trainer and correct my colleague who said that the president said the stock market was based on the house and the senate. absolutely 100% wrong. time stamped on twitter 7:33 a.m. october 30, the stock market is up massively since the election. people want tosee what happens after mid terms. if you want your stocks to go down i strongly suggest you voting democratic. he was absolutely clear on what he said. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." coming off the best post mid term election rally in nearly 40 years, futures steady. fed decision today at 2:00. europe split between gains and

losses. jobless claims were in line. our road map begins with the post election rally. >> some stocks are out with earnings. they are moving in the opposite direction. we are talking quaalcomm, square, wynn. >> tesla finds a replacement for elon musk. we will fill you in on that. stocks are coming in off the post election rally. jumps back above 26 k. it was the best day for the s&p and blue chips. the fed wraps up a two-day meeting after that october slump stocks are rebounding in november. the dow leads the way up more than four percent for the month to date. dow has regained 80% of october's losses. s&p 50%. nasdaq almost 40%. >> i was talking to my friend

yesterday, tremendous technician. there is an index -- do you know we had a day in october which recorded the most sells in a given moment in 40 years i mean, that october panic was an under rated panic in terms of its velocity and how ferocious it was. we are coming right back. i think a lot of people were saying what was thrown away during that period where things weren't so bad >> so when people ask you to explain yesterday is this buybacks at work you said on tuesday the markets want it to be wednesday. >> and i think that it is funny there were people who wanted -- who were afraid both houses go republican and democrat. they like what happened. they bought everything

yesterday. a lot of it was etf buying. i have been monitoring this one particular etf called the momentum index. i noticed visa and mastercard were up huge. nothing had happened. it is because they were overweighted in the msci momentum index. momentum buyers came back yesterday like you wouldn't believe. that is what drove the market. >> it is such an important part of the overall market. i would argue hedge funds had just a horrific october. when it is finally all done, guess what happens stock goes back up. >> no wonder warren buffett when he says the guys aren'tgy good, the algorithms had them sell low and buy high.

amazon went up about 30 points. >> brent and russell 3.5 to 1 is nothing to write home about. volume 20% below a two-week average. are you in a fade or chase >> i don't want to fade. i felt that apple had a great quarter. i thought that amazon had an amazing quarter. i thought that alphabet's quarter wasn't nearly as bad. have you seen the story? what is it like? >> people are standing outside. >> i ran a wildcat strike once. i was a vendor. i ran a wildcat strike. >> was it just you >> it was supposed to be a lot of people. it ended up six of us. that's what i think is at alphabet. i do not think it represents the vast majority. people talk about shutting down

alphabet. >> you don't want the fade. >> you are back in a july to september mindset. that was quick. >> is it all just a distant memory >> i came out here and said i like f. amaang and starbucks. amazon is finished. they are building two headquarters. how can you be finished and building two headquarters? >> you know who else is adding to headquarter space square. >> sarah friers did remarkably. jack is talking about adding more and more products. jack is really doing a lot of interesting things. but at the same time it is a spend year. they hate it on wall street when you say it is a spend year.

look how much they hated when facebook said spend year. it's a curse. spend is a curse. we want to make, not spend. jack's talking about spending. sarah is saying good bye and going next door, literally next door. >> it's the company. >> you like that >> where do you think she is from. >> i have no idea. >> belfast. >> it is a tough morning for a few companies as we mention square. quaalco quaalcomm, too. shares of wynn taking a hit after earnings miss expectations and executives warn of a slow down. >> that conference call, there was a line that said get out now. sell our stock. there is golden week and then

post golden week. did you read the line? >> i did. we have seen it in particular in the premium end of the business. premium slots and v.i.p. what we are saying is we have seen post golden week slow down. >> choppy. >> so they expect it's the first to attract. they also say it will be the first to expand as you come out of the slow downs. but the ceo going on to say we have seen the last. where there is a slow down globally or in asia in particular. you are seeing it in singapore and las vegas also experiencing something. the chinese high roleers. >> i will riddle you. which is worse to lose if you are wynn or quaalcomm and

you lose apple >> apple. >> apple was 1.7 billion. >> $1.7 billion in fiscal 2017 for quaalcomm. we knew that number. i guess the guidance was still below what those who follow the company anticipated based on the continuing. they are going to trial most loikly first quarter next year in san diego with this. >> i will give you the bull case. first you get the great yield. second they have the best 5 g technology. third, there will be a trial and a contract dispute. it will be settled on the courthouse steps. when that happens the stock will be up $15. >> that was a lot of info. >> not to say it won't get worse before it gets better. are you prepared for that? >> true. >> we did mention smaller names with warnings like roku and party city.

>> i like the platform. roku is up a great deal. i think roku went down. they say we are the play on cord cutting. i don't know where we are supposed to cover disney. >> disney tonight will be paying close attention. i hear a lot from investors trying to understand what are they going to spend. >> minimum of 300 million is my bet. >> on the -- if you look at the numbers, didn't that make 2019 possibly a down year can you imagine if you are a growth stock guy >> they get themselves together to offer the direct consumer. it's not necessarily about volume as much as about hits. they are going to attract you because they will have so many exciting titles. >> i think that is right.

>> the questions are building. i don't know how many they will get to tonight. the deal is not closed yet. so you would expect you get a lot more granularity next year. >> it goes from 112, 113 and kind of settles and maybe it starts its long way back up. i just love what they are doing. do you ever -- >> we used to talk about espn. >> netflix is making a big splash in asia. they have been on sort of a global tour. nobody is standing still. >> i think netflix has a problem. i don't this can that -- i don't hear anyone talking about "house of cards." >> can we come back to wynn for a second >> sure.

>> because that will be down an awful lot. steve wynn, some people say is the biggest beneficiary of the me too movement. i walk that back. he sold all his stock because he got booted out of the company. he sold it all at almost 190. >> he bought a ton at 50 and 60. who else has done these things gary kohn. if howard schultz runs for president he can sell stock. look where that stock is. that stock has not had a day down. >> i think it was september that insider selling was running at a ten year high. that was before the sell off. >> and then you have to get right back in. >> las vegas sands -- >> it's down 3 bucks.

i think wynn in particular was premium high rollers. when you read that it doesn't inspire you to buy the stock. >> no. it doesn't inspire you to buy the stock. when it comes to china again you start to focus on the renewal of licenses in 2021 which is not that far away. he is very close to the president. you would imagine that he is sort of focussed on that issue. >> was he as close as the cnn reporter was to him? >> i think they have a much more affable relationship than jim acosta does with the president. it's something you can imagine is going to be on his radar as a tension point. >> he was there as the president was watching returns on tuesday night. >> that's a great piece of data. >> along with a few others. >> mr. china.

>> quaalcomm -- i like how quaalcomm is set up with china. they are doing a lot of business. they are doing 5 g. everyone is going to throw it away and they are going to settle. tim cook is going to settle. >> you think so? >> yes. >> the dispute is whether they are talking or not talking. they have talked to apple but now are not talking right now. it doesn't mean they can't talk. >> the people who say this, the reporters have never been in complex lawsuits. unfortunately, i have. at any given time you can get a phone call saying let's get together. typically it doesn't happen until the judge says i would like to call tim cook to the stand. i was in a complex lawsuit that wouldn't settle. we settled. i couldn't believe it happened. it was like a drama.

it was like hospital. >> separate from your good wife appearance. >> it was one of my greatest calls ever. >> you didn't get anything for the iron man. >> i got a hat, stark industries. it turns out everyone else made about $15,000. >> i said i will take a hat. i was thrilled. >> i have been in no movies. >> i could have gotten about 150,000. when we come back, tesla picking a new chair three months after the controversial tweet about taking the company private and had an exclusive on roku. we are keeping our eye on the

supreme court. a.p. reporting ruth gader ginsberg has bkeron three ribs in a fall. more "squawk on the street" in a minute.

tesla's named board member -- denholm currently cfo and head of strategy at australian telecom company and will leave that firm, ends a 14-year run of musk as chair at the company. >> i have read a bunch of articles about shouldn't they have picked someone more independent. those are slams. this is an executive with high level positions at juniper networks and toyota. financial management. i think she is a great financial manager and a great pick. i don't think -- i think she totally understands the ins and

outs. i think there is sexism if you don't think she is a good chair person. >> you don't have an issue with her having been there when the madness began with >> i think she is a person to do it. i think people will have to eat some crow who think this was some sort of crony. very serious executive. >> you think this person will be able to have any sort of governor over elon musk? >> i think you are not going to get -- >> anybody in that role -- which is why i don't think anybody wanted it. it will be a very difficult position. they are going to get blamed every time he does something that conceivably brings -- >> maybe she is empowered. >> by whom >> i think it is a real -- i

think she has positions that would indicate that she can't be as easily -- >> i think it's a difficult position to be in if you are her. >> i don't think that she would stay if there is real -- the cbs board people stayed even though they knew things -- >> directors are just amazing. i don't know who is asleep and who is awake. >> you just put page 69 and leave that page out for the board. you have 68 and 70. if they don't notice it they are phony. as we go to break we want to show you the nasdaq. they are remembering the victims of this shooting in thousand oaks california overnight at the border line bar and grill, at

least a dozen dead. 6 of the 25 deadliest mass shootings have happened in the last 13 months. we are back in a minute. ♪ ignition sequence starts. 10... 9... guidance is internal. 6... 5... 4... 3... 2... 1... ♪ is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a

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with about seven minutes to go before we get started with trading, let's get a mad dash in the books. want to talk a little apple. >> have you ever read the book "war and peace"? >> i think i tried and failed. >> because it is so thick. alpha wise.

it's really interesting the timing of this. waited for the selling to be exhausted. price target goes to 253. 24% upside. $27 per share incremental value. i highly recommend this. this is a very good piece about how to understand the service stream. i think that this stock could lead us. >> with her in the sense of what. >> we just continue to underestimate the service stream. the narrative is she is getting a switch from why did they stop telling you how many hand sets they are going to sell to this is a products company. this stock needs to be covered by a consumer products analysta don't want to have someone who

is not technology cover it. >> if you had someone who covered clorox and this, alice, to the moon. >> the honeymooners would be the name of that show. what is the honeymooners >> did you have that >> what was the hardest question you had? >> i forget. i got one wrong. nu we have an opening bell five mites from now. stay with us on "squawk on the street." welcome to emirates mr. jones. just sit back, relax

and let us entertain you... ...with over 3,500 channels of entertainment, including the latest movies and box sets from around the world. ( ♪ ) we even have live sports and news channels. ( ♪ ) and your free wi-fi will start shortly. enjoy your flight mr. jones. world's best inflight entertainment. fly emirates. fly better.

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a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible. you are watching "squawk on the street." the opening bell in just under two minutes. a busy thursday coming off that rally. got a fed decision today at 2:00. we might see the president as he makes his way to the supreme court. we will keep an eye on the headlines that say justice ginsberg has fractured a few ribs after a fall. we have a comment from the court. as for the rally, first time since '02 that the market rallied the day before, the day after the mid terms.

>> i'm more concerned about the fed. are they going to continue with ignoring staffers, worldwide slow down and solely focus on the small gain in wages for employment. every time i look at david, david reminds me that it is the strongest job market since 1969. i don't want it to be too fragile. i'm just saying there is enough that is slow that you put that and make sure it doesent gorun away inflation and then take a look at d.r. horton. >> dhi. 1.22 met. revenue was a miss. rising prices and rising rates. >> it's a very responsible economy.

you will see the stock down. >> home accouequity loan provid china celebrating a recent i.p.o. >> they want us to have pandabear.com merge with visa in order to issue a credit card. >> coll plant, it is a compliment that they want to access our capital markets and rule of law. >> did you just read that thing on the nasdaq company? the 3 d printing of organs and

tissues. >> i went out to see hp. they are making 3 d printing of organ organs the doctors can go in and look at it prior to the cut. they can't learn to do a transport. this is a fabulous revolution. >> i learn something every day. >> what a man. they are dedicated to making it so doctors can perform better operations. no one is talking about 3 d printing. they are doing organs. it's really fabulous. >> got some action in retail. costco comps up on a two year

stack. it is 122. >> we are seeing tjx, burlington doing incredibly well. kohl's doing very well. retail is going to be choppy. >> they said bed bath doing better than expected. october comps up four. they are working their way up from being the poster child for everything bad. >> there will be a loss. what has been weak is apparel. ralph lauren deidn't come back. you guys head back to boston coming up. >> i don't know. boss has a fabulous read.

i think his work is really good. we need a good christmas because apparel makers are signaling that it won't. they are all trading down except for columbia sports wear. >> holiday hiring has been rolling over a little bit. some are saying it's because of technology. >> i think so. target is still -- people think target will have a good holiday. there was a downgrade. i think lowe's is involved in a major long term turn. >> closing the stores he needs to. >> it's a tough thing to do. >> you know kohl's has never closed a store >> it never closed a store. >> i buy my nike at kohl's and socks at kohl's.

i don't use kohl's cash because i can't figure out how to do it. my wife uses kohl's cash. >> i thought kohl's wouldn't let you get a credit card? >> there were ten people behind us. >> they sent me a box of gold toe socks. i was trying to buy some socks and about $400 worth of other stuff. they denied me credit. >> maybe they looked at your real estate portfolio. >> my real estate portfolio is doing fine. >> it's a good thing you are not in oil because that pop yesterday is short-lived. >> that's phony. we are back to march 16 levels. >> one thing that j. powell, if he looked at the oil collapse, he would be able to say he is beginning to win the war against inflation. oil is collapsing, guys. it is collapsing.

>> supply and demand. >> thank you for that. >> can you get a little deeper for me >> we are at 11 million barrels. a lot of people feel saudis are pumping in order to appease the president after the tragedy that happened -- >> with khashoggi? >> with the "washington post" reporter. >> khashoggi. >> getting more prominent americans to go back. >> they haven't stopped doing business with the saudis. nobody has. >> i'm just saying oil is in a ferocious bear market. if you look at a stock a trust, that stock is below where it was. that is extraordinary. >> it's incredible. >> you remember how bullish everybody was? >> falling into the 50s? >> i could make a case for the 40s here. >> really? >> i could. i'm not kidding. >> because you are going into

the cold season with a bunch of supply >> i think -- because we are finally building enough pipe in the country. pipe is furious. to get the oil to market. that is what is happening. one after the other the pipes are coming on. >> it is coming on you have been talking about this for months. >> it is happening right now we have gigantic ports. >> huge export terminal. >> the economy and the world is slowing. demand is slowing for oil. we are pumping like mad. it's finally getting to market. if you noticed the spread on the refiners, that's because finally that oil is getting to market.

>> worth coming back to the casino stocks. wynn is just as we said at the outset of the show down dramatically. >> they issued a sell call on their conference call. >> giving warnings about softness particularly among high rollers. there is a read through for las vegas sands. wynn only has 2,700 rooms. that part of the economy is okay. that's fine. >> remember when steve wynn set it up, it was about being a palace. he would talk on the conference call about how hewould personally arrange the tables and do the furniture. she was a detail guy. i think they lost control of the details. >> they may have. caesar's is another name that

keeps coming up in gaming potentially as a takeover candidate. their current ceo leaving the company in a couple of months. i just wanted to come back to that. remember a few weeks ago we met with -- he is still at it. he is still trying to figure out a way to galvinize the large holders to re-engage with the company and the board to try to get them to think about the idea of him coming in given his success as an operator. we'll see if it goes anywhere. there had been some speculation about would mgm have interest. for now, don't count him out. it just seems to be an uphill battle given he wants to use their balance sheet to help buy

his company and take over both companies or manage both companies. it isn't inconceivable if you were to raise separate equity that it can come with a real offer in some way that they can get some traction. >> i don't want anything to do with it. >> it is funny because it was always penalized because it has been such a huge -- >> just to go back. horton is down almost ten percent. i'm going to tell powell that. >> that is for horton that is taking you back to summer of last year. >> you know what they need at horton a good toightening of the fed fund's rate. that would turn it around. it is great to have titans. that is me being hyperbolic.

horton is doing so badly with five percent mortgage what would happen >> your buddy is listening. >> is he following he was a tight end at iowa. >> tight end. what do you think he does today? he works. he has those guys who are 23 years old. they are out of school, 23 to 28 years old. they call a couple people. >> the beige books don't read fabulous. >> come on. remember when he said he had to overshoot. bernanke kpp stopped the crisis on the banks by going on 60 minutes and saying it is over. powell goes -- >> that was the key interview. long way from neutral. >> remember when bullar went on satellite radio on friday?

why don't the guys say we are thinking about -- >> you are going to overshoot and go -- overshoot, why do you say that he is a great guy. >> he is a very nice man. >> beloved in his neighborhood. i know a couple of his neighbors. >> i am not making that up. i am actually telling you the truth. >> you went -- >> what are you? joe kernan >> kind of. >> a couple of different threads. we mentioned roku. part of it is being driven about reports about our parent potentially having a streaming box. the other monster is coke and whether or not coke can move in with competing drinks. >> coke was supposed to buy monster. it was about how coke has to

compete. quincy is so aggressive. you would love him. he said i bought it for coca-cola. how smart is that? >> i didn't know what it was until about six months ago. >> you can get like six bucks for a bottle of water. >> the margin on that must be unbelievable. >> it costs us a fortune. it's a fortune to buy. they left it off the truck for a while. coca-cola has three percent yield. this is back to blue chip status. >> quincy is aggressive. he is funny as all get out. >> i would like to spend some time with him. i'm not sure sarahizen will allow that. >> she was doing athleisure

night that night so i was able to move in. >> you can never be stamped out. >> do you know probably the best performing stock in the entertainment industry this year >> the one that you dis -- >> discovery. you guys are too good. >> it was entertainment for 200. >> i can't get anything by these guys. >> almost 53%. >> the stock was at 21. >> thank you. i will take the compliment. it was what he said. it wasn't the interview. >> you asked questions about how to make money. stock was 13 points ago. why do you feel like you can't take credit? >> great quarter. congratulations on the quarter. >> i appreciate it. we are big internationally.

>> can you give us some color? >> i think we will be up. >> let's move on. >> did you go to the labor day party? >> i have been there, but i haven't in a while. discovery is up again. the company reported good numbers. the conference call is going on right now. i want to share more once we get it. the reason the stock went up so much is because they got added to hulu and apparently that is all it needed. >> when it is over, who owns hulu >> disney. >> let disney come in and then

buy disney. let it come in. let it come in. >> what if it doesn't come in? >> i like disney. >> guys, s&p down six. dow down 16. let's get to bertha coombs. >> we did see the dow move into positive territory. we are seeing energy lead. one of the big debates here is did we go from being oversold in october to maybe being a little overbought yesterday a lot of folks really surprised by the extent of that rally yesterday. the dow is now within three percent of the october record. one thing that has people feeling positive as they are expecting that the fed will be back on schedule in terms of rate hikes. not expected today. there is no conference after the rate hike announcement today or the rate announcement this afternoon. but the futures are now indicating that hikes will be

back on schedule to where they were in early october in terms of expectations because the consumer is strong. we have lower gas prices and we seem to have a fairly resilient economy here. among the best performers since this recovery, if you will, in the markets have been utilities and real estate, those rets pay high interest rates and health care. all of them are within about three percent from their highs. it is tech that we are watching and what is happening with that recovery. tech lower today. overall the recovery in tech has been more of a struggle. the s&p tech sector has moved back above the 200-day moving average. the communications in the chip sectors remain in correction. still very low. that faang recovery has a way to go. amazon and netflix are the best gainers since october's lows.

facebook up about nine percent. facebook and netflix remain in correction territory or bear market territory. the interesting thing is that it is the old tech names that have seen the biggest moves. 85% now for earnings season for the s&p. 65% of tech and communication names have beaten on revenues compared to 60% for the s&p. take a look at xerox. that is one of the best performers and symantec. they are not the ones that we normally think about as being the sexiest tech stocks. >> thanks so much. bertha coombs covering -- >> a lot of these were big rebound stocks. advanced micro. that stock had been cut almost in half. let's understand that business from amazon web services is very

significant. >> citi had some -- as the dow tries to go green, let's get to rick santelli in chicago. >> good morning, carl. one week of tens. we basically have a double top around the 323 area. we touched it yesterday. 323.5 closed there. open the chart up to early may. you can see the twin peaks there. what is always fascinating, treasury traders love double tops. it's one of the key reversal patterns. sometimes it works for a while. sometimes it works for a long while. here is a fly in the ointment. let's look at same day for 30-year bonds. doesn't look like the double top. you can see all maturities backed away. it really under scores something. last fed meeting was 26th of september. let's look at 30s minus tens.

you can see it was at 13 last fed meeting. it is a 20 now. it is definitely widening. many traders look to the 30 year to give them a tip of the hat as to which direction they should trend trade. 30s look a bit more aggressive to the upside than tens. in the cycles we always get leading up to fed meetings. this might give us a chance to break away, maybe lower. that is what traders are thinking right now. as for the dollar index, let's pick early october. it looks like a reversal pattern. 96 seems to be key. after the election it dipped below but bounced back. no coincidence even though dollar index doesinantclude the chinese currency. the dollar is up against a juan after the currencies started to rally going into the mid terms. that seems to have reversed a bit. pay close attention to both of

those fx trades. back to you. rick, thank you very much. tomorrow on cnbc, an exclusive with david taylor. you do not want to miss that. sarah is bringing him to get th. >> meantime, yesterday was the record 13th day in a row of a dow triple digit move. tighter range today ahead of the fed at 2:00. back in a moment

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take a look at fang. politico had a piece about looking into facebook's tax policy in ireland. tfwn almost 2%, amazon and nelix trying to hold on to gains. we'll get stop trading with jim in a moment. ♪ ignition sequence starts.

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then i need to get if i'm into character. santa, ♪ ho ho ho this is christmas, baby ♪ [ groans ] dude, how many candy canes did you eat? [ mumbles ] that's hurtful. [ready forngs ] christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home.

and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. time for jim and stop trading. >> the bull market and cyber security is officially back. unbelievable number from cybr. there's just so -- the hacking, we just talked about this, the chinese, the north koreans, the russians, they're just the singing greatest reason why you need. >> it david solomon and diamond have said the biggest -- >> and if you leave a company, they find out and get your password and burro w in

tonight on "mad" i have take 2, the stock reversed, that may be ridiculous then i figured i'd nail down ed breen. >> awesome going to do pullups? w strauss? >> no, but i'll show my six pack versus him. >> you don't want the rating, that's fine. but that would get eyeballs. >> set up a whole gym. >> we have to go. >> okay. when we come back, veteran strategist david rosenberg on stleioraets after the po-ectn lly. dow is down 3.

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get your insurance quote today. welcome back to equi"squawkn the street." i'm carl quintinilla with david faber and sara eisen at the new york stock exchange. tight range today as we await the fed decision at 2:00 eastern time, the final meeting without a press conference. >> that's where our road map begins, with stocks. hitting the pause button investors are awaiting today's rate decision from the fed and clues for the next rate hike straight ahead.

what now for health care what the new congress might mean for the fate of the aca and health care technology. plus, tesla has chosen elon musk's replacement to chair the board of directors we'll tell you who she is. jumping into the story of the day, a mixed picture for stocks two days after the midterm elections ushered in a divided congress and ahead of the fed's decision expected later today. talking about all of that, we have the oppenheimer ceo krishna, explain yesterday and the day before and the day before that. >> well, the explanation for that is october. effectively we are baunsing back off of significant correction. i don't think the underlying fundamental trends have changed and i think the people who buy stocks back are back in the markets buying things and those are companies. >> buybacks at work. >> absolutely. there's a very seasonal trend to markets rallying this year

we are off of earnings and people are buying stock from their own companies, things do well. >> david you are your note yesterday morning, early stations of a stagflationary environment. what the do you point to on that >> inflationary pressures are building mostly from the cost side. there's a variety in spending industries that are passing on these cost increases to consumers. we have accelerating wage growth so i'm not telling anybody we're going back to the 1970s wearing bell bottom jeans and listening to disco music so it won't be that pernicious stag place but the find that economic growth weakens into next year we're seeing it globally, that will spread to the u.s and rising inflationary pressures keeps the fed in play, that's the major macro theme. >> bell bottoms are making a

minor comeback, krishna. do we see any tone moderation from the fed in terms of their path towards steadily raising interest rates given the freakout we saw in the market? >> well i don't think that's coming in this session if there is going to be a change in tone it probably comes in the december session when they have a press conference and do something on the rate front that we don't expect to see but i think to get back to david's point, yes, inflationary pressures are increasing but coming off of a relatively modest base so i would say we have been worried about stagflation for the last three decades and it hasn't materialized yet and it's unlikely to materialize in -- any time soon. >> we're not seeing slow growth. yes, slower than the 4% we were seeing earlier in the year but still, very strong consumer spending environment i know you're bearish on the economy but not all the economic signals are pointing to lower growth. >> sarah, we had a monumental

fiscal stimulus this year that bought some time and so it's exactly right. the part of the economy that's done well is consumer spending whereas the cap x boom coming out of this tax stimulus the stimulus is gone in the buybacks capital spending growth was basically flat in the third quarter. we now have two months in a row of flat readings on core capex orders so there's no momentum on business spending in the fourth quarter. what's the outlook for consumer spending once the tax stimulus fades away and we'll be left with the lagged impact of rising debt service costs no doubt that wage growth is going to be a positive for the household sector but the offset will be rising interest rates. here's what i'm saying, sara we know the fiscal stimulus fades and that the peak impact of the fed rate hikes, not just the rate hikes but the tightening impact is going to hit home next year

remember, fed policy hits the economy with lags that are long, variable, and insidious. typically 12 to 18 months so next year growth is going to weaken substantially the question is how much and i don't think that'sfully priced into the market right now so it's not looking at the data and the fed isn't data dependent despite what everybody seems to say, they are forecast dependent and only when you see tightening conditions causing the fed to change the forecast, that's the point they stop tightening policy. >> we're back to quarrels and don't chase the needles? >> david is right. things will slow down. the real question is how much. we think it's probably still back to trend rate rather than significantly lower than trend rate and i think as a result inflationary pressure is probably moderate. wage growth is probably going to be higher than it has been in the cycle so far, but that's probably a good thing because that's what you need at this point in the cycle, otherwise the workers never benefited from

a very prolonged period of growth our theme remains five more years and that's five more years in the cycle and one of the reasons why you will get five more years is because of the moderation in growth do i know precisely whether it's going to be five more years? what i do know is the cycle isn't ending next year or any time soon. >> are you counting on a huge gain in productive any if so, how does capex get us there? >> i think the productivity trend is probably going to improve from what we have seen so far capex boom hasn't materialized, that's for sure. if it did, i think growt projection would have been higher that's not the case but you can grow at 2% for a prolonged period of time. >> he was laughing. >> i heard david's chuckle. >> i'm sorry, i couldn't help myself look, here's the reality productivity growth is not

accelerating we had a bit of a boost that was artificial because of the fiscal stimulus and we're not seeing thrust towards capital spending. i'm not bullish on productivity growth and look at labor force growth is running below 1% the reality is that the u.s. economy has run out of skilled workers, we are now j.p.ing the bottom of the barrel but the pool of available labor is a 12 year low immigration in the united states is down 6.5% one thing that isn't changing is immigration policy there's only two factors of production in the economy, labor and capital. labor growth is slowing down and the quality of the labor that is being hired is probably of the poorest quality that we've seen at any time in the post world war ii era so it's quite scle rot i can. maybe we have five years i wouldn't make that a base case scenario just remember that we have 13 fed rate hiking cycles in the

post word war two experience and ten landed the economy in recession. the three that didn't, the so-called soft landings happened early in the cycle we're heading into the 10th year of the cycle and there's very little spare capacity left in the economy. >> david, let me stop you for one second we're going to run out of time i want to come back to capex mick mulvaney or larry cut low will come on and talk about the benefits of the tax reform to capex. so what are you citing is that so different from what they're citing and continually talk what about they believe will be an expended period of higher capex pending by corporate america vults of the ability to write that off in year one. >> you're posing that question to me? >> yes, i am. >> okay, so my answer is if i was a politician and working at the white house i'd be saying

the same thing so i would have the rose-colored glasses on. but i'm not a politician so i can just come out with pure raw honesty that we had a couple of quarters of better cap x growth. third quarter data capex growth was flat the orders data are slowing down dramatically it's very clear to anybody looking at the numbers that the majority of the tax reform went into stock buybacks. we look at earnings per share not dollar earnings, earnings per share. when you take the share count down to an 18-year low, which is what's happened in this cycle, it's not very difficult to artificially create a humongous earnings boom and propel the stock market which is really a major, dominant theme in terms of the bull market but i guess what i'm focusing on is just let the data tell me i'm not seeing in the survey data that we're going into ansel

ration of capex. >> david, krishna, that was a good one come back soon. >> take care. >> we'll see where the fed weighs in. let's get over to dom chu with a market flash on home builder dr horton. >> those shares are sharply low they are morning after the home builder reported profits that matched average analyst estimates but also forecasted lower than estimated home deliveries for the first quarter of 2019. sales fell shy of expectation. the company saying rising home prices, higher mortgage rates are affecting demand weighing on the entire industry group. check out shares of the ishares home construction. it's breaking the near-term uptrend after a rough year of housing-related stocks we'll see if the shares catch a bid in trading today back to you. >> the weaker housing market feeding into the slower growth side of the argument dom, thank you

dom chu. when we come back, health care in a post-election world. what the results in the split government means for the future of health care policy. a quick programming note, don't miss our exclusive interview with p&g ceo david taylor we'll be live from cincinnati tomorrow his company's investor day is tonight. "squawk on the street" will be right back right baalpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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watching health care stocks one day after the sector saw dramatic move higher a lot of the bullishness in the space as democrats retake control of the house of representatives and for good reason spending on health care has soared 260% since 1960 to just over 18% as a percentage of gdp. joining us now is former shearing plow ceo fred hassan and bill george. blue house, red senate what does that mean for 71% of voters who say they had health care on their mind when they cast their ballot on tuesday. >> i think the real issue is were they voting for coverage or voting for scrutiny of drug pric prices i would say drug coverage. in that regard the industry has always been pro-patient,

pro-drug coverage. the drug coverage for seniors has gone up dramatically since part "d" came around and the industry worked hard to bring that about. >> but you saw number i just showed costs are rising people are spending more it's an economic concern at its cor core. >> you're right, i think through better work we can probably get our costs down by 20% or 30%. >> better work means >> means working at the whole system better regulatory frame works for innovation, better scrutiny of drug prices by the market for example, if a generic cost a dollar, why is the consumer paying $3 or $4? those kinds of questions also, the cost of litigation is an out liar in this country compared to any other country of the world.

so there are lots of other issues. >> and bill we had health care policy analysts on yesterday saying that you see the major rally in the sector because split government means nothing will actually get done even if there is consensus drug prices are too high and something needs to be done about it, that doesn't necessarily mean both parties will agree on how. what's your take on the likelihood of any legislation here >> well, i think if president trump wanted to get it done, or the democrats and senator klobuchar and others were promoting it they could do so. the big flaw in obamacare is they said the government couldn't negotiate with drug companies but i don't think that's the real issue, sara. i think we were moving steadily under andy slavitt at cms towards pay away from fee for service and to pay for value and that's stopped and as long as they here in fee for service, you pay doctors and hospitals to do more, they're going to do more procedures, more drugs, more surgeries and more patients

and we have to get the pay for value and i think our institutions need to focus on disease care the population is getting sicker in america and costs will rise until we address that issue. no one is willing to address that i think where you'll see it is in the private sector. we've got what -- what you'll see is the rise of health care information companies. focus on health care information. we won't be a facebook and health care, i can tell you that, because the information is so confidential. what you're going to see an organization like united health group which was way up yesterday, that's because of not insurance, that's because of optimum health because they have the information. i'm on the board of may owe. we have huge amounts of information. i give you an example. my wife had breast cancer 20 years ago. millions of women have breast

cancer every year. we can't just give them chemotherapy that works in less than half of the cases we have to use individualized medicine how do we get to the point where the chemotherapy is only applied when we know it's95% effective we'll have to change our treatments using information, those insights are there with big data going to the individual patients, artificial intelligence is going to tell us a lot so that's the big opportunity in health care that i see. i think pharma would do great. i think we'll have great drugs medical technology will be very strong but to address the real issues, we'll have a huge new market of clinical information. >> that doesn't involve regulation at all? >> no, it's not about regulation it's not about amazon. amazon is going to disintermediate@ they're going to disintermediate. it's not a dollar hiked to $3, it's five cents the pharmaceutical does for generic and i think that's got to be

disintermediate. but that doesn't have to be done through government regulation. >> there s there a point where scrutiny on pricing hurts innovation at the margin can you think of a good example where this has happened? >> you go back 20 years, there was scrutiny on the hiv drugs pricing, fortunately we have the proteus inhibitors in 1995 but had there not been so much pressure, many companies literally walked away because it was a no win if you got something great, people want it for free. if you didn't get anything great, you're no good because you didn't do your r&d so it's important to be sensitive. you're dealing with a 10 to 15-year investor psyche cycle versus a two-year cycle that a politician has or a much shorter cycle that a bureaucrat might have it's a disconnect that needs to be managed carefully. >> i agree with fred and i think they had a medical device tax to

3% on revenues and that pulled people back and the last congress got rid of it that was a big step. there's tremendous amount that can be done in that field. so we have to focus on innovation. >> bill, stepping aside from health care,ing we're trying to figure out what a split congress means. should ceos be excited about that prospect of polarization in the government ceo confidence levels were running pretty high before the midterm elections. >> i think they're still high. they have the tax bill they wanted now they're going go full speed ahead. the thing they won't do is back away from globalization. they can't you talk about pharma companies, these are global companies, we'll move ahead with globalization and people will produce what they want to produce, sara, they won't back down they'll give lip service but i think in general confidence in the ceos is high because they're running their businesses well today, creating good earnings

and they'll keep going and they won't be deflected by the political winds. those who do will pay a big price but those who stay clear -- by the way, you'll see ceos speaking out more about these public issues and often in opposition to what the politicians are doing. i hope they'll continue doing that so ceos today is -- are in a good position to make a positive impact on public policies, not just behind the scenes but in front of the camera >> fred, last word the reason i asked about confidence is do you expect the outcome will impact hiring and spending plans >> i think the fact that it's a divided situation creates confidence that no mischief will occur for the next two years and more importantly, as bill said, it's a good time for innovation never before have you seen the convergence of three or four major forces -- digital, the genome, the micro biome.

there are new things happening everyday and also i'd just add to bill's excellent point, the voice of the consumer, the voice of the patient patients have now so much power because they've got access to information. it will be a very important of the future health care ecosystem. they will decide the doctor, they will -- a lot of them are going to know more about their situation when they go see and the doctor so information will make the consumers very empowered. >> fred, hassan, thank you very much bill george, thanks for weighing in as well good to see you both. as we go to break, keep your eye on tesla today back to 353. the company names robin denholm as its new chair dow down 20 points we're back in a moment

special etf spotlight today. retail stocks moving higher as stores across the nation gear up for the holiday shopping season. walmart announcing it will offer

bailiff deals at 10:00 p.m. eastern as someday a research firm e-marketer predicts u.s. christmas sales will surpass $1 trillion in sales for the first time ever. joining with us the holiday outlook on retail is matthew boss, retail analyst at j.p. morgan very highly ranked what's your top holiday pick among the retailers? >> i think you want to be positioned with value, convenience, innovation and pricing power so we think this holiday season could be the best back-to-back the consumer has seen in five plus years. we think the micro indicators line up from a weather perspective. we like the off pricers, burlington, tjx, ross stores and on the global brands we like lululemon, ralph lauren, pvh.

i think the consumer is in a great place. i think retail still has disruption you're going to have more store closures in the last two years than we've seen in the last five so the disruption continues. you have rising prices, you have wages that are rising, transportation that's rising that's where i think pricing power is key so to us it's a barbell positioning. i think you want value and convenience, that's where the off price sector comes into play that's where a coals comes into play and i think you want companies that are in control of their own destiny from a distribution standpoint. that's where we like the global brands that's where a vf corps and pva

and ralph lauren come in. >> so those apparel days are over >> you missed one of the biggest ones, which is e-commerce. so i think the lines across all of retail are completely blurred. from a consumer standpoint it's the global brands. that's where there's loyalty but in terms of where to get the product, that's why you're seeing more closures that's why you're seeing more bankruptcies so the last part is who can benefit from the disruption over the next couple years and that leads you back to those off price retailers which i'd included in there. it points you back to the discounters. dollar general is a name overweight five below sets up very well for this holiday season. but you're right, the lines are blurred. excommerce is driving a lot of the intersection between brick

and mortar very us is digital. >> on a similar note, we used to judge the upcoming holiday season off of holiday hiring and people are putting together charts showing it's robust is that a good tell? >> i think the key this year, last year was the best holiday season in three years. retailers -- this was the big concern over the course of the year in my sector was how are we going to lap this. as the years progress, i think the underlying consumer has strengthened we're seeing trading within stores so i think it will be a

key in terms of national brands, name brands, full price selling, inventories are in great shape heading into the holiday so from a mark down perspective i think retailers can win not only on the top line but also on the margins. >> i'm curious about your pick for ralph lauren this has been such a hot stock over the new management team and didn't react well when it just released earnings. so what do you make of stocks that got punished. coors yesterday off of what were decent earnings. >> i think it's very company specific so ralph went in after a nice run up into the stock. there was some crowding looking for a near term move i think it sets up well from here great management team as you said i think they're thinking about things differently they're looking to capture millennials and like some of the recent collaborations that they're doing on that front, north american sales have turned positive for the first time in

three years. europe is moving in the right direction and there's gross margin and sgna so i think ralph lauren is a double digit earnings story flip side is some of the others, michael kors moving back into negative comp territory in north america was not well received. i think the overhang also continues to be china. i think stocks and volatility is died to some doynamics that are out of their control >> time to send it over to contessa brewer at our headquarters. >> a hooded gunman wearing all black opened fire at the borderline bar and grille in thousand

thousand oaks california he's identified as 28-year-old ian david long found dead in the bar. president trump says he was fully briefed on the shooting and offered his condolences. >> it's a horrific scene in there. there's blood everywhere it's a horrific incident it's part of the horrors happening in our country and everywhere, i think it's impossible to put logic or sense to the senseless 85-year-old supreme court justice ruth bader ginsburg was hospitalized after a fall last night. she went to george washington university hospital after experiencing some discomfort overnight. henry kissinger met with chinese president xi in beijing. he says cooperation is essential for peace and progress in the wor

wor world. when we come back, all eyes are on the fed investors preparing to parse through its statement after today's meeting. we'll tell you how the fed speak could move the markets "squawk on the street" is back after this whooo! want to take your next vacation to new heights? tripadvisor now lets you book over a hundred thousand tours, attractions, and experiences in destinations around the world!

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clues. >> let's look at expectations for today and beyond 90% of our fed survey panelists saying no change today but 85% expecting that fourth rate hike of the year coming in december that's pretty robust and one of the higher numbers we've had for agreement on that december rate hike now, next year you can see there's disagreement everybody pretty much expects two, but that 2.5% tells you some people think three may be coming, some think there will be four whereas other people say, hey, they'll stop at two but look at the trajectory for rates, the average trajectory among the panelists. 2.4 is where we end this year, 3% in 2019, 3% in 2020 now that terminal rate is a bit of a misnomer. it happens somewhere in there and the fed comes back down.

>> unemployment not ticking down 3.6% ten year rising and the s&p a modest gain seen by the end of next year to just $29.36 chance of recession ticking up just a bit as some see in the next 12-month period a greater chance that maybe we hit the recession. that's below the long run average but up from the recent low ranges around 14%. here's the commentary we took. the chief economist at point loma nazarene university writes, in 2019, it could be the most important year for the fed since the end of the financial crisis. it could either tip the economy towards recession or feed building inflationary pressures. and then alan sinai, chief global economist and strategist in decision economics says prosperity has arrived in the u.s. and is going to hang around for a while. carl, i guess that may or may

not depend on how the fed handle s. >> does the slowdown in capex and housing get their attention today in the statement >> well, the slowdown in housing is perhaps often misinterpreted as being generated by the higher interest rates in fact, there's much more demographic element to it related to the fact that most of the millennials and the people in the 35-year age bracket can't afford a house and it's not because of the interest rates, it's because of the dun payments. >> dr horton would probably take issue with that. but it's a demographic play, mobility play? >> exactly these are relevant factors, i'm not saying interest rates don't matter, they do. but at the margin these other factors are weighing on housing relatively more than they would have. >> what about capex? >> if you look at interest

rates, they're on the rise but overall financial conditions are accommodating so we have to take a broader perspective to adjust interest rates. >> you are clearly not in the camp, catherine, that says the fed is missing out on some pockets of weakness and they should slow down a little on these rate hikes >> well, there's some issues with regard to balancing the objectives of returning the asset prices, the constellation of asset prices we have right now. there's a lot of risk in the system that hasn't been priced yet. some prospects for inflations surprises that haven't been priced in yet. so in some sense the fed has to keep their eye on that as well as on the economy. we have a tremendous robust momentum in the consumer sectorr >> he's going to speak in dallas next week. any chance he tries to refine

that line, what he said? >> well, first he did say that we should be careful about what we mean when we say neutral. there's a neutral for the real economy, a neutral for financial markets and actually right now the robustness in the real economy, that's consumption, i think there's a fairly robust investment that is -- needs to be balanced against the realignment of asset prices that has to happen as part of the normalization of monetary policy. >> what i'm trying to figure out catherine and the bigger risk that the u.s. is running too hot, overheating or actually slowing down because of what's happening globally and tariffs and all of that. >> we have to make the distinction between what's happening in the domestic economy and firms that are basically domestically oriented, don't really pay attention to the global economy they don't really pay attention to wall street -- sorry about that -- and the other set of firms that are very globally engaged and are very involved in

wall street, there is a distinction between those two parts of the u.s. economy. i think we saw that playing out in the elections as well so the fed has to manage this combinati combination, domestically oriented versus not engaged and balance those two. what does that mean? one hike in december and how many next year. >> well, we are looking at one hike in december and two more next year. >> you think the market can handle that? >> the market hasn't yet gotten on the same page with the fed for next year, we're missing about 50 basis points between what the market thinks and the fed says they're going to do so closing that gap is going to have big implications for where we are next year. >> you mentioned the election. did anything on tuesday change your view of the economy through trade policy, debt limits, things like that >> well, the trade policy is very much at the executive level and trade hawks and national

security hawks are in a strong alliance so i don't see any changes in the direction for trade policy now the debt sealing and the fiscal cliff become important agreements for the u.s. economy going into '19 and beyond so those should be the objectives of fed watchers and any watchers. >> does that get interesting on december 7 or does that get pushed into march? >> it will get pushed into march but it should be on the minds of those taking long-term investments because the decisions on those two aspects, trouble around the debt ceiling, there's always turbulence but more importantly the prospects for a bipartisan agreement to push the fiscal cliff to the future changes the trajectory of the u.s. economy between '19 and '20 and if you're looking at capex or financial investments and you're looking beyond the short term, you need to think about those two trajectories for

the u.s. economy. >> so the upshot for growth, the administration says it wants 3% annual growth, looks like it will get that this year. what about next year >> we're pretty close to that for next year. we see a lot of the gains for both the fiscal spending that was part of the 2018 bill is going to show up in 2019 and there will still be strength from the 2017 tax cut. so we have domestic demand is very strong. consumers are out there. we'll see more wage increase that's robust. >> catherine, thanks. >> thank you very much. >> catherine mann joining us from city. when we come back, a brewing battle in beverages, why coke may jump into the energy drink space and the company trying to stop it from happening we have the details. "squawk on the street" will be right back don't go away. dow is up five points.

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one online retailer is crushing amazon this year. but is it too late to get in on the rally? find out on tradingnation.cnbc.com more "squawk on the street" is coming up.

let's get to the cme group in chicago and join rick santelli for santelli exchange i. >> thank you, i was trying to come up with the correlations and tell wes get from market movement based on facts going on in realtime. and it was easy, actually, election night because at one point when it looked as though the gop had the possibility to hold both houses, we saw that interest rates, specifically the

ten-year note yield, shot up in a new virgin seven plus year territory around that 3.25% level. it looked as though they would maybe do okay in the senate but probably not take the house, it moved back under 320 sounds subtle but this 323 to 325 era is a very important technical area we could take it a step farther. being fede, a lot of what happened that night has to be in the minds of fed officials as they meet. the notion of why that occurred is very telling because basically we have put stimulus in the system and maybe a counterbalance to that will be that the house goes to the other party. it's okay to have good fiscal stimulus, the fed begged for it not that many years ago but if you don't do pay-fors, if you do the right thing on policy but

you don't pay for it properly or cut down on spending it isn't the best of every world. and let's not forget the counterfactual, what would have happened if the republicans did take both houses and this isn't political, it's based on how the market acted indeed, the fed may not only have more issues, it tells us the fiscal stimulus is making an impression on investors. pretty logical let's go to the white board. we've done a lot of santelli exchanges. double tops mean something in ten year traders will give it the ben pitt to go lower so it's gone from 30 to 20, that's a big widening. if you look at the 30-year bond in the same period, the pattern looks more aggressive so this is one of the rare occasions where

many traders have looked for down yields but not to the extent they would have the 30 year looks aggressive and the jobs look good optimistic te from the markets let's send it to jon fortt with what's coming up on "squawk alley" in the next hour. >> roku is down big, 18% we have the ceo coming up because the streaming numbers are strong, he's expressing atboidence wh aut the mismatch, coming up on "squawk alley.

welcome back to "squawk on the street." i'm dominic chu. check out what's happening in markets. they're trying to find positive territory on the dow now we want to call your attention to what's happening with financials, they're on the move. they're about a quarter percent to the up side among names moving on this ahead of the fed meeting are some of the banks out there, regional specifically and some money center banks as well check out what's happening there. bank of america, charles schwab,

and capital one financial and sun trust banks higher by a percent to 1.5% or so. and cincinnati financial, moving to the up side by about one-third of 1%. and oil, something to keep an eye on today as we watch that sector in particular as oil prices move to the down side wti crude is off three-quarters of 1%. 61.22, the last trade there shares of monster beverage are under pressure this morning on news that came out of the conference call last night that koch coke -- coca-cola is launching two competing drinks they signed a cooperation agreement in 2015. coca-cola owns 15% of the company, contain some competitive exemptions but they disagree whether the exemptions apply in this case and they are headed to

arbitration. coca-cola saying we value the relationship with monster, we will abide by contractual bligtsz, filed with monster about the launch of coca-cola energy we have a difference in interpretation to arbitration panel for resolution, a mechanism agreed by coca-cola and monster. clearly, monster hit on worries, a, of competition with bigger coca-cola, launching two drinks on its own, and a lot of bull case on monster has been that coke would acquire the company that's been out there since 2015 the way it is described to me it is a family friendly feud. the fact coke is taking it to arbitration for clarification of what was actually in the agreement, and as far as the drink that they are planning to launch, i can tell you it is a naturally based caffeine drink,

coke energy. there will be two energies coke energy and coke energy zero with garana extract, a plant source they haven't announced when and where it will launch they want to get through this with monster beverage. >> this mitigates the idea that three years after they made the investment will buy the company, or does it not >> actually i don't see it related at all they made a number of acquisitions. >> and kerrigan was bought -- >> coke is trying to be a total beverage portfolio they're in innovation mode, exploring natural and zero sugar beverages. i see this as part of that monster partnership is working well, evidenced by monster earnings yesterday it is growing strongly quick programming note here on

"squawk on the street," tomorrow i will be joining us live from cincinnati with an interview with david taylor, procter & gamble ceo they're coming off the best sales quarter in five years. you won't want to miss that. the company has investor day expecting news later. >> do you go back to your old bedroom and stay there >> i stay in a hotel, the house is 25 minutes outside of downtown but hopefully i will see my parents. >> say hi to the eisens. shares of roku hurt despite beating the top and ttboom line. we talk to anthony wood next on "squawk alley. don't go away.

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