"squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. the nation is observing a day of mourning in honor of our 41st president, george herbert walker bush we will take you live to washington in a moment first here's a rundown of what's open and closed today. the new york stock exchange and nasdaq closed. the u.s. treasury market closed. adp jobs data and the productivity report have been postponed until tomorrow jay powell's testimony to the joint economic committee of congress has been postponed. earnings from lululemon, american eagle and h & r block have been rescheduled. u.s. index futures will be open until 9:30 a.m. eastern time if you look at the futures after yesterday's massive selloff, you will see right now there are some green arrows. the dow futures indicated to

open up about 112 points s&p up by 17 points. and the nasdaq indaicated up by 52 points. this after yesterday's 800-point loss check it out and see what happened overnight in asia the hang seng was down 1.6%. the shanghai was off 0.61% japan down by a half percentage point. red arrows across the board in europe ftse is the biggest decliner, down by 1.1% stocks in france and germany also down by around 0.80%. the energy futures trading on a normal schedule today. looking at crude oil, barely budging, up by 4 cents to 53.29. president george h.w. bush

being honored today in the nation's capitol ylan mui has more. >> good morning. president bush has been lying in state at the capitol rotunda since monday evening the public viewing will end at 7:00 a.m. when the preparations for his departure to the national cathedral will begin. so many people have come to washington to pay their respects to the 41st president over the past 35 hours. not only members of the public but special time was set aside for those with personal or political connections to the president. one of the most moving moments is when former senator bob dole, bush's one-time political rival and fellow world war ii veteran was lifted from his wheelchair so he could offer the president one final salute others who came to pay their respects were former c irngs a dire cia directors, leaders from desert storm, about a dozen

personal aides were there and more than 200 extended family members. former president george w. bush has been receiving guests at the blair house. president trump and the first lady were there last night trump and george w. bush shook hands, gave warm smiles. trump put his hand on bush's back kindness, civility, those are the common threads amongst all the remembrances we've heard from republicans and democrats alike. mitch mcconnell described president george h.w. bush as the embodiment of the greatest generation i think lawmakers on both sides of the aisle would agree with that >> thanks. let's talk about the markets and what we saw yesterday. was really ugly. we saw the banks got hit hard. the transports were down almost 4.5% the nasdaq very tough, down 3.8% apple didn't help with cirrus

logic having supply issues another supplier that had really not great earnings joining us for what we'll talk about now is chris retsler and peter boockvar we snuck up on the old highs we didn't get there, but 800 points off the dow brings us back to 25,000 and change. on the s&p we had seen some tests of the 2650, 2640 area, we're barely above 2,700 it was a big move yesterday chris, did you see commensurate volume pick up yesterday i heard it was a weird mood yesterday. >> throughout the day, comparing to the average daily volumes out there, the underlying stocks did not show a lot of concern to me as a portfolio manager >> the vix didn't even get to 20

again. >> if you're out there to buy or sell you would probably move the market there wasn't a lot of volume behind it you did see more volume in the etfs, it's a quick way to take risk off for somebody like myself a long-term investor, i wasn't panicking. we were thinking more there is a u here in where we would be in a recovery so you have to pick your points, be patient -- >> in terms of an economic recovery or stock market recovery or both >> somewhat both because we're moving into a slower economic environment where we think the earnings next year begin to slow, not decrease >> that's not a u, that's an "l." >> there will be a pick up at some point here, probably i think early next year. we're in a period of investors having the discussion about the next leadership in the marketplace. >> whatever businesses banks try to get in, it still helps to

borrow low, short and lend higher, long-term that almost explains the yield curve at this point, you still have a little bit of a -- it's not inverted on the ten-year, but on the short end people are saying inflation expectations, given what powell said most recently have been tamped down. therefore long-term bonds are more attractive. it is solely due that that nothing to do with a slowdown, boockvar what boockvar what do you think? >> i was shocked at how much the curve further narrowed in two days it's been a steady narrowing since late 2016. it's very hard for the fed to pull off a soft landing. 80% of the rate hike cycle has led to a recession every time they begin a rate

hike cycle, the bond market knows let's flatten the curve. it started to flatten late 2016 as the fed was picking up their pace of the rate hikes from one per year to three per year, this year they'll do it four times. to your question, it's a combination of the big drop in oil, reducing inflation expectations, the pce core number last week that moderated was slightly below expectations. but there's a legitimate concern about slowing growth overseas. the impact on housing, autos do to the rising rates here i think it's a combination of those things it wasn't just that stock market that really surprised us, it was a dramatic flattening of the curve in two days it was like a reverse parabolic move >> hit us over the head first thing in the morning we were wondering whether we would get a two handle >> the move in the fives changed everything >> the two-year, the day before powell soundeddovish was

trading 2.82 >> but the fives moved >> the fives moved and the ten-year moved substantially a lot of the move in the yield cuff h curve has been on the short end. >> how much of this is because of what's actually happening in the economy right now with slowing housing, with slowing car sales. how much of this is fear and concern that starts with ceos and somehow winds up with consumers? is this a self-fulfilling prophecy when people get scared, they pull back. >> it certainly is a part of that but we're talking about the treasury curve it's much more central bank manipulation around the world. when you hear the word inversion, it's a scary headline but it has not triggered the ones that are more important, which is the two-year/ten-year

relationships and the three-month and ten-year we're not there yet that would tell you that probably a recession is more on the horizon. it is something to pay attention to we're paying attention to it we've been talking about it all year any inversion is concerning. smarter mon generally lies in the fixed income market. as equity investors we pay attention to what they're telling us >> i wonder whether to have a sustained sort of uptrend, whether we need a switch in leadership if apple is going to dictate what happens in the stock market, there's something really fundamental happening with that, i don't know whether it is, people are saying remember when everyone finally had a laptop? hey, this laptop is good i don't need another laptop. if that finally happens, they're transitioning to more services i use apple music. if we're going to hear any supplier that comes and misses a number, if that tells us apple is not market leader it used to be, who will be the leader in

the next upturn? >> as a tech investor i would love to see it broaden out >> are you worried about apple >> not in the long-term. near-term if -- they're not making sales, they're not making sales into china the supply chain will correct. >> is this china or overall iphone sales will never go back to that beautiful -- >> i will never say never with apple. >> it's a saturated market >> but is it if in china it's the -- >> the thing with china, you can buy an iphone equivalent from huawei for a faction of t fracte price. if the f.a.n.g. stocks plus microsoft at peak in market cap were 15% to 17% of the s&p, you splintered that f.a.n.g. group therefore you have to search for new leadership that's what the market is trying to do. >> these stocks have lost 1$140

billion yesterday. >> you have six stocks that are 15% of the s&p >> have you seen a housing and auto slump at 3% unemployment? is it that much of a -- does it lag six months or a year after the overall economy slows? >> i think a lot of it is psychology it's a mortgage rate people are not used to people in their homes that have a three handle or four handle on a mortgage rate that don't want to lose it. they know if they go into a new house they have a higher 5% type mortgage we have a lot of debt. so small changes in interest rates on a lot of debt equals a lot of dollars >> laffer says larry kudlow is doing the greatest job larry kudlow said no recession right now, not even close. no recession for at least a

couple years do we count on larry for that? is he right? no recession for a couple years? >> i think the determining factor of when the next recession comes is what the stock market does. we are an asset-priced dependant economy. if you get a 20% decline in the s&p, it will alter consumer behavior consumers will warein things in ceos will say market is down 20%. i limited visibility now i may hold off on capitol spending >> people ask me that all the time, when is the next recession. i said when the stock market falls by north of 20%, that could be the catalyst for an economic slowdown of substance >> you could already have that >> we have exports that are moderating, global trade has slowed capitol spending slowed in the third quarter because companies want to see how the tariff thing plays out. the visibility issue is in play here >> we won't have more visibility

on that -- >> we punted for another three months >> we won't have more visibility at the end of that. >> that's something the yield curve sniffed out monday and tuesday, we have to wait another three months, let me hold off on a project. >> thank you, peter boockvar and also chris retsler when we come back, a new report in the new yo"new york t" says les moonves destroyed evidence and misled investigators as he faced multiple allegations of sexual misconduct and we'll take you live to vienna where major oil producers are gathering for a crucial opec meeting. the future of technology investing

lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. from capital one.nd i switchednt to the spark cash card i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet?

i am a techie dad.n. 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. ♪ welcome back to "squawk box. u.s. markets are closed for the national day of mourning, but there are a few things that are

trading somewhere. let's look at the futures, look at the dollar. look at oil. we'll run through these boards get to some of the stories of the day. there's the futures, after a 3% loss we are -- that's big in the dow. transports down 4.4% yesterday the nasdaq just regurgitating down almost 4% on the session. a big move point-wise and percentage-wise 800 sounds like a lot of points, but it is 3%, a fair amount. we' we're still above that 27,000 level. so we did gain a lot of ground back >> this was the fourth biggest loss we've seen in terms of days this year. you saw the dollar everything interesting is happening in the yield curve the interest rate complex.

things are moving there a bit. then as far as oil goes, oil factors into all of this it's all related. oil looked like it would break into the 40s now back to 53 on wti. over 60 on ice brent opec and some non-opec leaders are gathering in vienna today. hadley gamble is there and she joins us with an update. what can you tell us >> good morning. well, we are anticipating at least three days of some high drama here in vienna the official opec meeting doesn't kick off until tomorrow, but there will be a jmmc meeting 1:00 local time today. ahead of that we'll have the russian energy minister meeting with the saudi counterpart apparently they'll decide whether or not they're going to cut. that cut looks likely. and what they will be cutting, potentially 1.3 million barrels a day. the question is whether or not that's something the russians

can hoang on to. how long they can do this. vladimir putin said over the weekend it was something they were willing to do all of this against a major geopolitical story for saudi arabia, under extreme pressure right now not just from the trump administration but also from those on capitol hill, over the last 24 hours we heard a lot of noise surrounding the murder of jamal khashoggi, the cio report that many senators have been privy too suggesting to many of them that the crown prince of sud saudi arabia was involved >> you have to be willfully blind to not recognize this was orchestrated under the command of mbs and that he was linked to the death of mr. khashoggi

there is zero chance this happened in such an organized fashion without crown prince >> saudi arabia, there's zero doubt they know they have to cut. the question is how much are they willing to do when they are under pressure from the u.s. and from president trump in particular given that longstanding u.s./saudi relationship also over the last several days qatar decided they will no longer be a part of opec iran's energy minister last night suggesting that was directly as a result of saudi arabia a lot of high drama on the agenda we'll bring it all to you live >> hadley, thank you very much les moonves mislead lawyers and distroyed information in an effort to preserve his reputation that according to the "new york times. we have one of the authors here this morning, ed lee, he is here

to discuss this with us. ed is also a cnbc contributor. >> it's either really, really late or really, really early >> it's late for me. let's talk about it and talk about the -- we were talking before, joe was saying he doesn't know -- >> i wanted more detail. >> you want more detail? >> i wanted more salacious details. the importance is it's the lawyers. >> it's the lawyers, this is the draft and this gives them effectively the board to say okay, 1$120 million, we don't have to pay you. >> the report is written in a careful way, which is it's not recommending, hey, you should fire les moonves for cause we're saying, the report is saying that we found enough evidence that if the board decides they need to fire him for cause, here's the evidence to do that >> i would go even further than that if you decide to fire him for cause and you need to go to court, you will prevail.

>> you will prevail. they approach it like lawyers. here's the evidence on his side. here's the fact pattern in terms of how he behaves, what he does. we interviewed these witnesses, they're credible to us he was evasive that's the word that the lawyers use in their report. >> take us through the new evidence in the report >> it's a litany of things more of what we are hearing are the reports in terms of engaging in sexual misconduct with cbs employees. that's the newer part of this. in one instance having someone on call to service him it was a really hard thing to write it was pretty terrible the allegations. the lawyers had access to all people, they had direct access to files as well so they were privy to how the company operated, how les moonves operated and a loose structure in place >> les moonves's lawyer quoted

in the article continuing to deny this. >> he denies any of these encounters that were not consensual there are some encounters he doesn't recall >> is there any reporting to suggest there's a type of settlement on the way? is there any back-channel discussion that says we won't pay you 1$120 million, but we want this to go away, we'll pay you $10 if this goes away. >> i don't think that's with it will end it's an all or nothing situation. there is also a relatively new configuration to the cbs board following les' exit, a bunch of people left and new people came in >> how lucrative it is to work in media was driven home to me for years they would make more than everybody else, then there's need yo ceo pay and they make more. >> there's an x factor in that job, programming >> giving the go ahead for "survivor" means you're worth $1

billion? >> according to -- >> leaving it up for 26 years? >> that's up to the board, the investors. >> csi is worth -- >> cbs and viacom plisplit off. >> media ceos are -- it's a warped withed with ide ed witee idea >> people have been talking about jim ianello has been there by les' side for a long time does this report suggest anything that he might have known about anything >> we are looking into the report, but in terms of really high-level executives who were privy or not privy, we have included them in the current

story. >> how long has joe been there >> he was chief operating officer, for a solid decade he was at that level. >> so a lot of these allegations happened before that. >> right the other thing the report noted is after oles moonves married julie chen who is a cbs host >> still, by the way she's supposed to come back. >> the report characterized that moment as a bright line where he stopped a lot of this activity so the report doesn't indicate that after 2004 that things could have happened, but they have not found any of that >> i don't know if this is a side show or not to the future of cbs, your take on the future of cbs as a company, is it an independent company, merged up with vsee via come

>> i think more than 50% chance that there is a merger for viacom if the board of cbs and viacom by themselves decide a merger could make sense here. earlier this year when les was still in charge, the two were not that far apart they were apart in terms of the numbers, but the issue was really management with les being out and new players, that could be back on the table >> ed lee, "new york times" reporter and cnbc contributor, good reporting >> thank you. coming up, european markets are open for business. we'll take you to london for the reaction to yesterday's selloff in the u.s a programming note, tonight is the premiere of "deal or no deal" on cnbc with howie mandel. howie will join us in the 7:00 a.m. hour to talk about the show's return. as we head to break, here's a

look at yesterday's s&p 500 winners and losers

so they say that some day ai will transform the human race. well, today you're a little busy transforming your call center. dealing with millions of customers a year, like this one. no, i'm pretty sure i didn't order a squirrel playing a guitar. that's why you work with watson. it works with your systems to resolve calls faster and improve customer satisfaction. i detected fraud and helped reassign a new credit card. honey, they're overnighting us a new card. woooo!!! woooo!!! for ai that works with tools you already use, choose watson. hello! the best ai for the job.

♪ ♪ good morning welcome back to "squawk box" on this national day of mourning.

we are remembering the life and legacy of president george herbert walker bush, he's lying in state at the capitol rotunda so members of the public may pay their respects at 11:00 a.m., a state funeral for president bush will be held at the national cathedral. after the funeral, the president'ses c s cacasket willn for the flight to texas. u.s. stock markets are closed today. data releases have been postponed. the u.s. futures market is trading at this hour after a very down day yesterday. dow looks like it would open off -- we would normally say open off for tomorrow morning by about 80 points right now. >> open up >> i'm sorry, up about 80 points let's check the european markets that selloff yesterday

joumanna bercetche joins us now from london. good morning joumanna >> good morning to you yes, you can see right behind me all of these majors are trading in the red i'm blending into the wall technically we have all of these indices in correction territory now with the exception of ftse mib, that's technically in bear market territory it's been another day of steep losses for european markets. i wanted to talk about ftse 100. a lot, as you know and are aware, there's a vote next week in the parliament. unlikely she can get that vote through. we also had weak services pmi numbers this morning that is pulling down that index. so it's not just the broader risk off playing here, it's also some political issues going on in the back drop let's talk about sectors and see what the breakdown is. in terms of composition, real estate, travel and leer sure at

the top. autos finally seeing a bounce in some of the european autos, this is after a more constructive session between the german aut autdmaaut automakers and the chous yesterdwhite house yesterday. tech, another rough day for european equities. a very bad day for the nasdaq. also playing into the chipmakers into europe that are hit by the supply chain effect. basic resources also weaker. finally oil and gas trading heavy. don't forget we have an opec meeting coming up. the expectation is that we would be seeing a production cut now in the last 24 hours it appears consensus is shifting perhaps towards an extension away from that production cut. spot price is trading heavy. overall a day of losses for european markets

>> joumanna, thank you let's dive deeper into the global markets joining us is neal dwayne from allianz global investors thank you for coming in >> it's a pleasure >> we've heard a lot of reasons for the selloff yesterday what do you think the real reason is. >> i think it's a confluence of factors. i think a lot of the markets are realizing that they're seeing a proper global slowdown the fed, i would argue, is saying they are still raising rates. i know everybody was exuberant that he was closer to neutral, but we know there's a rate rise coming on the 19th with the cyclical sectors in the u.s. like housing just going down, down the tubes at the moment, people are getting nervous about expectations for next year. >> even if the fed is one and done with december, you're worried that's too late?

i don't think it's too late. i think they have a full economy, they have the concern of the phillips curve and wage inflation that's coming any minute we're all waiting for a pay rise at some point. but the other way of thinking about this the fed is out of the way for the markets now simply because if we're having a slowing economy, we'll have lower earnings, cutting interest rates doesn't solve anything for the next couple of years we could have seen peak earnings, and then from a global investor's perspective the u.s. at a market level is just the most expensive equity market in the world. therefore people are probably maybe moving more towards taking profits. >> it's kind of amazing, only a week ago fed chairman powell was speaking and soothing the markets by what he was saying. then you had president trump announcing that there was progress made in china that seemed to remove two big concerns overhanging the market. here we are a few days after that and we're thinking even with all of that we're really concerned about an economic

slowdown >> it's been coming. i've been on your show and other parts of cnbc in the last couple of years wondering when this economic expansion in the u.s. would start to slow down i think as an outsider the delicious political interest that i have in the u.s. from here on in is we know the president potentially wants to get reelected in 2020. he not only has to start fighting the fed, he has to try to fight the economy with a divided house. can he get a deal with the congress to do an infrastructure package or a healthcare package that keeps the u.s. economy going to improve his -- >> even if he gets an infrastructure package going, that package often takes three, four, five years, a decade to see the fruits of whatever plan you lay. >> so does trade but trade has been popular with his base, even though nothing has changed. >> in the reverse. from it's the message that he's doing something. therefore he has something to campaign on, i would say >> the one issue is if he is concerned -- next year we start

thinking honestly about 2020 and what will happen with that election that has people wondering if you're looking at a brief window for these trade talks with china or for the idea that you will reach a mild agreement or pull back in if you're not getting what you want because you will not want that additional weight on the economy. >> that's true i would argue the trade story is something that will take time to rebalance. the one thing i would leave for you for the first half of next year, not necessarily for the u.s. economy but for global economies, everybody has front run the tariffs. economic activity in the second half of this year has been fine. i'm worried about next year when people knew the tariffs would be in place, and they have to rebase -- >> so you think people pulled forward already. >> yes >> and that you have already seen those results >> yes, or we're seeing them at the moment, which is why the global economy feels fine. maybe when we get through the chinese new year, we will find out asian industrial production is 5%, 10% lower because they

can't front run the tariffs anymore. the other thing is i think even if we think trade is a headline issue and an inconvenience issue, if you add up the tariffs that the president is threatening to put on china, it's less than 1% of chinese gdp. really it shouldn't make difference it's less than a half percent of u.s. gdp it shouldn't make a difference the concern i have is what we're calling the emerging tech cold war. washington decided to go up against china for the theft of intellectual property, for the abuse of business models in corporate america. i think that's when jack ma talks about this trade war lasting the next 20 years, i think it's about technology. it's not about trade >> is it a fair and justified complaint? is it something that he should be standing up and saying something? >> i think he should be. the question is at what point maybe washington decided it's gone past a red line >> that's my question. the markets short-term may want a quick solution to this and get

out. but longer term what is our economy kneading >> longer term we would prefer continuity of the globalization we've enjoyed in the last 20, 30 years. the brexit vote, the increasing political fragmentation in europe, the fragmentation in the u.s. toells me globalization is done for now business models can no longer arbitrage the lowest costs around the world so the tech cold war makes sense for me because we will see president trump and the washington system put pressure on people like apple to bring jobs back to innesota. they don't want it assembled in vietnam or china anymore >> which tells you what? >> what i would say is tech is 35% of asian and u.s. indices. if you think there's margin disruption, supply chain disruption coming, either the price of the iphone goes up or the margins for apple go down.

one way or another, when they're such big drivers of the u.s. stock market, i think one has to start sitting there being confident about the valuations that one is looking at >> so that's your technology call on all of this. what does that mean for the broader markets? we've been talking about if f.a.n.g. is not leading the way, if the high flying technology stocks don't lead the way what does >> that's the interesting thing. we've seen in the wobble, we've seen the u.s. trying to rotate towards healthcare and staples with the democrats in charge healthcare looks more challenged they won't get cut the slack they would before. infrastructure may have some chances. i agree with you over the duration of infrastructure energy is the place we still like $60, $70 oil is great for most oil makers around the world. you don't need it to get higher because it crimps global growth from a valuation spperspective,i said this for three years, the

value in global equity markets is not in the u.s. there are great companies in the u.s. but also great companies outside that are significantly less aggressively managed and offer the same type of returns >> thank you very much for coming in. >> thank you coming up, a lot more to talk about we'll take you live to washington where our 41st president is being mourned today and honored. we'll talk to joe watkins, he served as an aide to george h.w. bush's white house that's next. you're watching "squawk box" on cnbc

welcome back to "squawk box. today the nation remembers the life and legacy of president george herbert walker bush want to bring in one of president bush's former white house aides, joe watkins who worked on the bush quayle presidential campaign. joe, great to see you. >> great to see you. >> just give us some remembrances you spent a lot of time with the president on this day as we honor his memory >> yeah. a lot of great memories.

he left us a legacy of great leadership, strong leadership, steady leadership, great character and compassion he was selfless, humble to a fault. he put others before himself i just loved his sense of humility he was very, very caring he always wanted to make sure everybody in the room was taken care of. even the little guy or gal he knew everybody in the white house. he knew the people that cleaned his office he didn't just know their name but knew about them. he knew about their families he was sincerely interested in them he let you know it i loved that about him so he leaves behind a legacy of strong leadership. he helped bring us through the cold war take down the berlin wall. did it without doing an end zone dance. did it humbly, without upsetting gorbachev. and he led us to a stable economy in the 1990s

>> when did you first meet him >> i first met him in the early 1980s when i was an aide to senator dan quayle i met him at governor bob or eshg e' house. he and mrs. bush were seated at that with me then i was a republican nominee for congress in indianapolis in 1984, george h.w. bush came to indiana and endorsed me, which was wonderful. he had been somebody who supported me i had a chance to return the favor by working on his campaign and in the transition and on the staff at the white house >> was did he have to do to get the endorsement? did you ask for it >> i didn't have to ask for it he was following me. i got a call saying the vice

president was watching my campaign, that he would come in and endorse three candidates of indiana, of which i was one. that was the kind of guy he was. the vice president said, joe, i'll be watching you let me know if there's anything i can do to help you that was the kind of person he was throughout the time he served as vice president and president. >> speak about being on the transition team. they often say some of the most telling moments of a president come before they actually walk into the white house >> i think that's right. he assembled an excellent transition team. his son was there, lee atwater, andy card. i worked for dave demerist, communications director and a great human being as well. dave drafted me to work with him on the transition. so we worked in the transition under the president's communication. at the white house i continued to work under dave and bobby as

a public liaison which was a great opportunity for me i worked with great americans who loved the president and who advanced the president's message. working wore the if the wfor th was a pleasure because he was such a joy, so personable. >> were you in the room when it was discussed about closing the gap in the deficit with the new tax? i've seen all kinds of in hindsight people talking about how this came about. even to this day, you know, 43 points out that i don't know whether perot would have been emboldened to try to have the backing to run against him that one of the times in history you can look at a third party candidate that really affected the outcome. >> he did. >> that's why president bush wasn't reelected >> yeah. i was not in the room for that >> who was there

i heard maybe he wasn't well served by his staff and -- i don't know, sununu -- i don't know who to point the finger at. there's an undercurrent of dissatisfaction of who was advising him >> i think the president was very smart, thoughtful, he listened to all of his advisers, to all the people in the room. people did the best they could with the information they will they had at the time president bush always thought about what is best for the country, how do i put the country first. he made decisions based on what would move the country forward, not what would get him re-elected i had the utmost respect for him. >> he might have moved the country forward if he was re-elected in his mine, mayd, maybe he woue thought that would are behave b

positive >> that's true >> it would have been great for him to have a second term. >> we have to run, i want to hear about when you hopped a ride on air force one. >> okay. i hopped a ride. the president invited me to ride with him i brought some people up to meet with the brought people to meeth the president in the oval office he made me get into the picture which is unheard of for a staffer. then he said i want you to drive on air force today to new york i said i'd be delighted. i wasn't going to turn him down, of course. that was my first time flying on air force with the president really great >> did you make any phone calls on air force >> i did i did. as a matter of fact, i was told by dave demers or somebody to call art fletcher. i picked up a voice on t-- phone on the wall and a voice said, yes sir. i want i need art fletcher he said yes sir. a moment later the phone rang back and the voice said we have

mr. fletcher for you, sir. that was my introduction to air force. >> did you call your parents i would. >> i wanted to, but i probably would have gotten in trouble >> i called my mother when i went on. joe watkins, thank you for helping us remember the former president. see you soon still to come this morning on "squawk box," we will be talking to former fdic chair don powell and former dallas fed president richard fisher both friends of the bush family. "squawk box" will be right back. [leaf blower]

you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

welcome back to "squawk box," everybody. the u.s. markets are closed today for the national day of mourning but we are watching the futures after yesterday's selloff with the dow down more than 3%. this morning, the futures are indicated slightly higher. looks like the dow would open up by about a hundred if we had an opening this morning and the nasdaq up by 47. if you look at what's happening overseas in europe where markets are open, red arrows above the board. the ftse spmib in italy just wet flat all right. coming up, deal or no deal

the show returns tonight on cnbc with host howie mandel that's tonight at 8:00 p.m. eastern. howie is going to join us live on set in a few minutes. "squawk box" will be right back. ♪ it's the first day of school. yeah, he's so nervous. tom is letting him know it will be alright. i know, it's a big day. i'm so proud of him.

gotta go. ♪ good luck on your first day. just as we help companies advance in the digital era, cognizant is helping people do the same, by investing in skills training in communities nationwide. ♪

rememberin

good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and joe kernen. it's a national day of mourning as we remember the life of george h.w. bush you're looking at the shot of

the rotunda where the president is lying in state. there will be a formal funeral to honor him later this morning. the futures are trading this morning and will be open until 9:30 a.m. this morning dow looks like it would have opened up higher, if you will. 95 points higher than nasdaq would have opened 46 higher and the s&p 500 about 15 points higher we should tell you what's happened in europe and probably show you what's happened in asia overnight. taking a little bit of a signal from what took place in the markets here yesterday ftse 100 looking off over 1% this morning here's what's making headlines at this hour a presidential task force says the post service should have more flexibility to raise rates for shipping packages. the task force was formed earlier this year to find ways to cut losses. companies like amazon were paying too little to the postal

service for package delivery, the president said >> that was to me one of the most interesting things in this report they said the allegations that somehow they were getting a sweetheart deal or were responsible -- >> no. they were getting smaller rates because of the bulk that ships through. >> and in fact, those shipments were profitable shipments for the post office that piece, by the way, was surprising to me i imagined maybe they made lousy deals for everybody. but the idea those were profitable cuts against everything we'd heard earlier. chinese officials are expressing confidence that a trade deal can be finalized with the u.s. china's commerce ministry called the latest talks successful and that issues agreed upon would be implemented quickly. and the city of detroit is back in the muny bond market four years after the biggest municipal bankruptcy the city officials saying

investor demand was strong detroit's debt is still rated below investment grade and after yesterday's big plunge, want to find out what's trading and what's not as the nation remembers president george h.w. bush dom chu gets us up to speed this morning. >> good morning, andrew, becky, and joe. as we talk about what's happening with the markets, we did mention the fact that u.s. equity futures will be open until 9:30 a.m cashwise, equity markets will be closed in observance of the day of mourning. also u.s. bond markets so no treasury trading, corporates, bond futures not trading as well. "x" through there. as to what is still going, we will still find prices in u.s. equity futures like we said until 9:35 a.m. eastern time also if you look at oil markets, they are still trading metal, agricultural futures. we have normal trading hours for

those particular instruments so that's something to watch there. also what's happening, no action in the treasury bond market. so no action on the yield curve. but still just to point out, that big down trend we have been seeing as of late in yield curves the 2/10-year spread is trading a little bit higher. and of course that played out in a massive drop for u.s. equity financial stocks in yesterday's trade. the spdr etf that tracks that not trading again today. but was off by about 5.5% yesterday alone. watching the financials still, andrew, as we get back to trading tomorrow joining us right now after what was quite a wild ride in the markets yesterday is a global chief market strategist at kanter fitzgerald also mike santoli. so what was the revelation for you yesterday? >> i didn't have one

>> you didn't? the market seemed to have a revelation >> look. the market hit a low several days earlier it bounced off of the fed and a trade deal that maybe was or wasn't a trade deal. >> clearly now it's a head fake. >> look. i've been pretty consistent all year long thinking we get a lot more market vol on tighter financial conditions globally, on higher rates volatility and that's come into -- that's come to pass about 2805 on the s&p has been my target since march 13th so the revelation really is when you're in an environment where you're going to get much tighter monetary policy, if the yield curve weren't so darn important, i'd be tired of talking about it curve is starting to invert, policy is tighter, and equity markets tend to be more volatile. >> what is the longer term prognostication, mike santoli? get out of the 12-hour, 24-hour -- >> it's tough.

we're coming to the end of a year where i think the dominant feeling is we had a lot of good stuff fed into the market and the market made almost nothing with it. you had all the buybacks you had the tax cut filter through. and all of these things, really low yields that should have been manageable all of these things haven't really gotten us anywhere. and yesterday brought together all the fears that have been hovering out there in one day. right? fear the fed's made a policy mistake. obviously trade is going to be this frictional issue for a long time at best and the general sense of deceleration i think the market is fully absorbed in this late cycle psychological. whether that's true or not, that's where we are. and i think that's why as peter says, the yield curve -- look. we are overfixating on it. we're anticipating this becoming a trigger. i do think it encapsulates where we're at we're still in this messry range

we've been in for months i don't think you can declare the lows we had on thanksgiving or before in october are destined to be broken. but i think the burden of proof is rising. >> the smartest investors in the world don't know whether we're overestimating the yield curve. >> that's true >> you just said we are. >> i said we're anticipating it. >> are you sure? >> i'm pretty sure because it's not inverted yet zplp what if it inverts? >> then i think it has to stay inverted >> some of the smartest people running money don't know what to think of it right now. it's dismissive to say it's going to be fine >> i didn't say it's going to be fine i'm saying that it has not been a front page headline story in previous cycles. and there are other issues if i'm not mistaken as to why the five-year maturity is rallying like crazy >> you said this yesterday and i was trying to remember what the

reasoning was. >> i wouldn't say it's a particular reasoning, but if you think the fed is about done, that's the rally and you can tell me about the technical factors not irrelevant factors, but technical factors for why there's a short squeeze in parts of the curve. >> it's interesting. the curve has been behaving bad i did. threes to fives recently inverted you know, couple basis points. and twos to tens are now at about ten basis points and then three-month to ten-year which banks care about most. this is one of the reasons the regionals got slammed yesterday. that collapsed so that went down to about 50 basis points, i think. and then obviously that matters most on net interest margins so the curve is really important. when you look at it imperically, six months to a year after you get an inversion, you do have an economic slowdown. it's not always necessarily a recession. because there are obviously other factors that are important. >> we may not be inverted on any of the twos to tens but you are

talking about on the threes to fives. we started seeing yesterday, that's the first time that's happened since 2007. that scares people just hearing. >> and it should all it really does is say here's the markets positioning of a slowdown of some magnitude it comes when the ism is at 60 on monday and who knows what jobs are going to say. unemployment is under 4% the fed is not getting the signal to slow down. >> how much of a signal would this be for the fed too? that the 10-year yield was the metric greenspan watched more frequently how much of this signal of what we saw yesterday is something that would either panic more members of the fed or give credence to what the members of the fed like a bullard and kashkari saying the inverted yield curve could be a big deal. how much more do people listen to them in the room this time? >> i think it's funny, mike.

you've got the fed that has tried to sort of step away from a yield curve inversion as an important thing for a very long time and they tried to walk back. maybe it's not all that important. maybe when twos to tens are at 70 basis points early in the year the reason i felt like i would invert is the rest of the world is slowing when you look at european pmis this morning, for example, and you think about what the ecb is going to do on the 13th, low global yields have helped. >> the 10-year bund this morning is at 0.242% >> and that tells you a lot about what potentially the ecb is going to do or not do on the 13th they extended once hey, september the ecb is going to end it. they extended it through december will they extend it more i think they probably will end it but probably dovishly >> powell himself has said when they asked him about signals, he said it gives you some idea of what neutral rates are

if the 10-year does that, that's a signal >> peter, by the way, what are you doing about all this >> well, it depends what you mean in terms of what we're suggesting to clients is we've been telling them to pair risks since the recent rally we think it's a sell the rally market i'm concerned about europe i'm concerned about housing. i'm concerned about u.s. credit. so i think it's a risk off >> okay. thank you. big hour still to come including a preview of tonight's big premiere of "deal or no deal" right here on cnbc executive producer and iconic host howie mandel joins us plus a breakdown of yesterday's selloff and what to expect when markets open for business tomorrow u.s. markets are closed today as we remember president george h.w. bush. take a look back at his legacy in washington and beyond "squawk box" will be right back. place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. check out the futures this morning, folks you'll see right now they are indicated slightly higher. dow up by about 87 points after falling almost 800 points yesterday. the s&p is indicated up by about 15 points. the nasdaq up by 46. when we come back, "deal or no deal" is back one of america's most beloved game shows returns to cnbc

tonight. iconic host howie mandel is joining us for a preview of what to expect. he's our special guest right after this break here he is broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!? different kind of sick. if i can't work after surgery, how am i gonna pay my rent? all these bills? aflac! oh, aflac! and they pay you cash in just one day. see how aflac helps cover everyday expenses at aflac.com. you're still here? we're voya! we stay with you to and through retirement. i get that voya is with me through retirement, i'm just surprised it means in my kitchen. so, that means no breakfast? voya. helping you to and through retirement.

took a lot of guts to go one more time. >> it did. >> she respects that >> thank you >> and when she respects that and you risk that, she rewards that >> we say deal the hit show returns tonight on cnbc at 8:00 p.m. eastern time joining us now on "squawk" on the set almost ten years after the show ended its original run is the one and only howie mandel he's executive producer and of course the host of "deal or no deal." great to have you here today. >> great after ten years it's good to be back >> i think about the dna of the show and why it fits so perfectly with cnbc. and i don't want to say there's gambling involved, but there is a lot of risk that plays out and it's similar to what we watch on the day side here on cnbc. >> i am so endebted to cnbc. i've been scraping and clawing to get back to do this show, number one i can't think of a better home

than this because i do watch this network and for all the reasons you watch this network, this is a -- you know, it just fits so perfectly because not only is it entertaining and not only is it, you know, a fun edge of your seat scream at kind of show, but i think it's a great teaching moment you know it is a great -- and it's risk versus reward. which i believe the stock market is risk versus reward. it teaches every lesson you guys teach each and every day in real life this is a game and the game is no skill whatsoever so you don't have to know about the market you don't have to know about anything you don't have to know trivia. you don't need to have any physical acumen. you just show up and if you feel in your get that you're doing the right things, your life can change forever >> there's a little bit of math involved, right? i played the -- you know in some

arcades they have a "deal or no deal" arcade do you know about this you play it all the time >> i get paid for it >> do you play it? >> like dave & busters for tickets? i have i have one in my office, to be honest with you. >> but there is math involved. right? >> well, odds. and people don't realize this. this is what's great about this show this is "deal or no deal" 2.0 and we have made some changes. one of the changes is that once in the show, the contestant can counteroffer and negotiate so there's your numbers. you have to -- you can't just willy-nilly throw out a number it's got to make sense based on. the odds and the numbers and our new banker -- >> are they negotiating with you or the banker? >> the banker. the banker is now female she is working -- and sometimes the contestants will appeal he's a good person, he deserves this. and she's just strictly about money and the numbers. so you weigh the odds against

what is there and the amount of money. it's just strict shrewd business >> there are economists who studied it >> steve >> steve liesman came in and economists look at this for crowd behavior, crowd psychological. that tells you about market movements too. sometimes they're based on fundamentals but sometimes crowd psychological. they've looked at these things too. >> steve did an article -- he's standing right there steve did an article on the show in 2006. and it's in economic textbooks you know they've actually used it in economic textbooks, economy textbooks, psychological textbooks. you know, economics and psychological i think is the epitome of what the market is. right? so i never thought as somebody who -- i'll be totally honest with you, somebody that doesn't have a ged would be part of teaching somebody economics and market and whatever. though i love it i'm risk adverse myself. >> you're pretty conservative.

would you -- how would you perform in "deal or no deal" >> horrible. i think personally i would do well because i would walk out with the first offer because that's a guarantee so i'd probably have like 10 grand or 15 grand for doing nothing which i think is a good investment but for television, i wouldn't be a good -- the show would be over in, like, 11 minutes. and there'd be no tension. it would just be, i'm going to take it. i wouldn't go for it but that's the beauty of people. that's the beauty of america that's the beauty of the economy. that's what this is about. go for it. >> do you have a favorite guest? i mean, do you have a favorite situation? >> i'll be totally honest -- >> did you have a situation where you loved it >> i do have one i tell a story about in the last run and some things happen -- you've got to watch. tonight 8:00 here on this network, don't miss this premiere because this first guy joe is amazing.

and i will be tweeting along live i will tell you a story from the last incarnation of the show there was a kid, a young korean man who was about to start his life and he -- you know, i'd get out of them what their story is. he talked about how his parents came from korea with nothing but $750 in a bag. they came with two kids, didn't speak the language, and he made a life for himself finally he was going to college. he was going to do something in the stock market, i think. he couldn't believe the american dream and now he's on "deal or no deal" where he has an opportunity to expand his life and walk out with a million dollars. he played the game, and when we played the game, he pushed all the way until there were two cases left and one case had $750. and one case had $750,000.

what are the odds? so he -- the offer was $350,000 and he took the offer. smartly took the offer didn't take the gamble and then i took his case to see what he had chosen and i took it in the audience and his father was sitting there. so i had this little case like this and i gave it to his father i said he just sold this case for $350,000 what does he have? and this little korean man in his 80s at this time opens the case, and there was $750 like he started with so it was like this circle of life it was beautiful you know, this is a show about humanity, about economy, about risk versus reward it's got every -- i call it an emotional roller coaster so tune in at 8:00 watch with me. >> howie, we're so excited to have you here on the network to be a great reflection of what we do during the day.

thank you for coming in. >> well, thank you i feel like i've been adopted into a new family. >> you have. you are. howie mandel, again, is the show's host and the executive producer don't forget "deal or no deal" premieres tonight on cnbc back-to-back episodes starting at 8:00 p.m. eastern time. thanks, howie. >> thank you still to come, what are the chances of a recession we'll break down what bond experts are saying about the yield curve. a look at currencies this morning. check out the european markets right now responding to yesterday's big selloff here at home "squawk box" will be right back. who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies

at scale to advance speed to market. what if numbers tell onat t. rowe pricey? our experts go beyond the numbers to examine investment opportunities firsthand. like e-commerce spurring cardboard demand. the pursuit of allergy-free peanuts. and mobile payment reaching new markets. this is strategic investing. because your investments deserve the full story. t.rowe price. invest with confidence.

♪ president george h.w. bush being mourned today. of course being honored in washington ylan mui joins us live from capitol hill with more on today's upcoming events.

>> reporter: andrew, the public viewing for president bush concluded about a half hour ago. the casket will remain in the rotunda until about 8:45 a.m that's when they'll begin the preparations to the departure to the washington national cathedral. we are expecting to see the bush family here at the capitol for that departure ceremony. it's expected to begin at 10:05 a.m. the ceremony is expected to look a lot like the one we saw when president bush's body was brought here to the capitol on monday evening there will be a 21 gun salute they're going to play "hail to the chief" and there will be a special military honor guard that carries the casket down the plaza stairs and places it into the hearse the departure to national cathedral is expected to happen at 10:20 a.m the ride up to the cathedral is

going to take 20 minutes or so and at the funeral, in addition to obviously the bush family and domestic dignitaries, many world leaders current and former heads of state are slated to attend including germany's angela merkel, the king and queen of jordan, prince charles as well the family after the funeral will then depart to joint base andrews. they're going to fly down to houston today in order to be there for a memorial service in texas tomorrow the body will be buried at college station, texas a&m, where president bush has his memorial library over the past two days we have heard so many memories shared by lawmakers and public officials and one of the things that stands out amongst all of those remembrances is that president bush really inspired the next generation of politicians. we heard from paul ryan and rob portman. they were called to public service by his call for a

kientkient er -- kinder and gentler america. >> thank you very much joining us now to talk about the president's legacy is john powell formerly of the fdic. your relationship goes back for a long time with the bush family when did you first meet george herbert walker bush? >> i first met him probably about 1998 it all related to the bush school of government and public service at texas a&m i was serving on the board of regents at texas a&m he reached out to me that then-governor bush had indicated to him that we should establish an advisory board for the school >> and what was it like to work with him >> you know, i was -- i reflected a little bit about that during these past days, and i recall then-governor bush when he was discussing with me about

the appointment of being a regent at texas a&m, he leaned over the desk and said this appointment is really, really important to me. i said it's important because it's a great institution in texas. he said you want to know why this is important to me? and i said yes, sir. he said, my dad's library is there and i don't want anything to embarrass him and i got in the car and i reflected upon that. i said here is a man that deeply loves his dad. he deeply loves his dad and i thought about that on everything, every decision that we participated in during those years to come. he was -- president bush was the most authentic man, i guess, that i ever met. we talk a lot about his decency, but he also put you at ease.

i remember being with him -- i was most anxious every time i was around him i wanted to please him and i worried about making sure that the things he thought were important at the bush school, in fact, were executed. but he would -- because of his very presence, you would feel like it's okay and so i just -- i love the guy. >> tom, we've heard a lot of words his sons have spoken about him. not only george bush but jeb and neil what you're saying is a constant we've heard from anybody that worked for the bush presidency just this inspirational leadership what is it about him, about his past, about his experience that you think really inspires people to say the things they've said about him? >> well, his history of public service. i mean, i still am in awe of a

young man 19, 20 years down and a hundred landings on the carryer. i think about his leadership skills, his people skills. he's just a genuine human being. he had the genius of being able to express a thought and ideal without offending anyone and there was nothing in it that was in his demeanor that was demanding. he didn't require -- he didn't say i want this done not once did i hear him say to me, it's important to me that this leadership change or this student be admitted to school. he wanted what was best for that institution. he trusted the system. he had all the leadership skills that we know about >> we have made the point that he is the last of the greatest

generation in terms of the presidents who have gone someone who served in world war ii as you mentioned. what do we need to look to for the future and in terms of what characteristics we're looking for in our lewders -- leaders >> i think duty, honor, sacrifice, selflessness, all those things george herbert walker bush possessed. his life is an example of all that i've thought about this, again, over the last few days, and his life will continue to live he will live in these students that will attend the bush school, the students that have graduated from the bush school he inspires all of us to do what is right for not only our fellow man, but our country >> donald powell is the former

chairman of the fdic very good to see you thank you, sir coming up when we return, we're going to have a lot more on the yield curve and the markets and what it all means. "squawk box" returns after this short break. some moments can change everything. you can't always predict them, but you can game plan for them. for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions to help them reach their goals. being ready for wherever life leads. that's the power of pacific. ask a financial advisor about pacific life.

♪ the signals from the bond market and the yield curve are scaring the equity markets steve liesman joins us now with more >> all right here's the good news or let's start with the bad news bad news is the inversion of the yield curve has a excellent predictive rate of predicting recession. and we're not quite there yet. you have to get there for it to be a real signal the white lines are the recessions and the circles are the yield curve going negative, 2/10 spread. you can see 13 to 17 months there after you have a recession. does a pretty good job of doing that so let's take a look at how the curve has flattened -- >> before you do that, we've

asked the question yesterday how many times it's -- >> it's about perfect. >> but how many times has an inversion of the fives and threes or fives and twos -- >> that one i didn't look at you didn't give me an assignment the fed -- >> it may not be the 10/2 inversion. >> the fed likes the fed fund futures to the 10-year they say that's not as close here but i want to look at how we got here the second screen we're going to look at here we're 21 points down on the spread and the 10-year, 16. and it's the speed and call it the fury of the rebound that really spooked people. you can see if the fed is going to go up, it kind of clears the way for people to buy on the long end there is a technical aspect of that markets trading with a certainty of the economic slowdown, i find that hard to find in the data here look at our cnbc rapid update. we're still running at 2.8%

which is strong for an economy where cbo estimates the potential is 1.8%. we did 3.5% in the first quarter. i think that's a good number to do 2.8 again somehow the market has defined for sure it will be a slowdown and one other thing i want to show you, guys, remember we got the jobs numbers coming up friday we have adp coming tomorrow. adp has estimated 198. october was 250. average hourly waging will be strong at 0.3% i don't know how certain if we get a number like that the bond market is going to be that we have a slowdown coming but the high frequency data is good, and i suppose they're taking the bad news from the housing sector, the bad news from earnings is creating a macro picture. >> inflation nowhere to be found

for quite a while. and the fact the 2-year is still, what? 2.70%-ish in terms of yield, it's saying there's room under it for the fed to do more. in other words, it's not saying by this time next year, the fed is going to be cutting rates that's where you're at when it's flatteni flattening let me get to mr. giddis here. because he -- i read this this morning and went, oh because i thought that makes sense about the yield curve. let's welcome kevin giddis, head of fixed income for raymond james. so kevin, your notion is that when we're looking at dot plot charts that have three or four next year, people were sure that the fed was committed to raising rates for the foreseeable future and the long end was sort of felt like inflation wasn't around, but it's like the fed must know something and something must be coming the minute jay powell said,

whoa maybe we're just under neutral the minute they said that was the missing piece of the puzzle and people at that point were able to act on their bullish intentions on the long bond and rates came down and because the short end was going to stop going up was that basically it. it confirmed the number we saw the previous week and all of a sudden people say it's safe to go back in the water is that what happened? >> yeah, joe you hit the nail on the head >> i read what you said and just tried to say it again. so it's not me, it's you >> you did a great job >> okay. thank you. steve even nodded. which i live for nods from steve. >> it was an all clear signal. >> but he said it -- >> he said it like this. and you said it like that. >> exactly >> yeah. keep in mind, the long end of the treasury market has never really bought into the fed's inflation theories or concerns about it so that was always hanging out there. as you stated, the two things

that were the biggest two things came out of the core pce which is the fed favorite. drops to 1.8%. and two, powell's comments of just below so those are the big things for the bond market that gave a bit of a free spin to the long end of the curve to start buying again. what we're seeing now is -- and you guys have been talking about the five-year interest we are seeing a bit of a hedge trade going on between those that may have been in the short end of the curve willing to take more duration risk and see how this plays out because we still have, as steve talked about, the average hourly earnings is going to be the key. and the fed meeting on the 19th. now, the fed could -- there's still about a 75% chance they'll raise rates. but let's say they do. will they sing a dove song in their comments which would probably further flatten the curve? >> kevin, if you're saying there's a technical aspect to this trade which is what joe's talking about here, does that suggest that maybe the equity

market is getting the wrong signal from the bond market? >> well, i think they are. i think there's a general idea that the economy and global economy is slowing and the u.s. economy will slow as well. i think this is the equity trade seemed to me, more about the lack of follow through and the trade dispute between the u.s. and china and the fact that china was silent up until recently and maybe this wasn't a true truce i think that really hurt you got your momentum from that trade over the weekend you lost it in the first day. and then now we're looking back to the bond market i still think that we are -- we have a growing economy, not a slowing economy in that the fed is going to slow down. but not to the point where we think that they're going to stop rates from raising rates the rest of '18 or '19 >> we had jim paulsen on yesterday and he uses that horrible "s" word, the

stagflation word it's got to be worst for everything high inflation and low growth. if you could orchestrate the opposite of that, you know what i mean would there be any reason to just blindly raise rates if there was no inflation is there any reason to just assume that good growth is going to have negative consequences? if there's something that's holding down inflation globally and you could -- you know, without fear run your economy hot, is there any reason to raise rates just to slow the economy for the sake of slowing it if inflation is not going to be a problem >> here's the thing. i think of the fed's mandates, two of them are basically in their pocket that is employment and that is inflation. if they're trying to sustain growth by raising rates or slow the fire of the growth, they don't have to do much to that. i think it's something that may

warrant one or two more rate hikes between now and 2019 and almost everyone has their sights set on 2020 for a possible recession so i think easing off thepedal spending a lot of time observing this is what they're going to do going forward. >> don't you want a normal world where there's a cost to money outside of inflation right now what everybody's complaining about is essentially a zero real funds rate so that you give me money and you don't demand any compensation at all. >> i don't want us to be the only country in the world that decides that's normal. >> but if you want a normal capitalist system, money should have a cost. and the longer -- >> wurp fiyou were fine with ite years when it had zero cost. >> when we were running below potential and inflation was below potential. >> my only point is if they're -- let's say the idea of the singularity is that shorter

and shorter time periods are enough to have advances. let's say technology with computer aided learning and computer thinking getting us to a point -- how much did the internet push down prices? >> and i think this gets exactly -- steve's chart earlier about the yield curve. the near miss in the mid-'90s is the situation you're talking about. end of 1994 we had a sideways market, two 10% corrections. they almost declared victory on inflation. they said we're going to see what happens we're going to have a slowdown in '95 then you got that productivity revolution in the second half of the '90s powell as steve and i talked about has alluded to this scenario to keep it in mind as the possibility. >> neither the apocalypse or the coming of the messiah are forecast they're hopes. right?

we may get some great productivity -- >> on a chart you can plot over a billion years how quickly things are happening >> it's so interesting you're saying that, but the economists who are dismal and otherwise can't see a lot of things, they don't see this huge technology progress that we feel in our daily lives in the data. we have that recent pump up. if all those things happen, you are correct. >> but in 1994, 6% unemployment was generally thought of to be the level below which you risk a problem. now 4% people say is maybe that level. >> that's a function of education and technology maybe >> all right kevin giddis, thank you. senior managing director head of fixed income for raymond james liesman, you out of here now >> no. we're going to come back and talk about george bush with -- howexcited are you

laffer is going to be here >> which plays into this notion here too >> it's all about the question of can we raise the potential growth of the economy. and change the dna of the economy such that the run rate is more like 3%. which by the way, you would still have a higher -- >> you look at japan how did that happen with inflation? >> what happened and why can't we fix it? >> also if no one's having babies -- >> demographics. when we come back, we'll have the latest corporate headlines plus what you need to watch when markets reopen tomorrow check out the futures this morning. they are trading until 9:30 a.m. eastern time right now looks like the dow would open up by about 95 points s&p futures up by 15, and the nasdaq up by 47. later as we mentioned, art laffer will be our special guest. "sawbo wl rhtac (vo) 'twas the night before christmas and all through the house

not a creature was stirring, but everywhere else... there are stores open late for shopping and fun as people seek gifts or even give some. not necessarily wrapped with paper and bows, but gifts of kind deeds, hard work and cold toes. there's magic in the air, on this day, at this time. the world's very much alive at 11:59.

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. welcome back to "squawk box. in the headlines this morning, mortgage applications rose 2% last week. that's according to new figures from the mortgage bankers association. the average 30 year rate fell to 5.08%. shareholders of japan's takata pharmaceuticals have approved the $59 billion

takeover of shire. and aig has replaced its chief financial officer. the company has named mark lyons as the new cfo all right. we're getting ready for some key data over the next few days all leading up to the job numbers on friday jim, a little unnerving for folks to see the market closed on a day after we happened to have an 800 point drop for the dow what does that mean if anything technically and for nerves of people there >> i think that part of the move yesterday was because of fears that the market was closed today. and lack of access gets people a little bit jumpy the bounce today is uninspiring. i'm going to put that -- i don't care as much about that because of the extenuating circumstances. but if tonight and tomorrow we don't have a decent bounce, and after a 3.5% decline in the s&p,

the likelihood of the day being higher the next day is up a little bit the whole thing, by the way, is the news of the fed going more dovish that played out over the last few weeks and then the china sit-down, whatever you want to call it. those couldn't take us over the mid-november highs or october highs. that should have been a signal it was not in mush bearishness as we saw yesterday, but that should have been the signal. i still think eventually we're going to take those because the story's too good to sit down we're just not ready for it yet. >> just a question for you you mentioned we'll be watching the futurie ins right now, toni and tomorrow is there anything we can read into the moves >> no. i agree with you 100%. by the way, even yesterday the

big plunge was relatively low volume if you want to see a high capitulation trade to see them go higher but you can't read as much on the downward move. the job part of the economy, we are still conditioned to think that's fine. that's not really where our focus is if something happened there and we didn't get good jobs numbers, that could be a big deal >> i was glad we had last week you know what i mean >> me too. >> if it was 800 points from the lows or -- >> that would have been a huge deal. >> -- 300 points from the lows instead of 300 points from what happened last week because it just gets us back to 25,000 on the dow. the s&p stays at 2700. didn't get through santoli's 2800 but it didn't go through 2550 either. you know >> no. >> so thank god for last week or

yesterday would have really -- with a closed market the next day? >> yes but i actually think that those kind of things happen when you fail to make new highs and they accelerate it too if that happened from the lows, that would be a huge deal. by the way, there's a couple different market where is significant lines in the sand have been drawn. in crude trade, we pierced through it twice and the 2600 level in the s&ps we came down there twice if that broke and we stayed below it for a couple days, then i would think this could turn into something but i don't believe that now >> we definitely wrung out any complacency from the powell comments and g20 and we're still above the lows we got the bearish mojo back without really having to hit new lows so i don't know. >> but something you just said is very important here >> really? >> we have ten years of -- >> can you tell me what it was >> i'm going to.

the volatility that's back is good in a couple different ways. one of it is that people were conditioned over a ten-year period to go further and further out the risk spectrum. rating were low and volatility was low. people have to remember, now i'm switching from traders to average investors. people have to remember there is risk in risk assets. so the investors that start to come back in in 2019 will be more conditioned for that and more stable and will be a lot less weak hand money in my hand. i'm fine with this volatility. >> jim, it's great to see you. thank you for joining us >> thanks. folks, just a programming note for you i am headed to washington, d.c. tomorrow for the business round table ceo innovations summit among the special guests that will be joining us is boeing ceo dennis muilenburg, jamie dimon, at&t ceo, and walmart ceo doug mcmillon we are going to bring you those

conversations live throughout the day right here on cnbc we'll be talking to them about what we see in the economy, in the markets, and on the jobs front. then tomorrow on "squawk box," the first interview with lance armstrong since he spoke to oprah winfrey back in 2013. the first interview he has done here in the united states, major interview. i spoke to him at his home in aspen earlier this week about his new venture capital fund we'll talk about that, investing in uber, his settlement with the u.s. postal service, and how he feels now about doping we'll talk about that and so much more. coming up, though, art laffer of laffer associates joins us in just a bit and we are honoring and remembering george h.w. bush this morning the services sta rt in just over an hour. more on his legacy when we return

under pressure world markets are in the red this morning after u.s. stocks plunged yesterday on growing fears of an economic slowdown. what happened? we're going to look at what hurt

the markets after seemingly good news on trade. and the nation remembers a president. americans across the country are honoring the 41st president george h.w. bush today we'll talk about his legacy, economic, and personal as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" on cnbc i'm joe kernen along with becky quick and andrew ross sorkin our guest host for the hour, richard fisher we'll have much more with richard before this. i thought we had stanley fischer. >> that's a wiser fisher. >> the better fisher they're both good. first up, the nation pays tribute to former president george h.w. bush

he died last week at the age of 94 president trump has declared today a national day of mourning and remembrances for the president is today including a funeral at washington's national ta cathedral the stock markets closed the u.s. bond market is also closed adp's november report on private sector employment and the labor department's report on third quarter productivity and costs have been postponed until tomorrow so we have a little news backup tomorrow should be exciting and fed chair jerome powell's testimony to the joint economic committee of congress will also be rescheduled u.s. equity futures, though, are trading. i saw a triple digit move last i looked 106 now on the dow which gets back 12% -- >> of yesterday. >> yeah.

nasdaq 47 or so. almost 300 on the nasdaq is regurgitating almost they are going to conclude trading at 9:30 eastern. overnight in asia as you can imagine, maybe responding to yesterday's moves in u.s. markets and european equities sort of the same story over in europe and then energy futures trading on a normal schedule today crude prices at this hour are indicated up it's good to have. you don't know if you want higher or lower oil prices in texas. >> we like prices, period. >> it's like goldilocks. not too hot, not too cold five handle is good >> pretty good for the permian

>> anything above a three handle let's get you caught up on the selloff yesterday. steven parker is the head of thematic equity solutions. and who is portfolio manager we've been blaming a lot of things for what happened yesterday. parts of people concerned about an economic slowdown also more confusion about what those trade talks with china really meant over the weekend. but you point out another point, too, something we haven't talked about yet this morning those were some of the comments being made at the goldman sachs banking conference yesterday what did you hear that made you think this is something we need to reconsider? >> thanks, becky the comments out of the gold conference were primarily positive talking about some loan growth into next year how their consumers and customers are reasonably healthy, but there

were some words of caution about loan growth slowing a little bit. also about consumer credit so therefore as we were listening to the banks, people were expecting that the news would be mixed that also contributed to the factors you mentioned. the yield curve, the tariffs >> when we heard from the big bank ceos when we got earnings last month, all of them were saying things look great on the horizon. and there's no need for concern. did you hear that yesterday or what you're describing is that saying maybe we can't see quite as far as we thought >> i think the horizon has come in just a little bit, becky. still positive looking for good loan growth. not quite as enthusiastic as they were on the earnings call last month >> let's go back to what we saw with the yield curve

you say the step they should be doing is what they're seeing in fixed income >> yeah. not necessarily a great indicator around what you should do from ans a tet allocation perspective. stocks generally rally over the last seven or eight cycles for the year after the yield curve inver inverts. on average you see 20% gains with inequities. we're not making wholesale changes. but rather taking in some of the fixed nm side. trimming credit exposure, adding duration focusing on qualities you have a little bit more of a defensive quality while still maintaining. >> that's kind of the move a lot of people have been making particularly when you look at corporate bonds. >> and i think the other thing to keep in mind, there's a risk/reward tradeoff on the upside, we think if things turn out better than expected, the upside, you're going to get from equities is much better than what you're going to see from corporate credit and on the downside, i'm not so

sure that the defensive nature of high yield especially some of the lower credits is going to protect you as much even in an equity downdraft richard, you're here and great to have you. because you knew 41 so well. but -- >> i also know this guy. >> but i'm just dying to talk to you about what's happening with the fed too. what's the most surprising thing since we've been watching and talking about this for years and years. but now where are we were you expecting anything close to this in terms of the way it's played out? >> well, i was talking to steve about this earlier we appliied ritalin to the markets. monetary ritalin or lithium. we started doing it in big doses. as we approach the first week of

march of 2009. we had expanded the balance sheet by $750 billion. we were literally looking to infinity now we're at 4x. it's been a one-way street as we were talking about there was no volatility. we actually heard the term meta-stability everything is meta with the younger generation >> you're talking about me compared to you. >> at some point a price will be paid >> is this adhd? >> it's a return to normalcy but it's hard to withdrawal from that dependency. >> so we're stuck? >> we will get out >> it's tough though >> it's going to be slow on the way out. >> it's going to be slow and painful. >> what's the pain look like >> i think we've seen some

expressions of pain. we've also seen an expression of the moodiness. >> this is not terrible pain though we can deal with this pain >> look. i made my money in 1987, we were down 800 points. that was 20% fortunately i was short. i'm still living off that, joe many years later 800 points is not very much right now. so here's the point. you've had a one-way street. it's gone on for over a decade a lot of people in the business have seen nothing else we're also on the back of the greatest bond market rally 800 years of history going back to genoa and venice. so, you know, you're seeing a turn those turns are very painful it takes two guys like these to sfig yur that out. >> did you know this could start -- >> on that speech, to me mr. powell made an observational

comment. the range that's been estimated by the guys that plot the dot -- remember i was a dot for ten years. from knew ral rate 2.5% to somewhere above 3% one more move, you're at the lower end of the range. >> but why it feels weird to me it's not 6% that's what i was used to. i thought that companies can do fine at 6% >> you're an old guy here's what i believe they're still doing. powell and the committee are being good squirrels they're putting nuts in the tree by the way, not squirrels that run back and forth in front of your car down the street that's not what you want for the fed. you want them to store up rate increases so when the cycle turns, you can mitigate the downturn by cutting and also by expanding. >> were we too loose with the money so now we can't -- the slightest increase -- the slightest increase suddenly we got to pay that on the debt service. is that why we're in this soup >> well, this is another real

problem we have. i'd be interested in their views. as the fed is cutting back its balance sheet, next year they will issue more in treasury debt that creates particularly in the two to seven year space on yield curve. i think that's why those have been sloppy. that in turn impacts how you discount the present value of future cash flows when you're buying something else. so the directional sign is up. you probably have more informed views than i do. >> what you think about that, ellen? >> the curve in addition to those technical factors really also represents the market's best assessment of what the growth is. and as we look into 2019 and potentially into 2020, we're seeing growth slow down. we're seeing gdp slow down we're seeing europe slow down. we're seeing the aftereffects of the tax cut. so in addition to the technical factors, the long end of the curve is reflecting slower

growth and that's going to continue to be difficult to digest for the market >> how much of this is slower growth and how much of what we're seeing in the 10-year is a reflection of what we see in the 10-year overseas the german bund. also yielding 0.24%. lowest levels since may. >> fixed income, it's a global market we've seen a big move off of the recent historic lows rates actually look pretty high comparatively speaking you have to assume some. but i also think from an equity perspective if you turn it around, there's a relative trade look outside of the u.s. emerging into global equity markets where monetary policy continues to be much easier relative to where we are in the cycle here in the u.s.

>> you have a global perspective. the european central bank has been floating that market with free credit. in fact, they pay you to take something. what's the risk there when they stop that program? and don't we look -- >> i think there's two ways to look at it yes, when they stop that program assuming it's an aggressive shift in policy, i think that will be painful to digest. i think that we are still a ways off from that. and i think in the interim as an equity investor, one of the things we're seeing, a lot of the political noise, the fundamental growth story in europe by european standards has actually been above trend. and yet markets aren't giving corporations or economies any credit for that. so i think that, yes, eventually there will be a price to pay i don't think the ecb is interested in making that shift any time soon. and if we stabilize from a global growth perspective, there

may be a shift out into some of these non-u.s. markets >> richard, you said at the beginning of the conversation that you were short the market back in 1987 you've been living off that ever since. i know it's not your day job now, but would you be short the market here? >> i'd be heavily invested in cash >> because you're concerned? >> well, again, i've been -- if i had been fully active, i would have been spoiled for a decade when everybody wants something, you don't want it. when nobody wants it, you want it i'd be prepared for people not wanting things as much i would have raised cash already. >> and you -- that means you don't think inflation is coming any time soon. because cash is not a good place to be if inflation takes off. >> well, it's not there now. if i did come, i'd want to be in a position to exploit it it's that simple >> richard fisher is our guest host today we want to thank ellen hazen from coming in also steven parker thank you, guys. coming up when we return,

the nation honors former president george h.w. bush today. a state funeral will be held at the national ka th-- cathedral 11:00 a.m. eastern when we come back, there are lots of stories to tell. stay tuned you're watching "squawk box" on cnbc 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. welcome back to "squawk box. today the nation is honoring and mourning the death of the 41st president george h.w. bush our guest host today is richard fisher, former dallas fed president and senior adviser at barclays he was a friend of the late president bush can you describe the beginning of your friendship when you first met him? >> to be clear, i'm a friend of his two sons in particular president bush and former governor bush. but my father-in-law was a congressman named jim collins. he and president bush were the first two republicans elected to

office in texas with h.w. representing the houston area and this father-in-law the third congressional district in dallas this goes back to 1968 it was through congressman collins i had the pleasure to meet president bush and get to know the family. they're incredibly decent, classy people. and i'm really proud to see the way the country is treating this man. he was a decent, good, perfect definition of a gentleman. the way i'd like to see our statesmen be yes, he was a one-term president, but i think he was dead honest and straightforward. my favorite image of this whole thing is seeing that dog sully lying by his coffin. despite what slate said about that dog, it's a perfect metaphor for the loyalty and decency bush had for this

country. so that really moved me almost to tears i had the privilege of harguing to get him an honorary degree at harvard. you would have thought i was arguing giving it for hitler they were so against it. when he sat on the stage, a roll of standing ovations over and over again at that this is an honorary degree in 2004 it was overwhelming. and i remember looking out in the audience and tears were running down barbara's face. yale had mistreated that man terribly and so our citation when he got the honorary degree was his cap was blue remember he was a great baseball player >> great fielder could have been in the major leagues if he could hit. >> he said his cap was blue, his house was white, and now his gown was crimson anyway, one of the most decent

men to ever serve in office. from a great family going back to prescott bush i started brown brothers here in 1975 prescott bush was a senior partner at brown brothers. i mean, these people had been around for quite some time both father and mother's side of the bush family. great people >> one of the things i saw that moved me was that both bob dole and george h.w. bush both shouldn't have come home, theoretically. i mean, really >> yep >> president bush lost his entire crew. he was for four hours in shark infested waters. >> amazing then he gives his service revolver to the guys that pulled him out. >> he had to salute left-handed because -- >> to see him standing >> that's what i mean. you talk about the greatest generation i have no -- it just does not compute to me landing on an aircraft carrier not even in

combat but 120 times and you're 18 years old you're headed to yale and instead go to -- i don't know. they were cut from a different cloth. makes me feel like i need to do something today because i felt guilty about everything that was left me. >> when you think of we have giants that are passing right now, this clearly was a giant. paul volcker is in his 90s now and ill. who's going to replace these people in terms of style and dedication and grace. >> what do you think's happened? >> i don't know. i think it's to basic decency. but when you criticize the elite -- here's a guy, president bush at andover then goes on to yale, et cetera. in today's world, some would criticize that >> i lived through that. i watched the media treatment of -- i mean, it started with h.w. and then it went to -- i mean, before trump, george w.

bush was -- >> a wimp. >> no. h.w. they called a wimp after 120 landings on a -- it just goes to show you the media coverage of people on the right, it goes back to stevenson, i think. and i don't understand >> the point is, it's good for us to celebrate a decent, good man. >> puts it in perspective. >> and the years of service. >> absolutely. and as joe said, from being dumped in the pacific during the war to being president of the united states and everything he did in between, forget about republican, democrat that's not the issue here. this guy was a leader from the get go and i'm happy to see us honor really one of the uniquely wonderful americans. and to see the world honor him as well. >> i think as a whole, the country felt bad he didn't get a second term and elected his son. >> i would go back to one thing we don't talk about very much. we wouldn't have had nafta if it

hadn't been for president bush my job was to implement it in the second term of bill clinton. but if it hadn't been for this president and brian maroney who will speak at the ceremony today, it was george h.w. bush that put us on the path to trade liberalization remember we just wrapped up putting together the wto all this stuff was started by the bush administration. so on the trade front as a former deputy isgr, i honor him significantly. >> all right, richard. thanks for being here today and stay with us you'll be here until 9:00. >> thank you coming up, we're going to have much more on the economic legacy of former president george h.w. bush later in the show, we'll be joined by art laffer president bush called the laffer curve voodoo economics that's coming up stay tuned

most kids today will have jobs that don't exist yet. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work.

when we come back, the banks, particularly the regional banks. we're going to talk about what's next for financials when "squawk box" comes right back. the future of technology investing

lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. the global investment management we're truck and jeep experts,ore than a store. and have been for over 50 years. from wheel and tire upgrades. to full custom builds. 4-w-p has you covered. whether you want to order the best parts online or shop in-store. do the work yourself. or get it done by a pro.

all roads lead to 4-w-p. do your rig right. shop online or find your store at 4-w-p.com.

good morning, everyone welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center today, the fed is set to release its beige book at 2:00 p.m. eastern time today. it's a handful of schedules today that have not been postponed because of president george h.w. bush's funeral most earnings reports scheduled for today have also been postponed. one company that did issue numbers is spirits producers brown-forman they matched profits with a 52 cents a share. but the sales fell a little short of estimates and brown-forman said sales growth slowed because of the impact of tariffs. there's no extended hours trading today, so we won't soo reaction on that and the mortgage bankers association did release their report applications up 2% overall powered by a more than 6% jump in refinancing activity. the average 30-year mortgage rate fell to 5.08%

all right. a new tweet from president trump. very strong signals being sent by china once they returned home from their long trip including stops from argentina not to sound naive or anything, but i believe president xi meant every word of what we meant at our long and historic meeting. all subjects were discussed. okay we'll see how markets react to that tomorrow given that the markets are closed today in the meantime, jpmorgan was one of the dow's biggest losers yesterday. goldman sachs has plunged in the last three months down 22% here to break down the sector is marty mosby. good morning to you. >> good morning. >> also our guest host this morning is richard fisher former dallas fed president and senior adviser at barclays. a competitor but also living in the space as well. marty, what do you think is happening here to these banks? and what does it both tell you about where the economy is going

but also does it suggest to you at all that there's a value play to be had? >> well, that's really two questions and two forces at play here first is are we going into recession or not what we're seeing is the tight rope the fed has to walk last week they were going up too fast so they were going to push us into recession now they back up a little bit. and that's a metric sending us into recession that's the one piece the other is are bank fundamentals going to continue to improve and that's the one piece that's really in place. estimates keep rounding up profitability is higher. and if we go into next year, we think that will continue as long as we don't see that first question flip over into the wrong answer >> would you buy banks then? >> we would. what we'd be looking at are banks that we think have the momentum and the last quarter of this recovery. so the last piece of deregulation gives you capital

deployment what we have in the interest rate environment is the biggest gap between where market rates are and security portfolios. so we look at banks like sun trust and citizens or the superregional space. morgan stanley up in the money center banks or even like center trust. >> how much damage do you think a jpmorgan or goldman sachs will be by all of this? >> this again is really broad. it's not just one bank reflecting when you're talking about goldman sachs, you have another reputational issue so they're off on their own path having to kind of fight back from some of the turmoil that they're under right now. but jpmorgan is in line as one of the higher quality banks. we would expect them to do well and they already have. so their valuation hadn't dropped as much as some of the ones we mentioned earlier. >> ri6chard, you said you'd keep cash on the sidelines. what about this here >> we've had this massive economic expansion

we've had a decade of hyper low interest rates which they overcame it puts pressure on the yield curve. obviously there's an impact here but i don't see anything unnatural here particularly marty referred to the superregionals i think of banks like coamerica and so on in my part of the country. they've had a pretty good run here of course it took awhile to get loan activity built up and to get out there in the space >> they've had a good run as in, if you were invested that's great. but now get out? or they've had a good run and you should did -- >> i don't do any timing i'm just saying the underlying economy has been healthy for them the interest rate improved for them and i think their price is reflective of that now as marty pointed out, if you're worried about where the economy is going, they're at the front line and they would be impacted there may be some discounting there. there are special factors affecting goldman sachs. >> let's talk about -- and i think by the way, you might have seen jpmorgan. what you're referring to was the

reputational issue that -- regarding 1 imbd at goldman. what do you think the outcome of that is going to be? >> again, those are things that are uncertainties like what we're watching with wells fargo. it takes time to kind of come out and understand all of the dynamics and what this means it's really a shifting landscape with how this foreign business has to operate so i think there is going to be a transition i think there will be some fines and giveback of fees that we'll have to see. and that will just be an overhang for that stock for the time being so i think it's a wait and see you've got to watch that kind of percolate on its own path. >> do you think this impacts the rest of their business meaning if you're a potential goldman client or someone who is retaining them for whatever reason, given this mix of headlines, that somebody would say actually we're going to use so-and-so instead right now? >> i think that there's

marginally probably like with wells fargo some impact there. but i think there's reasons customers use goldman sachs versus others. i don't think there's a broad movement we think there will be incremental deals that in the short run move one place to another. i don't think the the long run that will damage the franchise we're looking at here. >> by the way, what do you think of this goldman sachs news >> i'm going to stay -- i don't have a dog in this fight i'm going to stay out of it. i mean, i do remember very well a million years ago gus leavy took me up to his apartment here in new york. he said when we go public, it's a totally different culture. everything changes, richard. and he was actually given his old sty being one of those people that built that firm, he was worried about the pressure it would put on partners over time >> and you think that's bearing fruit? do you think that's true of all public -- okay that raises a different question do you think all of these banks

shouldn't be public? >> i'm not saying that again, i came out of a private bank but it's always had a different kind of culture. when your own money's at risk, you take different kinds of risks. there are some great institutions out there greatest, of course, you've got morgan you've got barclays. and you've got good institutions you know, they're going to suffer whatever of being a publicly held company. so it works. >> we got to run, but are there any banks you would stay away from now in this environment >> again, it's going to be your prescription of risk if you really believe that we need to hunker down because of going into that recession, you want to focus on the banks that are going to perform the best through thatprocess. it's going to be the u.s. banks. it's going to be the mnt banks but if you feel like we're going to be at least in this kind of stagnant slow growth environment with the chance to see upside when there are some catalysts, then these superregional banks in good areas like a sun trust

and southeast are really good -- >> but you'd buy now basically even though they're down 10% >> because we have a credit cycle monitor that basically says as we look over the next 12 to 18 months, we're not heading into recession so the discount you get right now says that stability gives you cash flow of about 10% because these banks are being able to deploy capital, generate a 3% to 4% dividend yield. and when we look at that, that gives us the assurety to say we can buy most any bank at this point. we're going to see upside and total return for shareholders over the next year >> okay. marty mosby, director of bank and equity strategies. richard is sticking around i called it 1 imdb thinking of the website that is -- anyway. just want to correct myself there. >> wait a minute imdb's not a trouble >> no. you seeped into his brain

though >> i know. so those are two different things >> two different things. >> okay. i use imbd a lot >> you do? >> i do. someone saying -- >> they made a film though "the wolf of wall street". >> they did. but years ago, you'd be like who is that person and that would be the end of it. now it's like, oh, my god he was the bartender on joey. that's who you can immediately find out who everyone is. >> unbelievable. you can even ask alexa now >> that's a jeff fox worthy joke coming up, the nation remembering former president george h.w. bush today when we return, we're going to be joined by economist arthur laffer on the economic and personal legacy of the 41st president. stay tuned "squawk box" will be right back.

♪ the new capital one savor card. earn 4% cash back on dining and 4% on entertainment. now when you go out, you cash in. what's in your wallet?

welcome back a nation honoring former president george h.w. bush today. the president died friday at the age of 94. back in 1980 when president george bush was running for the gop nomination against ronald

reagan, bush had this to say about our next guest. >> it's very interesting that the man who invested this type of what i call a voodoo economic policy is art laffer, a californian economist. and two years ago -- nothing wrong with a california economist, but my gosh you got to have a sensible approach to it two years ago when the tax cut bill that governor reagan came to prominence based on laffer's theory, laffer said when asked about this theory there is more than a reasonable possibility that's i'm wrong >> all right we have art laffer founder and chairman of laffer associates. steve liesman is here as well. so art, it's weird the way history then played out. because he became the vice president of president reagan, obviously, and is it fair to say that some of your voodoo economics that you advocated

were put forth by president reagan and had some -- what you would call, i mean, i'm surrounded by people that don't think it works but would you call it a successful outcome for voodoo economics in the '80s and '90s >> i think it was pretty successful, joe. i had a fun story about george bush at that time. when they finally lost the primary and they came and joined us, the reagan executive advisory committee, they joined and george bush sat next to me at the meeting there i just said thank god you're here, george i'm so tired of having these self-made california cowboys all around finally i got a fellow yaly. and he just looked at me and spirked and said my god to think i went after you, art. it was fun he was very, very nice barbara was the delight of the century. i supported him totally in his run for the presidency reagan had asked me to do that even though jack kuemp was an

usher in my wedding. george bush was our chosen person the final quote was, read my lips which was sort of focused on me again. >> did president bush ever revisit the voodoo economics comment with you did you guys talk about it you were close to him and you became great friends how did that finally -- >> well, they made jokes about it gosh voodoo is -- the haitians were furious. because they take voodoo seriously. that was one of is the jokes the other is voodoo is the past perfect of vd. tons of voodoo jokes only a yaley and understand and appreciate that. you know, there were so many fun ones with george bush. i mean, it was a shame that he didn't follow through with his promise. he would have been elected to a second term. it would have been a good term of his economics was not his gig. he's a manager he's not an entrepreneur

reagan was an entrepreneur, not a management but george bush's management skills clearly worked out very well in managing the collapse of the soviet union, of the gulf war. i got one fun story of him i mean, literally. it wasn't with him but i was with margaret thatcher i spent a lot of time with her she was very wiorried about the coalition and the iraq war she was worried about george bush in fact, she used for the first time in my presence "wobbly. she said if he doesn't get it started, i've got british troops in there i'll give them the instructions and they'll get the whole thing going. two things happened there. number one, she lost the prime ministership before the war started, so she couldn't do the instructions to the british troops and number two, george bush was not wobbly he executed it beautifully it was really a good time. >> art, go into the way back machine for a moment that was a different time, right? where somebody could say

something like voodoo economics, put those differences aside and suddenly he's working in the administration it's a different world today, isn't it >> i don't know if it is or not. i hope it's not. back then it was a very contentious world. if you go to the reagan ranch and look at the videos of republicans and what they said of ronald reagan, it was vicious. let alone what the democrats said >> they interviewed romney for secretary of state what romney said prior to the election was ten times worse than what george bush said >> yes what bob dole said about reagan was awful as well. you can go through a whole list of the republicans they've got all the videos there at the ranch and if you go through them all, they really were awful but reagan wasn't that type of guy. he was a very congenial, good man. he was one of the nicest people on earth i never saw him lose his temper ev ever, ever, ever he wanted the best administration

he chose george bush which was a great choice >> we did the tax cut. i'm shifting gears just a little bit to get your opinion quickly on where we are. because the market has been turbulent for the last six weeks or so. deregulation, tax cuts, things -- you know, we had a couple great gdp numbers now we're back to wondering is debt too high? is the cycle ending? is a recession on the horizon? not five years from now but maybe a year and a half from now or closer? what do you think? >> right now i don't see anything that would tell me we're going into a recession as you mentioned, the tax cuts are there. they're really doing well. we've got the deregulation going on i think that's wonderful i'm a huge fan of powell's to be honest with you. i think he'sdone a great job i normalizing interest rates and we do have a work in progress on trade. and to be honest with you, it scares me. i'm not a negotiator i'm not a guy who understands that stuff so watching all of this play out in real time is terrifying to me

the big one we have left to do and need to do is control spending spend i ing. and i hope that is the next agenda item for the president. it is, i don't see any reason for a recession. i think we'll continue on long prosperous path -- the skies the limit. >> business spending in the last couple of quarters, it slowed down are you seeing the kind of response to expect or is this something to expect next year in terms of response of business expenses and tax cuts. >> i follow gdp carefully. gdp numbers looking great, you may have us weaker in the fourth quarter. once the tax cuts took effect from january 1st, 1983 to june 30th, 1984, that's an eight month period, the u.s. grew gdp

by 12% if history is our guide, i am optimistic of what's going to happen in the next two or three or four years. i am an optimist in the economy and with larry kudlow and steve mnuchin are in there, i feel secure he's getting the best advise possible. >> you get your larmarry pluggen there. >> always, do, he's my best friend, what can i tell you. >> when we return, we'll head down to washington for a preview of today's event honoring the former president, george h.w. bush ♪ oh, there's no place like home ♪

argh! this one's a pretty big tree... ahh! i'm trying... [ glass shattering ] ♪ yippiekiyay. [ laughter ] ♪

mom. ♪ welcome back to "squawk box" everyone, the nation remembers george h.w. bush we are joined by carl quintanil quintanilla. >> what have you guys for us >> you guys have done a great

job honoring the president's legacy and mixing in with the market turmoil that we have seen we'll pivot to the event of the day of president george w. bush will head to the cathedral >> i really enjoy hearing the reminisces from richard and others talking about what it is like to work with 41 as he was called joe, i know you are a dog guy but i don't know if you have an opinion of sully the service dog, the online outrage over whether or not concerns of sully was justified. that was one moment in my family that my dad loves seeing him lying next to h.w.'s caskets and that's something we always talk about. >> it is not the only time you

see man and woman's best friend do they all stay there forever. i don't know, it is late, i wish we did not have to talk about that >> it is obviously written by a cat. >> exactly >> like george who anyway, thank you, carl and kelly and cnbc coverage as the nation honors the formal president. we'll have our final thought here on "squawk box" in just a moment we're about to move. karate helps... relieve some of the house-buying... stress. at least you don't have to worry about homeowners insurance. call geico. geico... helps with... homeowners insurance? been doing it for years. i'm calling geico right now. good idea! get to know geico.

and see how easy homeowners and renters insurance can be.

this scientist doesn't believe in luck. she believes in research. it can take more than 10 years to develop a single medication. and only 1 in 10,000 ever make it to market. but what if ai could find connections faster. to help this researcher discover new treatments. that's why she's working with watson. it's a smart way to find new hope, which really can't wait.

♪ ♪ december tends to be a strong month for stocks, the top sectors, industrials and financial and utilities. this is a cnbc's special report, the state's funeral of president george herbert walker bush, the 41st president of the united states, live from the nation's capitol. >> he went from serving his country in world war ii to be aele elected to the 41st president of the united states. we remember george herbert walker bush who died on friday night at the age of 94

good morning everybody, live from washington, d.c., i am carl quintanilla. >> i am kelly evans. the president has claimed a national day of mourning >> later this hour, the bush family will head to the capitol for a departure ceremony after the former president's casket will be driven to the cathedral. y lan mui is there at the scene. >> reporter: you can see they are getting in place as they are beginning preparation. there has been a public viewing as his coffin has been draped with the american flag people have wa