we're out of time. we want totha thank our host to farley. >> i like it here. >> "squawk on the street" is coming up right now. ♪ good thursday morning. welcome to "squawk on the street." the premarket is steady and green after yesterday's selloff. now the only major index up for the year. we have a big ceo lineup today. gary kelly of southwest will join us. lisa su of amd. amazon, alphabet, intel all report tonight. our road map begins with futures fighting back. the volatility remains on this

biggest day of earnings season. >> shares of southwest are sliding on inflation fears despite the airline delivering 16% rise in profit. we will be joined by southwest ceo. >> shares of amd plummeting after the weak fourth quarter guidance on revenue. lisa su will join us in a few minutes. stocks are looking to rebound from the selloff yesterday and send the dow and s&p back in the positive territory for the year. the dow with a seven percent drop. p nasdaq in correction territory down more than ten percent. we have been able to put just a small handful of positive days together this month, four in october. >> it is incredible. if there was a day you could mount a rally it would be this one. really good. microsoft maybe the best i have ever seen microsoft, maybe the best ever.

when i went over with the guys at twitter, they cleaned up all of the bad guys and the numbers were sensational. ford beat the numbers. what can you say about tesla did they put a muzzle on elon musk this was incredible. it was such a nice call. we have a lot of things going, but it may not matter if larry kudlow doesn't come out and say it is the mid term elections. we don't need the fed to be aggressive. >> wpp slashing their forecast. >> consteilation was on yesterday. remember when you called buds the cement heads the bud is no longer selling the way it did. it is anti-craft. >> it is being talked about among a universe of companies

for growth and having to make tough decisions now. >> that was the deal too far. they really shouldn't have done that deal in retrospect. you are combining these beer companies that aren't doing that well. by the way, i know that cannabis won't stop. >> they have to make a decision as to whether their dividend is more important than their credit rating. yesterday i think investors were taking a look at at&t and questioning whether they were going to be able to get it. wondering what comes first they will protect their credit rating. they will choose to stay on the path of delevering. i only bring that up because you are going to see this with any number of companies that have this debt load.

>> is it not amazing -- at&t, that call was a call that brought down a lot of stocks. ithought what they did -- i really don't like to see what they did. they basically said over the top the analysts are wrong. do you know they lost as many dish directv subscribers as comcast made isn't that unbelievable? directv is bad technology. >> i think anyone who has it might understand what you mean. >> it's old technology. >> comcast this morning is out with numbers. you can see at&t may rebound a bit after that substantial loss yesterday. to your point, guys, total customer relationships at comcast up 3.4% to 31.1 million including net additions of 288,000.

that's customer relationships, of course. high speed internet customers increase by 363,000. i want to get deeper and give you cable numbers. it does end up being a bit different. total video customer net loss is 406,000. it's still a shrinking universe. >> they have this other company that they are buying. >> done. >> just to get really the irony, comcast added 360,000 broadband users. directv lost 363,000 users. 360 versus 360. >> it does -- >> is at&t going to blame -- >> do you know who they are? it is a julius caesar situation. they should blame themselves, not the stars. the stars did well. >> best earnings growth in cable

in six years. brian roberts talked about what else stood out in the quarter. >> if i have had to pick one or two i would say 363,000 net broadband additions in the quarter. that is the best in ten years. the team is doing a fabulous job. our product is better. our high speed internet is just going great. and it was up 7.6%. that is the best in six years. we are seeing a really good transformation of the cable business into connectivity, higher margins, lower capital spending. that is why the numbers all seem to be better than people's expectations and we are delighted. >> connectivity. even six months ago when brian roberts talked about it, people said they are trying to change the narrative from the cable. they changed it. it's a broadband company with really attractive assets.

the stock was down seven percent when they announced stock. >> they clawed its way back almost to even. >> the rest of the market clawed its way down. >> yesterday it got hit along with all of the nasdaq. there is still the focus on sky and the high multiple paid there and how it will pay for itself over time and the levering of the balance sheet to a certain extent. theme parks is one area. they cite severe weather and natural disasters in japan. they did increase to 6.5%. >> the cash flow is remarkable. we work for them. maybe i drank the kool aid. actually it was the -- i just really believe that the cash flow here is bountiful. the pay down will be good. the price is high. >> so if ppg sort of tore the

firewall in earnings early in the quarter, are we now at a stage where the bar has been lowered and people who will print from here will be met with more open arms >> unless you get a resolution people will be talking about tariffs. lisa su, last question vsh what does it mean for tariffs. i'm waiting for someone to say to olive garden how is tariff hurting you? it has become the standard question. ppg, by the way, he said he has had enough with the bad management. he told me i'm going right to you on this because i think it is relevant. >> on ppg? >> trying. the bid was a dumb move. i know chuck bunch who was the

previous ceo is a good friend of nelson. they were on the board together. michael mcgary, not great. >> the company is already coming back with some talking points with top line growth roughly four percent. strong margin profile, 40% increase in the dividends. board unanimously supports their ceo and chairman. and they believe he is the right leader to take ppg to the future and capitalize on growth and value. it has characterized his tenure. let's talk more about that and more about china later when we look into earnings. that has been such an important component of the conference

calls. slowing there, the tariffs. now we have to get to gary kelly. >> shares of southwest down this morning despite revenue above expectations. joining us this morning is southwest airlines chairman and ceo gary kelly. it's great to have you back. good morning to you. >> great to be with you. >> you do say we will continue to experience year on year unit cost inflation of at least three percent. how hard is this -- is this treadmill getting faster and can you keep up? >> well, i guess that is an interesting way to ask it. first of all, i'm very happy with where we are. this is a great third quarter. we are going to finish the year strong here in the fourth quarter and very well positioned for the future. we made a lot of investments for the future, looking forward to serving hawaii next year. just a lot of exciting things on tap. this year it looks like our unit

cost excluding fuel will come in roughly flat to maybe up one percent. we have seen some inflation creeping in here in the latter part of the year. our early read for next year is that that will continue. we will be busy over the next quarter spooling up efforts to drive some efficiencies throughout the organization. one thing that has been happening over the past decade is we have been investing. we have been investing in airports. we have new air planes in terms of technology that we are deploying. we are just not seeing the efficiencies in our operation that we really need to see. that will be a major focus and our top priority for 2019 for sure. >> what is holding it back does any of this have ramifications for capacity growth in the year ahead >> we made a lot of investments and we need to grow into those investments. if anything, i would argue we would want to add more capacity

to absorb a lot of overhead, if you will. so we have invested in airports. we have invested in technology. that is all for the future and all for growth. no. it won't impact our plans negatively in that sense. the other thing to make sure that is clear for you all and everyone is that our business outlook is superb. we are looking at strong earnings in the fourth quarter. we are looking at very solid margins for 2019 at this juncture. we have a magnificent fuel hedge in place. we will have tremendous protection. the cash flow is strong. we will continue rewarding our share holders. we will make cost control our number one priority. it is time to do that. >> i think people at home will be saying sales are good. what i'm looking at is this is quite a strong quarter for your peers.

united, delta, american all had much stronger revenue than you. that is highly lly unusual. what are you going to do to reassert your leadership as the best company when it comes to that metric? >> jim, you are right. of course, i have been at southwest for a long time and i long believe that southwest is the best. the margins are industry leading. the returns are industry leading. that continues. the revenue growth, i'm satisfied with it. we are up 1.2% this quarter. we will be up 1.5% in the fourth quarter and looking for stronger growth in 2019 as a lot of our revenue initiatives come online. a lot of that has to do with comps. we don't have a lot of easy comps. a lot of our competitors do. southwest, as you point out, has performed very well over a long

period of time. that is continuing and will continue. >> you are not a man who is made of excuses. i will let you do this. you had 2,200 flight cancellations in the quarter. i would like to know what that really -- thunderstorms, weather-related disruptions. it did hurt numbers. how did 2,200 flight cancellations actually hurt your results? i want to find something here to explain that this is an aberration and down seven percent might be a buying opportunity and not a selling opportunity. >> it's the hurricane season, if you will. all those flight cancellations are primarily attributable to florence and michael. but it's a very strong quarter. it was a record quarter. we are looking at another strong quarter in the fourth quarter. basically my report is we will have another strong year next year.

early read on cost is i'm not satisfied with three percent plus unit cost growth. that is clearly an aberration. we will make sure we drive the efficiencies we need to. the thing to make sure that everyone understands is that in order to produce the kind of product and drive the revenue growth that we have seen especially over the past five years has taken an investment. sears is a great analogy where that is a tragic story of a brand that did not have proper nurturing and investment. so now it is time -- we have made the investments. it is time for us to harvest the benefits of those. you are right, we are not making any excuses, but the results are good and the outlook is good. if things don't go so well next year in the economy or with fuel prices, we are very well prepared and very well protected. >> it is funny you mention sears

becoming a poster child for lack of investment. are you getting any sense -- i know it is still early days here on tariffs and trade, but is there any sense that companies plans for cap x and investment are getting a second look and not in a good way because we don't know what '19 is going to bring? >> you know, we are all following the news. i think as the investment community likes to say, there is always a wall of worry to climb. everything that we see looks really good. obviously, our view into the future is very short, but the bookings are strong, the trends have been strong. i think we are set up very well for next year. short answer is no, we are not seeing any indications of that, but it's hard to see around corners. we just always try to be prepared. we have very low debt. in fact, we have all the

investments i was talking about, we haven't borrowed one dollar to fund those investments. all of that has been funded with company cash flows. we have refinanced debt, but even that has been coming down. we have lots of cash. we have a great fuel hedge. if things do go the ways that you are describing, we are prepared for that, not predicting it but we will certainly be prepared for it. >> straight talk, gary. appreciate it very much. gary kelly of southwest airlines. when we come back, an exclusive with lisa su. amd taking a hit on revenue guidance last night. we keep our eye on the premarket and see if the levels can hold off of the highs of the overnight. "squawk on the street" continues in a moment.

it's not often you hear griping from people about a stock that is up more than 100% for the year. we are going to talk about amd. the shares are falling sharply this morning after issuing what many people would regard as weaker guidance ahead of the fourth quarter. we have a treat here. if it is down four points y. say it is about a company that has

turned away. exclusive is with amd president and ceo dr. lisa su. lisa, i want you to do two things for me. one, talk about what missed. i have to ask you, the stock is up dramatically, tell me about a year from now given the gross margins. i say a year because i know the next quarter has to be clouded by the same inventory correction. >> it's good to be here always. it's important for people to understand what is going on in our business. when we look at the third quarter, lots of our businesses did quite well. the client business did very well. the data center business did very well. we did have a problem with the gpu. we had some elevated inventory levels going into the third quarter and those ended up being larger than expected. when you look overall at the business, we are pretty happy with how the business is shaping up particularly around new products. jim, if we looked at it a year

ago, we talked about how new products were going to drive amd's growth and amd's market expansion. going into the fourth quarter we will have over 50% of our revenue in those new products around processors, around data center, around gpus in the data center. i think the product story is doing quite well. and then to your question about a year from now, i mean, it is all about products and product competitiveness. we love our markets. we think the data center market is a strong market and will continue to be strong. our goal is to gain market share on the strength of our new products and our competitiveness. >> let's talk about this inventory issue because people are going to focus on that. two things that i'm hearing. one is that obviously there was a lot of demand for crypto or block chain. there is also another line of thought that i'm getting from the bears in amd which is that

people are waiting or starting to buy the nvidia chip. >> let's talk about gpus. gpus in general are a very good market and we consider it a growth market. what we had is a very strong first half of the year. there was a lot of demand for gpus and frankly, we were under supplied. in that case people built up inventories and there were extra inventories. this happens from time to time. we will work through it. as it goes for our competitiveness, we think gpus are extremely important. we are investing strongly in the hardware and software. i think you will see new products that will be very competitive. >>lisa, i thought you would have taken great share. i think your chips are better and cheaper. i cannot believe i said that

because for 30 years i have said the opposite. why did you not crush intel this quarter? >> as you know, we are always on a journey. it is a journey. i will say i believe we gain share in the third quarter in our processor business. we will see how the results come out. we were very strong in desktop and note book. we increased our units in revenue and server, as well. it is a multi quarter journey. we look at it as we are going to increase again in the fourth quarter. we have a very strong road map in 2019. customers are engaging deeply with us on the cloud. i do believe we will gain share and it is a journey that i always try to remind people. >> one of your answers reminded me of the beige book yesterday out of the regional banks that have comments on the economy. they say several key industrial suppliers believe their clients placed excessive orders to boost inventories in advance of

tariffs and now expect demand will be lower. does that pass the smell test to you? >> i think every industry is a little bit different. clearly we are all watching the tariff situation and it does add complexity to the supply chain. what we would say for our industry is we are multi sourced in general. we have various sources for supply. we don't see tariffs as a meaningful impact to our business. we do see customers having more complexity and needing to work through their supply chains. we will continue to work through it with them. >> do you see a resolution to that >> we would like to see resolution sooner rather than later. we are prepared to work through it. the thing about global supply chains is if you have multiple sources you can work through that. >> we will be getting earnings from amazon. these are the hyperscale data center guys that you seem somewhat confident about. cap x is going to be watched closely. why am i picking up confidence

from you do you think they will continue to spend at the rate they are? >> we really do believe that the data center is a macro friend that is very strong. when you look at it, people need more computing. there is more need for high performance computing. we think this is a long term bet. of course, there may be variations. this is what we believe is the bet for amd as well as a very, very strong growth driver for semi conducters. gl i have to go back because i know people will say you glossed over this inventory issue. you made it very clear this is not a one-time issue. what do you say to people who want to buy the stock but you said next quarter will be tough with this inventory, too. >> i think it is important for people to look at the quality of the revenue. i think the quality of the revenue is where are our new products the fact that our margins will

be 41% in q 4, the fact that our client business, our processor business, our data center business will be up. i think the quality of revenue is very strong and indicative of where we are going. i think the important metric is exiting this year, we'll be at 50% of our products being from new products. imagine what we will be in 2019 as that trend continues. it is all about new product momentum, growth in data center. that is what we are focussed on. there is some gpu channel stuff. >> i was hoping you would talk about what microsoft talked about last night which is the brand new 2020 x box. that is huge. we should think past 2019. how much does x box mean to you? >> i will not comment on any specific customer. >> how much does gaming mean to you? >> you are making a very important point. we believe gaming is very

important. we believe the consul market is a very good market. we do see in our custom business growth beyond 2019. >> do you think these chinese gaming approvals are throwing a wrench in that market at all >> i would view those as -- in the grand scheme of things. >> what does that mean >> i think gaming is a good market whether pc, consul gaming >> i have seen the lack of latency on a 5 g network. you will not need the consul in the home anymore. it is coming. >> i think the beauty of it is that you have the ability to play games across all of your platforms. whether you are talking about pcs or consuls or the cloud or mobile we have the technology that can really address that. gaming is a secular growth driver. whichever platform it is on we will service that demand. >> i want to congratulate you

for a stock up 100% in a very tough year. i understand it was a quarter where it was uneven but so much was good and a portion was bad. thank you very much for coming on the show. >> thank you very much. let's get ready for the opening bell here. we'll get a look at the s&p at the real time exchange. it's going to be a busy day. dr. su here with us. ned segal will join us. we will hear from the fed vice chair for the first time. >> if they are going to walk it back and get away from the notion that things are just spectacular -- >> nobody said spectacular. >> david, you are talking about -- if you are on any conference call, there is almost no one who says things are

faster growing. it is just how much slower it is than we thought. >> let's get to the opening bell. stone company, a provider of technology solutions. we really didn't do enough on microsoft or visa last night. azure growth slowing got a lot of people's attention. >> i think that one of the things that satya nadal has done, double digits. this is $800 billion company. things like linked in, 30% growth, windows 10 doing well, gaming doing incredibly well. i'm a huge believer in azure.

i love the fact that they took a shot saying you want to trade with the enemy i think satya is terrific. i think this is a quarter where if we were not possessed by negativity the stock would be above 110. i know the market is a crummy market. it is crummy because nothing that satya said. visa doing double digits right here. i know i'm conscience about our -- during the extreme yelling that goes on here that totally tries to throw you off. there are companies, union pacific saying there is no real slowing of growth. we wanted to see acceleration of growth in keeping with the narrative that the fed is telling us about. >> i think it is an important point. we should spend a little time on the markets here. we have been going over the

conference kaulds, calcalls. they are pointing to drivers. do you know what they have focussed on is the reason? it's china. it's slowing growth in china and it is the concerns and/or building inventories for any other number of things involved in the supply chain having to do with the tariffs. it's also just slowing economic growth worldwide. >> or was it october 3 when powell said we are a long way from neutral >> you have seen this kind of commentary in a long time. i don't think that people or investors had appropriately -- we have kind of been talking about china forever. everybody is starting to think it is really not a thing. >> now it is. >> i think that is really right. the only shake i felt from visa was one line about china. i have been calling this the

roomba market, a $700 vacuum cleaner. they are saying we are going to eat the cost of china. you are right, china is a place not just -- you don't want to not just source from there. how about lisa su talking about alternative sources? business in china is not so hot. >> a very strong proponent of the administration's posture, i did ask, you bring the second largest economy in the world to its knees are you really benefitting yourself or hurting everything or is it worth doing >> i think the rhetoric now is really about how the government trounces minority rights and steals our military secrets. this is not -- >> it's not as much about jobs and manufacturing. >> if you go back to 1947, you

have to go back that far, no i was not alive then. there was a particular letter that was written by george f. kennedy saying we have to contain these guys. we have to contain them because they are really after us. it was shocking because they are a great ally in world war ii. if you look over pence's speech, the language is the same except for there is more of a mr. gorbachev, tear down that wall aspect. the president says he is a great friend but it would be great if he stepped aside. >> the journal does say that the u.s. will not renew talks with china unless they give us a concrete proposal on forced technology transfers. expectations are going down. >> we had a soft opening. will we stop it already? who are these people >> we haven't gotten to some of the big names, twitter and tesla

that we might typically talk about right away. >> it can rally. tesla was fantastic. >> isn't that a real positive for investors? the company has been so doubted in so many ways? >> i actually going back and forth with the left had the nerve to call it ahead -- >> versus someone that just fried and roasted. there was just -- they are making a lot of money per car. profitability, all the bears are saying it is -- you know who said this? we must prove that tesla can be profitable elon musk. he was humble. what are you looking at? >> maybe it is about as long as

the profitability. >> he did say we do not intend to raise equity or debt. that may change. >> also, what happens when they start selling $35,000. do we believe their cost of goods and services went down across all cars? >> we know that the factory does make things more cheaply than others and the china factory is like the newer factory. there is a man who wants to do business in china. >> it is hard to do well when you have a 40% tariff. ford is also dealing with that. >> not to mention expiring credits out of california. >> there is some -- >> that's all playing next year. >> as much as a million cars. >> their cars are ahead. in the beginning of the call rather than trashing analysts it is about the safety of the

tesla. >> mention sir isaac newton. >> he likes to go by sir. >> is wilf a sir yet >> goldman did raise their target on tesla to 225 from 200. >> that's real value-added. a fed official who is not powell who can say we are seeing some strength and weakness. >> you mean -- we are going to have a recession -- no recession. no one is talking recession. that was a bogasity. i made up that word for you. >> i like it. >> yellen talking leverage loans is a little -- she is getting closer to that. >> that was off the mark. come on ms. former chair woman. it's just about the data. it's about housing. it's about autos. it is about construction.

i was with a group of entrepreneurs in philadelphia yesterday. too expensive to build. it has to come down. there is tight labor. be careful what you wish for. it is going to be weak labor real soon. >> on that point, draghi is making comments about real estate and other things as the ecb holds study. steve liesman has been monitoring that. >> euro has been in free fall for about 20 minutes now. take a look. it's not a lot when it amounts to it. look at that kind of sharp decline there in the euro that happened when draghi started talking about brexit. he said he is concerned about brexit. he is concerned about how the private sector might react to brexit. he said if this stalemate goes on too long the private sector will have to react and that can create uneasiness. let's listen to what draghi said

about brexit and the private sector here. >> if this lack of solution will continue and will approach the end date, the private sector itself will have to prepare on the assumption that there would be a hard brexit. and that is where things may be -- i wouldn't call it big financial instability, but uneasiness. >> the euro was a little weaker before that happened. it was those comments where it took off. he said significant stimulus is needed to under pin the inflation goals, protectionism, emerging market volatility are all risks. he sees weaker momentum but not enough to change the baseline scenario. some of the wires were marking about his comments about wage increases were not temporary.

anything to indirect politicking to urge it. a lot going on in europe. i'm not quite sure what the reason is for the weakness. you have to go back to august to find a level this low for the euro. >> thank you very much. >> i'm a little worried about deutsche bank. >> deutsche below nine is getting a lot of attention. >> the german government snauist going to let the jewel of germany -- there won't be a malcolm x to keep deutsche bank afloat. i think this thunderstorm elephant in the room. it goes down every day. >> right now it is not. >> what happened >> it doesn't go down on the day? this is a stock, if this were to actually stop going down, i would breathe a big sigh of

relief. >> because it is such a big bank. i don't want any credit risk over there. they deal with that. >> can't judge the bank by its market value but by the balance sheet. >> it is very pre-2008. >> and as you guys well know the criticism has been the europeans did not take the necessary hits that they needed to the same way we did. you go back to the stress test and the huge raising of capital. >> more on data privacy than bank balance sheets. >> i think deutsche bank would be substantially higher if they had a geithner over there. they do this endless bailout and it is really disconcerting that we are still talking about major banks. think about this country, when you think about wells fargo what

do you think about >> scandals. >> i would say issues. >> when you talk about bank of america what do you talk about >> deposits. >> three for three. i'm going to stop right there. >> speaking of substantially higher, twitter -- >> twitter is the number one s&p gainer. they are blaming gdpr and what they are calling health efforts. >> when you speak with them -- i think ned segal is a remarkable guy. remember, jack dorsey likes to have these proxy people. they send ned segal out. this is really -- the u.s. turned much faster than anyone thought. i have to tell you, i am blown away by how they can have just talking about the user growth. how did they pull this off while

scraping all these bogus people? >> dau is up nine. >> they don't give us a -- >> it is -- >> what they are doing is getting more advertising on the platform. >> if you want to introduce a movie, if you want to introduce a program, if you want to show sports, it is becoming destination to bring people in. i remember when there was a movie that would come out. you would see like four pages about this movie is coming out. now it's twitter. it's twitter, twitter, twitter. >> that is four straight quarters of profitability. >> isn't that great? >> remember, a lot of people thought it was going to miss. that was the common parlance about this is be careful of twitter. it does bring up facebook. grimace. how much is facebook down? did you see? >> it is up.

>> they have a release >> no. >> i didn't see any negative stories because i was too focussed on seeing whether the red sox are the greatest team in history. the narratives control my newspapers who have hated facebook. i was at a dinner on monday. i did my informal poll about who people hate. now there were people that come up as people they don't like. second was zuckerburg. zuckerburg. i mean, this guy, wow. this guy should go out with some sort of world tour for charity, peace and freedom and food. >> he has visited every state or was that a couple of years ago. >> he has to put some benjamins down. >> i don't think carlos is hated near that but his investors are not particularly happy with him today. stock is down about ten percent.

worth coming back to the largest -- >> they cut the dividend by 50%. they want to do that because of allocation priorities. they want to delever it as little as two times. they want flexibility, cash returns to shareholders. they cited currency volatility in brazil, argentina, south africa. >> did they cite that people don't like the beer indid that come up at all that they don't think that the beer tastes that good? >> budweiser you have a problem with budweiser? >> budweiser is the man. i want to stick it to the man. >> etit's either that or total noncorporation debt is down -- >> just wait until cannabis -- tastes great, less filling.

not filling at all. i think beer numbers were so extraordinary. rob sands yesterday, i couldn't believe the numbers they are putting up. they are the polar opposite. there is something wrong with that brand. >> hibring back the clydes dale. do you step in front of alphabet and amazon >> i happen to like both companies. i'm so down on the oncoming train thing, light at the end of the tunnel. i think they are both going to be good. when you say that, i need so many body guards. i only have one body guard in philadelphia. amazon web services is doing incredibly well. satya takes a shot. amazon advertising is doing great. someone is going to say retail isn't that strong.

there is always a kink in every story. how about the fact that $15 an hour amounted to not a raise versus the stock. >> that was a criticism of amazon. your amd, yours, amd is well off the lows. >> lisa su was here. >> nvidia which gave up its gains is only down two percent. >> we upgraded that for my charitable trust saying it may be time. nvidia is a winner here. one reason i asked about competition is this chip. he has a 20-year view on things. he believes it is a superior chip to watch. she came on. she doesn't cancel. >> gross margins are getting

better. two stocks are down. gross margins were better. if you are willing to look through the next quarter you will be a buyer of amd and not a seller. they are taking share. intel, i don't think you can be as bad as texas instruments which was basically things are really getting bad. >> i don't hear you being spooked by the weakness in the 70s with the idea that they are the building block for all of our industrial economy. that doesn't scare you. >> as karen cramer would have said, shouldn't you have been spooked a few weeks ago? she would have been so harsh. >> micron, how much is micron down some of the stocks, they pass and have to go down every day. i think that is overdone. micron has to cut -- you have to cut numbers before you get a buy. that is the problem. there is always someone who doesn't know that they are not going to make the numbers. >> we did get upgrades of

engersol and hilton and some of these perennial 52-week lows. >> i have a thesis that i'm developing over the last 95 seconds, what i think is going to happen is we are going to look back and say let's say the tariffs get pushed through -- >> we go up to 25% on 250 billion. let's assume all of it. everything from china. >> even if it is bad, people are going to say next year at this time this is going to happen. we will be anniversary in tariffs. we should stop thinking about them and ubsesziobsessing on th. >> what about -- >> why did you give me a smirk >> what about slowing global growth >> have you noticed slowing global stock priceinis?

>> i have. we see the nasdaq regaining a bit of losses from yesterday, what do i want to own? don't i want to go back to growth everybody wants to transition into value. against that back drop do i want to own growth? >> do horrible quarter or do i want to own amazon if it gets hit tonight. i'd rather own amazon than kimberly people will always blow their nose give me a break. all i ever see is these dyson things, they blow the water. remember paper towels? >> i do. >> uh-uh. >> well, for time being dow and the nasdaq being helped by microsoft in a big way let's get to bob miss sa. >> take a look at the sectors, communication services, big help

with twitter and google doing well semis are doing better health care, utilities all lagging here the earnings were overall excellent. maybe we hit a lucky bump today but whether you're talking about ford, tesla, comcast, twitter, microsoft, citrix had a nice buyback, wlirl pool raised guidance the last time they raise guidance, july of 2016 first time we've seen that in more than two years. the traders said they'd be sold off by the end of the day. so which way is the pain parade in is the pain trade higher or lower? the pain trade is the trade that gives the greatest pain to the most traders if you look at the way the market is set up, i would vote pain trade is higher not lower why? look what is going on here the cash contract is way above the futures contracts.

a lot of put buying. we've seen dramatically oversold conditions look at the rsi. i look at these two week indicators when you're way overbought when you're over 70, when you're in the low teens, when 40% of the s&p is in the low teens that's like several standard deviations away from normal markets and historic norms you don't see this very often. it doesn't continue like that for very long so the market right now is telegraphing -- i think we'll get a bounce but the market is telegraph ago big problem with earnings and i'm talking 2019 earnings. so revenues about 6% but the market is telegraphing, they don't believe it. the market one month ago was

16.5 the multiple is the price you're willing to pay for a future stream of earnings the multiple decline is telling you they dent believe the 2019 numbers. what is the real number? i don't know it's half that, maybe we're only thinking 4% or 5% instead of 9% or 10% like people anticipating the analyst numbers. that's a significant hair cut and i think that's the problem we've got right now. meantime, you look at the yields on these companies, i know you talk about 4% or 5% with the reits and utilities. ford is at 7%, at&t is almost at 7% invesco, other investment companies are up in the 6% gm is in 5%. i know ford has a lot of cash. phil lebeau has been talking about that but these are impressive numbers these are what the utilities were bear that in mind. finally you want to see what a crummy market does to the ipo business big drop in prices we're waiting for yeti to open, here it is outdoor equipment. 20 million shares at 19 to 21.

they're ending up with $16 million. they're raising 30 less money. that's a market condition situation. we'll see how it opens we did better at nasdaq. we are at the highs for the day up 225 points on the dow back to you. >> bob, thanks very much align technologies, one of the big winners of this era. down 27% on weak guidance. >> i did hear there was going to be competition i just didn't think the competition would be that bad and they have these dental organizations that can finally get pricing so there is -- also let's remember that group is weak. merck had a good quarter anything bought because we were supposed to go into a recession is being sold today. this is one of the whippiest markets so be aware that it's

being pushed down but health care stocks that are good are being pushed down. when was the last time the banks were being bought? particularly the cloud stocks. one of the stocks we have not talked about that i think is an incredibly good company that delivered a great number and i know that david likes him very much is surface now. stocks only up a dollar. that one is a buy so we are seeing cloud stocks doing better >> he's going to be with us. >> when? >> very short linchts ly. >> he's my guest. >> no, he's not. >> there's always time to say my partner is stealing my guest, even in a big decline. >> let's talk about your show tonight and where you're going this weekend. >> i'm still stunned he did this to me. >> it happens. >> i've got centene. and man of the hour, al kelly. i've only begged him since the

day he was appoint ed then i'm going to wembley. i'm the good luck totem. if i'm there the eagles will beat the jags. if i don't go, well, as andy reid once told me, jim, i think you've got overblown importance because i am the center of my own attention. >> and your own universe. >> well, that's a line from a pearl jam -- >> were you there for the panthers >> last weekend? i never miss a game. i never miss a game unless my life says -- no, i never miss a game that's why i'm going to see the jags our season turns around this sunday i said that last weekend good to see you, partner. >> oh, he gave me a partner. >> yeah, i'm chiefing you, sparky. >> no chowder head. >> have a great weekend. "mad money," 6:00 p.m. eastern time twitter one of the big gainers up 18% we'll talk to cfo ned siegel

about the quarter and the ceos of union pacific and service now. dow is up 220. interesting clock. oh, there weren't enough hours in the day to maintain are old data center. so we made a twelve a fifteen. three extra hours. but that really doesn't add hours to the day. yeah it does, look. i'm not sure it works that way, but at cdw we get that time is precious. so we'd access your needs then design a nutanix enterprise cloud. to give you more time to grow your business. yeah that's better. hey we still on for lunch at 15 o'clock? you bet. for private cloud solutions you need nutanix and it orchestration by cdw.

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welcome back to sweet, i'm diana olick with breaking news from the realtors. pentdi i pending home sales in september up 0.5%, that's the ninth straight month of annual sales declines this measure is of signed contracts to buy existing homes so people shopping in sent when we saw mortgage rates jump realtors are saying this game could be because there is more supply on the market it could be folks are seeing the rising interest rates and those on the fence decided to jump in.

in the northeast sales down, sales up in the wez. sales were up in the month but down 7% from a year ago and in the west prices are highest in the nation in the south where we saw the impacts of hurricanes sales fell but we're up 3% year over year realtors are saying they're an eck totally hearing more people talk about renting and rising interest rates.anecdotally heare talk about renting and rising interest rates welcome back to "squawk on the street," i'm carl quintinilla with sara eisen and david faber. dow being helped by microsoft and other names following microsoft's earnings last night, up 216, trying to claw back a third of the losses from yesterday. >> our road map start there is an attempt at a snapback, stocks getting a boost after a massive selloff that sent the dow and s&p lower for the year. >> it's the busiest day of the season reports from come cast, tesla,

amd and more. and twst is soaring after the company beat expectations. we'll have the cfo straight ahead. >> nasdaq is up 2% after yesterday's tumble that sent the s&p and the dow into the red for the year and the nasdaq into correction territory they're rallying on the meals of pretty big earnings movers, twitter, ford, tesla, comcast and microsoft are higher following their reports. are stocks setting the stage for a comeback joining us, fill camparelli at j.p. morgan. welcome back. >> good morning. >> are we conditioned now to respond aarnings versus the begn of the quarter. >> this quarter has been a lot like q1 where if you beat on revenues and earnings you're flat but if you miss you're getting annihilated so cash, cash in the portfolio was trash

for the last decade. the fed moved rates eight times. cash isn't the best asset class but when you're thinking about a v-shaped recovery and cash becomes a viable alternative, it becomes less of have the second is for a decade when we were asset allocating we knew if we had treasuries in the portfolio or a safe asset in the portfolio we would get bailed out. now, we're not getting bailed out this month so late cycle treasuries start to become a tough of a hedge versus as it was earlier in the cycle and that happened in february and this month and the third thing foremost, carl, we have seen a tremendous selloff this month. so valuations on the stock market, if you don't believe there is going to be a recession next year, if you don't believe inflation, critically, will move higher, you've just got a great entry point for stocks this month. >> but you said late cycle three times. does that mean you see a recession? >> it's not like betelgeuse

saying it three times so late cycle for us, the biggest risk is if you think a recession is happening in two months and it happens in two years and then suddenly you've left a ton of return on the table so we think we're in late cycle but who knows how long it will last. at least through 2019. >> recessions six months after the dow hit asahi almost never happens, right what is j.p. morgan's recession? >> through 2019 we don't see two consecutive quarters of negative gdp growth so given the setup from that month that creates a nice entry point. the only thing we would watch is inflation. if inflation picks up you'll have higher interest rates and lower stocks we are not positioned for that that is not the base case for us >> there's an ongoing argument as to how important corporate buybacks are to our stability and moving up but when you raise the point about individuals and their cash balances you wonder about corporations who are earning money on that cash

are they less willing to perhaps buy back stock automatically as they might otherwise >> i think that's true we'll get them to buy back a lower stock market so a valuation like the consumer, for corporation valuation is important for buybacks, we would definitely think buybacks would step in in q4 and buoy the market here. >> bob, what do we make about the earnings and how the market recalibrated the forecast? that seems twrob t s to be wher worries are. >> the market is telling us it doesn't believe 2019 earnings forecast miss -- the market doesn't believe it's telegraphing that the multiple on the s&p, the value you're willing to pay on a stream of future earnings was

16 16.5 that's the market's way of telling you we don't think the 10% will happen. it looks like the market will be half that. 4% or 5% earnings growth which isn't bad but a takedown let me say something about buybacks very clearly corporations have been the big marginal buyer of stocks for the last eight or nine years i'm with you i think once this traditional. there's a blackout period and corporations can buy back stock but i think with the prices down the people in charge will say hey, look at this, we're buying back stock more cheaply, let's put more money into into the buyback program and they could be another significant player in the market right now so i think you're right about that issue. >> so are you getting what you

need based on the results? do you think that is providing the bounce here? >> not yet yesterday afternoon was panic. yesterday afternoon was a lot of put buying we've been waiting for that to start to happen. one thing that happened in february is we saw five days in a row where put buying became panicky. so not yet but that's a start what happened yesterday afternoon. >> i want to ask you about yellen today it won't get enough attention given the earnings she talks about leverage loans, a $1.3 trillion market, that we've gone too deregulatory. she's worried it will make a downturn worse then we have budweiser cutting dividend. >> corporate health is very strong lev renned loans for us is a good way to diversify fixed income it's not be all end all. so we allocate maybe 3% to 5%.

but corporate lelt isn't flaheat flashing signs of red. >> even corporate debt to gdp? >> rates have been too low so in terms of afford blts -- the fed isn't taking the risk-free rate to fiv >> we keep hearing concerns that liquidity might get difficult but i watched etf market tightly bid. even in the senior loan etf business i don't see liquidity concerns there. i see spreads pretty tight what are you seeing? >> i feel like we got a look on high-yield liquidity not this year but in 2015 when oil prices went from 100 to 20.

when that happened the high yield index was down to 3% there was some low quality high yield that got hit but liquidity in high yield is less of an important trade for us because yields are more normal than it was when it was a great total return trade but high yield liquidity is something we're keeping an eye on. >> what about contagion? i see no recession, very little signs of stress ott side the stock market a little in the commodity selling off but i don't see any other big contagion issues going on. >> around with italy, no contagion there overseas. >> phil, thanks, interesting days as we head to break, look at shares of twitter. they're soaring today up 20% the little blue bird beating on top and bottom lines twitter's cfo is with us next. plus, union pacific railroad

announcing job cuts are on the way. the ceo will join us later in the hour to talk about what he's seeing in the ecomand ony trade. don't go away, dow is up 250 points

shares of twitter soaring today on better-than-expected quarterly results. the stock is up almost 20% and with us now from san francisco and a first on cnbc interview is twitter cfo need siegel.

julia boorsin covers the company. >> a question about your revenue far outpacing expectations. are you going to come up against constraints without inventory. >> thanks for asking, we're thrilled with the results. the business accelerated and drove our overall performance. we see opportunity with the wind at our backs with delivering better ad formamts this is leading to great results and we see a lot of momentum behind us now. >> clearly enthusiasm for your revenue growth outweighing concerns about the decline in monthly active users we saw greater-than-expected decline in monthly active users; deceleration in growth of daily active users you say that is about making the

platform healthier but how much longer will we see these numbers decline? >> we do think mau will decline in the mid-single digits in the fourth quarter because of gdpr, health and the contracts we have where we deliver text messages with tweeted but we still see lots of opportunity to grow dau. that's the best way to measure whether we're driving daily usage of twitter it grew eight quarters in a row between 9% and 14% and between the product improvements we've made and the opportunity to continue to improve, we see ways we can drive dau growth from here. >> but less than half of your monthly active users use twitter on a daily basis how are you going to turn that around at what point will you have higher percentages there >> to us that's a big part of the opportunity. with well less than half of mau

as dau, there's opportunity to convert them into into daily users as we continue to improve all kinds of things around the service. from the notifications you get to continuing to improve the timeline our on boarding process can get better as well we need to make it easier to find the things people are looking for on twitter everyday two million people come to twitter that haven't been on the service for a month or more. a third have never been on twitter before so we see opportunity to continue to help them find what they're looking for to grow our dau. >> ned, is there any way to quantify that decline in mau how much is self-imposed, for lack of a better word? whether that's gdpr compliance or your own internal health effort efforts? >> you should think about the drag wes tas we talked about. those are the things that have been drags

underneath that is a strong underlying trend the dau growth that we talked about is the best way to identify that strong underlying trend where product improvement and people just organically coming to twitter because it's the place to go to find out what's happening in the world and what people are talking about. the dau growth is the best way to deck strait our success in growing user base. >> ned, it's david faber using this platform for years so i have a lot of familiarity. i've been talking to your leaders and i can remember dick costello talking about on boarding the same way you did and getting better can you give us specific things you've done to make it easier and any metrics you can site that your on boarding efforts are succeeding >> there's a lot we need to do to make on boarding better i don't know about you but i'll go through the process of creating an account to see what it's like and how it improved

and i'm able to appreciate what's improved that we do a better job of getting you into a timeline faster than we used to but i can appreciate there's for for us to do we should be able to get you into a timeline that tells you about the things that are most important to you quickly so you can enjoy the great things about twitter as quickly as possible but it is not just about that. it's about the second and third and fourth time you come to twitter. making sure we're anticipating the topics and events you care about. getting you to tweet about them and to observe other people talking about them. >> we're hearing about your efforts to improve the platform but we've heard a on the from you as well as jack dorsey about the health of twitter is the most important thing obviously you've purged a lot of accounts you're trying to protect the flat form from election manipulation how much is that distracting

from your ability to innovate the core products? >> health is our number one priority we think of that as not just a way to remove suspicious behavior but it's a growth vector when we talk to our advertising partners is resonates because it demonstrates having a healthy twitter is the way to attract the people to the matt will form who will spend time there. all of us should be on twitter to encouraged to spend more time on the platform when we know spamming and suspicious behavior is being removed at signup that we're looking for unhealthy actions and removing those wherever we can. we think about it as a number one priority and a real growth vector for the company over time. >> but is there a point when you think you'll be done cleaning it up you'll have put the guardrails in place that this will no longer have to be your first priority you can focus on innovating?

is there going to be a point some time next year where we can think now twitter will be done dealing with its health issue, we can just deal with innovation and growing user base? >> health will always be a priority it's a great platform for innovation whether you're going through the on boarding process or thinking about how we present topics and events, it's important to the whole experience people have so i suspect we'll talk about health for a long time but we want to talk about how to improve revenue products our advertisers use. how to invest in our sales team and the flat form we use as well. >> tim cook suggested this week in europe that the u.s. could go with a gdpr in this country and maybe that would quiet the political heat and alleviate the concerns we have right now about privacy. would you be in favor of that?

>> we view privacy as a basic human right. jack and others from twitter have spent a lot of time talking to legislators all over the world. we're opened to continued conversations with them to make sure we're protecting the people that use twitter, that we're clear how we're using their data and that it's that you are data to decide how it's used. >> thank you for joining us. i think you stopped short of calling for a u.s. gdpr. the stock is rallying hard, up 18%. cfo of twitter, our thanks to julia boorstin as well. when we come back, john donahoe will join us to break down service now's results plus, a state of ceo confidence. let's get a check on shares of our own parent, comcast beating top and bottom lines, best quarter for table earnings

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dow is off the highs up 175. 10% off the highs. one of the most closely watched etfs in the space, ticker iyt, rallying today, still down more than 12% from its recent record highs hit last month, remember, transports posted solid gains throughout the summer into mid-september bolstered by strong economic data and increased freight demand it's been a different story, weak earnings reports, a number of key components, just yesterday, u.p.s. shorting a sharp drop citing industry-wide pressures, namely concerns over unresolved trade issues between the u.s. and china we'll hear more on this from lance fritz, the ceo of union what pacific railroad later in the hour.

>> we will service now reporting a quarterly earnings beat. revenue rose 37% the stocks up more than 200% from its lows in 2016. joining us now for a cnbc exclusive is service now ceo john donahoe very nice to have you on the program this morning >> great to be here, david. >> i want to start off on the feds and how that has become such an important component of your business and what your expectations are from here i believe what -- 25 deals in the quarter, greater than a million and i think you said the federal government now represents our biggest deals in the quarter accounting for a fifth of total net new acv is that a good thing long term >> what is happening both in the u.s. government and all over the world is governments are embracing cloud. initially governments weren't

clear whether cloud was safe and secure and now they realize cloud is the way they can deliver better experiences to their citizens and drive significantly greater efficiency so in thisication the u.s. government, the department was a large deal where they are trying to embrace cloud technology to drive better experiences for their employees, provide better experience and drive better productivity and one thing i'd note, it was a high portion of our business in q3 simply because that's the last fiscal quarter of the u.s. government so many deals close. what is q3 for us is q4 for the government. >> understood. but i guess to the point of sustainability you've made investments in washington, d.c. in terms of marketing to the federal government is it your expectation that this pace of investment will continue over time and that you will continue to benefit from it?

>> absolutely. i think we're still in the very early days of both companies and governments embracing cloud. it reminds me of the consumer mobile revolution that was privileged enough to experience at ebay and this feels like 2014 in the consumer mobile revolution the same thing is happening inside of governments and governments where they are embracing cloud and with clouds also mobile capabilities so the u.s. government and governments all over the world are at the beginning of embracing clouds because cloud allows them to do the same thing it's done in our personal lives -- provide better experience and deliver significant efficiency and those are two things that are not going to go away so our conversations -- we have a dedicated team in washington but we're dealing with governments and companies all over the world. and the government is probably less than 8% of our business in

total so it's an important part, it will keep growing but the real story is companies and governments embracing cloud to drive drew pomeranz. >> so i'll ask about your company business since david focused on the government. off unique window into corporate i.t. spending. we're trying to figure out if this is the high watermark in terms of company investment and positive trends we've seen all year. >> i've had the opportunity over the last six weeks i've talked with over 100 ceos and cios and i hear a very consistent trend which is software is disrupting every company and every industry and every geography so every company is trying to fight back and figure out how they embrace technology to their benefit. so they're declaring a digital trance formatio transformation they want to provide better

digital experience and they want to use digital technology drive efficiency and productivity so they're investing their scarce resources and innovating for their customers and not dealing with the complexity of running a global enterprise. so as part of that digital transformation, they're embracing cloud and service now is one of the core strategic platforms that allows them to enable better experiences for their customers and employees and drive significant efficiency and productivity so i see it as strong structural demand behind the i.t. spend and it's frankly platforms that can deliver real return on investment so strong demand will continue we're in the early innings. >> john, you're probably hearing a lot of tumult here we have an ipo, yeti, that i think just started trading. >> as you can see. post 8 is really close, as you can hear that. bell isn't too far away from us but looking at a 7%, 8% decline at the open. manufacturer of outdoor

life-style products, did price below the range -- the original range of 19 to 21 at 18. previously tried to go public in marge and pulled it due to market conditions. >> you talked about, of course, other companies making key investments in the digital future what about your own investments? you're increasing r&d and head count. there seemed to be some focus on your conference call amongst analysts in terms of how much you're spending yourselves. >> >> i think our risk is that we underinvest. >> we have a window of opportunity unlike anything i've seen in my career where this digital transformation is no longer a business buzzword, it's a reality and service is well-positioned to help enable that so we're investing heavily in our platform. we're told our platform is the best out there, i want to make sure we're continuing to

innovate and build on that platform, build new applications on top of the platform we're investing heavily in our talent as we scale to become a global large company and we're investing at the very beginning of our company brand we're very well known among i.t. and decision makers inside the enterprise but we're not that well known outside because we've never spent a dime on raising our company brand. and over the last year, we've been named "forbes" number one most innovative company. just last week "fortune" named us one of the top three companies of the future so we're spending more trying to raise our general visibility around c suite and the general public. >> all right, well it also helps to come on this network and we appreciate your doing that, john and look forward to many more visits john donahoe, ceo of service now. >> thanks, david. >> dow is up 270 let's get a news update from sue

herera at hq. >> good morning everyone here's what's happening. a second suspicious package has been founded a dressed to former vice president joe biden the first was found at a postal facility in newcastle, delaware and it appears to be similar to similar packages sent to other top democrats and cnn. the second was found a short time ago at a postal facility in wilmington another was found outside robert de niro's restaurant he has been a frequent critic of president trump. saudi prosecutors say the killing of journalist jamal khashoggi was planned, reflecting yet another change in the shifting saudi arabian account of what happened to the journalist in their istanbul consulate. they originally said he walked out, then they said he was killed in a fistfight. ford says it's recalling nearly 1.5 million cars in north america to address a faulty part that could lead to engine

stalls it involves ford focus cars from the model years 2012 through 2018 with two liter engines. you are up to date that's the news update this hour carl, back to you. >> sue, thank you. when we come back, the ceo of union pacific is with us after reporting results. plus, taking the plunge, yeti goes public after pulling its ipo back in march due to market volatility shares down almost 6%. ceo will join with us the dow up 292. i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back to "squawk on the street," i'm sara eisen with carl quintinilla and david faber live from post 9 at the new york stock exchange stocks are in rebound this morning. rebounding sharply a little more than half of the loss wes saw

yesterday after the massive selloff that saw the dow and s&p give back its 2018 gaines.es wea yesterday after the massive selloff that saw the dow and s&p give back its 2018 gaines. ford, tesla, microsoft, all higher paul, let me start with you on the nasdaq, it's up 2 and a third. technology stocks either in the lead or the biggest losers in the market did you get what you needed from microsoft? how will we know when it's safe to buy into tech you won't know they don't ring a bell at the bottom so you won't know for sure we think the best move for investors is to start moving in with cash a little bit at a time as we get the rest of the tech sector ultimately reporting; we think it will be if not the

bottom we think we're trying to put one in and we'll see higher prices until the end of the year. >> ian, what do you make of the anecdote s we're getting out of corporate america with some of the warnings on higher prices and tariffs? is its making a dent in the solid growth we've seen? >> only at the margin, really. for some individual companies it's a big deal. i would not want to be an electronic equipment maker because they're suffering from the tariffs but from a macro perspective the tariffs aren't big and we'll report this week gdp growth close to 4% for third quarter after a similar in the seconds quarter. but i think it's time to get close to the bottom. >> one topic that has been taken off the front page is the president's criticism of the

fed. you had a tweet talking about what's at risk for powell if he decides to pass on december and then the "journal" op-ed page takes the president to task with a peace entitled "trump flunks fed politics." how much of this matters. >> i think it does matter if the fed doesn't hike in december because the signal would be that they've buckled to the pressure from the president the thing is that presidents have always had views on interest rates it's not like they don't care but they've been more subtle about the way they approached it we have an open an attack on the fed with the president calling the fed loco and crazy and publicly musing over whether he regrets finding jay powell as chair. what it does is its makes it more important for the fed to do what they say they're going to do which is raise rates in december because if they don't you'll never be able to trust them again so the president has put the fed in an awkward position. >> guys sorry to keep it brief,

we have a lot going on this morning. two stocks moving in opposite directions. tesla rising after reporting that beat on the top and bottom line amd, though, getting hurt off the lowings s of the session and issued a weaker-than-expected current quarter revenue guidance. when we come back, union pacific chief lance fritz talking about job cuts at the railroad operator when "squawk on the street" comes back. what do you look for when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

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bank stocks plunging into a correction how should traders play this find out on tradingnation.cnbc.com more "squawk on the street" coming up.

at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item. shares of railroad operator union pacific slightly higher after reporting strong earnings. company announces a 33% rise in quarterly profit, a boost in freight revenue days after

announcing they will lay off nearly 500 employees by the end of the year. joining us in a first is union pacific ceo lance fritz. always good to get your take on the economy. welcome back. >> thank you for having me. >> revenue up 10, operating ratio flat, but you say we didn't make the service and productivity gain wes expected what do you mean what happened? >> all year we've been battling some costs from service inefficiencies the good news is in the quarter we made progress against them. i was just hoping we would make a bit more the other part of the good news is we exit the quarter, i see us accelerating the progress so a solid quarter, top-line growth, 6% unit volume growth. we generated record eps. we generated strong operating

income and cash from operations. so overall a solid quarter. >> you got ag up six, industrial 13, energy up one. any of this suggest to you that, i don't know, tomorrow's gdp numbers should be disappointing in any way no, we're pretty bullish on third-quarter gdp. you recall second quarter was something like 4.2% number and as we've experienced our customers' industries broadly across the economy i think tax reform, i think the sensible approach to regulation, the overall optimism amongst both consumers and industry is going to generate a solid gee pdp num. >> what about trade? you didn't mention that as one of the policies that is helping our economy. how much it is hurting >> so i wouldn't say it's necessarily hurting right now. it was an overhang

we talked about that in previous visits where we were concerned about the renegotiation of nafta and now that -- largely that's put to bed what has been released is generally a positive agreement in the new usmca so certainly the industries that are doing business to and from canada and now that's been replaced by our approach to trade with china and that is a concern but what we've seen so far is it hasn't retarded consumption. it's just changed trade flow so, for instance, fewer soybeans going off the west coast to asia but more going off the gulf coast to latin america and south america so trade flows are changing a bit and we have to wait and see i'm not a big fan of tariffs they are a tax on the economy

and we'll have to see how that plays out as we go forward. >> we keep hearing anecdotally theories about activity getting pulled forward, it got echoed in the philly fed beige book yesterday and if we get a strong number tomorrow, i'm sure there will be those who argue people were trying to get stuff done while the getting was good ahead of tariffs what do you make of that argument >> we saw maybe a little pull forward on the margin but we see a pretty solid peak season in the united states and the other things we still continue to see is consumers are still buying things so consumption looks good we serve a broad segment of the u.s. economy so i think while there might have been pull forward to avoid tariffs, it's just a bit too early to say that will have a significant impact on go-forward growth

we're still quite confident that next year looks like a growth year for us on the top line. >> i'm hearing a lot of optimism on the economy, on the business, on what you're seeing out there. your stock is down for the past three months and transportations are in correction. so do you think the market is overreacting to worries? what do you make about that kind of action? >> that's a very troubling outcome when you see your investors operating with a negative sentiment our optimism is built on what we see and what we can control. it looks like the top line continues to be a tail wind with growth we announced a little bit more granularity this morning on our call regarding the implementation of unified plan 2020 and we're seeing some really nice outcomes from that very early in implementation and

we also talked about confidence in a 5$500 or greater million productivity number for next year so as a railroad, union pacific is shaping up into next year pretty optimistically. >> lance, that's a powerful message. appreciate it, obviously every quarter. lance fritz, ceo of union pacif pacific. when we come back, yeti going public after pulling its ipo in march due to market volatility today the company takes the plunge you can see how the stock has performed in its first minutes of trading we'll have the ceo join us but before that let's send it over to jon fortt and see what's coming up on "squawk alley." >> it's been an active week in tech earnings so we'll give you a look at what to watch for coming up on "squawk alley."

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and yeti has just gone public, maker of coolers and thermoses with a cult following. we talked to the ceo, matt reintjes >> nice to see you. >> you priced below the expected range and opened lower are you disappointed with some opening action >> you look at the market backdrop and volatility going on, we didn't go into this for one day action long term sustainable growth has been our plan all along. the reception with investors, we went through the stock portfolio and what the brand is, has us excited. >> you pulled it earlier because of market conditions and then decided to go public in one of the worst months for stocks in years. >> yeah. the pulling down of the ipo was cleaning up, postponement we did in 2016 to get ready for the process to go back into it it was the chance for the business to evolve to where we

are with infrastructure and consistency, performance we expect to deliver. and we believe in the intrinsic value of the business. >> and the concern about china, for example. i want to go through it. are you concerned? how are you dealing with the tariffs and potential price increases you may have to pass along to customers. >> before the tariffs that are talked about today came in play, we constantly look at the global supply chain footprint, where we contract manufacture and source products recent tariffs caused acceleration of conversations, look at what we can do in the supply chain efficiency. at the end of the day, we think things coming our way are addressed through managing our business. >> moving things out of china? >> we move suppliers all around. we moved some things out of china that were already in the works before the tariffs came

into play. >> you already have high prices. you have very loyal customers. how do you get people paying 4 to $500 for a cooler >> it comes down to premium performance, durable products. what we want to do is change what a consumer's expectation of a product should be. you think about performance. the price is just a result of design and performance we bring to the product we have been at it for 12 years. we have had long running success with our hard and soft coolers and drinkware. we are excited what it brings to loyal consumers. >> a lot of it is willingness of the consumer to pay up it is a good economy now do you feel like you would have sustainability to weather a downturn in consumer confidence and overall ability of consumers to spend >> absolutely. when you think while our products are premium relative to what the historical market is defined as, we did price points

achievable, regardless of what happens in the economy as long as we continue to support the brand in the way we do and build a passionate loyal life-style brand, launch products that are innovative, we think of things for consumer use and gifting, we think the products continue to be attractive. >> where does the growth come from, you're in the early stages of going international australia, japan or is it in new products and r&d? >> it is a mix this business was born in austin, texas, grew up from texas to florida we're seeing nice growth in the rest of the united states, you think of where some of the most populated urban centers are, we are still growing into those markets. when you have brands, they start from urban centers, move to the rest of the u.s. we like what we have in the current product portfolio in addition to innovation and international. >> what are you doing with proceeds from the ipo? >> proceeds are used to pay down a little debt. we continued to constantly do

that, and have done a nice job of managing the balance sheet. >> capital allocation, do you think you have enough? why are you paying down debt as opposed to using it for other purposes >> we look at some for general purposes but the reality is we are a strong, cash flow business fund our growth. we believe over the years we have enough free cash flow to support the growth of the business. >> also have a debt pile which is something that investors were concerned about. >> and if you look at debt in a relative way before this, we have been paying it down methodical, done a nice job of delevering the balance sheet. >> thank you we watch the stock, down a little less than 5%. matt reintjes, ceo of yeti going ipo. coming up, all about earnings all tech today amazon, snap, alphabet, intel and more it will be interesting the analysis later on "closing bell."

carl, back to you. we'll deep dive into stocks driving today's rally, dow up almost 300 points, s&p trying to avoid a vesenth day down "squawk alley" starts in a few moments. ♪ ♪ ♪ ♪ comfort. what we deliver by delivering. ♪ ♪ (buzzing) gather new insights, leave your data protected on-site, and put it all to work with ai. the ibm cloud. the cloud for smarter business.

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good morning, it is 8:00 a.m. in palo alto at tesla headquarters and 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ welcome to "squawk alley." i am carl quintanilla with morgan brennan let's get into it. busiest day of earnings. dom chu looking at the markets dow up 280 julia boorstin is here and phil lebea