lets che's check on the mark 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 for some time we'll get to italy and spain as

well italy is important by the way given what's going on with the market france is taking the hardest 10-yr note yield, 2-yr has been kind of interesting creeping up as it has. look at the 10-yr, the same level as we have seen. oil continues to be lower. below 70s. >> i thought we need 72 rate hikes. what's that about? are we on-air? >> we are on-air >> the come back for stock, volatility may continues as we expect they are relatively strong procter & gamble economy that stock is up in the premarket, it had strong organic growth numbers we had a few headlines to head in the world of automobiles. ford is moving slower and mercedes-benz just cut its 2018 forecast i want to talk to jim about

that >> sure. >> let's get to stocks right now, they're looking to rebound after sell-off yesterday you also had stocks bounced back over night in china. new data showing chinese economic growth of the weakest pace since the financial crisis. yesterday on closing bell, david solomon weighed in on the market >> i always go back to looking at the under lining economy, what's going on with the under lining company at the moment it is pretty strong from time to time of the gain given in the market it is not surprising that you see some selling and rebalancing. at this point, the under lining economy seems to be pretty good. >> the autosector would say different and housing would but other part of the economy are not strong and we are worried about china.

they did not get the plunge protection team that's what we call them over there they went to work. >> so many for china t >> now that it is down 25% >> what they don't realize that there is a class of people who are wealthy in china and they bought stocks. what are they supposed to do our savings are unimportant? some of them level up there to do it. this is years ago. people walk in and it is like a betting parlor >> yes, it is. >> i am glad you mention >> you can buy stocks and you can watch them as you are watching a horse race. >> did you know what happened in japan from '87 and '89 >> i do. >> japan started buying our company. they never got over what happened

>> the banks during the way during that point, misubishi and i forget some other ones, they were giants playing in our arena. >> this is kind of what happened in china in japan, that period they would say we are taking up tokyo's electronics tonight. do you want to be on board all right, i will buy something. they took you around what they used to do were not banned they were fix it that ended badly and i am saying we can't say the chinese stock market does not matter if you remember what happened in 2015, it mattered plenty which is why theyare drawing a line in the sand. the worse in 2009, do they have enough cap weaker because they are not doing well >> our markets may have turned

as a result of shanghai. >> they have >> their 6.5% is still awfully good they're not pointing to the trade wars being the culprit, it is having a psychological impact it may be early. they did cut down a great deal on lending there and on sort of trying to get a hold of what was a debt fuel economy and has been for some time. >> a shadow economy? that may have the impact of bringing economic broke down a little bit >> i agree, some of these stuff were facetious there is a mention in the paper how people are drinking more beer are they kidding me? how did they get that number they're now giving it to him we read about china and we have to believe that they're drinking more beer like we really had

that the only number that are true out of china are electric. we have electric demand. >> beer. >> who do they speak to? >> the mai-tai was the worst think i ever had >> what was it >> i don't know what it was, we had a lot of them. i believe this tariffs story does matter to them and us you mention up with housing. if it is connecting with housing, it is considered to be something like growing money into a gym achimney and lettingg on fire. >> meanwhile oil is below 70 so it does not seem to correlate. >> things are going to get much worse. they're going to start to produce less oil >> um, no. one of the things that bothers me as i follow it very well.

people are saying they have enough pipelines they do not have enough pipelines. it is people making up stories i knew that from august and appears in a filing after the bell and the stock is down 10% >> 6%. >> 1.6%. >> was it really >> they're upset about that. >> also may have been a communication issue but people did not understand that they had already targeted this. the analyst community was aware. >> david, not good news. but it is also new news according to deutsche bank certain companies and countries are making certain products because we are being blocked from our products.

it comes back to china more and more it is unnerving for people i was on the united rental conference call. that's the domestic way of playing. they move into uri and they were solving it aggressively. i struggle every night because talking about the fed is a license to turn thursday night football game as horrible as they are particularly last night which may be the last. but i do think when i look at the situation geez i have to talk about the feds, i have no choice >> you do have a choice because we are going to talk about procter & gamble because it is a potential helpful data point this morning they did have some impact of foreign exchange and operating cash flow, shares up 3% and they

show some organic growth >> look at this grooming number. they come in at organic buy at a plus five. they're minus one in the last quarter. the beauty has turned on the jets healthcare is great. david taylor is doing a good job and don't let anyone tell you otherwise. >> why >> he turns the business that we were most concerned about and particularly grooming. he has done organic sales that are shocking these numbers honestly i would say as much as nelson contributing some great things there. how was he elected to the board? this is the program that taylor promised when he came to my office listen, i can deliver these numbers and people were skeptical. >> positive mix impact was the 1% health of organic sales

>> it is such a weak category. >> strong growth in the united states >> how do you get it going they're not unlocking the blades though >> we still can't find the blow back i can't get them to stop them sending me blades. i have a stack of blades this big. my wife is taking up the whole closet stop the blades. it is the blades >> i can't help it there is a line here in this, unfavorably foreign exchange was a 3% hurt to sell for the quarter. >> hurt? >> who's writing this >> it was a 3% he's putting exactly >> they got to get out of the cincinnati bengals >> you can do better than that i did like the quarter it has been a lousy group of clorox and bingo >> let's get to a couple of earnings

>> we did not go back to gary cohn yet and solomon >> yeah, earnings. >> goldman has been good >> express, thank you. >> we should take a look at paypal as well >> oh my god >> american express a boost in what well, as you may expected of card spending, right >> there is no line in the american express conference call the fellow, get this, what really helped them can you do a close up for me this is really important t the u.s. platinum card continue with strong performance. new consumers are up about 50% and about half of those are from -- >> millennials i didn't even know, i just guessed. >> millennials what are millennials

when they have some money in their pockets. >> who would have thought that >> you know they're paying for platinum cards >> the same time, how about american express time with paypal where they are venmowing each oth it is $100 billion company reserve new growth was 14% of $3.68 billion both the spot and currency what are you doing >> i was just playing with my hand >> 9.1 million active accounts >> is that amazing >> that's a lot of accounts. >> shulman is hitting it out of the park and people kept thinking that separation rebasis

going to matter. now they're done about 11% >> across the border, the stuff is good. wait a second, i should take credit for that. it would be terrific had they merge with square. >> i am glad you pointed out the stock is down from recent highs. today it is regaining some of the grounds that it most recently lost back in august or september. >> did you go to square in the departure? >> well, never is not a very long time. it has only been a btbout a wee. >> we have memory of nasdaq in the wall street. >> dragon flies? they have a really short life. >> i got an 800 in my biology. do they still do that thing? >> i screwed up in my freshman year bio-college as i remember

>> how about jamie dimon, didn't he go to the same college? >> no, he went to the college. turns out he had a fortress balance sheet. >> he's going to join you today. i was upset about that as well >> yeah, what was that about >> yeah, i sent him al nice note i am hoping that -- there is only so much of them to go around >> i will get lloyd, the shining. remember that? the lloyd that i think about is the lloyd from "the shining. >> you can have lloyd all day long this is going to be our cohost we are replacing mr. zillow. >> perfect >> you should be out of the game >> floyd and tesla, by the way

>> what a pick that was >> here is another look at the futures, 15 minutes before we c,e e veropotrading here at the ny warli fm st nine after this

three oautomakers are not focused this morning ford is being downgraded t analyst jones says he's not seeing progress. meantime, tesla unveiled its new cheaper version of their sedan this one costs $45,000 the main factor they say is increase and expected expenses with connections of ongoing government proceedings with regards to mercedes-benz and diesel vehicles. it is a long sentence to tell you that >> the only positive in the autos is tesla a i insist that you listen >> the model 3 is running high

i know that they felt that ford's top of the line and the truck business would be good enough it is time to buy tesla and my problem with that is of course there are so many and as he calls it, these zero mission. there are so many wild cards he's saying they're the strongest auto company forget ford motor gm the numbers for diaimler is terrible >> strongest in what way >> momentum and the ford, you know david, there are two pieces today, i want to call people's attention and they're trying to figure out the shenanigan of wall street. they said ford of some of the parts they thought worth a lot who cares? not going to break it up >> its got as $10 price target

>> that'll be a huge twin. >> where is his brother? i will tell you, daifvid, when read these things, the apple call, i don't want to mention it it is what is tim cook going to say? let's break up apple >> it is time when some of the parts are of importance and there are time when -- it is another way to value something and get a higher number if you want it. >> a long time ago you came to me and people are not buying the traditional cards anymore and millennials. the fy 50 is a great play on the small, medium size business. i think the small and medium size business -- >> so much on the value in terms of the proceed values of these automakers are going to be wrapped up in their autonomous

plants >> right >> maybe waymo >> the ceo of alphabet is watching waymo you could have a 50 or $60 billion company but no one thinks like that no one >> all right, we got our "mad dash" come up with jim we have nine minutes to go before we get started at trading here one more look at futures, we like to give you that before we get started. you can see what reawe are hierpengctg. a gh oni

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. all right, we got six minutes before we get started with trading here. honeywell is one earnings name that we did not get to >> yes, it has come in and he's reorganizing the company and spinning off he puts out a figure these days. he has double digit growth in a business that's safety and protection but has the automation of amazon which we don't know where amazon is going to put their second plant. if you want to know why $15 an hour is not a struggle for them, it is the logistic stuff that honeywell has at their plant >> so they're selling into the warehouse on amazon.

>> kind of like a smarter warehouse. >> he sold up the turbo. >> dan lobe was pushing for that dan lobe has to be very happy. i would say this one is good dan's got to be happy. he's not easy to please. >> no. >> he's a rough customer >> he's a hardm man to please >> i really like him >> not typically satisfy you don't want to go through life that way. >> if you are rich, that's your own fault. >> my 20,000 square feet apartment. >> i am not satisfied with my 300 feet boat. >> i am not satisfied. >> sometimes, what can i say this is a winner, it goes higher and a lot of double digits and some people are saying the best, organic industrial growth. >> really? you had to buy one, which one? >> honeywell

>> the chinese are holding up of the key yunited technology. >> they're still expecting >> still expected to be in the super bowl >> i know a lot of people don't understand what's going on there. >> we got a lot more to get to on "squawk on the street," opening bell is after this my name is chris hughes and i am a certified arborist for pg&e. i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work, we work hard to protect the environment. getting the job done safely, so we can keep the lights on for everybody. because i live here i have a deeper connection

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p. you are watching cnbc, "squawk on the street. we with liare live, the openingi going to open minutes from now time to ask you what's the key of the market, what people are going to be focused on >> it is going to be apple the best work on apple saying a slow down in the app store for china which then critically, no reputation you know i got to tell you

david, i believe in this piece but i am concerned about what katie says i don't know her personally but -- >> the opening bell. take a look back at the realtime, you see quite a celebration here at the nyc today, the ipo of solar wind >> i think the entire company is here i am not sure if it had a lot to do with the sun. niu technologies i am going to spell it >> the scooter is so hot because of the replacement of autos. >> my friend, max smiths, is isnin it and they're killing it in l.a. with all these extra spots.

>> people are scooting in l.a. now? >> i thought they're scooting in san francisco? >> they're scooting in both places it is a scooter economy. >> this is our unicorn economy >> yes >> we don't talk enough about the unicorn. there we just talked about it. >> there is a lot of potential ceo next year. >> you know what helps this market are the buy backs this year because they shrink the supply it may be there is not enough demand in the marketplace. the bankers really have it within -- >> there is always enough money, you know that. come on. >> i think 30 years ago. >> or 31 for that matter today is the anniversary of -- >> 1987. >> 31 years ago.

>> iremember it well >> the guy wants to pull a surprise of what happens for terrible tuesday >> did to team come into effect, too? >> they put out a note saying will make all the liquidity necessary. and boom, they stood there like blue horseshoes >> i remember it well. i was literally standing by. that's when we had a dow ticker with paper that you had to feed at at the in vvestor at the time >> i was trying to cover my johnson &s johnson shorts. >> whatever. they got to approve that that was compassion use and they had the fda earlier on

i think it is the fwiirst quartr approval and people don't realize this is one of the biggest drugs of our lifetime. watch. >> what are you sighing about it >> how about the disney call >> disney call from barclays >> it is talking about something i want to go right to you on it is talking about first of all, speculation about the scale of earnings downside david, they are talking about this company having the least leverage of any media company. they have the best balance sheet. >> yeah, leverage is not going to be an issue for disney. that's one of the reasons why they did not compete as fully as fox would have wanted them to against us in the bidding, the final bidding for sky. you need to have the resources, jim, to build out the directive consumer offering that they're going to be. it is the future of the company. >> you are in some sort of

position where you are more highly levered and you are worried of your credit rating and what your bond investors are saying other overar overall wha investors are saying you make sure this thing works they're not thinking as much as the volume overall i am not sure if you are going to see this in netflix service where they have so many new shows. they're going to have a lot of pillars as you know. franchises that they're going to rely on for bringing people in >> i like the stock very much. >> i should talk about mad dash. the honeywell is great but they're talking about tariffs. stock is sinking because it is tariff talk. that's again so incredible higher rates and tariffs you have to look at who the prism of those i know jay powell does not want to think about these

if we don't focus on that, we say by honeywell 158 i owe the viewers the naturrati of what's happening right now. they're not ready and that's probably not exactly because i spoken to tariffs. he's completely ready for tariffs. analysts don't want to recommend any stock that are directly influenced for china global and gemini is -- who's global, the united states or china? it is not about tax. >> it seems to be what the ma market is going into slowly. this is something that's going to go on for quite a long time

>> you will hear about china proxy. >> we said it many times and you reference during the "mad dash" that there are concerns and it will spill into other areas and it won't be for tic-for-tat. it will spill into antitrust i will tell you that people close to united technologies are still confident. >> what is the conference baided on do they know something about beijing. >> united technologies make a lot of stuff for the chinese military >> it is a waiting game. >> yeah. >> investigators continue to wat for the collins deal and they're expected to split itself up.

>> waiting for board's approval. >> they're still waiting for approval for the chinese it is not as situation like nxp but what i continue to come back to, i ask the same question that you do, does anybody know anything >> no, they don't want to know you are done i know you're done and you are going to get aprooufprovalapprol >> did you know what the kremlin is going to do the russian market were smaller than during the timeof stallin because they watched 20 million people in the works. you got to start thinking bipolar. >> speaking of bipolar paypal is up and ebay is down. >> it turns out -- because there is gmv trends in the paypal numbers that don't look particularly good for ebay >> cross quarter is lucrative

for paypal 18% down to 11%. that's not reflective of how it may actually hurt may palpaypala little bit paypal every time you run to paypal, they come up with new partnership. >> let's not forget, i am mentioning both, please bring up ebay as we can as well that's the percentage amount >> there it is >> 52-week low, david. >> do you remember where john don went >> yes, i do service. >> you need to get it to be big. donohue comes in, he's a superb manager. ebay does not know what it is doing. >> amazon yesterday, you saw that, right? >> we didn't talk about amazon yesterday. i think you mentioned it

>> amazon is well off the tie. >> you see a lot of coverage of who's going to get to the second quarters >> obviously philadelphia -- >> i don't think philadelphia is in the running >> they're picking a state that's democrats >> i am not hedging your bets enough they should be going and thinking texas and think in place that is are rock solid republicans. that's my advice to him. like new jersey is ever going to vote republicans again >> did you think it would matter because of the retributions? everything is political now? >> they're so big that they're all coming under the purview of standard oil if you go back to the standard

oil case, it is easy to break up standard oil they were too big. if you look at the pleadings, all it was about is it is too big. alphabet is too big and apple is hard to fight because they don't have tentacles everywhere. >> it is interesting you say that i have no idea they're thinking of the political benefit there are still many people believe they had quarter coming up in the washington, d.c. area whether it is maryland or northern virginia. in the papers today, there was not a new hack about facebook. >> no. >> there was nothing bad about facebook today >> here is what happens. >> stock goes up 1%. when is the next story facebook by the way, the most hated company. i mean it is almost as if it is dark vader >> amazon is known for dark

vader. >> alibaba is up today, that's more surprising. it is a proxy in some way in terms of the ongoing war between the china and the u.s. >> there were under cuts retail and sales, that was one of the stronger parts of the economy and shanghai it was up more than expected >> and into beer that story does not have any residen residence. i have not talked about constellation today. they were all in alibaba they should have been in canopy. it is done going down and it is time it is just time to buy canopy. >> you waited 41 minutes to talk about canopy >> i waited until it was down. one day constellation may be 50% of its market cap. >> time is now, huh?

>> i had a retailer on my list that i am going to do pot stores that are going to be like victoria's secret. >> the one in canada that looke beautiful. >> that's always i think a little forbidding. >> yes that may be. >> jim ford's shares are down. >> 1.7%. we went over the autos, of course, and tesla being the beneficiary and dimon. >> i want to do a bottom idea. i think down six is very interesting. they have growth driven by vans. vans is up 27% year over year.

they're getting rid of their jeep businesses. this may be an opportunity for people to let the stock down six. that's a mistake people do not understand >> vf corp. is getting rid of their jeeps? >> i think this is a great opportunity and i think people are going to regret that they're going away right now >> jim, i did the story the other day and i want to come back to it which i forgot to not that i have much news to offer, i don't >> he's a contributor and he had a show on cnbc >> he's dynamite >> restaurants and casinos, caesar it is a tough one for him to pull off though. there may be certain shareholders, supportive of change of management there is fair to say and believed mr. furtido would do a good job

managing the caesars property. a great deal of expectations among the caesars side of the board level that they'll be willing to get a deal done, two or three billion dollars dutch auction would follow if they did. i wanted to come back to it. >> i am glad you did >> it is early days. we'll update as we get it. >> there is been trouble of ipo. >> yes >> it does not have any debt in it >> that's always good. >> when you say key to the mark, i should have been fibrocated, because proctor is going up. >> wow >> 6% in a day >> david, our statistician will

lel let me know. >> he's doing a lot of things right with nelson pelt there is. proctor, extra ordinary organic growth stock went from 110 to 105, it is coming back now we are seeing a soft good arrival based on proctor >> let's get to bob pisani >> that's what we are seeing consumer staples are leading the sector >> a nice start today. proctor pushing consumer tapeste up nice day for china and emerging market, recovery tech is okay you see the banks, it is not doing anything a little bit discussion of what if anything bank of the ozk.

thfts o this was one of the big lender and commercial real estate very aggressive. earnings come out and issue a commercial real is sate. is this a cannery in to the cold mine we don't know. it is being debated. ozk, one of the reasons we are seeing problems with the bank today. michelin just came out europe and china, weaker demand and i think diamler is down there. a lot of this is due to increase diesel related expenses in europe all the autos are down in europe we are 20% through with earnings season 83 companies reporting look at the numbers here, the average is 65% beep. 25%, this is not blend it.

this is all the company reported, revenues 65. up 7.5%. those are excellent numbers. the fourth quarter is holding up very well on top of that that's pretty good about it and about even that's not bad we are flat looking at 20% for the fourth quarter remember everybody, where the biggest fears are out there. the three big ones, trade war number one, fed tightening increasing that's a high number for the last few months. this is the bank of america v'sy survey every month a lot of people are talking about air bnb. look at how terrible it is down 10% in the last month. s&p is only down 4%. the volatility really hurt the ipo market

solar winds were waiting for these guys to open look at what happens here, they price 25 million shares at $15 >> they cut the deal in half right now we are waiting for that to open of the 15.5 to 16.5 is what we are looking for we'll talk more about volatility and the ipo market in the 11:00 hour eastern time. guys, back to you. >> thank you pisani on the floor. >> let's get to the nasdaq, bertha coombs is joining us. >> thank you, daifvid. >> we are watching the nasdaq. among the big movers and the indi the apple bouncing a bit still negative for the week.

they have set an event here in new york city for october 30th and some of the chinese names are coming back as well. meantime, it is really been a story about healthcare, healthcare continues to be the leading sector here and healthcare services and devices among the best performerperform blowing them away of a number of device, procedures up 20% that's better than expected that's in part of the issue in terms of russell 2000. it is the best index this week and part of that coming from the healthcare and particularly biotech names, small cap biotech names >> thank you, bertha >> coming up, jim stewart, he spoke exclusively with eddie lambert of the bankruptcy of sears.

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a. there is a look at the heat map back at hq you can see we are up nicely on the morning as a result of a number of important rngseain including p & g. up next, stop trading with jim the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.

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past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. time for stop trading with jim. we want to talk a little dough d -- dow dupont. >> dow dupont, there was nothing new, stock went down to 55, right back to 58, it's a buy. >> sometimes after hours can be a dangerous time. >> ed breen will be do a great job. let him work his magic "mad" tonight? >> john rainey is the man of the hour paypal, venmo starting to work my daughters have paypal accounts and they have american express cards -- well, one of them why? because they're millennials.

>> and their success is having an impact. ebay is down a lot on the reflection of what it means for them. >> after i get rid of the fed, i'm going to take over ebay. tell them stop focusing on the five rate hikesly go fix ebay. i have a lot on my plate and the longshoreman opens next week. >> have a great weekend. >> not really mine, it's my wife the dog watches. we have to go, david, enough enough w. have to go no >> jim stewart is coming up next.

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welcome back to "squawk on the street," i'm diana olick with breaking news from the national association of realtors existing home sales down 3.4% in september month-to-month to a seasonally adjusted annualized rate of 5.15 million units that's a big miss. the street was looking for essentially flat august numbers were revised down so that makes this the sixth straight month of sales declines and the slowest pace in nearly three years. important to note, sales fell across all price categories. we had only seen sales weaken on

the low end where there was no supply but now we are seeing across low end and high end, down 4.1% year over year and you can't blame it on supply anymore. inventories up to 1.88 million units for sale, up 1.1% year over year to a 4.4 month supply. home prices gaining. 258,100 was the median existing home sale price in september that's up 4.2% year over year, but that's the fifth month we've seen in the the 40% range. we'd seen price gains around 7%. realtors are saying there's a definite shift in the market, sara. >> just the latest in a string of disappointing housing numbers. diana olick, thank you very much. good morning, welcome back to "squawk on the street." happy friday i'm sara eisen with david faber and mike santoli live from post 9 at the new york stock exchange carl has the morning off. let's look at the markets. things looking better this morning. the dow is up 163 points thanks in part to what was a blowout

sales number from procter & gamble got a lot to say about that one. consumers staples leading the s&p higher but it's broad. you've got all sectors higher right now. technology is coming back strong today. the nasdaq composite up 1% bonds and the dollar under pressure, europe is mixed and china bounced. our road map for the hour starts with the markets. stocks trying to bounce back on this wild week of trading. solid corporate earnings giving the street a boost. >> speaking of dow, procter & gamble is soaring. the consumer products giant reports its best quarter in five years. sara is going to dig through those numbers for us. he was once dubbed the next warren buffett the now former ceo of sears eddie lampert spoke with jim stewart and jim will join us in a few minutes. let's start off with this week, volatility continuing. this morning the market is gaining, the dow is up 180 as we watch rates. here's the goldman sachs ceo david solomon talking to wilfred

frost yesterday. >> i would certainly not call rates high in any way right now and you don't have to go back that far in history to just have a different perspective. i think about my career. i started in 1984 and the 10-year treasury was around 11.5%. so there are different things that can affect rates over time but the fed has been pretty transparent. >> joining us to discuss this is david zervos, chief strategist at jeffreys who is live in mexico city this morning and at post 9 is the chief market strategist at kanter good morning to both of you. peter, david mentioned the treasury yield he said it's not about the level, it's about the speed and how fast we're getting to these higher levels. do you expect it to continue to disrupt the equity market given the speed we've been seeing? it's been a theme of ours from the beginning of the year and especially initially the short end of the u.s. yield curve has been what we were focused on

it was our view that the fed was going to continue to raise rates rather quickly and that, in fact, the long end was going to be anchored to global factors. that is, still active qe in china, in europe, and so we've had short rates volatility, we've had long rates volatility and when one turns off, the other has tended to turn on so we don't expect the long end of the u.s. treasury curve rates to go above 3.735, b5 but we expec changes to be what to look for into the end of the year and that will be a head wind for equities in our view. >> david, match that up. you have to head wind of rising rates but if you're to be better corporate results, most companies are beating earnings, p & g is great on the upside numbers are good except for housing numbers. >> good morning, sara. to put in the perspective, we've had 200 basis points of rate

hikes, we've seen the balance sheet contract from a peak of $4.6 trillion to $4.2 trillion we're losing $50 billion a montmont month. the fed is likely to go a couple times in december but we're talking about a cycle with what looks to be at least 300 basis points of tightening built into it so i'm thinking that's quite a lot. that's the type of cycle we had in 1994 which managed to blow up a lot of things by 1994 so i'm not sure i would say rates have a long way to go from here i think we're getting very much toward the end of this and i think the market is a little bit maybe off in how it's reading the fed. >> peter, it seems like this little stock market freakout we've had in the last few months has been a mix of concern about the cycle potentially having its end coming into sight along with the fed being seemingly at least

by its rhetoric determined to get rates up so that mixture seems to be what the stock market doesn't like. >> i agree it's a few things. to david's point, there's not a lot left for the fed to do however you have to look at monetary policy globally and there is a tightening going on globally the ecb is about to end its purchases at the end of the year which, actually, i don't think it's going to be able to do. we had a non-consensus call, they weren't going to end in september, i believe they may extend into march because of the slowdown afoot in europe but it's not just a fed phenomenon it's an ecb phenomenon china is slowing, although chinese authorities have been providing some stimulus through triple r ratio cuts and the boj has been on the long end of their curve so it's a global tightening that matters most to markets in conjunction with the fact that earnings still matter. earnings that we think at kantor

have peaked. >> europe can't do anything now that it has the basket case of italy. japan is battling deflation. >> i agree but on margin boj is tighter. long end of the curve in japan has gone from zero to 20 basis points doesn't seem like a lot but 20 basis points matters ecb went from $30 billion to 15. they're threatening to stop which i don't think they'll do pboc, i agree, they've been stimulating but relative to their slowdown probably not enough. >> david, what about the china question 65 65.5% gdp. the bulls say that's great growth the bears say china hasn't seen growth that slow since the financial crisis how do you interpret it? >> i think china borrowed a lot of dollars when we did qe i think they levered themselves up and they're in a tricky position as we tighten because we're tightening up for them they're pegged to the dollar

they tried to unpeg in '15 and '16 and it didn't work out so well this is not an easy time for china. add trade negotiations and it gets more complicated so i agree there are international concerns slowing global demand even with the stimulus because there is a marginal bit of tightening and u.s. tightening is feeding overseas markets, particularly em that borrowed dollars but to step it back to the u.s. the u.s. -- the fed has had a really difficult time i think in the last few weeks communicating with the market. i think jay made a big mistake in his pbs interview with judy woodruff talking about being a long way from neutrality that's why equity markets rattled and looked at discounting earnings at a higher rate and it was very inconsistent with everything he said at jackson hole and at the fomc so i think we have a bit of a communication where the markets will jitter and we'll learn more

about jay powell like we did if february and march but this is not a fed that will dramatically and aggressively jack up the front end of the yield curve i think it's unlikely and i sort of agree with crimer who has been on this topic a bunch that this is kind of a silly concept to think about a fed that is jacking up hard bunch >> i'm thinking tactically where the market is it's obviously had a hard time getting velocity despite the fact we've had strong earnings so if the cycle has another two years to go, you have to think the market would be well set up but it's not easy to convince investors of that. >> i'm not sure we have another year or two to go but you can feel the change in the market. we've gone from a dispersion market where you had sector opportunities to what feels more like a correlation market. so we have across the board

stocks up, tech up, large caps up we've had -- we haven't had that for a while and when that happens it tends to be a sign of market weakness and a sign that investors are more concerned about the bigger financial risks not only in the u.s. but globally and my biggest fear -- and it doesn't take a lot of move for the fed in such a low interest rate environment is the fed continues to hike, even if it's modestly, while the rest of the world slows, em is slowing, europe is slowing. that will eventually come back to haunt the united states in terms of u.s. growth. >> guys, we'll leave it there. a lot of big themes everyone is talking about in this market david zervos, peter chiccini, thank you very much. when we come back, procter & gamble shares, that's a rarity almost 8% gain, reporting its strongest sales growth in five years. we'll look at the company's results and see what it says about the state of the consumer. plus, he was once dubbed the

next warren buffett, but now eddie lambert's sears has filed for bankruptcy pulitzer prize winning columnist jim stewart is with us he's taking a close look at that story after speaking exclusively with mr. lampert quk t see iback after this the meeting of the executive finance committee is now in session. and... adjourned. business loans for eligible card members up to fifty thousand dollars, decided in as little as 60 seconds. the powerful backing of american express. don't do business without it.

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the street." procter & gamble is the big winner, fuelling the dow's gained aing 42 points to the dow's 182-point rise after the company posted surprisingly strong sales growth, the best we've seen in five years 4% organic growth, double what wall street was expecting. also better profit numbers what drove the increase? the company is seeing a big turnaround in a lot of its businesses, beauty was the highlight. double-digit growth in brands like olay and sk-2 home care did quite well, that's tide and february breezeeze nine out of the 10 categories that p&g sells saw growth. why now? higher prices helped p&g raised prices on patchemper, bounty, puff brand that panned out well for the company. the cfo says p&g has managed to

grow market share in the u.s. and abroad and the company called out the strength in the united states which is the largest and most profitable market for p&g so that is a reflection of a better economy, better pricing power, lower unemployment rate and steady wage gains we have seen in this economy. gay gave comments about the early read they're seeing in october. the cfo says we haven't seen a dropoff in shipments and consumption. it did keep guidance the same reiterating 2% or 3% organic sales growth for the year, analysts saw that as conservative but keep in mind, this is a company that is getting slammed with the stronger dollar, rising commodities costs, both of those weigh on profitability so perhaps a reason there for the caution going forward. but despite some of those macro issues, volatility and emerging markets they talked about the turkish lira for instance, this was a much better result and i think what you can make is it

was a combination of a turnaround plan, higher prices, and a better u.s. economy. >> investors have been looking for organic growth for company for years and have been disappointed what gets them there do we understand what it is they're doing differently than they had done previously, sara, that is allowing them to start to perform the way they have this last quarter? >> a few things. number one, they chopped a lot of categories and a lot of brands over the last few years to focus on the core and they have argued a long time, including in their very publicized and messy battle with nelson peltz who joined the board that that was the right way. he wanted them to focus more on individual brands and innovation that appears to be bearing fruit. the cfo talked about the innovation driving margin and their ability to pass on higher prices to the consumer so you see it there so the fact they shifted strategy on pricing, other the last few years it's about

discounting and trying to compete with private label and they got rid of that and have embraced the higher prices and the more premium brands in what is a better consumer environment and all of that is working in procter & gamble's favor they said it won't be a straight line to growth it tempered the enthusiasm a bit on the call this morning but this is an inflection point when you look at the underlying sales growth across the business. >> it's interesting. a little bit of a halo effect on colgate, palmolive, kimberly clark and clorox. >> that makes sense. >> they're up 2% to 4% so the idea that pricing might be taking hold is probably helping those guys >> also the cfo did say the market grew and if you look at the early results we've got in this season from unilever, johnson & johnson, it's a better economic environment and a better pricing environment for these consumer scape ye yer st.

>> not often you see a move like that in p&g. >> it was a good setup >> usually a slow moving stock and business so -- it also shows people very keptally positioned in the entire consumer staples area. >> even with today's gain the stock is down 5.3% this year it's been an underperformer. also higher rates makes steady dividend payers less attractive. but 4% growth is a switch for p&g. >> best day in a decade for the stock it maintains this. >> it's a big chunk of the dough but the dow isn't outperforming so it's not all about just profit. >> but consumer staples are outperforming the s&p by 2.3%. we're going to get the etf spotlight. i'll look at a totally different part of consumer spending. autos and housing.

these have been down beat, the durables area we've not seen a lot of light there you had two downgrades that i thought were interesting of ford and harley-davidson. these stocks have been really beaten up. take a look at the cars etf. this is a global auto stock etf, very, very small etf but it holds all the big names in terms of global automakers and parts makers both ford and harley are in there. you see a slight bounce today but this is down 21% year to date multiyear lows and the big question is what is this telling us about the duration of this economic cycle is this a disrupted area and trade frictions don't help at all we got the housing number today. look at the itb. this is pretty concentrated in home builders but also does own some sherwin-williams and other home-related stuff, again down 28% year to date and the take

away is that if you want to make a bet that the u.s. economic cycle has legs then this stuff is very cheap out there and in theory kd get a second wind so either raead the market and say the cycle looks fine and the stock could be comeback candidates >> one of the tells about how the market is interpreting is the big miss on existing home sales. yields stayed near the highs of the day and so did stocks so it wasn't taken as an ominous signal about the overall economy, i don't think. >> it isn't. it's oddly decoupled people look at the extenuating factors, constrictions on supply and the fact that there's not enough sellers out there in part because they have a low rate mortgage and they don't want to swap into a higher rate. >> no housing than canary in the coal mine before. when we come back, america's largest retailer sears filing for bankruptcy pulitzer prize winning columnist jim stewart sat down exclusively with now-former ceo diede

lampert and jim will join us to discuss his interview next

♪ beautiful day is don't get it get away ♪ eddie lampert was called a financial genius and perhaps the next warren buffett but now with the retailer filing for bankruptcy, the former sears ceo is grappling with failure and he talked with our next guest for an exclusive interview joining us now at post 9, pulitzer prize winning "new york times" columnist jim stewart it's interesting not just the sad story of sears but lampert's decision to go from one of the highest profile hedge fund managers of his time back when there weren't that many of them to a retailer. >> right what came through to me when i spoke to him was what a fine line it can be between being a

genius and succeeding and failure. i'll say good things about lampe lampert. he's the first to acknowledge he was a contrarian most people thought from the get go that putting two fail regular tailers together, kmart and sears, was doubling down on failure. he had a vision and when you think back on it, the great fordhfo fortunes are made because someone takes a contrarian view. you don't become a billionaire by following the heard secondly, he stuck with it forever and people are saying this is crazy, you're going down with the ship, why are you doing that but if this had worked, look how long jeff bezos stuck with amazon, decades of losses and he's hailed as having brilliance and conviction so i give him credit for those things, but the sad fact is most contrarians fail because usually the

contrarian view is wrong you have to find the needle in the hey stack where everybody thinks you're wrong but you're right and that turned out to be difficult. >> there is a criticism that he ended up enriching himself at the expense of sears shareholders but the numbers don't tell that story, do they >> i don't think that's a fair criticism. he's still very wealthy but his net worth has sunk precipitously because he invested so much of his own money, he loaned so much of his own money to sears and he worked really, really hard i will give him credit for that. what i will say in criticism of it i think the vision here never really adapted to the post-financial crisis world. it never adapted with the speed with which amazon was taking over mass description retail, the advantages it has and also i never could get and answer from him. they said we wanted to be customercentric but i never got a clear answer who the sears customer is or was and how sears

could serve them in a way that neither walmart on one side or amazon on the other could. >> what did he say the mistake was or what led to the downfall of the business? >> he felt his biggest mistake was he didn't realize how tough it was to change the fundamental culture of sears sears was an old line traditional retailer that measured success by sales to square foot and was all about get the merchandise in and get it out it was not a nimble, agile digital let's try this, let's fail, let's try this no he was trying to move an aircraft carrier and by his own admission he couldn't do it. >> he stopped investing in stores he didn't feel that that was an appropriate use of funds some of those seem to bes may i can mistakes. >> all the traditional retailers say that i don't think nicer stores would save sears he said we were never going to

be bloomingdale's. >> counterfactual to that, since he put kmart and sears together, j.c. penney is down 98%. they spent money trying to make it work. >> their stores look nice and it didn't help. i don't think he was wrong about that he was trying to invest in the digital platform, the using data to cater to people's needs but that is super capital intensive and when you have sears and shareholders, they weren't given the benefit of the doubt the way amazon was nobody said you can have 20 years of losses and we'll let you invest billions. >> and real estate cushion wasn't big enough. did you ever get a straight answer on how much house money he was playing with? what he originally got control of kmart for it's hard to retrace what his profit and loss is. >> it is hard although there's a good gnarl the "times" today as well that tries to sort of sort through those numbers. it's really hard he didn't really address that.

>> i took from your column he also had trouble hiring the right talent. >> he did. some of that was just not getting the right people and then he had somebody who had an illness in the family that quit after two years. i think that was a deeper problem, though. again, you have this -- the controlling shareholder, him, as the chairman, a retailer wasn't the right answer but a non-traditional retailer didn't understand the basic to keeping the trains running. >> he made the mistake of buying back a lot of stock at higher levels over $3 billion for a company that tin debtedness which is what sunk it. >> and when his vision didn't pan out he turned to every financial engineering trick in the book and i don't think those ever really do anything to prolong the life of a company.

>> what is he going to do now? he's chairman and he says they'll reorganize but is he thinking about another act. >> he wants another act. we didn't delve into that but he referred to either taking -- he claims he's learned a lot from this about running businesses and he said he'd like to apply that to a revived sears or some venture. i don't hear anyone saying there is a future for sears at this point. could it limp along in a slimmer version? probably but it's hard to be opt mistic about. >> it jim, thank you thank you. >> let's send it to sue herera for a cnbc news update at this hour. >> good morning, guys, good morning, everyone. here's what's happening at this hour. afghanistan's election commission postpone elections in

kandahar for a week following a brazen attack on a high-profile security meeting that killed two senior provincial officials including the province' police chief. the taliban claiming responsibility for the attack. in singapore, jim mattis says the attack is unlikely to fundamentally weaken afghanistan's security situation despite the loss of the police chi chief. >> the officers around him, i've seen the maturation of the afghan security forces and it's a tragic loss of a patriot for afghanistan but i don't see it having a long term effect. >> turkish officials say police are searching the forest on the outskirts of istanbul and a city near the sea for the remains of journalist jamal khashoggi saudi arabia denied allegations by turkey that they killed khashoggi inside the saudi consulate and later removed his

body. you are up to date that's the news update send it back to you and see you in an hour. >> sue, thank you very much. as we head to a quick break, let's get a look at the major averages here. the dow is up 167, s&p up 0.8%, nasdaq up 1% the broad market is retaking about half of yesterday's losses the nasdaq was down 2% yesterday. take a look at the top gainers in the s&p 500 in the first hour of trading papal nosing out p&g "squawk on the street" will be right ckba for your heart...

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welcome back to "squawk on the street." i'm sara eisen with david faber and mike santoli one hour into trading, let's get a check on where the major averages stand dow is up almost 200 points.

the declines yesterday were sharper. the s&p is having a broad-based rally day. staples, tech, communications services in the lead but all sectors are green. despite today's rally, investors continued to be cautious overseas. >> yes, they do, in fact, they continue to be because we've got worries about china with weaker-than-expected gdp numbers overnight. also concerns over italy's budget which are front and center as the eu slams the 2019 budget plan. with us now on set distributor -- that's what we call you now >> that's what you call me. >> well, we're happy to see you. michelle caruso cabrera. you spent a good amount of time on italy how concerned should people be about containing that percentage of gdp >> the eu and ecb have levers

where they can instill a lot of pain of course inflicting that pain could lead to volatility but you see the u.s. market higher today, the eu, the euro weak but not acting like there is an existential threat the market acts like they think they'll get to a resolution and that the probably true because what do we see over and over again from leaders who think they can flout the bond markets. once they figure out they have to divert more and more revenue to interest payments or bailing out a bank and they can't spend the money on what they wanted to, what's the point they're put in a box. >> you mention the banks that is where the focus tends to be. >> that's the doom move. they carry italian debt on their

books so every time you see yields rise you get a market down it doesn't matter until you have to tell the ecb what capital rates are but it's problem mat psychothe banks are where the leverages are. they're limited down today in italy. they're down like 25% so far they are deep in a bear market. >> is this going to come down to draghi doing whatever it takes to save the euro and the poll thyss won't get it done? >>. >> whatever it takes, yes, i think so but it's probably the opposite of what it used to be we'll take whatever collateral we have to now he has to put the hammer down on his compatriots and say you have to follow along because the precedent would be terrible and they're carrying italian debt on their balance sheet that

they need to worry about. >> the eu commissioner said the eu won't interfere in italy's economic policies and underst d understands italy's priorities. >> he's french, right? i'm not surprised. the french would say that but the germans are in charge and there are eu budget rules so that's that. that's a reflection of the dynamic that exists always in the eu france always wants to be lenient on greece because they have wanted to flout the budget rules as well. >> china has been a much larger impact on our equity market. you can see sentiment. 65.5 gdp growth. the numbers are coming down in terms of growth. >> they're coming down and probably everybody worse than that nobody believes the gdp numbers

out of china we believe they are constructed to deliver a message so if you follow the psychology, the economy is weaker than that and when you see all the headlines, looking at the south china morning post, everyday there are headlines that indicate that that economy is weaker how much of a flow through to the united states is the key question transmission mechanism is less clear than what happens in europe they have a walled capital account so they can constrain a lot of things. we don't like they don't let money flow out of china but right now when you have situations like that, it works in the rest of the markets' favor around the world. >> sort of gets at that question, is it weak enough to bring china to the negotiating table in a meaningful way and give the u.s. leverage in this highly anticipated meeting between xi and trump in buenos aires since the end of november? >> i'm not sure because china's problems are so much bigger. china's problem is this -- they want to go backwards. under xi jinping they want to go backwards.

all of the market liberalization that started under deng xiaoping has been stopped and we see retrenchment on all fronts it's in the in their thinking that having a more liberal dynamic economy is good for them they don't seem to believe it. >> well, it's worked out pretty well for them. they've only taken 400 million pete o people out of poverty. >> i would argue that happened when they were reducing the number of ministries and level of intervention into the state economy. that was going lower and lower and lower and now it's going backwards. i would argue they've stalled because it stopped under hu jintao, and here we are now with more money in the state-owned enterprises. that crowds out higher quality money -- money going to higher quality investments. >> great to see you. >> good to see you, too. >> michelle cab rus cab rue -- o

cabrera. we've heard the economy is strong, nothing much has changed that picture, yet. >> at the moment, the underlying economy is pretty strong so from time to time given the gains people have seen in markets it's not surprising you see selling and rebalancing. >> we continue to see the economy grow we continue to see earnings grow we continue to see companies invest in the labor force and we continue to see wages grow i think that's a great environment. >> i don't think the fed chub taking a pause but it's a year since i left the fed and things happen the economy seems to be doing better than we expected it would a year ago and i trust their judgment. >> this is the tightest market, labor market, i've ever seen so

that means if rates go up, ultimately prices take hold. >> picking the other side from those voices on stocks and the economy, david rosenberg, gluskin sheff chief economist. i don't think you'd argue too much with the fact that the economy here has been good and is on a coincident basis looking okay but i guess you're alert for some signals that, in fact, somewhere around a peak or have passed it. what specifically would would you be looking at to say maybe it will be tougher going ahead. >> well, look, in terms of the economy, we've had one really good quarter which was beforehand along second-quarter growth and we've got some spillover and a lot of inventories into the third quarter which is probably 3% plus but wlald anybody expect

when we have arguably the most gargantuan fiscal stimulus plan of all time. of course there would be some initial response to the economy. the question is what happens in the coming year and what are the leading indicators telling you we have the leading economic indicator from the conference board just yesterday and when you look at the real components as opposed to survey components, they're running flat the commentary on the economy surprised me because the real great leading indicator that we all know is housing so i find it fascinating that we're hearing commentary on how great the economy is on the same day existing home sales in september collapsed almost 3.5%. down six months in a row and over that six months is down at a 15% annual rate. if you believe housing is a leading indicator of the economy, it's telling you once

we get past this fiscal sugar high we'll have a few problems in the 2019. >> don't you have consumer incomes doing okay the pmi indexes are still not too far off their highs and also how far ahead of the last recession did housing sneak two years? >> you're probably correct housing didn't just peak housing and home building stock and you're quite right about personal incomes doing better but that will come at the expense of corporate income. we're going to have a significant margin squeeze on corporate profits from rising interest rate expense and don't think for a second that the impact of the slowing growth overseas that we get the impact on u.s. corporate earnings, yeah, i fully agree we're going to see accelerating wage growth

ahead but there is no such thing as a free lunch. we had weak wage growth for most of the cycle and that was with fed benevolence and low interest rates. the market loved that. now we have a situation where i think the big surprise -- and it started with amazon with 50% wage hike -- that that will transmit itself through the broad retail sector and beyond and from a special perspective, that's great news but wall street doesn't trade off of the social perspective it trades off of interest rates which you have to use to discount the future cash flows to depress it. so accelerating wage growth puts the fed on the block it probably will have to do more than people expect so the fallout from the personal income means interest rates will go up and that will be something brand spanking new the reason why the markets have been so choppy this year is 1.3%

and if that interest rate is altered, all of their asset classes globally have been the shift that will continue over the next six months at the least. >> david, if housing is the basis of your bearish argument, some might argue there are factors going on, oversupply issues in markets like new york, worries about higher taxes with the state and local tax changing next year. foreign investment drying up as a result of the strong dollar and the less friendly attitude toward foreigners coming into this country is there a chance housing is some sort of an anomaly and everything else in the economy is doing quite well if you look at everything from jobless claims to consumer spending? >> well, the point i would make is this -- the sectors are the canary in the coal mine, housing and autos. i know mike would say it's beyond a little hope to say that we have another two years left in the cycle just because i'm

going to extrapolate what happened in the last cycle what we know about the next year is we're going to have tremendous fiscal policy withdrawal we know tim pact of everything the fed has done, the fed told us and maybe the president is right in his tweets that maybe the fed will go too far. when you consider what the fed will be doing on its balance sheets, another $600 billion, more rate hikes, we haven't seen the full impact of the rate hikes being put into the system already so next year we're going to have the peak impact with the fed hitting the real economy with a lag and fiscal policy withdrawal unless we get more rounds of fiscal stimulus which i find hard to believe looking at the state of the national balance sheet. >> all those issues are in the head of the markets. that explains the rough patch we've seen dave rosenberg, thanks for the time this morning.

>> the dow is up 184 s&p up off the highs but sllti up a nice 0.8% we'll be right back.

volatility rattling the market this is week. what could investors do to what can investors do to protect from more poteiantl down side. more "squawk on the street" is coming up.

welcome back to "squawk on the street." stocks off the best levels of the day, staging a solid move to the outside. rebalanced 9 of 11 sectors 7 on a weekly basis. consumer staples the real standard that group of stocks on pace for the best week since december of 2011 procter & gamble after upbeat earnings reports up. you have colgate, palmolive,

clorox, and kimberly-clark clorox on pace for the best week since early august record highs in that sector now. back to you guys >> dom, thank you. they're picking up a discarded group there. when we come back, mega millions mania the jackpot approaches a billion dollars. a look at the real lotto winners and losers next. eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

lottery fever is taking over as the mega millions jackpot closes in on $1 billion. winners set to be announced later tonight. with one of the biggest jackpots ever comes the smallest chances to win frank holland has more on the story. good morning, frank. >> good morning, sara. we're in hackensack. she sold a winning ticket for $330 million people are lining up for their chance at a near billion dollars jackpot. one of the tickets gives you a chance, but that chance is 1 in 302 million. last year they changed the formula, the matrix to entice more of us to play show you what they did you see the first five numbers, they lowered the range from 1 in

75 to 1 in 70. the mega number, increased from 1 in 15 to 1 to 25 that means the jackpots are bigger, but you have less chance to win one of the big jackpots the trade off is you have a better chance at winning a smaller jackpot. people are here, playing to win big. to give you perspective, a sense of the odds of winning the big jackpot, you have a better chance of marrying a millionaire, odds of that are 1 in 250 better chance of being struck by lightning. that's 1 in a million. and better chance to be elected president of the united states that's 1 in 32.6 million people here still like the odds, they're still playing. >> i'm a teacher so i know the probabilities are not great, but it is fun. just for fun i think everybody should buy some >> i think i'm going to get two more, it is so much money, take

a chance, only a buck or two. >> if it is a friday jackpot, everybody gets their paycheck. so lots of people are excited to try their luck >> well, if you win, the jackpot stands at 970. most take the lump sum after taxes, 300 million back to you. >> frank who wi, thank you very. we have more on the lalevoti week for stocks with "squawk alley" up next don't go anywhere. laugh ] but then cdw orchestrated a network transformation using cisco digital network architecture. allowing scalability and providing fast, comprehensive security from intruders like me. luckily i found a new calling. faster. security transformation by cisco. just run. run like you know how to run. it orchestration by cdw. ♪

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