>> john taylor >> pretty good show. >> it was a good show. >> and becky quick and joe kernen >> that's right. that could be what turns the market dow futures are up by 161 points make sure you join us tomorrow right now it is time for "squawk on the street. ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer, big morning as powell speaks, futures up 160, suggesting the bar for good news both on the fed and the president meeting the chinese this weekend europe is higher about half a percent. watch bond, the third quarter, consumption is lower our road map begins with way off

base, the president renew his criticism of the fed >> plus the trade, stocks seemed to be poised for ahm mid open. there seems to be some sort of compromise with china. >> after a 16-year, microsoft is inching its way back to the top stop and apple is tumbling fed chair powell is speaking in about three hours. he told the washington post he's not even happy of powell what the president said gm recently announced plant closures we'll bring you full coverage of jay powell's speech and will

include some q&a >> yeah, look there are two camps and i think they are xy m exemplifyed by the president the president has been saying o f the slow down. he's no longer saying that he was rattled by gm yesterday he's beginning to recognize there are cracks in the strengths of the economy that came from his tax cuts he's starting to realize holy cow, this could go away. i think by the way, g-20, i know we'll talk about it, very crucial. the president was so personally attacking jay powell that it is the type of thing that if i attack you or david like that, i think we would have a problem and would have to get off the

desk and resolve it. except for there is no getting off the desk jay powell is a man of great distinction and integrity. he's not someone -- he's tall by the way. >> new rule for fed chair. jay powell -- >> not you before. >> yeah, you are getting a little taller. >> i am shrinking. >> jay powell is a man of great distinction. you don't trifle him with this he's a person who has rigor. he won't know what to do with the president that frankly shows tremendous disrespect in the institutions this fed has gone 200 basis points in about three years. real rates are zero. one of the slowest hiking cycles that we had in recent time what would have happened if he's president when green span is doing 200 plus

>> you saw what happened to vernackie. it was a big mistake we look at the way the fed is raised we should be looking at mortgage rates. it is 5% that makes it so very difficult to just by selling your house and buying new house because you are making it so it is more expensive. this was not a great quarter for retail you have possible slow down in retail gm does not lay off people you have a slow down for housing. what else is left? amazon did well. amazon and walmart, lower prices for consumers and oil and gas have been an issue it is good for the airlines but good for consumers

>> consumers are an important part of overall economy when we are producing 11 million barrels a day. >> 12 million. your view is good and my view is good i am trying to develop a little way where i think the network is going. i respect you. >> you are saying it is 12 and not 11 he talked me down to 11-7. >> you have to look at the box i think what's most important the strongest area of the economy had been texas the amount could be cut back from 50 verses 80. >> we are on the same page >> there is no region in the country that's as strong as it was six months ago there is a gentleman who came on air earlier, mr. taylor, he said business is accelerating and strong that's ill-informed. he has every right to be informed >> you have not mentioned china

once you don't think china is important? >> will you get away from me we are going to go ahead with the 25% on the ones we already have but we'll delay it for the next 200 something -- >> no january? >> for the new ones. >> so go from 10 to 25 to what already is 10s but not do the new 267. >> they buy natural gas and soybeans did you know the price of natural gas, what do you think the price of natural gas in premium? >> i don't know. >> zero. >> thank you forgiving me that zero number. they're flaring like crazy you know could you tell the president what ferc stands for

that could help the debate move forward. if you do 10 and 25. remember we have to think about not what the numbers were. the store numbers at target. we have to think of what it will be at 25% hike, listen, it would be 550 >> if we get a deal out of argentina and decent out of powell today, are you in line with reymond james that we'll get a rally the next few weeks >> i think if he delays that, i don't think he's going to, i think it will be possible to have a nice year end rally provided that powell admits that his statements that me made beginning october 3rd, were wrong. you go back and read the judy woodruff interview and that's

like from heaven >> we are still talking about judy woodruff. >> powell or china which is more important? >> the president would say fed is a bigger problem. >> the president more hilarious than ever, right >> handwritten notes here? >> yes >> i think the fed is a much bigger problem than china. the chinese i think -- we hear the chinese playing the long game >> do you agree? >> do i think it is? i think the fed is more important. >> you do. at least near term >> yes, because i think we are forgetting what the rate increases have done. >> you think the secular rise of china, potentially the number one economy in the world isless of an issue than a rate hike cycle? >> here is what i would do if i am the president, not that i am the president. i want the 25%, i want more time

for our manufactures to move out of china and go to cambodia or vietnam. >> all manufactures? >> let's say supply chains for our company to move out of china. >> let's say you make pants, bring it back to honduras. you make shirts -- >> no, i understand. >> the point there is nobody bringing it back here. that's all >> david -- bmw talked about it. all i am saying is that if the president were to say i am going to delay 25%, we have good rally but i don't think he's going to do that. i think he's too deep, too in. >> we'll get to more about obviously what we may hear from powell and we'll talk china. apple in the meantime is getting a new price target lower apple and microsoft continue to battle it out for the title of most valuable company in terms of market cap.

apple closed at $820 billion, that's above microsoft at $822 billion they say it tends to predate estimates coming down. they do a stress test and they say their worse number means 7% below consensus right now. >> that's not bad. that's how you can rally and the thing that could hurt that if the president suddenly says apple included >> they did say ex tariffs >> i think it is hard to keep your numbers where they are if you include the tariffs. you raise the price, the elasticity of apple is not clear. >> we speak favorably of the company and we talk about it >> we all do ecosystem and reoccurring revenue as a result there. they did $66.63 billion in ebit

in 2015. this year they're going to do $71 billion. not much of anything their capital expenditures grow, they don't innovate the way they used to. listen >> i am listening. >> they did not buy anything and are not taking necessary risks they may otherwise their unit sales are not going up either. a company that's really barely grown ebit, from 15 to 18, it is not necessarily seen as the first mover when it comes to innovation why would i want to own it >> i am going to give you an answer, you have two billion users. >> i am depositing that because i have not heard that thesis among -- >> service revenue stream is ska significance >> i am going to give you heads up clorox clorox has growth that's less

than 3%. >> that gets back to the multiples. >> you are not talking about -- >> can i finish? 3% with all due respect, david, y'all idiots -- just kidding listen, clorox is multiples twice that of apple. apple's revenue growth from the service stream is accelerating as i think of the ecosystem. >> is it a sign, when a sign of innovation, you introduce three models at one time and everything is incremental? what happens to the tv and the car, what's going on at home >> i am going to talk to tim, i will get back to you >> i am just asking. >> okay, what happens to this? >> this is a light saber is that nothing? they sold a lot of those >> let me give you another

thing. >> listen -- light saber and lifesaver. this has a higher earning multiples than this. this saves lives and tastes really good. >> most of the bottom line increases as a result of share buy back >> what do you think the results of share buy back? >> you keep moving it other companies to defend apple instead of just defending apple. >> you end up of having to try to value things. you have to try to value i am stuck with the four walls of canvas, i am limited thinker. i am rembrandt i can't get impressionist or expressionist or post impressionist. i am stuck with the four walls

of reality it says to me i got to find a way to value apple so i come up of the price of bleach which by the way is the most -- remember chemistry, bleach has a higher multiple than this did they reinvent bleach did they reinvent? where is those things that we use to wipe down that's the innovation. >> how about when he does that he looks down at the people. there is a movie for you >> let's go to break, when we come back, you will hear about sales force and what benioff told jim cramer. and going for three in a row here, we have three days left to

erase your losses r e ntfothmoh. "squawk on the street" back in a minute this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. the president this morning retweeting and doubling down on his gm criticism if gm does not want to keep

their jobs in the united states, they should pay back the $11.2 billion bail out that was funded by the american taxpayer. the journal takes a crack in the op-ed age of the gm policy an economy does not run on nostalgia. >> you know i have been reading the journal opt-oed on the president. there is a lot that's right. i remember when jeff negotiated the deal, the french just said listen, here is how many people you can lay off. we laughed at them and we said the french are doing it all wrong. the president is offering similar analysis to what the president, to what france d

did -- >> that was suboptimal $23 billion so far written off most of that deal. >> maybe you buy something of $16 billion. >> to your point, trying to manage the economy in any way particular one that seems to be based on your view in the 1950s. >> right. >> or 1983 that's when he went into his gold tower and he came in 35 wree wre years later. >> that's good analysis with all due respect. >> it is remarkably similar, pence is remarkably similar to the containment letter of the 8,000 words letter in 1986 we have a french policy when it comes to gm. i am confused. i thought that the french were wrong when they said allison could not lay off people and

jeff inmal agreed with that >> it is more of not let the market dictate what you do >> company were happy with the bail out >> what do they owe? >> that's a much larger question in terms of are companies obligated to do anything beyond increase shareholder value we can have that conversation for a long time. >> many are taking that in a different direction. what are your obligations to your communities or work force or country or customers. >> country >> state >> that's not the way we run things here.

>> we are about shareholders >> we are capitalist country we don't have a managed economy. we build our gm because we did not want huge playoffs the stockholders got nothing >> we got to talk about your buddy benioff. my buddy >> he's my buddy he's not my buddy. >> i am going to take back that charity. >> that's the win. >> okay, cramer, mad dash, we'll count to the opening bl elin a minute a lot more "squawk on the street" continues after the break. . cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.

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all right, we got a mad dash coming up here on this hump day. we like to acknowledge wednesday here on the nyc. burlington >> my biggest problem at burlington is the prices it is so low they raise our forecast. this macy's does well but it goes down target goes down people regard that as a little priceyier. this offers some of the best

bargains other than tjx. i come back to the idea that the dollar tree, the dollar generals are doing well >> this is discount or what is it >> it is giveaway. my wife gets angry when i go there because she says how can you look like you just bought stuff at burlington store. i am proud, i buy at burlington and kohl's, how do you think i end up making money? >> i like a good deal. i may have to join you at some point. >> i was in century 21 >> all right, we got opening bell less than five minutes from now. we'll talk about those sales force numbers and stocks are okoking up and tiffany is loing down on earnings, we'll have them both

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of g-20 this weekend have not gotten to retail earnings that we gotten today, jim. >> i think it is interesting i see weak ones. comparable store sales were down i didn't think tiffany is nearly as bad but it is 77 verses 77. and i do think that when we look at entirely, we have to include in chicos. that's really bad. >> did you mention tiffany yeah, 77%. >> they do cite primarily chinese in certain reasons as one of the reasons they did not do well. >> some people concerned of macy's not doing well, the reason i want to focus on chicos because the mall did badly on black friday that's where people were

you fear layoffs, if i were jerome powell, ill would be worried of layoffs >> fewer people shopped in stores on black friday >> you are buying things for less and amazon and walmart are keeping prices down. again i urge jay powell to consider amazon and walmart. now, there are some people i talked to who say they have really considered everything that i talk about that i understand i do think that we have to understand that walmart verses amazon may be the single biggest creator of disinflation in this country right now. >> at the big board, great provider of energy services of

24 states. provider of on demand food ordering and delivery in the southeast. >> there is a school of thought that artificial lily low rates p a bunch of retailers open and alive. >> you never want to be the reason why vendors don't give them money starting in january but as someone who has come from a retail family, it was remarkable you stop getting paid in january. you get paid in december i think we'll see that for more retailers. by the way, l brands, they're going to have to do i believe, they may disagree. they are way too big >> they got the dividend >> they can't come in.

plan and fitness does strip malls. sears and k-mart, they are real estate i will mention jc penney's future is not right. >> i don't think you are alone in that. 98,000 people work there what are we going to do? i think we'll ask jay powell we have people who worked at jc penney and that could change the numbers. if you start seeing higher on employment >> do you think we see the one claim? i think the economy peaked in october. >> just to put in perspective of all the people that work at jc penney >> let's take a look at all the jobs that's added. largest transmitter in the country said on "mad money,"

other than oil and gas the economy down shift the oil and equifgas picked up. now oil and gas is down shifting there are enough reasons to do one and wait i have not said they should not wait >> understood. >> jay powell by the way, i think he's like 6'2" >> is he really? >> yeah. >> this is in reference to president trump talking about yellen's hieight. >> she was short and he asked her peop-- other people if she s short. >> there is nothing you can do about it you can do a lot about right here but you can't do anything -- i used to tell my

kids that but both of them will end up being taller than me. >> my late dad, now i am my dad's height i would qualify a lot of positions under president trump and those would be taken away now. >> nvidia and dell >> we got a piece today that says advance micro it had been kept down by the crypto craze >> i do think the crypto craze is over. i think advance micro is a great situation and nvidia can run sales force was as remarkable display. you got to stop thinking of the cloud, cyclical and the

digitalization of the world. this is its center driving it. >> we want to talk more of sales force which is up 7% your friend mr. benioff had positive things to say of the overall economy. i am reading here from the call. he may have said different things on "mad money." i am not sure where he we'll get all the people that we need to hire it is amazing that's happening not just for us but for everybody. >> we talked about the fourth industrial revolution. while sales force may not be hi hired, he's concerned of the millions of people that'll get laid off by the technology savings sales force. >> he did say when he talked to ceos, they tend to be more conservative >> he did talk to jim about earnings, 2020 revenue expectations and consensus take a listen.

>> the third quarter is phenomenal i hope certainly we are all praying and improving on that by the way. now we can see a strong fiscal year ahead and fiscal year 20 as well i don't think the company had ever been stronger or in a better position. every company we are dealing with is going through a huge digital transformation every digital transformation jim begins and ends with the customers. >> well, let's go over what he's really saying. he's saying companies have to become -- it can't be analog it has to be digital he's saying sap and oracle are not doing as well. >> you don't know much about tech you bring in emy and pwc and

they say listen, you got to digitalize and the way you do that is on the sales force platform you can argue adobe no longer has that classic relationship with more. adobe and azure, adobe and microsoft verses sales force amazon and google. so those are the -- that's the world and those two are doing very well. >> how are you making that decision if you are a chief technical technical or whoever makes that -- what are you basing it on, money? >> savings you go in the cloud and you get to lay off a lot of people >> i know that, when you are choosing between the two >> it is about partners. 60% of what sales force gets is what the partners tell them to do when you bring in delloyd, he's

partnered with sales most of the ceos do not have the ability to understand who they should get they rely on somebody else to make that decision >> consultants handed off to the sales force. >> microsoft must be doing quite well, too. >> yeah, microsoft this morning is doing fairly well >> i have never seen so many guys on the call before. >> they have the cfo and benioff and they got stephen taylor? >> did you see me on the call. >> four different people on the call >> he mentioned me which is the thing that i am concerned about is the layoffs it will comeas everybody in

kn >> now, does greg hayes believe that as you raise rates, you create more engineers? >> he's not worried? he's worried of finding qualify people do we have the work force and retrain enough people to get these high quality jobs that we are talking about. you still think i am an idiot. >> no. >> if you go to marc benioff, i think greg just from ge attrition, he can get his engineers. one of the most exciting things i heard from benioff was against facebook >> he's mad, talking about being on a rampage in the big tobacco

comparison >> you have cook and ramety taking shots >> lack of transparency fro from -- this is the iphones. this is the thing that will apple go down on that? i don't know there is a good look to tech today. we have cross currents everywhere >> did you hear about transports because we got boeing doing well for the dow. a lot of people are saying the wave transport has held in >> $5.5 yet. sphere was up big. >> why do we need one hike take it based on the things that had been thrown. and then we wait

by the way, can i just ask you guys -- you guys are like regular people is it not -- let's talk about the word prudence. is it prudence to keep hiking or waiting the see what happens to the hikes? the president who is saying a lot of negative things about jay, again, it is undeserving because he's a pretty good guy and he's doing his best. >> this president has got a lot of unorthodox paths. before we get to bob cbs will close today and analysts coming out talking about good line of sites so we'll watch both of those a lot of money coming out of the

market >> your friend cohen yesterday said cbs is taking down $40 billion in debt and finishing the other deal they have $10 billion of free cash flow. i think it goes right to 90, unh had an amazing meeting yesterday. >> boeing is leading the dow up almost 3%. you get some mileage out of that let's get to bob pisani. >> happy wednesday three days in a row. sitting here at the highs of the day. it is a momentum day you got tech leading and consumer and industrial and s&p retail the sales force numbers are doing well service is up 3% broad semi names like nvidia is

up and microsoft, the biggest company in the world and apparel names, not a lot are moving, burlington's numbers are be etter th better than expected i include tjx and ross are also a fraction of that let's say very specific to a small part of the retail world burlington generally is good number and tough tiffany and signet jewele jewelers the comp sales were disappointing and the guidance is disappointing i think 6% was the consensus for tiffany. europe was flat. we were expecting a 4% that was a big disappointment. asia were in line.

there were a lot of comments of low spending in a lot of the stores in china. here you have strong dollar impacted some things and the wealth effect of discretionary spending may fit in of the slower global growth story that we have been seeing. you put the strong dollar together, slow global growth and tariffs, you get a lot of pressure on these material stocks we don't cover them everyday because the market cap are fairly small you look at some of these names, dupont and nucor and freeport-mcmoran the trend is clearly down. as for the speech today, vice chairman powell, boy, i don't understand why the fed chairman would change the stance ahead of a meeting, that would be unprecedented. he's been consistently talking

about the u.s. economy being solid and inflation is getting closer to the fed's target he's been saying this for months and the whole market is crying for a rally. it is not going to be that way, it is going to be nuance he's going to emphasize a little bit more slower growth there is going to be a comma in there of financial volatility some where they could mention credits spread widen out that's going to be the nuance. we'll need to get a rally in the market, maybe. all i can tell you that everybody is expecting some kind of rally today we'll keep an eye on that. i am old fashion, i like to see a couple of quarters of slower ism growth and a couple of months of unemployment disappointments. that'll get their attention. guys, back to you. >> amazon's web services are

reinventing conference ahead in las vegas. joining us here at post 9. i guess flying in on the redeye, john a >> are my eyes red >> amazon, they're making a bigger move on custom hardware, he's also answering an attack from oracle. a question on a lot of investors' minds, will they spin out the cloud business as a business company take a listen. >> what i would always say for the record i will never say never about anything there has been so many things in my life general and particular to amazon that i would never predict it but, we don't have any plans on the horizon to spin off amazon for all the reasons that we have talked about in the past which is just usually companies will spin off groups if they for some reason don't want them on there in their books or if that new

unit needs access to capital that it can't get but being part of the broader company amazon where we are really comfortable being misunderstood for a long period of time. we are not concerned of aws being on the books and aws has been helpful the last several years, too i think also amazon has been such an incredibly generous there is no need for at additional capital we don't see a huge reason to do so i don't see it on the horizon. >> i remember when jeff bezos told me there are no plans on the horizon to open more brick and mortar stores. once again, jassy is saying in the near term or medium term, no plan to spin out aws

he had a lot more to say and we'll bring it to you later. >> you do wonder how it would be valued in the markets and given the margins and growth rates that analysts obviously tried to break it down to some of the parts. will they be under pressure from regulators so it is not necessarily their decision >> that we did not get into. i don't know if the connection of cloud and retail is where they would come under pressure specifically but there are a lot of different areas where they could come under pressure as you know >> it looks like the adoption just continues and it is just radical in terms of what it means for the world it is really a story that amazon is trying to tell this week, continued dominance. there is no shortage of other companies in silicon valley and beyond and nipping in their hills. it is nipping at here hills. >> i have wanted to do -- i have

wanted to talk to jassy for five years. >> you normally get what you want >> i get what i need though. >> more on the 11 oert >> don't miss the last of john's ex clus s exclusive with andy jassy. when we come back, take a look at the movement today, s&p is up at 12 and the dow at 184 really want to be there,

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president tweeting again this morning says the reason the small truck business in the u.s. is such a go-to favorite is that for many years tariffs of 25% have been put on small trucks coming into our country, it's called the

chicken tax, if we did that with cars coming in, many more cars wou would be built here. the president has great power on this issue because of the gm event, it's being studied now. >> well, that cuts to the 10% to 25% on the chinese but then he says he stays the rest $250 billion. >> but you talk about 25% tariff on automobiles coming from europe the chinese are not importing cars here. exporting. >> i have said that's the line in the sand. when you put the tariffs on europe larry kudlow assured us that will not happen. >> well, it seemed like trump and juncker have reached accommodation some time back, right? >> but we don't know whether larry is in charge or is lighthizer, navarro? you tell me. >> navarro is in charge? >> yeah. >> then look out below.

>> navarro is a smart man. >> went to tuft's. >> i'll tell you how i feel during the break. >> we will be right back dow is up 187. this isn't just any moving day.

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jim, what's on "mad" >> qualcomm. i want to talk about 5g and what it means what what because he's one of yours? i was trying to get jassy, i didn't say anything. i didn't say that fort was great because -- oh, i did. y tig, m.htji dow is up 159. two hours until powell stay with us ron! soh really? going on at schwab.

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the federal reserve board out with its first semiannual report on financial stability. steve liesman has this steve? >> a 46-page report detailing the risks to the financial system i want to start with the good news and then get to the bad news the financial system, the fed says, is far more resilient. it says banks have more capital and liquidity and household borrowing is at a low-to-moderate level. business and household debt is in line with gdp but, here we go. valuations are generally elevated, especially corporate debt, the federal reserve says on stocks it says pe ratios are above historical norms and equity prices are somewhat high relative to the forecast

earnings they have some concerns about mutual funds holding corporate debt there's a mismatch with how the liquidity in the mutual fund versus how quickly they can sell underlying assets of corporate debt ondebt in general, they say leverage loan standards are deteriorating. business leverage is at the highest in 20 years. business debt service, they say, however, is at the low end of historical rates because interest rates are low there's some signs of riskier activity by banks including the easing of loan standards for commercial and industrial loans. hedge fund leverage is up by one-third and then there's this section on near-term risks to the financial system and they mention brexit and euro area fiscal challenges in general and they say slowing growth in china and emerging markets and trade tensions they don't cover, by the way, elevated public debt levels in the united states. so the question will be what do

they do about it the answer is nothing in this report this is a report that existed inside the federal reserve system more or less before it was made available to the public, and now they're making it public as part of this transparency that effort is part of two or three different reports they're putting out from the federal reserve as part of a transparency effort under the new federal reserve chairman jay powell. >> how likely is it this gets rolled into whatever powell may talk about in a couple hours >> i think he'll talk about it extensively and maybe put meat on the bone of concerns about valuations the key here, carl, this is like -- it's a broad survey of financial risks to the system. it then goes to policymakers the question is what do they do about it, if anything? i led with the good news because i think that's actually the important thing, that they see the capital and liquidity levels are in good shape which means given other problems they don't think much needs to be done about it when it comes to banking supervision levels,

although maybe individual or across-industry memos or things about issues like corporate debt that we've seen where the fed warns them to reduce their exposure we've seen that in the past. >> always good to get color from the fed on the markets there's so much fed news i'm wondering, when you look at the ten year -- >> tell me about it, sara. do i look tired? i'm tired? >> do you judge a fed chairman by the height. is 5'3" too short for a fed chairman >> i don't know. you yourself, you mean who's 5'3" >> i'm referencing the "washington post" article where they spoke to president trump and buried in that article there was this paragraph from the "post" reporting saying the president appeared hung up on yellen's height. he told aides at the national economic council on several occasions that the 5'3" economist was not tall enough to lead the central bank, quizzing them on whether they agreed, current and former officials

said that's what i was getting at it feeds into the bigger question about the criticism around powell and the president not being shy about the fact that he doesn't approve of interest rate hikes. >> what he has done is put the fed's independence on the table as an issue for determining rate hikes. you say the fed is not political. what the fed is, is very, very concerned about its independence there's a reason why obama, bush, and clinton decided not to talk about the fed because they did not want the issue of the fed's independence from the political body to be an issue that would be at play when they decided whether or not to raise rates. and you have to believe that the bar is higher for the fed not to raise in december because of the very comments the president has made which go against what i think he wants ultimately. >> good point. it complicates the whole situation and, yes, to your

point that disqualifies me, too. i'm 5'3" steve, thank you steve liesman, our economics reporter. we have new economic data to tell you about let's get to diana olick. >> october new home sales, 544,000 units. down 8.9% month to month, down 12% year over year and missed expectations by a lot. the street was looking for 575 again, 544 that's as the median price came down 3% to $309,700. now you have a 7.4 month supply of newly built homes unsold homes at the highest level since 2009 so you have a lot of stock ready to be sold buyers are not coming in this number in october represents people out shopping and signing contracts, so that's when interest rates are higher, affordability much lower but that's a sharp number down 8.9% for the month and 12% for the year

because we've seen new home builders try to get into that entry level product, lower the prices down 3% and the buyers are simply not coming in that's probably why you saw home builder sentiment drop earlier this month as well so not a great number going into the end of the year. back to you guys. >> that's harsh. not much good in there at all, diana, thank you. meantime, stocks are higher, although off the early highs of the session. investors awaiting the key speech from jay powell at the economic club of new york at noon eastern time. it comes as we mentioned on the heels of fresh criticism from the president who told the "washington post" he's not everybody a little bit happy with powell. joining us today, the goldman sachs chief u.s. equity strategist david, good to have you. >> nice to see you. >> how much are you watching fed overall as you're computing your targets for year end '19 and so forth? >> interest rates is one of the risks we think about, but the broad thrust of business activity is still reasonably positive and the commentary from

corporations remains positive. the individual balance sheets of consumers remains strong that's 70% of the activity in the country. so that's the fundamentals we look at. from an interest rate perspective, it's something we're focusing on. the expectation is ten-year bond yields will rise to something around 3.5% at the end of next year so that's an issue has more pertinence for valuations. what's important to understand is there has been an adjustment in valuation since the start of the year that the overall market is trading at a 12% lower pe multiple now than it was back in january. >> big drop historically speaking. >> it's a big drop what's anonymomalous is that th devaluation has happened in an environment over the last several years when the fed has been tightening. so the multiples were rising they got to 18 times forward earnings at the start of this year, now they trade at 16 times forward earnings and the big issue that i and my

team is focused on for next year is we have a stream of income led by earnings and led by the economist generally growing and is the market going to trade at 14, 16, or 18 times multiple on those forward earnings and the number-one issue that portfolio managers have been asking us relates to the prospect and probability of a recession in 2020. now our view at goldman sachs is that's unlikely to be the case, so there's some risk around that. >> you say 30% risk? >> certainly's a possibility that you could be in recession and therefore the market would trade in that. but the broad central thrust and the central case is that we're not and the economy continues to grow at a decelerating rate in '19/'20 and that would be consistent with the market staying around these levels and therefore the earnings growth takes you higher. >> so what's the ten-week or so selloff been about to you primarily and how do we know whether it's over? >> well, bond yields went up

almost 40 basis points from 280 do 327 they've come back in at 305 now. basically, that was a particular risk we've seen in the past. when rates jump at a fas pat pa that would be one big issue. but from a valuation point of view, the market has come down to a level that is more consistent with the underlying activity we're seeing. >> so these threats for chairman powell, i don't know if they're threats, but complaints from president trump about the fed policy and the fedchairman personally, is that a market risk >> everything is a risk, but i would not put that as a central concern that we have there's a lot of concerns we focus on near term is tariffs >> do you just see it as noise and not a question about federal reserve independence >> i think the issue is what's going to affect the level of earnings and corporate balance sheets are highly leveraged. they've become more leveraged

now than they have been in the last 35 years. that's a reference you made earlier in the release of the federal reserve assessment that's one area of risk. but other areas in terms of consumer balance sheets have deleveraged dramatically and that's an important part of activity overall so that would be -- the three risks we are concerned about would be one is tariffs, two is labor inflation and the pressure on margins and the third is higher rates that's the three areas of concern. but the fundamentals remain strong our focus is on higher-quality companies at this part of th cycle. now we can debate how late we are, but quality company, you can define that in different ways but you're looking at strong balance sheets. the low historical drawdown, you can see a consistency in terms of their revenue growth and earnings those are some of the attributes we look at and you can see a variety of companies that meet that criteria. alphabet, mastercard, visa, blackrock, these are companies that are consistent with those

attributes. >> david, what role does psychology play? you keep getting questions about a recession in 2020, i hear about it, a lot of macro forecasts seem to become more negative it's not as though ceos are immune to that kind of thinking, potentially pulling back and almost self-fulfilling this concern. >> that's certainly an issue we think about. psychology and money flow. the general concern is that -- addressing that issue, you had a revaluation of the market multiple has come down a meaningful amount. so that would be one area. the argument is, to sara's earlier question, we had a swift 10% drawdown that was basically a derisking. you saw rotation out of defenses and that would be consistent with concern about the prospect and trajectory of growth and i would argue that that's, if you will, almost trading it too early. if you're concerned about a recession potentially in 2020, historically you would trade

that maybe six to 12 months earlier so if you're looking that the in the middle of 2020, talking about that in the latter half of next year as opposed to now. >> everything moves quicker these days. >> well -- >> everything sped up. accelerated. >> so in that case if you've sped that up, by extension in that logic, you should be rallying. >> maybe first half of next year. >> so if you think about it philosophically, that's plato's republic are you looking at the reality or shadow on the wall? >> now we're in the cave. >> you know that well. >> your defensive position, though, includes technology, right? >> when i think about technology, the variability in the growth rate has converged with the market. software spending. real spending on software in the united states for 50 years, 200 quarters, has been positive with four exceptions, four quarters you saw that negative 2001 after

the tech bubble. other than that, you've had growth for 50 years and that is the type of revenue stream we're looking at, companies that tap into that as benefit. >> we're looking at microsoft right now at this very moment. >> so you look at microsoft. they had 40% of their revenues was recurring and likely to go towards 70%. that recurrent revenue stream is what you're looking at as an attribute of value that you're looking at right now. >> what do you think are investors expectations around president trump and president xi meeting at g20 this week >> portfolio manager expectations are quite muted i think the commentary ahead of this is that it's probably unlikely to make any major adjustments. when you saw the transcripts of corporate america as a result of the third quarter, the commentary was -- the companies are trying to adjust already to taking the prospect you're going

to have obviously tariffs already exist and are likely to go higher so they're adjusting their supply chains. >> is that in the it that correct. >> not necessarily, no we haven't seen that in a quarterly earnings season. it's act t ee's about the prospd risks. so if you think about domestic, 70% of the revenues of u.s. companies are domestic on the supply chain front, that's a potential risk on inflation and margins, so the margin story is one of those attributes we're looking at. companies that have been able to maintain their margins over time. >> one last question on financials there's been discussion about whether or not they're reducing their asset base, maybe getting more selective on loans. where do they fit? >> think about the financials. a lot of focus on the relationship between ten-year bond yields and financials research shows it's much more sensitive valuation wise to the

slope of the yield curve that's an area we would be focused on so it's a more neutral position on financials at this point in time. >> see you soon david, i hope. when we come back, the chairman and ceo of deere, sam allen, is with us. what the trade war means us for the economy, manufacturing in america, his company and more. plus, going after general motors, the president continuing his attacks on the automaker we'll talk to the ceo of mercedes-benz u.s. what gm's move signals for the industry. and laying out the future of the cloud. jon fortt will join us with his interview with andy jassy. we have a huge show still ahead. the dow is up 120 points don't go away. i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. u.s. leadership in technology is under threat from, who else china. that's the latest warning from the council on competitiveness as president trump prepares to meet with president xi at g20. with us now in a cnbc exclusive interview is the chairman and ceo of deere and company, samuel allen, also the chairman of the council on competitiveness sorry i couldn't be there, sam great to have you from this conference. >> thank you good to be with you again. >> do the president's policies around trade against china make us more competitive?

>> i would say no, not in my opinion. i think the issue he raises is clearly the valid issue, that china has -- through intellectual property theft has caused problems for us and we need to remedy that. but the tariff approach is doing more damage than good in a lot of respects. >> what would be your message from the council on competitiveness and as a ceo caught in the cross hairs of these tariffs on how to deal with china and the intellectual property theft >> well, from the council perspective we believe you should engage the country. there should be discussion with china and its leaders. we think that's probably best done outside of the public forum and done in more private conversations that can lead to fruitful negotiations. so it's a negotiation approach

that we would recommend the administration follow as opposed to a public discourse with china which ends up creating more friction rather than coming up with potential solutions. >> some in the administration made argue, look, that's been trade before obama didn't get anywhere. presidents who have tried to work with china through diplomacy, through the wto haven't been effective and china has only increased its lead when it comes to technological innovation >> yeah. there clearly is a point there but this is a different president. i think he has a strong will and has an opportunity in those discussions with his skill set to maybe come up with a different conclusion than what has happened in the past so just because it's not worked in the past isn't a reason why it won't work in the future. at least that would be our opinion. >> so there was a report that was interesting from the

minneapolis federal reserve that showed 84 farms in the upper midwest filed for chapter 12 bankruptcy in the last year ending june. how painful is this trade war for farmers and do you see it getting worse? >> you know, it is painful no doubt, especially in the soybean commodity area our concern in the near term is it's painful for some that are very leveraged in the longer term, the issue we worry most about is that as china buys soybeans from brazil or whoever, structurally countries like brazil will be able to bring more land into production quicker and as a result of doing that will end up with an overfsupply for a longe period of time which will mean the pain the u.s. farmer is feel willing go on for a much longer period of time much like that grain embargo in the '80s so we're concerned today but more concerned if this doesn't get resolved about the

structural changes that it might force on the global supply of soybeans and other commodities. >> there's been discussion about potential ag deals that we might get this weekend out of the g20 with argentina, sam. i wonder how -- characterize your hopes for getting something specifically on commodities and ag out of g20. >> i would go into it not very optimistic as a ceo, you're always thinking about the down side so we have a tendency to think about what's the down side. i just -- in my mind we're in a negotiation phase. and to immediately come to a conclusion this quickly. that would be a very pleasant surprise but not one expected by our party. >> got new home sales numbers, sam. not good at all. we have to go back to '09 to see

a higher number of newly built homes. on the construction side, do you see a turn >> you know, we still see things fairly strong. no doubt home sales drive a significant portion of our construction equipment market, but so does oil and oil is still at a level that supports fracking which is a major driver of construction equipment, especially in the texas area and the dakotas. so when we look at our order book for construction equipment, we're still up significantly we just finished our year 31 october. construction was up 78%, which included the addition of a company we bought which was about two-thirds of that even next year we're forecasting equipment sales up 14%, 10% is just the base book of business and if we look at our orders, we're ordered up through the first half of next year so we

have not seen thedownturn that might be implied as a result of new home sales. >> the other big debate we've been having besides what the impact of the trade war will be is what the impact of the fed policy will be chairman jay powell will speak this afternoon and we're wondering whether he's being too aggressive the president called him out, is he hiking interest rates too fast for an economy that may or may not be slowing down. what's your take you have such a good vantage point on activity and construction and overall global economic activity. >> i would be very much in line with the president i do think they're moving too quickly. i think they ought to pause and see if the economy continues to move forward in a robust fashion. they can always later meet another rate or two increase but i worry if they bring in another rate increase that it may be the triggering event that causes the economy to really

slow down and so i would wish they would hold up for a few quarters. >> how much are we slowing >> in our numbers what we would say is it's not so much about what is being reported as what it is in terms of our conversations with our dealers and customers about what their thoughts are and it's clearly on top of mind right now. we have seen a slowing of order book activity that indicates that people are worried about what might happen. so it's -- as opposed to a specific number, it's more about the conversations we've had with customers and dealers that indicate that this is top of mind and they are concerned if rates continue to rise that it will have a negative impact. >> sam allen, thank you for coming on and for some of your

candid thoughts. fed should pause, tariffs are doing more harm than good. the ceo of deere and the chairman on the council of competitiveness which is having a huge day in washington we'll have more guests throughout the day but commerce secretary wilbur ross will be there as they make their positions on these issues known from the business community. watching shares of amazon as the company's marquee web services conference continues in las vegas. that's where jon fortt caught up with andy jassy of aws for a cnbc exclusive brought us interesting stuff at 9:00 and more now. >> lots more jassy and amazon are trying to project a story of momentum this week and dominance in the cloud. trying to get cloud technology deeper into the enterprise not just about storage and web apps amazon wants customers building more production workloads on amazon the cloud is also a growth engine behind microsoft and others so i asked jassy what stage of maturity the cloud business is in in the u.s. and

abroad. >> our business is -- in the last financials we released $27 billion revenue run rate business, growing 46% year over year so it's a decent-sized business yet i would argue we're still in the early stages of the meat of enterprise and public sector adoption in the u.s. outside the u.s. i think we're 12 to 36 months behind depending on the country and the industry. >> 12 to 36 months >> 12 to 36 months. >> that's not as far behind as i would have expected you to say a year or two ago. are they moving forward more rapidly? >> lots of countries have made incredible progress over the last year or two but because of the technology is -- it's so easy to use and build applications on top of, companies often start with test but more and more what you see

is virtually all the new applications being built today that don't have legacy, that don't have dependencies are being built on top of the cloud, to enjoy the benefits of the cloud right away in the early days, those were mostly web applications. and we still see a lot of web applications as new applications but increasingly what you see is that they are applications that use machine learning applications that are taking advantage of devices on the edge and capturing that information from those devices and doing analytics and reprogramming the device to take action or analytics capabilities so you can't have a business the size of ours without a large amount of production workloads but i still think it's relatively early days. >> he continues to try to push and press amazon's advantage in the cloud thus far look for more news on custom chips they're building based on what they know customers are doing in the cloud

that should lower the cost of the workload and they can pass that to customers and perhaps do pricing better than the likes of microsoft. also database. he takes on oracle and the claims larry ellison made about amazon and why he thinks oracle's model of the database is one of the past of course that's what he would say. >> still spending enormous amounts of money at amazon in terms of data centers and how much money they're putting into the effort. >> how much amazon is spending on aws >> yes. >> they are. and it's growing quickly you heard him say 46% year over year the investment in artificial intelligence is interesting, because if they can get customers to adopt that, then they're in the cloud deep. the very way the customer is getting smarter and its business is dependent on amazon's cloud and programming to that. that's why a lot of these different cloud providers are trying to get their customers in deeper on ai.

>> 5g. any opportunity for them there as that begins to develop as well and the edge of the network is where the computing power is? >> somewhat in that for all of these devices like your ring doorbell cameras that amazon purchased, yes in order to really get the best advantage out of ai in the cloud you need that internet of things sending data into the cloud unstructured in some cases and the enterprise needs to get smarter off it so presumably as 5g continues to roll out, you end up with more devices at the edge, more data coming into the cloud. how do you manage that how do you get smarter at it more quickly than your competitor well, amazon will argue it's on their cloud because their ai is better microsoft will have a different argument, et cetera, et cetera. >> jon, that's great stuff your one on one coming up in "squawk alley" in the next hour. the auto industry font and

se -- front and center as the president talked about gm laying off employees. phil lebeau is with the ceo of mercedes-benz u.s. dietmar exler, let's talk about the president's stance in terms of ev, tech policy. i want to talk about you unveiling the luxury suv that market is getting more competitive than ever. >> thanks for having me. always a pleasure to be with you. there are two trends going on in the auto industry. one is trend to suvs we're up to 65% in the luxury side the other is the trend to digitalization, electronic interfaces that make the life of the consumer easier and with the all new gle, we're hitting it on both dimensions. it's a talk that design wise is

fantastic, built since 199 199 the u.s. in alabama. and it learns from you based on artificial intelligence. >> we were at your plant in alabama. one of the things we talked about down there has to do with the policy in terms of importing vehicles a few minutes ago the president sent out a tweet, much of the tweet was regarding his thoughts on general motors. but one of the things he wrote in his tweet was the countries that send us cars have taken advantage of the u.s. for decades. the president has great power on this issue because of the gm event, it is being studied now. mercedes-benz imports its sedans from europe. if they raise the tariff there, how much will that hurt? >> well, that would depend on how tariffs are, whether going up what will happen here we know the eu commissioner is in washington today and they're negotiating. i hope sound reason prevails and they come to a good solution for

both economies in the spirit of free trade that helps economies in the european union and in north america to grow. >> are you worried, as the person in charge of sales in the u.s., that there will be these tariffs? >> i'm not worried about it. i don't know what that siren is about. >> we're not having a fire drill but something is going on. >> i'm more to worried about the tariffs. i worry about the things that i can control and focus on them. on the other areas, it's too early to say which way it goes. >> i want to ask you about ev tax credits that there's some discussion in washington to scrap them if you take $7,500 away from an incentive for somebody to buy an electric vehicle from mercedes-benz, how much does that hurt your sales >> that depends on how convincing the product is. obviously it's currently in the form of a tax credit so it's really a $7,500 deduction. on the luxury side, it would affect us less than it would affect vehicles in the mass market side. >> you've been to china. you know what's going on in

europe if we take that away in the united states, does the u.s. fall further behind the rest of the world developing electric vehicles >> there is a chance but i don't think it's too big because the trend to electric vehicle is on the rise it will come and the automotive companies, we will continue to invest and build electric capabilities >> quickly, give me your perspective on industry sales for 2019 do we pull back? >> slightly. we're going stay around 17 million, maybe a hair below. still a very, very good level. it will be more competitive but that's always been the game of our industry >> dietmar exler, the ceo of mercedes-benz usa on a day when they unveiled a new gle. guys, back to you. >> lot of news in the auto sector. we are getting a read on oil inventories, jackie deangelis has that at headquarters. >> very important number we got a build of 3.58 million barrels. this was higher than expected.

this is a bearish number we were down 0.75% before this came out we dropped down to as high as 1.75%. gasoline saw a little draw the u.s. production number stayed at 11.7 it's been at that range for the last three weeks in a row. investors watching that because of the supply situation and the production we're seeing, the rampup we' ramp-up from saudi arabia record level. remember, that $50 level is key here, guys back over to you. >> jackie, thanks. when we come back, we'll take you live at the east tech west conference. imran khan is with us. and dow continues to erode its gains a little bit up 114 s&p is up four back in a minute alerts -- wouldn't you like one from the market

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i'm sue herera, here's your cnbc news update. in a speech to parliament, prime minister theresa may defending her brexit deal after a government projection that 15 years after departure the gross domestic product would only be .6% low eer than if the uk stayed in the eu. >> our deal is the best deal available for jobs and our economy that allows us to honor the referendum and realize the opportunities of brexit. this analysis does not show we'll be poorer in the future than we are today. no, it doesn't russian president putin blaming the ukrainian president for the standoff with ukrainian vessels in the black sea in a televised speech, he said the incident was entirely provoked by ukraine which refused to communicate with russian border guards. saudi crown prince mohammed bin salman arriving in argentina. security has been increased at the saudi arabian embassy in

buenos aires where he will be staying. you are up to date that's the news update guys, back downtown to you sue, thank you very much cnbc is hosting its first-ever tech retreat in china. it's the east tech west conference deirdre bosa is there and joins us with imran khan hi, deirdre. >> good morning, guys. that's right, imran khan joins me in guangzhou, china thank you for being here. >> thank you for having me. >> this is your first interview since leaving snap and you have personal news that i want to get to in a minute but let's jump in with snap first since this is your first one it's been quite a year for snap. shares down 50% this year alone. what happened? let's start there? >> i think at snap everyone on the team is focused on building the business for long term and when you're trying to build business for a long term there are ups and downs and they had some challenges and that impacted the share prize.

>> why leave now it seems like the story is far from over? >> i joined snap four years ago and at that time the company didn't have any revenue. over the last four years, in q3 our run rate revenue was $1.2 billion. so i'm proud of what we have achieved and i wanted to do something else i always wanted to build a new business and i wanted to go try that new thing. >> absolutely. and we'll get to that very shortly. one other question i want to ask you. there's report about evan spiegel's attitude toward public markets, that maybe he was dismissive you worked with him closely. did you see that >> i think evan wants to build a business that will last for long term and he's focused on building a great business for long term. >> do you think he enjoys being a public company ceo. >> you have to ask him that question. >> let's talk about you because you used to work for a public company and now you're starting your own venture

tell us about it. >> i've always been fascinated by e-commerce. i worked with alibaba guys for a long period of time, i worked on their ipo. excommerce and when i look at e-commerce, it's still so early. in q3, e-commerce was only a $130 billion market which is only 10% of overall retail sales so there is a tremendous opportunity for new information. >> but some very stiff competition in this space as well you've got amazon and walmart battling it out. why e-commerce what makes you think you can get into this market with these two guys building up their businesses and even though the penetration is still low, they're taking a loot of it. >> i think the key thing is the market is so big that not two companies can serve very well. so there's room for servicing customers in a different way and

if you look at markets like china, there are more than two players so the u.s. market can sustain more than two players and i'm excited for what we can do. >> we've been hearing a lot of talk about competitors to alibaba and able to come up out of nowhere you're betting on e-commerce snap was about social media. where do you see the opportunity? are you leaving snap because you think the social media world is difficult or because there's more opportunity in e-commerce or both? >> i'm leaving because i wanted to start my own company. four years ago when i joined snap i was going to start a new company or do something different but then i met evan and i was impressed by his product vision i learned a lot and what i learned at snap will prepare me better for the future so i'm excited to do the new thing. >> you're still an investor in snap what do you hope for the company? it's been a ruf yeough year.

what would you like to see happen >> i'm a shareholder of snap and i think internet mobile is such a huge opportunity people are spending more and more time on mobile and there's a lot of opportunity to innovate china has the innovation happening, companies didn't exist that then became very large companies so i think there's opportunities for innovation and snap has done a good job innovating so hopefully they will continue. >> my colleague sara has a question for you. >> hi, sara. >> hi, imran nice to see you, thank you for joining us just to follow on questions about snap how do you view the threat of instagram stories and what would you tell investors who are worried they're continuing to dominate this space that snap started? >> i think both products have some similarities but a lot of differences. for example, snap opens to a

camera and you basically create your own experience when you open the snap camera whereas instagram, you open to someone else's experience. but i think, again, going back to time spent on mobile devices will continue to grow and as time spent continues to grow and companies that will continue to innovate will capture more time shares and they will grow. >> you know, we spoke to jim a little bit earlier and it feels like founder-led companies are under fire these days. we talked about zuckerberg, spiegel, obviously, has been having a hard time how do you view it, having worked for one of them. >> i think founders bring a lot to the table because they have the moral authority of the company so they can make things move faster and i think founders a lot of times have much bolder

visions and also board and shareholders are much more open to give them more benefit of the doubt to take much bolder visions. so they bring a lot to the table and i think companies like mark's have done a good job. obviously they have real challenges now jeff bezos is a founder and a lot of founders have created values. >> is there time founders need to take a step back in the way listings work now? it's harder for them and if evan spiegel doesn't want to give up control of the company, or mark zuckerberg, they don't have to do you think there needs to be changes there? >> i think -- look, at the end of the day there's always the potential check and balance that can be created more. and i think -- and that's always a good thing and my experience with all the founders and i don't want to get into any specific situation, they want to do right for the company because they put all their time and effort building the business so they want to do

the right thing for the company. and the company that i'm building, i want to do the right thing for the company. >> and you're going to be the founder now so we'll ask you that again once you've had your own experience imran, thank you. >> thank you for having me. >> back to you in new york. >> thank you, imran. make sure to check out coverage of the east tech west conference online at cnbc.com. as we head to a quick break. shares of tiffany on the move after matching estimates on the bottom line. light comp store sales weighing on the stock tiffany reiterated its prior full-year earnings forecast, though it cited weakness in chinese tourist spending in particular the stock off almost 10% and home builders tumbling as well after we got the weak housing data at the end of the hour new home sales seeing a sharp selloff. more "squawk on the street" after this with the dow still in rally mode, up 133 what's the hesitation?

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the global investment management businesses of prudential financial, inc. taking a look at the major averages, stocks are up off the best levels of the session, but we're still looking at gains it would be a third day in a row if we can hold these gains nasdaq up a quarter percent, dow up half a percent. treasuries selling off and the dollar is higher ahead of a key speech from federal reserve chairman jay powell at the economic club of new york. everybody wants to know whether he's going moderate his tone on interest rates, recognize some of the weakness we've been seeing in the global economy and see whether he sees anything in the u.s. economy as well as far as what's working in this market, it's kind of mixed health care is the top performer right now, technology is doing well, consumer discretionary, but materials and communication services are weaker. two debates, right what's going to happen between

trump and xi on trade and what's powell going to say and what's he going to do on interest rates. i thought we got a very rare opinion from a ceo in the middle of all of this this hour sam allen, ceo of deere had some thoughts on the fed policy and what they should do next listen to this. >> i'd be very much in line with the president. i do think they're moving a little too quickly i think they ought to pause and really let's see if the economy continues to move forward in a robust fashion they can always then later do another one or two rate increase i do worry if they bring in another rate increase that it may be the triggering event that causes the economy to really, really slow down and so i would very much wish that they would hold up for a few quarters >> fascinating it flies in the face, david, of what greg hayes told us 24 hours ago. i'm concerned of full employment there's inflation on the horizon. we've got to hire 35,000 in five

years and labor will figure out a way to make that work. >> mr. hayes having a very different set of concerns, not related to a rise of rates affecting his business but much more concerned about how he'll hire the people he needs to continue to grow at united technologies as it splits into three companies the next 24 hours. coming up later today on "the closing bell" the chairman of shell chad holliday will be with us. you won't want to miss it, 3:00 p.m. eastern is'll digest what powell says th afternoon more "squawk on the street." we'll be right back.

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welcome back to "squawk on the street." time for our etf spotlight, retailers in focus 'tis the season for earnings and holiday shopping that puts the consumer front and center with the consumer discretionary sector very much in focus currently one of the best performing sectors today one of those stocks not participating is tiffany, which is the worst performer in the index by a wide margin today one of the big' retail oriented etfs is the spider fund.

it attracts a wide range of small caps to midcaps. it's not dominated by names like walmart and amazon the fund has lost 14% of its value since its high on august 22nd, a trend to watch now i'll send it back down to you, carl, at the exchange. when we return, a lot of jon fortt's exclusive. and we'll check in with larry summers out abgm and powell speaks in just over an hour. "squawk alley" starts next

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