democratic sweep the markets are going to rally through the end of the year. it will be out of the way and move onto god knows what in this news cycle we'll move on. >> barry, thanks >> good to see you good to have you in today. >> make sure you join us tomorrow, "squawk on the street" begins right now. good monday morning, welcome to "squawk on the street," i am carl quintanilla with david faber. futures is in a tight range. midterm elections and fed meetings and chinese president xi speaks on trade we'll get to all of that europe is mixed. invest invest sediment is down there. our road map begins with china talking up about free trade

after weeks of volatility stocks are largely flat ahead of the open >> apple is under pressure >> and looking at antitrust very seriously, the president with the warning of monopoly power of google, facebook and amazon. stocks are on pave for a modest open we got china/u.s. tension focus. the two countries weighing on asian stocks over night. the china international expo, the chinese president took a swipe at president trump, the practice of law and jungle and winner take all are a dead end a big event, the trade fair over there, xi tries to promote china as a local good. >> i think there could be a deal short term, ain't going to

happen the president periodically, when he sees the market goes down people vote for their 401 k. it is a well orchestrated campaign by him. he's trying to say don't worry and by xi saying we have been business for 5,000 years how mu how long is his view >> 300 years jack ma wanted alibaba to be three centuries, '90s and 2000s. >> speaking of jack ma, ma got some thoughts on his own on global trade war, take a listen. >> we have to make sure that we should not worry about those things like trade. trade war is the most stupid thing in this world.

trade is to communicate. there will be no trade deficit issued in the next ten years because of technology. nobody can stop the free trade >> all right, the question is how much water ma is carrying for the chinese? >> right, maybe ma is mnuchin or kudlow i mean look - >> i think he believes it without a doubt and knowing him a bit through the years and having spoken to him for years >> vice president pence is talking for more than trade, that's the bigger issue. it is not intellectual property. it is the suppression of muslims which he has said clearly and something that has to change i think the whole 5,000 year campaign, what it is missing is that we respected that china

have been in business. they don't think regime is legit. it is really interesting they just consider these guys soviet union and they don't want trade. >> you sound fairly negative >> i am not saying -- >> it is wwho knows what the assumption for the markets that this will continue certainly into next year or a long period of time seems to be sinking. >> do you think if the democrats win, will it matter? they seem to be more in line in some ways or more of the republicans on this issue, right? >> we have a synchronized global economy except for synchronized down that's a big theme this week

chevron said it was a great quarter and exxon. look at slummer jay. it was well below where it was when it was 26 haliburton and weaththerford we from 5 to 1. this is the headline from isi this morning >> i think it mirrors what you have been saying u.s. economy is very solid but global growth is slow. they have a report this morning, this seems to be what investors -- >> he talked about the possibility of revisiting some old highs. listen to that >> i think you will have a chance to see the old highs revisited if and when and before

we go into the bare market so again i am thinking through the end of the titan cycle the pause and the excitement around that pause and then i think boy then you got to pay attention. we'll rally when ever they finish >> is it when you stop hitting your head with a hammer and it feels good >> of course, he's there for just capital which is an index of company that actually do well and beaten the s&p he's bullish a lot of people are crafting at 2019 bad scenario. 2019 is when a lot of this and the foreign negativity reaches our shore. that's when we really see the brunt of what we are doing >> speaking of 19, apple down in the premarket on the hills of

friday's 5% drop japan's nikkei, demands for iphone appears to be isappoi disappointing. 2019 will be a tough year as consumers will delay up grading until 5-g, 2020. >> how many times have we seen reports from asian paper of the supply chain wrong and apple does amazing things to make sur you don't know about the supply chain. what do they want here how about earning some money on your cash balance because of short term ratio is it convenient all these panicers and sell it down to 200. i bet you will be selling it to the company. that won't look back ultimately. it is interesting and so well timed. they just reported and they're

not going to break downey phones now you are supposed to say ah-ha, i know why they're not telling you this this is a complete nonsense. i am saying the company has buy backs and they'll buy every share they can why don't you guys sell? we want to buy really interesting calls would you please sell and panic? we want to buy >> although duponte share did go up >> first time in a long time we got the new 10-q and a fresh air count and the trillion dollars market cap we are below that today. >> look, that's very interesting that warren buffett is buying stocks above where he said

>> buying stocks in apple or his own stock? >> so i am saying, here is the dichotomy. buffett had nothing to buy so he's buying back his stock then i read another article, buffett is butting stocks. this is glass half full. >> we have a lot of cras crash -- anyone looked at some stocks, there is a lot of crashes that's happening honestly it is huge number of ipos. >> ipos have not performed well. at least many of them. we have 52 lows. the list is fairly long. >> you are going to know and what's going to be next. evan spiegel, he's pretty bull issue, right >> larry culp bought $2 million

of stocks. >> i would have told him to wait i was looking at how much stock jeff bough through his period? 88,000 shares of 28. 50,000 shares of 31. 141,000 shares of 25 back in march of 2014. >> those are statement buys. you want statement buys? how about ibm this morning four ibm directors and some smart people wily james owen. former ceo of caterpillar or anthem jenny rometty is buying $3 million in stocks her own funds. those are statement buys now we have to start changing it in that buy is a stupid buy.

but, let's see if what culp buys is smarter than jeannie. >> ibm having moved down ge was just touching that $9 >> what's the smarter insider trade? >> i don't know. i hate to say it it could be the bills verses the jets >> thanks for that >> no problem. >> oh my god the empire state, whoa man! bad. >> only one play the bills are the only one plays in new york. >> we'll talk more about culp. >> listen, i don't sniff at these ibm buys these are all smart people >> they're all right these are really rich people they're buying a million bucks

worth of stocks, right >> maybe they have to average down >> it is not insignificant >> no, it is not insignificant is it significant of the city and a big change there new chair. i am saying buy city on that it does not matter >> john dugan, former comptroller, right >> easy to interpret everything. big negative nancy i am telling you that i am thomas and camera today. >> did you see that game >> i did see that game >> he said who that? it is the saints

>> no to those tto those two gu. >> that's harold and kumar >> when we return the president takes a swipe of amazon, facebook and google when it come to antitrust the best weekly gain for the nxpx back in a moment.

presidency says his administration is looking into amazon and facebook and google, violatinining with antitrust la. >> what about monopoly >> i have so many people saying that it is something that we are looking at >> will you break them up? >> they're talking about it this years ago, monopoly, long before i was in office. >> do you think you are the man to do it > >> the previous administration stopped them >> you are in charge now

>> i am definitely in charge we are looking at all three. >> the reaction is largely been when the president says we are looking at something, that does not mean we are close to implementing anything. >> i am getting tired of this stuff. remember amazon was 1588 he took amazon down to 1369 giving it the chance to buy. teddy roosevelt kind of talk >> it is a tough antitrust case to prove the conference back in may and who runs enforcement for the antitrust enforcement division at doj and it is just a tough case to prove. market power is one thing but in terms of the actual antitrust law. not that there is an argument to

be made but i have not heard it. being made by any body from law enforcement yet. >> where is the argument >> what happened >> amazon? how about walmart? >> you could break google up and alphabet up and youtube and search separated out, they dominate search. >> by the way, how about waymo >> standard oil being broken up. that was a monopoly. >> who does not have a monopoly on search? >> i sometimes get directed to other search things if i hit the wrong button >> that does no t happen too often. >> do you think the president would say listen, facebook and instagram should be broken up? >> maybe the president, does he know about twitter >> he does >> he has been active this weekend. >> what is he doing?

>> what mattis president doing >> do you think he knows >> it is getting a little humor at this point, frankly >> midterm elections, people hate facebook. monopoly you call the justice department because it is a department of justice. there is like you need to have justice in order to bring a case you know it is not b.like bobby kennedy where they have the squad. no there has to be a reason is what i am saying. you need a reason, i am sorry, sorry. you need a reason. it is still the united states. it is not venezuela where they don't have a reason. >> you don't believe shares trade is any fear? >> no, i believe it is a buying opportunity. >> you don't think it is a buying snubu buying opportunity >> i am not saying that. >> the president double downgraded >> he probably did not like that

quarter either >> back on the day he may have owned 4.9% he never would have known. >> he got upgrade snap here. if he upgrades snap, every van beagle is the king he has been leaning on snap. was it him >> man >> who is this person? >> not sure. >> a person who's tired of a nonsense listen there is the justice department and real people, i was going to speak ahead of the antitrust but you scoop me he's a serious guy he went to law school and practice you can't just say hey, i don't like them. amazon, you know, virginia, the heck with them you got to have a basis. it is the united states. there is a government. it is a serious group of people. it is not a political justice

department i am sorry >> i respect the justice >> traditionally, that's how it is been done >> what is he going to bring the case himself or take the case on >> keep the fire jim, we'll get the "mad dash" after the break count down to the opening bell and take a look tathe market this morning this morning a lot to come, back in a moment. thisdoctors and surgeons a loand all the life savers.ent. the world is alive as you can see, this time of the year is so much more than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,000 credit on select models now during the season of audi sales event. (indistthat was awful.tering) why are you so good at this? had a coach in high school. really helped me up my game.

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it is a monday i know it is ramping now. thank god for the "mad dash. >> under armour, david, everyone is still trying to pile one. i really like it revenue recovery, kevin plank, the only thing bad of the story is the baltimore ravens. i see harbaugh going down. >> well, everyone thought it was le'veon bell but turns out to be connor >> they got it together again. >> he's focused and the inventories is down. that's what matters. all the inventory is being cleared. there is room for all the sneaker companies. under armour has less exposure

to china nike has been good shape in china. nike is a technological lead of under armour >> now if we still go back a while. you are talking about here >> yeah. right about here >> this is where rob thomas -- >> michael thomas. >> all right, we got five minutes until we get to the opening bell here. we got more stocks to watch. let's talk about retail and financial, too they have separated. >> david, whatever you want to go go there is years. recently, more than $20 million

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med me fed meeting is called a non-event. >> there is a dichotomy of the collapse in come mmodity versesh employment numbers are worth knowing. it is too close. if they say anything it is going to be we got to tighten. i just say be careful because the forces from overseas could drag us down a bunch of strategists are saying next year is going to be weaker >> what about oil? we have not talked about -- we are going higher but we are going lower. >> right in the face of sanctions. oil is coming down we are pumping $11 million we are not a swing produced. >> we are number one >> it is literally our saudi

arabia 63.72. >> that's why haliburton is worth knnoting >> and february of 2016. >> there is a look at the opening bell ac immune and, bio pharm focusing on diseases >> it is such a great quarter. the cash flow is the best it has been the best quarter -- the best quarter ever >> a lot of the numbers really top 2014 and boy, was it 110 what a remarkable company? stocks were down slightly. >> they keep their target at 138, i think

when everybody else was falling apart in the gulf, they kept on drilling the stocks should be higher. vp is second >> it is going to keep giveriin different layers >> these oil companies all say yes and they're making a ton of money. ton of money of course, the problem i is -- everyone is trying to remedy the pipe shortage you can't find and you got to bring the stuff to the market. they can't that's a natural gas we are flaring so much natural gas that i am sure if we are astronauts and looking down to earth, what we would see -- they don't like to flare it when anyone is looking. >> i am not kidding.

>> when do they do they flare when no one is looking. >> when is that? >> middle night flare. hey, don't look, we are flaring. >> oil services are higher today. is that in relation to iran? >> a lot of people feel that the sanction as are going to drive e price up good luck. >> i think they're worldwide slowing of use that's what people don't talk about. they were doing 1.5% i think we are going back to 1% because of the end of the global synchronized rally >> is that china >> it is china europe is becoming a pathetic parody >> tariffs are working in terms of their slow down of china. the question is the chinese is resolved the chinese have that 5,000

years plan how did he do? besides being mass murders >> there is a lot of that. >> there is a whole era. i got to tell you if the president thinks the regime is changed, when you look at iran, they're calling for regime >> back who when we started thew with, you don't think much when we start the g-20. rewind to friday or thursday, suddenly there is optimism >> they have to play a lot of gulf >> they're having dinner >> who likes to play golf with abe in japan who specifically worked on his game >> golf. >> he was pretty strong. >> you would go along with the thesis that the g-20 may be a

cease-fire or we don't get the 25% in january >> the president loves to say i had a talk with my good friend when you are good friend, that's like the end i am still looking for 25% i think that happens it is apart of the navarro's plan there is nobody matters right now. >> and how many times have apple's been done? >> 202.5 will take you back to august >> there is so much ironic stuff that's happening >> look at that basket >> he's the cfo of apple

>> it is 95% of the buy. >> right there >> could you sell me every single share i am begging them and making money on the interests are you kidding me $273 billion in cash >> look at this. >> all right, i will >> it is about time. >> they would say the same thing at chevron that was just a celebration conference call. >> it was. >> fedex with some shipping rate hikes, jim average of 4.9% with the u.s going to start in january. >> they're trying to make money. >> nice. i know this morning netflix, buckingham goes double upgrade

on constructive on further pricing power. >> you know what's interesting disney has to show its got its own netflix this weekend >> i don't know if they'll be able to do that since their directed consumers are not coming out for another year. >> your back to this world where netflix is amazon and disney is walmart where you have t to -- remember when walmart had to reset >> they were competing on different metrics, that was the problem. >> the other one was the shareholder. >> one on growth >> netflix is like johnso johnson & johnson when it comes to the balance sheet johnson & johnson is aaa, netflix should be ccc.

it is better than venezuela. >> i think that's true, too. >> better than sears >> definitely. sears is in bankruptcy >> netflix is able to borrow with impunity. >> you are not allowed to compete with netflix you are a real company >> you are which is why you don't want to level yourself that much because you do have a lot of capital you got to be spending on the direct consumer businesses and they'll be that was part of the consent group of the government. why they may have stopped where they did and in part you take on additional debt and you don't want in any way threaten your ability to spend what you need to on the most important effort you are making at disney which is developing, direct consumer

to compete against >> you got to be careful we are going to own it as long as iger is in there. we are buyers. i think he got to reset in 2019. i don't like what doug mcmilan do >> you do see it narrowing between the two. >> of course disney is a force to be reckoned with a lot of people are under estimating what disney is going. i think he'll go out on top. >> he's like brees brees is not going out for a while. >> brees is unbelievable >> starbucks is getting a buy. >> would have been better last week the 4% u.s. which most was by the way, ticket price. once they start to get traffic can you imagine. the blue bottle and blue bliss

and that they're doing ads, national ads, i think they admit that they blue the holiday season last year and so they're doing a lot this year. i like the stocks and the upgrade. i will give you kudos. you turn at the right time 52.50. >> you were negative we did a tough interview with him back in june but then you turned -- >> buying back stocks. really turns it into a technology company that sells great coffee i feel that kervin johnson is going to take that company much higher a beloved guy. in nashville at 52, that was amazing. i am not taking the titans

against dallas >> espn yesterday, that's all i can think of ad ad adam schachter >> the best. >> he does 20 here >> on the upper west side of manhattan, they're going to close. he's a disciplinary, i like what he's doing show me that stock if it comes down he's taking the action that they're not womilling to take fo the administration >> they're opening stores. ellison is taking chart and makimak and -- taking charge and he's making prints. he's doing a great job he's nice. >> yep >> by the way, on retail, two things on amazon one these reports are getting close on hq 2 which is crystal

city virginia in the lead and dropping the minimum purchase for free shipping for non-prime. normal normally 25 bucks. >> they mean business. stock's getting hit on the antitrust. >> jo$5 target there. i think some people disagree with that. >> a $5 target there >> i am going to read that >> yeah. >> amazon. go back to amazon. >> ge is up percent and a half or culp's decision to buy. >> open market purchases i do -- i am still uncertain of the market because you can't entirely lose fang fang is under pressure

what do you guys think of facebook quarter instagram is doing so well >> i see every ad. >> i am buying things on instagram left and right wow, that's what i am thinking of >> really? >> yes by the way, grub hub reported of a really good quarter. i think grub hub is doing really great. let me tell you this -- delivery people are hard to come by >> not to mention, once you are on seam leless, it is great. >> do you think the president would do that? >> no. he noticed they are the same >> i don't know. >> we mentioned the insider buy at ge and ibm. both of those companies are up ibm is up a full percent

the stocks are down. > >> they are. it is hideous. >> 23% for ibm this year >> what do you this i the south china sea scoring tonight of apple. what is it going to be they have too many watches >> the nikkei? >> they're going to slam apple how about tim cook why don't we do everything >> before we get to bob, financials are showing s-- i have to take my watch off. nobody wears it anymore. >> 20 million of them. >> nobody. south china sea. five years ago, there were none of them. >> that's a loser. they lose money on every watch why don't they come out with the one that saves your life

>> david blaine, can you give me my watch back. >> it is going to lev taitalevi. >> let's get to bob pisani on the floor. good morning, bob >> good morning everyone nice start, 2-1. look at the sectors here, we got a great start for energy all the big oil is up 2% or 3% industrial is okay healthcare and modest leadership that's largely because of the fang name. i want to point out what a great start oil got today. it is up 60 cents or so. all the big oil names, everything is up 2% or 3%. eog and apache and all of this stuff is up 1% or 2%

>> antitrust from president trump of amazon and facebook and google, they're waiting for the fang names and apple is weak as well nothing i saw change my opinion. number one is china trade and tariffs and it seems to me, i have not changed over the weekend. the best case is a deal. that's what everybody is talking about. maybe we don't get 25% tariffs going in it is sort of a truce. the other issue is rising rates and the 10-yr yield. the we do get a rate hike in december the fed will respond to that this is a bull case scenario you need to watch the revenue situation, there is some signs of margin pressure is starting to waive a little. q-3. and q-4, numbers are still good

and q-1 in 2019 but they have come down a little bit in the last few weeks keep an eye on that. the buy back stories continue. i know everybody made a big deal apple had its 10-k out over the weekend. they bought back 19,500,020 times. $100 billion buy back program on may 1st. they have spent $29 billion. apple has $71 billion in authorized buy backs they have not spent to buy back their stocks that's very important. i have been pointing out corporate america is the marginal buyer of stocks and not just for apple and not so much etf. that's money coming out of future fund. who is the marginal new buyer of stock for the last several years. it has been corporate america.

we expect to have one trillion dollars. that's an all time record far and away a lot of it is not used yet. that's unspent that's why i am saying that it is not just apple. there are over 300 companies and the s&p that acted buy back programs those companies seeing prices down as they have been down that's going to spark the market in the fourth quarter. >> bob pisani, zthank you. >> let's get to rick santelli. good morning yes, ahead of fed meeting and coupon supply and ahead of elections. it is going to be a big week look at the one week of 2-yr note yield they extended a little bit two days of tens, extended to

321. it has backed off just a bit as most of the yuan has look at the july start, yesterday backed away. they closed it at 3.45 and a half on friday that was a fresh high going back july of '14. they are still trading higher yield than what they had for their extreme last friday which was 340.5. the reason i bring it up the yuan has been ultra firm in terms of its yield and now we switch yield to the dollar yuan, it has rallied a little bit against the dollar everyone thouen though the dollar is rising we want to pay attention to

that finally a lot of issues regarding brexit and a lot of issues in europe regarding merkel and looking at chancellor ship the pound is no doughbt, it hasa nice start carl, jim, david, back to you. >> thank you very much rick santelli take a look at this morning's top performers of the s&p. apache and bershire and cabot. >> theow d is up 2 points and s&p is up at 5 back in a moem moment obvious.

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apple below 202 for the first time since early august. one of the laggards on the dow as the fresh 10q comes out and shows the $2 trillion rkmaet cap would be 1074.

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there's the syy kind that's warehouse and transportation expense challenges this is about more truck drivers. that's the weakness in the economy. we don't have enough, they're not paid enough and waymo can't get them up enough hopefully the president gets alphabet broken soup the stock can fly, breaks up facebook. we need this the president is basically the ultimate activist at this point. he's an engaged shareholder. >> constructivist. >> constructivist. he doesn't own stock but if we broke up those companies we could see them fly, not only standard oil. >> he normally gets a meeting when he wants. >> i think the president has to pursue this and get thes companies broken up. i have other companies that need to be broken up. exxon. >> you should have a disclaimer that says sarcasm at the bottom so some of america picks up on that. >> sarcasm >> so the clip isn't taken out of context

what's on "mad" tonight? >> i'll reveal the ultimate fake news story that's not fake that's a quiz. that's in honor of the president. i'll see if she's thinking about doing what the president wants i think waymo itself is worth half the price of the stock and amazon web services could just fly. >> jim, see you tonight. "mad money," 6:00 p.m. when we come back, we'll keep our eye on fang apple down more than 3%, eyeing 200 as the dow is up 99. contaminated. one of the biggest successes we had early on, was entering agreements with the epa on cleaning up the property. we're recycling over 98% of the products on site. the impact that this project will have on the community will be enormous. ♪

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welcome back to "squawk on the street." breaking news, our october read on ism non-manufacturing, the service sect ovor, the biggest section of economy, we zoomed to 60.6 that's a good number the problem, is it follows a great number, 61.6 from last month was unrevised, the second-highest reading ever. only second to the very first reading in '97, that was at 62 so this is 60.3.

anything 60 or higher is lofty so this is a good number not quite as good as last time yields continue to be firm on the long end, carl, back to you. >> rick, thank you to that rick santelli, good morning, everybody, welcome back to "squawk on the street. i'll carl i can-- i'm carl quintinilla with david faber at post 9 at the stock exchange our road map for the hour starts with this mixed picture for the market as investors prepare for midterm elections. we'll break down how you should be preparing your portfolio next. the big moves in oil sanctions on iran go into effect but the impact is stunt bid the administration's move to grant waivers. >> and amazon hq 2 reports the e-commerce giant is closing in on its new location. we'll tell you where it is and take you there live. we'll start with the market. mixed after weeks of volatile trading. the dow, s&p and nasdaq all

rebounding in the past five days but now new geopolitical risks on the rise could bring more uncertainty. here's alibaba's executive chair jack ma weighing in on the trade tensions between the u.s. and china. >> we have to make sure that we should not worry about those things like trade. trade war is the most stupid thing in this world. trade is to communicate. there will be no trade deficit issue in the next 20 years because of technology. nobody can stop the free trade. >> how should you be positioning your portfolio in the midst of trade tensions and ahead of midterms tomorrow? joyce chang is global head of research at j.p. morgan and joins us at post 9 great to have you back. >> great to be here. >> what's the consensus thinking about the g20 and what could happen there

>> i don't know if you're going to get a major breakthrough. we estimate that if the tariffs that were announced went into effect it could take as much as 1% off of china's growth we put out a special report on how to look at geopolitical risks, 50 analysts collaborated on this report it looks at u.s./china trade, the midterm elections and iran. >> what do you think xi was trying to tell the world at this trade fair >> i think what they're trying to tell the world is that we're in an integrated global economy. the trade wars are a lose/lose situation all around for the u.s., for china and the rest of asia and the emerging markets as well. >> when he talks about the law of the jungle, is that a swipe at the president as some have suggested or not >> i think it's a call for looking at the way that negotiations occurred before that there had been a trend towards globalization and collaboration and rulesover the game and to go back to a

framework this had been in place. >> you mentioned you did a big report on the midterm elections. how are you telling investors to position themselves? >> i think it will be a non-event from a market perspective. i think there's going to be more focus on the trade wars and iran than the midterm elections we found in looking at geopolitical risk that some of the best hedges are not the ones that have been the conventional wisdom we don't think it's gold, we don't think it's the yen it's been short equities, short u.s. high yield and to be -- stay long involved >> why do you think the midterms are a non-issue? you have policies out there like more tax reform, deeper stimulus, deregulation, infrastructure spending, trade so many issues that matter to the markets and that could limit the president's ability to get it done. >> well, the trade issue is one where they have not gone through the congress and that's gotten a lot of market attention, but the tax reform which was comprehensive already went through and is already in place so some of the things the market

will focus on is risk of a government shutdown. i think there's skepticism given the size of the deficit that you can do more deficit spending for infrastructure and that even for tax reform 2.0 that might be difficult to proceed. >> take me back to china signs of significant slowing in the chinese economy. a lot of discussion about whether they're going try to stimulate beyond the smaller tax cuts they've offered and go perhaps further in for a broad income tax cut will that be the case? >> i think china will respond with a mix of the currency and also putting in more stimulus measures we've seen what they've done with the reserve requirements but i don't think it will be that dramatic. we've taken the china growth forecast down to 6.1%. we think if the tariffs go into effect they will offset more than half of the impact of decline in growth. i think it will be more along the lines of what we have already seen over the past year.

>> do you expect they will go -- that we'll go to 25% as of the first of the year and not much will come out of the g20 >> that's been our working assumption so far. we have to see what happens at the g20. there have been a few more conciliatory remarks, but right now there's no signs of a breakthrough, so we have put that in as our working assumption for right now. >> does seven stop being the magic number of the yuan and does that raise the ire of treasury here? >> i don't think there is a magic number, quite honestly but i think you will continue to see gradual moves and seven is a level the market is focused on. >> is there a correlation between whether or not the house flips and treasury yields right now? >> i think the house flipping is consensus. you know, the news would be if something happened in the senate i don't think there is much of a correlation with treasury yields on that front. i think the expectation is that it will be a house flip but with a relatively small majority. if it were to be something more

dramatic you could see treasury yields move. like if it were like the 60 seats that happened in the first obama administration but i don't think that's what's likely to be the outcome. >> yields slower if that happens? >> i think more uncertainty, yes. >> what if it doesn't flip >> i think if it doesn't flip it seems to me that that will be one where the questions will come up. much as you asked, like could there be more stimulus measures forthcoming. but i don't know if you're going to see that dramatic a reaction if it's just about the house you really would need to see the senate turn. >> i just wonder a lot of people say that if the republicans do better and if they are able to maintain the house and the senate and then there's talk of more stimulus or permanent tax cuts and all of that, what would happen? the dollar has been super strong, there would be worries about fed interest rate hikes, potentially higher treasury yields would that be bullish? conventional wisdom is it would be bullish because you would see

more stimulus and it's pro-growth. >> it would be more bullish over the near term but i think focus will turn to the size of the deficit which we estimate at 5.4% of gdp next year. short term it could be more bullish because the market isn't working with that scenario but i do think that you have seen the best prince of gdp growth already it's come down third quarter is strong above trend. i think the deficit and the size of the debt burden will also come into focus during the course of 2019. >> why do you think that 5.4% of gdp. where does that rank in terms of how high it is and why 2019 suddenly will we care when nobody seems to? >> in an expansionary mode, it's unprecedented to see a deficit like this. this is higher than the size of the deficit under reaganomics and only at points where we have a global financial crisis have you had a deficit that size. we've seen heightened market volatility, some of the small

flash crashes where the market has come down a lot. october's performance was something that very few people thought you would have a selloff of that magnitude so there will be focus on the deficit numbers in 2019. >> on earnings, the "journal" takes a crack at first half expectations going from sevenish to sixish in the past month or so other analysts are like don't pay too close attention to revisions at the moment. where are you guys >> 80% of the companies that have been reported have been at or above earnings. i think you'll see slowdown and this is where i think trade tariffs matter we think if they go into effect, you could take $8 to $10 off of u.s. eps. >> for '19 >> in '19. >> bringing you down into the high 160s? >> into the high 160s. so it would stop a rally >> well, that will get your attention, though, taking that much off of $19. joyce, thank you covered a lot of ground.

apple down on the heels of friday's 5% drop a report from japan's nikkei newspaper says demand for the iphone 10r appears to be disappointing. sources are quoted as saying apple told suppliers foxconn and pegatron to slow down. as they see, guys, iphones troughing in terms of units next year they argue once 5g become mrs. common in 2020, maybe that's when people upgrade. >> and still a response to the decision to suspend unit measurement and what that means and whether or not it really is seen as a negative but it's picked up steam in terms of at least the losses, down 3.5%. as you pointed out given how much stock they bought back in case we like to keep track of the trillion dollar mark, it's 210. >> and we haven't been below 200

since august 1. technology losing big in the s&p 500. when we come back, the u.s. unleashing new sanctions on iran hitting oil and banking, we'll discuss what's next in the market moves that are following. plus, closing in on hong kong 2, amazon finalizing its list we'll take you live to what is reportedly the front-runner city. and look at the top-performing stocks on the s&p 500. off defens you have a defensive tone with real estate in the lead. "squawk on the street" will be right back dow is up 21 points. don't go away. [ phone rings ] what?!

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a guy just dropped this off. he-he-he-he. the u.s. reimposing sanctions on iran. secretary mnuchin and pompeo announcing new designations saying sanctions will accelerate the decline of the iranian economy and hopes to curb the regime behavior. the secretary of state announcing exemptions for eight countries that rely on iranian oil. liste listen. >> more than 20 nations have zeroed out their crude imports already, taking one million barrels of crude off the market. the regime to date since may has lost over $2.5 billion in oil revenue. we have decided to issue temporary allotments to a handful of countries to ensure a well-supplied oil market the u.s. will be granting these exemptions to china, india, italy, greece, japan, south

korea, taiwan and turkey. >> joining us now is the rbc global head of commodities strategy and capital founding partner john killdoff. export oil prices are higher right now. was there any surprise in this announcement or anything that moved the market in particular >> no, we had an expectation that iran would place it what the market has been missing is these countries have all made significant reductions the countries receiving these exemptions will have to cut further over the next 180 days and several of them are close to zero so i think it's important for the market i think the administration has been successful in getting iranian barrels off the market. >> so you're saying the fact that there are eight exemptions which are big countries, that doesn't water it down? >> no, there were 20 countries under obama that got these exemptions so they've done more than the obama administration has, they are going it alone if you had said in may that we

would have lost a million barrels of iranian exports before the sanctions kicked back in, that would be bullish. going forward there will be a further round of reductions so this is materially important. >> john, explain then why leading up to this decision why oil prices are down 15% from the highs? >> i think there was a real fever in the market and a real fear that halima rightly describes in terms of losing what was thought to be all of the iranian exports. the administration talked up a heavy handed game using -- saying they were going to use maximum pressure the market kind of took them at their word they put a burst of oil. so it's been a 1-2 punch for this market. it's been a litany of bearish news

the highest opec production since 2016, record russian production and u.s. numbers got jacked up for august going over 11 million barrels a day in the latest monthly report from the eia. >> who is the most important marginal producer now? >> i mean the most important countries watch are what can saudi arabia do? the trump administration put pressure on saudi and russia the front load, the production increases. the question is what do they have going forward have they reached the near term high the market is well-supplied now but as we go into further iranian reductions, if we have any problems or problematic producers it becomes a question of does this market tighten? >> the chinese won't stop buying iranian crude overall. you hear reports of unmarked tankers and things of that nature is that not true. >> they're clearly turning off their navigational system but tanker trackers have it, so does the u.s. government. i don't think there's any expectation that china will go to zero. if they make any reductions, that's more than people thought they would do.

we had a lot of clients thinking china was going to ramp up their purchases. if they make any reductions that's important the indian oil minister said we're not cutting it off they're down by half so it will be important to see who has to cut more into the next 180-day decisions >> how much income is iran actually losing. >> they're getting cut in half on oil exports in the billions of dollars this will squeeze them big time. >> will it bring them to the table to renegotiate a deal? >> it's close. their economy is teetering as much as you see anti-u.s. demonstrations, there's plenty of anti-iranian regime demonstrations out there that are on the rise. but saudi arabia is the key. after election day they'll be less incentivized to do president trump's bidding in terms of oversupplying the oil market this price selloff registers with the kingdom and they say

whoa, we're put tong brakes in terms of output. the russians will keep going full out but the saudis will turn the dial back. >> is khashoggi an important dynamic? >> i think khashoggi is an important dynamic for congressional sanctions. the saudi leadership does not want a further erosion in prices so watch what happens. there's an opec meeting taking place in abu dhabi the first one before we have the final meeting in december, that will be important to see did they signal they will put the brakes on and talk up a the market >> you seemed skeptical when john said he thought the iranians would come to the table. >> look at the 12 conditions that's saying to the iranians you bet care pitch late in order -- you better capitulate. so i think it will go on i think it will be something we're living with for 2019. >> i feel every time we have max bullishness mox the guests we bring on it goes straight down every time.

>> a couple of months ago there was so much talk about $100 oil i said it became conventional wisdom which means it won't happen this is a market that gets hot and the narratives get hot and the positioning builds up markedly we got to a record open interest in terms of long position iing. the prices in the front are lower than the ones in the back. long only commodity hedge funds get killed in that environment. >> but hedge funds are net sellers of oil futures five weeks in a row. >> the ones that can are building a short position but the speculative length that got built up has the legs cut out from under them because of the oversupply in the global market. >> it feels like this economic slow do slowdo slowdown narrative is winning the day. >> i think the concerns about

what was going to happen to demand in china, what is happening in emerging markets like india, what's happening in turkey rose to the real bearish concerns out there in the market so it's been this sort of push/pull between the demand and supply story in terms of fears. >> and the rising dollar crushed these non-dollar countries and economies. india and other emerging markets. you thought we were paying $75, $80, they were paying over $100 a barrel. >> bottom line, where will we be at the end of oil prices, wti? >> around 75. >> halima. >> around 75 and low 80s for brent. >> thank you, halima kroft and john kilduff amazon closing in on its next headquarters. we'll take you live to what might be the front-runner city it's been a mixed picture for stocks investors getting ready for midterms tomorrow. triple digit gain for the dough 17 as ple dn apisow3% we're back in a moment

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read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ amazon reportedly narrowed the field for the new home of its second headquarters. the company held advanced talks to locate the campus in crystal

city, virginia, just outside washington, d.c. scott cohen is there in crystal city and has more on the story scott? >> david, we should point out that this is not a done deal according to all of the reportinrepor reporting by the "washington post," by cnbc and others. the decision hasn't been made. this section of arlington city is known as crystal city it's a stone's throw from reagan national airport, the pentagon is right here, there's a d.c. metro stop, it's an easy limo ride to jeff bezos' new home in the district there's a lot to argue for this location there's a great skilled work force in the d.c. area a lot of workers come here not just from d.c. but maryland. transportation part of these talks involve a generous transportation package and there are already options close to here as well.

and business friendliness. it's a priority of amazon's and virginia has been embarked on a bipartisan effort to cut red tape our amazon race report card that looks at our america's top states for business data and other government data against amazon's criteria gives virginia a solid b-plus the one weakness, transportation, and that's being addressed. with all of this now, amazon coming here is kind of the talk of the town. >> great location, different cultures, different races. >> great great for the community, jobs. >> good reputation and they blend nice with the corporations that are already here. >> but in the not-so-fast department, this tweet over the weekend for from mike grella, he is a director of economic policy he's not involved in the hq 2 selection process but he says memo to the genius leaking

information about crystal city, virginia, you're not doing them any favors and stop treating the non-disclosure agreement like a used napkin. the point being you don't want to count your chickens until they're delivered and we should point out the "wall street journal" reporting advanced talks are also going on in new york city and dallas guys >> yeah, we'll see about either one of those certainly when it comes to new york scott there's a public market's play here. jbg smith properties, symbol jbgs, it's up 6.5% they own a lot of real estate, scott. my understanding is a number of years ago a lot of government contractors were there there was a good amount of vacant space which might appeal to amazon as well. but certainly a potential boon for that reit if that were to come to fruition. >> absolutely. and the building behind me that you see shrouded in green is one of the buildings that's been the subject of speculation

jbg smith owns the building. they had planned to convert it to apartments. they've scrapped the plan, possibly to make way for amazon. and there is, indeed, a lot of vacant space so with amazon's idea of wanting to move in quickly and then develop this project over the years, this would fit in well with that. there's a lot of places that they could move right into and get going. it has kind of an urban feel which is what amazon has beenin head quarters in seattle and there's some rain which could make them feel at home. >> have you ever seen anything like this, scott where it's such a hot contest for a corporate headquarters >> not exactly like this in the economic development people that we talked to, they say the same thing they kicked it off so publicly a little over a year ago and got all of these places bidding,

some 238 locations in north america bid for this it's down to 20 finalists. it has been really something it's become more traditional very quiet the non-disclosure agreements you talked about the one thing that comes to mind, this is decades ago, is when general motors was going to put their saturn plant they centered on spring hill, tennessee, which was a boon for a while. so there are things like this over time but on the level of amazon a $5 billion project with 50,000 jobs, everybody's been salivating over that it's been something to behold. >> it has. scott, thank you scott cohn in crystal city, virginia. now for our etf spotlight. mike santoli at the tell administrator taking a look at junk bond etfs >> specifically the hyg etf.

this is mostly about treasury yields going higher. so that means treasury prices go down all corporate debt is priced off of government debt so that's why the price is down 3.5% year to date. the total return is positive at the beginning of the year an index of high yield bonds was 5.8% yield so it's become more expensive but the credit markets in general have been firm. the best way to gauge of t strength of the market is relative so this is a ratio of the hyg etf and the iei. so when this charles is going up it means risk appetites are going up so here was the high in january, that was ugly. here's the high in january and here's the high right there. october 1.

so you saw that credit softened up in the lows in october. we rebounded along with last week's bounce. high yield does move stock prices but you see all this land in here where we haven't recovered so credit markets are softened up a little bit relative to treasuries as gauged by the hyg it's something to watch. not so much an emergency levels but something people are concerned is going to be the friend of the stock market. >> you've been great at keeping us honest at watching credit nice to have you back. let's get over to sue herera. >> good morning, carl. here's what's happening at this hour secretary of state mike pompeo and treasury secretary steve mnuchin announced that the u.s. is reimposing harsh sanctions on iran the u.s. lifted those sanctions under a 2015 nuclear deal negotiationed by the obama administration iran's president meanwhile says he plans to defy the u.s. sanctions and continue to sell oil.

softbank's ceo says the company's $100 billion vision fund will continue to do business with saudi arabia, nearly half of the fund's financial backing comes from the saudi investment fund. he says the murder of the journalist jamal khashoggi was a tragedy but softbank has to carry out its responsibility to its investors. a story just posted to our web site president trump's plan to deploy troops to the u.s. /mexico border is shaping up to cost $220 million. u.s. defense officials telling cnbc.com the initial estimate could go up or down based on the ultimate size and scope of the mission. you can check out the full story on cnbc.com. and queen was king at the box office 20th century foxes exceeded expectation it earned $50 million

domestically j that's the up in update. carl >> sue herera, thanks. shares on appleare downgraded on expectations of weaker iphone sales at rosenblatt securities. we're below 200 for the first time since early august. major averages, dough swiw swinl over the place we're back above 103 look at how you should be positioning your portfolio ahead t midterms is up next don't go away.

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welcome to emirates mr. jones. just sit back, relax and let us entertain you... ...with over 3,500 channels of entertainment, including the latest movies and box sets from around the world. ( ♪ ) we even have live sports and news channels. ( ♪ ) and your free wi-fi will start shortly. enjoy your flight mr. jones. world's best inflight entertainment. fly emirates. fly better. welcome back to "squawk on the street." i'm sara eisen here with carl quintinilla and david faber from post 9 at the new york stock exchange one hour into the trading session you have a mixed picture for sox. dow is up 105 building on the gains we saw last week s&p 500 is trading on the flat line but the nasdaq is down almost 1.2% there.

it's a story of apple weakness but not just apple you're seeing weakness in technology all of fang is lower, david. amazon down 3.5%. >> yes,getting hit and faceboo down 1.5%. your money your vote we're one day away from the midterm election dom which you is at headquarters looking at what's at steak for investors. ylan mui will check the economy and numbers since president trump took office. let's start with dom chu and the post-election market share in owes. >> as we talk about the likelihood, by now many of you have known or heard that the criminal of the house is likely to go to the democrats so as we take a look at the possible scenarios, a democratic house and democratic senate is the least likely scenario. the gop house and gop senate is somewhat likely but the most likely scenario is going to be a democratic controlled house and

gop senate on the markets that predicted around a 61% odds. if you look at the sectors or industry groups, in the most likely scenario where the democrats controlled the house and the republicans controlled the senate with president trump as president, you could see sectors like defense do relatively well as the specter of uncertainty comes out of the marketplace. remember, the budget already in motion so that will be one to watch as well another scenario is where you see a gop control of both houses and that could impact higher regulatory industries like energy in particular so the energy spider xle could happen if you see the gop-controlled vote one last one in the least-likely scenario where the democrats controlled both the house and the senate, watch what happens with banks because bank regulations could

be a huge focus. remember, those banks have been underperformers as of late if there is the unlikely chance that the democrats control both, those are some things you want to watch obviously we're hitting a few scenarios but david for more go to cnbc.com. we have a lot of bases covered there. >> lots of scenarios and who knows what will happen let's get to ylan mui in washington with a check on something we can at least sort of establish a little bit more substantially which is is economy under president trump. >> well, the conventional wisdom there is that the president's party typically loses seats during a midterm election but president trump is enjoying one of the strongest economies of any first-term president in at least a generation so let's take a look at these numbers. we are taking a cue from clint eastwood and calling it the good, the bad and the maybe so start with the good news first

jobs, about 4.3 million jobs have been created since president trump took office. that compares to about four million jobs lost during the first two years of president obama. now, more jobs were created under president clinton, roughly 6 million jobs or so, but the unemployment rate during that time was nowhere near this low now, however, let's look at the bad news as well and that is the cost of tariffs. we got exclusive data from industry groups showing that businesses paid 54% more in tariffs in september compared to a year ago that's a price tag of $1.4 billion one place where the jury is still out is wages. those are the maybe. you can see wage growth has been ticking up over the past two years but it's been slow right now it's at 3.1% and the

question is will that last now, most people experience the economy through their paycheck so that wage growth number is going to be important for undecided voters heading into tomorrow's elections so if the polls are right. the gop will lose the house but the expectation there is that the strong economy could be one thing standing in the way of a potential blue wave. guys, back over to you. >> ylan, you showed us a number of metrics that bode well for the president and republicans. is there any single one? is it the unemployment rate? consumer confidence that typically tracks poll results or election results in particular >> the reality is, midterm elections tend to be more unpredictable than presidential elections so in a presidential election, you tend to see a very strong correlation between movement and the unemployment rate and the outcome of the

presidenc presidency. >> charles, do you have good sort of tactical playbook moves pivoting off of ma what may happen tomorrow? >> yeah, we tend to be long term investors and don't like to be tactical but i'd call out a couple of things people forget democrats have been sympathetic to tariffs. the unions are important in the democratic party and historically republicans were more free trade than democrats there's more support for tariffs and prohibitions than in the democratic house and that would increase the risk of tariffs the second one i'd call out is republicans are matt at the technology firms and i think

there is some tactical risk there will be new regulation, may maybe even anti-monopoly attacks on amazon that could come from the republican party. >> the latter hasn't been well articulated yet has it, charles? >> that's what i'm saying. if you go into the history and you look at the anti-ibm antitrust moves, if you go back and look at the anti-microsoft moves, people don't like the big large tech firm having a big impact on mom and pop. amazon is putting small business people out of work they don't like the preferential treatment that amazon's gotten and trump doesn't like the liberal politics out of amazon so i think there's a real chance of that in the next two years. >> which policy is most in play?

is it trade? infrastructure spending? tax reform perhaps >> i'd say all three if the blue wave materializes it also adds the volatility of an uncertain future for not just the administration's agenda and trade related policies but the leader of that administration as well so we will see volatility and disruption through the midterm elections no matter what the outcome. >> are you talking about a democratic sweep the blue tsunami or a split house and senate >> a split house and senate. >> we think that could create some unnecessary but likely uncertainty in terms of domestic politi politics we think it's a fool's errand to bet against a consumer even though it remains fool hardy in

terms of short duration investment grade quality bonds and some cash reserves. >> charles, historically we always say stocks like gridlock but are you suggesting maybe that's not the case this time? >> i think i am saying that. i think a republican house has been a constraint on tariffs republicans do well in agricultural areas, agricultural areas don't like tariffs because they tend to be net exporters. the coasts tend to be more pro tariffs so that would be where it would be dangerous. >> we have billions of dollars worth of transfers, charlie? you think the president would have done more if he didn't have republicans controlling both houses >> absolutely. i think this president would have liked to have had a full-fledged trade war with china. he thinks china is an existential threat he thinks we need to change bad

behavior on china's part and need to do it now. i'm not saying whether he's right or wrong but i think that's what he wanted and i think there's been restraint in people around the country saying this would not be good to our farmers and republican voters. >> using round numbers, 2700 up to 2850 using people's base case scenarios. do you think we hit the upper on that before the end of the year? >> peak earnings doesn't mean no earnings we have slow growth not no growth the driver of our economy and the global one in good shape but they will have to swim against the tide of increased not decreased volatility between now and year end. >> tomorrow will be an important day. one of those things traders need to pay attention to. see you soon as we head to break, keeping our eye on shares of amazon, facebook, and google

all getting hit pretty hard today. the president says his administration is, quote, looking at whether the tech giants are violating antitrust laws and as we head to break, take a check on the top-performing stocks on the s&p 500 this morning. sort of a mixed bag, energies doing well berkshire hathaway as well with the results over the weekend re, 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.

it's been a volatile couple weeks for the market and one wall street bull says we are not out of the woods just yet. find out what has them worried on trading nags dnation.cnbc.co. more "squawk on the street" coming up.

let's get out to rick santelli. >> i'm like to welcome jerome snyder from pimco. what a wild couple weeks we've had. interest rates are still extremely firm we have $83 billion in threes,

tens and 30s a supersize package. what can you tell me that investors should pay most attention to when it comes to fixed income and interest rates? >> two things. fixed income markets poised for growth. we have seen that triangulate to higher rates in one to two years. investors should be prepared for high rates to come forward in the next year or so as growth continues. we had fantastic economic numbers the past few days. investors need to be poised to embrace those numbers and understand while financial conditions are tighter, stock markets are wavy the past few weeks, ultimately it leads to confirmation that the fed raises rates in december and probably two times next year. they need to prepare for higher rates in the next year, and number two, slightly higher inflationary pressures whether due to wage pressure or not. that's not necessarily derailing the fed focus for the near term future

next, supply that has implications for term premiums the differential in shape of yield curve and ultimately what investors want to pay for owning treasuries versus other securities in the world. we favor steepening bias. >> that's impossible not to think that strategy is the correct one. here's my problem. investors tend to be lazy. like tomorrow's midterms when you look at polls, they look at static information, and static information in this case is the metrics for future discount of earnings will change with higher rates. we all know that, but that's nothing to be nervous about. the economy can make it up in growth ways we don't know yet. >> that's what the fed is thinking about if you have growth continuing along that way, then they meet growth objectives of job creation, inflationary protection expect this to continue over time investors should be comfortable with that. the key factor that investors overlook is with increased

normalization, meaning approaching that 3% rate and potentially beyond which the market isn't prepared for, as we approach that 3% rate, expect volatility to permeate markets and conditions will be seen in the past few weeks will frankly persist. >> i tell you what, you look at the risk parody trades, if volatility perfect sitsists, itg to have on-going effect on equities. >> without a doubt investors need to change the psychology instead of buying the dip, mind the dip. minding the dip means prepare portfolios for increased volatility, changing liquidity costs, meaning they're going higher, and changing cost to capital. >> almost out of time. see any surprise for the november fed meeting >> no. look at the communication for increased normalization, focus on the front end as the source of value. >> thank you for your take david faber, back to you >> thank you, mr. santelli. time to send it to jon fortt for what's coming up on "squawk

alley. >> kara swisher recently sat down with elon musk for a wide ranging interview. now she's sitting down with us to talk tesla, elon, and more. that's coming up on "squawk alley. ♪ ♪ ♪ ♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too u.s. bank - the power of possible.

stocks are holding gains the s&p is trading a little to the up side. consumer staples is one of the notable outperformers in trading, up around a percent one notable laggard is sysco they reported earnings, warning that high costs are eating away at profits something to watch there, guys back to you, sara. >> thank you. coming up later, all day on cnbc, your money and the midterms we take a deep dive into sectors that will be most impacted by the vote and how to position your portfolio into tomorrow and beyond we have you covered, starting 3:00 p.m. eastern time david, see you then. >> evelyn davis died at the age of 89. the dutch american investor agitated company meetings more than 50 years. many of us remember being in

attendance of some of those, there she's ringing opening bell she took a lot of ceos to task, carl. >> she said meetings were probably boring before she came along. gh that's rit. dow up 137 back in a minute alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns?

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