it's monday, december 10th, 2018, and "squawk box" begins right now. ♪ ♪ live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. we have mike santoli as a guest here this morning. we are watching the u.s. equities this morning. we're off the lows of the session by a long shot it looks like the futures are down by 35 points. the s&p down 4.5 and nasdaq down by 8 points. comes after a pretty horrific day on friday in the markets wrapping up a rough week dow down 4.5%. the nasdaq down by almost 5% mike, after friday's action, where are you feeling it how are you feeling it >> this is like the fourth trip down to this level in just the

last couple of months. if you look at the s&p 500 so the one question is does the market give you four chances to buy the low? that's why i think a lot of skepticism breeds this market. it's been a violent market but not one that's sitting there and pricing in new fundamental information in a way giving you much indication of what's happening. i could have come in today and said that we were up 300 or down 300 and that would make sense. >> that would make sense. >> that's the kind of market we're in right now i do think when you mentioned the december weakness, even in weeks or years when december was bad in the first couple of weeks you did get some kind of relief. you did get some kind of push. is the market going to seize on one of these excuses to have a rally? it's refused all these other opportunities. >> it's a weird headline for the journal, lead story. they sort of -- i don't know, it's not like breaking news.

>> right. >> bargain hunters bypass stocks. >> for the first time since the dot come era, investors are saying buying the dip. i guess they can measure it a certain way. they lead with that. this is news >> yeah. >> that's what you're saying. >> all different ways to slice it i don't know that it feels that way since the dot come -- dotcom era. it's a measure of complacenccom. >> sure. >> if you're talking about this is late cycle stuff. >> that's right. >> late cycle economy, late cycle, late cycle, i think people at this point think that the tightening phase that we're in right now, maybe it's not global but it will be eventually >> yeah. >> there's a difference between late cycle and index cycle. >> right. >> is this something that's a year and a half out, two years out. >> people have decided that tightening is different than

keeping the specifigots open. >> did you see the feed on twitter, santa clauss punching each other this is the santa claus rally? >> it's sloppy, doesn't inspire you to think the market is in very good shape. very hard to distinguish that from a reset phase if the faang stocks were going up for no real reason other than sentiment, if they had held up we would be talking about a stealth correction, not a real deep correction. the market, the s&p 500 closed friday down on a one-year basis. you look at 12 months, it was down a few points. that doesn't in itself mean anything but we were there as well in 2015, 2016 we had one of these big reset faces. you also had the death cost and the 50-day moving average.

>> i couldn't really tell you. >> steven moore is going to be on and he's got an op ed piece in the journal that it's not a one-time thing, the tax reform, that it's not a sugar high, that we're still in a strong -- fundamentals don't really reflect what we're seeing right now. he can make that case. we'll see. >> let's take a look at what happened overnight in asia the major indexes there, too the nikkei down by just over 2.1% hang seng down by 1.2% and shanghai down by .8 of a percent. europe seeing active trading right now. red arrows across the board there, too declines are somewhat modest mostly a decline of .4 of a percent. the ftse down by under 1/3 of a percentage point treasury yields last week, the ten year treasury ending at 2.851% this morning you see that the

two-year still has a higher yield. they're at 2.7 and 2.3 a takeover deal just announced. nutrisystem will be bought by tivity health for $1.3 billion in cash and stock. shareholders will get $38.75 a share in cash and about 1/5 of one tivity share for each share they now hold. $47 a share, tivity is a provider of fitness and he healy they send you a month's worth of food so what does that pizza in the third week like? >> frozen. >> it's not like famous -- is it >> ray's famous? >> yeah. and then ham burger, is it meat?

deserts -- talking myself out of it this is not your problem. >> one of few people who have problems one in japan in tokyo because prosecutors have officially charged carlos ghosn for underreporting his income. they've extended his detention he has been jailed since his arrest on november 19th. he is considered a flight risk >> meaning they are not going to let him out. >> exactly nissan was also charged with false -- filing false financial statements we should also tell you over the weekend nissan went on the offensive against ghosn himself. there's an apartment in brazil that the family had petitioned to get into. they had actually gotten permission to do so. now nissan is appealing that decision to force them -- to prevent them, rather, from getting into that apartment. and so the soap opera continues.

it's very hard to figure out what side of this he's on except to say nissan and i would potentially argue the japanese have clearly doubled down on their position against ghosn this is not unlike what took place in tyco with dennis keselowski there were original positions taken by tyco. it became beneficial for the company to get the government on its side because it made its case stronger. you're starting to see something that a lot of people in legal circles are saying look at keselowski, look at this don't even look at the people themselves, look at the cases and you can start to see -- >> but the one thing that's different in this situation is the japanese legal system is nothing like the american legal system it's not what you would anticipa anticipate he has not been allowed to speak

to his family. i think it's a little bit of a lesson for anybody doing business i've always felt if i went to canada it would be the same system as the united states. i would have put japan in that system as well there's a lack of clarity. >> you would have thought that about the united states and the chinese over the past weekend. >> that was canada >> but that was us it's getting interesting it. the ceo of huawei will be back in court after a bail hearing ended with no decision she faces potential u.s. extradition over allegations she misled banks that deception would put the bank, plural, for sanctions.

china has demanded her immediate release. her lawyer made the case effectively that she would never want to put china in harm's way, she would never do anything to disrespect china and, therefore, if she were to flee, that would be some kind of disrespect it's a fascinating argument to be made on friday. interestingly you should know that our interview with wilbur ross over zte was actually cited by her defense lawyers, they actually had the transcript of a handful of -- this was before they went after zte in terms of the rumors with huawei and whether this was politically motivated. >> what were the questions and answers? >> i have to go back and get you them we have asked -- we had asked wilbur what this would mean for huawei when the zte thing was

going on and he sort of makes these -- we should go get the tape at some point and show it to people. meantime, uber filed paperwork confidentially for an ipo. that puts uber neck in neck with rifle lyft which filed last week the filing indicates uber could go public as soon as the first quarter which would be earlier than the ceo suggested he had been predicting the second half of 2019 would be when this public debut would take place with lyft out there. >> we are following major developing story out of france. protests in paris turning violent for the fourth straight weekend. thousands took to the streets. it started against a carbon tax, a gas tax hike carbon dioxide turned general protests against french president macron and leaving a

trail of destruction, smashes windows and he's set to address the country around 2:00 p.m. eesh a little late in france. it will address some of the protestors's complaints. it's still beyond his attacks. his pro private sectors. >> it's cost a billion dollars in economic. >> i don't have a yellow vest to wear maybe i'll throw one on when we're sightseeing. so they think we're in solidarity you don't want them to mess it up. >> every time they came close to the arc de triumph, they would put tear gas down and the crowds would disbeers. >> wearing a yellow vest

word could spread in france. >> one of the protesters, one of the peaceful protestors there saying she is in a position where she's spending half of the money she makes to get to work she can't pay for shoes for her children. >> they're chanting we want 2ru678 over thetrump over there go ahead, they can have him. to washington news, the afore mentioned trump mentioned the afore mentioned john kelly will be leaving. eamon javers has the story nick ayers looks like if he graduates, i figure maybe he can -- did you see this? he's very young. >> yes. >> he has triplets apparently. >> he's 20. >> he has triplets that are 6 years old or something, too. >> right which is better than me, i'm 46 and i look 66. >> not really.

you have the distinguished hair. >> that's right. that's right i dye it thisway. >> the face is very youth full >> thank you i'll take it so the president announced this on saturday. it's been long rumored that john kelly was going to leave as the president's chief of staff the two men had developed an acrimonious relationship over the year that kelly has been in the job as chief of staff at the white house. the president though going out of his way on saturday to suggest this was an amicable departure and also to suggest that he had a successor waiting in the wings here's what the president said >> john kelly will be leaving. retiring great guy. john kelly will be leaving at the end of the year. we'll be announcing who will be taking john's place. it might be on an interim basis. john will be leaving at the end of the year. it will be almost two years now.

>> everyone assumed it was nick ayers but yesterday nick ayers tweeted this suggesting that he's leaving the white house after all, he is the vice president's chief of staff he said thank you @realdonald trump and @vp, and my great colleagues for the honor to serve our nation at the white house. i will be departing at the end of the year but will work with the #maga team. i am in the process of interviewing some really great people for the white house chief of staff fake news has been saying it is nick ayers a great person i will be making a decision soon so who is on the list? here's our best guest. this is relatively a gift.

all of those are names that have been mentioned there's so much focus on nick ayers, the vice president's chief of staff taking this job that all of the official washington a little bit surprised trying to figure out who might be in line for that job. the president says john kelly will be leaving by the end of the week that gives him a couple of weeks. >> saw chris christie. people are throwing out names, right? >> yeah. yeah. >> mnuchin, would somebody leave a cabinet level position to do it >> no, generally, but in this white house the closer you have this is would be seen as a more powerful position although it's not senior in terms of the constitutional hierarchy it might give you more influence in terms of the direction. >> his office is pretty close. >> just across the street. the question is at this point

with the russia investigation heating up, with democrats taking control over on capitol hill, there are a series of major problems that the next chief of staff is going to face. the previous two chiefs of staff in much more benign times had a difficult challenge in working with the president and neither one of them was entirely successful. >> eamon, benign is a relative term, right? >> that's not a word that i think of really >> well, i mean, relative to what's coming, right >> i get it. >> subpoena power. >> capitol hill. >> the last two years there hasn't been a day -- >> i hear ya. >> -- where i think benign is the operative term >> fair point. eventually you stop salivating if they fake you out enough? >> right right. >> a clap. >> who is the president going to find who's up for that series of challenges it's a question.

the other thing that you hear when you talk to people about this job is that if the president mentions the word russia near you when you're chief of staff, you're probably going to have to get your own lawyer to handle your own legal interests if there's any discussion of anything related to russia, you could be a witness in the mueller investigation and, therefore, that could be expensive and these don't pay an enormous amount of money for what you can make on the outside. >> when you go in and interview, can they negotiate legal representation >> they're not allowed to do that. >> the government can't do that -- >> the government and the president can't either >> right >> that's an interesting question >> interesting question. could the president? >> no. the president can't. i'm fairly certain that i've read that that cannot be part of the deal you'd be responsible for your own costs. >> ultimately you want to pay for your own lawyer because you

want to make sure your lawyer is working for you. >> it's interesting. when michael bloomberg was the mayor of new york city he paid out of his own pocket certain members of his administration. >> that's the question could he plus up the people's salaries with a bonus or something? but would that have to be disclosed? i don't know interesting question. >> you don't want to talk about the redskins, i guess? >> no. no >> the giants! did you see it, 40-0 at one point. >> i saw a lot of weeping and gnashing of teeth on twitter. >> don't look at jim cramer's tweets. >> i'm from philly. >> you are >> that was unbelievable. >> we'll always have last season >> that's true not always and even the patriots found that out, too eventually you saw that yesterday, too. >> all right see ya later.

>> see you guys. let's get back to the markets. joining us is phil orlando he is chief exweek wiquity strat and we talked about the lead stories in the wall street journals how bargain hunters are no longer buying the dips. that's the first time that's happened since the dotcom bubble are you in a rush to buy at these levels >> what we're seeing is confusing. michael made a great point that was our level as well then as you look at -- >> close, anyway. >> so we thought we would double bottom off of that we've now triple bottomed off of that you look at the fundamental sign post we've been focusing on. the powell lunch in new york we got exactly what we wanted out of that. the fed is close to neutral. the g20 dinner between trump and xi, we got exactly what we wanted there we suspended the carrots for three months and they'll have a chance to work out the details

this past weekend out of opec we have a 1.2 billion barrel per day cut that puts a $50 floor under crude. then we have the f1c meeting in the next couple of weeks as we look at all of that, the core inflation has come off the board at 1 mown poi.8%. the fund amt algs would suggest we would like to see it hold we'd like to see bargain hunters come in. >> this is interesting as you've said, you've gotten everything you wanted on every one of these key critical points and you are waiting to see someone else go first? >> we've put some money to work. obviously before we put everything in we want to make sure the sentiment has changed you were talking about the death cross on the s&p 500, that happened on the russells i guess

a month or so ago. >> yes >> so technically speaking there's pressure right now >> but what you would need to see is just this bid get picked up, other people willing to change it because sentiment is what you think is ruling the day? >> sentiment is exactly what's ruling the day corporate earnings are pretty good we think they're going to be decent in the fourth quarter talked about steven moore coming on the longer term impact we're right there in that camp the key issue was that $2.7 trillion of repatriated assets coming back into the united states it will take a couple of years to work that money through on cap ex which we think will work. >> let's talk about where we stand in the cycle, the economic cycle. is this the case where you're going to be coming up against tough comps as we get into the new year or you think this has fundamentally changed the way

the business has viewed the world? >> well, i think part of the backdrop is certainly what's going on in the markets. we have seen that. it's what's happening in the markets. >> is that a predictive cycle? >> self-fulfilling to some extent if the drop in the s&p 500 is 10% or so, it's not that big of a deal for the most part the numbers are holding up pretty well there are pockets of weakness in housing and the export numbers look a bit weaker. you look at the ism surveys and they're close to 60. i think overall the economy looks pretty solid but there are some signs of moderation here nonetheless. >> and with the market weakening, you think that becomes a self-fulfilling prophecy >> don't deploy some of the money. >> i think if we're there. from the fed's perspective they

do want to see moderation in growth there will be a down trend in the unemployment rate. it means slowing unemployment growth to $100,000 or less they're trying to slow things down without slowing it too much they're trying to thread that needle it is a difficult challenge. >> the other question coming from other economies around the globe that have slowed significantly, does that catch up to the united states or are we able to kind of run things our self >> we look at the ism survey that came out last fwreek manufacturing. the export orders index was 52 and change the first half of the year that was over 56 so there is some slowing in export orders yet you look at the overall ism index and it's almost 60 so far at least the overall economy seems to be doing okay despite slowing in exports. >> the number of rate hikes expected next year, he's pointing out he's looking for less than 50% chance of a rate

hike in march. what are your expectations >> i think that's plausible. in my weekly i wrote about that possibility. we'll certainly hear out what the fed has to say on december 19th they are certainly raising the possibility that they go more than three months after the hike in march -- after the hike in december that doesn't mean they're done they priced out an awful lot of tightening here. if the economy holds up and unemployment keeps falling and we get well over $100,000 in pay rolls, they'll get tightening. i think that is plausible, yeah. >> phil, you said you've been putting money to work. where have you put that money to work and where's your next target >> where we put the money to work has been large cap value and the things that had looked more attractive to us over the last couple of months have been some of the more defensive categories with the dividend payers those sectors of the market have looked better. to jim's point, relating to hacies, we think we could be a

one and done situation here. we think the december rate hike is coming but as you look out to next march you have the tariff and trade deadline with trump and then you've got brexit coming up at the end of that month. the fed may very well skip march and become data dependent based on what's going on in june who knows what's going to happen six months from now? >> that goats you back to the 2016 example, right? >> right. >> you had all of this messy noise but the market found a way to bottom. >> filg, thank you very much for coming in. >> thanks for having me. >> phil orlando, federated investors and jim o'sullivan. coming up when we return, back from the brink. a new documentary showing president george w. bush's first reflections on the financial crisis. plus, elon musk speaking out on "60 minutes" making clear he has no respect for the agency that stripped him of his tesla chair title, the sec

we'll show you those dments a minute our newsmaker of the morning paul tudor jones, i'll be sitting down with him in just a little bit that live exclusive interview coming up at 8:30 eastern time "squawk" returns in a moment the future of technology investing lies beyond the tech sector.

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♪ yippiekiyay. ♪ mom. ♪ welcome back to "squawk box. we are in the chairs this morning. upcoming hbo vice documentary, president george w. bush reflects on the events leading up to the 2008 financial crisis. he reveals what went through his mind with hank paulsen and ben

bar knack key spoke to him about what was about to happen >> i was unhappy about it. i was a free marketer. i told people that, you know -- and firmly believed it and still do, by the way but hank is a persuasive guy and i trusted him. are we headed to a great depression and bernanke said, it looks that way and you have to make up your mind, you know do you care? and what i cared about was people that would be hurting >> "panic" airs tonight on hbo at 10:00 p.m it is the first time i have never seen bush talk publicly in any meaningful way about the financial crisis on tv before and so those comments are pretty interesting. there's a whole host of interviews including by yours truly that are in that interview. >> i saw a clip where you called

big bag of crapola or something, right? >> what was that >> it was the assets of bear stearns. >> the director asks you to explain and re-explain something. i was trying to explain what would the toxic -- i said, it's like a bag of crapola. i couldn't think of a good word. >> hank paulsen, i spoke with him last week. he said getting into the market and it was very difficult. >> talking about not using your words well, by the way, we have to talk about this next story. maybe he used his words exactly how he wanted to elon musk speaking out on cbs' "60 minutes." >> why are you reading it? >> why not >> why shouldn't we read it? >> you love him so much and you love talking about him so much. >> i do love it.

>> maybe this is your -- this is just the chair -- that's you, baby >> no, no, no, no, you go, man you did the interview. >> why don't you -- >> no. >> you're taking your nice pills. >> i thought he had watery weird -- i thought it was bizarre. you go ahead i want you -- i want you to. this is your thing. >> go ahead. >> elon. go ahead. >> somebody read >> joseph, go. >> elon musk speaking out last night on "60 minutes." he didn't mince words when he was asked about the sec, which forced him to step down as tesla chairman as part of a settlement over his go private tweets earlier this year. >> i want to be clear, i do not respect the sec. i do not respect them. >> but -- but you're abiding by the settlement, aren't you >> because i respect the justice system >> also asked about missing production deadlines >> punctuality is not my strong suit

just because i am dumb at predicting dates does not mean i am untruthful. i don't know -- i've never made a mass produced car. how am i supposed to know with precision when it's going to get done >> i'll say on that point he also said don't listen to any of his predictions for future deliveries, too. it was an interesting sort of -- >> i have so many thoughts. >> you do. >> musk was asked about using the plant that general motors is shutting down. maybe he'll buy a couple for tesla. >> some of those plants, those factories that they're closing down, you're shaking your head yes? nkts it's possible we would be interested if they were going to sell a plant or not use it, that we would take it over. >> tesla shares now up about 15% after a volatile year where, you know, the whole take private thing didn't help. >> here's the question first of all, he says he's abiding by the sec rules and yet he's not because he explicitly says his tweets are not being

monitored -- they're not vetted by the government or, rather, by his board or some kind of compliance office, which is part of the settlement. let's start there. second, he's effectively taunting the sec saying he doesn't respect them investors by default all have to respect the sec. if you don't respect the sec, therefore, numbers, what's being put into your filings, that seems to be a problem. >> the biggest point i thought was when he said the woman who is now chair woman, chairman of the board. it's my company. i'm the largest shareholder. >> i can get rid of her anyway, that was a good point. >> the idea of putting out predictions when you can meet targets, that's a material -- >> that's a material issue. >> trying to step away and saying don't listen to the predictions. >> what's unfair is he's had to say these things to be able to raise capital. >> exactly >> to be able to have investors invest -- look, he has a big date coming up on the calendar in february if he does not hit -- if the stock is not at a

certain point -- >> right about where it is right now. >> he has, what is it, $2 billion in cash payments he has to pay if it's above that he can pay it in stock. >> otherwise he can pay it in stock. the only way it's going to stay at that number or higher is the predictions, dare i say. >> he said don't listen to his predictions. market beware. >> don't listen to my predi predictio predictions. >> he's very dramatic. his childhood. >> he said he was beaten by his father >> never named his father. >> beaten by bullies -- >> and then he said his father. >> if you read the book -- >> i don't know. then he also -- a little bit of a messiah complex. this is about saving the world if someone can build a better car, go ahead. >> that he has said since the beginning. >> the patents are open source. >> i want one of those flame

throwers. >> oh, boy. when we come back, brexit showdown theresa may is facing a make or break vote wilfred frost will join us to tell us what he thinks happens next. later, our "squawk" newsmaker of the morning, paul tudor jones, weighing in on volatili volatility, rising rates and a debt fumble. [leaf blower]

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don't get mad. get e*trade and start trading today. welcome back you're watching "squawk box" live from the nasdaq market site in times square. the brexit clock is ticking. we are seeing conflicting reports. some of them this morning saying theresa may will pull her brexit vote for tomorrow. others saying she will not wilfred frost joins us right now. wilf, huge question whether that vote goes or it doesn't. if it does go, what are the odds that it passes

>> reporter: yeah, becky i'd say most of the reports i've seen in the last five minutes say that the vote is in fact ahead. we can come to that towards the end. as you say, if it does go ahead and theresa may wins that vote, then the u.k. will leave the e.u. in march of next year under the terms of her withdrawal agreement. we'd likely see the british pound rally off of that because a no deal disorderly brexit would be avoided if she loses that vote in parliament tomorrow there are five options of what could happen next. the first is she tries to renegotiate herself. that seems unlikely unless her loss in parliament is very small. the second, no deal. remember, that is the default option if nothing else happens between tomorrow and march but mps would try and block no deal. number three, a change of prime minister by changing the conservative party within the own mechanisms number four, a cross party support but it becomes possible if her loss is very large.

number five, a second referendum a very important ruling this morning that said the u.k. could unilaterally decide to call off brexit that solved the e.u. hurdle of whether a second referendum is possible or not. it doesn't solve the u.k. side of that question still meaning a second referendum is a distant possibility. that's why the british pound has stalled off despite that ruling. i guess the final point, becky, is whether the vote happens at all. the sources i am seeing in the last five to ten minutes suggest the prime minister will go ahead with that vote despite the odds being stacked against them guys >> wilf, it is so hard trying to read the tea leaves from here trying to anticipate knowing the five options out there what's the most likely scenario or does anybody know at this point? >> i think the most likely scenario is that she doesn't win the vote tomorrow. the reason being is there are remainers that don't like her deal and there are brexiteers

who don't like her deal and plenty of mps have come out and said i will not vote for this deal it makes the math incredibly hard unless there are a huge number, hundreds of mps that change what their public stated way they're going to vote is at the last minute. now the next factor is by how much does she lose if she loses by only a small amount, then maybe she plows on. maybe she gets to renegotiate and there's not a drastic change in direction for the government and for brexit if she loses by a big margin, then everything is on the table from a general election, a second referendum and with that the two options both remain and no deal. that's the interesting change in the last six months, becky six months ago people felt if her deal didn't come through comfortably the most likely outcome was no deal. that's bad for risk assets the change in the last couple of months has made if her deal doesn't go through, the chance between remain and no deal slightly more balanced but probably the old stated no deal remain in that circumstance.

>> wilf, i'm glad we have you there. thank you for the update we will check in with you soon. >> pleasure. coming up, our guest host at the top of the hour, terry lundgren is the new macy's ceo to weigh in on the health of the consumer carlos ghosn charged with underreporting his income. it looks like he's not getting out of the japanese jail any time soon. 8:30 billionaire investor paul tudor jones, we'll talk about market volatility and the debt bubble. steven moore from the heritage t fodaon geready for that you're watching "squawk box" on cnbc is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives.

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steven served the trump economic advisor during his presidential campaign he's co-author of trumponomics >> good morning, guys. >> i think we had you on last week to talk about a few things to talk about what we saw with 41, the week of the funeral, which was -- >> a week we'd all like to forget. >> i had my kids watching.

one of those unique -- maybe not unique to america. a pretty good week the bushes, i think it came off exactly like -- >> the funeral was -- >> a -- >> if only george w. bush had spoken like that when he was president. that was one of the great speeches i've ever heard him give. >> this is not just the notion that it's a sugar high, even when we were in mid euphoria about the second and third quarter and howell things were going. it looked like we were going to have a 3% year, which we didn't have during the entire obama presidency, but suddenly the people that have been talking about a sugar high are feeling vindicated or feeling they're going to be right or hoping they're going to be right. it looks like the fourth quarter is slowing and what you're seeing in the stock market or even in -- you know, in the bond market seems to be indicating that things are running out of steam, which plays right into the narrative that it's a -- it was a one-shot deal, almost like an obama stimulus, which as you

point out went to, what? went to obamacare subsidies, went -- what else? food stamps. talk about it. >> well, look. the whole notion of a sugar high is completely wrong. it's based on the cansian -- >> castor klunkers. >> stimulates the ideas. we would have a stronger economy if we didn't have all of this government spending. number two, as i point out my piece in the wall street journal, if this is a sugar high -- this year the growth rate is going to be probably closer to 3.5% that's better than any of the eight years we had under obama that's a huge improvement in the growth rate. my point is, look, our deficits today as a share of gdp, i want half of what they were under obama. if this is a sugar high, we should have had 5 or 6% growth under obama. one other point about this, i think a lot of people are confused about the tax cut that larry kudlow and art laffer and

i helped write for the president. it would be one thing if this tax cut were going to expire at the end of this year it's not it doesn't expire until 2024 or 2025 it's not going away. >> absolutely not. it doesn't change the way the economy is set up. you can understand the market argument that once you refigure a stock's value based on this idea, it's not going to annualize that every year. it may change entirely how ceos spend. maybe we're talking two different things, the economy versus the market. >> to the point, for example, joe was making is the economy slowing down? wait a minute. i don't see the signs of this. the jobs report, i was watching cnbc and other business shows. this jobs report what are you talking about 155,000 jobs >> is it your expectation we'll be over 3% for gdp >> i'm talking about corporate plus personal tax cuts for them to work/pay for themselves/be done in any kind of responsible way you have to

be over 3% for this to even math out in any way i'm not sure it maths out then. >> that's right. if you get -- one of the points we told donald trump was the only way you're going to get the deficit down, you're going to grow the economy you were mentioning people like larry summers who does think this is a sugar high larry summers is the economist who said we couldn't grow faster than 2%. >> new revised larry. >> most of the people frankly who are the people who are saying, oh, you know we're on a sugar high, the economy is going to slide into potential recession in 2019-'20 are the ones wrong about 2017-'18. their track record is pretty poor. >> there could be other things that cause the economy next year not to hit 3%. >> there are there's no question. >> doesn't disprove that the tax cuts were permanent. it doesn't disprove that it would be -- >> of course not >> you're kind of staking the --

>> you know why i'm more bullish than most people you're going to hear on these shows is because i think there's a high likelihood that we're going to get this trade deal done with china that's where i think the market isn't figuring this in right this is going to happen. we are going we are going to get this trade deal done with china i don't know if it's going to happen in the next 90 days or a month or a year, but it is going to happen. when that happens, we get this trade deal, they stop stealing our intellectual property. then you'll see the biggest boom >> people are saying that the 1.75% obama was able to muster was because the fed stayed at zero the policies were a head wind. the overregulation and now trump's done deregulation, he's done the tax reform, but without the fed and without 0%, he's going to be lucky to be able to grow at 2% in other words, obama was able to do it because he a $5

trillion balance sheet orchestrated by the fed. maybe 2% on our own is actually pretty good. >> you just knocked it out of the park the only thing that really worries me about the economy right now is what the fed is doing. by the way, trump called this three months ago when the fed raised rates >> but that's a reality of the marketplace. it's a reality of the economy. >> somebody needs to explain to me why there's -- what possible rationale -- >> is the economy in great shape or good shape but it can't take the stress of the fed continuing >> the fed is what the economy needs now because there's so much global demand for dollars, it needs to pump more dollars, not less look at -- wait. listen look at commodity prices commodity prices are falling how in the world is that consistent with an inflation outlook? it isn't and a lot of these conversations -- the fed has to raise rates now so they have a mechanism to deal with the next

recession. my point is, wait a minute the fed is going to put us in the next recession. >> it's 70% of service based economy. we're not really talking about being dependent on what commodities are doing globally or even -- >> but commodities are the indication of whether there's disinflation out there and there isn't any. so my point is the fed should be looking at those commodity prices if commodity prices are falling. they've fallen by 10% since just the last rate increase how in the world is that inflationary we need more dollar liquidity in the economy, not less. by the way, if they were to do that, if they stop raising rates, i think what would spook the market wasn't the rate increase it was we're going to raise them and raise them and raise them even higher than the inflation rate >> i just worry that staying where they did for so long and, you know, the fed's balance sheets, corporate debt, the global bond bubble, whatever you want to refer to it as, any type

of slight increase in rates we're not prepared for >> there's some truth to that. >> it's the roach motel. we checked in with the fed and we can't check out >> one of you made the great point, i think it was you. we are sucking in capital from the rest of the world right now. that means investors need dollars. if you want to buy american assets, you have to be able to have dollars to do it. that's where the fed isn't accommodating that i think it's a big mistake again, trump called this he said why is the fed taking the punch bowl from this one of the biggest rationale when we talked to trump doing this tax cut was to raise wages. >> that would have to be part of the calculus right? >> well, yeah. because we were trying to get real wages up. and so as soon as we get the wages up, the fed says, oh, my god that's inflationary, we have to pull back on the money supply how are we ever getting wages up when every time we have an

increase the fed is pulling it back >> well -- >> right >> i guess i don't know whether you look at commodity inflation or wage inflation. if commodity -- doesn't look like it's going to be a problem from oil >> larry kudlow and i believe that wage increases do not necessarily mean inflation we wanted this tight labor market right now when you said 155,000 jobs was a disappointing result, my goodness we still have 7 million more unfilled jobs than we have people to fill them. it's amazing we're even get hg 155,000 increase in the workforce right now. >> which means you think we get to what unemployment rate beginning of next year >> i think we're going to see probably 2.5% for the fourth quarter. and i think as long as the fed doesn't try to suffocate the economy, i think we're on a long-term path of 3% growth. through the deregulation, through the reduction of taxes and repatriation of capital. >> other than the fed you don't see any -- >> the trade stuff

>> what about the business cycle itself it doesn't die of old age. right? is it dying? is there someone reason we're in late cycle >> this has been a lengthy recovery you've got to read the book on -- there's a chapter in the book about obamanomics economy still hasn't had had the kind of growth we -- as you said, we grew at less than 10% >> why would you make me read that i was there for eight years. i lived it i have to relive this? this is like reliving the financial crisis >> a lot of places like pennsylvania, ohio, michigan, kentucky you ask them how is the recovery going they say there is no recovery here. >> you point out the other government spending we saw, the narrative is now obama had to do that to save the economy that's the narrative not that it was done -- you know, people can make up whatever narrative they want >> this is why economics is important to understand the lessons of history

we had the most massive keynesian under obama. and it didn't work >> but he saved the economy with cash for clunkers. >> it gave us the weakest recovery since the great depression >> it was a different depression, they would argue >> he'll tell you. >> every year they said we're going to get 4% growth >> okay. >> we're going to see him in a little bit when we come back, it's crunch time for retailers we're going to talk to macy's ceo. and later our squawk news maker of the morning i'm sitting down with paul tudor jones. he's got a big market call it's an interview you cannot afford to miss it cinup'somg at 8:30 a.m. eastern time

new this morning, ousted

nissan chairman carlos ghosn indicted in japan for financial misconduct the latest plus what other corporate leaders should learn from this case "squawk box" goes shopping our special guest host this hour, former macy's ceo terry lundgren plus in times of great market volatility, we're turning to a tried and true investor paul tudor jones will be our special guest as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> good morning. 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. cnbc's senior markets commentator mike santoli is also spending the morning with us and our guest host for this hour is terry lundgren. we're going to talk about how he

sees the economy right now, what's happening in this holiday shopping season. but first look at the u.s. equity futures at this hour. right now the dow futures are indicated down by about 43 points s&p futures off by five, the nasdaq off by eight. it was a horrific week last week the dow down 4.5% for the week the nasdaq down by almost 5% more on the markets in just a minute, but first here are the other three big stories we're watching the top one, carlos ghosn indicted today for underreporting his income. he has been jailed since his arrest on december 19th. nissan also charged by prosecutors. two on the list. huawei cfo will be back in a canadian courtroom today she faces potential u.s. extradition over allegations she misled multinational banks about huawei's control over a company operating in iran. huge geopolitical implications and three, the uk can cancel the brexit without asking for

permission from other eu member countries. there have been mixed reports about a major vote tomorrow on the brexit deal. the pound trading lower right now on that news all right. let's get to our guest host this hour terry lundgren is former chairman and ceo of macy's it's a good time to check in did you see some of the doug mcmillon -- i'm urging the change to mcmillion. >> he's doing fine >> he is he was pretty positive we're starting to doubt whether ceos are lagging, leading, or coincident indicators. do you know whether we're in a -- some type of imminent slowdown or are things good for christmas? do you know? >> if you look at all the numbers you guys have been reporting week after week, you'd have to say the consumer's in very good shape. and as good of shape as i've seen this consumer

and obviously gdp is driven by consumption. and the numbers are good i mean, you've watched retailer after retailer, you know, putting up really good numbers top and bottom line. so even raising earnings and guidance in some cases and getting no credit for that, by the way, in most cases for their stock price. i think that has nothing to do with how the consumer's responding i think the consumer is healthy. i think the consumer is spending i think the stores are busy. i think you're watching now more and more consumers are shopping both online and in store and i think that's really good for business because they spend more when they're in a physical store than they do when they're online. so to me, i think we're set up for a very decent finish to the year. >> is part of the problem the retailers' margins might get hit on several fronts? if you're buying online and in the stores, that's expensive fo the retailers to figure out how to get all those issues? and then you have the trade

talks looming. and if anyone's going to get hit hard, it's probably the retailers. >> i hear all of those arguments. and i think most -- there's going to be a mix, becky there's going to be retailers that are going to be winners and losers i think that's not what has been sorted out yet, but it's clear to those of us who i think spend our lives as students of this business knowing that there's going to be winners and losers here that are going to shake out over time. it shouldn't be that complicated to see them, and the ones that are going to be winners are the ones that are going too work through all of those various issues i think they're all solvable >> the industry itself is how close to halfway through store closures that need to be done given the new environment, the online versus bricks and mortar that you tried at macys? are we halfway through three-quarters of the way through? >> this is what i believe. there has been -- i said this for a long time. there's been an oversupply of

physical retail stores in this country. and it's this country, by the way. this country is way overstored they get smaller from there. so we're just way overstored if there has to be a contraction, i can tell you in the case of macy's, they closed 20% of their stores. joe, the answer is no. we're not. because the industry has not closed it's going to be -- there is going to be more of that that's what has to happen. because as this shift to online has occurred which has been the reality, it's still only about 10%, 11% of all retail sales, by the way, but it is growing you have to get rid of 10% or 11% of the physical stores the answer is no, not there yet. when that does happen over time, supply and demand is back. that's when you'll see the physical stores grow again >> have you seen any clever

reuse of the space is there anybody out there saying i could see what the future would look like meaning in these malls that are otherwise tushing into ghost towns. >> i can tell you i've seen only interesting changes in evolutions, revolutions of shopping centers i can't tell you the results yet. but i was recently in century city, california, which is really a fantastic neighborhood, if you will, but frankly was a mediocre mall in overall performance. and they've done a phenomenal job of redeveloping that center. they brought in, you know, everything from whole foods to -- i forgot the big restaurant format. but soul cycle all these different things there's sports activities. there's concerts being done there. there's theater being done there. i'd say we moved from 10% to 25% non-fashion retail in that

center i think something like hat some kind of mix like that makes sense for the future >> when you talk about the strength of the consumer, there's obviously been, i mean, jobs are growing, incomes growing. the retailer seemed to have figured some things out during this phase there's also been a comeback in people buying clothes again. for awhile it was seeing this secular decline. is that sustainable? or is that just kind of a burst? >> well, i think fashion is hard to call sustainable. you know i think that, you know, consumers have demonstrated a willingness to shift from category to category there is a big run for accessories for the last few years of shoes and handbags and accessories and jewelry. and that ended up taking dollars away from apparel. now you're seeing the shift back into apparel i don't think that's necessarily what retailers focus on. and the good news about a multi-category retailer is that you can shift your inventories to respond to what's happening >> do you go to the parade this year >> yeah.

i brought the whole family to the parade >> were you cold >> i was very cold it was the single coldest parade in history, but it was also one of the most watched parades in history. >> i used to see you front and center >> yeah. i was second and center. i was right behind my successor. my family was right behind jeff and the group. >> you got to tell me the truth here >> of course i'll tell you the truth. >> yeah. truthfully, i love when people say that truthfully unlike what i've been saying what's the percentage of lip-synching versus real singing? >> this is highly confidential information and i cannot disclose it. i'll tell you the truth and that is i'm not going to tell you the answer to that question. >> the guitars -- the electric guitars that don't have wires plugged into them. >> that's a hint those are not -- those are air guitars. >> your fingers would be so cold, you couldn't hit anything. >> i will tell you some of the

artists insist on performing live >> it's a percentage >> it's a percentage >> that great lady i used to see every year, she's unfortunately not with us. i heard that i was shocked. she seemed young, but i'm sorry that happened. that was a sad part of this year anyway, thank you. when we come back, there's no lip-synching here coming up, carlos ghosn indicted in japan for financial misconduct we'll talk about what other corporate leaders should learn ayom this case st tuned you're watching "squawk box" here on cnbc will it feel like the wheend of a journey?p working, or the beginning of something even better?

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mom. ♪ . welcome back to "squawk box," everyone prosecutors in tokyo have officially charged carlos ghosn for underreporting his income. phil, i'd ask you what you know but the important question is what do we still not know? >> we don't know a lot, becky. we know about these charges and it's not only against carlos ghosn. but also as well as nissan itself here's what we do know what happened here in the u.s. monday during the day in japan. carlos ghosn has been formally indicted for failing to disclose income the exact amount remains a little unclear we're hearing about $44 million

over five years. he has also been rearrested for further investigation of other potential crimes which means he remains in jail, in detention with very little interaction even with his counselor over in japan. for nissan, couple other things to keep in mind here former director greg kelly, he has also been indicted same crime alleged with him as with carlos ghosn. and nissan the corporation was indicted for financial crimes as well the company issuing a statement saying making false disclosures in annual securities reports greatly harms the integrity of nissan's public disclosures in the securities markets the company expresses its deepest regret for carlos ghosn, the real threat here is the potential that he could spend up to ten years, up to ten years in prison if convicted you guys, you'll hear a lot of stories and you'll read a lot of stories over the next couple of days that the conviction rate

for people who are indicted and charged in japan, it's something like 90% that doesn't mean that carlos ghosn is going to go to prison for ten years, but it's an extremely high rate of conviction once people have been formally indicted. >> okay. phil, thank you for that we're going to continue this conversation right now yale school of management's senior associate dean for leadership studies is here the one and only jeff sonnenfeld good morning to you. >> good morning. how are you? >> so what's your take here? is carlos ghosn on the wrong side here? or is there something else going on >> we don't see any evidence he's done anything wrong he's perhaps not the most humble person in the auto industry. there are some 90 books about him. and he's contributed to all. but other than perhaps a lack of humility, we can't see how he's done anything wrong and we haven't seen the evidence. certainly nissan and renault haven't produced any evidence. it's definitely a prosecutorial

overreach. >> i mean, do you believe that this is not about him in the context of whatever he's done with the actual financials of the company but is actually much more about the relationship between renault and nissan mitsubishi what do you think is behind this >> that's about 50% of it. the other 50% of it is nissan's own smoldering resentment. what's going on here is you have three companies, mitsubishi who is part of a joint company renault, and nissan. and mitsubishi and nissan have recovered nicely nissan when they were in distress in the late '90s. and for $5.5 billion, they got about 45% control. now nissan is about $120 billion or so. >> you think that's all that's

driving this >> i think there's national pride at stake that's a lot of it it's a commercial dispute. if at worse they say there wasn't a disclosure on compensation, this isn't a capital confiscation >> but listen. you were about to say about the legal system in japan, what i was going to say is it's the legal system in japan to say it's not the legal system here >> the legal system in japan if you're an american that's being punished we didn't see this with the executives where there were massive debts after the tsunami with the whole problem with that nuclear reactor. >> if you were an executive doing business in japan right now, would you stay or would you go does this say something larger to you >> something larger with the arrests in china as well >> the arrests in canada, you're suggesting >> and then there was a more

recent arrest in china of a banker and we then arrested the cfo, of course, of huawei. or canada did. >> zung governments are now using the prosecutorial system to do their bidding when it comes to trade or other corporate affairs? >> we're seeing the mixture into disputes -- >> do you put the u.s. in that same category? there are some including the defense of the cfo of huawei suggesting that that arrest is nothing more than using the u.s. and canadian prosecutors effectively to do the bidding of the trade policy of the united states. >> there are so many differences. the show's not long enough to outline the differences. xi has full due process. huawei has been reminded of issues it's outrageous. whereas in this case, we don't even see what the charges are. he can't talk to his family. he can't talk to his u.s. attorneys. this is carlos ghosn

and deferred compensation issue. he never got the money that was charged. and there's a little bit of chicanery going on here to delay detenti detention. we know it's an eight-year period >> why do you think we have not heard from either the treasury secretary from wilbur ross, from any of the administration officials on this issue? and by the way, not carlos but his number two is an american. from what i understand, there have been little public efforts made to try to solve this. >> i think part of tit is they are waiting. as you know macron is distracted were he not so distracted, we'd hear from france and france would probably ask us to weigh in u.s. gets to buy a pass because of some of that confusion. but this was strictly the head of legal change and how things have to be reported.

carlos ghosn reported up to this minimum and they had deferred compensation he's never received and -- >> what do you think of the suggestion that he is maybe in the category of dennis keselowski he had apartments in tyco's name but ultimately was arrested, indicted, and convicted of stealing that those apartments were for his own benefit the similar argument could be made for carlos ghosn. i'm not suggesting either is right or wrong, but i'm curious where you stand on that. >> once again, the show is not long enough to outline the differences. dennis was loaded up with fraud. he had fake packing crates of artwork and things to undercut tax issues in states around the country. there are many issues against him setting a terrible model of fraud right at the top and this is not the case here. there's no evidence of fraud and keselowski did take possession of those properties whereas there are some houses here that are still in nissan's

name is what ghosn contends. there's just a lot of envy that basically nissan is rebounding, they're $120 billion in sales. they would make themselves the number one car maker but unfortunately, renault is only about $60 billion in sales and they resent that >> jeff sonnenfeld, thank you, sir. we'll see what happens. >> do you have a messy desk? >> you know, i never get to use it. >> do you see this, kyle it's like chi i don't say. >> the message is don't worry about joe. just don't get the split screen. >> is your desk like the typical college professor? did you get everything -- >> i appreciate you write down what you think i do the same thing. >> i never use it, but in case i was going down huawei -- >> it's your thought process >> he's a professor. >> you want some of these? >> i read it all while i was

sitting here i could have done the interview, in fact. >> how come you haven't pulled me away yet? i'll stay. you better watch it. >> threat or a promise scam of the century. it's been ten years since bernie madoff's ponzi scheme. we have an update and interviews with some of the players you never heard publicly until now that's next.

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. ten years ago today in the thick of the 2008 financial crisis, bernie madoff confessed to his sons that his $65 billion hedge fund was nothing but a giant ponzi scheme the ripple effects of the scheme continue to this day scott cohn led our madoff coverage back then he is back with a series of reports about where we've been and where we're headed i can't believe it's been ten years. >> i can't believe it either, but indeed, it has madoff is marking this tenth anniversary near as we can tell quietly at the medium security prison where he turned 80 this spring now 9 1/2 years into a 150-year prison it's where i spent a surreal two years with madoff behind bars. >> reporter: to hear madoff tell it, running a ponzi scheme was stressful even before he got caught it's kind of like being in the

army, he told me in 2013 only you're not worried about getting killed madoff's lead defense attorney is still in touch with his most famous client. >> he's doing okay for 80 years old. there's a respect from the prison population. and i think he's got that. and it's prison, but it's not the max. >> reporter: but one person doesn't want to hear from madoff marc litt was his prosecutor litt's office overlooks the lipstick building, madoff's former base of operations and for three years a federal crime scene. >> i looked around the room and there were pictures of his boats on the wall and they were all named bull i said what is that thing over there? and i saw that it was a sculpture of a wood screw. and it all of a sudden hit me

that here i was the prospective investor surrounded by bull and getting screwed, but i didn't know it. >> mark litt has never spoken publicly about this case until now. we've got more from him and key players. out today, madoff ten years later. you can subscribe at apple podcast. a lot more coverage in the next couple days of this weird anniversary. >> joe was asking you, what's been recovered of the $65 billion? >> so $65 billion, this is what was on the statements. the amount of principal invested was more of $18 billion. of that, $13 billion and counting which is impressive for a ponzi scheme. >> parly in the midst of the financial crisis

but the trustee has been going after clawbacks and all of this aggressively now for ten years >> so people that had thought they had $10 million don't have $8 million we see the headlines they've recovered most of it >> that's an important point a lot of people's lives were ruined by this. >> no doubt. all right. thank you. coming up, the trade factor. what the u.s./china fight means to the global market stay tuned futures have worsened but not triple digits. you're watching "squawk box" on cnbc

♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center that we're watching, one are developments in great britain. prime minister theresa may is set to pull the vote she's set to make a statement at 10:30 a.m. eastern time. spokeswoman for may said earlier

today there were no plans to pull the vote. our wilfred frost is in london and will have more top of the hour gasoline prices plunged over 22 cents per gallon over the last week. the average price of gasoline is at -- this is, like, so nice music to my ears 2 357 $2.51 a zblon. >> i like it >> how does that translate to jet fuel >> i'm talking about consumers driving to shopping centers and going to various stores i have an interest in >> you see a big difference -- >> you do. particularly in the spring/summer period you do >> and i pay cash now. >> do you? >> i do now. because it's like 10 cents cheaper. >> you are so cheap. >> i do the number of -- what

does your big suv hold like 30 gallons, right >> i don't know. because i use a credit card. i never give cash. >> do the math do you leave -- let's say it's sitting here it's not mine. will you finally say okay i'll take it? >> yeah. >> okay. >> that's my only point. >> people in jersey like nothing better than to talk about buying gas. how you do it -- >> that and the weather. >> where do you live >> i live in manhattan >> it's like $4.50 here a gallon >> we don't have to pump our own gas here either. >> i know. let's get to the latest on u.s./china trade tensions. for that we welcome bob hormats. bob is also former vice chairman of goldman sachs a former undersecretary of state and a former deputy u.s. trade

representative bob, with all of those hats, let's turn to what we're dealing with with the situation with chinaright now what's happening >> it's complicated because it's a multilevel problem first of all were there are going to be frictions. one, we're a market-driven economy. we're comfortable in the notion we're going to be advanced in technologies for the indefinite future now for the first time we have a real competitor in artificial intelligence, robotics, biotech, a whole range of things. and they're developing very rapidly. i was just there a few weeks ago in their silicon valley. they're developing new technologies of their own. third, many of these technologies have security implications not just for economic benefit of the country, but security related issues which adds to tensions and fourth, the concept of what he rules should be differ between our views and beijing's

views. >> let's go back to section three. that plays into the huawei situation. is this a situation where the u.s. is doing this because there were actual trade violations with the sanctions in iran and how much of this is just because of concerns about security and how much is concerned about growth, them outpacing us >> it's unclear at this point. the legal elements of what the united states is doing or doing currently in canada in terms of the canadian courts is murky what the charges are we don't know all the details. but it's clear the chinese see this as part of a broader effort to suppress their rise the legalities are one thing we have to sort that out >> i talk to people with an interest and they say there is a legitimate concern about security that they could spy on anybody using huawei technology. is that legitimate >> i don't know the answer to this

there's so many questions to what the actual charges are that are in the canadian court. it's awfully difficult to tell what the real implications are, what the legality is relative to what's going on in those courts. >> with all this going on, is there any chance a deal can be struck within 90 days? >> i think we have to look at this and given all the structural issues that i've mentioned, as a long-term set of differences between the united states and china, some of which can be worked out, some can't. i do think with respect to the next 90 days, there are things that the chinese can do that will help. one is certainly to buy more american goods they've already offered to do this second, to lower their barriers to american products going into china or american investment going into china their so-called restricted list.

lower the level of items on the list and the third is intellectual property this is a big issue. but when wu go to china, you see they're developing their intellectual property too. and a lot of chinese companies made the point we want protection for our intellectual property so there's a constituency in china among chinese entrepreneurs and companies for intellectual property protection just like in the u.s i think they've taken measures already to toughen up their intellectual property protection and second, i think the outline of a deal, not a perfect one but a better arrangement than we've got now, is there from my conversations in china i think this is not impossible and probably an opportunity for at least narrowing the differences. but there are going to be a number of areas. >> but beyond the 90-day period, right? >> 90 days is the first inning >> then they'll have some other extension, if you will, right? >> i think that's the process. more purchases of china by

american goods a little bit more opening or more opening by china to american goods going into china. and then perhaps progress on one or two issues. and then carrying the process along without escalating the tariffs. because they hurt china. but they're already adversely affecting the u.s. the markets are telling us that. >> it's 80 days now. >> now 80. and if anyone thinks this is going to lead to major breakthroughs that solve all the issues given all the structural issues and all the other issues that have been going on with china between china and the u.s. far long time, 90 days is not going to do it >> but there's things we're not going to fix in five years the things we can't fix in five years we can fix in 80 days so there will be something. >> i think there will be something. i think the chinese would like to have something. and i do think in the united states given the situation in our own markets and there are people suffering, some progress is important we need the chinese in the long

run to work out a whole range of things between the united states >> that's what you think is the most likely scenario what are the odds we get to a position where tariffs are put back on or ramped up >> i think the -- it's very hard to predict in this i do think it's possible to do something on the things i've mentioned including intellectual property but as joe's pointed out, it's not something we're going to be able to do in 90 days given the backlog of issues that have been discussed for the last six, seven years. and all the differences in perspective. and the systemic differences that i pointed to. they're simply not going to be resolved in a 90-day period. but it can be a start. and the problem is not to -- we can't resolve them but at least we can manage them in a way that's not mutually harmful to their economy and ours that seems to be the important part make a start and manage the areas we can't resolve >> bob, thank you very much. bob hormats. let's get back to our guest

host for this hour terry lundgren who is the former chairman and ceo of macy's terry, as somebody who spent his entire life in retail and finding what this means, what would happen if goods coming back from china are all taxed at a 25% tariff >> well, it'd be a big problem, frankly. because a little bit of inflation in the apparel business is not a difficult thing for consumers and it can benefit retailers because the retail is lifting and it helps comp store sales growth. a little bit of inflation i thought was okay 25% is a problem so it's hard to cover that up. now, i can tell you right now that companies, retailers, others, are moving production, doing their best to move production because of the uncertainty we don't know if this is going to happen or not so we're hedging our bets. i know other companies are doing the same looking to indonesia, looking to vietnam. looking to other places they can manufacture other products >> how quickly can they make

those changes? >> they've been doing it for awhile it's not a brand new subject but the capacity just isn't there. china has the capacity they have the technology they have the infrastructure they have the people and replacing all of that is going to be difficult. it's going to take time to accomplish it. you cannot get it accomplished in a year for sure so a big tariff increase would be a big problem for consumers in fall of 2019. i don't think it'll affect much in spring of 2019. >> that stuff is already here. >> intellectual property rights, it's this umbrella phrase we use. from a retailer's point of view, you give some factory who's supplying you some kind of designs, things like that. did you think that stuff is going to be knocked off and go elsewhere? >> always. always i did and i would see physical evidence of it throughout --

>> i guess you're not really retailer in the domestic market there, for the most part >> i'm not i'm personally not for sure because i'm not there anymore. but my former company was not there. but had an online business there through alibaba. but having said that, i think there is clear evidence that that type of thing is going on it's gone on for a long time no one likes it. we can't stand it. but we've dealt with it as effectively as we can. >> all right terry lundgren is our guest host we'll have more from him in a bit. coming up, this morning's biggest movers plus a cover story in "wall street journal" says that the market's latest problem is a hesitation to buy the dips our market experts use that term 'losely. wel debate that once "squawk box" comes right back.

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welcome back to "squawk box," everybody. let's get to this morning's biggest movers dom chu joins us from the newsroom with those. >> good morning. on this monday with those global growth concerns and the trade tensions weighing in, computer chip stocks continuing to feel the pressure mai kr

micron down a percent. we are still down around 20% in the highs we saw earlier this year so that vaneck sector important. and oil prices are showing a bit of weakness. continuing that near term down trend we've seen since opec agreed to cuts 1 10-year note yields showing relative stability right now 2.85% the last there we'll see if that trend down will continue. then also watching what's happening with the utility stocks because this particular sector as measured by the spdr utilities etf up margely now it hit a two-week high in trading last week. this sector now trades at a premium to the overall market. it trades at 17 times expected next year's earnings versus 15 overall for the s&p 500. back to you. >> we don't know anything about rates anymore, dom all bets are off anyway, thanks, dom. dow's been on a wild ride during

the past two months. swinging more than 2,000 points during that time the index is now negative on the year joining us now, brian leavitts and jason trenert. i was looking at some of your comments, brian. there's policy uncertainty which causes some of the volatility. but you think the people at home should not pay quite as much they should watch cnbc, but maybe not pay quite as much tension of the swings. >> i think it depends on your time horizon if you really do have short-term liquidity needs, then you may want to pay attention to it. if you're a long-term investor i think we're in a long-term secular bull market and we're dealing with volatility right now as a result of policy uncertainty. i believe as a lot of the guests earlier today said this certainty will start to

alleviate. hopefully some agreement on some deal and that should lead to some stabilization in the dollar and a better involvement >> i'm getting more bullish because i think trenert is getting bearish. when did you decide that long-term it's going to be really challenging you've been so bullish >> and i continue to be bullish. >> on what >> the next year >> one year. >> i also think the returns over the next ten years will be trailing the last ten years. i think you'll have higher inflation and the u.s. government is going to have to deal with structural issues. >> what are you talking? mid-single digits? that's all we ever get >> you add a couple points for dividends. it seems like a pretty good bet.

i tend to agree with brian here. that i think we're throwing the baby out with the bath water as far as the economy is concerned. the economy by almost every measure is quite strong. i think interest rate sectors are softer than they've been >> in the last ten years if you do the math, it probably looks like we had unbelievable returns. that's from the recession lows if you go back to 1999, our returns have been terrible >> i think you'll be sympathetic to this. in my opinion the policy mix we had which was extremely easy money but tight financial regulation the irony is it was good for financial assets but it wasn't good for the average person or the real economy. now we're in a situation where in my opinion the policy mix is good for economic growth but we'll be less positive for financial assets.

>> you're just saying the easy money has been taken away so we got to do it on our own. >> so the liquidity is going to go into real economy hopefully it will go into capex. it's not going to just lift pe multiples and drive 10-year treasury yields down. >> joe, you make a good point though >> wait. seriously? >> yeah. you did. so everybody's talking about this as the nine-year cycle or ten-year cycle from the march 2009 bottom. but if you really date it from when we got back to the prior high, you're looking around 2012, 2013 so in my mind, perhaps this cycle isn't as elongated as people think i think this cycle is going to go on far longer than people suspect so long as we don't have a significant policy mistake along the way. >> which could mean many bear markets along the way. not the meltdown that ends the

cycle. >> yeah. cyclical bears and bulls happen. so this year we would have a couple of them the cycle will end with an inverted yield curve, a significantly strong dollar valuation. big credit growth. we haven't really seen it. >> one of the things i would say is our muscle memory is flabby in terms of volatility any given year going back to 1926 is 26%. high to low as a percentage low. this year it's been about 13%. so i know it feels bad i think you have to keep a longer term perspective. this is part and parcel of the fed getting out of the way which is -- >> when i got in the workforce

1980, 1981 or whatever 780 on the dow now we're at 25,000. so this is all -- obviously stay long this is the same thing that horrific '70s that's what worries me in the '70s it was abysmal it was just abysmal. if we had a ten-year period like the '70s, you don't want to be part of that but there's no reason to think that >> when you started the fed funds rate was probably close to 20%. >> i know. >> so this is pretty different >> you get three secular bulls in your lifetime enjoy the one in the middle. >> let it happen again but you're talking about 800 to 25,000 it's going to be tough to go from 25,000 to -- what would

that be? but it goes up over time, right? i just can't believe you've gotten bearish >> i'm not bearish come on, joe i have a 9% return over the next ten years. come on. >> okay. all right. thanks when we come back, we have much more from our guest host terry lundgren then at 8:30 eastern time, paul aydor jones. st tuned you're watching "squawk box" here on cnbc

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welcome back, everybody. our zbes host this hour is terry lundgren part of the discussion we've been having off air is how much of a focus there is on the internet retailers if you watch the stock market, they think online retail is the only place you're seeing anything happen. everything is positioned as amazon versus walmart. by the way, walmart is the underdog how does that stack up to the reality? >> there's a lot of closures which needs to happen. we need to shrink the retail footprint. but 90% of the business done today is still in the physical stores that's changing.

consumers shop both. they start their journey with their phone. then they're going into the store. many cases they're buying online and picking up in the store. you did an interview with doug mcmillon talking about that happening with food. food is only 2% of the business done online where apparel is 20%. so now if you can get more and more shopping online and picking up in the store, they're going to buy more -- >> you get crossover when you're there. >> in my own experience, the number 25% it's significant then there's no delivery fee >> right because they pick it up themselves >> so there's all kinds of benefits >> doug mcmillon showed me something on his phone he keeps a list of the top ten retailers going back decades just to remind him you've got to innovate or go out of business. what did you do to motivate

yourself because you made a lot of changes at macy's. >> we made a lot of changings. there used to be a joke in my company. they kept say to me, why do you have to keep changing? we're doing well i said because we have to keep doing well we have to get in front of the consumer don't react to the consumer after the fact get in front of the consumer make decisions, make these changes so you can lead opposed to follow. i think all good retailers have to think like that and lead like that >> terry, it's a pleasure to have here you. thank you. coming up, the big washington stories that could have a huge impact on wall street house majority leader kevin mccarthy will join us in studio next ♪ ♪hold on, i'm comin'

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breaking news on brexit. a big week for theresa may begins with conflicting reports on a key deal vote set for tomorrow the pound already moving on the possibility that that vote may not happen google heads to the hill with the search giant's ceo set to testify in congress this week we've got the house majority leader on to talk regulation, trade, and more. and a hedge fund titan weighs in on the market. paul tudor jones joins us in a couple of minutes with his views on stocks, interest rates, and

america's most just companies. 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. mike santoli is also with us today. andrew is en route to a big interview at 8:30. he's going to be with paul tudor jones, the hedge fund manager. something about just companies or something it's more socially responsible >> yeah. >> yeah. okay see what he has. i think he's also going to talk about debt on bubbles, things like that as well. all right. the futures right now up 28 points they had been down averaging

between 50 and 100 all morning so this is relatively recent we've gone from red across the board to green across the board. dow jones up 28. nasdaq up 21 we said kevin mccarthy was going to be on >> he's here >> i know. and we were down 50. it's been upticking. do you have some really good supply side type -- you know are you going to sell these recent economic policies the house has passed are you going to make it clear this is helping? >> it's obvious it's helping. >> okay. we're going to get to you. causation -- correlation is not causation. we did mention that he'd be on things did go higher but maybe not because of that. we'll see. did you bring your "a" game today if sh. >> whatever you need >> it's monday it's tough >> it is monday. we're in session later

>> that's also correlated. we have watching three big stories this morning one, former nissan chairman carlos ghosn indicted in japan the ousted executive was charged with underreporting income between 2011 and 2015. ghosn was rearrested this morning. he's been held in a jail in tokyo since mid-november and that will continue to be the case for some time to come based on what we're hearing today. two, huawei's cfo scheduled to be back in court this morning. meng wanzhou was arrested december 1st in canada at the request of american authorities who kussed her of misleading

banks. three, emmanuel macron will address his people today the fourth weekend in a row of protests over economic issues that have morphed into anger with macron's government itself. a few stocks on the move this morning nutrisystem agreeing to be bought by tivity health. going to pay just under $39 a share in cash. and about a fifth of a tivity share for each nutrisystem share. 29% gainer this morning. and gilead sciences naming a roche executive as its new ceo of march 1st that takes effect next year. the drug maker's chief pat tent officer will certain as interim officer until the start gate gilead said in july its current ceo would step down the end of the year conflicting reports about

the key of that brexit vote. wilfred frost joins us with more anything else to tell us at the point? >> reporter: the latest development is we have a previously unscheduled statement to parliament at 10:30 a.m. eastern time while we don't have official confirmation tomorrow's big brexit vote has been postponed, that's what everyone is taking this to mean sterling has fallen. why has it fallen? taking it as confirmation that theresa may knew she was going to lose that vote and her brexit deal is dead already her critics have pounced on her the leader of the opposition party jeremy corbyn says the it has taken the desperate step of delaying its own vote at the

eleventh hour. she's also -- going on to say i said a fortnight ago she should go this proves my point two options of where we go from here either she faces a challenge to her leadership from within her party or outside of her party. or she manages to go back to brussels and secure further concessions even though the eu says otherwise and comes back and poses a new deal to parliament to vote on at some point in the near future the pound has hit an 18-month low in the last couple of hours, it suggests the market is skeptical she'll be able to do the latter. >> what concession would she need from brussels to appease this group of critics she's dealing with right now these are people that either don't want to leave the eu or people who want to leave under

tougher terms. >> reporter: absolutely right. and the most likely option that people are talking about that might be enough is to get through parliament is to scrap what's known as the backstop this is the mechanism that would protect the eu from fearing a hard border between the republic of ireland and northern ireland. they're not willing to negotiate on that point. it remains to be seen if she can achieve anything more than superficial given the scale of expectation of her loss on the current deal at the moment we're treading water, stuck in no man's land. until we hear from theresa may at 10:30 a.m. eastern time perhaps she has a statement to suggest she's going to secure something more meaningful. at the moment the -- >> what would make the eu more willing to negotiate

>> reporter: one would have argued that had the deal been defeated in parr limit and then the eu feared a no deal disorderly brexit, they may have decided to negotiate but it's not going to be defeated in parliament if the vote is delayed. so there's no real change from yesterday, today, the week before when this was all they were willing to offer. and just on that note as well, that ecj, the european court of justice ruling this morning may remain a more realistic possibility than previously if this deal doesn't get through. so the tone from brussels all things considered today has been one of if you don't get this deal through, we're more hopeful of a remain outcome than a no deal outcome all those things suggest renegotiation is hard at this point. but if theresa may says she's pulling off the vote, i guess

that is her plan that she will take forward >> all right, wilf politics, man. it's tough everywhere. tough there. tough in france right now. we have -- >> reporter: absolutely. >> we have house -- i guess for awhile -- majority leader kevin mccarthy of california counting the days, i guess >> until january >> those were the good old days, right? >> just means we try harder. that's all >> it is going to be a different house, obviously and i do want to get your thoughts on what you think it's going to be like on -- you know, what the daily routine is going to be focused on at this point because, you know, we've got your party added to its seats in the senate so this is going to be divided dwoft at this point. but the house can do a lot of things in terms of subpoena power. >> yeah. >> is that -- are we looking at just endless bickering

is it going to get worse than what we've seen so far >> i think it could, but we don't know yet it's going to be different with a new congress coming in and it's going to be different than the congress before when nancy used to hold the gavel she still hasn't got enough votes. it takes 218 come january on the floor. so she doesn't want to finish out this year vote on anything because she's afraid but this new democratic member who is are coming in, they're more a progressive socialist than they are with the democratic party if you watch, they don't go to narn si pelosi's office to have a meeting with her they go there to join a protest against her. they will have a smaller majority than we had i think they'll have a bigger challenge on what to pass. but they seem very focused nape didn't win the majority by laying out an agenda so when you talk to them, it is a lot about investigations i just believe america is too big and too great for such a

small agenda you've got to have something more to it but divided dwoft has worked before now, remember, we have a majority in the senate but 60 is the rule in the senate that causes problems and we still have the white house. i think when it comes to targeted infrastructure, we can get something done i just believe that the democrats start off just by investigations it'll slow things down >> what are you calling the new nafta? are you calling it the usm -- we tried to do -- >> that will come around febds that will be interesting >> what's going to happen? >> well, it has to -- we have to vote on it i think from one standpoint, the president will sit down with schumer and pelosi this week we'll see how that meeting goes. but that's more about funding the rest of the year >> the market believes nafta 2.0 will clear no problem. is that the assumption >> i don't think you'll see congress say it's clear. they're going to try to have

influence. they're going to try to move different things that they can but i think at the end of the day it's too important for all of north america when you think about currently what you have, this is an improvement. this is a modernization of it. it shouldn't be as big a hurdle as some will make it >> there's a line of thought that going into the election, the stakes in terms of economic policy from here on out maybe weren't as high. you got tax cuts through what would be the top couple of things that you think you're not going to be able to move forward with if you would have been able to had had you retained the majority in the house? >> you always come back after a major piece of legislation and do a cleanup we would have done tax 2.0, try to move that through we probably would have dealt with health care and finished that in the process. because you had a stronger senate we could woman back with an infrastructure plan to make things solid we've got criminal justice still sitting out there. we've got a lot of things we would have built on. you look at what we did to

combat opioids in the process. there are things to build on going forward. there's still opportunity though. >> so you've got the ceo of google on. >> this is big this is something i've worked on for more than a year if you think of technology, how much it controls our life. but two-thirds of all adults get their news from the internet 90% of all searches go through google and google also owns youtube if your information is on the second page, 90% of people drop off before this get to the second page. if you watch that video after the election, is that bias they're now working -- i praise them what they did in 2010 stepping out of china because china wanted to use the system to monitor but now they're talking about going back in. >> is it your belief that google is a monopoly? >> technology makes it difficult

because you would have had that same question to ibm a number of years ago. it's the you allow companies to move up. it is a question that has to be asked. they are also dealt with differently. is that happening when you watch that video if you watch what happened to california republican party. two weeks before the primary election, it said our ideology was nazism is there bias in the place when you go in and put a search inside google and they give you the query of five options below, if i put one negative option there, our mind will directly go to that one first. it can influence and i think more transparency is very important question is, should they self-police? are they now a content company because how do we deal with you and how do we deal with them if two-thirds of america is getting their news through them and they're not getting any checks and balances, that becomes a concern. >> you think that's why the republicans lost so many seats

in the house >> no. look there's a number of reasons we lost in the house. one was history. two was -- because the party in power, the party that wins the white house historically always lost more than 30 seats. >> i just wondered based on what you said before. >> no. i don't believe that but there are also questions in there where they say a silent donation there are areas. they redistricted pennsylvania so we automatically started losing three seats there in california they changed the election law same day registration but also harvesting of ballots. people say this is a program for democrats just to pick up your ballot we had too many retirements. more than 41 the most we've ever had. >> okay. this rabbit hole, i don't even want to go down. we're not cnn. it's not what we normally talk about, but i guarantee you know what they're talking about today. they're talking about cohen, what happened last week, it's a rorschach test did you see what nadler said

got to impeach this guy. jailtime it's hyperbolic. now what's your view about whether they're hesitant, democrats, to go down the impeachment road because they think the same thing that happened with bill clinton will happen again because now i'm starting to see a change -- >> i thought nadler said something slightly different that they were impeachable offenses but didn't know if they should impeach >> maybe >> let's put it in perspective you go to schiff what did schiff say before any investigation started? he had proof he has no credibility on either side of the aisle when it comes to the house if you hire an attorney to deal with your issues, you assume that attorney is going to follow the legal balance. if this is a campaign finance problem, how are members going to look at themselves if a number of their own problems are a problem. are they going to leave office

i think it's hyperbole of what they're doing, but their base is so ginned up, are they going to be able to control themselves in this process but there's nothing there that it's impeachable it's from my standpoint, if they went down that road, they would lose >> it is a rorschach test. i saw certain people say it's as clear as can be. >> where >> other people say there's nothing there whatsoever >> from every investigation, house or senate, nothing there >> do you think people can see -- they're talking about hansel and gretel crumbs >> to what >> i don't know. do you think it's imminent before christmas >> he's got to finish it off >> all right, so that was our tribute to mainstream media.

>> i think everything builds the case there's nothing there you've had the house, senate say there's nothing there. they want something to be there but there is nothing there >> as far as russia. >> yeah. >> then you have to wonder whether business dealings and campaign finance and all that, whether that becomes a -- >> how did that influence the election hillary clinton was a bad candidate. she got beat we need to move on the country, i think, has a lot of challenges before us and we should work to solving those problems >> good to see you on set today. >> thanks for having me. >> you're very welcome you get back down there though >> i'll be down there today. back in session. >> lucky you when we return, fears starting to creep into language economists are using we'll dig into the messages being tossed around and talk about why others are pushing back and andrew will join us in a few minutes with a special guest andrew, tell us about what you have coming up >> we've got a big interview coming up with paul tudor jones.

of course the legendary investment manager, founder of just capital out with new newsrooms today. we will talk about that. and also his big mart kecall paul tudor jones in just a minute when "squawk" returns ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

welcome back to "squawk box," everyone we've been watching the futures this morning and at this point, it looks like they are implied to open up for the dow at least by about 76 points reversal to earlier in the session. s&p indicated up 8.5 points. and the nasdaq up by 38. some economists are changing their tune singing a more dire song now about the outlook senior economics reporter steve liesman joins us now with a look at how forecasts are changing. >> surprised to see this language over the weekend. the fear factor rising in part to changing fundamentals partly in response to the market selloff itself carl weinberg at hfe, he's the global guy he says an economic downturn threatens every country we monitor. we worry that darker days of

coincident economic downturn lie on the horizon >> jim o sullivan was not as concerned on that very point >> i'm not sure carl was as concerned for the u.s. and the reason was the stronger global growth that helped the u.s. economy in the couple years is expected to fade. market selloff indicates its own reality. check this out one jpmorgan recession indicator looking just at the economic data sees a middling 21% chance of recession but the indicator jumps to 36% when you include market signals like the market selloff itself and the flat yield curve it sounds like a circular -- what would you call it, joe? never mind don't go there by the way, trade tensions are seen having uncertain negative outcomes few see the outcome as positive. now some economists are pushing back the outlook is not nearly as bad as it suggests we believe they reflect excessive growth pessimism

we expect only a moderate slowdown in economic activity in the coming quarters. so what's the fed trying to do it's trying to thread all this uncertainty. on one hand, pretty healthy right now. but is expected to slow. the result is going to be more gradual rate hikes and the metaphor is the one powell used about how you go into a room and it's dark and you grope your way around a little bit >> vicious cycle is that what you were looking for. >> no, i was looking -- >> no. he's not getting it from me. >> he knows the bounds of cable better than i do >> we both have learned. and they've changed. >> the boundaries have changed >> before i go, i know we got paul tudor jones coming up but look at what's happened to the fed funds futures. we ain't got no rate hike in 2019 priced into the market right now. >> at all. >> which is interesting itself >> we went from four to zero.

>> if the fed is a fear factor, the fear factor has been eliminated >> by fear >> by fear itself. you don't have that factor in there anymore. >> think of tweeting when you were 16. >> my lord. >> that would have been a problem. my kids are a lot smarter than i would have been back then. >> okay. when we come back, andrew returns with hedge fund titan paul tudor jones we'll get his thoughts on the markets and the list of thmoe st just companies around when "squawk box" comes back.

i am here with paul tudor jones. when we return, we're going to sit down with the legendary investment manager and talk about a whole number of things the markets, volatility, some new rankings out from just capital. all of that coming up right after this short break your muscles look good, but we should be seeing

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good morning, everyone welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center, we'll get a fresh look at the labor market. the jolts report comes out at 10:00 eastern time

that has shown u.s. job openings at or near record levels a dispute is brewing between the board and a major shareholder at yelp. sqn investors was preparing a letter to the board saying yelp has suffered because of years of missteps yel. issued a statement saying sqn leaked a copy to the media yelp shares right now up by 2.5% "ralph breaks the internet" topped the movie box office this weekend again. it has the number one spot for the third weekend in a row "the grinch" was number two taking in $15.2 million at the box office let's get over to andrew now. he's at the offices of tudor investment he's joined by a special guest andrew >> thank you, joe. we are at the offices of paul tudor jones, legendary investor. of course he's looking at me --

he hates when i say legendary. but the legendary investor is here he founded robin hood, just capital. we have a lot to talk to you about many things. first i want to talk about just capital. the other about the markets and where things are at. i know you have a bold call on what the fed is maybe going to do we'll get to that in just a bit. but first, give me a taste in the past couple weeks the volatility has been enormous what are you doing with your money? >> i think we're going to see a lot of more of what we just saw which is a lot more volatility it's really easy to say i'm bullish, bearish i see a two-sided market i think in the next year we'll be from where we are today ten down and ten up. >> ten down and ten up >> both sides of it. at least 10% either way. maybe 15% either way from where

we are right now. >> we'll put a pin in that for a second and talk about it in a moment i want to talk about how you position yourself for that but i want to talk about just capital this morning you're releasing new rankings for 2018 this is your effort to rank companies based on the way the public perceives these businesses and you have an etf out. you talked about it last time in the spring we should say that etf i think is down about 5% pretty much matching where the s&p was since that began >> that's about right. it's outperformed the s&p and the russell 1000 for seven straight quarters. i think the s&p for seven straight quarters. >> let's talk about, though, this ranking top of the list is microsoft and it's a very tech heavy list at the top this year what was the big surprise and difference when you made the rankings this year >> oh, there weren't that many

changes. we had 33 new companies move into the just 100. it is tech heavy because tech does such a great job on worker pay. that's our number one metric 18% customers. 25% worker pay 15% products what's so interesting about that is 25% for workers and 18% for customers is so different when you think about what the public's telling us. it's about people. right? it's about workers and customers and people yet on wall street, companies always manage for profit

>> at some point you'd want leadership in shareholders >> and if you don't have really well incentivized, smart, engaged workers, you're not going to have a product or customers. none of this is black or white it's all shades of gray. it all works into this wonderful thing called capitalism. because we want to make capitalism work for all. we're trying through the private sector which you know $18 trillion four times the public sector we're trying to change the most important thing in our lives which is our work in a way that's going to give us a society that's more sustainable.

you're going to be 20 years from now doing this from havana unless we change the way that capitalism works right now because we're leaving too many behind right? in the past 40 years, we've had an 80% increase in worker productivity but they've only shared in 10% of that. so we have to modernize. or this great system that we have is not going to continue. >> number three on the list you mentioned earlier is alphabet. alphabet's also come in the news because of data protection issues and other things. how does that then rank in this? >> right sop remember something like data privacy is going to be a component of probably collected over 80 different subsets of our

ranking. i forgot how many hundreds of thousands data stream. it's one small part. they do a great job on pay equity they do a great job on the customer experience and customer satisfaction you can't look at any one thing in isolation >> i mentioned jeff bezos before he comes in, amazon's only number 30. and they're the top retailer in your group what happened there? >> so they'll probably move up again next year. remember our rankings are in may 31 when they went to the minimum wage, that was after that fact and that'll be definitely a real positive for them next year. retail i'm excited about because you've had target, walmart, amazon all increase their basic minimum wages that they're paying across the board. and see, that's what's so great. i think about these rankings these really are a competition for goodness i'll give you a great example. microsoft, why is microsoft number one

they have 100% compliance on pay equity meaning they do a survey and they make sure their women are paid just as much as their men are. it's funny i have a small business. has cnbc ever conducted a small equity survey? 39 out of the top 100 just companies have conducted a pay equity survey. and it's interesting because until i got into this, i never would have thought about it. >> do you do a pay equity here >> i just got finished asking our hr she said we've never actually conducted a formal survey. i said maybe we should she goes, well, we're not like a large corporation that probably has tens of thousands of employees. we've got 380. i think we're covered. but the point is the reason this is so much more important, is these best practices are what everyone whether you're a public

company or private company needs to do so we have a just workplace. >> general motors i'm surprised came in at 14. this is above amazon and facebook and other bigger companies we talk about. >> great job on worker pay and treatment. great customer experience. >> they just laid off 14,000 people >> that again, happened after may 31 that will have an impact in next year's rankings. so these are as of may 31. so the only thing i would say is what we're trying to do here is take the message that's really to me most important which is it's about the human side of what companies do. and we've got to make sure that in businesses as well as when we're investing that we don't look at companies just as these lifeless entities that do nothing but make profits

because we're not going to have a sustainable social structure capitalism will not survive. >> let me ask you two other ones one is tesla in the bottom 10% on this list basically doesn't make the list. >> yeah. look at the room for improvement he has next year right? they don't do a great job on worker pay and treatment if i was on the board of tesla or if i was elon musk, that would really bother me that would really bother me. and so hopefully i'd be focused on that. i'd say i don't want to be there. >> he's trying to avoid the unions right now he's saying -- he's actually saying he does pay his people well because he pays them in stock. he'll tell you people on the floor could potentially make a lot of money given the stock but how much of this is dealing with governance? on "60 minutes" last night he

said he doesn't respect the s.e.c. >> so that particular bucket is about 7% or 8% remember there's so many other issues that go into it it's not just one thing that makes or breaks or disqualifies you. it's the range of things >> how much do you want ceos to look at this list, call you up, say how can i get higher on the list and how do i have to reposition myself then the question is -- >> hold on they're not calling me we poll the american public. >> i know. but i assume they call you and say, okay, i need to understand the metrics with which you're using because i want to figure out how i can do better. but if the focus is on worker pay over making a killer product or delighting the consumer -- >> it's not black or white remember, it's all shades of gray so it's about worker pay and treatment. it's about having a great customer experience. it's about having a socially beneficial product and a

reasonable quality it's am i creating domestic jobs for american workers >> interesting we all want domestic jobs for american workers. we all want higher wages by the way, you care about ma o macroeconomics more than anybody else look at what the fed thinks on wages getting where they're getting. think how the market is reacting to that. you think about the reaction and you think what >> you mean with regard to the fed? >> with regard to the fed but even more broadly, with regard to the way the stock market reacts when wages go higher. you think that companies or shareholders would effectively give you kudos for this. it does the opposite >> it's really interesting right? jeff bezos was probably the only ceo that could come in and say i'm going to have a $15 minimum for every one of my employees. he's probably the only guy

because any personal that was kind of a hired contractor ceo is going to have a board and shareholders he is amazon could do the right thing, the beneficial thing i guess, you know, the thing that i look at -- when i look at the wealth disparity in this country, which is the single biggest threat we have it's a threat to our capitalist way of life. we've got too many americans left behind. and so i look at this almost like climate change. we know climate change is bringing impending doom and disaster, but it's happening incrementally so we don't do anything about it. when i think about worker pay and going to 15 bucks, okay. maybe it's going to cost a little bit in terms of r.o.e but in the long run, if we don't do this, we're going to lose our

whole form of capitalism i think as americans, as shareholders, as any stake holder, we've got to realize there has to be a better balance than how we develop corporate revenue as well as workers , customers, communities it's out of whack and we've got to change it >> okay. i'm going to press pause for a moment we'll take a quick commercial break. when we come back, we'll continue our talk with paul tudor jones on fed, china, trade, so much more. paul tudor jones when we return.

welcome back to "squawk box. we're continue our conversation with paul tudor jones. >> today of celebration for companies doing just things. >> i also want to talk to you about what i think is a

relatively bold call about what the fed may or may not do when it comes to hikes. what do you think is going to happen >> well, central banks always generally speaking manage by looking in the rearview mirror so they're always looking at data that's old. the whole fore guidance thing locks them into these intractable paths that's difficult for them to deviate from and that's probably not the best way to manage an economy but it's -- when you're driving that many different stake holders and you have so much momentum, it's hard for them to change what's different this time is that i started out as a cotton trader so commodities, i was trading. that was the first thing there were no financial futures or certainly no stock index futures. when i first started all the financial futures had just begun my point being, i always look at commodities because they're a

great leading indicator for the economy. right now we have the goldman sachs commodity index down about 15% over the past 40 days. never in the history of the fed have we had that kind of a deflationary impulse eight days before a hike so just within the last two months, we've got this incoming data and we had what i think is the bellwether of the economy telling us -- >> there's a problem here. >> there's potentially a problem, right and real question, is it supply driven or demand driven? it's demand driven, oh, my god it's funny if you go query up goldman sachs commodity index down 15% over the past 40 days and you go look at those times through history, you find it typically is happening during cutting cycles, not hiking cycles. so this is different this time we are hiking with this really

contemporaneous set of very important data if i -- the only other times we've been close to this was '74. i think the gsi was down then december of 2015. so in '74, that was the -- they hiked us right into a recession. and '97, that was one hike before we ended up getting into '98 and all the problems associated with that and then in 2015, we were on pause for years. so the one thing that i would say is there's a high probability that this hike will be -- assuming they hike -- will

be one for a long time >> so you don't think they're going to hike in 2019? >> no. i don't think they're going to hike in 2019 >> really? by the way, the market still expects them to hike >> there's 20 basis points it's not that much priced in. p. i don't think they're going to hike what do you think the chances that they don't hike in a week >> i think they'll probably hike again, there is so much momentum and central bankers by definition are so conservative and for them to change that quickly required this unbelievable change. and look, you know, so on the one hand we got this fact set that we have never seen before hiking into clear deflation. okay, let's say i don't think they're going to hike in 2019. let's look and say what happens if this is the last hike

what happens -- >> are we off to the races >> we got three episodes to look at when i say episodes, long hiking cycles so i will throw out '98 long hiking cycles followed by termination points that gives us '95 and 2000s and 2006 those are the last three modern days of hiking cycles. when they end it, they were generally speaking great times about the stock market within a month or so, the stock market was off the race. so, if you just thought okay this is going to be like last time you want to be thinking about in this turbulent period, buying stocks because history would say '95, we explode and 2000s, we retested the hike

we were back retesting the highs in october in 2006, we went on for another 20% or 25% all the way up to 2007 modern day history would say if thises the enis the end, we gote ready for a rally. >> is your guys buying right now? >> on the other side, all of a sudden we got them hiking into this deflation impulse 2015, we had that horrific january and '74 we got n annihila annihilated. so if i am just looking for historic analogs -- >> which ones are you betting on >> we are going to be both sides. i don't know just yet. >> what are you going to do about it if you are ten up or ten down

>> i am about the hell ten lower for sure that's an absolute lay-up. the difference between now and say december 2015 is the market is deleveraged so much if you think of all the buy backs which we are going to have all of next year, i can't imagine sometimes next year we won't be up 10% or 15% next year because we still have the same buy backs we had this past year. the differences we are walking into next year completely, totally deleveraged. for being honest, marketings a lot of time is hurting capitol . >> again, and again that's why i think we can be both sides we are sitting on a big global credit bubble. i hope i am not under estimating

the potential negative impact popping that bubble. this one you are saying the problems coming from -- you are saying it and china domestically and on the private side you are saying in italy who have a credit bubble in terms of public debt so we are seeing this hike playing out in the areas of the grayest vulnerability and biggest bubbles. >> china trade, how much is it impacting the market >> i would say there is an emotional aspect of it that had a huge impact. no doubt about it. it is having impact domestically in china and popping their credit bubble which is having ramifications. yes, it is a big deal. i would say 50 china and 50 fed >> we'll leave the conversation

there. thank you. >> let's talk about all these great things >> thank you, guys i am going to send it back to you. >> okay, andrew. let's get cramer's comment on the new york stock ex chaechangi cramer is joining us now >> what do you think >> okay, i think, he makes some great points about where the economy really is. it has been -- people have come on over and over again as how well things are doing and that's no longer the case employment is good but there is a lot of other negatives i thought he's going to be dead right about 10 up and 10 down. that's hard. we don't know. that's a bit of a coin flip. i do agree with him about the feds and what they have to do. they're stuck with this hike >> the one thing he says is down 10%, he's going to buy the hell

out of it. do you agree with that in. >> i think we got a bunch of people who are saying we are in bare market. down 10%, we would be down 20% so, yeah, that makes sense, too. >> what about -- did you hear the first part of the interview of millennials don't like capitalism, there must be something wrong with it? >> i had to pull on before, the one thing i would say i is is -- may be a little different. i don't know a lot of billionaires have a lot of ideas of solving income in equality i think sometimes they think about bad of having a billion or how does it work >> i want to see it. >> billionaires. >> all right >> we fix the education system everybody got a shot of it

>> i agree >> all right, jim. we'll see you in just a couple of minutes stay tuned, "squawk box" will be right back

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yielding 2.851% is now yielding 28.56% >> but a little leave on the long end and a little bit of a bid to suggest that the s&p is at the bottom of the range here. >> thanks for your help today. join us back here tomorrow everybody, right now it is time for "squawk on the street. ♪ good monday morning, i am carl quintanilla with david faber and jim cramer futures have managed over the over night lows. that's coming off the worse week for stocks in about six months may is going to talk in 90 minutes. the white house is looking for a chief of staff europe is down, japanese gdp was revised lower in tha