it's tuesday, november 13, 2018. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. we'll start this morning with the markets. the dow dropping by 600-points yesterday. it got dragged down in the close. all session long it was dogged by apple negative reports coming in from one of apple's iphone suppliers and by goldman sachs following new reports about the bank's possible connection to a massive fraud scandal in malaysia. more about those two stocks in a moment let's check out where the u.s. equities are shaping up. futures are indicated in positive territory dow futures indicated up by 105

points s&p indicated up by 14 points. the nasdaq futures up by 50 points losses across the board. the steepest declines came with the nasdaq yesterday in terms of percentage points. across the board, weakness in the tech sector. let's look at what happened overnight in asia. the nikkei closed down by 2% the hang seng up by 0.6% shanghai composite up by close to 1%. in europe, where we're already seeing the early trading taking place, there are mostly green arrows the dax up 0.7%. the cac up by 0.25%. the ftse also up by 0.25%. check out treasury yields in the united states. at this point the ten-year sitting well below the 3.25 level. 3.16%. crude oil prices on their longest losing streak on record. we're down 11 straight sessions. >> whoa. >> for a while yesterday we were

trading higher as we heard about potential cuts coming from opec and other nations. this morning you see wti down by 2.25%. all the way down to 58.59. i think this all really started with the president's tweet yesterday. tweeting that he did not want to see these supply cuts coming i think saudi arabia is in a weaker position than it might be to withstand this pressure >> they're not the swing producer anymore >> they kind of are. >> we are, too >> they were going to cut by 500,000 barrels. >> after 19 straight days down, they were higher by 1% >> one tweet from the president turned that around >> i hope it's just supply i hope global growth is not crashing >> i would say it's more supply. but i think there's -- >> that's what they would say. >> there is some demand. >> and the dollar -- euro 1.12

dollar strong, too home depot is reporting, the company just reporting numbers the estimate was for 2.26. is this for real can they do that much? i have 2.51 estimate same-store sales up 4.8. that's what you were looking for. u.s., 5.4. that's about what you were looking for. the bottom line number was up a lot. in fact, the company sees fiscal year earnings per share up about 33%. there must be stuff in there it was up 29.2%. and for the whole year, 5.3% for comps. i think total comps. also a buyback of about 8 billion. you see anything so far? what is that thing called? >> blackberry. >> it has a little keyboard on it and everything.

should we listen to an analyst that has a blackberry? you know about iphones, right? heard about apple? >> they don't have as great a keyboard >> so far, what are you seeing >> results look good >> stock is up >> i'm noticing the 5.4% comp in the united states, that's quite positive look, there's been a lot of concern out there in the marketplace about a slowdown in housing. as i look through these results, we're not seeing that. >> let's back that up. we're not seeing weakness in housing based on this. but that doesn't mean there's not weakness in the housing sector when you come to home depot, a lot of people say you may not be able to buy a new house or get the mortgage you were hoping for, in which case you stay. that's good for home depot >> this doesn't negate the problems or concerns about housing. >> that's right. so home depot is a different take on the housing environment. you have that dynamic. you have people for one reason

or another not moving to a new home they're more likely to fix up that home. it's my view in overall housing that things are not that weak. i agree with what you're saying. >> one complication, it says the company will have a 53-week operating result for fiscal 2018 but talks about the numbers in the context of a 52-week operating year >> every four, five years they have a 53rd week >> and their tack rate will be 24%. it won't come down to 20%. that's the function of 1078 state taxes. >> that's correct. that's expected as well. >> i'm just -- 215 is the high we're trying to bounce off 179 it may not be related to housing. then again sometimes you see it move with housing. you would say housing is a supply problem, not necessarily demand problem as well, right? we were talking about oil. we're notbuilding as many

houses as we used to that may be holding it up a little >> i had that view for a while as we talked about the slowness in housing, a lot of that is supply driven. my team and i put this piece out talking about this the underlying demand for housing seems to be quite good there's maybe been a bit of an issue in the near-term with regard to rates moving higher, underlying demand is good. that typically goes back to jobs growth, other economic factors the same thing looking fat factors for other retailers. the slowness in housing is supply related to a big degree >> we've soon a drop in sales in california where it was down 18%, 19% some staggering numbers. you think that's entirely because of supply or is that because prices have gotten high? >> could be a combination of both take it back to home depot made a comment, it was about the

seattle market i forget the numbers they gave, they said they're performing very well in seattle despite that type of pricing dynamic or sales dynamic, home depot is performing well in those markets. there's also been antidotal reports about millennials getting to the point where they do want to buy houses. the older age millennials are having kids and then want houses >> i love that narrative it was only a few years ago that the market view was that millennials were not going to buy homes. >> as soon as they start having kids, that changes >> going back to home depot, lowe's made the same comment one of the biggest drivers of demand is millennials moving into their first home. >> we should leave that chart up i like the way you look, brian but i think 183 thousand up $4 now. that's helping the dow

that's now up 115 points premarket. that's a long way from where we were before we started yesterday morning. all right. there's the chart. even though it -- nothing wrong with home depot or its results, it's been affected in the downdraft as well. the number i couldn't believe, the earnings per share growth. >> 251 >> that one, but also the year over year gain you give a multiple of 30 times earnings in this >> keep in mind, andrew hit on this, this year you vice president lower taxes. you're benefiting from lower tacks this year, next year that will be a nonevent >> diluted earnings up per share, up 34%. >> without the tax benefit, you're looking at something closer to 20%.

>> which is still good for a company this size. >> we'll hear from lowe's soon >> next tuesday. >> so the question that we always ask, you look at this, is this going to be an indicator of anything at lowe's or are these companies so different? >> it's a great question i would say the strength we're seeing in home depot bodes well for lowe's as far as the investment goes, lowe's has a new ceo, marvin ellison, came from home depot. i don't think they get a pass, but the focus is much more about what marvin says about the business more than results i like lowe's a lot as a stock as long as next week's results are not a disaster, it's going to be much more important, their turnaround strategy. >> one note from craig manier, he says we believe this is a testament to the overall strength in the home improvement

market so that may mean good things for lowe's >> i love walking through there. i use a lot of that stuff. primarily the light bulbs. yeah that's about it. the lumber stays there when i leave. light bulbs. >> mr. handy >> handy is a big turn on supposedly it's not going to happen for me. like those guys, those two brothers, you know what i mean >> the property brothers >> they love those guys. i think it's clockwise >> when you put it in. >> okay. thank you, brian. let's talk about a company that people always thought would eat the lunch of home depot, amazon amazon expected to announce its new headquarters as soon as today. sources say it will split the second headquarters between the new york and washington areas. specifically crystal city and

northern virginia and long island city in queens. this had been telegraphed for the past couple of days. it's reported that amazon will also announce a major investment in one other city. they did not comment when contacted by cnbc. neither new york nor virginia have disclosed how much in tax breaks they offered to amazon. that will be a very big question in terms of how many jobs can be created. there had been a critical or critique of this whole process that amazon's gotten a free look, if you will, at different cities around the country. and sort of a better understanding than most companies about that goldman sachs stock is rebounding slightly from yesterday's 7.5% slide the prime minister of malaysia telling cnbc that goldman cheated ma lay she ovlaysia oveb

billions went missing from the fund u.s. prosecutors filed criminal charges against two former goldman sachs bankers earlier this month one pled guilty. there's been reports about meetings between various people with lloyd blankfein at one point and others >> the guy who pled guilty was the former chairman of southeast asia for goldman sachs you look through, he had hundreds of billions of dollars he had access to >> he has said -- he said repeatedly that he cheated goldman sachs. >> it looked like he was keeping it from compliance in terms of blankfein, it sounds like there were two others with jolo -- >> i don't believe that. >> just knowing him, i can't believe there would be something involved with this i'll give him the benefit of the doubt until we hear anything more. these were meetings attended by the prime minister or the president of malaysia.

i think goldman's stance is you don't know who he will bring along. stocks to watch, boeing is one stock to watch boeing reportedly withheld information about the potential hazards associated with a new flight control feature that may have played a role in last month's deadly jet crash in indonesia. the "wall street journal" says the auto stall prevention system on 737 models can in some cases push the plane's nose down so strongly that the flight crew simply can't recover safety experts say u.s. airlines and pilots were not told that feature was added to the 737 kellogg is exploring the sale of its cookies and fruit snacks businesses, that includes brands like keebler. the little elves who live in the tree the company will focus more on its core business like cereal, morning snacks and frozen foods.

bayer reporting flat growth in the latest earnings positive sales of its heart drug were offset by weakness in the animal health business i don't know what the heart drug does, but i asked my heart doctor to scribe prescribe it f because it looks so good better than the other one which can cause bleeding the company also says it faces more than 9,000 losses related to its roundup weed killer which is acquired through its purchase of monsanto. we asked someone, one of the pbm guys or something, what's with the advertisinadvertising? the doctor has to prescribe it any way. they do it to get to you ask your doctor.

>> of course you have never gone to the doctor saying -- >> no, first i would like to have the thing wrong with me i don't want to go in and say that purple whatever -- people seem happy they are active. they're with their wives, over in europe. i want it. what does it do? you should have the problem before you ask the doctor to prescribe it, right? do you know what they do >> a lot of people see the ad and think i want that. >> they do want it but they don't have the malady >> that's worked on you? >> probably. probably >> probably. >> you bought that big thing we advertise on cnbc, the big contraption -- >> the netty pot >> i should get that >> if you do buy it, can you have someone in your family video you using that >> i will bring it in. we'll sit it down on the table and we'll do it as a segment >> i love that does that thing work >> i don't know. >> it looks like a dehumidifier

for your nose. >> i haven't tried it. >> i'm going to order one. you think because we work at cnbc we can get a discount >> not after the comments. >> i'm not making fun of it. >> you're thinking about something more serious for all your problems. >> my ailments >> yeah. >> i these something with the nose >> try that first. >> that's why that spray was working. >> real good you were off a week. off a week two weeks ago >> okay. >> back to the broader markets after yesterday's 600 point selloff in the dow, joining us to talk about this is ed campbell, senior portfolio manager from qma, and also phil guarko from jpmorgan private bank welcome to both of you we thought we made it through october, some of that volatility here we go again ed, last time around you said you were buying on the dip what do you say now >> yeah. bottoming is typically a process. we were buying into the down

draft. we think october 28th was probably the bottom in terms of the quarter. we think we're likely to bounce from here and end the year stronger the bottom line is the economic reality is not as bad as the stock market performance we've seen this year so we're barely up on the s&p 500. we've got, you know, major international markets down subs t and we'll have 24%, 25% earnings growth, we've seen an improvement in valuation here. >> i hear what you're saying but you're not saying with quite as much conviction, are you buy nothing this dip >> we bought on the first dip. we're comfortable with our positioning now. overweight u.s. ektiequities. we have the biggest near-term conviction in the u.s. market given the positive near-term

fundamentals >> phil, how about you >> we're similarly positioned to what ed talked about we are also overweight equities, but i think, yes, things are turning. everybody talks about late cycle. the earnings that we heard from home depot this morning, and we probably hear similar ones from lowe's, because they are bellwethers rather than individual companies when it comes out to sales, i think what you're seeing now is sales are very good because higher wages and the good economy is still outweighing the effect of rising interest rates at some point, rising interest rates and our 30-year mortgages that jpmorgan are knocking on the door of 5%, we have not been there in a long time, so that's like a titanic struggle right now. as interest rates keep going up, will it start having effect on earnings like some of the stellar companies we heard this morning? >> you're sounding just as sort of hesitant to kind of jump in you're thinking that we're not at the end of a bull market, but

you don't sound like you're ready to completely pile in. >> we're not instead of reducing the amount of equities in our portfolio, we have taken steps on our picked income side where we reduce the credit, increase the duration of our core-free bonds, even within equities adding some sectors like utilities those are more bond like to prepare us as we're going forward. what that does, it allows us to still keep an overweight in equities the overall risk of those equities is less than six months ago. >> ed, are you doing the same thing? i ask because technology stocks were hit so hard yesterday people are running from those growth names looking for more value stocks >> we still like tech. we're overweight tech. i think it's premature to think that leadership is going to shift away from tech leadership does not typically shift in the late cycle. when we look at technology t

sti i still has by far the best fu fundament fundamentals the regulatory risk is there but i think that, you know, overplayed in the short run, that's likely to be slow moving given the complexities involved and the lack of consensus about how to move forward. so near-term fundamentals will drive tech as an out-performer between now and year end irthink we'll still have rough sledding in terms of volatility and overall returns until we get a signal from the fed that they're ready to back off. ed, phil, thank you for coming in today >> thank you coming up, the death of the toy store. it may have been exaggerated fao schwarz's flagship store in new york is reopening on friday. it ended its run as the nation's

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included with your internet. plus, get $200 back when you when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. welcome back just when you thought the toy store was dead fao schwarz is reopening its flagship store in manhattan on friday it will focus on the toy shopping experience. joining us now to talk about it is david kahn, ceo of 360 brands which acquired fao schwarz back in 2016. it's been a rough year for toy stores with the bankruptcy of toys "r" us. i say this as a mom who has been looking for a place to shop for

toys so what happened why did you buy in 2016? why the reopening now? >> we think there's never been a better time to bring fao schwarz back to new york city. customers are craving experience, physical retail. experiential is the biggest buzzword in retail when we open our new store this friday at 30 rockefeller plaza, there will be live magic shows product customization opportunities where kids can make their own remote control cars, have a mechanic help them put it together. we have a baby doll adoption center where kids can pick out the baby doll they want to adopt. they'll be interviewed by our employees dressed as nurses and doctors. there will be a naming ceremony, a birth certificate and it's fao schwarz, so we have the big dance-on piano, this time not just on the floor but on the ceiling above. >> that a commentary on what has

to happen in bricks and mortar retail is there a place for a toys "r" us version of a toy store or seconds peer yeis experience the only way that can happen >> we think experience will separate the winners and losers. fao is authentic, it's 150 years old, it's known for experience >> experience costs money. you have lots of employees you're in a very high-rent district in terms of that experience, people are paying to go to places like this >> and this is at 30 rock. >> people may pay $5, $10 to have that experience but in this case they have to buy product. what's the margin on the product and are they expensive products? >> a lot of the products in that store are exclusive and can't be

found anywhere else. so we can charge a premium for those. the other is that different from the old fao schwarz store, we're owned by a company that's a large manufacturer, importer and seller of merchandise. about 40% of the products in that store will be fao schwarz private label products >> got it. >> the legacy store had that, but it was much smaller, they didn't have the sourcing structure that we have we think that's a game changer >> this is not something that will be replicated and it will be in 3,000 cities >> no. no our core business involves three different channels we sell to thousands of department stores, places like macy's, bloomingdale's, nordstrom, hudson bay in canada, and we have shops in those stores we have franchising opportunities. we did a franchising agreement in china with a company called kidsland we have hudson group for travel retail >> this store in new york, does it have to be a profitable

store? for it to be profitable for you -- >> it can't be a loss leader >> thank you >> we believe it will be profitable and drive our business in those channels >> you are sourcing some things from china any concerns about tariffs >> tariffs for toys have not kicked in yet. down the road, we'll see it will be a level playing field. all the companies in the industry will be dealing with it >> whose idea was it to put the piano on the ceiling >> great question. we overlook rockefeller plaza. we had the piano on the floor. you couldn't see the piano keys lighting up from outside we want people from the plaza to see people dancing >> dancing on the ceiling. we were hoping you would come dance on the piano >> what's the hottest toy this christmas? >> a lot of things for us plush is always big we've had a lot of momentum with kids activity sets things they can do with parents,

whether it's salon sets, tie die, gummy bears, s.t.e.m. toys. >> gummy g ymy bears welcome to the neighborhood. appreciate your time. >> thank you when we come back, grocery wars we'll talk to the ceo of the dutch grocery giant behind u.s. chains like food lion, stop and chop and delivery service peapod. and we have the headlines moving markets this morning. dow up 144 points. getting some additional help from home depot which beat expectations. as we head to break, let's look at yesterday's s&p 500 winners and losers

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning, everybody. welcome back among the stories that are front and center today it looks like amazon may have found its second home -- or two of its second homes. the retail giant is set to split its second north american headquarters between new york and the washington, d.c. area. that announcement is expected later this morning

keep an eye on shares of boeing the "wall street journal" now reporting that the company reportedly withheld vital information about potential hazards associated with its 737 max 8 and max 9 planes that's the same kind of aircraft that crashed in indonesia last month. the journal says the planes have a potentially dangerous feature that under unusual conditions can push the plane's nose down so strongly that pilots cannot recover. kellogg is exploring the sale of its cookie and fruit snacks business. the company plans to focus more on core businesses like cereal, morning snacks and frozen food u.s. equity futures at this hour have been indicated higher. yesterday the dow was down 600 points this morning the dow is indicated to open up 150 points. just crossing the wires, flipka flipkart's ceo announced his resignation effective

immediately. he resigned after misconduct allegations that he denies let's talk about the grocery business you might not have heard of dutch grocery joint ahold delhaize, but i have definitely heard of some of its branded stores including food lion, giant foods, stop and shop, or peapod here to talk about the grocery competition and the future of the business is the ceo of the company. good morning to you. >> good morning. >> you're making an announcement this morning >> yes we're very proud after two years of integrating the companies we're making an announcement about our new strategy leading together focused on growth, comparable sales growth and gaining market shares the second thing which is pretty cool is that we will announce we doubled our e commer-commerce sp to 7 billion euros >> people always pit your company against amazon and what

they're doing with whole foods, the way the supermarket wars are battling out do you think of it like that >> no, we're very proud about our great local brands in the u.s. we operate six of those brands those brands all operate in the local markets. we are complete into the food business 40% of fresh food. we had a strong quarter last week we grew in the u.s. 3% comp sales growth we focus on our customers, close to our communities, close to our great local brands that's our focus what's the investment case look like in terms of the amount of money you have to invest to effectively -- whether it's through peapod or those other brands, upgrade the systems to people are walking in and just taking stuff out or it will be delivered. is that the future of grocery? >> we invest a lot of money in technology this year we will invest 8.4

billion euros. we are having people on the digital business and e-commerce business and we are investing heavily in the bricks and mortar network, like stop and shop where we remodeled 20 stores in connecticut. what are y >> what are you paying people currently? >> we're paying market levels. >> what is the average pay >> over $12 in most of the northern brands. >> with amazon going to $15, that has a lot of people thinking that everybody else will have to run to that same number >> i think there's more things towards minimum wage it's also what kind of working environment you have what are your health benefits. we are paying according to market levels. that's what the value of our company is

we attract a lot of good people. >> you're looking at ai, robotics, as are amazon in this cashless almost employee-free stores where people walk in, there's no cashier you just walk in, walk out is that the future of what this looks like >> i think if we talk about our customers, they expect an easy process of shopping. they expect digital shopping experience, together with the stores, e-commerce, online networks and i think in our stores we facilitate this by faster checkout procedures. so we have a lot of self checkout also with stop and shop in the u.s. we go to the next phase where our dutch brand is now innovating in seamless checkouts with tap and go card you just click the label of the article, you have paid already with your bank it goes in that direction. depends on what customers expect from us in a self-checking and smooth shopping experience >> long-term, in terms of

delivery, is the future in delivery or no >> i think the future for e-commerce will be a mix of various models same day click and collect, next day delivery we all work with the various fulfillment models >> the royal, when you merged you dropped it to seem more common with everybody else it took you 100 years to get that from queen beatrice for 100 years, royal ahold you dropped it >> we didn't drop it it's now royal ahold delhaize. >> it's royal ahold delhaize >> don't drop that can you imagine sir paul mccaartny now saying call me paul >> i think he might say that -- >> sir andrew ross sorkin which is coming. i think you need to be british born

>> we're proud about our heritage >> you should be >> ahold has been there for 130 years. delhaize, 150 years. we have a lot of heritage. >> talking about branding, you own some fabulous brands in the united states. the question that some investors, analysts wondered, you talked about the local strategy isn't there one or two brands you could save a fortune if you rebranded some of these stores and went down from five brands to two >> in our opinion it's a misunderstanding to save a fortune by doing this. we believe in great local brands close to our communities understanding the communities, and our brands have an extremely good heritage and appeal with our customers. >> that's true i don't want to shop at food lion, i have a stop & shop near me don't change the names >> the brands are all regional >> when your staff brings you groceries, they tell you they like their local -- >> i grew up with a & p, what

are you talking about? >> whole foods >> i did not grow up with whole foods. >> nobody did. they're new. >> that's where you get the non-d non-dm oshnon non-dmo -- >> a lot of new yorkers shop with peapod. >> kings >> you shop with kings a nice news item is next wave of remodeling our stop & shop stores in long island, it will be in 2019, so hopefully a lot of new yorkers will be even more happy with their shopping experience in long island. >> thank you for coming in >> thank you coming up, a new read on small business in america. the latest numbers from the conservative group -- no, the nfib that's next. at the top of the hour, a look at some movers on the dow goldman sachs was off more than 7% yesterday apple was down 5%. home depot out with results this morning. "squawk box" will be right back.

. right now it's time for the executive edge the national federation of

independent business out with the latest report on confidence. kate rodgers has the details good morning optimism taking a slight dip to 107.4, the second monthly decline in a row after hitting a new all-time high in august. this month's read is still well above the historical average of 98 this is a look at how optimism has been tracking over the past year the group noted the biggest drop this month was in those who believe now is a good time to expand the only component to see gains was in plans to increase inventories. small businesses are feeling positive heading into the end of the year when sales are expected to get a nice boost from the holiday season labor remains a stubborn issue for small business it is in the top spot yet again this month as the single biggest issue followed by taxes and red tape this has been the case for 2018. it is not improving but also not impacting optimism it's also not holding back the

positive sentiment that small businesses continue to have. one more thing to note, wagers and plans to increase compensation, both of those are near record highs. back over to you >> thank you for that report coming up, the dow falling by 600 points yesterday, but our next guest has two dow components on his buy list one just reported this morning mark pinto joins us next. as we head to break, a quick check of what's happening in markets. we're in the green back in a moment at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. 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.

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♪ welcome back to "squawk box" this morning take a look at u.s. equity futures rebounding this morning after yesterday's 600-point selloff. the dow would open about 134 higher nasdaq up about 57 points, s&p 18 time for today's edition of what's working joining us now for stock picks is mark henderson. he manages the growth income

strategy funds both are rated five stars by morningstar. mark, we always kind of smile when active managers are here and they say, you know, this is a market where, you know, you got to really -- stock picking is paramount and things like that so my question is, given the last month or six weeks, is it a market where it's about picking stocks or is everything a little cheaper than it was? is it more important now or not quite as important as it was six weeks ago? >> i think it's actually a really good environment for active managers. october is a great example both our funds markedly outperformed >> were they down? >> they were down. but outperformed the s&p 500 >> so it there more to buy now more that than raising an eyebrow saying i didn't think i'd be able to buy that there? >> i don't think we're -- we're not at the point where everything is par begin babarga

basement-like. plus but there's been some reductions in valuations so i actually think it's a good environment. you know, the backdrop is still very favorable we've got low rates. we've got an economy that's still doing well and, you know, we've got a friendly government where ceos have more confidence >> i imagine that home depot and nike, two of the stocks you're bringing us today are both adding to positions. if you buy them here, you already own them >> we own them well. so we're obviously happy with today's news it doesn't surprise us >> for home depot. >> home depot is a great example of a company that has navigated the threat of e-commerce and just general the malaise in reta retail they've done a great job giving their customers the ability to buy online, in the store, or a

combination of the both. for me, it's a poster child for a retailer evolving their business model to compete in the e-commerce world i think today's results suggest that >> you like nike for special reasons. it's $75 now people remember -- everyone dates the decision on colin kaepernick that was $82 or so down from where it was $75 is a better entry point for nike >> i think when you look at n e nike, i think you have to look at the growth in terms of non-u.s. markets it's a very powerful brand not only in the u.s. but around the world. china's obviously a big market for them and just rest of the world, you're seeing a lot of growth in their basic apparel. i think nike's also another example of a company that has managed the whole digital divide well when they're on the right side of it in terms of the way they're customizing products for customers. the nike i.d. where you can go online and create a shoe that

fits your needs. and obviously it allows them to connect with customers better. also allows them to sell directly to customers and not have to go through retailers. >> how do you customize something? >> you can customize sneakers? >> yeah. you should probably ask my kids. they do it all the time. but you go online and put your name, your baseball number on it you put the colors you want. >> oh, okay. but i can't get a kernen basketball sneaker >> yes, you could. i could make you one i have tennis sneakers that are a.s. sneakers. we do. i'm saying you can do it on the nike site. this is what you do. >> he trapped you, andrew. >> no one needs to be wearing my basketball sneakers. >> this is like when you got donnie deutsch to say he had fungus >> you like boeing too >> we do

obviously some news today which we're still digesting. but i think when you look at boeing, you look at the fact that air travel around the world is continuing to grow. particularly in china. and so, you know, boeing is sitting on almost eight years worth of backlog we think that that's going to continue to grow >> okay. we got to go, but you like u.p.s. and john deere. >> we like them both >> all right marc, thank you. marc pinto when we come back, we'll dig deeper into two dow components "squawk box" will be right back. every investor should ask questi is money iright place? what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary?

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♪ all right. welcome back, everybody. good morning again this is "squawk box" here on cnbc we are live from the nasdaq market site in sometimes square. i'm becky quick along with andrew ross sorkin and joe kernen the dow is now indicated up by about 131 points s&p futures up by 16 and the nasdaq which was the biggest percent decliner yesterday, it was down by what was it? about 200 points yesterday >> nasdaq was down 2.8%. >> it's now indicated up by 53 points we are watching three big stories this morning number one, the markets looking to open higher after yesterday's

600-point slide. apple and trade tensions causing most of yesterday's fall we'll get you caught up on what to expect in today's trading session in just a moment number two, hq-2 and 3 northern new york and virginia for the new headquarters an announcement is expected today. also number three, tesla ramping up production. what skeptics are saying about the stock. those stories and much more straight ahead let's bring you the other headlines this hour. sources telling us amazon set to make that announcement as soon as today about the new headquarters report s say it will split between washington areas and virginia area. all of this has been telegraphed. separately, the prime minister of malaysia now telling cnbc that goldman sachs, quote, cheated malaysia over 1mdb

billions went missing from the fund u.s. prosecutors filed charged earlier this month we're going to be joined to discuss this story in just a bit. also home depot reporting quarterly reports this morning analysts beat expectations the expected number of the revenue in line. globally topping forecasts you're looking at those shares up this morning about 3 approximate. -- 3% coming up at the g20 summit. "the wall street journal" says mnuchin and his chinese counterpart had a phone call late last week china put forth an offer before a trade deal beginning the u.s. and china are not expected to come to an agreement

but potentially work on a framework followed by a discussion on january 1st, most of those tariffs will increase from 10% to 25% and the markets taking a big slide yesterday, but closed at a key bottom point or at least a question of if this is the bottom mike santoli is here >> still a big question. >> you've been able to sleep on it now >> yeah. >> i spoke to you last night what time was that >> that was 5:25 >> so i mean, this is -- i remember what you told me then if you change -- >> well, what i told you then was what i told you yesterday morning. so that was not about yesterday morning. >> but you've slept on it now. >> i did >> is it different than -- >> i drew some pictures. what's interesting that happened since we spoke is you got these trade headlines, right dow down 600 points. reports come out of a phone call

last week. a good test of whether the market is kind of compressed here and coiled up and willing to respond to what seems like perhaps slightly good news on china. so we do have a bit of a bounce happening. do have a picture of where the markets closed in terms of the field position right now here's the interesting part about where we did close the s&p 500 about 27, 26 it's exactly just about where we were at in october october 11th was the bottom of that slide we had. that was when the market seemed like it was giving way see that on the right there? that saw tooth pattern people are pointing to that as if we can go from hereby, it's going to create a pattern. it's called an inverse head and shoulders. it doesn't matter. but it means the market did not go back down to its ultimate lows and found a reason to find buyers up at these levels. that's what people are trying, i think to jump right now.

another question i have in response to the news, can big tech after the drubbing it's taken start to shrug off bad news because yesterday really was an odd day. down 600 on the dow. 120 of it was goldman sachs. apple dragged down big tech. it was like specific stories that the overall market got weighed down by opposed to macro headline people were panicking about. by the way, bond market closed >> the weird thing, i started looking through some of the statistics that came out about how many individual stocks in the s&p 500 are now in bear market territory or correction it's kind of staggering. 363, i think >> it's been a comprehensive broad correction it's been going on for depending how you measure it, six or eight weeks. something like that. so i think the indexes where people are gaming, trade the indexes. in reality, a lot of stocks have been drastically discounted.

it's defending that flat line right now. this is -- what's interesting is the bull case coming into last week and this week was all very seasonal and mechanical, right it was all about, well, after midterms we rally. november's really strong december's seasonally strong we have buybacks coming back and we're going to have a performance chasing fourth quarter. it wasn't the fumtss are great all that is really kind of assumes. it's baked in. >> yeah. mike and i were talking last night. 5:20 when people write in that santoli and i work half days, it's because they're 12 hours. half of 24 right, my man? >> mike does that. >> we work half days 12 hours, sorkin that's what a half day is for me thanks, mike >> by the way, i did two hours extra yesterday too. >> you were down at like 2:00. >> 3:00. and i stayed at work the whole time

i didn't go home >> i love that someone wrote in that. working a half day is 12 hours joining us is jim paulsen who worried so much that i'm sure it's even more than 12 hours he's chief investment strategist at leuthold group. kinnehan you here? >> i made it >> you break in? we didn't know if we had you or not. all right. paulsen, you just heard mike santoli and in your view, we got more to go you think this correction is halfway through? we got more work to do going down >> i do. i don't know if that's right or if it's hands now or several months out i'm thinking a few things.

mostly we need slower growth i just don't think we can sustain a rise in the stock market with as strong of growth we have as 3.7% unemployment rate but if we got a look at lower valuation here slower growth, the economy, and fear, some panic i think that combination might be a good buying opportunity if we're not going to go to recession. the combination of slower growth and fear, i think, would stop the bond market and the fed from having to raise yields it would give the market a chance to start to trace earnings again but i don't see that yet we're still growing too fast here we're still going to suffer with pressures. this is another really controlled correction where no one's really too scared yet looking at it more as a buying opportunity rather than something to run from. i think when we do find a bot m bottom, we're going to feel a lot more fearful about a

recession is just around the corner we just haven't got there yet. >> people were pointing that out. that there wasn't the real flushing of the latrine that you get sometimes where everybody is really scared. kinnehan, good to have you you follow the vix so closely. i guess when we got most negative, the highest we saw, did we get a 25 print or we didn't even close there, did we? >> no. and you know, joe, we're actually back if you look at volatility, we're near historical levels. and so when you see days like yesterday and we talked about this yesterday a bit kin it's a law of big numbers. the one thing i will say is this has been an incredibly orderly downward move. mike touched on it a little bit there. we're seeing a repricing of assets and with that, you know, the news out of china just really seems to be what's going to drive us today's news is good, not great. so we get a little bit of a

bounce does it last throughout the day? because we're still getting a lot of negative news from others it was good on home depot's earnings today they guided higher because that's the real thing we kind of lacked over the last few weeks is because of some of the tariff news, et cetera, so many of the ceos have been very conservative and you can't blame them they're not going to get penalized for being conserve tifr but they're being conservative in their forward guidance. nobody is sure where this is going to land come january 1st >> jim, if you don't focus on the averages and you look at individual stocks, there's a lot of pain and misery and blood on the streets. isn't there? but you're saying that sentimentwise, you're not really seeing that, you know, sort of overtly expressed enough by a lot of people? because there has been a lot of stocks down in bear market territory. >> there has been, joe

i think that is an interesting phenomenon here in this correction it even gets worse if you go away from the united states. and you start looking at the international markets. you know, there's been a ton of carnage already. so there is some truth in my book about this being a rolling bear market. maybe that's right maybe we can have a rolling bear market that does enough damage without a panic. but i just don't think that's going to be the case i think ultimately most of the money is s&p 500-like money. and i think we're going to create some sort of capitulation in that index eventually and i think the stock leadership coming out of that has still got a ways to go yet i think the next shoe will drop. we've been dealing with great economy against rising rates and that's been a stalemate this year in the s&p 500. but the next shoe to drop, i

really think, is the u.s. economy slows in half to around 2% growth. and that might force wall street to lower 2019 estimates to maybe flat line next year. if we slow growth but don't pull back interest rates, then i think there's another leg down in this market >> you're just -- i mean, it looks like you just rolled out of bed no jacket, dark shirt, didn't shave. this is affecting you. you really take your clients' fortunes on like the weight of the world is on you, paulsen relax. have a cocktail or something all right, j.j not now, jim or whatever. it's up to you all right, we're glad we got you on j.j. kinahan and jim paulsen when we come back, could poor sales of the iphone force apple into a new course of

action what it means for your investments. that's next here on "squawk box. a little later, tesla is ramping up production which means more electric engines will the latest move change the mind of the skeptics we'll talk about that. stay tuned you are watching "squawk box" here on cnbc xfinity mobile is a new wireless network

designed to save you money. even when you've got serious binging to do. wherever your phone takes you, your wireless bill is about to cost a whole lot less. use less data with a network that automatically connects you to the most wifi hotspots in millions of places and the best 4g lte everywhere else. saving you hundreds of dollars a year. and ask how you get xfinity mobile included with your internet. plus, get $200 back when you when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. welcome back to "squawk box. apple shares taking a big hit

after the iphone parts supplier cut its outlook. joseph is looking at the ground in sadness. >> let's do it -- let's do phonics. >> we're not going to do it again. no, no the dow component is down over the last month >> hooked on phonics sound it out >> joining us right now is raymond james. good morning to you. first of all, can we just -- let's just clarify one thing right now which is to say are we 100% sure that just because of this one supplier's report, that somehow all of apple, that there is a true problem in terms of apple sales? chris, can you hear us he cannot hear us. we're going to come back to chris in a bit but right now the big issue is

the supply report just yesterday giving a lot of people some scares about apple sales the supplier, we should say, supplies part of the face i.d. technology the face i.d. technology is no longer just in the phone but the ipad that has created a little bit of confusion about whether this is completely related strictly to the iphone or something else is going on we're going to try to come back to him, perhaps, after this break. >> we'll be right back after a quick break. we're also going to talk about tesla's push for more production and whether that cou mn ldeabig things for its giga factory. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward.

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because energy touches so many industries, it supports 10 million u.s. jobs. welcome back to "squawk. joining us now is raymond james analyst chris caso we got cut off there i want to start with this report by the supplier. how convinced are we that this actually is a sign there is a real problem at apple? >> well, we started getting cautious on units from apple as it was driven by the short wait times for the phone. particularly for the xr. you could go in the store on

launch day and get one so i think there's been some evidence before that the other issue that raised some concerns was apple's decision to stop disclosing unit sales around the earnings report which, you know, when companies stop disclosing things, there's usually a reason for it. what we think happened with this supplier and there were actually two suppliers which, you know, down ticked since the apple report what we think happened is apple will often report their own earnings and releases information to suppliers after that we don't think this is incremental to apple's own earning report but we think the suppliers found out about this >> two things. there seems to be some confusion about the actual suppliers themselves because they supply the face i.d. technology it's no longer on the phones but also on ipads. by the way, there's some speculation in the future this technology will ultimately find its way onto laptops, macbooks

>> that's right. in terms of vool ylume, iphone the largest volume you have. so in terms of what's driving the december quarter, you know, it's really all about iphone >> and you're convinced they have -- i don't know if they hadn't stopped disclosing sales, iphone sales, you don't think it would have taken the dive it took yesterday? >> well, i think what's happening here is that you're seeing iphone units either now or, you know, shortly in the future start decline on a year on year basis. at what point that's disclosed is probably in the short-term. but for the long-term, i think just the stock has to reflect the fact that units will decline. now, apple's point and one of the reasons they stopped disclosing is there's still iphone growing revenue despite the fact that units so far have

been flat for the last couple of years. they feel that's a demonstration because of the higher prices they can still grow revenue. my concern is going forward. now the prices are higher if units don't grow, how do you get growth of course units decline. then perhaps revenue starts to decline. >> final question. what's your price target on the stock? >> we have a mark perform rating there's no price target. >> so $193 is a fair price >> i think it can go lower again, my concern is not necessarily what's happening right now. it's kind of what's happening going forward. neither myself nor others have, you know, so far uncovered any rumor or speculation about compelling features for next year's phone so if this year's phone is selling even if it's just okay, they have to come up with something to get people to buy a phone next year. unfortunately, i don't see that at the moment.

>> all right chris caso, appreciate it. thank you. we're going to talk tesla with lebeau, but you might touch on boeing too. kind of an interesting story tesla ramping up production. phil lebeau joins us now with an exclusive look inside tesla's growing giga factory you are there. >> we are here when you come here, the thing that stands out -- this is an exclusive look inside the giga factory. how are they building these batteries? because of robots like this. highly automated plant here for the production of model 3 battery packs. while you see a lot of robots and automated guided vehicles moving things between the different lines, there are people who work here in the giga

factory. got to make sure there's not a robot machine coming by. when you come down here, you'll see there are about 7,000 people here they do do the work in terms o of part of the manufacturing process for the battery pack for the model 3. production about 5,000 per week. they can get it up to 7,000 per week as they continue to expand model 3 production and the head of automotives at tesla, he says there's a lot they can get out of the plant. >> quite a lot there are different ways we can do that. we are going to increase production so we're going to get greater scales the lines themselves, the production lines for themselves is becoming better to increase the yield. the yield is increasing very nicely thirdly, we're improving the design of the sell

the design of the sell is not frozing. we have a nice map of improvements for the coming years. >> guys, here's why this is important. look at this chart here. it says it all tesla is way ahead of their competitors when it comes to cost per battery cell. why is that important? they want to get as close as they can down to $100 per kilowatt hour. right now the estimate among experts is probably about $116 but they believe they can go further as we're taking a look at greater production here in nefss. let me show you what a battery cell is. i hear people say what's in a battery pack there's about 4,000 of these in a battery pack that goes into the model 3. this really is the key to tesla driving down costs which helps the company or did help the company in the third quarter turn a profit. and according to elon musk, they will be profitable for all quarters going forward in part

because of the efficiencies that they've been deriving out of the giga factory back to you. >> all right phil lebeau, thank you for that report >> that's kind of amazing. we were just sitting here talking about it, phil we shortchange elon musk in terms of thinking about everything he's done with building the giga factory, the rockets. seeing it in action gives you a slightly different perspective, i would guess. >> and let me bring you guys back over here when you do come in here, you do notice the robotics they are all over the place you're not going in on the robots but this is what you see when you come in here and a lot of these self-guided vehicles that are moving parts and components from one area to another as they continue the manufacturing processes. but that's at yn what you see here at the giga factory

coming up when we return, goldman sachs taking a turn after there's a malaysian fraud scam earlier this month. we'll have much more on this story in a few minutes and what it could mean for the wall street firm. take a look at u.s. equity futures this morning after a tough day yesterday. dow looks like it would open55 1 points higher right now. we're back in just a moment.

good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. dow component home depot out with earnings this morning those numbers were much better than had been expected $2.51 a share. that beat the street's expectations of $2.26. revenue was in line. same store sales were up 4.8% globally and up 5.4% in the u.s. both those numbers beating forecasts. shares of home depot this morning up 3.25%

so that has been a big mover helping the dow. dow was up triple digits before we heard from home depot but certainly got help after those numbers came out the dow up 154 points. the ceo and cofounder of walmart's flipkart has resigned. the independent investigation did not find any evidence to corroborate misconduct but found lapses in judgment about the way he handled it. kellogg is exploring the cookies and snacks businesses. the company plans to focus on its core businesses like cereal, frozen snacks, and frozen food the monthly oil market report jackie deangelis is joining us with details >> a lot of focus on the report with oil logging the steep decline we've seen 11 straight days of losses self-reported production from the cartel, it went up last

month. 32.9 million barrels a day take a look here the saudis, the uae, they were the largest increases and iran did see a bit of a dropoff we don't know what they did, but the expectation is they increased production as well where does this leave us with all the big producers pumping again. that is why prices are down so dramatically the shortfall expected from iran sanctions never came the president easing his stance a little bit to make sure oil prices didn't spike. o couple of other things to think about. saudi arabia talking about a million barrel a day cut its talk right now, opec isn't going to meet until december 6th. then the president tweeting opec shouldn't cut, that prices are too high, guys one more note out of that opec report, they are talking about 2019 and a glut again which is some conversation we haven't seen in quite some time. if everyone keeps pumping like

this, then that's what you'll get. >> oil prices are never too low and interest rates are never too low. >> not true. >> i said if you're the president. >> if you're the president >> but we have seen times with it gets concerning if it's too low. the cure for low prices is more pumping and that brings -- >> the s&p is loaded with oil companies. >> and when prices are too, too low, extremely at $25 a barrel, it's hard for those companies to do well. >> which means there's a drop in production >> right they'll push the prices up themselves there is a sweet spot. to your point when prices are lower, those prices come down. consumes tend to like that >> $20 oil makes you think the globe just fell off -- global growth is off. >> right that's when you see prices like that jackie, thank you so much. as she mentioned, oil prices falling for an 11th straight session on monday. that is the longest losing

streak on record let's look at crude this morning. well below $60 a barrel on wti $58.78 joining us to talk more about where prices may be headed is gary ross. gary, jackie set it up nicely. she talked about how we were expecting to hear talk of production cuts from opec. that is the first thing we saw pushing oil prices higher for the first time in 11 sessions yesterday until the president came out with this tweet saying he doesn't want to see production the saudis are in a precarious situation because of the khashoggi incident when he president doesn't want to see production cuts, how much are they on the line because of what's happened? >> i think at the end of the day, they'll cut production. they're already trimming -- well, cutting 500,000 barrels a day in december. the problem is it's not enough they're pretty much snookered by

trump. trump led them to believe that the iranian exports would be zero it turns out they'll be 1.2 billion barrels a day. way higher than people thought meanwhile, we had record production from saudi arabia, u.s., russia all at the same time i mean, the saudis based on ship tracking data are way too high so the market is just oversupplied >> to answer joe's question, this is not a weak global demand picture. this is simply an oversupply >> not as far as we know >> i would say you have to say the emerging markets have been weak because of the strong dollar keep an eye on the dollar. it's been strong and that's hurting. but i think broadly speaking it's an over-supply tostory. they are not going to cut enough to drive prices back up to $80 brent. >> all right we saw a few run up on

expectations for the sanctions then we saw the exemptions for the sanctions and you saw oil prices come back down as a result but now i hear that they are already trying to rein in some of those what's the story on that >> the exemptions are for six months they're going to run until basically may 5th. i think there will be cutbacks from that. but the fact that these exemptions exist, i was there five weeks ago in beijing. they thought they were going to get zero now they're getting 400,000 barrels a day. the koreans are getting indians. they asked for more oil and they got it so basically oversupplying the market this is a tax cut. $650 billion oil price reduction. this is a positive for global consumers. this is a dramatic decline of

pricing. we've flipped that argument on its head depending on which way it's going >> it's because of u.s. shale. u.s. shale has changed everything it's made it hard for opec to manager the market 1.4 million barrels a day. plus another 600 a day this is a massive expansion. >> that's an amazing chart nothing about production in the united states changed right at that peak. >> not in the last year. >> no. and you know what that also lines up with? that's pretty close to powell too. and if you believe that, you know, the only way recessions ever come are they're orchestrated by overshoots in the fed and also every time you raise rates, a dollar gets stronger it correlates -- the selloff correlates for when he was construed as being too hawkish about what's necessary

i'm not convinced it's not -- i mean, people are starting to fear that people are long in the tooth, right >> i think that's true we are long in the truth but to the extent we don't have inflationary pressure, we can't inoculate ourselves. consumer price index is going to be weak with this oil price decline. >> let's hope it declines. right off a cliff six weeks ago or whatever it was >> straight down $30. >> it was the maximum period of uncertainty. no one knew whether we were going to get any iranian oil then all of a sudden, trump realized maybe we would get $100 oil.

>> i wish it was that easy. >> do you think the relationship is going to deteriorate with saudi arabia given the reports about khashoggi given the past day of this idea where they say tell your boss and the president has said he's going to have an opinion, a strong opinion about this issue this week. >> well, it's very tricky. he's very popular in the kingdom. so i think it's going to be difficult to push him aside. he now is in control of so many lovers of power. i think that publicity-wise, everyone is going to be quite harsh. end of the day, he's going to be important. >> we had general david petraeus here yesterday saying we want to see some of the changes he's making making sure women are being brought along and other things but there's no easy answer with this >> i'm glad we don't know about everything that's happening around the world in some of these places you know what i mean who knows in dungeons, in prisons, whether it's russia or china or north korea or iran or

syria. if every one of these things were taped, we'd be like, we'd be mortified on a daily basis. this was taped >> what do you do with this knowing it's the situation no i wit anyway, gary, thank you for come in what's coming up i don't know it depends okay stocks to watch ahead of the opening bell on wall street. meanwhile, check on european markets at this hour it's green across the board. we're coming right back. i know that every single time that i suit up, there is a chance that's the last time. 300 miles per hour, that's where i feel normal. i might be crazy but i'm not stupid. having an annuity tells me retirement is protected. annuities can provide protected income for life.

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welcome back to "squawk box," everybody. after that big selloff yesterday for the markets, you are seeing green arrows not nearly the bounceback you might expect today dow up by 134 points and the nasdaq which was down by 2.8% yesterday up by just 54 points this morning. let's take a look at some other stocks we may not have focused on as much this morning. bayer, positive sales of xarelto

were offset by weakness in the animal health business company also says it faces more than 9,000 lawsuits related to roundup that weed killer it acquired through the purchase ofman san toe. woody, buzz lightyear, and the whole crew are all getting back together in the first trailer of "toy story 4. all are making a comeback including mr. and mrs. potato head but there is a new toy in town a spork named forky. >> is he the bad guy >> i don't know. >> you remember -- >> but i love this >> well, so do i but you remember that sequels aren't always reat like "toy story 2" disappointing. "toy story 3" was a best picture nomination so let's hope they take this seriously. some of the people are gone. me too stuff or something?

it's hard to keep track. goldman sachs taking a hit in yesterday's session after it was allege d that the firm arranged billions of dollars in deals for a troubled malaysian state fund wake up! now the finance minister there seeking a full refund. and don't miss larry kudlow on "squawk on the street" this morning at 10:30 a.m. eastern. he's a great american. "squawk box" will be right back. we're putting ai into everything, and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments. in this lab, researchers are working with watson to help them find new treatments.

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welcome back to "squawk box. goldman sachs had its worst day since 2011 this week this coming after officials in malaysia said that bankers at goldman sachs cheated the country in its dealings with its state fund 1mdb. we spoke to the prime minister there about the growing calls for recouping fees >> revelations are emerging now about the involvement of goldman with underwriting 1mdb bonds is it safe to say that goldman sachs will never be permitted to do business in malaysia again? are they now persona non grata in your opinion? >> goldman sachs has done things

which are wrong. they shouldn't have done that. but we want to see the results of all this investigation and the actions taken, for example >> what does this tell you about compliance >> it doesn't work well. >> joining us to talk more on this is tom wright tom is the coauthor of "billion da dollar whale." good to see you again. it was nice to see you on set recently now that this news has broken, how big question is how far or how deep this goes inside of goldman sachs. what's your take on that >> that's a great question lloyd blankfein has said -- i think the big problem here for goldman

is it's about red flags and compliance one of the huge red flags was there was an operative who ran the fund from which the money was stolen behind the scenes goldman says he couldn't have known jho low was behind the fund however, i believe many people at goldman knew about it and compliance asked leistner over and over about jho low. but i think that goldman was making so much money from these trades, it was difficult to turn down >> let's talk about not only the reputation but the potential future regulation cost in erm thes of all this in terms of just the straight math, what's at risk here for goldman? >> well, i think goldman for sure are going to be fined under

the bank secrecy act and so people are guessing at the moment this could be a civil penalty and in the billions of dollars the huge question mark here is will goldman as a firm be indicted we don't know that tim has pleaded guilty he was a chairman of southeast asia when he left and his sentencing will be in early next year in early january, i believe. but we just don't know >> were you surprised as part of his guilty plea, he seems to suggest he was a rogue actor in all of this. suz he deceived his own bank were you surprised that he took that tact opposed to trying to flip on others

>> well, he does appear to have flipped to a degree. there's an affidavit from june that does not mention the co-head of banking the indictment in june doesn't -- i'm sorry, in august, doesn't charch him with anything but it names him as a coconspirator. and it says that vela was also involved in hiding jho low's role at the 1mdb fund from compliance at goldman. that's very interesting. that's the kind of thing we're going to learn more about. vela right now is on leave >> we've seen goldman sachs increase its legal reserves. what kind of number could you put on something like this >> well, the talk is $2 billion at least $3 billion, $4 billion

>> they don't have that in reserve at the moment though i don't think their legal reserve is that high i think it's in the hundreds of millions of dollars. >> and i don't think they've provisioned as high as that number either. i think at their latest results they've provisioned much lower than that. but this is guess work who knows what the regulators in the u.s. are going to do in terms of a civil fine. >> is it possible in this regulatory climate, not to say the government looks the other way but that they say, look, this fellow deceived them. they need to be fined. it won't be harsh a penalty. >> well, you know since the financial crisis, no bankers have gone to jail. i believe it seems likely that tim leistner will be sentenced we also don't know he may have reached a plea deal that doesn't lead to jail time who knows on that. yeah, bankers generally don't go to jail. it looks much more likely to be, i think, a deferred prosecution agreement. but i think it'll be a very high

number you know, in your segment earlier, the prime minister of malaysia is asking for the money back that's $600 million in profits goldman got from this deal just to start with. the number is going to go up from there >> all right tom wright from "the wall street journal," thank you. appreciate it. >> by the way, amazon expected to announce its new headquarters as soon as today sources say it will split its second home between crystal city in northern virginia and long island city in queens. we'll have much more on this story and corporate headlines in just a few minutes coming up when we return at the top of the hour, faang stocks are bleeding. we're going to go through what's driving these stocks lower after the break. check out futures right now. we are in the green after what was a treacherous day in the markets yesterday. another big hour of "squawk" straight ahead we're back in a moment alpha seems more elusive today.

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split decision after a year of hype, amazon looks ready to make an announcement on hq2 today. only there's a catch trade war or trade truce washington and beijing resuming talks. the global market impact is straight ahead plus this morning's biggest stock movers including home depot giving futures a boost 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" on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin the futures are getting back up. the nasdaq hard hit yesterday. 2.8% almost is rebounding 48 points today and the s&p is up about 16 treasury yields moderating with the selloff. 3.17% today the big story. yesterday and for a couple weeks now the price of oil which earlier this morning was down about 2% again, it's in a long, long -- longest in history as far as days. >> 11 down sessions in a row

>> down in bear market territory. now around $58 at least wti. let's talk about some of today's other stories. shares of home depot posting better than expected earnings and same store sales the home improvement retailer also offering some upbeat guidance analyst brian nagel joined us earlier this morning to talk about the company. >> 5.4% comp in the united states is quite positive and there's been a lot of concern out there in the marketplace about a slowdown in housing. we're simply not seeing it >> check out home depot shares right now up by 1.5% we've seen them up by 3% and better throughout the course of the morning. you may wonder what this means for shares of lowe's right now the market seems to think positive things. they're trading that stock up 0.75% craig maneer the ceo of home

depot said in a release we believe this is in the market. boeing reportedly withheld potential hazards associated with the new flight control feature. this may have played a role in the deadly jet crash in indonesia. the autostall prevention system on 737 models can push the plane down so strongly that flight crews can have difficulty trying to recover we're going to talk to a boeing analyst in a few moments right now that stock up by 77 cents. as joe mentioned, we are watching prices of oil this morning too. crude down once again this morning. already on its longest losing streak down 11 straight sessions this morning down more than a dollar. trading at $58.87 a barrel and the other big corporate story of the morning, an announcement expected today on amazon hq2

diana oh lilick joins us now. >> reporter: if it goes as expected, it will mean billions of dollars in investment capital and 50,000 jobs split between here and new jersey. the split probably done to ease concerns over congestion from that many new workers. now, a big tech neighbor here in northern virginia, aol founder steve case posted on social media saying to the other 18 finalists the plans they made in creating a bid for hq2 can help their cities gbj smith owns and operates much of crystal city. the stocks to watch on apartment reads here and in new york avalonbay. houston based camden property

trust has big holdings in the d.c. area. 6% of its portfolio in northern virginia alone and residential housing of course will see a boost. northern virginia's median home price, $600,000. that'll likely go up long island city's price higher than that. the big question, will the jobs be split evenly between the two locations. and how many will be moving in and using new space. we'll find out, i guess, right >> before you go, literally in the past week as rumors let's call them or speculation has mounted about these two locations. have there been real estate investors or others who have moved in and just started buying up apartments or other residential real estate around these places >> oh, yeah. we saw it in the apartment reits. last week they've moved higher they've been battered because of higher interest rates. i heard from real estate

refrigeratagents they were getting calls from all sort of people for investing that want to own them. >> flipping scenario >> you don't think of them as nearly as liquid but do we know, have prices spiked i mean, are sellers, you know, raising their prices by 10% or 20% as a function of this? >> well, i wouldn't say that it's 10% or 20%. there was a lot of demand over the weekend. you can expect residential prices to go up from owner occupants as well as those who are landlords renting out properties but northern virginia and new york city have shortage of affordable homes for sales right now. especially here in northern virginia so you're not going to get a lot of smalltime investors coming in to flip on this in some way. you're going to get the big-time investors who have the cash to do something like this, hold, and then rent out. >> diana olick, appreciate it. look forward to the announcement do we know what time it may or may not come today >> reporter: they haven't even

said there's an announcement coming amazon has not confirmed any of this we just have many news sources saying it. >> what about the speculation there might be a third city? >> reporter: no confirmation >> all right thank you. see you soon all right. three quarters of stocks in the technology sector are in correction territory at this point including the so-called faang stocks, all of them. joining us to talk about the slide is dan ives. also ed lee. gentlemen, just getting the news that goldman sachs is cutting its apple iphone estimates in terms of that negative supplier outlook. we're talking about the report yesterday from lamentum. people are assuming that is apple. what do you think about this, dan? are you cutting your numbers or

your expectations based on this? >> i think it's kind of a little overdone in our opinion the read through here from a face recognition perspective, it also could be on some of the ipads as well. net net i think the street right now, you know, is really expecting we could see maybe 205 million units versus where they were at 220. so i think right here what we saw was a bit of an overreaction there's no doubt ever since they pull the metric and ever since lower iphone units, now this is sort of what i view as the straw that broke the camel's back in terms of the bulls viewing that iphone could actually see growth in 2019. >> goldman is cutting its price target on the company's stock to $209 from $222 even that $209 is above where it's trading right now at $193 what are your expectations for the stock? how much of this is baked in at this point >> in our opinion, that's just one where you're seeing a lot of group things here.

once we get through this on the services in terms of where we see this over the next six to nine months, it's going to be a painful hand holding period here but in terms i see still the stock going meanfully higher trading on the lower end of the range. ultima matly i see the multiple increasing >> what do you think of the demand for the new iphone? >> they're getting rid of that metric >> that makes people nervous >> huge. going forward, it makes it that much more difficult to figure out where my estimates are going to land. you'll see more pullback coming from there stop focusing on the hardware. look at the overall business they've been talking about the service as a big part of the business >> is that a fair point? >> it's a fair point, but i don't like having less visibility >> can i ask a philosophical

question if you were going to do this at some point, if you want to move people off of this, do you do it as -- when do you do it? >> there's no good time. you're going to pull the band-aid off and bleed for a little while why did you have to do it at all? that's my question why don't you go on making that part of the report >> that's what drives the company. what if they think that's what wrongly drives the company i guess you're right from the perspective of just transparency if you think it's services, tell us more about the services >> that's the thing. start breaking out the services revenue, right maybe a third of that services revenue which is the most steadiest growing is going to be the stuff that apple has control over, right? the advertising within their app ecosystem, the 30% cut they take on media sales within there. the rest of it comes from all the other sort of apps. >> let me play devil's advocate there. if you've got warren buffett as a new investor and he's not

concerned about these things and that proitsds you cover and he says don't tell people what you're going to earn because this is outside of your control. they don't want you to be telling us about numbers or expectations you might not be able to meet because of forces outside your control >> it's their right to do it you'll see this volatility happening in the meantime. >> it's also the way that it -- we give the streets a heads up in fiscal' 19, we're -- it's the way they did it. >> very abruptly >> that's what you see yesterday. relative to what it would have been >> dan, we've been calling them the faang stocks for a long time jim cramer started that awhile ago. i wanted to know whether he included apple on the get go from this. but i think you say to stop paying attention to the faang stocks because they're not going to move as a group anymore >> you'll see a fork in the road situation because each of them have specific issues

when you look at apple right now in terms as that pulls to more services on the hardware side, that's really going to mean more of a prove me stock. if you look at amazon, that's going to be more on how they value the consumer piece if you look at the other names, look, investors are just fearful about some of the consumer facing names that's where i think the faang names you've got to look at them separately you can look at them as a group, but we're definitely getting to what i view as the seventh inning of that faang trade i think it's dangerous to just buy them as a group given they have certain company-specific issues >> which do you like >> in our opinion apple here at these prices, the risk reward i view as a $5 to $10 downside as long as we get through this iphone cycle and services starts to manifest. this is the one that sticks out here obviously we talk on the aws side for amazon.

that continues to be the core strength part of why they're moving the shadows of the pentagon. which looks to be an aws potential winner on the amazon side >> okay. so what happens next, ed we head into this holiday season we're not going to know exactly how many are bought. but what are we going to be dealing with in the end? >> i'm agreeing with dan here. you have to stop thinking about these faang stocks as a group. i actually think they're different levers pushing on these guys they're completing on cloud services because that's a big part of their business going forward as the internet rises, so does cloud. therefore all these companies have more business to bid on that's a different sort of market pressure than looking at how many -- >> two things we heard yesterday that play into that same thesis. ann winblad said she really likes all of these enterprise

software companies because they are going to continue to see the spend coming from companies. the companies are spending more capex. that's where it's going to be going. and then we also heard yesterday linkedin dan roth talking about job demand lots of areas that had seen very strong growth dropped off other sectors. one was in software. >> what's driving the economy? i mean, it's tech nothing in its services these are the things where the economy is being driven from we're not -- and as much as manufacturing is as huge a part of the economy it's not necessarily the driving part >> and look at alibaba i mean, alibaba, cloud, what's their focus? aws, microsoft that's why right now if you look at who's in the position of strength, he's really the top of the heap right now in the enterprise >> got you all right, dan thank you for coming in. ed lee, great to see you >> always. coming up, boeing reportedly

failed to warn the airline industry and pilots about a potentially dangerous feature in a new flight control system that could have played a role in that deadly crash in malaysia the impact on the stock coming up before we head to break, here's a look at the biggest premarket winners and losers you're watching "squawk box" on cnbc oh good, you're awake! finally. you're still here? come on, denise. we're voya! we stay with you to and through retirement... with solutions to help provide income throughout. i get that voya is with me through retirement, i'm just surprised it means in my kitchen.

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wherever your phone takes you, your wireless bill is about to cost a whole lot less. use less data with a network that automatically connects you to the most wifi hotspots in millions of places and the best 4g lte everywhere else. saving you hundreds of dollars a year. and ask how you get xfinity mobile included with your internet. plus, get $200 back when you when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. welcome back to "squawk box. the futures right now are solidly higher but less so than earlier we were up at 150 the highs of the day. s&p indicated up 15. nasdaq getting a little bit back from yesterday's almost 3% drubbing up 40 points oil prices down again. before coming back a little bit.

>> back above $59. president trump tweeting this morning on trade. france makes excellent wine. so does the u.s. the problem is france makes it very hard for the u.s. to sell its wines into france and charges big tariffs where the u.s. makes it easy for french wines and charges very small tariffs. not fair, must change. i'll talk more about trade at 8:30 eastern saw another tweet from the president which was -- >> i did do. >> -- about, i don't know, the defense of europe and the macron idea for an eu force >> he said something about how they were speaking german. so if you thought he was going to dial it back down and make nice, not the case early this morning. >> no. let's talk corporate stories this morning boeing reportedly did not disclose a possible fault in a flight safety feature that's suspected in the lion air crash.

joining us now to discuss it is the senior research analyst at aerospace and defense at baird peter, this almost seems shocking that they didn't disclose this, no? >> possibly a little bit good morning, andrew i mean, look i think it's not one versus another. it's likely a combination of factors in this unfortunate incident ultimately you'll see more details on training and communication and potentially a software update. but i don't see it going further than that. because i think originally the systems involved here with the 737 previous generation are almost identical to the max. the things that are different, obviously, is there is a different stall protection system here which comes with different procedures >> speak to the liability issue though >> well, that i think is still in play here boeing will work with the safety

investigators on this situation. clearly boeing is covered by these type of events they've been in this business obviously for many decades involving accidents. but the 737 is critical to boeing's entire investment thesis it provides a majority of their profits. and so no question, boeing will work closely with them. >> as you've been speaking, we were showing some really tragic and sad pictures of those that lost their life as a function of all this and i hate to be crass about it given that we are a business channel and we think about business historically after an accident, sometimes you see the stock of an airline or not just an airline but the manufacturer of the airplane take a hit. but i know you've studied this over the years what typicalliy happens? >> there's always a knee jerk reaction and then, you know, we wait for

kind of the information flow to come out people initially will say, well, this comes with bigger engines this aircraft has changed the aerodynamics of the aircraft is that a result of the conditions or was it better training it's too early to say. but historically unless there's been some ground breaking fault in the design, usually we see the manufacturer recover >> has that ever taken place meaning there has been some kind of true design fault that's actually created a real legitimate problem >> you'd have to go back to the macdonald era where they had design changes they needed to -- i think going back to the horizontal stabilizer i think there was a falling accident on the west coast but outside of that, i don't remember anyone. >> peter arment, appreciate it >> you bet

there are a couple more tweet as and the last one happee two minutes ago. make france great again is one that the president just mentioned. but the other ones, he's sort of taking it back a little bit. i don't know whether he felt bad about the one tweet that they'd be speaking german but he said on trade -- no he said the problem emmanuel suffers from a very low approval rating in france 26%. and unemployment rate of almost 10%. he was just trying to get onto another subject. by the way, there is no country more nationalist than france very proud people and rightfully so dot dot dot. then the last one out, make france great again >> that's how you think he's trying to walk it back and be nice he has really low approval ratings. >> the low approval ratings are a function of macron trying to energize the private sector and doing things that -- >> that's not what he said

he said he's just trying to change the isn't. >> yes but they're nationalistic and make france great again. let macron be macron and do what he needs to do lower taxes, less of an entitlement state. >> that would not be my read of those tweets, but -- >> well, he's -- you know. he always gives and takes when he does this sometimes it's tough love. and that's some tough love but supposedly -- >> but it sounds like he's still upset of the comments by macron saying nationalism is the opposite of patriotism >> definitely still upset about that but most people are it's not unusual for citizens to want the best for their country. even if it's, you know, they may not feel quite as strong about wanting every country on the globe to be quite as successful like some people, andrew i'm afraid i'm not allowed -- i didn't know globalists had a dog whistle associated with it

i'm afraid to say anything i didn't know nationalist meant white nationalist either everything you say, it's like -- >> here's something safe to say. when we come bab, more stocks to watch. and later this morning, don't miss larry kudlow. he will be joining "squawk on the street" today at 10:30 a.m. eastern time "squawk box" will be right back.

welcome back to "squawk box," everybody. we've been watching the futures this morning after a rough day for the markets yesterday. right now things are in positive territory, but not nearly as positive as we had been earlier this morning dow yesterday down by 600 points this morning we've been up by almost 150 points in the futures. but right now looks like the dow futures indicated up by just 70 points s&p futures up by 12 nasdaq up by 34. a few analyst calls this morning. comcast being reinstated at overweight at barclays the price target is $44. best buy downgraded to neutral from buy at bank of america merrill lynch. coming up this morning, today's top stories including a trade truce. it could be in the works reports of talks between u.s. and china are resuming we'll get the latest from washington in a minute plus ge announcing it is selling a stake of baker hughes. can the former dow component

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♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center this morning, multiple reports today that the united states and china are resuming talks as they look to cool trade tensions eamon javers joins us live from washington i feel like we've heard this story several time do we believe it this time >> well, becky, let me walk through some of the headlines here reports coming in now from all around the world start with "the wall street journal" then move onto the south china morning post "the wall street journal" reporting this morning that secretary mnuchin and the vice premier of china spoke by phone on friday. the conversation they report did not spark any breakthrough, but they're trying to reach an

accommodation. "wall street journal" concluding that the trump administration remains divided on china trade that is most certainly the case. they're reporting that the vice premier of china is set to visit the united states soon they're also saying that the atmosphere between the united states and china is, quote, much better now that's consistent with expectations as well a lot of people pointing to that g20 meeting at the end of this month beginning december that's when the window might exist for some kind of deal between the united states and china. not clear what that deal would be but it is clear that at least some conversations have restarted behind the scenes. we'll see if that goes anywhere. meanwhile, here's what's up on the rest of the trade agenda a lot of moving parts to keep an eye on there's a regularly trade

meeting at the white house they're going to talk about auto tariffs. they're expecting to get the so-called 232 report at which the administration more broadly is going to make some conclusions not considering there's a decision coming with the president in the oval office this afternoon also on wednesday the eu trade commissioner is meeting with the trade representative in d.c. a lot of moving parts on the trade front. the president's been tweeting furiously this morning on trade and the eu and trade there's a lot on this president's mind his mood seems to be relatively sour based on some of those tweets you saw the france great again tweet. and he's been tweeting about the helicopter in france as well a lot on the president's mind today as he goes into these tariff meetings today. >> joining us now, peter, first

of all give us a quick rundown you founded your company how long ago >> 2004. >> 2004. no other company in your view really does what you do. that is you're fully devoted to helping people navigate what happens in china >> actually, the way we put it is we level the playing field. the goal is i've been having an enjoyable time where everybody has been looking at what to do in china the irony is it's 2018 so this is a statement of fact i get that when i had set up a joint venture in china 15, 16 years ago, the mistakes we made back then because we had no idea what was going on, there was no game plan, you now can go to that you can look for experience. you can find out what worked and what didn't work and not make those mistakes. the reason i'm here in new york, actually, is we have several clients making avoidable costly mistakes that i just can't for

the life of me decide why they would do these sorts of things >> things like what? agreeing to go into a joint venture? i thought you were forced to do that >> no, no. you're not forced. there are a lot of options now there are a lot of elements not being picked up. like, you could set up a foreign enterprise and build it from scratch. fidelity has been successful. >> so why do we hear secretary mnuchin and others saying part of what they want to fight for is not being forced to have these forced ventures and forced transfer of ip. >> because what we're looking at now is these are not mutual refunds. these are for prooit worth but over three years, this is what the argument has been that is going to then trend into wholly foreign owned companies the issue i have with the

mistakes is we still have mistakes tying up with counter parties. they have a typical way of negotiating which is we're going to talk to a dozen different groups so we get the best deal the american wills typically come in and europeans and they'll have basically we want this one partner, like this guy. and they move all negotiating power moving forward >> you're saying that strategy is a failing strategy. >> uh-huh. >> if you're going to walk into china today, you need to do what then >> well, what you need to do is actually have a very clear idea of what you want to achieve over the next five to ten years right now that's not about what you want to do it's how you're going to get it done so the way we phrase it is it's very clear you understand what the optionality is in the market, what you can do. but then it's how do you execute? how do you find the right

people how do you build in the process? how do you import what you do globally into china? that's where things are falling apart. >> falling apart because >> because there's not a lot of real thought going into it it's more of get china done, go do it. then there's not real support for rx a lot of groups now are finally starts to fund it properly you know, to enter china right now, we've got a half dozen groups that invested $27 million to build a asset management in that market. >> given the conversations about trade wars and things like is that, a lot of people say that apple could be considered a proxy for what's going to happen in china does that make sense to you? >> it depends on what regard i mean, you know, in terms of demand or in terms of, you know -- >> in terms of how much is manufactured there, for example. you know, obviously there's

foxconn and those -- and that piece of the business now. they're using the icloud servers in china >> right. >> is that relationship ever becoming more complicated? >> look. i think the apple element and this is outside of my wheel house. what i will say is that i think when if you look at tim cook back in the day when he was running the show as an operating office, he did a great job building it in china i don't think that there was a lot of long-term thought put into it of exactly what they're saying right now we call this the foustian bargain. i'm going to go in because i made a lot of money in china without thinking what does this mean longer term for me? this is coming home to roost right now. >> you think they're going to end up moving their facilities out of china >> i think a lot of firms are going to have a lot of hard discussions that should have happened a long time ago. >> do you think those manufacturing facilities end up moving back to the united states we had the brooks ceo here talking we would go to vietnam

or somewhere else. >> sounds great on paper try to get that to happen. the favorite thing i had that came out this week is foxconn going to wisconsin oh, you don't have enough people we're going to bring the chinese literally in to work in those outlets. that's not going to happen this is a very typical way the chinese have operated globally >> meaning the united states is not going to let them import chinese workers to take the jobs supposed to be going to the american workers which is why they got the tax breaks? >> just the optics alone i don't think that's going to be close to possible. no matter how many actual employees they can find. there's a ground swell in the shift on how to target china everybody like i said has gone through the process for so long without thinking really long-term. now we've got china -- >> peter, are you arguing you with help people maneuver through this system and it doesn't need political change from the heads of state to be talking about this or are you arguing that there are graduations of what you can

do in the existing system? >> well, i can tell you full stop that what i do on a daily basis is help them navigate what is possible. i'm trying to steer so many away from the cliff at the moment because they're hearing all of these negative elements of what's possible. we didn't do this, can't do that what we're trying to say is theis there is a gray area >> if larry page call you tomorrow saying we're thinking of going back to china you would tell him what? >> please don't. >> you'd say please don't. why? >> because the -- where the -- this is just on the i.t. side of it where their own home grown internet is and i deal with the internet there all day every day. they would not be able to achieve what they think they can achieve for the chinese government to have a lot of

demands on them. they wouldn't be able to negotiate from a position of strength so anything would -- they're better off i think sticking to what they do well in other markets they're open to. >> given all the companies you've worked with, some of which have had ip issues and other things, my question to you is actually about huawei and the connection to softbank we've been talking about huawei the telephone operator >> right. >> people have said that huawei is a national security risk not just in china but outside of china. do you think any of these companies coming to the united states, do you think we need to look at them differently >> i think the united states policy needs to look at not just chinese but all foreign tech companies in a similar way i think what's happening right now is just it's a great way to leverage up where president trump is trying to negotiate with the chinese to sort of focus on zte, huawei, and all these other tech companies but bear in mind a lot of the

technology so-called forced transfers over the last decade, i don't know how forced they were these were actual companies that went in and said we're going to do a joint venture with you, here's our technology. the argument we give to people all the time is if you're ios, you don't have to give them your latest version give them version 5.0, not 13.2. there are ways around what the chinese are asking for you can always say no. this is what we tell clients all the time there's a joke that goes along the lines of the chinese will ask the foreigners for everything because they might be dumb enough to give it to them and that's what we're trying to stop groups from doing >> very good peter alexander. you're a busy guy. reporting, doing the china stuff, going to the white house, all that stuff thank you. >> you're very welcome coming up when we return, shares of home depot rising this morning after earnings beating

the street and the company offered an upbeat outlook. we will get an analyst's take next before that break, check on european trading right now you're seeing some green arrows in france, germany red arrows in the uk ayuned you're watching "squawk" on cnbc

welcome back to "squawk box" this morning, everybody. the futures this morning have been in positive territory all through the morning.

s&p futures up by close to 11 points and the nasdaq off by 2.8% yesterday up by 32 points also oil prices have taken an addition aal tumble. yesterday we saw the 11th day in the row, the 11th session in a row oil has closed lower record number of low days. we're off another 85 cents to $59.09 in our headlines this morning, johnson controls is selling its power solutions business to brookfield business partners and other institutional partners that cash transaction is valued at $2.2 billion. among today's top stocks to watch, home depot. the dow component posting better than expected earnings and sale

comps. here to break it down is the managing director at raymond james. it's now off its highs it's come down quite a bit in the premarket. what do you think happened here? >> i think when you look at the detail of the quarter, what you see is a good solid quarter. they beat our estimate by about 9 cents. but below operating profits, you had a big tax. 18 cents versus our estimate and significantly more versus last year's number and when you look at we also had an improvement business business experience and lower shares. below the line, we had more of the beat up than above the line. in addition with the fourth quarter guidance which they raised their own guidance but when you looked at the

projection below the eps of the street i think it implies about $2.11 i think the street is $2.16 or $2.17. we're a little bit below that but above the street consensus but versus the street consensus the new guidance implied is actually below i think all of that has factored into it. there's probably one additional thing investors look at which is the traffic are decelerated from the second quarter but the second quarter benefitted from a tough first quarter. and you look at the 1.4% traffic in the quarter versus the average of the first half, it's 1.1% so i think the stock would actually have a little bit of a second u-turn today. >> the tax improvement helped the bottom line. in terms of comps looking out a year from now, how much harder

is it going to be? >> well, it will be harder this is what i think investors were worried about you saw the stock peak in mid-september and off about 15% going into the print from there, i think what we've seen is suppliers having a tough third quarter raising -- or reducing their own expectations for the fourth quarter that caused us a week or so ago to lower our own numbers as well and i think we're all worried about 2019 we are worried we are seeing slowing. i think one other factor is the chinese tariffs are playing a factor i think you are going to see elevated purchases going into the end of the fourth quarter. that inventory will be bled off in the first quarter of next year, but i think you'll see that happen as well. >> thank you all right. when we return, jim cramer live from the new york stock exchange and here are the futures right now. these are maybe the worst

session -- worst levels we've seen but still green. we'lbeig bk.l rhtac mato you cak 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. this is the ibm blockchain, built for smarter business. built to run on the ibm cloud.

and one additional tweet coming in. president trump tweeting, by the

way, when the helicopter couldn't fly to the first cemetery in france because of almost zero visibility, i suggested driving. secret service said no, too far from the airport and big paris shutdown speech the next day at american cemetery in pouring rain little reported, fake news you asked tom baric about that yesterday. >> good answer. >> a lot of speculation and questions about that >> that's his. >> the shares of ge regaining t it. >> it's an equity analyst.

the downgrade. >> there are plenty of opportunities. there are plenty of opportunities to do that >> there's a cost on our market. >> the financial services. >> jim, you were a little disconsolate yesterday he raised some cash in the stuff that you manage for your charity. we have more work to do, is that your view? >> let's take apple head on. every time someone cuts hand set numbers, it doesn't go down, you'll find a bottom, but that's

kind of where we are we had a downgrade why? because things are weaker. we had an upgrade of nvidia. when that happens we have to continue to cycle through, let all the people who are really scared leave and then we can have an end of year route but we can't have it until everybody has cut numbers and everybody's decided that apple's going to 170, micron's going to 30, best buy going to 50. we have to have all these happen and i'm just waiting for them to happen and then you get a bottom not until all the negativity is priced in. >> those are the main things the vix, do you have a number for the vix? >> i don't know. it went above 25 before it went to 29 i think the problem is it went drip, drip, drip

look, i think it's not 2007. i hear a lot of people say -- we had a guest talking about home depot. that was absolutely right. home depot was not perfect in the end, home depot beat the numbers. one day -- it beat the comp store numbers. that's what i care about one day that will matter not today. >> you see boeing seeing some of that, the latest quotes on boeing are down, probably why the dow has come down quite a bit as well. >> yes look, i just -- i mean, we can talk about -- boeing boeing's a great company you can write about anything look, i think ge comments, i am glad they did this and used ge that was important get it down to 50% raise some capital we have analysts like john saying liquidity, liquidity, liquidity. the only way you can solve the liquidity story is to raise capital. when you raise capital it gets better when it gets better i hope when they get it back to 10 they

issue stock. >> interesting >> they said it's not in the plans but they were pretty careful about how they hedged that. >> nothing is in the plans nothing is in the plans until it's in the plans. >> very quickly, i've been wanting to ask you all day, apple, was that one of your original faang stocks or did we add it in after? >> we added it after we went to faang. i never did that people did that. they lumped it in. faang was interesting because they were all high multiple stocks apple is a low multiple stocks katie literally raised what she thought it could do. when everyone cuts hand sets to the bones and sits down, we haven't got enough downgrades. some people want to say to tim cook, yes, i am, i'm downgrading. we have a couple of downgrades, everybody cuts their hand set number, we find a bottom remember, warren buffet, becky, bought stock in the 170s

well, maybe that's where it has to go, but i get tired of one analyst after another saying the same thing each day. but that's what they keep doing. >> thank you, jim. >> we'll see you in a couple of minutes. should be another interesting session today. up only 35 now coming up also on "squawk" on the street, don't miss larry kudlow live at 10:30 a.m. eastern time. let's see what he can be we'll be right back. ericans 50+g 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 with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for? yes or no?gin. do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks,

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okay, folks. final check on the markets from us dow futures up by 40 points. s&p up by 11 nasdaq up by 32. make sure you join us back here tomorrow right now it's time for "squawk on the street. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintinilla and jim cramer plenty to watch. home depot beats and raises. lame duck session begins in congress reports th