good morning it is 11:00 a.m. at the white house. 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ good morning i am carl quintanilla with jon

fortt. we got a bounce from williams when he talked to steve liesman but it faded that followed comments from the new york fed president specifically on the balance sheet, exclusively on cnbc last hour take a listen. >> 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 it in the dictionary, judges means we made an opinion it is our judgment or opinion, that's where we see things going. this is not a commitment or promise or in any way a sense that we know for sure that's what we're going to do we're saying pretty clearly this is how we see it now, based on our positive, optimistic view of the economy, and we'll change it as needed. >> this as a government shutdown looms hours away, set to go in effect at midnight we expect to hear from the president shortly. he invited some senate gopers to

the white house. jason pride and laurie heinel are with us. good morning good to see you. >> nice to be here. >> how much was new out of williams just now? >> it is interesting to see them stepping back the language here. there may be a recognition in the fed, if williams is out there saying this, the way it came across wednesday was a little bit not as nuanced or subdued as they wanted to come across we had almost a 3% swing in the markets, which is a big reaction for a fed meeting. i don't think that's exactly what they're intending to have in the market. the walk back makes some sense at this point. >> and lori, if it were just the fed weighing on the market, maybe it would have had a larger effect so far, not necessarily that dramatic. if you look at anything in the way of market behavior, you are going back to early 2016, maybe 2011 is the call just recession or no recession in terms of how the market goes from here?

what do you see the fundamentals saying >> absolutely. the problem is that nobody really knows what the trajectory is the core thesis is that we'll still have a good 2019 the details around that have gotten elevated, whether it is concerns on fed language, there's something for everybody to not like in that statement, or whether it is trump and some of the things he is calling for in the government shutdown the problem is that the core thesis is in question. >> jason, given everything we have been through this week and in recent quarter, how much does action out of d.c. matter, the increasingly likely government shutdown, the mattis resignation, does that factor in or is it noise you ignore? >> i think the way i would be thinking about this, the government piece is noise on top. it is like the cherry on top to all of the different problems we are grappling with the fed is tightening. we're going into a cycle where they're starting to get close to

what they think is neutral and there's always a possibility they step over to put it in bigger picture context, we're in ninth year of expansion. we put in place recession model internally to gauge what's problemability of recession in the next 12 months it is not a perfect indicator, but gives an idea of risk. that popped up to 35% in 12 months let's think about that that's a yellow light, not a red light. the thought process is one in three chance that means two in three chances we don't have recession, we keep going in the expansion, we extend it further. but a third chance is higher than what i like to see typically. typical majority of the cycle, through the majority of this cycle so far, the recession indicator was showing sub 20% yu numbers. we're seeing 35% i think expansion that's on-going but one that has fragilities. if you have the right factors

that hit the wrong way, you could see recession. markets don't like that. >> you think corporate profits go to zero in '19? i don't think so i would pause given it is a 35% chance we have seen the indicator hop into 70, 80% range i think it is hitting 35% because there's chance of technical recession, but a recession, if it were to come about would be light in magnitude. we don't have that much in the way of excesses built in the system to pull back from so it will be the corporate profits if that were to happen, may hang in there surprisingly well. >> do you agree, people say be glad housing is not a significant size of economy, corporate debt up 65%. >> a lot of shorter cycle signals are bouncing all over the place. we have some indicators flashing more red than a couple of weeks ago.

literally next week or the week after could be in the yellow or amber zone we're not worried about recession in 2019. corporate profits should be around 8 or 9% what's happening is risk premium are resetting. these levels we think it is an interesting entry point. >> for equities. >> and in the u.s. where we think despite the geopolitical tensions, the u.s. is still the least worse house on the block. >> even with tariffs going to 25 >> yes with that trade dispute, it is weighing on global companies in particular, but on balance we think we'll get through it we'll look back, think they were good buying opportunities. >> we'll see it is getting interesting now. thanks so much for the time. starting our hour off. following a chaotic day of negotiation, government shutdown seeming ever more likely as congress and the white house refuse to budge on funding a border wall.

ylan mui is in washington. >> reporter: republican senators went to the white house to meet with trump of course they're going to talk about the border wall and government funding, in addition to senate majority leader mcconnell, chuck grassley, lisa murkowski, susan collins, mike lee. that's a diverse mix of senators, moderates and conservatives. gives you an idea of how wide ranging that discussion is likely to be now, president trump has been putting pressure on mcconnell to invoke the nuclear option. this would allow them to pass legislation with only 50 votes and that means they would not need democratic help in order to get the spending bill done but this is not a road mcconnell wants to go down, and there's also not support within the republican caucus to make this move already this morning we have seen at least three senators come out against it, jeff flake and orrin hatch tweeted their opposition, senator lamar alexander put out this statement. i want to put a stop to this

practice of the senate breaking its rules to change its rules. i will not vote to turn the senate into a rule breaking institution. the senate is expected to convene for official business starting at noon one of the big questions is how many senators will actually show up for the session, how many people will be voting. we do expect the vote to happen today. we don't know what time. but guys, the omb started to notify federal agencies to prepare for potential government shutdown about 800,000 federal workers to be effected. back to you. >> all right the suspense builds. we'll talk to you soon thank you very much. still to come, general counsel for qualcomm joins us later for the latest in the legal fight with apple and cisco chairman and former ceo john chambers is thwi us a lot more "squawk alley" is still ahead.

stocks were up briefly off the back of optimistic comments from new york fed president john williams last hour now mostly in the red. the dow about flat, barely hanging onto gains nasdaq briefly in the green, now back in red, out of bear market territory. down double digits in the last two months this against the backdrop of possible government shutdown and

continued tensions between the u.s. and china joining us in a cnbc exclusive, cisco chairman emeritus, john chambers that runs his own firm, jc 2 ventures. happy holidays, good morning >> good morning, jon, carl, rest of the team. pleasure to be with you today. >> now john, a lot of big tech stocks suffered in the last quarter as the market has. how is it impacting the pace of investment in the valley, your outlook for 2019 is this something that companies are largely shrinking off as a wall street thing or is it hitting home in silicon valley as well? >> well, i think you can break that question into a couple of pieces, jon, and it is the right question to ask. many of us, myself included view the fed missed an opportunity the other day to basically raise interest rates, but then say i'm going to pause and watch how quickly the market is changing when you have the stock market

almost in bear territory on the nasdaq and crossed into bear territory from the august high, down 20%, that's an indication when you have cfos around the world thinking we may be going into recession, like 75, 80% of them, then all of a sudden you have a self fulfilling prophesy. the fed can't do the same things they've done before in terms of amount of time and guide anlance i would like them to stabilize it in terms of venture capital startups, it is huge i was just in france, many were leaning in on high tech. in terms of investing, thinking two, five years out. vc and private equity is bullish. >> we have been hearing anecdotes of boards bringing down the internal growth forecast did you say 80, 90% see recession coming >> i think 70 to 80%, it was the

cbs survey of chief financial officers, it was done in terms of outlooks for late 2019 and 2020 i saw the slowdown in 2000, the hard way our business was up 70% at cisco. and within 45 days, it was in free fall. we saw it in 2007, we saw a hiccup in financial markets, said something is wrong in middle of 2007, and it slowed later. that goes back to why i think the fed missed the opportunity i think he could have stabilized markets and sent a more cautious tone in terms of saying we'll be there quickly if we need to. >> sounds like people that try to draw analogs like '01 and '08, you think the comparisons are not meaningless? >> no, i think the stock market signaled them ahead of time, it was usually a segment of the

economy that set it first. i think odds are that we will personally, my own view, not go into recession because the majority is wrong on this. there's more negative pressure than positive. i think it is a perfect time to be cautious. >> how bill a role is china and trade war with china playing in your calculus around this. ip issues in china, you're no stranger to that, having dealt with it at cisco how much of this is something that the u.s. needs to prosecute now in order to have the kind of growth needed in the future and how much of it is causing the kind of near term pressures that are leading cfos to have the projections you just talked about? >> when you have the two largest economies in the world in a major trade dispute and it is clearly slowing down economies of both sides in terms of that dispute, it is clearly a factor. you combine that with europe

beingsoft and you suddenly see u.s., china, and europe in a period of softness it is absolutely a factor. i have been in china for 40 years, i was with wang laboratories they're great business partners historically, have always been tough negotiators but a win-win environment. last ten years it has been more of a win-lose mentality. unfortunately we have to get back to level playing field. we have to do business in china the way chinese want to do business in america. can't be two sets of rules has to be intellectual property protection while i wish we had a more general way to have the trade dispute, it is an issue, can't have 370, $400 billion deficit between two trade balances and not treat both countries with a win-win attitude it is absolutely a factor. you saw it in china's numbers. often numbers on the state side may be softer than the public ones they see as well.

>> john, i miss color you brought to earnings calls, commentary on the quarter and so forth. i wonder what you made of fedex's commentary where they said a large part of global slowdown, including asia and europe, is a result of political mistakes is that something you would have echoed >> well, fedex and their leadership has always been very candid i don't think we're executing with the effectiveness we need in terms of our politics, both in europe, in the u.s. and in asia, and i don't think it is one party or the other i think we have to get back on track of making the right decisions for the long run and i think we have to do it together, not with a minority group influence on it. i think i don't know if the chairman said that or ceo, but i think they are fair in their comments, yes. >> all right john chambers. jc 2 ventures. thanks for being with us happy holidays.

>> always. happy holidays to you all. when we come back, art cashin market predictions for 2019 first, some of the worst performing names in the dow so far this session dow is up 34 points, but the s&p has gone red after the inter day williams rally williams rally more "squawk alley" in a minute. the dads and the drivers. there are doers of good and bringers of glee. this time of the year is so much more than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,250 credit on select models now during the season of audi sales event. ♪

the dow holding on to a small gain, quarter of a percent after losing yesterday we had a spike after fed john williams spoke that rally was sold fast as they have been for the last couple of weeks, as a matter of fact the open exceeded the close in the market five days in a row at least. right now, dow up 78 points. a third of 1%. every year, ubs director of floor operations joins bob pisani for a conversation about his outlook.

bob pisani is on the floor with what art says 2019 has in store for us. >> mike, i have been with the him at the bar doing this more than a decade, reflecting on the wild year that was, looking ahead to 2019. art and i agree the big story for 2018 was return of volatility here's some of art's thoughts on what's in store for 2019 first on the fed and rate hikes, none >> i think perhaps the fed will not hike ever again in 2019. if you go back and look at what i said, both in our interview and with you time and time again, i have been a bear on yields i think the fed is somewhat misreading what's going on yields are not going much higher, and there's an outside chance they cut before the end of 2019. >> on the stock market in 2019,

expect a bumpier ride. >> yes, i think it will be very volatile and for the first half probably flat to down as the fed and others grapple with what they want to do. >> next on tariff and trade wars, art thinks the president may walk back tariffs, but long term trade deal with china is much less likely >> i don't believe so. i think we will get something that approximates it, and you'll get perhaps in midyear a relaxation rally, but with the problems of political secrets and whatever, i don't think it works out. >> as for art's 2018 predictions, i give him high marks for three core predictions. first, china could interrupt the

synchronized global growth story. he was right on that second, the fed, the risk is that inflation remains too low give him half right. it moved toward the target but was still shy of it. and bitcoin will not work out the way the enthusiasts think it will right on that. this is not big, given how low the accuracy rate of most predictions are. art reflected much angst for 2019 by freely acknowledging how uncertain outcomes are on big issues like brexit, trade, global growth, president trump himself. you want to see that full interview, more predictions. tra trader talk, cnbc.com. >> thank you. european markets are closing in a few minutes seema mody joins us with today's action. >> hey, jon, european markets trading lower. two pieces of negative data investors are chewing on first italy saw a drop in

manufacturing and business confidence this month. that's weighing on banks in france, though the anti-tax demonstrations eased, the country's economy could feel the heat in 2019 french business confidence plunging to the lowest level since november of 2016 confidence in retail was hit hard, lowest point in three years. the soft data in europe is spelling out a concerning picture as we wrap up the year in terms of specifically levels to watch in the broader european markets, the spanish equity index could be the next european market to enter bear market territory. it is down about 19.8% from the 52 week high keep in mind, italy, germany already in bear market among individual names in focus, look at the drug company perrigo. a nine year low after the company disclosed ireland is attempting to collect a large tax bill shares down over 24%

we can pivot the discussion to banks. shares of danske bank the lowest level in five years. they issued a second profit warning. look how the european banking sector fared in 2018 bigger losses than in u.s. financials some of that is due to specific political stories playing out across europe, whether it be italy or brexit. back to you. >> thank you very much dow up 64 points let's get to sue herera for a news update. good morning, sue. >> good morning, carl, good morning, everyone. president trump is looking at removing u.s. troops from afghanistan. no decisions have been made, two defense officials tell nbc news that the white house has ordered the pentagon to draw up plans for a full troop withdrawal among other options. news follows secretary of defense jim mattis' resignation after disagreement on several

issues trump tweeted he was retiring, but he hand delivered a letter of resignation. tonight is 30 years since a plane exploded over lockerbie, scotland, killing 270 on board and numerous people on the ground memorial services were held thursday in scotland to remember the victims, most of whom were american. and a senior official in china says the first batch of videogames has been approved they were stopped earlier this year no new game releases have been allowed since march, when they stopped approvals amid criticism of violence in the games. that's the news update this hour jon, back downtown to you. >> thank you, sue. let's get a check of major averages as we head to break the dow is up 74 points. s&p has been hugging a flat line, right now up fractionally.

nasdaq down three-quarters of 1%. later, don rosenberg is with us "squawk alley" continues after a quick break. quick break. stay with us that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. riyou ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪

the market reversing early gains after getting a boost from new york fed president john williams the nasdaq still on pace for the worst month since 2018 faang numbers having a rough december, including amazon down 15% so far this month. joining us to talk about it,

gene munster gene, it seems that for most of faang, maybe set facebook aside, it has been the same story with what's going on at the companies and maybe the fundamentals and market deciding to put a different valuation on the fundamentals is that the case and what may change about that preference into 2019? >> well, i think there will be a split in the faang i think you'll see outperformance from companies like apple, google and the other ones, but fundamentals have changed slightly if you look at the near term fundamentals specifically, this is setting aside all that's going around data privacy and push back on social setting. all of that aside, growth rates are starting to slow apple is just an iron strong company, they're working through head winds regarding emerging markets and demand on phones and

what impact that could have. there are some nuances on faang names that haven't been present say six months ago that add a little complexity to how the waiting should play out for investors in the next few months. >> and brian, you had a sell rating on facebook for some time obviously have been correct, it has been sliding steadily. now the stock is about 128 and change i think your target is 125 is it time to reassess in other words, all of the challenges you talked about priced in at this point? >> well, i am constantly reassessing what i'm thinking. here's the problem though. risks are more to the town side than anything, not to say i change the price target necessarily, but to say that i think wall street may be too optimistic on revenues i think independent of what's been happening in the last few weeks, most investors don't understand there are limits to growth for the total advertising market and for facebook inside that that's the first thing second thing, too much wall street still thinks when

facebook is giving guidance on operating expenditure growth that that's a conservative number i don't think facebook has a handle on the kinds of expenses you have to incur on all sorts of fronts. >> gene, should we still be talking about faang? you think about who is not in faang. apple wasn't originally part of faang. microsoft certainly was not. names like adobe continue to be important, nvidia, various chip stocks is there a way to recast the important tech companies for growth and for platforms heading into 2019? >> i think there is, jon, and i think you'll see it slow i don't know what the right acronym is, who the exact players are. microsoft earned a seat at the table. i think facebook should drift off that list. i agree with brian i think there are greater issues around usage of facebook that will play out in the next year but then you also have companies

and very controversial company like tesla, relatively small, $60 billion market cap that could be a fundamental probably the best product road map for any company in the next decade i would think those, microsoft, tesla move into the names, facebook moves out but definitely a shift this mail it in approach to just own faang will be different the next couple of years >> brian, a lot of discussion today on core capex numbers and wondering when the numbers are more solid some analysts draw a line between that macro figure and how adobe and crm held up. how much risk is inherent in those names? >> i cover both those names. if anything, they're probably best positioned going into a downturn, i mean, if that happens, advertising supported names are not well positioned, facebook and google in particular will not hold up anywhere near as well as adobe

and sales force. i think they're fairly valued, we're not really incorporating a downturn, but if that were to happen, i think they're well positioned. >> brian, are you sure about that just wondering because adobe when it was a lot more weighted to marketing spend in the creative sweep did suffer down turns. we haven't seen how cloud based subscription models hold up, what customers will try to get out of when a real downturn hits >> so many revenues are multi year revenue streams they booked multiple years ahead of time. i am less concerned about that the other thing is when marketers ask we can't spend money on facebook or stop spending on facebook, despite concerns, where else are you going to spend the answer is digital experience and market technology. there are a ton of places. adobe, sales force are positioned for an advertiser

looking to reallocate resources for marketing. >> and gene, finally i guess a couple of months ago may have thought the story of tech next year might be finally some unicorns going public. do you think the big four get out there, uber, lyft? >> i am going to be cautious we come out with predictions on 2019 on the 26th there's a prediction around that it should be a year for some new entrants into the public markets. >> all right little bit of a tease. thanks a lot, gene appreciate it. >> thank you. much more on this morning's market move straight ahead "squawk alley" will be right back

what a morning for economic data let's get to rick santelli and "the santelli exchange." >> good morning. i want to welcome my guest, john taylor needs no introduction. taylor rules, stanford, worked within the government in various agencies john, thank you for joining me this morning. >> thank you >> all right we had new york fed president john williams on, great interview with steve liesman my impression, got a nice pop out of the markets i think he talked more towards the notion of balance sheet, whether it is really on

automatic pilot, referencing comments made in 2017 that it could end so they see it fit, and mr. powell, the previous day in my opinion during q and a did the most damage to the market seeming more stallworth on the notion of the balance sheet. speak to that, why it is hard to calibrate how we drain it away >> you know, i think they have been much more specific about what they're trying to do. that's good. remember, the temper tantrum was a mess a few years ago, it is better than that i think automatic pilot is about the right way to put it, they're able to make adjustments as they want to going forward, so there's flexibility. most important, it is clear what they're doing. they made a big effort to be clear about it >> when it comes to the balance sheet, i rubbed shoulders with a lot of people that traded markets for four decades, and the notion that this is something never done before, especially on the scale we have

seen globally, how do we know if we are proceeding correctly, whether it is a stencil, automatic pilot, whether it is more subjective. it is something, we're not sure of feedback loops. >> we haven't done this before it began with massive balance sheet expansion. we are in the process of regularizing, normalizing that it is difficult, always has been difficult. that's why some people warned about big purchases in the first place. what we learned so much is if you can be predictable, explain to the market as best you can, it should work better. it is not easy, people should recognize that, but it is going well there are lots of people that go back and question how much of a boost to the market these did in the first place. there's a lot of debate about that amongst economists. they're trying to be predictable, it is good. it is not automatic pilot,

that's for sure. it is much better than it was. >> you know, funny you mention that, john i have seen that you've done a lot of empirical research as of late about lots of the policies implemented during the credit crisis great recession your conclusion was they didn't make much positive difference, maybe even negative. that includes quantitative easing that gave me a question that popped in my head. none of us thought about it specifically, but many believed many of the fed liquifying prophesies did not do as intended if that's the hypothesis and you can finish this out, that would mean maybe there's too much nervousness about the unwind of qe >> i think there's some truth to that there's actually debate amongst economists, some recent work out is saying a lot of qe in the first place didn't make much difference latest research is showing that. i think you have to be careful

about too rapid, unpredictable unwinding. the fed is treating it seriously which is good. >> excellent john taylor, thank you for joining me always a privilege to get you on the air. i hope you have a wonderful holiday. mike santoli, back to you. >> rick, thank you very much. we talk about fed communication, markets were moving this morning off the back of steve liesman's interview with fed president john williams steve joinls s us with more >> what the markets heard, why they would rally and rally off it, a lot of commentary from folks was the idea that the federal reserve is listening to the message of the market and incorporating that, maybe saying so strongly more than jay powell said it at the wednesday press conference, more affirmatively saying the fed was in corp rating those concerns. here's john williams on the idea of listening to the markets. >> 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, think seriously about that second, i think we're hearing something important from markets, that's concern around risk to the economy and potential slowdown, further than we currently expect in the base case. >> mike, i think another thing important for the markets to hear is that the fed is not inflexible is how williams put it when it comes to $600 billion balance sheet roll off i want to point out, listening to rick's interview there with the monetary policy expert john taylor, he points out one of the things the fed has done by programming the balance sheet selloff, it is automatic, the market doesn't have to worry about it i think the markets may want to be careful what they wish for here we have to go into meetings wondering if the fed will raise rates on one hand and alter the balance sheet selloff on the other. those are two variables to worry about, whereas now we only have

one. john makes a good point why the fed is on this auto pilot thing. i wonder if they like it if the fed is flexible without having to worry about the balance sheet as well. >> extra dimension of complexity. >> multi varied equation at the live meetings. >> steve liesman, appreciate it. qualcomm is continuing to extend pressure on apple, forcing the company to pull some iphones in germany qualcomm general counsel sits down with us next. first, some of today's laggards on the nasdaq 100 "squawk alley" continues after a quick break.

when it comes to consumer discretionary names, amazon dominates. it is the most valuable company in the sector. is it the best buying opportunity? dom chu has a closer look at potential up side outside of amazon for a lesson in sector n nomics >> it trades still even with the pull back in the market at a premium to the overall market valuation, based on next year's earnings estimates, something they call forward price to earnings if you look at the yellow orangish line, forward priced earnings of discretionary is 18

times versus red line, s&p 500, which is 14 times. then equal weighted version of retail a spider xrt, equal waited eft that doesn't place as much emphasis on amazon, trades at a discount, showing you amazon effect for valuations. when it comes to where the opportunities could be, it might be in some of the most beaten down names check out the average analyst estimates for target prices and what the potential up side could be best buy, possibly 39% gain if analysts are right tiffa tiffany and company, 40% t tapestry, 57%, michael kors, 71. one thing they have in common with the exception of amazon is that every one of these names is now negative year to date and hit a 52 week low or worse in the last couple of weeks, so as we watch amazon, still an up

side standout, positive on the year, but falling off highs. whether or not they adjust target prices is something to watch in the coming weeks and months back to you. >> thank you and qualcomm is continuing u a patent battle of the company's iphones. qualcomm forcing apple through germany to pull some of its older phone models there, the 7 and 8. apple's response to the ruling in part, quote, we are, of course, disappointed by the verdict and we plan to appeal all iphone models remain available to customers through carriers and resellers across germany. apple did say the iphone 7 and 8 will not be available at retail stores in germany during the appeals process. with us for the latest is

qualcomm's general counsel don rosenberg. don, good morning. >> good morning, jon >> apple always seems to interpret the rulings more narrowly than you do in china they had to pull less from the market than you interpreted and in germany they're saying they only have to stop sales in their stores and their partners can continue to sell what is your interpretation and why should investors believe this is real pressure on apple >> well, thanks, jon it's not a matter of interpretation all one has to do is read the orders in both of these venues and you can see very clearly in china that apple was asked -- ordered, excuse me -- to immediately cease selling, offering for sale and importing the models that were described,

6s through 10. and they should be doing that right now. if they're not, there's no interpretation, they're in violation of the order >> even what they're saying about just the 7 and the 8, you're saying 6s through 10? >> sorry, i said in china. >> right >> they said 7/8 for germany in china it's the 6s through 10. that was because those were the only models available. the new models weren't available when we brought the lawsuit. in germany they're saying the 7 and 8. the order describes the phones that were described in the court and those were the 7, the 8 and i think the 7s, 8, 8 plus as well plus the x. those are all covered. that order goes into effect soon

as we post the bond. it's a ban on, again, the sale and offer for sale it's not just their retail stores it's any offer for sale >> it's a weighty bond, $1.5 billion, i believe i wonder if it's so narrow apple only has to stop sales in its own stores why the bond ordered for you to protect them against losses would be so high but, also, apple's got money to burn. they have tons of money. komiyama lots of money, too, but not nearly as much can you play this all across the globe as you prosecute this legal fight? >> you talk about the pressure we're putting on apple it's the courts and the rule of law that's putting the pressure

on apple apple sued us first in the u.s. and multiple places around the world including china. we generally have not litigated. this is the second time we've been involved in a patent litigation we've initiated we invent and protect with the patents and we lie on the rule of law forced interthis situation we had no choice but to protect our intellectual property, courts are recognizing and enforcing it in places like germany and china which is good news for the united states. and soon it will come in other places as well >> as we head into 2019 5g is an ever more important part of

qualcomm's stories you have a lot of intellectual property around that apple is challenging the idea not only do you sell a proponent but you have a value based on how much the phone sells for you have a lot to lose if you lose this. is there any room to settle or is that up to apple? >> let me just -- and i could spend time but we don't have it -- let me make sure we remind people our business model which is a licensing business model and is a contributor to the standards that structure all of mobile communications around the world is a model that was intended to and has expanded the ecosystem. when we were able to convince the world our technology was the best and accepted in the

standard, that opened up many opportunities for many companies to come in to the communications market that's what happened largely in asia at the time we have this terrific model which shares our inventions withed world so the communications market can expand as successfully as it has. apple criticizes us for our own standards model and even more ironic it seems to me that intel who has a common agreement with apple would criticize us given their approach to proprietary monopolization of that arena settlement as we've said often is something we prefer just as i indicated before

we don't loathe litigation but we have to protect our rights. if there's an opportunity to settle we look for that opportunity. >> thank you for sharing that, don rosenberg. thank you for being with us this morning.

obviously the williams rally is gone. the dow and s&p negative back to the worst week in nine months let's get to "the half." i'm scott wapner what are the positives for stocks the fed is hiking, the economy is slowing, washington might be shutting and a key cabinet secretary is resigning is there anything that can lift the market it is 12:00 noon this is "the halftime report." the fed takes -- >> we're going to be letting the data speak to us >> and then gives back >> this is how we see it now based on our optimistic view of the economy. >> which side should the market be on? plus, a big call on nike makes the stock