>> i am not. >> andrew is back. >> tell andrew that i miss him >> that's right. or, we can have andrew >> sam zell, great to see you. talk to you soon folks rierk folks, right now it is time for "squawk on the street. ♪ goo wednesd good wednesday morning, i am carl quintanilla and david faber and jim cramer happy halloween. facebook and gm is going to hel out today. adp, the biggest jump in eight months despite those back-to-back hurricanes and 227 jobs 10-yr hits a one week high in

the yield. the nasdaq and russell down 10% for the month. sharp gains of the open. job hiring trouting expectations >> gm, what would be its best day since may. facebook unveils a new growth strategy some strong global sales boosting kfc and taco bell and ceo of yums brand will join us at this hour >> heading into the final trading sessions, the dow with a 6% drop today. s&p is down 8% nasdaq and russell and so-called correction territory with a more 10% decline. a lot of technician wants to see if the s&p can close above 200 days >> that would be important there is a lot of technical

damage done. a lot of people are freaking out of yesterday's rally bob lane did fantastic work on "mad money" last night look at the rotting, look at how bad it is. i would come back and say october is over. it does matter yesterday's seasonal strong day. we are very over sold. we got yesterday and today's bad news because of some stocks are irrelevant i was in the facebook call twice. on the call people sold it and they bought it and sold it again and bought it. that's a kind of sign of great indecision but in the end enough is enough. you have 16 firms cover it three boosted of what their price could make

i am seeing that they basically you are thinking of making 70 or 80 this is less than you no know - >> the broader market, the algorithm, i am curious of your thoughts i made this point yesterday when i think the hedge funds have taken their growth down and i am looking at a letter here that came out yesterday it is a large tmt focus hedge fund it has been a difficult third quarter and we reduce our growth that's gone on so many hedge funds. and couple that with this algorithmic trading but are we done >> business is really great.

people are saying the algorithm are in charge. you mention code two i happen to have code t. code t is questionable i try to figure out whether -- i look at the situation and i say there is also a conspiracy of why stocks are going down. major cfo, what is it with the algos? what do we do? watch when facebook is going up then down and up and down. you can look at -- i measure amazon and alphabet at the same time as if amazon is controlled by facebook it is because they're in 10 etfs together >> these are so crowded.

more crowded than when you have not had one in 15 minutes. >> the best gainers in the s&p, red hat and twitter and number three, -- if you are looking for signs that investors are betting and trying to find way to leverage a more volatile environment. >> it is working, we have more money passing and algo we few individual investors. >> the hedge fund model i would argue it is broken at this point. >> what does it leave? fidelity >> i don't know. who's the price to discover nowadays >> that would be good for us >> are you a buyer >> the fourth quarter would be an amazing time to make money are you buying this year's end squeeze? >> yeah, kind of yeah.

oh, let me backup. if apple is good tomorrow, yes it is all that's left. now we got the scenario where we are going to get the rate hike if we get strong number on friday, we are fine. then we are going to get the tariffs and that's going to slow down the economy a little bit. if apple is good, this is the most binary thing i have seen. if apple is good, there is nothing left >> until it gets included in the tariffs and it is not good anymore. >> very good point we need the exceptions look, someone recommended nike this morning stacey likes nike, nike and apple are the two fine companies of the last straw. >> hard to exempt them if you are going to put a tariff on everything what is he going to do >> i have no idea what he's

going to do. >> or she for that matter as pmi is 52.2. if that goes into contraction then what do they do >> we'll talk to phil about gm the last month of gm, we'll get some tariffs hit >> i had a couple of people attending dinner with ligthizer recently >> he's not talking about tariffs. he's talking about religious freedom about china cracking down on buddhist you have not heard that for a long time. >> no, but the term remains war-like >> company reports $1.76 revenue is slightly below. this is what mark zuckerberg says of the revenue growth

picture of last night's call >> i want to be up front of where we want to go from a feet only world, it will take some time in and our revenue growth maybe slower during that period like it was transitioning our product to mobile. >> jpm adds to the focus list. the deceleration is not as bad >> that was a fabulous piece by jp morgan. a lot of analysts are waiting for this so they can lower their price target what i found to be the case that once again if you are going to reach the new consumer and you're a consumer package good company, you have to go to instagram. and they'll monetize you they did not lose the advertisers. they just did not. that's because people don't read the newspapers and don't watch tv as much this is how you get them i don't know if you watch or read your instagram feed before

you go to bed. my wife does it for an hour and a half the in sstafeeds i am looking it is like three things by friends and then there is the ads when you look at ads, you're conscious that you are looking at sham well when you are looking at the instagram feed, it is an artistry >> it is true. >> it is seamless. >> well put. >> the transition from news feeds to stories and the high level of engagement is very strong they do need to reposition the ads. they were saying mid to single high digits and now they're saying single digits >> and expenses, did you see how many people they hire?

they're looking to hire people where they put trash and lies and starting to focus in that stuff. >> they seem to be >> they got a unit there they got people focused on 2019 assort of that burning reset year and you go into 20 with growth again >> yes that's right, david. for stock that's trading under 20 times gap earnings, they do seem to be no shortage of analyst but also a number of investors who are thinking okay, management said the things i need to hear for me to believe it is going to be that year and given the multiple being so slow and the growth rate is being fairly high versing that multiple, i am a buyer >> that's the best analysis that i -- that's completely right >> take that moment. and i have collorox on tonight clorox is selling at two times earnings and facebook has 20%.

huge amount of cash. when you look at the number cuts, they're minuscule. >>how parent is 150 on facebook i think the stock should be at 165 just to get to where it would be a little bit better where the s&p was two months ago. look, i think and i know yesterday i said fang was back i checked my twitter feed and basically just accused me being brain dead >> i say that. >> it was a good sign for a bottom greenberg told me that i was in the dumb class. and i remember coming home my parents were like wow, my son is in the dumb class it was not dumb. those people are in that same class but they have not escaped

it >> it is tough i didn't know how to spell >> you got there >> they don't use tracks anymore. tracks were bad. tracks were bad, i stayed in that track until underlininth g. it was wrong >> i am still angry about it >> gm is up sharply in the market the automaker blows, the cfo talked to phil lebeau earlier. h >> higher prices and better mix. the premarket moved here, jim.

they only had one double digits move >> i want to be careful. i want to see what people say about whether china can be maintained and what david said about apple which is yes i have to say apple gives me the hurdle, what are the chinese going to do? a lot of that strength -- >> it is 40% now gm is trying to deliver 836,000 vehicles in the third quarter. >> whatever to the chinese government, they don't want that but then things slow >> that's what i am worried about. i want the granularity >> i think the upside are the u.s. >> sorry >> upside the u.s. is very good. i am just very concerned that every time everyone bought gm up a spike, how is that done for you? >> let's see if it does not come

in based on the fact that every region is down i think that's really, really important. >> north america property it up 33% and record shine up results. >> right >> we got to look at the unit sales. it is great to have good mix but you also want to have big six. remember amazon had a great bottom line number how did that get it? >> it did. >> the algos did not like it the a.i. running algos thought they saw something >> they did face recognition >> what does facebook talk about when he get together with bezos. >> bezos >> your comment of algos are not necessarily reassuring for those wondering for u.s. stocks. >> i think they're kind of done

for this month the algos take a vacation. hey, we wreck the month and now we can watch netflix and they're bingeing today they're on netflix and they're done we did our work and we destroy the market and let them have a couple of days and they'll be back again >> i actually like -- i don't want to talk about midterms with you. i do my prediction with midterms and then what happens. >> you will do a prediction on midterms >> no. talk about the midterm elections. i check at ahead of the particular party and she's confidence >> charlie cook spoke this week at the economics in new york they know nothing right now. >> very dufifficult >> who knows anything? >> it is like china policy >> i do know we have to go >> we do when we come back, jyum brands

y getting a lift the ceo is going to join us. take a look at the market here more "squawk on the street" from the ny in a moment. ♪ ♪ (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. i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman?

hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

trying to build on yesterday's rally obviously,

putting a couple of back-to-back gains together for the s&p which we have not done at all. adp, private sector adds 227,000 jobs for october that's the most for february let's get to rick santelli at the cme. >> yesterday was a good day for equity treasury market certainly paying a attention to more than the weakness fixed income market may just be a p the future and uniting of the market economy together. one thing i can tell you two days back-to-back being counter trend on tuesday on the trading floor. this may push treasure rate higher look at the one week of twos and tens it was a solid number. the yields are already moving

higher before 8:15 eastern on foreign exchange which really has been hot, hot, hot if you look at mid august of the dollar verses the chinese yuan, basically two months and continuing to move higher towards seven and continuing to hover levels that we have not seen since spring of 2008. if you look at a dollar index specifically, you can see it continues to escalate and now firming to a couple of sessions above '97 and like the pound yesterday, the euro is at the lowest level since june 17 the pound is not far behind. carl, jim, david, back to you. >> when we come back, we'll get cramer's "mad dash," count down to the opening bell and more "squawk on the street" straight

ahead from nyc checkout is at 4pm. plenty of time to enjoy your ride. (bicycle bell sound) ♪ ♪

(bicycle bell sound) ♪ ♪ (bicycle bell sound) ♪ ♪ explore more with a guaranteed 4pm checkout at over 1,000 fine hotels and resorts. it's another way we've got your back. ♪ ♪ the platinum card from american express. don't live life without it. every investor should ask questions. is our money in the right place? what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary? a good place to start is with an independent registered investment advisor. as fiduciaries, they live by a simple rule: always act in the best interests of their clients.

that's why charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com 6.5 minutes to go before we get started with trading here on nyc on this hump day.

we want to talk a little bit of estee lauder >> he has done that and more, the stock is ready to rally again and why david? it is the frenzy towards beauty. it is about the apple. now the apple, the new apple can get rid of blemishes but the old apple that people use this asia because of the numbers are perfect and the duty free numbers are perfect. that means china goes traveling, they buy estee lauder. it is remarkable we have mac, big mac, well, he does a remarkable job. he does incubation of brands he goes to china constantly and meets with young people influences >> asians are such an important part of their growth are they impacted at all

>> estee lauder says business are better than expected and contrary to what we know >> estee lauder, i got to tell you when you got to see this man. he's the true visionary of the consumer package group stock nice number. >> watch ulta on this. >> we got an opening bell that we'll be keeping a close eye on. stay with us on ""squawk on the street."

four years ago, we rejected marshall tuck and his billionaire backers for superintendent of public instruction. but they're back. the corporate billionaires and their handpicked candidate, former wall street banker marshall tuck. tuck's billionaires have spent over $25 million distorting tony thurmond's outstanding record on education. all because they know tuck shares their agenda: diverting funds from our public schools into their corporate charter schools. the same agenda as trump and betsy devos. protect our public schools. say no, again, to marshall tuck.

♪ protect our public schools. ♪

each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you are watching cnbc "squawk on the street," the opening bell is just about 90 seconds. another busy trading session on tap of this final day of october after worst month of the s&p and nasdaq and 10. we have been good results out of facebook and gm. now to talk about kellogg's guidance

>> it is really interesting because kroger is doing quite well even though i felt that their guidance is down beaten. walmart is the largest growth in the country is doing quite well. the guys are getting the gross margins of the retailers and not companies that are being squeezed clorox and kellogg, that's the kind of great middle ground where they have not been able to get a lot of pricing power on the kroger call, it is pretty interesting. you got to kick me out to pay to play you get on the end caps and it is costing more money and it is not a great business to be in right now. clorox has been by far the best. just watch that. that's not where the action is so to speak. >> yeah, adding both of them siding material costs and 4-x as we see from 3-m. >> 3-m was not good. i have been wondering how much

of that was the economy and how much was the company the economy is not that great. >> they'll have the same question for texans. is it a true macro straatement r not. >> the meantime, i think if you look at what gm is saying, it is your fault >> the opening bell, s&p at the cnbc realtime exchange it is circor national and green brick partners sam zell on "squawk" today >> his -- i think what sam zell

is not thinking about and this is not his job it is the competition that you are going to get from rates. they're just delicious if you look at amazon, i liked it at 175 and i like it at 1,750. when you wipe out several hundred billions in a few hours of trading, is that not 87 like. we got to be careful amazon was amazing how quickly that felt. >> maybe 2,000 i have been hearing it from

other markets who were just talking about the highly valued technology stocks and the battering they have taken where as shelters and some other names not expected notice like verizon. >> i love mcdonald's it is terrific hey, you know what, we are not doing that well. the cross currents are really typical. i keep oncoming back saying the cross cards are difficult. what's the rush of rate increases after december there is sam zell and all i am saying is that when there is a dispute between two sides, what you do and what's proven is wait to see the preponderance if he can take it back, i think. >> i think that's true the quote of the long wait from neutral. jim, at the same time, eci

today, do you want jobs missed on friday? would you rather have it under shoot? >> i would love to see and i know for people who are working. yesterday paychecks, one of the surveys paychecks had, there is not an increase of hiring or wages. people starting to realize, i can't keep hiring because people cost so much if you saw any data that said that wage increase were benign then i think the market will be fine >> price increases and things from mcdonald's and hamburger to paint. everything is going up >> well, i should not say that we have seen a peak in commodity prices they make kitchens and baths >> inflation, you can make an argument is there in terms of

some of these. >> i just need to know whether it is peaking. everybody thought that masco that inflation is peaking. they're saying the generics, the private labels are all made from china and it is going to be decimated. that's going to be an advantage to them because they make a lot of stuff in america. how could some company have dramatic forecast. it is a very important conference call. >> t-mobile, we have not hit that yet >> i like it do you like it >> that sub is by far the most of noth any big carrier out thee at&t did not add much. sprint did not have a bad

quarter. if approved by antitrust regulators and t regulator. >> the quarter of t-mobile is a strong one >> i was telling people that we ought to buy t-mobile because john ledger delivers over and over again but then you see the stock goes down. >> how did that happen >> that's good for margins >> turn levels are low and everybody seems to hold back on that they introduce the true when they did all you can eat plan and forcing other carriers to follow them. >> that does get back together is that going to be good for prices >> don't you think 5-g is going cost a ton do you agree with that you can make that argument

that was essential argument. > >> it will be essential argument if you just apply traditionally. no, you can't let it happen. >> the capacity of this company can be huge in 5-g the expense for 5-g is monumental >> oh, it will be tens or if not hundreds of billions of dollars. >> it is going to be big drama for tech you will be talking about that in 2019. it is going to be a secular growth for 2019. we just got to get there >> we got to figure out the investment theme when it is really fully enabled and what's going to benefit from it we talk about other things >> no.net fli >> netflix >> no, some people think it is qualcomm which was down 5.8%

>> caqualcomm, one of his new positions. >> did you see the downgrade today? david, you got to get this thing. he's talking about idea that they're exhausted in remedies with apple you know they got a 4% yield marshawn lync they don't think they'll get there with apple and they'll go to court >> apple yesterday was in brooklyn how fabulous was that? >> brooklyn academy music. >> it is beautiful >> i mistakenly referred to it as brooklyn of museum. >> buy backs likely to provide se temporary support. >> we are back to qualcomm >> interesting on buy backs, we got the ibm authorization

yesterday, commitments for the past two uniquweeks are averagi lower of earning ss seasons for the past several years the only company that has done that is apple. apple is going to be out of the market some of the banks are supposed to blunt this. yum that we'll talk about. >> is that interesting >> that stock is up. >> we criticize companies oftentimes for buying high but perhaps they made a good choice buying low >> that's a good point >> i like that point ge, day two, carl, we have to look at it it is flat >> did you see the ubs >> it was not the evidence slab. >> we think couples will succeed in cleaning up whatever needs to clean up overtime.

they do say even though they admits their balance sheet risk when fully realized but they do believe in culp. >> watch it trade below $10 yesterday for much of the afternoon. >> pressure on power not done and peak uncertainty had been reached though >> ten bucks of share. do you consider buying these things because you think culp is going to succeed >> i like culp so much >> or significantly higher the next couple of years, not that he did not have a lot of work ahead of him >> it is distracting handling powell i am trying to understand why it is simple tofl t have two divis. what i learn that there was a

big victim of power. it seems like the power was not healthcare which should have been or arreerospace i want him to figure out a way not to get the good stuff like healthcare i don't think he should get rid of healthcare. why would you get rid of the good to fund the bad >> that plan is intact you know that? >> i know, it bothers me >> let's get to bob pisani on the floor. >> nice rally here at the highs of today we got a global rally going on let me show you what's going on. good earnings in europe today. germany has been a lot more stable it is moving off the lows the last three or four days. japan has been stable. shanghai looks like they're trying to bottom over here that does not seem to blunt the rally. those weak numbers will make

china and the trade war dispute is not clear the market over there is up. we had great earnings not just here in the united states but over in europe, loreal had good numbers and all the stocks are up 3% or 4%. here in the united states, fangs are all up and facebook, shorthand is good enough.netfli companies are not the same apple is up 29%. facebook is down a lot of writing on apple. the risk is to the downside for apple right now. that's the key stock for this week sector communication services of course you got google in that group that's doing a little bit better and tech is doing okay. i would like to see industrial a little stronger since that was hit so badly

let's call it fair of course, staple stock is selling off a little bit after strong showing overall watch the market lagger to a fourth etfs that's beaten up this month home builders and semiconductors have been horrible these are not out performed but on energy and metal there. home builders are doing a little bit better two out of four is not bad how about get us into november please, any chances in there a lot of good signs here we got potential for fund rebalancing. remember stocks down so dramatically, pension fund has to be rebalancing in a certain way. buy back activity is going to rise and we got strong seasonal flow during the midterm year. s&p has been higher every midterm election since world war ii in the fourth quarter here.

trade that's interesting, how about the big amazon verses retail trade you know it is becoming unwound. amazon is down 14%, look at this macy's, in order strop and gnor. they're all up retail is doing better buy backs, i mention that you will see more of them. look at what we have seen in the last few days. a lot of buy backs have been announ announced. buy back has been the main driver of the rally in this cycle. buy backs should drive equities higher if you look at it in the last few days of continental exchange, estee lauder and ice and ibm, we'll see it back >> thank you, bob. >> we got some strong global

sales except for china because they spun off china. boosting kfc and taco bell, yum bron bro brands joining us now is greg creed these numbers are extraordinary. i want to ask you how they can happen systems and sales and growth and foreign exchange for taco bell plus 8% and kfc of 7 paer%. these are high single digit numbers for old brands, what are you doing there? >> you are right, jim. 8% of taco bell sales and 7% for kfc. it was tremendous. it was broad base and around the world over 130 countries it was a great performance by nose t those two brands and hats off to the teams and all the countries doing a great job in delivering

expectations >> when you lost china so to speak, everyone wants to high growth china taco bell and india, you are reinventing per country what you guys sell. >> yes, these are important markets for us we got all three brands and all three brands are doing well in india. it is exciting that we are doing well in those parts of the world where the markets are accelerating >> let's talk about what you said at the end of your call which is how do you get these kinds of same store sale numbers. you are talking about innovation but you are talking about delivery i know that partnership with grub up. grub up's stock down is horribly that is paying off for you >> we love our relationship. it is a great pot next year. we'll have about 2,000 kfc and close to 4,000 taco bell

delivering we know that in the stores that are already delivering by getting check increases and incremental to come from it. we are very excited of this partnership and we think it goes well for future sales growth of kfc and taco bell. >> greg, food inflation? where are we in that cycle right now? >> i heard jim talking about it earlier. i think the great thing about yum is we got such scale that yes there is inflation and inflation affects everybody. i believe even in an inflation market because of our scale to handle it better than everyone else we had to call up our franchi e franchise franchisees. there are variables that move

around we continue to deliver on consensus is really important and a testament of the strengths of the three brands. >> greg, when i try to figure out what is going on with pizza hut. i know most of the question from analyst is about pizza hut that's a tough turn around why didn't pizza hut take more share? >> well, i think that first of all pizza hut is a slow turn around and we have said that the most important thing is the foundation and i talked about this on the call whether the speed of the service and the quality of the product we got to do a better job of communicating the value and the easyne easiness which we are all good at do i think we can do better with pizza hut in the u.s.? yes, i do. we are bringing new customers into pizza hut and that's going to bring them back again and again with outstanding

experience >> we need to be better job of bei being distinctive. >> how did you get such an acceleration, he did say the nfl's ratings are coming back. that's very important. you guys are deeply intertwine with the nfl are you seeing similar rate boosts and for sale for your nfl partnership. >> are we delighted to be the partner of nfl yes. that's really important. we love it we are with the ncaa pizza and football go hand in hand i could not be happier where the nfl partners i think we can leverage both in the short term and long-term going forward. >> one thing that got a lot of notice in the last 24 hours,

greg, is this partnership with toyota in which robots essentially cook pizzas en roro. how serious can you take this? >> i take it very seriously. i love our partnership with toyota this is about technology and robotics and about what the future is envisioning. driverless cars and robots making pizzas, it is all in our future is it in our future next week? no but no but it is in the foreseeable future everything that we can do to make our brand rerelevant, that what we'll continue to do and not just pizza hut but at taco bell >> mcdonald's is doing were well and yum is doing really well i thought we are at the moment that young generation likes

qinoa. >> we are making options we are promoting the original product, pizzas and tacos, that's what people love. in time of uncertainty people go back to comfort food.

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

♪ the new capital one savor card. earn 4% cash back on dining and 4% on entertainment. now when you go out, you cash in. what's in your wallet? now when you go out, you cash in. this is a very difficult job. failure is not an option.a.

more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges. betty called me at she thought it was a fire. it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.

yesterday microsoft had a curious bit of action. the stock got completely crushed midday 52 million shares. remember we were talking about the get hub deal because of ibm red hat because microsoft bought github at a very high multiple, they announced in the june, it just closed you have a lot of selling shareholders, you have microsoft stock from github, founders and others and that appears to be at least one reason why there may have been that downdraft in microsoft because of that 52 million shares to sell. >> it was jarring, very jarring. particularly because satya

nadella talked about the greatness of github and they slapped him in the face. >> you're a founder up enormously, you won't just ride the whole thing. >> microsoft is a great company. >> it is, i would ride it a littl little a lot of people were saying what's the matter with microsoft. it was supply. it's back today, service is back again. cloud kings have been under pressure the last couple days, that pressure is over. they were driven down by algorithms going against what some clown put together. >> the clowns put together an algorithm of the cloud kings >> like the pajama traders who can code. >> give them dr. denton's. the first amendment allows hedge funds to lose as much money as they want and come on air and

bash stocks. >> has scotus ruled on that? >> absolutely. kavanaugh is in favor. >> they've taken their grosses way down. >> and that's what happens. >> what's on "mad" tonight >> the best read on the u.s. economy is from nick akins i have charlie morrison, wing stop is the best performing takeout, millennials love wings. and then benno dorer for color rex. let's hear what he has to say before we decide clorox is finished maybe it was just not a good season for kingsford you know what kingsford is >> charcoal. >> takes a lot of oil to make a trash bag. we know. >> that that's a very good point. the costs are not that good. and don't drink clorox. >> i'll keep that in mind, too, thank you. jim, we'll see you tonight, "mad money," 6:00p.m. eastern time r w is back above the 200 day fothe first time in a week, s&p is about 50 points away. don't go anywhere.

♪ a moment of joy. a source of inspiration. an act of kindness.

an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities. what we deliver by delivering. i am an independent financial advisor. when i meet a new client, i start by asking questions like: did you understand all the fees you were paying? was your broker a fiduciary? were you satisfied with the attention you were getting? then i explain that being independent gives our firm the freedom to give our clients the attention they deserve. we can put a plan together that makes sense for them. independence lets us do that. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

♪ true feeling, it's a true feeling ♪ good wednesday morning, welcome back to "squawk on the

street." i'll carl quintinilla with sara eisen and david faber at the new york stock exchange. another 300 points on today's rally makes it the best couple days for february and the dow. a lot to watch today. >> our road map for the hour starts with stocks opening strong in what has been a rough october for the markets. the nasdaq and russell down 10%. is now the time to get in. and today looks to be another good one the president weighs in on the moves in stocks and corporate earnings. speaking of results, we have big gains, at least so far, for facebook and general motors. we'll bring you the numbers and analysis we are breaking down three big stories this morning for you, starting with the last trading day of what has been a wild october ride for stocks the s&p is on pace for its worst monthly performance since going back to may, 2010. dow with a 6% drop for october and the nasdaq and rullssell 200 index in correction territory.

huge morning for earnings. we'll break out the biggest movers for earnings, including facebook, mark zuckerberg laying out plans for the future the stock is getting a big boost. and volatility reigning supreme. the vix up almost 100% for the month. a huge show ahead and the key angles covered for you. >> with us to break down the month and the road ahead is brian belsky, brian levitt as well. >> it's the brian and brian show. >> back to back. so you've been construct i have all year you get this bull pac, more constructive now or less so? >> still very constructive october means bottoms for markets. traditionally september is the worst month. there has only been nine times we've seen double digit losses in october everyone seems to be talking and looking for capitulation we talk about it jeff selling

and the machines this is a normal correction led by small caps, then they took out tariff-related stuff and finally got to the tech stocks this is normal and we believe is very healthy we don't like it when people lose money but we needed to take the froth and complacency out of the market over the next six months it will be led by tech and financials and next year will be health care, financials, technology, kind of the cornerstones of the u.s. economy and stock market. >> taking your 2019 is down? >> we're not we'll publish our official forecast for 2019 in a couple weeks. we think earnings are understated. that companies are becoming -- remain defensive and they're still so afraid to be wrong they don't want to be right and that defensive mind-set to underpromise overdeliver is showing up in earnings the average bead is 9.9% they've gone up 130 basis points >> the numbers are going up a

bit for next year. >> they are and let's remember people were begging far 10% correction in markets. last year was such a benign year we've seen financial conditions tight within rising rates and a fed raising rates and spreads out a little bit so this is normal this doesn't look like the end of the cycle the u.s. economy will slow into 2019 but growth will be strong enough so we've raised raised interest rates, tightened financial conditions, growth will moderate and the u.s. will come back closer to trend and on we go. >> all those fears about the federal reserve hiking into a trade war and potentially peak economic growth and earnings -- >> i think you bring up a good point. i think the three biggest risks are what is the federal reserve going to do? the market is slowly bringing

down expectations. if the federal reserve is convinced they'll go four times in the next year, we'll have more worries with inflation the way it is, the fed has room to back off if the dollar stays stubbornly strong and accelerates, that could slow the economy. >> it goes up everyday. >> >> back in 1994 we had a tough year and markets broke out in october, i'll never forget it and we segued into american stocks, big cap stocks, that's when we came up with the goldilocks regime and we're headed back there the next few years and a strong dollar and rising interest rates mean the economy is improving the next few years is all about u.s. dominance in terms of economic growth and earnings growth in terms of power with respect to how great companies are in this country. >> we were 6%, 7% interest

rates, right >> because the fed had to be very aggressive and the market was negative the entire year up until the last six weeks of the year and then we gripped it and ripped it and then we're heading into this era. it took three years to get go g going. >> and technology stocks were down something like 20% from july through october and then ripped in 1999 so i think we'll know what the end of the cycle looks like we'll have an inverted yield curve. >> we're way overblowing all of that. >> you're not disagreeing with the term peak, right >> from the numbers they are, but i think numbers coming into next year are too low. they're at 10% and they've stayed steady over the last 30 days which is incredible

considering all of the quote/unquote bloodbath we talk about everyday in the market but think about this if i'm right and companies are becoming too defensive, they're sandbagging it, underpromise, overdeliver. the numbers will gt. >> won't there be some culling of companies highly leveraged that require capital markets to fund operations? we know who they are. >> yeah, but let's remember that interest rates are still very low from a historical perspective but we need to differentiate as investors i don't think that -- if the u.s. was to go to a higher sustained level of growth you want to buy the -- unlock some of the value in the markets, this will continue to be a growth in a slow growth world. market leadership doesn't change so i think investors will pay up for growth despite what we saw. >> and you're talking about what

a normal correction looks like do normal corrections only last one month. >> no. february we had a 12-day correction but a normal correction in terms of how stocks went down and the order they went down clearly it was mom-mo on the way up and mo-mo on the way down. >> momentum. >> you have to focus on the most consistent earnings companies in the world. >> is that amazon and netflix? >> since 2002 the technology sector in america has become the most stable earner overall so talk about companies like apple, microsoft and communications services company like google and netflix with respect to becoming the more consumer staples type names in our count. >> i finally story out today, fresh i have looking to add more supply in the fourth quarter than they have since' 0 '09,

there's thought it's going to dollars that would otherwise be high yield or low mortgages. is that a deal >> i don't think so. long rates are going to reflect the growth trajectory of this country. i don't think they'll go up significant significantly. you know, there's going to be buyers and i don't think -- we're looking at -- there's $160 trillion in household savings around the world looking for a home, the u.s. treasury market is $20 trillion. people are looking for income. spreads won't blow out until we're heading into the next recession. >> the income people should be going toward is equity income. dividend growth will be rocketing the next few years as companies increase their dividend and fundamental value not the value indices but fundamental value, debt to

equity below one everyonings that are growing that's fundamental value. >> good way to look at it. b-to-b brian belsky, brian levin. revenue user growth fell short of some analyst expectations on facebook mark zuckerberg addressing the company's plans for 2019 in last night's conference call. >> i want to be up front that assuming we get to where we want to go from a feed only toward a feed plus stories world it will take some time and our revenue growth may be slower while it was while transitioning our product to mobile. >> joining us to discuss, the rbc capitalist lead mark mahaney. a number of investors seem focused on this inflection point 19 to 20 that does seem to be behind what has been a strong gain for the stocks this morning.

>> i think two things, that statement that revenue growth could reaccelerate as they solve the monetization stories of challenge and facebook watch, they talked about a surge of video usage. secondly the other key point was investment levels will be accelerated into '19 and should alleviate into '20 so somewhere in the back half of '19 you'll have one of those revenue growth reacceleration margin expansion quarters and that's what the market is looking forward to but valuation had come down so much under the worst-case scenario, you have seven bucks in earnings next year. that's a 20 pe multiple. adjust for cash, an 18 pe multiple for this kind of global presence i think the there are no in the stock h -- the floor in the stock has just been found. stand by, we have some breaking news out of washington. >> the fed is meeting to go over

proposals for expanding and loosening bank regulations for large to smaller-type banks. the adjustments the fed is proposing to make will reduce regulatory compliance requirements for firms subject to what they call category four. that is to say banks with assets between $100 billion to $250 billion in assets. reduced requirement there is but keep in place the existing requirements for firms subject to what they call category in one and two standards which are the biggest banks with global scale out there. one notable dissent to this particular proposal comes from fed governor brainard who says that this raises the risk that american taxpayers will again be on the hook. in short, i see little benefit to the institutions or the system for the propose ed

reduction in core resilience that could increase risk to the taxpayer so all this in essence is that the fed wants to loosen regulati regulations. based upon the latest fed quarterly data it looks to affect maybe two dozen banks on that spectrum front. >> interesting to hear brainard. then it was a few days ago midwest mester talked about raising interest so this is some debate among fed officials. >> fed proposals will look to enhance the standards placed on the tear oier one bank, the j.p. morgans. but it looks to loosen regulatory burden placed on regional sized banks like a fifth third bank or a key corps, that level of bank out there so whether or not this goes through there are debates about whether

loosening capital requirements and restrictions on those banks is in the best interest of preventing or maybe exacerbate ago possible financial crisis in the coming months and years. >> all the banks are trading higher right now financials a winning group up 1.5% i think of stanley fisher, the former vice chairman of the federal reserve who warned and made a big point to warn there's a wave of deregulation for banks happening right now. be cautious. don't forget how we got here to this crisis. we know that was one of the reasons and one of the appeals for jay powell for president trump so i wonder if the fed will get brownie points with president trump in what has been a heated environment where the president called him out for raising interest rates this fulfills the president's agenda of deregulation on the banking side, something president trump talked a lot about. >> in particular for these banks that aren't the top tear let's get back to mark mahaney we were talking about facebook

mark, you were making the point this may be a key point for the stock that is going to prove to be a bottom so to speak, or at least up from here some say he'll have to go back to europe to testify or there will be continued pressures on facebook, whether it be taxes in the eu or uk whether it will continued r regulation or more regulation in the u.s. >> you probably laid out the biggest downside risks i asked about the uk digital services tax, facebook hasn't figured it out, they have until april of 2020 to figure it out we have these elections coming

up in short order and if there's an issue during these elections, there's safety, security issue with the facebook platform despite the amount of attention, the resources, the dollars they put into securing a platform, that issue comes up during these elections. this stock will go lower zuckerberg is acknowledging how expensive it is to keep bad actors off of this platform. i don't think they realized that year and a half ago, two years ago. they're realizing it now will next year be the peak investment year? that's the hope in the stock, we think that's reality but that's an unknown. >> mark, it's amazing, after the slew of negative stories the company has been through, do you ever wonder what it would take for advertisers to truly get repelled just to say, you know what we're going to start revisiting our entire social media strategy if this isn't enough.

>> well, the one saving grace is snap continued to show declining dau, twitter did, too. facebook showed growth it came in less monetizable areas, they singled out india, indonesia and the philippines. growth in the u.s. and europe was flattish there wasn't any growth in those two markets. if you had a decline in the number of users at facebook i think you would see advertisers pull dollars away. that would be one down side risk. >> hard to walk away from two billion people using your platform mark, the other big take away from the earnings call and mark zuckerberg was that stories is the future those posts of photos and videos that only last 24 hours on instagram, we all use them, on whatsapp people are using them what's the implication for advertisers and can facebook successfully move them from the news feeds to the stories? does that make as much money

>> evan spiegel was right at snapchat, that that's the future of social media. i'm overstating the case but it's interesting to hear zuckerberg saying the market wants to move towards those ephemeral snaps. those things that scroll at the top of your news feed. so i think what facebook needs to prove and one of the most, i think, encouraging comments from the call last night, although no data to back it up, was that overall engagement is rising in other words, people aren't just dropping news need usage and just going to storage usage. their overall usage is rising over time facebook will solve this the history of the internet, having covered this, generally people have figured out mon monetizati monetization, whether it was google, yahoo or facebook. he makes this analogy with

desktop mobile transition that the company went through five to ten years ago. i think this kind of transition is much smaller, much easier to work through than that transition was that's one of the reasons we're bullish onthe stock here. >> well, mark, you're not alone, at least this morning for a change given facebook up over 6% thank you, appreciate it mark mahaney. >> thank you, david. when we come back, earnings continue to move stocks. gm, t-mobile, yum brands offsetting the negative guidance out of kellogg and clorox. we'll get numbers, analysis and sharp reaction to those shares as we close out the ugly october we've had, look at the nasdaq leaders and lag gagards has theo is above the 200 day 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." check our shares of general motors surging today phil lebeau has been following it and joins with us the story good morning, phil. >> that move in the stock price is significant because we are looking at general motors shares having their first positive month since may and when you look at why it's easy to see why. they had a big earnings beat driven by two strengths for general motors north america isn't only the fact that they have a rich mix in terms of trucks and

sufficient bsuvs but it was driven in part by strong prici pricing. in china, gm's largest market in terms of volume, got about a half million -- half billion dollars in equity benefit. the sales were down 15% but they are benefitting as they see record profits in part because cadillac is doing well and there is a stronger mix in china than they've seen in the past this is giving all auto stocks a boost today. general motors was up as much as 10% pre-market ford has moved higher. we have fiat chrysler earnings which were strong and then you have toyota so this is welcome relief for the auto sector and investors in the auto sect who have really had to endure rough couple months in terms of the stocks moving lower. >> i remember last quarter the story was about how much it was

going to cost to deal with the steel and aluminum, particularly steel tariffs. >> and it is it's still the story there. >> did they give an update >> yup $400 million head wind in terms of commodity cost. those prices are moving up globally because of tariffs driving those prices higher and they're looking at a billion dollar head wind this year in terms of commodity cost. so it's still a factor but they have been able to offset that because of the commodity prices people are willing to pay at dealerships in the united states. >> i was going to say, phil, on the demand side how does it square with mike jackson on our air yesterday or the day before saying consumers had sticker shock once they wrapped in the financing cost >> i echo what mike jackson is saying a number of dealers have said i have to work harder to get somebody to buy a new vehicle

because prices are moving to record high levels and you have higher interest rates which means auto loans are seeing higher interest rates right now general motors and ford are able to sell pickup trucks, suvs and crossovers at record high prices people may be resisting but not to the point where people are saying uh-uh, i won't buy that. >> phil, thank you, as we watch gm shares, big gainer today. when we come back, it's been a rough month for stocks, no doubt about it the fang stocks in particular hit hard nasdaq having its worst month since the financial crisis despite a nice two days here back-to-back gain for the nasdaq. >> is it time to get in? and take a look at the leaders and laggards on the s&p for october. we'll be right back.

this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option. more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges.

the meeting of the executive finance committee is now in session. and... adjourned. business loans for eligible card members up to fifty thousand dollars, decided in as little as 60 seconds. the powerful backing of american express. don't do business without it.

♪ ♪ fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business. stocks building on

yesterday's strong rally mike santoli with us taking a look at the value stocks compared the momentum stocks on this final trading day of the month, the month where we've wondered if there is going to be some rotation. >> you saw stirrings of it, sara, during october, momentum stocks took it harder than value. value perked up on a relative basis. today is not really that story momentum, you're seeing a rush back in thanks to the fang earnings but if you look at year to date, there was a wide gap. this is the i shares momentum strategy etf basically the -- i think it's the 100 s&p 500 stocks that have shown the best upside momentum that was a 12 percentage voice spread on october 1. the widest spread with the invesco pure value etf which is the very discipline deep value strategy right now for the month to date you'll see the value etf is still ahead. and actually by a substantial degree by four percentage points. is this a long-term enduring

shift of leadership? it's not clear it seems as if value stocks got beaten down so far that they were the first ones to get picked up. i think people are looking at today's rally. the nasdaq 100 leadership saying uh-uh, we're going to go back to that muscle memory again so that is to be determined. >> netflix up 9% when you say value stocks, what are the top three stocks we should watch to see if this continues? >> gm is helping this. so if you looked within this, it's got almost no tech. it's got a ton of industrials, a lot of old retail so if you look at chain retailers and 25% is financials so you're looking at regional banks and insurance companies, very cheap financials on a price-to-book basis. >> amazing that macro is really getting set aside today. china pmi no good, shanghai was up, chicago pmi no good.

>> i think we used up macro anxiety over the course of the month. people i -- i agree. it goes in two halves and the second half is a relief if the first was bad. >> if we close the month below 2765 is that seen as a failure some technicians argue it is. >> i wouldn't say a failure, i'd say ta tbd. it doesn't take the market beyond the bounce category it's a higher burden of proof than it has been in a while assuming it's an uptrend. >> good stuff, mike, see you soon let's get to contessa brewer this morning. >> the news right now, istanbul's chief prosecutor says saudi journalist jamal khashoggi was strangled as soon as he entered the saudi consulate october 2. he said the body was dismembered

and disposed of, claiming the killing was planned. a man set off a bomb at the entrance of the local branch of russia's main intelligence agency, injuring three officials and killing himself. it's not clear if the man intended to leave the bomb or was on a suicide mission iranian president hassan rouhani says they have no fear about the new sanctions. iran began selling crude oil to private companies for export this week to counter the planned sanctions. >> harrowing moments for passengers on a san francisco transit train as a man pulled out two chain saws 47-year-old patrick bingham was arrested after trying to start them on the train as horrified passengers watched one pulled out her phone, shot this video and others called the police er the vying that's the cnbc news update. let's go to jackie deangelis for the eia inventory. >> crude oil prices bouncing over $66 on the back of this

report building crude oil, inventories of $3.2 million, a drawdown in gasoline of $3.2 million, just in different directions. u.s. production 11.2 million barrels a day. that's high, probably helping send prices lower but total stocks which is the numbers traders look at for oil, down $7.9 million which may be why we got that little bounce in prices here session high today was $67 even so you can see we're well off those levels back over to you at post 9. as we go to break, look at shares of estee lauder cramer talked about it earlier better demand for luxury skin care products raising the dividend stocks up 6% along with amazon up five, netflix up almost nine. back in a moment 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 david faber and carl quintinilla at post 9 on the new york stock exchange stocks are building on their gains from this morning and yesterday. for the entire month of october, we haven't seen back-to-back gains for the major averages, for the s&p and nasdaq this is the best two day stretch going back to 2016 we'll see if it holds as the day unfolded in many different sessions and volatility. so far the nasdaq up 2.7%. >> true. numbers of earnings movers to talk about general motors, facebook, t-mobile, sprint, tapestry look at clorox and kellogg, both lower after disappointing outlooks they talked at length about that but folding in raw material costs for clorox, in particular it's about oil and how much it takes to make a plastic bottle, for example. >> and kellogg it's weakness in the business

snacks declining this company has had a hard time, as many food companies have in this country the broader market in rally mode, dow is up 378, let's breck it down after what was a painful month for investors with jim grant, founder and editor of interest rate observer you had this big downdraft in stocks, worst month in years, and you didn't get much of a flight to safety in the bond market. >> it depends on how you define safety it used to be said when yields in the teens, treasury yields in the teens that the u.s. treasury market was unsafe. it was a legalized confiscation of one's capital one can see that to lock in yields of 50% with 25 years call protection, that was not a bad deal so today , 30 years later, peope

are inclined to ascribe inherent safety to an asset that is yielding less than the cost of living, the rising cost of living after taxes you are not making the cpi after tax. >> so you're saying it's no longer a place where investors should go. >> what is safety? >> here's the progression of the data, 1789, one trillion in public yet 1996 that was five trillion. 20 2008, 10 trillion, 2017, 20 trillion this year, a year of supposed bounding prosperity we are expected to run in excess of one

trillio trillion. >> there's been a lot written about a breakdown in the correlation between stocks and bonds and whether or not the 60/40 allocation makes sense anymo anymore. there are some bargains available in bonds there are closed and municipal bond funds a half dozen of them blackrock, novene, and they trade at discounts to net asset value, steepest since 2008 15% diskoucount these are curre yields and if you hold them you may or may not do well but for those in search of yield, that's at least one example of something that may be inherently

safer than not owing to the price of the value. >> is this going to matter is there going to be a point next year at which market participants sort of -- >> the great paradox of treasury supply is that for example in the reagan administration the public debt tripled and from the highest to the lowest interest rates were chopped in half there's no correlation between supply and rates unless it's a paradoxically inverse one except until the time when people decide that the public debt, public credit is out of control and nobody issues a press relief and say now the time is tie-to-pay attention to it now this year the treasury issuance plus the expected fed dispositions of securities as percentage of for-cash gdp is like 1995.

and, again, this is the year of prosperity. >> but you don't know when that's coming. we may never see the markets say okay, debt has gotten too high or is it when interest payments somehow as a part of the budget eclipse defense expenditures >> there are three countries to compare. italy has a debt problem and it shows in the cost of financing jap japan, 200% of gdp plus. >> they don't have any problems financing it. >> and america which issues the coca-cola of monetary brands for its currency and we, too to examine the numbers don't have a problem in funding we did in the carter years would turn down american express travelers checks that was very humiliating. that was only one two cycles ago. so these things do turn and sentiment changes with respect to the favorite currency

it's been the darling currency, the reserve, but who knows. >> so as long as there's no threat to the dollar's dominance it seems like the u.s. won't have trouble borrowing is that true >> i would say that's true you'll let us know. >> i know there's been talk about that forever jim, i wanted to ask you on the safety theme you say treasuries aren't safe and they weren't this month but neither was gold gold is up a percent for the month of october >> right gold is my problem child but i continue to be bullish on it to hold a torch for it because it's that thing without a liability it's a monetary asset that they can't print and i have, shall we say, high hopes for it. >> we've had the fed get job owned repeatedly for raising rates too quickly. separate from whether or not that's true, do you think they'll receive similar job owning on the disposition you mentioned? the net liquidity injections >> they are a little behind what

they might have done they have a ceiling for expected dispositions this year and they're like $72 billion shy of that 20% less than they might do if they were doing the maximum they projected. and i don't know if that is somebody in the fed saying let's not go too fast or waiting for a better spot in the market but they're not doing all they might do with respect to dispositions. >> hasn't been a hiccup in the high yield bond market. >> credit has been sanguine. >> do you have concern >> no, absolutely not. >> why >> because credit is the promise to pay money and if the stock market is telling you -- which it's not today -- that the capacity to pay money is significantly reduced as the stock market was telling you as recently as last week, that should reflect on credit i think that the trouble with credit is the trouble with rates. we have -- have had boom time asset values and depression level interest rates

even at this moment they're like $7 trillion of bonds worldwide priced to yield. it's never before seen this is the fruit of central bank suppression. >> on corporate debt, the levels are so extreme that the yields are not does that strike you as weird? >> it strikes me as the sign of a very ripe moment in the credit cycle. people are desperate for income and they're reaching for it. for a bond investor it's like eating out of the hotel mini bar. you're hungry, you have to do it but you hate yourself for it and you overpay. >> because the snickers is $7? >> we're looking at $7 snickers bonds. >> jim grant good to have you here. >> thank you, sara. >> talking about what makes sense and what doesn't in this market. facebook shares are up on better-than-expected earnings. stocks seesawing during the company's earnings call as executives walked through the challenges and opportunities ahead.

julia boorstin has been covering that hey, julia. mark zuckerberg warning the company is in a transition period as it invests in safety and security as well as transitioning products and ads facebook has focused on to meet consumers where they are. >> i expect 2019 to be another year of significant investment we'll say more about in a moment i want you to know that looking beyond 2019 we need to make sure our costs and revenue are better matched over time and that is something i'm focused on as well. >> facebook cfo david wehner saying they will grow 40% to 50% in 2019. j.p. morgan adding facebook to its focus list citing management indications of less margin compression after next year. now, safety and security is a big part of facebook's growing investments, zuckerberg saying they won't be where they want to be in terms of protecting users

and preventing abuse on the platform until the end of next year. >> we won't be perfect because, you know, there's more than 2 billion people are communicating on the service, there are going to be things that our systems miss, no matter how well tuned we are but i think we're making progress, we've made a lot of progress in the last couple years on content overall, elections are a special case, an extremely important special case of the content and safety issues and security issues we face. >> zuckerberg saying next week's midterm elections will be a real test of the protections they put in place back over to you. >> julia, thank you very much, big story today. as we go to break, another check on the markets on this final trading day of october this is back-to-back gains of 1.5% for the s&p bespoke saying in a few moments ago haven't done that since brexit looking at the dow leaders and laggards for the month

we'll be right back.

at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. 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 &. & when your patient's tests come back...

investors looking at the hunt for yield we'll realve which names money managers are recommending on tradingnation.cnbc.com more "squawk on the street" coming up. ♪ acan echo throughout ane entire community.nge that's why we proudly support, invest and volunteer in communities like yours. because the changes we make today...

can you hear me? ...shape the possibilities of tomorrow. u.s. bank the power of possible. time to send it over to the cme group in chicago and rick santelli with the santelli exchange rick >> thank you, david. i'd like to welcome my guest, lacy hunt. thanks for joining me. let's get right into it. debt in issuance, a huge story in 2018. just over the last 12 months, federal debt has reached $1.27 trillion but here's an interesting fact, while while, the actual deficit isn't up that much explain to viewers that discrepancy. >> well, there's a deficit in

off-budget items of more than half a trillion dollars so the actual deficit is 780 and then there's 500 billion or more off the budget total increase of 1.25 trillion. that's the answer, pure and simple. >> now, that is something that's gone on a while in government. my question to you is, should we or how nervous should we be regarding the size of issuance over the last handful of years loftier levels >> the main determinant of the risk-free long rates, the long treasury rates, is inflationary expectation and the inflation rate in our view has peaked for the year its duturning town has been a decelerati deceleration, the feds draining

liquidity from the rest of the world. the dollar is basically at all-time highs except for a brief episode in the early 2000s. we have a synchronized monetary deceleration going on around the world. inflation rate is heading lower and ultimately that means that the bond yields will be heading lower and not higher supply is not a major issue other than for very short-term periods, because the increase in federal debt works with a negative multiplier, not a positive multiplier. it's debilitating to economic activity and this will actually reinforce the restrictive monetary policy that's under way. >> very interesting take of course, lacy now, let's run with that, we have about a half a minute left. there is a dollar liquidity issue around the globe and it may end the divergence with the u.s. economy, meaning it could pull us a little lower your final thoughts. >> well, i believe that what we're seeing is a synchronized

downturn globally. europe, japan, china, emerging markets, their economies are deteriorating. the u.s. economic growth rate has been strong up tuntil now bu i believe there are clear signs with downturns in the automotive, housing sector and capital equipment expenditures that the economic outlook will be considerably weaker going forward. >> excellent it's always a pleasure to talk to you. >> my pleasure >> i can't wait to get you back after we get some of the numbers for the end of the year as we move into 2019 thank you for joining me sara, back to you. >> my pleasure. >> dow up is 300 points. let's send it over to jon fortt. >> after facebook earnings we're assessing the state of cap tech. apple is coming up atht e end of the week where does that put us we'll take a look coming up on

"squawk alley.

welcome back to "squawk on the street." stocks hovering right near their highs of the day with the s&p looking to stage back-to-back gains to close out this month. one of the sectors bucking this

broader market uptrend is the consumer staples which has been one of the lone bright spots in october so far among the names leading that sector to the downside, you've got general mills, kroger, campbell soup and clorox finally take a look at kellogg, down 8% so far after lowering its forecast due to higher advertising and distribution costs. that stock, guys, on pace for its worst day since 2000 back downtown do you guys, sara. >> it was a weak quarter all the way around dom, chu. coming up later we'll see you on the "closing bell." close look at the markets as we head into the final trading day of a painful month for equity bulls. looks like we're set to end on a high note. anything with happen in that final hour we've got scott minerd and mohammed el-erian who will be with us. i think they're on totally

opposing views we've also got earnings. see you then. >> minerd has been resolution in his view about where rates are headed we'll see you then "squawk alley" is coming up next with the dow up 306. obvious. sometimes, they just drop in.

cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪ so they say that some day ai will transform the human race. well, today you're a little busy transforming your call center. dealing with millions of customers a year, like this one. no, i'm pretty sure i didn't order a squirrel playing a guitar. that's why you work with watson. it works with your systems to resolve calls faster and improve customer satisfaction. i detected fraud and helped reassign a new credit card. honey, they're overnighting us a new card. woooo!!! woooo!!! for ai that works with tools you already use, choose watson. hello! the best ai for the job. is it because so many go after it the same way, chasing after short-term returns?

instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

good morning it is 8:00 a.m. at facebook headquarters in menlo park, it's 11:00 a.m. on wall street, and "squawk alley" is live