to hedge stock portfolios. make sure you that you are consistent with the fact that you don't have as much hedging tool >> mohamed, always great to see you. hap happy holiday to you >> thank you, to you >> we'll see you over the weekend, right now it is ""squawk on the street." >> good friday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and sara eisen jim cramer is off. we'll walk u.s. fed chief john williams on our air in the next hour dana, we got a miss gdp and consumption. our road map begins with volatility trade

futures are higher >> john williams join "squawk on the street" ex clus sclusivelyy way. the house is passing a spending bill with border wall stalemate. president trump is calling republicans to go nuclear. >> the nike crush. a big earning beat helped by strong online sales and the tariff threats are raising the outlook. >> stocks are on the week for the nine months. a government shut down is looming tonight at midnight unless the president and lawmakers can come up with an agreement, the sticking point is funding for a border wall. got the house vote, looks to not pass in the senate, although the president is leaning on mcconnell to end the filibuster

to allow to pass with 50 votes shut down are noise and if it is shut down, it is not likely to last very long, although the president said differently >> yesterday w e talked to his economic adviser, and i asked him what kind of economic impact does it have listen to what he said >> they're estimate that can have a negative impact on the job numbers in the short term. think of all the turmoil that we had, looking back, we tend to over react economically is something that does not have a big, long effect if we had a long government shut down, it may show up in the job report >> so hassett says long time shut down are good he acknowledged the decrease

spending, capitol spending business they got those thunumbers that r disappointing. hassett says the guys are having a hard time meeting demands. the odds below gdp next year are very small >> yeah. difficult to say i mean we certain lino other measures like corporate profit re-patriation has come down a year or ago tomorrow >> we move into next year's anniversary starting of the benefit of the cut in terms of what you are talking about whether it is repatriation and

benefiting in terms of the stock market prices. it has been a long time since we have went up psychological damage this month, carl, i don't know it is a tough one certainly across the board as we end the year, certainly with a liquid markets here it is going to be interesting to see how we do prior to year end and early on >> s&p is down 11% so far this month. thebiggest december drop since 1931 stocks having for their fourth quarter. a lot of damage has been done and big question this week is what the message that the market is telling us about the economy and the outlook. clearly they don't agree with the jay powell who says things are looking okay and we'll continue hiking rates. if things were good in the u.s. economy and if fed is on a track to keep raising rates, that'll not happen >> and we can look at crude

whether it is wti or brent in the substantial fall continuing today, not as bad as yesterday when we saw of what a 3% decline does for wti what does it say in terms of the demand picture and overall view of the economic view of the world. we go up by a billion and a half barrels per day in terms of demand for next year a lot of people are looking at wti's odd. >> yes, negative 45 bucks for a barrel. >> for more on where we stand there. let's go to ylan mui good morning, ylan >> good morning, sara. they're scheduled to vote a bill this afternoon that includes $5 million for the border wall that'll not get the democrats

support. president trump pins the blame on democrats today, shut down today if democrats do not vote for border security. president trump's solution for all of this is for the senate to change its rules, allow republicans to pass the bill with a simple majority instead of 60 votes. now the pressure is on mitch mcconnell. a few days ago, he was assuring washington that there would be no government shut down. a lot of senators left town and now they're coming back to washington and they're not happy about it when susan collins of maine heard the news yesterday, she told reporters, quote, "you are ruining my life. the shut down would affect 25% of the government and roughly 800,000 workers and key agencies and treasury departments and

irs, those would go unfunded president trump would cancel his plan trip to mar-a-lago and stay in washington if a shutdown occurs no one is sure how long this is going to last. >> absolutely true ylan thank you. or mandel, strategists guys, happy friday, thank you for coming in >> yes, it is friday let's get the shut down out of the way. is it noise? >> i think it is noise in the future it will be frequent but also noise. even if you have a prolong turmoil politically based on this, market are forward to look

enough into it >> to pay attention to a deadline in march, right >> trade deadline in march is laying on investors now. we did our quarterly investor survey most investors on the equity side don't think we'll have a trade deal with china. >> most do not >> do not. there is doubt that we'll get it out of the way that's one thing that's clearly weighing on the markets right now. >> you do get some relief from trade. you just don't get them yet. the fed meeting is a good example of that. the trade situation is a matter of balance and a matter of the political incentive to strike a deal and there are not many, regardless of what side of the isle you sit on and the costs of the trade war are escalated. if you do go from 10% to 25%

it would raise the economic cost that's coming to balance with the political benefits and at that point, i think they strike a deal. is a market signaling a recession, laurie? >> we are at a cross road right now. we put in the drop that we saw in 2016 and 2010 we have not done the 2007 drop yet. that was 19% the stat i have been talking a lot about if we fell another 10%, we would actually be pricing in the median recession. if it does get too much worse from here, the market is on its way doing that regardless of what the economic communities is telling us >> i like to remind viewers of the bearish call on tech you were getting laughed at. do you feel differently now? >> i have been marketing a lot in december and i am finally to

a point where people are not fighting with me on technology we are talking about what are the last shoes that may need to drop in the second so our valuation model is hovering at neutral we think there is more pain to come >> what are the shoes to drop before you actually would say okay >> i would say a couple of things, if you look at it industry by industry of what we saw in 3-q was that the hedge fund community piled out of the semis stock. they ratchet it up their expo sure to software and i.t. services so i see two risks going forward. we are hearing a lot of survey data that ceo comments are coming in. the tech sector tends to trade in line with capital

expenditure. that's one thing to watch for in this difficult environment we are in the other thing is let's say we do get a trade war deal, a trade deal with china. i think hedge fund will reverse those trades and go back and buy semis. i can see a couple of ways to get there. >> ben, i want to ask you about cash all week long it has been tampered and goldman says today it is piled up going into 2019 >> there are different ways to hedge at the end of cycle risks. what you want to be holding for the end of cycle, duration and something like treasury and you see over the past month or so, a great example, worry of the expansion and bond yields drop, that's the hedge you want in a balance portfolio. there is a place for cash.

but, that's more of a hedge for inflation shots where we see guess lead for that over the course of the entire portion of the cycle. >> you know, it hate to put you in opposition of the chairman of the ceo of your company but i am still waiting for the 4% bond. >> he's a fair minded guy. >> not both. >> one last thing, we'll hear from williams in the next hour, should we be prepare for a big dovish walk back to wednesday? >> i will throw that into our economis economists' laps, it is ping-pong going from one expectations to the other. i think economy is a show me story at this point. the market and the fed are on completely different pages right now. i think equity investors need to understand that the fed are trying to assess and looking forward. >> who's over reacting is the fed under reacting to the

market >> so if we are right and the economy is not going into a recession and going back down to trend after an exceptional fear of growth, the fed is going twice verses pricing of less than one i feel that there has to be some repricing to count for that even as they introduce the longer term more dovish for guidance. when we return, nike share is not seeing a economic slow down, rallying on a beat, across the board. also, ahead, as carl mentions, we have our interview with john williams take a look at the future is higher s&p is up 20

headed for a sharp liloly for te lower week more "squawk on the street" when we eturn.

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shares of nike rising. the dow component is hosting better than expected earnings and revenue and outlook and margins. nike with strong demands globally the ongoing trade dispute has had zero impact on china business let me give you the break down that nike is seeing around the globe. north america which recently is in a turn around mode, it is now growing 9% there is the china picture up 31% revenue growth, emerging market which we hear about of struggling the strength is really across the board in terms of footwear and apparel, guys. there is converse up 6% and asia pacific, latin america of 19%. so clearly a buy signal for

investors. the analysts with swooning over this report. this is a flawless report with room to run from nike. conference call, bullish as well i pulled a few snippet out for you, they talked about a ton of digital. they emphasize on digital transformation going on. parker is saying there is a lot of momentum there in women's sports right there in term of the outlook, they're in q-2 of their fiscal year could potentially approach double digits growth so, overall very bullish outlook for nike example, guys in the turbulent economic environment, nike deals with a strong dollar and anyone else with the political problems why you need fundamental strengths in your brand and innovation heads that keep

oncoming like shoes and a lot of their hits during the quarter. >> digital, how large of a percentage do you know of revenues at this point >> i know that it grew about 41% of digital business? they did say in the call it can become the majority of their business >> it is both so they talk a ton of their partnership with alibaba all over the globe they talk about the partnerships going on they're testing this program with amazon. they also do a lot of directive consumers and that's a huge progress their sneakers have grown rapidly and launch in places like japan which they pointed to became the number one app within weeks. it is a combination. this company is in ahmad ahmadm shift. they're seeing becoming a large chunk of their business verses wholesale, that's why they take

out the futures order. whole sa wholesale is not a growth for them in stores >> no mention of amazon. >> not at all for europe europe were double digits for them they're seeing an economic slow down and probably taking market share from the likes of adidas that's the one risk here if they see a slow down, they're not preparing the market for that they talk about the fundamental strengths there. >> it is going to be a conversation starter next time we have adidas on. >> we'll watch nike all morning long when we come back, we'll talk more of the slump in tech, the sector on the edge of bear market territory, down almost 20% of the october high. we'll talk to john chambers and get his outlook as we approach the new year "squawk on the street" from the nyc is back in a minute.

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members of the new york fire department is ringing in the opening bell this morning. we'll get that opening bell in seven minutes. coming up in the next hour, john williams is going to join us, head of the new york fed will he give a dovish message coming from powell's decision? for the meantime, "squawk on the street" continues in a moment. don't go anywhere.

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"squawk on the street," live from the financial capitol of the world. opening bell in three minutes. busy friday morning obviously, we'll get the expiration of some futures and option contracts, maybe some thin volume as we are a couple of days before christmas. first day of winter, a lot of eyes on d.c. whether it is the shut down, mattis' resignation and syria withdrawal there is a lot of to process here this is traditionally the start of the santa claus rally something else to throw in the mix that could be positive is over night more comments out of china talking about significant cuts to taxes and fees in 2019, signaling easier monetary policies right before they cut interest rates. just more signs china is

prepared to tackle the slow down after the end of a another tough week for the market, both in china and the u.s. >> not particularly a response from them given the charges yesterday and in terms of corporate espionage. some saying that's a good sign the talks of where they may be right now remaining on tracks, separately from the huawei's cfo and the decision by the department of justice to charge two individuals of espionage >> ba >> maybe because of the president of our allies. we are looking for 5% less down wee weeks. durable goods are showing some growth we did not see if there is a real turn in data that would backup some of these big moves

that we are seeing this the stock market >> so many suggestions yesterday, ratios of the highest ever the ten day moving average at a ten year high and russell at a 52-week low. thank you can't find many strategists who are will to bet on a big up term, liquidity will probably be an issue as well >> the group that comes upmost often in the conversation that i had with hedge funds managers are still around is the banks. just because they gotten so beaten up this year. when you look at the percentage loss, or of course, goldman sachs on its own issue 33% for goldman and 33% for city and bank of america is down. morgan stanley is 25%.

>> if you look at the sector performance, the s&p 500, all are lower but fn sinancials areh best perfoperformer. only down 3% >> at the big board, the fdny are doing the honor and over at the nasdaq, awareness for als research >> very strong really they did not give investors much to complain about in this report and even the strength of the dollar which cuts into over sea sales it makes a debt but does not get in the way revenue growth, 10% and even with the strong dollar double digit growth in china despite the trade war, they don't see impact from business

there. they expect for it to look bett better than originally forecast. the innovation pipeline is strong for nike and that's helping them speak to consumers despite the tough economic environment. up almost 9% here. part of that is the big sharp fall it was a winner, sell the in withers w -- >> nike is going to be our s&p leader this morning. got a few calls from apple today. ka katy hubberty, the tawaniese are not seeing -- what a trip it has been below 160 yet again today

>> yes, of course, no longer the largest market cap company in the world or in the country for that matter. it does not seem that long ago it was a $1.1 trillion market value. that does give you some senses for the lost there the continued fight on qualcomm is taking a toll on the share as well yesterday it was germany where qualcomm won the victory, enjoying the sales of some iphones and the dispute of which ones and why in china, we saw a similar kind of move there from the court there. they are appealing that and awaiting for judgment. perhaps having a bit of an impact, carl unclear really given apple what it will be, a lot of focus on their overall subscription business and how important that's going to be and how it should be judged i know when a company has research along those lines

>> hubberty goes right through that the investor base is not keeping up with change and apple models. the next five years, services and wearables will count 100% of revenue growth and 100 plus percent of asset growth. >> yeah, although of course they want people to focus on what would be a reoccurring revenue stream with subscriptions. the core business is not really grown. but, if you can come back every year with the same number, you can add on an enormous amount of wearables which obviously are new products >> right >> and the reoccurring revenue >> 27% over the last three

months how about campbell soup? you know this name it was very strange timing if you ask me as to when they made this announcement. that's because just yesterday when the announcement came last night, they were talking about all sorts of problem i pulled some out of shawn connelly, of what they were realizing of pinnacle. innovation came up short they talked about problems of leadership brand and how pi ne n ne -- pinnacle extend it mark clous was the guy that ran

it and sold it to them it was interesting that campbell made this announcement dan loeb, he must have been behind >> he was in favor of it you and i cover it closely ending peace between campbell and third point. >> they had to lower the financial target that pinnacle promised to deliver. >> a lot of investors concerns of abbott of pinnacle. stock is up barely this moment yesterday it was down dramatically on that it was not an interesting timing >> he was the chief growth officer, so clearly he's an industry veteran he knows the food business and knows brands and has

successfully sold a company, you can say that i think campbell is a tough one to turn around a lot of the turn around efforts are already in place we'll see what mark clouse can deliver and figuring out what parts of the business to sell. he knows snacks. campbell is heavily into snacks right now. >> i am looking at the performance over the year, it is a lot better than market >> they have the exposures to markets. the market rate is better. snacks is a better place to be where kraft is or general mills are. snacking is doing better, he's focusing hard on the local markets and what works on the ground there i got to try snacks and

vietnamese snacks and different by the market. that's a winning strategy when it comes to the results of top line growth. >> this is the time of the year when you look back prep time i am down to 42% for the last 12 months >> where is the deal >> that's what investors are worrying about >> where is the beef and be replaced by healthy. >> valveeta. >> city downgrades though saying it signals the company's lack of confidence in cigarettes the ceo talks about a future where adult smokers overwhelmingly choose non-combustible products >> i thought it was a fascinating deal yesterday because of the amount, the size

of the deal itself, the fact that altria was willing to accept terms that did not give any path of control. a deal of this size for a private company that's only a few years old, when altria is making that kind of investment, 35% of ownership and $38 billion overall value, you would expect there would be some sort of path where they have the opportunity potentially own more than 50%. that's not the case here they can't sell for six years. they do when they get any choice clearance get a third of the board and they'll approximatini its ownership position there is no path of control here they give juul a lot of good things they're going to help them with logistics and distributions and put inserts and packages in cigarette packages that promote the product.

shell space and things of that nature a lot of people, carpl, the poit analysts are looking at, oh wow, they must felt desperate it is going to be a good one but with no path of control. >> the other thing that's getting some attention today not really moving the cannabis name is this farmville and legalization of industrial hemp. project for leader mcconnell you got companies like cannabis saying they're starting to play in the u.s. because of that. does that change and does it move the needle on legalization overall in this country? it is something more and more industries are watching tobacco industry and pharma and cbd and him got a boost out of that i am looking at the winners and the losers on the week crude oil is down 11% so far this week. energy stock, the worse performance, sector and s&p by

far is 8%. crude oil is down again today. there is this big debate whether it is supply driven or demand driven the bear says, well, there is no real catalyst this week but except for growth concerns out of the fed and headlines more of severe cuts and did not get you any mileage. >> exactly >> u.s. exports on a pace to set record, export as and not just production as well i am talking to some of my people, three tankers loaded this week for export imports may plummet. we also want to look at importantly what it means where it is saudi arabia essentially and the plan for drilling next

year at this price and what it is going to mean you are right around sort of a level where at least 40 bucks and then you have supplies slow down and potentially the surprise price go backup again. >> one of them is ge, 4% on the week i thought that was interesting >> tusa kind of went to neutral. maybe you never see an act as powerful as that that helped. we have not heard from culp. he's trying to do his work that got a long way to go you got that potential news they are moving quickly of the dispatch of healthcare and a form of ipo of 99 is what they talked about private filing that'll be followed by public filing, and

an offering of that unit to come, let's call it mid year, that seems to give some people the belief now is time to get into a stock that's still down 58% for the year >> not on general mills which is another winner of the week huge loser during the year, came out with earnings and investors cheered that >> nike is maybe a third of the dow's gain right now it is the only dow stock up for the week there are no dow stock for the month. let's get to bob pisani. >> a tough week. a little better on the advance of the decline line. nice to see semiconductor doing a little better. take a look at some of the conductors that are moving we see a little bit of moves of consumer stables and healthcare and energy is down energy is 8% for the week overall. energy is positive, that was the weak sector, i was coming over

today. today what's going to be going on, this is a quadruple expirati expiration we talked about this many times, this is the quarterly expiration of futures and options we have big volume of the open part of this get downright in the open today at the close today, we have a rebalancing of the s&p, the waiting o f the stocks we have big volume of apple and oracle and microsoft you see some waiting revisions and some big volume of the close. the stock prices are not clear the object is not to move the stock price. what else? very extreme levels, we talked about it a lot yesterday rarely we see 1200 new lows at the new york stock exchange and 1.7, those are not what we have seen for a long time the vix at a high level since

february is there anything different this week why is the market down there is a couple of things that have changed this week it is not nothing. the most important thing is the fed risks. we call it rate risk is a big issue. that's been around for a while now. the important thing is also u.s. political risk i think is a little bit higher with matt mattis leaving and trade war risk is still elevated the things that have changed this week, rate risk is higher and political risk is higher the end of the year, we got 5.5 days of trading left that's what i am concerned about. you drop 200 points a day with nothing going on because it is not a big event, it is down a thousand points. i am interested of what's happening the next five and a half days. nobody does anything in the last few days selling pressure and moderate and buying interest is very low.

normally this is reverse selling pressure is low and buyibu buying interest is moderate in the last two weeks who's the buyer? the hedge funds are in redemptio redemptions. that's not going anywhere. corporation may be the buy backs and some hope s with the pension funds rebalancing. wells fargo says 60 billion and some midday rallying that you are seeing as a result for pension funds. carl, back to you. >> thank you, bob pisani dow is down 123. nike is accounting for a big piece of the dow's gain. we are getting news that the president called some senate gop leaders to the white house today. for more on that, we'll get to eamon javers

>> the republican senators will meet with the president at 10:30 discuss the funding bill and the importance of border security. the question is can the president and republicans work out some sort of compromise in funding. the president had been tweeting throughout the morning urging senate republicans to fight for his border wall saying that democrats will ultimately take the political blame. the republicans they're going to need a large chunk of democratic votes to pass that bill. they simply don't have democratic votes for any bill that would include border wall funding. they passed that in the house last night a measure to open the government which includes the border wall funding. now, they're up in a rock and hard place so they're not going to have a vote is there some sort of compromise here and looking at the language, carl, you note that sara sanders' tweet only includ the term border security and not the wall

is there some sort of compromise that does not include the wall will the president accept that the president is issuing a defensive tweet here on china. apparently responding to jonah mattis issuing the resignation yesterday, nobody had been tougher on china than i have the president is blaming on fake news >> eamon javers, thank you very much >> let's head to the bond pit right now. rick santelli is joining us in the cme group in chicago >> yes, they are perking up a little bit but they're still in the negative column both for the day and the week being a friday, i always like to go through this. two-yr note yield, down. tens, down on 3 on 11. the 30-yr bond, down 5 and down

14 you can see that implied in the net changes day and week is a real flatten bias. we all understand when we had closing bell conversations with kevin hassett, he thinks that the yield curve, the in version, its wiggles don't mean much because of manipulation of interest rates through policies. investors and where their money goes is all that really matters and perception is not on his side of interpretation look at the one week of tens, it is trying to hold in you can see the level of jumps right around 280 and 281 midpoint of the year if you open up to october, include the second of the two tops, a couple of things should jump out at you. since you violated 311 which i thought significant after the double top that was after 16 in november. we drop over 30 bases points it has worked very well.

with regard to overseas, here is a bund chart going back, it is hovering, 20 bases points should support their october of the dollar index i has a nice top going on right now. carpal, ba carl, back to you. >> rick santelli, still to come of that exclusive with new york fed president, john williams we'll get his take on the economy. the president is meeting with some senate gop leaders in 40 minutes. nike, best day in june but the worse quarter in six years

that time of year again when wall street strategists unveil their market forecasts for 2019. a number of variables make next year's predictions incredibly tough. seema mody is at the nasdaq with more what are the themes? >> a number of head wins going into next year from the ongoing trade uncertainty to rising rates. wall street strategists, though,

are cautiously optimistic that stocks will end 2019 higher. the median forecast for 2019, 3,000. that implies a double-digit percentage rise from where the benchmark is trading today looking at the specific targets, deutsche bank is at the higher end of the range, 3250 by the end of 2019. morgan stanley at the lower end of 2750 for the s&p 500. it's worth noting mike wilson at morgan stanley is the only one who didn't change his target for 2019 and these are initial forecasts. we will update them as trat gists tweak their outlook. on a seconder-by-secotor basis, deutsche bank making the point that this is has lower sensitivity to macro factors like rates, the dollar, volatility and oil prices and should continue to benefit for my buyback activities. so we have to see if that theory plays out and that's why this round of earnings will be of importance to investors to see if organic revenue growth can

offset these broader challenges in relation to rates and ethics head winds back to you. >> seeemsea, interesting. dow up 85 with the fed's john williams on the way don't go away. this isn't just any moving day.

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> en we come back, an exclusive with new york fed president john williams. steve liesman has that in just a few moments. dow is up 95

welcome back to "squawk on the street," i'm carl quintinilla with sara eisen and david faber at the new york stock exchange the session high was up about 156, just a shade below that plenty to watch, including new economic data crossing the tape. let's get to rick santelli. >> yes personal income for the month of november was up 0.2, 0.1 light of expectations, sequentially falling up a half percent. if we look at the spending side, 0.1 bet, up 0.4. and then an improvement in the rear-view mirror, there's nice numbers. there personal consumption expenditure month over month it

was up 0.1 that's on core if you look up core year over year, that's year over year. and the deflator month over month,.1, one-tenth lighter t er than .2 sequentially so we see that core pce year over year was hotter and the fed likes to watch that the big number, university of michigan sentiment december final, the mid-month gets tossed out. that was 97.5 and it's a good one. 98.3 98.3, if you look at october, that was 98.6. 97.5 in november so you can see it fits in there the high watermark was 101.4 in march. that was going back to '04 and there aren't many reads over 100. inflation, what the university of michigan survey says, one year inflation, 2.7 equaling our last look and five to ten year

2.5 a bit higher than the 2.4 mid-month read so you can say hotter we're continuing to hold very solid on rates they're down on the day but not much we'll continue to monitor if we can reclaim to 80 territory in 10-year note yield sara, back to you. >> still below that level. rick, thank you our road map for the hour will start with shutdown showdown just hours away from the partial government shutdown. the president set to meet with senate republicans at the white house this hour. we'll take you there life for the latest and boosting the dow, nike reporting blowout results, stocks way up. we'll break down what it says about the state of the global consumer. >> nasdaq is trying to hang on to its gains we're a couple hours away from a partial government shutdown, the deadline to avert is tonight

around midnight. sticking point is funding for a border wall. lpl has some interesting stats on five past shutdowns, s&p traded higher through all of them hasn't always been the case but good run of the market. >> market takes in the stride. as kevin said, it these last a long time before you start to get an impact here the debate of the week with stocks down 5% major averages and the nasdaq in bear market down 20% from the highs is how much is growth slowing is jay powell right, the fed chairman who says the economy looks good we're watching financial markets but so far not having a big impact and on track to hike rates? is the white house right saying you don't go from 3% growth to 0% growth and what is the market telling us about how bad the growth trajectory looks. the economic data is mixed durable goods, capital spending didn't look good however rick just brought us consumer

sentiment and spending that continues to be the bright spot for this economy so the markets and the economists and the fed are not on the same page here. >> jpm says 2470 is essentially pricing in $165 in s&p earnings next year which is flat but how much is the market trying to absorb that is not about corporate profits? how much is uncertainty over trade, geopolitics, dysfunction in washington and everything else. >> and what the fiscalpicture will look like how much of the boost from the tax cuts is going to wear off and how much is it going to filter through to the consumer and the zmorpgs i think that remains a big question mark. also, david, people are watching the corporate bond market. a trillion dollars of refinancing coming for corporations next year that's a big deal. they're also watching the treasury market, there will be competition there with china not buying our bonds, our treasuries

for the last eight months so a lot of these things are coming together and making the forecast for 2019 very blurry. >> the investment grade market about a $5.4 trillion market i think high yield closer to $1.6 trillion. it will be more difficult for companies looking to refinance, particularly ones that have a large footprint. >> no issuance in the month of december. >> nothing going on in terms of that and when it comes to capital markets, the investment banks, it's been quiet. crickets for the last month, at least. >> corporate issuance, a seven year low in terms of bonds let's get to steve liesman, our senior economics reporter with the interview of the morning hey, steve. >> carl, good morning. i am live from the federal reserve bank of new york with federal reserve bank president john williams. thank you for joining us. >> it's great to be here with us welcome to the new york fed. >> thanks, the market seems to be signaling that there's a severe slowdown coming

bond yields are down stocks are considerably off where they were. the federal reserve raised rates, though, this past wednesday, signaling additional rates. is it your contention in the consensus forecast and your forecast that the market has the outlook wrong here >> i don't view this as about one side having it right or wrong. the important message is the economy is strong, that's why we're seeing strength going into the new year and we expect a healthy economy going in 2019 and that's our baseline expectation. however, we are listening very carefully to what's happening in markets for two reasons, one is financial conditions have important influence on the economic outlook and we take that into account and think seriously about that second i think we are hearing something important for markets and that is a concern around risks to the economy and potential slowdown further than we currently expect in our base case so we listen carefully to that we try to do our best to absorb that information and think hard about what are the various risks to the outlook besides the base

case, which is really one of health and strong growth i'd like to reiterate something that is important about this conversation is that we're moving to this more data dependent mode of chairman powell, i and others have highlights the fact that as we move away from this explicit forward guidance we'll be more driven by the data in thinking about the economic outlook and our policy decisions and for some people think they data means looking at the gdp data that came out but for us data dependence means not only the economic data but surveys of households and businesses that we and others conduct. it means listening and talking to people in financial markets, understanding what that is telling us here and abroad and finally one of the strengths of the federal reserve system is we have the 12 federal reserve banks, we as presidents talk regularly to people in businesses who are telling us what's going on today. >> but if you're hearing the

message from the market, are you listening? in the sense you that you raised rates on wednesday how do you justify that if you are listening to the market? investors who are putting the money on the line have decided that, a, there's not much inflation concern in my purchases of fixed income bonds, i'm going away from stocks how will do you justify the rate increase if you're listening to the message of the market? >> we're listening but we're looking carefully at the data and talking to business and other leaders in the communities around the country and trying to incorporate that information together to get a view of the economy so right now we have a strong economy, we have 3% growth this year unemployment is near 50 year lows and we expect this economy although having slower growth next year but very solid growth and good solid job gains but importantly we are listening to

the -- there are risks about outlook. there's clearly some concerns that maybe the economy will slow further and we are sitting there thinking we know for sure what will happen, what we'll be doing next year is reassessing our views of the economy, listening to not only markets but everyone that we talked to, look at the data and be ready to reassess and re-evaluate our views and our policy stance. >> but after saying you were considering not providing further guidance, the statement still says some further rate hikes so how data dependent are you if your statement tells us you're still going up? >> i would make a couple comments we made important changes to our statement around that we change the word from "expects further gradual increases" to judges now if you look it up in the dictionary, judges means we've made an opinion. it's our judgment or opinion that that's where we see things going. this is not a commitment or

promise or in any way a sense we know for sure that's what we'll do we're saying this is how we see it now based on our view of the economy and we'll change that as needed we put the word some in front of gradual increases which is indicating that although we don't think we're done raising rates, we've made progress in getting interest rates back to normal finally we did add that the committee is monitoring and continues to monitor global economic and financial market developments and their impact on the economic outlook so when we add a sense like that that has meaning, it's indicating we're focused and attuned to the possibility that this outlook may change in coming months and we'll be focused on studying that and open to reassessing our zblus you've been a federal reserve bank president before san francisco. can you remember a time when the

market so much thought one thing and the fed seems to think another thing? are you worried about a market and a fed in terms of their outlook that are so on different pages here >> you have to be careful when you say "the market because we follow lots of marketings, we have the stock market, bond market, currency markets, lots of other markets around the world. >> if it were a christmas hymnal they'd be singing from the same book, it would seem. >> but there are a lot of factors affecting the markets beyond the specifics of monetary policy obviously concerns about global growth in china. we hear from business leaders concerns around tariff and trade nations so there is a number of factors contributing to volatility and market moves. our job is to carefully assess what we're learning from the markets from all the other information and come to our best judgment in terms of this disconnect, we've proven over the years that

when we see changes in the economic outlook we are ready to reassess that view and obviously we're ready to shift our view on monetary policy to vast achieve our goals of maximum employment and price stability and that's what we're going to do. >> one of the things that many people in the market complained about was a comment by federal reserve chairman jay powell that the balance sheet reduction planned to be reduced by $600 billion is on autopilot. is that accurate that there's no change at all? that unless you here in a situation where you get to -- this is what janet yellen said to me in 2017, unless you get to a zero rate on the fed funds you won't alter balance sheet reduction plan. >> you need to take a step back. chairman powell was thinking or referring to the baseline forecast again, a strong economy, a healthy economy and in that we've started the balance sheet normalization a little over a year ago that's gone very smoothly so far

and assuming the economy continues to be strong, we continue to see strong job growth then the plan would be to stay on the path we're on. and i want to reinforce a point that we made in june of 2017 when we laid out the principles of our normalization and we tell you it has been repeated by chairman powell and others since then that is our baseline view and we do view that the movements in the federal funds rate is our primary instrument to adjust monetary policy in this baseline outlook but we also highlighted two other things that are very important. first is if there's a material deterioration in the economic outlook, obviously we will -- we consider our path for the short term interest rate but we also said that we would reconsider the balance sheet normalization and may even end that process if that's the -- if that's appropriate to achieve our goals and we said in that statement in june of 2017 that if the economic situation calls for it,

if it detier weeriorates to this extent we would use all tools to achieve our goals of maximum employment and price stability so we made these three points clear. >> fair enough are we at that point now where you are reconsidering the current plan to reduce the balance sheet by $600 billion? >> so clearly the committee just met. we did not make a decision to change the balance sheet normalization right now but as i said, we're going to go into the new year with eyes wide open, willing to read the data, listen to what we're hearing, reassess our economic outlook and take the right policy decisions that will keep this economy strong, keep the expansion going and keep inflation near 2%. >> i have to press you on that question are you at a point where you think the plan as laid out to the markets to reduce the balance sheet should be reconsidered >> not at this point i think the economic outlook again is very strong and i am personally of the view that we're on the right path. i strongly supported a rate hike

at a recent meeting. i don't see the need today to change our balance sheet normalization. >> let's step back i want to do -- look at that because i didn't get a chance to ask your general outlook for 2019 what's the economy look like what's the path of growth? what happens to inflation unemployment >> sure, and my views, i think, are pretty consistent with committee. i think economic growth after coming above 3% to slow somewhat to 2% to 2.5% next year. part of this is what we were expecting all along as the economy got a big boost from fiscal stimulus and other factors to see growth slow somewhat but, again, slowing to a pace is really still well above trend, a pace that means strong job gains and a pace that means unemployment coming down do 3.5% next year. again, in our lifetimes this is one of the lowest unemployment running mate rates we've seen

i expect inflation to around 2%, right now i see 1.9%. >> core bce as reported by rick earlier. >> so i think that's consistent. this is the baseline forecast. we here in the 10th year of expansion. if things go as plan wed vened,w see if those numbers come to fruition two rate hikes in that connest? >> so you go back to this projection and viewing -- this is based on my view of where the economy is now.contest >> so you go back to this projection and viewing -- this is based on my view of where the economy is now by movie is something -- my view is something that two rate increases in the economy going forward, we're data dependent as we've done over the years depending on how the outlook changed. >> it's worth having a conversation of what is strong we'll do north of 3% and the

consensus forecast for the fed is down to 2.3%. that seems like a weakening economy to me. >> it's not weakening. it's a growing economy we've added 20 million jobs during this expansion so this is an economy that has generated enormous job growth. i don't expect 3% growth but i see real wage gains. >> it seems like you think the market had overdone it on the pessimism. are you surprised at how from an all time high october 3 how incredibly the market has turned to have this amazingly

pessimistic views. do you think it's o people in m quite a bit. there are times when there's disagreements about where the economy is going what i sense is not so much a fundamental difference about is growth going to be 2% or 2.5%. there's more concerns about down side risk and whether it could go wrong with the global economic situation or things like that. maybe we emphasize a lot, our modal forecast where we expect the economy to go. there are down side risks to be watchful for i think markets are very attuned to what could go wrong we need to be so. >> we should talk about those risks. how concerned are you about what you've seen in the global economic numbers how does that affect the u.s >> i want to roll back about a

year ago so i think that's helpful here if you asked me last november or december, i would have expected pretty much trend like growth in the global economy in tweet 201 2019 i think we all got optimistic. we're seeing a synchronized global growth. the u.s. economy is doing well, global economy is doing well we've seen a retrenchment of the view of global growth but really more to just a kind of more of a trend like growth like we were expecting. and so i view these swings in sentiment. maybe people got more optimistic earlier in the year. >> too optimistic. >> on the end too optimistic. >> getting back to it, john, several big european countries have printed negative prints on gdp and some of the emerging markets look like they're in trouble here that's the sort of thing that can wash on u.s. shores here, right? >> absolutely.

that is why we emphasize we're monitoring this carefully and some of this are around particular issues around auto production, around regulatory changes and things so we look at the data very, very carefully. but i agree there's been a somewhat slower outlook for global growth. >> how do you talk about trade with u.s. and china? is that a positive for growth? a negative >> this is where i think talking to business people and people in the markets is very helpful because they're dealing with this and when you talk to people who are affected by tariffs or other issues, you kind of see how it affects them and clearly for some sectors of our economy this has been a negative and others maybe a positive. overall so far we haven't seen big direct effects of the tariffs but i do think there's a tone of uncertainty in the business community and a tone of uncertain any the markets that we're hearing about is concerns,

well, what happens if this gets worse. what does that mean for the economy? and that is one of the risks to economic growth and potentially a risk upside to inflation. >> could additional tariffs by the u.s. on china keep the federal reserve from hiking next year >> i'm going to answer this question how i answer any question like that we take all this information together, take the pieces, put it together, we discuss it, try to get our best view of where the outlook is and the risks are and come to a judgment about policy. >> let me bring up a topic you want to talk about which is the president's comments on the federal reserve. there's some speculation out there, i think the "wall street journal" editorial page speculated about this, that it was the president's comments that in part pushed you to raise rates on wednesday. >> that's -- i totally disagree with that view point first of all, i've been in the federal reserve nearly a quarter century. we are as non-political non-partisan group of people you can get together in washington,

d.c. the idea that we might raise rates has been strong. growth has been strong, job growth has been strong inflations move close to our 2% goal in the context of those economic developments, having our rate hike decision was fully justified and completely made sense. nothing to do with outside commentary, whether we should or should not do that i assure you at the federal reserve we get a lot of opinions expressed from a lot of different groups about what we should be doing and we hear those opinions but honestly we're focused on how to best achieve our goal. >> would you prefer the president not be making comments on the fed and what it ought to do with interest rates >> i won't opine who should or should not speak about this because to me it's -- we're so focused on doing our jobs and doing what we think is best for the american people. >> you're in a very special position here at the new york federal reserve because one of the things you do is monitor markets and you have this critical markets desk there.

walk me through how you react when you see things like the dow plunging 500 points in the wake of the federal reserve raising interest rates do you hit the -- your head with your palm and say we messed up how do you react to that >> i don't do that we have an amazing team of people who not only track financial markets carefully but we're talking to people on a daily basis and ask what's going on i and my colleagues are in regular contact with market participants to try to understand the thinking, the psychology of market reactions communication is important for us. >> my colleague jim cramer believes you're not listening to business if you were listening to business and following business you would not have hiked this past wednesday and would have really brought down your outlook for interest rates and probably economic growth next year. >> well, you know, we did have a

very very good discussion around all the information we hear hearing. we did adjust our path from where we saw economic growth and inflation. we did do obviously a significant shift in our view of the policy path going forward over the next few years. so i think we did change our views. i want to clarify something. you say as you and others have noted we only lowered our forecast for 0.2 by 2019 but that's in the context of a shallower path for federal funds rate so the right context is we see a change in the economic outlook. we then adjust the path for policy and that somewhat offset what is was the tidying of financial conditions and the global slowdowns so i think what we're doing is what we should be doing is we're changing our views in the economy as the information comes in and changing our outlook for policy. >> john, you've been generous with your time and there's not even a bit of perspiration on

your forehead. i'm impressed by that. i have this question for you, though do you think the fed needs to get to -- i should give background nobody has done more academic work on the concept of neutral and nobody's research are more cited than years so if there's an expert on neutral it's you if it's possible to be expert on this uncertain concept does the federal reserve need to get to neutral and should do it so next year and what is neutral in your mind >> as chairman powell said and it's absolutely right, we're at the bottom end of the range of neutral interest rates in terms of our best estimates. there's uncertainty about that despite having sent much of my life on the neutral rate, we should focus much more on where is the economy going, how do we get policy to achieve our goals? we want a strong economy, we want this expansion to continue on a sustainable basis mutual rate is part of that. the bigger part is really taking

all the other information into account to get to the right decisions. >> federal reserve bank president john williams, a half hour christmas time chat, maybe it will be a tradition. >> happy holidays. >> happy holidays to you carl, david, back to you sara >> i'll take it, steve, with an amazing potentially holiday present for the bulls in the market the market rallying more than 250 points on the back of that interview with fed president john williams clarifying a lot of what was said and what was meant to be said from the federal reserve chair earlier in the week that was remarkable market response to when he signalled more flexibility and more willingness to reassess the balance sheet policy look at that intraday spike there as soon as really williams started saying it was a judgment more fed hikes it wasn't a commitment, wasn't set in stone that was sort of the idea he was giving. >> right the semantics between expects

and judges. didn't take yesterday's intraday high of 2509 got to 2500 on the s&p and backed off just a touch so i'm not sure how much trading desks were hoping to get got mileage but not enough as you might expect. >> maybe, but it was a swift turnaround and powerful, it's true watching the financials as i said earlier given the performance of that group, they're already backing off highs but you did have j.p. morgan and morgan stanley up almost 2% from having been negative briefly now they're still up nicely but not quite where they were. >> thought he made a strong point to say we are listening to business we are looking at the markets. we see a strong economy but we're ready to come back in the new year and reasses those things not down playing what the market was selling us but saying we see strength. >> said two hikes makes sense in the context of the growing

economy. obviously commentary about criticism from the white house, seeing rate decision is nothing do with outside commentary haven't seen much effect from tariffs yet, at least directly although that obviously remains a concern going into the new year anthony chan is with us, chief economist at j.p. morgan chase and the lead portfolio manager with wells fargo asset management who have been listening to steve ann, how dovish was that >> i think it was dovish enough. the most important comment he made was really making sure that he answered steve's question on the autopilot. he said making that case on not whatever happens in the futher, that w that was the key for the market, knowing it's not autopilot. >> if that's the case, why

aren't we seeing a bigger rally. >> the market is going to be cautious it's not just the fed that matters. there's a lot of things that matter in this market today so i think it's one data point, one that we'll look at and the market will be cautious about a lot right now. >> anthony, let me get your thoughts on what you just heard out of williams as well. >> this is a real magnificent speech, and much different from what most of us are accustomed to i remember working as an economist at the new york fed when greenspan was there and john williams brought his fed-the-fed thesaurus to the table you had almost a 20% jump or swing in the s&p 500 index why is the market reacting this

way? very clearly, the concerns are what is the federal reserve going to do with the fed funds rate in 2019 the autopilot situation on the balance sheet, once again john williams says even that is on the table, that if things were to shift, on all fronts the federal reserve is telling us they're listening to the market. john williams took the time to tell you that people in the federal reserve and certainly when i was there he did it but he told us today they're watching the markets, using soft data, using hard data. in other words, if people think the federal reserve is tone deaf, today john williams told them that is simply not true that's why you got the positive reaction. >> nothing he said just now contradicts our unwinds what powell said on wednesday, including the balance sheet stuff. >> well, i really don't agree with that and the reason far is the market reaction was jerome powell is set in his ways,

they're going to raise interest rates. maybe they'll adjust it. but they feel the economy is very strong and what john williams said today, president williams said today was yes, that's the baseline estimate but if things weaken -- and that's all the market wants -- remember that when the economy is doing well, guess what you're on bullish drive, the markets don't need dovish talk but all of a sudden if you're approaching bearish drive, that is approaching bear market territory, we're not there yet, carl, that's when the market wants a more dovish fed and today john williams told us if you approach bearish drive where you get into bear market territory where the s&p 500 drops 20% or more, guess what? we are listening and ready to adju adjust that was the message and that was different from what the market got out of jerome powell's news conference and statements >> ann, what does that tell us about fed communication under this current fed chairman and

whether the market can put faith and credibility in him if williams has to soften his message and recalibrate the t e tone. >> hopefully he realizes words do matter and thinking very carefully ahead of time about what words you use with the market is very important longer term actions are what matters so when the market is nervous as it is, what it was looking for is the fed to say we have your back it gives people comfort now but the market wants to see it, and i think what we heard is they're saying they're paying attention, it was just semantics. >> i want to contrast, i think we have a soundbite from williams talking about the

balance sheet and bear in mind this compares to powell's answer to a question on wednesday saying the balance sheet would be on auto pilot and that rate decisions it would be focus of changes they could make. >> i think the economic outlook is very strong and i am of the view that we are on the right path i strongly supported our rate hike i don't see the need to change our balance sheet normalization. >> so we're trying to put into context for viewers how much of a pivot is that. >> i think it's a significant pivot because if the economy weakens, and another thing we didn't talk about is the fact that president williams talked about financial conditions if you look at the chicago national financial conditions index, that has deteriorated for

13 consecutive weeks where you've seen that index moving closer and closer towards positive territory wherever that index moves into positive territory, you get bear markets and recessions and so when you see that deterioration in the financial conditions index, that is put out by the federal reserve. john williams will be listening. that certainly will be reflected in terms of adjusting that autopilot. >> it's a good sign they say they're listening but i think what some investors are concerned about is that they're getting the wrong message. when they say the outlook is strong and the economy looks good, why aren't they referencing inflation expectations why aren't they referencing ceo confidence surveys which have rolled over along with soft data like the philly fed and new york fe fed. >> i think they're trying to carefully balance things your don't want the fed to be so

dovish and cautious. it scares the markets more so i think they see the same data we see. the markets react into it. they had this rate hike they were going to do it was more semantics about being said that being said, i believe they're focused on quickly changing any base case scenario they have if the things in the economy change there's a lot that could happen. if you get a china deal, you could see global growth turn up again so i think they're saying there is a lot of things in place and they're watching carefully. >> we will leave it there. anthony and ann, thank you for joining us stocks continue to move higher the dow was up 80 before it started.

it's now up 250. a partial government shutdown kicks in in just a few hours from now the issue on the table for the stopgap spending measure is fund ing for president trump ice border wall. eamon javers is there. what's the update? >> sara, that's right. mitch mcconnell has arrived along with a couple other republican senators at the white house. take a live look at west executive drive. that's where we're seeing the senators coming into the building we'll wait and see who all is attending this session today there you see the side door to the white house where the lawmakers usually enter and we'll watch for those arrivals here the president meanwhile tweeting that democrats are the ones who will get the blame from any shutdown of the government remember, this is a president who said he would be happy and proud to embrace the mantle of being the person who shut down the government for border security now, though, he said he wasn't going to blame the democrats now, though, he clearly is going to blame the democrats if there

is a shutdown, the democrats, of course, will blame him meanwhile, the president has been encouraging republican lawmakers on the hill to embrace what's called the nuclear option, that is getting rid of the filibuster on legislative matters which would mean you'd need a simple majority to pass bills in the senate. most senators don't like that idea because their power as senators comes from the power of being able to block things on capitol hill there you see the president urging mitch mcconnell to use the nuclear option a few senators this morning, key republicans including flake and hatch and lamar alexander put out statements saying they don't want to use the nuclear option they understand if the democrats retake the senate at some point in the future, they'll want to use the filibuster power themselves they don't want to give that away it's an institutional battle in terms of the power and prerogative of individual senators so we'll see what kind of a deal they can strike as we

watch senators arriving for a 10:30 meeting with the president of the united states not likely to result in any new border wall funding because they need democratic votes to get that funding through up on capitol hill and that is not likely to happen. >> you'll keep us posted eamon javers at the white house. we got that pop out of williams. s&p went to 2500 though we're 'sck to 24989. it no longer the worst week for the markets in nine months now it's only the worse week in two weeks. back in a minute.

stocks jumping higher after john williams said the fed could re-evaluate its view in 2019 listen to what he told steve liesman a few moments ago. >> we made some changes, important changes, to our statement around that. one is we changed the word from "expects further gradual increases" to "judges.

if you look in the the dictionary, judges mean we made an opinion it's our judgment or opinion that that's where we see things going. this is not a commitment or promise or a sense that we know for sure we're saying this is how we see it now based on our positive optimistic view of the economy. >> joining us now at post 9, pulitzer prize winning columnist jim stewart. it's been a while since we talked markets with you but let's talk about where we are as we end the year. your thoughts. >> this feels like a bear market there have been selloffs when i've been on saying no, this doesn't feel like a bear market to me, it's like one flash but this grinding down does have that feel about it to me, nevertheless my approach is be disciplined, rebalance, look at percentages, if you can't bring yourself to do it, pick a fixed

date and rebalance, ignore the political static i know trump is getting a lot of the blame and why wouldn't he? there's chaos in the white house, the threat of the shutdown but i never make market bets based on political issues because the effect on the economy is so tangential sometime sometimes. interest rates is the big thing, we here in a new environment where essentially very safe liquid assets are yielding something we haven't seen in-year-old. we all knew that would pose competition for stocks and that valuations are coming down i don't think any of this is terrible this is not like 2000, 2001, 2008 where there was a real crisis happening that was definitely going to affect the earnings of american companies the economy is strong so i don't see any reason to pani >> how much dry powder is enough in a portfolio right now

>> i think everybody has to reach their own levels here. i've always felt for long term people 70/30 is a healthy thing. i think right now of the 30 or 35 a lot can be cash because you don't want to go into long term or medium term bonds with rising interest rates so institutions maybe have three or 4% cash. individuals could have 10 without feeling uncomfortable. >> so you believe the fed when the fed tells us the economy and the outlook is strong because that's one of the things investors are grappling with of whether or not to trust that and feel that that's the right take. >> i do trust them i don't know anything to the contrary but they have all the data why wouldn't they be following it i think they're doing their best some people are saying maybe they're doing this to defy president trump and prove that

they're not being browbeaten by him into holding back. i don't think. so i don't know these people extremely well but i know them well enough to know that when they're sitting around the table they're not talking about well, people think president trump bludgeoned us into doing this. >> jim, as we end the year given the coverage that you've had and we've had of cbs, befitting that we wrapped that up leslie moonves doesn't get his $120 million. >> no. >> but he got his legal fees paid. >> you would think that is the end of the story to say let's run it up, he didn't get the money and by the way he shouldn't have but it's only the beginning of the battle because he can now go to arbitration, he can file related lawsuits to challenge this decision and when he does this, amazingly to me, cbs will pay his legal fees and all related expenses so why wouldn't he continue the battle?

i would bet anything that by the time i'm back on this show he will have filed arbitration because he has no down side, cbs is picking up the tab. it's true many companies do this for other former ceos and executives but they reached a distinct termination agreement with him in which they could have said we won't pay your legal fees instead they said they would and they had to have known what would he use them? to essentially fight cbs over the 120 million so it's one of those bizarre twists that you scratch your head and say how could this be happening? >> there is an awful lot in this story that i've asked that same question and you have as well, jim. thank you, happy new year. >> happy holidays to you and everybody else out there. up next, shares of nike soaring after blowout earnings results. a closer look at the company's

numbers, the outlook, and what it says about the global consumer "squawk on the street" will be right back dow is up 211. nike contributing the most to nike contributing the most to that gain.smarter business. nike contributing the most to

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apple on track for its worst quarter in more than a decade and shares are about to enter the dreaded death cross. find out what it means for the stock on tradingnation.cnbc.com. more "squawk on the street" is coming up.

time for our etf spotlight, looking at consumer discretionary trading up more than a percent nike surging on strong online sales, global demand despite trade tensions between the u.s. and china and raising its outlook. joining us isw retailed a visor president stacy widless. what are people saying about the global consumer besides the global consumer wants nike products. >> yeah, i think what this tells

us is that the companies that are offering innovation, customer experience differentiation are winning here we went into this report with all of the fears in the world, china slowdown, meaningfully slowing down, we went in worried, and they blew the numbers away not only geographically on a two year basis but in every single category so it shows that the innovation they pushed through in the last year after getting killed by adidas for several years worked and paid off. >> david asked me earlier about percentage of sales that are digital. i found out it is 15% of revenue now. they talked about digital more than 50 times on the call yesterday which they have been doing the last few quarters. what is the digital strategy, what differentiates it from nike >> i mean not only looking at 15% now and the goal is to get to 30% of business by 2023, and

they're going to blow that number away. they're way ahead of expectations already but they're not only online successful, they're using digital in stores and integrating their product with the consumer you can go into the new york flagship store and make your own product, make it exclusive to yourself i think they're usingdigital i a way that's making product specific to the consumer but also as they talked about, the direct business for them is still quite small. as that transitions to a bigger piece of the puzzle, margins in the company lift over the next several years. >> so they did talk about china in one sense, saying it is strong 31% revenue growth tells you the story. they said there's no impact from the trade tensions between the u.s. and china, stacy. what if tensions got worse, what if we saw escalation between the u.s. and china and more tariffs

that impacted footwear and apparel. what would that mean for nike. they didn't lay that out >> sure, that's always a risk here what they've said is there has been no impact and i think some of the smart things they're doing, what are they doing in the chinese market to gain share, they're working with alibaba. they sold 40% more pairs of shoes this year than last year on singles day they delivered 5 million units in five days, and did that through partnerships i think that's also important to point out. if you have the product, the partnerships, not only from the likes of alibaba but the correct wholesale partners in the mall, your model is sustainable, even in a slowdown. >> very quickly, is this the sort of report that boosts the competitors across the board or hurts the competitors in the nike stealing share? >> well, i think it is very clear that nike is stealing share. i have been out in the market over the past month looking at

the footwear sector. clearly there are no markdowns on nike. i wouldn't say the same for the competition. clearly this is a share story and the likes of adidas that were the darling two years ago have fallen behind in terms of innovation nike is pulling in front and i see it continuing in 2019 in the next year. >> nothing bad to say from you, the stock up almost 9% thanks for joining us. time to send it to jon fortt for what's coming up in the next hour or "squawk alley. jon? >> good morning, david the battle between apple and qualcomm one of the big stories of 2018 continuing into 2019 we've got don rosenberg, gerenal counsel of qualcomm coming up on "squawk alley.

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all right. as we close out "squawk on the street," time to see what's coming up on "closing bell."

>> covering it is a few days before christmas, find out if there are retail buys after the carnage we have seen in the market, like in nike which is soaring 9% we talk to dana telsey and other experts. e w t go away. thdorallying, 167.

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