flavors of e-cigarettes from convenience stores in an effort to curb use by kids. it's friday, november 9, 2018. it's friday, i'm in love ♪ live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" on cnbc. i'm melissa lee along with joe kernen andrew ross sorkin is reporting live from the annual baron investment conference, he will join us in a bit with guest host ron baron. and i guess he will talk about tesla, which you eluded to >> maybe, maybe not. we'll see you later.

let's check the markets. joe mentioned the dow lower by triple digits. down 120 points. s&p looking to open lower by 15 1/2 nasdaq down by 62. still digesting the fed meeting yesterday where there were minor tweaks to the language, particularly concerning business investment we'll get to that in a moment. overnight in asia, that trajectory is still lower. the nikkei down by 1%. hang seng down by 2% shanghai down by 1.40% in europe, let's see if we're taking cues from the asian markets. we are we have red arrows across the board with the italian minute down by 1.25%. as for treasury yields, we're watching that closely. on the ten-year up to 3.22 or

so right now at 3.028%. shares of disney moving higher shares of the entertainment giant are moving higher. disney reporting a record profit last quarter disney also announcing its streaming service is set to launch late this year. disney's ceo, bob iger, spoke about the company's banner year. >> the studio had another record year with just incredible success across the board obviously a strong film slate. that helped drive numbers for the quarter and for the year >> he seems like he is okay.

>> investors want him to stay. >> this is a different world has nothing to do with me. i'm talking about iger is he not -- he's 67, that is pretty young. >> it is young in this day an age people live to the mid 80s >> i would hope so the 90s and beyond >> sure. >> and beyond. shatner is 88. he's my idol he's on, like, the amazing race over in europe we'll talk more about the earnings and the youthful management at disney thanks for playing along with me >> humoring you? humoring you about your age? >> it's not about me >> procter & gamble looking to simplify they will reorganize into six smaller business units

each will be broken out by a product category like beauty david taylor sat down with sara eisen after announcing this reorganization she asked him what he's hoping to accomplish with the restructure. >> without question the goal for all that we're doing, both our superiority strategy and the organizational change is to get the balance, growth and value creation we believe that the path we're on which is leveraging superiority of the product, the package, go to market capability, communications, consumer and customer value, doing that right will cause us to win a big part of winning is making sure we're agile to serve the customers and distributors in each market. >> sara eisen will have more of her interview with david taylor in the 8:00 hour. yelp shares are plunging after the company missed on revenue. the online review company hurt by slower than expected local advertising growth yelp also cutting its revenue guidance

hertz shares going the opposite way they're rising this morning. hertz's earnings and revenues topping estimates. shares of activision blizzard are under pressure. the company reporting its third straight quarter of declining monthly active users despite that drop in users the call of duty maker did beat earnings estimates >> a lot of competition in the last quarter you were talking about red dead redemption, right? >> yeah. >> and fortnite. >> a lot of horseback riding >> really? >> yeah. going to small towns outlaws. sheriffs good guys. kind of cool >> apparently it made for tougher competition. news breaking late yesterday from the fda on e-cigarettes a senior official told nbc news that the regulator will ban the flavored cartridges.

the flavored products will be available at vaping shops and tobacco shops. the mint flavored e-cigs will be available at gas stations. you guys have talked to fda commissioner scott gottlieb, he threatened to say no sales alt these outlets. >> it's a weird phenomenon people are free, i understand how that works designing a new delivery system for nicotine, which is something you don't -- you're not born craving nicotine why you need to develop a jonesing for nicotine, i don't understand i think it goes back to the oral -- >> the oral fixation >> i do. to get off cigarettes, i understand but to develop a whole new craving for nicotine for no reason other than the act of

the -- that's all i can figure right now let's get down to andrew and ron baron at the baron investment conference in new york >> thank you for that. we were talking about e-cigarettes off-camera. it is great to see you today is ron baron's very big day, it's the 27th an ral nual n investment conference. there's a lot to talk about. the markets, volatility, the politics of it all you still do own and are one of the great bulls on perhaps one of the most controversial stocks, at least in our modern history, tesla let's go there first, then into lots of other issues since we last saw you a couple things happened. there's a new chairman or chairwoman running the company, that was just named yesterday. your thoughts on that, and just your thoughts on we finally got the number

the quarterly number came out. they beat the number in a big way. there's still lots of bears on this company who don't believe it it w >> it was a good quarter up 70% they made 1.4 billion in cash flow before they spent on investing. so an annualized rate of 5$5.5 billion of cash flow before they spend on investing the company is valued for 60 billion. so 11 times or 12 times, not bad. in addition to that, they are growing at 50% a year. i think this year they did sales of 20 billion. we started in 2014, they were doing 3.7 billion. this year it's 20 billion. next year it's 30. i think that in 12 years, in 12, 13 years, 2030, this could be a trillion dollar company. could be it's clear they'll be 60 billion

in three, four years, but they could be, you know -- this could be a big company >> do you have any anxiety that they'll have cash flow problems? they have a debt payment that will come this month a much bigger debt payment comes in february. but could be swapped for stock depending on the price of the stock. it's getting close to where it needs to be for that swap. >> as far as the cash flow goes, when i look at the numbers, it doesn't appear to be a problem elon musk says it is not a problem. take him at his word he could have sold equity a year and a half ago at $370, $380 a share. people were scrambling to buy. he chose not to. he thinks he's at the point -- you have these businesses, they invest when they invest they penalize profitability. when you build a paint factory and you spend 3$300 million on the factory, it's built for 250,000 cars a year and you're

doing 20,000 cars a year, 30,000, you won't be profitable with that. you get it to 250,000 cars a year, you're making 1$150 millin on a 3$300 million investment. you are at the point now where incremental investments will be incredibly profitable. they're doing 5,000 cars a week. they'll be able to do -- of the model 3. for virtually no additional investment they will get to 7,000 cars a week. >> the skeptics will say there's something funny going on the numbers were too good. maybe they pulled something forward into the quarter was there a fleet deal done that we don't know about? >> they told wall street this quarter that just ended that they were hoping to produce a gross profit margin of 15% on that car, on the model 3 it came out over 20. internally they were saying cut costs here, watch that

when you build something from the ground up, it's not easy it's not easy doing what he's done remarkable what he's done. >> let's talk about the news of yesterday -- >> by the way, one more thing. when he started making the model s and model x, those cars initially, when they were selling for over $100,000 a car, gross profits of 20% now they're in the 90s for the car, the gross profits are 31% so gross profits keep going up even though the price has gone down the same thing will happen with this car i think the gross profits for the model 3 will be as good as they are on the model s and x. >> the other thing that happened just yesterday was the announcement of the chairman of the company. this coming after he reached that settlement over his tweet for funding secured which we should still talk about. i don't think i've seen you since that all did get settled robbin denholm is the new

chairman do you have confidence in here >> i don't know her. i haven't met with her i was told yesterday i can talk with her next week and i will. i'm a fan of women as far as executives mary barra has done an amazing job. the women at boeing do an amazing job. the women who work for us do an amazing job. i'm a fan of women they think differently than men. that's clear he's done phenomenally well with gwen shotwell with xs spacex >> you think she'll come in at run the company eventually shotwell is the ceo, she runs it on a day-to-day basis. >> she runs it elon has input she said he comes down to talk about things, he holds meetings for the day. >> this is structured the opposite way >> elon is 49 or 47.

i think he's 49. and so he's right in the prime so he's right in the sweet spot. you know, i don't see him retiring maybe he wants to be just the engineering guy or maybe the new product guy or the dreamer for the business guy i don't know >> what do you think of the critique that this was a missed opportunity -- >> he says he will be the last guy out of this company. what do you think of the critique that this was a missed opportunity to bring in somebody from the outside, potentially somebody who people -- talked about an alan mulally, somebody who would give additional confidence to investors and that there would be more oversight. >> i think when you think about oversight, governance, that's what most people complain about. i think the s.e.c. action is helpful on that. there was a good interview that elon had given to kara swisher

he was humble in it. i love the stuff when he's humble i think he recognizes he made a mistake. he was talking about self-inflicted wounds. his brother said you stab yourself and then you turn the knife? what did you do that for he understands that he has to act more conventional and more boring, to use his term, and i think he will. he has been. he hasn't been tweeting. except about the new features on the cars >> i wanted to talk about some of the tweeting in a second. talking more about the robbyn denholm appointment. let's roll the tape. >> robyn has been part of the musk team for quite some time. she's a musk loyalist that suggests to me she might not be the best person to keep him in check. i think he needs a better babysitter, we're still staying

away >> this goes to the idea that -- >> who was that? >> this this is an investor who is not investing in this case in tesla, mark tepper, suggesting that if the whole idea was adult supervisi supervision, this doesn't count. >> adult supervision this guy is worth $30 billion, $40 billion, i don't know. you need adult supervision there's one elon musk. there's one warren buffett there's one jeff bezos there's one sam walton adu adu adult supervision? he could have retired when he was 30, 32 he chose to put all that money into spacex and into tesla >> i think the point on elon musk, when it comes to this adult supervision issue is here he was -- he makes the mistake on funding secured, right? on this tweet. let's just stipulate and

describe it as a mistake >> yep >> he then settles the case. he settles the case. part of settling the case was to have a compliance program around tweeting and everything else literally, i think it's within 48 or 72 hours later he's now then tweeting effectively making fun of the s.e.c >> that's your interpretation. so the way i think about it, i can't think of anyone who hasn't made mistakes. and you're correct when you're building a business this has a chance to be a trillion dollar business, maybe 2 trillion i don't know how many people can potentially do that in the whole world this guy is one of them. >> he may be well of them. i won't dispute that piece of it when you start to make your cars, he has this cool idea where the handles pop out when you walk next to the door, it doesn't work exactly right the

first time then he has the idea about gull wing doors doesn't work right the first time he has all these orders for cars, he wants to automate the line, doesn't work exactly right the first time, then he has these cars, he can now make him, and he's having a hard time delivering them. in your personal life, you're working like mad, you're making cars from 1,000, 2,000 cars a week, all of a sudden you're making 7,000 cars a week, you're tripling the number of cars, cars are incredibly complicated. when you're doing something like that, how you can expect to do everything right and the pressure you put on yourself he's in a hurry. >> my only suggestion after making a $20 million mistake, h seemed to make a number of mistakes a week after and almost taunting the system. whether you as an investor or any investor should feel good about that >> i would rather that he didn't

do it. i'm sure other investors would think it would be best not to do it we've been an investor in this company since 2014. we bought our stock between 2014 and 2016 we paid $219 for 1.7 million shares now the stock -- you invited me on after that happened to take a victory lap, the stock had gone to 350 or something. i said this is way too early for a victory lap. in the past year and a half, the stock traded between 250 and 350. it should be higher if it wasn't for those gaffes now i think he's recognizing it he's now above that pressure point. now it should be much easier he will never bet the company again. >> i want to slip in a quick break. you bet on a lot of people who -- let's just say it takes potentially a crazy person to have this kind of outside success.

whether it's sam walton, jeff bezos or elon musk the question i have for you, how do you know when they're crazy like a fox, how do you know when they're just crazy >> are we going to a break now >> we'll go to break in a minute but this is -- this is a real question >> i think when you're me, and you get to see people and sit with them and talk with them and see them repeatedly for a long period of time, you make judgments. you make judgments, they're smart, nice, honest, you can trust them you can shake their hand, they live up to agreements. they're not trying to cheat you. they're doing the best they can. you make judgments all the time about people i make the judgment. i have not met people -- i met bezos. the big mistake i made with him is not investing with him in 1999 i'm 75, so i just know it.

>> we'll slip in a break a lot more to come guys, back to you for now. coming up, stocks in china under pressure again overnight as trade tensions resurface. we'll talk to leland miller next. as we head to break, a look at the premarket winners and losers in the dow. something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year. right before our eyes, aging is unleashing exponential growth... ...in every industry. are you ready? we are. a-a-r-p is teaming up

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"get grinch tickets" into your xfinity x1 voice remote. [ laughs ] uh oh. [ laughs ] something in my throat. ♪ welcome back daniel zhang says cloud computing will be alibaba's main business in the future he said every business in the future will be powered by cloud and alibaba is happy to build the cloud infrastructure and support all businesses he made the comment ahead of the massive holiday, singles day, which generated $25 billion in sales last year. in terms of saying cloud will be the major business, right now it's 7% of revenues that would

be major growth for a company that has seen some astronomical growth >> we need to get to 51% from 7% -- >> if you're growing 90% >> all right trade tensions continuing to weigh on stocks in china the shanghai down 1.7% overnight it's down 20% year-to-date joining us is leland miller. we will get to the upcoming meeting at the g20 maybe some thawing coming. let's talk about what seems like ages already we had an election what's today, friday election on tuesday. the hurricane hit counties are finished counting but something interesting in broward happening. i'm reading from date line, november 8th democrat-led house seen backing

trump's china trade war and could even egg him on. you believe that?do. certainly in the medium term and long-term there is no side that is pro china as we get into the elections, this will be much more brutal than it has been the president could have a trade deal at g20, that's separated from china policy going forward. but it gets difficult. there is no constituency in d.c. will be to defend china. >> even more so with a democratic controlled house than a gop house? the president is not going to push back because they're democrats. if they're on his side, he's not the kind not to embrace that >> that's right. but this is all about 2020 and trade deficits the president set up his metric for success being the trade deficit, particularly with china. 2018, the tax bill meant this is

the worst trade deficit that history has seen as a result of that, he has work to do in order to get this trade deficit down by his own measures, so there has to be big things happening with china. either a big china trade deal or big tariffs. >> what is a big china trade deal look like a pause in things getting worse or -- >> only a pause. what's on the table now, two possibilities. g20 is a massive nothing burger, and we move on and things get nastier. or you have a pause deal tariffs stay at 10%, but the chinese agree to a laundry myself of things >> we parallel process meantime the other round of tariffs which have to go through a public round of comment >> or we pause and say as long as the chinese are behaving and buying a lot of our goods, maybe this doesn't click in and hold

it over their head, the january 1s deadlinst deadline. >> what did president xi say was there a change in attitude >> i don't think there's a change, that's a good thing for a trade deal i think the chinese would jump through hoops to get a trade deal they want one. this is completely on president trump. if he wants something, you will have a g20 trade deal. if he doesn't, there won't be. >> when you say they desperately want one, is that because of the economic news coming out of china? we had some news coming out about how banks lend that seems like a desperate measure on the part of beijing to prop it up. >> the fear is early 2019 will be a mess if the chinese don't get a trade deal they want a trade deal for the other reason that anything they agreed to in the short-term will not be one of these structural deals which changes made in

china 2025 it won't change the direction of intellectual property theft. though it could tweak around the edges. so anything they can agree to in the short-term that puts off their pain for another year, it's easy for them to do, they'll do it in a second. this is entirely on president trump's plate whether he wants the deal or not. >> interesting now he has some allies in the house. it's like the enemy of my enemy. leland miller china beige book international, we'll see you again soon thanks we need you in this new paradigm we have. coming up, get ready for the trading day ahead. and investing in art we'll talk about a huge new picasso sale at christy's with the grandson of pablo picasso. that's next. as we head to break, a look at yesterday's s&p 500 winners and losers

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that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning among the stories front and center, shares of disney moving higher the company reporting a record profit last quarter thanks to strength in its studio business.

also its streaming services is set to launch next year. procter & gamble is looking to make some changes they will reorganize into six smaller business units each of those units will be broken out by product category i don't know they sold pringles. i don't know what they are >> it's made out of dehydrated potatoes and other things. >> the wing design is cool >> very aerodynamic. >> yes >> we'll hear from p&g's ceo later this morning and yelp shares are plummeting revenue numbers falling short of analyst estimates. yelp issued weak guidance for the upcoming quarter let's look at u.s. equity futures. they have worsened a bit as things are going along down at this point 126, 128

points on the dow. s&p down 16. nasdaq off 65. one stock not adding to the dow's declines, general electric shares are sliding in premarket trading. jpmorgan securities cut its price target on the stock. i'm sorry to laugh >> twist the knife >> i still got some. i'm sorry. it's not funny one of the great, great -- thomas edison. the first dow component. how far it's fallen. >> yeah. >> cutting its target on the stock to $6 a share from $10 analyst tusa -- >> tusa. >> among the most emphatic critics of the company the stock, let's check where shares are right now down below $9.

8.80 that was a 6$600 billion company >> at one point when you probably acquired the shares >> i got all my options. >> they're worth something >> they look great on the wall >> wallpaper >> yeah. >> most expensive wallpaper you ever bought. shares of stoneco are higher in premarket trade according to an s.e.c. filing, berkshire hathaway has taken an 11.3 passive stake in the company. the "wall street journal" had reported that in late october berkshire was investing 6$600 million in two fintech companies. sometime for the "squawk" planner. we'll get the october producer price index at 8:30 a.m. eastern. forecasters expect an increase of 0.3%. new york fed president john williams and randal quarles will

speak later this morning we want to flag a big retail event this weekend, sunday is singles day in china the largest online shopping event. last year the holiday generated sales of $25 billion. compare that to last year's black friday which totaled 5 billion. tune in monday for the impact on the retail stocks like alibaba, the creator of singles' day. chinese internet stocks have been pummelled along with the pummelling in f.a.n.g. stocks we saw in october of course with the concerns over the china trade war. >> that is proportional to how we should think about china. >> double or black friday. singles' day it's double -- what did they say our plaque fridblack friday was

>> $5. >> what was theirs >> 11. >> what was the 25 figure? total sales. 11 we think of black friday as the retail event of the world. >> you think about the purchasing power of the chinese consumer, how much u.s. companies could tap into that in the future, or maybe not >> it's a huge gdp but divided by many more we hear it's past us we need to -- it may never pass us really. they may pass us in certain metrics. they may have already. >> let's get back to andrew and ron baron. they're joined by a special guest. >> we are joined by a special guest. we'll talk to arbout art

our next guest is pablo picasso's grandson he has a new book out that's been published in english for the first time we thank you for being here this morning. >> thank you >> we want to talk about your grandfather. the art market and given that you know him now so well the thing that is so interesting to me about picasso -- and the most expensive picasso painting ever was sold for 1$179 million and most recently a very expensive painting sold for 115 million or $117 million he was one of the few artists that not only created the art market but alive for all of this oftentimes artists toil away in obscurity, pass away, then the art becomes big. he created the current art market that we know today.

>> yeah. he was the period of the poor artist living with nothing, so when he came to paris in 1900, he was very poor and hoping everything would be fine it took time, but ten years after he was already confident about the value of his artwork he was even managing the market. sometimes he would have an appointment with an art dealer in one room and have another waiting in another room. what made him so confident >> probably the difference between talented and genius. he knew very early that his talent was not normal. >> what would he think now, as commercial guy of the prices both that his paintings are going for and the way the art market has moved in recent years. he would say this is a bubble? would he say this is -- >> an expert once asked me do you think the art market will collapse one day

i was asking him, and the guy said of course what about picasso never. probably because he's strong he had many periods, and pablo himself was controlling the market he was not surprised to get a lot of money when he was alive but he was not too impressed he was still an artist >> there's a lot of picasso product out there. in terms of supply and demand, there is a lot of supply >> there is globalization and in the past ten years we had new collectors collectors from russia, far east, middle east. maybe not enough picassos for everybody. >> how does the family feel when certain pieces of art go for sale you had a cousin who put up a number of paintings, including that expensive painting for sale is that promoted in the family

is that sack -- sacroligeous >> everyone does what he wants in the market. we have been careful we know noknow after the death y grandfather, it would have been easy to sell because of speculation, new art market in the '80s it was not necessary. what abo >> what about the fakes? >> it's a big question my mother is an art expert respected all over the world i've seen in my life many fake picassos >> can you spot them do you think you know? >> real experts know immediately. i've seen something like, i don't know, like something you think it's a picasso, but no it's very sophisticated.

thee use paint >> what would he think of banksy would banksy be considered an artist or too commercial >> my grandfather was a single artist he liked to be a pioneer he liked to be the first one to do something banksy was probably something that could have been funny for him. i'm not so sure he was happy to destroy artwork. it happened when he was in paris, very poor he had to burn a painting so get some heat. >> my gosh >> after that, he kept his artworks until he died >> olivier picasso, thank you for joining us do you own a picasso >> yes >> do you buy art as an investment or -- >> i buy it because i love it. it meant something to me >> do you trade art? >> no, i only buy. >> you only buy. okay thank you. we'll come back in just a bit. when we return, by the way, we

have more coming up from the baron investment conference. matt desch will join us. and later we'll talk investing with henry fernandez of msci. in the 8:00 hour, we'll get an update on dealmaking from ken moelis a big couple hours ahead on "squawk box. i consulted with your grandmother's doctor.

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. google responding to last week's protest by employees. the company changing ways it handles sexual harassment claims arbitration will become optional enabling employees to bring lawsuits in addition google says it will expect leaders to discourage excessive alcohol consumption at company events, proposing two drink limits google says alcohol was a factor

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♪ welcome back to "squawk box. a little dave matthews "satellite" we're explaining why. we're at the baron conference this morning i'm with host of the event ron baron. we thank you for having us also want to bring in the ceo o meridian communications. welcome. >> great to be here. >> meridian has had a long history of ups and downs but more recently ups. now getting a number of things in the sky we were talking about how you're

a big customer, by the way, of elon musk when it comes to spacex >> yes i'm his largest commercial customer and he's made it possible for us to get all our new satellites into space at a low cost >> let's talk about what iridium is doing or at least the modern day version of iridium >> we bought 10% of the company. $6.10 a share. it's now $20 >> and we appreciate it. >> speak to the point of what the vision of iridium looks like. >> it's still the most amazing satellite network. 66 covers the whole planet we're the only with 100% coverage of the planet people think of us from the satellite phone and the early pager. people call the internet of things, connecting assets,

trucks, trains, buoys, that sort of thing that's really the high growth area and now that we have brand new satellites that are in place, we've got revenue streams to propel our growth through the coming years. >> how many are going to be around aviation to provide service to airlines, airplanes, that whole system that i know you're working on. and how much of it is going to be terrestrial >> airplanes are an important market less than 10% today, but we're probably on like 60,000 aviation customers. the largest percentage but we're more in the cockpit of the airplane for operational communications for the airlines. >> right you're not go go i know >> no. we're not the wi-fi in the back. that's more of a commodity business we try to avoid commodity businesses like that but we see a lot of business growth in the future airplanes fly over the whole

globe. >> and they can't go direct. they've got to stay in contact with the land. >> so we're off and on orbiting airplanes, oceanianic airplanes. we're the way the air traffic controller can talk to the pilot and back maritime is a big business, land mobile, iot, and department of defense. >> on the iot mobile piece, with the buildout of 5g on the ground, do you consider that competition for anything you're doing? >> actually, you know, the original company tried to compete with cellular and we embrace really other technolo technologi technologies so often when we're on a vehicle or in the hands of someone else or an iot device, we're paired up with cellular we cover the other 85% a lot of times it's use cellular when you can it's low cost and efficient, but as the truck or train or piece

of heavy equipment moves out of cell phone coverage, we're the connection >> can you speak to the potential people talk about elon musk being a competitor. there are others out there what does that look like in the future to you? >> so they're not competitors. people think they're competitors because they're also going after low earth orbit. people appreciate the value of where we are in space, how close we are to the earth. because that means antennas can be small and batteries can be light. but they're going after commodity broad band to provide lower cost connection in homes they're using different spectrum there is a bit of a space race going on right now just like the space race we started in the 90s. i hope it doesn't end up the same way it happened for us in the '90s for them. in fact, there is some concern -- >> you think he's overbuilding right now? >> well, the investment community is taking a hard look at a lot of the business cases right now. because at first there was a lot of equipment now there's a little bit of a

scrutiny maybe that hadn't been there. so they're slowing down. but i do think there is going to be more and more capacity from space. and it's a good place to do business it's not just where you want to do everything from >> okay. it's a longer conversation we hope to have both of you back you're sticking around thank you. >> thank you >> we've got a lot more to come here at the baron investment conference we're going to talk to the ceo of msci. and later we're going to talk deal making with ken moelis from moelis & company and much more from ron baron "squawk box" returns in a moment alpha seems more elusive today.

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a "squawk box" power hour. we're joined by special guest host ron baron he's giving us a front row seat to his annual investor conference and the news makers keep coming nokia's ceo will join us in studio with a call on his business plus procter & gamble is reorganizing its business. we'll hear from p&g ceo as the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc you knew it was coming i'm joe kernen along with melissa lee. andrew is at the baron conference joined by a guy named

ron baron unless this other guy shows up that's in the prompter. it says rob. we're going to hear from them shortly. u.s. equity futures at this hour are indicated lower. triple digits on the dow 108, 64 on the nasdaq. s&p down about 14. melissa is here with me. >> i am. i have the pleasure of being here for a second day straight >> you're living -- >> the dream >> you're doing the right things it is harder -- the alarm clock is an issue. >> 3:30 is tough >> 3:30 is tough then you're back here thinking of your next show going until 6:00 is that like 15 hours or something? >> 6:00 to 6:00 is 12, joe >> that's right. making headlines at this hour, shares of general electric under pressure this morning. jpmorgan has cut its share from $6 to $10. ge has not been below $9 a share

since march of 2009. it was a pretty damning downgrade. i don't know if you got a chance to read it he said we believe this is not really about liquidity it's about a deterioration in run rate fundamentals. >> yes 3:30 to 6:30 is 15 hours. >> oh, yes, you're right you're always right, joe >> because if you -- you don't really time it from 6:00 to -- >> right on air to -- yeah. because there's a lot more preparation as we all know to be ready to deal with the things that come at you >> midnight makeup call is tough for me >> it's a lot of work to be done walt disney shares are rising disney beat estimates on the top and bottom lines in the latest quarter. higher theme park attendance and a strong performance from the movie studio and we'll get fresh inflation numbers at 8:30 a.m. eastern time economists think headline inflation was up 0.3% during a month with the ex-food and

energy rate up 0.2%. the faang stocks getting pushed around this week. dom chu joins us now with more on that. >> i will say that i will see you, i think, at 1:00 today. 1:00 to 3:00 for "power lunch. but it's a big day for the faang stocks we're looking at how much money some of those stocks have lost we want to put some dollar amounts to the percentage drops we've been quoting for weeks if not months now so we'll put this in perspective for you. facebook's stock has now lost $202 billion since july 25th that's roughly the size of a merck going away amazon already about $137 billion since the beginning of september. that's like dow dupont going away apple $114 billion since early october. netflix has lost $142 billion

since june and alphabet off $110 billion since its highs back in july so 202, 137, 114, 42, 110. in aggregate since their respective highs, these stocks faang have lost around $165 billion worth of value to put a number to those declines we quote here joe and melissa, i would say this facebook's peak market value back earlier this year was north of $600 billion. if you take it in aggregate, these faang stocks have lost the equivalent of what facebook was near its record highs. just in idea of the dollar amounts we're talking about here back over to you >> okay, dom we're going to keep talking the market here. joining us now siemian hyman and dan suzuki at a company called richard bernstein advisers

we have a guy coming on called hi rich bernstein >> same guy? >> i don't know. he has no middle initial it's a common name is this the same guy you work for? >> yes. >> all right it'd be easier if it was richard e. bernstein richard f. bernstein >> which is it >> i don't know. when did you go there? >> about five months ago >> okay. congratulations. how is it working with -- >> it's amazing. >> -- the guy we know. >> good answer five months in. >> all right let's talk siemian, i want to start with you. the market was up 500 points >> uh-huh. >> the house was taken over by the democrats. would you ever say that it was up because the democrats took over the house is that the rationale? >> no. i'd be more likely to say it went up because now we have a split house and senate the market has done best over a long period of time with some gridlock in split house and senate >> it wassed a expected so the

markets went up. >> if the democrats had won the senate and the house, do you think we would have been up 500 points >> i think it would have been a little less likely it's not a political point of view >> i know, i know. >> it's just when there's one party dominating -- >> right it's more to say the market would decline if the democrats won -- if there was a big democratic win it might not have been as big. >> i don't think you'd have that snapback rally >> it would have been hard to make the case with the straight face so from here, where do you think we're headed >> well, now that we do have that gridlock, it's generally a bullish sign we're back to where we were before 26% earnings growth in the last quarter. the recession doesn't look like it's anywhere too near and valuations are reasonable. so i think you have to be more or less bullish but not necessarily across the board we still have quantitative tightening it's a challenge for emerging markets. but certainly overall it's a

reasonable opportunity >> valuations are reasonable only if you believe earnings for 2019, that estimate has not changed. in terms of price level, we're back to early levels if you believe the earnings are just as strong, then fine. but if they come down for 2019, then maybe not so much what are you seeing for earnings growth so companies seem to be mixed on that >> i think that's one of the key questions for the markets today. right? i think there's a huge debate going on with peak earnings and what that means for the market first of all, you need to define what peak earnings is. that means the dollar amount of profits is going to decline which would imply negative earnings growth. i don't see anything like that i think that's actually very bullish for the markets. if we're talking about peak earnings growth, growth will start to slow. if you look historically, that's

not a bear market signal that's actually if you look at -- since 1980 you've had 11 different peaks in profit growth 90% of the time you have actual positive returns over the next 6 to 12 months anybody that's going to get very bearish on this hasn't looked at the history. so the question next year is what people are extrapolating is are we going to go from 25% to 15% to 5% to 0% to negative? >> or just -- you're right because what caused the selloff was the powell angst if you grow less quickly in the bad news/good news warped view, maybe the fed is not quite as aggressive -- >> where did the angst come from >> that means you still believe in a jerome powell put in the -- >> there's still linked stocks and bonds. >> but i think one way to think about it in terms of companies that are going to be more likely to keep the earnings momentum

going in 2019 are those with pricing power. and it's important this cycle for two reasons. one, of course, you need pricing power if inflation picks up. but, two, to preserve the benefits of the corporate tax cut that would be priced away. >> i don't remember you being so bullish. have you gotten -- but bernstein is bullish the guy we know. it's the same guy. >> i've been bullish for quite some time. >> he's implying he's adopting richard bernstein. >> at rba we remain bullishly positioned what about dan suzuki? >> i think that siemian makes a good point pricing power is huge, but i don't think he's saying to differentiate between companies that have it and don't i think that's right but the key is you're seeing across the board pricing power across a lot of different companies now. used to be that only the best of the best really had pricing power. but just look at what the companies are talking about the last couple quarters

even procter & gamble is talking about -- >> but it has moderated according to the fed statement should we be worried about that? we have got pricing power there. >> i think a little bit of that investment slowing is actually another piece of the corporate tax change which is the cap on interest deductibility that has to work its way through the system to get companies to new sort of leverage levels tha will allow them to investigate. >> so it's to come >> to come >> we got to go, but is there ever ice cream or anything at bernstein? does he pay for lunch on friday? is there a courtyard you hang out in is it a good corporate culture >> it is i'm going from a massive firm to a smaller firm it's been refreshing >> really? >> yeah. >> i've known him -- he was at merrill for a long time. >> we both worked at merrill. >> if it's the same guy. >> same guy, yeah.

>> but it's just such a common -- so one last question have you watched duke this year? oh >> what the -- >> we look like an nba team. >> yeah. have you seen any? no >> i'm very bullish on america and duke. >> i went to uconn come on. >> you're going to wish you went to duke after seeing this. >> injury free, it's going to be an exciting season ranked number two in the country. >> all right okay thanks siemian hyman of pro shares and dan suzuki of -- he says it's the same -- richard bernstein. >> you can just say rba. >> all right okay coming up, a lot more from the man of the morning ron baron has talked to us about elon musk and tesla. we're going to talk about his other top holdings right after the break. this was once the most

expensive home listed in america. price tag $139 million but now it's headed to auction we'll take you inside and explain why more and more of these megamansions are headed to the auction block.

welcome back to "squawk box. another negative milestone for crude oil this morning wti crude has dipped below the $60 per barrel mark. that's the first time in eight months today is the tenth consecutive decline for crude which is now firmly entrenched in bear market territory. want to continue our conversation this morning. we are live at the annual baron investment conference this morning. our host this morning, ron baron chairman and ceo of baron capital. we've talked about tesla already. we've had a conversation about iridium, another of your holdings and we're going to be talking about mcis in just a minute. and -- did i say that. >> msci. >> thank you and we'll talk to ken moelis as well just give me the take on the markets broadly. we've had a lot of volatility. the midterms have played into this we have oil and potential for

tariffs. what are you thinking of right now? >> prices of oil, penalizing profitability a little bit interest rates higher. penalizing profitability a little bit housing not doing essentially well cars so growth in the economy and whenever companies are missing a little bit, you have big declines but the big picture, i think, should be considered, is that -- so we're long-term investors and before we were discussing about how the stock market reflects the economy and in 1968, robert kennedy was running for president and the gdp in the country then was $800 billion. it's now $21 trillion. so it's gone up 23 and a half times. and the stock market was in a thousand it's now 25,000, 26,000. it's up 25 times and that's in 50 years and that's a compound rate of growth of 6% a year, 6.5% a year if you go 6.5% a year from now

to the next 50 years and i think it's going to be faster, that's nominal. the dow jones in 50 years, it'll be 500,000 >> so let's stipulate you're right. for those that don't have a 50-year time horizon -- i hope we all have 50-year time horizon but there are people here who are thinking of the next 10 or 15 years you know, getting in at a certain price does matter to some degree. i understand if you take the 50 to 100-year-long view, but if you think about where we are now is this an attractive market do you think we're at the end of a cycle? >> i think that the stock market is going to reflect the economy. and thing ten years, if you don't want to bring it tighter, i think in ten years the stock market is going to double. the gdp's going to double, stock market will double double in 10 or 12 years that's what the stock market is going to do.

real estate makes 3% or 4% a year gold you make 4% a year. basically the stock market is the best vehicle we have to do much better in the indid ex >> is there no distinction in terms of how you think about investing or certain companies that you would invest in based on whether our relationship with china breaks down or not whether interest rates go up in a material way. >> can you predict it? >> i think it's very difficult as a result, though, there are investors who say i'm not -- because i can't predict it, i'm not going to touch a company that's manufacturing other products. >> do you know anyone who's ever predicted those news events and got it correct and if they got them correct, whether if they -- whether that could translate into knowing whether stock prices were cheap or expensive do you know one person that can do that? >> who's the person? >> none. there's none >> oh, you're asking me. >> you can't do that, so why bother and it's interesting to watch.

but i think you have to -- if you take a longer term view and you say the value of my mine is going to fall continuously, how am i going to protect myself by the way, if you're investigating an index, the economy doubling 10 or 12 years, that index has in it all these companies that will fail so it has companies that 90% of the s&p in 1955 are gone 40% of the s&p that exists now in the next 10 years, 15 years are going to be gone 40% of the s&p so basically when you're investigating in index, that's what you get all these company that are going to fail. >> we're going to come back and continue this conversation with ron baron. our thanks to him. when we return, we should talk about stress -- or we will talk about stress in the real estate market robert frank brings us the story of the most expensive home ever put up for auction >> with so many mansions sitting on the market for years, more and more sellers are turning to

auction. we'll take you inside this $159 million megahome that's about to go to auction next week with no reserve. right after the break. broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!? different kind of sick. if i can't work after surgery, how am i gonna pay my rent? all these bills? aflac! oh, aflac! and they pay you cash in just one day. see how aflac helps cover everyday expenses at aflac.com. each day our planet awakens but with opportunity comes risk. and to manage this risk, the world turns to cme group.

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it is the latest sign of stress in luxury real estate a growing number of hyperpriced mansions and estates are being sold off at auction. robert frank is standing in front of one of the most expensive in the country in hillsboro beach. >> hello this will be the most expensive home put up at auction four years ago, this was listed at the most expensive put up for sale in the u.s. next week it's going to come up for auction for no reserve a number of megamansions like

this, they've doubled in the past year. there are so many of these giant homes just sitting on the market for years that the sellers just want to get some kind of deal done now, in dallas, the most expensive home listed there for $50 million recently sold at auction for $36 million. a home outside los angeles famous for the underground spa and tennis court and pools, that had been listed for $53 million for many years just sold at auction for $23 million. now, peter lynch, all our viewers know him, famous investor he just put his golf course mansion on the market in arizona that had been sitting there for two years at $14 million that will come up for auction next month but this is the granddaddy of them all it was listed for $149 million it is in hillsboro beach which is between ft. lauderdale and

boca it's 58,000 square feet. it's got 22 bathrooms, 11 bathrooms. it's got a private imax theater. the pool alone behind me is 156,000 gallons. the scale of this house is just incredible we'll show you more later on today. but this is house went up to $159 million, taken off the market and next week it will be on the auction market so you can start bidding on monday. you could go onlon at concierge auctions.com and see what the bids are on monday bidding will close thursday. and again, there is no reserve so it'll be really interesting to see what the price for this home is especially as the florida market strengthens going into the season. it could be higher than we expect or a lot lower than the seller expects guys, back to you. >> very good wow. you look good there, my friend not out of place at all, robert. for some reason. >> if we turn the camera, it

would look better because i'm staring at the ocean there are pelicans, sailboats. it's just -- it's 500 feet of ocean front. plus you have a yacht dock just across the way for two boats two yachts you can keep at your house. there really aren't many properties like this there's the view just to give you a little water view in the morning. >> begs the question, how many yachts can you water ski behind? >> well, two >> i know you've heard that before money never sleeps, pal. thank you, robert frank. coming up, the ceo of nokia on his company's changing bie i business this is not a company just about phones anymore stay tuned you're watching "squawk box" on cnbc

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good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square berkshire hathaway has taken a stake in stoneco that comes from an s.e.c. filing stoneco went public on the nasdaq on october 25th berkshire had invested $600 million into fin tech companies. a takeover in the optical components business announced this morning finisar will be bought for $3.2 billion in cash and stock. that's about 38% above finisar's closing price yesterday. procter & gamble have announced a major reorganization they will cut the number of business units from six to ten it will take place nextsara eis more next hour nokia plans to cut thousands

of employees in a cost-saving effort as they turn now to focus on 5g. joining us now, the ceo of nokia. great to see you you're going to make your targets even though the third quarter wasn't where analysts wanted it to be. >> the third quarter was solid we feel confident. >> the analysts were wrong about the third quarter then >> it was pretty solid because we came back into growth >> but was it in line with expectations with yours but not analysts. >> yes >> okay. the move from 4g to 5g, where are we are >> it is really start iing soon starting in the u.s. is the first market japan, south korea will come next the rollouts begin in 5g,

launches next year >> will there -- in terms of the size of your workforce, was it too big? is the transition to 5g taking fewer people what's the rationale you'll save 700 million euros by 2020 but how are you able to do the same thing with fewer employees? >> so, we're a leader in the network business so the first phase of the merger was all about elimination of duplication. now we're in the sect phase which is about optimizing the company. as we get into 5g. >> so there's still some fat that can be cut? i don't like talking that way, but the workforce is still too large. >> there is some duplication so we will cut legacy r&d, we'll cut some real estate overhead. some areas in i.t. so it's still a little bit of

duplication elimination and then optimize for the new >> are the tariffs causing the deployment of 5g to be more costly are there tariffs on any of your equipment and where are your supply chains? >> we've got a global supply chain. having said that, i don't think we're seeing an issue on the demand side. we do see some issue on the cost side >> on the cost side. how big of an issue is that? >> not meaningful for us not meaningful this year it's going to be ahead next year but we know how to get through it. >> if there are impacts, do you eat that cost or do you pass that on to the consumer basically or the consumer of your networks in this case >> it's a balance. you pass it on and sometimes you have to take it on yourself. >> you recently signed a big deal with china to deploy the network there. is there an advantage to being a company that's outside of this trade war, this trade skirmish

>> we are fortunate we have a joint venture with a chinese company in china >> does anyone not have a joint venture in china >> we're the only one that have a joint venture with the owner of the enterprises the only foreign -- >> but is it difficult dealing with china do you have the same concerns that the u.s. companies have technology companies >> in terms of forced technology transfer, ip protection. >> no. we've got that covered so we don't see that as a big problem. it's always something of a balance, but i think we're okay. >> so diplomatic about that. i mean, it really sounds like you're saying that all the companies are complaining about doing business in china, they've got nothing to complain about. because you have managed to cover it and telecom equipment has one area where the finger has been pointed again and again throughout time. >> so we are the number one foreign supplier to china, right? and we know we got to play only a souch many china

we know there's a percentage of opportunities addressable for us we announced three deals with all the three major carriers and we have a great opportunity in china as well. as china will -- china will be one of the first after the u.s. and japan and south korea to do 5g at scale in a meaningful rollout way. >> is there a company in the united states that you -- another diplomatic answer. is there a company in the united states that has the lead that you sell to in 5g? >> yeah. we're working with all of the carriers here -- >> who's -- they're competing with each other. who do you think has the upper hand >> we work with verizon, sprint, at&t, even smaller carriers. >> they're all in the game >> it matters on the spectrum you have. >> who's got the best spectrum in your view >> everybody's got a different starting point but eventually i think the most realistic and the best 5g plan for a carrier will be roll out

the low band for national coverage, mid-band spectrum for regional coverage and high-band spectrum for niche places. so i think eventually here all of that will be available in the united states in the next couple of years. >> and -- okay when they come in, we have the verizon ceo. he thinks he's in the cat bird seat in terms of positioning i don't know whether at&t would agree with that or not. >> not sure. >> not sure. >> my belief is that everybody will have launches of some sort in 2019. >> work with me on this. how's it going to change my life >> it's all about joe. >> it's going to be faster what will i be able to do? download things faster >> a lot faster. so you've got a few things so 5g, first of all has a massive cost reduction per bit every gigabyte you want to deliver, something like 90%

reduction. >> it's paid for by cnbc that doesn't matter. >> second is speed latency which is responsiveness of the network which opens up new critical applications. in erm it is of us, we'll get better speed as consumers, more time back. but also we'll get a lot more capacity so the thing you download something a second, then it takes you time to actually, you know, view it. you won't see that in 5g >> is there security aspects the trump administration says it will prevent china from spying on u.s. phone calls. is there truth to that >> well, governments are weighing in on that. not my place to comment on that. at nokia, we focus on security everything is made for security. we invest a lot in terms of sieb security in our products >> thank you we appreciate it >> thank you >> come back let's get back to andrew at the baron investment conference. andrew >> okay.

we have another big guest coming up in just a minute. we are live at the baron investment conference here at lincoln center the ceo of msci is going to join us to talk trade, volatility, and so much more stay tuned ghhe og quk x""sawbo rit ren cnbc ♪ a moment of joy.

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welcome back to "squawk box. joining me right now at the baron conference is henry fernandez mcis ceo and ron, you have been a bull on them since 2008. >> 2007 actually. >> and it was right after the financial crisis >> yes november of 2018 -- 2008. we were here october 24th of 2008, the day we were here the stock market was 8,000 down from 14,000 in 2007 the market could not be opened that day >> okay. so i want to -- let's talk emerging markets a minute. let's talk china which is you look at what's happening right now with the relationship with china, the tariffs, everything else and you think what

>> i think they're going to go through a rough peert. the economy is slowing down a little bit and obviously all the trade wars but i'm a big believer in china. i think the chinese market is going to open up a lot faster than people believe. it's the second largest equity market in the world. it's trading at relatively cheap valuations i'm not saying that things are going to get worse they could but if you look at a long-term perspective, you ought to believe that china's financial market -- >> how much farther do you think -- what's the downturn look like in the short-term? >> it has to do with geopolitics. little bit of the fed tightening and emerging markets come presing a little bit it'sgeopolitics. hopefully in the next few months we can see a trade deal between trump and xi jingping. >> ron says no one is smart enough to predict that but you want to predict what's

going to happen? >> i think it's going to take time we will probably see they work on it. but it's a big problem and it's going to take time to make it work >> it's really interesting here. what henry's business is he is the index provider whenever people are investing, they need to have his product and services so they can have proper diversification and he's the guy who invented it he's the guy who invented it he's the one who because of him it was started, spun out, became public he now has $300 million plus personally in this investment that he's created. because -- right >> yeah. it's been a good run >> so what exactly is the business >> msci? >> yeah. >> we're well known as an index company. but what we are, we create tools for people to make better investment decisions of all type that's how the company has

grown. >> here's my question. you are an active manager. you like to pick companies and stocks like him. or like his company. he's on the very opposite end of this right? >> so i can't -- so because there's been a tremendous move, he's the beneficiary of that the more people go to indexing the better it is for people. people generally can't beat the indexes. we beat the indexes. this is a good thing because it's less competition and we stand out more against the indexes. >> you wrote in your letter in october that the volatility that we saw was in large part a function of etfs and of the market is that a good thing or a bad thing and is he at fault then? >> do you agree with that? >> i don't think so. the underlying fundamentals in any investment vehicle is people are going to buy and sell. it used to be mutual fund. people will blame the volatility of the market.

at the end of the day, these are -- what matters is the market if they don't believe -- >> what do you think of the idea -- seth has been positive that investing has perverted the market because it locks in certain companies at certain types of multiples and makes it much harder. effectively the more you believe in the efficient market theory, the less efficient the market vl >> well, you still have 80% of the market being active in the world. so there's a huge amount of money actively managed that is basically investing on fundamentals and obviously passive investing is about that. so i think there is stale long way to go for passive investing before we begin to worry that it's taking over the world.

>> what about in the context of a crisis when you think about the -- especially the etf market, what happens? >> i think the etf market will be as good as the underlined liquidity. a lot of people talk about the etf as if they were divorced from the market itself if you have a lot of liquidity, it will be fine. the nav will track very closely. the underlined fundamentals of the stocks one correction, though, 2/3 of revenue come from active management clients and only 1/3 come from passive. so i have a strong vested interest in ron's success. >> we have products that use his msci index he has a tremendous growth opportunity. >> yeah. esg is environmental social governance, basically sustainable investing. it's the biggest trend in the world today. it is the fastest growing about

35% 40% per year and that is a symptom or evidence of how important esg investing is in the world and continue to grow >> these are funds where you've eliminated certain types of products >> more important is the governance factors >> and there seems to be two problems around esg. one is there's a group of investors out there that say i like esg because it's a way to mitigate risk. it's an approach on risk but risk only. then there's others who say i actually think there's going to be true out-performance as a function of thinking about some of these esg metrics >> it's both it started as risk but it's beginning to show

significant performance. and i think the next ten years, that outperformance is going to be best. not a week goes by with some kind of institution getting hit. and then the good companies do better if you look at the auto industry, the companies that were competing against volkswagen did better. >> is that part of your matrix right now or not yet >> we think about how businesses operate and we try to avoid businesses that we think are doing things that are inappropriate. and that's how far we've gotten so far but we are studying it >> henry, thank you. appreciate it. ron's going to be sticking around we've got a lot more to come this morning right here at lincoln center hold on for just one second. we've got stocks to watch including alibaba's head of chinese singles shopping event and then at the top of the hour

we've got, again, i'll call you a legendary investor but we also have a legendary deal maker ken moelis. live from the baron conference stay tuned you're watching "squawk" right here on cnbc what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

china's largest online shopping event singles day is going to take place on sunday. but is alibaba a good buy? the stock heading into the

weekend. dom chu has more on how historic, i guess, how it's behaved. what have you got, dom? >> alibaba shares are weaker in the premarket trade and they are weaker in chinese trading as well if you take a look at how many singles day events alibaba has had since it went public, back in 2014 we've had now four of them -- singles days b baba's on average down 2% on singles day. and they've traded negative all four times so maybe not the best way to go into it, although, again, small sample size. baba's also been negative 75% of the time singles day at least for now not the best place to go about putting money to work. although you can say maybe it

goes on sale one other place to look in the context of chinese internet is how poorly they've done. we know the u.s. internet stocks have been hammered over the course of the past month or so take a look at the gap in difference and performance meanwhile, that gap is now widening again that's something to watch for remember that krane shares is down about 37% since its highs earlier this year. meanwhile, this down only about 12%. triple the losses from its highs. that's something we'll watch as well >> of course, dom, the group we watch the equivalent of faang in asia, whatever you want to call them, it's getting it from a lot of different sides because you have the consumer facing stocks like the alibabas of the world feeling the pressure

and tencent is having trouble. >> so there are so many head winds cross affecting these names. we talk about the china/u.s. trade tensions that's going to play a role when it comes to whether or not the chinese economy slows down and impacts the overall spending power or economic buying power of the consumers in the middle class there. the idiosyncratic moves are also different. you wonder whether or not the chinese government is thinking of those types of things when they put these broader restrictions on them or if they've got a bigger game at tencent, it's the biggest gaming company in the world by some measures it's going to have a huge impact on the stock for those reasons, the chinese internet names have a lot of head winds

it could get even wider if the chinese economy continues to show signs of slowing. we've already got manufacturing data showing on that maybe it carries over to the consumer as well. >> all right, dom. thanks let's take a look at stocks to watch this morning. shares of revlon rising in pre-market trading posting a smaller than expected loss beat estimates on the top line it also said it is making progress on its streamlining operations dropbox, the company beat forecasts on the top and bottom lines and gave an upbeat forecast and hertz global reported well above the consensus estimate revenue also above forecast with the car rental company's results improving year over year for the fourth consecutive quarter activision blizzard reporting what has been a tough year for the video game maker due in part to weakness in its destiny franchise.

there's also some controversy addressing the game called diablo miortal many were outraged it wasn't widely released on pc and console as well. in corporate news, late yesterday news breaking from the fda on e-cigarettes. a senior official telling nbc news the regulator will ban the sale of the flavored cartridge based e-cigs sold around the country. that includes the fruity flavors of the popular devices it's part of the effort to curb the use by children and teenagers. the tobacco and mint flavored will still be available at gas stations an official announcement is expected next week >> did you know joule is 75% of

the u.s. e-cigarette market, total sales in the u.s. >> i only heard of even what it was -- i thought it was -- you know, i got a text from someone and i thought they had misspelled something >> and this flavors are like bubble gum and mango things kids like coming up, this morning's top stories. plus deal maker ken moelis live from the baron investment conference stay tuned you are watching "squawk box" on cnbc this is a tomato you can track from farm, to pot, to jar, to table. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port.

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heavy hitters. ron baron joins us live from his annual conference. ken moelis joins "squawk box" to talk m&a, saudi arabia, and more the house of mouse wraps up a 2018 to remember and breaking economic data on the morning after the fed decision we've got a key read on the economy coming up 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 with melissa lee. andrew ross sorkin is at the baron investment conference. we've got the s&p down 1.5 right now. and the nasdaq also lower down almost 60 points we're up for the week, though, obviously after wednesday. and yesterday consolidated the gains. treasury yields also based on whatever you want to base it on. whether it's the election relief that it's over or the market reboundi ining an looking like maybe the recent correction had maybe run its course you never know just waiting for the next correction at some point but back above $3.20 we are watching three big stories right now. one, disney tops estimates two, crude oil drops for the tenth consecutive day.

it is the first time that has happened in eight months by the way, oil is fully in bear market territory now and now down 20% from its recent highs. and three, we have the latest read on the economy from producers. economists expecting a 0.3% rise we get the number in about a half hour's time that number had risen 0.2% in september. here are the stories investors will talk about today. ge, the price target was cut jpmorgan an analyst there slashing his target from $10 a share to $6 a share. that is a slash saying that ge's most recent report was worse than expected in his view on almost all fronts. american express winning approval a full ten years after

china promised to open up. they will form a joint venture with a fin tech company to set up the network that's as good as it's going to get. and berkshire hathaway taking a sizable stake in payment company stoneco. news of the 11.3% passive stake was out in an s.e.c. filing. stoneco went public on october 25th as i recall the wall street -- >> what a great memory sharp as a tack, joe you're like an elephant. you don't forget anything. october 25th how could you remember that? >> it was october 25th in the morning. "wall street journal" reported last month that berkshire had invested $600 million in fin tech companies including stoneco. let's get back to the baron conference now and our own andrew ross sorkin andrew >> thank you

we are here at lincoln center. joining us live to talk about the world of investing and more, ken moelis is joining us of course ron baron is with us as well. >> we were just talking about the ipo. when he was pricing the ipo, the banker came to us saying the deal should be done at 26. we said we think it should be done at 25 but if he's going to be 26, we'll do it. and ken said, when they came and said you've got the deal done. >> it cost me a lot of money >> let's talk about making money right now. >> it's now $43. >> let's talk about the deal environment for a second on your recent conference call the trade, the tariff issue, trade war has not had had an

impact yet i'm curious whether you think it will >> it's interesting. m&a with china has come to a grinding halt. 2016, we did 12 deals from china into europe in the u.s it was a lot of transactions the last 12 months that's been pretty much down to almost zero. so other than that, though, i don't think it has affected m&a. and look, i don't want to say if this goes on for five years we might not see something, but for right now, it's not effective. >> how do you feel about the animal spirits in the boardroom right now. >> i think it's good people have to do transactions because the world is changing so properly to compete. you often can't even wait to build technology and change your business from the ground up. world's moving so fast that the -- i think what you can do

25 years ago organically you have to buy. >> when you look at the pipeline, are you looking at mega-kind of deals, what are you looking at >> i'd say it's an assortment of all. i think the election and the concern about the election might have slowed for awhile the megadeal conversation. just are we going to have a complete change of regime? are we not >> and so what is the election results that took place 48 hours ago now say to you >> i think the election result for m&a was actually perfect people like stalemate in the government look they always would like lower taxes and less regulation. and i think we have a trend toward that. but the best thing you can have for a corporate environment is stability. and i think the market on wednesday -- and the m&a market is like that we know the rules. we know probably there won't be

major changes for a year and a half >> so i think what's really interesting to me is i've known you since 1987 you were trying to bank steve wynn and got him to raise money in 1987 just after he opened mirage but i don't really understand. explain, actually, why do people choose moelis opposed to goldman sachs or some other large firm you're competing against these other firms, you get the biggest deals in the world why do you represent the president when he goes bankrupt in 1990? why do you represent dubai when they say they can't bring those on the port and bring them back. but they own the debt. how do you do this why do people use you opposed to larger firms >> look, i think -- it's

relationships. and the most interesting thing and i think young this as an investor almost better than anyone it doesn't appear on anybody's balance sheet. there's no line item for relationships, trust and yet almost every company i deal with in an every situation, relationships are the single most important asset and it's trust it's confidentiality and it's the belief that you're acting in your client's best interest and that takes years to develop. >> let me ask you a trust and relationship question. you chose to go to saudi arabia after the murder of khashoggi when most of your peers and colleagues especially at the senior level decided not to. why did you decide to continue >> i'm glad you asked that so first of all, what happened in turkey, what happened to

jamal khashoggi is horrendous. and i know that turkey and saudi arabia are in an investigation i hope whoever is responsible pays a price for what happened but my commitment was to the individuals who shook my hand. many in the region they've trusted me now for a decade with their most important business plans, strategy, and to be an adviser. and i chose to fulfill my commitment to my clients and those people >> do you think that there are other companies that will look upon that decision and think that will be good that off client for life as a result of going there in a way that probably nobody else will? but other companies, uber who clearly by the way says in business with saudi as anybody else who said to the government

there you know what? it's not good for you, not good for me i can't be there do you think those companies take a moral stance and say, you know what? this guy ken moelis may be a lovely guy, but i'm not going to do business with these guys either >> i don't know. it'll be up to them to make that decision but another thing, we have one of our values in life. and moelis & company chooses to be very transparent and honest when we went there, we didn't -- there were several large organizations to chose not to send their most prominent people but sent dozens of people a step below themselves and were all over saudi and the conference. and i felt that wasn't the right thing to do. if we make the statement, the honest thing to do was to keep my commitment and go. >> is there ever a situation that you conceive of where you'd have a client and say i can't do business with you anymore? >> oh, sure. sure you know, this didn't have to do with my client

my clients are individual businessmen who i met with and i've committed to, you know, they put a lot of trust in and they've invested in me, andrew, for years with their most important decisions. and i felt like my commitment is to them. >> you are still working on the aramco ipo the infamous, famous, ipo. >> we've never talked about it >> well -- >> which is the reason he has his clients. >> but can you speak to the question of when and if -- speak to what you think is going on inside saudi arabia that could eventually lead one way or the other to an ipo. when i say an ip o ro, an ipo in london or hong kong. not that happens locally. >> put out a statement they intend to ipo under their terms and on their time frame. that's a fairly important transaction for the country.

and it's a fairly large transaction. so i think they should do it but they have said they intend to go. look i think those decisions will have to be made in the context of the next couple of years. what happens in capital markets. >> it may not impact your firm, but i'm curious. softbank which has a tight relationship with saudi arabia, there are now questions within silicon valley about whether certain employees say, you know, maybe we don't want to do business with softbank do you think that's going to have a larger impact and ripple? maybe not in your particular instance but in other places >> i don't know. i'll leave that to softbank and how everybody runs their businesses we spent some time having a decision with our own people and we made our decision but i can't make a decision for every other executive in the country. >> i have one other question then melissa, i want to bring

into the conversation. but you have a big restructuring practice everyone says what inning are we in, but what inning are we in? in terms of when krour going to have to ramp up that part of the business >> i think you could find something very interesting here. the environment tends to be good good because the economy grows and the fed raises interest rates. we've had a lack of defaults marginal interest rates. there's a big difference between zero and 3% even in the short rate and so i think you could see that there's been a lot of paper issue. the default rate last year on leverage was 1.5%, 1.8%. if you just had that go to 3%, you know, that's a doubling of the restructuring business that's a lot of business we've maintained our group we think we have the number one restructuring group on wall street and it's just a matter of time.

>> where's the biggest risk in the market right now where do you say i'm nervous about this >> look. i think if you really think about it, there's an ill-liquidity starting in emerging markets it starts there first. there's a difference between zero interest rates and 3% people will move their money ting for ten years it became sort of why pay attention to my short-term money it makes zero or two basis points or when you can go to a u.s. treasury and make three, whatever it is over a short period of time that will affect funds flows i think you're starting to see that in emerging markets right now. that's where i think you'll see the first signs. >> melissa, you got a question >> i do. thanks for bringing me in. this is for ron and about tesla which is a stock i follow closely. as a percent of your entire assets, your stake in tesla has grown to 2.1% as of november h

7th. i'm wondering from a portfolio discipline standpoint, at what point do you say this position is big enough? how should we think about that >> i think wh enthe stock gets to somewhere over $5,000 >> so as a percentage of your entire firm's asset, you could -- >> no, i think that over the next 10 or 12 years twhab it's likely we're going to make 20-plus times on our investment. i think we're going to make a triple the next three or four years. and i think we could make 20-plus times in the next 10 or 12 years and what percent is too much the stock is owned by a very small number of our funds. it's owned where we can have very focused funds where they're designed so they can have large percentage of their assets in individual companies. that's one of those investments. >> we got to run, but ken if you were hired by the independent board of tesla these days, what

would you be advising the company in terms of governance right now? >> look, you have to have a lot of information and understand where they are in their projections. i read about what you read about them so i think there would be -- i can't give you that opinion. >> but he would be an amazing adviser for anyone including tesla. >> thank you >> check's in the mail, right? i don't know which way the check should go. thank you. good luck. appreciate it. joe, i'm going to send it back to you coming up, consumer products giant procter & gamble announcing a major reorganization a live report from cincinnati, ohio, home of midwestern common sense. are they recounting anything in ohio no it's a clear election. you know just can learn something from this great state other side of the break. stay tuned you're watching "squawk box" on cnbc

welcome back to "squawk box. procter & gamble holding an investor day outlining a change

to the company's structure in future strategy. sara eisen joins us from cincinnati where she sat down with ceo david taylor. >> reporter: good morning. from joe's hometown and my own i'm here in cincinnati because p p&g announced a major change biggest organizational shakeup in 20 years. what they announced is they will divide the company now into six sector business units like beauty and feminine and baby care with their own ceos in charge of everything profits and losses, trying to figure out innovation. they're trying to become a faster more nimble company to grow again and they did recently grow so i talked to david taylor the ceo about what kind of change this is and just what it would allow the company to do. here's what he said. >> without a question, the goal for all that we're doing both our superiority strategy and organizational change to get to

balance growth and value creation we believe strongly the path we're on of the product, the package, or go to market capability, communications and consumer and customer value, doing that right will make sure we're agile to distribute in the market >> a lot of talk about being agile. that comes from the subject of p p p&g's structure has been one of debate and criticism from investors the so-called matrix complex structure where they had different heads of geographies and business units all reporting up to cincinnati headquarters. this makes it simpler. thousand, you'll remember you heard a lot about this last year when investor in procter & gamble waged a proxy war he did win a board seat, has been on the board for months this is exactly the kind of simpler structure he laid out that would help procter & gamble

to grow again. david taylor said he hopes it's going to be sustainable. in what is a very tough macroeconomic environment. cost pressures rising, strong dollar obviously trade head winds it all plays a role. we talked about all of that. i'll play the entire interview for you at 10:00 a.m the other big news, joe, is that john mooul who are is a regular on this show, he's the cfo also becomes coo he's going to be in charge of the other non-key geography markets, the more complex wins that require foreign m exchange heading. >> i love john and he said something really funny last time. he said -- i was asking him how does the big giant brands, how do you compete with these niche brands that are so nimble and all the millennials want he goes, there's a reason they're called giant brands.

because they're giant. like saying nobody goes to that restaurant, it's too crowded it makes no sense. it's a great company and i see that you wear your comfortable -- where are you where are you right now? >> well, we're sort of on the border of walnut hills and over the ryan which is the best shot of the p&g towers. >> i'm just pointing out that when you have gone to the west side, you're absolutely horrified. where i grew up. so we may have grown up in the same town, but to you it's like you go over there and you're like where am i. >> they all went red i thought you were going to talk politics they all went red. >> no. i'm talking about you being from the good side of town. >> east side/west side so this is where all the companies are based. >> money huge money amerally village >> a suburb of cincinnati, yes

>> nice. palati palatial if robert frank visits cincinnati -- >> not quite not quite. all right. coming up, we've got some key producer price data coming up at the bottom of the hour i grew up near pete rose if that means anything. >> that means nothing to me. >> all right. >> nice part of town >> no. no >> wrong side of the tracks literally. >> literally later in-depth analysis of disney

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♪ coming up, key economic data on the other side of this race and as we head to break, take a look at u.s. equity futures. the dow looking to open webylor 83 points. stay tuned you're watching "squawk box" on cnbc . and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...

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seconds away from the october producer price data. futures have been down -- ppi. rick santelli standing by at the cme. >> all right, joe, you sitting down be careful here. this is big. headline ppi up 0.6% up 0.6%. that follows an unrevised 0.2% so we basically tripled it if you think it stops there, you're wrong take out food and energy it's up 0.5% also following unrevised up 0.2%. and we were expecting up 0.2% for both let's get into the nitty-gritty. ex-food energy and trade, it is up 0.2% as expected.

and that metric is half of the last look at up 0.4% how about some year over year final demand 2.9% popping into the cycle highs. if you look at year over year ex-energy, 2.6% also besting the the 2.5% last look the only metric here on year over year that isn't a little more or even a lot more hot than our last look is ex-food an energy, ex-trade year over year. that's up 2.8% our last read was 2.9% so these are definitely elevated, but of course cpi, different part of the pipeline of inflation maybe more important but we actually did get a pop here he popped a basis point on the 10-year note from 3.21% to 3.22%. the short end, 2.95% to 2.96%. so we want to completely monitor this this one's going to be important

to digest. the dollar index putting up another gain off its midterm evening lows melissa lee, back to you >> rick santelli, thank you. let's take a look at the futures. we had been down on the dow. looking to open lower by 80-some-odd points and we are looking at them move a little bit lower >> but all day we were down 120, 130. then they had improved to 80 down 80. now back i can't imagine this would be taken positively. >> no. hotter inflation means the fed is for sure going to go -- which we knew for december but people started really debating the path in 2019. >> just so you know, that was what i was going to talk about before i knew what this number was. the rising certainty on the path of the fed but i want to talk about this number and i need to put a caveat on this which is this number is a bit of a mess since

the government came back and revised it, trying to make it better there's a component in leer called the trade component i think they will write about today. the middle men and women and it was up 1.6% we really know what that is. it's sort of unpredictable there were other things in there, however food up 1% after falling 0.06% the prior month. most expected the energy component to fall because of falling oil prices services up 0.06%. i would say one of the things we've been wondering about the extent of which tariffs might extend their ware to ppi it's something worth watching for. if they do come in, it could be a one-time rise in the price level rather than an increase if the rate >> wouldn't it be viewed as a

tariff ppi versus a wage ppi, would be less worrisome to the fed. >> wage inflation. >> if it was permanent with wages versus what might give off. if there was a deal, there's manmade inflation. and you're laughing. but here -- >> it's all manmade. i get what you're saying >> man and woman made. >> people made let's be proper. >> there are a couple components in here that maybe smell a little bit like tariff type stuff. 1% on goods. we'll see. producer prices are not consumer prices

it is consumer prices that they're most concerned about we don't know how much of this gets passed off to the consumer level. i would say -- i'm not going to say this is a huge alarm bell for inflation. i'll tell you it's something to watch. so i just want to talk quickly before all of this data came out. i wanted to show you about really the fed is the postal service. neither market -- criticism nor decline in business investment spending is going to keep it from its appointed round of hiking rates and the market got that message yesterday. here are the probabilities for rate hikes 87%. that's a contract high for december now and now looking into 2019, almost a 60% probability of that first hike coming in >> low 50s it was above 50% but now it's up towards 60%. and now that certainty for september of the second hike

and then as i've been saying, we'll talk about it. that's for a third hike next year, some folks are saying they took it from there following the absence of dovish surprises, the easying and financial conditions over the last ten days, we increased our subjective odds of a hike previously and further rise over the inter-meeting period have not been enough to alter the fed's outlook. so i think they're on their way to doing that quarter point hike i think this inflation number helps them feel better about it because we didn't have a huge inflation surge over that period of time. and then we'll just have to watch to see and i guess that's going to be next week how much of what's happening at the producer level gets passed on. >> let's bring in the senior managing market director at wells fargo. what's your take

>> i think steve summed it up well >> that's why you like him >> it's a massive report >> it's a mess, yeah >> it's hard to get a read from one month's data and it's a little perplexing to me because commodity prices have been weakening recently. which doesn't show up in here at all. but may show up a few months down the line. businesses have not been able to pass their higher cost onto consumers. you see that in recent announcements where you see the chains are consolidating operations in some ways to get a handle on labor costs and get more efficient operations. they're trying to squeeze more efficiency out of their operations because they can't pass through their higher costs. >> do you discount, you just discount the month of october for ppi. right now the equity markets, granted the response is fairly muted, but we did go lower on the back of these numbers on thinking the fed's path is even more set in stone at this point.

would you say to discount these numbers, look through them >> i wouldn't discount them. you can't say that this one has got all -- this one's all right and the other ones weren't there's a herky jerkry kind of motion in this number where you capture the increase of one month and you really should spread it out. it does look to me like one of the leading indicators is starting to ease that's because the global economy is starting to slow and oil is the best example of that. i don't know the horse is out of the barn i think it certainly bolsters the case for a rate hike in december that looked like a sure thing anyway and we've got rate hikes in march, june, september >> june? >> and contemplating putting one in december. but i really wonder if the economy is going to stay this strong throughout that entire period or if we don't get some sort of interruption

they did acknowledge a slowdown in investment. but housing's been falling for six months in a row and residential investment has declined in five of the last six quarters so it was weakening before interest rates went up >> mark, you're bringing up an interesting sort of issue for investors here either one of two things looks like it's going to happen here if producer prices go up and costs of companies go up because of wages and let's say because of tariffs and other issues, it's going to hurt profit margins. or it's going to get passed along to the consumer, you're going to have consumer inflation. however, we need to layer in the discussion yesterday with joe which is what about all the technology stuff in the global resource -- global sourcing of all of these goods will that keep a cap on the inflation side and also allow companies to maintain profit margins? >> that last one fits in the

whole discussion on tariffs. will we see this intensify after january 1st or walk it back a little bit and i think that companies are very dependent upon imports of certain components in their production pipeline. and that can really muck things up so i hope we can take a step back or at least not intensify the trade tensions even further in 2019. >> all right mark, thank you. mark vittner at wells fargo securities and right now dow looking to open lower by 117 points steve, thank you >> pleasure. well, human newscasters have had a good run now china has unveiled the first artificial intelligence news anchor. >> hello, everyone this is my very first day in the agency my voice and appearance -- >> the ai anchor learns from the

live broadcast videos and it can read text in realtime. just like some human anchors just like some human anchors >> did you see who joined us >> oh, my. >> right at home here. welcome. >> how is this different than max hedroom? >> he's learning right now taking in what you and i are saying so he can eventually respond to us. maybe he'll turn out just like andrew if he sits here long enough. >> i wonder if my agent has already -- >> no health care needed >> no sick days. no -- yeah outbursts or rants >> or concerns >> no political leanings. >> mispronunciations the artificial intelligence anchor was developed by china's state run media agency they never would have to worry again about someone saying tiananmen or something like that, right? that would be banned forever, no doubt. >> because china developed the ai

or just anything in general? >> no, they mention ed -- >> the only good thing is it would put these parasitic agents out of business. i'm not speaking to you ari. but what do you think? >> i like. he'll just keep talking. strength at the studio helping disney beat on the top and bottom line. coming up next, analysis of the quarter. you're watching "squawk box" on the cnbc

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welcome back to "squawk box" on cnbc. let's take a check on futures right now. we really moved after the release of the october ppi which came in much hotter than expected on both the headline as well as the core number. s&p 500 looking to be lower right now. dow jones looking to be down by about 123. we had been down about 80 going into the data. and the nasdaq looking lower by 66. bob iger sat down with julia boorstin on "closing bell" and talked about what it will take to make its multiit'll different streaming services successful. >> our plan is to invest in all three services the espn service, disney service, and hulu service so we achieve our goals in terms of

not just going into the direct to consumer space, but transforming the company by being in that space. that will require investment and those investments will be made across those three brands. >> joining us to talk disney is steven k. hall from rbc capital markets. price target of $140 but you did acknowledge that next year you needed to cut estimates a little bit. why? >> it's an investment year for disney next year as bob iger said, they have a lot going on right now they have the acquisition of fox which is going to give them a lot more studio capacity they have the launch of disney plus which is their dedicated direct to consumer service and they're going to control hulu i think they're going to progress aggressively. it's a content-driven story. i see it as investing for the future and disney is one of the few companies out there that has the

content and the balance sheet to be a global direct to consumer player >> i guess when your content includes, you know, putting everything that you do visually into your theme parks, you've got to keep updating your theme parks. >> the theme park business looked really strong last night. i actually took my numbers up for parks and resorts for the coming fiscal year i mean, you see the same economic data i do you have a tightening labor market, wage growth going up disney is going to open its most ambitious parks next year with star wars land it is gate for them to be compounding earnings at a high rate right now >> we were talking about ge a lot today. the only reason i reference it, when they owned nbc and nbc universal, it used to drive them nuts, the film business. because they had no idea from one year to the next is it was going to be repeatable

you can imagine. little did we know they should have loved having them but that's neither here nor there. isn't disney dependent on that as well? the film business, that's why the earnings were so good, right? you can't count on that every year, can you? >> i think if you can count on it anywhere, you can count on it at disney. i mean, to me it's kind of how can you count on nike making a good shoe every year disney's been doing this for decades. and they've been doing it well for decades. you can't count on every film every year, but the portfolio that they've put together between marvel, pixar, disney, and lucas, that you can count on and i think their ability to continue to monetize that both theatrically and direct to consumer, it's really unprecedented. >> you read over the years trying to develop pits there have been things written about how networks go on a cold streak i can't imagine competing with

netflix. to try to -- original content is difficu difficult. you'll have to develop things like "game of thrones" or something. that just seems like you're -- that's going to be very costly, too, to compete. >> yeah. i mean, i think you need to do two things you need to do it well and i think both disney and netflix do it well there's no doubt about that. and the sect thing is you need to do it a lot or you need to spend a lot of money. i think there's probably only four or five companies that can be global direct to consumer players. netflix is certainly one and disney is another. again, i don't think it's a winner take all market but if you've got the balance sheet and the brands, you know, those where the two components that allow you to succeed. i think there are others that will struggle here but i don't think it will be disney >> i've been waiting for that $140 price target. maybe you'll be right. but it's supposed to be there three or four years ago according to a lot of people and we aren't yet.

all right. but you're convinced we're headed there >> yeah. we upgraded it to top pick last october. it was directly after the pivot to direct to consumer. it was before the fox deal, so fox has been purely addtive to ou the fact that they're not buying sky and investing the regional sports network enforces that that means disney is more of a content. >> do you worry of espn anymore? let's say for argument sake, i am deplorable, am i going to be able to watch them talk about sports or change the channel >> i look at espn as the cash cow. it is a high margin and low growth business. sub declines are going to be a factor in the future i don't think those will go away i don't think it will get worse. it throws off a lot of cash and cash that funds to direct consumers. >> i was kidding around. >> you know they ought to stick with -- maybe we should, too

>> they should stick with sports >> it is hard when there is not a game on. >> they have ufc on espn plus. >> what's that >> that's good that's okay. i thought you said ufsc i am worried about that. >> thank you 140, i am writing it down. when we return, jim cramer live from the new york stock exchange once again on the futures, s&p is down 15 and nasdaq is off by 69 we'll be right back. can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you.

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enjoy your flight mr. jones. world's best inflight entertainment. fly emirates. fly better. let's get down to the new york stock exchange, jim cramer is joining us now. do you think we got a couple of contracts left i can't imagine the artificial intelligence doing "mad money. it is going to be 20 or 30 years. >> no, maybe a co-host and start to learn some ropes. >> time cue. does not complain. >> right i think we got some time but not too much >> when i see fedex double decker truck that has no driver, that's about the time. >> so you are right about disney a good number, right

>> yeah, the problem today of what we are getting is sky works is considered to be apple. apple is down a lot. that's what the major part of the week this morning. sky works did not haves go good things to say for its premier. >> weird ppi number, that's not usually your thing i thought we were save there for a while. >> i love that >> i am going to steal that. that's jay powell. now, there is going to be 13 rate hikes in 2019, no, 14 67% probability of that. just put up to 72% in my own

survey i do in my head, the cerebellum that tells me 67% and now it is 72%. >> did you see your buddy? carl >> he's going with me to the dallas game, the cowboys he says he's not in here right now. >> i can't say what that 7-year-old say on air. you guys suck. that's kind of what people been saying of the cowboys. yes, he's been wearing that hat all day long >> i first felt he was a loser -- i can't say that on air either i didn't mean that, he's a winner if he wears that hat, he's out in the box he knows no hat >> the guest have this great food in the green room, carl

never here >> if he wears that hat, i am going to chop off his head >> we'll see you in a few. make sure you tune in on mda 'lbe joined by tom barrack we'll talk to him about a lot of stuff. good friends with president trump. i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

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thank you to melissa lee i need to correct you. >> you correct me. >> you know what i am talking about. i am kidding make sure you join us next week. "squawk on the street" is coming up next. good friday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer we'll speak to alibaba's president, michael evans and p & g, david taylor. futures are weak