wow, it's a day that will live in infamy. hopefully not with anything that happens in the stock market. it's december 7, 2018, "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this morning is mike santoli, cnbc senior markets commentator. we've been watching the u.s. equity futures yesterday the markets were down by close to 800 points made a massive rally through the session to retrace about 90% of those losses with the dow ending down just 79 points by the end of the session this morning we are not building on that momentum red arrows once again with the dow futures indicated down by 140 points s&p down by 15

the nasdaq down by 48. just watching the action yesterday, what does that tell you? >> it doesn't tell you anything decisive i think it is better than if we closed on the lows ahead of a jobs report. normally the market has this tendency to pull itself into a more neutral position with a big number ahead of it the issue on the other side, at 3:30 the "wall street journal" headline hits, the story behind it, basically saying the fed will further consider -- >> stop the presses? >> it was that kind of a thing >> was a total stop the presses. i read it this morning yeah, in the last week it looked like -- ever since powell made that comment didn't the volume pick up on the rebound? >> volume picked up. it is good stuff >> nasdaq looked good. >> all day the big nasdaq stocks were outperforming all day housing stocks were

outperforming. all day goldman sachs was outperforming. so even the most bombed out stuff was getting picked up. this is the third one of these sawtooth trips >> below 2,690 on the s&p. >> it's there. >> it's a tough thing to get through 28 >> it still might be but no day provides you an all-clear, but it was better than -- as you said, after tuesday, when people thought a lot of tuesday's decline was because we were closed wednesday, that was not the case >> i don't know whether the huawei story deserved -- so many dots to connect where that affects the u.s. economy all these guys are like things still look good. >> is mark servim services was . >> and the fed markets sold off after an

asteroid was said to hit the earth, but the fed said they wouldn't raise rates and things rallied. >> here's the problem, how many of these things we thought would bail the market out have passed without doing it the buyback window is opening up in october midterm elections. we always rally after that in the short-term it matters one of these will take hold. >> i don't think it's our viewers watching and saying i think i'll sell a little tesla today. these are machines >> that's the implication. >> five-year yield yielding 2.75%. two-year at 2.76%. >> at least it's not inverted yel yet. >> it has to go through, right >> it has to go through. the shorter end, the two-five that is now inverted, has not been a signal of anything. >> the ten-year is 2.888

>> rick santelli says more likely headed up from here >> that's confusing when you talk about santelli says, and he talks about what santoli said. >> you think it's confusing for you? >> confusing for the word. let's bring you that story that could cause problems for the president and made headlines yesterday about the potential trade truce with china the arrest in this case of the cfo of huawei, meng wanzhou, who was also the daughter of the company's founder, she will appear in hearing as she awaits possible extradition to the united states. she's been accused of evading u.s. sanctions against iran. officials say that president trump did not know of the arrest in advance there were questions about the timeline but national security adviser john bolton said he did know we will get a live update from beijing at 6:30 on how the arrest is being viewed by chinese officials and what it ultimately means. another update on a

different arrest this of the former nissan chairman, carlos ghosn the nikkei business daily reporting that ghosn will be indicted on monday for financial misconduct ghosn and nissan will likely be charged with underreporting salaries in five annual reports. the report says that ghosn expected to be rearrested on suspicion of making misstatements in reports for the three years that followed. i say finally indicted because he's been in prison, i believe at least two or three weeks without an indictment. without the family or the company really being told what is happening and it's very interesting. there's another political -- not just a political dynamic, there's a corporate dynamic to the japanese who are unhappy with the french. conversations in argentina about this >> the partnership with renault and mitsubishi >> i'm not making defense of the

case one way or the other, but these apartments and some of these other things were all in the name of nissan >> the corporate apartments. >> which i also found to be an interesting dynamic. we will see what happens on monday and we have to play deal or no deal, opec edition. let's get to brian sullivan in vienna he has the latest on the potential production cuts. good morning >> we're waiting for something to happen. yesterday we got no production cut. i want to give you a glimpse into how jumpy this market is. just a few minutes ago, 200 journalists and reporters were cramming into this stairwell we don't even know why we went out there. everybody was like there was a rumor that a deal was ready. but nobody knows just the hint, the sniff of a

deal, guys, this is what happens. over 100 people start jam nothing a stairwell. if there is no deal, they go back down and start again. coming into yesterday morning the expectation was for a cut of maybe 1.3 million barrels a day which was not going to send oil soaring but could provide a floor. headlines yesterday, either a smaller deal or no deal. guess what happened? the price of oil fell. oil and gas stocks fell. 88% of oil and gas stocks are now in bear markets. the russians have come today they're not a member of opec, but they're an important part of the equation because what the saudis wanted to do, they want to please two groups they want to please opec but they also wanted to please president trump. we know the president tweeted about opec nine times this year. he tweeted zero times last year. opec is in his cross hairs the saudis have to walk this delicate, fine political line where they may wanted to c to c

production to firm up prices, but they want the white house to know it's not just them that others are looking for a cut the russians today, it's expected that the saudis will ask russia to cut production by 300,000, 400,000 barrels per day. if they do that, opec can cut 700,000, and then canada is off 300,000. there's your 1.3 million the question is what will russia ask for from opec or any members in order to cut production 300,000 barrels a day? that's what they're discussing in a room above us in vienna >> that's an interesting question it leads to all sorts of implications not necessarily related to oil >> exactly right we know this morning the iranian envoy and the russian envoy had

a meeting. i confirmed that they were discussing something maybe the russians are asking the iranians -- here's the thing. there's more iranian oil on the market now than anybody thought because eight countries have gone to the u.s. treasury department and requested waivers to buy iranian oil and those have been granted. the fact there's more iranian oil out there because of sanctions is one reason why the numbers have come down if we get a deal done, who is giving up what the russians are not just going to cut production by 300,000 barrels because they're nice guys and they wanted to? and the russian enjoy doesn't have that power. you know who he will call? he will call vladimir putin. putin will call rosneft and lukoil and ask them to do it so vladimir putin looms large over these negotiations at opec even though he's not here. >> and he didn't get involved in any of this until after the khashoggi incident and all the things happening, roiling the

situation between the united states and saudi arabia. a lot to play out. thank you. >> the chess game is being played upstairs. we'll be here all day. >> we'll check in with you later. the ceos of the world's largest companies gathered at the business roundtable innovation summit yet. jamie dimon talked about economic growth and the markets. >> we have a bunch of geopolitical stuff oil, markets, and also trade how bad will it get? what can go wrong? that fat tail of a trade war how bad can it get that's why it's swinging the markets. rates are going up and is it recessionary i think the yield curve, it doesn't tell you that at all that's the thought there may be something in the yield curve that might say you have a recession

but you still have growth in america. >> the market still reacting to what the federal reserve will do dimon also give us his asse assessment of the fed's interest rate path. >> when you talk about the risk of the fed doing too much too fast there's also the risk of doing too little too slow. it's easy for people who own assets, it's all about lower rates. a strong economy, normalizing rates is a good thing. my guess is that the fed will look at data until the last minute and they will probably do december i don't think the fed should be overreacting if the stock market goes up or down, possible geopolitical events. the world will be much happier if america is growing and rates are going up a bit >> that's back to the big question facing the markets, what happens with the federal reserve? how much does it matter? how much have they already gone? could it be slowing the economy down at this point that's not opinion i expected to

hear from him on this. >> i immediately thought it's not a bad thing to normalize rates in a strong economy. now we're back to this what's normal again and what's strong. >> right is it strong you would think jamie dimon would have a good idea >> that's why i asked him. he sees mortgage loans, auto loans, strength from the consumer >> we had these -- the debates we were having with jim cramer about how strong these things were i was surprised not just by i had comments but a number of comments yesterday that seemed to fly in the face of the other sentiment we were hearing. >> he almost tied it back to the markets and said it doesn't matter if the markets throw a temper tantrum, it doesn't matter >> was a taper tantrum >> or the tepper tantrum

>> tepper. we will have more from that roundtable in a few minutes. we get a good look today on what is happening. we are counting down to the november jobs report it's due at 8:30 a.m. eastern. joining us for a preview and what a hot or cold number could mean for the fed's next decision, hence the stock market, and really ugly implications for the stock market michelle girard joins us also bethann bovino joins us so you expect 190. >> i'm 200 >> but loebelow 250. michelle said if it remains the

same as last month, you would exceed 2017. we were supposed to slow down because of no workers years ago. that would be people saying the jobs are not -- the growth isn't what it was in 2014. of course it's not we're at 3% or under 4% unemployment that would be staggering bethann, you think this is the last strong number because the stimulus fades i'm not sure you think that. >> i don't think that stimulus fades. there's a lot of talk about a sugar high >> she does. >> i have to say, i think there's somewhat of a misread of the whole tax package. you know, i think there's a tendency to focus on the demand side stimulus and treat it like so many or fiscal stimulus packages we've had, which have been about boosting demand trump's tax package was focused on businesses increasing output. this whole supply side stimulus

as opposed to being focused on the consumer and stimulating demand i think the economic implications of that are different. so i think people who are expecting that this stimulus will not last are focused on the consumer not having more money in their pockets from tax cuts going ahead. the reason consumers are spending now is because the job situation is strong, because businesses have reengaged. >> that's the question, whether businesses have reengaged. everyone says, no, you're not seeing that. >> but go back through 2017, we had business investment that was strong just on regulatory relief. in '18, you're right, the business investment has pulled back a bit but what we've seen is much better hiring than we expected the labor market is stronger the pace of hiring exceeded even my own estimates and i'm pretty optimistic. i'm not saying the economy will continue to grow at above 3% pace i think it will slow a bit

i don't think the fiscal cliff that people seem to be worried about, i'm not sure that's there. >> beth dann, have you changed your opinion >> no. joe, you must see some of my reports. we think near-term momentum is strong we're looking at fundamentals high we have grow coming in near 3% this year and slowing. but looking at 2.3 next year, which is above trend however we do -- where we see concern and the risk to the forecast is later out in 2019, earlier in 2020, where we see that fiscal stimulus start to filter out of the system our worry is are we going to see the productivity boost that is hoped for or will we see more inflation for the fed to fight how much i flags are nflation a talking about, too how much do we need? i think this was brought up. how many fed hikes would it take to unravel the expansion

that would be a worry. is it only three already markets are saying one rate hike and it stops there for 2019 or is it two >> would the story, top of the "wall street journal," fed may slow what will happen today based on the headline number and the wage gains what do you expect for wage gains >> for today we're looking for job gains around 200,000 looking at month over month 0.3, and thinking year over year holding at 3.1 we think wages will climb towards the end of the year, but not much >> that sounds manageable. 200 with that, i done think that would spook the markets. >> the markets have themselves so worked up there's a chance here that even if we get strong employment numbers, there's a lot of micro focus on the initial claims figures, which have begun to turn up. the market -- i could see the

market wanting to discount any signs of strength as, well, it looks okay now but going forward with these claims numbers moving will be sustainable? the market is working itself up. >> the market could be disappointed with either at this point. >> exactly if it's too hot, it's the fed. if it's too cold, the global growth concerns that are warranted. the housing and autos are telling us something now there's another shoe dropping with the employment that's like three. >> then you get back to what we said i think powell is less sensitive to the markets the fed has to stay focused on where they think the economic outlook is going and they can't be led around by swings in market sentiment two months ago i had two rate hikes for the fed for 2019, people were saying, no the fed has to do more the risk is to the upside.

now we have taken so much expectation out in terms of fed tightening, the markets are pricing in fed ease by 2020. >> they're not even certain there will be a hike in december >> exactly >> not 100%. >> not 100% like it had been >> the swings in market sentiment back and forth the best thing to do is stay focused on what's happening. the question about do they need to continue hiking beyond december and beyond neutral, i think that's a a fair onfair one i don't know why the fed would want to at this point in the cycle with signs of slowing in autos and housing, et cetera, why you do keep going into restrictive territory. >> so what we're expecting, the fed has been saying in terms of the dot plots, they have a medium of three hikes next year. what happens next week, will they actually slow it down i wonder if there will be a goldilocks period for the fed, three rate hikes, too hot, one

too cold, two is just right. we are seeing some slowdown. certainly the fed is watching housing. housing has a lot of weakness. part of that is tied to the weather, horrible weather distor shuns we'v distortions we have had. >> if they're rebuilding after the weather events, we'll see some of it here? >> we'll see >> we had hurricane and -- >>and california fires >> but it hurt now there comes a time when it starts helping >> i think the fed will wonder in terms of housing. housing you could say is average at best in terms of what we have seen the question is how much is weather, how much is the economy. particularly since it's the most intrasen sensitive sector, the d is probably wondering how has the weather impacted that.

and another thing the fed is worried about is investors taking undue risk. >> now they're worried about that >> better late than never. >> the biggest thing is i do think everyone changes as you are now getting into this neutral range. that's the difference. we talk about the fed changing their approach when you're normalizing, it's one thing. to get rates up to neutral given the economic fundamentals, everyone is on board with that this idea they may slow, they're moving to become more data dependant, that's appropriate given where the fed policy is in terms of that neutral range. >> it's a new normal >> new normal. >> i can't do that. >> you're not good at that >> i think it's new normal 2.0 >> this is a new normal for what's normal for interest rates. >> a new new normal. >> it's an old normal then, isn't it >> no. >> all right

thank you. are you from chick tachicago? >> cleveland >> you say hiring. >> actually. >> rick santelli will be here later. higher, lower. >> you're not good at him either >> what about warren buffett oh becky. natwe >> thank you both. >> you're good at one. i won't tell you who you're good at one i'll take you in the break. when we come back, some of the world's most powerful executives speaking out about the trade skirmish with china. that's next. right now as we head to break a look at the premarket winners and losers in the dow.

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the trade skirmish with china. here's what leaders of jpmorgan, ibm, boeing, at&t and walmart said at the business roundtable innovation summit. >> i'm encouraged by the dialogue we have heard i think both president trump and president xi are motivated to find a solution. >> it's a minor issue for some companies, but a big issue for others they have to change supply lines, make investments different. they may hold off on something because they need to know where to build a plant >> i hear from many different parties positive discussion that there is a way forward here to work through this 90-day period with china i'm cautiously glad to hear what i heard about those things >> a lot of people, myself included, say we see clouds on the horizon. those clouds are derivatives of trade discussions. >> creates uncertainty as it relates to pricing it causes us to think about where we want to source from we buy more merchandise made in the u.s. by far here than anywhere else. china is second on that list

we worry about next spring, next summer, next fall what customers have to pay if tariffs escalate. >> all of them taking a wait an see approach to this they all said it's not a massive issue right now. they're hopeful about what they heard this weekend summit at g20. walmart in particular, it would be a very big deal of those five companies if this were to go through. boeing, too. boeing right now gets 25% of its deliveries going directly to china. 33% of its 737 deliveries go to china. it's a massive part of its revenue. so big plans there >> it's on a different topic, if you go on to becky quick's twitter feed, you can see this image of doug mcmillon >> he carries around with him on his itself phoiphone, an app th the top ten retailers by decade. he said he keeps it as a

reminder not just to be paranoid but -- >> but it's so interesting to go back to look who was on top. is that an image >> it's an app he has. >> it doesn't change i was curious it was an app. montgomery ward was in there >> some of the names i had not heard of that tells you how quickly the big guys can fall. it's something that he says motivates him every day. >> retweet it out for everybody else this morning. when we return, president trump's trade truce with china thrown into question after the arrest of huawei's cfo we'll get a live report in a moment from beijing and talk about the china tariffs and talk tack taxes with the tax crusader. first a look at yesterday's s&p 500 winners and losers

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than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,000 credit on select models now during the season of audi sales event. welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning among the stories that are front and center, eddie lampert's esl investments made a 4$4.6 billion offer to buy sears the offer calls for about 500 sears stores to remain open and would keep 50,000 workers employed walmart announcing it plans

to buy art.com that's one of the largest online sellers of art and wall decor globally terms were not disclosed it will continue to operate as a stand-alone website but items sold will also be sold on walmart.com and jet.com. the retail giant has been buying e-commerce brands in a bid to try and attract younger shoppers who are not used going into stores. and amazon is looking to bring its checkout-less store format, looking to break that format to airports the amazon go stores opened in seattle, chicago and san francisco. customers scan their smartphones at the entrance and cameras and sensors identify what they take off the shelves. amazon is evaluating top u.s. airports for new locations, targeting hungry time-pressed travelers. >> it's an amazing way to not just test the service itself but for individuals to experience

it >> when you're a captive audience >> so in the future they can move to other cities and it's not weird. u.s. futures are indicated down equities markets climbed back yesterday. dow made it all the way back to 90% retracement of losses. it was down 79 points in the end. this morning the futures are indicated down by 162 points on the dow. s&p off by 18. nasdaq off by 55 >> the house is not burning mentality yesterday. people said that's a two-day loss of 1,700 points, except it came back. so it wasn't so many times that was the headlines. stock market down as much as 1,700 -- don't leave out -- >> the extreme weird part is in six days the dow is up over 1,500, and it gave it back in a

day and a half >> you know what i heard, four biggest drops in the dow have been this year >> because on a point basis, not a percentage basis >> i understand. because don't you think it's incumbent upon a person who supposedly -- >> sure. >> but people don't want -- >> we're not reliving 1987 >> that was 23%. >> the person she was tossing back to, wow this is part of the problem. the cfo of huawei is due in court today. she was arrested in canada and is awaiting extradition to the united states. it's a story that could impact trump's trade truce with china eunice yoon has been practicing that phrase. i don't know how long it will be good for the half-life of the trump trade

truce might not be that long it might be over. who knows. >> yeah. it's possible. it's possible based on what's happening now. officially the chinese government is not directly linking meng's arrest to the trade negotiations just yet. unofficially in the state media this is season as a political decision it's described as huawei being a hostage or that the trump administration is trying to stifle huawei and china's technology ambitions that's why what happens to meng is so important and seen as complicating the negotiations between the u.s. and china people here will be waiting to see what happens at the bail hearing tonight. meng wanzhou is expected to appear in court in vancouver at 1:00 p.m. eastern standard time. so far canadian authorities are sharing few details about the case the chinese foreign ministry today was complaining that

neither the u.s. or canada has provided evidence that meng has broken any laws. while meng is away, huawei has designated a new cfo, an acting cfo. this is liang hua. he was cfo before meng the company is also trying to reassure its suppliers that it's business as usual at huawei. in a letter to its global suppliers, huawei said the u.s. move was against the spirit of free economy and fair competition, and said regardless of how unreasonable the u.s. approach becomes, the partnerships we have with our global suppliers will stay unchanged. guys >> thank you, eunice appreciate this report very, very much. we'll talk more about this right now and the impact of tariffs. let's bring in grover norquist who has long emphasized tariffs are tacks on t maxes on thaxes

american consumer. what do you think the implications are of what's happening or what's just happened with this arrest and what do you think it means for the tariff or trade war, if you will >> tariffs are taxes the president argues that he's using them to negotiate a better treatment of american intellectual property and tariffs against american product going into china the challenge is that it's a weapon, tariffs, that raise the cost of goods and services on americans. tariffs on chinese goods are paid by american consumers it's one of those trade wars where you shoot your own team and ask if the other team is willing to quit. he is hopefully making progress. this is what hethey're saying if we can get this settled sooner rather than later, if we can get the tariffs off and a

move towards free trade, the european effort has moved towards zero, zero, zero that's a fine direction for the negotiations to continue on. we need to get that kind of certainty on china here domestically you have the democratic parties just taking over the house of representatives. they wanted a carbon tax france is busy playing with. it's unlike in the next two years we get tax reform or technical corrections to the previous tax bill. we're not going to get lower taxes. the democrats will be pressing for higher taxes the sooner we can settle the trade skirmish war, the sooner that weapons of tariff barriers are put down and replaced by an agreement the better off we are. that said we need to do something about china's treatment of our i.p

what >> what is it you think will turn this story? we're back to kick the can phrase, i guess. we're kicking the can. what is it that can happen over the next 90 days that could change this story that couldn't have happened 90 days ago? >> when people see the stock market go up and down, china has its own economic challenges. its own demographic challenges as it looks forward. it's in both countries interests to come to an agreement that makes trade easier, less discriminatory against americans, but also begins to fix i.p. we have as allies here the europe peeps who feel mistreated by china for all the same reasons that president trump and the american businessmen do. so i think we have more leverage in this fight because the world is at our back unlike the fight with europe or with canada and mexico the rest of the world goes we're with the americans on this one that's helpful this is not trump and the chinese leadership beating heads. it's the whole rest of the world

going, china, come on this is too much >> we tried with them before >> yeah. >> you know who you sound like, grover you sound like a soybean farmer. i don't like this but i hope something good comes from it you admit the possibility that maybe if it's done quickly maybe there could be a positive outcome. do you think it is a worthwhile pursuit to try to get china to change its ways? if you say yes to that, i know you hate tariffs and you say -- we get into the notes, tariffs are taxes. tariffs are taxes. you look like jack nicholson, you wrote it over an over and over again is there another instrument not as blunt force that could really -- there it is. there it is, grover. we got that. all work and no play makes grover a dull boy. is there some other way that you would suggest -- i heard the

european stuff it's like there weren't a whole lot of options left. >> i think this is why the trump administration is threatening tariffs. taking out an appendix with a baseball bat is not the best tool tariffs are not best tool. there is a tremendous frustration that we would be better off -- >> that seems painful. >> that is the thing that i can't figure out part of me hears you saying we need to fix this, we need to push the chinese around to get to the place we need to get to at the same time you're saying this is not the way to do it >> i would take the approach of talking to everybody else in asia and beginning to negotiate better trade agreements with them to make it easier for people to run their supply chains through indonesia, through japan, through korea and

other countries other than china to give us more leverage on that it's been easier to do it through china than some of these other places >> that's called tpp, we didn't do that. >> nafta is now the treaty formerly known as prince we can take tpp and say it's now this other thing >> yes >> make some changes good for a start >> we have to run. appreciate your perspective as always grover norquist. >> tariffs are taxes, by the way. >> let's end on that so we don't forget >> that was his tweet. tariffs are taxes. tariffs are taxes. tariffs are taxes. >> exactly >> all work and no play. >> coming up, the ceo of walmart speaking out on the health of retail and consumer spending

highlights from becky's interview coming up. we're watching the futures after yesterday's roller coaster ride in the markets starting to go back down stay tuned you're watching "squawk box" on cnbc

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welcome back. stocks to watch, lululemon --

>> i know. they're doing well >> i just want to make sure. >> third quarter profit beating forecasts. the maker of yoga and athletic apparel saw higher online and same-store sales website traffic rose 35% online business in china jumped 76% wh 76%. what are those pants called? >> they're stretch jy. >> stretchy pants. ulta beauty reporting third quarter earnings that beat forecasts. sales rose 16% in line with estimates. shares are lower after the cosmetics retailer issued a weaker than expected fourth quarter guidance >> gravity it's a pain. >> tmi when we come back, walmart's ceo sounding off on the health of the consumer. highlights from that interview next >> called abc pants, right >> already been chewed >> no. >> abc gum >> as we head to break, a check

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welcome back to "squawk box," everybody. walmart ceo doug mcmillon speaking out at the round table summit we asked how 2018 was shaping up for the retail giant and the consumer. >> our third quarter results with the 3.7% comp was good. we believe the consumer is in good shape we hear the news we have these same concerns that you guys talk about all the time but as it relates to the consumer, we're in a good shape. >> i heard from brian cornell recently, the target ceo he said the environment is the healthiest he's anyone in his career you don't sound quite as positive >> it's been a good year, no doubt. as we've released results throughout the year, we've got

low gas prices, tax changes. there have been a lot of environmental things this year that have been strong. >> but you wouldn't say it's the best you've ever seen? >> i've done this 30 years there have been other good years. >> for more on walmart and on the retail economy, let's bring in michael lasser. how about you? what do you think about the consumer environment right now just based on the companies you're watching? >> morning, becky. i think the consumer environment right now is healthy i think the big question is how long will that be sustained. as we get into next year, we'll start to anniversary the tax benefit that the consumer got now with that being said, there should be a sizable gain that the consumer sees from high trax refunds in the first quarter but once we get beyond that, it's anybody's guess how the consumer is going to perform given that a lot of the pressures out there will remain and we won't seethe benefit of the tax reform anymore >> michael, your tone sounded a

little similar to what doug mcmillon's tone was yesterday. and that's very different than brian cornell. the head of target but brian cornell made those comments a couple of months ago. has the situation changed in the last couple of months where we are much more worried on the horizon than we had been >> two points. one, i think we're having a good holiday. early indications are that november was strong. and we're likely to see that continue through the christmas spending period. but two, i think as we get closer to the end of the year, we're starting to look more towards next year. and really that's the question what's the consumer going to look like in 2019? and there is some risk on the horizon. so i think it's prudent to be guarded. and we're hearing that in some of the tones you had in your interview yesterday. >> in terms of what he retailers think for next year, they're already making decisions on how much they're going to be buying. how much they're going to be buying in particular taking

things from china. you're pulling that forward so you're making decisions even earlier. if you're concerned about what the future might bring, what does that mean they're doing in terms of how much they're buying and bulking up >> right now they're doing several things one, as you rightfully pointed out, they're trying to bring in as much product as soon as possible to get ahead of the uncertain tariff situation two, they're trying to shift some of their supplies around away from china to insulate it from the tariff situation. and three, i think they're being guardedly optimistic in how they're ordering for next year it's likely we're going to have a good spring. there's an easy comparison the weather was not cooperative early this year. we're likely to have a good first quarter. i think they'll take an evaluate and wait and see approach after that >> which retailers do you like especially as we have all this uncertainty with the trade negotiations hanging over? who would be your best bets? >> it's interesting. we've seen a significant

pullback in a lot of retail stocks in the last several weeks. one name i would point out is home depot which right now trades at 16.5 times next year's earnings yes, it's a cyclical business and we are likely to see cycles rise and fall. but over the course of the longer run, it's likely to have a very healthy growth earnings growth algorithm and a very healthy return on invested capital performance. so as a result, i would use some of the pullbacks in names like home depot, high quality retailers as an opportunity to look out over the long run and buy some attractive names at reasonable prices. >> we have to go, but name a couple of other like home depot stocks >> another one is dollar tree. dollar tree is in the midst of trying to turn around its family performance. we think it offers a nice self-help idiosyncratic story along with some defensive orientation in a more uncertain

consumer environment finally, autoparts space is attractive with the ability to pass along some of the price increases that we've seen as a result of the tariffs. advanced autoparts is a great way to play that it's in the midst of a transformation as well we think that's going to drive forward a lot of value for shareholders. >> thank you very much, michael lasser from ubs. when we return, the count down is on we're going to get you ready for today's big job number the potential impact on the fed. is going to be a goldilocks number this morning? let's show you what's going on s&p 500 off about 19 points. we are back in a moment. this is a tomato you can track from farm, to pot, to jar, to table.

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jobs friday is here with trade tensions high and the fed in focus we'll find out what you should be doing with your money and get you ready for the opening bell huawei's cfo gets ready to appear in a canadian court later today. what the decision could mean for the trade war with china plus amazon looking to move into airports. that corporate story and a lot more of this morning's business headlines as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody happy friday joe's favorite song.

welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. also joining us this morning to break down the market's wild swings we've seen lately, cnbc senior markets commentator mike santoli. let's look at the u.s. equity futures at this hour things have gotten a little steeper in terms of the losses dow futures indicated down 175 points remember yesterday we were down by i guess it was around 790 points at the low. we managed to close down just 79 points again this morning you are looking at red arrows. okay we are following the markets this morning as we get ready for the jobs number at 8:30 eastern time this morning. we will preview the number, talk fed, and of course the latest market volatility. but brian sullivan is in vienna this morning covering the opec meeting. producers have been hit with a plunging price since october right now they are in wait and

see mode as they try to get russia on board to cut output. what it means for businesses around the globe, we will talk about that straight ahead. then the business round table innovation summit held yesterday with many of the top business leaders gathering to discuss the market, jobs, trade, and the global economy becky was there speaking to some of the biggest names in business including the ceo of boeing, ceo of walmart, jamie dimon and many other highlights in fact, one of the ceos we spoke with yesterday was jamie dimon. we spoke to him about the economic growth and what he's seeing in the markets right now. >> you have a bunch of geopolitical stuff oil, brexit. but i think the one that's probably rolling the market the most is trade. the issue about trade is not just a direct effect it's the indirect effect of how bad is it going to get what can go wrong? and of course that fat tail of a trade war. you weren't thinking of that a year ago

now you see this swing in the marketplace. that with the added thing, rates are going up is it recessionary the yield curve, it doesn't tell you that at all. that's the thought that maybe there's something in it with the recession. so you all see you have growth in america >> of course one of the big questions is whether markets have gotten ahead of themselves at some point. we also asked diamond about potential bubbles in the markets. >> the corporate credit market in 2007 the underwritten book on the street, 240 million. today 80 there are no bad cdos, no subprime to speak of in a whole bunch of categories. much less leverage the banking system and non-bank system now looking at leverage loans. yeah, they're leverage loans that's a normal way to conduct business but the banks own $800 billion or something of term "a" loans which a pretty safe. term "b" loans are predominantly

owned by banks there is more of it. if you looked at a bubble anywhere, it would be in government bonds where wages have been suppressed now for eight years. that's the other side. you don't want to find out we're starting to have inflation and we have to sell $1.8 trillion of bonds between the government and federal reserve. so far plans to sell 600 that's a huge difference from a couple years ago so that's the supply and demand difference i wouldn't be a buyer of governme government bonds at these prices. in less than 90 minutes we'll get the jobs number of the month. the late day reversal happened when "the wall street journal" posted this article saying the fed could adopt a wait and see approach for rates in 2019 for more, steve liesman is in the house with a preview >> yeah, andrew. jittery markets are hoping for a goldilocks number. one that is not too hot and would bring the fed into play

for earlier in 2019. and one that is not too cold here's the expectations. 198. this is the context in which parts of the market are expecting a recession or some kind of slowdown next year we're going to print a 200,000 jobs number. and a 3.7% oh my god how high is that how low? unemployment rate will be unchanged. hourly wages look to be up 0.3%. and there's the adp, light but not enough for anybody to really change their forecasts here are the special factors we're watching today holiday hiring the numbers, expect a lot of holiday hiring they lop it off. then they wait to see if the lopped off number is higher or lower. >> that's how they do it >> you expect all the hiring is the actual hiring more or less than what they expected >> did they expect more this year it sounds like it. >> it's a rolling five-year average. it has tended to be pretty

strong there were hurricanes, fires, and snowstorms to think about. company's layoffs including verizon, gm, and sears, they could play a factor. goldman sachs not expecting much in way of that and beyond my reporter, fed officials thinking have shifted. they're going to follow market signals in economic data they are no longer hell bent on getting to that perception the december meeting, look for a markdown of the 2019 forecast, rate forecast. and the outlook is just different. they see the market signals. they see the economic data they see it weaker that 2.5% number for next year is going to come down. take a look at the fed funds probabilities. december back up to 81%. it was down in the low 70s but now take a look. june, we can't get to the 50%

agreement on the first hike for june we got to go all the way to september. i need to jog your memory a little bit it was march back a month or two ago that we were at a 60% probability of the first hike of 2019 so that's been pushed ahead by, what six months >> if the fed is data dependent at this point, is the most important number they'll hear today hourly average earnings? >> i think the fed would say it's not a single number that's an important number they're watching that. but remember average hourly earnings is an input to the actual concern which is inflation. and we haven't really seen it. we've got oil prices coming down you've got slower global growth. i'm not sure that hourly average wages is going to be watched but i think they need to see the inflation to showup. >> is there any number that could change what happens next week though? really i could see what could change next year, but i'm saying next week >> a super strong number with a

decline in the unemployment rate i think the markets would have to rethink how much is going to happen >> but a super weak number it would only be one number to be out of trend. probably >> yeah. >> it was down again where'd we end i thought we were 75 i saw 68 what's december now? >> december is up to 80% again we use a slightly different number from the cme. i think the reuters number is better than the cme number >> you get your number from the athletes again >> no, no, no. that's different that's the all american -- >> i don't know why they know -- i mean, they have a gut feeling, i think, the linemen typically the all american >> the linebackers would be the smartest ones. >> you ever see ravel interview those guys >> they're not bad >> you think people understand the 16-year joke we're doing now. >> you called it the all american survey. >> all economic survey the reason i named it that way

is because that poll is of all americans. everybody thought that cnbc was polling only rich people and that's why i named it that >> it's like the university of michigan survey bhop cares what the students think they're all stoned half the time in ann arbor >> most people get the joke. i'm happy to jam on it as long as people get the joke i think somebody just tuning in today is like, what are they talking about? >> all right there's a cool graphic i mean, is it just football? >> we've begun to expand >> we've got to go we have important things >> i'm going to get a note that it's my fault. >> it is your fault. you named it that. joining us to talk about what could determine the fed's next move, dino coast at the new york fed and now the chief regulatory officer. and morgan stanley's head of global macro strategies.

unfortunately you gentlemen do have some things you agree on. and dino, everything i read in your analysis, it just all sounds end of cycle. you kept saying that again and again and again. end of cycle here, everywhere, i don't want it to end. >> late cycle stuff. we're seeing late cycle fatigue. you're seeing growth decelerating in europe and all the major economies. >> and now we're decelerating. >> you sure? >> you can't say that you're totally sure, but we're seeing some of the interest rate sensitive sectors like housing showing signs of peaking and here we are. you know, how does the fed incorporate that and the thing i worry about a bit is the tightening of financial conditions the higher volatility, wider credit spread, stronger dollar, higher short-term rates. all of these things are saying financial conditions are tightening if you're the fed, you've got to take that on board >> cut to the chase.

should they not hike in december >> they will hike in december. >> should they not >> i think they should because they promised it there's enough strength, do it but it's going to be a dovish tightening you tighten and then say basically we're done for now or we're going to take a wait and see attitude and so the market's expectations which you were pointing out before, they kind of get validated. >> you don't know what jim's going to say, do you >> jim's going to tell you i'm wrong. i can't wait >> no, he's not. he's going to say for most of 2018 we were looking towards the peak now we've seen the peak. now we're looking at things at the trough so you're basically -- you've turned from a half full guy to a half empty guy >> i think so. well, you have to follow the numbers, right you know, full growth for 2018 is probably going to be above 3% probably going down to 1.7%. that's about half. significant deceleration when you're looking towards the peak and things are good and earnings are growing and you've

got gdp growth, then, you know, rising rates and u.s./china tensions don't matter as much. when you're looking towards the trough, that's the background noise. that moves to the foreground now we've got to contend with, you know, taking a look at that. and i think the markets -- in particular the fed has to incorporate that into their financial conditions as we were discussing earlier so it would argue to me they are on the slower side the market pricing one, i think that's a probability >> but you think they're in a position of managing some type of landing here. it's like a mattress you think it's going to be soft, bumpy, or hard >> i think the fed does have a role to play, right? as an over-simplified rule of thumb, i would say if the terminal fed funds rate is 3% or less, soft landing between 3.5%, it's a bumpier landing as recession risks could rise above the 3.5% for terminal fed funds, then i think it's a

harder landing so i do think that the fed is going to try to manage or engineer a softer landing in this cycle i think that's the key takeaway which means there might be a silver lining around asset prices at some point if it gets communicated that the fed may not go as fast >> what happened to all the hawks? what happened to all the guys that were like, the fed is too low, you're creating excesses in the economy. all of a sudden everybody who was out there screaming that the fed was too low is out there screaming that the economy can't withstand a 2% fed funds rate or really to think about it the way dino might, a 0% real rate i'm saying in general. the economy is so weak, dino, that we can only withstand a 0% real funds rate. >> no. it's debt so high that rates are different now. they go up a little and we owe so much -- >> that's a great point. it's the -- you know, we have had an expansion of debt in u.s. and globally so a real rate after having a

decade of real negative rates -- >> the roach motel you got >> i didn't pass the unfunded tax cut. >> no you only passed $11 trillion for cash for clunkers anyway >> anyway, the point i was making was a mildly positive real fed funds rate, you know, is showing up. so you're seeing interest rates in sensitive sectors already responding that is -- that tells you that the underlying economy is not as powerful -- >> of course the interest rate sensitive sectors will respond it's the only way for the fed to have an effect on the economy. the ones that feel it most, are they blinking at a time they should be staring? i don't know >> maybe let me raise the point we were talking about a little while ago. next year the fed's balance sheet is going to contract by quite a bit. you know, that is -- >> $600 billion. >> $600 billion of redemptions that will be coming through. that's an amount that the market needs to absorb. and so that's another way the

fed can tighten financial conditions without moving the rate we have to keep that in mind as well >> jim, is the bond market priced for the soft landing? for the fact there will be a prolonged pause in the first half of next year? >> i think we have to look at every asset specifically so i would say the treasury market, treasury yields have come down. i'm going to put the range in a 2.50% range. i think the bond markets are way ahead of this. pricing hike maybe one next year other asset prices, though, i think they are probably going to -- you know, probably going to have some more trouble. but i think that relative to the economic fundamentals in the markets and are expected to be in the markets over the next several months and even quarters, asset prices may have fallen a little bit too much relative to the kwumts if those fundamentals don't deliver and those asset prices are right, i think there is some upside here too.

>> which would include stocks, presumably >> absolutely. >> dino kos w, thank you. and jim caron. is it french >> it is >> we could do that from now on. >> if you're only 1% french, apparently that's enough to say you're -- you know, right? >> i'm in. >> you can drop at least one consona consonant. >> kevin caron used to be. is it the same name? >> same name no relation. >> what's with the caron >> very american >> very boston >> and next time we'll get into dino's ethnicity >> kos >> that's a longer story, steve. >> i know what that is >> did you found the daily kos >> no. when we come back, the arrest of huawei's cfo

we'll get an update on today's bail hearing and speak to mark weinberger, ceo of ey, about the tensions and global economy. stay tuned to "squawk box" on cnbc

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huawei, the cfo, is going to appear in vancouver court today for her bail hearing deirdre bosa joins us with more. good morning >> reporter: good morning. jo has been in canadian custody for the last six days and her schedule -- her hearing is scheduled for today at 1:00 p.m. eastern just down the block from where we are her arrest has been linked to investigations by huawei there is a publication ban we will be able to see her in court. meng is being sought for extradition. if it goes her way, she could actually walk out today. if it does not, she has 30 days to appeal. meng is not just cfo of huawei she is the daughter of the company's founder who himself

has close political ties to the communist party. she is also seen as his possible successor. huawei itself is the pride of chinese enterprise it is the number one network gear supplier in the world and it is the number two smartphone maker in the world a lot left to unfold today this has major implications for the china/u.s. relationship. back to you. >> deirdre bosa, thank you one of the big topics at the round table conference, china. >> what i think the likely outcome is they make enough progress in 90 days and actual progress about making actual immediate changes when they had their press release. changing -- they acknowledge that ip is an issue and tries to process to make -- fix ip. so if they do that, my guess is

at the end of 90 days, it'll get extended more. they can't get it all down in 90 days >> for more on u.s./china tensions and the impact on u.s. business, let's welcome mark weinberger he is ey's chairman and ceo. he is also the round table chairman thank you for being here today >> hi, becky >> let's talk about what this means first of all with the huawei cfo being detained. is that something you really think is a broader message of how difficult these trade talks are going to be? or do you think this investigation was going on separately >> well, yeah. i obviously have no insights into that one, but what is clear is these are tough issues. they've been around for a long time jamie hit the nail on the head in my view this isn't about short-term. it's about the industrial policy of china and leaving themselves out of the third industrial revolution they have a $1.5 trillion

initiative to expand across all of asia. they now are looking at much more of an important role into some of their businesses sop this is a real long-term difficult issue they're going to have to address. and which really i thought one of the most interesting signs of china coming to the table is you are seeing them use the word immediate a lot more often than they did before. so they are recognizing that things have to change as the economy is slowed. >> mark, how are you advising the u.s. companies that do business internationally in particular with china. what are you telling them about the supply chain what are you telling them about the changes? >> you've got to separate the signal from the noise. we have 16,000 people in china we've been in mainland china since the 1980s and 1970s in hong kong. we've seen ups and downs not like the volatility short-term we've seen here. but the china economy has to do well for the global economy to

do well. the u.s. knows that. i think eventually we're going to get through to the other side obviously there are short-term issues you have to look at in terms of your supply chain make sure you have coverage in other parts of the world long-term, everybody's still going to want to be in china >> jamie said he gives it 60% odds that we've made enough progress something gets extended there is communication that takes place. but that's 40% it doesn't happen what then? >> that 60% in the 90 days, i think. longer term everyone thinks something is going to happen we've seen this by the president with what was nafta and then coming together after a lot of, obviously, puffing and tariff threats and everything we've seen it in chorus. i think we'll see it play out again. >> when you're advising clients about where they might build a new factory or someone they're going to partner with, what countries are you saying are off limits and on these days and where does china fit into

that right now >> well, it's a great question, andrew bottom line is, if you're thinking longer term you're looking where your market is going to be. you're investing in china if you're going to have demand for your product if you're building a chip plant today, you don't get a return until ten years after that so i really -- if you were looking at the emerging markets right now with what's going on with commodities and the prices, you wouldn't be investing there at all but you'd miss out in the future of the global economy. we try to tell our clients to make sure you have the reserves in place make sure you set the appropriate risk planning. but you have to think to where your market is going to be >> china is not the only one with a long-term plan. they have their goals for 2025 and 2030 and beyond. ey also has its own goals. you came in with vision 2020 we just heard the news this week you're going to be stepping down as chairman and ceo next year. so you looked awfully happy when i saw you yesterday. >> well, listen, becky

it's been a great run. every ceo, every leader of an organization wants to leave a business stronger, more sustainable than it was in the past the markets validated our approach we went from a $28 billion organization to over $40 billion. it's time for the next group to take the reins i'm really excited about the strength we have >> obviously you're still here until july of next year, but we want to thank you for your time. >> thank you, becky. appreciate it. >> again mark weinberger, ey's chairman and ceo coming up when we return, we're going to get you ready for the morning's jobs report. plus boeing ceo talks volatility and tax reform >> and market volatility, i think, again, reflects market uncertainty. i think this long-term business mind-set is important to us. we invest for the future

>> more of his comments in a bit. meantime, take a look at futures and we're coming back in a second dow looks it would open off about 189 points right about now. back in a moment 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.

welcome back to "squawk box. altria just announcing it's buying a 45% stake in cronos for $1.8 billion it was announced earlier this week the two sides were in close and in talks to do that deal joins other beverage companies that have made investments in marijuana companies. cronos shares are currently halted they will resume trading in just about ten minutes. but a very big deal for altria as we mentioned, this trend continues. we will see whether regulators

and investors make this a good investment or a bad one. when we come back, we have a preview of today's big jobs report plus we head to vienna and talk oil in just a bit. right now let's look at the u.s. equity futures right now dow futures indicated down close to 200 points s&p futures off by 21 and nasdaq down by 63 "squawk box" will be right back. d from capital one. 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? what do advisors look for don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio.

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. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, a big drop for shares of retailer big lots the company reporting a quarterly loss of 16 cents a share. that compares to estimates of a 1 cent loss. big lots also said the holiday season will be challenging also reporting a worse than expected quarter, vail resorts reporting a loss of $2.66 a share. that was 20 cents wider than expected

it said sales for the upcoming ski season is up 20% from a year ago. and fiat chrysler is set to add a second production facility for the jeep grand cherokee model. the factory will be reopened in 2020 all of this comes as gm ceo mary barra fends off criticism for gm's decision to close five north american assembly plants crude prices ticking higher in the last hour on the report russia would agree to a bigger output cut you're over there, sully on the same -- at the same time that the u.s. again became a net exporter of oil and fuels for the first time in decades. >> is he not being allowed in? >> it looks like -- that's the story of my life you're on the outside looking in there, sully why don't we ever decide we're going to cut production? because we're nice

we don't want to gouge people. we could do that why aren't we part of these production cuts that get prices back up for our guys >> reporter: well, i'm not sure that the ftc would appreciate if u.s. companies came to opec and they all got together and sort of fixed prices. i don't know if that would work very well. either way, a group of crows is called a murder. it's a wedge of swans. i think this is a throng of journalists. most of them are from russia russia is here it is what you want to call it ropec we'll see if it becomes nopec or gopec right now the saudis and the russians are meeting what the saudis are doing is talking to the russians and saying how much are you willing to take off the table? will it be 300,000 could you do 400,000 barrels a day. because they want to cut less because of mr. donald j. trump, who's been aggressive with the saudis saying don't cut anything right now the saudis and russians are meeting

if they can come together, russians agree on something, perhaps a framework of adeal could happen the meeting was supposed to end today at 1:00 p.m. vienna time it's 1:30 vienna time. we've blown past the end of the meeting. we go end of day today without a production cut deal, look out below. the traders that we talked to yesterday that we're talking to privately are saying oil should have a four handle, maybe a high three handle in a couple of weeks or month ifs we don't get an output cutted a opec here today. >> a ropec, i like that. russia opec? >> reporter: it sounds like a dr. seuss book but there's nothing funny about it there's a lot riding on this meeting. >> we'll continue to kmcheck in with you for that. brian sullivan right in on the ground getting us those details with the russian media meantime, the jobs report

now less than an hour away what should investors take away from the numbers joining us now is leslie petis and keith banks. what's the goldilocks number and how do you trade it in advance >> i think what we want to see is a moderate jobs number. wages pulling back a little bit. this should be good news for the that being said, we are seeing weakness we would expect to see the fed taper back the pace. >> who do you believe though the market in the past week or two or jamie dimon he would suggest in so many of these interviews yesterday that the markets got it wrong that the economy is stronger than we think. >> i think i believe the data.

and the da ta says we are starting to see weakness coming in and particularly interest rate sensitive sectors like the housing market, we're starting to see the consumer pull back a little bit with the holiday season maybe not quite as robust as some of the earlier forecasts. we're seeing business investments start to moderate. that to me is the telltale sign that we're going to see a much slower overall economic pace as we look out over the next 12 to 18 months. >> keith, what side of this are you buying >> we're of the opinion you will see some slowdown next year. but we think you can still settle into a 2.5% which would be trend if there's a surprise, we think the surprise will be actually faster growth, not slower growth so we think that right now what we think the credit markets are telling us because everyone got wound up because the 3 to 5 year was inverted last week we think what that's saying is not so much the economy is going to dramatically drop off, but

that the fed has already gotten rates to where they need to be especially with inflation rolling over what we need to see is the fed start to taper off >> how much do you calculate the china potential trade war in terms of the way you're thinking about what may or may not be happening in terms of a slowdown if eng that's real >> i think the realized tariffs we've seen so far shaved off 0.2 percentage point from gdp. but 23 we continue down this ugly slope with additional levies, more tariffs on the remaining balance, we could be talking about shafing off closer to a half a percentage point from top line gdp. so i think that also is starting to filter into expectations and maybe exacerbating some of that downward pressure. >> keith, the idea that maybe we're going to get this lowdown, maybe the fed has gotten most of its work done has been one theme that's been bothering me markets. we don't know what earnings estimates will be for 2019 oil has been collapsing.

so you've had all these things together plus these big growth stocks that drove things for so long quickly went in reverse. so where does that leave us with the markets right now? about flat for the year in terms of the s&p 500 what have we priced in what do you think the opportunity is >> we're focused on a couple of things that are the big looming issues right now you know, europe is a big issue too. there's a lot of things going on, we got brexit with no clear exit strategy yet. germany actually had the third quarter negative growth. so there are issues out there, but we think when you put it all together, we're still seeing a very healthy consumer. we look at the bank of america numbers, credit card, debit card we think they're going to continue to stay strong. we think unemployment comes down the key will be, you know, and the point about the trade war, what impact does it have on ceo confidence because if business confidence starts to wane, that will show up in returning capital to shareholders that will turn up in capital

spending when we put it all together, we think that next year, again, we're going to be okay we're going to start to see -- >> so the stock market's overshot a little bit? >> we think so we think we'll see 5% earnings growth next year and if we see 5% earnings growth with the stock market below 2700 on the s&p, we think you can see a reasonable return next year. >> okay. thank you, guys. >> thank you >> appreciate it when we come back, high power executives meeting at the round table innovation summit yesterday. when we come back, we'll talk to boeing ceo dennis muilenburg he'll talk about the lion air tragedy thatept ei kthr stock under pressure right after the break. 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.

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get the iphone 10 s and our unlimited plan with your choice of the best in tv, movies, or music. more for your thing. that's our thing. welcome back, everybody. ceos of the world's largest companies gathered at a round table innovation summit yesterday. we spoke to dennis muilenburg about market volatility. >> we pay close attention to it. volatility shows uncertainty this long-term business mind-set is important to us we invest for the future

the great benefits that we've recently received from tax reform here in the u.s. are allowing us to further invest in innovation we're investing more in r&d and capital today than we ever have. we're growing for the future and this market is going to continue to grow growing at 6% to 7% a year that's a long-term sustaining trend. that's what's going to allow us to fuel the future so we pay attention to this local volatility but the long-term planning, long-term innovation investment is what makes this big work. >> we also asked the boeing chief about the fallout from the lion air crash >> well, first of all, i think it's important we express our sympathies and condolences for the families affected by this incident we know our airplanes are safe, but at the same time any time something like this happens, it has our empathy. the incident here, the situation is handled by existing procedures in the airplanes. we've reinforced that with a

bulletin we've put out which was further reinforced by the faa directing pilots and airlines to these existing procedures. but we are taking a look at that to make sure all the appropriate training is in place and the communication with our customers are there. it's very, very important to us. but i will say bottom line here, very important, is that the 737 max is safe. we're very confident in that we have not changed our design philosophy these are airplaning handled well in the control of the pilots they're designed the same way our previous 737s are. >> the journal said there wasn't more prevalence placed on this because you are making sure training is kept to a minimum so it doesn't put more burden on the airlines >> it's important as we transition from the 737 next gen to the max, part of what we wanted to accomplish was seamless training and introduction for our customers so we made it perform in the same way though it's a different design, the control laws that fly the

airplane are designed to make the airplane behave the same way in the hands of the pilot. >> but the accusation in the newspaper article and other places was that it didn't. it was more of a downward pull and not as easy to manipulate and not able to pull up on the steering >> that's why it's important to use the procedure that has been approved what we call a runaway stabilizer procedure the approach for handling that is to hit the cutoff switches, the same exact procedure in the ng as it is in the max >> let's talk more about the latest from boeing joining us right now is area space and defense equity analyst at jeffries. and gordon bethune gordon, we'll start with you you understand more about what happens with these airplanes what's your thought about what you heard coming out on all of it >> just as was mentioned, the procedure for runaway, the procedures exist for the max as they did on the new generation

ng that's the emergency cutoff which is standard for all the airplanes, i guess, since the 707. so that wasn't followed. and there's a flaw there maybe the highlighting of the pitch attitude changed uncommanded from the angle of attack is a new thing. but the reaction of runaway trim is the one that you learn basic training which has cut off the power to the stabilizer. >> go ahead. >> well, i'm saying it -- as dennis mentioned, the airplane acts exactly as the ng would you should do the same thing you've always been trained to do as don't try to automate the thing, manually fly the airplane by disconnecting the stabilizer there by your right leg. you get taught that in basic training >> sheila, how much of an impact is this for the stock only because lion air is the third largest customer of the max at this point, the 737 max?

>> we're not assuming any free cash flow at the moment. whether it's a cancellation or any change of design we haven't determined that now >> let's talk about what's bigger now with the trade talks. it's a massive part of their revenue and future plans too ang quarter of all airplane deliveries from boeing go to china. how are they held on that? and sheila, we'll start with you and then get gordon's thoughts >> i think what we're watching carefully a air traffic. in october it was up to 6.3% year to date 6.7%. i think people got used to 6.8% growth in air traffic. >> is that a line of the economy or more flying >> it's the economy, secular trend. i think a more normal rate should be 3% to 4% i think that's probably the biggest risk as people think, you know, it was their pullback because it just normalizes the region we're watching most closely is asia specifically

it accounts for 30% of air traffic globally southeast asia is actually what we're watching the airlines there tend to be unprofitable >> gordon, what do you think just about the tenor of the trade talks and what was announced after the g20? >> i think it's positive as dennis pointed out that it's a long-term game this is not a short-term game. so boeing has to take the 20-year view the way they design and build airplanes looking at traffic on an extended period. it's going to grow so those airplanes are going to be built, they're going to be delivered, and i believe that the traffic will be as it has been growing at a steady rate or a faster rate even >> you know, here in the united states, airline stocks have really soared as we've watched competition get a little smarter. gordon, we've talked about this a lot of times from you. is that good news or bad news for boeing or is that not reflective around the rest of the globe? they want as many competitors to be buying as many planes as

possible >> i think they want to get paid so having some stability financially, the u.s. airlines certainly will pay for the airplane that they are delivered and not be in bankruptcy court trying to throw off unwanted debt so a stable outlook in the u.s. for aviation is good for boeing. there's no question about it it's going to grow and it's going to grow at a rate that can be sustained >> sheila, what's your overall take on the stock right now? >> we still like it. we look at free cash flow to judge our stocks trading at a 8% yield. so still a 30% discount to the market no impact to free cash flow. >> thank you for coming in sheila is with jeffries. also gordon the former continental airlines chirm aairn and ceo. when we return, stocks to watch. including pot producer cronos. check out that stock right now it has reopened after altria announced a 45% stake in that company. it's up about 23% even though we

knew this deal was coming. the futures at this hour ahead of the big number which of course we'll get at 8:30 right now the dow looks to open off 170 points we'll see whether we get a goldilocks number on the jobs front. "squawk box" returns in just a me [leaf blower]

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cronos for $1.8 billion. now it's trading it wasn't trading earlier, i don't think. it had been reported earlier this week that the two sides were in talks. altria joins other -- there's beverage makers like coors and consolation brands that have made investments in marijuana companies. at the same time, altria announcing it's discontinuing its green smoke e-cigarette products as well as its verve oral nicotine product. altria sicites both the product and the regulatory restrictions that inhibits them to improve them i saw a pretty effective juul ad they're going with the quit, don't start now. i couldn't believe it. one in seven people in this

country -- >> still smoke >> apparently. >> i heard a statistic about secondhand smoke and one in six children is still expoessed. >> still a problem when we come back, our jobs panel is ready to go alex brill, aaron klein, jamie desmond, and jeff rosenberg are all standing by. and don't miss national economic council director larry kudlow. that's this morning on "squawk on the street" at 9:30 eastern time big hour of "squawk box" when we return 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!

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closing out a volatile week. futures pointing to more losses on wall street after a head spinning turnaround in the last session. we're 90 minutes from the opening bell we'll tell you what to expect when it rings. countdown to jobs. the labor department's november report minutes away. economists projecting almost 200,000 jobs added last month. we'll get you those numbers and expect reaction from our jobs panel. and crunchtime for opec. looking for a final deal on oil production cuts. we'll take you to vienna for the latest 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" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin cnbc senior markets commentator mike santoli is also here with us have you missed a day this week? >> here? no >> it's been a busy week in the markets. >> even wednesday wasn't so busy in this markets but he was here. >> but we had the futures that morning. >> yeah. they gave us a lot of insight see the next day it was up all day. before the arrest in vancouver today the dow indicated down 170. but 600 up from the lows yesterday. keep it in perspective the nasdaq actually closed up yesterday after a volatile session. it's down another 50 which is a fair amount for that index

and the s&p indicated down about 18 treasuries are solidly on the 10-year below the 3% range 2.894% and you can see that the 5-year is still below the 2-year. so we still have some inversion to the short end >> okay. we're watching three big stories this morning the top one major market volatility futures pointing to a lower open on wall street but not nearly as painful as what we saw in the last session the dow fell nearly 800 points before staging a dramatic late day recovery to end just 70 points in the red. that happened after "the wall street journal" reported the fed could end up slowing the pace of interest rate hikes. that was being credited in part with sparking that mini rally, if you will. number two on our list, fresh jobs data come up this hour we'll get it at 8:30 the latest employment report expecting to show the economy added 198,000 jobs last month. the unemployment rate expected to hold steady at 3.7%

then number three, huawei's cfo set to appear in court in canada the daughter of the company's founder has a bail hearing for 1:00 p.m. eastern time after awaiting custody for six days. meng wanzhou had been linked to alleged sections the u.s. seeking her extradition. a lot of people going to be focused on that. ceos of the world's largest companies joining at the innovation summit yesterday. jamie dimon talked about economic growth in the markets >> we have a bunch of geopolitical stuff i think the ones with the market the most is trade. trade is not just the direct effect it's the indirect effect of how bad is it going to get what could go wrong? that tail of a trade war you weren't even thinking about it before.

i think the yield curve, that doesn't tell you that at all but that's the thought maybe there's something in the yield curve. but what you see with the facts in the ground, you still have growth in america. >> you can see more of our business round table coverage on cnbc.com now let's get to the big data point of the morning. really of the week and that is the november jobs report here to help us prepare for the upcoming report is alex brill, american enterprise institute research fellow. aaron klein of the brookings institution, economic studies fellow jamie desmond, asset management. jeff rosenberg, blackrock portfolio manager for alternative capital strategies fund which is new as of what'd you tell me >> october 1st.

>> october 1st you're managing more money and you have to be right about this everything you used to know about the bond market. >> that's why i'm here >> excellent okay so let's -- you know, i'm talking to you i like your jacket, by the way it's more of a portfolio manager jacket i don't know if you noticed. >> it looks more that way. >> on the rack does it say that? portfolio manager? what's your number >> so we're a little bit low, below consensus. maybe 185 is the kind of number. that's just a weather issue. that's the volatility. i think the more important thing is the labor markets have been strong they'll continue to show strength and i think it'll be a contrast a bit to kind of the angst around is this fundamental, is this about the economies, the bond markets signaling recession. even if you get a little bit of a disappointment in terms of the numbers, the jobs report is a reminder this is the strongest areas of the growth. i think that'll be the more lasting message even if we are,

you know, getting some weather related effects. >> jamie, you're here. you made an effort to get in here, you get to choose second rather than those in remote locations. we may get to them no, we will. what's your number >> we're in consensus with the median expectation i think we need to remember unemployment is at a 49-year low. whether we're off by 10,000, we've consistently seen about 200,000 jobs added each month. we expect near that today. >> aaron >> so i'm at 153 i'm paying attention to some retail seasonals i think over time cybermonday is taking more of a bite out of of black friday and our adjustments are going to see that as a slower growth. i think the markets may react positively to that in the short-term i think this economy has more room to run on the fed and others give it credit for. i think it's interesting no matter where you are relative to this consensus, we'restill far

above the number of jobs needed to keep the employment rate steady there's slack out there. >> okay, alex. your number and just give me a little color on where we are in terms of late cycle worries, whether those are justified, whether they're not. >> sure. so i'm a notch above the bottom. i'm expecting about 170,000 jobs i think that that would be a great number i'm a little surprised consensus is so high i think we're all optimistic the question is just what's the details going to be? we're going to end up probably by the end of this month certainly by the end of next month creating more jobs this year than we did last year and that's quite surprising for us this late in the cycle. and, you know, obviously people are wondering how long that's going to go on the market is trying to sort that out at the moment but we're going to see a good number, something probably around 170, i'd say. >> is it -- while i've got you

here, what will we see in terms of wage gains? or what are the other things we need to average out? whatever we need to look at that could either help sentiment or hurt sentiment >> yeah, so obviously there's increased focus on the wage numbers. i think it's going to tick up just a little bit on the unemployment numbers the other one, we've never seen it this low where it's tied for the lowest i think it'll probably hold steady but i wouldn't read too much into it going up a tenth or down a tenth some of that is just measurement issues in the survey and of course people are going to look at the revision. we might see some coming down from last month. i like to look at the three-month trends to see where things are headed. we're going to be right in the 200,000 ballpark in that sense. >> i'm going to go backwards aaron, what's important to you here and what would the stock market like to see? something that shows we're not slipping into a slowdown or something that shows that the fed doesn't need to be hasty

with its moves i don't know what we want anymore. >> it's a very good question i think a weak number may give more credence to the market taking a pause i think the fed ought to slow down and pause their rate increase regardless of any one data point. everybody keeps expecting wages to tick up and they aren't ticking up enough. we have wage growth not at all in line with unemployment below 4% unless you think the natural rate of unemployment is far lower. the fed has dropped what they think the unemployment is. but then you see new models coming out the flower bell model and others that say the natural unemployment may be below 3% we may have been overestimating this number for far too long and if you see strong wage growth, the fed ought to pause and i think a strong jobs market may indicate that. >> that wacky bell flower model we were talking about on that

last break maybe not. do you agree with that do we not know what the unemployment is at this point? >> i think we've been waiting to see the wage growth. it's been ticking up although unemployment has been coming down consistently, we didn't get the increase in wages we've been looking for until recently so we expect that number to be about the same 3%, 3.1%. as jamie dimon said yesterday, there's 7 million jobs available. and there's about 7 million people looking for work. so that should shake out to increase the pressure on wages >> jeff, if there's one thing, the stock market has been worried about a lot of things but one thing seems to be the fed is fixated on certain numbers like the stock market is concerned is a lagging indicator. it doesn't encompass the potential for slowdown next year right now the bond market is kind of priced out hikes for the first half of next year. does that all fit together i mean, late but not ending cycle? >> it fits together in the sense that there's a lot of theme reversals here

you know, go back to the beginning of october and it was 180 degrees different in terms of what the bond market was expecting in what we're talking about and what the stock market was reacting to. powell's comments, stock markets were falling because bond yields were going up now stock markets are falling because bond yields are going down so i think the risk here, you know, note the panel is all skews below consensus. so joe asked the question, you know, what's the market reaction i think the market would favor a slightly weaker number, less wage inflation anything that surprises to the upside higher wage inflation, better, stronger number. the problem is the bond market now is priced out maybe too much and the narrative beginning to shift. you know, it's the morning after. the article on the journal saying, hey, take the hikes down but the fed doesn't want it to go too far down. because they're still in hiking mode they don't want to have the market overreact to a hike here in december or in 2019 that may be where the narrative goes

a weaker number would be good. wage inflation obviously key risk there if you see it on the upside market. >> this is a good place to stop. did you see? >> that was perfect. >> good work >> and mike helped glad you're on board all right. we're going to do this again because our panel will be back to talk about the actual numbers at 8:30 a.m. eastern and see if it is in line with what we just talked about. we'll see. looking forward to it. okay coming up when we return, some of the country's most influential ceos open up about the state of the economy most of them have a pretty optimistic take. we're going to hear from them and break down what they're saying wn rheweeturn. stay tuned you're watching "squawk box" right here on cnbc

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beyond traditional tv. to tv on any device. beyond low-res surveillance video. to crystal clear hd video monitoring from anywhere. gig-fueled apps that exceed expectations. comcast business. beyond fast. welcome back to "squawk box" this morning the countdown is on. we're 15 minutes from the big jobs number. look at the futures right now. of course all of these numbers may change in 15 minutes, but looks like the dow would open off 140 points down. nasdaq down about 41 points and the s&p 500 would open off about 15 points. president trump, i see one from two minutes ago maybe this is the one. it's going to be quick here's a short one china talks are going very well. exclamation point. >> no dot dot dot.

>> i would have followed that up with a, nice, with an exclamation point. i did one yesterday to someone i did one yesterday. and i did it and i ended with the period and ended with, sad, exclamation point. it's rubbing off >> we know >> it's rubbing off. you see people doing this frequently >> channelling the tweeter in chief. >> yeah. ceos at the business round table innovation summit were vocal about the state of the economy. here's a quick view at the top >> feels like we're almost talking ourselves into a downturn because all of us -- all the ceos around here talk and say things feel pretty good. >> one thing thatslows the economy down is regulation you only want to regulate a problem. don't over-regulate. >> you still have growth in america. >> we believe the consumer's in good shape we hear the news we have the same concerns that you guys talk about all the time but as it relates to the consumer, we're in good shape.

>> again, that economy, something where they seem to have an optimistic view which differs what we heard from some investors and concerns about what's coming down the road. some of these guys have a long lead time in terms of what they can see. >> that is true. i think one of the issues with the market is it's global issues that are impacting stocks a little more than the economic consumer if you looked at plays on the domestic consumer, all that stuff is right in line except for homes and cars. >> right. >> so that's been the case for awhile now >> and the looming trade talks is something that they're all concerned about. because they just don't know how big of an impact that will be. >> of course all right. coming up, we have the aforementioned jobs number in about 12 minutes or so final predictions coming up. don't miss national economic counsel director larry kudlow. don't think that he's blowing us off, so to speak

perfect. >> just blowing my nose. sound effects. >> he's not blowing us off he can't say anything for an hour after the number. he can't say anything for an hour after the number hits, so he's coming on at 9:30 eastern time "squawk box" will be right back. your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh...am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies lead with digital.

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welcome back to "squawk box. the futures have paired their losses slightly after president trump's tweet about how trade talks with china are going well. someone tweeted to me the arrests are going pretty well too. actually, that's even better now. now down just 74 points. and two stocks to watch this morning, cannabis company cronos up on news that altria is buying a 45% stake in the company altria also discontinuing a couple of its products one is called a mark 10. the other one is called green smoke. they're e-cigarette products as well as something called a

verve which is an oral nicotine product. when we come back, the november jobs report just on the other side of this break we have the numbers and much mo re

welcome back to "squawk box. november jobs numbers just a few minutes away we're going to get final predictions from our jobs panel. alex brill, jamie desmond, jeff rosenberg. steve liesman is with us here on set and mike santoli and rick santel santelli rick, you're new we haven't heard from you yet. what do you think? what's your number going to be >> i'm looking on the high side once again 205,000 would be my number i know there's a lot of nervousness of whether jobs have peaked or not. my feeling is they have not. i continue to think we're going to be drawing people back into the workforce. of course we want to pay

attention to wages but i really do think for the moment the inflation cycle has peaked it peaked awhile ago this should be a very interesting number for the fed and no matter how it turns out, it's going to be a complicated number for how equity traders play it. >> alex, how about you >> well, i feel more confident in the last few minutes we're going to come in a little bit below expectation. that's because the president's tweeting about china, not about the u.s. labor market. i think, in fact, that he's right in the sense that that trade issue broadly is on the mind of a lot of investors not necessarily so much what the trade barriers are at the moment but the direction of trade policy i think he's sending a signal that things aren't going to get worse. they're going to get better. i'm unfortunately not so optimiopti optimist optimistic i think we're on a rough road ahead in the trade agenda. we'll be fine, but it's going to be a bumpy road.

i think we'll probably come in under expectations i'm saying 170 >> aaron, how about you? >> i'm at 153. but alex, it's ridiculous that mr. tariff man, the tweeter in chief is sending out cryptic tweets that are changing market expectations of the economy. the president's job is not to move around with tweets. we've seen him leaking news before but this isn't how an economy ought to run you have an unsteady person at the white house making it all about him when point of fact what they should be about is the state of the economy >> i'm not endorsing the president's use of social media. it's up to the markets to decide if they want to read into what he's saying or not but i'm just saying that his focus on the trade policy is well put >> i agree with you. but all lovers of markets ought to be condemning his use of seeshl media for this. >> guys, we have a jobs report in two and a half minutes. aaron, what's your number -- >> you do this every time, aaron. you're a hack.

we give you a podium and you basically just find some way of -- you know but whatever what's your number >> 153 he just said it. >> thanks. >> jesus >> we say closer to 200,000 which would be consistent with the previous months we've seen >> jeff, we haven't gotten to you yet. >> we're 185 it's really about weather. will be between retail potentially being a bit bigger because of the proximity to thanksgiving and the cold weather pushing it down. we're going with the 185 >> mike? >> i don't have a number but i'm in tune with the idea the markets believe what they want is a mild miss from consensus. but probably something still in though six digits. i always think the fear is a steep slowdown >> overheating is the bigger problem. >> and steve, you're our anchorman. you end it up for us. >> my model is 235 >> what? >> 235 i don't know where these workers

are coming from and i have no adjustments for any weather. >> what was different -- what went into that what was the one that got it up there? what was the factor? do you know? >> the isms. >> i've seen a lot of people talking about them >> when the market says the economy is slowing down, the isms say otherwise there are indicators looking at that and they've been pretty strong i've never seen the markets so convinced about a recession when the economy is so strong at the moment i will say that. i believe in a slowing i think the plarkt overbelieves in a slowing or believes in an overslowing. >> we talked about this earlier. what you're seeing is weakness around the globe >> i may be totally wrong. >> there's also a little bit of a gap again of the survey and -- >> always. but when the fed raises rates and housie ining slows, what di think was going to happen? these are the interest rate sensitive sectors. housing didn't have the

post-decline boom, but that's the way the economy works. that's the way fed fupds work. >> all right we're going to get to ylan mui dow down 101 we're going to remember that ylan is at the labor department. she already knows but she's allowed to say it now. >> 155,000 non-farm payrolls rose by 155,000 in november. the unemployment rate unchanged at 3.7%. average hourly earnings, they were up 6 cents to $27.35 in november as for revisions, october's blo blockbuster number came down the september number, that came up just a tad. 118 to 119 the net change for those two

months is now 12,000 fewer jobs than were previously reported. and that means the three-month moving average of job growth is 170,000. the sectors leading growth in -- and transportation with 25,000 jobs retail saw a mixed bag there was strong hiring for general merchandise stores but sporting good stores, they shed jobs. all told the sector saw an increase of 18,000 jobs which the department says is not significant. the labor parps participation rate was unchanged the number of people who are marginally attached to the labor force. those are people who want a job but have not looked for one in the past four weeks. that went up by 197,000 in november u6, the broadest measure of unemployment, that ticked up to

7.6% back to you. >> okay. let's get some reaction to these numbers. you can see by the way the futures are trading, that -- well, you can. >> it's not bad. but it was the numbers slightly disappointing and the futures paired their losses even further. so maybe that's -- >> because mike's right. >> they wanted a slight miss >> the wage number is a little bit weak so it's a little weak there. retail wuss a little bit better. i mean, we heard the mixture >> steve, you're making faces at the computer what are you looking at? >> i find this to be a pretty strong report when i look -- just take a look down the list and look for negatives i got two negatives. okay information and technology and government i was talking to geoff

it is one of the surprising things that can't government unemployment the whole revision from the last month was all government numbers. but that's all right i sigh strength, for example -- transportation warehouse up 25,000 that may be a place where the new retail hiring is showing up. right? there's some debate about whether these retail employees are. and how weak retail hiring is. all of that tells me that the guys whose money is on the line, the folks whose money is on the line when it comes to christmas have decided they're taking a pretty good bet on hiring folks. up 18,000. we talked in the last hour about the seasonal adjustment. down a little bit but still up and the lee sure hospitality and the construction as jeff said may have a weather component to it >> okay so here's the question the fed looks at these numbers do they think anything differently? >> well, i think they've been looking for a reason to either speed up or slow down. and i think this is not a terrible surprise.

it's a little lower than expectation. but you see a lot of strength. the breadth of the sectors that have a positive return as was pointed out. >> and this is probably the last number before the december meeting that could have any significance in the decision or the statement. >> i think so. we heard a little bit of rumblings yesterday this doesn't affect the december number that that's expected for next yeek but it does really forecast what we might expect next year where we originally thought there would be many more hikes we're seeing that may come in fewer. >> should we go out to washington right now and get a take here? what do you think the fed does >> i think this number is pretty close in line. i think it doesn't change the hike in december but maybe slows them down a little bit looking forward not that they're going to base their decision on a single data point. kudos to aaron who came in closest with his guess but i think in general as someone said earlier, most on the panel steve aside were expecting a number a little bit

below consensus. that's what we saw >> aaron >> yeah, look. i think the fed ought to slow down i think bringing back a marginally attached people to the labor market proves the thesis that coupled with the weak wage growth is more evidence in the thesis which is fundamentally that long run unemployment can fall further. look, these jobs numbers, this may be weak compared to the last few months but this is well above what the natural rate of the economy can absorb it ought to give more evidence to the fed this traditional employment to wage hiypothesis may have broken down post-financial crisis. i hope the fed takes this as news to slow down more >> i have a question for becky quick. do you think these numbers match all the ceos you spoke to yesterday in terms of their optimism >> i think these numbers are a snapshot in time i think the margin of error, steve, is what >> 100,000 >> i think the market reacts to

these numbers because we're looking to intuit anything >> you don't have the right people for the right jobs? >> that was the conclusion yesterday from somebody when it came to small business was the reason why small business was lower in the adp report compared to medium, they decent have the wages. they can't find the people >> as our fed whisperer that you are, what did you make of "the wall street journal" article yesterday? >> i'm not sure it contained much news beyond what we've already been saying. i think -- look. >> the market moved on it so you never know >> i'm never going to argue when the market hears news. but the idea the fed was going towards a wait and see approach, ask jeff who is moving trillions. did you find information in there? >> there's not new information in the article, but the article is a long standing tradition of expectations in the market.

>> more than half of the intraday recovery happened before the article hit >> my reporting matches that i think goes a little further in that the bigger story is that the fed would be likely to mark down growth forecasts and the rate forecast for thex ye-- nex year >> do you believe that that article was generated because there was reporting or a reporting that decided this was the moment to go with this news? or do you think it was generated because there was somebody within the fed ecosystem that was trying to push this out there given where markets were headed otherwise do you see the distinction >> having worked in the sausage factory, i don't feel like i want to comment on that. >> how do we think about ceos? are they ever leading indicators are they lagging indicators?

how are their insider buying -- >> the thing i'm trying -- >> would they know >> what i'm wrestling with the last three months is i remember having conversations where there was a remarkable sense of optimi optimism then this sort of newfound optimism which i think you could see on becky's interviews -- >> although i will say in talking to doug mcmillon, he says it's going to be a good holiday season i asked him directly if he thought the same thing brian cornell did, that this is the best season he's ever seen in his entire career. doug said, well, i've been at this 30 years. so has brian cornell, by the way. he said we've had a lot of good years. and it's two months later. i don't know if that's concerns about what the trade war may mean specifically for somebody like a walmart who imports lots of stuff. >> did anybody not expect the economy to slow down in 2019

i mean, this is something that's been on the timetable for the full period of 2018. i think it got to the peak of october 3rd and there was an elevation there that gave it a certain vision and it looked around and said, whoa 2019 we're going to slow which was always the forecast out there. >> maybe they just looked and realized it's less than two months away. >> and now i think the debate is how much it slows. do we slow to trend? the fed had a little above trend. i think that's the debate. i guess there's a component of that i would love to hear from rick on this. >> you said the people didn't believe it >> i don't think they thought about it >> but to be fair, washington the administration was telling you a very different story economists were saying one thing. real economists were saying one thing. then there was -- >> markets thinking for itself regardless of what the administration says. i don't know how influential -- can we bring rick back into this i'm fascinated on his opinion on

the yield curve side and it looks like there's movement in the euro this morning. >> yeah, a little bit. basically we lost a basis point on the curve the long end is grabbing their basis points back. the dollar index took the brunt of the hit here although it's still not large. it just reversed from a slight positive, maybe a quarter set reversal but i think the big news embedded in the report is we lost a little time on the work week that's never good. we had a good productivity number this week that should mitigate some of the notion we hung up in 3.1 switch a good thing on hourly earnings on year over year basis. but listen here's the way i see it. it's divergence. that's where everything is falling apart here u.s. economy in my opinion is going to lose steam in '19 but not for the reasons we thought nine months ago. i do think the u.s. economy is on solid footing

the rest of the globe of policy mistakes that are goingto get worse because they have not done things we are mad at our fed for doing. they have bought some life insurance. and that's going to prove to be powerful i think they raise in december, but i think that divergence and the weakness in the global economy is definitely going to take a couple of steps out of our dance although we'll still lead on the growth side. and i don't see the fed nearly as aggressive in 2019. and i think jay powell certainly understands that any type of feedback which has kind of -- >> here comes the dow. dow is ready to turn positive. >> hey, aaron, since you got the number right, i want you to react to that. >> well, no. i'm broadly in agreement with rick for a change. i think the economy in the u.s. is on solid footing. i think there is a slowdown in interest rate sectors like housing. which is what you should expect after a long fed raising cycle

but i think the fed needs to pause. the wage growth is not as strong as it should be. real wage growth is too low. i think there's more room for this economy to run if the fed will let it run. >> we were down 180. we're now up 18. >> alex, we gave aaron a platform or he took it anyway. >> cnn is on the phone. >> why don't you take the platform >> he got it right aaron got it right >> we're not talking about that. >> can i just ask alex a question alex, i'm assuming you're still there. >> yep. >> is the market underestimating the continued stimulus that will come from the tax cuts and from fiscal spending this year? will it be surprise to the upside or are you with this idea of the growth slowdown back to trend 2019 >> i'd actually say both i think we're going to see a 2019 that's a little bit softer than 2018. we just came off a 3.5% real gdp quarter. and i think the consensus, a

little bit of slowdown what is keeping the economy going is in part a fiscal boost. it's a little on the spending side both putting cash in people's pockets. i think the firms take time. markets move quickly but actual real investments from firms do take time. we're going to continue to see that play out in 2019. that's going to be a push forward for the economy overall. >> jeff, is it safe as an investor to go back in the water? >> yeah. i think from a short-term perspective -- >> i'm talking short-term only >> and that's what you're seeing in terms of the chart there with the futures. >> if it was up 20,000, not 155,000? >> it would have been dismissed as aberrational. >> but if it was seen as

indicating weakness, would the fed be less likely to raise still have the equity markets up if we thought we were back in a late cycle environment again >> i think the aberrational one is -- >> all right but let's say not just the aberration for the number, but let's say work week was even worse than it was. let's say there was some negative things there showing a slowdown could that have -- would the market be up on that >> i think what we've seen with every number that comes out is the market doesn't necessarily react the way that we expect it to i actually think the market and retail investors that i'm working with, they don't want to be the last ones out this time so i think they're hypersensitive to any number that they see in a slowdown. many of these product -- predictors are 12 and 18 month predictors >> i think this was cool, but hot enough not to show that we're falling off a cliff. >> i'm with you on that, joe but we basically traded between 24,000, 26,000 in like ten days

for no particular reason on the fundamental outlook. >> right >> and the fundamental outlook can't possibly be changing that quickly. within the hour. >> if equity traders got the fed to not even go up in december but if we were totally falling off a cliff, we don't want that either >> i think if they don't raise in december, that scares the market too >> once again, we want it just right. >> want it perfect >> is there a consensus on the table here about this number i'm just not satisfied that i'm walking away from here with, like, i know what just happened. >> i think the average hourly earnings on a month over month basis was weaker than expected and that's -- >> jobs number a little weaker we're going to walk away and say the jobs -- but in terms of what's happening with the economy. >> i don't think you could get that from a single month rate anyway. >> the trouble has always been that we should not really be creating more than 100,000 jobs a month given entrance to the workforce, right now, you did have 233,000 jobs created which was my forecast in

the household survey but admittedly i'm not forecasting the household survey but we are finding workers, right? we haven't moved the unemployment rate. i think it was rick who said we'll be able to find these people that's a good sign. >> i think the employment rate is good at showing a trend i don't think a one-month number is going to be the indication of a change in trend or direction that anybody's going to buy into if you see a few of it or see it confirming other numbers we've seen other places, maybe that's a bigger deal. but because of the margin of error and revisions, i wouldn't say this is a turn in the economy based on one number. >> one other point on this is we should be expecting a slowdown a slowdown shouldn't be interpreted as a slowdown in the kmip it's about late cycle tightness. >> to find workers >> which is a different message than seeing, my goodness, the economy is slowing

it's actually the economy is doing so well we're doing the tightening >> i got evidence the economy is weaker if i think the economy is holding up, i got evidence it's holding up >> at this point that's where you're at. you're suffering at being too good at having a process and number you're anchored on. i said, range is probably fine. >> you get to meet a lot of athletes, like the guys you watch? right? >> you're assuming the people that understood the 16-year-old joke in the 7:00 hour are the same people watching the 8:00 hour and they understand the 16-year-old running joke >> you're leaving today without understanding really that well >> i'm going to figure it out though >> we want to thank steve, our jobs panel alex brill, aaron klein, jamie desmo desmond, and jeff rosenberg. also kruds prices are moving sharply higher watching and waiting moves in

vienna we're going to get over to brian sullivan who is there right now. brian? >> reporter: entering our second day and a half, i guess, andrew. listen maybe we're getting closer to a deal we're going to wait and find out. there are some headlines confirming what we've talked about for the last couple of days which is 1.3 million we'll see if russia kicks in here i'll tell you how dire things have gotten here in the basement of opec. about a few minutes ago, one of the opec representatives laid out these signs. they're putting up -- this literally might be a sign or signs that something is nearly upon us here from a deal perspective. the meeting, of course, the deal was supposed to be yesterday now it's the non-opec opec this is how we're resting our hopes. everyone rushes in and then sits around to wait because there's delay, delay, delay. so either way, the market is moving up as you noted 1.3 million. that's been the talk the entire

time iran said they're not part of any cuts because they've got sanctions. they're already getting a de facto cut. nigeria would like to participate in a way, but not use the word exemption in the thing. right now i think they're working out the words. either way, right now it appears we may be getting closer or else these placards are all wrong. when we get a deal, we'll find out. if it's under a million total because opec plus russia, watch out. these gains could reverse quickly. if it's stronger, it could be more the one thing to watch is not how many barrels, it's the wording. opec's got a lot on the line here from an organizational perspective. the need to be strong, clear, concise, and need the market to know they are still together and they are still extremely powerful in the global oil market with russia or without. so when we get something, guys, you will be the first to know. we are here and remain at your service. >> brian, the placards enough may be enough for the markets. if you watch wti, right now up

4.3% that's the last tick so anticipation about what's coming >> reporter: yeah. we're watching it closely. they've got the numbers around here we'll see what happens, becky. but again, if we get a bigger cut, if we get 1.5 million, we could see a surge in the a surgi the price of oil we have a lot of people to talk to, which is good. >> it is brian, thank you very much brian sullivan when we come back, jim cramer will join us live from the new york stock exchange. look at the futures which moved substantially on that jobs report the jobs report weaker than expected, 155,000. average hourly earnings also weaker than expected, up by 0.2% month over month market at this point is almost flat dow down by 13, s&p off by 2 nasdaq off by 17 "squawk box" will be right back. e day one. why would we leave now?

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let's get down to the new york stock exchange. jim cramer joins us now. we had it all there. the best of times, the worst of times. it had to be sort of not too good not too bad. what do you think the market is keying on that the fed -- >> i think the market is saying

wait, which is a radical position i took about a month ago. now i think everyone is with me. are you supposed to wait and then one i'm fine with the fed raising rates, but it's clear there's some areas of the economy that has taken a hit. steve said retail is good. becky said that, but those were four, six weeks ago. holiday season just okay not great. not what we're looking for mall, much worse than we thought. replacement of jobs online means a radical decline in what you pay people a lot of business formations beginning to slow. i think these numbers do not reflect the decline in oil, which is where all the manufacturing is geared to huge percentage of the increase in manufacturing i look at it, i say the fed has done its job they have to wait. they leaked the story to the "journal," which i think is great, they picked it up they changed their view without ever having to admit they

changed their view it has to be people like you and me who call it out it's important when the fed gots gets something wrong to criticize. >> were you surprised about the optimistic talk from some of the ceos that becky talked to yesterday? >> yes >> yes, you were >> absolutely. the numbers for the banks are particularly atrocious i think the world of jamie, but -- and he's doing better than most. i think that stock is a buy. i'm surprised the slowdown in economic opportunity i talked to the ceos of every bank i had to buck them up, and i'm a pessimist about growth >> do you think they say one thing in public, another in private? if you look at the goldman sachs speech this week, they were relatively positive.

>> but what are they going to do i'm not saying they're liars, but i'm difficult to say what the numbers say there are certainly a lot of parts of the economy that are still okay but the numbers are dreadful far worse than i thought i banked on some of the banks betting more activity, certainly doing more to finance growth i'm not saying it stopped. it slowed more than i thought. it's not an a dime, but the last six weeks, eight weeks have been dreadful for the banks i think they're shocked themselves their table for employment is way too high tim sloan may be optimistic. believe me, the automation is not causing the firing i think the banks are trying to get in line with the slowdown. >> we have to go i saw your thing on broadcom yesterday. that was a good number >> he did good >> there was some volume in that

rebound. are we getting close >> absolutely. hot tan did some good stuff last night. i'm not bearish, but they put a positive spin on bad numbers how about that >> we'll see you in a couple minutes. ay tuned "squawk box" will be right back.

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all right. welcome back to "squawk box. you can see right now things have settled down a bit. dow down about 40 points after being down 170 or more earlier in the session that came after the jobs report was weaker than expected but so were average hourly earnings have a great weekend right now it's time for "squawk on the street. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber coming in 30 minutes, larry kudlow on jobs, china, trade, huawei and more. speaking of the jobs number, 155,000, just weak enough to ease some fed rate hike worries. futures erased a nearly 200-point decline. more drama at opec a