to go long on at&t volatility because i think it is -- >> you liked that cme call >> i thought that was a good one. i continue to invest in digital currency >> glenn, it is always a pleasure to have you here. next time, please come for two hours. that does it for us, right now it is time for "squawk on the street." ♪ good monday morning, welcome to "squawk on the street," i am carl quintanilla and sara eisen, jim cramer has the day off. results this week from apple and facebook and starbucks and more.

big gains in europe, merkel will not seek another term as chancellor the market whip after a plunge in stocks on friday, we are set to gain in the open. >> ibm's biggest tech deals of all time, a massive premium for red hat. we'll have a lot more on the deal itself. the logic behind it and the movement >> global stocks are moving higher from leadership changes and germany. brazil to headlines about china's auto stocks. >> for october, dow is down more than 6.5%. s&p has dropped 9% nasdaq and the russell are in so-called correction territory although the average stock in the s&p is down 20 from the all time highs >> exactly this is a pretty widespread correction actually.

one of the few things that's not corrected hard is the s&p. whatever we call that 2015 into '16 people that people think it is a stelt market, it is kind of in the mode of calling this right now it is one of those things, things are lining up to once again you're poised to balance and things are over sold that you should have a stronger balance. we had all these rallies fade for a while. it is a market on a short leash. no matter what happens the next couple of months, you are looking at day-to-day just a selling pressure to ease up. >> one thing people are trying to figure out is the economy slowing? we got new numbers in personal spending and income and spending looked pretty strong to end out the last quarter of 0.4%, that's what economists are looking for. as a bonus, the inflation number

came out and this is the preferred fed inflation number, 2% from last year. moderation and some of the trends we have been seeing but nothing to throw the feds off course there is a wall street journal for the weekend saying there are signs pointing the slower growth and they quoted the cfo of waste management is that already in this market and the number has come down a little bit >> the market that is been trying to tell us for months and also why the companies are reporting really good numbers are getting hit in terms of their stock price. everything sort of strikes that nerve of downhill from here or front loading activities or pulling it ahead i think that's where we are ahead. >> for more on the market volatility of what we expect this week, anthony chance is

here with us and michael joining us in the impact conference in washington, gentlemen, good to see you both >> anthony this journal story, we got glenn hutchins weighing in >> i think the economy is slowing. non-defense capital auto the third quarter was nothing to get excited about. less than 1% business investment is slowing down people will say oh you are seeing housing and autos weakening but that does not shock me that's what you would expect after eight fed tightens not only the most interesting sectors but it gets impacted by whatever the federal reserve does what's starting to disappoint me is business. we need that to get better potential growth if we don't get that, we are

prepared for potential recession in 2020. >> michael, buy backs surpassed cap ex this year, is it healthy? >> i think so. i would adprgree with anthony's comment. is that a blimp in the road. is it just a temporary situation? i agree the volatility that we are seeing and the entire year has been due to investors trying to recalibrate of where we are on this spectrum of the growth cycle it is going to be whether where we'll top and all those questions. >> michael, to give you a sense of ugly october, there is three trading days left. the s&p has only closed higher five times what has this done to psychology and sentiment around the current stock market of how brutal it has been for october >> well, it is hard to predict

when you are in it we tend to see this is a bull market correction more than the beginning of the bare market when you look at the yield curving and corporate earnings and etcetera, these are all bullish sign i don't think they are indicative of a recession at the moment the trade issues, some of the revenue outlooks from a couple of bell weather techs last week. those wereless than positives. you got the midterms you can game plan whether the house goes democrat, republican, it will set the tone of the debate going forward if investors start to feel if there is a change of foot going into 2020. that can impact business spending and confidence and that can begin to curtail the recovery of what you should get from the tax cut and the cap ex spending and the liberalize

depreciation rule. look at what's happening in germany today? you still have brexit and saudi arabia and china these are all risk factors that could buy attempt by a thousand cuts our concern would be not necessarily today but where we are going a year or two down the road i think a lot of investors are in that same camp. >> it is logical that the interest rate sensitive sectors have slowed down a lot after three years of fed tighten where are we are in terms of the lateness of the cycle. that seems to be what everybody is essentially anxious about >> late cycle is a consensus view i think to extend some of the excellent points that michael made that that uncertainty of next year's earnings this is probably the first time that the market will have to adjust to a number of below concerns we have been spoiled over the last couple of years of every time the consensus comes out, we

beat it. the market has to realize they'll have to ratchet those earnings expectations down the market is digesting that right now and that's why you are seeing all those confirmations >> anthony, michael, thank you for starting us off for a busy week >> david >> thanks carl i want to get to the big deal of the morning. it is the new thing now. you announce your deals on sunday and you get your board together and they did it quietly given the size of this deal and the number of advisories involved, it did not leak. that was a side story here ibm is buying red hat, all cash deal $190 for shares for red hat. red hat stocks had moved down along with many of the growth stocks out there and nasdaq in recent sessions. while they negotiated this price a few weeks ago of a significant premium but not quite of a larger premium as it does appear

now given it moves down a little bit. it is a bold move for ibm. the decision of course to forgo for example buying back its own stocks for a couple of years and using cash in debt and obviously not expanding any cash flow to buy back stocks in order to fund this deal. listen we'll keep our dividend and that'll help anchor the stock. don't count on us for buy backs. will investors applaud it? that remains to be seen. ibm does look to be down this morning. they're trying to communicate around this a lot. the conference call going on this morning and how about a chance to talk with people around the deal came together of the terms itself but jim whiter at red hat and at ibm jim

whitehur whitehurst had been talking about it in terms of making an offer, i am told about six weeks ago when the offer was made they move quickly and they need to it does not appear that they may have the opportunity given at least how long the conversations between rometty and whitehurst went on. we'll see. don't look for an over bid here. as for the logic itself from a strategic standpoint, well, ibm, listen, it is going to help our cash flow and revenue growth their cloud strategy was currently based was not enough from the current environment they had a small percentage overall of what is an enormous

market it is one we talk about so often with three names aws, google, and azure from microsoft. they control the public cloud. they're the hyper scale operators building all these data center over and over again all over the world to help support computing power that's needed many corporations as oppose to small businesses may use public cloud for all things many corporations choose to keep a lot of their information, data and their ability to analyze it and work with it in-house. and so the hope here is red hat which has toperating system on all cloud that's been built. moving data from public to back to the corporate owned data will be traattractive and that ibm's enormous sales force is going to have a go to market strategy that has been lacking to a

certain extent for red hat and that's where they're going to find it. they did not offer any per share numbers here of what we are going to see, mike there is no doubt that it is a bold move in ibm's part here of a decision being made. they said many times in the press release on the air and in the call, they think 80% of the movement of the cloud is yet to occur. ibm wants to be there to manage and provide and providing software from so many companies that have the cloud approach you can't just keep all your data in the public cloud >> apparently. i am learning as we go a long. it is evolving an important of corporate strategy >> i mean implicit in the deal t it has to be the premise that this had a long runway ahead of it you are spending more than a fifth of ibm's enterprise value for the company in cash and it

represents 4% of ibm's current revenue. i guess that sort of scales the size of the bet that ibm is making red hat, you know the market value two years ago -- it has been a good start. it came in just over the year's high for red hat it is a quick way to get back to your highs all remains to be seen the market is not, ibm's stock is down 25 bucks the last three weeks just with the market maybe it was not much pressure to be had on ibm they need to communicate a lot of rounds and trying to have their shareholder base understood this is a significant move on their part and paying 32 times, enterprise value of ibida and nine time revenue. it is obviously a very large

multiple, although they'll tell you, microsoft -- and any number of the smaller deals but not insignificant one ths that have been done in similar area. >> i think it bring us in focus. rometty how struggling to turn around and according to the wall street journal, they only have 2% >> yeah, it is tonight ainy. >> amazon has about 50 >> taking a look at the futures this morning, looks like we are set to bounce. dow futures is up 214 and s&p is up 35. ahead of the open, more "squawk on the street" from post ne in from cnbc when we come back. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade,

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s&p has two more chances to string together back-to-back gains for the month of october last time it went a full month without, 2010. this is a nice look at the premarket. it is a chance to t atgeth string going we'll be back with more in a moment so all... evening long. ooh, so close. yes, but also all... night through its entirety.

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the nyc and nasdaq is remaining for a moment of silence remembering the victims from the past incident this weekend. here is that moment of silence.

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to helping your company reach itgoals. u.s. bank -- the power of possible. you are watching cnbc "squawk on the street," the opening bell in just over five minutes on a busy monday it is going to be a crazy week of earnings. we are looking for apple later in the week, general motors and

exxon and starbucks. merkel, her party in week of the elections saying she will not seeking for a rerun. the story is huge and most people don't understand why yet. >> look at the market. there has been a major reaction to the first victory and early in october looks like brazilian assets are going to open higher october has been an ugly month for global stocks. it is down about 9% and brazil is a notable exception vespa is up 8% in october. the market likes the reform and of president-elect has put out there. president trump actually just gained a potential strong ally in his fight against china both are famous for bashing china saying they're not buying in brazil. $75 billion worth of trade last year this could be potentially

helpful for president trump. he has been admired of president trump when it comes to confronting china over trade >> as you say the set up was almost perfect so that people finally getting used to the idea that there may be a little bit of a spark of deregulation and things like that >> i would say the all country world index is basically pushing 20% decline from the all time highs. the recovery has to be in part global if the u.s. market is going to get back on its feet. >> taking a look at some brazil movers there you got 12% of the s&p above its 50-day moving average. 12% of what we like to call over sold conditions. this will be another test of whether or not that mentality lives. >> exactly these are more than depths at this point when you have more than half of s&p

s&p 1500 is large to small cap is down to 20% you have the makings of looking for all that kind of thing and stocks are cheap in sub sectors. i think there is the tinder there for some kind of a recovery the flip side of that you broken a lot of tracks. if you were in this market because you say you know what nothing gets it down and it finds a way to stay on the bullish side the trend is in jeopardy right now. the s&p is sort of playing with that whole up friend line right now and by some measures have broken it. it is not game over. we are still playing with the flat line right now and a low in february it is not that it has been right carnage around it shows you that this thing has been going on for a while. >> you are looking for catalysts, there is a report out of bloomberg that china is

considered putting a tax most of autos. that's helping the german market and a lot of the foreign awe auto market. the latest attempt from china in the face of weakening economy data to boost its $12 trillion economy which is slowing as a result of the trade fictions we are trying to figure out the merkel announcement is surprising just because she had been in power for two deck kalds kalds -- decades in germany. what is it going to mean in terms of her replacemenreplacem. it is seen as a negative because we don't know who's going to fill the void and she's one of the biggest proeponents.

>> it is hard to see her successor being anymore, the eu given of what's happening of the direction that is all going >> growth is slowing there they're expected to grow under 2% this year and next. so potentially new politics and more far right figure could be growth friendly as we have seen in the market reaction to places like brazil but overall for the euro, there is some bigger questions. >> finally on the sell side, some upgrades. they talk about earnings drop in 2019, a refresher of some of the technology and the product mix that's what we have been looking for. >> if you can get comfortable with the balance sheet it is not as if it is a crazy lae leap >> there is a look for the 4%.

we'll get honda's earnings and other gms later during the week. the big board opening bell this morning. identity management celebrating at the nasdaq. aaon, heating and air-conditi air-conditioniair-conditio air-conditioning celebrating its 30th anniversary >> very nice >> yeah. ford was not the only research call either. apple, jeffries initiates a buy. 40% of growth profit and say services alone at that point would be worth $117. >> yeah. >> it is sort of a consensus

call right now but it is aggressive in terms of where it could get to and the multiples that the market would put on it. apple and microsoft has been holding the market together. and so i think you get a little bit of a bump in apple that's not one of the beaten down ones and analysts coming in and say you got the buy it >> that report highlights china as the clear risk to the call. such an important growth of the area apple and a sign of a slow down and trade war. that's a biggie for earnings though the option market is implying a huge move of apple and facebook. can apple save the tech trade or the market there are fewer saviors in this season >> what we are seeing is no. the rest of the market has sags. i don't think it is about one company. it is more about investors just

deciding to stop looking on the negative by the way, the stocks have been hammered down so much into this following week of heavy earnings report that you may have a little more room to get bumps on the report >> we'll get good reads from consumers. after the bell today i will be hitting that and the tail has been sort of mixed for package good companies consumer staples are flat for the month of october which is shaping up to be the worse month for stocks in years and coca-cola is reporting tomorrow. deutsche bank is initiated for earnings that bank is improvement for the top line and enhancing their digital products and they are appealing to consumers they have the survey out saying 58% of people had favorability

and a liking of ralph lauren and put it in between under armour >> there is a price call, it is a bullish call because the stocks have pulled back so much. >> the mix of winners today is pretty impressive. it is a lot of the beating down, 52-week lows fortune brands. you got some chips mixed in there. nvidia and rising and some of the industrial autonames on the ford upgrade >> i did see some work suggesting the action of semiconductor. huge out flows from the semiand etfs unlike the rest of tech and general both started to roll over a lot earlier and maybe that process is kind of flushing itself out >> ge is up 2% journal talks, the bigger the

cut in dividend the better from their standpoint >> it may be embraced by investors. of course it was cut dramatically during the financial crisis for some time and then also cut by flannery in his relatively brief tenure. the question is about the rating agency we brought this up when they brought copen. when it comes to the pay the credit rating rage ing agencies think there were some concerns and do you put yourself in overall financial positions by not spending that much a lot of messaging whether a cut or a suspension, mike. it is unclear what it is going to do to the stocks because you can make an argument that it is

reflecting >> the dividend has not acted on the support of the stock you had such a long process of a lot of the individual investors seeming to finally get enough sell out of it it is unclear whether anybody is hanging in there solely for that reason we had budweiser cutting their dividend in half ibm suspends their buy back. what's the conference like regarding capital returns? >> a little bit of liquidity squeeze on the corporate side. there is a lot of corporate out there. you have to prioritize where you are spending it. i do think it is a theme i don't think it is a rolling theme yet. as the corporate bond marke market, -- when you have a high debt low and how you are figuring out how to allocate your capital at&t is another name where it is a conversation they have said nothing to

indicate anything that's going on the yield right now is 6.7% for at&t given the debt low and given what they need or targeting in terms of increase craash flow a the company, it is the same kind of conversation that we had and that at least we have seen how it is financed by some others. >> ibm is down by 4.2%. the scrutiny is on the price >> it is a big price they're going to have to pay that price if the board of ibm decided if it -- i know these w can get confusing. most larger enterprises are not out sourcing all of their computing power to amazon or google or microsoft. they do keep a lot in-house. goldman sachs, you are under certain regulations, you have to keep most of it.

they'll use the amazon cloud when they hire a thousand of interns during the summer as additional computing power that they need and they'll go back. you love to have the ability to move data from the public cloud back and forth red hat maybe able to have those offerings and we can do this for you. we can help you as you build out your strategy in terms of both your internal cloud and your external use of the public cloud and how to manage it but, you got to pay a big price for it, no doubt the stock is down. i would argument probabliless than they have anticipated when they drew it they're not expecting the market responding immediately with a positive print given the buy back is being suspended for a number of years and multiples being paid to your point of very high >> stocks at 153 on october 2nd. that's what i am saying. a lot of the downside work have been done even in advance and having nothing to do with the

potential deal >> the stock is down 22% it is always on the losing list of the dow for the last 12 months >> the premiums does look a little bit more because red hat was down after they negotiated the price. >> anything below 117 or so we'll take you back return of the decade, 2010 almost a nine-year low being tested at ibm. >> mike, i don't know if you see the first date, it is hit pretty hard guidance specific, sara, currency >> that's a theme. we have seen that across it started up with nike which leads earnings season. it posted, i think the story of the earnings season. warrants it is not going to raise guidance because of the strong dollar and the stock gets punished

i would say outside this earnings season, right on tariffs and strong dollar and rising costs and inflation and what it is going to do to numbers next year. >> you would put 4 x ahead of tariffs. >> it is much more immediate >> the calls were about why were the number different first data you are talking about payments around the world so the 4-x affected is direct and immediate. it is not like their exports are looking less weak. it is a translation. investors never know the dollar impact on profitability. this is the quarter where it was an inflection point in the future starting to hit now but going to hit harder. the dollar continues to backup we are trading at the highest levels at the 17 months right

now. we are following all of these global stories of the impact on the market and germany and change at the top of the government, far reaching implications here for europe market and the entire world. our n annette weisbach is in germany. good morning >> reporter: good morning. merkel announced -- she wants to have the job together. now she's ready to serve the full term as chancellor but she will not run again as the chairwoman it sounds complicated but the implications are huge. that also raises the -- quite substantially that we'll get someone new on top of germany during the course of the next one or two years because she

will be a lame duck on top of germany. so what could well happen is that her coalition party will pull out of the coalition and that we'll get new elections as soon as next year most likely. bottom line is she has analyzed the situation, angela merkel, analyzed the situation in a sober tone and she conceded that this current government is not working perfectly and that this government can't go on like this and she has personal consequences that she's going to retire equally from politics and leaving of course, now the race is open from someone who wants to succeed here, back to you >> thank you so much for that huge story we are watching over here in the u.s. >> dow is up 202, very good breath on the s&p. let's get to bob pisani.

>> 7-1 that's decent. we are getting better today. in terms of sectors, brazil e leks have pushed up a lo lot -- tech's strong and bank is strong and healthcare. the big three sectors together, you are going to get a rally no matter what and everyon industrl is doing well. a lot of the names associated with latin america and some of the other ones today is the half way point in earnings the market is acting like it is going to be huge cuts in earns q-3, the numbers are still going

up it is down slightly. i would not say it is a big move but it is down friend for first quarter in 2019, it is over 8 a few weeks ago. down slightly but nothing dramatic so far. in terms of where we are and what to look for and about we have deeply over sold sectors here the percentage in ts&p 1500, building product is zero thrifts and mortgage finance, 0% >> we saw some excellent move in the home builders. there is a good idea of what's going on buy backs, i have been saying watch the buy backs and nordstrom announced of an accelerated buy backs. they accelerated today they said we are going to buy back a billion shares right now. they'll get 3 million shares on october 31st that's almost a billion dollars. they think their shares are

cheap and a lot of their chae companies are going to look at their shares there is a lot of cash out there. we'll have a record year about a trillion dollars that's going to be announced, that's the estimate, we got over $800 billion we'll probably see execution pick up, too that's people actually doing the buy backs getting close to 900 billion. that's a real support for the market at least. that's what people are thinking right now. keep an eye on accelerated back buys finally, we used to laugh. selling in may ends on october 31st we are not far from that sell in may go away, that may still work i will keep an eye on that the dow is up 200 points sara, back to you. >> bob, thank you. let's go to the bond pit now

with rick santelli >> good morning. >> friday we settled at 308 at a 10-yr note it is very interesting though that we are still below some key technical lef technical levels but not much. look at bund, you can see that rate popped a little bit, maybe that was a merkel effect could have been a time zone issue but it did firm up a little bit we settle at 43 basis points they are down five basis points. wow, is that spread moving a lot between 10s and bund that's huge. now if we look at the euro verses the dollar. let's go back to june of '17

we are not quite there yet we still have the august's highs. just a dollar index after slipping off its best level last week, changing position, very close to 17 month highs but not quite there. keep an eye on the 9665 on the dollar index and finally everybody is talking about china. we'll get to the dollar. we are getting close carl, back to you. >> all right, rick, thank you, let's take a closer look at the fang stocks when we come back. nasdaq, some familiar names leading the ndx today, american airlines and starbucks and texas instrument, a lot more when we return

♪

♪ ♪ ♪ ♪ comfort. what we deliver by delivering. then i need to get if i'm into character. santa, ♪ ho ho ho this is christmas, baby ♪ [ groans ] dude, how many candy canes did you eat? [ mumbles ] that's hurtful. the nasdaq is higher it is down about 10% for the month.

joining us now our lead analyst at sun trust, good place to start, everybody is worried of margins there. are you and what are your expectations going into the report of the quarter >> hi david, we expect margins to come in that's something that management already to o the second-quarter call so all expectations are for the topline to be relatively in line with expectations judging by the checks we've done throughout the quarter. advertisers don't have a lot of other places to go through so facebook continue withes a must-buy for them. consider all the tougher regulatory environment we're living in, particularly in europe but also the u.s., management has to triple invest in the business. that's an existential threat for them and the last kpi or data point we're looking for is user growth for that we expect them to lose a few million users in the usa few million users in europe but

to grow in the rest of the world so that's what we're expecting. >> what do you think the market expectation will be, let's say if they report a decent quarter in that sense but lose the subs, instagram is growing and they give us a number as large if not larger than expected in terms of costs for complying with or trying to deal with the various threats they're dealing with >> if the cost is actually higher than what we're expecting, then i think the market will probably take that negatively if it is in line and they end up coming in slightly better than on user growth then i think you'll probably see a relief rally. >> yusuf, i don't think you cover ibm but i know you cover competitors in cloud like amazon and google, both seeing growing cloud businesses how do you expect this ibm red hot deal to reshape the industry do you expect to see more land grabs from some of these smaller cloud businesses in. >> we don't cover ibm's, google

continues to do well amazon has shown 40% 45% year on year growth. our view of the cloud business in general is that the market is very large, that we're still very early, in fact even if you look at amazon it's a $20 billion run rate out of a $100 billion plus market opportunity and we think there is enough space to have multiple success stories there. so basically willing to pay the lower multiples. where do you think we are on this process i think it's hard to know for sure because we're still talking to a number of investors that have been on the sidelines for an amazon, they thought it was

too expensive on facebook, et cetera, and what you're seeing is some of these coming back little by little i can tell you nobody knows where the bottom is and they're still nervous around the overall market but these are named. they definitely want to own. so what we're seeing is them easing their way into them which tells me that we may not be at the bottom yet thank you, yusuf it's a gain on the broader market, stocks are coming back, the dow is almost up 200 points. all sectors within the s&p 500 are higher led by real estate

financials up 1.5%. technology also up 1.4%, carl. mix of factors including talk of china lowering attacks on autos, some of the inrnioteatnal developments we'll be right back with more "squawk on the street. it's not what champions do. it's what champions don't do. they don't back down. they don't settle. and they don't quit... except for cable. cable? oh you can quit cable. because we are cougars and we don't quit!!

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david faber at post 9 from the new york stock exchange. market up 250 on the dow as we look at a big week ahead for earnings, apple, facebook, ge. >> that's where our road map for the hour begins, with stocks raleigh. investors trying to regain their footing in the midst of steep losses for the month of october. >> one of the biggest tech deals of all time, ibm buys red hat for $34 billion. we have details. plus global stocks are rallying as leadership shakeups across the globe are announced from germany to brazil.

let's start with the markets. bouncing back as we start another big week for earnings. a global rally, german stocks higher, merkel exits, brazil's assets are higher on the election of a new president. let's check in with the chief u.s. equity strategist at credit suisse and the senior portfolio manager at wells fargo asset management jonathan, you have been bullish and positive going into next year do you think we have seen the washout, the correction over with. >> i don't know if we've seen the lows and i hope that we have but if you're willing to hold for two or three months i think this is an incredibly easy decision to want to be long stocks. >> the numbers, on the consumer like personal spending come in better the question is about the future and whether it's sustainable. >> the headlines are that the guidance is weak and that we're

hearing things about future quarters so the size of stocks beats is coming in much better than normal companies are betting expectations by about 6%. >> why aren't stocks get regular warded for it? >> i think they will and in the near term there's a tightening, we have midterm elections around the corner which could theoretically be disruptive but once we realize that these things are not likely to become problems but simply are risks of problems i think it will be fine. >> are you as positive and a buyer on this weakness in stocks >> well, i'm still positive. i think we have a nice year end rally, we always do. but i think realistically when you look at the outlook for

profit growth, while it's good, it will be decelerating from the levels we've seen this year, that 20% and that says many stocks will have a little in their price earnings ratio so that i think over the next year will keep earnings and profits more around mid-single digits for total stock returns so not quite as positive as we've had earlier this year. >> jonathan, have you done anything to your '19 earnings? >> no, i think -- you have two stories. between now and the end of the year i think you'll get all of this back, every penny of it as this volatility rolls over, as the vix moves back to the low double digits and next year i think we're in a low double digit environment and i disagree with your other guests so you have something like 8% earnings growth next year and multiples are obscenely low. they're going edge a little

higher and that will get you there. >> and you say multiples are not low enough given the trajectory changing for next year's numbers? >> yes i think there will be a little erosion in the average price-to-earnings ratio that will offset good earnings growth still i'm looking more for mid-single digit returns, not bad in historic context but not near the double digits we seem to be having earlier this year. >> any sector in particular that you think needs to correct further? >> no, i think it will be erosion. we've seen stocks one by one get hit when they come up short so it will be more of a sector rotation through the whole market, a little compression over everything. >> what about business investment it's slowed down from what we saw earlier this year after the corporate tax cut. do you expect it to rebound? >> we've written a number of

reports on the pace of corporate capital investment and what you're seeing is those areas in the market that are seeing great opportunities. we're talking about technology companies or other businesses. they're investing but the average company is not and even the early numbers which looked fantastic, they weren't as broad based as everybody thought and maybe the areas i'm seeing that are disappointing in capex are the same ones i would be avoiding, consumer staples those businesses for 25 years have been milking old brands and not investing why there's such rich dividends. >> you sound like nelson peltz. >> those things have been invested for their success. >> and yet those are the outperformers. >> that's because right now when the market wants to run for cover you run for companies with good cash flows but ultimately their growth trajectory is damaged. >> do you get defensive and buy a group like consumer staples

even though as jonathan points out, and it's true the group has struggled to see any top-line growth even in this big recovery for consumers? >> no, i'm not very interested in consumer staples. i think they have a little technical bounce but the longer term winners will be where they have been for quite a while -- technology, health care, certain parts of the industrial markets. >> global allocation, jonathan does europe or em get any more interesting? >> i like the u.s. our economy is better. more importantly the companies that are in the s&p 500 are just -- their profits picture is stronger, they're far more innovative, they have far weaker or lower fixed overhead so i think the u.s. continues to lead it's been a big theme for people to want to rotate and catch that bounce i think it will prove to be a mistake. >> would anything change your mind we'll get big earnings from

apple and facebook the dollar continues to strengthen, the fed is set to continue to raise rates. are these factors going to stand in the way of your optimistic forecast >> there's a million things that can go wrong first is the fed is -- if they say they're going to do it, we've never unwound such easy monetary policies, but the single thing that would concern me is if we see this tight labor market overheat and cause wage inflation. that would not only force defense to become such of an adversary. we're not there yet but it would make me be less bullish. >> and finally, any concerns about what the fed is doing given what we're seeing in the economy? >> no, i think there's a possibility with the unsettled markets slowing growth in the number of countries that the u.s. may consider not raising rates in december which would be a big game changer we have unemployment below 4%,

inflation is stubbornly around 2%, that's not a bullish case for higher rates so we may see the fed reconsider that move in december, i think. >> really? i mean, it's pretty much baked in. >> by the way, if the fed doesn't move in december, sell stocks. >> because that would look like they're caving to political pressu pressure >> not only that, but something had to go really wrong to convince them they can't move. if you want to say what are they going to do in march or june, that's on the table but december i think would be very concerning. >> we'll leave it there. thank you. it's one of the largest tech deals of all time. ibm buying software company redhat the price $190 a share it's all cash. overall value of the deal about $33 billion. there is a bit of debt bringing the enterprise value to $34 billion. jon fortt is with us to tell us about hybrid cloud and why it's

so important that's the part where i think you have a better time explaining than i do in terms of the strategic merits of the deal for ibm. >> i hope so or else i'm out of a job. hybrid cloud is about bridging the data companies have in their own data centers and private clouds which use cloud architecture but aren't stored on the same machines and public cloud, your amazons, your microsofts who have the data in aws and then the public cloud also so what's the point of hybrid cloud? well, first of all, you have regulatory issues where they don't feel comfortable putting their data in public clouds. second, you've got cost issues it's more cost effective in some cases for companies to keep a certain amount of their predictable data needs on premise. a lot of companies feel this way. and then when they have needs for spikes in demand for computing power, those kinds of cloud resources they can go out to the public cloud.

red hat is a supplier for those who want to build cloud applications no matter where they want to store them. maybe they want to work in their own private clouds or push to the publish cloud so you can see why this might be an important move for ibm at the same time, here's the challenge. red hat is seen as being a switzerland presence when it comes to the data center they are an early pusher of linux and open source and so those who don't want to commit to any particular cloud philosophy might have embraced red hat. so red hat is looking at ibm as a way to expand their selling, their market, et cetera. but how do they do that if ibm is seen as coming from a particularly cloud partisan point of view of wanting to push ibm products on the other hand, ibm wants access to red hats' customers. they have a thousand high value ready to move to the cloud type customers. how do they sell ibm technology into the customers without seeming like they're trying to upsell them in a direction they

might want to go they have to figure this out as we mentioned again and again, ibm hasn't done an acquisition of this scale many memory that we can recall. how they pull this off, even though they say they'll let it get independent, it these come from this synergy. right now there's a big theme in enterprise tech in general there are a lot of different clouds out there and customers have to by the integrate them because regardless of the way we tend to talk about it competitively. it's not like most companies are going all in with amazon and not doing any microsoft or going all in with sales force, et cetera so listen to these move in deals. we have dell vietnmware. you have microsoft's open data initiative that i covered a month ago with satya nadella and other ceos, you have

buying mule soft and now you have the red hat. >> you focused on the key things which can they deliver on the synergies by having a sales force and we know ibm's got it they are keeping all 12,600 employees and at least saying they're going to keep them as a separate division. you seem dubious about that. >> the question is, if you're keeping the red hat people, are you keeping the ibm people red hat has a middle ware product that's pretty important to them if you want to count all of that revenue as potential growth for ibm well, ibm's also known for its middle ware. so when ibm's massive sales force and services force go to market, how do they explain that how do they segment it who is red hat's solution for versus who is ibm's solution how are they going to get that sales force ramped up and

trained? they've been partners in the past so it's not as if they don't know the companies but how they'll sell that in a way that gets maximum value and doesn't alienate the customer, for me that's the question. >> all good questions, john, thank you. i should point out red hat shares are up about 47% but well below the 190 unclear exactly, certainly regulatory approvals needed there, potentially china. we'll get to that. ibm for its part also not off badly. i think the people who put this deal together anticipated a selloff given their decision to suspend their buyback and this, as you point out, john, enormous deal which is not in keeping with the strategy they followed but only down 1.6% as mike santoli told us, it's well off its recent highs. john, thank you, jon fortt all right, when we come back, stocks looking to regain their footing surging this morning. some concerns over corporate earnings and global growth still

lingering. the president and ceo of charles schwab is with us. let's look at the top performing names on the s&p dow holding on the 315 points.

welcome back to "squawk on

the street." with recent volatility in the market and october selloff, it's a good time to talk to the ceo of charles schwab. let's get to washington where the schwab impact conference is under way. sharon epperson is there and joins with us the president and ceo. >> hey, carl walt bettinger is the ceo of schwab and we are at the schwab impact conference. this is the largest annual gathering of independent advisers in the united states. 5,000 people are here and a lot of them are talking about what we have seen in this market and the volatility we've seen, what impact it had on its clients and what they're doing as advisers walt, what are they telling you and what is happening with the clients and what are they doing with their money at schwabb? >> first, let me thank you cnbc for being at our impact conference again you have such a wonderful footprint here and we're grateful so what's interesting is that over most of the last six months, our investor clients, including those working with independent advisers, have been

moving money out of the market now, largely because they're simply rebalancing back to the portfolio that made sense for them long term we've not seen any major movement this s this month as t market has been going down almost zero correlation between market movements and activity by clients. >> we're talking about $3.6 trillion under management at schwab and the registered investment advisers, they have $1.6 trillion of that money that they're bringing in. are they telling their clients anything different in light of the volatility that we've seen in the past? they're saying that the s&p 500 was going to go up in six months, that was in september, what are they saying today >> it's evidence of how difficult it is to predict the markets. advisers build a plan, understand client goal, understand risk tolerances and then stay with the plan. that's why you don't see big market movements by investors even though the stock market has its bit of a roller coaster of

late. >> rising interest rates have been an area that has benefit te many saver s. are your clients changing because of that? >> they are. we went through a period where clients earned almost nothing on their fixed income investments so it didn't get the level of attention it is now. now you get relatively short term treasury yields in excess of, for example, dividend yields from the s&p and that's going to make people rheal locate a bit more money toward fixed income. >> savvy investors are concerned about pricing. there is competition out there with firms saying we're going to have no fee on our mutual funds or etfs. could schwab have a fee-free etf or mutual fund coming out soon >> well, we could, we're studying that. but i think the real issue that we're trying to understand is consumers' view about the

concept of free. what we all recognize is that there's nothing free and so if something is marketed as being free, it's just another way to generate revenue from a client from a trade standpoint, whether it's lower quality execution than the client might be able to get elsewhere, higher receipt of payment for order flow, there's one way or another a for-profit firm is being compensated and consumers are savvy today so we're studying it but we want to be careful about what we do. >> one of the things your advisers have been studying -- and it came out today in the study you have out -- they're looking at trade policy, they're looking at tariffs and the impact that might. have short term, the majority of them are saying it will have a fwh negative impact. >> that's correct. short-term things like that may have a negative impact on the markets but for advisers working on a long-term time horizon, they won't overreact to shorter-term policy actions or even the possibility of a trade

war. those things tend to work themselves out over time having a plan, sticking with it is always a better strategy. >> the advisers in this study, the median age was in the mid-50s and they're looking at clients they've had for 15 years or more but the market has changed awe you know this all too well in the last ten years, so has the way you have to deliver services to your clients. you're doing a lot in the digital space that people who assume charles schwab was just, i get to talk to my friend about my money how are you changing that? >> we've hired hundreds of employees in just our two digital accelerators in austin, texas, and san francisco what the future brings is a combination of great technology, amazing client experience, but it still includes people money is highly emotional. it's not like other types of purchases people make. money is emotional

when you talk about emotion, it's important for someone to ask questions, build trusts. digital efforts, technology, will be important but it will never make the people side of money go away. >> and the people side might be a chat box or something but you'll still be talking to someone who is taking in the emotional component of your money and understanding how you should deal with that in terms of how you invest your money, right? >> i think so. human beings are still emotional creatures, no matter how intellectual we might get or what technology might do for us. i think a human being is likely to play a big role for a long time. >> and when you look at what investors should be doing now going forward, what are your advisers telling them what are you as a firm telling clients to do in the light of all that we've seen and in the history you've had over the last ten years in dealing with this market >> i think the most important thing at a time like this is either to do nothing, stick with your plan, forthings have changed for you personally, update your plan and change your

investment approach to reflect that but don't make changes based on what the market happens to be doing today, tomorrow, last week or next week that's a sure losing strategy. the first person that i meet who knows how to time the market, i'll be surprised. i haven't met him yet. >> and you've been doing this a while. if you don't know, they must not be out there walt bettinger, thank you so much for joining us. i'll send it back to you guys. >> sharon epperson, thank you. great timing to talk to the ceo of charles schwab. when we come back, global elections. a look at the leadership shakeups happening from germany to brazil sparking marketing move this is morning sweet will be ba "squawk on the street" will be right back with the dow up 310 don't go away. ♪

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german chancellor angela merkel announcing she won't run for a fifth term we're in germany watching all that >> the biggest surprise is that she's also not running again as the chairman for her own party, the cdu, because their mantra always was she wants to be the chairman of the party and also to be the chancellor to keep

grip on her own party. so one can fairly argue it's a very gradual process of saying good-bye to politics because today in a press conference she was saying she's ready to serve another three years as her term as chancellor but being ready doesn't mean she's also going to do it because the likelihood or the odds are very high that something else will happen in the meantime, for example her coalition partner could pull out of the coalition meaning we could have new elections as soon as next year in germany. it's not very likely that angela merkel would stay on as a chancellor being a lame duck on top of germany for another three years while we know that there is a clear power vacuum which we can see already in the reaction on the market it's not a good sign that angela merkel says she is no longer running as a chairman woman of her own party.

it will also mean nothing positive for europe. she was an anchor of stability for europe she was the most important woman probably in european politics. we have seen the euro dropped lower towards the u.s. in reaction to the news that she has surprisingly decided to leave politics gradually not like -- but this is the first time we've heard from her that she's planning to retire back to you. >> annette, thank you very much. just in terms of the euro reaction, down about a quarter of a percent not extreme. talking to folks in the foreign exchange market. the reason why is she committed to staying on through her term in 2021 so it doesn't set up an immediate void and question mark but it's negative for the european common project as she has been within of the strongest defenders throughout the

european crisis and while germany has stuck to their guns on ecb policy, they basically allowed the ecb, the eu and their own taxpayers to help keep this project together during the toughest times in greece a lot of it is on the auto makers and the reaction to the talk that china might cut their tax but also could be considered pro-growth for germany ultimately germany, not the eurozone as a whole if the country moves into a more nationalist right-leaning past for now. we'll watch that so germany isn't the only country with political news. brazil's candidate bolsonaro winning the election in a runoff seema modi looking at the i shares brazil which tracks brazilian shares. >> brazilian stocks rallying after far-right candidate and

investor fair jair bolsonaro defeated fernando haddad brazil's main etf up another 2%, on its track of 2016 on hopes that bolsonaro will tackle corruption crime and implement fiscal reforms that will help turn around brazil's struggling economy. some of the stocks on the move, brazilian banks, energy names, real estate players adding to a month long rally that we have already seen in brazil, pretty remarkable given the sharp downturn that we have seen in global stocks in the month of october, brazil is up 21% compared to the 9% decline we've seen in emerging markets analysts, though, are cautious saying we've seen the story play out in a number of countries including india and argentina when stocks run up on hopes that a pro-business leader can deliver change only left to be disappointed the key question for bolsonaro is whether he can get the support from congress to pass

economic reforms that of course is what investors are betting on david; back to you. >> thank you, seema. general electric shareholders are bracing for a dividend cut, perhaps a suspension of the dividend that's when ge reports its earnings tomorrow morning and that's according to analysts who spoke to the "wall street journal" as well as any number of investors it's ge's first report under new ceo larry culp morgan brennan is with us at post 9 no stranger to this possibility. we discussed it day one when mr. culp took over that also occurred on this same day. >> it's interesting. you look at shares of ge, they're up 3.5% ahead of the earnings tomorrow which are widely expected to be a kitchen sink quarter so three big things are in focus for ge first, public comments from that new ceo larry culp he's the first outsider to run ge in its 126 year history culp took over abruptly at the start of the month highly respected ceo due to the high returns he delivered at

danaher. on tap, introduction to his plans to accelerate a turnaround, though details not likely to come until later number two, guidance more pain and power means ge will fall short of previous 2018 earnings and free cash flow guidance now, that outlook had been eps $1 to $ 1.07 $6 billion in adjusted free cash flow but the street already priced in a miss with 88 cents the current consensus. cash is key. that's been shrinking dramatically over the past two years alone. that brings us to number three, which david just mentioned, the dividend is culp going to cut or suspend it it was already halved last november given those issues at ge capital which has a $15 billion insurance charge,m divestments, it might also be welcomed though details matter since shares are still widely held for that very payout.

so q3 consensus. right now, 23 cents a share on revenue but as rbc surmises, those should be afterthoughts since attention will likely be on how culp is, quote, triaging ge's hornet's nest of crises, cry shows that have sent shares to new multiyear lows in recent months they're down about 35% this year but as we mentioned they are rallying up 3% today ahead of those results. >> the culp rally, though, was short lived. if i recall, the stock was in the low 13s a day after his ascension to the top job but went back to the current levels where it's been inhabiting for some time. >> though i will note, he took over october 1 the stock is still ever so slightly higher on the month in what has been as we, of course, have been reporting, a very tumultuous month. >> is a dividend cut or suspension a positive or negative for shareholders? >> i think the past it would have been a negative thing i think now given the on going

tumult we've seen at this company it's very much sort of shifted to be considered more of a positive thing by a number of investors and wall street analysts >> thanks, morgan. we'll see what we get tomorrow morning. let's get a news update with sue herera at hq good morning, sue. >> good morning, carl. good morning, everyone, here's what's happening at this hour. debris is being gathered from the lion airplane carrying 189 people that crashed into the sea minutes after taking off from jakarta, indonesia. rescue groups say they don't expect to find any survivors and they are focusing instead on finding bodies. a suicide car bombing near the afghan election commission office in kabul killing one and injuring five others the taliban has threatened to disrupt parliamentary elections in most provinces. saudi arabia's top prosecutor is meeting with istanbul's chief prosecutor reporting the killing of saudi writer jamal khashoggi turkey is seeking the extradition of 18 saudi suspects detained in saudi arabia for the

killing. and back here at home, both the noyse ayse and the nasdaq hg a moment of silence for the 11 shooting victims of a pittsburgh synagogue on saturday. it's the deadliest attack on jews in u.s. history, allegely atrried out by an anti-semite. th's the news update for this hour, "squawk on the street" will be right back

warning, california. a handful of billionaires have spent over $70 million on campaigns to undermine our public schools. and electing a former wall street banker named marshall tuck to superintendent of public instruction is all a part of the billionaires' plan to take money away from neighborhood public schools and give it to their corporate charter schools. that's why tony thurmond is the only candidate endorsed by classroom teachers for superintendent of public instruction. because keeping our kids safe and improving our neighborhood public schools is always tony's top priority. welcome back to "squawk on the street." i'm sara eisen with carl quintinilla and david faber live from post 9 as always at the new york stock exchange. as you can see, stocks are starting off the week on an optimistic note. the dow is up 265. s&p 500 is up about a percent and a half led by financials, though all sectors are higher right now. real estate materials,

communication services and tech doing better nasdaq popping 1.3%. we're about halfway through the earnings season. cnbc has been scouring all 234 earnings calls that have so far taken place trying to gauge the impact of tariffs on the reports and on companies' bottom lines steve liesman joins us now with trult the results. sort of like our own beige book, steve. >> exactly we looked at the transcripts of all 234 earnings calls, our crack cnbc staff, including nicholas wells 65% did not mention the word tariff, 35% did. of the total, 19% said tariffs have had a negative or somewhat negative affect, 14% mentioning tariffs in a neutral way just 2% said it helped their business here's some of the quote wes found. united technologies said, quote, i would expect the pricing will also have to increase next year if these tariffs remain in place. it all gets passed on to the consumer in one four another

leggett & platt says, quote, waiting to see if in fact tariffs will go up 25% at the end of the year. we're fully prepared to act immediately. it's not a cost anybody can avoid if it comes to be. so 45% of companies mentioned it in a negative way. most of the positive, five, came from companies bettering results because customers pulled forward business in order to beat tariffs. in a separate survey, the national association for business economics finding that 77% of companies have not changed their business in response to tariffs. 23% had and most were negative look at some of the highlights of those responses 13% delayed investments -- sorry, raised prices 10,% delayed investment 4% accelerated investments and 4% delayed hiring. a lot of the negative tariff affects are reported by goods producers. about half raised prices and about 40% delayed their investments. sara >> steve, interesting, those who

were producing goods here, importing components from china, still struggling with that in terms of how much they raise, what they raise, and even the prospects of well it's going from 10% to 25%. >> and there could be more tlabdtlaband there's uncertainty about how long the products may be in place. is the goal to bring the chinese to the table on negotiating on technology transfer or is it to allow some companies here to create or take back that manufacturing that the chinese do in addition to their there being steel and aluminum tariffs as well so it's definitely having an impact but it looks like companies are managing it through passing along prices to consumers. >> that's the key question, i think. it doesn't appear -- and this is anecdotal from the conversations i've had -- that it's necessarily resulting in people creating more jobs here right now. you move your supply chain

arou around, you figure out places to source from. and some of the uncertainty is leading people -- and you saw this in your servicing -- to delay hiring not increase it. >> right and it's interesting, we did another look at how the stock market reacts to tariff news and it really reflects this, there is no day we could find where there was a 1% move or more on the dow to the upside when it looked like there would be more tariffs placed on the economy. the market rallies these 1% moves when it looks like they will there will be fewer tariffs and that's reflected in the earnings we're seeing. the majority of people affected by the tariffs are affected in a negative way there's very little positive we can see yet in any earnings calls. >> thanks, steve. >> pleasure. keeping our eye on tech stocks as well most fang names rebounding nasdaq trying to climb out of correction territory as apple and facebook get set to report

earnings joining to discuss those names, wedgewood partners chief investment officer david rolf is here a quick tie between this topic and what steve is talking about. does the china story make you less enthusiastic about the space? >> yeah. it's in a negative and where we would worry -- we only only 20 stocks our largest position is apple. and so if i see a headline, you know, any tariffs on the iphone, etc., that would really shake up investors, particularly our shop but thus far, again, it's been if there's been a mention it's been a net negative. but some of it might get priced in given the corrections we've had. >> what do you think apple needs to see >> i think the consensus is 277/278. if you squint a little bit on the average selling prices call, i think the high expectation is about $800 average on the iphone if they get to about 810 and if

service is surprised, 295, maybe $3 a share that would be a big -- we don't expect that. but the last four or five quarters have been routinely better than expected. >> on asps >> yes and the entire business model, wearables, et cetera, we're expecting a good quarter and a big guide for the next quarter >> you also have a big position in facebook as one of your top holdings what do you expect from that company give an different set up into earnings with the big decline for the stock this year? >> well, admittedly we missed the big move up and we've been buying it of late and if they just don't do a repeat of the last quarter, no new negative news, i think the stock is priced really cheap here and i would even go so far as to say that here at 145 on the share you're not expecting much earnings growth.

i think it's a fat pitch setup going into the quarter >> i noticed qualcomm is one of your big holdings. having followed the company closely, they're at war with apple which is your largest holding. not that apple if they were to lose the litigation would necessarily suffer that much but qualcomm would certainly benefit over the patent royalty dispute. >> i think the latest is qualcomm and i think in a court filing friday mentioned that apple is in arrears of $7 billion. that's a big bar tap the stock in the low 60s, even when informs the lt was in the probably no expectation that apple will use any chip set going forward. probably an agreement on the royalty rate, very low in terms of what that number would be but apple is interesting this year they'll ship 300 million devices. 220 will be phones and, of

course, with the watch a lot of these devices have lte. if you think a year or two from now with the new macbooks come out, cheap commercialization of 5g, it's not a stretch to think in a couple years apple could be shipping 300 million units a year with some type of cellular connectivity i hope they can mend the fences with qualcomm. maybe not do stuff on the chip side but have a reasonable royalty rate i don't think hardly any of that have is in qualcomm stock. >> that's one of the key reasons you own it >> yes and we're at the cusp of commercialization of 5g. >> and iot and the benefits there. >> and you have alphabet were they treated fairly far 20% revenue quarter? >> i don't think so. i don't think so and i wouldn't be surprised what we saw you roll back the tape on what we saw with apple when steve

einhorn got involved to capital return and then we saw maybe carl icahn google is sitting on a lot of cash, probably more than they need so net of cash we think the stock is cheap and good business model. we've owned it for a few years now. >> which is cheaper, google or facebook >> facebook. >> but deservedly so, right? >> yes, but i think it's gone too far. the stock is 217 to 143. >> you said you didn't want to see more nasty surprises but there's questions still on engage and cost and everybody hates them right now because of what's happening politically and the scrutiny for social media. >> again, it's -- the wild, wild west of facebook is over, we know that and i doubt the executives want to -- >> by that you mean hyper growth at all cost? >> right i don't think the executives want to travel back to doc sit

-- d.c. to sit in front of congressional committees i think they have the resources to protect day, to right the ship, to be more transparent for advertisers. they're almost at monopoly status i don't think there's a lot of good expectations down here at the share price. >> usually as a turning point. we'll see if this is it. david, good to get your take, thank you for coming in. as we head to break, look at shares of kroger on the move starting out with a decline, actually has reversed that and are higher they updated their financial forecast this morning saying store remodeling and optimization is going to hurt sales over the next few months of 2018. basically, it's going slower than expected. they did reiterate their full year earnings guidance they expect sales, which will be flat, to come back after they finish up some of the efforts they've been making to revitalize the stores. kroger now a gainer. "squawk on the street" will be right back

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haddad fernando bolsonaro. jair welcome back to "squawk on the street." rick santelli. i want to welcome andy brenner thank you for joining me let's get right into it. personal income and spending, today income was light positive revision should help gdp move up. in the end it is about inflation. any surprise you saw >> rick, thanks for having me. we saw inflation starting to moderate a bit, we're starting to wonder what the fed is seeing, and doesn't seem like the low employment rates are leading to much inflation. we wonder if cash carry is right. he said friday, maybe the feds should slow it down from expectations i think the market is starting to build it in >> it is hard to deny as early october comments regarding how far we may be from neutral might have effected the markets, friday had the lowest yield close since early october. when it comes to interest rates,

many think the feds look at balance sheets than rates to tighten up explain. >> the fed has history with rate movements and they can control inflation to a bit, they know what the economy will do, vis-a-vis rates, but never unwound the balance sheet. only time i remember them unwinding any part of a balance sheet is in 2008, 2009 bear stearns and aig there's no history there ph.d.s don't have anything to base it on at the fed. we think the balance sheet is much more hurtful to the economy, led to the volatility, when the equity guys started to wake up. ten years never backed up, yield on 326 should have gone to 340, 350, never did equity guys woke up and said we're onto something now we added small utility you have to take it more

seriously. they need to do it more opportunistically, not just 50 billion a month. >> real quickly, a lot changing around the globe politically the midterms may effect the markets, but the big issue is angela merkel. you look at what's going on in the context of italy, and we see what's going on with angela merkel in the last half minute left, how big is it that merkel and draghi will fade into the sunset in 2019. what does that mean for leadership and politics and monetary policy in europe? david, i guess we're having a sound problem. i'm shooting it back to you. sorry, andy, that you can't hear me david, it is all yours >> i'll take it, rick. we are sorry about that as well. let's send it to jon fortt he can hear us he has what's coming up on "squawk alley. >> loud and clear, david we are covering all angles of the massive deal in the

enterprise ibm buying red for $34 billion. what are the implications for the rest of the cloud giants and enterprise tech in general that's coming up on "squawk alley.

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coming up later today on the "closing bell", niall ferguson joins us couldn't ask for a better day to have ferguson on with the political landscape changing in brazil and germany that's his bag, political, economics with a conservative bend we'll be back in a moment. your company is constantly evolving. and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices

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