income >> i get it. >> it is 15 derivatives of reinvestment of income >> i think the economy will be better in 2019 i am still a believer. >> we have to go, have a great weekend everybody, make sure you join us next week, "squawk on the street" begins right now good friday morning, welcome to "squawk on the street," i am carl quintanilla with sara eisen at the new york stock exchange jim cramer is at the starbucks roastery where he'll talk to kevin johnson and dara khosrowshahi. the chinese will temporary halt some autotariffs

europe is down nearly a percent. road map begins with the china effect, futures is pulling back on weak economic on china. >> as we mention, jim's interview with kevin johnson and uber's ceo, dara khosrowshahi. a stocks at a rough open we got weak industrial production and retail sales add into investor concerns of global growth slow down and u.s./china trade conflict retail sales did come up above expectations up two-tenths you heard santoli and sar ra talking about the control group. >> you got this pattern, better u.s. data and weaker global data and all of that adds up to two things which are fuelling this market, one, concerns about

global growth and how much worse that's actually getting and could it spill over. two, the money goes back to the u.s. dollar. the dollar on track to have a 1% up week when the rest of the world weakens and we say okay, at least for now that drives money in and between all the brexit mess. especially in france looking pretty weak. looks like protests is starting to have an impact on the economy. >> jim, which of these numbers do we pay the most attention to? >> well, i think we are paying attention to all the wrong numbers. too many people are looking at europe and china and trading over night markets that are calling our market, we should be dealing with the fundamentals of our economy. last night we had great quarter from adobe and costco, people don't want to hear it. they want stocks to go lower it does not make sense to me there is an apple cut of phone sales, hello, they are bad

let's stipulate it and qualcomm is now is suing -- listen, we have to settle i understand there is a level of gloom that i think is far out of whack of what we know which is retail sales are strong and industrial is okay we are not going into a recession. our country is stronger. i am sorry to be optimistic and constructive things are not that bad. no, they're not great but they're not that bad >> um meanwhile these numbers, jim, biggest withdraw on record, u.s. stock funds, and correlating to that is the biggest in flow into market funds again since data began back in '92. that's crazy >> well, you look at something -- this is something jay powell, you are looking at cd rates that are really terrific and you feel beaten

down this year, i can earn 4%. gunpoint a 4% municipal the other day. you will only need to get rich once for haven's sake. there is a lot of alternatives to stocks for the first time the money comes out obviously when there is a seller, a seller can wreck almost any stock that may be the opportunity. if you take a look at procter & gamble, we know that procter is doing very well. if you get 4% growth and you gave it a strong dollar, that stock can come down to 94 on the market, you go t to snap it up you got to snap up coca-cola >> appreciate it >> there are situations you got to buy, you have to buy and there are situations that are not working. >> those in particular, i understand the appeal for you because their defensive plays in a tough market starbucks, i am paying attention on what you are going to talk about today. if the story is better than the

u.s., weaker china, there is no better company to talk to than starbucks, the stock is down 4% in premarket >> well, the stocks had a monster move, kevin johnson, bought a huge amount of stocks after the nestle deal. who knew if he'll be back here, we'll certainly talk to him. one of the things that really changed, we used to expect this market to bounce on faang, faang is not the bounce. what bounced is mcdonald's and proct procter and humana i don't care what you call them, that's where the money is going. there is not enough money to go around for stocks right now. >> yeah, utilities closing at the highest level also since november >> the list of 52 week lows, the russell and micro caps and regional banks and broker

dealers, we saw what happened with transportation yesterday. we saw what happened with retailers. to your point, people are just not trusting right now >> they're pulling out i have been using the word treacherous over and over again. remember the last real public comments we got from jay powell where this alleged walk back i still think, he's under the impression that things are really coming. he's under the impression that things are incredibly strong he has to look at the stock market there is nothing mathat matters with looking at the stock market love the guy but he got to stay focus on what's not working. he may be jammed this morning. if he watches the show and had a little espresso like i am, this is my first one. things may not be that strong. he's been talking about it he's got to repudiate his 2019

forecast he must repudiate it or this market goes down more. >> the fed does come out next week this is not your first espresso, it is like your tenth. >> maybe not >> tuesday and wednesday, fed meeting. >> that's a little hyperbole look at where i am if you don't have an espresso here, not seeing mickey, i am not playing that game. >> understood. so the fed, we are expecting an interest rate hike next wednesday. how dovish of a tone is powell going to strike? should the market embrace that we'll pay attention and watching the signals and see the signs of tighten in the market. could the market be okay with that >> well, look, sara, i think he has to say we have still strong economy because people can get

jobs and wage has to go up we are going to do one more rate hike and we are really done. we got to see what happens this is what he really needs to say. we don't want to hurt the economy anymore than it is right now judging from particular parts of what i see and judging from the possibility of a trade war. he has to incorporate the trade war and a lot of the data we have been seeing the last few weeks including carloadings. he needs to look at what the transports are saying with airlines down. he needs to look at the global growth situation, he has not wanted to do that but he has to do it. it is a tall order he has to own it this economy is a little fragile but they're still, this is a consequence of full employment, housing and construction, how about the regional bank. low losses and the big slow

down we have to take stocks only with the fed is prudence regardless of being rash. they have to be prudent. our moms and our dads told us to be prudent >> all right, jim, a lot more from you coming up when we come back, jim talks to kevin johnson and later he'll be speaking with the ceo of uber, teaming up with starbucks, a new partnership, cnbc's exclusive is coming your way. "squawk on the street" will be right back (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh.

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click, call or visit a store today. okay, here we go welcome back to "squawk on the street." i have got a special guest, i got kevin johnson of the brand now roastery ker kevin, great to see you. >> welcome >> you had a full meeting yesterday. you took down long-term guidance >> let me frame the context of yesterday's conversation we outlined for investors a growth that scales strategy and

agenda that mattis driving resus you look at fiscal year '18, we delivered 10% revenue growth and 17% growth in earnings per share. we reaffirmed fy-19 guidance and indicated fy-20 and 21 would be greater than 13% growth eps. after that, a 10% growth rate for long-term shareholder values that's what we frame for our investo investors. >> you got so many drivers i question the need to be able to do something like that, it is like what jay powell did with the federal reserve, we'll be flying high for the next couple of years why bother putting a gun on your head hike that >> we continue to buy back our stocks aggressively. we believe on the agenda that we outline for our investors yesterday. i met with 60 plus of our large,

long-term shareholders and everyone of them indicated what they look for was a prudent reasonable guidance allowing us to reinvest in the brand and partner wage and do the things we need to do to deliver a predictable and sustainable growth agenda for those investors. >> let me give you the counter >> all right >> you are 3600 short in china, only in 156 cities some cities maybe you have 50 starbuckss in. you are doing delivery i do not understand why you are so down beat in terms of what you could be doing in the out years. it is unfallible to me, kevin. >> we put together the growth at jail acknowledging three things. number one, we are building off of approaching 30,000 stores around the world you know we are currently opening a new store some where in the world every four hours. we are bullished on the long-t

growth we are dealing with a large number last fiscal year we posted $24.7 billion value. we are growing at that ase, significant rate with the guidance we provided second, we acknowledge that we are adapting rapidly to shift in consumer behavior, whether embracing in digital lifestyle or amplifying the needs or the desire for more personalized premium experiences, we are adapting to meet our customers where they are third is the acknowledgment that the competitive landscape is changing with the large and growing addressable market of coffee, coffee is one of the fastest growing beverage categories in the world. many people see that beverage category growing so there is new competitors in the u.s we see a lot of consolidations of those competitors and in china, we are seeing more starbucks. >> i thought of china as msd, mid single digit i look at these numbers now,

what the heck happened it was three quarters you you went from msd to lsd >> we are growing in china in the mid teens. china right now is in a different stage market development than the u.s china is all about store expansion and new unit growth so we can create a first mover advantage and establish the starbucks brand in more cities we are in and more cities we are not in in china, we accelerated our new store build per year to 600. we are now opening a new starbucks star some where in china on average every 15 hours. the growth in china will continue to come from new store unit verses comparables. china is all about establishing the brand through more points of presence >> i want to use a roastery as a metaphor of what's going on in

china. when you open a roastery in shanghai, how many people have gone through it? >> we opened roastery much like this and shanghai a year ago we had more than 1 million occasions in that roastery in fact, we open the milan roastery less than three months ago. just this weekend, we took a video and there was still a line around the building of customers waiting to get in and see the beautiful roastery that we built. >> you are an ambassador for the united states, what is the view, you got italy? regarding not as good of a friend of the u.s. you got china and obviously trade war. what is the feeling and you a business ambassador going around the globe, our country, how do they look at this? >> first, let's talk about the fact that we just enter the

market in italy. we waited 47 years since starbucks was founded to enter the market in italy. we wanted to do it in a way that shows respect for the italian coffee culture we enter that market with humility and thoughtfulness in terms of bringing that romance coffee to life in honor of italian culture. we do business with 78 markets around the world the starbucks' mission and values are grounded in humanity. it is the work that we do to take care of our partners and service our communities that we are apart of as an ambassador of starbucks, my role is to make sure we continue to romance and stay true to those things that built this great brand and it is about humanity >> when i hear things about human the i and respect for people and when i hear about the

notion of globalism, i think wow, whoever came up with that culture could make a great president. now, someone got 30 million shares all those things you just said are alternatives, not to say i am not saying better or worse to our current president, would you make a great president >> first of all, howard, his legacy and the heritage of what he created here at starbucks and his love of starbucks is woven into the fabric of what we are and what we do we are excited for howard as he venture to the next chapter. >> i think it is a yes or no thing, kevin >> i have great respect for howard you know howard has been one of those people that i think has done something very special in this world of what he created in starbucks. i think his decision on what he wants to do next is a personal decision i have great respect and

affinity for howard and i will support him. >> thank you for putting up with me and my nagging questions. fabulously go to the roastery, ker kevin johnson, back to you guys, downtown >> our jim cramer with kevin johnson, we'll be joined by dara khosrowshahi and talk about what this new starbucks/uber delivery partnership means for both companies. looking for our second week down, dow is up 208 for the week and futures suggest that could be wiped out for the opening be bell we'll be back in a minute.

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♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too u.s. bank - the power of possible. decent u.s. retail sales this morning now, let's head to the bond pit with rick santelli in chicago. >> it is a real mix call here. if you look at the november read for industrial production, it is unchanged. the big miss is from up 3.0. sales had great revisions.

here is the good news, capitalization, 78.5 one could say as expected. none the less, it is the best utilization rate going back to 2015 on the day, twos are down two and on the week, up three. fives are down two 30s are unchanged for the week the point of this exercise is we are slipping a little bit but we are holding some important levels look at the one week of two-yr you can see what i am describing the right side is a little higher up based on the left. we had a steepening and at least we are holding and of course a flat level the open ten-yr chart up towards mid august i do this a lot. we are holding it at the right levels but we have to be careful

if we get into the low 280s hole dollar index, huge day, it is popping and also popping against the chinese currency right now that's a chart starting in november, why it is interesting. it turned backup that one spike there, the best level since 2008 the dollar index specifically, you can see the pop on the one side of that one-week chart. let's open it up from november, that high right on that chart, 97.54, we blew it out today. preda pretty darn close to 18 months back to you. >> what a busy morning starbucks and uber is teaming up in this new partnership. jim is going to talk to the ceos of both companies in a few moment some of the data coming out to china over night, and what futures looked to open down, 222

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you are watching cnbc, "squawk on the street," opening bell is a little less than two-minutes on this busy friday morning. china announced retail sales of 8.1. industrial production, weakest since 2002 fixed asset that came in close to expectations. the stimulus that china start to put in place may be starting to

work it feels another painful week for stocks s&p and nasdaq are all higher for the week going into today. what's not higher for the week, small caps, the russell 2000 we get a retail sales report like today and headline numbers does not look that strong. control group, the core of retail sales corrispond with gdp numbers. the worry of the future is what propels the market and the sensitivity around interest rates and trade war. that's why it feels like we are down 200 points and really weakness in some of those key groups like cyclical like

technology and financial >> we chop around 26, 30 and 2700 it is just noise until we get a definitive break out there is a opening bell and the s&p at the cnbc's realtime exchange the big board, operator of hotel and mcs. plenty of sales side to get to today, guys. apple is one of the important ones this one analyst, widely follow in supply chain circle takes iphone numbers down of 20% seize overall iphone unit down 5 to 10 next year. trimming their numbers and targets for next year. >> jim mentioned that earlier.

there is also the continuing saga with qualcomm and slight new development over night remember earlier this week, just to fill you in on this qualcomm, that iphone important sales ba sal sale ban, does not include new products apple filed a motion with the chinese courts it would forced to settle with qualcomm due to that ban and caused manufactures returning to unreasonable charging mode and affecting customers. it would cost millions of dollars a day. here is a statement from the general counsel of qualcomm in responding app apple disregards and violate the court's order, they legally obligated to immediately seize sal sale sal sales. war of words continue. the only reason the new phones of qualcomm are not included

because they have not been released at this time. we'll wait to hear from the court next week potentially. who knows when that's going to happen whether it would be included or apple can get around it with the new software upgrade. >> jim is back with us obviously from the starbucks roastery, jim, three biggest laggers on the s&p today are adobe, starbucks and costco all down about 4%. >> guys, i can make a case for every one of those costco told you not that long ago how the month was. there was 20 cents added it turns out to be something has to be taken out. some people say it is a miss costco and starbucks, they are two stocks that just have a gigantic move here there is a story about j&j right now that's saying they knew something about it the j&j, somebody says something

that's mildly negative and people throw things out. things are fine with adobe carl and sara, people are looking for negatives. if they find negatives, they run with them. downgrade today at cisco, i want people to take a breath they are so afraid and so negative, wait a second, think before you sell. don't try to beat the other sellers out. that's not a way to make money heaven's sake. >> just to clarify, reuter has a story citing documents that they say show that johnson & johnson knew for decades any suggestions j&j knew hid for

safety is false. as for adobe, jim, you did talk about the quarter last night, they raised their revenue guide last year. this is what he told jim on "mad money,". >> creativity has never been important and when you this i of creative cloud to your point, we drove $1.45 billion of analyze record for the year for us when you think of what's happening of digital transformation and trying to engage with our customers, that grew dramatically. >> so jim, we talked about adobe yesterday morning. is it just a matter that they did not raise the revenue guidance enough? >> yeah, i think again we are in a market where the spin could easily been much better than

expected, raising numbers, narayen delivers again, we are in a funk. some tech companies are doing much better than realized. this is a company that owns the cloud and retail they do compete with sales, they are a competitive competitor we are in the down mode. people are going to take every word that shantinu says. fab youlous series of questions. this is one of the situations where she's a cool headed person it is great. when you get this, everybody who's going to say that's great just kind of says, i am not coming out of the fox hole right now. let the stock come down. that's what we are looking at whether it is j&j.

the company knows how good j&j has litigated this time and again where adobe where people just say let the sellers hit it and we'll come back. i predict by wednesday, people who sold adobe will be questioning why they even sold the stocks >> worse performing s&p stock on the week is under armour, looking to close the week down at least 20% it is been down ever since, put out the long-term targets. optimistic on five-year but a lot of it was back loaded and the north america projection were a little disappointing. the talk did not offer much for investors to get excited about especially if you compare the numbers right now that we are getting from nike with earnings out on thursday, what's your take >> i thought that kevin played it right since that he's not going to get any credit right now for doing what brian kornell

says which was this is the greatest time in history you don't get credit for that. it was a little down than what i expected from north america. it impacted the require retail change given how impactful under armour is. i don't want to be a bull here the market is treacherous. why did i sell under armour. people just want to sell the bias is down when i parse with what kevin is saying we are on a multi-year to do better think they that stock can go to 25 a year from now maybe it has to make a pitch stop of 17 where he just so negative at jay powell the headlines of trump helicoptering t helicopt continuing the negativity. every faang and the apple story, how many times and not just to stipulate, oh, yeah they're not selling as many phones

the stock is selling at a price earnings ratio and takes that into account i want to be as negative as people are but i am choosing to be constructive on days like today although i got to tell you, it is obvious today is an ugly day look at under armour >> there are a few calls out there that are bullish web bush, as you know takes tesla to a new perform and targeted at 440. compares them to amazon and apple and that follows with the 418 and jefferys went to abide with december 7th and has had a nice run >> we are in a situationwhere you are looking at mastercards and visas against banks. you are looking at tesla

t what happens with tesla is people are saying give me a growth there you go let's just say it is a little fanciful but it is working >> also, tesla is a big beneficiary as phil lebeau has been joining us from the lower tariffs and some incremental news there that 15% rate, it was way back in june. i guess it is a good thing that they're not remaining it at that crazy high level >> well, i think what happens here is the short is saying looks like the cash flow is there so they have been forced to cover the balance sheet, the balance sheet obviously is not good the balance sheet will be less of an issue. it is one of the few stocks that has a big short phase in it.

the short phase is working against them it is not like apple where everyday somebody cuts number. it is the opposite it is getting very ble-- use the adobe example and suddenly out of nowhere, you get a situation where people just say you know maybe it is not as good as i thought even though it is good you can't change people's minds all the time >> really quick, jim, that cisco downgrade that you mention, they talk about i.t. spending overall at 19 and maybe wobbling given comments from dow and hpe and broadcom suggesting cio thinking you don't bhooelieve that at all >> michael dell is saying the opposite he's saying 2019 is going to be a good year. did that person bother to read

hock tan's call? china is talking about a good year for 2019. it is absolutely true then you can say cisco is having a good run. i am not saying that was an incredibly stupid or horrible downgrade for cisco, i am saying it is a stupid/horrible downgrade. that's a step up >> jim, when we come back, you will talk about the ceos of starbucks and uber of the delivery of this partnership the dow is down at 32 to start this friday. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

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you'll only pay $4.95. fidelity. open an account today. one of the big headlines from starbucks yesterday, this partnership with uber to bring delivery to about a quarter with u.s. based company on stores uber has filed for that ipo. let's get back out to jim with the ceo at uber and starbucks. jim. >> well, this is incredible, i got kevin johnson and dara khosrowsha khosrowshahi dara, many remember you.

a lot of people feel this does not mean anything other than for show when you had miami test, is it not remarkable how many people wanted to get coffee and prophapastry to place being able to get coffee for etcetera under 30 minutes at your desk or at your home was just a home run. when we saw that at the miami high pot, pilot, we saw it is something that we can expand the end to end customer experience is incredible we could not ask for a better partner to learn from and hopefully to grow in >> now, kevin, as someone who owns a couple of restaurants, i am conscious of is you got to choose the guy to make it hot when it gets there you are the number one account in this country. why did you choose this? >> first of all, we learned a

lot as we launched our deliveries in china and partnership with alibaba so we taken a lot of those learnings and shared them with dara and his team at uber eats the thing that makes uber eats the right strategic partner to us announcing partnership with uber eats was the fact that we had a shared view, let's make sure we integrate the technology that seamlessly flow from the order into the store and we applied some of the things we learn in china when we prepare bevers rages, we know how to prepare it at the exact temperature so by the time they hand it to their customers, it will cool down. >> next weethe federal reserve,r

worried of full employment, they want to be sure there are enough workers going around without having wage inflation. both of you single handedly trying to pay your workers more. we should have workers be able to make in this country. >> i think that the fact that the economy now is doing very well for the first time you are seeing earnings go up. and, workers are allowed to make meteor show more money that's a good economic force we see it with our driver partner and our delivery partner. >> will that be reflected and people not want to take shares of ipo because of your gross margins may not be as good as others because you like to make it so we pay your driver more. >> growth is coming from plenty

of places including uber eats of this partnership that we are having with starbucks. >> kevin, when i think of this economy, what it says to me is something that you taught me we are in a digitalize economy which allows personalization and better service your tech background, is it helping you, you used to run juniper, is it helping you or infusing your thinking of what individuals should get of this fabulous roastery or everyday when we go to starbucks. >> i think it is the relationship that i have developed with daniel at alibaba and dara of starbucks delivery in the u.s., in an example of how we can bring technology solutions addressing the fact that digital lifestyle, more and more customers are embracing the digital lifestyle and personalized experiences and more channels to order to get their favorite food and beverage we are doing that. we found ways to use technology to help administrative tasks

that partners of our stores have to perform we allow our partners through that automation to spend more time with customers. both of those things are elevating the customer experience s experience at starbucks. >> technology is more and more infusing itself into the physical world now, into everything that we do. what's amazing is what used to be delight full five or six years ago, it is becoming ordinary you push a button and you can get your food within an hour now, if you don't get it within 35 minutes, what's going on? tech forces us to raise the game but also creates extraordinary opportunities to create new experiences for consumers at home or at a business. >> you represent one of the most growth companies in the world. some people came to grip to why

it is. you have been in other companies, can you put into context of the gloom verses what you see when you look at your numbers everyday >> i think the stock market is reflecting the uncertainty that you see in macroenvironment and the uncertainty and the beta used to be in the outskirts, right? emerging markets, et cetera. but it's in the middle now you think about what's going on in this country or the uk with brexit or france with the protests, et cetera, i think the volatility and the uncertainty coming into the developed markets is creating uncomfortableness within the market but innovation still goes on, digitization continues, growth continues, so i'm hoping that as this uncertainty passes we'll be okay and what kevin and i can do is build a great business and eventually the markets will catch up. >> his balance sheet, because of

some disposals you've made that are still working for you, you've been able to make the gloom work for you i have seen a voracious buyback the likes of which only a few companies have you are using whatever gloom is out there to buy stock because your business is going to get better in 2019. >> certainly, jim, we've committed to return $25 billion of cash to shareholders in the form of dividends and buybacks of this three year fiscal period '18 through '20. we returned roughly $9 billion of capital to shareholders we continue, this fiscal year we use the proceeds from the nestle global coffee alliance, we initiated a $5 billion accelerated share repurchase so we're in the market buying our stock back because we believe in the long term growth agenda for starbucks. >> dara, i want to talk because a lot of us -- uber is in our cell phone, in our life. it's become something -- it's a verb there aren't many verbs that

just got invented but one issue with your company is whether it was run right. you brought in a man by the name of tony west we know tony west as someone who is the -- you can't buy tony west maybe he was the toughest person justice has ever seen. you and him together cleaned up the whole culture? >> we are on our way to cleaning up the culture as a company we're doing the right thing and tony is not only a great general council but he's a culture carrier for the country. i wouldn't pretend you can change cultures overnight. one of -- kevin and i got to know each other and one of my questions for kevin is how do you build this kind of culture that starbucks has built we want to do that with tony, nelson, some of the other folks on the team. it will take time but i can't tell you how happy i am to have phony on the team. >> for you, your culture has been unmitigated now you had an incident in philadelphia, my hometown.

it could have festered talk about crisis. talk about the way you handle it when we look back, it has to be the way you have to handle something that is antithetical to everything you believe in. >> first of all, jim, when i saw the video of the two gentlemen arrested in our store it was heartbreaking but i knew at that moment that as the ceo of the company i'm accountable and we have to show up so getting to philadelphia, being on the ground and talking to everyone that i could talk to and learn from and understand why this happened, how this could happen and take action to ensure that it never happens again we're proud of the actions we've taken. we closed our stores for the afternoon on may 29. we did the first round of training every month we're continuing to drop new training modules to our stores and it has made us a better company it has allowed us to elevate the customer experience in our stores. >> from the point of view of

seeing a lot of ceos address the issue, you got in front of it. that's why we talk about something like this. it could have been something we talked about for a long time when you look at this palace, are you proud to be affiliated with these guys? >> absolutely. and it doesn't take this palace to be proud to be affiliated with starbucks i've been in seattle for a long time starbucks is an iconic company and brand around the world but especially in salt this is just a partnership that i'm really proud of but we have some work ahead of us to create a great, great experience for the consumer and both companies are up for that. >> well, something you mentioned in the prospectus for your ipo, you intend to beat lyft to market >> well, if there's a prospectus out there -- >> do you have to lawyer up like that it's you and me. >> you and me and everyone else. >> well, that's true we're not really off the record.

but a lot of people want to own shares in a company they love. people own shares in tesla but uber, where is your penetration in uber and will where will it be five years from now >> what's amazing is while we're a big company and a significant part of urban transportation, we account for less than 1% of miles driven in the u.s. so actually the penetration was incredible about this company is that when you talk about the transportation market, this is a trillion dollar global marketplace and while we're perceived as a big company, we don't think we're a big company. we have a long way to go and we have many markets penetrating. >> they're telling me i have a few seconds left both of you are emblematic, this is a theme of mine you have empowered individuals talk about it. >> well, listen, we essentially have over three million driver partners who are microentrepreneurs they run their own businesses. they provide terrific service for our customers and they get

to earn money on the platform on their terms. >> you >> we took our shareholders through yesterday. what we're doing to accelerate the velocity of innovation at starbucks and this partnership is a great example of that we had a small virtual team from starbucks and uber that co-created and developed the software that is needed to integrate the uber eating experience into the starbucks in a short period of time. >> i like people who put people back to work carl, i'll send it back to you this is dara khosrowshahi and kevin johnson. these two people put people to work and maybe that's in the end the most important thing a company can do. >> jim, great stuff as always. jim cramer at the starbucks roastery as he said, more with jim from dara and kevin tonight on "mad money," 6:00 p.m. eastern time dow is down 196. financials are barely in the green but that's about it. we're back in a minute

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i'm carl quintinilla with sara eisen and morgan brennan at post 9 of the new york stock exchange out of china, flash pmi out of the eurozone, in the u.s. we have industrial production and retail sales and now it's time for inventories. let's get to rick santelli rick >> october's first month of the fourth quarter inventories coming up on the business side expected up 0.6. perfection, up 0.6 exactly a positive revision last look. it moves from .3 to .5 the real issue here today seems to be revisions. we had negative revisions, industrial production, capacity utilization. very positive revisions, retail sales and as i just noted in business inventories, here's something fascinating. the inversion in the curve was prompted, the catalyst was a five-year note five-year note yield this week as things sit is up the most on the week at five basis points and we see a real stacking up of

twos, threes and fives at the same yield sara, back to you. >> interesting rick, thank you. our road map for the hour will start with global growth fears. stocks today falling on the heels of weak economic data out of china investors are on edge. we'll tell you where to put your money at work. starbucks ceo kevin johnson teaming up with uber and it's ceo dara khosrowshahi. and johnson & johnson shares falling. let's get to the weaker-than-expected data prompted more fears about global growth steve leaiesman joining with us more. >> good morning. the market's concern over the weak chinese data shows not just the rise of the chinese economy but how much the world relies on china for growth the weaker november growth

numbers which spook the markets would be the envy of most developed economies. retail sales dropped to 8.1% compared to 8.68.66% in october industrial production dropped from 5.4% in october here's the share of gdp. 24 for the u.s., 15 for china. but there's the share of growth. china has doubled the share of global growth as the u.s more telling is that the market pretty much ignoring fairly healthy u.s. retail sales numbers. and the reason you have this 0.9% increase in the core numbers and barclay's affirming its view of 2.9% growth. >> oxford economics titles it report hot-hot-hot holiday sales. but the market seems more concerned with chill-chill-chilly chinese economic data carl and sara.

>> i think it's ho-ho-hot. >> well, i didn't know whether it was ho or hot >> not to correct you too much so something that came up with my conversation with the short seller he's shorting the wynn resort. listen to what he said about that >> we've added new and old names and one area i'm scratching my head about is the macau casino guys again. >> who are you shorting? >> the u.s. guys wynn, sands and particularly their hong kong listed asian operations and in our hedge fund we're long the chinese operators. >> he's worried about the permits coming due that the chinese government basically has the authority to renew or not.

it's a good example, steve, when people ask what's the impact on the u.s. of the trade war, china is feeling it but in the u.s., the tariffs are one thing, a little increase of prices but it shows how vulnerable certain companies that have big on china are in this whole fight. >> well i want to make sure that the last thing i want to do is be short a short position so he's been on this chinese short thing for quite a while and what jim is doing, by the way, is underscoring the macro point i made earlier which is how much china is a parlts of the growth story of these companies and the question i have is the extonight which the administration has taken that into account and the kind of point you make which is that there is a knock on negative effect if that growth story becomes a different story for u.s. companies over there. we do things differently instead of making it here and sending it there, we go over

there and we make it we open up a casino over there and we open up a manufacturing plant over there and there will be a knock on effect i assume the separation has put this into the pot and said we stirred it around, it's still better for us to do this but don't think there won't be knock-on effects like the one jim chanos seems to have identified. >> we'll be on the lookout even though they can get a resolution even though the tone feels better this week between the u.s. and china steve, thanks. steve liesman. looking at today's selloff, off the initial lows of the session, let's bring in sam stovall and kirk hartman is chief investment manager at wells fargo asset management so you've been net constructive in the midst of the crazy fall we have. >> net constructive because our belief is we will be looking for an economic slowdown, earnings slowdown but not a recession on

either side. we did reduce our forward 12-month price target. we're looking at 2790 for -- 2975 for the end of 2019 so bringing down the optimism i call myself a bull but with a lower case "b. >> do you immediate to see real improvements for global growth now or can you wait? >> we can wait but this will be a slowdown because the bar has been set so high this time last year expectations for earnings in the u.s. were a gain of 11.5%. today that's a doubling so we're looking at something close to 23%. the street is for about 7.5% earnings growth in 2019 but that's down from 10% at the end of september our belief is we see something between 2% to 5% >> 2% to 5%? >> what's interesting is that going back to 2000, analysts

have been wrong 60% of the time looking at year ahead earnings by 5.5 percentage points so that could imply but not guarantee that maybe we end up with a 2% growth in earnings in 2019. >> kirk, factoring in all of this, the global growth story, the new landscape and outlook, how do earnings look to you next year versus what the market is pricing in >> what's happened is very logical. we're about a 15 pe. if you look at $170 on the s&p 500 next year and you put a multiple on it we could go to a 16 multiple next year so i think to the point i think growth is clearly slowing, but i think the u.s. economy is in good shape. >> sam, in terms of the u.s. economy, small caps, the rull 2000 yesterday and the dow transports closed at fresh 2018 lows, what are they telling us given the fact that they are so exposed to the u.s. economy? >> i think they're telling us they are worried, that investors would rather sell first and ask

questions later but if you look to the earnings growth expectations, while the s&p 500 is expected to show growth of only about 7.5% right now, small caps add 10 percentage points. so there's much more upside potential for midcaps and small caps but investors are playing scared overdoing it in terms of adjusting downward their earnings estimates and going to react afterwards. >> speaking of being scared, earlier in the week it was the bull/bear ratio, today it's these lipper flow numbers out of u.s.-based stock funds and into money market funds does that feel -- i don't want to use the word, but does it feel panicky enough for you to make tactical calls right now? >> well, not at all. i think what's going on again is logical. i think what you want to look at is bond-like stocks so i've talked about this before i like that vht sector, i like health care. i think you want to buy

bond-like stocks that don't have the duration risk so i don't think you want to overdo this. you don't want to go to utilities and reits but you want to look at things domestically with the dividend yields, internationally, when you own these stocks you want to look at china mobile or the telenor in norway so i think for a professional buyer there are great opportunities in this market and you have to take advantage of that. >> what's the poster child the u.s. for the framework >> health care stocks. health care is the new tech so you have to look at the health care sector. you have medical equipment you have pharmacy. you also want to play big data you look at all the lineups like human, that walgreens, cvs and aetna and you see the transformational effects in health care and other industr s industries, you want to look at 5g, verizon, at&t, you want to

look at what's changing in the digital technology space. >> how much of all of this will depend on what the fed says next week markets expecting them to raise interest rates but the tone seems like it will be important. >> i think you're right. the tone is important because it feels in some way like are we at the end of 1994 beginning of 19 1995 back then we had the fed raised seven times in a 13-month period and then the market was up by 20%. bonds were up 18.5% and you had the nice lift. i don't think we'll see something like that this time around but it could still be encouraging because inflation is remaining low. we saw that with the recent cpi numbers. so 2.2% year on year normally fed funds rate trades at about 2.5 percentage points above inflation before we fall into a bear market we're still below inflation right now so technically the fed is being stimulative add one more hike as we think

they'll do next week, we get to neutral, maybe they have two hikes next year but probably in the second half of next year we will still be below the narrowest threshold between inflation and interest rates over the past 60 years. >> and balance sheet rolloff can continue apace without liquidity worries or throwing weird curveballs at the market >> it could probably help the yield curve because the fed in the sense was holding down long rates like a balloon underwater. now with the quantitative tightening they're allowing the balloon to seek its natural level and normally we do see the ten-year yield about a full percentage point above the shorter term rate. >> sticking with d.c., off new congress coming to work january 3. you have what seems to be a crescendo in these investigations around the president right now. how much -- how does that affect markets, especially you see something like an impeachment take place next year >> well, i think the more

uncertainty, the more volatility and the more the markets will be cautious so to my earlier point it's logical that we're at a 15 pe and we were at a 16 pe the market likes certainty and to your point in washington, d.c., the least thing we have is certainty, not to mention the geopolitical risks abroad and you ask the question how does that affect all the trade war issues so a lot to be concerned about going is 019. >> but there's good stuff happening. consumer spending is a good story still. you saw that in retail sales numbers. but everyone saying the end of the tax cuts are still in effect on the family tax credit at the lower income scale so how much can the u.s. consumer carry us in 2019 if things remain strong. >> well, i think they will contribute to our belief we're not falling into recession the number that keeps getting

thrown about is the consumer represents 70% of the economy. normally we found the year-on-year percent change in consumer sentiment has declined by almost 10% prior to each recession since 1960 we're still in positive territory so the consumer is feeling good about their job possibilities, about inflation, about having more paycheck at the end of each month so that would be a supportive effect. >> so you would want to see it come down 10%? >> historically the housing starts have been down an average of 25% before a recession hits consumer confidence down 10% and the yield curve has been negative by 60 basis points and in an inverted state for an average 1061 months so usually what happens is, yeah, we get an early scare but we don't fall into a recession until later.

>> it will be an interesting year, sam, kirk, thanks. talk to you soon. let's send it over to leslie picker for market flash on johnson & johnson. >> routers is reporting that johnson & johnson knew for decades that its raw talc and finished powder sometimes tested positive for small traces of asbestos they failed to alert regulators or the public about the risk, according to the report. j&j sought to limit the fda's plans to limit asbestos in into their products as well as scientific research surrounding talc reuters says it obtained documents the contents of which are being reported and j&j told reporters it stands by its product saying thousands of tests show that talc is safe and any suggestion that j&j hid information is false j j&j's cfo said science proves their product is safe. >> with respect to talc,

appreciate the question. we're going to defend that product which is used by consumers across the global. science is on our side that is indicative the product is safe, not just the scientific conclusions of johnson & johnson lab folks, it's the fda, the national cancer institute. so we'll defend products we believe are safe. >> the story and surrounding controversy appears to be rattling investors the stock down more than 5.7%, continuing declines in early trading today. back over to you. >> interesting story still developing leslie, thank you very much. when we come back, shares of starbucks under pressure the company announced expanding delivery options via uber's. you'ller what kevin johnson had to say about the company's future plus uber's ceo dara

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this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back to "squawk on the street," shares of starbucks down 1.5% after lowering its long-term earnings forecast. the company rolls out new growth

strategies, including a big expansion in china cramer spoke with kevin johnson in the last hour. >> we are growing in china in the mid-teens and we outline that china right now is in a different stage of market development than the u.s china is all about store expansion, new unit growth so that we can create a first mover advantage and establish the starbucks brand in more points of presence in cities we're in and more cities we're not in so in china,for example, we accelerated our new store builds per year to 600 so we are opening a starbucks store somewhere in china on average every 15 hours. >> starbucks announcing a partnership with uber's. cramer talked with dara ka ko

khosrowshahi. >> we account for less than 1% of miles driven in the u.s. so the penetration, what's incredible, is that when you talk about the transportation market, this is a trillion dollar global marketplace and while we're perceived as a big company, we don't think we are we have a long way to go with many markets to penetrate. >> interesting to hear dara talk given what we know about their confidential ipo filing. >> yup as far as starbucks i'm watching the shares, they updated their financial outlook. stock is off the lows. long-term model they're predicting 3% to 4%. just modestly below the targets they provided last year but it's been a winner. it has been a stock that has cliemged back after it started to fall when kevin johnson took over as ceo and has

incrementally shown better results. >> i think the comments from uber and this idea of growth potential is interesting given what we've seen in terms of automakers like gm scaling back their production this idea that maybe this is the last time we saw a traditional boom in auto sales that we're coming off of and this idea that maybe the future of transportation is so much bigger and so much less tapped when you hear comments like that then people are assuming. >> ride sharing. yeah, ride sharing of our autos. >> and other things, too scooters and whatever sells coming our way supersonic flights. >> i just wonderhow many restaurant apps we'll have to have on our phone. uber eats, caviar, seamless, grub hub and these companies are picking partners and going about it their own way like mcdonald's and it seems very fragmented >> we need a cable bundle for restaurant apps. here's 50 of them. >> fat bundle. getting news here out of facebook julia boorstin with that

facebook admitting to another privacy issue saying a bug affecting up to 6.8 million users expose today toes that users had not yet third to third-party developers saying they had access to the photos for 12 days in september facebook saying in a blog post, quote, we're sorry this happened early next week we'll roll out tools for app developers that will allow them to determine which people using their app might be impacted by this bug. we'll work with the developers to delete the photos from impacted users s in the latest in a series of negative headlines around privacy issues as well as fake news for facebook. facebook shares down over 1% morgan, back to you. >> julia, thank you. when we come back, stocks selling off. we're closing in on wiping out this week's gains for the dow, s&p 500 and nasdaq 11 trading days left in the year we'll tell youhe to wreput your money to work. "squawk on the street" will be right back don't go away.

time for our etf spotlight seema mody is looking at the global markets under pressure

after some weak chinese economic data seema? >> that's right. global markets responding negatively to the weak chinese data retail sales are growing at the slowest pace since 2003. and part of this data, the auto market is now on track for its first annual sales decline since 1990 the world index is down about 1% emerging markets will responding to the down side, down 1%. as also in focus, chinese etfs are down 1% on the day for the year, china is currently the worst performing major stock market down due in part to the chinese slowdown but there are bright spots the bovespa up 15%

so there are bright spots in the market sara, back to you. when we come back, jim stewart is with us on a friday we'll get his thoughts on the current market volatility. china suspend ago percentage of additional tariffs on u.s. autos and getting a check on the major averages, dow is down 228. nasdaq almost down a percent s&p down 0.8%. financials were the only seconder in the green. just went red so that means all 11 are down. "squawk on the street" will be right back this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. good morning, everybody, i'm sue herera, here's your cnbc news update at this hour cohen appearing on abc's "good morning america" saying he bought the silence of two women because donald trump was

concerned about how their stories of alleged affairs with him would affect the presidential election. >> you have to remember at what point in time this matter came about. two weeks or so before the election, post-billy bush comments so, yes, he was very concerned about how this would affect the election. >> the french interior minister reopened the strasbourg market after a gunman killed three. the suspected shooter, cherif chekatt was shot to death after a two-day manhunt. and a game of chance decided the fate of a runoff election on thursday the candidate farce local city council seat tied after a recount and so they turned to a roll of the dice to choose the winner the incumbent came out on top, rolling a six to her opponent's

four you are up to date that's the news update i'll send it back downtown to you. >> that's one way to do it sue, thank you welcome back to "squawk on the street." i'm sara eisen with carl quintinilla and morgan brennan at post 9 at the new york stock exchange a down day on wall street, losses accelerating more than % 1% european stocks are lower. for more on trade and the market impact, listen to what former ceo of ford mark fields said yesterday when it comes to tariffs and autos. >> it hurts from a financial and planning standpoint because what businesses like the most and particularly automotive is certainty. because the automotive companies

have put their footprint and the globe together based on trade agreements and when those are in a state of flux when you're wondering where you'll put that product and source the parts, you have to understand what's my assumption of the tariff environment around that that gets back to the business case and can you make money on it that is the real impact is that uncertainty from a planning standpoint. >> he ended up saying he thinks trump will succeed when it comes to china. joining us at post 9, "new york times" pulitzer prize winning columnist jim stewart. he's talking about the suboptimal performance of college endowments and we'll get to that. but first, fields put out a good picture of what the predicament is for ceos in this environment and i'm not sure we have much clarity on where this is going.

>> we're seeing the way it's trickling down through the whole industrial food chain and it's showing up in places that would haven't immediately been apparent when you think of, like, oh, who is an exporter to china. like soybeans are going to get hit but we're seeing it show up throughout the whole industrial complex. i mean, i don't think there's any question it's bad. it's -- nobody is winning in this particular game the only question is how long is it going to go on? and the market reaction, every time china showed some willingness to concede something or trump seems to be softening his line the market goes up so it's very clear where investors are coming down on this particular battle. >> i get the uncertainty argument and i get that if you're the ceo of a company and trying to decide where to build your next factory, et cetera, when you have this uncertainty around tariffs, that makes it harder and maybe you'll hold off on doing that at that point in time but whey feel like doesn't get talked about is how many tariff everyone before these so-called

trade wars have been implemented by other countries around the world and if they're so bad i don't think they would be doing that ch that isn't that something that could play out here as well? >> you can look at this as a continuation of an on going battle to reduce tariffs around the world. there's an overarching trend over the last 50 years that there are tariffs and the u.s. has plenty of tariffs on things like trucks but the trend has been multilateral and bilateral negotiations to lower or eliminate those tariffs and this seems to be moving away from that long term trend with the u.s. saying we'll retaliate by not using a carrot it's the stick approach as opposed to the carrot. i've talked to people being hurt

who still support trump who say we think it will be time to get tough and we think the chinese will blink at some point the chinese will start paying attention to the political calculus and ask if trump will get reelected remember the chinese take a long-term view of things so two more years of the trump administration -- >> everybody says that but the question is can they afford to the market is 30% off its highs so can they afford to take the long-term view >> obviously we don't know for sure china has a middle-class. if the economy goes down they'll feel it but it's not a

democracy. they can't go to the polls and vote these people out. i think they can take more pain because we have a more flexible and responsive political system >> but what about what the state department is clearly warning us about? >> we have to separate clearly from legitimate trade issues on the legitimate trade issues we can make the case to the chinese that it's not a two-way street they benefit, too, from more open economies their consumers benefit. the idea that you judecide arbitrarily that we'll be the market leader in filling the

blank doesn't make sense criminal activity has to be addressed. this benefits everyone to provide fair incentives for people to innovate, create and reap the rewards. >> it will be a tough task why did you look at the ivy like endowments >> data just came in from this research firm and i was astonished that all eight ivy league college endowments underperformed a simple 60/40 mix of stocks and bonds. i remember not that long ago places like notre dame and yale are racking up 20% and 30% annualized returns because they're prestigious and they have access to the best managers lo and behold, we're looking at ten-year returns below what any of us could do with a mindless approach to investing. >> that's an amazing graphic. >> and i find -- they still all are following this very high

cost, very alternative heavy model and they are ahead in the 15 and 20 years so i give them that and they take a very long-term view it's perpetual they have been investing forever. we don't have the luxury give than we have a life span so maybe they still have a case i said let's come back in ten more years and see but the trend line is clearly they have fabulous returns in the early years of the strategy and it's been down, down, down, down and i always question when everybody agrees on something and all the big endowments are following the same strategy, i start to wonder if this strategy overloaded? is there too much cap all? will these returns keep going? at least on the ten-year basis it suggests it's not. >> would stewart capital management be adding to stocks >> at a 10% decline that's when i get very interested.

>> despite all the corners that are sharp in the near term >> we always have those. i mean there's a good article in the "times" that showed if you look a year ago, the market isn't down that much but if you compare earnings, earnings have been fantastic this year the pe number is really down. >> i thought you were going ask if he would run an ivy league endowment. >> i can assure you, it would be a very cheap approach and it would be simple and i wouldn't need an army or the whole harvard management corporation. >> but is it a talent thing? what is the problem? >> one of the problems is that even if you can pick any manager you want, you can get access to any fund how do you choose in this world where there are 8,000 asset manager, maybe even more it's harder than picking stocks,

there's more managers than there are stocks in the s&p 500. they can be illiquid up to a point and that should give them a return advantage over long periods of time. at the moment i feel they have gone into these very complex, very costly, they're paying out a lot in fees, they are propping up a huge investment network it's not flowing back into these institutions >> another good one, jim, thank you. >> sure. >> jim stewart of the "new york times." the "new york post" publishes a story that the pink that -- new york stock exchange used its own staff to make the trading floor look busier than it was it's alleged that members of the regulatory team were ordered to head to the floor by then-president tom farley to make it look more populated and this was captured on snapchat by a former employee. the exchange responds the new york stock exchange is one of the most transparent workplaces

in the world with news outlets broadcasting live from our trading floor all day long, all nyse employees are welcome to visit our trading floor and do so regularly to celebrate momentous events that happen everyday of the week, including our opening and closing bells and large ipos selloff continues here we're close to session los dow is down 266. we spau 3aw 320 a few moments ao "squawk on the street" will continue in a minute (clock ticking) (bell ringing) it's time. time for a new kind of cloud. the ibm cloud. the cloud that proactively protects your business from threats, instead of just reacting to them. that lets you modernize and move

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the last time stocks were this cheap they rallied more than 20% find out if that could happen is time around on tradingnation.cnbc.com more "squawk on the street" is coming up. alpha seems more elusive today.

is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc. welcome back to "squawk on the street." now let's get over to the cme group in chicago and rick santelli with the santelli exchange hey, rick. >> good morning and thank you.

i'd like to welcome my buddy jim bianco we have to start out with retail sales. if you contrast the data out of china with the usa wide divergence there our retail sales were solid and revisions were powerful. china not so much. your thoughts? >> that's a continuation of a trend we've seen that's been talked about all year. the global economy is slowing. china is slowing. >> divergence. >> the u.s. is not that's the divergence. you use and old greenspanism, an ocean of prosperity, can the u.s. stay that the marketplace is starting to question that and starting to worry that we cannot survive in the current growth rate if everybody else is slowing down. >> and investors are wide awake. look at the signs. we see fed funds for next year, you can argue no tightening price. maybe an ease is working in. now let's contrast that with what's going on physically money coming out of stocks and

bonds headed right into the money market numbers like $90 billion in money markets. >> two things. the marketplace has priced in less than one hike for next year the consensus of an economist is two or the three still that has to get resolved by firm that powell where his head is on this investors are seeing the same thing the markets are pricing in not only have they moving money market funds, they're going from growth funds to value funds, long treasury funds to short treasury funds, low volatility funds, low duration funds, they're trying to derisk themselves up and down the line and even getting out of risky stuff like leveraged bank loans. >> you read my mind. the poster child for that dynamic are those loans. do you have anything you'd like to add >> yeah, if you look at high yield and investment grade you don't see the same thing you see outflows but nothing like that.

>> as a matter of fact the securities side has widened but two years ago, three years ago, five years ago, that widening disappears. >> it's a derisking. i want to be in the credit space, i want to rather be in the space that looks like investment grade. >> let's keep this supervisual the notion of what the balance sheet is doing, which securities are running off not get regular placed, then i look at the demand in money markets. is there an implicit steepening built into the psychology of that >> if the fed was on hold, yes but the short end of the curve will be determined next week if powell is hawkish, we're back on the flattening train one more time. >> let's assume that conventional wisdom is not the cornerstone of this fed and stencils aren't their gospel i sense from jay powell that would be the case. if he's discussing the way you and i are, most likely curve

steepening will ensue and he'll get more dodgy with regard to how close we are to neutral. >> i agree if he backs off on the race hikes and less than one comes down, short rates could back off and you could see steepening >> jim bianco, always a pleasure, thank you for joining me today sara, back to you. >> rick, thank you take a look at shares of johnson & johnson. j&j lowered. getting hammered on the worst day since october, 2008. that's falling on the heels of the reuters report that the company new about asbestos in its baby powder. stocks lower on the day. quk t see w0. "sawonhetrt"ill be right back

welcome back to "squawk on the street." i am jackie deangeles. markets selling off, all 11 s sectors were lower at the moment, the real estate just turned positive slightly. consumer staples, health care are the laggards and ones to watch today. among the stocks dragging the health care sector down, universal health services, hca,

and boston scientific. and look at johnson and johnson, on pace for the worst day since 2002 the stock selling off after a reuters report says the company knew for decades raw talc and finished powders sometimes tested positive for small traces of asbestos. >> thanks. big move for that stock. a key theme for the holiday season, physical retailers offering convenience with check out with an employee throughout the racks, without going to a register some will be checking out without the help of a human at all. courtney reagan joins us from sam's club in dallas with more on this story. courtney >> reporter: good morning, morgan we have ten days left until christmas. time running short to check off the list imagine going to a retailer where you don't have to check out at all that could make it easier for you. that's what sam's is hoping. at the sam's club in dallas, it is a store and tech lab.

walmart owned wholesale club used this to test technologies to decide whether to reiterate them scan and go is an option available for shoppers for several years. it is the only way to check out here, the centerpiece of the experience a member host helps a shopper set it up the first time, takes about two minutes, and you're ready to go. shop, scan items as you go when you leave, an associate scans a code on your phone when you leave. >> great member feedback for almost three years now with scan and go it is one of the applications, the rare ones you get where people tell you they love the product and time it saves them, the ratings are high, reuse rates are high >> reporter: shoppers don't scan the products at all, they scan when they enter the store, shop

normally cameras, sensors detect what's in the cart when they leave. standard cognition sells cashierless technology to grocery stores, convenience stores in japan, the uk, the u.s. it uses cameras and sensors to detective purchases and charge the connected account automatically. when it comes to costs, no one is disclosing how much it costs to do these, but they say in the long run over time it will be less expensive to use cashierless technology than traditional forms of checkout. back to you. >> i was going to ask how much it costs to implement the machines the other thing i wonder, how buggy it has been, self check out at the grocery store, sometimes it is more difficult than i would have expected >> reporter: exactly that's going to be a problem with all technology, right what sam's club says is that's why they have this store, it is one location in dallas

it allows them to figure out the bugs, get the feedback from consumers. in some cases maybe it is not as easy as it could be, that's where they're looking to shoppers to help with that we asked how easy is it for someone to accidentally walk out with an item they didn't pay for because it is not detected by sensors and cameras. they say 97% of the time it catches everything in the shopping cart. back over to you guys. >> thanks very much. we continue to monitor the selloff, the indexes are off lows of the session. financials, we were wondering if they would hold the mid morning session and they have not. just about every sector is down, but not by dramatic degrees. >> that's why it will be interesting to see how the day closes because the nasdaq is the only one higher of the big three for the week as a whole. this is a week dominated by olive branches from president trump to china, and china vice versa, loosening restrictions,

lowering auto tariffs back to june levels. we're still heading for the worth quarter since 2011 for u.s. stocks. underperformance of small caps, underperformance of transports what does it mean for the outlook? final hour of trade, see you at the closing bell wilfred is back from england >> what a week he had. >> we get an update on where brexit stands. they're in brussels having another meeting. i don't think europe is caving or bending for her we're back to where we started beginning of the week, she doesn't have a brexit deal and no path forward. >> right she had wine and potato chips, right? >> she celebrate her confidence vote victory the crisps are better in the uk, salt and vinegar is a flavor you don't find here. >> go for french fries >> see you this afternoon. >> fish and chips. when we come back, apple announcing the new campus in the lone star state, and the texas

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good morning, it is 8:00 a.m. at apple headquarters in coopupertino, california, an 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ ♪ good friday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan at post 9 of the new york stock exchange. jon fortt has the morning off. we begin with the markets. we have weak china debt overnight, sending stocks down as retail sales, industrial output come in under expectations for the