right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. yesterday markets down once again. dow closing down by 200 points after being up by 300 points or more during the session. s&p was down by 20 the nasdaq was down by 64. this morning we are starting out in the green with the dow futures indicated up by 44 the s&p up by 4. the nasdaq up by 32. we'll see what happens let's look at what happened overnight in asia. the nikkei was down by 0.2%. you did see stocks higher in china. the shanghai was up by 1.3, the

hang seng was up by 1.75%. in europe, markets are mixed the dax is flat. the cac is down by 0.3%. the ftse in london is up by a tenth of a percent stocks are weaker in italy and spain. finally check out treasury yields here today. after some comments from jerome powell yesterday looks like right now the ten-year is yielding 3.1%. we'll talk about powell's comments in a moment >> we have some brexit breaking news overnight the pound sinking against the dollar after the uk's brexit minister resigned putting more pressure on prime minister theresa may. dominic raab said he could not support may's divorce agreement with the eu because he could not reconcile the terms of the deal with the promises his party made

with the county. the working pensions secretary also resigned. investors looked for some safe havens british bank stocks are sinking this morning we'll get a live report from london in just a minute. jerome powell is expressing confidence in the strength of the u.s. economy speaking at an event in dallas. he said the overall domestic picture looks pretty good. >> our policy is part of the reason why the economy is in such a good place right now. we have 3.7% unemployment. the economy is growing at 3% inflation is on target there's good reason to think we'll continue, you know, in a positive vain like that. pleased about the state of the economy. >> he said markets should consider every fed meeting a live meeting with the potential for a rate move. he made the obligatory statement that we'll be looking at the incoming data to see if our policy stance is appropriate

powell also said he is concerned about a gradual chipping away of global growth. that's the lead story in the "wall street journal" today. he addressed concerns about the fed's independence as well notably linking the fed's mandate to congress rather than to president trump >> we have a very important job that congress has assigned us, and that is soto serve the publ through maximum employment, stable prices, we have the tools to do it and protections to do it without political involvement. >> president trump has been critical of the fed rate hike. in the "journal" piece they quote powell saying you have seen a slowdown globally, not terrible, but it is concerning the one-time event, not the typhoon or the earthquake that hit japan, bottlenecks at german auto plants associated with new emission standards i was supposed to have a car in july

literally at the beginning of june i was supposed to get forgiven for some of my lease from the last one, you know, my lease wasn't going to end. they do that sometimes i wonder because when they're trying to front-end load the sales. still isn't even being made now. >> your car should be here just in time for the tariffs. >> for the tariffs and the snow. >> he also made some comments about the tariffs. >> he did. >> what? >> nothing >> am i missing something? >> no. i usually look at -- >> powell did make some comments about the tariffs. he took a -- >> what are you doing? >> nothing >> ignore him. >> did you forget? >> i'll make your point for you. powell made some comments about the tariffs. he said they could be bad. to the extent that more and more products are subject to tariffs.

>> greenspan said they're insane >> he did. >> even tariffs -- what are you doing? >> i'm trying to read and explain my story you will get back to willem. ws are vs, vs are ws >> i'm going to start staring at you funny. >> i always felt that way. >> let's get back to our breaking brexit story. willem marx is in london this morning. >> thank you good morning it's willem, you're right. we've seen two cabinet level resignations so far. three other government resignations after theresa may's cabinet approved her draft proposal for britain's departure from the european union. what this means is increasing pressure on the prime minister from within her own party. those people that resigned can, once that proposal faces a parliamentary vote in the house of commons, they can vote against the government if she faces very difficult

parliamentary math it would mean this proposal that she spent 18 months negotiating with the european union would be dead in the water. there's also pressure within her own conservative party about her leadership if 48 of the 315 conservative mps decide they're not happy with her as leader they could trigger a no-confidence vote that could have disaster consequences for her future. there's a lot of uncertainty about what comes next. she has been speaking to the house of commons listen to what she said about this deal. >> mr. speaker what we agreed to yesterday was not the final deal it's a draft treaty that means we will leave the eu in a smooth and orderly way on the 29th of march 2019 and which sets the frame woworkr

our national interests >> as you can hear from that latter thla laughter that greeted her comments, she faces a huge amount of skepticism about this process. what will happen next? next sunday the european leaders, the eu 27 will meter in br meet in brussels for an emergency summit, then it comes back here for that crucial vote. at that point we'll get a better sense of whether this will go through in what she calls an orderly fashion. >> willem, orderly may be a stretch at this point given what we've already heard. >> yeah, i think that's a fair point. essentially the big criticism from within her own party and dozens of mps have been talking about this is part of this agreement requires the uk, if they cannot organize a trade agreement in the future with the european union to fall back on a set of circumstances that keeps

the uk inside a customs union with the rest of the eu. that's something that a lot of people who voted in favor of brexit are not happy about, that includes members of her own cabinet who have resigned and a large number of mps in the house behind me. >> willem, thank you let's talk about the broader markets. joining us is katherine rooney vera from boltec capital markets and ryan dietrich from lpl financial. i want to start talking about how bullish things look at this point. in your view you're looking almost at everything as half full is that fair to say? >> look, i think the opportunities are there in the markets. when there's a lot of panic, opportunities present themselves it's fair to say you can find them in some places specifically like the emerging markets.

there are a lot of undervalued currencies and the baby is getting thrown out with the bath water here you can find some value. when i was on last with you guys, i recommended brazil brazil has done well since then. over the past two months a double digit return. i think when you see maximum or panic you can find gems in the markets. >> ryan, i don't think you're quite as sanguine. is that true how are you feeling? this is a serious correction that's dragged on longer than people thought >> you're right. there are definitely concerns, but building on what katherine said we see more positives than negatives. let's look at volatility we had eight 1% moves up or down last year in 2017. last year, assuming we have one again, the next will be the 50th 1% move up or down that's more historically normal. volatility is normal late in the cycle. we took a look at midterm years on the closing low for the s&p

500. we now know that was october 29th the good news, every single year back to world war ii from the closing low of october to the end of the year, the s&p was higher every single time, 18 out of 18 times. some of those gains were not a lot. some of them were impressive we think the calendar is a bull's best friend here, the october 29th lows, we think those are the lows for the year. might closely retest them. overall we think that was a major low and really the rest of this year should be positive for the bulls. >> what do you think the market is really at this point keying on, ryan if you had to look at one thing s it oil is it oil or the dollar? the f.a.n.g. stocks led for so long we were talking about large market caps on all of the leaders. there's a two-year apple chart if you were to draw a line, that

almost looks at a point where it wouldn't look so ascentotic on the right-hand side of that chart. what can you make about whether this correction is over. >> sure, you mentioned growth stocks and the f.a.n.g. stocks historically value does better when you have a stronger economy. we think that's a place where people can find some value what makes the bottom? that's obviously -- allt lot o people give a different answer, a lot of people think those october 29th lows were solid, but overall participation is still there. and let's talk earnings for a second the cover of the "journal" today, concerns over global growth we are looking at 15% em growth, emerging markets, next year and 10% in the u.s., 20% this year

so earnings growth is still strong yes, things are volatile but earnings drive long-term stock gains. we would still be a buyer of volatility and dips. >> katherine, you think it has to do with what happens between the leaders of the united states and china? donald trump and xi? you think that's as important as anything >> yeah. >> really? >> yeah. we have to face facts here this is sentiment-driven as your other guest mentioned, we have solid earnings growth. we have economic growth that's still strong in the united states so i think that once sentiment shifts we need a driver to get there. that driver could be -- i'm not saying it's going to happen, but if we do get even a verbal agreement, if we get an agreement to allow joint ventures between u.s. and chinese firms in china or an opening of the chinese market to u.s. car imports, or if it's even allowed to have a crackdown on ip theft, in a real way any

one of those three things will send the market flying so that's why i think it's a good time to get in now in the fourth quarter in u.s. sectors and in the emerging market space, positioning for outperformance in 2019 >> you even go not just to china, you look at some emerging markets as well. argentina, brazil. there's a lot of things that are on your radar. >> brazil is going to position for a strong 2019. this has been a country that's been really battered over 2018 they recently had a presidential election in which the market friendly candidate did win on the other hand you have mexico, the unfriendly candidate who won the election there this divergence will favor the biggest heavyweight in the region, brazil, for 2019

combined with low interest rates. in the broader emrnerging market space, china has been beaten up. the biggest risk in my view, we do get that jump from tariffs from 10% to 25%. which is on the docket the threat is the remaining 50% of shipments from china to the u.s. are also hammered with trips. that's the worst-case scenario that's keeping me up at night. they need to get to some agreement. i think the agreement with the renegotiation of nafta gives us good precedent i think there's ground for some agreement with regard to china and to avoid an escalation of trade tensions >> the way it looks to me, trump knows what the market is doing xi knows what china is doing they'll agree to have some type of -- who knows if anything happens. >> at the very least hopefully they agree to not raise tariffs

to 25% or put those tariffs on the additional -- >> or the 75% mohamed el-erian pr probable whe probab probable -- problability where they change a couple things. >> i don't think trump is in line to accept this. >> i think insecentives are in line for trump to take an agreement. there's not the political incentive to keep hammering china. the rally in stocks is a badge of honor for the president the economic growth is as well i think that at least -- at the very least his economic advisers are telling him if you jack up tariffs from 10% to 25% and put tariffs on themaining 100% o

shipments from china to the u.s. will cause inflation and which will jerome powell to raise rates. so the incentives are in line to get to an agreement on both sides. >> ryan, are you thinking about trump and xi and how they approach each other? what do you think? >> absolutely. here at lpl research we think g20 later this month, there's a good chance of some resolution there. next year is pre-election year you look -- >> we have an election coming up >> exactly usually markets do quite well from the midterm election 12 months out, you're trying to get the economy going, good news out there. stocks look to do well and so does the economy as everyone tries to get re-elected. we think that could play out in 2019 >> are you supposed to -- if they're still counting votes in florida are you allowed to talk about the next election? >> let's wait.

>> it may be premature >> all right katherine and ryan, thank you. coming up when we return, a start-up that harnessed the power of social media to generate $1 billion in retail sales in just a year the co-founder of like to know it joins us next. and then alexis ohanian will be here. and then the founder of the largest hedge fund will join us. as we go to break, a look at the premarket winners and losers in the dow. first day of school.

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our next guest is an influencer, can we call you there? let's welcome the like to know it co-founder. thank you for joining us we met you, i'm trying to think, about a year and a half ago? >> about a year and a half since we launched the app on "squawk box. >> you are launching a new part of the app >> the like to know it app is a shopping app that lets users shop in the context of influencers lives. today we're launching product search which attracts an audience with intent to purchase you can search for table, stroller, and you will get contextual results search engines have been around. you search white marble table, you will get some flat product images now you're getting results from real people who are using those products in the context of their real life. >> these are all influencers you're finding

how are the pictures matched up? >> we have 35,000 influencers creating content, about 50,000 products every day in the context of their real lives. everything from fashion to home to lifestyle, travel, fitness. on the other side we have 4,500 retailers providing those products to those influencers. >> for free? >> providing the product catalog so they can talk about and link to those products. then 4 million registered consumer users within the like to know it product and 500 million that are actively shopping from these influencers, not only across like to know it but their own channels their blog, their instagram, their pinterest. >> if becky and joe want to be influencers. becky has a great dress -- >> if we wanted to be bigger influencers. >> or would joe be influencing the purchase of that tie >> you would be surprised at how many people would be interested in where you got that tie. that's why we started like to

know it. influencers like yourself, people are curious on instagram, back there 2013, everyone is asking where did you get that what size? what store we started like to know it to help consumers get those answers. >> how did you get paid? t >> the influencer gets paid for every sale this is a great new kind of innovation in the retail space >> it's word of mouth on steroids >> it is with the influencer actually first in providing the product within the con-text of real lif. before you would be paying people to stand in stores, now you have a distributed work force that's performance base and has an influence realm of their own. not only are they selling content -- >> how much are retailers willing to pay

>> we're driving about 8$800 million in retail sales. they're paying commission on sales for that >> what kind of commission >> 10% to 20% commission on sales. that's negotiated on an individual retailer base >> are you worried about snap, for example, talking about this partnership they'll have with amazon so when you snap a picture, if i snapped a peck chur icture of ba dress would be clickable i could click on it and buy it >> a couple answers. the social platforms have been incredible partners and fueled the fire for this industry and given influencers a platform to grow audience. that said we are very different from them. while we are in constant dialogue with them, we are very different in that we're a shopping app also image recognition is

something that is of interest, not only for the social platforms but for search engines as well as retailers everyone has been trying to move into this space. in 2016 we purchased an image company out of new york. and then used their technology to put into our app. that's where you are able to -- if you have an app, you can take a screen shot of content and we'll give you information provided by the person who wore it becky is wearing a beautiful black dress. image recognition technology will show other similar black dresses from retailers but becky knows what designer she wore, where she bought it. >> do you have influencers getting clothes for free or are they paying them to wear the stuff? >> we power professional influencers. while certainly within the press community brands have always tried that version of providing products, trips, all of these things for free, these are people providing for themselves

and families through what we provide to them. we have 83% more influencers year over year earning over $100,000 through our technology. >> see, you could sell a lot of dresses and ties >> i don't know. >> can we talk about drills or something? did you send this backdrop >> i didn't. it's fantastic >> don't you think we look better in the chairs with this behind us. that is actually fake. >> it's huge behind you. you look like a little kid in your mom's closet. >> i'm trying to figure out how to buy this. >> sweater of the month. >> for pilar >> for pilar not for me >> thank you very much for coming in. >> when we come back, we'll talk to reddit's co-founder

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square.

welcome back some brexit news breaking overnight. the british pound sinking against the dollar after two of theresa may's cabinet members resigned among them the uk's top brexit secretary, dominic raab. raab says he cannot in good conscious support the current brexit draft deal. the working pensions secretary also resigned. prime minister may speaking to parliament earlier this hour >> we can choose to leave with no deal, we can risk no brexit at all, or we can choose -- or we can choose to unite and support the best deal that can be negotiated. this deal, a deal that ends free movement, takes back control of our borders, laws and money, delivers a free trade area for goods with zero tariffs leaves the common agricultural policy and fsh rfisheries policy, reta

the continued security cooperation to keep our people safe, maintain shared commitments to high standards, protects jobs, honors the integrity of our united kingdom and delivers the brexit that the british people voted for i choose to deliver for the british people i choose to do what's in our national interest. i commend this statement to the hous house. >> european bond yields are falling as investors look for safe havens. the british banking stocks also sinking this morning they're down across the board. royal bank of scotland down 7% barclays down 4.5% the broader markets in europe also a bit of a -- actually, they were under a struggle but the dow looks like it will open up higher nasdaq up 24 points. s&p 500 looking to open 2.5 points higher.

uber reporting a loss of $1 billion in the third quarter, up 20% from the previous quarter but also down 27% from a year ago when the company posted its biggest loss in the wake and departure of travis kalanick revenue rose nearly 40%. growth in booking for the ride hailing service and delivery services were up 6%. i did this for our taxi read earlier. >> you did >> for people riding in the taxis, drivers will hear that uber posted a billion dollar loss, which they'll be happy about. >> yeah. waiting for the destruction. >> as they slowly -- yeah. what are the medallions going for? >> they've come down materially. we are keeping an eye on digital currencies the cryptos are getting crushed. bitcoin plunging below $6,000.

i always said i would get in at under $6,000 >> it's $5,400 that's way below our next guest is a recent chur inve venture investor, and the driving force behind one of the internet's hottest destinations. joining us now is co-founder of initialize capital and reddit, alexis ohanian let's start with where the markets stand right now with the damage in technology, with the concern people have about things, your somebody working in recent venture capital what do you think given the extreme volatile we've seen the last month and a half? >> it's certainly tough to watch. at the same time we're lucky because we invest so early our time horizons are at least five,

seven, ten years out when these companies expect return. we're their first check in many cases. the reality is this is a byproduct of the business cycle. we know tech stocks have been doing tremendously well for quite a run. it seems like the market is cooling off. our belief still remains every business has to be a software business in some way, shape or form for us to make these investments on bright engineers building software solutions still feels like the right long-term play. >> we had other venture capitalists who have come in and talked about how enterprise software is a place companies are spending no matter what. is that your view? >> yes it's actually -- we noticed a turning point the last couple of years where i think basically the "c" suite all got on instagram. what i mean by that, they got exposed to and there's now a broad use of world class software for really trivial

stuff. so once enough executives have spent time looking at selfies on instagram of their kids, grandkids, they come back to their desk and look at the software their companies are using and can't believ antiquated it is so we are seeing people who left that world, are seeing the problems and are saying i can have a better solution and then sell it back to my buddies ten years ago if you were starting dropbox, you could be trying to sell the basic $10 a month package to a little startup. today companies realize this need and startups are able to sell to enterprise direct. >> you talked about instagram. you built one of these early social media platforms in reddit, what is your take right now on the facebooks, snaps, and twitters of the world? there's a massive story -- i

don't know if you had a chance to see this called delay, deny, deflect, how facebook leaders leaned out in crisis this morning. >> i'll be reading this after we get off air. this looks sensational >> it's an amazing piece it goes into the lobbying effort that sheryl sandberg took on in the past year. after tim cook made these comments on privacy, mark zuckerberg ordered his whole management staff to no longer use iphones to only use androids these little nuggets of craziness. you sense a sense of panic in that company in a way that i don't think i understood before. >> so this -- what you're telling me is not surprising to me i think there's still -- even though facebook, the platform has been in decline. instagram, whatsapp still continued to grow and have a huge impact on our lives they only started monetizing it.

i think we reached peak i guess traditional social, where this idea of we all follow individuals and an individual has a following, that model over the last ten years has flaws in it, can break down i think the new wave that's happening now is community based. if we look at other emerging platforms that have come up, companies like discord, nextdoor, this model of people wanting to follow communities whether it's of interest or location, it seems to be where we're fleeing now. >> explain the difference between following individuals and following communities. >> i think we're sort of burnt out on this idea of a lot of us following an individual and amplifying whatever they're saying or what photos they're posting. i think we're retreating back to spaces where we want to go where everyone loves the yankees we can just all talk about the yankees.

we don't have to deal with all the other noise that comes with the traditional social or the trolling or just the weirdness of it. the sort of anti-social nature of it. >> the mean nature of it at times. >> yes, frankly. instead we wanted to go back to whether it's knowing what our geographic community is talking about on nextdoor or whether it's knowing what all of are sharing news about, it's a retreat to community platforms i think we have burnt out on the idea of following individuals. >> when you say peak social, you say admittedly they have only just begun to monetize things like instagram and other platforms. it may be the most that we are in terms of sharing and following, but it doesn't mean the money drops off from here, is that what you're saying >> i would agree with that i personally believe that we are caring more about our privacy -- just say americans, than we ever

have at the end of the day it's still not a big enough pull. even hearing about the facebook data breach. there were tons of people shutting down facebook accounts and going right to instagram >> which is also facebook. >> which is also owned by facebook so i think that we have -- we have to make as creators and investors, we have to make better user experience to draw users and create that competition. >> is the business model of people getting something for free but trading off their privacy, is that a dying business model or is that the reality of people wanting stuff for free >> my hunch is that it will get more transparent in the future i don't know what the new platform will be one feature it would have is a much more explicit model like look, i want to be marketed to but i also want to draw some benefit from it. i was on here talking about fortnite, twitch, there are

interesting models around mon monetizing g monetizing di monetizing digital goods, there's a way for users to owl out their credit card. >> we had jared lanier here and he said he thought we would be moving towards the netflix s subscription sort of way of doing things do you agree >> i believe so. we backed a company called girl boss sophia's entire model is based on the idea that we need a subscription based model >> if you paid for facebook, the average subscriber would have to pay $100 a year to make up for the amount of money you make on

advertising. >> i don't think you go back i think you build the model from jum wp th jump with that subscription in mind in the beginning you sacrifice ref kn revenue -- >> but how many subscriptions do we need? hulu, netflix, "wall street journal," "new york times," cab cable, magazines are going behind paid walls. it's not a one percenter world, but it's not a hundred percenter world at all >> no the reality is most of these will not be able to thrive in this model. the simple test i have for it is can this content be created for free by a 12-year-old with a smartphone if the content being created is simple like a nice photo of a cat or a top ten list of which disney princess you more like, that content will not be

defensible with that kind of model. if it is unique, if it requires research and is special, you can justify it >> can i ask about a real-world other investment you made? >> sure. >> you are into skip, right? >> yes >> skip is the scooter business. >> yes >> i don't understand the hotness of the scooter business. >> have you never ridden it will change your life >> i don't understand the valuations ford just bought one of your competitors. >> yes, they did >> you got granted rights to actually do this in san francisco. their version didn't what is happening here >> two or three years ago we saw a version of this with bicycles. there was a glut of bicycle startups in china. this trend came, a ton of money was put into it, it disappeared, a few of these companies pivoted

into scooters, smaller form factor, better user experience it's solving that last mile. a majority of the trips done by a taxi or car sharing service are only about a mile, mile and a half that experience is awful from having to wait to get your driver, it's time consuming. the idea is if we can make it easy enough, smart enough, you pick up one of these things, go where you need to go and drop it off. skip is working with cities and communities to get those permits and work with the areas they serve instead of just -- >> what do you think of ford and others trying to buy these things >> i think it's smart. these companies know now they have to be more than the makers of the hardware. they need to own the networks or have some relationship with customers. whether it's a ride hailing app or the last-mile scooter business the challenge is going to be how do you get great engineers to work on this software.

there's a talent -- >> what's the defensibility of this why is skip better than scoot or bird or any of these guys? >> i think working with cities and towns will matter. >> the anti-uber approach? >> yeah. cities have learned from uber. a city can confiscate these things when they're on the street and lock them up. they can enforce permitting. the magical part of this is that we don't have a real solution for that last mile problem until it becomes simple enough to just open up your phone, have something be there that you can get on and get to where you need to go. i think it will be like lift or uber most people will have a couple apps on their phone. >> how many of these will go out of business when this is all done there will be a scooter bust when this is over. >> there were other ridesharing services we don't talk about anymore that had silly names, got funded, and have gone away

i think we'll be in a similar situation with two, three players. whoever has the best experience for users and the community they serve triumphs >> we talked about bitcoin, that being down at 5,400. what does that mean for coinbase or others? >> so coinbase has had significant growth in spite of the fact that markets are doing poorly they still make money as long as people are trading trading numbers have declined this year. long-term i think they're continuing to secure themselves as the trusted resource for getting into crypto. i'm happy with the fact that there's been a tough year in all these cryptocurrencies it gets people focused on the things that matter, which is building the software that will hopefully make all these things tremendously valuable in the long-term. there were a lot of shpeople who

were in the mix and this is a way to shake them out. there are blockchain companies, but they are far mour sere seris than we saw a year ago people working on crypto now need to think ten years down the road, not thinking about the quick buck and buying a lambo. >> as we were talking, this news hit. the saudi prosecutor is seeking the death penalty for five people in the khashoggi killing. 11 of them i guess are implicated 21 people are in custody 11 indicted. now five seeking the death penalty for five the top-ranking official is that deputy intelligence chief who was fired. at this point it looks like there's a firewall there, that he's the highest ranking

official that evidence that they said tell your boss -- is that not true there's at least some dispute as to whether that is true. bolton has, i guess, come out and said he did not think the recordings implicated mbs. >> mohammed bin salman >> yeah. i guess the death penalty in saudi arabia, the bar is not quite as high as it is here in the united states. but still that's -- will this do it will this satisfy? >> i don't know. i think it will kraut all sowilt of problems for mbs inside the country. if you were part of his security team, and if he was responsible for this and this is the way he deals with it -- >> throwing people under the bus to protect his -- >> right it's interesting to look at who the five people are. >> is the guy that was fired the highest ranking guy one of the

five >> i don't know. the fella who was one of his security detail who was in the united states with him everywhere >> pictures. >> yeah. who -- who everyone that i talked to said is actually a friend of his. is he being on the list. interesting. >> with alexis we have more coming up. we will talk to the ceo of one of his investments, zeus living. it's been called the wework for housing. they provide furnished living arrangements for workers we need that in davos so my feet don't hit the wall >> no love for the big fellas in europe >> no. especially there we're expecting quarterly results from walmart we'll bring you the numbers and instant reaction later ray dalio will join us stayun, u' tedyore watching "squawk box" on cnbc really want to be there,

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many employees in the mod determine economy are more flexible and nomadic joining me an entrepreneur trying to find a place to live director of zeus living. and our guest has invested in zeus we designed this as kind of a rework for housing i don't know if that's the way to describe it help us. >> yeah, it's not that far from the way i would describe it. we're noticing millennials they want to be more asset-like, they want more flexibility. we're providing a solution where they don't have to sign up for a lease or a space. >> how does this work? you're taking on longer term leases and they're taking on shorter-term leases? >> yeah. >> this is a service >> yeah. there's two facets to our business the way we get our homes we're

positioned as sort of a proxy manager for homeowners the idea is we provide managed ownership. you get all of the benefits of owning a home. and we'll sign a two-year lease and manage the homes >> by the way, just so you're clear, if you own a home, i assume, can hammer stuff into the wall, change stuff whatever you want this you can't do? >> not as much the expectation is you probably don't want to do a ton of that >> one of the critiques of rework model or any of these models, you're changing the risk profile. you're taking on the risk of these longer term leases >> uh-huh. >> greater part is you're giving me the lease on a shorter-term basis? >> yes >> great when the economy is great. terrible when the economy turns south. because you're on the hook for these longer-term leases and i

can walk away from you without even blinking? >> yeah. it's an interesting point. since we started the business, the market has softened about 15% in the bay area, which is where we started what we found when the prices come down we actually pay to the homeowners which reduces as well >> you're not locked into the lease? >> well, we are locked in. we started with two-month leases and extended it for 24 months. basically, it's on us to do the math of what we think the market is going to do and then on the price to homeowners we factor those things in. >> what happens in a down market it soungsds like a great deal for the up market. but the down market? >> we've been in a down market and it's been okay we have enough of a premium or margin uplift that it hasn't hurt us too much and i would say, you know, we have a lot of businesses and people use us for relocations. and we're actually a lot more

affordable than hotels or extended stay hotels >> you have wi-fi, right >> we put in the fastest wi-fi, yeah >> fastest >> yeah, it's important. >> what's the standard flat screen size that you put in the living room? and is there a flat screen in the bedroom? >> nobody watches tv anymore >> cable -- >> okay. how do you deal with -- you have xfinity in all of these rooms, comcast? >> we're actually working with comcast. i think we put in cable but to be honest, not a lot of people watch it >> never mind. i withdraw the question. >> in tvs in the bedroom >> no tvs in the bedroom >> as you said, millennials are putting off the social idea. >> we've got to thank alexis for hanging out with us. when are you coming to new york? >> next year when we come back, dow

component set to project earnings walmart's quarterly report will hit the tape in the next few minutes.

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new this morning, the brexit battle lines have been drawn pound plunges as a key minister quits. details on this developing market story is straight ahead walmart quarterly results set to hit the wire. the state of business coming up. and buffett's new bet with banks why the oracle of omaha is set on the sector as "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york this is "squawk box. ♪

good morning, welcome back to "squawk box" right here on cnbc at the nasdaq market site along with joe kernin and becky quick. take a look at equity futures this hour. dow looks like four points higher nasdaq would open about 30 points open. the s&p 500 looking to open about five points higher all right. brexit lines have been drawn teresa may needs to get the draft deal approved by the majority in parliament she's spoken in the last hour. willem marks has more. >> reporter: yes, approving the agreement that teresa may was pushing, this evening, two of the ministers announced their resignation about an hour ago. domenic robb, the man charged with this brexit and the secretary of work of

compensations for here in the uk three slightly more junior figures also tendering their resignations teresa may, though, quite a defined tone inside parliament over the last hour or so essentially laying out what she sees as the options available right now. >> we can choose to leave with no deal. we can risk no brexit at all or we can choose to unite and support the best deal that can be negotiated. this deal, a deal that ends free movement, takes back control of our borders, laws and money. leaves the agricultural policy and fishery's policy delivers a foreign defense policy while retaining a security operation to keep our people safe. maintains high commitments to high standards protects jobs, honoring the integrity of our united kingdom

and delivers the brexit the british people voted for i choose to deliver the british people i choose to do what is in our national interest. and i commend this statement to the house. >> reporter: now, not everybody here has been agreeing that way sentiment. and people inside parliament within the last few minutes even members of her own party asking her why they should not request her resignation. people from opposition parties, of course, saying this deal is shambolic. a chaotic affair has led to the resignation of jeremy corbyn and we're left with uncertainty. a huge amount of uncertainty >> do you know the levels of jeering? what's the worst jeer? if you really want to dispreexp your dissatisfaction we don't do that over here that's pretty bad, wasn't it

is that a high level of jeering? >> reporter: interestingly, joe, the man responsible for keeping order was saying on both sides, please, keep the jeering to a minimum. teresa may, as you pointed out, already facing a huge volume of noise from her party and opposition benches >> thank you dow component, as you saw on the bottom of your screen, walmart is out with $1.08 a share. that was a little bit after the $1.01 which is the sns and adjusted number. the revenue is a slight miss but we're talking $125 billion worth. and if you factor our currency factors, i think it's -- >> ex-currency is $1.49 billion.

>> and the u.s. expectation for that is 3.1. 3.4 is above that. very quickly what we've heard in terms of guidance we should point out the company's overall guidance looking at $4.45 a share so that lowers traises the lowe five cents and they're also saying u.s. counts at least 3% versus about the 3% they were saying before. so that's pretty significant >> right it is pretty significant i really like to look at the u.s. comp streak it is impressive to have a retailer the size of walmart and have 16 now, 16 straight quarters of u.s. sales comp growth that is mpressive. they just locked in 3.4% for this quarter 1.2%, but that number is small,

but think about the number of people that walk through a walmart store. traffic is now up for 15 quarters for walmart u.s and the nightly commerce sales, becky i know you look at that pretty closely, up 43% so that rate is the highest this year >> stronger than it would seem >> exactly and they aged overall for the average, 43% is the strongest number we've seen yet. and of course, we're going with the fourth quarter which tends to be the higher penetration over an index. and i did speak with the walmart cfo brett biggs on the phone today, he reminds us that the pace of change continues to accelerate and when it comes to consumers and worries expressed here on cnbc and otherwise that maybe the best is behind us. brett says, look, we haven't seen a change in the consumer over the quart euro prices historically are in

shape. and regarding tariffs and the current plan increase of 25% on january 1. biggs says, look, our merchants are all over it. they're planning for anything they might have next year, we'll manage our way through it but if you have large tariffs, eventually it goes to everybody. >> $300 million in sales -- $300 billion market cap >> and we still call walmart the world's largest retailer because of the revenues. >> i mean, if you look at it years ago, it was 10% of all retail sales courtney, stay with us joining to us break more to break down walmart's results is charlie o'shea he's the lead retail analyst at moody's. charlie, i know it's early, what do you think

>> it's another great quarter for walmart. we keep talking about the investment that the company has been making and when you post numbers like this it validates that investment piece. the company is running on all cylinders. i've covered the company for a long time and i don't recall a period where it's been running this well given what's happening on retail on the whole when you've got the amazon effect, et cetera this is an out of the park quarter for walmart. >> i will tell you, i've heard from suppliers that it's getting tougher and tougher with both walmart and amazon a lot of this is because of private label. it's always been that the walmarts and amazons have a lot of headway and leeway and a lot of control, but it seems like they're kind of calling the shots on everything right now. >> yeah. if you're a vendor -- i've heard a number of 300-plus it's probably higher than that, vendors with operations in bentonville which gives you an idea how important walmart is to the vendors. i can't imagine there's a vendor

out there for which walmart is not the most important customer. size has an advantage. with working capital generating massive amounts of cash at amazon wall mart has a similar phenomenon going on. walmart's also had the ability to, i don't want to use the world word here but entice its vendors to be a little more beneficial to walmart on price >> which means, with the cfo, when he's saying he's less concerned about tariff because they can spread the pain around? >> well, they can spread the pain around. it's going to be an issue that ripples throughout retailers and other industries as well so everybody's in the same boat. and walmart, in my opinion, will be able to execute better than anybody else >> will they be able to if it's a 3% gdp in the united states and unemployment is so low, walmart is so big it's going to

be reflected as the better operating environment overall, right? i mean, there's concerns for retailers, but walmart out of all of them, just seems like they benefit from the consumer being flush. >> again, the scale, the balance sheet, all of that, management quality, vendor power, you put it all into the soup, and it's a real tasty bowl of soup here for walmart. they've got levers they can pull you know, it's kind of hard to outrun walmart in anything >> more of a stew than -- >> pardon me >> than a broth. it's probably more >> it's probably more like a beef barley. a heavy soup >> charlie, walmart made it to 40 in these commerce companies do you think that's a safe bet should they be doing that? i know you look at the debt of walmart but yes, they are generating a lot of cash quarte after quarter. >> flip cart -- i said last time walmart has runway, and they do.

what walmart has been able to do historically is throw the purchase share lever when they need to. they can dial it back when they have to. they're kind of doing it now with the flip card transaction but transactions are sensible, yeah, there's room for wall mart to do some of that i think you'll continue to see that why wouldn't the company continue to buy expertise? mark's comments that walmart was the one to do that when they got jet and paid for it. blut they got ma but they got mark and his team some of these niche online businesses, they bring a lot to the table other than just the revenue. they bring expertise and insight into the consumer. and i think that's something that walmart will continue to leverage and to exploit. >> charlie, i want to thank you for your time today. >> great to be here. >> courtney, thank you we have a break.

we've got news on dell and what's been a fight between michael dell and carl icahn over the future of this very complex transaction that's been trying to take place between dell and tracking stock of vm ware which would bring dell back into the public markets dell technology announcing this morning, they're putting up a new bid for what is known as the class "v" shares price tag, they offered $120 in cash that's subject to what they say is an increased aggregate of $14 billion. there's a choice for investors here in this situation in total, this would value at company at about $23.9 billion the total increase is about $2.2 billion. we will see whether this satiates, the appetite and maybe some of the criticisms of people like carl icahn. we should say that michael dell has teamed up in this case -- i

don't want to say teamed up, but there are now binding agreements, they say, to vote in favor of this new transaction, executed with dodge, cox, elliott management, canyon partners and mason collectively, those firms hold 17% of the class "v" common stock making it much more likely that this will take place you're looking at that stock up only 1% in the premarket but we'll keep an eye on this story and bring you more as we get it in the meantime, i want to get to steve liesman, because fed chair jay powell spoke last night and made provocative comments and mr. leaiesman is here >> yeah. with fed rate hikes not so much in december but in 2019, that follows overseas on brexit and the comments by jay powell last night. powell said the economics have worsened since the upbeat days

of 2017. >> i think this year has seen a gradual chipping away at that picture. you see a bit of a slowdown. not a terrible slowdown. you still see solid growth, but you see kind of growing signs of a bit of a slowdown, and it is concerning >> at the same time, powell was positive on the u.s. economy and suggested it made hikes to continue at least near term. >> our policy is part of the reason why the economy's in such a good place right now we have 3.7% unemployment. the economy is growing at 3% inflation is right on target and there's pretty good reason to think that we're going to continue, you know in a positive vein like that so very pleased about the state of the economy right now >> all right let's look at how the fed fund futures have processed all of this first, look at december fed rate it was trading at a high for the contract it's not even a week ago at 90%. that's now down -- this graphic is not terrific in that it doesn't show down to 78%

so, that's pretty much aloft this quarter point now take a look at probabilities that have happened for next year there's december on your left. that's come down since tuesday but they're under 50% for the first rate hike of 2019. now trading at 48% and that september which had been above 50%, and as high as 60%, now whittled away now, i will say walmart is one of the few companies that for me is kind of like the macro indicator. >> uh-huh. >> so, you've got to be careful because walmart could be taking market share in which case it's less of a macro indicator. >> or if there's a downturn in the economy. >> or people looking for bargains, right. however, it seems very hard to have the kind of growth they reported this morning. and be stealing market share >> right >> that's got to be -- what do you call that, indigenous or

organic. that's the word they use >> right >> and more importantly is the outlook. we want to know, there's a sense that people became flush with the tax cuts >> uh-huh. >> now, we don't know if that's all there is to it suspicion that maybe there is more and when walmart says we think this is going to go on -- >> well, they raised their guidance and macy's reported better numbers than expected. >> right >> and also talked about how october was the best of it the stock sold off there's a lot of things going on, but if you're looking for signs of the consumer strength, they're there for walmart and they're there for macy's yesterday and macy's seemed very optimistic about what they're seeing right now >> and one could get lost in the weeds with all of the talk of business spending and the consumer remains 70% of the u.s. economy. >> right >> we have the tax cuts and the

jobs and lower gasoline prices are a challenge for the consumer >> right >> now, headwinds we've got to think about the global slowdown here which i'm not clear how deep that is i think that there were some excuses for germany and japan that are worth thinking about. >> emissions. >> emissions and you not getting your car >> yeah, exactly >> joe, do you have one porsche or two, how many do you have, just one >> who do i look like to you alexis ohanian i have one, leased >> one leased? >> yes >> do you realize if you bought that porsche you would have a $100,000 trade deficit with germany? do you realize that? >> can i read these -- i want to continue this tweet eventually >> okay. >> i like it when dot, dot, dot -- because you don't know what's coming. it's a really good tease okay we got the new guy, where the

doj said he's allowed to do that, right? >> whitaker. >> yeah, we got the new guy. now, who knows what trump is going to do, right and then you got flake who says, no, i'm not going to vote on anything until we protect mueller. trump says the inner works of the mueller investigation is a total mess they found no collusion. they were screaming and yelling at people. they are a disgrace to our nation and don't dot, dot, dot -- earlier this week, we were supposed to hear about roger stone and jerome corsi >> very likely coming. >> now, we've got whitaker and him ramping up the rhetoric. i don't know what that means anyway, we'll wait for the next tweet. >> since that's exactly in my line of expertise, i'm going to comment -- no, it couldn't be

fur further afield of something i know about >> but the fed futures -- maybe that's what's going greenspan's comments >> i don't hold a lot to that. i think the president's goals are laudable i think he has mistold the relationship with people in china. guess what, china sberled the w

tch entered the wto less than 20 years ago. okay when they entered the wto, tariffs came way down. in the middle of that, we had negotiations with them that unpegged year one. that is what happened with our trade negotiations i think our allies help. this process, i think getting kle china to move on this technology issue is important -- you've got to go, becky >> we've got to go but we have a big interview. >> we're going to get a chance to talk with richard clarida it will be his first interview a guy on cnbc that i've known for 20 years he's a monetary expert along with stan fisher, the vice chair. >> do you got to travel for that >> i've got to go to d.c., but i'm taking the train today

>> we'll see you here tomorrow 8:30 >> first class >> i don't go first class. who do you think i am? >> joe kernin? >> andrew ross sorkin would be choppering still to come, the markets and your meyon and the ceo of procter & gamble we'll be right back. you're still here? we're voya! we stay with you to and through retirement. i get that voya is with me through retirement, i'm just surprised it means in my kitchen. so, that means no breakfast?

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teresa may's top brexit chief hands in his resignation we'll have more overseas in just a few minutes. coming up, the $5 billion export oil/gas industry. brian sullivan joining us with a preview. good morning to you. >> reporter: coming up after the break, we're going to tell you what that ship behind us is doing that has never, ever happened in the history of the continental united states. the global energy race for dominance is officially on as of today. that's all coming up next. >> announcer: time now for today's aflac trivia question. how much on average do households spend on food in 2017 the answer when cnbc "squawk box" continues aflac!? no-good break. gooood break. the answer when cnbc "squawk box" continues households spend 2017 the answer when cnbc "squawk box" continues

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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 >> announcer: now the answer to today's aflac trivia question. how much on average did households spend on food in 2017 the answer, $7,700 some breaking news this north. saudi arabia's top prosecutor just announced he's recommending the death penalty for five suspects charged with ordering and carrying out the killing of saudi writer jamal khashoggi that announcement by the top

prosecutor appears aimed to place blame on mohammed bin salman whose decision making powers were in the outcry. we will see whether this changes the dynamic and, perhaps, the goal of the conversation but for now, i think there's still some skepticism. no one else, the race for the global energy dominance in the market took another big step today as national gas imports marked a first in texas. cnbc is there exclusively. brian sullivan is there in corpus christi, texas. good morning, brian. >> reporter: hey, good morning you know that liquefied natural gas, lng, but maybe you don't know how big this market is and projected to be. as of yesterday there were only three lng export terminals in the united states, today will officially mark the fourth because the ship behind us marks

the first ever shipment from the new export facility here in corpus christi this is the first shipment ever from a purpose-built export facilities in the lower 48 states the other three, by the way, were import facilities, remember, we thought we were importing natural gas that had been converted now as we say the shale oil booming, america is awash with natural gas so the lng business is growing you guys were talking about china earlier. you were talking about the potential of a global economic slowdown there's no sign of that from the energy side because the majority of liquefied gas from here and other locations in america is going to go to china here's the story i know everybody's talking about oil and the 12-day slide the price of natural gas has gone up, but this facility doesn't really care that much about the price of oil here's why as the price of oil moves, the market moves a little bit but

the buyer is the one that absorbs any extra cost so it's a little more insulated. we got a chance to talk with the ceo of shanear, we talked about how much the shale oil boom matters to what they're doing here >> we've seen incredible growth in natural gas all of type-one development coming out of permian is at our door step at corpus christi. as fast as they can build the pipes, we're happy to get that gas. >> reporter: guys, 13 different pipelines coming here. it's a very cool, $15 billion facility, by the way, guys and that ship can light 50,000 homes for a year with the natural gas on it behind us. >> brian sullivan. looking good that's one hell of a shot.

it looks quite pretty. >> reporter: i have nothing to do with it, but thank you. when we come back, a lot more, procter & gamble and the u.s. chair jim ryan join us to discuss the global economy and much more. take a look at u.s. equity futures at this hour alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. and among the stories that we're watching this morning, uber's losses ticked up to nearly $1 billion in a quarter and growth continued to slow adjusted net loss at $939 million compared to $680 million lost in the second quarter the company's slowing growth could be contributed to uber's rapidly diversifying businesses. and new transportation offerings like bikes and scooters. ebay is headed offline the online marketplace comes to life on friday offering a brick and mortar interactive toy taupe

pie taupetopia in new york and bitcoin plunging below 6,000 and that's understating it because you're now talking about $5423 for bitcoin. it's down 60% since january. >> i still got the touch, man. i do >> calling -- >> $8400 >> 8400 went -- where did it go? >> i think one place where you can buy it, something didn't work i tried three times. and they closed me out for 24 hours. and i never tried again. >> saved you some money. >> saved you some money. >> but literally, $8400, and it's been going down since and i blame you. >> i always thought if you got below 6,000 it was worth the venture. >> but i thought it was said you had to get in over 5,000 >> and we had alexis ohanian a

coin investor said it's good to see the shakeout, i don't know how much of that is happy talk around us, but good to see the shakeout and focusing on the hard work. brexit news breaking overnight literally. the british pound sinking against the dollar after the uk's brexit minister resigned. and more pressure on prime minister teresa may. and wilfred frost joins us now with the developments. which are like so many things -- you know, politics are tough enough for us in this country. and when we delve into other places, a lot of this has to do with northern ireland. and the way that that's handled, right? >> yeah. the two issues he resigned on are northern ireland but also whether or not britain will be purely a rule-taker as opposed to a rule-maker moving forward. those are the two big ones he outlined to summarize things, prime minister teresa may's cabinet

unity has cracked after she tried to sell her plan to brexit to her cabinet two members, ester mcvey and domenic raab now sterling has plunged and sits down 1.4% against the dollar stocks also reacting, the uk banks in particular. but certain european exporters to the uk as well. the resignations are ablow because teresa may's plan needs to get through parliament. if they cannot keep the support of her closest allies in particular how can she tackle parliament now, how can it get worse for may, well, two ways. if the resignations continue and she can't continue and throws in the towel. >> throws in the towel and says what >> i've done my best her tone this morning suggests that is not likely

that she's defiant or she faces a vote of confidence triggered by her own mps outside of her cabinet for that they need 48 of 316 mps to call for a vote she then faces a vote as soon as the following day where half of the 316 mps would have to vote to remove her. >> if she's removed, what's the most likely scenario >> if she's removed -- the last few months it's been between 172 and 128. if you think if she's removed, the pan would drop >> politically, which side as the upper hand >> sure. it would increase the chance of a no deal, more than it would increase the chance of a second vote the reason be, the default, if nothing happens if neither side makes a very clear argument for which is better, the default is that britain crashes out of the eu with no deal.

>> so, if there's a hard crash, what does that mean? hard crash out >> it means all of the current trading arrangements -- >> just end? >> -- just end and the reason you're seeing the banks have the most is because they have the most complicated issues >> some of the banks have already moved some of their headquarters -- not headquarters but have moved some of their operations out. >> they've moved some out. but u.s. banks have picked where they want to go and got office space ready so they can kick into action the no deal plans. the 4% highlights for the uk banks that this would be a pretty big blow for them >> what were you saying about bmw -- >> bmw was down today clearly because they have exports for the uk but for them, it just means there's going to be some kind of tariff imposed and the price of a car will be higher and there will also be supply chains issued. but for the banks, it's the crux of the issue if she goes, the next step is

leadership election within the conservative party >> who wins in that case, the -- >> a vote now would be one would think almost purely based on the topic of brexit. >> right >> clearly if you go towards a hard brexiteer, then the panel will be articulating a tougher negotiation and to go for no deal but if the board went for someone articulating an argument for a second referendum, then that still leaves a lot of uncertainty but you probably wouldn't get a sharp reaction. i think the pound by the way would react badly either way >> thank you we're back to the -- we better summaryize the first one. the inner workings of mueller investigation are a total mess they've found absolutely no collusion. they're screaming and yelling. they are a disgrace to our

nation and dot, dot, dot, don't care how many lives they've ruined -- they ruin, it says these are highly conflicted bob mueller, who worked for obama for eight years. >> if we're going to report the twe tweets, i just want to add one sense -- >> do you want to get some editorial -- >> no, i think we should add some semblance of context, historically, when he's written something like this, either something is about to happen, or he's very anxious that something is about to happen, or he feels cornered >> two days ago, i thought we were supposed to hear about more indictments. and that was the lead story on a lot of the news. >> the reason why -- to the extent that we report on these type of tweets, i would argue the reason they're important is because he also historically has acted out or in other ways

related to policy or people around in the white house. >> you're claiming the wag the dog thing now? you think we're going to do something with -- >> i don't know. i'm just suggesting if we're going to to contextualize -- >> we're not contextualize -- i can guarantee you, twitter sphere is about mueller. one side contextualizes one way and the other side contextualizes like you. in the meantime, i want to talk about equities in the fixed income market right now. the high yield bond market is going to be affected by this it is falling, though, in part on concerns of what a possible ge bet down would be we're going to talk to randy james. and andrea garcia, chief executive officer. good morning to both of you. can we talk about this ge situation and how much -- what kind of ripple effects since you're sitting next to me, what

kind of ripple effects do you think ultimately they could have >> just a reminder of being endanger of a high-quality stock, this ask a wake-up call if you have a high yielding stock and a blue chip, you're in good shape outside of that from an idiosyncratic standpoint, i think the market is just trying to look at one stock to point to as kind of a scapegoat for the downside there's a lot of prize momentum. it's going to be hard to turn around the story >> kevin, do you agree with that >> well, i think ge in particular is reflective of ge as they go through righting the ship i think it's a little offshoot of what could happen that's worth watching. we've seen spreads go up or widen out all year long

but in the last week, they've made their biggest move. but on the flip side of that, dow dupont made a deal yesterday. >> but, kevin, "the wall street journal," the first front page points out that these bonds are now attack trading at junk status, even though that's not where they're rated yet. we don't know what's going to happen from the ratings agents but we've also point out if ge goes all the way to junk status, you're talking about ge making up 10% of the $1.2 trillion junk market what would that mean >> well, obviously, it means a lot. especially because so many of the ge bonds are in institutional hands and they've been the biggest sellers of late there's also covenants that would require them to sell even more if the downgrades continue. it's important for ge to get the asset sales out of the way raise their cash, reduce their

debt levels so this doesn't happen again, it's somewhat contained i'm not sure it spreads beyond ge right now >> if we are seeing spread -- the other day, larry said, look, i feel the accuracy but i don't want to rush is that the accuracy in what he should be thinking how much urgency to this should there be >> i think the markets want him to rush as fast as he can to try to put some clarity out and build up cash here because these dead loads are hear. >> i know you think it's an idiosyncratic issue, but you also allude to the issue that it could spread just walk us through the permutations of what that could look like if that was the case >> so, what you're seeing right now is every new deal that seems to break lower, versus, you know, we've spent the last three or four years every new deal

gets priced. titans its spread and new cash comes into the marketplace so, what we're looking at now, this has been on the lower stack. we've seen emerging market and high yield and now as we move into the investment grade credit, we're going to have to pay attention to each new deal, how they break into the sale. and how much is reflected into the company itself if earnings continue to go well, i don't see a big problem, if they start to fall, it's going to reflect on the new companies. each new deal -- we could see a drop pretty quickly. >> 20 seconds. we've got to run >> no problem. one thing to keep in mind outside of ge for high yield is energy stocks, right, energy companies. with oil falling the way it is that's a much bigger trend that's not idiosyncratic >> okay. we'll keep an eye on both. andre andreas, thank you kevin, thank you coming up, david taylor, ceo

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over 100 ceos gathering in new york today for the ceo action for diversity and inclusion program. and two of the participating leaders are here now david taylor, procter & gamble chairman and ceo and tim ryan, pwc u.s. chairman and senior partner and founded the ceo action in reading about kim, it's not totally access, it's happy talk and action and benefits. i think so you had to look at it and really consider things, david. and the more you look into things, you see it makes sense, probably >> yeah, absolutely makes sense. it's a coalition of ceos that are concerned about how to turn

on all of the human capital. and there's a significant portion of human capital that wasn't fully turned on and finding ways to create dialogue in our company has made a difference it's made a difference on our company and employees. it also makes a difference on how well we conserve consumers, or more broadly, diverse consumers. which is important to our business and the coalition is now about 500 companies, that can share best practices, that can identify ideas in this area, if we're along with each other, we can create a better marketplace for everybody. >> and, tim, there must be some type of complicit bias that most people aren't even aware of. for example, gender issues and the number of women in positions of ceo. >> we asked ceos to come in, one of the reasons why we did ceo action, we wanted to start at the top.

we knew that ceos could do remarkable things and if they can, they can do better. and one area to do better on is implicit bias. one of the things here is to make unconscious bias training available to all of the employees, not just the executive team in fact, we've put it out on the website for anybody to use so we can all learn how to deal with our biases to learn to be better leaders and a better community >> there's a poll that cited how many individuals would like to see social justice issues take on by ceos i think it's a nuance position i think in this case, absolutely makes sense. but in other cases, one individual social justice issue is another individual protest movement, because we're sort of divided. >> yes >> this one, i think everybody can probably agree with. but at procter & gamble how do you view activists, ceos, in

terms of across the boards -- let's say san francisco social justice issues do you think p&g needs to adopt every one of those >> p&g needs to understand what is important to our employees and create an environment inside our company where people can perform at the highest of their potential. we also need to find how to connect with consumers throughout the country, consumers that are very diverse. do we chase all of the social justice issues no do we listen to our employees and understand what is important to them? absolutely and this is very much focused on trying to take advantage of the fact you take 500 companies that are collectively learning a variety of different things, we can become better faster there's many areas we can compete. in this area, we can create a better culture inside our company and done well. >> we're so excited to have you here, david. just because we don't get to talk to you that much. but you had the best sales growth that you had in years, in the most recent quarter.

how are you approaching the small, the niche millennial, you know, they want to have -- i don't know, take your pick of a small niche brand versus a procter & gamble behemoth brand. how do you look at the future? >> answer is both. we compete in ten categories in each of those we have generally the leading brand or number two brand most of them the leading brand but you've also seen us add additional brands where we believe it's a small brand today but we want it to be a big brand. we're not about having 500 little brands but we are about having a segment of consumers that we can grow and you've seen us do three or four of those in the last year the big brands are going faster why? because we're undressing needs that consumers have.

>> we heard from walmart this week and it's doing well. how much have we had to have the number one or two brand to have the pricing in the world >> it certainly helps a bit. the number one or two brand does a number of things because it brings people in the stores. and it meets a consumer needs. as long as we're in touch with consumers, staying focused with consumers, we'll be well positioned, whether it's walmart or any other retailer. consumers consult online to solve their needs, solve problems >> let's go back to now, there are only five women who run, are ceos of the s&p 500. >> right >> three african-americans three in the whole group if you look at the pipeline inside your company, inside your company, in your succession plan, you get hit by a bus when you leave here, i hope it doesn't happen, will either of you be replaced by either a woman or someone of color?

>> andrew, let me narrate that first. a couple of things i'm very lucky to have been blessed with my predecessor who is serious about succession plan my adviser practice is a african-american man, and my adviser is a woman i hope i don't get hit by a bus tomorrow -- >> you just bought a bus >> we did just buy a bus that being said, what i think is important the work that ceos need to do from the ground up making their companies inclusive at every level not just so you look up but on every single level on the ceo website, there's over 400 best practices that anybody can look at to figure out what they can do. >> how about you >> we just named six ceo sectors, three are women and i have african-american

women. anden in the top team, we have representation across americans and nonamericans, southwest most different forms of diversity we believe it's critical to win in the future. we want to serve consumers around the world we need to be represented by people that understand them. >> do you carry around a handkerchief when you watch the dollar index and sort of dab your forehead? has it gotten worrisome yet? >> yes, it is worstsois worrisoe >> yes, 60% of sales outside >> yes, 60% outside. >> have you talked to the president about it >> i have not talked to the president about. >> say hi to mueller not robert mueller -- whew >> when we return, check out the shares of walmart up by 1%, better rising guidance "squawk box" will be back.

coming up on "squawk box," ray dalio's latest market call with heightened global call and trade tensions why he says saving cash is the worst thing you can do that interview is straight ahead, right here on "squawk box. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. i cowe can do theyour screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes.

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earnings alert, walmart posting a bottom rise. we'll show you how wall street is reacting. and two big newsmakers first, ray dalio, founder of bridgewater associates we're going to ask him about the rising rates, the fed and where to invest when markets turn volatile and majority leader kevin mccarthy, preparing to turn over the keys to the house. if the democrats will ask him about the impact of divided congress and your investments. we'll find out as your final hour of "squawk box" begins now. ♪ >> announcer: live from the most powerful city in the world new york this is "squawk box. hi good morning and welcome back to "squawk box" here on cnbc live from the

nasdaq market site in times square take a live look in washington snow is falling right now. i'm not even going to say -- i'm going to call that a wintry mix. >> did you know they already had snow in houston? >> yeah. >> before they did in boston >> it's a wintry mix amazing. i'm joe kernin along with becky quick and andrew ross sorkin i have another problem because i'm not going to get my snow tires put on the car i have because the new one -- a lot of things personally being affected the futures right now, they were up, quite a bit earlier. not sass nudge now 14, 12 or show 20, 21 on the nasdaq and the s&p up by less than a point. treasury yields, as you might imagine with the renewed turbulence in the equity markets are testing the yield. 3.2 on treasuries. there's the story.

it all has to do with teresa may and brexit and the british pound seeking against the dollar after two uk cabinet ministers resign putting more pressure on teresa may brexit minister domenic raab said he couldn't support may's divorce agreement because the eu -- he couldn't reconcile the deal that his party made to the country. and work and pension secretary also resigned. may also speaking to parliament earlier this morning to jeers. >> mr. speaker, what we agreed to yesterday is not the final deal it's a draw of treaty that means that we will leave the eu in a smooth and orderly way in 2019 and respects the framework for a future relationship that delivers in our national interest >> you always think of the british being so proper and

polite until you watch that. >> not parliament stuff. >> shambolic, is that the word >> yeah. >> remember, somebody got punched out? >> yeah. right, we've seen other parliaments where they throw shoes at each other and heckle each other european bond yield is falling as u.s. looks for safe havens meantime, british bank stocks are sinking. >> rbc now down over a percent >> 8.5%. >> barclays -- >> in the meantime, walmart reporting quarterly earnings $1.08 a share. that beat by seven cents revenue did fall slightly short of forecast. analysts are not always great at nailing, if you look the at it without the currency changes they also came in better than expected and also raising its guidance for the year. and the u.s. same-store sales up

by 0.25% and they say they will be up about 3% for the year. joining us now to break it down further is miking lasser, analyst at ubs looking at the quarter strong quarter, looks like the consumer is in good shape. what's your takeaway >> good morning, becky my takeaway is a solid quarter with more positives than negatives. positives were tightly managed expenses and items came in better than expected to drive. and the forecasts were better than the published forecasts slightly below what was in the embedded stock price of 3.5% still, there are things to like about walmart in this environment. and that will provide support to the stock, namely three. we're probably about six months away from a slower consumer

spending environment, as the boost from tax reform starts to fade and the market is going to continue to discount that. so there's a wave from some retailers that were disproportionately moving away from that. there's a host of uncertainties in the world tariffs, rising rates, rising costs. walmart's in better position because of its size and scale to withstand those uncertainties than others. and three, walmart's got a good plan and is run by a talented team and we're seeing results of that in its performance and those three factors provide a lift to the stock at this point. >> i always think of walmart being a company that can do very well in an up-market like it is right now, with consumers having jobs and pay raises, i think it's a company that can do very well in the downturn where people start to turn down and look for cheaper priceses ju just looks like good management

with the team. what do you think? >> i agree with you. the team deserves a lot of credit and walmart has not always operated to its fullest potential. and there has been opportunity there. and this team is unlocking that opportunity. not only that, but they're positioning it in the future for what they're investing in today. i think we're seeing signs of that in the financial performance. and we probably will continue to see that, independent of how the macro environment is it positions walmart well. >> when you're talking about the investments, you're talking about the investments they're making online? or you're talking about the actual investments in the stores and the people >> i'm talking about all of it i'm talking about e-commerce generating 43% e-commerce growth this quarter i'm talking about what they're doing in the stores. and it's not only investing in their people which is the right call to make, but also deploying robots to do tasks that otherwise would have been done a labor-intensive model. and that's saving money and

leading to better outcomes and they can redeploy those savings to more labor-intensive tasks. also positioning it for the future in terms of international business like flip card. >> bernie sanders went after amazon and jeff bezos in particular where he wanted to force him to pay more to their people amazon went ahead of that getting legislation passed and now bernie sanders is going up against walmart with new legislation that would force big companies to pay at least $15 an hour to their people or they wouldn't be allowed to buy back shares i don't think it's very likely that legislation goes anywhere, but it does speak to this populous sentiment out there walmart was the first one to say it was going to be paying for to its workers. but how much risk does it face politically for moves like this?

>> well, putting the politics aside, more importantly, economically, we're until a situation where there's less than 4% of people unemployed and that's going to put upward pressure on wages. and for a retailer like walmart that employs a lot of people, they're going to have to be mindful of what's happening in the marketplace. i trust that they're going to respond and continue to be ahead of that, and do what's right both for their employees and what's right for the business. >> michael, thanks for your time today. we appreciate it retailer jcpenney also reporting sales well short of estimates down 4.5% as the company tried to lure customers into the store with discounts. that's much worse than 6% that analysts had expected. it you look at the stock, down over 10% berkshire hathaway is doubling down. a company found that they took a

$4 billion stake in jpmorgan and also bank of america, goldman sachs and b of new york last year. and berkshire revealed a $2.1 billion stake in the software company. all right. appaloosa has a new stake in apple. appaloosa bought 100,000 shares somewhere in the third quarter and also revealing that it cut its opposition in facebook and now holds 1.3 million shares and also cut its stake in alibaba and reduced bank of america by more than a half. when we come back, we have ray dalio, founder of bridge award. and then we have kevin

mccarthy he'll be taking over the role. he'll tell you what the divided congress could mean for business and your investments stay tuned you're watching "squawk box" here on cbs. cnbc xfinity mobile is a new wireless network

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welcome back to "squawk box" this morning take a quick look at futures we're now in the red this morning. the dow looks like it would open off 20 points. nasdaq off and s&p 500 off by 4 points things have swung around joining us from the granite economic forum ray dalio is here founder of hedge fund bridgewater associates >> good morning. welcome to greenwich, connecticut. >> thank you for that. we want to get your sense of where we are in what seems like a very complicated market these days we have a lot of volatility. we have questions about tariffs and trade, of course and interest rates you've always put the markets in the context of the economic machine. so where are we within that machine?

>> well, you know, there's the short-term debt cycle, ong-ter debt cycle and productivity. we're in the late stages, maybe the seventh, eighth inning of the business cycle, right? we're in the part of the cycle where there's been a lot of monetary easing. central banks bought $15 trillion worth of assets, pushed them up a lot. we had the benefit of a corporate tax cut, all of that systemation, and as a result, we're in the late part of cycle where there's a tightening of monetary policy. you know, so it's kind of the late part of the cycle with that that's fully priced. and in terms of the longer-term debt cycle, we're at a point where interest rates are comparatively low, the capacity of central banks to ease monetary policy is limited, united states is limited, and other companies, limited

so that's where we are, we're in a position also where we have the emerging power china competing with the united states as an effective power competitor that's very much like the late 1930s. i think that's where we are. >> let me just go back a second. the 1930s are a complicated time but specifically, on the issue of the fed and interest rates in terms of where we are in the cycle, there is a debate, as you know, about whether interest rates should get hiked and how strong the economy really is or isn't what do you think? right now, the fed expects to raise it bone more time this year probably three more times next year i think there's a problem in terms of asset practice. i think that rate of increase would not be able to be made because we've raised interest rates to a level where it's

hurting asset prices we have now, a flat yield curve. we have -- in other words, you can now get in a two to five-year note, you can get about 3% and you have a no material price risk so, we're in a situation right now that the fed, i think, will have to look at asset prices before they look at economic activity it's a difficult position. because that stimulation that they have in the form of those tax cuts is a big stimulation into the capacity limitations as we have low slack. so that the economy itself will pressure them to raise rates i think probably too much. i think we have a supply/demand problem for bonds that will particularly come next year and the year after in other words, because of that tax cut and the deficit, we'll have to sell a lot more bonds. and united states itself can't

absorb that quantity of bonds. so we'll have to sell those bonds to investors in other countries. you look at the portfolio of those, and they have a lot of those that are sort of overweight in that bond. so i think there's a supply/demand imbalance and a difficult position for the federal reserve. >> just to put a fine point on it, it sounds like you're recommending if you're jay powell you might slow down, similarly to what the president suggested? >> yes i would look at what is discounted in the curve. and realize that that's discounted in all asset prices it's discounted in baun ed ied . it's discounted in real estate equities it's discounted in private equities that rate of exchange. and i would keep it certainly not faster than that, and i would probably keep it less than that you know, the risks of asymmetric on the downside, because if we have a little bit

overshoot in the inflation rate, you're going to be in a position where it's not going to be a problem. who cares if you have 2.5% or something. it's not going to run out of control. but if you have a downturn, first in asset prices and then you have a downturn in the economy, it's an asymmetric risk it's a serious risk. we have a downturn, i think the conflict is going to be greater, i think that's a big issue and i think also, the tools are not as effective on the downside i would err on the side of easier monetary on the curve >> let me ask you, if you're concerned about asset prices one of your peers, dan lobe recently just wrote, we have delevered our portfolio, reduced our tech exposure and lower ed the short

book >> we've gotten the good behind us and i think assets are fully priced and i think they're asymmetric risks like i said, i won't talk about our positions, but i think -- i think the upside position is not as strong and relatively to the risk >> ray, that made never made much sense to me, you said we have the tools some people think we need to raise rates to get to the point where we need to cut them. does that make any sense to you? >> that sounds like pretty bad logic to me. >> you know what they're saying if you're up that, you can keep cutting but when you're all the way down near zero, you don't have a lot of cuts you can make in case there's a downturn >> yeah, but --

>> to go all the way down is crazy. >> yeah, but i'm telling you what's built into the curve, what's built into all of the markets is existing interest rates. >> right >> i think the federal reserve should use more macro true terrib prudential policy. there are bubbles emerging but macro prudential policies, what that means, if there's a regulatory authority that can deal with certain bubbles as they're emerging to be more targeted, than using interest rates as a whole >> hey, ray, talking about bubbles, do you worry about high-yield bonds we were having a conversation earlier today actually about general electric, a connecticut-based company whose debt has come under a lot of pressure of late >> boston based. >> now boston based, yeah. >> a lot of the high-yield debt market has gone into leveraged

loans and clo. and so, as a result, it's off balance sheet -- i mean, it's private. and there are parts of that market more than the particular high yield debt market although if i was to take double "b," that triple "b" types of debt, i think that it's more than fully priced. >> but, ray, i'm wondering if can you shed a little light on what might happen to the junk market if ge heads towards junk status i mean, it's kind of trading there based on the credit default swaps at this point. it's headed that direction if that were to happen, you're talking about ge becoming 10% of a $1.2 trillion market that seems like an awful lot to absorb what kind of aftershocks would that potentially have? >> because -- i think ge's

problems are well recognized in the market >> right >> and probably reflecting those. because there's a lot of index funds or etfs where the investor experiencing a sting looks at that asset as a number of assets, you could have more contagion to the other markets, as they say i don't want that kind of fund and then even less stress funds would experience some sort of contagion. so, yeah, there is that kind of risk >> ray, i wanted to ask you about china. i know you just announced a new fund that's actually going to be based in china and you spent a lot of time there. perhaps we're in the middle of what some have already called a trade war, given the tariffs just speak to what you think of the potential trade war and how you think it will ultimately shake out.

>> the trade war i think can be worked out, trade balances i think from a chinese perspective, american perspective. but it goes well beyond the trade war, you know? there is this now competition, real competition, in the world, in supremacy this is the first time since the '30s that we've had an emerging country that is a comparable power, really, to the united states and there are issues there so, those issues have to do with property rights. they have to do with access competition. they have -- they're geopolitical they're a number of things i think that the trade issues can honestly be dealt with it's a broader issue that will be with us for a long time and i think what most fundamentally it has to do is a different approach to life a different approach to how they think governments should work. as one of the chinese leaders

described, it's basically a top-down, versus a bottom-up type of approach, you know if you were to look at gaming, by way of example, playing games, video games and you go in kleichina, they wl have a point of view as to what their kids should watch on video games that exemplifies this. show they will control it can't be a certain amount of hours and certain games. that would be a top-down decision in the united states, we would not want the government -- the system, to bottom-up so, it really goes back to confuci confucius, in 500 b.c., it's a very different approach. so, when you look at the 2025 plan in china, the government believes that they should have a plan for making china great. and they work that plan. and then they'll have coordination between the parts so, yes, the military will cooperate with the tech companies and so on.

that kind of actionivity is objectionable to the united states because that is viewed as something that is different. so, that kind of identity issue, or those types of rivalries, will be with us for a long time, even though the trade issue itself i think can be dealt with >> ray, before we let you go, i want to talk about a perhaps more local issue than this global issue, which is where you're based right now and the conference that you're attending. and i know there's a number of big speakers, including yourself later today. this is the greenwich economic forum. but there's a big question right now about hedge funds and connecticut. the state of connecticut taxes in connecticut whether it's actually the right place for firms like yours to be based, given the tax rates there. how are you thinking about that, given that some of your peers have left the state? >> well, you see what greenwich, connecticut is, i mean, it's a

fabulous town right outside of new york city. so easy access to the city fabulous community and then its vitality, it's great intellectually, it's very stimulating. there's a culture here that is great, community, all of those things and then there's this issue of the state issue. i think that the state is going to approach this in a very effective way. we'll see. you know, there's a new government and so we'll see how. but the approach, even new york does, in terms of long island city and the bringing in, creating a tax-free economic zone for example, you could take bridgeport, and you could take new haven, and you could take hartford, connecticut, and make those tax-free economic zones and bring in vitality to the state. i think it's really going to be a test of the cleverness

and it's an issue that they're going to have to deal with one way or another it could be very harmful to the state. it's a risky issue because the polarity between the high-income areas and the other parts of the state, which are really suffering, cannot be touched it's a challenge >> before you pull up stakes and move down to zero income tax florida, you might want to temper the recounts. wait a couple of weeks before you decide >> he's not deciding he's staying there >> no, i know. >> by the way, what do you think of your peers that have moved to florida? >> the joke's on them, maybe >> well, i think the tax issue is an issue of consideration and the worst case scenario is a bad scenario for, not just connecticut, but some of the northeast -- new jersey is a good example new york different parts. and i think that model has to be department with by bringing in a

lot more revenue, by creating, you know, a different approach but it's understandable. it's not just -- it's the whole area wherever you have taxes. san francisco is dealing with the same thing like nevada it's a national issue. >> ray, we only have a few seconds. very quickly, what you're talking about creating these zones it coming under protest from people in new york city right now? >> i'm sorry, i didn't get that. say it again, please >> people are protesting the tax giveaways to these wealthy companies like you mentioned for long island city >> no, no, i'm saying, i think if you take -- i don't think you can cut taxes. you have to raise tax revenue. >> right >> issue of raising tax revenue is -- it's much the same as if we're looking at amazon going to long island city >> right >> is that going to be a net benefit? or is that not going to be a net benefit? and you got to take a sharpensle if you take a free economic

zone, i've seen this happen in a lot of places, and the impact of companies who are not there coming into a tax-free economic zone brings net revenues and we need net revenue. because you can't cut expenses it's not humane. you can't raise taxes. if you raise taxes people are going to leave more. you have to have something like that >> ray, we want to thank you it's a pleasure. you have to get to a panel we have some breaking news to get to as well we appreciate your time. thank you as always. we look forward to see you again very soon in davos, i think. actually, we are -- let's get to the jobless claims, retail sales and import, export prices go ahead, rick >> yeah. come on down november read on empire for the gotham city 23.3 that's better than the 20 expected, sequentially, obviously higher than 21.1 in

the rear view mirror and the sales, up 0.8. strip-on auto up, up 3%. if we look at the control number plugged into other numbers up the food chain it's up 0.3 that follows up 0.5 on the control. and the highest reading of 2018 thus far is chaired by both july and may. we just see philly hitting 12.9. that say miss. we're expecting 20, following 22 import prices for the month of october, up half a percent that is much more than expected, although everything more than expected there we gave up in a revision last month. eased up 0.5%. down 2t0.2. if we look at export prices up

0.4, that's hotter than expected as well. and finally year over year, 3.1. import prices year over year were up 3.5% we've seen a lot of pricing movement both import and export some very counterintuitive to tariffs. by looking at interest rates, mostly downward bias around 3.09 and free equities up a smidge. i mean just a smidge joe, back to you >> rick, thank you let's get to steve liesman, he was -- i don't know, twitching and grunting >> there's so much to digest ray dalio's comments were interesting. the retail sales report is kind of like a trickle -- maybe, i don't know it's a strong report now, i have to say a piece of this is 3.5% increase in

gasoline sales that goes away but what does that do? that frees up money for other stuff. miscellaneous stores, 0.6. nonstore retailers, those are your internet retailers baked in there. 0.4. rick is right, what's important this is the report of th consumer in the fourth quarter what is this doing it's highlighting and echoing, and bolstering walmart >> and macy's yesterday. >> you keep adding that. >> just because it's a different consumer >> and motor vehicle sales, up 1.1% electronic appliance up 0.7. i can't say -- i honestly don't know how to look for this, in the 30 years i've been an economics reporter i've never really had to look for trade tariffs in import numbers. but it could be there's a piece of inflation in the import numbers.

>> not our tariff -- >> whose tariffs >> everybody else had them on in your 30 years. never mind keep going keep going. from our side, we just were dealing with the ones put on us. go ahead >> yeah, but that's not true either, joe. >> all right, go ahead >> somewhat. >> somewhat for some, for some things bottom line is, let me just show you here, 14 -- 1.5% increase -- >> can you imagine walking and somebody is throwing ice in front of you, that's what it's like to speak on "squawk box" with joe and others. >> food, feed and drink prices love up 2.2%. there's a possibility of some tariff in there. remember, just to be clear, you have a rise in the level of the price from the tariff. and the rate doesn't keep going up so that would wash out over time >> it's like the taxes

that wash out over time when you go up against the top. >> this is good. i think we're still headed for -- i forget what we updated, around 3% for the fourth quarter. we're going to do three this year and then next year raywas very el low centoquent o prices and a little less on the risk versus inflation. >> management is up like a hundred gazillion dollars. right? you're in a position to -- you always do that -- >> because he has a lot of money. >> yes, yes, he's not an economics reporter >> all right >> he's in the game. >> one point i want to make, ray dalio is a huge contributor to his local contributor to his local economy in terf donation and charity i don't think he's going anywhere ray wouldn't say that about himself, i live not too much from greenwich, and ray is deeply involved. >> he was making the case.

>> i just want to say he wouldn't say that about himself. do you have anything coming up tomorrow? you're like dory -- do you have anything coming up tomorrow? >> i've been spending too much time with fish yes. an interview with the vice chairman coming up, house majority leader kevin mccarthy was just elected minority leader. the highest ranking republican since paul ryan leaped and democrats are taking over talking about the challenges facing a divided congress. straight ahead stay with us leave your data protected on-site, and put it all to work with ai. the ibm cloud. the cloud for smarter business.

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comments about banking regulations. >> make no mistake, come january in the admitted days of this committee, we can be putting our economy once again at risk of another financial crisis will come to an end >> joining us now to talk about what is ahead for regulations for tax reform and new congress is majority leader kevin mccarthy sir, thank you for being with us today. >> thanks for having me. >> first of all, congratulations on your election today you will be the minority leader when congress takes over >> i was hoping to have majority in front of that give us two more years >> right let's talk about a little bit about what this new congress is going to look like because it's something that investors and business people are watching very closely what maxine waters said yesterday did rattle the marketing. all the rolling back taking place over the last couple years, she says that's going to end right now. what do you think?

>> well, we're going to be in a divided government the uniqueness i'm seeing, though, seems like all of the old players are coming back, the leadership, nancy pelosi, steny hoyer and clyburn, you've got maxine water and user got president trump and that's why you've had these economic changes in the last few years. i think they'll try, but they may not be successful. but that means government will be a little more divided but i don't think maxine waters' ideas are. >> do you think things were change in the house and senate >> we'll have to wait and see. the democrats have to wait to see who is their speaker i think america is too great to have a small agenda, a vision. i think their majority will be

smaller than our majority. they're going to have challenges they're going to be sitting in seats, 16 of them, that president trump won. i still believe we may be sitting in the minority, but we're going to have a very good chance to be able to work with the senate to still make the tax cuts permanent for the middle class. to find a common ground when it comes to infrastructure. i still think, when you look just yesterday at the criminal justice reform, we're still in power here until january there's still a number of things we will be able to do. we'll have to wait to see what the democratic leadership holds. if it's the same leadership as the past i don't think they'll be very successful >> leader mccarthy, let's just play this out. it doesn't look like nancy pelosi has has the votes that's needed you know what it's like to deal with a party where not everybody is moving in the staplame step

you've been dealing with that for quite a while yourself it seems to me that pelosi has kind of significaalled that hery is not the party of negotiation. what kind of fine line would he be walking? in terms wanting to reach out to make deals across the table and also trying to answer the voices in her own party >> look, i know thedifficulty of trying to get to become speaker. you have to have 218 on the floor. we have a number of people who ran who said they would never vote for her we're coming from the majority to the minority. having been it before, i disagree with you because the things i hear from congresswoman pelosi, it's say lot about investigation. if you listen to that, it's all about negotiations they did not lay out an agenda for the american public. look, we have places and room for improvement.

there's not one reason why we lost if you look, history was against us on average when a new president comes, he'll lose 30 some seats. history played the course. we have more retirements than ever before. michael bloomberg's money went a long way he defeated a lot of people by writing those $5 million checks. so, we did have room for improvement, but they did not win by laying out an agenda or pledge to america. when you talk to them about what they're going to do in january, they think they need to get together to talk about the agenda the only thing they've talked about is investigating the president, trying to get a tax return and talking about impeachment. our country is too great for that >> what ground do you think would be that ground infrastructure, do you think that's realistic because there are all sorts of disagreements between the two parties and within the party about who is going to pay for that. >> that's going to be the reality of the infrastructure, how do we pay for it we just did criminal justice, we

found the ability to do that we found a number of ways when we were in power right now, that we were successful at different things it's going to have to wait to see what their leadership. if nancy pelosi is the name nancy pelosi in the past she's not very good at working across the aisle. she doesn't allow her he membero work across the i will i think if she were to fall and stenny hoyer would be the speaker, i think that would happen one of the newest members went to her office not to sit down and meet with her, but to join the protesters that is a little crazy >> you know, there's an election coming up. i keep saying that because it's -- >> uh-huh. >> i know. but it is intended, the irony is intended, obviously, it is so, all of these newly elected house democrats that you have are going to be up in two years. and my only point is, that if

they really do keep pushing things like, i don't, single payor. i think that's number one on their list, single payor i think they got the independents this time, for whatever reason, the pendulum does swing back and forth, we know that with midterms. but they've got two years. if that's the true color of what we're going to see, this far left, sit-in climate change agenda, you'll have a chance in the next election, it could be one -- theoretically, leader, if you play things right, i don't know >> it's always better to win on -- >> where is country on single payor? where is the country >> i think if you polled the question it would be split 50/50. >> really? >> yeah. if you go into the details, though, 55% of americans get their health care through their company. that would be wiped away the v.a. would be wiped away so, once you really have the debate about it, i think they

would lose look, health care became the number one issue in the election and the places that they won were in suburban areas i think they'd be one of the first people to lose if they overstretch and really go to what the core of the new people coming in wanting to impeach the president, that would only guarantee the re-election of president trump so, if they overstep their bounds i think they'll be in trouble. they're finding that they can't even put their leadership team together that's going to be a struggle for some time. >> leader, i want to get your thoughts on a headline that just crossed literally within the last hour. saudi arabia saying they're go together seek the death penalty for five different members the murdering team, dare i say, that killed khashoggi what do you think the relationship should be with -- between the united states and saudi arabia bolton has now tried to say that he doesn't think that mbs had

anything to do with it, or that it wasn't conclusive your colleague, lindsey graham, has said that mbs is toxic says that he can never be a world leader and should never be trusted. >> i think the only way to handle this situation is transparency you've got to have a fair process. you've got to get all of the facts out there. and i think time will only tell. >> but who do you elieve the problem is there's a lot of skepticism about the investigation that's gone on, at least what you're hearing out of saudi arabia they've changed that story, five, six, seven times >> yeah. >> and meanwhile, you have a problem even in the white house, because of the relationships that the president and some of his family members have with mbs personally >> well, i would wait and say -- that headline you just read, i don't think that headline would have came to fruition if this administration had not been tough on saudi arabia. let's be honest with the work being done i think our secretary of state is doing an amazing job here i would not jump to conclusions but if you keep changing your

story, you've got a problem on your hands america, using the diplomacy of what they're dealing with and also managing the region at the same time, but the number one thing that america has stood for is about the rules, law, honesty and transparency and we'll continue to drive to make that happen this is not something that's going to go away by any means. this is something that the entire world is looking at and if you keep changing your story, you're not going to be successful at the end. >> leader mccarthy, thank you for your time. >> thank you coming you, the stock, the read, the latest signals on the market it has been right very frequently we'll lko atta tth in a minute taking a look at u.s. equity futures. i think that she's a very nice girl... ...you never got the brakes looked at?

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say that this has gone on longer than was evident right at the very beginning of the correction or is it about as expected >> i would say as expected at least as of now. the retests that we are seeing this week i don't think will lead to a test of the october low. i think we will see a higher low relative to that. i say that largely because of thine deepest oversold that we have seen. the timing is pretty interesting. i think as we come off of this we have a little pattern called an inverse head and shoulders, a break out above 2812 to 2817 will complete that pattern and support a nice rally into year end. >> what has resonated with me is that the fear hasn't been deep enough or the urge to throw in

the towel and say i'm worried -- i'm starting to see signs of that. i'm starting to see sell all rallies or this is a deep correction or the beginning of something much more than a correction. you are starting to see that with maybe a third of the players. there is still the idea that we will weather this garden variety correction and head back up. i'm wondering if you have wrung out enough. >> my conversations go the same way. when i look at the measures, the transactional measures of sentiment -- they are extremely oversold or extremely bearish. the vixes could be higher. it's really to the point where it is totally set up for a relief rally -- >> apple i think has conjured up some of the fear and complacency getting wrung out.

more and more people, analysts are -- now there is a different downgrade. apple is a proxy maybe. >> as a technician i can't help but look that up. gaps down occurring near the 200-day moving average. for me it looks like an entry in apple. when i look at the former leadership of the market technology discretionary and retail i think we have some opportunity here to add exposure at least for an intermediate move. if that loss of momentum is lasting i think we get the intermediate term up move. >> jim, i saw the two-year chart earlier of apple. it looks like if you draw a line it's in an area where you wouldn't feel like you are buying it up on stilts.

it almost looks like it is down to where if you drew a line you wouldn't be crazy to think that maybe you are finding buying. >> i was worried about the buying the banks. everybody thinks maxine waters will nationalize it. it is one more analyst away from saying it is finished. it is about devices. she is talking about services. i think it represents value as it comes down. i know i'm out on a limbi saying that. we are in a market that is so hated and horrible. you can see a snapback rally. i'm sure there will be people in our area who say he didn't soften his position. we will say anything. we have a thing underneath the picture on the 5:00 that said the economy is strengthening and is strong. everybody says anything to knock

this market down. macy's is horrible. j.c. penney is done. some of this stuff could happen. it's not a great time. i think you and i share a similar optimism. it's not 2007. it's not 2008. there are stocks that are coming down. i could argue that home depot is good. that's not what people want to hear. they want to hear eighth cycle. it's the 11th inning of a game that ended in the 9th inning. everybody who hates it is smart. they are rich and smart. so therefore they are right? no. it's the fifth quarter. it's getting really late. it's very overtime. what do they want? >> i get confused. what do they want? >> college they do it. i don't know.

i get confused. >> clemson lost in the national championship. that is how late it is. >> see you at the top of the hour. don't miss feder reralesve vice chair richard clarida tomorrow at 8:00 a.m. eastern. on every purchase, every day.is my credit card only earns double miles on airline purchases! well, you earn double miles on this and on everything with the venture card. thanks! hey, by the way, how'd you get in here? same way you did. cross-checking. nice. what's in your wallet... oh, c'mon! yeah, tom is letting him know it will be alright. i know, it's a big day. i'm so proud of him. gotta go.

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let's take a final check of the markets. the future has been bouncing around. the s&p off by five. the nasdaq up. we'll see how this shakes out as we head towards the opening bell and the closing bell later today. right now it is time for "squawk on the street." ♪ good thursday morning. welcome back to "squawk on the street". futures unable to hang on to gains again despite good numbers from wal-mart, decent trade news regarding china. brexit chaos weighing on sentiment and the pound as may faces more resignations from

aides.