re mike santoli thank you. one thing with you, your partner likes bitcoin and things like that do you >> i don't dislike it. the prices you see changed is not the same thing as apple. the opportunity for mischief is infinite on the crypto currency changes. >> thank you so much for being with us. that does it for us today, make sure you join us tomorrow. right now it is "squawk on the street." ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla, david faber and jim cramer at the new york stock exchange. a productive phone call on trade on monday night. google may meets with the e.u., janet yellen is worried we could have another financial crisis. wholesale inflation is a little

warm, up 2.7 futures point to another rally on sign of a possible progress on trade deal. >> global growth and challenges, the ceo and in coming chairman of coca-cola is joining us this morning, he's going to talk trade and economic outlook and the beverage giant switching strategy and mr. pichai makes his capitol debut in the next hour the dow rebounded from a more than 500 points drop u.s. and china begun its talks getting the phone call from mnuchin and lighthizer, the president teases the progress today. quote, "very productive conversation with china, watch for important announcements. they are willing to discuss ip protection, they're going to review the request to lower

tariffs on cars from 40 to 15. >> trust is verified on this i want to hear from lighthizer mnuchin says it, it means nothing. lighthizer is one that wants to teach a lesson contain china it is interesting at halftime. yesterday we talked about apple and apple turns around while we were talking we needed a tweet from the president to say that china is good and we got a tweet from the president. this captures us by surprise that every dip has been bad. every time you by the way dip is horrendous that's not what he's focused on. it does lead to a short squeeze. i regarded suboptimal with

apple. china is going to give up the big stuff, intellectual property i don't think they well. they're big talkers. >> the journal makes the point, the fact that we had a phone call with the cfo of huawei still in custody meaning they are willing to silo it off >> canada and europe comes out against them if the president were wise about these things, easy to build the coalition and something that larry kudlow wants to do that's not really been things i think about when i think of our president. >> no. there is no doubt, the phone call and the separating huawei from the talks is certainly a positive >> yes >> jim, i wonder whether over these next 80 days, what ever we may have left in this time period, whether we are going to get whips on positives or negatives. it becomes unclear, exactly

where the consensus and agreement can come from between these two parties. i say that because we just don't know exactly what the administration is willing to accept we really don't know at this point what the chinese, they seem willing to give but how much >> there is no consensus. >> look there is china -- steve rochin, i think what he do a lot is wrong there is this mnuchin factor let's keep letting boeing se selling planes and caterpillar and lighthizer contingent. >> it is going to be up to trump to make the decision >> all he really cares about is goods and a big number if they give you more buying and take that number down, he'll be

happy. lighthizer is taking a lot more broadly in terms of ip, theft and to your point, navarro does not -- >> vice president pence. >> trump is going to present something he's going to have to say yes or no. >> they have to give america best of franchise without some bogus. it is usually like bigdog.com get together with micron it is crazy. the chinese have to give up that it is really just suggesting the road initiative, what we are not trying to do other than frozen aid. can you imagine them doing that? they don't think they do steel >> although you made the point that if you do see that, they let in american express gets that >> nothing says that may not

happen >> better than qualcomm green light to buy nxpi which the president says that's a total phony. >> i heard that's not really discussing any femeaningful >> we don't have a transcript of that dinner. >> we don't really know. i agree with you >> this is not going to solve things that we have said on our side and xi may have said we'll be happy to work on all of them. i have been told he did not. >> i disagree the notion that chinese lie like hell. i am not going to go that far. that's from sandusky i really think in the end the chinese can't be trusted one bit. i think they can have a phone call and the president can tweet and he gets the stock market up and he probably feels better that's his ratings >> you got the market down and

the mueller sentencing memo on friday why would the chinese be willing to give anything now other than the fact that autosales are down five month in a row. >> the chinese, their economy is down shifting erratically. all we know from the apo-- we a pitiful helpless and not only how nixon describes us and we are trying to go against north korea. i do think what's happening here is the president cares about the stock market so he puts his tweet up and we talk about it. >> although it is possible we'll end up with some sort of deal that's certainly better than where we are right now >> we don't need a deal. we need good faith we need american express to be able to up and micron to stop being urnnder siege they need to do this >> starbucks

>> iphone is the least of the issue. they make them there and assemble them there and sell a lot of them there. >> it was directed by the prc, it is a communist court. the communist never make any bones about it if you look at the chart of china, the supreme court comes under the party. no, i looked at the chart. >> back to apple that other court is going to follow >> but, yes, i think the communist party could just say listen we are not going to enforce that ruling because it is a secure court and we are going to tell the president listen -- the president likes apple. they have a dialogue >> we do have some reflections on the apple news. the injunction appears limited in scope but need to monitor for the impact on consumer demand in china as she says it was weak

last week. some reports out of the global times saying chinese consumer boycotting canada goose. >> that's funny. one of my favorite companies it does a lot of threat to consumers. >> china is an important market for them >> yes, it is. >> do you think it is interesting, they're like what do we do hey anyone is selling stuff here in canada. are they selling anything? what do they got what can we shut down? >> look at this. >> by the way, i think it is still up in premarket. >> i will tell you >> they have to think long and hard of who they can go after. it is a statement, no more codes with the emblem. we'll shot them down what are they banging their jackets? >> canada goose? party should be a little more creative they should say cannabis is out.

>> you don't think americans will start boycotting things that say made in china if it gets really bad. >> do you guys have pets >> every single pet food that you buy got the american flag. bob marley or canadian or china and dog food this is not a kill shelter i am running. he's got a dog >> we all do >> i love my dog >> the chinese, do i look to see if it is made in china >> kind of >> you know dollar general told me that i should tell david and those glasses are every bit -- >> you don't need to they're all just worth a 1.50. the margins on ray ban is unreal >> it is ridiculous versing the dollar tree of sun glasses

>> you seem to describe power beyond all believes of the chinese. >> there are millions of people. >>. >> i think we got to go. >> okay, i will go >> open our eyes >> can you >> don't you have to bring a lot of visine because of the pollution. >> remember toy story, that kid created the toy and put a barbie head on another doll >> it is a weird odd of hybrid makes no sense to those who knows it is capitalism >> i thought when they came into the world, the trade organization, they're going to liberalize they're just real communist.

>> remember that hat you wore? >> which one >> the hat that you wore when you were in davos. the hat that had the mufflers around it. >> my deputy dog hat >> people forgot that. it was a really big deal when nixon went to china and that was really kind of the beginning and we are at the end, if you listen to navarro and read what pence is saying, pence at the apex speech, he's talking about, religious freedom and the belt and shutting down from foreign policy david, we cannot to contain them pence's speeches are vintage 1946 cold war. i am waiting for him to talk about the chinese iron wall. >> once again we have been in a negative place >> all right, just kind of more of a netflix series than a disney movie we are running up here remember in "body guard.

oh, i am spoiling it >> i am only three episodes in >> when we come back, wall street is gearing for ra big rally at the open. dow and s&p is still down for the year today nasdaq is hanging on for the gains as we are on pace of the worse quarter of q-3 of 2011 back in a moment a february to remember... ...starts with a december to remember at the lexus december to remember sales event. lease the 2019 nx 300 for $319 a month for 36 months. experience amazing at your lexus dealer.

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looking for a balance in the premarket here as we had that big upside reversal yesterday some 550 points off of the employeelows prime minister theresa may meeting with european leaders today in the hoping of working that deal. there is no room whatsoever for ren re-negotiations. he was os astonished >> it is a long running soap-opera and all i care about is europe is still not doing well and they seem to be focused

on brexit. >> europe is slowing down. again these are always antidotal. >> you hear about it and i hear about it i have heard this recently and i assume you have as well. >> 25% of their exports. >> that's not good news for china. >> i was going to say china, the export market from europe to china is important >> their number of exports to europe is enormous >> think about it, the yellow jackets and france and germany got to growth because they are physically tight italy is just what i regard of a back in recession. what happens if they stop buying the bonds. where the heck would the interest rates be?

europe is not good i care more about that than i care about brexit. go back and forth, it is a side show they got to expand their economy. it has not worked. it has not worked. i don't get it >> mrthere is may right there she will be doing a whistle stop tour she will see merkel. she already met with the dutch and she will meet with juncker tonight. >> region air is very cheap. i think his head bumps into the ceiling of the plane just when you go over to europe, ru sho you are shocked. you would think they try to support it at this point because of inflation they're just doing nothing >> andy circus, an actor well known for playing in "the

hobbit" series he took time out to parody to teresa may >> we take back control. >> i find it and i will negotiate it we want it we have to do it >> i am not listening. i am not listening >> that freaks me out and even in theresa may outfit freaks me out. >> it is scary it is an odd thing to run. >> i like the one -- i don't know if you saw the battles in

season two >> it is on netflix. in the second "lord of the rings. >> the battles >> you didn't watch it >> i did watch "lord of the rings," at some point doing this, i absolutely watched it. >> that's me sitting back in the couch doing nothing. >> guys, we should point out dell technologies shareholders have approved as expected. one that was significantly improved for dvmt shareholders that's the tracking stock of its holding of vm ware it has been approved remember they got a lot of voting agreements that was not in doubt carl icahn backed off after a brief fight. there is 61% voting in favor what does it mean? well, come in here soon to the new york stock exchange. shares will begin trading on the

new york stock exchange on december 28th. >> really, we'll be able to talk aboutdell as a fully public company once again >> i welcome michael dell to sit with us. vm ware is much too cheap. it is one of my cloud kings. we got an adobe quarter that's going to be monster on thursday. i believe it is going to be a blow out we'll have some tech news that could take the nation architecturally hightech news be higher. >> it turns out nvidia and amd is false tale and almost entirely because of that crypto mania. there is still people coming on air liking crypto. it is cryptic why they like crypto they are crypto thinkers

>> carl icahn picked up $11 billion and they ended up giving some of that back to the shareholders and increase the cash consideration as people remember fairly significantly. most important, that's going to fully reflect what dell is going to look like >> 118 >> okay. >> if you say so >> you are jim cramer. >> i listen to what you have to say. >> i am jim cramer >> hopefully jay powell. jim, you are taking credit for saying jay powell. i am not taking credit jay powell is in a box the data is not so great the fact that ppi was .1 well, what happens when oil is not in assistance? >> by the way, the truck shortage ended >> it has? i thought it is still going on >> that's why wages and pressure were going up at fedex, for example, some say.

>> well, i did the homework. the feds tell people to accolade you got cap ex plans lowest since march and inventories highest in a decade or more. >> i feel bad for jay powell the october 3rd gap, october 3rd or 4th those are two days of economic -- remember he says we need four hikes. who would ever say that after what happened in 2008? what an odd place to do it he involves the media. if i were him, i would say i don't like the janet yellen crisis she had a great record of navarro tech call, she should drift off to the sunset and do a lot of education >> we'll get to what yellen says

specifically of the market she's not alone. powell has been on that. we'll get to cramer's "mad dash" and opening bell and we'll talk more of google on the hill and some verizon of cbs news and downgradedd fziser, back in a moment

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. a look at futures as we count down to the opening bell we'll start with trading at 3.5 minutes. we'll have a significantly higher open. all right, with that said, let's get to our "mad dash," squeeze

it in before we get to opening bell where do you want to go? >> online subscriptions, a lot of company have done and zorra has propounded that. stitch fix, the key metric is the number of active clients active clients did not do as well and the future to say that active clients will be flat. it is game over. that's what people care about. >> carl and i were on the closing bell yesterday >> yeah, i saw you guys. >> the stock reacted positively to earnings. they gave that number and it was -- >> earnings was quite good active users were very disappointing which is how you can see the stock go down that much a lot of people feel cynically that they pimp the market hit the high david, when is it ever at an

absolute high? >> um -- >> snapchat. >> blue apron. >> and blackstone. >> and groupon, that was high. >> if you look at the chinese, something impressive to drill down on. it is not that great >> we are trying to get those chinese ipos they're going to air lift you out of the new york stock eck chan exchange to keep you off of this >> man, they are after canada. >> there were reports of 35 or 40 minutes ago they're going to detain >> what else

micha . >> it could be totally -- >> alexander has a house at halifax. >> oh. >> there is some discussions that the huawei, entertainment cfo helps create a little bit of a cry. >> what will be most interesting that she's brought to court, the government of the u.s. is fourt producing evidence will there be evidence we alleged for years now of the ability to compromise the equipment that it is used for espionage. >> that would be something

mark benioff who's in town suggests he'll buy a book calls "ghost flee. it is the most realistic novel i have seen about the situation. >> look, i think there is the upgrade on nokia today which says nokia can be a winner in the situation for telecom equipment. if everybody kind of switches away from china, i do think that going after canada ace loser canada is a love country worldwide. canada have never done anything wrong. >> well, they invested a lot in africa and latin america >> yeah, they have their head of government who is an internationalist and a globalist. david, he's a globalist. >> who >> troudeau.

>> how about freeland, remember her from the financial times >> she's a distinct globalist. the chinese going after the globalists is a mistake because the europeans are very global. don't mess with canada you mess with canada -- nobody thinks canada is bad who thinks canada is bad you got anybody you know that does not like canada >> everybody likes canada. >> they're not going to like hockey it is about hockey canadians will not be able to play >> at the big board today, the cooper company celebrating its 30th anniversary and at the nasdaq, amdocs amd is going to lead us with

4.5% j jim, who needs to lead >> when i call china stock you know what i feel about lisa suh. how strong she is. she's the winner in every single case in the exception when she goes head to head with nvidia. nvidia is hurt by the crypto craze. >> strong open here as we can see. the nasdaq yesterday was an area of strength even during the significant downturn stocks. it was down, don't get me wrong. it was not down as much and faang performed well facebook was up. >> a lot of people feel the worse is over. >> more cynical comment. did she call the bottom and

apple with her price target cut. some people are saying that. i think the bottom of apple came when josh downtown brown saying the dossy chart is good. >> what kind of chart is that? >> listen, if you have to ask, i can't help you >> it is candle sticks >> i know when david does fundamental work, he completely ignore candle sticks >> now, that's a wedgie. >> that's a different technical -- >> jim, those who were cautious in yesterday's rally argued that you got your old school architecturally, right >> right >> banks and credit, copper, small caps, high short names didn't really follow >> that's got to be second day

>> really get those stocks up. it helps >> what's going on -- when janet yellen saying, the bank stocks are virtually free fall. >> i think she's off the reservation as much as i like her. there is no need to cry wolf she should be crying wolf at the fed that's too tight she should relay her thoughts through the fed where she should be quiet >> yellen was in new york last night and in a discussion with one of the new york times, talked about what she calls a gigantic hole in the regulatory system take a look. >> there was a big to-do list of things that still needed to be worked on. i am not sure we are working on those thing in the way we should and then the remain holes and regulatory push backs.

i do worry that we could have another financial crisis >> she was so darn worry, what was she doing about it you think it just came under powell's watch if she's worry of the non-banks, why didn't she do anything about it i screwed up, i let this happen and now it is jay powell'sne ne. i thought it was ill-advised and there is no place for them she did not take blame for what she's saying is a problem. do you think the bubble just started? >> part of the argument is regulatory push back on the $1.3 trillion we have in leverage loans >> last day she went after wells fargo. she can be constructive.

she's not being constructive she's not offering solutions she's calling out problems and i think she's being unfair and i think she should take some of the blame for what has happened and why she did not look at this >> what has happened what >> non-banks took off under her. >> just a second, we got people walking down the hall. this is sundar pichai. >> suboptimal situation. it is his first appearance after the hill regarding the election meddling a couple of months ago. there will be discussion of

privacy data and expansion of china as you mentioned, jim, political buyers which is a big al gas station especially of the right part of the political spectrum >> i think that's when goog google -- one of the things that we have to be careful for is that when you snub them, they have memories. it is not like okay, listen, this guy is above the law. i think it is going to be a real problem. i don't think it is going to go well i do believe that i happen to like this. this is not necessarily a -- no one is going to say in conclusion, i think you should buy google and i am taking you into a strong buy. that'll not happen no congressperson will take it >> he's looking like the miami dolphin guy. he's reversing field and going back the other way >> malloy had that guy in fantasy, i played him.

it did not matter, i still crush him and now i am in the championship game. >> while we are watching mr. pichai there and on the subject of google, we are hitting verizon. it wrote down oath, that's why we are watching him entering the hearing room it is not impacting verizon's stock. you can see it is up 1%. it is interesting to note. they also give us a little more insight on 10,400 eligible employees who'll separate from the company which we heard about yesterday. they go onto talk about the fact that oath, the combination of yahoo and aol have experienced increase competitive and market presence that resulted lower than expected revenues and earnings and going on as well saying that oath has achieved

lower than expected benefits of the integration of yahoo and aol. they expect the pressure on the business to continue they resulted in a loss of market positioning to their competitors in the digital advertising business google and facebook, certainly are the two names we think of. the jim, the point you just made, they have new projections and therefore based on those new projections for the business, they're taking a right down of about $4.6 billion, that's $4.5 billion after tax to put that in some perspective for you, the verizon deal when announced on the 12th of may of 2015, the aol deal, excuse me, it was worth $4.4 billion. the yahoo deal at close, they took 350 million off for the breach, it was worth $4.53 billion. add those together about $9 billion they taken right to half

>> could you put this in perspective say of snapple in terms of acquisition, maybe the hewlett-packard situation >> maybe aol >> really small. >> aol/time warner, these with company's deal >> obviously there were issues >> yeah, we always wonder about their ability to compete and wonder whether they'll successfully be able to carve out a true market share position >> right >> and clearly they are having a difficult time with it right now. we are losing market positions to their competitors and writing down roughly half the value that was paid in terms of at lea least -- >> that's a non-cash goodwill and impairment charge. >> we do not talk enough about the total collapse of that

revenue. there was a great piece in "vanity fair" about how vice is hurting among others i have seen what happens >> mike is dissolved >> i was up there. they own a floor we don't talk about it enough. this is just a collapse. >> facebook and google and amazon >> it is significant competitors now and given the platform of what they are doing. >> note after note talks about how amazon is coming in and there is not room for anybody and twitter is hanging in there. the media organization that raise billions when advertising and including snap, it did not happen >> they're still spending a lot of money >> yahoo finance >> i would prefer them to raise dividends. that's better to shoef ve it ine

chimney. >> we did get an upgrade on at&t >> a lot of people think the acquisition of the great america's company is pretty smart. do you remember the great american >> i do. >> he's having a great old time of the great american. >> he's on the foreign -- i was not being rude i have the apple watch i have not said for important things david, the apple watch, that's something you need to consider when you talk about apple's revenue stream you should >> this is a really important thing. remember the service revenue stream at 163. becky called saying buffet buffett buffett -

buffett -buffett -- buffett -- qualcomm says it is a huge injunction >> they are. >> the watch is oh, it is my daughter oh, she's coming on the trip with me. that's really good >> you can do that >> apple and pfizer are the only component in the red let's get to bob pisani. >> good morning, happy tuesday everybody. 10-1 advancing of declining stock. kind of boring over night session until early in the morning then we got some reports. take a look at auto stocks china may cut tariffs of some of the cars made in the u.s no confirmation on that. you see bmw and daimler and everything is up at 8:30, the president tweeted productive discussion with china and watch for an announcement. that's the president talking

the usual industrial names are all up 1% to 2% as you can see here they were all 52-week lows again. goldman is 35% off its 52-week high it is about time they bounce pretty modest bounce still at least we are in the green. we are approaching the end of the year already i am seeing headlines of the worst returns in decades by heavens. before the open we were down 1.3% we are just about flat of this big move here. this stays this way at 2018. we only had one down year in a decade 2015, down 0.4%. basically everything else was, 2011 was flat. you average this out the last ten years and essentially we are up 11% a year if you average these ten years out. reversing into the mean is to be

expected that's fine, please spare us the worse returns headline of decades. that's an exaggeration tomorrow, big ipo is coming. this is the ten cents ipo. the biggest platform of china. the talk is 13 to 15, that's $1.1 billion it is going to be trading right here behind us talking to some other people that are involved. this is the third biggest china ipo. this is one of the shopping apps, basically fly on the air, you can see now at $18 and pinduoduo, they're up 5% not a great year for the chinese ipo. we'll talk about that. dow is up 323 points back to you.

>> of course, we got that wholesale inflation number ahead of cpi tomorrow. let's get to rick santelli ats the cme. hey rick >> ppi as you have been saying was warm it was not hot it was not cold. i think it under skoescores as e whine down to the fed windows of 2018 you see a two-day of two-yr there. we have up one and twos and fivers five years have been the one that has had the best buying interest that's kind of the odd man and out of kilter to the downside. tens are unchanged and 30 are two downs on the basis point if y early august, what you really want to pay attention there is ultimately we held where we needed to hold in the low 280s if you zoom back to february, you can see how much work we have done down here.

if ever there was a level i would put my hand on the holding, it would be 280 30 years have to come down a little bit you can see after the data this morning, it had a really nice pot. how nice if you go back to early november, you can see that high there. that high is a 17-month high we talk about barclays spread. yes, it does not look great but it is basing and the spreads are starting to tighten a little bit. you want to pay close attention to that. carl, jim, david, back to you. >> rick, thank you very much >> still to come this morning. the road ahead for coca-cola, sara eisen is in atlanta where she will talk with the ceo later today. >> hey, sara good morning, carl

ji james quincey will be ceo of coca-cola. it is a cnbc's exclusive coming your way in just a few minutes stay with us here on "squawk on the street."

google ceo set to deliver his first-ever testimony to congress on capitol hill ylan mui is on capitol hill. good morning, ylan >> reporter: it was a chaotic initiation for his first time here on capitol hill he was being heckled this is a test for google's leadership they expect him to testify in personal tones to the committee. >> ylan, we're going to work on your audio mix there the hearing is called transparency and accountability,

examining google and filtering practices, house judiciary we'll see what pichai says and how much grilling he gets, in this case, from the house side. >> for all of fang -- it's not faang, because the second a. but i do feel that this is something we have to be very careful of this has impacted the stock. this is not some side show when you start talking about invasion of people's privacy, conversations. i would be aware, it's not going to be good. >> google down about a percent now. dow losing some of the early session high 'rup42s. with the chase ink business unlimited card, i get unlimited 1.5% cash back.

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let's get to jim and stock trading. >> apple has come back down after being up two, and that's significant. i had dinner with james quincy last thursday to celebrate his chairmanship he's terrific. i know the dollar's concern, coca-cola. that stock is a great stock. grub hub, we don't use this. we don't deliver we don't pick up grub hub.

one of his best ideas. the stock has really been crushed. 16.4 million customers they use square, sara fryer introduced us. some stocks have come down so much that they are more attractive than they were. >> jim, tonight? >> yep, tonight a company called masimo, talking about noninvasive surgery and what you need to do i love companies that do not have anything involving health care devices i know you think i'm being cynical. i'm not. my father worked for chinese for years. he we they destroyed his company, he went to work for them. >> taking a look at the dow map.

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good tuesday morning welcome back to "squawk on the street." sara eisen is in atlanta, where she's going to talk to coke ceo and incoming chairman in a few moments. take a look at that. markets up 245 after reversing that 500-point intra-day drop yesterday. this will take you back to levels we last saw on friday, david. >> is that where we're going okay friday feels like a long time. >> i know. >> we're about to look at a live shot of google ceo sundar pichai there he is. yeah he previously declined an invitation, you may recall, to testify before members of a senate panel back in september his no show at that hearing, it was marked by an empty chair,

alongside executives from facebook and twitter, who did appear before that committee this morning, lawmakers are expected to question pichai on how the web search giant handled a data breach and how it plans to handle chinese government censorship demands we'll continue to monitor and will take you there as soon as he begins to speak sara >> david, i'm out here in atlanta. coca-cola's headquarters i'll be speaking exclusively with the ceo and incoming chairman of coke, james conviqu, moments from now the market, volatility, tariffs, state of the global consumer and, of course, the future of the company under his leadership he has already made so many changes since taking over last year it's being reflected in the market with the stock outperforming the last three months how does he keep the momentum going? carl, that will be one of our key questions. >> thank you, sara meantime a bit of a bounce on our hands

continuing yesterday's positive momentum a big warning, though, coming from former fed chief janet yellin telling an audience in new york that she does worry about another financial crisis. >> there was a big to-do list of things that still needed to be worked on. i'm not sure that we're working on those things in the way we should and then there remain holes and then there's regulatory pushback. so i do worry that we could have another financial crisis. >> former fed dallas president joins us richard, always good to get your take thank you for joining us. >> thank you, carl you want my take on what janet said or -- go ahead. >> not the first time she's brought this up. october 25th, she told the ft she was worried about the leverage loan market, talked about systemic risk, deterioration in standards and here she comes again how justified is this concern? >> well, this is really a

byproduct of the tremendous stimulus program that was put together by the central bank, by the federal reserve. i was there. as you know, i descented on qe3. those of us that pushed back a little bit warned we were going to create problems by pushing people into new risk parameters. when you hammer rates down to zero and make clear that you're going to keep it there for a long period of time, the financial entrepreneurs are going to figure out new ways to capture risk and they're being rewarded for it by very low rates. this is no longer the federal reserve in the old-fashioned way dealing with the repostitory institutions of commercial banks. there's a lot of new innovative products i think that's what she's referring to but, remember, we helped create this by virtue of the policies we pursued to stimulate the economy, get it off its back and i don't think

i'm surprised by this. she's making an observational statement. it's imminent. it's one of these byproducts from the policy we pursued and we should have seen it coming. it hasn't come yet the economy is still doing well. the markets are highly volatile because it got so rich and they lost it all in 2017. i don't see anything unusual here. >> right. >> it's good to raise it because we have to be wary and the regulators need to be fully aware. >> adjust all form of adjustable rate mortgages made by nonbank lenders but it was really the securitization and double securitization and reverse securitization that therefore spread the risk. is there something analagous to that going on now or not >> we've seen an enormous amount of leverage being used here because it was an attractive way to do it it's also corporate balance sheets and people embracing

risk so, again, i don't think there's anything new here. i don't think there's been, by the way, anything new since 1792 and the mississippi bubble it's just we've become more modern in the way we do things yeah, i think you're seeing some risk build up here what happens when rates rise you pay a penalty for some of this risk it increases liability at the margin so, again, nothing is surprising here what it does indicate to me, though, is you probably have a cap on how far the fed can go. i don't think they're there yet. she also mentioned in those comments that normally we go to 5% and in order to have some ammunition, in order to shoot that ammunition when the economy turns down that's what i'm worried about. that is that the central banks are no longer running -- they have yet to put enough nuts in the tree when the winter comes interest rate increases, you get

a downturn what do you have to turn to? that's going to be the real issue. that's what i worry about long term. >> right. >> just to end on a happy note here, by the way. >> i get it. a lot of the doves, kashkari and others, say that makes no sense to them. why raise rates so you can lower rates later on >> i've never understood mr. kashkari, never have, never will i don't understand his comments. let's face it, the fed has a job, to create the monetary conditions to enable full employment and maintain employment and to push off either deflation or inflation. well, if the economy eventually will turn, the cycle is long, we're going to break the growth expansion here that's the longest since the civil war in the united states, but at some point, the cycle turns the fed's job is to mitigate that downturn, maintain employment levels to the best of its ability. we don't have enough ammunition right now in our holster to do

so that's the counterargument to what mr. kashkari is saying, mr. kardashian, whatever you call him. excuse me. >> that's okay i don't think he's part of the kardashian family as of yet. richard, how high do you need to go in order for you to be comfortable there is enough ammunition, as you say if, in fact, we do hit, at some point as we expect, a rough patch? >> well, you have two things at work here. one is undoubtedly going to move this next meeting which comes up so soon, december 18th, 19th. i would like to see them get up to three that gives you some room for expansion. we established the principle of using the balance sheet, orthodox monetary tool now there's a limit as to how far you can go and ms. yellen referenced that in her comments the other day. there's political pushback you're reducing the balance

sheet, trying to raise rates sensibly, gradually, as painlessly as possible i would like to see us get to three plus, get the balance sheet down you have those two tools the question is the following. is that sufficient what else can you do those are the orthodoxed tools that have now been established you want to have them. i think the fed is headed in that direction. >> mostly money managers who said that of a reduction in the balance sheet roll-off rate would be a sign that the fed really gets it how likely is that >> reduction of the balance sheet? i'm sorry, i missed the question. >> in the roll-off in the pace of the roll-off. >> right the pace of the roll-off, theoretically is 600 billion a year, 240 billion in mortga mortgage-backed securities, 360 billion in treasuries. mortgage backs are a very difficult thing given the amoritization. the full run rate started in

october and by next october, we should see another 600 billion in reduction the balance sheet is down 4 trillion presently at the same time, the europeans are supposed to stop their monetary accommodation expansion program at the end of this year. so, this is a big shift. you've gone from hyper accommodation, at least, to somewhat withdrawal here in the united states, a stoppage about to occur in europe these are the two big money pools and that shifts the directional sign and it puts pressure -- up ward pressure on interest rates here as the government is expanding, borrowing 300 billion more in the next year. it creates pressure on the upside, particularly in the two to seven-year space. that's what's rolling off the fed's balance sheet as the government issues more and more and more we have to discount them. >> you got to my next question you sort of advanced to it are you concerned about the

rising did he haeficits you poi their impact, of course, in terms of the actual need for issuance, not to mention the roll-off that's occurring, richard. are you concerned longer term about where the deficit seems to be heading >> of course but i've been concerned about deficits for four years doesn't seem to have much impact we are really leveraging the balance sheet. there's a plus to that as you know, the basic formula plus investment and global spending g is being pumped up here. there's an expense to doing so you create higher interest rates. eventually that rolls back into the investment and consumption function right now the economy is doing well i want to point out the nfib, national federation of independent business yes, their survey came off a little bit, it was released this morning. it's still very robust those companies, small, medium-sized companies run by women and men, employ over 50%

of american workers. so that's telling us the economy is still proceeding at pace, maybe coming off a little bit. but it's not as dire as you would assume if you look at the s&p or half the s&p numbers and if you're nervous about the markets. the underlying economy, to date, is still performing rather well. and that's what the fed manages policy to. >> so when nfib today says the net percentage of increased inventories is the highest since ' '04, not a thing to be concerned about? >> of course it's -- it shows we're peaking up if you look at the unemployment data it also shows they're likely to move forward on increasing total compensation, which creates inflationary pressure there's mix in that nfib stuff overall, the bottom line is that it's still fairly robust at the same time, if you look at the conclusion of that data, it says we may well have peaked in

terms of economic expansion. it doesn't mean a recession. it just means the rate of growth slows. meantime, if you're the central bank, you want to get as many nuts in the tree for when the winter comes we're saying it's not as robust as it was, but it's still moving forward, still growing eventually you turn down and you want to be prepared for it. >> richard, thanks as always. >> it's that easy. >> right, it's that simple. >> wow. >> yes we'll see you soon that was great thank you so much. >> thank you, carl bye. sara, let's send it over to you. >> all right, carl good morning again to you. live from atlanta, coke headquarters, where i am joined by james quincey congratulations on that announcement. >> thank you, thank you. >> crazy market volatility, stocks are up today but it has been a wild ride what's your take on the market jilt we're feeling >> i, like everyone else, i'm a

little confused. is it the return to the normal level of volatility or is it a sign of the uncertain moment we're at, as to what is the direction of travel geopolitically and economically going into 2019? you can find any forecast you like out there what it's really a sign of is the degree of uncertainty that everyone has what we have to do as a company is focus on what we can control. we've got a great strategy, game plan we've got to execute it. and we will see our way through what i think will be a very interesting 2019. >> i know that's the message you're here to tell. you also have a pretty good view into consumer spending have conditions deteriorated in the u.s. in the last few months since we spoke >> i think you saw coming out of the summer, it became a little softer as it got into september and so we did see a little decline in september obviously, we talked some price increases at the beginning of the summer so, some of that wasn't entirely

unexpected, given the process of some of the inflationary cost of goods and freight that's happened in the u.s. market. i think some of that was to be expected of course, we'll see how that passes through the system. often you get a reaction in the short term but i think the moment is uncertain, even here in the u.s. >> as you look forward into consumer spending and the u.s. economy, what do you see in 2019 >> again, 2019, i think, is uncertain. you've got lots of forecasts out there, whether it's the u.s., globally, saying there will be growth next year maybe not as much as 2018. a little bit slower, but still growth still growth in u.s. and still growth in the u.s. economy we think consumers will have the money and so we're bullish on our plan. >> all the market volatility, your stock has done very well. it's a defensive play, up 7% in the last three months, overall market down 8% in that environment. you're also outperforming some of the other staples what do you chock that up to

>> we've had a good 2018 people are starting to see our growth story coming to life. we've got five quarters in a row where we've had our top line in the range we're looking for in the long term with good operating leverage turning into profits and turning into u.s. dollar earnings. i think people are starting to see that we're getting traction off the refranchising, settling of our bottlers and as we lean forward into a broader portfolio, we're starting to get the growth of people who want us to start driving. >> how do you keep the momentum growing? wall street is a fan of the total beverage strategy, some of the deals you've done. what are you telling them to keep them excited about all of that >> we're talking about our discipline of building out the portfolio. consumer brands are not created overnight. they tend to take a gestation period of time to come around. we need to have a disciplined approach to building that portfolio. if we stay consumer cent rick

and work to create value for retailers and customers we sell to, we can continue to make this happen into the future. >> you get full control in april. you've been ceo the last year. take i taking over as chairman, what's that going to allow you to do that you haven't been able to? >> i think it's a process of transition as ceo, you run the company. obviously it's a great honor to be nominated by the chair, by the board for april. but in the end, this is about taking the foundation that's been created over 130 years and building the next growth chapter. we've got a great board. obviously, i'll be there as chair. we've got a new lead independent director, our first female lead independent director with the rest of the board and the management team. our focus is on the next chapter of growth. everything that's come before is the foundation, to allow us to build going forward. >> on that end, deal making has been very busy

busiest, i think, 2018, six deals. didn't see that from coke in the last few years part of the wall street bullish thesis -- a number of notes out this morning, reiterating that thesis, is that the pace continues to ramp. is that what's going to happen >> i think pace of deal making is a very lumpy proposition. no one corduroy year is projected into the future. not just is the strategy right but the financials and the opportunity there to invest in the brands we're interested in building out a portfolio. we're excited about the prospects in 2019 and beyond what we're focused on is putting the pieces in place to build out the portfolio. >> don't expect that pace to continue >> no, it's unlikely to continue in 2019. partly we have to absorb the ones we invested in, in 2018 experience would tell you that they just don't come up at that sort of rhythm the whole time. we need to focus on also

bringing them to life as well. >> one of the biggest and flashiest has been costa coffee. when and where will we see costa in the u.s.? >> firstly, we need to close the deal that's the first thing that needs to occur and then we've got ideas on what the expansion should be for costa, remembering that we've taken this on board because we actually see the multiple formats in costa as the way it will fit into the coke system. the way that they have developed the business within someone else's business, combined with that huge strength is being a cold beverage partner, we can be a hot beverage partner as well that will allow us to really offer the retailers and ad customers a much more effective solution for everything. >> it also means you're in the restaurant business, which i know you've gotten a lot of questions about. it's a departure for coca-cola

has it changed the relationship with mcdonald's, your biggest food service customers, your competitor now >> it has some coffee stores we've got a lot of customers out there. some of them have asked questions. our focus as a coffee strategy is not trying to be the big retailer in the world. we're trying to -- take the costa vending machine, for example. hot version of our free style machine. normally you have six or eight valves on a fountain gun this can do over 100 beverages costa is the latest upgrade to cappuccino or barista style coffee it can help to drive a hot and cold solution for many retailer s out there. >> coffee is growing as you look toward more categories and so does cdb it sounds like you're trying to play it cool and cautious. why is that?

there's so much growth that may not be legal fully in this country but it is. the rules are changing. >> yeah, look. we have an approach on all ingredients, including cbd and the way i've expressed it, it needs to be legal. >> it is in canada. >> it needs to be safe and it needs to be consumable it is not yet in canada. one day in 2019, it will be in canada it needs to be safe. consensus science is not out there. for us, as a large consumer company, consumers expect us to be on the safest end of ingredient science consensus science that's robustly behind safety is necessary for us but it also needs to be consumable there are things you can take once in a while, couple of times for a few days but then you should stop. we want our beverages to be consumable every day. >> not there yet >> it's not there yet. >> how much tougher is the macro environment making all of this for you? particularly foreign exchange?

>> foreign exchange is a problem. 75% international company, based in the u.s., but 75% of our business is international. the currency environment had calmed off the back of '17, coming into '18. clearly in the third quarter for us, it went much more negative it was about 8% negative on our own into the third quarter i think, you know, what that's going to look like in 2019, it's very hard to say at this stage i wish i had a crystal ball. we'll have to focus on what we can control. the currency will be an impact to us one way or another at the moment it's standing in the negative column. >> would you join the chorus of those on wall street calling for the fed to stop hiking interest rates so that the dollar slows down >> i think that the fed will follow their mandate, which is to set the rates that make most sense to the u.s. economy. also having inflation take-off isn't positive for consumer business either. it will eat into consumers' purchasing power i don't think it will be one of those things where one can look

at a single variable so i think the fed will make the decision it makes. in the long run, the currency will play itself out for a company like us, it affects us in the short term. >> brexit is a factor here, big source of anxiety in the market. what a mess. how do you think this all plays out? >> i don't have a crystal ball on brexit. i sort of suspect at the moment that it's going to have to go to some sort of thing where they go back and ask the population what they really want when you ask for a choice -- >> you think there will be another referendum >> i don't know whether there will be a referendum i personally think that having a single transferrable vote, it has to be choosing between do you want in or do you want out if you can have a transferrable vote between all those things, you would end up with something

more than 50% of the population is for the problem at the moment is everything -- everyone can find something they don't like about everything that's on the table and what we need to achieve is something where more than 50% of the people coalesce around it and the rest of the population in the minority can live with it i don't know whether that will happen but i think it's more likely than it was three weeks ago. >> is the trade war impacting you at all i know you have a lot of local production in china but what about coke as an american brand? >> trade war isn't really a direct impact on us, as you say, virtually everywhere you go in the world 95% of what's sold in the country is made in the country. so we truly are a local business in that sense. trade wars tend to be an indirect impact. they dampen consumer purchasing power. it feeds through as an impact on us that's how it affects us in the end, we stand for better trade deals. none of them are perfect all of them can be made better.

>> do you think they'll be able to make a deal, u.s. and china, 90 days? >> i don't know. i hope so. >> when you see reports of iphones being smashed in china, for instance, as a source of national pride, doesn't that worry you about the big business you built on the ground there? >> yeah. clearly when these sorts of negotiations or disputes start to get very emotional, they can be picked up by elements and used for other purposes. but i think there are a lot of cool heads in governments around the world trying to focus on making trade better, growing the economy. in the end, they're all in the business of delivering a better quality of life and better economics for their populations. >> finally, this hour, we're watching sundar pichai, google, testify on the hill. you're one of the biggest advertisers in the world do you pay attention to these hearings and the behavior and the scandals around companies like google and facebook when it comes to those advertising decisions?

>> absolutely we're interested not just in what advertising vehicles are affected but what goes with them we provide a lot of ttention. >> are you making any moves on that >> we're constantly evaluating where we should spend our media money and how it affects us in the use of those vehicles. >> thank you very much, weighing in on a number of topics in the news and the company and the transformation you're making, ceo and incoming chairman of coca-cola here in atlanta. send it back to you guys. >> sara eisen. when we come back, as sara mentioned, sundar pichai is live on the hill. we'll take you there as soon as hebegins to speak. session high was 268 we've lost some of that. some of the top-performing names. we're back in a minute place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. rets g let's get back to capitol hill ylan mui has been monitoring the hearing as it's getting under way. good morning again, ylan. >> reporter: good morning, carl. it's been an amicable start so far, a handshake and kind of a bro hug. political rivals, at least at this hearing, starting things off in a friendly manner the appearance of mccarthy was a

bit of a surprise. he had some strong words for google, however, particularly as it relates to its operations in china. it says that the potential is that google could be used to streng strengthen china's suppression and control. there's some tough words for the big tech company meanwhile the chairman of the house judiciary committee is talking about political bias and his concerns that google has, perhaps, more data on individuals than the nsa we are expecting some volatility but at least they started off with a friendly tone. >> ylan, we will -- yeah, there's three -- i wonder on the spectrum of issues that they may face, privacy data being one,

the china expansion, number two, and then this alleged political bias we see alex jones this morning in the hall there. what do you think will get the focus of attention today >> reporter: that's a big question if this hearing ends up centering on political bias, it ends up being a win for google i think that's a signal that this is really more about the public spectacle of the hearing than about potential for legislation going forward. if you hear this hearing start to shift to more substantive policy matters around how google collects its data, what privacy protections it has put in place, i think that's when you have a risk for investors that more legislation could be coming down the pike several proposals that lawmakers on both the left and right have out there. they share some common themes. how much do lawmakers want to push that forward in 2019 in a new congress that is the question this hearing is an opportunity

for them to try to shake that out and see which messages actually stick. >> they say misery loves company. i'm wondering if they are wishing they had gone to d.c. originally where they would not be the soul performing, so to speak. >> you would think that would perhaps be a better outcome. it was an interesting choice they made at the time to skip that hearing. >> ylan, thank you we'll come back to you for more as the hearing gets under way. ylan mui dow up 243 let's go to -- oh, no, we're going to go to the hearing as he gets sworn in. >> let the record show that the witness answered in the affirmative. our only witness today is mr. sundar pichai, chief executive officer of google. written statement will be entered into the record in its entirety we ask that you summarize your testimony in five minutes. to help you stay within that time there's a timing light on

your table and the light switches from green to yellow, you have one minute to conclude your testimony when the light turns red, it signals that your time has expired. mr. pichai, you are very welcome and you may begin. >> ranking member nadler, distinguished members of the committee, thank you for the opportunity to be here today. >> we take you back as he gives his opening statement, we will monitor, of course, for the q & a, which tends to be where a lot of the meat for these hearings comes quick programming note, we'll head to break here be sure to join us tomorrow, we'll be joined by jonathan bush, first interview since the sale of the company he r fanor years, athena health alerts -- wouldn't you like one from the market

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all right. time for our etf spotlight the sector hovering just above bear market levels, 20% from its

most recent 52-week high it hit that, by the way, back in late january s&p bank etf lag in the broader market you can see it there, year to date joining us now, president and chief investment officer, anton schultz. we always bring you on to talk about the banks, of course it can't have been a good year so far are better things to come next year >> well, you know, we've seen a lot of things create a lot of fear in the banking index and the sell-off started in mid september with the people warning on long growth and margin and then, obviously, otherwise some financial funds that occurred in october and we've certainly seen some of that continue. we've seen people liquidate and certainly a lot of fear on inversion of the curve i believe that two to five-year predictor has been accurate 88 times out of the last nine recessions so a little bit of too much

emphasis placed on things like that a lot of short interest in things like ten-year treasuries. and we've seen the treasury really, you know, go out and issue a lot of short-term debt, which has pushed up the yield on the shorter paper. i think there's a lot of fear, much ado about nothing the financials have given up their entire move versus the s&p since the election, since the trump bump and, you know, you look at single digit pes you look at, you know, high single digit earnings projections. return to capital is amazing m & a is happening among the smaller guys. >> oh, sorry. >> i was going to say, highest percentage of financials had a 52-week low since '08, which some wondered if it had a

capitulatory tone. anton, we have to get back to capitol hill as sundar pichai continues his testimony. >> okay. >> thank you. >> doesn't this really mean that google is compiling information about virtually every movement an individual with a smart phone is making every hour of every day? >> mr. chairman, thank you for the question today, for any service we provide our users, we go to great lengths to protect their privacy and we give them transparency choice. android is a powerful platform and provides smart phone for over 2 billion people. as part of that, it depends on the applications users choose to use. if you're using a fitness application, the number of steps you walk, you expect it to send that information it's a choice users make we make it clear and it depends on the use cases. >> so the answer to my question,

my first question is yes, is that correct that the information that i cited is gathered by google? >> if -- for google services, you have a choice of what information is collected and we make it transparent. >> i understand there are users that consumers make use of i use it to keep track of the number of steps i walk i understand that service that one of your competitors provides i understand that purpose. but do you think the average consumer understands that google will collect this volume of detailed information when they click through the terms of service agreements in order to use the android operating system >> it's really important for us, you know, that average users are able to understand it. this is why we do something called privacy checkup. >> do average users read the terms of service and updates that are frequently sent to us >> beyond the terms of service,

we actually offer -- we remind users to do a privacy checkup. we make it very obvious every month -- in fact, in the last 28 days, 160 million users went to their my account settings where they can clearly see what information we have. we actually give -- show it back to them and we give clear toggles by category where they can decide whether that information is collected, stored or, more importantly, if they decide to stop using it, you work hard to make it possible for users to take their data with them. >> let me switch to the issue of section 230 of the communications decency act you heard me say in my opening statement that this provides broad liability protections for you and other technology companies for good faith restrictions that when google things something is obscene, lewd, obsessively violent or

otherwise objectionable. objectionable material by whatever standard applied likely elicits the most engagement from users on your site and that potentially means increased revenue. however it is important for google to make very clear where it draws the line and i don't believe google has done its best to make that clear what i would ask is the following. would google or youtube be willing to make changes in support of a healthier civic dialogue if doing so meant a drop in user engagement metrics? >> absolutely, mr. chairman. we have a long track record of we've always focused on long-term goals to user satisfaction we focus on their knowledge, happiness, success and that's what we work hard to create it is important to us that platforms like youtube are viable over the longrun. it's in our natural incentive to do so. youtube is a place where users,

advertisers and content creators who make their livelihoods use the platform we want to make this work in a sustainable way. >> when it comes to political advertising, as you know, some of your competitors in other advertising media are required by law to offer the same rate, the lowest rate, matter of fact, to all political candidates. so, for example, that's true in television and radio would google -- should competing polit political candidates be charged the same effective ad rates to reach prospective voters >> our advertising products are built without any bias and the rates are comparative set by a process. depending on the key words for which you are bidding for, depending on the demand in the auction, the prices are automatically calculated so the system decides that. >> i understand it's automatically calculated but

could two politically competing candidates see different ad rates and if so, could that be substantial? >> there wouldn't be a difference based on any political reasons unless there are key words that are of particular interest in the market determines it it's a supply/demand equilibrium. it can result in a differential of rates but will vary from time to time. there could be occasions where, yes, there could be difference in rates i haven't looked at the specifics of it. >> the result is different than in other markets like television or radio, where every candidate is entitled to the lowest rate that television station or radio station offers to any political candidate for office >> there could be variations based on the time of the day, the key words you're choosing to

go for, the geographies you're advertising in but it's decided by the system and it's a process we have done for over 20 years. and let me assure you, anything to do with our civic process, we make sure we do so in a nonpartisan way. and it's really important for us. >> thank you the chair recognizes the gentleman from new york, mr. nadler, for five minutes. >> thank you, chair. mr. pichai, according to reports, google found evidence that -- well, let me go to the other one first. google found a bug in its google plus social media platform that could have potentially exposed private data of up to half a million users without the consent of third-party developers google, however, did not disclose this bug until months later after it was revealed in a report in the wall street journal. yesterday as i mentioned, you announced another bug. what legal obligations is the company under to disclose that exposure that do not involve sensitive financial information but still involve private

personal data like users' name, age, e-mail address or phone number >> congressman, we take privacy seriously. the bugs you mentioned are bugs. we found them by either doing an audit or, you know, using our automated testing systems. whenever we find any bugs, we follow -- you know, it gets escalated to our data production office -- >> i'm not criticizing what you do i'm asking what legal obligation is the company under to disclose such data exposures that don't involve financial information but still involve other personal information? >> it depends on the situation we follow the requirements and in that case, in the first case, typically we look at our legal requirements we go above and beyond to make sure we do the right thing for our users. in the first case, there was no misuse and we couldn't --

>> i understand but what legal obligations are there? >> today, right now, if you find a bug and -- >> sundar pichai answering a question from the ranking member democrat from new york we would expect republican-controlled committee would get heavy into allegations of political bias. we'll monitor that during the course of the hearing today as the google executive is on the hill dow is up 228, losing some steam but still obviously more than 200 points higher, amid signs of cooling tensions between u.s. and china as the two nations begin supposedly a new round of negotiations the president tweeting this morning, watch for some important announcements. joining us at post nine today, cnbc contributor eric davidson is chief investment officer.

what do you make of this phone call they had last night >> you're talking about the china/u.s. thing, right? i think there's progress being made on the trade teams understanding each other the huwaei thing has been a big mess and wrinkle in the deal but the trade situation has actually been spiraling downward on average more than upward. we may have some progress. but we don't have a solution. >> when the journal says that they're willing to discuss things like ip protection and make some changes in china 2025, does that seem possible at all >> we're hearing that from our side of the camera they may be hearing something quite different inside china and chinese media. those are the exact areas where we need progress, in ip especially also remember there's a lobby group inside china that makes its wealth from ip

alibabas and the like. there's pressure inside china to change that. but amid all the fanfare about h huwei, and this thing. that's why huawei is so interesting. there's no solution to that in the talks going on now. >> eric, you know, the market at this point, what are your expectations in terms of are we simply going based on assumption of progress and no progress and then progress to china, is that the main theme for some time to come >> certainly trade is at the top of investor worryies. you can add brexit in the last couple of days we will be whipsawed but over time, let's keep in mind that the administration is run by a

deal maker there's very little chance at the end of the day we'll walk away with no deal. further from a tv executive standpoint you don't want to solve it in the first few episodes it's likely it will play out over time but there will be a season finale and some sort of deal. >> so it's "the apprentice"? >> you could say that. >> you kind of seem to be. >> john, can you put it that simply i mean, if it were that easy, you would buy some soy and call it a day. >> absolutely. look, the ups and downs are there. i think we have a lot of personality in the white house at the moment but a solution to this isn't forthcoming as long as they characterize it as goods trade. in fact, this year china will

have a current account deficit, a little one but a deficit against the rest of the world. that's the number economic theory talks about doing something for soy beans or cars or whatever is not going to solve this entire issu but it is very important inside china. inside china what matters most to xi and his inside group is to look tough and not get pushed around so we have to be careful if we really want to get a deal done to keep our mouth shut and communications open, and i'm hoping that's what we're beginning to see here. >> we'll find out. more clarity if they do indeed send a delegation to washington next year as the journal suggests good to see you. >> thank you auto stocks are moving higher, following a report china is moving towards cutting tariffs on u.s. made cars, 40% now. phil lebeau has more details on the potential cut, phil?

>> reporter: david, if the tariffs are cut, it would bring it back down to 15%. that's what it is for china, what they charge all other countries around the world biggest implications are for bmw, mercedes-benz and tesla bmw and mercedes-benz built suvs in the united states, send most of them to china look at the projected sales for 2018 overall, the u.s. will send a little over 200,000 or that's the expectation in terms of vehicles sent to china shares of tesla no doubt are moving higher because china is the number one electric vehicle market in the world. lower tariff should certainly help sales until they get a plant built starting end of next year quickly, look at the auto stocks gm, ford, fiat, chrysler, don't have big exports to china. all stocks move higher as the group moves higher with news back to you. >>ha y tnkou "squawk on the street" coming back after this

stocks, bonds, commodities are negative on the year what do you buy when nothing seems to be working? ndutfi o on tradingnation.cnbc.com more "squawk on the street" coming up.

welcome back to "squawk on the street." stocks are losing steam this morning. 10 of 11 sectors in the s&p are in the green now materials are the outperformers, up 1.5%. check out these names moving to the up side, at least with the material sector. check out what's happening there. alvin moreau, one of the ones to watch. back to you. keeping our eye on the pichai hearing, talking about privacy. >> interesting here, some of the question, and more to come as you point out potentially on how they treat candidates for

office, folks, and whether or not they're biased in some fashion. let's bring in sara at coke's headquarters after her interview with the chairman and ceo. he is not quite yet. coming up, or is he chairman already? is that official >> it is official in april where he takes over. the leadership changes one of the cool things about being at atlanta headquarters, guys, i got a peek in archives where the coca-cola artifacts are. turns out, i don't know if you know this, coke had one product in one size from 1886 to 1955. there's a look at some old school bottles it used to be in. the company now has 4,000 products and growing we're going to dive into the question about whether this is the right strategy for the beverage giant a huge cultural shift from a company that was focused on dar bon ated soft -- carbonated soft

drinks they makeup a large amount of revenues and volumes is it a risk to margins? that's what some analysts are warning. the stock outperformed in the last few months and last year against competitors in the market, but where is the up side coming from next i'm going to show you a peek how they're thinking of capturing the millennial prospect in the next hour. we'll take you back to capitol hill as sundar pichai is testifying "squawk alley" starts in a minute the future of technology investing

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