good morning, it is 11:00 a.m. in crystal city, virginia, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ welcome to "squawk alley" with contessa brewer in for morgan brennan with the day off, and jon fortt as well at the new

york stock exchange. dow is up. we begin with apple. shares are down following friday's 5% loss after the report from japan's newspaper suggesting demand for iphone xr may be disappointed. the report says apple told suppliers to stop preparing for the original boost in production shares are down 3% for more on the recent slump, bring in tim arcury and tim shay if we close below 200, tim, first 10% drop in five years why is it happening now? >> look, there's disappointment with how guidance shaped up, and i think the main point is the way they disclose. there's a reason because the units may be in decline. you're not paying a lot for growth they put up 21% growth

we think that the opportunity where apple will begin to disclose services margin for the first time, this looks important and apple clearly intends to tell a compelling services margin story i think the debate shifts there, that's the big story the next five years. >> does it matter if iphone units are in decline or are flat for the foreseeable future people that thought so probably would have bet against apple, even reaching a level where it is now arguably this could put apple in the position of focusing on product quality instead of product quantity, and maybe investors focus in the same direction. what are we losing with the change in apple's disclosure >> that's right. look, as an analyst, you want more than less i think they've grown gross profit dollars 16% in the past year, even when units are flat stock has done well as you note. yet it is still the most

underowned stock globally by active managers by a factor of three, even though gross profit has grown like this. units don't correlate with the stock, gross profit growth correlates with the stock. >> tim, at this point are you looking at this as an opportunity for apple to highlight what it does in services rather than prostitution >> -- products. >> we think of the trajectory of the margin it is improving and fast we think it is coming in at double the gross margin of the hardware business. if you look inside the services business, it is app store, apple music, apple pay, icloud, apple care all setting records. the app store alone, call it an $18 billion business this year, growing at 33% extremely high margins 75% coming from mobile gaming. that's $150 billion business alone right there. you have apple music, a third as

many subscribers as netflix. spotify trading at 25 billion, you have apple pay, volume three up it is growing faster than paypal there's real value they're internet, software styled businesses, a lot of leverage we'll see where gross margin goes going forward we think it is 50% of gross margin to services that's the opportunity. >> to that point what's the important metric to look at if buying this company for services zie do you believe in what others say about downloads? >> look, there are a lot of moving parts >> go ahead, tim >> i think the key is the growth in gross profit dollars, the ability to grow revenue.

i think there's underappreciation for just how profitable services is i see some estimates out there where people don't get how profitable the business is i think by breaking it out, if you look at the comps that the business ought to be come ped t they trade 20 times earnings take it back to the phone business, you get the most, probably the planet's only recurring hardware business at basically a multiple equivalent to roughly hp's multiple so it is pretty crazy. >> is this a recurring hardware business and to what extent do investors need to be worried about more volatility now that apple is providing less data like this report from japan, used to be unit sales would refute it on something like iphone sales now they say maybe the revenue is higher, but overreliance on the high end and mid range is

being eaten up by chinese competitors. i know what they're going to say. >> look, you're going to have investors talking about units the next five to ten years that's not going to go away. i think the new math, it is lesson selling, more on phones and what's happening, upgrade cycles being extended, the average iphone is three years upgrade cycle at this point. you sell fewer iphones, but when you buy it, it comes through at a higher price, higher attachment of wearables, and higher penetration of service on top. means iphone units, we model them on perpetual decline. it is still big for a service business. >> your price target is 240. where do you see head winds for apple? >> i think the head wind is getting over the fact they're not giving iphone units any

more i think there's a feeling that the company can grow there's a general perception that as you hear about cuts in the supply chain, that means they're not selling units when i think what's happening is you're seeing a mix change. to the extent there are cuts for the xr, i think there are upward revisions on other models which is why a unit doesn't equal a unit the way it used to because they never had a stratification like today >> that's why we're watching the prices closely this cycle. thank you. good to see you. coming up, has amazon made a real decision on the home of its second headquarters reportedly in late stage talks with a handful of cities. we go live to one of the front runners for the latest a lot more "squawk alley" still to come. [ phone rings ] what?!

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i think we're not getting a lot of spending gains going forward. we have it baked into the cake that fiscal 2019 will be strong, that federal spigots are on. will we get additional ones on that, that would take agreement within the two parties and across party lines which i don't have a lot of hope for these days, even though there is a desire to do infrastructure spending, i think adding to the deficit would be an interesting and difficult thing to do at the end of 2019, further adding to it i also think it is important to look at where the fed is this is not going to change. it is important that jay powell is afirmifirming by raising rats and doing what janet yellen would have been done it is lost because the context of the economy has changed it is not different even as growth slows, unemployment will continue to fall, wages will continue to pick up. >> also with us, the head of public policy for pimco, libby

it has about an 85% chance on the democrats retaking the house. if that happens, are we going to see an opportunity for the fed to slow down rate hikes? some say the republicans keeping the house means more spending, more stimulus, more aggressive growth >> and it is a good question i think in some ways, i look at the markets positioning for this, if the democrats sweep the house and senate, the likelihood for fiscal stimulus increases significantly because then chances for a big infrastructure package that diana alluded to increase if there's a split congress, then i would agree there will be a push for infrastructure among democrats. they want to show they can govern but deficit concerns will weigh on senate republicans. in some ways i think you see less fiscal stimulus if you have

a republican sweep it is counter intuitive in terms of what markets are positioned for. >> if we got infrastructure with the discussion of what workers we find, would that be part of it you can barely operate the economy we have with workers we have >> it is a good point, carl. in terms of infrastructure and fiscal policy, many people would argue that infrastructure actually could increase potential growth, could increase productivity sure, actually labor might be an issue, but in terms of increasing the potential growth for the economy, some folks argue that would be a more effective mechanism than tax cuts >> diana, i am old enough to remember people talked about deficits and fiscal responsibility and out of control entitlements as something the market is scared about, but i'm not sure which party represents hope or threat in those categories any more first of all, does the market care about those things, and if

so, how do you factor that in depending which way things swing? >> it is an interesting issue. does anyone care about it. consumers say they care about it, and when polled about it, say they're worried about it that's not been the case for a long time. that's good news that may mean they said they care about it when going to the polls. we'll see. i don't know anyone that's talking about it who is running in the polls now, that said, they said they care about it so that's one good thing down the road i think we have interesting pressures building up and it is that we're adding more to the debt and deficits at the same time the fed is allowing a bloated balance sheet to gradually contract and that means there's not as much support from the fed at the same time china no matter what happens going forward, they're not going to be able to provide the same support they once did, they slowed the purchase of bond purchases, not about to sell, but we're losing some support for bond buying we had seen, which we have already seen as rise in long term rates. that's where you could see a

more dramatic rise in long term rates and be surprised because of shifting dynamics of deficit spending without the supports put under cap fund rates. >> we know congress needs to approve the deal with mexico and canada, no longer called nafta where do we come down on trade with a divided congress? >> it is a great question, i call it nafta 2.0 for ease the usmca. i think this is also underappreciated in the markets. if democrats were to take back the house, i think that ratification is much more difficult than folks are expecting it to be and kmats wademocrats want theit on it, i don't think they swallow whatever deal the administration negotiated. i think ratification and withdrawal risk comes back into the frame in 2019 should

democrats take back the house. >> one last point, it is a little afield. i keep seeing conference calls, investor calls to explain dynamics or consequences of a hard brexit. how much of that is on your radar? >> it is on my radar along with all of the trade stuff i am encouraged, the administration is noticing the effect on financial markets and the overall economy, hoping they'll back off honest ka ladies and gentlemen with china. brexit is something real and we are underappreciating the risk we have seen a major slow down in the uk after a false summer warning trend. that's two years in the making, it is only a vote, not an action, but it is an action that dan happen soon. >> thank you so much for your perspective and insight. trouble is brewing between disney and home of disneyland, and a he

anaheim. >> reporter: so much going on with the election in orange county this story is about money, wages, unions, and mickey mouse. disneyland taxes are $140 million a year to anaheim, half its annual budget. for years the city did all kinds of things to keep the resort growing. now the city council, much of it, and the outgoing mayor fear that anaheim is giving too many incentives to a wealthy company, once warm relations are frozen now the happiest place on earth is being accused by some workers of low pay >> some of us are sleeping in our cars i have done that a couple of times. >> reporter: this was a "new york times" op-ed where some workers say they can't make ends meet the union is pushing a ballot measure to raise minimum wage to $18 an hour by 2022 for any large company that gets tax rebates. so to exempt itself, they returned over $200 million in tax rebates and killed a luxury

hotel project. >> disney has cancelled the four diamond hotel in anaheim, which will cost over 5,000 construction jobs and 1100 on-going jobs. it will kill more jobs than intended to help >> reporter: if the measure passes, could be up to a court to decide if disneyland is exempt disney released this statement we believe wage decisions should be made at the negotiations table where we have successfully negotiated contracts with unions to pay $15 an hour or more to majority of hourly cast members, which is three years ahead of california's minimum wage requirements we tried for weeks to get comment, guys. disneyland finally gave this statement over the weekend, the union never replied after repeated requests. back to you. >> jane, this story is smack dab in the middle of something we have been talking about a lot lately, cities doing all they can to lure big corporate headquarters amazon is doing it now

there's controversy over whether wisconsin is getting what it thought it was getting with foxconn. what is the underlying message you're hearing from workers and politicians about the potential down sides in all these incentives to corporations >> reporter: well, it is strange and interesting how there's a growing movement in anaheim against disneyland it is one union out of many at disneyland that's pushing this ballot initiative, and the fact that disneyland renegotiated to raise to $15 an hour already shows that they have responded, but by exempting themselves, by giving back all of the tax rebates for the luxury hotel project, they don't have to get to 18 by 2022. it becomes a dance

yes, you can say disneyland is a wealthy company, but they got wealthy not building luxury hotel projects unless they pencil out >> it is a joy to have you back. look forward to seeing you soon. jane wells, looking at disney. a look at the major averages dow up 138, not far from session highs. s&p up 8 mpen iis one of the few dow coontsn the red. "squawk alley" is back in a moment hi, my name is sam davis and i'm going to tell you about exciting plans available to anyone with medicare. many plans provide broad coverage and still may save you money on monthly premiums and prescription drugs. these are affordable, all-in-one plans that help pay for doctor visits, hospital stays and

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after a brutal month for stocks, the s&p should determine whether it was a bounce or bottom in october. it is the subject of mike santoli's latest column, here at post 9 to talk about that. 2765 >> yeah, that's the first technical test 200 day average. it is where the market fell off a cliff. it would be a logical place for the market to stall if we get up another percent, and turns out

it was a bounce. i want to be clear, the bounce last week was strong you had three 1% up days in the s&p 500, that's rare, it tended to happen around a good trading low. doesn't mean it is up and away from here. the other i would say head wind is treasury yields if you look at these levels in the s&p 500 in january and again in the summer, the 10 year treasury was below 2.5, second time below 3, now 3.2ish or just below that doesn't mean the market can't make progress but we haven't made net progress. it shows resistance there because of valuation pressure from that. the seasonal story is a positive one. my only issue is everyone believes it is so hard everyone believes as soon as the election passes we get this automatic, it is a rock solid lock up side for two months. i don't know if that's not true, but i think it is a wait and see. i think the market would act very much like it is acting now if that was a great, perfect

entry last week or if it was just we're going to knock around awhile. >> seasonality, do you mean consensus around year end or around a midterm >> i think those are combined into a super bowlish story november and december are often strong, even stronger in a midterm year once you get that one year past midterm, everyone points to stats, it is always higher than the october low. i don't deny that. my problem is there's only been 18 since world war ii. is this a statistically significant sample >> how are you weighing in what happens with trade >> interesting i see it as almost a sebsent me tell -- a sentiment tell. it is not the near term driver or shouldn't be if we have a positive fundamental story.

>> how do you factor in the chipped tooth for faang? facebook is not so hot amazon, not so hot alphabet, not so hot apple who you sometimes include, not so hot only netflix of that named group overperformed. >> they overperformed, look how it traded after, right, in terms of stock performance i think you definitely have winded leadership there at the least, maybe wounded leadership. apple was hanging in there well before the report. on one hand we have seen good rotation, day like today, you have more of these when the market is up a half percent. most are up, faang is down, financials are good. you can build something around that, but the math doesn't work that well in terms of getting to the old highs and beyond them if those guys aren't participating. >> thanks. good stuff read the column. cnbc.com. with the end of daylight savings time in the u.s., european markets are set to close at 11:30 we get seema mody back with

today's action >> we are back look at the european stocks, under renewed pressure on monday, closing mixed. they had the best week since december of 2016, jumping 3.5% you can see today a different story, technology among the worst performing groups overall. down more than 1% in today's trade. italian banks are again under pressure, despite positive results and the latest stress test conducted by european banking authority, some of the big names down in today's trade. and switching to turkey, new data shows the inflation rate jumped more than 25% last month. the highest level in more than a decade what's interesting is the lira is gaining ground against the

u.s. dollar on expectation that the turkish central bank will respond again by raising rates finally, the trump administration new sanctions on iran, snapping back into place today. three major european importers of iranian oil are spared from immediate penalties, italy, greece, turkey a lot of analysts say it gives oil banking majors in the countries more time to assess whether they want to import less from iran in coming month. back to you. >> thank you. let's get to sue herera for a news update. >> good morning, contessa and good morning, everyone here is what's happening lowes closing 20 u.s. locations that are underperforming the home improvement retailer says most impacted locations are also within ten miles of another lowe's store. the trump administration reimposed sanctions on iran that were lifted under the 2015 nuclear deal this includes freezing assets,

barring americans doing business with iran, cutting off the regime's oil revenue. the moat around the tower of london is filled with 10,000 lit torches. the remembrance marks the 100th anniversary of the end of world war i. torches will be lit each night by armed forces representatives and volunteers and a final ceremony of remembrance sunday. and frequent guest evelyn y. davis has died. she attended annual meetings more than five decades, pushing for changes at countless companies, including bank of america, ford, and goldman, sachs. she was 89 years old i had her on my shows many times. she knew how to take a ceo to task, that's for sure. that's the news. i know you remember it, too, carl >> yes she will be missed >> sue, thank you for that. when we return, will tesla stay public? what elon musk told kara swisher

in her near 90 minute interview e ll the ceo shtes us about it after the break. (toni vo) 'twas the night before christmas,

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let's look where we stand. "the washington post" reports that amazon is in advance talks with officials here in virginia about locating hq 2 here cnbc reporting according to a source that discussions include potentially a generous transition package which is clearly important, and "the wall street journal" saying that it is not a done deal everyone is saying it is not a done deal and that amazon is also in talks with new york city and dallas this particular area, crystal city, checks off a lot of the boxes for amazon the section of arlington, virginia, it is a stone's throw from reagan national airport and the pentagon, an important amazon customer. it has a great work force and is certainly in great proximity to district of columbia clearly bringing amazon here has a lot of people talking. >> pretty cool to work near one of amazon's headquarters >> i think it would be pretty

awesome. i think it would potentially end up creating a better work force around here. >> i think it would be good for the company personally, dealing with a diverse community of businesses around here >> reporter: here is how jeff bezos described the profit he said you collect as much data as you can, you immerse yourself in that data but then you make the decision with your heart he owns "the washington post," he's renovating a home in district of columbia, and as far as data, virginia is number four in the 2018 top states for business rankings. when you put that data against amazon's criteria, we give it a solid b plus so virginia is always a contender. crystal city, the increasing focus of a lot of speculation. but again, a decision not yet made guys >> scott, for all of the sweepstakes atmosphere around hq

2, new york, d.c., dallas would be traditional places for headquarters talk about middle america, why doesn't amazon do this or that if they don't have one of those places in the final running, what does it say about the process? >> reporter: what it says about the process is what amazon has been saying since they launched the sweepstakes a little over a year ago work force is key. you can see that in all of these potential final finalists, d.c. area, dallas, and new york all have strong work forces. dallas is a little short on stem workers, technology workers, still a lot of people there. and that's the key and it has less to do with cost than maybe has been traditional. they need to have critical mass of workers to make it work the thing that is important about d.c. which is really increasingly becoming more of a tech. center, much more of a work force center is that you

have that critical mass and the pentagon nearby. that's why people are talking about crystal city that's an important customer of amazon, particularly in web services area. so we'll see i think what it says is that amazon has a lot of weight to throw around they can do that with less emphasis on cost and tax breaks, although you can be sure they're trying to get as much out of this process as they can >> indeed. nobody better to cover this. scott cohn crystal city proximity to washington might be useful, following the president's renewed criticism of amazon and other tech stocks last night over antitrust concerns. here's what he said in an interview with axios that aired on hbo >> what about the justice department >> i have so many people sayin that, but it is certainly something we have looked at. >> would you ever break them up? >> they were talking about this years ago, they were talking about this same subject, monopoly, years ago, long before i was in office. >> do you think you are the man

to do it >> a lot of people thought it was going to happen, and i guess the previous administration stopped it from happening. >> but you're in charge now. >> i am in charge. i am definitely in charge and we are certainly looking at it. >> this is anti-trust? >> yes. >> for amazon? >> for all three >> joining us at post 9, recode co-founder, kara swisher not sure what he said there. >> i'm sure he knows what he really said. someone told him antitrust, repeat it over and over again. i interviewed sally yates last week, they have been looking at it, of course they have. the justice department has to look at these things as they did in previous years for other companies. this is not something new. he is correct in what he said there. and that's obviously interesting to see what level regulation plays into this, whether regulation, antitrust or other actions by state and local governments. >> how politically dangerous would it be? for all of the talk about how

big these companies are, how potentially dangerous the companies are, customer satisfaction for apple and amazon is really high. >> amazon is just 1% retail. this is all political. i had an interesting talk, intelligent guy, he didn't think that was the case. it is something people need to look at. what is the regulation, what's the smart regulation, and i don't think we're going to see that in a statement. this is someone throwing out another bomb >> is there any way to discount, given what we have, which of the three is most at risk? >> you know, they passed on google many years ago. you can look at probably google and facebook and amazon would be most at risk of them i think in order, probably google at the top of the list if you were going to do that. >> do you think these companies see themselves as overdue for

regulation their importance in election and marketing, privacy, the way they infiltrate every detail of our lives. >> i think they know it is coming i think privacy regulation will be interesting, there are others around data portability and things like that, i think you'll see it from the next congress if the democrats win. the democrats are very much out for doing something about this now, which is funny. they were the friends of tech, right? >> i saw fund-raising numbers, google for the left, it is crazy. >> i know. it is funny how a russian situation can hurt a relationship, you know so i don't know. i think there's a feeling something has to be done, it is a question of what to do, how to make sure we don't favor, too much regulation will favor big companies. you have to think what creates startup innovation that's not something that the trump administration or congress is thinking about, how do you keep innovation going given challenges from china. the rest of it is political and a little silly when you have to think about how we create the next generation of tech. >> we talk about potential

regulation, europe is doing it they're pursuing cases specifically seems like there's little chance of the u.s. getting ahead of europe, so is all of the talk kind of talk is the action in europe primarily, and it is up to the u.s. to perhaps catch up >> look at california. i think you'll see a lot of stuff around the states, massachusetts, new york, california if as it turns out knewsom becomes governor, the things they're passing in california, around employment, self driving, i think you'll see hopefully innovative legislation there, and maybe it is a template for what happens around the country. >> jon will move you to elon musk in a moment on amazon as we look at shares there, your thoughts on the search at this stage >> i think it is just a circus i am glad you are enjoying covering it. i think they'll be in virginia

i thought they always would be there. he has a nice house there, not just because of his house, but makes sense to be there. crystal city is an interesting place, a here nor there place. it seems like if you're going to pick somewhere, i would put crystal city first dallas is also a great option. i didn't think they would locate in any state problematic from a social point of view, all of those things i thought maybe pittsburgh was an option. i don't know i don't know where he is going to go. i think virginia has to be it. i think that's probably the place. >> moving on to the interview with elon musk, the tesla and space ex-ceo sat down with you nearly 90 minutes, covering twitter to space travel. here he is talking benefits of going private. >> i think we will be cash flow positive for all quarters going forward. >> all quarters going forward. do you need more investment? >> no. >> not at all. >> i don't think so.

>> do you need to go private are you still contemplating that >> we don't need to go private i think going private would -- we could execute better if we were private >> lots of gold in this interview, i don't need to flatter you. one line jumped out, when he said there wasn't some other way to do this about his hellish past year. seemed to underscore the idea he is not going to look for another ceo, arguing he has it under control, not working 120 hour works, back to 80, 90. is that what investors should take away? this is an elon musk that says he is recalibrated >> he was calmer i have known him 20 years. he was back to the way i have known him. i think working 120 hours a week and stuff like that, he shouldn't have done that first of all, that's not good. you saw that line, tesla cannot diane it almost died

that's how he thinks about it. almost a religious point of view toward the company he feels that tesla becoming an important company is important to the fate of the human race, that's what he is saying because of climate change and everything else and he is kind of right, the things he is taking on, space, transportation, they're big topics you know, he seemed like he's got it back together but you never know with elon and he is not going to stop tweeting, looks like, we talked about that he has the boring company and the space thing, a boat in the ocean that catches nose cones. hasn't caught one yet with a giant net. has a lot of ambition. >> knowing him like you do, what surprised you? >> i like that he pushed back at me, he is very funny the dad jokes were a surprise. hnlt heard dad jokes in a long time it is elon he is so creative and interesting. i know there are problems that short sellers have with him, but i like a person that takes a big

swing, and that's what he is doing, and people know that. >> how is he seeing regulation for tesla? how is he factoring that into plans? >> he was positive about states and federal, moving in the right direction. he seemed positive about that. that was a surprise. i thought he would slap back at the government but he didn't i think he feels good about relations and legislation moving forward all over the world and he did talk about how china again was moving faster in those regulations and it was more coordinated between state and federal officials, but didn't seem to think it was a big factor >> profitable, cash flow positive, meeting weekly targets. do you think he reached critical mass in fighting back the tractors >> he is biting off big things, hitting hard industries. i think he likes it, and i think that's his way i don't know it is interesting. the space stuff is fascinating >> does he see it as a problem if the sec is his distracter >> he paid his bill, $20 million

tweet. i don't know i love covering him, i can tell you that >> he seemed to be still of two minds about a couple of subjects you asked about regrets. said he maybe regretted certain tweets or going after some people then at the same time he was unrelenting in attacks on certain journalists he says aren't being factual in their approach didn't seem to have any remorse about continuing to go after them. >> mathematically, i only attack this person. i am like there's no way i can get out of that. just pull out, kara, stop. >> and mary barra was asked if gm would be competing with tesla in ten years she basically said maybe. >> he said no, he is like good luck catching up with me. >> i wonder how he is seen in

detroit? >> i think he is right, it is a software, hardware problem that will be hard for the companies to jump in heavily someone like you have to eat your own lunch the pickup truck must have made him crazy, talking about the titanium pickup truck. doesn't care if he sells them. imagine if you hear that if you're ford, like ah i enjoyed the interview. the last pot smoking one got a lot of attention we had an enjoyable water, had a lot of water. >> no video, right we wouldn't know if you were smoking. >> we weren't doing anything we were so clean we were at tesla headquarters halloween night and didn't have any candy. >> i enjoyed your commentary great to have you with us. >> thanks a lot. coming up, why alibaba jack st salls the u.s. trade war the motupid thing in the world more "squawk alley" after the break.

i am scott walker. here's what's coming up at the top of the hour. apple drops below a trillion in market cap is now the chance to buy or is big tech's wreck going to get worse? we debate that. and the call of the day, starbucks getting an upgrade jim cramer has come around on the name what about you and jon najarian as rates are in focus

contessa, about ten away see you then >> waiting with baited breath. thank you. let's get to cma and rick santelli hi, rick. >> good morning, thank you with the fed meeting this week, 83 billion in coupon supply sta three year and then 10s and 30s, other areas are underscored. it's debt and deficits, of course, but the notion of the dollar and how strong it's been. consider at the end of last year we were just a little bit above 92 basically up about 4%. but that isn't really the whole dollar story at the beginning of the year when rates came out of the chute really hot and so did the equity markets until we had the period of volatility in february, the dollar, well, it started to plummet. as a matter of fact its low around 88.5 in february. if you consider we are up close to 10% from that level that's probably a better gauge as to

how the effects of a strong dollar in a global economy saturated with debt with the plan, it shouldn't be any shock that the dollar is strong. logistics get in the way big positions and how they're accumulated in the convention at wisdom of the dollar has to be strong put it down at the lows in february, but the way it's come back underscores several dynamics we hear a lot about inflation. as we've learned from very sharp economists like ed lazier just because wages are going up it's not a foregone conclusion they'll end up in the bucket of inflation, that productivity and other global issues and domestic ones, how we assimilate the working force back into the work place and what type of productivity arise, another

issue is that strong dollar will help keep that inflation at bay. now, we can't prove a negative here with respect to counter factual so we don't know what the alternative would have been. the trade war that many are nervous about that most likely will result in a positive outcome hasn't had the effect on the numbers many thought i think the strong dollar and behavior that has changed to deal with terrorists before they actually hit in the end consider lgfvs, local government funding vehicles in china. the size may be as much as $7 trillion u.s. dollars. why do i bring it up a lot of how tariffs get resolved and the government deals with debt in china is most likely going to help the currency which will be a big down at some point in the future

for the dollar index jon fortt, back to you the nasdaq is down 1%. "squawk alley" returns if we're gonna steal christmas,

we're gonna need the element of surprise. go team. [ snow crunching ] [ load crunching ] [ whispers ] this is the loudest snow ever.

i am a techie dad.n. 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. an eight-point gain ahead of the midterms tomorrow, fed meeting.

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call today for a free guide. alibaba's jack ma with harsh words this morning speaking at the china international import expo in shanghai take a listen. >> we have to make sure that we should not worry about those things like a trade, trade war

is the most stupid thing in this world. trade is for peace 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 >> jack ma and president xi sort of double-teaming. the rhetoric as xi said a country shouldn't white wash themselves and blame others when it comes to trade. >> it definitely sounds like jack ma is speaking against the trump administration's approach. he's gotten good at saying something you could interpret a bunch of different ways. >> a lot of people getting hurt by trade and they still think the trade war is okay even if they're feeling the pinch themselves >> even if they disagree the tactics, the end game is one they believe is worth fighting for. apple has been one of the stories of the morning any close below 200 would be the

first 10% drop since 2013. as we watch the trillion dollar market cap >> amazon briefly approached it. we'll see where they end up. >> earnings season goes into its final stages.contessa. i'm scott wapner is apple's second downgrade? as many sessions a golden opportunity to buy the stock, or is tech's continued wreck a sign to stay away it is 12:00, noon, and this is "the halftime report." apple's drop the stock falling heart since thursday's earnings report is tl an opportunity here? what about the supply chain stock? what does it mean for the rest of tech? a new round of earnings from lots of big players. and the coffee call of the day "the halftime report" starts right now.