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good wednesday morning welcome to "squawk alley." i am jon fortt with morgan brennan and andrew ross sorkin carl has the morning off, great to have you with us. stocks rallying this morning ahead of the fed decision on rates with the dow and s&p still on pace for their worst yearly performance since 2008 joining us now at post 9 is ceo john rogers. john, interesting setup to today. everybody pretty much expects a rate hike, but i guess it's some of the commentary around that that's going to have a lot of people's attention what do you think is most important? any adjustments to the fed's expectations around growth, language around future hikes what are you listening for >> i'm listening to their ideas about future rate hikes. i think it's really important they signal that they're not going to continue to raise rates at the pace they have been there's so much extraordinary volatility, there's so much risk out there. people are so fearful, i think

the fed should now signal something that will show that we'll keep rates low and keep the economy chugging along. >> to the extent that the fed is having to react to the trump administration's trade policy and uncertainty that might be created around that, what's the fair way to navigate that when there are other signals in the economy that traditionally would suggest, hey, it's okay to raise rates? >> well, i do think the country has become much, much more productive we have so much great technology out there today. everything we can do on our smartphones, it makes it so much more efficient that higher productivity i think will keep inflation under control which means we can keep interest rates low i do think these tariff problems are temporary and won't last forever. >> we had the dow up 200 points plus right now, but in general the pullback we've seen in the equity markets, do you see it as a painful correction or the beginning of a bear market >> i think it's a painful correction

we had such a nice run now when people get a little fearful, it's an opportunity to pick up some extraordinary bargains in this environment. >> do you think the fed should raise rates today? without the political overlay and cloud of what the president said and the independence of the fed and all of these other factors that seem to be at least people talking about, just the john rogers' view of the world, would you raise them yourself? >> i would not raise them. >> do you think the economy is strong enough? >> i think the economy is strong enough and inflation is under control. >> so, therefore, you would raise them >> i still think things are subtle, things are solid we don't need to disrupt the market there's so much risk aversion out there today. everybody is reading the headlines and watching television, all the latest news from trump i've never seen so much tension since the financial crisis of '08 and '09. >> do you think the fed is raising rates -- the fed if they raise today would be to demonstrate their own independence >> i think that could be part of the problem.

i think they have already been talking about it so long and have expectations about the rate raise that people don't like to get away from something they have already signalled they're planning to do. >> i'm curious your approach to tech for a long time, 30 years you've been doing this with your company. you've had a focus on smaller stocks, staying away from the hype faang has been largely hyped over a period of time. you put out a view that that's partly fanned the flames of some of this perhaps overdoing it that we've seen the market do earlier this year and maybe now some of this downward pressure that we've seen on major indices and lots of stocks what's your approach to tech do you think smaller tech stocks are interesting or largely staying away >> we're largely staying away from those tech stocks where we think there's a risk of rapid an less ens

when you can find those companies with the right products at the right moment, we're willing to play those. >> how do you tell -- what's the work that you do to tell the difference facebook is cheap but that's not one of the ones you're looking at here. i shouldn't say it's cheap, it's cheaper than it was. >> what we do is go out and visit companies, meet with management teams, we go to the conferences, we talk to competitors, we talk to customers. that's what we've always done for these last 36 years. we're always trying to build relationships for the long term and see those businesses that last for the long term. >> you mentioned bargains before what do you see as a bargain more broadly >> i think the housing-related companies are really, really cheap. one of our favorites is masco, 9 or 10 times earning. mohawk is earning 9 or 10 times earnings that's been a perennial favorite of ours. it's gotten extraordinarily cheap with the fears around the housing market. >> we'll talk a lot about facebook a little later, it's half of what it used to be basically. would you ever touch it?

>> it would have to get really, really cheap for us. i think that's not the kind of stock we would buy who knows five to ten years from now how they'll be able to make it. >> how would you characterize this market this year? i'm looking at performance for your funding year to date, it looks like it's down 18% it would seem like the market went against your investment thesis how would you sum it up? >> we've been right in line through november with our indexes appendicitis been slightly outperforming december is a little volatile but we're starting to perk up and come back as the markets start to recover our 10 and 30-year track records are what we're most proud of and we've been right at the top of the charts the last ten years and have a great 30-year track record. >> what do you view as the legacy at least in terms of the impact on not just the stock movement in your investments but the underlying business, the legacy of the tax cut? there's been a lot of talk about what it did do or what it didn't do what's the effect that you've seen >> it's generating a lot of cash

for a lot of american-based businesses we were talking to the ceo, a couple of the leaders of the madison square garden network, one of my favorite stocks i talk about and they were talking about the benefits of the cash flow that's come through the tax reform and allows them to buy back more stock, pay down debt we see that time and time again. if you can pay down debt and buy back stock, it's great for shareholders. >> great insight john, thanks for being with us. >> great to be here. one of today's biggest movers is micron the chip maker missed on revenue and cut its outlook. josh lipton is on the other side of the country back at market one with micron's border how are you? micron not off its lows, it's still in the red and down nearly 30% so far this quarter, largest u.s. maker of memory chips, delivered disappointing guidance q2 revenue will be $5.7 to $6.2

billion. they projected profit of $1.75 per share, plus or minus 10 cents and that also missed forecasts. the micron ceo sees near-term challenges he talked about his cloud customers working through this period of digestion and called out weakening demand at the high end of the smartphone market but tried to sound an upbeat tone on the conference call. take a listen. >> it's related primarily to inventory adjustments as well as some seasonal weak mobile demand, including mobile demand on the high-end smartphones that is impacting some of our near-term visibility as well as the near-term outlook. >> so referring there to just an air pocket but you see the

market reacting. as for the overall chip sector this morning, the smh is basically flat here, not down muc much the sector is already down very hard and now we have this big reset from micron so some investors may be thinking that the worst is behind us now for more on this, tune into "mad money" tonight when our own jim cramer will sit down with the micron ceo and talk a lot more about this story back to you. >> it's going to be a must-watch interview, especially given the fact micron has been embroiled in this u.s./china back and forth as well. josh lipton, thank you. when we return, facebook under pressure again this morning on a report claiming that the social network again misused people's data. and later, chris ailman will joins. u we've got a big show this morning. more "squawk alley" in less than three.

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welcome back facebook responding to a "new york times" article this morning alleging that the social network gave certain companies access to use their data without their permission julia boorstin has the latest on this story this morning. good morning, julia. >> good morning to you, andrew "the new york times" reporting

that facebook gave microsoft, amazon and others access to user data, including e-mail addresses and phone numbers, giving netflix and spotify the ability to read users' private messages without user consent facebook's director of privacy and public policy responding to this "new york times" article saying they're winding down integration partnerships and they know they have work to do to regain people's trusts but also defending facebook, saying facebook's partners don't get to ignore people's privacy settings and it's wrong to suggest that they do. over the years we've partnered with other companies so people can use facebook on devices and platforms that we don't support ourselves. unlike a game, streaming music service, or other third-party app, which offers experience that are independent of facebook, these partners can only offer specific facebook features and are unable to use information for independent purposes they say it was never that popular so we shut the feature

down in 2015 at no time did we access people's private messages on facebook or ask for the ability to do so spotify saying it cannot read users' private messages. facebook messages. there's no evidence that spotify ever accessed these facebook messages amazon responding that it uses information only in accordance with its privacy policy. microsoft saying in its engagement with facebook, it respected user preferences of course this is just the latest report, sowing concern about facebook's privacy protections. back over to you >> thank you, julia. joining us right now to continue this conversation at post 9, former huffington post ceo eric hippo. also former apple chief evangelicalist, guy kawasaki good morning to you. eric, you're sitting right across from us here. you hear the news, you read the headlines, you read the reaction

from facebook. who do you believe >> i'm not sure. the verdict is out that facebook is not to be trusted with your data the counter parties who said they had access -- some of them were surprised that they had access, saying that they really never used it, at first you have to believe them until it's proven that they actually used the data for something else. >> but is the issue they didn't use it or they gave them access to, meaning they could have used it and god bless them for not using it if they didn't. >> sure, they gave them access to it thinking the data would be used in ways that would then come back to facebook and benefit facebook, i'm assuming again, facebook has proven time and time again, particularly this year, that they just cannot be trusted with your data. they'll sell it, they'll lend it to people, people will do things with it. you don't know what it is. >> guy, if eric is right, if facebook can't be trusted with your data, what's the

repercussion on the business >> the bigger picture is you should assume your data for what it's forth is out there and you shouldn't really, quote unquote, trust anyone basically you have made an agreement. you're using a, quote, free service, and nothing in life is free so if you're using a free service, it's going to be ad based. if it's ad based, they're going to mine your data. one choice you have is not to use free services. that's reality >> is that a fair trade, though? meaning is it a fair trade to use the free service for the amount of data, if you don't know the data is being used the way that it apparently has been? >> therein lies the rub, right at least you should make a conscious decision, yes, i'm using something free so they're going to use my data and then you can make a decision. i think if nothing else, this controversy is bringing that to light. i don't think there's going to be a world where facebook is

going to fix everything, all these social media services are going to fix everything so you can truly be confident that nothing is leaking, nothing is out. that day is not going to happen. >> eric, one of the things that i think is getting overlooked in all of this is this idea whether it's this report or some of the other ones we've seen, about this idea of almost preferential treatment in terms of the access to data that some of the other big tech companies seem to be getting or seem to have gotten from facebook. is it -- how should we think about that too because it almost seems like an opportunity where the bigger tech companies have been able to get bigger >> i think it's very concerning. and if in fact data is the new oil, as people have been saying, then you might be seeing a new oil cartel of big tech companies that exchange massive amounts of data among themselves, excluding all the newer companies, the small startups that don't have access and, therefore, a.i. and

machine learning and predictive computing can only be done with massive amounts of data. that leaves all the small companies out of it. i think that that's something to be concerned about. >> guy, here's the problem as i see it facebook for years, since its founding, pretty much put forth sharing and open information as being this global benefit. it was good. if people shared more, it was going to be great. if more data was out there, if you could share things with your friends and gave other companies information about who your friends were and authorized that through facebook, it would be good they didn't consider the downside that's part of the issue with this russian meddling. it's the issue with this now they're trying to say we've changed. and yet i don't understand exactly the mechanism through which yahoo! microsoft, blackberry and others got access to this data they say they didn't use it but are they sure some employee didn't tap into that and run off

with data? i don't know exactly how this gets handled, guy. does that have to become a lot more explicit? >> well, listen, there's no downside in being more explicit, more open and transparent. at least people can make the intelligence decision. having said that, i love the quote of eric, that's going to go kind of viral that this is the new big oil, there's a cartel there's the opec of data but man, from what i know, you know, people like google and facebook and apple hate each other. they're not sitting around there price fixing stuff so i think you don't need to worry that much. but basically it's just greater awareness that your data is out there. if you don't want to participate, fine. but if you do participate, know that there are risks and then make an intelligent decision don't believe everything you read in fact believe nothing you read. >> here's my question for you, eric when you get off the set, just hypothetical, mark zuckerberg

calls you on the phone and says i just watched you talk about us as an oil company and part of a cartel i need your advice i'm not going to fire myself, i'm not going to fire sheryl sandberg, what do i do what do you actually tell him to do >> if anybody tries to change their privacy settings on facebook today, i defy them to be able to do this in a way that's reasonable and within a reasonable period of time. so the first thing to do is make your privacy settings really clear at the top of the page and make it really easy for me to change, and i think that will go a long way towards giving people some form of comfort that in fact they do care about your data. >> eric hippeau the ring leader -- >> ask me that question. >> guy, you had an answer? what would you tell them >> i would say mark, add a paid version of facebook where you absolutely promise it's a subscription-based model and we will do nothing with your data. >> yeah. >> but it doesn't work is my problem with that because if my wife has different privacy

settings than i do, they all know where i live because they know where she lives and they know we're friends, they know people in common so individual privacy settings aren't the answer. they have to come up with something different. it's tricky. >> a u.s. gdpr. >> thanks, guys, appreciate it. the second largest ipo in history, softbank's mobile unit having a rough debut abroad falling during its first day of trading. here's the story from tokyo. >> reporter: this is japan's biggest ipo with $23 billion raised it was right up there with the all-time biggest ipo, aollialib back in 2014 retail investors, those first-time mom and pop buyers. but negative headlines in the lead-up essentially crashed the party. earlier this month a software

glitch left 40 million subscribers without any access to mobile voice and data for four hours, angering users and then there was the issue of huawei's cfo being arrested over in canada. the japanese government came out after that saying they would no longer be using huawei equipment and encouraged private companies to do the same that has left softbank in a tough position because they're the only carrier here in japan that uses huawei equipment softbank has said they would consider out the 4g equipment for those from the european counterparts but that's likely to cost a lot more at a time when growth is already slowing for softbank the one thing that has made this stock attractive is an 85% dividend payout, a 5% yield for shareholders softbank executives have said they are confident they can deliver on that, but given the growth prospects here domestically and also the performance of the stock on its

first day, there will certain low be a lot of concerns that they can sustain that. back to you. >> all right, thank you. coming up, shares of fedex sinking sharply this morning, on pace for its worst month in 40 years. a deep dive into why the company says a global trade slowdown is to blame but first, take a look at the best performing stocks in the dow so far in today's session. caterpillar, ibm, dow due pauup. a lot more straight ahead.

welcome back to "squawk alley. shares of fedex plunging this morning, down 10% despite an earnings beat on the top and bottom lines after the company lowered its guidance for fiscal 2019 it's the worst day in ten years and the worst month now in 40 years. on the call ceo and chairman fred smith citing a slowdown in

global growth fiparticularly in europe and china. >> most of the issues that we're dealing with today are induced by bad political choices i mean making a bad decision about a new tax. creating a tremendously difficult situation with brexit. the immigration crisis in germany. the mercantilism and state-owned enterprise initiatives in china. the tariffs that the united states put in unilaterally you just go down the list and they're all things that have created macroeconomic slowdowns. >> now, in case you're wondering what he's referring to in thames -- terms of a bad decision on a new tax, it's that treasury department covering that one-time tax on unpat yatd

earnings fedex continued solid growth in the u.s. but also continued a slowdown internationally as the peak for global economic growth now appears to be behind us. so fedex announcing cost cuts and buyouts of thousands of employees, capacity reductions after troubles in the express unit, which is getting a new ceo and with a tnt acquisition there pressuring profits as well keep in mind a year ago as tax reform was passed, fedex was one of the first companies to commit to higher wages and spending so they are getting a lot of attention right now. overall the results, i would say they're very blunt comments on that call. all in focus for investors right now because there has been so much concern, guys, about global slowdown. >> fair or unfair to blame the politics that was basically the kitchen sink, right? everything in the world is terrible it has nothing to do with our

operations, it has everything to do with everybody else but us. fair or unfair >> i would say maybe -- >> i'm a huge admirer of fred and what they have done over the years. >> i would say maybe 50% half fair and the other half being what's going on with fedex specifically, with the express segment specifically tnt had that cyber hack and that caused some issues in terms of integration there but they are concerned. i don't think they would be implementing those cost cuts and doing them as quickly as they are if they were not concerned. european markets closing in a few seconds. seema mody joins us with today's action. >> take a look at how european markets are faring ahead of that highly important fed decision later this afternoon stocks are higher led by the ftse the italian stock market index on pace for its first positive day in four, higher by 1.5% on a budget breakthrough between the

italian government and european commission after italy finally agreed to lower its deficit target to 2.04% from 2%. italian yields also trading lower by 10 to 12 basis points the german bund is basically flat and we're looking at the euro gaining ground against the dollar a relatively soft dollar in the past couple of days is helping the euro gain ground following the fed decision the focus will quickly turn to the bank of england which is set with its own monetary policy meeting tomorrow economists at citi expect the central bank to keep rates on hold primarily due to the uncertainty surrounding brexit and the recent soft economic data with the latest data out of the uk confirming a slowdown in its economy, 0.4%. guys, back to you. in the meantime we've got to get over to the one and only sue herera who has a news update for you. >> it's so great to see you, andrew, thanks so much here's what's happening at this hour, everybody.

former attorney general loretta lynch arriving on capitol hill to appear before the same house committees that former fbi director james comey appeared before two days ago. republicans argue that justice department officials conspired against donald trump the democrats say that's nonsense. a criminal justice bill passed by the senate would give judges more discretion when sentencing some drug offenders and would boost prisoner rehabilitation efforts it's expected to pass the house and be sent to president trump who supports that measure. and can you read lips? check this out this is what happened in parliament when british prime minister theresa may spoke during a lively exchange labor opposition leader jeremy corbyn appears to mouth the words, quote, stupid woman when she sat down. >> i've got some advice for the right honorable gentleman. look behind you. they're not impressed and neither is -- >> a spokesman for corbyn says

he said stupid people. we'll let you decide that's the news update this hour got to love parliament back downtown to you, andrew. >> i don't know about you guys, i am going -- i'm not going with that, i think that he said "stupid woman" i'm sorry to say. >> i think so too. >> it looked that way. >> i think american politics has set the bar so low that it kind of doesn't matter. >> which maybe goes back to fred smith's points at fedex in terms of politics causing issues in the global economy. >> okay. sue herera, thank you for that giving us a little bit of a debate here on set this morning. when we return, we're only now about two and a half hours away from what is the crucial decision from the fed on interest rates and what jay powell is going to say about it and what's coming in 2019. how investors should be positioning themselves ahead of this afternoon we'll talk about it and hear from chris ailman right here next "squawk alley" continues after a

quick break.

welcome back keeping an eye on the major averages, just two hours into the trading day the dow is currently up about 0.7 of a percent. s&p up 0.6 of a percent and nasdaq higher half a percent as well it's a volatile week thus far ahead of the fed's 2:00 p.m. eastern decision on interest rates and that 2:30 briefing first, we continue to watch shares of facebook following the latest bombshell report from

"the new york times" detailing how the social network gave companies like netflix, spotify and microsoft the ability to read private messages and access the personal data of users' friends without consent. facebook says it allowed the data sharing but denies it did so without consent nonetheless, those shares are down 2% right now. joining us in a cnbc exclusive, so much to talk about, chief investment officer at calsters with $219 billion under management, chris ailman chris, great to speak with you today, happy holidays. >> happy holidays, morgan, good to talk to you. >> i want to start with the fed later today. what do you expect to happen here and do you think we're going to get a hike, which seems to be priced into the market right now? >> yeah, we're definitely going to get a hike, we should get a hike the market has already priced it in but i think as you said many times and rick santelli said this morning, it's about the language after the hike. and we think they're going to be hike and then hold

news break, i think they're going to be data dependent next year and see how consumers do here on the holidays and see how we go into the winter time that's the big key, hike and hold we said this morning at our trade desk it's a dovish hike. so if there's such a thing, it's going to be slow and mild after this but i think that's what the street is expecting, so i think i appreciate the time clock, but i think it's going to be a normal day we're going to have to look then at bank of england tomorrow. >> in terms of the market and the sell-off we've seen in recent weeks and recent months, you've got a number of folks coming out this week basically saying it's the end of the bull market, we're going into a bear market, run and hide do you agree with that >> no, i don't agree with it i'm not surprised in gunlock's statements earlier this week he's a fixed income guy. i think it's -- depending on where he's positioned, his

comments were in his favor in our view, it's look at the economy. we're not growing at 3% but we're certainly growing at 2.5%. volatility is here to stay i don't think we'll be in a rip roaring bull market in 2019, but there's reason to believe that we'll have a steady climb. bob pisani said this morning again that buybacks are at a historic level, so the number of stocks are slightly shrinking. people are going to keep investing. it's really always about the economy and the consumer, so until the consumer starts to back away and slow down, i don't think we have to worry about a recession being at hand. i think the fed is doing exactly the right thing, which is raising rates back to normal so they have a full tool kit in case we get a weakness coming in later '19 or in '20. >> chris, i want to talk a little facebook from the business and investing side. i believe you deleted your facebook account earlier this year did that hold or did you get back on? >> no. i deleted my facebook account. apparently you have to have

something called friends, and i didn't have any so that wasn't a big problem to me. but, you know, i have been on their case from the get-go as you said in the lead-in, this was bombshell news i'm sorry, but i think we're just going to have this kind of news breaking time and time again. there's no corporate governance at that company. there's no strength on that board to hold management accountable. and the comment about privacy, as your earlier guest said, it's too hard to figure out so just anecdotally, i have 75 high school kids here. >> the same could be said of google in terms of governance, in terms of founders having outsized control over outcomes at the company given what's at issue here, which i believe is how data flowed from facebook to partners and did consumers, did users really understand what they were agreeing to when they allowed that partnership to take place over their data, what do you think needs to happen to make

you more comfortable not just with facebook, but how this data economy is treating user data? >> well, absolutely i think it's got to start at the top within those companies. i think you need stronger boards it's awesome that we have entrepreneurs that have built these empires, but they need some governance. we've seen that in tesla and other examples where it's important to have a little bit of accountability. accountability in life is a darn good thing then i think we need more oversight into all the things. i'm not calling for mass regulation, but every other form of communication you guys have the fcc regulate you. there's got to be some kind of oversight probably on a global basis because these aren't just u.s.-focused companies that really has a say about how data is managed and handled you're right, it's being sold without people's knowledge the privacy settings are far to

hard to figure out our phones tell everybody where we are and what we're doing and i don't think consumers really realize that as much we need to be aware that an amazon echo is a lovely product, but it's listening and what does that mean? >> yeah, chris, before i let you go i want to get your thoughts on another holding, and that's johnson & johnson after that extraordinary report from reuters and what was an extraordinary move to the downside in those shares how are you thinking about that as a stakeholder is there anything here that changes your investment thesis >> we're thinking about it long term and i would go back to the comments this morning by david faber and cramer, which is this is a darn good company but also shows the power of social media and disinformation that whole incident that went on in india yesterday and the company trying to properly describe it. and then their difficulty of getting that news out into the market so that people believe it far too much is being on a

reactive basis we've got to realize there are hedge funds and other people out there who are playing dirty tricks who don't care about the long term but care about the short term in our case we think it's a darn good company we're going to look to the long term, stay involved. it's had a tremendous brand image. again, there's a good example where it's up to management to safeguard the risks, be open and honest and transparent and communicate with serious shareholders and find a way to manage this social media storm that happens to a company. but it's the board and management that we'll look to to be accountable to make sure that it's got safe, quality products because name brand is key to them >> chris ailman, thank you always great to get your thoughts. >> thank you, morgan good to talk to you. we're going to have a lot more on this afternoon's fed's decision coming up before we do that, rick santelli, what are you watching, sir? >> well, of course i'm watching the markets in lieu of the big

2:00 eastern statement and subsequent press conference, but i think i know the answer. i know what the fed needs to do and what the fed needs to do to the economy to me akit robust. it's not easy though, but i'll share it after the break tech s . it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

i'm scott wapner here's what's coming up on "the halftime report" at the top of the hour we'll count down to the fed decision with richard fisher what are the chances of no hike today? we'll ask that key question.

plus another face plant from facebook when it comes to user data is there any reason to buy the stock today? is there any reason to trust the company's management we'll discuss. our call of the day sends ge's shares surging. the analyst's first upgrade in a decade joins us. we're about 15 away. >> sounds good ge is up almost 7% for now let's get over to the cme and rick santelli who's got the santelli exchange. rick. >> thanks, jon i love fed days. i haven't actually missed a fed day being on the trading floor since 1979 that and unemployment reports top of the mountain in my world. but they have gotten so much more complicated but i do think that i know the cure for what ails the economy what the fed needs to take care of the problem is, it's very difficult. liquidity addiction. it's not like we haven't brought this up before, but as i was pondering what to talk about today and reading everything

there is to read about what the fed should do, what the fed could do, what the fed may need to do, liquidity addiction e-mails, texts from many of my sources, it's always for liquidity addiction. harken, it goes back to 2013, ben bernanke that's when we had the taper tantrum. the taper tantrum put in place in my opinion a series of barriers that the fed is very nervous about. when the market had a hissy fit, a tantrum, whatever you want to call it back in 2013, when the notion of balance sheet reduction was front and center and we were going to stop buying and quantitative easing would end, that tantrum made ben bernanke stall out the road he was thinking about going down. beyond that everything in my opinion changed. i think the fed needs a third pillar they need some way to deal with addictions by the marketplace because the marketplace really needs a 12-step process to

finally break away, stand on its own two feet we shadow box this issue oh, we have to forget guidance but all of that basically is about trying to talk the market through its addiction. and, when we think of these tantrums, and there's going to be and have been tantrums, and i still say at the end of the day you could draw any conclusions you want from all the events of the day, that we connect the dots as to be the catalyst for market moves but the biggest thing is liquidity addiction, and you can describe it in many ways can the fed cure it? absolutely but at the end of the day when you have to do the same amount of gdp with less, meaningless capital, less liquidity, that has to be made up in some fashion. i do think it could be made up in a variety of ways but to get the market to understand the need for purpose in that regard is going to be a messy journey.

morgan, back to you. >> rick santelli, thank you. still to come, after over a year of digging, we'll take a tour through the tunnel of elon musk's boring company to see how he envisions the future of mass transportation but first, take a look at some of today's laggards in the nasdaq 100 we've got more "squawk alley" after the break. this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back to "squawk alley. elon musk unveiling his boring

company's tunnel under hawthorne, california, last night giving our own phil lebeau a demo ride. a look inside the tunnel and what elon musk is saying about its future hey, phil. >> reporter: hey, morgan they believe this is the future of high-speed transportation take a look at this video because we went on a demonstration ride we were in a model x as they lowered us down 45 feet. once they lowered us down, it was a quick acceleration and then we were off top speed 49, 50 miles an hour admittedly this was a rough ride because they've just completed the tunnel but have not had a chance to smooth it out. there are two front extension alignment wheels that stick out from the side of the front wheels on the vehicles they keep the model x in line. in other words those side wheels, you can't see it in the video, but they buffer against the side keeping the car from running up against the walls total top speed, 49, 50 miles an hour elon musk envisions these times of tunnels having a top speed of

150 miles an hour. >> this system is designed to do over 150 miles an hour through the tunnel wouldn't it be incredible if you could travel around l.a., new york, d.c., chicago, paris, london, anywhere at 150 miles an hour >> well, maybe some day we will be able to do that it's a way off the boring company has a long way to go before we see these projects be commercially viable. they're working on an agreement to build a tunnel between chicago and o'hare they haven't broken ground d.c. to baltimore, they are starting to dig on a potential hyper loop there and elon musk says the city of las vegas is interested. when you go to these events you're used to people being very excited. there was an extra incentive for them to be excited last night, tesla shareholders or fans of the company who won the right to be there they were also given a demonstration ride

will the public have a chance to go inside this tunnel anytime soon probably not the company says they have not yet received regulatory approval for the public to go on some of these demonstration rides. very interesting let's see where it goes from here >> phil, very cool i'm quite jealous. what did you think of the ride >> it was bumpy. it was quick i could see the potential of these types of tunnels in the future, but a lot of things need to be sorted out how many people can go down there at any one time. how quickly will they raise and lower vehicles when you're going into or out of the tunnels they say that these tracking -- deemployable tracking wheels on the side that basically keep the car in the middle of the tunnel, that they could be added to any electric car for $200 to $300. let's see if people really want to put them on their vehicles. the potential is there, but for a first ride it was definitely a demonstration because it was rough and bumpy. >> i need a clarification. we tried to talk about this

before on "squawks box" this morning, phil. you put them directly on your tires? i thought you just get lowered on almost a -- >> reporter: no, no, no. they're on the tires, andrew, and they fold underneath and then they fold out when you get to the tunnel and then those two side wheels, they're going this way, they go up against the walls. and that's what keeps the vehicle in the middle of the tunnel now at 50 miles per hour we felt it a couple times where i thought, oh, my gosh, are we going to be -- could we jump it if we went any faster than this. potentially we might have. i don't think they were going to let that happen. they think they can get this up to 150 miles an hour with those side wheels. >> all right >> not for the claustrophobic. >> reporter: you see the side wheels right there a little hard to tell but they're sticking out right there. >> thanks, phil. >> reporter: you bet what major investors are thinking about the fed decision this aeronftno that's next. "squawk alley" is back in three minutes.

the aftermath of the fed decision from all the angles the moves markets and investors will be making the fed should not raise rates. we're now below 2.00, which used to be the fed's target, and dropping that is a sign they shouldn't be hiking >> i think they'll probably

hike again, there's just so much momentum and central bankers are so conservative. for them to change that quickly would require this unbelievable change >> the only argument i'm hearing from the fed to raise rates now is that somehow they have to exert their independence from the white house. now this is a bad argument >> the risk of the fed doing too much too fast, there's a risk of too little too slow and, of course, it's easy for people who own assets all about lower rates. the fact is a strong economy, normalizing rates is a good thing. >> they shouldn't raise rates this week. the bond market is basically saying, you know, fed, you've got no way you should be raising interest rates >> the question of the morning hike or no hike? only about two hours away from an answer to what is in powell's suitcase >> the expectations right now, or i should say hopes this will

be one and done. we'll see. so much will hinge on the commentary in the 2:30 press conference >> deal or no deal, is there any chance of a surprise >> there's always a chance but, you know, pretty low i think the commentary is where it's at. >> open the briefcase. >> we will see for now carrying on with this question, scott wapner and "the half." you bet we are, jon. thanks so much i'm scott wapner to hike or not to hike, that is the question and for investors it is the only question as stocks head for their worst quarter since the great depression can jay powell and company save the day? it's 12:00, noon this is "the halftime report." spotlight on the fed the decision's coming two ours from now how will jay powell and company impact the market today and in the weeks and months ahead earlier this week bond king jeffrey gundlach weighed in telling the fed to stand pat >> the bond market is basically saying, you know, fed, y