"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site in sometimes square. i'm becky quick along with joe kernen and andrew ross sorkin. look at u.s. equity futures at this hour. yesterday was a big down day for the markets. dow down almost 400 points a decline of 1.5%. s&p down by 1.6% nasdaq down 3% you might have expected a rebound this morning, you're not getting it dow futures down by 143 points s&p futures down by 15 the nasdaq off by 59 should say yesterday was the worst day the nasdaq has seen since october 24th put that index at the lowest level since april 25th

watching very closely to see what happens if you thought we were out of the woods after october, not yet. we will continue to watch this a big part of the decline is because of technology stocks apple closing in bear market for the first time since july of 2016 all of the f.a.n.g. stocks are now in bear market territoriment we' ter toyterritoriment ter toy territory we'll talk about that in a bit. over in europe, red arrows across the board declines of 1% from the dax and cac. in london the ftse is down 0.6%. stocks in italy off 0.8% in spain, off by 1%. the big losers yesterday, obviously technology stocks. check out the f.a.n.g. names facebook down by 1.3%. apple off by 1.6%. amazon down 2% netflix off by 1.8%.

alpha beth dobet down 1.7%. >> let's walk you through some other big corporate stories. renault expected to hold a board meeting this afternoon the directors are expected to discuss temporarily replacing carlos ghosn this coming after his arrest yesterday in japan under allegations of serious financial misconduct shares of nissan, rin nauenaultd met met are tra mitsubishi are trading lower today as questions begin to swirl about his leaving and accounting mismanagement that may have occurred. boeing will reportedly hold a conference call with airlines today to discuss systems on its 737 max model. this is the aircraft that crashed in indonesia last month

following that disaster the faa warned that information from sensors could have led the plane to pitch its nose down boeing shares were down sharply yesterday in the stock's worst session in three weeks. deutsche bank shares are hitting a low in european trading this morning the drop comes as the bank gets drawn deeper into another big money laundering scandal involving denmark's largest bank you recall we had doug bronstein on who made a big bet on deutsche bank a couple weeks ago. expecting that stock to turn around it has not yet some other stocks to watch, all the cloud companies today after many of those stocks got slammed yesterday. salesforce suffered its worst session since early 2016 other names hit hard, workday and servicenow in retail, urban outfitters shares are trading higher. the clothing retailer up 4% after reporting better than

expected earnings. the company posting strong same-store sales growth at all of its brands. l brands earnings beat forecasts and the retailer lifted its guidance for the year but shares are lower more than 4% as the company slashed its dividend in half and named a new ceo for victoria secret. sales at that brand have fallen in seven of the past eight quarters intuit had solid results the softwaremaker sees strong subscriber growth for quick books online as well a its consumer tax products. lowe's out with its quarterly numbers. the company came in with numbers of $1.04 a share street was looking for 98 cents. same-store sales up 1.5% the guidance that they're talking about, $5.08 to $5.13. street was already at 5.15 we'll dig deeper into these numbers and figure out why they are issuing guidance that would be below what the street's

expectations were when they are beating this quarter's numbers joining us with reaction is brian neagle thanks for being here. >> thank you >> you're in the hot seat, we just got these numbers, i have not dug through them myself to see why they're talking p guidance that may be below what the street anticipated let's talk about this quarter. 104 versus the 98 cents the street was expecting >> if i look at this quarter, i think the numbers we should focus on, 1.05 in earnings, a domestic comp of 2%. >> i have 1.04 or an adjusted basi basis. >> i'll go with your numbers >> these are just literally hitting. in and of itself, those numbers are okay the 2% comp it a bit light we and others expected something closer to 3. as i'm looking through this release, the bigger message is

all the other strategic efforts they're putting forth. we talked about the new ceo, marvin ellison, at one time in his career was at home depot joined lowe's in early july. now we're learning they're exiting the mexico business. they're exiting canada there's a streamlining focus going on to me, that's the big takeaway, they're streamlining this business to focus on core operations >> yow pleasu're pleased with wu hear about that? >> yes i think for a long time lowe's have been too focused outside of what they're supposed to be doing, the core domestic home improvement market >> they say they expected to see positive trends entering 2019. it doesn't sound like they're warning about sales, but if they're looking at earnings being down for the full-year, that probably means they'll be spending some money to pay for these initiatives they're talking about. maybe that's why we're talking

about this 5.08 to 5.13 is what they see, after beating by 6 cents in this recent quarter, that means earnings for the fourth quarter will come under pressure if they don't make the 5.15the street is at >> basically i would have to dig through it further. there's probably extra expense in there >> you're not worried about that again, this is about the new leadership from marvin ellison and what he's doing. >> that's correct. >> you talked about what you would like to see. a lot is in the back office, the logistics and management of some of the things at lowe's too, right? >> we line up lowe's versus home depot, it's very easy to see lowe's stores are less productive there's a lot of reasons for that the sales at lowe's stores are not like they should be. as a company they're more focuseden co eon core operations

i have written about the labor model stories. they need to work on that. they need to work on inventory mer much doch they need to work on inventory mer much docandise merchandising. if we think about lowe's, the real opportunity is there's not something drastic that needs to happen it's a lot to of blocking and tackling >> indeed what we were kind of guessing was the issue is the issue. they think there will be additional charges associated with the exit from the mexico restaler resale assessment. those charges are why the numbers will be below what the street had been anticipating comp store sales, they expected an increase of 2.5%. they expect total sales to be up by 4%. and they say that operating income as a percentage of sales, operating margin is expected to decrease 240 to 255 basis points, including 135 to 150 basis points from the strategic

reassessment charges anything in there cause you concern? that sound about right >> that sounds about right that type of comp is a decent number given the more difficult comparisons last year. below sales, a lot of noise now with this transition of this business model >> okay. brian, thank you very much for coming in. >> thank you lets get back to the markets. joining us for that is michael tyler. on set with us is chris retzler. nothing is funny, i will say that, guys, about this i just sort of raised an eyebrow at some of your comments, chris, because they reminded me of the days when i was a broker you're saying that the tech wreck -- some valuations are being reduced as outlooks face headwinds. there's an adjustment going on my phrase was that mr. client,

your stocks are sconsolidating t lower levels this is frightening to anyone. you're saying it's somewhat confined to tech, and maybe tech was overbought, but it was also a leader and i'm wondering whether when you see something like this, why confine is just to tech and not say maybe the overall market is sort of feeling sick to its stomach and tech is leading it down. some of these stocks are down -- facebook, i look at the amount of money, valuation that facebook has lost or apple has lost, we're trending up towards a trillion dollars, maybe more >> i think tech has the headlines. there's clearly weakness in other sectors out there. we probably expect to see the energy markets pull back four, five years ago when oil prices dropped that had a hit to technology because the oil revolution is different than it was 15, 20 years ago there's a lot of technology out

there for analysis and for big data and also how they're processing the seismic reports it's all sper conneinterconnect tech is leading the way. >> it can't just be confined to tech we mentioned cloud, chips, software >> crypto. >> apple and social media then bitcoin. it's just -- speculation is just oozing, it's almost tumbling out of the market. we saw a weakness in server chips. think of the customers at the end, are they financially healthy? can they continue to invest money? what we'll also be looking for in these f.a.n.g. names that you're mentioning, what are their budgets going forward?

i don't think they're pulling back forever there may be a temporal dip, that may be for a quarter or two. >> don't you look at all of these stocks and there's an idiosyncratic reason for all of these in some way. the question is what do you think the overlay is >> that's -- as a stock picker, that's what i'm supposed to figure out on a stock by stock basis. we also think where money has been going over the last bunch of years has been passive investments. as they all went up together, they're all coming down together that's the opportunity to find that value where they may be overly punish the jued just becf their association in these passive etfs that's the work we've been doing. we've been more defensive with our cash position. that's something that we used strategically here >> meaning what? you bought at the lows in

october or you're buying now >> we had a cash position that's oversized for a couple months. >> you don't anymore >> no, we still do and we view that as strategic as we go through this volatility. >> but that sounds like you don't think we hit the lows. >> we have not been much of a buyer in the last few weeks. >> let's get to michael tyler here where are you, michael you're listening to this what do you think? >> i think that what we're shaping up as is something more like 2015, where one sector led the market up. then a couple things happened then in 2015, the oil market crashed. the dollar soared, the entire stock market stalled as a result it didn't go down a lot. here we are this year, tech has gone way up. but it's also taken a beating. while you have the f.a.n.g.s in bear market territory, on the other hand they're all up except

for facebook, they're up between 10 and 20% this year it's not ban bad year for tech as interest rates have driven up, there's concern growth is slowing down i can understand why tech has come down somewhat maybe there's a little more to go in the broader context of the overall market, maybe it stalls the market, but we're up single digits this year i think the market can survive this and do just fine. we're sanguine about the market overall. but i think that it's wise to say the tech stocks still have a little more of a valuation issue to work out over a period of time call it consolidated as you did earlier. call it whatever you want. there's a bit more downside in tech then i think it rights itself. but the overall market is doing okay >> the gloom is getting thick. you sound like you're whistling past the graveyard a bit i heard your voice crack when you were saying that we're still up -- some of these

are still up a bit no >> we're okay. year to date amazon is up 30%. what was it up at the highs? >> they're down, that's true the gains have been cut in half. the overall stock market has not. it's done fine it's up 5%, 6% year-to-date. as long as the earnings keep coming through, and i think that's a big question that we have to keep asking, the market will be okay even though rotation is happening and it's clear that the defensive names are where there's more action right now because they are coming through. consumer spending is still strong business investment is still strong if we have a big change in the tariff picture with respect to china, and we're looking at 25% tariffs on 2$200 billion in a couple months, if that happens, that means we have some real issues we hope the g20 meeting next month will alleviate that. >> michael, if we had some type

of positive news on china, i could see that being good for one day. but it just seems like we're in a period where that might not be enough either. the reason i'm trying to get you not beoptimistic, i think all the points you're making are right. earnings are good. not much changed about the back dr dropto t to the economy and everything else, but i think we should just embrace the gloom, maybe that will help make a bottom the longer you have holdouts that still say everything is fine, and this is a garden variety correction, the longer it goes on there's still people clinging to -- some people, cramer and others are looking for more of a v bottom maybe we have not seen that yet. >> i think this will take time to work out. i don't think we're getting a v bottom >> that's a u bottom >> something like that >> don't pick your bottom either >> that's right.

>> look, i think we'll have an extended u bottom. >> you do. >> yeah. i don't think we rebound that quickly. >> you have money you're not putting to work, you don't think we're hit the bottom of the u. >> correct that's right i think there's still some pain to go. the interest rate market continues to be going up it's causing impacts with our dollar, which for exporters -- we are also seeing in the supply chain adjustments. companies are pulling out of investments in china and resetting up in countries around there, which longer term should be helpful, but it takes time to move those supply chains >> michael, your point is well taken about technology we made the point that we were waiting for apple to get to $1 trillion suddenly we're like this is at nearly a trillion. this one is near a trillion. this one is catching up. the big names were all closing

in on that this is now like -- i don't know, they're coming back to reality a bit. doesn't mean they're not great companies or that the world is ending, but i think maybe they got ahead of themselves. actually their charts, they can -- apple is coming down to where you draw a line for two years, it's down to where that support would be that means before that it did sort of have a spike that maybe was not sustainable. how long is that that looks like a one-year that looks scary that looks like it's breaking down let's look at a two-year if we draw a -- is it below? just barely below where the line would be might be >> for head and shoulders. >> no, if you just draw a line straight across. look at that low at the beginning of '18 >> we need our old telestrator back >> we do i don't have anything. it's weird i kept drawing on this thing

here okay nothing is happening >> like every screen is an ipad. you ever see kids, they go up to the screen and think they can draw >> must be broken if the screen doesn't move are we -- you guys have more to say? i'm willing to let you talk for a while. can you stay until 6:30? >> yeah, no great. thank you. >> i'm kidding we have to go. chris retzler is here and michael tyler. coming up when we return, the founders of tom shoes is known for using his business to help change the world. today they're announcing a new corporate activist program we'll talk about it and what it means next as we he as we head to a break, the biggest market winners and losers in the dow.

toms shoes is launching a pain to end gun violence, kicking it off last night. >> will i see something come up? >> yeah. let's see. >> there you go. you sent the first postcard right now to congress. chlg ama >> amazing thing you're doing. so happy you're doing this >> joining us now is the founder of toms and one of the organizers of the national stun student walkout last spring. lots of companies pursued different corporate activist movements. this is a new one. what is this about why did you decide to do this now? >> unfortunately 13 days ago after the shootings in thousand oaks, which was just 20 minutes from my house, my wife called me and was scared to take our kids to school. it became very, very personal. she said i think someone needs

to do something about it i realize we have an incredible community atoms, th toms so in seven days we transformed our company to do this changed our holiday plans. we have the biggest site traffic in the history of toms last night. >> what is the program >> the program is we're 100% focusing on passing universal background checks. this is something that 90% of americans are for. this is not political this is a human issue. and this is something that we're really focused on. we believe that every single person can go to toms.com. we have a technology there that allows you to send a post guard to your representative takes less than 30 seconds this postcard will make a difference because it will make your voice heard when they show up to congress >> winter, how did you become involved in this >> toms is committed to

investing in favorabilities. after the walkout i've been working with toms. >> toms has invested $5 million and my wife and i also committed $1 million yesterday >> toms has always been about doing good, if you will. part of your business model is giving away a separate pair of shoes. you have ever done anything like this on any other issue? >> no, this is the first time. we've been talking about for years evolvie ining our giving l investing in causes and issues that are important we've been talking literally for two years about this when that shooting happened we said we'll stop talking, we'll act. >> there's the shooting yesterday in chicago as well one question about this is 90% may believe in universal background checks, there are still questions and political divides in this country about how to approach this issue

do you worry about politicizing the issue from a corp praorate perspective? >> of course we believe it's a human issue. we know many people will think it's still a political issue 50% of our customers are republicans. 50% are democrats. we know that that's why we frankly feel we have the responsibility to do something. we have the ability to bring people together. that's what toms has been about since the beginning. how do we come together to make the world a better place for a better tomorrow. that's where our name comes from we designed this technology in four days, got it on the website so that millions of people can send postcards and take action on toms.com. >> do you think this changes the way younger people think about working with different companies? are you more inclined to buy something at one company over another because of these issues? >> 100%. i think that's something that's been shown especially with gen-z

and this generation, in order to market to us and get us excited, we want a brand that excites us and cares about ideas in this world. >> does that mean companies could have different ideas there could be someone on this side of this issue, and there could be someone on the other side of this issue >> 100%. the thing about this issue is bullets don't discriminate this is a human issue that everybody should be able to rally behind me as a 17-year-old to be sitting next to blake, to put our minds together to figure out a solution and work together to end gun violence or work towards that is something that is monumental >> okay. cool to see you guys on fallon thank you very much for coming in >> thank you >> you can get it on the website? >> toms.com. thanks. when we come back, f.a.n.g. stocks under pressure once again this morning and they're taking a bite out of the broader markets. we'll talk to a portfolio manager who owns apple and ask what he's doing now. that's when "squawk box" comes

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let's put smart to work. ♪ target out with quarterly numbers. target eni target earning $1.09 a share 3 cents below the target comp sales were slightly below the consensus estimate the stock is under some pressure right now, down by 4% on the numbers. again, they are just hitting we'll dig through a bit more about what they have to say. >> not a good start. >> no.

adjusted 5.0 30 to 5.50 >> 5.41 is where the street was. >> i don't know. apple is down nearly 20% from its record high in october on concerns about iphone demand. shares are lower again this morning. joining us now is tim lesko portfolio manager from granite investment advisers. when you watch apple, if you watched it for years, what goes up sometimes comes down, then it goes back up and comes back down is there anything at this point, tim, as a long-term holder that makes you think there's a fundamental difference or some type of inflection point that the company has hit, not just that the stock has hit >> i do think the company is in that transition from wanting to

be a hardware company to being a software an services company the fact does remain they are a hardware company and people will remain laser focused on units they sell. regardless of what the company wants to release publicly. however we have not seen a fundamental shift in the type of phone people want to use in apple's market share typically when technology companies and particularly hardware companies fall, they fall because somebody else makes a better product if you look at blackberry and nokia, they had massive market share that got eaten away by the iphone until we see a shift in the way people use technology, longer refresh cycles on iphone don't care us. >> longer refresh cycles yeah just because as a user, i'm fine with the one i have. i don't want new features, but my battery is starting to -- i'm below 90 now, sorkin >> your battery health >> my battery health is not great. that would prompt me to say i need a new one >> what model are you on

the 6s >> iphone. >> you're on the iphone model? >> made by apple >> i think an 8. i think it might be. >> i would say after a year or two, i'm down to 90 or 85. >> so there will always be a refresh cycle. tim you point out that it coul ab longer refresh cycle. you think it's a coincidence that they stopped with the unit sales and here we are a month later and we're talking about whether there's a problem with unit sales >> i think the timing is probably a good idea looking into next year you're going to start to have people hold off on purchases waiting for a 5g version of it that's the first leap that we've had in maybe a half dozen years. so i think they're right to stop the unit sales, and look at themselves as a consumer products company they don't need to report that you both mentioned you're maybe going to slow your refresh of your iphones, but you won't stop paying for the services. so we've had a lot of analysts

on talking about how maybe services will slow down because iphone sales will slow down. i don't see that as the case >> that's the pesky little problem with all investing, you know, the price is based not just on earnings but what you assign the thing that can be 50% or 150% of where the stock is then sentiment and psychology around the stock market, that affects the multiple what's a fair multiple for apple? their earnings, you can come close to what they'll earn as far as a forecast. what multiple should be on apple? >> i think if you look at apple you look at the businesses they're in they're at the forefront of mobile communications, media and technology, of cloud-based services so maybe a market multiple i don't think it deserves an amazon multiple or a netflix

multiple growing at 15% or 20% numbers. it certainly deserves market multiple which it has not enjoyed over the last five years. if you're looking at apple you are look at something that trades at a hardware multiple trying to get more towards a software an services multiple. and guidance wasn't that bad going into the quarter i think the stock is a bit of an overreaction, and you could probably take it out of f.a.n.g. it did not trade with f.a.n.g. in 2014 and 2015 i don't see a reason why we have to lump it together with those >> so it's 880 billion that's still a nice market, less today with it down today but you take that market cap with global penetration of people using iphones, i guess that's a simplistic view not everyone in the world has an iphone yet not even close >> and they have never wanted to play in the low end of cell phones >> they could double their --

easily double -- >> that would require creating a different type of phone at a different price point. >> they don't seem saturated the world is not saturated with iphones, is it >> no. i don't think they wanted to do that they've been the high-end manufacturer it's not about market share with apple, it's about share of wallet and of the high-end customer >> i just -- anyone in my family, if i said i'm taking your iphone away, it would be a mass revolt. i try to cut down. now it keeps reminding me how much i'm using the stupid thing. i feel like i have a problem because i see the daily numbers. that's just -- life is totally different. >> that's not a problem for them >> no. >> they're fine if you use it a lot or a little. >> it just seems like -- even without services, the iphone, people will continue to buy it i can't imagine we're not using an iphone in two, three years.

>> nobody leaves the platform. >> the refreshment is what we talked about at the top. >> we have to go because we wanted to talk target. on a multiple question, do you build any positivity or optimism in that there is something else that they will build besides the phone where you will decide the higher multiple makes sense because they're doing something that's exciting that will be a new growth opportunity >> i think they'll be involved in internet of things in the home and the automobile, whether it's a car or the operating system that runs a car i think what they're trying to do is make their operating system ubiquitous, which probably does drive multiple we only build about 16 million cars a year against 77 million iphones i'll stick with the communications business. >> yeah. we stopped asking that question. what's next for apple? cars, tvs. now we almost got content with them doing what they do so well.

but i don't know things go up things come down i don't know whether 180 billion is expensive or not. wasn't that -- it was a $89 billion company, remember? they didn't foe who to put in as ceo. who was that >> and microsoft gave them $10 million. >> they had the guy from pepsi you know i don't know this has been quite a success story when jobs came back. s this target. >> let me explain why target shares are down. the stock down by 8.6% target came in with earnings of $1.01 $1.09 a share. the street was looking for $1.12. the gross margin rate fell substantially, 28.7% versus 29.6%. higher supply chain costs were a part of the problem largely because of the growth they saw in digital fulfillment costs

tar gget has had a push where yu can order online, pick it up in the store or use ship, a delivery service all of those things are was the customer wants, but that comes at a cost. so target shares had one up as people on the street were happy to see all of these different options that target was offering the reality is for any retailer to do this, it is going to cost more money that's what you're seeing here the company is still looking for fiscal year earnings of $5.30 to $5.50. street was at 5.41, just about in the middle of that range. again, the gross margin rate will be an issue you're also talking about a company that admits it's phasing higher kocosts for hours, tradig and wages. higher wages because of what amazon has put in with this. i think that gross margin rate is the reason why the stock is selling off. it's down 8.6%, a decline.

>> can't be good for overall sentiment. not a dow component. >> we're not talking about weakness in the consumer but in looking at these retail stocks, retail wreck because people thought this was the end of shopping as you knew it there's been a resurgence and good feelings about these stocks because they're doing what they need to do, they're finding a way to give the consumer what they want, but these stocks never had the same patience that amazon shareholders have given jeff bezos this is the payback. we were already down across the board. you're continuing to see that with the dow futures down 1.15 it's not a dow component, but this will have a big impact. >> we were down more than that earlier. i'm surprised sentiment-wise a lot of retailers are facing the same issues. >> we will continue to follow

target also the loez lowe's earnings coming up, one of the move productive companies says they have the awensrs some of those secrets when we come back. not long ago, ronda started here. and then, more jobs began to appear. what started with one job spread all around. because each job in energy creates many more in this town.

welcome back business magazine fast company releasing its secrets of the most productive people

talking about this is the magazine's editor and chief. thank you for being here >> thanks, becky >> most productive people. this is something that just about everybody in business are looking for ways to get ahead. how did you get this list? >> we are looking for people who are trying to get it done. janelle monae is a singer, activist, getting involved in film products. how do people like this get it all done another person on the list is melody hobson, somebody who clearly has a ton of responsibilities, seems to have a system for getting everything done so we wanted to get inside their heads and get inside their systems and understand how do these highly productive, highly high performing people get everything done in any given day. >> did you take away some secrets that you thought, okay, this is something i will implement in my own life what were some of the best tips? >> there was aen it of great

tips one thing that is surprise being janelle monae, she uses slack in a specific way she doesn't use e-mail, she uses slack. she has specific channels that help her organize her thoughts and information she gets as somebody who has sort of a love/hate relationship with slack, it made me realize there's a way to use these tools. you just need to personalize them >> i read that i didn't understand what she was doing. slack, you can use with people in your office you can set up outside things. how does she run her life on slack if she's not responding to e-mails ever >> i think you set up your systems to that people know you don't listen to e-mails or read e-mails. >> you make it clear that no e-mails. >> that would increase my productivity greatly >> that's the thing that's different about this year's issue versus the past, where we always tried to help people

wring the most out of every technology tool. this year we tried to help people break their addictions to specific technology tools. throughout the package we talk about breaking your addiction to social media, breaking your addiction to breaking news, to e-mail and i.m >> maybe that's a watershed moment, we have gone from more technology to less >> absolutely. you're seeing it with all the apps designed to help you limit your time on your smartphones. last month's cover of fast company was the new palm device that steph curry is involved in, trying to pare down mobile usage. we are at a watershed moment where people are not looking for more from their tools, but really how to do more with less. >> please tell me at least one of these people admitted they are not as together as we think they are. >> april ryan is somebody who said she has a great work ethic but is completely disorganized >> thank you that makes me love her all the

more >> stephanie, thank you for coming in today. >> thank you for having me coming up, target shares are down sharply after its quarterly results. tareil expert dana telsey will join us with her take next at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...

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morning, are we in for an opt -- are you a bull or a bear at this point? >> i'm concerned about 2019. i think the third quarter numbers for these retailers could they represent the high water mark because we've certainly come through a time period where we've had a strong consumer, a fashion cycle that's benefitted. and in 2019, we're going to be lapping tax reform, wage increases. we've got labor cost pressures and freight pressures. you have a strong consumer, but each of these companies, there's initiatives in place that don't come for free and cost money i think there's going to be a risk reward people look at with these stocks as we go into 2019. so i'm more concerned that third quarter was a high water mark. >> of the stocks, what do you like what don't you like? speak to the target issue this morning. i can't figure out if that's an idiosyncratic issue to target or if it's something more across the board. >> i think we've seen a bit of that across the board.

look what happened with macy's and nordstrom numbers last week. none of the numbers are clean. and with target you have higher levels and that gross margin was pressured. look what you had with nordstrom. their credit card charge and the sale anniversary impacted their revenues and the margins so there's nothing that's clean. and overall, there's some head winds as we go into 2019 this doesn't mean that -- oh, go on >> go ahead. finish your sentence >> this doesn't mean that holiday's off the table. i think we have a strong consumer, but it does mean where's the valuation reset that makes these names interesting. >> dana, i think these retailers, a lot of them are doing what needs to be done which is making sure they can deliver the product to the consumer any way that the consumer wants it. but it's expensive i think that reality is probably just starting to sink in that this stuff doesn't come for free and it is going to eat into gross margins. i mean, that's the example of target this morning. nobody else gets a pass like

amazon does in terms of shareholders willing to see money spent now hoping they'll reap the rewards later >> totally agree i was on the phone with urban outfitters last night who reported after the close and they need positive comps in order to leverage delivery expenses like you said, it's not for free >> when you think of the multiples assigned to the stocks, what do you think a fair one is across the board? >> when you look at the brand health of these companies, we should have a steady state of 14 to 16 times. we're going to need to have earnings growth accommodate that and you're going to need to see leverage on those margins. >> of the stocks, i know you're semi-bearish on the whole category right now who do you like and who would you not touch as an investor >> i like pvh, tommy hilfigehilr they're benefitting from better brands coming to their network also i like lulu and ulta.

i think the cosmetics world is strong those are some of the names. and i also think we're going to see some one offs in terms of where valuation becomes interesting like a children's place. >> and flip it around. i know you don't like to do this, but what stocks do you look at and say run don't walk >> i think some of the names overall where there's pressure points, i think some of the women's apparel retailers. we've had challenges with some of the names out there, some of the department store names like dillards they've had a tough time i think you have more competition out there. >> what do you do with target this morning >> i want to hear what the call says, but overall i'm a long-term buyer of target. >> you're a buyer of target. >> long-term yep. >> okay. fair enough. >> i want to hear what the call says i'm a long-term buyer. >> dana telsey, great to see you. i hope we're going to see more of you over the next month as we get into the holiday season. thank you.

>> thank you. when we come back, today's top story. the global selloff futures under pressure dow futures down not the worst we've seen this morning but still triple digits. decline of 105 if we opened right here the nasdaq down by 43. this comes after a 3% decline for the nasdaq yesterday check out the faang stocks once again looking to move losers across the board. amazon declines of 1 pn.6%. we'll tell you what you need to know before the enoping bell rings. "squawk box" will be right back.

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retail detail. >> i love the smell of commerce in the morning >> quarterly results from target and kohl's ahead of the holiday shopping season. we'll get an outlook for the sector straight ahead. boeing under pressure. the company ready to hold a conference call this morning to talk about its 737 max plane

and this bitcoin trading below $5,000 this morning. more on the move as the seconds hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" right here on cnbc live at the nasdaq market site at times square we have a busy morning ahead i'm andrew ross sorkin along with becky quick and joe kernen. let's show you the u.s. equity futures after a tumultuous day yesterday. dow would open off about 132 points down. nasdaq looking to open off about 50 points down and the s&p 500 looking to open down about 13. we'll call it 14 points right now. retail in focus this

morning. as you've been hearing if you've been with us so far, retailer target out with its earnings already. it was 3 cents below what the treat was expecting. the company did maintain full year guidance but it's looking for a broad range. it's seeing anywhere from $5.30 to $5.50 street was in the middle of that same store sales came in at 5.1% that was just slightly, slightly below what the street was expecting at 5.2%. but i think the big problem here is if you dig deeper into the release. gross margins for the quarter versus the 29.6% in the same quarter earlier. that's because of higher supply chain costs. they are talking about growth in digital fulfillment costs. that's a huge issue. they've tried to make sure customers can get them any way they want. whether it be through shipped or in the store or ordering online. you are seeing that eat into their profits. higher costs they point out for hours training and for wages

these are all things that keep up with amazon it does come at a cost now, the numbers weren't horrific, you can see the street's reaction to this does come as a shock to investors who maybe thought it wasn't going to cost nearly as much. that stock is off by more than 6% this morning. also lowe's earning $1.04 a share. revenue also above what the street was expecting although 1.5% increase in same store sales fell short of what the street was expecting that's where you see the punishment there looks like that stock is going to be down about 4%. it's making a lot of changes it's going to be pulling out of mexico that is going to come at a cost in the current quarter the fourth quarter too and that's going to eat into earnings for the quarter that stock down to 87.52 and urban outfitters posting same store growth at all of its brands

and that stock is one of the winners today. it's up by 1.4%. then there's l brand's earnings beating the forecasts. the retailer also lifting its guidance for the year. but the shares are lower today as the company slashed its dividend in half this company doing it thinks to do, cutting the dividend so it can reinvest in the company. that stock off by 5.6% >> we were down less thana hundred. now down well over a hundred 166 on the dow best buy's good. best buy reporting if you're looking for everyone in retail to be disappointing, best buy 93 cents was versus expectations of 85 cents revenue of $9.59 billion versus estimates of $9.56 at least as far as best buy is concerned, up 3.6% this morning.

>> also sell apple products, by the way. they're an interesting bellwether looking into tech land to some degree. >> it was a stock people were going to be out of business shopping at best buy and buying at amazon. but they've got people that help you set things up. they've got a service arm in geek squad and all these things. i mean, they've done a pretty good job under -- he's not new anymore. but they've definitely had challenges they've overcome. if you're looking for a blanket statement about retail, i'm not sure we can make it. although you would think that costs are going up at most places. >> you've got to think costs are going up by the way, what they're doing is an expensive business too all these services don't come cheap. so the question is whether they're going to be able to continue to do that and pass the costs up >> i would think that the refreshed cycle on the big screen tvs is getting extended

too. i haven't seen anything that makes me think i need something new. they tried the curve things. it was like -- you know? depending on where you sat >> bigger is better. but other than that -- >> i agree new developments this morning following the arrest of carlos ghosn shares of nissan, renault, and mitsubishi are all trading lower today. renault is expected to hold a meeting later today. saying the board will talk about replacing ghosn as ceo the french government called for an interim management structure to be put in place and this all comes after ghosn was arrested yesterday lead story in the journal. big deal allegations of financial misconduct we'll be waiting to get more details on >> i don't understand it any more even after 24 hours >> exactly also new this morning in

scandal land, boeing is going to be holding a conference call to discuss possible systems issues with its max 737 aircraft. the lion airline had crashed last month killing all 189 people on board in the first -- after the crash the faa warned airlines that inputs from the anti-stall system sensors could lead the jet to pitch its nose down even when autopilot is turned off making it difficult for pilots to control now, shares of boeing have been under pressure over the past month. yesterday had its worst trading day in three weeks and longest daily losing streak. it accounted for 102 of the 396 points that the dow lost in yesterday's session alone. the nasdaq dropping more than 3%. it sort of stood out when it was down, like, 200.

i don't know, dom. you didn't really warn me on this yesterday it was the composite's worst day since it fell 4% some of those losses, i was looking at facebook and others kind of a sickening feeling watching it happen, dom. >> yeah, in realtime watching the billions come off just second by second. and to your point here, if you look at the nasdaq composite, many are going to argue it's been the epicenter of the recent downturn if you're looking for is the most oversold of those indices. we're going to do this in percentage terms just so you can see the juxtaposition. facebook already 40% below its record high levels back to july 25 that's $250 billion in lost market value that's roughly the size of wells

fargo disappearing amazon, a quarter value lost since its highs on september 4th. that's around $255 billion in lost market value. that's roughly the size of pfizer disappearing. apple down 20% since its record high october 3rd that records $222 billion lost in market value. that's the size of at&t disappearing alphabet, 20 below record high july 27th. $155 billion in lost market value. that's the size of citigroup disappearing and netflix, $63 billion in lost market value it means it's roughly the size of kraft heinz that's disappeared. these are the real momentum drivers because of a value perspective. but check out some of these momentums. $945 billion lost market value check out these names.

nvidia, 51% down align, 49% down. square, 38% down salesforce, 25% down adobe, 21% these momentum stocks also feeling the pain we'll see if those go on shopping lists for investors any time soon. back over to you >> stop! if we just don't talk about it, wouldn't it be better, dom >> whistling past. >> one after another you just kept piling on stop >> i would take -- maybe the ostrich approach is the right way. bury our head in the sand. >> we're on a need to know basis. we need to know. what you say about nvidia? >> they've lost 50% of its market value since its highs half its market value gone this was one of the top performers overall in the last two to three years >> remember when intel lost all its market value >> think how you feel at nvidia

as a shareholder it reminds me of the old wildwood of sports joining us now -- dom, thank you very much. joining us now to talk more about this is brian nick he is chief investment strategist at nuveen also tom manning who's president of putnam investment company tom, you don't think the technology is going to step back in and take the leadership any time soon, right >> i think technology is going to recover, but i don't know that it's going to take the leadership over. you saw just on that graphic the declines we've seen. going to take a long, long time for those to resume market leadership it's time for the markets to shift in a little bit of a different direction. we're definitely seeing that in the next weeks >> meaning the markets collapse or find new leadership >> find new leadership it's going to take a little bit for that to turn around, but we've seen a shift towards value and away from growth that's manifested itself in the

last few days. >> brian, the pessimism is thick and heavy here do you think it's going to be the reigning sentiment >> we don't. i think we're getting the 2019 bad news out of the way. like when we priced in the good news of 2018 in the end of last year i think technology will have a chance to bounce back. when you see it come down for earnings and s&p 500, some names will stand out we don't think the growth trade is over, but it will be more when it comes to quality making sure we're not looking after names that benefitted from the tax cut this year or are relying -- >> everybody benefitted last year >> not tech as much. the tech did so well this year when they were not the sector that would benefit because the tax rates weren't that high to begin with >> which means what? you would buy here >> there's a lot of cash flow. there's not as much exposure to

overseas markets. >> what names are those? i'm trying to think through. apple seems like high-tech, high quality. but it does have a lot of exposure to overseas markets. >> in terms of the valuations, the stocks that have done the best recently that are priced -- the most optimistic growth is what we're looking for >> who's left? i feel like everybody's gotten hit. even some of the enterprise software groups got hit hard >> some of the names in growth rotating in may be names in health care which are more defensive. >> so you don't like technology really -- i'm sorry. i'm a little confused. you like technology some names or there's not too many places to hiede right now >> i think if you have names that are going to continue to post decent earnings growth next year, not going to have that huge decline like the s&p 500 overall will, they may stand out next year opposed to this. >> like who? who are you kind of counting on

for that >> so, it -- i don't cover individual stocks. like a portfolio manager would but we're -- the word i keep hearing from our pms is quality. when it comes to selecting names for next year. and there's a fair number of them looking at what are some of the names that are overbought at this point, maybe too much rotation not enough credit given to the idea that we're going to continue to grow next year we don't think we're going to slide down into recession in 2019 or in 2020. so some of the selloffs here that we were just marveling at in the last segment, you know, they may be overdone >> tom, let's talk about retail. i don't know if that's an area you focused a lot on but we are seeing names in retail that are posting pretty decent sales numbers maybe not quite exactly where the street was expecting but the consumer looks pretty good some of these names are getting hit pretty hard. because they're investing more in their operations whether that be more in salaries. >> that's the key point. does look like the retailers are

doing well but some of the input costs, appears inflation is creeping in and affecting results. you have to be a little bit careful. we do own target, we do own lowe's it's disappointing to see those. it'll be interesting to listen to the calls but i think consumer discretionary is an area you can be selective in. it's been one of the stronger sectors this year. we'll be looking there u this. >> you own target. right now that is more than 7% down on this you think it's because of the guidance they're issuing just in terms of what they'll be investing and what that will cost the company >> i was getting miked when the results came out but it looked like inflation started to creep in and maybe the costs of running online sales are impacting results. >> does that mean you like the stock less or when you see it down 7%, would you like to buy more >> i don't like it's costs them more that gives us cause for pause on

that stock so we're not going to go in and buy today. i can tell you that? >> are you going to be a seller? >> probably not. long-term we still like that name. >> what about lowe's >> lowe's we like as well as had a pretty nice multiple gap over lowe's that narrowed so we're more in favor of home depot. >> tom, thank you for coming in. also brian nick. great to see you coming up when we return, they are the official time keeping device of the olympics and their watch was the first on the moon we're talking high in time pieces and keeping those devices. and later, the bitcoin breakdown. we're going to talk about this one because what is going on after hitting a high of nearly $20,000 late last year bitcoin. tom lee is here. he defends his call of a bitcoin

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welcome back to "squawk box. the futures right now are, as you can see, down 156. a lot of red down 156 on the dow. the s&p down another 16 or so. nasdaq after a route yesterday is down about 60 points. i guess we should put a bitcoin bug on we love having a bitcoin bug on other shows when it's up at $18,000 or whatever. we need to talk about the -- now, we don't really invest, so it's not fair to say so. but you mentioned below $6,000 then it went below $5,000. >> no discipline >> but that's what happened to people in a correction you say i'm buying below $5,000. then you say maybe $4,000. and then you get a bounce. what's tom lee have to say >> tom lee just last week cut

his price target for the end of this year to $15,000 from $25,000. that was just a few days ago now he's got to look at this and figure out is it going to triple from here? >> thank you, may i have another? our next guest is leveraging his luxury brand to a younger audience let's welcome raynold. it's great to see you. i guess the demise of the luxury wristwatch versus apple was overrated. i still use mine watches are more than measuring my heartbeat >> yes good morning, andrew it's a pleasure being with you of course this was a long discussion and we're having happy to discuss about this. but as i said when we were talking about this, i mean, we are offering much more than that than just about getting time and

luxury market. and omega's doing great. >> so the question all wonder about is long-term, do you think that the luxury market will have a digital component -- i apologize, i'm wearing an apple watch this moment. >> i'm not i asked for first question, raynold. i was with you i was the right guy for you so you wanted to talk to andrew i'm wearing -- i wouldn't be caught dead in an apple watch. but, you know, you want to talk to andrew, you talk to andrew. >> joe's wearing a rolly over there. that's what the kids say >> do they >> they do >> yeah, but -- >> go ahead. >> i mean, watches -- sorry? >> no. i'm kidding. i'm kidding. >> no, but i think it is getting

back to the watch industry and to luxury. i think one of the best example of our e-commerce we started a year ago in the states where we were focusing on the consumer and their needs on a daily base. and the success is great you know, a watch is something much more than giving time it's giving a lot of emotion and somewhere it's something that you feel good. from that point of view, i wouldn't say there cannotbe an digital watch. but what is important that we keep the soul and image. and also the innovation when you wear an omega watch, you have something different on the wrist than if you wear just other digital watches. we see the success we're having in the states and worldwide. >> raynold, how do you see the economy playing out at the high end? at the luxury end? you know, we've had a lot of ceos come on

there's been a mixed picture there are some who are very bullish about it where are you? >> i'm very optimistic and positive because, you know, i can see the evolution over the years. and as i said, if you take only luxury as being a price segment or just spomething that is only exclusive, then you might think 2019 would be difficult. i think if you're bringing a lot of attention to the brand, doing innovation, and following consumers. we've been spending a lot and we're very close to our consumers and we bring them to the journey. we want to give them an experience >> the strength of the consumer, though, at the high end -- >> the strengths of the consumer >> yeah. you're a customer. >> the consumers at the high end level -- yeah. the young customers or any

customers, as i said, they are still very interested. they want to feel good they want to be different from all their friends. and they want to wear what is the best on their wrist. so from that point of view, i don't see any trouble of having them continuing to consume, but the right product at the right time with the right image. and the right strengths. this is for me very much important. because as i said, they will still be looking and consuming and having emotion and they still want to have the best. >> all right raynold, thank you it's a beautiful shot that we have of zurich where we will be passing only briefly passing through in like a month and a half. >> davos >> we should have him on in davos. he can come up from zurich which is one of the best places with livability. always near the top of everyone's list. and it is nice there anyway, i thank him.

i'm with him i don't know about that. and you always have your sleeves rolled up. >> so i can show off >> i think that's what it is. >> no. >> because you're working hard >> working so hard retail earnings in focus today. we're going to run you through the names on the sector on the move today and who may be winners this season check out the futures at this hour we've been under pressure even after the big declined we saw. the dow down by 400 points yesterday. more red dow futures down by 175. s&p off by 18. the nasdaq indicated off by 65 points we'll be right back. broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!?

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lots of turkey talk this week, but this story is about beef are you going to do the sound effects? >> that wasn't me. >> i don't know who that was

check your fridge. this is important. a massive nationwide ground beef recall due to concerns of possible e. coli contamination jbs recalling nearly 50 tons of ground beef. the agency tracking bacteria contamination to a jbs-owned plant in utah with production on or about october 24th. no illnesses reported so far >> that's pretty gross 50 tons? >> that's a lot. >> how do you even track all of that it doesn't say where it came from half the time you know >> gosh, i'm glad we have this video. coming up, retail in focus for investors this morning plus how business -- something funny. watching the fed, sorkin if they were to really back off, you'd almost have to say maybe trump was onto something you'd almost have to say that.

because that was six months ago. all right. and then tomorrow, "squawk box." get ready for your thanksgiving holiday season with a market feast. check out the lineup of market pros that will be speaking tomorrow the market pros or turkeys no, the pros plus it's a "squawk box" tradition. the butterball turkey hotline joins us for the 11th straight year every year i cook the perfect turkey, but there's always room for improvement, i think this never gets old at least to somebody anyway, we'll be right back.

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welcome back to "squawk box. good morning we're right here on cnbc live at the nasdaq market site in times square we've got a couple things front and center now going to get a fresh read on the housing market in about an hour. expecting october housing starts

to rise. cvs expecting the acquisition of aetna to close after the thanksgiving holiday a lot of people going to be watching for that. cvs says it now received approval from 28 state insurance departments and is in the final stages of the process with the other two. and two more retail reports will be coming out we'll get an eye on these. foot locker and the gap after the closing bell and before we go, we should show shares of boeing right now for the past couple of hours, frankly, we've been telling you they were supposed to have a conference call to talk about the problem with the 737 max and to answer some questions about that situation that call has now been canceled. and that stock has moved down this morning after news has broken that it has been canceled. >> did they say why? >> i do not have an explanation.

but we will try to figure it out. the latest results of the cnbc cfo council survey are out. >> the top external risk factor according to the cfos we surveyed, u.s. trade policy. 35% said it's their main concern this quarter when last quarter 45% were concerned about consumer demand. the impact of the policies are expected to have a negative impact on their business going forward. interesting, though, when they were asked what congress' top priority should be in 2019 almost half said infrastructure spending while only a quarter said the trade agreements. meantime on the fed, about 60% said they see a rate hike coming in december. almost half said two hikes a little more than 40% say three. on the stock market, a notable shift here more than half said that they think the dow is going to fall back below 23,000. last quarter the majority were

unsure the quarter before that, they thought the dow would surpass 25,000 for the first time. some confidence being eroded here meantime on treasuries, all the cfos knee the 10-year yield will be over 3% at the end of the year the majority think 3.25% so rising rates, falling stocks, trade policies keeping them up at night that's what they're watching as we head to the end of the year >> okay. thank you for that meantime, bwe've got to tal bitcoin. bitcoin went from being an unknown digital currency to one of the most popular investments for the masses it was up near $20,000 yesterday the cryptocurrency fell more than 10% again dipping below $5,000 bitcoin is now down more than 60% since the start of the year. remember when we used to talk about bitcoin billionaires maybe we'll talking about some bitcoin bankruptcies here to talk what is next is one of the big bulls on this, tom

lee from fundstrat tom, you told me by the end of the year we'd be at $25,000. we're now closing at under $5,000 i always said if it's under $6,000 i should be all over this maybe i'm not disciplined enough tell me what to do >> it's been tough global markets have seen liquidity dry up bitcoin as you point out is not necessarily a value asset. so as growth stocks and tech and faang come under pressure, it's going to hurt bitcoin. >> at best, it's not a currency yet. it's a commodity >> yes it's best to view it as a commodity. >> and so the question is what is going to be the inflection point on this? and by the way, all the people getting burned on it now, are they ever coming back? that's part of the psychological -- this whole thing more than anything else is

based on psychology. it's based on a herd mentality one way or the other there's no other way to think about it >> yes there's really sort of two players in crypto. there are people who are using it and have wallets. and, you know, that sort of on chain wallets haven't collapsed as much as sme speculator side which is people getting burned so we need to have sort of both interacting with each other. >> but take on this thesis i look at all these tech companies and their stocks are coming down. the people most inclined to buy bitcoin are those in the technology sector who have -- i don't know what they've been doing. but they're now looking at their own net worth falling. you also have the chip makers falling and you can say that's a chicken and egg situation. then you have the fight over bitcoin and the split.

that's a whole separate thing. i don't want to confuse the audience but if you have a whole world of people who are going to start hurting. and the investors in this, how does this rebound any time soon? >> i think that's a great point. i think the down turn in faang is hurting those who are owning bitcoin might need to raise cash but the next wave of adoption is institutional. they're not necessarily getting hurt here. there is a crossover happening this is an awkward transition. >> when does that happen >> i think you will get it partly through infrastructure backed which is launching soon but part of it is going to come from regulatory clarity. i think part of that is under way. once we have that, i think institutions will feel more confident. >> you now have a new call of $15,000 by the end of the year ticktock, ticktock >> there's a few things that could happen that could drive that but this past few days has

definitely been, you know, a negative development because we're talking about b k breaking to the downside of momentum >> what do you think the true downside is? has it already fallen where you thought that would be? >> does this shock you >> i think technicals, especially in a bear market mean that price levels can retrace beyond what you think are fair value, but bitcoin breaking even is $7,000. >> so we're below fair value bitcoin mining a year ago, you could have done it at this price. >> it's getting more expensive to maintain the security which is what should support the price ultimately because the price, if it's a commodity, it's going to trade at break even cost >> you've been right on a lot of market calls >> exactly are you saying what was i thinking why didn't i just stick with the stock market >> well, some -- days like this, it does make me wonder >> what was the upside you had a great call on the

stock market who knows what this thing is this is like, who has any ideas? >> again, i think that digital assets are important it's a real project where we have 50 million wallets, there's 5 billion visa cards the runway is adoption in the future >> we always talk about bitcoin because that is the biggest of the cryptos out there. are there any other cryptos that are working while bitcoin is not? is there a safer haven than bitcoin? >> you mentioned briefly part of the bitcoin has been this cash relative to bitcoin starting to break out. >>. >> like an alternative to bitcoin, yes and xrp is a token that is really used for settlements. cross border settlements

it's held up great >> do you have any expectation that regulators are going to prove more in a way that currently are not? that to me would be the tipping point. >> i think the first step in that is going to be regulators sanctioning investigations i think that's taking place. sort of price transparency and i think that paves a way for institutions i think the steps are under way. >> do you think it works well at $500 a coin or $5,000 a coin it doesn't have to live in this other place for it to be used. >> referee: i think in some point is the unit price. it's a hundred billion dollars

it's clearing more transactions relative to paypal by a factor of three now bitcoin is used to move money more than paypal i think it's already establishing itself. >> what's the market value on paypal right now you have any idea? >> it's probably in the $20 billion, $30 billion >> so the question is bitcoin at $100 billion >> yes in a couple years it could be six times the amount of paypal >> by the way, paypal holdings market cap at $94 billion. so if it's three times the size, it should be $300 billion. >> paypal is $600 billion-ish. >> all right tom lee of fundstrat we got about a month are you going to come back see if we can get to 15,000 at that time? what's your conviction rate? >> it's not high right now

but, you know, do i think bitcoin bitcoin as a long-term fundamental is broken? i don't think so >> when you sit around your thanksgiving table with whomever you're going to sit with and there's a conversation about bitcoin because i remember last year there was a conversation. a lot of thanksgiving tables you remember, by the way, that's one of the reasons people thought the price went up after thanksgiving do you think you'll be telling people to go buy >> i think it's going to be a generational argument, right i think there's going to be a lot of young people who see the case then i think a tlot of people are going to be wagging their finger >> the problem is the young people don't have the money. thanks appreciate it. coming up, target and kohl's reporting. we'll run you through the numbers after e ea thbrk.

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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. some big retail earnings out just before the holiday season kicks off. courtney reagan joins us now with more. what's that number >> quite a week. >> what happened to target >> it wasn't so bad.

we've got black friday door busters two days away because they start on thanksgiving a number out with third quarter results ahead of all that. target put up a mixed bag. revenues did come in stronger than expected. comparable sales up at 5.1%. strong but slightly below the street's forecast. digital sales up 49%. that is the strongest metric since target has been reporting that traffic was up more than 5% in the quarter and if it performs to its fourth quarter expectations, it'll ultimately have the strongest annual growth in a decade and hit a new all-time high for earnings you can see, though, shares are lower. best buy beating estimates comparable sales up 4.3% the street was just expecting 3.5% growth there, so that marks seven straight quarters of positive comp sales. best buy also raising full year

guidance for earnings and revenue. kohl's also beating on earnings and revenues and posting a fifth straight quarter of 2.5% the department store raising the low end of its full year guidance shares also lower at this point. and lastly lowe's earnings beating estimates. also above consensus, comparable sales up 1.5%. but that's just about half as strong as the analysts had forecast so i think the market is starting to worry that maybe this is as good as it's going to get going into the important fourth quarter i think the bar is pretty high because retail has been strong and it started last holiday season we've been on the strong run. so it's a strong quarter to comp here >> look, i think the reality is it's going to cost a lot more money to make some of the investments. >> you're right. >> that the consumers want and that frankly the street has said it's wanted to this point. >> you're right. >> the digital comps number that

target's putting out, that's a number investors had been keying off. now they're looking at the gross margin >> exactly that's a great point especially for target the gross margin was a little weak that came in on two points number one was the cost of fulfillment. and as target gets better at fulfilling from the store and shipping from the store, they say that will pull their shipping costs down dollars per order. but it's expensive and we know right now they're in a period where they're offering free shipping with no minimum threshold. >> get somebody to pick something up at the store and bring its to you same day, that's not exactly what customers want but there's that. >> these are investments that need to be made but they're not free >> i don't think it's the only place. lowe's today, this is also a story of them saying they finished their reassessment. >> you're right. >> but it's going to cost them money to get out of mexico it's probably the right long-term strategy, but your knee jerk reaction today is the stock selloff. >> exactly

also they're closing 51 stores again, probably the right thing to do in the long-term in the immediate term, it makes you think why did you have those 51 stores? their comp sales came in half as strong as expected but marvin ellison is in there -- >> but there are things to point out there. >> you're right. and marvin is in there doing his thing. home depot is the largest seller of christmas trees. >> lights, decorations, all over the place. >> and tool kits for dad anyways, they're important as well during the season >> thank you >> you got it. let's go further into this we are going to be talking about retailers especially heading into the black friday weekend. micha michael laser is here lowe's was one of your favorites. so given what we saw today, any changes to your outlook on those three? how was lowe's

and then best buy, good. target, down >> morning, joe. yeah no changes to our views here we think you want to buy the dip on lowe's. it's going to have an idiosyncratic story in the next year as you were just talking a minute ago, the cost of retail is going up. and we're going to see a scarcity of retailers who grow their margins next year. lowe's absolutely is going to fit in the camp of one who can grow earnings next year because of all the moves it's making we think you want to buy the stock ahead of when we start to see the progress from that >> okay. let's move onto the others when you have a neutral on a stock, i guess you can go either way with a target. but were you surprised at margins? were you surprised at the bottom line miss? >> sothe market was expecting comp from target in the 5.5 to 6

range with stable profitability. what we caught was slightly below that and profitability under pressure to put it in perspective, sales grew 6% and profits were down 3% that's an algorithm that's going to drive some uncertainty. and because of that, the stock's probably going to trade at a discounted valuation and we don't think that's a stock you necessarily would want to chase at this point until we see some evidence that it's profitability is stabilizing. sop we continue to be neutral on that stock >> how about best buy? >> on best buy, they're seeing the benefits of not only a good product array of product categories, a healthy demand environment, but also what they're doing. they're the survivor in this category the question is as we get into next year, will some of the tail winds that we've seen from healthy demand and products like televisions, mobile phones, are

those going to begin to fade and as a result they're going to have a harder time growing their same store sales and if they can't grow their same store sales, it's unlikely they're going to maintain their margins around where they are. i think the burden of proof will be on best buy to show that they can stabilize their profitability into next year and continue this very strong performance. but i think the market's going to have some skepticism and the stock's going to remain around its current level. >> all right well, we're not going to talk about the entire macroenvironment for retail. or the consumer. just leave it at that. maybe at another date we'll do that michael lasser, thanks. right now phil lebeau joins us on boeing we were expecting a call what happened? >> there was supposed to be a conference call this morning between some of the technical advisers from boeing and their customers.

essentially going over what the company has or has not told airlines when it comes to the 737 max 8. and at the heart of this, it all started with the lion air crash and the questions about whether or not there has been some changes made to the software on a particular system that might change how pilots react in certain situations or how the plane reacts so the pilots are aware in certain situations. boeing's contention all along has been, look we are not hiding anything from any of our customers this system and the software, all of that was in the flight manual that has been passed along to the airline what we've heard back from airlines and particularly the pilot's union in some cases has been, listen nobody told us about some of these changes. and we should have been made aware. so you're in an awkward area here where boeing is saying,

look this is a completely safe system nothing has changed. you as a pilot will continue to operate 99.999% of the time exactly as you have before and that any changes were outlined in the flight manual. we want to make sure everybody's aware. we're in this area here, becky, where there is a perception that is growing perhaps amongst investors and also within the pilot community that boeing has not been 100% forthright dennis muilenburg put out a statement saying they had not withheld any information about changes to software. that that's 100% wrong that they have been communicating completely with their customers. i believe a that is the position of boeing. yet at the same time you don't have to go far to find pilots who were saying nobody

completely told us about this. so this is one of those things where it continues to fester and for boeing, that's a problem because it now gives the impression to investors that perhaps they're not 100% straightforward. >> all right phil, we're going to talk more about this in the next half hour there was a united airlines union that said they were trained. more with phil later in the morning. also coming up on "squawk box," we'll talk about the markets with jim paulsen the futures under pressure today. continue to see that right now the dow is indicated down by 260 points it's about the weakest level we've seen nasdaq down by 92. (scream) no! others won't believe it. no! no! and some just won't have the words. (laugh) join t-mobile and get the samsung galaxy s9 free. we look forward to your reactions. (scream)

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tech wreck faang stocks dropping into bear territory and they're showing no signs of recovery this morning the broader market impact straight ahead facebook under fire. the plan for the social media giant. and breaking housing news coming up. the final hour of "squawk box" starts right now ♪ looiive from the most powerl city in the world, this is

"squawk box. >> good morning and welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures now are some of the worst we've seen as far as the dow. down 267 now almost chip in another hundred almost on the nasdaq after a big 200-point drop yesterday and the s&p down 27. after a route like yesterday, we've heard you don't want a big false bounce the next morning. so if you don't like the bounce the day after and you look for some searching for a bottom, you're getting it this morning we can look at it positively >> you can what strikes me with this is the declines at this point are getting to be a little bigger on a percentage basis right? as you get back down below 27. not huge, but still a little bit more than when we first looked

at these things. >> we had 600 last monday. >> right >> i'm -- yesterday didn't have a four handle, i'm like it rallied into the close >> 400 points yesterday and this morning 260, that's more than last monday. >> and it was down last week we never recovered from that monday overnight in asia -- and there's pain in asia too which makes me think, i don't know both sides need to say uncle we'll give you something, you give us something. let's both smile in this we'll see whether that happens with president xi. but there's some pain. there's some pain in the asian markets. european markets still reacting to yesterday and then it sort of feeds on itself back here they're all down some of them over 1% the big losses yesterday, and it really stood out, tech stocks. check out the faang names this morning. all down another, you know --

look at netflix down 3%. facebook got just shellacked yesterday. i'm telling you, i looked at the market i understand how it works, you know, they got all the private info i understand but remember when it was $600 billion or whatever it was and you could add up three of the biggest -- add boeing plus jpmorgan and it's like really you're not worth what this stupid face -- i never understood >> netflix has lost the equivalent of a kimberly clark if you add up all the of the losses, it's a trillion dollars lost >> i never really -- i mean, i understand think if they're not allowed to steal all the data and use it. think if it actually costs money. i mean, that would change -- if it was the european model for

privacy, there's a lot of things face -- and then you had all the different stuff with sheryl sandberg and zuckerberg. i don't know plenty to worry about. plenty to worry about just the technical break down in those stocks let's tell you about some of today's other top stories. retail target down sharply after same store sales fell short of what the street was expecting maybe more concerning it laid out some of the cost structures for what you're seeing in terms of being able to deliver online, get it shipped directly to your door within the same day all that stuff costs money and their gross margin was down from a year ago in the same quarter. they said it was not only the cost for fulfillment but higher labor cost too. they think they can offset the labor cost but the street surprised by this this morning a decline of more than $7. $69.69 is the latest for target

shares lowe's also getting hit this morning after the comp store sales increased less than expected and its full year forecast falls short of what the street was expecting. they were expecting broad range. it was in the middle of that range. they are going to see higher costs as they change the mix, change the brand and get out of stores in mexico that stock down by 6%. $85.68 kohl's shares also trade iing le this morning a decline of almost 10% there. a couple other stocks to watch on the move this morning best buy posting better than expected earnings revenue. electronics retailer raising its full year financial guidance we'll see whether that is just its own story. whether it has to do with apple or the other companies that are in those stores.

skst u take a look at campbell soup this is quite important because next week literally a week from day next thursday they will vote dan loeb and third point have taken on this company saying they need to replace part of that board there's a loonger slate as well. and these numbers are meant to try to push back on third point. having said that, third point by the way just got some support from iss recently as well. >> a lot of different numbers that they have in there. just what they expect in terms of divestitures or not that's kind of confusing those numbers are all going to be kind of squued because it's not going to stand the way it is >> i think they want to demonstrate they have a plan and

that they're at least partially through some of it separately, hormel earnings beating the street but revenue fell short the maker of spam, dinty moore and others >> meat in a can i mean, who doesn't just want to have that all the time now to the broader markets the futures right now as we saw down 275 i want to read something quickly from steve liesman then i'm going to let everyone pick their poison, who they want to give credit to. steve liesman said the fed, the market is increasingly pricing out. fed rate hikes in 2019 while december is still seen as a good bet, the first hike of 2019 is now not seen coming until june it had been march. and there's now no second hike priced in within the next year, 12 months. that's the first time it's been

true for awhile, but the market might be going too far in pricing out the fed, according to steve when i say pick your poison. you can either give credit to cramer for saying that things are slower and the fed needs to back off or trump who would you like to give credit to? >> i want to be magnanimous. give it to both. >> that's a first. i don't know whether it's right. what does the fed and powell have to do with facebook's problems >> well, that's what i was saying they were way far away from knewal when he said we're a long way from neutral even with the price hikes or the rate increases. >> but if i told -- if powell came out and said, you know what no mas i'm not doing this. >> too late. >> then what happened? does facebook go wildly up no >> that's what i mean.

okay so powell says okay, uncle and then president xi says we'll do whatever you want that still doesn't mean we're out of the woods >> and the market sentiment had been we could handle good news or we love good news and can handle bad news. now the sentiment is selling off on bad news. >> let's get to -- paulsen's been, you know, broken clock you've been bearish a long time. look, he's smiling he's chortling he's saying i told you so. cnbc's senior market commentator mike santoli is here are we getting close to a resolution or consolidation near the lows or we got a long way to go >> well, you know, you can think about levels but i think more of it is just the -- i'd like to see a behavioral, you know, end to this panic, full panic, full acceptance that the bull's over

and recession is coming. i think that reflects one of the things we've got going on. i think that is recession fears are escalating here. and perhaps for good reason, the market message coming from stocks, cyclical stocks across the board. everything from materials and industrials to financials to tech getti inting pounded then if you go to the commodity market, industrial commodity prices are off 10% to 15%. you go to the bond market and both are blowing out you're seeing increasing concern in the market about recession. i think that's feeding through into fed probabilities and i think that's one of the things driving this market down. the problem we have now is it's very susceptible you think about the fed could stop, but what if we get a hot wage number again in a couple weeks on top of people worrying about decelerating growth. i still think there's pressure

here, but i do think we're maybe getting closer and if we -- i think we're going to set new lows for this year yet maybe and if we do, there could be wider panic. and maybe that could be a good buying opportunity at some point. i do kind of agree with that >> i mean, without a doubt we have not necessarily seen a kind of run for the hills moment which is interesting about the action this week in terms of segments of the market you talk about, you know, apple, boeing yesterday it wasn't just facebook it wasn't just the stuff with headlines. it was adobe, salesforce, paypal the market is hunting to where there's profits in these stocks. going for the most kind of beloved name surrounded by a lot of certainty about the fundamental story. and, you know, that's obviously not necessarily about the fed. but it does show you this risk off sentiment. basically you have all these excuses in the last -- today is two months since the s&p peaked. two months after the s&p peaked, we were in a similar spot in terms of failed rallies kind of

dropping around the lows now the trends are broken, we don't have that earnings acceleration ahead of us all that stuff is feeding it also when a market does not respond to favorable seasonal tail winds, you have to take notice, right? so that's what i think is the stew that we're all watching over right now >> the selloff today too >> another area of certainty another area that said whatever else is going on in the world, domestic consumer is fine. well, domestic consumer is fine but thestock is not positioned to benefit from this particular quarter. >> right >> you know, becky -- >> go ahead, jim >> i was going to say real quick on retail, there's a really strong correlation historically between how the market does leading up to the retail sales and what happens in the season and certainly the decline in stocks is suggesting we could have a weak holiday selling season i think that's part of the reason the retail stocks are

selling off. it's more about what the market message is saying about the retail shopping season >> although, jim, last week we heard from macy's. the stock sold off but macy's did say that what they were seeing in the last few weeks was selling accelerate in a better consumer environment how long does it take something like that to catch up? because that's exactly when we saw the stocks really kind of crumbling. >> yeah. you know, who's right? the ceo or the market? i just -- i don't know, becky. >> both could be right >> right but often when the market as a whole does not do well leading up, you tend to have a disappointing holiday shopping season we'll have to see. i think a lot of the market message here is economic growth is going to slow quite a bit even the atlanta fed gdp number now is down to 2.75% for the

quarter. you know, maybe that falls to 2% or less. and if it does, you're going to see more people starting to move up the recession forecast perhaps for next year. >> jim, do you think that would be the correct conclusion? what i mean by that is if you go back 10, 11, 12 months, the market was saying we're at risk of overheating here. the fed is going to have to get busy and we were pricing markets for that is there a way right now we kind of front load recession fear and you have a near miss next year and still things are fine and yet asset prices kind of got out of whack >> that's where i lean, michael. certainly, this could be the end. we could be close to the end here but i kind of lean that we're going to have a really deeper correction that scares all of us and convinces most players that the bear is here and the recession is here. but i kind of lean towards your

view that what i think so might happen, that might be a whale of a good buying opportunity and maybe we have a couple three years left and another bull run before this is done. the other question is is this 2007 where recession is around the corner or is it 1987 where you have atough correction and two or three years left? and i lean towards the latter view yet but it's kind of a close call. we'll see. >> i think that's what this is all about. end of cycle or late cycle >> all right, paulsen. thank you. got your tie on at least today looking a little more presentable. anyway, we appreciate it thanks leuthold group >> happy thanksgiving, guys. >> happy thanksgiving. you are always splendid. >> mostly tie, yeah. >> buttoned up >> point to the mannequin, say i'll take that >> you are still to come this morning, facebook coming under pressure from both washington and wall street this year

we have former facebook board member don graham. he's going to join us with his advice for the social media giant after this ♪ ♪ ♪ ♪ what if we could turn trash into money? plastic bank is doing just that, by exchanging plastic for digital credits redeemable for everything from food to education... powered by ibm blockchain. when you understand the potential of new technology, you can put smart to work.

welcome back, everybody.

our squawk news maker this morning is don graham. he's the chairman of graham holdings he's also the former lead director at facebook don first met the founder of facebook mark zuckerbergwhen h was just 20 years old as a harvard student. don, we want to thank you for being here this morning. you told us back in may that he's a good person, that you know him well. you have known him for years and the personal attacks coming on mark zuckerberg needed to stop you said the conversation needed to end there the conversation hasn't ended there. and the stock is down another 17% this month don, i want to ask you what you think about the situation where facebook is now. facebook has a lot to do and the leadership of facebook has a lot to do. i continue to have great confidence in the ability of mark zuckerberg and sheryl sandberg it is a hell of a complicated company as everybody knows

and identify read what people have written about it recently, what people have been saying about it and i ask myself exactly who could run that place better, clean up those problems better yes, i continue to have a lot of confidence in those two people but they have a very hard job to do and a lot of people trying to take advantage of the platform they've built. >> what do you think facebook is doing wrong right now? or what could they be doing better to staunch some of the bleeding that's taken place? >> i've been off of the facebook board for three and a half years. i am -- i'm best viewed as a former insider >> sure. >> so i've got -- i am very -- i follow facebook very closely i believe in the company i believe in the people running it but i'm not -- when you ask me about things going on this moment -- >> understood. but don, i know you were a big

proponent of kind of the ad revenue model. that's more than 90% of the revenue the company takes in there's been questions of whether this needs to change does it need to go to partially a pay for subscription sort of model. what do you think of that idea is this something that still exists or can exist as an ad revenue almost exclusively platform >> well, i don't see another model that remotely could build today's facebook you know, facebook ever since its inception, ever since the earliest years has inspired a lot of emotion and a lot of emotional reactions. and my feeling when one of these things happens is we should take a deep breath. we should think about what we ourselves use facebook for google you need to use amazon you need to use apple you either need one of their phones or the competitor's

phones nobody needs to go on facebook unless they find it enjoyable or useful i continue to find it both but that does not diminish the misuse of the platform by russian and other state actors in 2016. facebook's got a big job cleaning it up, and they've got -- they -- despite what everybody's been -- despite some of the things that have been said, i believe as strongly as i can in the two people working to fix it >> don, there seems to be two challenges that facebook is facing as you just said, it's something that you don't need but you need to -- for facebook to work, you need to want it. and so there's an issue that we haven't talked a lot about recently given the other news which is just how millennials and younger people are not using the service the way they did that cool factor is an important component of all this. and the second piece is not so

much just 2016, but even what's happening in 2018 in terms of being able to police properly what's on the service. some of the things you saw happening even ahead of the midterms or some of the other trolling and misbehavior and whether you think the model unto itself is broken and how you fix that to me there's two pieces i don't know which you think is more important >> andrew, go back to the first half of your question. i'm having trouble hearing you just go back to the first thing you said >> the first piece of the question was when you look at the service unto itself, you can see that younger people are not as attracted to the service as they used to be. >> when i get in a room full of high school or college students, just out of curiosity i always ask them what social media sites they use and what sites they use because i'm constantly learning about two things and new things i didn't know before mark was smart enough years ago

to buy instagram at what now looks like a very low price. and to buy whatsapp to be determined the younger people you're talking about who are not having facebook users are very heavy instagram users. they're also snapchat users. they're users of other services. but facebook continues to have -- facebook and its suite of products continue to be used among the young people i talk to >> don, you mentioned some of the problems facing them from a regulatory perspective senator mark warner told "the new york times" over the weekend that he thinks facebook needs to look at the advertising model. what kind of a threat do you think it would pose if washington -- because this is one of the few areas that seem to be a bipartisan issue both the right and the left are kind of piling onto the social media networks at this time. and talking about privacy issues if privacy issues like we saw in

europe are passed in the united states, what would that mean for facebook >> your analysis is exactly right. everybody is waving their arms at the tech companies right now and screaming that they need to be regulated i have a sort of troglidyte view here it will probably impair their future significantly when companies are going very, very well as google has been for years as apple and amazon has been, there's a tendency to view them as permanent. and as even you three know, that isn't so that, you know, when i was starting out in business, ibm was the colossus you couldn't do anything about and business changes i think does facebook have a long run in front of it? that will have a lot to do with

the way they handle these issues and the public perception of the company. it's -- i don't think that's guaranteed and, you know, this is the city where nothing happens. it may be that the regulation of social media companies is an exception and congress can somehow pull itself together and pass a bill. but it's usually wise to bet the other side there may be some regulation of facebook there's certainly this honest ads act that facebook has sort of pre-adopted i think it's a very good thing that's an example of something that could be done. >> sure. don, very quickly i want to talk to you about the scholarship program you funded it's the largest for dreamers we've seen here in this country. raised over $90 million. what impact do you think a divided congress will now have on potentially looking at any immigration policy, any immigration legislation? >> becky, thank you for the

question congress is coming back for a two-week lame duck session and president trump is focusing on his desire to build the wall to focus on border security. it's a slim chance but i hope the democrats are listening to what the president says and seeing an opportunity to do something about the million 700,000 in this country. and that this lame duck session offers a chance to resolve the status of some of those people maybe the president can get some of what he wants and of course the president also earlier this year made a proposal for the dreamers if some of his own were resolved maybe we can get a compromise. becky, a dreamer won a rhoades scholarship this week off to study medicine hoping to work on

cures for diseases if daca goes away while he is out of the country, he will not be able to work for any employer in the united states legally that's crazy >> it is we always love having you on douse a favor and let us know when you'll be in new york next. we'll have you in studio >> let us know on facebook i wanna keep doing what i love,

that's the retirement plan. with my annuity, i know there is a guarantee. it's for my family, its for my self, its for my future. annuities can provide protected income for life. learn more at retire your risk dot org. welcome back to "squawk box. yes, breaking news our october read on housing starts and permits starts are up about 1.5% at one point 228 million annualized units. and that is from a slight revision to last month a little bit of an upward revision there and on permits, we're down a bit. 1.263 million seasonally adjusted units that's down about a half percent or so from 1.27 million and that

was a revision a nice positive one, actually. so up 1.5%, down about 0.5%. and in terms of interest rates, certainly looks like most of the curve is locked and loaded with regard to rearview mirror on the highest yields of the year of course that may change. but ultimately the equities have caught up. and many are talking about fed fund futures pricing lower percentages. of course. they're just another interest rate they're just like another t-bill and that market is selling off when it does, the percentages sell off, it's because the market of course is rising in price, diminishing the possibilities. so we'll continue to monitor all of that. andrew, back to you. >> thank you for that, rick. want to get some reaction from steve liesman who is right here in studio. also diana olick steve? >> oh, diana's there

great. i'm going to give my take and then diana is going to correct me good number. let me just point out there was a negative number, deeply negative number northeast. i don't know the reason for that as a fisherman, i'll tell you the temperature has been ten degrees lower than normal. maybe that's a reason. makes me think that perhaps there was some weather effect in there. also, i don't know if it's too early to start measuring the effects of the fires out in the west, but it was also negative out there. this is the month of october probably more of a november story for the fires. but some possibility that it was earlier than that. >> steve, is this where i disagree with you? >> go ahead. yeah, you've never been shy before and you shouldn't be. >> never look, the northeast is the most volatile region in the country it's where you see the fewest housing starts you'll see big swings in the northeast month to month you can't rely on those.

i'm not sure that plays into it. the difference is between single family and multi-family. single family is where we need to see construction. single family down 1.8% month to month, down 2.6% year over year. all the growth you're seeing is in multi-family. and we've got a lot of multi-family supply. >> right i mean, i was kind of getting to that, diana. one thing i wanted to point out was there's something you've done a nice job in chronicling which is the relationship between supply and price and preference which are all out there as big issues i don't know where millennials want to live >> not as they're aging. as they age into childbearing years, they are buying >> millennials don't age we established that. >> they do and they get married. >> okay. >> millennials are out there and they do have demand. they can't afford it because the entry level homes have been

bought up by investors turned into single family homes and you have rising interest rates. that's -- go ahead >> no, no. i was going to say here's three more challenges out there which is higher interest rates a hundred basis points higher on the mortgage rate. you've got these tax changes affecting certain areas. then also going to mention rental preference. on the other side of that, there's another piece of the ledger which is more jobs, higher wages, and the tax cuts have to be helping some people as well. so there's a -- and it looks like -- first of all, diana. i have a chart here you can't see which shows housing starts over time with the recession what you find in that chart if we do have it available, perhaps we do, is we're at 1.2 million now. previous downturns -- there it is thanks, guys you see those recessions there we've done a million so we're just 200,000 over the bottom over the 2000 -- sorry.

the 1990 and the 1980 recessions. >> but we are so far below where we should be in single family. i mean, you look at -- there's been actually a boom in multi-family construction over the last couple years. and rental demand is still strong i want to raise a point on that area look at what happened when the builders stock yesterday you saw home builder sentiment tank to the lowest level in two years. they dropped dramatically and shot back up it was also because of that note from the fed that maybe they won't be raising interest rates as much as we thought they would. that's what really shot those builder stocks back up again they're so sensitive to any tiny interest rate moves. >> yeah. i was just about to use that wonderful segue. >> were you watching >> i was watching >> you didn't thank me for mentioning your name >> am i supposed to do that? >> i don't know. i mean, i made it sound like it was a big deal >> as you know, there's a large

gift basket coming the end of the year do you like the dried fruits and the nuts >> should it be -- i mean, should we feel strange we're now at neutral are we at neutral? >> who says we're at neutral >> i don't know. you do do we have december? >> okay, look. here are the probabilities, okay 73% -- now, that's a low for this that's come down it's not the lowest, but we've been at 90% for december anyway, it's still the better bet it's going to hike in december okay look what's happened what i do is i just chronicle where we can find a 50% or higher probability on the month. now we got a 58% for june. we used to be above 50% for march. so march, april, may, june that's four months later and in the 12-month period for which i have probabilities in front of me on my computer, i do not have another hike. there is no second hike in there. >> okay. >> raising the question are we at neutral certainly for the housing

market can i bring diana back into this conversation if she's still there? there's no way, diana, housing is not going to take it on the chin here. they are the interest rate sector interest rates are the tool the fed has. one thing out there is housing is not the thing it was relative to the economy in previous expansions >> because we're not building so much you're not contributing with the builders >> right it doesn't have as much to fall. but i wanted to ask you this question the wages and the jobs, there's no positive offset at all to all the negatives happening in the housing market >> you're seeing people feeling more wealthy buying a home is the most emotional purchase you can make. even if you aren't personally making that much more money but you feel the economy is stronger, you'll feel better about buying a home. but again, it's that millennial generation that's where we're going to see the bulk of the buyers

even the downsizing baby boomers, we should see them selling the big houses and downsizing they are not moving. why? because they got 3% on a 30-year fixed. why would you trade thatfor over 5%. >> so you stay in your house to keep your mortgage >> exactly why move if you don't see new buyers come in and don't see that demand, then you'll have a problem and obviously with a labor short a age, builders are not able to build that entry level product every one of them tells me we'd love to build cheap homes. we can't afford to >> thank goodness for diana olick. one thing i want to point out is i think the second hike -- >> you think it's overshooting do you remember the days when we were in the middle of qe and we were going to taper and those

who wanted free money for everything -- >> they still want free money. >> they're doing it again (. >> they are doing it again i know we got to go, but a 0% real funds rate is what they say is neutral that's crazy >> i mean, there are people -- >> not crazy. >> -- that don't want rates to go up. they're mad. >> going to sell stocks until powell gives >> right uncle. coming up -- >> thank you, joe. >> you're welcome. i'm your biggest booster boeing shares adding -- i'm your number one fan i am we'll tell you why when skb comes right back

boeing had been set to hold a conference call today to discuss the systems on the 737 and pilots' safety concerns. but sources now say it's not going to happen. phil lebeau joins us live from chicago. hi, phil >> hey, joe. this is one of those stories that continues to bubble under the surface and increasingly is getting more attention one reason why you see pressure being put on shares of boeing. so here's the latest with regards to the 737 max operating system airlines that are currently flying the plane what they're seeing and saying as well as the investigation into lion air. at the heart of all of this is whether or not the airlines are completely briefed in terms of any changes in the software system there was going to be a conference call with some of the

technical leaders, ifyou will. the fleet operators for the various airlines by the way, they hold these calls on a regular basis that is not going to take place this morning though boeing says we continue to talk with our airlines, with our customers about how these, all the airplanes operate. at the same time, ceo dennis muilenburg sent out an e-mail defending the company. here's a quote from that e-mail. continued media speculation has introduced false assumptions it is important that you know the facts to the extent we can share them at them stage of the investigation. the investigation he's referring to in regards to the lion air crash from about three and a half weeks ago in indonesia. and that's at the heart of all of this, guys. whether or not the pilots in that situation, in that case, were fully aware of changes in the software for a particular part of the plane and how it

reacts in extreme situations and whether or not they were fully briefed on how to act in that situation we still don't have the cockpit voice recorder so until investigators have that, they will have an incomplete picture of what the pilots were seeing and how they reacted in the cockpit having said that, the airlines that fly the 737 max, we've heard from more than a few the pilots coming out and saying, look there is a slight change in the software here that nobody completely told us about boeing's contention is it doesn't change anything. it was in the flight operation manual we gave that to all of the airlines and 99.9% of the time, pilots are going to react the same way within the cockpit so you've got a situation here where you still have some pilot groups saying perhaps we should act the same

perhaps nothing changes for the overwhelming majority of times but nobody told us in advance. >> thank you for that. we're going to keep our eyes on this the stock continues to drop even as you were speaking there we will continue to watch this one. in the meantime when we return, retail shares are also getting slammed this morning following quarterly reports. the street's reaction, we're going to talk about it you're looking at red arrows across the brdoa kohl's down 10% this morning we're back in a moment it's time for ultimate sleep number week on the new sleep number 360 smart bed.

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so, this year let's all get up, get out and shop small on november 24th. i got croissant. small business saturday. a small way to make a big difference. welcome back to "squawk box. a big morning, a shellacking is what you might describe it as for retail target, best buy, kohl's and others reporting before the bell take a look at what is happening to these stocks in the premarket. target off about 10% kohl's looking to open down 12%. lowe's looking to open down 7% best buy with actually very good earnings looking to open down over 2%. and we're just days away from

black friday sales joining us now to figure out what's going on here, charlie o'shea from moody's. you've seen the reports. >> yes do >> does this match up with what you're thinking? >> absolutely not. we talked about this last time best buy reported. the pricing for perfection they need to work on that phrase it's just permeating throughout retail right now these companies are doing exactly what they have to do they're investing and they're spending money and you're going to have to absorb some short-term pain for long-term gain we see what walmart has been able to do you're making investments. target, same thing shareholders have to recognize that nothing is free and nothing happens at the flip of a switch. and i think that that's the part -- that's a big part of the

problem. wi >> and not in a bad way, but i'm separating them out from a target, separating them out from a kohl's and i'm trying to understand whether this portends something much larger about the kind of sales numbers we're going to be hearing when it comes to black friday, cybermonday, hristmas. >> okay. let's differentiate sales from earnings because as you guys know during the holiday, there's lots of promotions we focus on earnings so we're always late with our assessment of holiday performance. we're waiting to see what goes in the bank. that went out the door i think what we're going to see this holiday is a good season. the question becomes what's the promotional environment going to be like? we know amazon and walmart is going to promote like crazy. what are the ripple effects going to be? target is on the right track when you look at where the growth is, these private brands, they take time to kind of

germinate. you got to plant the seeds and let them grow. but that's a really good strategy it's going to differentiate them from target and amazon and everyone else. but it takes time. i think this holiday we're going to see 5% to 6% sales growth that's unusual for us to sales we think it is going to trickle down in the bottom line, we change our outlook positive on the retail sector on the whole driven by efficiency >> would you buy coals right now? >> i can't buy stocks. >> in this environment, is this a buying opportunity >> i think a lot of these companies are getting beat up unfairly and a lot of these companies are under valued when you look at where they have going. >> to differentiate the group, is there any one there that you would not buy? >> i would view favorably all four of the companies on that chart over the medium to long-term with the caveat that

you have to absorption from time to time. we got target in the midst of strategies and best buy and kohl's >> we'll hear gap this afternoon. >> i got stuck in traffic for two hours coming in here >> thank you, andrew i appreciate it. >> thanks a lot. >> thanks for making it through the tunnel >> thanks for waiting for me >> when we return, jim cramer, interesting to hear from jim today. ssn. ts are at the lows athe seio we'll be right back. causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory.

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get down to the new york stock exchange you have seen this movie before. bad news is awful and the good news does not help boeing is down and 100 points of the dow, boeing today. >> there is not a lot of confidence anywhere right now. we are in a phase in everything but healthcare boeing is a good company but also pence this weekend really declared the containment policies in china. boeing won out of every four

planes in china. you have the negative news on the 737 and one out of four going to china there is not a lot of good news to be able to get in front of that freight train >> i hate to get you to talk about the fed. you like earnings and you like facts and things like that 73%, they go up in december. do you think they go in december >> yeah, i think they do what you are seeing with most of these retailers is a lot of people guarding it as last good quarter or people finding something wrong with every single one of them home depot, i think allison is taking all the top actions and people don't want to do that we are getting some reactions from the kohl's quarter. i think kohl's is not nearly as bad as he says but let's see what the conference call target is a good quarter

>> do you think we are quarter away from neutral. there is neutral and what the feds think it is neutral >> the fed if they pay any attention of what we do for a living, they would know it is already too late they're wage oriented. it is the main factor. i listen to oleck -- there is a lot of bad i am not going to hide it. it is a bare market except for healthcare we have always checked for etfs for healthcare to stay up. there is nothing good here a lot of these numbers for retails are not that bad expectations got high. it does not matter i am saying that people can find negatives but if the fed moves in december, you will wish you will sold at these prices >> okay, tjim, we'll see you at

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for each job exxonmobil creates, many more are created in the community. because energy touches so many industries, it supports 10 million u.s. jobs. final check on the market. the dow looks like it is going to open down 350 points right now. nasdaq is looking to be 129 points s&p 500 looking to open up about 36 points. we'll see all that happening on

retails. some of the stocks are down 10%. look at the bottom of the ticker, apple. nvid nvidia >> what jim cramer just said is really important you will listen to him right now on "squawk on the street" of what else he has to say. >> you want to sell now. >> make your you join us tomorrow, "squawk on the street" begins right now good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer on the new york stock exchange nasdaq's seventh months low. as we get closer to retesting of october lows analysts is rushing to downgrade tech