"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site in times square, i'm becky quick along with joe kernen and roandrew ross sorkin we are starting out with crude oil this morning after yesterday's 7% slide in wti. crude oil down 25% as soon as the four-year high hit on october 3rd. look this morning at this point it's up by 12 cents, still sitting at $55 and change. looking at the u.s. equity futures they are indicated higher futures are up

the dow up by 66 points. s&p futures up by 5 points the nasdaq on the flat line. sitting around all these issues. yesterday we were higher as we came in in the morning the dow was down 100 points. s&p off by 4 the nasdaq closed with the smallest move going back since 1980 it was by 0.006 lower. >> why did you look at me? y >> you would have known it >> i lived it. as i pointed out, there are advantages i lived through that fake moon landing. isn't it unbelievable? people think that? >> yeah. >> you can see the nikkei closed up by just over a tenth of a percentage point hang seng was weaker

the shanghai was lower, down 0.85 you can see the pressure that came in on chinese stocks. in europe this morning in early trading, you will see that right now it looks like things are relatively mixed the dax and the cac are lower. we'll hear more about brexit details sometime today and italy and spain both lower italy down by more than 1.1% let's look at treasury yields. yesterday we did see treasury yields moving lower. this morning you can see it's down for the ten-year at 3.136%. >> it's a pivotal moment for brexit and the uk and the eu they have provisionally agreed to the text of a draft divorce agreement. now prime minister theresa may has to sell the deal to uk

lawmakers. wilfred frost will join us at 6:30 to talk about what's in the deal and what comes next theresa may will be speaking at 2:00 p.m. in london. let's look at the british pound. right now it is off just marginally also this soap opera saga going on with boeing new details this morning on safety concerns surrounding boeing's latest 737 aircraft the faa now denying a report that it launched a new probe into the safety procedures on boeing's 737 max jet following the crash of lion air flight in indonesia last month that killed 189 people the "wall street journal" saying the agency opened up a review. the faa says it has not launched a separate probe, and it is working with boeing to evaluate the need for potential soft wear or design changes to the

aircraft as well as updated operating procedures and training investigators are expected to publish a preliminary report on the lion air crash by the end of the month. as a result of these crisscrossing reports, boeing stock fell 2% yesterday. higher in premarket trading this morning. we will talk with gordon bethune in the 8:00 hour i don't know who to believe at this point >> we also will speak with a representative from the allied pilots association, who can tell us more about what pilots think about this what information needs to be passed along all sorts of questions are being raised on whether the faa has given away too much oversight to the manufacturers in terms of what they determine to be important to pass on to some of these companies. and what's in the manual. >> there are four things that had to happen. they went through it and said that's unlikely to happen. but then it happened it seems like it's just a -- it is not

necessarily a problem with the new flight control system. it's just telling everyone sxaktsxak exactly what to do >> this is a feature to keep it from stalling, but the problem is if the pilots didn't know to flip the switch in case this went off, they were getting differing conflicting reports from all of the electronics on board. it happens when you have more sensors running things, more computers running things t takit takes aw control of the pilots. it happened with me last week driving. there was a faulty sensor and i lost control of my power steering >> we don't want to talk about airline crashes. it never happens anymore you hate when we do that >> i do. >> in this country we have to go

back a bit >> 2001. >> it's unbelievable >> a couple months after 9/11 there was one in new york. >> i told you when i grew up i had to walk to school, remember through the snow, uphill, both ways back -- would you like to guess, there was an oil crisis when i first started driving. >> '73 >> '73 prices spiked. would you like to know how they spiked per gallon? >> tell us >> they went from 38 cents to 55 cents a gallon. >> that's too much my grandma remembers when ice cream went from 3 cents to 5 cents. >> i looked back, i thought it was 1.50 when i started driving. 38 cents >> my grandmother tells me stories about the day they moved it from 3 cents to 5 cents for ice cream. >> i didn't even know they had cars when you were born. >> we didn't call them cars. we called them horseless carriages.

couldn't believe it. it's like where -- usually you're staring into a big butt of a horse. >> wow i was thinking more like the flintstones. >> some stocks to watch. snap says the justice department and the s.e.c. are looking into allegations that it misled investors ahead of its ipo last year. the company says it believes the investigation is likely focused on statements it made related to competition. a class action lawsuit claims snap did not reveal how much instagram was hurting its growth prior to the ipo we talked about it i remember at the time instagram, i thought -- i thought it just let you change photographs and stuff. it became a huge deal. a huge social -- >> teens are on it >> my kids still try to get certain levels of likes. all that tilray reporting a surge in revenue but also a wider than

expected loss in the quarter the cannabis producer said the average selling price fell in the quarter as did gross profit margins tilray shares are down this morning but the stock is still up more than 500% since the ipo in june. blue apron is cutting its headcount by 4%. this comes as the meal kit delivery service focuses on its online business. the company reported a narrower quarterly loss, but revenues fell for a sixth straight period as it saw a drop in orders and new subscribers. >> the stock is trading at 1.18. a 4% decline is a big move >> i don't know what the point is to having the -- i don't know what wrong with just having -- >> i think it's supposed to be virtual reality, so it looks cool when you're standing there. >> all right i'm a worker bee

whatever people think is good. when i'm doing it, you know, it would be nice to know if something is down 11%, up 4% what do you think? >> we'll work on the graphics. >> all right >> you're placating me now you won't do anything. >> you're right. you know how this works. >> i will. >> you had the same feeling? >> i generally agree with you on this we don't agree on much >> no, we don't. that's a start >> we found something to unify you two. >> something to build on great idea >> it took six weeks for oil prices to plunge from four-year highs to bear market territory joining us now to talk about that is matt smith we know there's a couple things happening. one is the economy is slowing down around the globe. the other is we're suddenly faced with a bigger supply glut than had been anticipated. what happened yesterday? we saw a 7% decline yesterday when people already knew most of

the factors. was there a technical level hit here >> i think so. we saw oil sell off 11 days prior to yesterday then we saw a drop in below 60 we dropped below the lows made earlier in the year in february on the back of an opec report which showed demand growth is expected to slow down next year. we're just playing this game of trying to catch the falling knife. so at some point we'll level off here it's unprecedented to see the oil market drop 12 consecutive days it's been this supply side factor as well as demand growth concerns that have dropped us this sort of 25% since early october. >> i think it's 28% at this point. is this selloff unwarranted? has it been overdone do you think this is normalizing to take into account what we've seen on both supply and demand

>> in early october there was an expectation that a lot of iran barrels would come off the market so essentially saudi arabia was duped into increasing production so we saw them increasing through september and october. we've seen their exports increasing on the expectation that there would be this supply gap to fill because the u.s. administration would try to reduce those iran exports to zero we see saudi putting more on the market other opec and non-opec members putting oil on to the market because that production cut deal was unwound in june. so we have more supply coming to market then we don't see those iran barrels coming off the market. we see all these waivers coming through. so that left the market unbalanced from the u.s. administration, they played this well.

whether that's intentional or not, they've done a good job of decreasing the oil price because it's been at the expense of some of those relationships there >> the saudis are saying they'll be cutting production, not only for them but doing that for opec at large "a," will that matter? "b," how weakened is the saudi hand right now given the international issues and the khashoggi incident >> so, with "a," yes, they can have that impact we saw how well they've done over the last year and a half, two years in terms of reducing that supply glut the thing is they're the ones that really have to drive that we saw that happen last time around so they have to then go to all these other members of opec, non-opec such as russia and say, look, we asked you to cut. you helped to a certain degree now we're asking you to cut again. that's a big ask at the same time they're the ones that made the sacrifice

last time in cutting production. so they're the ones that will have to do it again. in terms of the international status, really they're still the kingpin in terms of opec they're such a large exporter that they'll be driving the market going forward in terms of being the swing supplier, not only in opec but in the world generally. >> matt, thank you for your time today. >> thank you >> matt smith with clipper data. time for the "squawk" planner. the october read on consumer pries at 8:30 a.m. eastern it will be closely watched because of friday's producer price index. it shows the fastest pace of wholesale inflation since 2012 on today's calendar we'll hear from macy's. that should come before the opening bell after the close we will get results from cisco systems joining us now is steve parker

and jay jacobs which one of you two has the best insight today who wants to start jay, do you have anything thematic or do you have normal stuff? you have anything thematic >> of course >> you just don't brag about it in your title. >> well -- >> you don't know how to answer that let me know. are we in the middle of this correction or looking for a bottom or is it the beginning of something that is really serious because it's forecasting some type of end of cycle action and globally even. we're starting to hear that now. this is the beginning of something. i think if we threw out the last month and we look at where we are today, we look at where we are with valuations, where we are with the markets, the markets are appropriately priced they were probably too expensive a few months ago now you have rising risks with rising u.s. dollar, rising interest rates. the trade war going on, and that

is making people rethink where should appropriate val yauation be >> we were overvalued then before >> yeah. >> because earnings have continued to go up, we've come down so things are cheaper than they were on a relative basis six months ago so in that respect, it's a positive we built a bit of a base >> any time you see a rally like we have, you need to let off some steam >> so there's not an air pocket underneath it that there may have been before >> no. we see this more as a recalibration of markets >> steven, sense you are thematic, a lot of your comments today have to do with brexit it's front and center with what's happening any impact on global markets that we should be ready for based on what happened >> clearly there will be an impact on global markets i don't know that we'll see that in the near-term this is step one in a multi step

process. based on the lack of reaction to a deal in construct, that tells you investors are still skeptical and they want to see this get through parliament. if that happens, that's clearly a positive, not because it necessarily changes the fundamental course for the uk and europe but it removes a big uncertainty. investors have been skittish around europe and the uk removing that prospect of a hard brexit if we get there, it will be a clear positive >> oil have been on our lips since it started -- actually, it was on before then as it was going up it was on our lips going up and down either of you have a different than consensus view on this? is it oversupply >> in some sense oil markets are incredibly simple. >> really? but that makes it complicated because i wanted to know if it's

supply or demand >> this is a supply issue. you see demand expectations coming down in the oil markets the real reason is that opec started increasing output. u.s. output growth has been extraordinary, you have an oversupplied market again. >> good or bad for the stock market >> good for consumers. this could be another tailwind heading into the holiday season. it will be bad for energy stocks >> we think this is a tactical opportunity to be lookingat opportunities within energy stocks the concerns around the demand piece of it, i think they are overdone demand in the oil markets tends to be sticky this supply shock we're seeing is going to rebalance itself out. at the same time if you listen to what energy producers were saying during q3 earnings they seem to have found a discipline that investors have been looking for basically forever. if they can have a for shareholder friendly mindset, make it more about returns than production goals, we think this is an opportunity for tactical investors to be buying enp

stocks >> both of these dudes have the hipster beards i would like to do a side by side twitter thing and have people vote. >> who wears it better >> look at his you have a fancy thing that's perfect right? how do you do that is it an instrument? >> just so you know, these guys are both jealous >> we can't do it. i get the salt and pepper look but that's -- is this -- >> it's movember >> next year next year. >> do we catch you on the perfect day? >> this is high maintenance. >> it is this takes a while >> it almost looks drawn on. no offense, steven >> i have three kids under four. this is the best i can do. >> you just get up, i didn't sleep at all i'm going in like this >> you have three kids under four >> i do. >> unblooviblelievable. >> and you're here this morning.

>> a grandfather had three grandkids in ten days. i couldn't figure it out >> you couldn't figure it out? >> it was a set of twins thanks, guys when we come back, the feld family is out of the circus business but is still betting big on live entertainment. today is the grand opening of dreamworks trolls right here in new york we'll give you a tour and tell you what to expect next. and later, the ceo of lending tree will be here to talk to you about the impact of rising rates on mortgages. right now, as we go to break, the winners and losers on the dow. ♪

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welcome back for our next guest entertainment is a family affair and they mean business it's time to welcome nicole feld and kenneth feld today is the grand opening of dreamworks trolls, the experience in new york city. it's a partnership with nbc universal. thank you very much for joining us today it's great to see both of you. >> thank you great to be here >> trolls, we know all about so many feld entertainment things out there before this is brand-new. why trolls this is a little different >> okay. so it is very different for us in some ways it is a fully immersive walk through experience for the whole family. it's rating on 57th street you walk in and you're transported into the world of trolls it's physical things, tactile things for kids to do.

you can walk out of there and you'll look like a troll you get to meet papi, the big payoff nicole can get into details of it. >> it's a partnership between feld entertainment and nbc universal. it is a walk through play zone filled with all kinds of troll tacti tactiles, kids can get a full troll transformation they collect memory mementos, they enjoy scrapbooking which is innate to the trolls film and to papi >> but it's not a show what i'm used to getting from you guy suys is a sitdown experience, a show what happened? >> this seemed to be a perfected fit with the brand when nbc dreamworks came to us saying they wanted to do something different with trolls, this seemed like a natural extension of the brand kids are playing with trolls everything is about happiness

and color. textures this kind of experience felt like the right way to naturally extend the trolls franchise. >> this seems to be a trend of these experiential places. it's almost like the new museum. some of them are pop-ups some of them are permanent is this a permanent space? >> we're on sale through may >> would you stay there longer if -- >> we will probably stay longer. but it is not permanent per se it will be here for a year, year and a half, whatever it is and for us, it was a great experience so that we could learn and then as you know we move shows all over the world constantly >> will this one will be moving? >> there's a lot of spaces available around the country and around the world so we have the ability to adapt this to move it and maybe it goes to houston for two months

someplace for three months what are the economics of this kind of business for those who are thinking about getting into this space relative to the circus business? >> well, the circus was 146-year-old business model. >> of course >> i think it's quite -- it's quite different. what we had to figure out was the whole throughput so we can get basically 60 people everybody 15 minutes through there. it's time tickets. we have a 47 acre campus down in florida where we set the whole thing up and we tested it. we have 600 associates, they bring their families so we have figured out the proof of concept down there, installed it up here we're vertically integrated. we have a lot of economies to scale when we do these things. soup to nuts, we put this

together and i think it really goes to a different business model. but it definitely can work and i think you could take this around the world and there are other ips that people know right away like trolls, they want to come we've been open, soft opening since october 22nd we open officially today the response has been extraordinary. >> ken, nicole, thank you both for joining us we appreciate your time. >> she's totally got a troll thing going on >> kenneth and nicole feld and it makes noise >> we'll have to take the sorkin family to see trolls >> something about becky >> yeah. coming up when we return, the ceo of lending tree is here to talk about rising interest rates. the impact to the housing market he has an inside look at the latest trends for borrowers including the highest average rate for the 30-year mortgage

since 2011 as we head to break, a 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. u.s. equity futures at this hour have been stronger th points. that's down from where we started the hour the nasdaq is in negative territory. down close to 11 points. we're watching crude oil prices. crude oil down 7% yesterday. 12th day in a row that it traded lower. this morning after looking higher, it's down by 9 cents to $55.60 a barrel. uk prime minister theresa may is holding a cabinet meeting today in what could be the most privatal moment fpivotal moment since brexit itself. i will look at you wilf and see if i can detect how you're feeling about this

if it was a hard brexit, i think you would be depressed you are okay because it's a soft brexit >> we don't know what it will be yet, joe, a lot rests on today my mood is just excited. it's a great story for politics, for markets, for us at cnbc. so yesterday prime minister prem was able to announce that the uk and eu provisionally agreed to a brexit withdrawal treaty sterling rallied yesterday on that news. significant hurdles remain most notably selling this deal at home in the uk. today a cabinet meeting at 9:00 a.m. is a crucial test despite yesterday's jump in sterling, it is still in the middle of its four-month range 1.27 to the low side, 1.32 to the high side. if today's cabinet meeting goes well for theresa may, it could lead us to get towards the top of that range or break out of it if it goes badly it could fall below the amount what would badly look like theresa may will want to try to

avoid any resignations whatsoever but she may be able to survive if there's one or two. marlee if it's the junior ministers who have already made noises. she would struggle to survive resignations from raab, gove, javid and hunt these are senior ministers who are meant to be her allies it's probably the biggest single test for brexit since the vote itself and for may's premiership today. even if it goes well, there would be another test, that would be the parliamentary vote. and i think that's why we're seeing sterling today slip about half a percent the noises from all sides, whether it's the brexiteers outside her cabinet, the northern irish mps, the labor party, they've been negative overnight. that's why we see the slip back of a half percent so far today joe? >> been a long time coming

not over yet you have your finger on the pulse, right >> loss more to come, but this is a big test for her. i think it would be a defining moment for her premiership if it goes badly if it goes well, not quite as defining because there's still one or two more hurdles to come. >> i don't get to see you as much as before, wilf i miss our -- >> i miss it greatly good to see you on "fast money" early this week. >> have you seen -- excuse me for one second i promise it will be two seconds. have you seen this bodyguard on netflix? >> it's good >> rob stark >> it's good and it's got lots of undertones of current things going on >> that's what i mean. i'm through about four of them i was a bit shocked that a couple of things that happened in the last one. >> i watched it three or four months ago >> now you're just -- >> it was on a bbc version

>> you're way ahead of me. >> no, it's really good. i agree. i just started the new "house of cards. lots of politicaldramas. always the best. except the reality political drama. >> on both sides of the lapt atlantic >> he will reportedly be the new bond if not you. >> i'm fighting him for it >> you are he's not very tall you got it there, my friend. thank you. >> good show most popular show in the uk last year >> is that true? >> yeah. >> finally -- sooner or later everything finally >> let's talk lending. if you're looking for a mortgage we have the guy to talk to lending broker lending tree saying the refinancing pool is the smallest it's been since 2008 here to talk about the current mortgage rates and the trends is

doug lebda let's pretend i'm buying a home this week. i need to get a mortgage >> how is your credit score? my credit score is fine. my question is -- i want to get a 30-year mortgage, do i want to get some arm situation in this environment? do i do a 15-year mortgage >> i always think consumer debt for you guys is like corporate debt how long do you want to keep your loan? how long do you want to live in your house if you want to live in it five years, get a five-year arm if it's 30 years, get a 30-year fixed. >> if it's 30 years, five or ten years ago you would have been better getting a five-year arm and then switch to a fixed >> exactly

>> how do you play this? >> you can't predict mortgage rates will do what they're going to do. >> you're here to predict. that's why we have you >> in general they're low, but the great thing about the mortgage business -- this is why our business is not indexed to mortgages, rates move up and down refinancing comes and goes what you can do today is comparison shopping. we're seeing right now the spread between the low and the high from any individual borrower is 60 basis points. so $100 a month on a $300,000 house by comparison shopping that you can save. the refinancing market is the smallest in years. >> it is there's only 1.5 million borrowers in the united states that can benefit from an actual lower wait what you can do is refinance into what's called a cash out. you can cash out money from your home and pay off credit cards. so we see people all the time that will take out a loan, pay off credit cars, consolidate

debts. credit score goes up then you can refinance >> then you're taking unsecured debt and securing it if you don't pay it off, you lose your house. >> certainly that's going to be a concern of people. obviously if you're working with your down payment, et cetera, then that's okay but there are a lot of people doing it you have to make sure you use smart debt, not dumb debt make sure you don't get overextended the neat thing we're seeing now is you can improve your credit score by consolidating other loans. that resets your picture >> what is the best rate you can get for joe, super jumbo for joe? 30-year fixed. >> joe's probably 9%, 10% i'm guessing >> 9%, 10% interest? >> i'm kidding >> oh. >> depends on your credit score. >> the average on a 30-year now is over 5%, right? >> everybody is over 5% for 30-year fixed. >> what does that mean in terms of its effected on the housing

market historically over 5% would not be a big deal, but if you're looking at how that compares over the last ten years, it can be sticker shock >> we've seen the rate of change makes a difference clearly as rates are going up it will impact affordability. affordability is still at okay levels housing prices have also gone up for us, mortgage is only about 20 prgs of o 20% of our business. the housing market and interest rates are tied in. >> what kinds of crazy promotions do you see people doing? banks are saying if you move 200,000 here, $500,000 here -- some of these are move it over and six months later you can take it right back, which makes no sense to me then they're offing insane rates. >> banks and lenders will always do what makes sense at the moment we actually bought a business a couple months ago called

depositaccounts.com. it comparison shops for deposits if you want to open a cd, checking account and the biz usiness is up 100% the last couple of quarters because you can save money doing that you never know what an individual bank will do at an individual time. the good news is they're always going to vary. if you shop around, you can find -- >> usually the best deals are ones that require you to change your direct deposit, which is a complete pain. >> the reason for that is that banks are hoping that you'll stick. >> all right at the same time consumers want to comparison shop our business is good for banks but also good for the consumer >> are you expecting a real downturn where people will start defaulting you look at the big cities where prices have come down. they're still way up from where they used to >> i was living in new york when the last crisis happened so i'm not -- i can't predict it

but i think it feels like we're okay >> okay. doug, thank you. >> thank you coming up, opportunity from all this volatility. we'll get some investment ideas from the energy sector that could benefit from lower crude prices later senator rob portman will talk trade, the economy and fallout from the midterm elections. stay tuned, you're watching "squawk box" on cnbc

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shelves in an effort to reduce use by kids and teens. the company will continue to sell tobacco, mint and menthol flavors. juul will halt the fruity flavors until buyers can be confirmed they're 21 years old the fda has threatened to crack down on e-cigarette companies unless they find a way to halt the rise of the popularity of their products when it comes to kids and teens the fda has been harsh in its

pushing of this. we talked to scott gottlieb several times about this the fda asha raiding juul earlir this year to look into this. and wework has secured funding from softbank. the value of the company now 45 billion dollars. wework announced a 5$500 million funding round in july which included softbank. in october there were talks that softbank would buy a majority stake in wework. a lot of real estate folks have been waiting for this company to fail i actually made an argument in the column yesterday that weworks is now almost too big to fail they're the largest tenant in new york, london and washington, d.c. when and if these long-term leases they have with these short-term customers go bust,

there was also the view that the landlords will kick out weworks. i don't think that's the case. the landlords will turn around and the commercial real estate value would plummet if they kick them out there's been a lot of talk about what happens in weworks in a downturn >> we talked with sam zell about this >> i think i was traveling >> you were out. wework is in an interesting position he said the first time he remembered a wework like business was in the 1950s. he watched it happen again and again. every cycle there's been, they fail and they are the margin buyers these are the guys in an up market -- >> it works in an up market. >> in the down market they are the first ones to go we did have a conversation with zell about it. >> it's a fascinating one. a lot of people are waiting, licking their lips hoping they

fail i'm now more and more convinced, also with the banking of softbank, given the cash they have, they might be able to deal with a downturn a way regis could not. when we come back, oil prices plummeting, but volatility means opportunity we'll talk to portfolio manager bill costello. he has a list of energy sector stocks he thinks you should be buying 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. at&t provides edge-to-edge intelligence.

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♪ prices tumbling to lows. westwood funds manager bill westphal here. we have you here to talk about oil and natural gas in general is that right? and you're ready to do that? >> absolutely. so i co-covered the energy space but i cover all capsizes

it's on the management side i'm on the small caps. >> so there's opportunities here and so there are some stocks that you like as far as -- we were going to promise some that you don't like but what you're really saying is the whole universe of companies that are overleveraged are the ones you're worried about because they have trouble. >> two things going on the business itself inherently has the leverage to oil prices so you have that on the downside as we sit today. if you combine that with financial leverage, it's a recipe for disaster. >> do you have any that are the worst? do you have a couple that are -- i don't know why i want to do the worst. but are there any that are over-leveraged >> there's definitely a few out there. but given our -- >> you're not buying those >> right given our quality bias and everything, we just avoid those and stay away from them. we don't fish in that universe we don't short anything. other than that, those would

have been the candidates to pick >> but in large cap, i'm going to start with this one because i like the symbol. remember in the old days, it was soda and other things. this is diamondback energy symbol fang, because of rattlesnakes right? >> exactly >> because they own the rights to viper >> that's cool too that symbol is vonm. >> this has nothing to do with technology obviously >> maybe it's just been sold off like the technology stocks >> maybe there's only one "a" here. diamondback energy and pioneer natural resources are your two big cap picks. you figure both are where you buy them right now >> absolutely. we think the pullback in oil prices, i won't say it's been overdone there's some fundamental reasons why it has happened. and your earlier guest had alluded to them. at this level, we think those stocks are discounting oil in

the mid-40 range and so we think just to get to the current price level, there's at least 20%, 25% upside for the stocks to discount that value. longer term, we see oil prices settling in the 60s. we think the stocks have tremendous upside. >> all right are they all -- are you just specific fundamentals to any of those individually or those are the small caps you like in this arena >> those are the ones we like in this arena it's just not an oil bet really there's specific things going on fundamentally that these companies are doing. >> in each one of them >> in each one of them in cowan they had a great quarter. they raised their guidance they're going to see cash flow neutrality next year which is something we like and then from then on we should

be able to generate cash wpx was a company that used to be in 12 basins. they've narrowed it down to two. so they're really focused. they're really driving results it's one of the best management teams in the business. they were a little bit over-leveraged they've gotten down leveraging in an area where we're comfortable with it. and they should generate free cash flow next year. centennial is different. they're a faster growing company. they won't generate the free cash flow. they're run by resources and took it from a small cap when i owned it we can rep llicate that in the personalian. >> thanks. westwood funds portfolio manager. born and raised in boston. i didn't notice that couldn't tell. we have a big show ahead make money in media titeacva

michael wolf will join us. former president of mtv. back in a minute numbers to examine investment opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence.

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volatility is back investors closely watching the price of crude and awaiting inflation data what you need to know ahead of theopening bell. beware the next smart device activist ceo says as ai gets sma smarter, your privacy is at risk amazon has hundreds of cities feeling lonely this morning. as the second hour of "squawk box" begins right now. ♪

live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin futures now just barely positive the nasdaq which has been the most problematic is now negative dow indicated up 16. was up earlier s&p flat lining. andrew, it's time for the big three stoisries exactly three. >> here's the top one. crude sliding to lowest level since december of last year. two on the list, a big moment for the uk and european union. they have now reached a provisional agreement but big

hurdles do remain. and three, boeing having a tough morning. the latest on a potential flight has around and reaction from a pilot straight ahead we'll tell you what else is in our headlines at this hour. the white house will be holding off on opposing tariffs. at least for now after the president met with his trade team at the white house. the president had reportedly threatened to impose a 25% tariff on all four snap says it believes the investigation is probably focused on statements it made related to competition the class action lawsuit claims that snap did not reveal how much instagram was hurting its growth and a read on consumer prices at 8:30 eastern time. that number will be watched closely after friday's producer

price index showed the wholesale inflation since 2012 the price of oil in focus. investors want to know about the differencein crude prices and equities mike santoli is here with more. >> wish we had an answer because the relationship kind of moves around a little bit. i think it was more of a kind of clear net positive for stocks in the economy when oil prices went down >> tax cut >> it was considered to be, yes, a tax cut. i think the move we had recently, one of the biggest recent sasset markets, that's unnerving. traders and investors say what's going on, how many people could get it so wrong? also the effects on the dollar on capital spending expectations and on credit. because they are highly leveraged. all those things mean that it's actually been a little more positive for stocks when oil prices than it used to be before that. >> what percentage of the s&p is it

with how much the companies go up at about 6% there was a point not too long ago. >> absolutely. yeah so it's not so much the stocks are driving the overall index. it's kind of people asking what it means >> what do you think i mean, we've talked about it a lot lately is it an oversupply or weakness in demand? >> pure supply near term oversupply of the market, that's not a terrible thing futures curve is not saying there's going to be a longer term collapse. that you're not seeing demand go down the issue is the dollar is strong right now so it's not as if -- if anything it should relieve pressure on emerging markets which is a point for the global investors, right? so for awhile, with oil high and the dollar high, it's really expensive in emerging markets. >> let's say you were a worry wort and you saw the market

break as oil ruz breaking. as wesh at 3.7% unemployment wouldn't you worry there's some demand side of it we're not taking into account? >> yes you're asking the question you have to ask the question, i think. >> you wouldn't know until -- you don't know until you know. >> you don't know. it's not showing up much in other places >> cramer seems to be able to find places. >> yeah. companies are able to kind of isolate. in where the consensus thinking we're late in the cycle but nowhere near the end of the cycle. >> no. how close you are to the end is like the whole trade right now for everything and i do think that's why it's causing some anxiety >> all right let's bring in chief investment strategist at janney and here on set we have chief investment officer of merrill lynch and u.s. trust i think -- did i get switched

over i have a bank of america account and then merrill how much money do you have to get to be in u.s. trust? >> more than you have. >> yeah, it's probably not me. >> well, it's about $3 million and up >> oh, it's not me so that's important. you're an important guy. do you have an answer or at least some thoughts about end of cycle demand being part of the equation with oil? the stock market break where are we >> we have some thoughts answers are opinions, in my opinion. but michael brought up a, actually, the easy way to think about it how far away from the end of the cycle are we it runs the full gamut right now there's a growth scare. cyclicly speaking, everyone thinks there's a growth scare coming next year or close to where we are today relatively speaking, is it a hard landing

are we going back to trend growth below trend growth think 6% or higher if that is the case, the stock market is discounting something below that right now we think it's gone too far at the lows in red october. right now it's trying to find its way. it's looking at oil prices it's trying to figure out if that is the growth scare it's telling us the rolling bear markets we had overseas, is that coming to the united states? so many questions right now. but there's two big answers that will help alleviate some of this growth scare the first one is we have to have a de-escalation with china and the u.s. some are looking for a long-term view it can't happen. >> if that's the most important thing, how come all of the happy talks surrounding the negotiation -- >> they are looking for some kind of concrete sign that says, okay we're going to meet at the g20

we're going to get into next year and it's a short-term solution overall. but it's going to alleviate what some of the companies are seeing >> or keep those tariffs from going to 25% >> that's absolutely right number two, the fed has to get a little bit more dovish at least in communication. >> how much of this was driven in yesterday by what seemed like a public spat between navarro and kudlow which i thought was shocking in terms of the comments that kudlow made about navarro. >> it seems like there's a lot of that has been going on the last few years generally speaking i think investors are used to that but it's going to be expected particularly since what we saw in the elections recently. >> if nothing else, it served to reinforce the market's idea there isn't a coherent plan of attack for the negotiations. >> although ben white said this morning and i agree with him, that larry kudlow had already consulted with the president

about it it sounded like the -- dow goes down 300 points. so that market is saying, okay, fine show me when the market's had a great day. and we hear about substantive talks that we can start pricing. >> all right let's get to mark. we're up here in the cold and he must be good at what he does he's down in naples. so probably have a lot of money. where are you on all this late cycle, china, any of this. do you agree >> first of all, let's say we're happy to take your account at janney montgomery scott. >> all right good firm. a i'll call you after the show >> excellent no, besides that, we're generally in the consensus which is a bit worrisome but sometimes the consensus is right. we do believe the u.s. economy is on clear footing.

but i don't think the market necessarily needs to be worried about a global slowdown. it's occurring i mean, if you look at the jpmorgan reading, it's been down nine out of the ten. in 2017 it's clearly at lows and indicative of non-equity markets falling. really the linchpin there is china. once again it drives 33% of the global growth impulse, emerging markets. together that's almost 80% since they do more amongst themselves than u.s. and europe, making non-u.s. growth, it's hinged upon china's ability or their desire to restimulate in a way more significant than what we've seen so far. we think it's safer to keep our money invested here in the united states at the moment. and like your panelist had talked about, oil prices we think are a bit acting

idiosyncratically. we think demand is still sufficiently large to warrant higher prices. but at the same time, it became a very crowded trade that everybody expected a retaliatory response from iran which we haven't seen develop so far. it's been relatively benign on that front and the waivers given to eight countries meant the abundance of supply we've been grappling with is only to worsen before it gets better i think oil is far oversold. but beyond that, it's going to be a function of whether we can see some supply taking off from the market from opec 2.0 going forward. >> okay. chris of merrill lynch sort of uppity money manager and very egalitarian mark who is willing to take me on at janney montgomery i'll just tell you something i read yesterday, sorkin how's your mood today? >> my mood i'm in a good mood feeling good >> he's going to try and stop that >> all right >> i'm going to put you in the

best mood of your life did you read the axios piece yesterday? >> i read all of them. which with un? >> about the doomsday scenario for trump in 2020. >> i did read that piece >> so you're already in a good mood i read that and it's like, holy moly you should see this. >> i didn't see it >> the consensus is he's got a really good chance at re-election. well, once you get through with the investigations from the democratic house, you throw in the suburban vote trends that we just saw, and you extrapolate that to pennsylvania and wisconsin and other places and then the end of the economic cycle and the end of the stock market boom. all happens right before 2020 and it's just, like, going to be an uphill slog like you've never believed you could probably elect -- hell, you might as well run hillary again. >> did you read the piece? hillary 4.0? >> no. she's going back to the hillary health care days of 19 -- she's tried everything

but maybe that will work bloomberg. your guy -- we're playing this for you now. now you're shiny happy people. ♪ he walked in here bouncing >> trust me, it's not about that piece. >> what was it about >> seeing you. >> okay. >> or the coffee when we come back, the next terrifying smart device that people will use everywhere activate ceo michael wolf joins us to talk about it. and later, boeing in focus that stock taking a hit after a safety feature linked to a deadly crash problem might not have been disclosed. we have reaction from a pilot who says boeing did a bad job about providing information about the safety feature that interview is straight ahead. stay tuned you are watching "squawk box" right here on cnbc xfinity mobile is a new wireless network

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the screen, if we could, folks maybe we can't we will try in just a minute >> we have seen mixed results. dow still implied higher we've seen the nasdaq and s&p turn down in the half hour >> thank you finish that report without having to look at the screen >> it's in the corner down there. >> oh, you're looking at the corner i wanted to show this screen >> there you go. >> you're in a very good mood. i'm glad >> much easier to see. dow jones looks like it would open 43 points higher. meantime, every year consulting firm activate releases a report on technology innovation and industry dynamics to predict what's next for tech and media. joining us now with predictions, michael wolf ceo and cofounder of activate. good morning to you. >> morning >> i got a chance to look through the report which i know you talk about every year at the big conference help us understand this. you start with the prediction that in media and tech, that the

business is going to grow by approximately $340 billion, which outstrips gdp in such a meaningful way why? >> there are just so many new revenue streams coming into the business if yo ku look at over the next three years, e-commerce globally is going to at least double from $3 trillion to $6 trillion there are a whole bunch of new businesses coming online for example, sports gambling in the next four years. so there are so many new revenue streams in this business doesn't necessarily mean it's going to the biggest companies, but there's going to be a lot more money flowing into tech and media. >> just take the tech piece out for a second i want to talk about media for a second part of your premise relates to subscription businesses, no? the netflix and hulus of the like also publications all of which are throwing up pay walls and

more and more people are having to subscribe to get to that content. my question is isn't there an upper limit where you start to push on the edge and consumers say i can't do this anymore. >> so far it's not only not happening, but people find there are other things they're going to pay for we project there are going to be video games subscriptions. that the business will double in the next four years. there are so many ways people are going to be paying for broadband access and 5g. there are so many ways people are going to pay for tech and media. if you look at what a huge part of the average consumers' lives tech and media plays so at the end of the day, they're going to continue to subscribe. and they're going to continue to pay. >> my question then is who's the loser? this is discretionary spending for most people. if they're spending it on

subscriptions for video game services and netflix and hulu and newspaper subscriptions and 5g, the money's got to come from somewhere. who's the loser? >> i don't think there is a loser. i think that in a lot of cases, people are allocating their spend. but from other things in their lives. it's mainly going to be consumer products it's other things like that. it may be going out to restaurants because we're finding that people's tech and media time is actually going up. we're forecasting that people are going to spend another 11 minutes a day with entertainment or tech. >> michael, just quickly i hadn't thought of it until andrew posed that question but we've been talking about the potential for late cycle and how that worries a lot of market watchers and investors what about in this scenario, too, right now people have a lot of discretionary spending. but if we head into a downturn, what happens what would go first? in terms of what entertainment they're paying for

>> we've never seen this never been a cyclical downturn in terms of the amount of money people are paying for subscriptions. whether it was back in the old days whether it was movie theaters or cable. we've seen it at the edge. but for the most part, people continue to pay for tech and media. >> you also talk about the smart camera finally maturing to a point where it's so meaningful in our lives. what do you mean by that >> we're going to be at a point where everybody is going to have a lot more smart cameras in their lives. the smart cameras have got a lot -- the intelligence, the visual intelligence has got a lot better their networked together now there's a bunch of concepts. that's enabled by concept. you look at the ring cam, people are putting them not just at their front door but at the back door and around their houses cameras on cars. we forecast that the average american is going to have 12

cameras in the next 4 years. >> all of the things you talked about last night with this presentation, what is the one upside surprise? you have predicted lots of things by the way, over the years. he was the first person to tell me to get into bitcoin this was probably 2012, '13. then he said that "black panther" was going to be a huge hit. >> give us another tip >> give us one more big tip this morning. >> there are a couple things that are going to happen in the next couple years. one is i think we'll see podcasting, not only is it going to continue to take off but it's going to be a business right now it's not really a business we're going to see one of the major tech companies create the youtube for podcasting i also think we're going to see -- we're going to see -- it's not just more cameras in people's lives i think we're going to see the utility of cameras so if the last wave of home devices was the speaker and it was voice, the next wave is vision so if we had talked about this

five years ago, nobody would have imagined there would have been a home speaker in everybody's houses i think everyone is going to get very comfortable, the functionality. >> michael wolf, ceo of activate thanks, man. see you soon >> thank you when we come back, we have some stocks to watch ahead of the opening on wall street plus what did boeing know about a safety feature and were pilots made aware we will speak to an american airlines pilot "squawk box" will be right back. broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!? different kind of sick. if i can't work after surgery, how am i gonna pay my rent?

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simulate how self-driving cars would behave and would eventually switch to automated vehicles which is, i can't imagine. i don't know what my dogs are going to do. if a car comes up with no one driving it and , do they go nut still? do you go out -- >> do you greet the car? >> do you open the door, get your stuff and the car drives off. >> you're not going to wave at it >> okay. but you might, right no okay you just take it out >> take it out and go. >> probably say something too. thank you. huh? that guy died. hal died >> i heard the actor who voiced hal by the way, he was -- he swapped in late. he was not the original voice when they started making that film >> i can't imagine it without that voice when we come back, boeing

shares under pressure. we're going to talk about a story that a design change might have played a role in a deadly crash in indonesia last month. we'll get the latest and speak to an american airlines pilot who actually flies the 737 max and we are watching crude prices this morning yesterday's dive weighing on equities as well this morning you see wti up by about 43 cents right now earlier it was down by 8 or 9 cents. we'll keep watching this just above $56 something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year. right before our eyes, aging is unleashing exponential growth... ...in every industry. are you ready? we are. a-a-r-p is teaming up with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for?

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good morning welcome back to "squawk box" hoar here on cnbc the number of people filing mortgages fell in the last week. rising interest rates amid stock market volatility to blame plus private money managers are calling on the firearm

industry to accept new princi e principles on gun safety california state teachers retirement system is among those signing the statement today. and calstirs cio is going to join "squawk on the street" to talk about it. it's an important consortium bloomingdale's starting to sell high end appliances ahead of the holidays. the program will be tested at its flagship store in new york they will then decide whether to expand to other stores. the faa is designing a report that it's launched a new probe into safety procedures on that 737 max jet made by boeing. this is after the crash of a lion air flight in indonesia last month killed 189 people. phil lebeau joins us now with more wanted to talk to you about this yesterday, phil, but you were in the tesla factory. glad we have you now

what's up? >> i think the question remains what is boeing telling operators when it comes to the 737 max 8 you talk about the faa denying there is a secondary probe, if you will we should point out that the faa continues to look into the circumstances regarding the lion air crash. the software for the beginning or the liftoff, if you will, for the max 8, that's the issue here in terms of whether the procedures that pilots have to follow, whether they were fully conveyed we have heard from a number of the pilots unions. they say, no, boeing did not tell us everything in advance like they should have in the changes in procedures. especially in certain situations boeing maintains that it has a safe plane here. and that these 737 max 8s are safe planes, safe to fly there are about 240 of them in service around the world boeing issuing a statement late yesterday saying while we can't discuss specifics of an ongoing

investigation, we have provided two updates to our operators around the world that re-emphasize existing procedures for these situations as you take a look at shares of boeing, keep in mind this is one of those situations where boeing says, look, the procedures that we have outlined for our operators and have reiterated make these planes safe to fly, make it clear to pilots how to handle a particular situation during takeoff where there apparently was an issue that's still under investigation with lion air whether or not some software contributed to a steep nose dive with that plane. but there's no doubt these shares have been under a little bit of pressure. particularly over the last week and a half as questions have come up with pilots unions, guys, where the pilots unions have come out and said, nope they didn't tell us. they did not fully brief us on what procedures need to be followed within the cockpit if we encounter this situation which by the way is not like

i'll do this, i'll do that it's a quick decision that needs to be made by these pilots i know you're going to be talking to a pilot here who flies the 737. so this is a developing story, but at this point the faa is saying no secondary probe has been launched. >> all right thank you very much. we are going to be talking more about this right now with a pilot. let's get his reaction to all of this captain dennis tasier is a pilot with american airlines captain, we want to thank you for being with us today. >> thank you it's a pleasure. >> just to give people some information about your experience, you've been a pilot for 32 years you've been with american airlines for the last 26 years you have ten years experience with the 737 you fly the 737 max right now. you had a visceral reaction when you were reading "the wall street journal." what happened? what did you see >> well, frankly "the wall street journal," a high ranking boeing official said they had made a decision to not disclose

information about a new system phil talked about. due to the fact they assumed that the average pilot would be inundated with this information and they just thought it wasn't appropriate. that's not only professionally insulting, it's a little bit ethically insulting. that's okay because safety culture has many layers in it. and now that information has been provided to us. and we're digesting it i saw in t"the new york times" report that we're starting to learn more about this. this may have been one of the issues that needs to be looked at closer. the good news is and i want to make clear that that 737, the previous version and the max, they're a safe aircraft. we fly them every day and our families are on them what makes it safer today is now we know more about the system.

that's what this is all about. >> i mean, that's very interesting. it's a very fine line and very important distinctions that you are making you do feel like these are safe aircraft you do fly them every day and you fly your family on these flights too. what would you describe overall? because there are a lot of people just trying to understand what this means. technically it is complicated. what kind of things do you normally hear from boeing or other manufacturers about the planes you fly and do you feel like there has been some sort of a problem in the information flow >> o obviously there's a problem when they said they chose not to disclose this information. all the pilots, we want information about our aircraft that's our obligation and calling as professional pilots so someone choosing that they don't need to know that is not part of a safety culture but the good news is we have that information now we're processing it. we're asking additional questions. we're finding out more and more smaller details that are important to us. and i think that's going to make

us an even before aviation system throughout the country. might i add, our system in the u.s. is the safest in the world. and it's that way because we have many stake holders that are part of the safety culture american airlines has been extraordinary in the relay of the information of this immediately. what we see here is a positive set forward. >> captain, does this situation give you any anxiety that there's other information about other features on these planes that are not shared with pilots because there's a view internally within manufacturers that it's too complicated or that, you know, four, five, six, seven things have to go wrong before you would need to know this last step, if you will? >> that's a great point. that's exactly what we're struggling with right now. there's been a loss of trust because of this information withhold we'll get through it, but that's what we're going through right now. we're asking what else do you

have, please yeah that's front and foremost. for the complexity of things and whether or not we can process, try us. >> how big of a modification or a change was it? how often would you see something like this? which i'm trying to get to how many other things maybe do you not know about this seems like it was a fairly significant thing that was changed. or does it happen all the time and they say, well, they don't need to know because the way you found out about this is not the ideal way, obviously. >> that's true obviously. and what occurred by the faa emergency airworthiness directive and boeing's disclosure was an erroneous gauge. it triggered many automated systems that we were not aware of does this happen on aircraft we're always learning about aircraft we're always adding to our knowledge base so it's not uncommon, but to be

totally in the blind on a major system like this that is so vastly different than the original -- >> so that's rare. that it's completely different this was a fairly big modification that boeing made? >> yeah. and i think it's rare that we're not briefed on that. this is an anomaly and it's not the way business is normally done and not reflective of a perfect safety culture but we're there now. >> captain, there are a lot of people from the outside who are now analyzing this and trying to figure out if this is a situation where the faa needs to take more control and tell the manufacturers what needs to be done or at least be providing more oversight but we're all on the outside you're on the inside you have a very good happenndle what's happening what do you think is the proper solution to this is this something the industry can manage on its own?

>> the faa stepped up like we were hoping for. boeing put out a notification to crews on this. then the faa said we're going to issue an emergency airworthiness directive. so they elevated it quickly. they were decisive that got our attention, got our company's attention. very quickly we received information from boeing that was very high pressuelpful we're pleased and looking forward to that type of team effort going forward we encourage boeing to step into the circle of trust and let's get this done right. >> captain, we really appreciate your time today. i think we all understand it a little better after listening to you. captain dennis tajer is an allied pilots association spokesman. in the next hour, gordon bethune will join us a lot to discuss with gordon we haven't seen him in awhile.

coming up, the crude collapse we're going the talk about it. why oil prices went from four-year highs to a bear market in just six weeks. we'll discuss the move and what it means for the markets after the break. meantime, check out the futures at this hour we're in the green dow about 81 points higher back in a moment

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all right. welcome back, everybody. we've got stocks to watch this morning. snap says the justice department and the s.e.c. is looking into allegations that it misled investors ahead of its ipo last year the investigation is probably focused on statements snap made related to competition a class auction lawsuit claims snap did not reveal how much instagram was hurting itself growth snap shares this morning down by 4.6% then there's till ray reporting a surge in revenue but wider than expected loss the cannabis producer says the average selling price fell during the quarter and so did gross margins. the shares are down this morning

but stock still up since the ipo in june. revenue up by 85%. even that wasn't enough for the market blue apron cutting its head count by 4%. this comes as they focus on their online business. revenue fell for a sixth straight period as it saw adro in both orders and new subscr e subscribe subscribers. and oil prices in focus this morning. the oil minister saying opec is not the problem. here's what he told steve sedgwick overnight at an energy conference in abu dhabi. >> it's naive to think about you can just get rid of opec and things will be better. things will be way worse if opec is there the second question, do we force -- does opec force countries to make decision when it comes to production absolutely not the decision of producing is a decision by the state itself >> joining us now on the

"squawk" newsline, mark fisher of mbf asset management. mark, help us try to understand whi what he just said. >> i actually think that what's going on here is not just the fact that saudi came out and said they're doing a study on the relevancy of opec. the fact that you've caught everybody long and you had, you know, china and everything else. more was i think you're seeing what everyone is talking about is that people that have been long oil and gas forever and i once focused on crude oil coming off in the last 14 trading days nat gas has surged 50% in the last two weeks what happened is you had a tremendous amount of macrofunds

that for years have been basically buying oil and selling and has done tremendously well in no short period of time, it has imploded and i'm sure there's a ton of people getting margin called out of the trade where they're being forced to buy nat gas and sell crude oil. and that's added to this >> does that just mean it's a temporary raid temporary trade gone wrong, if you will >> it's obviously -- i've been talking about this for three months about how i felt that this is how it's going to go because of a lot of -- you know, something to do with the storage levels but also what's going on with sun spots and the lack of sun spots and everything else. but i really think the move in oil, it's going to be over pretty soon. the five-day roll is over. i think you'll see less pressure on the fund. the market is as cold the winter, they will stay down at

these levels i think that the worst is over in crude oil now i think, you know -- i'd definitely be a buyer than a seller i think this whole thing just shows you what can happen when people are caught, you know, with these positions on and have to unwind. that's what this has shown >> mark, it's penelope's husband. i cannot believe you just mentioned -- did you just mention lack of sun spots? honest to god, did i just hear you say that >> 100%. nasa came out with this a couple weeks ago about sun spot activity versus natural gas. okay you'll see a pretty good correlation. you may not agree with me. >> wait a second on the contrary, my friend we could go into an extended cold spell on sun spots. it's all about solar activity. the reason i mention my wife, you remember she was a dollar trader for you you remember that pretty well, right? >> yes absolutely and we'll leave that as it is.

i remember your wife that was a long, long time ago >> the best ever yeah that's pretty funny. anyway, yeah so do you think -- how cold is the winter going to be >> i mean, i don't know how cold the winter's going to be, but the fear of a cold winter is what's driving nat gas prices obviously. obviously because later in the winter there will be less of a winter left. with the price spiking 50%, you know, in two and a half weeks and you have all these funds that have been long crude and, you know, long heat, short nat gas, to some degree, the higher nat gas prices went the more they had to get out of the trade. it's like reverse logic. i think now that the five-day roll period is over with crude and heating oil, i don't see how they'll beat up heating oil much more the worst is over in the crude oil side it's anyone's guess what can happen >> i just want to go back to

this issue of the narrative over the past several weeks that's been this supply/demand debate and sort of geopolitical issue how much do you think the move is really an overlay of what you're talking about which is the unwind or trade gone wrong here >> i think that it's a lot more about what i'm talking about you're not going to see a 28% drop in crude oil. people will wake up and see that, why is there forced selling? why does this happen so fast there had to be an unwind. well, what was the unwind? was it worrying about china and saudi. let's all hit the button at the same time. or was it because they had on a pair trade which i think is really what's happened here. >> okay. mark fisher, thank you for bringing that to us. we have not talked enough about this >> it's sort of -- are you a

climate skeptic, fisher? or how am i reading you? you think the temperature has more to do with the sun than it does the co2 >> no, i think both have to do with each other. but i think people don't pay enough attention to the sun. >> i agree i mean, a lot of variability over the aeons >> if you want to get really technical, what you really want to look at is heat oxide readings but that's getting way too technical for you guys >> you can't get too technical for me, pal. all right. anyway, thanks >> thanks, mark. when we come back, amazon's announcement of hq2 raising questions about how they conducted their search and the cost for the cities that tried to lure the company to town. that's next. and a programming note, be sure to watch "squawk on the street" this morning david faber will be speaking to john malone of liberty media at 9:00 a.m. this morning "squawk box" will rhtac beig bk. every investor should ask questions.

is our money in the right place? what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary? a good place to start is with an independent registered investment advisor. as fiduciaries, they live by a simple rule: always act in the best interests of their clients. that's why charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

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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. you are looking at the cover of "the new york post" this morning. a bunch of cities have to look in the mirror this morning "queens ransom." they put everything on the line to win the hq2 project and came away with nothing. scott cohn has been spending a lot of time on where hq2 was

going to land over these many months he's in san jose this morning. scott, so much to talk about in terms of this decision and what maybe some of the losers are thinking this morning. >> reporter: yeah. they have a lot to think about san jose was one of the 238 cities in north america that submitted bids for hq2 last year but even san jose with its tech workers couldn't even make the first cut. now that the decision has been made, new york, virginia, and a little slice also to nashville some lessons for the losers. lesson one money is not everything. remember how new jersey offered $7 billion in incentives to get amazon to come to newark former governor chris christie made that bid leaving his successor to do the walk of shame tweeting that newark is stronger and has benefitted from the spotlight it has been under

for more than a year maryland offered $8 billion and change in insint icentives but least it will have amazon nearby in virginia. at least that's what the governor is going with calling it a tremendous win for the entire capital region. fact is, though, $7 billion or $8 billion is not going to mean much in a company that will make that amount of money in just a couple of weeks. >> incentives almost never determine where a company expands or relocates they can't because they're not the big cost variable. they're altogether less than 2% of a company's cost structure. >> reporter: the other couple of lessons here, workers rule we now know that for sure. that's why northern virginia and new york won on this and also no when to fold 'em a lot of the cities have now shown their cards. look for other companies to come with hat in hand wanting some amazon style love. >> scott, real quick because we got to go, new york, though.

big questions in new york. a lot of debate on this. about $48,000 an employee. $1.5 billion looks like they got their head handed to them relative to virginia what do you think about that >> new york had a lot of weaknesses to make up for in terms of infrastructure and in terms of a lot of the sort of unfriendly business regulations, so they paid a little bit extra. they didn't pay the $7 billion that new jersey was offering, but $1.5 billion is no chump change >> okay. thanks, scott. all right. coming up, senator rob portman on the economy, oil prices, tariffs, and more. futures at this hour are indicated up about 60. we'll be right back.

crude realities. oil trying to find stability after yesterday's drop trade war. will china and the u.s. resume talks? and what happens if they do? we talk to rob portman a key rebound inflation half an hour away the last hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. >> okay.

we've got -- good morning. welcome back to "squawk box" here on cnbc live from the nasdaq market site i'm here becky's here sorkin's here. macy's is out. looks like it's not bad. looks like -- if it's 20 cents, it's well above the 14 cent estimate that i'm seeing on first call here. i'm looking for a comp store number looks like comp store sales growth, 3.1% on and owned basis. sales, $5.4 billion which is exactly in line with the current quarter. there are other quarters that mean more to macy's. the estimate for next quarter is like $8.5 billion. so $5.4 billion is more or less in line. we'll see the stock reacting positively so far. up about 4%. company updating its annual guidance it says including a 15 cent increase in earnings per share

so that -- for the year, and we got one quarter left here after this quarter, the fourth quarter which ends in january for the year i mentioned they earned 20 cents this quarter next quarter they're supposed to win 2.73 dlsh$2.73. reminds me of an h&r block or something. >> that's why they call it black friday. >> on black friday we do like $5 billion in the whole country and china does $30 billion on singles day. so envious >> singles day is a really important holiday. >> it looks like for -- we're seeing an adjusted earnings per share of 27 cents which would almost double the estimate >> exactly yeah the adjusted is 27 cents and then the non-adjusted number is 20 cents the expectations were 14 cents beating on both. and macy's revenue is in line at

$5.4 billion we like to look at the owned plus license number. those are up 3.3%. and that does mark four straight quarters of gains for that comp number and that started last holiday season the online sales for macy's again growing double digits. makes it 37 straight quarters of double digit online for macy's macy's is with its guidance forecast it did it last quarter too and now macy's is expecting comparable sales for the year to be 2.3% to 2.5%. that's up from 2.1% to 2.5%. and earnings between $4.30 a share. i get to m speak to the ceo on the phone briefly. he said october was the strongest month finish macy's. all months again, stronger in october more macy's.

while the first quarter was quite strong for tourism in the country, the second quarter cooled and then this thirty quarter is negative. still, though, transactions were up the average unit per item, the average unit in retail, that was up 3%. macy's does have the ability to beat last year's fourth quarter comp, when that strong run continued. the backdrop for consumer spending is good their consumer confidence is strong and the penetration is higher in the fourth quarter for stores we're going into the fourth quarter with momentum so we know that it is going to be a big test and you might remember last year on black friday, macy's had some snafus with their transactions online but gannett said we've battle tested the pipes he sort of laughed when i asked him about it they knew it was a pain point for a big day. >> the sales came in basically in line with expectations.

>> yeah. >> $5.4 billion. where did the street miss? why was the earnings per share number twice as strong >> that's a good question. i haven't had a chance to dig into that yet. i'm not exactly sure but that was -- the revenues were exactly in line then the earnings were much stronger then the average retail was higher for the price so the margin was likely stronger than analysts had expected >> asset sale gains. >> they shall in there too and we've been dealing with that for several quarters that was a big one last quarter that changed the earnings. we initially looked at 59 cents per share. then we ultimately said it was 70 cents >> extra 10 cents just attributed for real estate asset sales. >> because they're still going through monetizing that portfolio and working. that makes the numbers a little messier than maybe a clean quarter to look at the sales in the profit that way. >> thank you. >> you got it. meantime, let's talk oil,

some other headlines this morning. oil prices trying to find some footing this morning crude has lost now more than a quarter of its value since early october. take a look there. then separately, uk prime minister theresa may holding a meeting for brexit the prime minister has to sell the deal to uk lawmakers before the brexit date. you can look at the pound right now. it was off just marginally before then the other big market story of the hour, the october consumer price index comes at 8:30 eastern time that number will be watched closely after the producer price index showed the fastest pace of inflation since 2012 some stocks to watch this morning. shares of canada goose are rising earnings and revenues topping estimates and the company is offering an upbeat view of the full year. shares up more than 14%. and merck says its drug keytruda

met the stage. looked at the ability to extend the lives of patients with cancers of the digestive track the ft reports the money has come in since cohn opened his office to outside money earlier this year. he was able to open to outside investors after the s.e.c. lifted a ban against him coming up this morning, stocks to watch plus senator rob portman is going to join us to talk about the u.s./china trade tensions and relationship. first as we head to a break, here's a look at the biggest premarket winners and losers on the dow. stay tuned you're watching "squawk box" 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. zblmpblt welcome back to "squawk box," everybody. yesterday turned out to be another disappointing day for the bulls. this morning things are in positive territory at least at this point

we've been up and down through the morning. but right now the dow futures indicated up by a hundred points nasdaq up by 21. apple downgraded to neutral from buy at guggenheim securities the firm is cutting its fiscal revenue and earnings estimates right now that stock up by about 7 cents. new this morning, the faa is denying a "wall street journal" report it launched a separate probe into safety procedures on the boeing 737 max following the crash of a lion air flight last month. faa says they are working with boeing if there is a need for changes to the software or pilot training or procedures during the last hour of "squawk box" a representative from the allied pilots association reacted to reports of the potential hazard and its in-flight control system on the 737 max 8 and max 9 models >> obviously there's a problem when they said they chose to not disclose this information.

as pilots from sully to the newest new hire we have, we want information about our aircraft that's our obligation and our calling as professional pilots so someone choosing they don't need to know that is not part of a safety culture but the good news is we have that information now we're processing it. we're asking additional questions. we're finding out more and more smaller details that are important to us. i think that's going to make us an even better aviation system throughout the country >> joining us right now with his thoughts is gordon bethune he's the former ceo and chairman of continental airlines. he's also a cnbc contributor thanks for being here today. it's good to see you >> dpogood to see you, becky. >> what do you think of this situation? we heard from that pilot earlier this morning he thinks the 737s are safe, he feels comfortable with them. but he think there was information not passed on that should have been >> that very well may have been. the difference is training

usually includes when you upgrade an airplane like the max. the only difference is curriculum given to the operator so they can teach the pilot where is those airplanes differ from where they're flying. maybe that wasn't fully done in this case. >> what do you think should happen if that were the case we talk about safety systems and beyond, who's responsible for doing that is this something the industry can fix or something where the faa needs to have more oversight? >> i'm not sure where the ball was dropped. but i do know that the system was meant to improve safety, inadvertent stall of the aircraft but that automatic kick-in isn't natural on the 737 so that system was upgraded and those differences weren't talked to the pilots that could automatically pitch down as it did. and i think that's unfortunate that that wasn't covered in differences training >> how unusual of a situation do you think this is? >> well, obviously very highly

unusual. i worked a long time at boeing with the 737 57. that's the safest airplane in the world. so it's just -- it's so unfortunate, but it's rare it's so rare, becky. i couldn't give you the number >> gordon, we've been watching what's been happening with the airline industry you were somebody who talked for a long time about how airlines could only be as smart as their dumbest competitor >> you remember that >> yeah. it seems like the dumbest competitors have gotten smarter these days it's a different industry than it used to be, correct >> it sure is. they weeded out a lot of guys like hooters heair and independence air the big four, actually the big six are all run by really smart people i think we're stable here in our country. not saying that's true overseas, but it is in our country >> do you fly united which is now what continental used to be, gordon what are your opinions of how united and continental after the merger and everything else, was

that a good merger do you like oscar munoz? is the product as good as when you were in charge >> well, i think oscar really humanized the place. he's done a tremendous job of trying to put a human face back on united which is a great company. the route system is unparalleled they have their problems as most do in integrate. it still manifests itself in one or two ways. i fly them all the time. >> what do you mean humanize the company? >> well, it got the feel, i guess, or the touch that it was too profit oriented, not driven by the human side. and that may be not true, but that was the culture that seemed to prevail for awhile as they integrated and cut costs you've got to have sensitivity when you're moving people around and displacing people from their

jobs it helps to pay a little more attention to the human side of business i think oscar's done that. >> oscar's had big issues. there have been issues about the guy who got dragged off the plane, about the dog that passed away those are some tough issues to deal with. >> they are. and that's when i say that you get out there when we screw up, don't deny it. get out there and apologize and do something about it. but get out there and say that you're aware of it and you do care and i think the people at united do care. they can't prevent all the screwups, but they can show that they care a lot. >> i have two quick questions for you. one is just a very point of fact would you have any problem going on a 737 max right now, business travel or any kind of travel, jump in one of those planes? >> not at all. first of all, it's not a major learning cycle on the stabilizer the issue is you disconnect it and that would keep it from automatically pitching down.

so the pilots could do that in the seconds. they usually get that in training they're just not used toen a automatic pitchdown like they get in the system. so no, not at all. go any time on a 737 >> and then i was going to ask you, if you were to look at any of the airlines right now, is there one right now that you look at from a management perspective and you say those guys are clever, they're doing something? >> i think -- i got to give all four of them top grades. i mean, there's not -- they've weeded out the people that -- the people that are running these airlines here are all human smart guys i know each one of them. so it'd be hard to handicap who's the best they're pretty dead heat right now. >> gordon, thank you for your time today it's great to see you. we hope to see you back in studio again soon. >> thanks, becky thanks for having me >> gordon bethune. trade headlines continue to dominate the market action right now. we want to get to eamon javers with the latest in d.c

>> good morning, andrew. just bringing you up to date on a day of massive feuding between white house aides and officials yesterday leading into a day of uncertainty at the white house today. it all started with the economic team the first big feud of the day yesterday was between larry kudlow the national economic council director and peter navarro the top trade expert in the white house. peter navarro had given a speech last week which he said wall street was exerting too much on the china trade negotiations he said that was inappropriate and wall street was trying to muscle its way in. larry kudlow responded to that on cnbc yesterday in a very pointed fashion. here's what he said. >> he was not speaking for the president nor was he speaking for the administration his remarks were way off base. they were not authorized by anybody. i actually think he did the president a great disservice >> that's not something you often hear is white house aides saying the other aide gave the president is great disservice.

then we had this comment from the first lady commenting on the deputy national security council official mira ricardel it is the position of the office of the first lady that she no longer deserves the honor of serving in this white house. how unusual that is for the first lady to be weighing in there you see mira ricardel at the white house yesterday as the president was doing his celebration lighting of candles in the white house and mira ricardel attended that event. so we had this moment yesterday where tlhere were reports she ha been fired and escorted from the white house. and aides pulled people in the office that said she's still at her desk, she still works here so some real uncertainty yesterday. aides refused to tell me whether she would still be working there today after that broadside from

the first lady yesterday unclear where all that's going to land today. and then rumors swirling about possible additional staff and perhaps cabinet level changes inside this administration staffers yesterday would only say wi say, you know what tomorrow's another day >> i thought she was just under bolton she's a bolton hire. she's a deputy >> deputy national security adviser. >> is that really low level? >> it's relatively low level it's not a cabinet position level. but it's a staff position. she's bolton's player. >> i don't know what that means for bolton you see both sides were out with a spin i saw some articles that she's, like, the articles that are obviously on one side were saying she's like a terror she barks out orders and, you know, that it cuts a wide swath through the entire place so i'm not sure what to think. >> other people pointing out she's never met the first lady >> really. i thought they were together in

africa or something. >> apparently the clash here is on the staff level between the first lady's east wing staff >> and then you have john kelly. if the home security goes, that might force -- >> some question of the fate of kirstjen nielsen she is closely aligned with john kelly. both of them have been on the rumor list for some time especially over the past week or so john kelly, he's going to stay until 2020, the white house has said but not a lot of people believe that there's some real infighting going on in the white house right now. publicly it spilled into view of the kudlow/navarro fight on the record denunciations which you rarely see >> are you hearing whether rob portman is up for any cabinet level? >> i'm not maybe he can tell you. go to the source on that >> i don't think i have to ask him. he's waiting to talk to us joining us now rob portman

it's not like you haven't done every job there lfr, senator would that ever be a possibility just out of the box would you do something other than what you're doing right now if asked >> no. i did serve in the first and second bush white houses there are always conflicts between the staff. it's manifested in a different way in this white house. i'm happy where i am in ohio >> and no staff arguments. >> sometimes i think, you know, president trump kind of looks around and might even egg one or the other side on. i don't know i don't think this is something necessarily that he tries to tamp down that much. what do you think about the trade? you just heard larry kudlow versus navarro that smackdown what do you think is really going on with china right now? >> well, i think it was a positive meeting yesterday with regard to auto tariffs that doesn't relate to china as much as it does japan and the eu and canada and mexico. i think we're heading in the right direction on the tariffs

on autos it would be a mistake for our country, our consumers over 2,000 bucks an automobile increased cost over 6,000 bucks an automobile in imports doing a tariff of 25% based on a national security concern over minivans is not going to be good for us other countries will raise their tariffs and ultimately i think we lose that case in the wto and we lose the tool which is important to have in a national security situation china's a different matter we'll see what happens in a couple weeks, we'll know more president's meeting with president xi of china. hopefully he can resolve some issues because china is not playing by the international trading rules. they are cheating in a number of ways one is the technology transfer that the administration is focused on >> the senate changed. flake's gone now mitt romney's in i mean, what's it like walking around there now what's it going to be like what's the house going to be like

what are you -- are you excited? are you apprehensive i mean, you must be getting used to this by now that's why it's called the circus on that show, right >> exactly it's nice to have mitt romney here we've added a couple seats maybe as many as four. we'll see what's going to happen >> what is going to happen >> i think in florida we'll be okay i think less clear in some other states but i think we'll probably end up winning that state. so, you know, wooem end up with a little bigger majority but the house obviously has switched so we're going to have to work together with democrats in the house. a lot of that depends on them, joe. if they decide to make it two years of investigations, we won't get much done as a country. i think the american people won't be very happy. i think they are looking for us to get things done my hope is that instead we'll figure out a way to work together by the way, sometimes in divided government, you get things done.

example might be reagan and tip o'neill who used to work together on things like social security reform. >> reagan, tip o'neill, nancy pelosi and president trump >> that's the analogy. >> i wonder. so what? fr infrastructure immigration? what's possible. >> i actually think immigration is possible. i think i'm a minority in that view but i think that donald trump having taken the views he has has credibility to be able to cut the deal that needs to be cut which is to both to improve the legal and illegal systems in our country both of which are broken and he'll say to enforce the laws yet deal with people here in a practical way. and we're going to tighten the enforcement not just at the border but at the workplace and end up with a sensible immigration system where we have more people coming on a legal immigration track. i think there's a possibility there, i really do

>> senator, we have an election coming up. i don't know if you know that. >> you're not talking election already. >> oh, yeah. >> 2020? >> of course it's coming up the reason i'm asking, i saw this weird poll yesterday. we've seen some polls where president trump has a really high republican approval rating behind him i saw this weird poll yesterday that a majority of republicans won a primary challenge to the president. did you see that poll? and what is -- what's behind that >> i did not i did not. i think the president's approval among republicans is very high probably within 85% and 90%. i think some of that is driven by good policies an economy is really kicking in as you guys have talked about. and it's because of good policy on regulatory reform and tax relief it's working but i also think some of it, frankly, is driven by the overreaction to the left to president trump and sort of rallying around him some time.

>> all right >> we'll see. >> senator, thanks great to have you on today >> great to be with you guys >> senator rob portman from ohio when we come back, we have a key read on inflation. stick around

welcome back to "squawk box. yes, we have breaking news the october read on cpi, a very important number and it comes out up 0.3 on headline exactly as expected. strip out food and energy, it's also up 0.2 as expected. 2.5% year over year exactly as expected if we take year over year core up 2.1%. that is 0.1% cooler than expectations no revisions so let's look at the sequential rearview mirror, shall we the headline is 0.2% hotter than our last look at 2.3%. and the 2.1%, expectations were

the same at 2.2% that on the year over year if you look at the headline number, we are 0.2% hotter and the ex-food and energy versus our last look really the number to beat year over year is 2.9%. we've had a lot of 2.9% this year that moderated it down to 2.5% you have to go back to 2011, i believe it's december of 2011, to find that elusive 3%. so these numbers unlike ppi aren't hotter. they're basically, you know, still warm but the fed understands warm interest rates, they're down a bit. we're down basically ten basis points from the high close on tens so we're still within striking dance. keep an eye on the dollar index. that, of course, has been on a tear of late even though with had a light setback yesterday.

coming in lower at the moment. >> want to get to steve liesman now with his reaction to the data >> yeah, andrew, i think rick's got it right that it's been hotter but it's hotter than it recently was. this decline in oil prices, i'm just going to work its way through the inflation numbers. but also a lot of companies have been mentioning inflation in their earnings report. in fact, what we've been doing is scrubbing the earnings, we call this earnings intel going through all the earnings calls of all those companies that have held them in the s&p 500 to find out what percent are mentioning the word inflation. 425 calls that we've scrubbed. and we found that 141 have mentioned inflation. that's 33% that's up from the 10-year average of 26% so 7% more companies mentioning the word inflation and they're mentioning in the context of

transportation and freight costs, materials costs, and wage costs. let's look at it by sector here. what we find is that the number one sector where inflation is mentioned is consumer staples. 65% of those companies followed by industrials 64%. materials 57%. those are the top three. then here's the bottom three the ones interestingly health care in there you might expect it to be in there, it's not. communication services and information technology are the bottom three sectors how are companies dealing with this let me show you quotes from the earnings calls the second half of the year has become increasingly inflationary since we upgraded in july. tariffs, the knock on effects on tariffs into our forecast. pepsi, a company that's really pushing it onto consumers. regarding the input cost inflation, whether it's transport or whether it's aluminum, our history has always

been to price through inflation in our developed markets we did that post q3. and one other company, they are taking a hit to earnings so really adversely impacted our results. those are the three ways we find companies dealing with it. they try to pass it on, they try to increase productivity, or they may have to eat it in earnings >> thank you, steve, for that. want to bring in the senior economist and founding partner at rdq economics you heard what steve had to say. you saw the number what was your expectation relative to where we landed? >> in line with that apart from didn't expect the tick down on the year over year rate but we were expecting that energy price boost this month. of course we know that that's going to reverse this month. this was pretty much in line the only thing surprising was the winding down >> how anxious does this make you or not >> it doesn't make me anxious. i think what we're looking for

here -- and this report is important for considering the fed path that's what people are looking for. as long as inflation remains around the 2% area and i think this is flagging what to see on the core deflator which is going to tick down from 2% as long as we're around 2%, that's going to keep the fed on this path. >> you think jay powell looks at this and he -- if he woke up to watch this nurnl, he went back to sleep >> this is a number that the fed likes. what the fed doesn't want to see a material move away from either direction. i kind of feel like right now given all the anecdotal information and what steve talked about, we see it in surve surveys, the small business survey this week was suggesting a rising share of companies raising prices what the fed doesn't want to see right now is inflation pick up and move away from this area where it's right around its target because then it -- potentially have to increase the rate hikes. this prevents them having to do a. >> are you as worried about

interest rates going up? >> i'm not if we look at -- again looking at surveys, if we look at that nfib survey and small companies and their ability to access credit, there's no problems there 2% of companies said that credit is -- access to credit is their primary problem. companies are getting the credit they need. the survey that came out yesterday shows that lending standards are being eased. we're not seeing any tightening up sure we see it in some markets but as it effects the consumer, we're not seeing any material impact in terms of tightening. >> the dollar is getting stronger and stronger. >> the dollar -- again, that's going to have its impacts. right? that will have an impact on import prices. but again, this is -- the dollar getting stronger, oil prices falling. this is offsetting some of the other cost pressures that businesses have. businesses are facing cost pressures from rising wages. we've been hearing it from business for a long time now we're seeing it in the data.

the impact of a stronger dollar and lowering import prices and commodity prices, the drop in oil prices, that's all good for businesses and offsetting other areas. >> we hear the weak dollar is good for exporting u.s. goods too. >> okay. so there's the two sides right? and this is the stronger dollar is potentially going to have and maybe a political impact there is going to have an impact on a widening trade deficit that's not something that worries me i know there are political issue there is >> what's your growth rate for the full year. what's 2019 look like to you we had that big bounce in capex. i was kind of surprised by the third quarter number i think we see stronger capex numbers. these are still growth rates even though it's slower. that's going to give us conti e continued declines >> what about the realistic implications of a stronger

dollar it hurts tourism businesses. it may make the difference if a consumer is looking at whether they're going to buy a u.s. made good rather than something somewhere else strong dlaollar, it's hard to s. >> it has an impact on industries that are export orientated but the u.s. is still a large mostly closed economy. so the dollar, i don't think, has as much of an impact currency fluctuations in the u.s. don't have as much of an impact on u.s. growth as, say, growth in europe or the uk. >> so how do we know when -- the worry is the fed always orchestrates business cycles by staying tight too long or getting too tight. how will we know when they've overshot >> the first thing is we need to see some broad measures showing material tightening. we're just not seeing that they're tight from very easy

levels a year ago. >> if that's all we're worried about, relative levels, then i'd never worry. but sometimes the government has this much debt service, and it only goes to 5%. but it doubles, they say my god how do we fund this stuff? zblit would be a problem -- >> it wouldn't have been ten years ago. but now it would be. >> because we have a ton of debt now. it's unlikely we're going to see interest rates i think the rates will head higher but we're still at low levels. >> mortgage rates are 5% though. what's the terminal point you worry about mortgage rates just on the housing market? >> i think that mortgage rates are going to hit higher probably closer to 6% i mean, that's not a mortgage rate and impacts on affordability -- >> historically it's not a big deal but you're talking about -- >> we're changing from low levels i don't see these -- when it comes to activity, i agree that changes matter but these low levels are not

going to result in dramatic designs thato freeze up activity i just don't see it. my concern would be, i think what the fed is focused on is the inflation reports. if they were to show a material pickup in inflation pressures and the fed were to start hiking rates more quickly, that could be something that would be problematic for the economy. but we're just not there yet not with core inflation. >> conrad, thank you appreciate it. coming up, veteran market strategist jeff saut will join us futures right now have moved sharply positive up 163 now on the dow. and nice move in the nasdaq. up 50. on 17the s&p. stay tuned you're watching "squawk box" on cnbc

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still to come this morning, stock futures extending gains after the cpi data came in line with expectations. that's a little bit of a relief for wall street at the moment. we're going to hear from raymond james chief strategist next. dow futures now up 150 points. s&p up by 16, nasdaq up by 45.

welcome back to "squawk box. joining us now is jeff saut chief investment strategist at raymond james. it's been a little while i don't know if we talked to you when we went into this corrective mode. what's causing it? where are we in terms of at the beginning of the end, end of the beginning, what do you think >> the thing that caused the monday meltdown were washington whispers the president was going to impose a 25% tariff on everything coming into this country including from canada and mexico

after the knife fight between navarro, mnuchin, and lighthizer, cooler heads have prevailed and lighthizer is in charge right now at least as of this morning, the president is not going to impose 25% tariffs. i think that's why the futures are up this morning. >> let's go back a month and talk about just the recent break, you know, that got us down almost 10% on the s&p i used it too many times i jinxed it by calling it a garden variety correction. but is this a garden variety correction or is it something more >> i think it was. on your show we talked about our shernl proprietary model on october 2nd. we wrote that if you have speculative trading positions, you should sell them we didn't do anything with investment positions so in retrospect i wish i had in some cases. the models targeted the october 29th low at around 2600. we said the market would ral by

back to 2820 and you would have a secondary pullback which is what i think we were in. if the rumors out of d.c. that he's not going to impose a tariff on everything, the lows are probably in. >> the lows are in is there a year-end rally that's tradeable from where we are now? >> yeah. i think there is earnings continue to come in better than expected inflation appears to be contained. interest rates, they probably go up a little bit more here, but i think it's kind of out of gas on the upside in the near term in terms of raising interest rates. there's plenty of liquidity out there. >> how about next year >> i think next year we're going higher earnings still look good to me for the next three or four kwafrte quarters the numbers i see out of a number of agencies suggest it's pushing up against 180 bucks for next year. so at the recent low if that earnings estimate is correct, we were trading under 15 times

earnings 2019. >>. >> you mentioned, you know, the lighthizer, navarro, brouhaha. >> is it the political stuff we need to worry about? is it just trade or if we do investigation after investigation if mueller comes out -- i don't know what's happening with roger you know, every day you read something. you hear all these things. does any of that stuff ever cause you to think that maybe there could be a problem with the stock market based on that or does it have to be based on trade? >> i think that that a noise i think it does have a short-term impact on the equity markets. just because of the emotional. but i think if the democrats try to impeach the president, i think it's a huge mistake. i don't think it can be done i just -- i think it's a huge

mistake. it would impact the market on a short-term trading basis but longer term, we are still in a secular bull market that should have years left to run on the upside >> years left to run and what about the business cycle? does that have years to run too? even though it's long inrun, even though it is long in the tooth? >> i am not so sure of that. i have argued the downturn is so severe and recovery is so muted. what you did was extend the mid cycle and we have not entered late cycle yet i hear people talk about late cycle and peak earnings and what they have been saying for the past five quarters and i don't think ere in cycles where we are in peak earnings >> what's the peak off here? 3.7% of employment what would you use that says you hit late cycle

>> i think you would have inflation picking up and you have to see animal spirits at the corporate levels when mci put their name on the stadium, you should have sold their stock. i am not selling ramon james stock. >> yeah, you do. >> jeff, thank you >> you bet >> when we come back, jim cramer will join us live in the new york stock exchange. the next hour don't miss david faber's interview with jonah loahn john malone. we'll be right back.

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down at the new york stock exchange, jim cramer is joining us now tell us we are okay that we are up 165 or is that bad? >> i pick up the paper and lead story in the journal markets, oil price dropped. if oil is up, we'll rebound. joe joe, last time with gasoline goes down in price, that helps 317 million americans. we have to worry about is the 7%

of s&p is vofrinvolved in ameri. >> absolutely. when things are down, when stocks are down, it is bad when stocks are up is good literally, that means they look at this stuff and they say oh, i am really scared about apple, i am really scared the only thing i know is natural gas is 450 if you need a capital company, there you go >> before i thought it was you need a new iphone like every year or something. they say it is some where in the middle >> the crucial thing of the iphone, when you put it in a washer machine with an iphone in it, well, then you need a new iphone the bag of rice thing is a big joke >> i did it and it worked for me >> what kind of rice did you use? what kind of rice? >> uncle ben's

>> what's the difference >> i want to know the difference >> i am going to get a box of uncle ben's, it is never going to happen again. >> get the new phone you don't have to worry about it >> that's true apple sales have to be down because the stock is down, right? you know what i did today? i did a drawing. i had a hat and everyone has to pick a name of who's going to downgrade it next. it is $100 i got let me see -- i got key bank the guy at barclays is going to win. who's going to downgrade it next it is supply chain >> supply chain. to be continued.

tim cook is nothing. >> we'll see you at 9:00 >> absolutely. all coming up on "squawk on the street." >> don't miss the cio ofettingc, the investment managers at pgim take a long term view. of calstrs stay tuned, you are watchingon "squawk box" on cnbc top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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let's show you what's going on with the market dow jones is up higher and nasdaq is up 51 points and the s&p 500 is up about 18 points. make sure you join us tomorrow now go hang with the gang on "squawk on the street. begins now ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer. and david faber in new york city we'll talk to john malone and gregg maffei oil is red for the year trying to catch a bit