools business, the van business everybody's been focused like heat seeking missiles on the

u.s. it was growing and the profitability was highest for the quarter. it was in the repair system information business which is kind of the sell -- not to the technicians which the vans do. but the owners of the garage and it tends to be the technical piece of the business. so i think you have a tale of two tapes. if you're worried about tariffs and material costs and steel prices have gone up, we only use u.s. steel and they went up i think the 18 months before the beginning of this year 30% and they've gone up since then we've had material prices rolling upwards. but earnings were up 70 basis points better than ever. we seem to be able to manage it and we have -- based on those results. what i think maybe people took a little bit of umbrage at or looked at was the garage is

moving more toward technology. and diagnostics. we have the best there's no question of that and it's been carrying the tools group for umpteen quarters. >> but that wasn't the big concern on the market yesterday. yesterday you got caught up. your stock was down 8.8% the concern from everyone is there is going to be less demand in china and other inputs are going to continue to climb is that kind of that dual squeeze you were worried about >> i worry about everything, i think. but we've improved our margins more than 1200 basis points in the last ten years and part of it, we're very vertically integrated. a lot of opportunities for productivity advancements. so we've been able to do that over things like the material costs activity that i just

talked about over things like currency which a not apples to apples we had years in which we ate 48 cents and margins went up. so i think we have a great mechanism for that i don't worry about that i worry about it, but i think we have a team that's armed and ready to do this the second thing is if you talk about china, china for everybody else is strong it's going to be great for us. but 24 million new cars. 160 million new cars on the road in china, but they're four years old. so the repair wave hasn't started yet. so for us, we're building in china. we're building the physicals i lived in asia 11 years myself. and building the physicals is everything so we're doing that. so it's not going to be a -- >> when is it at year what for vehicles >> if i knew that, i'd be smarter than i am. i don't think it gets pushed

out. the thing about china is hard to predict. people that own the cars in china don't know about oil changes. like us. we grew up with cars so we know. but juxtapose to the united states, there are 11.6 years old and they've gotten older since 1980 it's not yet a huge mover for us >> thank you, sir. appreciate it. always good to see you coming up, quarterly results from procter & gamble. going to look at the stock quick which is basically unchanged there. dig through the results. "squawk box" will be right back.

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rebound following yesterday's slide. china in focus and its economy shows signs of slowing. the earnings parade continues. what you need to watch this morning. breaking news. earnings news from the nation's largest consumer brand procter & gamble set to report results cfo jon moeller set to join us and a look at the sector and names you need to be watching 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're lye ive at the nasdaq mart site take a look at u.s. equity

futures at this hour dow looks like it would open up higher about 61 points higher. nasdaq looking to open about 31.5 points higher couple of headlines to bring you. china's economic growth, it has slowed to its weakest pace since the financial crisis growth came in at 6.5% in the third quarter. that's from a year earlier it's the smallest since the first quarter of 2009. it's probably going to step up more pressure on china as these trade wars and tariff conversations continue also, amazon now making a fresh round of visits to potential homes for its planned second headquarters. that's according to "the wall street journal." the paper says the cities visited doesn't necessarily mean those are the leading candidates but the parlor game continues through. one economic report on today's calendar to watch. the national association of realtors releasing existing home sales.

coming out at 10:00 a.m. eastern time got a few stocks on the move this morning paypal up beating forecasts. it signed up more new customers and contracts from venmo rose 78% some concern about ebay this morning based on those we'll talk about that later too. also american express reporting third quarter results. it's raising its outlook for the year a.m. exciting the rising wages for a 10% increase in card spending and the new goldman sachs ceo speaking to cnbc here's what he said about the recent volatility market yesterday on "closing bell." >> there's no question at times markets are going to retrace a little bit i go back to looking at the underlying economy at the moment, the underlying economy is pretty strong so from time to time given the gains people have seen in markets recently, it's not surprising that you see some selling and rebalancing.

but still at this point, the underlying economy is pretty good >> he said he thinks the equity markets can withstand a gradual normalization. interesting interview there with wilfred frost. we have png. i've watched it. i saw the organic sales number and said this stock should be moving up. it fooktook a minute, but it is the stock is now at $82.50 bid it's up almost 3%. and out of the fog, i remember what moeller told us last time a buck 12 was above expectations which was $1.09. and the sales were also above expectations i remember last time jon was on, organic sales, i think they were trying to do three to five and we had to take their word for it so the company's trying to deal with pressure from tariffs check this out

procter & gamble has outpaced estimates by an average of 3% over the last four quarters and outpaced earnings estimates for 13 straight. despite these impressive stats, the company is facing head winds thanks to the tariff talks and higher costs may be tough for the consumer brand raise prices for walmart which could trickle to higher prices for consumers or watch profits fall i don't know who that idiot was that -- was that me? >> somebody trying to mimic you, i think. >> i don't know what happened with that, jon jon moeller of procter & gamble. does my voice really sound like that >> pretty close, joe >> i remember last time you were on, you did it you did it 4% how'd you do it? it was shipments too shipments were up 3%, right? >> yeah. it was a really strong quarter consumption, volume, shipments, market share all up.

organic sales up as you said 4%. on the bottom line up 3%. up 11% on a constant currency basis. cash flow's strong returns, $3.1 billion in cash to share owners we're holding guidance on the top line holding guidance on the bottom line hold guidance for cash and cash return so a very good start >> there have been other times where things weren't quite so good i'm surprised the estimate for sales growth was 1.6%. so four is clearly much higher that's why i was thinking the stock is probably going to trade up is there anything as people look through the numbers and i don't know whether you have a conference call or what, but you expect this to hold up the 2.5% gain today? this is that much better than people thought >> well, i won't speak to the stock price, but we expect the

revenue progress and bottom line to hold up both are high quality numbers. david solomon said in the piece just before this, there's a strong underlying economy. and we're seeing despite some of the angst that exists, increases in the rates of market growth which you'd expect with the employment situation and eventually the wage situation strengthening significantly. >> wee keep hearing about pockets of weakness whether it's housing or whenever. as far as you can tell domestically this feels like a 3% gdp i'm talking about unemployment 3.7% and 3% gdp economy does it feel like that to procter & gamble >> well, perspective in a quarter we just finished, in the u.s. we grew 4.3% which would be in line with those numbers and is above the growth rates that we've been generating over the last couple of years you can't take too many

conclusions from one quarter but everything we see tends to support continued progress >> what about tariffs, trade issues you're a global economy. how are you feeling it, where are you feeling it >> well, we are definitely for free and fair trade. as you mentioned, we're a big multi-national company doing business in many markets against other multi-national competitors and local competitors. and free trade ensures a playing field. it's something we support. having said that, just because of the economics in our industry, we produced most of what we had where they're sold hitting us are a significant factor they won't hold up our overall practice >> jon, wanted to ask you about nelson peltz who has been on your board for quite -- a little bit of time. wanted to understand what kind of direction he's giving the

company and what kind of impact he's had one way or the other. >> if we look at the quarter we just completed and seek to assign credit, i assign it first to 92,000 pn g-men and women working shoulder to shoulder every day. we also have a strong board inclusive of nelson which make a positive difference. there are two things that nelson says i agree with completely one is simply sales up, costs down couldn't agree more. another is i'd rather be right than -- i'd rather be rich than right. and as long as we both hold onto that objective for our share owners, we're all going to be in good shape >> do you think he's pushed the company in the right direction and do you feel -- you know, companies where where he has stepped in often have felt his

influence. >> jon, how are you going to do -- how are you going to deal with a whole segment of the population that wants, like, i don't know, non-p&g new age crap that all the millennials -- they don't want to buy all the old style brands they want to buy different things and feel organic or something. i don't know gluten free. >> well, interestingly if you look at our top 20 brands, 17 of them are either number one or number two with the millennial consumer set we're able to meet those with brands i feel comfortable in serving this consumer. in terms of the notion of kind of the death of big brands, i always kind of scratch my head when that question is raised if nobody likes big brands anymore, why are they big?

>> although you guys did come out -- i read this recently. i read you were coming out with trying to trademark things like lol and other sayings on these brands it was panned as a dumb move to lure in millennials. >> look, we're running hundreds of experiments in multiple markets across the world at all times trying to make sure we're in touch with the consumer we're serving and doing the best job of serving them as we can. >> but are you really trying to trademark that it's out in the public lexicon >> i'm not familiar -- there are tons of trademark filings. i'm not familiar with individual filings. >> i heard that was your idea, jon. >> you know me, joe. >> that wasn't -- so -- i think everything's really expensive to

buy these things too they're having their day in the sun. are you looking at any of these small niche brands that get all of the buzz and things on social media? i mean, is p&g -- you're going to pay up for them i don't know if it makes sense >> we made several acquisitions recently including the native brand which is a direct to consumer offer g offering but we're going to be choiceful. we're not going to limit our options. >> i'm still using sure. sure solid with the original -- not the unscented. do i need to -- >> that and old spice too? >> so that's p&g, sure, right? >> it is you're good, joe >> what would native do for me, jon? i should be asking andrew. what do you use? that axe stuff spray it all over your body?

>> spray it everywhere don't i smell nice >> have you tried native what is native, jon? give me an idea, what is it? is it selling? why would someone buy it what is it >> it's a stick. it's an naturally sourced and based deodorant which has some appeal to a certain set of consumers. we combine that with strong efficacy and a broad scent range. it's doing well. >> did mackenzie just e-mail that was so quick. say that again that was really good you talk the talk, don't you what was that you said >> i don't think i could say it again. >> i don't think you could do i got to pay you money now for saying that? becky's laughing at that anyway, jon, thank you once again, thank you for -- >> putting up with us. >> yeah. let me ask you -- >> always a pleasure. >> are you glad you kept that coach? i mean, is this really happening

this year with that quarterback? howdy doody? what's his name? >> andy dalton we'll talk after this game >> that is going to be a test. and even if they get in the playoffs, we know what happens, right? like 60-0. >> oh, come on >> okay. all right. i'm still not on the bandwagon but i'm looking for a team you don't want me, believe me. jon moeller, thank you good to have you on. say hi to all my friends in the queen city we'll see you, thanks. >> will do coming up, e-cigarette use among teenagers is skyrocketing. dr. scott gottlieb is going to join us after the break to talk about the marketing of e-cigarette products big debate there

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welcome back to "squawk box. take a look at futures right now. dow would open about 109 right now. s&p looking over ten points high per. and the nasdaq looking to open 45 points higher in an effort to crack down on e-cigarette sales to minors, the mission was to learn about the company's sales and marketing practices. the fda is also considering a ban of online e-cigarette sales. joining us now is fda commissioner dr. scott gottlieb. thank you for being here today >> thanks a lot. >> let's talk about this before that raid, you came on with us and you were really looking to crack down on sales to minors. for anybody who wasn't listening at that point, explain your reasoning behind that. what's been happening that caused you so much concern >> we've seen a sharp spike in e-cigarette use among minors over the last year from 2017 to 2018

so kids use has increased 70% among high school students 50% among middle school students when all the data comes in, we're going to be publishing it next month, it's going to look like around 20% of american kids are using e-cigarettes and almost a third using a form of tobacco products there's no good news in this report because even while these great use is increasing so is the use of combustible products. >> you said at that point when we first spoke about this with you, that you were waiting to hear from the tri to hear what some of their ideas might be but then in pretty quick order, we heard about this raid on juul's offices >> we're collecting information. there are going to be other efforts we take to gather information. we met with juul, i met with another in the last couple of

weeks. i think we have a sense of where we're going stob he-- to be heading. these products are too appealing po kids right now. the open tank products you might find at vaping stores are not being used by kids we're going to take steps to restrict access among minors some further steps we'll take steps to reduce their appeal that's going to mean some restrictions on the flavored products it's the flavored products that are driving the use among kids >> we'll talk about those steps in a moment. again, why this raid on juul i understand their product is being used heavily but you must have thought they weren't be forthcoming in their answer ifs you went to the extent of this raid to find out what was happening behind closed doors. >> it's not that unusual for us to conduct inspections around manufacturing market practices

this is something we do -- it's probably something we're going to do in other cases in this space as well. we have to get a sense of how these products are being marketed we sent out a letter to manufacturers last week asking them to come forward with information to demonstrate they're being lawfully marketed. you had to be on the market before august of 2016. so we don't have evidence all these products were on the market before that so-called, you know, deeming date and so we're going to be gathering information to prove whether these products are not lawfully marketed. there might be other inspections as we go through and try to determine whether all these markets are -- all these products were on the market legally. >> i long thought the denials these companies have been kind of -- something i didn't believe because of the many flavors that are out there. what did you find? >> well, we're still going through the documents, if you're talking reference to juul. we're going to put out data soon

looking specifically at them, the scope of their sales that are now legal sales to kids. i think it's going to be a big number of their total sales. clearly that's driving a lot of use. some of the products are more popular and appealing to kids than others. the reality is if it's one product today, it's going to be another product a year from now. we have to treat this as a market segment and look at the features making these so appe appealing. >> i want to i think up a statement from juul. they say, we are committed to preventing underage use and we want to engage with fda, lawmakers, public health advocates, and others to keep juul out of the hands of young people you said a significant portion of their sales are to minors what makes you say that? >> we did an analysis. we have access to surveys on the market on how many kids are using different products next year in the national youth

tobacco survey, there's going to be a question in that survey asking which product kids are using. we're going to know exactly from that survey. exactly how many kids are using various branded pru eed product. we think the figure might be underreported because some kids when you ask them if they use these instructs and they're using a juul product, they consider it juuling. next year we'll have an accurate read there's another survey coming at seen and we're doing our own to get an idea of all the products. we think it's going to be a high number our estimates and we'll be publishing them soon, show a high number. >> last time you were with us, you suggested one way of trying to prevent these sales would be stopping them from being able to be sold online is that something that is more likely at this point given what you have found so far? >> i think it's more likely. it's more likely we're going to

put some restrictions on how it can be sold online if we continue to allow online sales we could potentially ban online sales until regulations are in place. most of these products are actually sold through brick and mortar stores. we're looking at whether or not the flavors should be sold in regular stores, a 7-eleven or truck stop or gas station. or whether there are flavored products that should only go to adult only shops a lot of the sales we've seen going to minors are actually happen in the brick and mortar stores, the convenience stores >> dr. scott gottlieb, you mentioned this idea that kids don't even think they are smoking e-cigarettes you go online right now, even just their own website calls it the smoking alternative. people don't even think it's a vape or an e-cigarette the way they're marketing these things would you ever support the kind of labeling they have not just

in the u.s. but in the uk? you've seen those labels those are pretty aggressive labels in terms of saying what can happen to you if you, in fact, engage with this >> there are labels now that -- we extend applications on products to allow them to stay on the market. we recognized them for adult smokers that want to get satisfying levels of nicotine without the threat of combustion they need to be put through a regulatory process and there's also no free lunch here these products while probably safer than smoking and if we can switch every adult to an e-cigarette, it would have an impact there's no free lunch. in the setting of kids, we're addicting them to nicotine that's something we can't tolerate and that we now have data that shows that a proportion of people, kids, who

become addicted are going to migrate onto combustible tobacco. that's why we're concerned about this >> dr. gottlieb, want to thank you for your time. hope to hear from you back to the beginning of the year. again, dr. gottlieb, head of the fda. >> marketing the youths? >> you've got to go online and see it it's disgusting. >> no. "my cousin vinny." never mind coming up, sorry charlie charlie the tuna anyway, details after the break. and later in the markets, can we expect a bounceback after the past two weeks of volatility we'll find out if the emotional trading will continue. "squawk box" will be right back.

trouble in tuna land starkist is pleading guilty to price fixing they face a fine up to $100 million for conspireing to fix and raise prices for packaged seafood. when we come back, china interest rates and earnings. that's the focus for investors right now. we'll get you caught up after

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♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. tesla has unveiled a cheaper version of its model 3 sedan the new version costs $45,000. that stock up by 1.75% this morning. procter & gamble saw a 4% increase in organic sales during the fiscal first quarter you can see that stock is up by 4.7% this morning. with wall street's intense focus on interest rates, two

speeches by fed officials may get extra attention today. bothic is a voting number of the fomc another volatile session for the markets and dom chu is going to take a look at some key levels and stocks that have actually held up through the turbulence >> so, joe as we talk about the futures bouncing a little bit this morning, perhaps one of the reasons why is there's that long-term average. for the s&p 500 it's 2,767 so we're just around there right now. you can see it's been a bouncing area for the better part of the last year. and probably a little bit more at this point. so as we look at this bounce here, we'll see if traders do take this opportunity at that downward trend line here to add some positions also looking at what's happening with the nasdaq composite. that area there is where we are

seeing this trend line develop we have seen a bit of a bounce here we'll see if that trend line stays in place we have seen that area be a bit of support certainly in focus there also a couple of places to watch in terms of the overall market hot spots. one of them is the dow jones u.s. home construction etf the reason why i point it out is you can see that drown trend developing for the better part of the year here we are on pace for this particular etf to have 19 of the last 22 days that are actually negative as we look at the trend overall for home construction, that's one of the places we're going to watch to see if there's a bounce there at all also one other place to watch is the dow jones at least the transportation etf but the reason why i cite this one here is this move lower over the course of the last week means we're on pace for the transportation index to have its fifth negative week in a row

last time that happened was in 2008 that's the reason people are watching the transports. and because we like to accentuate the positives, let's see what held up the large cap pharmaceuticals. those stocks have held up relatively well. as the markets have taken a downturn health care stocks have held up relatively well. those are one to watch if this continues. back over to you >> thank you want to take a look at the markets now. joining us is head of u.s. equities at s&p dow jones industries also the portfolio strategist at richard bernstein advisers dan, what do you think was actually happening yesterday as everything seemed to be moving in all different directions >> it's a bid of a head scratcher. there's a lot of talk about what

was going on with the chinese currency and impact on action. it was rallying in the morning it wasn't until midday where it starred to sell off. a little bit after, i think bob pisani talked about it yesterday. that was after mnuchin said he was going to withdraw. it it's a bit of a head scratcher initially economic data was coming in strong you got some talk of the fed a bit hawkish. then rates shot up and the market got worried >> is this a head scratcher for you or do you have a real explanation? >> on a day-to-day basis, maybe it's difficult to pinpoint exactly what drives the market like yesterday but i'm not that surprised to see the downward moves like this we noticed that the small caps were falling ahead of the large

caps and when small caps can't keep pace with the large caps, the bearish divergence is when the large caps are making new highs but small caps are falling that means there might be some economic weakness. because a lot of times the large caps can be clients of the small caps and it doesn't work when they're diverging. the last time we saw that was before the global financial crisis it was about 15 months before. but then we only saw it once again right at the top around 2,000. it's a warning sign. and maybe an early warning sign. but the other warning sign that's more recent is how quickly the volatility -- so, like, volatility convergence and on the volatility, the large cap volatility spiked so that it reached the small cap volatility and that matters because that

means that there's no safety in the large caps and that has only happened twice in huistory so not only am i not surprised -- >> the two times in history you're saying are still prior o to -- the second piece you're talking about. >> there was one in 2011 november of 2011 and one in august 2015 and one at the head of the decline in 2011. in 2015 it was the bottom of decline. the market came back up and fell again. there were subsequent declines again, that happens because when there's some fear in the economy and of the markets, then you see that the large cap volatility will move towards small cap volatility >> but i'm going to take good

news away from that, at least the second part of what you're talking about. because those were hiccups along the way. the first example you cited is actually much more nerve-racking, but the question, of course, is whether that will actually correlate to where we are today. dan, do you have a take on that? >> whether it's going to correlate -- >> with the prices >> the reality is, like, there's a lot of talk about how small caps are in a correction now if you look at the history, small cap relative performance peaked in, like, 2013. from that perspective, it's been a relative bear market for a long time. it's because the fundamentals haven't really kept up with the large caps if you look at earnings growth over the last three or four years, they've undergrown. their leverage is close to all-time high. huge portion of their debt that is floating rate opposed to fixed. there are a lot of issues specific to small caps that are

the cause of a lot of this divergence we're seeing today. i don't think that means the economy is going down the tubes. i think the fact that everybody today is so focused on a repeat of 2008 tells a lot about sentiment and where we are today. >> were you buying yesterday afternoon? >> we've held a bullish position it's kind of like a repeat of earlier this year, right if you look at the -- if you had sold after the big sellout in march, the market is up quite a bit then i think that's the case today. >> what do you think, joseph >> i'm thinking -- i mean, you work at -- what's the name of it richard bernstein. >> that's correct. >> is it the same richard bernstein we have on >> that's correct. >> okay. because it's such a common name. if you don't have a middle initial, there are hundreds of thousands of richard bernsteins in new york. i just googled richard bernstein. artist, star maker, philosopher,

opera. >> but i don't see effing on the list >> that's why he needs -- >> i've lobbied. >> then all this time i just wasted making sure it was the same richard bernstein because there's no way of knowing it's the same. it's such a common name. >> that's correct. >> were you done, andrew >> we can leave the conversation there. >> he doesn't have a middle name dpop you have a middle name? >> i do. >> everybody's got a middle name what is wrong with his parents >> jodie, what's your middle name >> melissa >> great middle name >> are we going around the table? >> jodie, thank you. >> if a guy can change his name is ochocinco, someone should be able to change their name to richard effing bernstein no it's friday. >> it is friday. >> and you're in love. >> don't do it, greco! don't do it! he's going to play that song i know it. ♪

>> oh, it's coming but not now >> we've got to go thank you. when we come back, our defense stocks on your screen. we'll tell you what's working after this break let's look at the dow's biggest premarket winners and losers check this out procter & gamble on fire up 4% after better than expected earnings stick around "squawk box" will be right back. broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!? different kind of sick. if i can't work after surgery, how am i gonna pay my rent? all these bills? aflac! oh, aflac! and they pay you cash in just one day.

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the global investment management businesses of prudential financial, inc. welcome back to "squawk box" this morning dow looks like it's going to open up much higher. s&p 500 up about 11 points nasdaq looking to open about 50 points higher. markets are currently digesting a deal from early this week to try to create the country's sixth largest defense contractor announcing an all-stock merger the combined company would have a value of $30 billion joining us right now for a look at this deal and much more about what's working in the defense sector right now is sheila kialo

from jeffrey's thanks for being here today. >> thanks, beck y i. >> let's talk first about this deal was it a surprise? >> this particular deal, yes but given our coverage about half of them are merging with each other >> does that make sense? >> it does >> why is that happening and explain why you think this makes sense. >> i think the market is good. aerospace, air traffic is growing. that's a positive backdrop on the commercial air space side. with regards to the defense, we're seeing the budget up 6% over '18 and '19 combined. and although they were doing fine just on their own see the combination as an opportunity to even further expand their margins. >> are there other players you would expect to combine after 13 something like this? >> we've seen it in i.t. services these are the labor services guys we've seen general dynamics in february saic are combining so the next players in that

space in terms of scale would be a booze allen. a lot in the i.t. services space with harris and l3 this creates the sixth largest prime. their revenue will be around $16 billion. they're coming close to the next prime so you might see the other small cap guys pair up as well >> who kind of got caught up in a downdraft yesterday as the street started worrying about industrial companies everything from caterpillar to snap-on tools we had on earlier. talking about what happened yesterday when the markets said, uh-oh, the economy in china is slowing down and we are facing higher costs what does is that mean was the reaction yesterday a justified one? or do you think it was overdone? >> they reported results with their industrial segment it's specifically 10% of the company, the specialized vehicles unit and it was more

specific where it's u.s. dealers not able to sell these vehicles essentially. so the channel to the market isn't sufficient at the moment the company lost 15% of its market cap over the last two days investors are looking at zero value to the specialized vehicles business. that selloff is overdone and see that as a buying opportunity but no specific impact from china and tariff discussions just yet >> another big headline in the news lately is what happens with saudi arabia if there are any implications if the u.s. decides to cut back on anything whether the u.s. would decide to stop some of those defense sales. or whether the saudis would decide not to go ahead with those defense deals. what's your take on all of this? because so far most markets have been pretty -- >> we've seen it sell off on tariff discussions saudi is a big defense purchaser. in 2014 and '15 when oil prices

went down, we saw them cut back on spending. but we have to remember these are purchases they'll make and there aren't many international companies that will compete with the defense prime such as lockheed and raytheon that manufacture the products being sold to saudi. >> i think the bigger issue -- there's two issues one is the relationship between the united states and saudi overall and what kind of direction the defense companies take from them for that. and the second piece is whether you think that the defense companies may have to actually step out on their own differently and make a distinction and even separate themselves from the administration >> i think this administration has actually been very supportive of defense companies. when u.s. defense companies sell internationally, they're selling company to country whereas other competitors internationally sell country to country, essentially so, in fact, this administration

despite what's out there in the press and the media has been very supportive of -- >> no, no, no. i'm not saying the trump administration -- i'm saying it is possible the trump administration could actually find some kind of solution to this, if you will, but at the same time there could be enough global outrage about what actually took place that they feel they have to -- that the defense companies just like some other companies have decided that either they can't do business with saudi or that they have to put a pause on it or whatever because of the sort of global public/moral pressure you think that doesn't exist in the defense world? >> i think it does we've seen that to a degree. saudi has a purchase of an order out there. it was supposed to be some time in 2018. we haven't heard an update on that there are some things that are left in an interim period. >> have any of the defense companies said, look, wejust can't do business with that

country? >> i can't recall off the top of my head, but i'm sure there's been situations where we -- defense companies have decided to discontinue certain products they find unsuitable to sell to certain foreign nations. >> sheila, what's your favorite name in the sector >> we'll give it to harris at the moment the defense budget is positive that should help them. but they also have the margin capability l3 on its own maybe would have difficulty, but the combination with harris allows them to sell its products in that manner. >> does that bring us where we need to be in your view? or do we need a couple more years? >> i think we need a few more years. what we've seen in '18 and '19 have been helpful. we've seen big programs move

forward such as next gen combat vehicle. so big projects like that and modernization needs are getti tg funded >> you think we are still the top country in the world in terms of our capabilities? >> i think we need to continue to spend to enhance our capabilities >> no kidding. so we need to keep spending with all these defense contractors. >> i think they need -- what our company dos is invest their own r&d. so they need some backup from the government as we see very often, investments sometimes get punished by investors if they don't move as quickly along or they don't materialize >> andrew, if you're $500 for everyone per month under $100,000, if that goes through, if you keep pushing that --

>> i have not been pushing that. chris hughes was on yesterday. >> you were nodding and looking over at me and nodding >> i was nodding to see whether you were going to push back. that was what the nod was. >> sounded great to you. now you might be affected by -- are people that make over $100,000, are they rich? >> it depends where you live that's a yes the answer is yes. >> a guy with half a billion dollars wants to -- how do the people that make a hundred ever get to a half a billion if they are over-taxed like that i don't understand how they can get to where he is if they were -- >> we will do a separate segment outside this >> you are on the record and not for kamala harris's point -- >> a i'm trying to be a down the middle journalist. >> do you think it's a good idea to do the universal -- >> i'm very --

>> friday. i'm in love. >> i'm very interested in how all of this plays out. >> thank you for joining us today. great to see you >> i'm against it. i'll say that. >> read the tease. >> coming up, friday morning pops and drops at the top of the hour, technical talk from katie stockton she's going to join us what are the chartstelling us about where the markets are headed "squawk box" returns in a moment

as ♪

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yeah. bring your phone. switch your carrier. save hundreds a year with xfinity mobile. plus get $100 back when you bring in an eligible phone. call, click, or visit a store today. ♪ time for pops and drops. harley-davidson downgraded, in case you were wondering. you'll hear the sound. to market perform from outperform at bmo capital. firm says it made a bad call with a prior upgrade that anticipated drivers of sales for the motorcycle that they were anticipating did not materialize. get to hear the other sound now. apple added to the best ideas list at wed bush wed bush says the street is likely too conservative in the estimates of iphone demand

and dow dupont -- oh this is sad. that stock is not down that much company says an analysis of the agriculture unit would not meet prior sales. >> i'm concerned about what this means for farmers overall. this was north and latin america. farmers there wondering what that means >> my maltipoo i'm told leaves the room when these happen. >> so they're watching >> yeah. he's gotten much more sensitive and now he hears this and he's out of there >> it's either that or he hears your voice one or the two >> no. he's my dog. when we come back, we'll talk technicals. and housing stocks have been their worst year since 2008. the sector is facing some

serious head winds we'll look at home builders and the overall sector check out the futures right now. dow futures up by triple digits. 110 points s&p up by 10, nasdaq by 50 we'll be right back. ♪

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stocks rebounding after yesterday's selloff. we'll talk technicals with katie stockton earnings alert we'll show you how wall street are reacting to honeywell and procter & gamble and fallout from the tech wreck. down at least 8% so far. where the faang names are headed from here. the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, 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

apparently it's friday. >> and you're in love. >> well, it's just -- it's a good day futures right now are good, are up up 131 tough day yesterday. kind of searching for a bottom 57 on the nasdaq, up 12 on the s&p. >> before today, even, the dow and s&p were still on track for gains for the week before you saw these advances nasdaq was just behind it. >> what was that >> tuesday we had a strong day >> held on monday and then big rebound on tuesday we're going to talk about this, obviously. 3.19%. it was 3.17% earlier back above 3.2% on the 10-year yesterday. then with that selloff, as we sometimes see, yields fell but we're approaching 3.2% again. >> here are the stories that investors are going to be talking about besides those

markets. chinese economic growth slowing to its weakest pace. the economy grew 6.5% in the third quarter. that was below expectations and down from a 6.7% growth rate in the second quarter what it's going to mean for currencies and whether the yuan will hit that mark procter & gamble beating on both the top and bottom lines. sales at the consumers product giant were for beauty and home care items despite a cultural shift towards smaller name products, their cfo told us the brand is doing well amongst younger consumers. >> top 20 brands, subpoe17 of te number one or two with the millennial set and with the notion of the death of big brands, i scratch my head when that is raised and ask, if nobody likes big brands anymore, why are they big >> also, dow component honeywell

is reporting quarterly reports above expectations profit at the industrial giant was dricven by strong sales. that stock up by almost 3% elon musk tweeting last night that tesla is launching a less expensive version of the model 3. just released a super simple new order page the car starts at $45,000 and offers a range of 260 miles per charge musk tweeted it will actually cost about $35,000 after factory and federal state tax credits. and true ownership is around $31,000 after gas savings. you can start ordering that model 3 right now. delivery takes six to ten weeks. to be eligible for the full federal tax credit, you have to take delivery by the end of the year baupz tesla is now going to be over 200,000 vehicles if that credit only applied to

the first 200,000 vehicles >> so how much time? >> i think you can do it in half an hour. a full charge? >> yeah. >> i don't know about a full charge but a super charge, you can do it on -- >> it's still hard you can't really go on a vacation yet, right? >> right there's the mileage thing. >> plug it in every night. >> unless you are willing to stop at a lot of places. >> but you can make it across the country. it's interesting you put in the destination, and it will tell you along the way >> but if you're going to eat lunch or something while it's happening. >> you were going from here to washington, d.c. or maine or something, you'd have to stop along the way. now they do them at shopping malls or places like that. when are you going to do it? you like them. >> i'd need a big one. >> three kids. >> yeah. >> one of those s? >> no. with the wings

i like those >> you do? >> i mean, i think they look great. >> okay. >> pricey though >> you like the prius though the cheese wedge >> i actually don't. >> i don't either. remember the pontiac aztec >> i do. >> who came up with that you wonder why pontiac is no more let's get to the latest in this week's market moves. joining us now katie stockton and j.j. kinnehan. katie, do your ears -- you know we talk about you even when you're not here. and you're welcome >> i've heard. thank you. >> so i thought last week one of the things i said that you -- your contention was that we were closer to the end of maybe the correction phase in the beginning. and then it all seemed to be happening earlier this week.

but then we have tested the lows a couple of times. is everything on track for what you told us last week in terms of what you think the eventual outcome of this latest correction is? is it garden variety in your view >> yeah, it's completely on track in terms of the fact the market internal measures were very oversold. now they're rising from that territory which is constructive. even from yesterday which i wouldn't define as a retest because it didn't follow a substantial rally, but rather part of a consolidation phase. that consolidation phase affects improved short-term momentum following what we saw last week. to me the correction is over and now we'll position for follow through off of that extreme. look for momentum to continue to improve. and then maybe we get a retest the retest does tend to be fairly harrowing as you can imagine, but i don't think that was it yesterday what we did notice overnight in asian markets are gaps down on

the charts when they follow down moves tend to be more exhaustive in nature. you better believe if china's bouncing, emerging markets are bouncing, we're going to be well off too. >> and your view as maybe some of those are bottoming then. >> i think so. it's not the most attractive market from the technical standpoint it is a down trend yet you have oversold extremes there that have been matched in the u.s. i think it's compelling especially from a contrarian perspective. where sentiment is often where there's opportunity. >> okay. i'll get to you in a minute. 2768 on the s&p. will we get another print? i don't think we go below 27 then, i guess. >> i would sort of look at the april low in the s&p 500

i think we will see some kind of retest, but maybe not a takeout of the lows. with that in mind, a bullish buy is appropriate we haven't seen a flip negative. we haven't seen a amajor loss o breadth. >> then do you think we get back somewhere near 3,000 if there's any future trouble >> i do. i think so remember there is some positive seasonality to year end. and of course october tends to be characterized the intermediate term gauges have been deteriorating for several weeks. and in a bull market, they only tend to do that for several weeks. so i think we're at that point >> what do you agree with and disagree with? >> i do agree with katie on one thing in that, you know, we may

rally to the end of the year but i don't think it's going to be a clear rally i think we're going to continue to see us stay near this more normalized historical volatility i believe there'll still be a lot of back and forth as we get there. especially as we head into the midterm elections. jamie dimon talked about a lot of political situations around the world that can sort of blow up i think we saw some evidence of it this week you're just starting to see little hot pockets of news that bring the market down. i don't see an end to that before the end of the year as i said, throw midterms on top of that. what happens with tariffs and outside the true equities themselves that's the stuff that causes volatility what i will say i do agree with is the fundamentals are solid. you look at earnings today you guys just got done talking

about procter & gamble and honeywell. good earnings end of the day are what drive markets with that -- with good earnings, we should continue to see the market go higher but, you know, in my career, i can't really remember a market that's got so much noise around it and that causing people to really question their investments after time or maybe have a little bit of a -- it seems to me that the holding periods for people have never been more divided. what i mean by that is people are in for the quick hit on bounces. or they're saying, you know what i'm going to have to ignore the day-to-day for a few months here because if i don't, i'm going to drive myself crazy and shorten my holding period. >> it wasn't long ago that we were saying this going into the midterms, this looks different than what we usually see and what we usually see going into the midterms is a selloff followed by a rally after the

election's over. and given august and september were so good in terms of the market doing well, we thought maybe it would be the opposite but it looks like we finally did get a selloff. typically after the election, isn't it bullish >> i think we can rally into the end of the year. i think getting there is going to be lower than normal. this ask going to be a lot of back and forth the last thing i'll add, especially to the retail investors that watch you these moves feel bigger than they are moving 300 or 500 points now is not what it was ten years ago. >> i kind of disagree that we got more scary things going on around us than ever before missiles aren't flying over japan anymore every two weeks. >> yeah. but those were short lived >> i know. but what are you so worried about now? china?

is that what you're worried about? >> yes, china a little bit but it doesn't necessarily have to be war-type things. i think tariffs remain a concern. i think the middle east situation hopefully it'll -- things will work out there obviously it's a terrible situation at the moment. but again, what's going on in italy is not good in terms of the -- >> okay. how about nancy pelosi as speaker of the house how's that grab you? >> i'll stay away from politics for now, joe how's that >> yeah. >> you're going to win lottery this weekend anyway. >> this has nothing to do with what happens they might try to take back the tax reform it matters what happens, doesn't it >> it does matter what happens i'm not going to disagree with you on that. but we'll see. you know, everybody who's predicted elections over the last few years are probably not richer if they bet on it we'll have to see what happens >> 18 days >> yeah. >> all right i won't ask you that, katie.

i don't know what the technicals for the election -- i guess that'd be like predict it or something. >> think about the november 2016 low, right >> i know. i just love the 98% on the new york -- i just -- and watching it flip from 98% to 98%. some people were crying, i know, on cable tv. i was crying, too, out of laughter and joy katie, thank you katie stockton and j.j.kinnehan. faang stocks off to a rough start for october. we'll talk to mark mahaney about where they're headed and leert, a stock picker who's finding value in the hardest hit housing seorct bi stay tuned you're watching cnbc ure is not . more than half of employees across the country

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fidelity. [ neighing ] ♪ [ sigh ] it's bring your own phone, not pony. so i could have taken the bus? yeah. bring your phone. switch your carrier. save hundreds a year with xfinity mobile. plus get $100 back when you bring in an eligible phone. call, click, or visit a store today. welcome back to "squawk box," everybody. we have been watching the futures this morning and after a whip saw a couple of weeks here in the markets, here's a friday for you. right now it looks like the dow futures are indicated up by 150 points s&p futures up by 14 and the nasdaq up by 61. we'll see if this holds as we go through the trading day on this last trading day of the week

again, at this point even before we saw these gains this morning, the dow and the s&p 500 were on track for a positive week this week that's because of the strong gains we saw on tuesday. before we saw gains this morning, we'll see what happens. a couple of wild weeks in the markets. and it's something investors are watching closely to see how this week ends. all right. let's talk about the tech wreck. faang stocks are off to a scary start for october. we always talk about faang as one group. i always think that's a bit unfair so i'm going to ask you to try to break down faang and how you think about the individual components as opposed to it as a index which it is not. >> okay. good morning, andrew look these are fundamentally similar and fundamentally dissimilar stories. the strongest fundamentals right

now belong to amazon and netflix. they show you accelerating revenue growth, accelerating subscriber growth at the opposite end of the spectrum is going to be facebook which is going to get you revenue growth deceleration and margins coming down it's the most controversial of the four there's a big question whether social media is the new big tobacco. that's the overhang on the stock. amazon and google are in the middle probably google is the most consistent of these stories. they had 20% revenue growth for well over eight and a half years. that's part of the spectrum you have on those four stocks. >> so here's the question. given where facebook is now, is there an argument it's undervalued? >> absolutely, andrew. i think you know my answer on this one i think it's the most attractive

risk/reward play across all of tech this thing is trading closely to a market multiple. just step back i know we're going through a lot of debate on the stock and this company has a lot of things to do to improve security on their platform, but they own the largest messaging applications those last two are barely monetized. this is a company that has good product innovation even though they lost some key executives recently they still have these asset ifs they continue to innovate, this could be a stronger asset in a year or two. 50% upside that's the best skew i can find in large cap internet. it's our number one pick >> okay. is there a faang you think is overvalued at this point not worth touching >> no, i don't out of those four stocks, i like all of them. i prefer facebook. i think google trades above a

market bubble. the most aggressive valuations -- the most aggressive is netflix. you have to be looking out three years in order to buy that stock. i'm willing to do that and amazon now is in the middle of the pack. they used to be the most speculative. it's turning on that stock no, i think the valuations are reasonable on this group the most compelling is facebook. >> i'm going to take it away from faang for a second. the two that get lost in this are both twitter and snap in the social media realm where do you think they land >> i can paint a lot of really negative scenarios for both of those stocks the more enduring is proving to be twitter i worry about twitter going into next year. if you had facebook warn people about the need for an investment cycle for platform security

reasons. i think that announcement is going to come from twitter i don't think you want to be owning that stock as it goes through that investment cycle. it's the one that i hate to say it, i've got a buy in the stock, but it's the one with the zero risk on there in part because it's got this massive competitor that's innovating just as quickly. >> what do you mean zero risk? >> i'm sorry i didn't mean to say zero risk that's the one that has the potential zero outcome i.e., this is potentially deteriorating asset if they don't accelerate their efforts if they don't get more of their users to use them for media and not just communication that's the one with the greatest downside >> does it have the most upside at this point as well or no? >> well, i guess so. if there's an acquisition -- of all these assets, the one that can be acquired most likely.

i think this stock could get acquired but that's five years out. you're not going to make any money waiting for that >> okay. mark mahaney, thank you. rbc capital markets. great to see you coming up, corporate blunders we'll tell you why kleenex has to rebrand one of its products and elle magazine is apologizing for a tweet. "squawk box" will be right back. i know you want to leave me for schwab, but before you do that, you should meet our newest team member, tecky. i'm tecky. i can do it all. go ahead, ask it a question. tecky, can you offer low costs and award-winning wealth management with a satisfaction guarantee, like schwab? sorry. tecky can't do that. schwabbb! calling schwab. we don't have a satisfaction guarantee,

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controversy over a kleenex product in the uk. kimberly clark will -- oh, i did see this -- will rebrand its mansize kleenex after customers complained the name is sexist. the facial tissues will now be labeled extra large. the new branding will roll out in the uk in the coming months i saw that arnold schwarzenegger had to apologize for years ago using the term "girlie man." >> i remember that >> he had to strike that from his lexicon. >> there's a lot that's changed

that's no longer -- >> man size mansplaining >> that's not going away that's what you do to someone to shame them elle magazine is apologizing after attempting to trick people into registering to vote they tweeted kim kardashian and kanye west are splitting up and had a link when users click the link, they're rmoved to a site to register to vote they said we are sincerely sorry. when we come back, the big october dip didn't just hit stocks oil prices are down more than 5% this month we're going to talk about the geopolitical concern for crude next this morning it's up just over 1% but still below $70 take a quick look at the u.s. equity futures dow futures up by 125 points almost s&p futures by up almost 12. ine nasdaq up close to 50

pots comes after a big down day yesterday. we'll talk about it in just a minute i'm april kennedy and i'm an arborist

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good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, shares of intuitive surgical rising in premarket trading. the company reported a profit of $2.83 a share for its latest quarter. that topped the estimate of $2.66. the results helped by increased use of the company's robotic surgical devices this would have been one to buy, like, ten years ago. i remember it was, like, trading at $50 or something like that. now it's $500. remember it? professional sports leagues could make a combined $2.4 billion per year from legalized sports betting the nfl, not surprisingly, would take the largest share about $2.3 billion and starkist is pleading

guilty to price fixing they are fined for conspireing to fix prices for packaged seafood. executives at amazon have made a new round of visits to several of the 20 finalists for its billion dollar project they have been focused on urban sites in new york city, newark, and chicago. also followed up with washington, d.c. some cities including raleigh, north carolina, have not heard from the retail giant for months unclear whether any of these visits are a sign of which direction amazon will take the disappearance of jamal khashoggi believed to have been killed in turkey is throwing the u.s. relationship with the saudi kingdom into turmoil joining us now is jacques russo. and on currencies, we have winn

thin good morning to both of you. i want to start with the oil a lot of people were pinning this on the idea it was because steven mnuchin, the secretary of treasury was pulling out of that summit this could lead to other issues between the companies. if you watched oil prices, they were coming down it didn't seem to hold a lot of water. what's happening what's really driving this market >> if you take a look at the oil market over the past few weeks, what you've seen in the data points is rising oil supply, concerns that oil demand i going down what we think is going to happen over the course of this quarter, you're going to see a big pullback on iranian exports. remember the fourth quarter of the year is the peak demand quarter of the year. we think that's going to be a

positive backdrop for oil prices. >> that's been the reason we've seen prices rise to these levels to begin with. >> we haven't actually seen the oil come off the market. i think that's the key everybody looks at all the data points until you actually see a million barrels per day less exports ring through to inventories, then i think that's going to get a lot of attention >> we have demand being the other half of that equation. what you're talking about is supply we did hear their economy slowed or grew more slowly than it has been to this point how big of a concern is that slowing growth in china and actually some declining growth in other nations >> it's definitely a concern but i think when you look at the demand side of the equation, the data takes much longer to really figure out just remember oil goes into a lot of different things. transportation, petro chemicals, airplanes. so the aspects of oil demand can be pretty varied >> let's talk about the china

situation and what that means for currencies too because hearing this today, there are now concerns that the chinese currency will push to seven yuan to the dollar or beyond that. that's been a real concern if we were to hit that psychological point. "a," do you think that's a risk of happening and "b," what would happen in the fallout from that? >> well, i think there's been a lot of ink spilled about that m it yuan will also sell off as well. i don't think the saudis are trying to engineer a weaker currency >> no. they're almost propping it up. >> yes look, china's a concern. i've been on the show many times. i've sort of pooh-poohed the kind of disaster story but i'm getting concerned. the yellow light is blinking more they're juggling a lot of balls. growth is slowing. we know all of a sudden the leveraging has gone out the window new loans are going to be used to prop up the economy

that feeds into the financial stability issue. look i'm not saying it's going to blow up, but i guess i would say i'm more concerned about china than i have been in several years. >> can i go back to saudi for a moment i want to ask about where you think the leverage lies. everybody has this view that trump is going to somehow roll over and effectively come up with some kind of concocted story and we're going to continue to do business. this is brett stevenson in the paper this morning apologists say we need riyadh to oppose iran and pump oil that's the argument about why this would happen. but he says the kingdom no matter what still is going to pump oil regardless of the attitude we take towards khashoggi's killing. and as for intelligence, if they don't want to share their intelligence with us, we don't need to share with them. he says in the age of fracking, house of saudi has infinitely more need for the united states than the united states has for the house. what do you make of that if that's true, could we turn on them and what do they do in

retaliation? does it matter is brett stevenson right >> i would say he's right in the sent with the fracking we are much less dependent on middle eastern oil. and the saudi -- we may see oil at $200. that to me is not a significant threat we have a global disaster, global recession and it would be shooting themselves in the foot. >> where are you on that, jacques? >> saudi arabia is such a big ally of the united states for different reasons. for regional defense, for terrorism. so if you take a look at breaking that relationship, what happens with saudi arabia? they become closer to russia and obviously that is not a great move for the united states >> i think the point he is making is they don't that we have the leverage in terms of being a moral player in terms of our values globally and they actually -- even if you upset them or upset the apple cart, if you will, or the oil cart in this case, that actually maybe they actually come back to

us >> well, i think if you take a look at -- if saudi arabia pulls back oil production, what's going to happen? oil prices are going to rise the united states is not at a point where it can be the excess supplier of oil. there's a lot of pipe lines in the perm iian basin. saudi arabia still holds a lot of power in the oil market >> win, let me ask you quickly you think of currencies going back to this, that we're underestimating -- the market is underestimating just how far the fed will go with interest rates. how does that play out >> we had some comments from powell we had minutes earlier this week that talked about restrictive policy which to me means going up 3.5%, 4% will we get there? i don't know the way things stand, the fed has a clear intent to hike rates i think farther than what the markets are expecting. the dollar has gone back and forth.

it tends to get traction when people focus on this hawkish fed. but this recent softness, it's puzzling to many at least three hikes, maybe four hikes next year. that's where things can get mess y i. >> win thin, thank you very much for being here thank you jacques russo. >> where are you now on him? used to be a solid never trumper. then he said thank god we had trump for the kavanaugh hearings now you're back liking him again? zb it's not about liking him i thought brett is one of the most thauroughtful people out there. i don't always agree with what he's saying or writing but i -- >> in general where brett stands on -- >> brett and holman always make he think >> that's good

>> you, on the other hand -- >> remember the late great john mccain i never knew whether you loved him. you hated him when he ran for president. then loved him -- >> it's not about love or hate it's about being involved in the intellectual conversation of it all. >> that's what i think of when i think of you oh, this is me perfect. >> you have stocks to watch. >> i can really soar shares of skechers are soaring shoe company issuing upbeat guidance for its fourth quarte revenue and earnings meantime, aig is tumbling. the company says it expects its catastrophe losses -- we don't have any sound effects >> we're not doing them in the 8:00 a.m. >> i miss them. >> so does your dog. >> the losses from weather events including the typhoons in japan and hurricane florence here in the u.s. and bank ozk falling in a big

way. thank you! the arkansas based bank reporting disappointing earnings for its latest quarter missing on its top a going to wk okay okay there. it takes a second. >> to get the ding >> we have the pops and drops song ready to go when we return, stocks that have been crushed this year. we're going to talk to a stock picker who says two of them belong in your portfolio we'll explain when we return i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes.

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housing stocks having the worst year since 2008. that's interesting in the sectors facing serious head winds rising interest rates, for example, some analyst downgrades our next guest, though, isn't afraid some of the top picks are in the home building sector joining us now from seattle is bill smead are these new picks, bill? or did you write them down >> well, we wrote them up and we've written some of them down. you got to remember, these stocks were up 100% last year. and they are in a secular growth

phase for a cyclical industry. >> so you're adding to your positions that you've held for awhile which ones are we talking about? and then you get interrupted then you can go back to your train of thought but you like lennar. what else do you like in housing? >> nvr, brighton homes based out of washington, d.c they cover pennsylvania to florida. for example, they'll be building a lot of houses in north carolina in the next couple of years. >> so why are -- why are you -- i don't know if you're going against consensus. there are some worries that obviously you can see it reflected there. there are some worries about the industry whether it's interest rates or housing starts, whatever why do you think -- >> let me cover that the first thing to understand is if your time frame is three to six months, you should go to another project. but there are 86 million people in the united states between the age of about 25 and 43 and most of them have not bought a house yet.

and we're in a bit of a baby boom among 30 to 45-year-old women. many of them are successful, have careers, college educations, and when they get a child, they want a house so the demographics are spectacular. second thing, alan greenspan was on tv for the first time in a long time yesterday. he started a statistic 38 1/2 years ago. u.s. household debt ratio. we've been bumping along 38 1/2 year lows. in other words, the financial ability of u.s. households to buy a house and service the debt is the highest it's been in 38 1/2 years so you put 26 million more millennials than gen-xors in a system i think the outlook is quite bright and secondly, the mote in the industry is getting bigger

the mom and pops dropped out in '08. and the market share that the five largest builders have is dramatically larger and they are able to get the employees that they need -- they can get the plumbers, carpenters, and electricians because they can go to large multi-house sites and work in the same place for those union laborers, that are more attractive. >> discovery is not a home builder and you like it. and we know there's experience with tnbc there. >> what's their most popular show, joe? >> shark week? >> hgtv. far and away their most popular is hgtv. they made personalities out of people who are buying homes and fixing up homes. it's very simple we're going to have a huge

number of 30 to 45-year-old people >> that's interesting. okay >> it's the same buy er it has been all about 27-year-old single people. so the most popular stocks were the hot restaurant or the craft beer or the apple devices. now those same people are forming households they're buying houses and they're going to buy cars and they're going to ommute. and then thirdly the most popular advertiser on hgtv is target one of our other picks demographic is 30 to 35-year-old moms and they're going to be more affluent because they waited

later in life to have kids >> all right discovery, target, nvr i think we got them all there. bill, thanks is that a -- what does that mean only the lonely can play that's like a -- what does that got to do -- >> joe, how many computer programmers were around when paul allen did the first computer programming one. who got rich who got rich the lonely one >> is that a stork what kind of bird is that? >> it's a herring. it's the smartest of all the birds and they fly above the storm. >> all right so only the lonely can play. and what'd you say >> it's lonely in home building right now. >> i get it. bill smead ceo of smead capital management. are you in seattle >> correct >> all right thank you. >> thank you when we come back, we're going to talk to jim cramer

about this morning's reports from procter & gamble and honeywell. he will join us live from the new york stock exchange after this honeywell up by 2.5% and p&g up by 5.5% p&g helping the dow this morning. it uabt 'sp ou94 points. the nasdaq up by 39. "squawk box" will be right back. she thought it was a fire. it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.

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welcome back this morning to "squawk box. here is what gary cohn had to tell steve liesman yesterday. >> tuse their money to buy services or lucky enough to save anything raise the price of a good does not make sense of our economy. it is just another tax gary cohn saying he agrees with president trump that the u.s. should hold china accountable

for the theft of intellectual property by taking to theft on others >> let's get down to the new york stock exchange. jim cramer is joining us live. i was thinking about you a lot katy tockton, i was thinking o your comments of housing in some of your comments and where are you today, i saw somebody said you are wondering if it is going to get faded again >> the proctor numbers were extraordinary and honeywell numbers were amazing we had people saying look get me out of here because the feds is going to raise and europe and china is so bad. we have to deal with that fear factor there is an interesting division coming down. if you are involved with autos, i only value raising that you

got morgan stanley raising tesla. if you bought housing, i don't know what to do. you are involved with yesterday with united rentals. anything that's involved in domestics that's involving economic activity that people are giving up on it is a difficult thing to mount a sustain rally given that attitu attitude >> we have the ceo earlier, it was an okay quarter but to see the stock down 8.8% that he was making the claim that we continue to improve on our margins even when the steal prices are up. the tax reform has helped a lot. how do you break out situations where it may have been, or maybe you don't think it is over played >> this is the new world where everything and no matter what nick did, the stock would have been down because people regard this part of autoa and there is

as genuine bleep that you can't expand anymore the narrative when it comes to domestics and consumptions having anything to do with auto and housing, they'll do anything to sell it no one wants to touch it because of the feds. g goldman comes out with five rate hikes whart are they trying to do people don't want to own those stocks and it is as shame and they shift it over to proctor. i don't like the fact that everyone is givering ing up to n and auto >> she's talking about how a lot of people decide to stay in their homes because they can't afford to trade up if that's the case, she's saying, she did not tell us directly back to home depot but

a lot of people are deciding to stay and renovate. >> the cfo of home depot has done unbelievable work of staying in the house and renovate is every bit as good for home depot but no one is listening. the thesis housing sells, it does not matter and you can't bucket it is amazing the mindset of how people -- >> gary cohn just hammering trump on tariffs but then said a agree with holding china accountable. can you say both >> i want to say gary, how do you stop china >> i know. it is great to say mutually contradictory thing and be able to feel on and off but in practice i don't know how you do it >> anyway, jim, thanks >> it is the only instrument i

only have. i don't know what else to do >> he's still stealing things off people's desks we'll be watching at the top of the hour we'll be right back. ♪ can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james

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the nasdaq is up 47 and 48 and s&p indicated up 11. i know you are getting ready for the big pgame tonight major deal make sure you join us on monday. "squawk on the street" is next ♪ >> good morning, welcome to "squawk on the street," i am david faber along with jim cramer we are live on this friday carl quintanilla has the day off. >> let's take a look at futures for the last trading day of the week we are set up for higher opening. european markets, well, they have been open f