democrats win control of the house but republicans keep the senate and pick up more power there. the global market impact as u.s. equity futures point to a higher open. from washington to wall street we'll bring you the headlines that you need to know. i got messed up with daylight savings. we're starting now early, on for hour hours today a special edition of "squawk box" begins right now. ♪

live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host is peter boockvar from bleakly advisory group. lots to talk about today today's top story a divided congress democrats picking up seats in the house of representatives to take control, but republicans adding to the majority in the senate eamon javers will bring us the big headlines in a moment. u.s. equity futures are up sharply. dow futures up by 250 points while it was expected that you would see a split in congress with the house going to the democrats and the republicans taking the senate, the majority really was probably a surprise by just how strong the number of republicans were in the senate

we saw some of those key senate races called, you saw the futures up by 100 points >> i'm surprised at the consensus. we said maybe presidential elections, the consensus can go topsy-turvy. this is what people thought would happen add to the senate. >> very much what people thought would happen looking at the s&p futures, they're up nasdaq is up by 120 points s&p futures indicated up by 30 points one thing you can probably say is with this you won't be seeing tax cut 2.0. the democratic house won't put that legislation through that's part of what we're seeing in treasury yields this morning. that would have meant the treasury was issuing more bonds. that's probably not likely at this point yields have come down across the board.

ten-year at 3.18%. overnight in asia, markets higher there the hang seng ended up 0.10% the nikkei closed down 0.25% in europe, with the early trade, you will see green arrows across the board. biggest of the major averages, biggest gains with the cac in france, which is up by 1.4%. the dax is up by 1.1%. the ftse is up by 1.25%. >> we want to do a breakdown for you with eamon javers. he's been awake for far too long he has the details on the balance of power that investors are focusing on this morning he's looking at the house and senate i want to talk about the gubernatorial races as well. >> so fascinating. 2016, remember two years ago we had that wild unexpected election cycle this year in 2018 we had a wild

but ultimately totally expected election result. let's look and break it down in the house of representatives, the magic number is 218 for the majority the democrats needed 23 seats to pick up net, to take control they end up with 230 democratic seats. that's enough for democratic control. there the democrats are taking away the house of representatives from the republicans. it will be a democratic speaker, most likely nancy pelosi that will cause significant political challenges for president trump over the next two years. democrats will now have subpoena power up on capitol hill and can launch investigations into all sorts of behavior they don't like in the white house. that story will drive politics in washington for the next two years. where the democrats did not come up successful last night is in

the u.s. senate. right now at this hour, we have some seats out there, the picture is that the democrats needed two seats to pick up net to take control. in reality they have lost seats. republicans picked up two. they may not be done yet with four seats still outstanding 45-51 is the breakdown as we stand now. that number could change as we go throughout the day. the president of the united states, his political fortunes hanging in the balance how did he respond? tremendous success last night. thanks to all. the president was out on the campaign trail hammering home a message on immigration largely through the end of the campaign cycle. he views this as a win because his party did not lose the senate >> the senate, even tester, it

looks like he will lose. if it stays the way it is in arizona as well, what would that -- if they win all four -- >> i think you're looking at two more pick ups. >> which two >> in montana and arizona. >> are you counting -- you're counting mccaskill is gone heitkamp is gone, nelson is gone but the democrats -- i almost said you, democrats picked up nevada, right? >> yeah. what you're looking at here is republicans -- >> sounds like four or five, doesn't it >> it could be a big day for the republicans as we go through the morning here republicans ultimately not losing seats >> tester is a surprise. >> tester in montand nachl the famous buzz cut, he's a guy that the president went after hard personally because he thought

that was a weak spot for the democrats. turns out that was likely right. now we'll see where the numbers shake out. the president i think is in position where he's -- he understands his political muscle out there on the campaign trail. he understands the messages that works for him. the problem is he's now beginning a re-election process for 2020 was will be the message that works for him in '20 >> that's what i was going to ask in terms of looking at the messaging. the next two years, i'm not sure much is going to happen legislatively, but in terms of where you think the country is, what worked, what didn't -- what worked, do you think, for democrats in certain places and what didn't? >> overall this was an anti-trump message from democrats. there's a lot of suburban districts out there where democrats were frustrated with the president, angry, eager to get out the vote

a lot of republicans sitting on their hands not enthused about the president's harsh tone this election, when we sift through the dust, it will be a lot about women and young people that's some of the energy and demographic change in this country. that's some of the energy for democrats in the house of representatives. we'll have to see what seats are up next time around and what that portends. >> a lot of high-profile democratic darlings didn't come through. >> beto o'rourke didn't come through. gillum didn't come through >> i thought florida was interesting. >> nelson -- how much terms was nelson going for was this his third nelson is a surprise watching the coverage last night, i was -- i was having a hard time finding coverage that

i thought was -- normally that is not the case. desantis -- they were -- they were building up gillum so much. i thought he would win for sure. he was ahead that was a shocker when desantis and rick scott pulled that out >> i was talking with john harwood off camera and what happened in florida with the poll numbers there you see gillum coming up just a bit short the difference 59,000 votes. >> it's trump. this was a trump election. >> florida senate. that's the one you're talking about. that is a surprising situation rick scott, looks like he's well on his way there officially with 99% in, still too close to call. >> crazy what a night >> kind of consensus

>> yeah. nks democra this is what we said yesterday. >> we can't believe it >> we can't believe the consensus. >> after 2016 we thought throw out all the polls and systems, we have no idea what is going on yesterday the pollsters got it pretty accurately. >> yeah. >> so what does that tell you about american politics? is it settling back down was the trump effect a one-off was that one year where things broke exactly -- >> or does it tell you people have recalibrated? >> what is the average pick up for -- or against the incumbent. >> it's right in the sweet spot. obama lost about twice as many, right? >> yeah. ultimately presidents lose in the first midterm after the

election >> if you're looking for a mass refu refu refutiation you don't see it here, do you >> this is not a mass rejection of the president and his policies >> blue trickle? blue sprinkle? >> some democrats have been saying this is not the blue wave it's not the red wave that the president was predicting >> in the senate it was. >> it was a democratic victory right in the sweet spot of expectations what it was was a huge voter turnout. 114 million votes from the early read compared to 83 million from the last midterms. eamon, we'll check back in with you in a bit we want to talk about what the midterm election results mean for the markets. historical numbers from kensho tell us the s&p averaged about a gain of a percent a week after the midterm elections going back

to 1980. the index climbs on average 2% a month out, and 5% three months out. but going back to 1896, fu fundstrat says the average stock return is about 2% when the house control flips. joining us is jack calferi e ca peter boockvar jack, tell us what you think >> i think when we think of the last election cycle and polling and thinking what you thought would happen didn't happen, that perhaps resulted in now what >> so we're holding back >> i think people were sitting on their hands, now they get

more certainty and more clarity that maybe things won't change as much as you might have considered or thought. tax policy will go slowly nowhere. you will see some more bias perhaps in order to get progress >> bipartisanship, it's hard to think of places where these two sides might cooperate. maybe infrastructure >> i could start with infrastructure that would play to both sides bases. if you think about projects that wind up resulting in employment and trades you can get there. >> you heard pelosi talk about drug prices last night do you think that's a bipartisan issue or not >> i think that you can put four politicians in a room and get six opinions on drug prices in terms of getting to where you want to get. everyone hears what they want to hear when you talk about what

you want to do in the healthcare reform area. >> do your investment stances change at all after yesterday? >> not really, no. what you hear going on from the politics potentially weighs more on the multiple, in terms of your certainty you want to apply to earnings streams, but i think earnings will drive us once you think about 9, 12, 15-month horizons it's much less psychology and much more earnings issues. >> peter, how about you? >> i don't think much changes the next two years legislatively trump got what he wanted in the tax bill most relevant to the election is how does trump approach the negotiations with china. china has been holding off on saying much until after the election do they feel like they have more leverage because trump lost the house? >> they've been sitting on their hands waiting for this moment to get this clean read on where the united states and the power really lies. you wake up this morning, if you're sitting in beijing, and

like us you're sitting around trying to figure where does the power lie. what does this election say about the power or leverage that the president has or doesn't have within this country and therefore with china >> right we'll see in a couple weeks the result i think this is the outcome china wanted from a negotiating standpoint >> what do you think the read is do you think they're sitting around saying, okay, he's now injured. he now has more power than we thought he had we think -- >> i think the selloff in the market and the pressure that the administration is getting internally from american business was enough to -- i don't want to say alter, but maybe soften his negotiating stance i don't think the chinese will get anything more than they were going to get, either way i'm hoping there's some agreement.

>> what would an agreement look like is there something both sides could say, okay, we can agree on this, we can save face >> i think both sides can find a negotiating strategy that woul allow them both to declare victory. it's not necessarily where i would claim expertise, but to the extent there's been talk of 120 demands being put forward, they can reach agreement on 80 of them with maybe 20 to 30 of those basically being off the table. >> peter thinks trade is the most important issue you think earnings how do those shake out >> when you think through the mechanism of trade is a question of earnings, what do tariffs look like? do they go into effect on january 1st? is there wiggle room i think we've spent ten years with companies doing a good job managing costs what you haven't heard a lot of comment tear about is what might

this mean for missed sales from the customer walking in to a home improvement chain and realizing that the electric drill he thought would cost $80. that's a lost sale for the home improvement retailer, for the company that makes the drill, and how does that work its way through. the margins may be fine, but if people miss on the top line, that's something where the street is still operating in the dark >> thank you for coming in, jack >> thank you >> what's with the glasses >> is that an early morning thing? >> it's 5:00 a.m >> it's the dentist appointment i have later i'm likely to close my eyes. >> oh. >> pleasant understanding. >> and contact lenses like that don't work >> both of you guys with the cleaning >> i just had a cleaning

yesterday. they suggested i use a straw -- >> for coffee. because coffee stains the teeth. >> or wear a yellow tie. brown teeth, yellow tie. >> they didn't say my teeth were yellow >> i've given up and you have sensitive teeth >> i do. >> that whitening, i'm telling you, that is like -- i tell them anything they want to know >> you're choosing your teeth over the vishibilitenvironment. >> right now i'm using my green plastic straw. >> thanks to you i'm on the scarsdale diet >> investors around the world were watching the u.s. midterms. we'll get global market reaction from europe to asia. as we head to break, here's the premarket winners and losers in the dow what ti

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let's find out how the global markets are reacting willem marx is in london we want to start with sri jegarajah in singapore >> interesting session in the asian markets. they surrendered early agagains. the market perspective was a divided congress was a best case scenario there was a sense that the markets could lift with this as the session wore on, the markets seemed perturbed about the prospect of gridlock the way that's expressed is in the currency markets, the dollar is on the defensive which has offered a reprieve to em fx. the story out here remains muted because of the global growth concerns, because of the fear of the fed as well, and of course the tech sector.

then you have the trade conflicts. i wanted to talk about that that remains a risk for our markets heading into g20 as far as the midterms are concerned, it seems as though mr. trump from the perspective out here, he will lean on his executive powers to go harder on trade policy versus china. speaking of which, we got a read on china fx reserves for october, holding above the critical level, but only just. they suffered their biggest monthly drop since december 2016 implications there for the currency and dollar y/yuan and that critical level of 7 fomc is the next big central risk for our markets that's how we look out here. i'll push it over to willem marx in london for a read on the european markets >> thanks, sri equity investors here in europe

have a positive picture with the four major indices well over 1% at this stage of the day's trading. let's check in on the local currency pairs euro stronger by 0.60% dollar swiss, the swiss franc performing well against the dollar in terms of the gloeld prices, you can see that spot price is up 0.7% on the day's trade another potential area where investors can go looking for yield ahead of the dollar in terms of the major sectors to watch here in europe, you can see all of them well into positive territory basic resources worth watching mining stocks in europe performing well. cars, healthcare let's look at healthcare those major stocks here, swiss, german, british as well, all performing well. they have exposure to healthcare

spending in the u.s., some of them so investors are looking at that result from the u.s. midterm and thinking there may be positive news coming out of this. looking very quickly at the auto sector, they're all performing strongly bmw is the exception, net profits down remarkable amounts this morning the cfo saying they expect continued trade tension to weigh on profits >> willem, thank you very much. when we come back, we'll talk about some sector plays in the u.s. the industry winners and losers. in the next hour, our conversation with harold hamm. he will tell us what the balance of power in washington could mean for the energy space. you're watching a special edition of "squawk box" right here on cnbc better, faster"

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good morning welcome to a special edition of "squawk box. today's top story a divided congress democrats picking up seats in the house of representatives to take control, but republicans adding to their majority in the senate we'll head to our cnbc election desk in a minute that only adds up to 96. we have four more to decide. at this point the gop was up in

all four of those, but who knows. there's absentees to be counted. you never know at this point even if it were to go all four of them switch, it would be 51. first the global market reaction u.s. equity futures are up 223 or so. that's probably not completely unexpected in that the uncertainty is gone and the outcome was more or less where the consensus was. a loss in the house for the gop and retain or add to seats in the senate treasury yields, 3.18. we want to get over to cnbc's global headquarters for a check in with our election desk. eamon javers is with us, john harwood, michelle caruso-cabrera exit polls tell us these were the three biggiest issues voter were facing, healthcare,

immigration and the economy. i'm hoping -- we were talking earlier with mr. boockvar, when you think about where the leverage lies in terms of on those issues, but even with china, for example, on trade, what you think this election effectively says >> i'll jump in on that one. look at that tweet the president put out. he called it a great success you might scratch your head and say how is it possible the president can say this was a success when the president was rebuked in the house we'll have nancy pelosi coming in wielding all sorts of power, how can that be a good thing for the president? but i think the president is right here in this sense this is a president who needs a foil politically he thrives when he has a fight and a political enemy. in 2016 the president suffered from catastrophic success. he rolled the table, wiped all

of his enemies from the face of the board. hillary clinton went into retirement in chappaqua. there was nobody left to fight with for the president he had to work with republicans and pass legislation this is a republican president who thrives when he's in a political fight. now he will have a credible political enemy on the scene in the democrats and house of representatives. his complaints about the democrats over the last two years were not krcredible becaue the democrats did not have power, but now those views are credible and he has somebody to run against. it might set him up well for 2020 >> the other thing that helps him when it comes to the senate, the federal judiciary. the senate confirms those judges the degree you want those federal judges to roll back the administrative state, which they have began over the last two years, that's even more possible with the makeup of the senate now. and mitch mcconnell doesn't have

to worry about legislation because he doesn't have the house anymore. >> the judiciary has been important for some republicans wh republicans maintain the maybe didn't choose president trump as their first voice but he has done what he promised, he put conservatives on the supreme court. >> if clarence thomas wanted to retire, i think he would feel comfortable retiring now that's been scuttlebutt. there's been a couple others, who knows what will happen >> it's a much more enduring legacy, right? you put a judge on -- >> so is the senate. >> they last a long time >> the senate is six years we're doing this again with the house in two years >> we're doing it with the senate in two years, too the republicans will have more seats to defend then >> the four or five that they gained in this election are there for six years. >> yeah.

>> john, in terms of the calculus now for pelosi and the democrats have to think about where to cooperate, where not to cooperate, specifically the money issues we've been talking about, where do you see the opportunity forever ity for bipn support? do you think it's healthcare or does everybody say talk to each other's hands, we won't do anything for two years this is truly gridlock >> i think the latter. it's unlikely we'll get compromise the democrats have talked about big infrastructure plans, but now that deficits are heading back to $1 trillion, that means the republican senate is not likely to go along with a big infrastructure spending program. there will be talk about that but not much action. the same with prescription drug

prices nancy pelosi said the president talks about reducing prescription drug prices, so am i, they have taken minor steps, but i don't think the republican senators will be comfortable with more, even if they are comfortable with the president's steps. >> john, that's an interesting point. if you think that pelosi is willing to work with the president on that, how likely would you game it that some sort of plan to try to stop gains for prescription drug prices actually takes place >> not likely. there will be talk about it. there's likely small steps to be taken, but i would not expect much same on trade. the democrats lean towards trump protectionism. a lot of republicans like the tariffs that the president introduced when i talked to pelosi last night, are you going to improve this new deal with canada and

mexico, she said i have no idea. it's a work in progress. we have not looked at it so democrats are likely to push the president from the left on trade. i would not expect action on that front >> andrew, to answer your question about china, i don't think china wakes up in a better position here. if there's one area where there's bipartisanship, it's that democrats and republicans suddenly seem to agree that china is a problem you can disagree about the methodology. >> did china make a mistake in terms of its timing, calculus that if they waited that somehow the president would be in a weaker position, you're making the argument -- are they in a stronger position or is this a default position >> they needed the information they needed to see what would happen they wanted to know this midterm result and see if the president is in a stronger or weaker position ultimately the president is in a slightly weaker position, but

not dramatically weaker. >> i think the variable here is president trump. he personally is going to be on the ballot in 2020 i think he's the one who has been driving this story. he's the one driving this trade conflict the more unsettled the markets get, the more potential fallout you see from the economy, the more he is likely to dial it back himself on his own hook >> do you think that's true about the dialing back i'm not so sure. >> i understand. but the president is somebody who talks a lot about things sometimes backs away when he gets heat. i think the economy -- the potential slowdown in the economy, the nervousness of markets will be a check on the president as he prepares to run for re-election. one other thing i wanted to say to eamon's point about the

democratic congress as a foil -- or the democratic house as a foil, that's an offsetting benefit for the president. it will be a benefit, but the biggest result is the changeover in the house that's an earthquake event for the trump presidency the ability the democrats have to protect the mueller investigation. those are consequential. as we look at the next few weeks when we see what mueller comes out with and the fact that the democratic house can stand and protect mueller, that is more important than any potential legislative development. >> still the rhetoric will be intense. think about all the tweets about chuck and nancy, they didn't even have power what will he say about maxine waters in charge of the house financial services committee? it will be intense >> to john's point, adam schiff running house intelligence

instead of devin nunes that's a situation where democrats will be able to reopen that intelligence investigation. that's all but shut down at this point. will how ways and means try to get the president's tax returns? >> the answer to that question is yes an aide told me last night that process is under way for the ways and means committee to request those tax returns. we'll see whether the irs turns them over, but in theory the weigh ways and means committee has the power to get that done >> do we have time for one final point? healthcare is a big issue. maybe by the time we get to the next round of elections it is less of an issue because we have seen costs come down through the department of labor. >> three other things that happened that were significant

last night three of the red states, trump friendly states, voted by ballot initiative to extend medicare under obamacare. >> okay. guys, we'll come back to you a lot more in the next hour and throughout the day when we come back, the top corporate stories. first, as we head to break, check out the futures. up across the board. jack caffrey was with us earlier and said wall street likes certainty. we weren't sure what would happen nobody trusted the polls before. now we know. dow futures up by 240 pounds s&p up by 30 the nasdaq up by 113 you're watching "squawk box" on cnbc

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welcome back to "squawk box. wow. 5:45 u.s. equity futures are indicated higher, up 234 on the dow jones. the s&p is up 29 the nasdaq is up 112 take a quick look at oil we'll talk about that later. see if the election has impact there. 62.86, up about 1% on wti. stocks to watch this morning in the wake of this election, again, in this case unrelated,

shares of fresenius medical care up at this hour. bmw posting a bigger than expected 27% drop in quarterly profits. the carmaker was hurt by currency headwinds, raw material costs and higher research and development expenses. our guest host is peter boockv boockvar talking about healthcare being an important issue that americans who went to vote said they were concerned with, we looked earlier today, you saw a lot of drug companies. those stocks trading higher in some of the overseas trading i guess the idea being they think there's going to be a huge u.s. spend into these drug companies. if you listen to what the trump administration has been doing

and saying, it's not been friendly towards some of these big drug companies how does this play out >> that's a great point and it comes down to pricing. europeans pay less for drugs than we pay here but all the r & d is done in the u.s. so u.s. companies try to get the return on that investment mostly here than overseas i think there's positioning ahead of the election. now that we have the results people can either take it off or press them i think it's too early to say how this will play out talking about drug pricing is one thing. actually implementing it is something else >> that's john harwood's point he said he spoke with nancy pelosi and she would like to work with president trump on this issue john said it seemed unlikely they would come to an agreement. however the trump administration is taking some steps where they

don't need anyone to sign off on to get some regulatory things. >> right it's a difficult situation because of the sensitivity of the r & d involved and that these drug companies need a return on their investment you have to be careful when you play with drug prices. the senate is a place where they may get support. overall, would you tell people to buy into drug stocks here how much of the pressure is legitimate, how much is not? >> i think it's legitimate because you're threatening their business model when you try to price control their products drug companies and big pharma have also been big dividend plays and safety plays >> the ceos of the major drug companies have been cognizant of this issue as a result they've tried to

hold back prices we had the ceo of eli lilly on yesterday. lilly had strong results based on higher sales, but not because of higher prices for drugs drug prices were down. >> more volume all of them feel the heat, that they need to create more products and more volume instead of relying on the usual lever of price. what other sectors should we pay attention to based on these results? >> initially everyone will talk about infrastructure they'll be buying material stocks, the rocks, the gravel that will go into roads. the thing with infrastructure is we have a dearth of labor out there. finding the people to build the bridges is not easy to do. it's great to talk about it, but i wouldn't be relying on this. >> peter boockvar is our guest host. coming up, from energy to

defense, the areas investors can expect to see moves post-election. there's a check on what's happening in the european rks ghw.no making my dreams a reality takes more than just investment advice. from insurance to savings to retirement,

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with the midterms in the rearview mirror, it's time to look at how the results could impact the markets and the economy more broadly joining us is chuck gabriel from capital alpha partners you better have some good answers here, chuck. what happened was basically what the consensus thought would happen you had weeks and months to figure out how drug prices, pharmaceuticals, the oil industry, tax policy, you had a long time to think about this. can you give me the three biggest things as far as how the midterms affect the business world? >> i think we'll have to see and

get some clarity and assuredness on the georgia governor's race mr. gillum conceded in florida i think first of all on the healthcare front there was a prospect for a lot of change with regard to medicaid opt in on the aca, affordable care act. we'll see less of that with regard to drugs, the democrats did fairly well in winning 230 seats. republicans had hoped to win 210 that would give them a chance to come back in 2020. they have a head of steam and moderates that will moderate them somewhat, but drug pricing will be an issue what's interesting there, you can't count on the populist, president trump, to lean against a movement to constrain drug prices, particularly if itgain bipartisan traction in the senate i think on the energy front,

that's really a state issue. i think we have to comb through the results in the state of washington, the state of california first for the most part the president's deregulatory agenda remains, energy is the original leave us alone group >> whenever i think of how to phrase a question, we're still gridlocked deficit spending you have the big spenders in the house in charge theoretically. people think republicans are spending i can't imagine there will be tax cuts at this point the house won't go for that. what about budget and omnibus bills, funding the government. there will be gridlock there, too, unless people work together >> a bit more suspenseful.

i think the democrats are the more bond friendly party to the extent there's a lot of suspense about the fed or angst about the fed, that split government thing is not so bad unless we really get a confluence of events that force the need for some austerity. >> would either the house or the senate, if there was a different makeup, would it affect tariffs? now we're hearing that some democrats are more amenable to what the president is doing with china than the republicans then again you have republicans emboldened in the senate what do you expect what's your forecast 54 or 55 >> i guess mr. tester is ahead again. that race was close. the president had a very good night. kanye had a very good night, taylor swift, oprah winfrey --

>> tester is back up you got >> the last i saw. >> what time was that, this morning? >> this morning. we'll see. that would be a cherry on top for the republicans if they get the tester seat. just 54 is a big number. that insulates them strongly. >> jeff flake is not one of the 54 >> roger that. >> it's almost like 55 >> it's quite something. on the other hand, the democrats had a big day in the house you will have the president who feels totally vindicated in his posture and promotion of immigration. trade did not show up at all in the exit polling so the president will keep at it the democrats come in and there's some who want to press the president with investigations, subpoenas, but

they have that freshman house among the house democrats, there's a moderate group of those folks. they have to worry about re-election, too it's a pretty good blessed gridlock prescription unless we need them to work on the deficits, then the fixed income markets will tell us if that's the case >> we're out of time we only have four hours. good-bye, chuck. >> working hard today. coming up, a complete recap of the midterm elections and what the results mean for your money. and we'll be joined by one of the nation's richest oil men, harold hamm will tell us what the balance of power could mean for the energy space a look at futures. we're in the green you're watching a special edition of "squawk box" here on cnbc i'm ken jacobus and i switched to the spark cash card

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good morning divided congress republicans hold on and add to the senate, but democrats take the house. both sides declaring victory markets taking comfort in the result dow futures pointing to triple digit gains at the open. voters are signaling two of their top issues, healthcare and the economy, we'll talk about how the midterm results could impact those priorities. and the impact on energy we'll talk to oil executive harold hamm, the richest guy in all of oklahoma. it's wednesday, november 7, 2018, the second hour of a four-hour special edition of "squawk box" begins right now. ♪

live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box" on cnbc, live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host is peter boockvar u.s. equity futures have been higher all morning long. if you look you will see the dow futures indicated up by 226 points s&p futures up by 28 the nasdaq up by 104 these gains started yesterday, late last night as the results started coming in. for the most part you are seeing what was widely anticipated. that was a surprise after what we saw in 2016 where the polls and analysts were all wrong on what would happen. overnight in asia, mixed markets there. the nikkei was down by a quarter percentage point

hang seng up by a tenth of a percent. in shanghai, stocks were down there by 0.7%. in europe, stocks are up across the board. dax is up by 1%. the cac in france is up by 1.4%. the ftse is up by 1.2% stocks in italy and spain are higher look at treasury yields here in the united states. you heard chuck gabriel say it, he thinks the democrats are more helpful and better for the bond market ten-year right now is coming under a bit of pressure, the yield 3.189% the explanation for that being there probably won't be tax cut 2.0. the treasury won't issue as many bonds. >> we'll get over to eamon javers this morning. he has all of the details about the balance of power and how investors are focusing on the results.

>> good morning. let's review the bidding from overnight about where we landed in the house and the senate. look at the house of representatives, this is where the president's party suffered a defeat, losing control of the house. remember, you need 218 to gain control of the house as it stands now, 230 democrats. we are looking at a potential speaker of the house, nancy pelosi with democratic control in the house in the senate, we have some up certainty here in the jat as republican senate as republicans have picked up two seatsso far. still four seats to be determined still too close to call in florida, for example a situation too close to call in arizona and montana. there's the florida senate race, rick scott, bill nelson, that

was very close too close to call even though you got 99% of the vote in many arizona, mcsally and sinema, a difference of over 14,000 votes still very, very close there as you go through the states, it's tight again, tester, matt rosendale in montana. tester may lose that seat. 94% of the vote in there in mississippi there will a runoff later in the month. so we have some time before we know the full makeup of the senate the expectation here is that some of these states will take a while, several hours to call we don't think we'll see any clarity here we can tell you for sure that republicans maintain control and

pick up at least two seats >> several hours, we're doing four we can do several hours. we can do that in our sleep. you remember florida and the hanging chads? that was several months. hours we can do. get it right, just take your time >> wise words. >> thank you we'll have more from you and the gang back at hq throughout the program. >> joining us now is founder and chief investment officer, ed bonson and ed keon from qma. and our guest host is peter boockvar from bleakly advisory group which is usually his view on the economy as well, also a

cnbc contributor that works any way. who wants to start it was consensus, wasn't it? >> it was, then you kind of look into the details, i think net-net it would be an incredible act to spin that it didn't go more to the democrats. nevada is the only exception if i were looking for bad news as a republican, you would have to think the southwest it's continuing to move that other direction. arizona's margins are tight. i think the cruz case with 1$100 million spent, and he was coming from an unpopular starting spot even within the trump support base

overall the consensus view is what took place. >> what does it mean for the markets? what does it mean for the economy? we were just talking about who was friendlier to the bond market chuck gabriel said the democrats. i mentioned a conversation steve sedgwick and geoff cutmore were having >> i think we already know what the discretionary spending levels will be that's not going to be moved much i'm amazed by both sides of the aisle refusing to admit if we want to move the needle on deficits, it's on entitlements >> so tax cut 2.0 goes away. you won't have that fiscal stimulus going into it treasury won't issue as many bonds to pay for some of those

thing things >> i do, but the size is not needle moving any way. one interesting thing about the markets, at treasury department level they can have the inflation indexing to capital gains. >> can you both speak to the issue that mr. boockvar was talkitalk talking about, the leverage china thinks it has or doesn't have today relative to yesterday? in terms of where this tariff/trade war goes. is that going to be the overhang over the next couple of months >> i would hate to think by client capital would be affected by me forecasting how china is interpreting midterms. >> they were waiting for it. >> they were i believe we're in the same place we were. both sides do not know what the other side's end game is i don't think china has less or more leverage. >> so there's no new information -- they were waiting for new information either

because they thought the president would be -- >> if there was a sound rebuke of president trump, that they had the leverage or they didn't so they would have to -- >> that's a fair point i don't think anyone is waking up this morning saying president trump is scolded this is so far from a 2010 moment >> you have to buy into the supply chain disruption bearish story to think it's that big of a deal our domestic economy is kicking right now. i don't know if china is front and center that's not the one thing i would talk about >> the tariffs are a concern >> q3 gdp -- >> the democrats like the tariffs. >> but the business investment number within q3 gdp, i'm one of these guys who thinks that has to be high with the explosive capex in q1 and q2 coming down to zero in q3, i think that was tariff related. >> i guess i don't want to give

china the credit for being the wildcard in our economy. maybe it is. ed, that was you barely bullish, right? >> we still are. >> nothing has changed >> i wouldn't say nothing. what did the midterm election mean to your overall viewpoint >> i don't think it's that dramatically changed i wouldn't say nothing has changed, but the basics have not changed much at all. the fed is on track to continue to raise rates one of the interesting dynamics is how does the president react to the fed as they continue to raise rates. does he ratchet up the pressure as he did in his interview with you or does he sit back and let the fed do its thing i wouldn't be surprised if he starts to run against the fed as part of his strategy for 2020.

does ta mean that mean the fed pause? i think that's an interesting dynamic. >> is that it? you have to think about sectors. you like bonds more? you like them less >> we like bonds less. >> bonds less. >> yes less than stocks that is >> okay. >> i doubt we'll make a lot of changes to portfolios. the market hates uncertainty now that we know what happened, there's not much change there. we will start to focus on things like how much of a sloedo doslon we'll see in earnings in 1990. the fundamentals of the market have not changed much. >> mueller is back theoretically, right >> 100%. >> it's over the midterm elections. and the power of subpoena. >> it's been built up.

nobody has been leaking. but there's also going to be a question for the democrats about how to approach this whole situation. nancy pelosi said legislate, legislate, legislate, not investigate, investigate, investigate. >> she said she will reapply the checks and blanalances. >> they didn't want to push it too far ahead of the election because that would mean it may get out the vote more for the republican side. >> getting out the vote for 2020, we'll start talking about that what time is it by 7:00 we can start talking about that >> the markets got what it wanted from the president. they got the big tax cut, deregulation if we get no new legislation -- >> did the markets get what they wanted in the midterm election >> the consensus turned out to

be right >> all right >> be nice to do bipartisan immigration fix, wouldn't it >> that's going to be hard >> why >> trump could go -- >> it will be interesting. >> he could come to your side of things more. >> not my side of things >> you're right. you're right >> thanks, david bring people together, not apart. any way, you missed that when we return, the impact of the midterm elections on energy prices. we'll check in with our election desk and we'll talk to oil tycoon harold hamm he is the richest man in oklahoma we'll find out what he thinks about all of this. as we head to break, the biggest premarket winners and losers in

the dow. i am a family man.

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welcome back to this special edition of "squawk box." we'll get to the cnbc election desk michelle caruso-cabrera, john harwood, john kilduff are there, but we start with eamon javers >> good morning. democrats take over the house of representatives. let's look at the united states senate picture it looks like we're talking about at least two republican pick-ups in the senate in this area we have four seats still out there. we don't expect to see those calls any time soon. there's still opportunity for pick ups for republicans so that creates a picture where you have a democratic house of

representatives, republican senate you are looking at a situation where you might have by some peoples estimations sort of goldilocks gridlock, where if there's liberal legislation coming out of the house, that may not be passed by the senate that is controlled by all these republicans. the president is unlikely to pass any legislation coming out of a democrat ic house >> we are here on the election desk john harwood to my left, john kilduff also here. good to have you here. >> good morning. >> there were two energy initiatives on ballots in this election one in colorado, one in florida. colorado, a win for the energy sector what happened? >> it was a lit pumus test it was the grass roots evidence of push back against the

fracking industry. we see it here in new york and pennsylvania colorado was a big test. it went down it lost. >> they were voting on whether or not to push back drilling to 2,500 feet from occupied homes >> it would have been an effective ban. the amount of real estate you could have drilled on as a result of this was shrinking >> so that was a win for the energy industry. in florida, there was another ballot initiative. people were voting on the same question as to whether or not allow offshore drilling off the coast of florida and indoor vaping both the same question so it passed but we don't know if people were voting against drilling, offshore florida, or voting against vaping indoors >> i think the oil and gas industry executives were indignant to being linked to vapors. >> how much drilling was going

to happen offshore >> so the trump administration has opened up all of the offshore drilling, there are some richfields between key west and cuba has have been eyed by the oil industry they were in play. i think that was a particularly sensitive issue. in florida they have other issues with red tide i don't think they wanted to see a black and gold tide coming their way. >> john, it strikes me to the point that eamon made earlier about gridlock that the most significant actions that this administration has taken on energy are regulatory rather than legislative i see no reason that will not continue yes, democrats may attempt to block regulations, but i'm not sure they'll be successful in that of course the republican senate, stronger majority will stand with him >> no doubt. most of the power here, the exploration and production, the

exports, a huge agenda item for the trump administration, especially as it relates to trade where natural gas is an ace in the hold for the united states is controlled by the executive branch my only idea is that the democrats will try to make hay on the issues, issues for consumers, like the natural spike higher in gat pris prices the weekend. there's a deficit in supplies versus last year and the five-year average, that will make supplies tight this year. if we get a spike in gas prices, democrats may use that as an issue against the administration to say let's put the brakes on some of this stuff >> worth noting, 80% of oil and gases campaign contributions

went to republicans. >> thank you very much >> we'll check back in with our election desk coming up in the next hour. the energy sector is a key to the nation's economic growth our next guest is on the front lines of the oil and natural gas industries joining us is harold hamm of continental resources. not sure how much of that conversation you have heard. what had been anticipated regarding the election happened what does this mean for your industry >> taking anything off the table and making america less powerful, less dominant with energy is nuts you don't want to do that. the initiative petition idea in colorado got beat soundly. we hope that never comes back.

america is in very good position i her the conversation about natural gas. certainly that's an ace in the hole we have the cheapest gasoline prices in the world. you know, as far as any major increases with crude oil, gasoline prices, i think we might see a moderate increase, but not major. >> there's been speculation that the u.s. liquefied natural gas industry would suffer because of these tariffs and this trade war with china what is the situation so far china is a big importer of liquefied natural gas. if there are massive tariffs that come to bear, what will the impact be? >> you know, they are an important importer, but it comes down to about 4% you know, the tariffs have not

been a big factor as of yet. still their best deal is to buy l & g from america it's a great thing we've not had any adverse affect from that so far >> what do you anticipate will happen if this stretches out and if there are additional tariffs placed by february >> if there's additional tariffs, it may slow down a bit. basically here you've been waiting on the capacity to come about. so a lot of demand out there for our lng. we have not been impacted by lack of demand there's a tremendous amount for this fuel around the world >> are you seeing changing behavior on the part of chinese and where they're buying crude oil? >> no. i think as far as people are buying their crude oil, there is some -- there's some changes, you know

if you pull back on the iranian sanctions, that demand goes somewhere else so there's a lot of shift there with crude oil we have good export capabilities we are building on that right now. >> harold, we saw a run up in oil prices as we headed into those anticipated sanctions on iran a big pullback on oil prices has happened since then. oil is back to the lowest level in seven months. does that surprise you a bit >> it did. there's been a pullback. more supply has been brought on in the u.s. than people anticipated. here in america we've done a remarkable thing in the last ten years, we've doubled the production capacity. it's all do you to drilling it

in america >> in terms of what that means for oil prices down the road, even if the saudis were to stop pumping as much, do you think the american supply would just step up and fill the gap again >> i think we can. we're still growing supplies in america. there's infrastructure challenges in the preermian and other places with this much expansion you would expect that. so a lot of pipelines are being built. pipeline reversals are going on. we'll take care of it, but there's additional capacity that we see coming and going that we'll fill the doe mand iemand n america. >> does that mean you don't anticipate oil prices going to $100 >> i don't anticipate $100 oil i certainly don't. >> what do you think is the right price for oil given global

demand pictures and our supply >> we could see a 20% increase and still be in a reasonable range. i think that's where most people come down. you know, it's not going out the roof, that's for sure. >> harold, i know you're close to the president and you have been a supporter i've heard you were watching the returns with the white house inner circle is that the case >> that was the case it was a good night even though, you know, there were so many close races in the house yes, the democrats will take control by a small amount, but it wasn't the runaway. you never saw a blue wave. maybe a blue puddle. if there's a wave coming, it never got to shore >> what was the internal read, if you will, sitting in the room

with everybody as they were watching this? the expectation and then the result and what you think it means for 2020 even though i know we're not supposed to jump two years ahead, today is the beginning in some ways of whatever that becomes. and how the markets and the economy will react to all of it. >> i think it was very positive, the atmosphere in the room that's what i read, particularly with the senate races. the president has done a tremendous job he worked hard during this midterm election cycle i think it's a great success overall. the pomood was positive. that's what i witnessed. >> okay. harold, the president is tweeting take it for what it's worth. president trump tweeting i

received so many congratulations from so many on our big victory last night including from foreign nations, friends that were waiting me out and hoping on trade deals now we can all get back to work and get things done. >> there's a direct message to the chinese. >> yep >> and anybody in a trade deal >> still here. >> the posture and the stance. uncertainty wiped out. markets tend to like that. >> like to be a fly on the wall in that trump/xi meeting coming up in a few weeks. coming up, we will talk about the battleground state of new jersey we'll take you to the third district where the democrats attempt to flip a republican district generated more than $2 million in spending. brian sullivan, what do you have coming up? >> the crystal diner in toms river is just opening up we expect it to be filled.

this is one of those races that is still not called. this is ocean county, new jersey the republican incumbent up by 2,300 votes, but a few thousand left to be count hopefully we could get a ricisionibility thi ibilitabout distct of new jersey it's your money, your vote, and we'll have pancakes. we're back after this.

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good morning welcome back to a special edition of "squawk box." let's start with the response to the midterms in the markets. we'll start with u.s. equity futures. investors waking up to a divided congress the democrats gained enough seats to take control of the house of representatives house minority leader nancy pelosi -- i'm already ready to call her speaker -- said the election was about restoring the constitution's checks and balances to the trump administration, because there haven't been enough checks and balances on trump yet. and defending healthcare programs the republicans maintain control of the senate, added some seats. we don't know how many yet they won some key contests in texas, indiana, north dakota, missouri and tennessee i'm from ohio, big win for mike

dewine, governor of ohio cordray is out, he did not win for a while it looked like he might. there we go. governor races, in wisconsin, scott walker lost. a lot of consensus about -- >> i'll tell you, everything was a surprise to me >> you went to bed early >> because iwent to bed early because i had no expectations. you didn't trust the polls >> the georgia and florida stuff was probably not necessarily consensus. >> no, no, the georgia part was always going to be tight >> i knew it was going to be tight. i thought there was a feeling that desantos was a bad candidate and trump couldn't save him

bill nelson, tough to beat all the hurricane stuff, scott got credit for that. >> i'm convinced that foxconn deal, a scam from the start -- >> in terms of how many jobs it would create for the state >> they gave away the store, they gave away the house in terms of the tax breaks. they said they would create 13,000 jobs, turned into 3,000 jobs >> i thought he had done a good job in wisconsin the last two terms. it's amazing how quickly people can flip and toss you out. >> that's the first state where public unions came about he totally reversed a lot of that he had three elections he had to win the first one, the

recall, and the next one going back to the well maybe one too many times for a third term. most places you can't do that. that's why rick scott had to run for senate >> any word on connecticut >> we have some people who live there. mac, the democrat is up now, right? it's close lets get over it our election desk, mac. >> right now, in fact, let's get to a district that has not been called brian sullivan is in toms river, new jersey, a battleground for democrats trying to flip a republican district. you know how to pick some drama there. >> i guess we wanted to go to a district that was polling that was too close to call. we didn't realize we would be this exactly right this district here, which cuts like a charlie brown t-shirt

stripe across the middle of huge 49.8 for democrats to the republican incumbent, 48.9, andrew kim but under the new new jersey laws, any ballot postmarked as of yesterday can still be counted. so it's possible we may not get a decision today or tomorrow it could come as late as thursday or friday if some of those ballots still continue to come in. there are thousands of ballots to be counted from burlington county burlington leans more democratic that's where kim is from his campaign manager saying once all those ballots are counted, they declare they will be declared victor. of course that's from his campaign manager we don't have a decision in the

new jersey third district. we know the house has gone to the democrats. this will just be one more seat, but it will be local drama and a flipping of a republican-held ocean county seat if that's what happens. we're waiting here today we're not here for that, but we're here because all day at the crystal diner we will talk to people coming in about the results. do they want to see the democrats go after the president, ask for his tax returns, try to impeach him or see the country get an infrastructure bill, try to end that cap on state and local taxes, joe and becky you know what i'm talking about here. >> that's my question. how much of this is directly related -- this being such a close raise in a republican district, how much of this is because of the tax cut and what that meant to blue states where some peoples taxes went up >> when that cut got passed i

called it the mroblue state payback. doesn't matter if you're republican, democrat, independent, you got hit in more affluent areas where you itemized your deductions, you won't take the standard deduction, it will be a hurt some people yesterday brought that up. andy kim, we talked to him yesterday about that he mentioned that as well. that was certainly one of the issues facing him. going back to your previous conversation, as a wisconsin taxpayer, i sort of lived there part of the year, in the past seven elections now six of them, americans have flipped the party in power in either the white house, senate or the house of representatives. that's how democracy is supposed to work. i guess democracy is still okay. somebody get me an eagle and a hot dog because america will be fine >> the republic might survive. >> not an eagle hot dog, that's illegal.

>> yuck. >> i still get tweets about how it's all i care about is my tax cut. all i care about is my tax cut that's all i care about. >> when you live in new jersey, it's hard not to care about taxes. >> you got the aforementioned agent fees i can't write off my agent -- >> i'm taxed as hell, i'm not going to take it anymore >> brian, thank you. we'll check in with you throughout the day >> we're happy to pay more, andrew >> our fair share. >> yeah. is it fair >> possible infrastructure spending is a big money item joining us now is jim -- >> jim something put up the name. let everyone decide.

don't try it, andrew >> jim, here's the question. we were talking about china. you can base it on how china thinks about it or how you think about it your analysis of what you think this election means in terms of what trump can or cannot do when it comes to the tariffs with china >> listen, you know, all you heard so far is gridlock, is gridlock good or bad maybe it's good. there's a lot trump can do the single biggest economic issue is these tariffs where trump doesn't need song. he suffered defeats in sort of the industrial heartland base, particularly wisconsin and pennsylvania there's nothing else he can do that's bigger than that. >> if president xi called you up this morning -- >> i'm buying more sorghum

the president wants to cut a deal, buy more sorghum and natural gas, they could have don't mnuchin deal months ago. i think the president may be coming around to the navarro position that this is a long twilight struggle with china will redefine our economic relationship, our political relationship there's bipartisan support for doing that, if not for the tariffs in particular. i think there's a reasonable case that this trade war will go on and intense f intensify >> how would you get to an infrastructure bill? >> listen, pelosi already said she would like do it she doesn't think they'll impeach trump unless the mueller report is terrible and republicans go with it republicans have a big agenda

that's about more than infrastructure either come with a down payment on the infrastructure deal it might make sense if the economy begins to slow the democrats will have more to talk about and they can show they can get something done other than just investigate, which people will find very boring >> jim, you're assuming they will not take a confrontational approach >> they will be confrontational. they'll look at tax returns, but they won't impeach the president on a single party line vote up less it is a blockbuster report from mueller saving that, i think they'll want to get something done kamala harris may not want to get anything done, but a lot of house of representatives will want to get something done that and healthcare and drug prices are the obvious things. >> jim pethokoukis, thank you. >> you did it! you got it >> you know?

you nailed it. >> complicated name. >> it is especially -- >> when it pops up >> can i buy a vowel >> coming up, tom fanning will join us. he will talk abouthis company' earnings and the impact of the midterms on the markets and the utility business. then our guest host at the top of the hour, eric cantor and robert johnson much more to come this morning on "squawk." right now as we head to break, a look at the u.s. equity futures. dow futures indicated up by 200 sd uts naaqp by 100 s&p up by 25 "squawk box" will be right back. as fiduciaries, they live by a simple rule: always act in the best interests of their clients. that's why charles schwab is proud to support more independent financial advisors

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welcome back we've been talking about the winning candidates from the midterm, another big winner is marijuana. utah and missouri have legalized it for medical use let's look at some of the pot stocks on this news. up across the board. cr kronos up by 4.3%.

aurora cannabis up by 3% southern company out with quarterly results. profit of 1.14 a share, that's 7 cents ahead of estimates thomas fanning joins us now. we want to talk about earnings, but first your reaction to the midterms, and you're a big fed guy, at least you have a lot to do with the atlanta fed. what are the implications in your view? >> yeah, great to be with you again. you know what? last night, with all the excitement, enthusiasm on both sides, i thought it was a great night for america. in terms of how it impacts us, you know, implementing an effective energy policy is something that i think both sides pretty much agree on it gives us an unassailable advantage in a worldwide competitive economy. so i think we have every reason to be optimistic going forward in terms of monetary policy and everything else, obviously i'm

not in the room, but the economy remains trong. gosh, we look at our retail sales numbers, they're as good as they have been in a long time retail sales up about 1.4% for the quarter. there are some issues we need to worry about going about going forward. you think about momentum statistics it looks like this big move up may be flattening out a bit. i think with the positives of tax reform, reducing regulations has been great but i think the trade war skirmish, whatever you want to call it, may give some people some pause and may cause people -- what we're seeing right now is investing capital in current operations. in order to get people to make long-term investments, i think we need to have that uncertainty resolved >> does that imply you are seeing reluctance on the part of business to pick up investments? >> well, recall what we are seeing is a lot of investment in

current operations or expansions at current operations. i think to get the real long-term investment, i think there's another move that could be made if we remove that kind of uncertainty >> i love that -- andrew, let's use both it's a great night for america can we do that >> all sides -- >> everybody gets a little bit of what they want. >> but for the democracy and everything but, see, tom gets a lot of checks sent in for utility bills from democrats and republicans i mean, that was a really forceful statement there, tom. you don't care whether they're blue or red checks as long as they're green. i think that's what you're saying >> you want to know what we do we hope everybody participates in the political process >> all right >> no seriously. >> no, i got it. but you're down in what is now being called the deep south and that's one of the ways they explain things i mean, are you surprised that a

guy backed by bernie sanders and who espouses some -- i don't know what you call it, democratic socialism or whatever, did so well in geor a georgia, the democratic candidate did well also. the south is becoming much less republican, it seems like. >> oh, i don't know. look, we'll let the numbers speak for themselves my sense is the business climate continues to be really good. when you look at the issues facing us, you look at the numbers that we're seeing for the quarter and really i think what we see going forward, it remains a very bullish climate for business as compared to the rest of the united states, i would say. >> i just thought it was weird that in florida which has no income tax, that you were having a guy that wants single payer. and he did very well i thought he was going to win. in fact, a lot of people thought he was going to win. so things are changing

but they didn't change all at once last night. but you're certainly seeing sort of a shift, i think. >> well, it certainly is an interesting argument to have right now. especially having that argument with the economy doing so well fascinating stuff to talk about here >> all right what were the highlights of the report from your company today >> yeah. so it really was benefits of tax reform i know one of the crawlers on the tv screen earlier said we missed revenues. revenues were down just a little bit less than a percent. 0.7% but you want to know what that is that is the benefit of tax reform one of the things we do is collect taxes as part of our business and tax receipts were lower. so revenues went down. >> wait. explain that again, tom.

>> sure. essentially if taxes are higher, bills are higher what we were able to see, the deal we pretty much struck in all of our four-state regions here in the southeast anyway is that we gave about 2/3 of the benefit of tax reform in the form of lower bills. and that helping -- >> as a result that hurt your revenue numbers because you lowered prices with what you got back from taxes. okay i get that >> tom, we're in a rising interest rate environment. how is southern company handling its upcoming debt maturities assuming if you have 2019/2020 maturities you may have to refinance at a higher interest rate >> look, i love talking about our debt portfolio i used to do this stuff for a living we have about $45 billion of debt on our balance sheet. the long-term debt side has an average life of 16.4 years at about an average cost of 3.78%

it's one of the great debt portfolios in america, i would say. and it's so big and it's so well run from a lieblgt managemeabilt standpoint from a risk management standpoint, we've dialed down what we call our risk capital. that would be maturities due within a year. it's down around 11% now from normal levels of maybe 15% to 18% in the past. so weave dial've dialed down ouk exposure it's worked out well >> tom fanning, thank you. thanks for commenting on anything we ask you. we appreciate it, tom. southern company ceo >> thank you great being with you >> okay. want to thank you, peter, for hanging out and being so smart for all these hours so early in the morning. especially on this important election day so thank you coming up, two other big

hours coming ahead on this very special edition of "squawk box." our guest host the next two hours, former house majority leader eric cantor is going to be with us along with robert johnson founder of rlj companies and the b.e.t. network they're going to break down the results in the midterm elections and the issues that matter most to your money. "squawk box" returns with two big hours ahead. each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. a moment of joy. a source of inspiration. an act of kindness.

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this is a special edition of "squawk box. your money your vote we're breaking down midterm results and what it means for your investments in this hour, bob johnson of rlj companies, eric cantor vice chair at moelis & company, and

marc morial. plus our special election desk coverage continues as we break down winners, losers, and wall street it's your money, your vote and "squawk box" begins right now. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. at this hour, more of what we've seen all morning long. dow indicated up by over 200 points nasdaq indicated up by close to a hundred points and s&p up over 25 points. a big morning adds wall street gets ready for the opening bell after midterm elections. dom chu is covering the early market reaction. eamon javers is breaking down the big races.

robert johnson of rlj companies is here to give us the business perspective and former house majority leader eric cantor joins us as well he is now vice chair at moleis and company. we'll talk to them about all of this >> why is eric in such a good mood >> because it's 7:00 he didn't have to start at 6:00. >> you came in here bouncing along whistling. you just seem like -- >> because it's no longer his problem. >> well, that is true. >> maybe that's it is that all? >> we're going to talk about why he may be happy in just a little bit. it may have to do with some of the election results we'll talk about the election results this morning here is what is making headlines at this hour, though we want to tell you about the federal reserve. it begins a two-day policy meeting after these elections. the central bank will announce a policy statement tomorrow afternoon. the fed not expected to raise rates this time around, but lots of people will be looking for clues there, of course michael kors out with

earnings this morning. the company earned $1.27 per share. also raising full year forecast. comparable store sales did fall greater than expected during the quarter. and the stock taking a hit as a result and dell technologies preparing to raise its bid for dvmt shares. that is the one that tracks investment in software maker vm ware carl icahn has said the bid undervalues the company. but "the wall street journal" now says that dell has been t k talking to those shareholders to find what value would be acceptable it's gridlock again. gridlock in washington the democrats taking the house, the republicans holding onto the senate still waiting, eamon don't rush it. don't rush it. still waiting to see how many seats they've actually added but you're here to help us with some key results you got any more you can tell us or are we still holding at 51? >> no new calls over the past

half hour, joe take a look at the recap where we stand in the house of representatives, the president's party suffering a significant defeat 230 democrats in the house of representatives. the magic number there is 218. that means republicans lose. the democrats will have a speaker of the house most likely nancy pelosi that will change the tenor of the last two years in the president's office and then look at the senate as you were pointing out. there are still some uncertainty here of where the margin is going to land, but the republicans had a big night in the senate with a two-seat gain at least so far. still four seats out there to be decided. the possibility here of more republican gains in the senate we'll wait and see where that finishes up. something to monitor throughout the morning. and then take a look at some of these governors races. particularly in florida, that's such an important swing state.

andrew gillum looks like going down to ron desantis in the governor's race. 99% of the vote in there looks like desantis is in. take a look at wisconsin as well another key governor's race. something here for the democrats to like. evers in, scott walker looks like going down to defeat here that with 9% of the vote in as well so something for both parties to like here. something for both parties not to like here but the president already declaring victory. here's his tweet from this morning just out within the past couple of minutes. receiving so many congratulations on our big victory last night including from foreign nations, friends, that were holding out on trade deals. now we can get things done the president sending a signal to china there also, guys, the president of the united states has just announced he's going to be having a press conference at 11:30 in the east room at the white house in

washington presumably we're going to hear more of this from the president about how last night represents a big victory for him and for his policies back over to you >> eamon, thank you very much. we'll check back in with you shortly. the midterm results are in line with what wall street was expecting. dom chu joins us with more on how the markets are reacting >> good morning. as we talk about the positioning in the market, we do know right now given the positive move to the markets in the broader spectrum, that we have certain parts of the market that were well positioned. not a lot of surprises, of course, there. as we talk about the election results with a divided congress, now the attention focuses on sectors that could become common ground for republicans and democrats. a couple of those to watch at least when trading starts to get going here in the u.s. and of course later on this week and into the next quarter are some of the pharmaceutical related stocks the reason i want to show this is we don't have a lot of active trading premarket for the big

pharma companies like merck and pfizer here in the u.s but in european trading right now, you can see sharp moves lower here 1.2% for pfizer. then 2/3 to the downside as well the thinking there is if the republicans and democrats can come together on some kind of legislation to look at drug pricing, that could be something that drug companies will react to that's one to watch. also one to watch in the u.s. as we get going in the premarket into the opening bell, are materials related stocks right now we see the materials spdr down by 1.5%. but will there be prospects for a compromised infrastructure spending bill? those are stocks to watch as well then on the macro side of things, we're watching the 10-year u.s. government yield. we are seeing a bit of a move to the downside here. and the reason here is if we do have a divided congress, will there be less likelihood of more

fiscal stimulus down the line? that's something to watch there as well. a lot of places to keep eyes on as the trading gets going into the opening bell >> it's fun, dom oil, currency, interest rates, stock market it's all -- you can make a logic to predict all those different markets. it affects all of them >> and there's so many different cross currents so the idea here is if the markets are handicapped pretty well for this right now, is it going to stay that way in the coming days and weeks? >> well, we're going to try and figure out what a split decision means right now. let's get to our guest host for the next two hours bob johnson is founder and chairman of rlj companies. he's going to talk about the business side of things along with eric cantor who is a businessman now. but eric might have other stuff to talk about, too, that might border on the political side of

things now managing director of moelis and company. in sports when there's a split decision, someone's hand still gets raised as to who wins when the judges are split in total with the house, the senate, and the gubernatorial outcomes yesterday, who had a better night in your view? the gop or the democrats >> well, i think the answer is it's probably split as you said. it's a split >> neither hand gets raised. >> neither hand gets raised. the problem with the politicians that's different from business people, business people have this ability to walk and chew gum at the same time most politicians don't so in business, if you lose in competition with another business person you forget about it and move on to your next strategic objective. you don't demonize the person who beat you for the deal. politicians have a different approach and if that happens after this

split and all we get is gridlock combined with demonization, then we really got problems but for the most part from the business standpoint, we're glad we have a democracy, but we're probably even more happy that we have a free market economy and rule of law. we take that in stride and move forward. so the world is not going to end tomorrow because of a win by the democrats in wisconsin or a win by the democrats in -- republicans in florida it's going to continue going the question is, is it going to be attack, attack on it? i don't know how as a business guy you really like to do a deal with people you like and the democrats are saying we're going to impeach trump on one hand and try to cut an infrastructure deal on the other hand i don't know 20 people who can deal with that problem of you're trying to kill me, why you asking me to help you? that's a pretty difficult

process. so i think the best part for the democrats is to say is there a bridge we can cross together to achieve an objective and for the republicans to look at how do we bring about the kind of economic change that we can champion >> all politics are local and you live in florida. obviously. were you surprised that a bernie sanders endorsed candidate came so close to being elected governor of florida? and would you have -- was he the right guy for florida in your view >> well, joe, you said something earlier about florida being a deep south >> i said that because i'm starting to see it called the deep south >> i think that name is sort of passe. >> how about georgia, the deep south? >> no. because i think with the movement of people -- >> i agree >> the young people, it changes social norms and interaction i think the deep south moniker is out of favor.

with gillum, he was against a traditional politician in desantis what he didn't do -- what he had to do to win -- he didn't turn out the african-american vote at the level barack obama did >> why do you think that was >> well, he's not barack obama, the first thing. and the second thing is that african-americans for the most part are not very left of center in public policy and if you have someone who talks about things in the way that he sounds more like a progressive than an african-american leader -- >> to the extent that people did think that florida could be a referendum -- people talked about it as what is it going to say about 2020 does it suggest that the democrats actually can't go too far on this progressive side >> no. i totally agree that if the

democrats go so far to the left -- >> but was he too left >> he was too left for two important constituents one, the basic voters of florida. and the african-american sort of center african-american church motivated, basically not wanting to disrupt anything and focus on their own economic well being. and when they heard him talk about social issues, it wasn't the normal social issues of voter suppression or economic opportunity, affirmative action, those things that are bread and butter things that drive african-american voters. and so i think that combination is worth this margin of loss that he had that kept him from beating desantis >> that would have been quite a switch for florida

you think of it as a tax haven zero income tax. and to go from that to democratic socialism in one election seemed like a bridge too far. >> i don't think he was a socialist, by the way. >> i said democratic socialism i said that for you, andrew. i did. i said democratic socialism. i was very careful not to -- very, very careful just to say -- all right i tried so hard. >> you say democratic socialism -- >> democratic socialism is okay. that's what you -- >> no, it isn't. i don't know what you're talking about. >> oh, i thought it was. okay you got to tell me exactly how you actually think just define it for me. >> it's not how i think. >> anyway, eric, what do you think? >> i think the democrats, it is proven and to bob's point way too extreme for the electorate in florida and if you look across these races where there was so much hype of beto o'rourke, the race in maryland, the one in florida.

the extreme progressive agenda -- >> bob's the one that said he was a socialist. he said he was too far left. >> that's a loser. >> i called him progressive. >> you said way too left >> way too left -- as eric said, way too left for that constituency >> a different question. relates to china if you're sitting in beijing and you're president xi this morning trying to assess these elections and what they mean for the strength or lack of strength it president trump has vis-a-vis tariffs or global power internally and externally in this country, you think what this morning >> clearly he's got control. my party's maintained increased control in the senate. the senate is going to allow the trump administration to continue to place people in presidential appointments, positions that require senate confirmation. the trump administration will be able to continue with his deregulatory push.

now, i think if you look at where the chinese are seeing, they'll know just like we do that the gears in washington are going to slow down a little bit because i believe that nancy pelosi and the democrats, when they take charge in the house, they're going to have the temptation and i believe that it's very analogous to when my part took over that the push is going to be there and it's going to be there big-time her biggest challenge is to not go right to impeachment. >> is that your column today on the china thing is that what you wrote your column on today? that's what i'm checking today. >> today is a wednesday. >> oh, okay. yeah so you don't -- >> column was yesterday. >> did you write it on china yesterday? >> no, i did not >> i think trade andtariffs is one of the biggest issues. >> whether he's weakened or not -- >> if you were to say what is the immediate reaction if i'm

there is what are people in beijing thinking infrastructure, health care, all these other things -- >> the big takeaway is the trump administration deregulatory agenda will continue in the same direction. it will slow, but i think it's a good sign. clearly the markets are saying that our economy will continue to grow. >> you would think the democrats adding the seats and taking over the house would embolden trump because he's got more people on his side for tariffs we just heard that democrats are more amenable to tariffs in trade disputes than the republicans are. he's not weakened, he's actually strengthened >> i thought if he lost big in both houses, it would be a situation he would dig in a little bit because that's his nature, i think. >> the president doesn't really need congressional approval on certain things >> no. it's nice to have friends. >> one thing i've learned about

president trump is that when you think he's at his weakest point, that's. >> he'll come out the strongest. i thought if he lost the senate, he would be even more over the top with his stance with china >> i think the same will happen if the house tries to impeach him. they will probe, but i guarantee you that president trump will respond probably more aggressively than -- >> does that mean there is no chance of any sort of bipartisan agreement on anything whether that be drug pricing, even issues like infrastructure >> i think this. remember, today begins a day where president trump is in cycle for re-election. and i think that he's going to look at and this is my worry as the prior segment showed my worry is that the free market bend that my party has been about, it may start to turn a little bit because the president may lookfor an opportunity to

try to work with the other side. even though they may be gunning at him every day and he's been unpredictable in terms of his philosophical bend if there is one as to where he goes >> or when he would call them into the room and cut a deal with them. >> he is a business guy. and as a business guy, he's used to being locked in a competitive battle we would love to sit with the democrats and talk about infrastructure, health care, or drug prices. but he'll do it on the idea that i can cajole you into backing away from any kind of damaging investigation. if he doesn't get it, he will go hard and basically shut down that's the biggest fear that i have >> there's an immigration deal with trump in the house. i don't know about the senate though >> i don't believe it. >> you don't >> i don't believe it.

my former colleagues who lost last night, they all were in the suburbs in the more affluent suburbs of this country. and they supported the movement on dreamers. they supported movement on immigration. not the ones who are there >> so nothing's happening there either. >> what the democrats have done, they've made immigration and the wall particularly a litmus test. and they feel if they cave on the wall or if they cave on an immigration platform that includes merit based immigration and all the other things with legal immigration, they are saying to the hispanic population, we're bailing out on you. >> that's bad. so they need it for 2020 so we can't do a deal? that's a bad reason. >> when you see a voting pattern of the democrats moving to the far west, that's going to be dependent on the expansion of the hispanic vote. one thing i'm interested in noticing is that the

african-american vote is becoming the second peg in the -- the third peg in the democrat platform of voting power. because right now the democrats are winning with white educated americans and particularly women. and then when you go west, you throw in hispanics in those states where they're already going to win because they're already democratic so now i think for african-americans, they have to ask themselves where is our power play within the democratic party? >> all right we will be back with more from bob johnson and eric hey. what happened to that guy that primaried you a couple of years -- >> listen. >> i haven't checked that. what was his name? >> i was shocked >> well, what happened to him? >> i was shocked to see my former congressional district flipped to go democrat >> he lost dave brat lost okay >> it has now been 38 years that

district was in republican hands and now it's flipped and in my state, there were three congressional seats that flipped. and it was the one up in northern virginia in the suburbs -- >> they were watching that closely last night >> again, i think reflective of a trend you got going on in suburbs everywhere which is a challenge for my party >> good answer, eric coming up, more of your corporate headlines. morgan stanley public strategist michael zezas is going to lay out his outlook for the markets and what may or may not happen leading to the next presidential election stay tuned you're watching a special edition post-midterm elections here on cnbc

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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. now that america has voted, investors want to know how markets and policies are going to be impacted and where to find potential opportunity. what do the midterm election results mean for the markets historical results show us s&p 500 has averaged about 1% the week after the midterms all the way back to 1980 the index climbs on average more than 2% a month after the election, and by 5% in the three months following election day. michael zezas is strategist at

morgan stanley michael, this was not unexpected on wall street other than the idea that nobody was paying attention to the polls and thought maybe they could be wrong. what does this mean today? we're looking at the equity markets trading higher this morning. >> i think if you cut through the noise, the real question was whether or not you were going to get enough votes that were going to meaningfully the change the fiscal policy, health care policy and trade the answer to that question is no right? so tax is a good microcosm of this with the democrats taking control of the house, you're not going to have tax 2.0. you're not going to have the higher growth trajectory that came with. and the treasury yields probably have to take a pause on account of that. but on the flip side, you also didn't get the blue sweep. therefore we're not talking about higher odds of unified democratic government 2021 that might come with a tax rollback the type of thing that would pressure treasury yields lower

so ends up being a neutral outcome. you kind of memorialize policies in place the next couple of years. >> which means what? just in terms of an investors perspective given how weak the month of october was >> i think what you do is you largely take off the table some of these policy variables and you revert back to fundamentals driving the market so what our equity team thinks of that is going back to 2019 with a pressure story from higher cost and higher rates fed being a little bit more aggressive, natural cost pressures from trade and other material costs inputs. that'll keep us in a range of 2650 to 2800 for the foreseeable future. >> if it had been a blue wave where the senate was taken over by the democrats too, what would you be telling people differently this morning i mean, it doesn't sound like you're really issuing a strong buy here >> no. i mean, really because i think this was the status quo

expectation and it seems like at least compared to how investors came into the night, the polls ended up being more right than it was thought i suspect the panel on your show right now would be talking about or probably rightfully so that there's higher probability in 20 2021, that all the challenges that might represent that have liked tax cuts and deregulation and the like the fact we're not having that conversation keeps us in the range opposed to talking about downside or flipside upside if they managed to keep the house and had the votes to jam through another tax cut. >> what sectors have you drilled down we've talked about health care this morning we've talked about the energy sector we've talked about drug pricing potentially. >> i think health care is a really interesting one to focus on, obviously. in the blue sweep scenario, i

think there would have been underperformance pressure there that would have suggested that the democrats' core message around health care and the linkage to prescription drug pricing would have had substantial agency amongst the electorate now it's a lot less clear. but if you listen to nancy pelosi last night, that was really the one issue that she mentioned. so i think if you're looking for bipartisanship right now, because a lot of folks come at us and say there should be an infrastructure package that should be another reason for optimism well, it's entirely possible the democrats might try and prioritize something around prescription drug pricing which at least in name the president seems to agree with democrats on so i think that's a sector you've got to continue to look at that might have some pressure as we learn more about what the democratic agenda is going to be as pelosi speaks, as president trump speaks in the coming days. >> michael, thank you for your time it's good to see you >> thanks for having me on >> michael zezas of morgan stanley. when we come back, marc

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♪ good morning welcome back to a special edition of "squawk box" right here on cnbc we're live at the nasdaq market site in times square a day after the midterm elections. among the stories front and center outside of the election news, health insurer humana beating estimates and raising its full year forecast they earned $4.58 a share compared to $4.26 a share. it was helped by the strong performance by medicare advantage plans. also reporting this morning, dish network the satellite tv operator beating estimates by 15 cents.

quarterly profit of 82 cents per share. however, dish lost 367,000 subscribers during the quarter more than 232,000 losses than analysts had been anticipating mortgage applications fell last week. both new purchase applications and refinancing activity fell during the week and the average 30-year mortgage rate rose four basis points to 5.15%. let's get to our election desk and eamon javers who's been picking through some of the key exit data -- or exit polling data which, i don't know, was it any better this time around, eamon? >> look. fascinating last night what was on voters minds as this went to the poll last night. this is not what we expected to see this morning biggest issue, most important issue for voters last night, 41% saying it was health care.

just 22% saying economy. 23% saying immigration guns coming in at 10% here what is normally the biggest item on this agenda? it's almost always over the past ten years the economy stupid as we talk about. well, last night it was health care stupid that was really driving voters out to the polls. i think if you look at it, you could make an argument that this issue, this issue, and this issue are all different flavors of the same thing. it's all economic anxiety. and this is what happens to me if i get sick. this is how am i going to make sure i have a job. this is the overall economy. all of those things are sort of the anxieties that are weighing on voters as they went to the polls last night but this is the first time in the history of this exit poll, joe, that health care has risen to the top of the list in a presidential or midterm year that is a big change and something we didn't expect to see. >> yep all right. you're going to head over to our panel now? >> that's right.

>> stick around. let's bring in the rest of the election desk. john harwood has been following closely. michelle caruso-cabrera is also with us and on the economy, trade, and issues and more -- oh, my look who's here. it's steve liesman you're a new add, steve. good morning welcome. >> he's working the late shift today. >> that's right. anyway, take it away, eamon. >> can i weigh in on what you just said? so health care, right? what we don't know from the exit polls is what was the concern? was it cost or was it coverage it probably depends on the voter. if you're stuck in a high cost obamacare plan, you're worried about the cost if you have a pre-existing condition, you're worried about the coverage, right? >> and the president started tweeting -- late in the cycle he was talking about pre-existing conditions >> the other point i would make is any reforms they've been able to do when it comes to reducing costs and ensuring coverage happen very late, right? there is the association plans

that went into effect in june under the labor department, right? which is going to make it easier for smaller businesses to pull together they get the scale big businesses do. just last month is when they put in this regulation where businesses could offer tax exempt dollars to their employees, right to get rid of that asymmetric benefits >> can i -- >> so my final thing i would just say is any changes that might help this, we're not going to see -- wouldn't have impacted this election. maybe it's the next election where these reforms maybe help the republicans. >> i want a little sympathy on the desk here. for 16 years at cnbc, i'm used to being number one. i do not remember a time when i have not come in the day after election and my job is, steve, what did people say about the economy and how did they vote. and i wonder if donald trump is a victim of himself in two ways.

a victim of success when it comes to the economy so it wasn't as high on people's minds it's been the last several years. and a victim of his own publicipublic i -- politicking to the point he's the one that elevated immigration. and the democrats elevated health care to a place that i don't know the people who are covering this election were quite aware of how forceful an issue it was going to be >> first of all, the reason that the president turned to immigration was because he was trying to rally voters especially the working class white voters in conservative states and this was the issue he thought motivated them most. remember, those are people who have not gotten huge rewards from the trump economy the other situation is, this recovery is in its ninth year. people are used to the economy improving and that removes some

of the upside that you get from the fact that times are good and on health ca correct, steve democrats placed that issue on the agenda they had help from republicans from their attempts to repeal obamacare last year which backfired. and then this fall democrats could run at republicans for taking away the pre-existing conditions and republicans could drop back saying i support protecting pre-existing conditions too. but if you look at the composition of the people who responded to health care, those who saidhealth care voted democrat and by a large majority they said democrats would do better >> what do democrat ds do with that this morning? i don't think they necessarily expected it either from a legislative perspective, what can they do they can't pass anything they can't send anything that

the president is going to sign how do they resolve that >> the biggest potential compromise is that nancy pelosi who i talked to yesterday said i'm going to take the president up on his pledge to reduce prescription drug costs. the president has taken some regulatory steps toward using the government's power to negotiate lower prices democrats say it hasn't gone far enough i think the republican senate is not likely to go along with more aggressive steps i think gridlock is the answer it's possible through spending bills they can restore some of the re-insurance provisions that bolster obamacare. >> don't discount what i said earlier which is these reforms they put in place in the last three months, they could start to trickle through and maybe this starts to fade in terms of people being concerned -- >> can i talk about another victim of success thing? >> real quick. >> the tax cuts. very interesting results we started getting these results

on all-america 29% said it helped them. 22% said it hurt them. and 45% said no impact i bring this up in context of the legislation comment because i wonder if there's a way where the president and the republicans need to go back at tax cuts in a way that those numbers change more in their favor. >> that's the point i was making before most people did not feel a big benefit from that tax cut. >> they're not going to do it with democrats in charge on the house side, but you look at it sector by sector, it seems if you're worried about a particular sector, it might be something to look at as you start playing through what these results mean out there in the business world, andrew >> thank you for that. we're going to get back to the elections. we want to bring you one piece of business news for a moment. former intel ceo brian krzanich, he has a new job he has been named the new ceo of

cdk global which was a spinoff from adp jim cramer caught up with krzanich and asked him about his exit from intel. >> we loved you there. you did a remarkable job it's been a fantastic stock. was there any way -- i know you had the violation of the n nonfraternization policy, but any way you could have stayed there? >> the board and i agreed it was time for me to retire. i've spent the last few months really thinking about what i want to do next. intel is set on a great course and it's a great company and i have 100% faith in it. >> you can catch the full interview on "mad money" tonight at 6:00 p.m. meantime, what we want to do is get back to that conversation about the midterm elections and what they mean marc morial is here, former new orleans mayor and now national urban league president eric cantor now vice chairman of

m moelis and company also bob johnson from rlj companies. thank you all for being here all of you were watching that conversation that was taking place at hq with eamon and steve and john and michelle and the gang before we get to that -- everyone had had different faces and had a different view of what was takes place. but your view on what the elections ultimate means for business this morning? >> well, it's too early to tell. it's the end of one-party rule so we're back to what we had during most of the obama years what we had during most of the bush years, and what we had during clinton we had divided government. so i think you're going to have a different dynamic when it comes to it. i think it's too early to tell i think anything about business is speculation to raise great fears or hopes. let me tell you what i hope. i hope they can get together on

infrastructure that would help the economy. that would help american business it would help american workers that's what i think it could be. >> you talked about what divided government has looked like over the past two decades it has been divided. it has been polarized and it has only gotten worse and very little typically gets done what would be the political incentive for the democrats to hold hands with the republicans over the next two years? >> what's the incentive for donald trump to hold hands with the democrats? two can tango. >> flip it around, same thing. >> two can tango, but they have to find common ground. right now there's a wide difference of opinion. as i travel around the country, while people want people to work together, they also want their leaders to stand on what they think their principles are yesterday was a positive day for america in that we had high voter turnout. what surprised me is that so many races are so close. so that tells me that deep down we are in this very difficult time in american history we can't wish it away, we can't

think it away, and it's going to be a lot of work common ground is going to be narrow in this congress. there's going to be w, i hope, criminal justice reform and maybe infrastructure i don't think we're going to see a goldilocks moment in the next two years. >> eric, what are the odds of a government shutdown at this point? >> i think we've definitely seen an increase in the odds for a government shutdown. i think president trump has been very clear he is not shy about even bringing about a shutdown. and he promised before the election that immigration and the wall will be the premise on which that shutdown will likely occur. so we're going to see a lot of focus -- >> that's an issue the markets would care about if it becomes a reality. how would you look at the odds at this point? >> i would put the odds at over 50% there's going to be a shutdown in december you know, i think that the president had promised -- he had promised that in the election. he said he would sign the continuing resolution that

expires in the beginning of december all over the wall >> if he's dealing with a budget committee not from his own party -- >> but he will in the interim. before december, he'll deal with his own party. mitch mcconnell has been on record multiple times in resisting the idea of a shutdown as a political tool. so there's going to be tension within the republican caucus about whether a shutdown is going to be held against them. and so i don't think while the president i think is interesting in how he uses leverage, he will talk about a shutdown. he will hold the wall out there. i think the wall has been trump's trump card and if somehow there's movement on the wall, he loses that as trump's trump card >> i want to ask you a question. i'm probably -- i describe myself as democrat moderate centrist in the bill clinton mold but when i look at the democratic party today, i see an extreme left part that's saying we're going to impeach this

president first order. you got jerry nadler saying he's going to have judiciary. maxine is definitely looking for her pound of flesh and when you've got the liberal wing of the party pushing the democrats this way, how are you going to find -- how is the democrat party going to find common ground? zbl >> i'll tell you this. both the democratic caucus and republican caucus have id logical issues within them >> what was the -- we got to go, but what was the lesson of last night for the democrats then >> health care works it worked as an issue. they bet the farm on it and it got control of the house for them >> okay. we're going to have to continue this conversation. marc morial, thank you for being with us. nbc news political director and "meet the press" moderator chuck todd, it's coming up in a second you're sticking around >> bob, impeachment to the democrat is like the wall to the republicans.

>> that's the problem. >> it's a motivator. >> no, it's more than a motivator. it may be a litmus test. >> he wants the threat of the wall >> marc, i think it's a litmus test >> all right i guess i got to read this nbc political director and "meet the press" moderator chuck todd will be our guest. glenn hubbard and jason furman will also be our guests. here's a look at futures at this hour at t-mobile, forty bucks gets you an unlimited plan and a new samsung galaxy s9 included for every line. this is what you get with your $40 plan at verizon. recap! with t-mobile, you get this: four lines four phones for forty bucks. with verizon, you get this... the choice just got a whole lot more obvious. get more because you deserve it. only at t-mobile.

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♪ welcome back to, everybody the balance of power shifting in the house while the gop hangs onto control of the senate and builds let's talk about some of the issues facing the markets. the economy and your money doing that now with us is chuck todd moderator of "meet the press" on nbc and also host of mtp daily on msnbc

also with us is eric cantor and robert johnson chuck, let's just talk about the issues that mattered most to voters a lot of them were straight up business issues. things like health care and the economy. how did that sway this election? >> well, i think health care really drove this on the democratic side. i mean, i think you -- if there is -- democrats got control of the house, if they have one mandate that i think voters sent them and if you judged them by their campaign, they better produce. they better figure out how to protect pre-existing conditions. so i think that is one promise that they made that i think voters are expecting them to at least fight and do >> can they do that, though, when they have control of one house? >> no. but i think republicans -- i mean, look they know they have to do this like, this was -- this made them vulnerable, the issue on obamacare made them vulnerable in some places they shouldn't have been vulnerable so it was ineffective. it was one of the few issues

that can cut across our very polarized divide so in that sense, perhaps. but the economy, you know, when the economy sometimes is this good, it allows culture issues to sort of rise up look at the president. he said the economy is boring. i can't gin everybody up i think it's fascinating. the president wanted to close with immigration the president was right. because it prevented -- look the democrats won the popular vote they won the house okay they won more people showed up yesterday to vote for democrats to control the house than republicans but it wasn't a wave because the president did a good enough job of getting his base out that he won some key races in the electoral college two years later. >> what do you think the lesson is in terms of how -- i'm already going two years out in terms of how you think the

democrats approach this all over again in 2020. meaning, is it -- was there a lesson in terms of being a democratic centrist? where do you think people are going to shake out on that it's going to have a huge impact on how this shakes out in the next two years >> i had a democratic presidential candidate say to me -- i'm not going to say he or she but it was somebody not white saying i'm watching andrew gillum's race closely. if he wins it proves i can run as a progressive >> so do they poll in? >> i don't know. because go to the other part of andrew's question, what did phil bretisen do? the central democrats lost and the progressive democrats lost

but you could argue texas, georgia, and florida let's do texas and georgia ironically, it got them closer running a progressive candidate in texas and georgia >> in a red state. >> than you would have thought so i don't think there's a right answer other than i do think if you borrow a page from trump, being bolder and drawing brighter colors is a way to galvanize your base. if these are base elections, you could argue that the democrats might have to go to bolder lines. >> we don't have a lot of time left let's do -- you bring it meet the stocks. what do you like i was promised a meet the stocks full screen. >> a full screen you want stocks? i'm just weighing -- >> what are you long what are you short huh? >> i feel like whatever i say, i will somehow get in trouble with that company or somebody will accuse me of trying to manipulate -- trying to make money. i can't do anything. comcast is a terrific stock. that's what i hear i love comcast >> let's go back to what eric

said he thinks there's a better than 50% chance you could see a shutdown of the government that's not something the markets would like what do you think? >> i think it's possible because you're going to have this pressure. i mean, look eric cantor was there. he felt the same pressures you have a base of your party that expects you to -- you go after this t. when you were brought into power in 2010, you were expected to confront president obama >> and if we weren't able to repeal obamacare, we weren't fighting hard enough it's going to be the same thing -- >> same thing on the left. >> exactly >> the problem for nancy pelosi, there's about 28 new members of congress that were elected saying no, we want to get something done we're going to be obstructionists. so there's tension infrastructure, maybe. that's the one you know what? i thought he would do infrastructure immediately when he got in. >> infrastructure is the pay for issue. there's going to be deficit concerns >> house democrats are going to be deficit hawks that i can promise you >> when president trump says i want pre-existing conditions

protected, does he mean it and does it mean there's a deal there with the house because most of the things that the republicans were going to do, they might have weakened pre-existing condition protection right? does he mean it he wants to protect it >> if he wants to do it, i think he should do it. i think he could basically say, let's agree on repairing obamacare. and i think now that we have litigated obamacare so much, that i think the president could get away with, okay, this is what we got. the modified version of it >> you never know with him >> that i think is more possible than people realize. >> chuck, we want to thank you a after a long night >> he said he got up and shaved. >> you know, i missed a spot here, here, here >> was it in the dark? >> as my grandmother says, i missed the entire thing. >> "meet the press" moderator chuck todd by the way, we've got a lot more to come. we'll have more market reaction to the midterm results after

this the equity futures up across the board. and later on cnbc, catch avenue capital chairman marc lasry. he will join "halftime report. "squawk box" will be right back.

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balance of power democrats grab control of the house, but republicans make gains in the senate. >> the issues. americans casting ballots with their money in mind, the economy and health care high on the list and the market reaction. wall street's first take on the election just 90 minutes away. we'll tell you what to expect as the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin and it's now thursday, i think we've done a three-hour show no, it's not. >> it's wednesday. >> it's still wednesday. okay our guest host -- feels like

that robert johnson is here founder and chairman of rlj companies and teeric cantor is here from moelis and company here's what the futures look like overnight as the election results came in. the futures right now are pretty solid for most of the session. we'll see what happens between now and 4:00 we were at 240 on the dow. now 185 or so. treasury yields are below 3.20% right now. >> all right thank you, hairdo. we are watching the democrats taking back majority in the house they will have 230 seats to 205 for the gop. republicans meantime keeping control of the senate. with few races yet to be called,

the gop has already flipped a few seats. number two, markets already reacting to the election results. futures pointing to strong gains as wall street gets ready to weigh in on the vote and number three, breaking down that vote. health care and economy, two of the biggest issues voters had in mind a few stocks to watch on the move this morning. michael kors out with their earnings the high end handbag maker reporting adjusted earnings per share of $1.27 revenue essentially in line but the stock coming under pressure this morning thanks to a 2.1% drop in comparable store sales versus an expected drop of 0.7%. also health insurer humana beating on the top and bottom lines. strong performance in the medicare vantage business raising results. all right. some key races from yesterday's vote still too close to call eamon javers joins us now with

more on an already reshaped congress i'm trying to figure out what you can do when you have one, eamon. like, throughout the day you can use a kazoo or something. >> i might need jumping jacks later to keep the energy up. we have the trumpeters coming in later, but that's after your show. >> so you have nothing new zplp no new calls as of now but a new tweet from the president of the united states here's a president who has suffered a stinging rebuke by all political terms by losing the house of representatives he's declaring victory though. he says those that worked with me in this incredible midterm election embracing certain policies and principles did very well those that did not say good-bye. yesterday was such a very big win, capital "b," capital "w." and all under the pressure of a nasty and hostile media. i'm assuming he's referring to you there, joe ultimately this president declaring victory. he's going to have a press

conference at 11:30 in the white house. he'll say the media was unfair to me but the candidates that went along with what i had to say are the ones who won and the president is not wrong on this, joe i think you look at the republican party today, the day after, they did lose the house of representatives but ultimately the party as a whole is a little more trumpian today than yesterday he is remaking the republican party in his image what does that mean for the next two years? tim gra >> someone who calls a loss a stinging rebuke. right? >> that's possible yeah this was a tough day for the president. he loses the house. >> what's the average loss of house seats? what's the average loss? it wasn't -- >> no, but what eamon says is the correct point from the perspective of the subpoena power, how that slows down any

agenda the white house had in mind >> right >> ask eric cantor who's sitting there with you if a president losing the house of representatives is a big deal or not, joe. >> not stinging rebuke we've got to remember, we're in midterm elections. midterm elections i think traditionally yield the party but i went on to eamon's point when in '15 the house actually gave subpoena power directly to the chairman they don't have to confer with the minority ranking member. and there's going to be havoc to wreak. >> oh, yeah. >> adam schiff instead of -- nunes, adam schiff think about that >> close only counts in hand grenades and horseshoes. but it also counts in elections. you've got the chairman of each committee becomes a little, you know, the power you have to deal with >> when the chairman says they

don't have to confer we haven't seen this in play >> right up until '14, chairman would have to confer and there was only one committee that had a chairman with that much power. but still would confer with leadership now all chairman have basically de facto unilateral ability to issue subpoenas. >> here's a new tweet. maybe he's watching. if the democrats think they're going to waste taxpayer money investigating us at the house level, then we will be forced to consider investigating them for all the leaks of classified information and much else at the senate level two can play at this game. >> so the question there, joe, is -- >> it's 2020 >> the question there is who does the president mean when he says we? >> he's talking about the senate at the senate level. >> or is he talking about leaks that were happening in the senate because if he's talking about we

the white house, the white house can't investigate anybody. maybe the senate if you look at that again, we will likewise be forced to investigate them for all the leaks at the senate level. so maybe he's assuming he's going to mobilize senate republican chairman again the house democratic chairmen. and that paints a pretty picture. clearly not a lot of legislating is going to go on. >> i want to say stinging rebuke for, like, losing 60 or 70 seats. what would you use armagedd armageddon nuclear armageddon for that. i don't know >> a mild rebuke maybe >> mild. a couple of those senate races, you've got to admit -- i'm trying to figure out why awful i don't feel awful, eamon. i'm just trying to figure out -- >> because it wasn't a blue wave there was so much talk about a blue wave and that didn't materialize. the red wave didn't materialize.

but the blue wave didn't show up last night >> blue sprinkle >> it's like on a bench. when it's up to your sand castle but doesn't totally destroy it the senate held. >> a blue mist like one of those when you're hot, you get a little blue mist. >> we are mixing our metaphors this morning >> in a big way. thank you, eamon let's look at wall street's take on the election for that we get to dominic chu so far equity markets trading higher. >> it is and it gets to this point that we were going to have so much a seesaw price action. a seesaw congress with the president, with everything else, that maybe not a lot is going to get done and that conventional wisdom, if you recall over the last week or so that since 1950 the data has showed when a republican is president, you want to have a divided congress that ends up yielding the highest average returns for the s&p 500. at least since 1950. so to that point and the way things are playing out, there are key sectors in industry

groups we are watching right now. we told you about those drug companies early on let's look at materials related companies. that might be expressing some bullishness based upon possibilities of a joint bipartisan plan to tackle infrastructure bu vulcan materials is one of those. now up 3% at this point. we're seeing a big spike here in the premarket just on that one other place to watch is on the industrial side of things on infrastructure take a look at what's happening with united rentals. also up about 2% on that why? because these guys rent all the equipment it takes to make those. that's something to watch there as well. and then as we talk about maybe some of the more bullishness happening now in the overall risk sentiment in the market place, we've been focusing how semiconductors -- we've got to

make up for the damage that's been done. but as we talk about the market movements going on right now, we are still well off of our record levels i mean, not that far maybe 5%, 6%, something like that but if we look at the way the election is going to shape things, maybe this takes a little of that narrative off the market and we see more focus on the other fundamentals going on corporate profits, that sort of thing. we'll see if the deficit issue gets resolved in the coming weeks and months based upon a divided congress, guys back over to you >> thank you, dom. for more on the markets and where things are headed, we have janel janelle woodward good morning to both of you. you just haeard dom's report. you wake up this morning, you do what if you're an investor anything different than yesterday? >> three things to think about in the short-term, you probably see relief rally right? you've taken out the uncertainty.

that'll calm the market down a bit. and the long-term, quite frankly nothing has changed. the economy looks good but we are late cycle. it's reasonable to think you would see lower earnings growth next year and that might result in muted equity returns. and then the personal reaction i see joe is reacting very strongly this morning as many of us are if you go back two years ago, many people were nervous about what trump did i think we got to focus on the 23u7 fundamentals and put the politics aside >> janelle, we want to get your take but specifically look at what's happened to treasuries in just even the past couple of hours and what you think the expectation is going to be in terms of what divided government ultimately looks like. >> sure. yeah, i think if we looked early last night we saw the 10-year move up at one point to 3.25%. and going into the cycle this summer, we really took a look and said what do markets

typically do when we see a shift from one party to anothered a midterm elections? we observed that one month out, it was slightly lower. why we think this was informative during the summer months, we have to step back and put it into context on what the pricing of these risk assets have done over the last month. so when we step back and look at the underperformance of the risk assets, many credit sectors year over year we think the removal of the uncertainty decreases volatility >> different version of uncertainty and i know joe thinks i'm beating a dead horse, but i think it's the issue of the morning. it's what beijing things this morning and what that's ultimately going to mean to the negotiations over tariffs and therefore the markets. >> because that will impact growth, right? if you think of next year, if you can't get earnings growth, you can see equities are down. >> but the answer to the

question -- or the question, rather, maybe you have an answer, is how you think this changes the dynamic of those negotiations if we thought that china was waiting to see whether the president was going to have more or less leverage after today. and i'm not -- it feels like a bit of a jump ball >> i can't see them changing the way they've been thinking about this just because of a change in the house. >> but beijing probably not celebrating, right not thinking they have a stronger hand. >> no. but they're thinking longer term we're focused on 2020. they're thinking 2025, 2030. i don't see them changing. >> janelle, do you have a take on that? >> yeah, i think we would agree. if we look at the third quarter earnings cycle, definitely the impact of higher input weighed on corporates and corporate outlook. but again, i think it's about stepping back and putting into context. we see wider yields certainly higher and there has been a benefit of tax reform

and we have seen stronger corporate profitability. it seems like there's still a lot of good opportunities in this market and fixed income and we're not concerned. we're actually more constructive on this repricing that we've seen >> are there any industries that you think, you know, as you look through what happened last night, even by state, is there anybody who you think is either a beneficiary or a major loser in all of this >> we've been watching anything that was tariff related, right if you look at the autos, you think there's any change in that stance so we've been positioning depending on what your view in the outcome was. >> what's your view on the outcome though >> you see a bit of a relief rally in the sectors if you believe there's some check on what's going to happen to a degree, then the concerns being really impaired from a growth standpoint. >> what do you think of the faang stocks in particular the regulatory environment for tech companies in part, you know, you heard the

president. he made some comments earlier this week on that axios program. he's obviously been making comments on twitter for the past two years. but democrats oddly enough have very similar views >> faang, you look at valuations there's some where there's valuation support and that makes you more comfortable owning them end of the day people are going to look at valuations going into next year. >> do you have a take on the regulatory tech stuff? >> i'm not sure i have any comment on that. i was just wondering though about agrabusiness if you're playing with the tariffs, i would think they look at this like you say there's a check. that may might feel more comfortable that they've got some growth. >> and we've had people looking at exposure. less so from the stocks. that's where you're taking the view on the commodity and you're overlaying it. they're looking at the commodities outright it might make sense going into the last two months of the year.

>> i would just follow up on the tech issue i do think there is some consensus building about the privacy issue with the tech firms. and just what we've seen go on in europe and then increasing concern here about privacy online i think you're right about that. i think we ought to look to see some vulnerability in that >> meaning the regulation would look like the regulation there >> i think we move in that direction if there's a consensus to be had. i think with democrats in control of the gavels in the house, you're going to see a lot more focus on the privacy issue. and as you know, the tech world, digital activity has been much the focus in the campaign since there's enough for both sides to be angry about towards the sector >> except you have to think you look at who's been very supportive of the democrats. right? it's the tech industry >> i understand that again, i think that there's enough driving republicans to want to go in and join -- >> and you think that's different than it was yesterday. that republicans would not have -- >> i do. i do i just think, remember

you know, the far left, that's part of this pressure that's pushing the new democratic leadership in the house. >> okay. we want to thank monica, thank you very much. also janelle woodward of bmo thank you, guys. coming up, midterms and what it will mean, perhaps, for the market our guest hosts weigh in on last night's key races and what a split congress meaning for the financial markets. stay tuned you're watching "squawk box" on cnbc ♪ a moment of joy. a source of inspiration. an act of kindness. an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside?

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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. welcome back to "squawk box. we are joined by our two guest hosts today. eric cantor former house majority leader who is now managing director of moelis & company. and rlj companies founder bob johnson. eric, you're our political guy but you're in the business world too right now. but you got -- you know, you got your -- you're in so many different markets especially with your private equity stuff, bob. business is good >> yeah. business is good

take everything by sector, private equity, prices are going up on everything and so it's getting more expensive. so you got to buy right. that's the issue the people who fund private equities are asking more managers and paying less that's always the case automobile, it's getting tougher by the minute because of the tariff question. and also because of the change in the way people buy automobiles. i mean, it's getting where you buy automobiles over the internet like you buy, you know, clothes from amazon. so it's a tougher business at the dealership level and in the hotel business, it's always driven by supply. supply has been growing because tax rates have been favorable for investments and the hotel real estate. but business is good >> how about the media, bob? you see what comcast paid for

kai? those are valuable things. >> i love media. we just closed our deal with amc network to combine our company with them. >> did you see rick died for people that haven't seen that on "walking dead. >> spoiler alert. >> oh, sorry >> let's get to the sectors you just mentioned autos and homes. those have been very interest rate sensitive sectors we've seen a lot of slowdown there and people are saying that's a reason the fed shouldn't keep raising rates do you agree with that >> you know, i think the fed is sort of always fighting last year's recession or inflation, i guess i would say. >> so they're backwards? >> they always look backwards. their job is to keep the economy at a level of growth and, you know, it's always very hard to do so you err on the side of

what didn't we do the last time we had a breakout on inflation but yeah they are very sensitive to interest rates rising. if mortgage rates go up, home building goes down and also imports wi imports, tariffs for building supplies, things like that >> so eric, how about moelis what are you going to do today when you go in >> listen. i do think -- i mean, the outcome of the midterms is the status quo as we've said just throughout this morning. there's not a lot of legislative activity to be expected. i think the continued benefit of the tax cuts, continued benefit of deregulation will be there. and i know we are very active in a lot of areas across the globe, sectors across the globe i do, though, think that this kind of trade protection trend

as well as investment protection, you know, we forget about the fact that cfius and inbound investment in the u.s. has also been very challenged of late i think you're going to continue to see those as well >> gentlemen, stay with us glad to have you and we'll talk more as soon as we get through this next commercial when we come back, we know the outcome of most of last night's races. what we don't know is the impact of a divided congress on the economy. columbia business school's glenn hubbard and jason furman will weigh in stay tuned you're watching quk x" ghhe ocnbcawbo 'twas the night before christmas and all through the house not a creature was stirring, but everywhere else... there are stores open late for shopping and fun as people seek gifts or even give some. not necessarily wrapped with paper and bows, but gifts of kind deeds, hard work and cold toes. there's magic in the air, on this day, at this time. the world's very much alive at 11:59.

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still to come this morning, for the last two years president trump steered the economy with his party in full control of congress what a divided capitol means for investors and the u.s. economy for the next two years we'll talk about all of that coming up. as we head to break, look at u.s. equity futures. dow implied open abo 1 rht w.ut92ig wanleave me for schwab, but before you do that, you should meet our newest team member, tecky. i'm tecky. i can do it all. go ahead, ask it a question. tecky, can you offer low costs and award-winning wealth management with a satisfaction guarantee, like schwab? sorry. tecky can't do that. schwabbb! calling schwab. we don't have a satisfaction guarantee, but we do have tecky! i'm tecky. i ca... are you getting low costs and award-winning wealth management?

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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. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, federal reserve policy makers are set to begin a two-day meeting today. forgot about that. with a rate decision due tomorrow afternoon, fed's not expected to raise rates this time around. this will be the last time a fed

meeting is not followed by a news conference. there's one scheduled next month though and starting in 2019, all meetings will be followed by news conferences boeing has issued a safety bulletin to operators of its 737 max aircraft and that -- if you're thinking about that crash last week in indonesia, that's the one. it was involved in the crash of a lion air jet in indonesia. the bulletin data shows how pilots should handle erroneous data from a key sensor known as the angle of attack sensor and shares of adidas falling this morning they lowered the full year forecast because of increasing competition from nike in western europe however, the ceo told cnbc that the u.s. market is doing well and that trade issues and politics have not had a negative impact

>> free trade globally has been great for the global economy whenever you put barriers in, it does have over a period of time a more negative tone to it you have the current policy in the u.s. and these matters are never good for business. so of course long-term we always hope for a more open border. and maybe the midterm will change, but so far i can't say it has prevented us from growing. which you can see from the 18% growth of the adidas brand in the usa. >> and you can see more of the interview with adidas ceo kasper rorsted on "squawk on the street." brian sullivan joins us right now with more. it's early morning and still waiting, right >> it is yeah we don't know when the results are going to be in the new jersey third district which halfway on the parkway between atlantic city and northern new jersey is where we

are outside of tom's river, new jersey we could get the finality of the results today or tomorrow or thursday remember under new new jersey election law, any ballot that is at least postmarked, put in the mail as of yesterday still gets to be counted. this is a race, one of the few that is left out there that is undecided. a kwocouple of thousand votes separate the incumbent and the challenger we are expecting a few more thousand votes to come in from west of year in burlington county they generally lean more democrat but anything could happen. this is an interesting part of new jersey because i think if you're watching nationally you probably think new jersey, it's always very liberal. they've got blue senators, blue everything not the case here. there are pockets of strongholds in the red in new jersey we are actually in one there's our district there we spoke to two men here and

asked what mattered to them. they both mentioned the economy, the stock market, and maybe a bit about our president. listen >> the economy is getting great. it's getting better and better and better it has never been like this. the stock market has never been like this. i mean, i'm 79 years old and i never seen a stock market this high >> trump's working in the right direction trying to do things for us, the middle class people. >> so there you go we'll see if that translates into a win by the republican incumbent. it won't matter nationally if this vote goes red, it's not going to swing the house back to the republicans. but at the same time a litmus test here because both candidates, guys, really wanted us to know -- we were here yesterday too -- just how centrist they were this is one of those areas you're not going to be far left or far right if we get the results today, we'll bring them to you. either way, they did deliver

pancakes so that's a positive. >> brian sullivan, thank you, sir. maybe you should bring us some pancakes meantime, as the dust settles from the midterm election, what will the balance of power mean for the nation's economy and the president's economic agenda? joining us now is jason former former cea chairman. and also glenn hubbard is joining us, dean of the columbia business school. good morning to both of you. i'm going to start with jason real real quick. your take now after the results of this, in terms of what you think the economic -- forget about the markets. the economic impact will be over the next two years in terms of economic policy? >> you know, i think it means we're not going to get a lot of economic policy. the sequester's supposed to come back in 2020 i'll bet we get a deal, trump gets defense spending, democrats get their non-defense spending so it'll be a less fiscal

contraction. but we'll still be getting some of it that's already there so i don't think a huge impact, probably a mild plus on the fiscal side. maybe some restraint, but not a huge deal either way >> glenn, you called it a crazy trade policy what does it do in terms of emboldening or damaging the president in pursuing the tariffs and trade policy that's on his agenda? >> well, i agree with jason that we're likely to see gridlock generally in policy. i think the economy will continue the path that it's on on trade, the president of course has some independent scope of action. and he likely will pursue that, whatever its merits or demerits may be but i do think there's an opportunity here there are some areas that both sides should be able to agree on i think of them as bridge -- partially physical bridges in infrastructure but also areas of work and

training that the president seems interested in. and so is the democratic house so we'll see >> when you talk about infrastructure, you think that's actually something that's realistic? we've been talking about the politics of that all morning >> i think both infrastructure and work support are areas where ideas could come together. the question is going to be more about the budget the budget is already out of balance and the question is will there be opportunities to do more where would the offsets come from but i expect the combination >> i got to read this tweet from trump. it's amazing from the president in all fairness, nancy pelosi deserves to be chosen speaker of the house by the democrats if they give her a hard time, perhaps we'll add some republican votes she has earned this great honor. now, what is going on there, eric this is not sincere? >> no, it is sincere >> but does he want to work with her? >> he cannot wait for her to be the speaker of the house. >> you don't think it's possible

this is an olive branch? they're laughing you're so cynical. isn't it possible? >> anything is possible in this time, but from the president's standpoint, he likes to negotiate. and he's starting negotiating right now. >> i mean, she has through thick and thin stood her ground. i mean, you know, i've met her she's an impressive person i may disagree with her on a lot of stuff, but she does probably deserve this for what she's been through, right >> he loves to negotiate with people who will come back with -- >> jason, speak to the politics of this. i know you're an economist, but speak to the politics of the democratic party deciding one way or the other, nancy pelosi, to actually work with the president or not >> look, i think nancy pelosi is terrific she did work really well with president bush both to get a stimulus done, t.a.r.p., other legislation on the financial crisis i think president trump is the

one who's proven he's not really a negotiator a year ago he had a deal with the democrats. he could have gotten his funding for the wall in exchange for doing something for the dreamers there were few extremists on fox news that didn't like that deal, so president trump blew it up much to the surprise of people like senator lindsey graham. so i think if there's a reasonable deal to be had, i think nancy pelosi would do it i don't think donald trump is going to be there for it >> eric cantor >> listen, guy back again. president's in cycle he wants nancy pelosi in that chair as speaker to be able to use her as a foil and to go in and continue his mobs versus jobs hashtag theme that the campaign was about it's all about the extremity which he stands for. >> and glenn hubbard, i would argue on the infrastructure side of things, even if you were to -- even if they were to come together, he's not going to

necessarily get the benefit of that because you're not going to see it in the economy too quickly. >> it's possible, but it would be a good long-term policy discussion i agree with eric. i think the president would love to have miss pelosi as a foil. hopefully the country is in the middle of those two. >> we'll leave the conversation there. jason furman, glenn hubbard, thank you, gentlemen still to come this morning, we have much more of today's guest hosts. former house majority leader eric cantor and rlj companies founder rob johnson. stay tuned on cnbc and we've grown substantially. so i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. that's right, $36,000. which i used to offer health insurance to my employees. my unlimited 2% cash back is more than just a perk,

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there are the futures. welcome back to "squawk box. we're back up 200 on the dow the nasdaq was up more than a hundred, but it's backed off a little it's up 91 and the s&p is bouncing, up about 24 points. let's get back to our guest hosts this morning eric cantor is former house majority leader. he's now managing director of moelis & company let's think one more time about this your short-term and long-term takeaways from this, what it means not only for politics but what it means for business eric, why don't you start? you've been doing this for a long time looking at these elections and trying to figure out what it means. >> i think traditionally when you've got a republican

president in charge of the white house and the administrative apparatus in washington, the regulatory front is going to be much more favorable to business. and we've seen that in the trump administration during the first two years. that stays in place, but now with a democratic house on the scene in washington, you're going the to see a lot of opposition to whatever initiatives the white house will undertake. so they'll be there to stop it they'll also be there, i think, with oversight and investigation with a vengeance and you're going to see that distract the administration to a certain extent they're going to have to go in and deal with the aspects -- >> from doing what >> i think just from the -- take for instance what happened with scott pruitt under a republican house, they decided the they needed to investigate all the allegations around the epa and the director. and ultimately he left and that's because the

committee, its investigators got down to work they called up some of the folks under the director all of a sudden maybe they didn't have representation or counsel, spilled the beans, out goes the director. i think that happens at large across the administration. clearly it's going to be a distraction. >> which means what from a businessman's perspective, bob >> from a business standpoint, becky, business people have baked in the gridlock. even the nasty gridlock. so they're going to continue to do what they do on a process that says let's not make any major moves in business investment or business growth. let's keep things fairly simple because we don't know what the outcomes will be in terms of regulations that could be rewritten, restructured because of the house so they're going to continue at a steady pace. long-term it's going to be the election starts today. both for -- >> for 2020. >> for 2020. and i can assure you that

business people will have to decide where they want to go at some point >> where do you think the economy is two years from now? >> two years from now? assuming nothing happens with the mueller probe and -- >> you think the mueller probe is going to have an impact on the economy? >> it'll have an impact on the question of how crazy things get in the house. >> i think it'll have an aspect on business sentiment. >> if the business people feel that there really is a possibility of impeachment and then you throw in everything that happened globally the business environment -- >> so that would be bad for business if there was an impeachment? >> it would be because everything becomes turmoil what happens if china makes a move in the south china sea? what happens if some other global problem, korea launches, iran does something? it gets -- the whole country gets very scared >> capex has slowed down it was strong in the first and

second quarters. slowed down in the third quarter. why and what happens next? >> well, again, from a business standpoint, you're investing for two reasons. you're investing for growth if you believe it's still there because of deregulation or you're investing to buy back your stock now, if your stock is sort of where you reached a level where you've got the kind of returns out of buyback your stock and you don't want to make a big push into investment growth, things just slow down until you get a better insight into where the economy -- the national economy's going. and i think businesses are sitting on a lot of cash >> wbefore we go to break, i hav a question for eric cantor i had an issue with it you were one of the only prominent americans to sthoe up at that saudi conference i want to understand why you decided to do that given that so many others including myself and so many ceos said that it was

impossible from a moral perspective, from a values perspective to be in a place like that given the timing and the moment >> well, first of all, i want to say what happened in istanbul is certainly a horrendous event i know our government is working with the turks and saudis to get to the bottom of it. and i know that once we find out what happened, there'll be action taken but let me tell you. at moelis & company, we are there for our clients. our clients are multi-national corporates they expect us to be there they expect us to be their independent advisers informing them of our view of what's going on around the world including that region. that reason will continue to be a very important region from a geopolitical standpoint and a business standpoint. frankly i think you've heard our president, our secretary of state reflect the fact of the importance of the u.s./saudi relation >> was there any hesitation though >> listen. i've always said no one thinks what happened was any good in fact, when the conference

opened over there, there were statements made by saudi business people as well as government officials and the crown prince himself said these are unacceptable acts. one of the business people said this is not in our dna, it's not in our culture and i was really reassured by the saudi citizens that that's not the kind of conduct they expect >> what did you feel about the lying? i mean, your client lied to you. your client lied to you. all of these people called you up and said you've got to come over here and we didn't do anything we had nothing to do with this they changed their story after you left >> first of all, we didn't get calls like that. second of all, we work for our clients. we work for the businesses in that country we work for folks there. and we work for other multinational corporates that expect us to be there. you know, the interesting observation i had was there were a lot, a lot of regional affiliates, partners, employees,

associates from all the banks here in the u.s. that happened to be there as well. so again, a lot of -- >> just not the prominent executives >> a lot of the noise around this, i think, was -- it certainly was very loud. but at the end of the day, i think that the day, both leaders of financial institutions here in the u.s. have subsequently said they'll continue -- >> do you think they made a mistake by not going >> it is up to them how they're dealing with their clients all i can tell you is that we represent our clients, we don't condone any activities that's going on in istanbul and i don't think our government does either i don't think the united states government is going to break the alliance that we have with saudi arabia >> thank you for answering that question as candidly as you did. we'll talk to jim cramer who's down live at the new york stock exchange and get his take where the markets are headed after this historic midterm elections.

take a look at the future right now, dow is down 200 points. we'll be back in a moment. cal: we saved our money and now, we get to spend it - our way.

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on this post election day. the measure did pass 60% to 40% it was a controversy issue the twitter ceo, jack dorsey and the mayor all came out against the order. benoiff favored the tax. we need to get down to another prominent american at the new york stock exchange right noi. now. >> you paused. many prominent americans but you did say like myself. >> let's go down to jim cramer >> i don't know, the true prominent american >> you got to let the whole

class into the joke. something very funny happened and we want to know. >> andrew were saying that many prominent americans did not go to the saudis like myself. >> this is post steal book. you have been using your third party, have you? >> andrew ross >> you have been doing that. >> okay, jim cramer. >> go ahead, i can't event talk. >> tell us about the midterms. >> i think you guys have to start at 5:00 a.m. everyday. it brings a whole new sets to the building >> we are punchy >> listen, there is a lot of

money. corporations have a lot of money on the sidelines and people are saying okay, we got through that if there is any way that jay powell says if we got to wait and see of the rate hike we got to have the rally of all ral rally. we have to deal with him and g-20 at the end of november and hank paulsen about the new iron curtain. >> can sorkin agree with that? >> i heard andrew sorkin agrees with it. >> 5:00 a.m. >> no, jim thank you, we'll see you in a few minutes. when we come back, we got the final word from our guest. stay tuned, president trump is set to hold a news conference after last night's elections "squawk box" will be right back. .

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all right, thank you to our guest host this morning, eric cantor and rlj, bob johnson. >> two prominent americans >> true. >> the most prominent americans on the set

>> gentlemen, thank you for being here we proosappreciate your insight we hope you will be back here soon >> we did. make sure you join us tomorrow right now is time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber. wild swing the futures on election night full coverage for what the midterms mean for stocks and deficits and more. europe with a host of 10% gained and oil rally on some production cut talks. we begin with the midterm momentum