bear market? joe kernen is off, but kelly is our pick to sit in with andrew and becky quick. markets close early, so get your trades done, "squawk box" starts now, merry christmas everyone. ♪ live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. merry christmas eve. i'm becky quick along with andrew ross sorkin and kelly evans. joe is out today we've been watching the u.s. equity futures i bet you have, too. believe it or not this christmas eve morning we are looking at

green arrows across the board so far. dow futures indicated up by 61 points the nasdaq up by 40 points the s&p up by close to 9 points. let's talk about some damage we've seen investors not in the holiday spirit at all. you're talking about the biggest weekly loss last week in ten years for the dow and the nasdaq and the largest for the s&p 500 since august of 2011 friday's close for the dow was the lowest since september of 2017 the s&p is the lowest since july of 2017. lots of action today, even though we are talking about a holiday shortened trading day today. trading closes at 1:00 p.m we'll watch this closely throughout the course of the day. there was even heavy volume. dow was down by 400 points on friday in the heaviest volume we've seen in about two years. overnight in asia. the nikkei was closed in

observance of the emperor's birthday stocks in china were mixed with the shanghai up by close to half a percentage point the hang seng was down in europe, the dax is closed for christmas eve. other markets are actively trading. red arrows across the board. ftse down. the cac in france off by 1%, as are stocks in italy. in spain, the ibex down. across the entire specter, yields were sharply under pressure last week ten year is below 2.8% 2.75% is the last tick the two-year and the five-year slightly inverted. the two-year at 2.628% treasury secretary steven mnuchin calling america's biggest bankers over the weekend to discuss market turmoil. the treasury put out a statement

had a lot of people scratching their heads. the department saying banks confirmed ample liquidity is available for lending and consumer markets the statement says we continue to see strong economic growth in the u.s. economy with robust activity from consume e and the business mnuchin spoke to the ceos of six big banks. i spent some time on the phone last night trying to understand what the statement was about what was he saying to the ceos >> he set off a tizzy. >> he sent off a tizzy about who is talking about liquidity prior to this? >> part of it is probably because of the conversations or the reports that were out there suggesting that president trump wanted to fire jerome powell at that point mnuchin put out a statement saying he talked to the president and the president had said, no he disagrees with powell but he doesn't want to

fire him >> my understanding of the calls with the ceos, i spoke to a couple of them, it was a blanket almost normal kind of check in >> how often do these check-ins happen >> i don't think it's that normal but it wasn't a hair on fire type of call >> the statement unto itself, if you're trying to calm the nerves of the market, it seemed to have the opposite effect. >> the fact that everyone is watching futures, trying to figure out what does treasury mean by this, what's going on with the fed, that's highly unusual. >> i believe steve liesman will call into the show about 7:00.

several other headlines out of washington, ylan mui joins us no now. >> we have a stalemate in the shutdown late last nigh tweeted this, we need border security, and you can't have border security without a wall president trump did have lunch with conservatives over the weekend. jared kushner was there, mick mulvaney, but no democrats attended so it doesn't look like he's quite ready for compromise vice president mike pence met with the top senate democrat, chuck schumer. after it was over schumer's spokesman said we remain very far apart. both chambers are adjourned until thursday and the president

canceled his trip to mar-a-lago. the first lady is coming back to washington from florida so they can spend christmas together defense secretary jim mattis is leaving on january 1st, that's two months earlier than previously planned it comes after his biting resignation letter and then the news that president trump looked into whether he had the legal authority to fire fed chair jerome powell. as you mentioned, not just secretary mnuchin pushing back on this story but mick mulvaney saying president trump now realizes that he does not have that legal authority but not saying whether he actually looked into this >> there's been also talk back and forth about what was mnuchin trying to do by putting out those tweets, by quoting the president -- >> what was that what are you reading into the grammatical quirks of this >> the use of the word "nor" in

the tweet does not sound like president trump's normal syntax. >> nor mine. >> a lot of questions about this i've been trying to reach out to the treasury department. i have not gotten a lot of answers. part of that could be because treasury is affected by the shutdown so there's not a whole lot of people who are available to respond and to be looking at this >> that's a good point so it continues. ylan mui, thank you very much. i have a big investigative piece on the front page of the "new york times" this morning. i've been working on it for about six months i don't know if you recall when i first started the writing these columns after parkland, the shooting in parkland, trying to look into the role that banks and credit cards play in these things i decided to take a deep dive into this. the article is called devastating arsenals bought with

plastic and nary a red flag. every major mass shooting in america since virginia tech. it reveals how creditcards hav become a crucial part of the planning of these massacres, in a way i did not appreciate myself we reviewed hundreds of documents including mrortdpolice reports, we used foia requests to get much of this material just to put a fine point on it, of the 13 major mass shootings in america over the last decade, at least eight of them the killers financed their attacks with credit cards. some of those credit cards, the killers could not have afforded to buy the guns without the cards. that's a crucial component of this to explain why there's even a question mark about what role credit cards and banks can play in this. those eight shootings that involved credit cards killed 217

people and injured over 500 people here's a list of the recent mass shootings that involved credit card plannings to put a fine point on it. virginia tech, ft.hood, aurora, san bernardino, orlando, sutherland, las vegas. some companies don't allow gun sales over their services. paypal, square, apple pay do not. the banking industry for so long played a huge role in protecting us in ways i'm not sure we appreciate after 9/11, part of the patriot act, banks file suspicious activity reports for transactions involving more than $5,000 that the fim institution has reason to suspect are part of a plan to violate or evade

any federal law. so there's a question out there on whether the system should be changed and whether companies should be doing it voluntarily and i've gotten some e-mails overnight, or lawmakers should think about what can be done if you're a believer in the second amendment this is not an effort to take that away it's really an effort more than anything else to try to at least identify some of these patterns. and they are patterns. you see it clearly if you get a chance to read the article these people are spending 10,000, 20,000, $30,000 within several weeks prior. it's evident that the second these things happen, the first thing that investigators do is go get the credit card bills they don't look at social media and all these other things, they go to the banks. we should give you a statement from visa. i would say unfortunately this

is what they believe we do not believe visa should be setting restrictions on the sale of lawful goods or services. our role in commerce is to efficiently process, protect and settle all legal payments. asking visa or other payment networks to arbitrate what legal goods can be purchased sets a dangerous precedent. they are the most obstinate -- >> maybe outspoken >> i would tell you there are a number of banks that are desperate to try to fix this situation. after the first series of columns i wrote, bank of america, citi group walked away from their relationship with manufacturers. they didn't walk away from this issue of sales the reason is because they don't get the mcc codes, merchant category codes which would allow you to see what store it is. all of them, it would love to

have that information so that if they saw somebody who was under 21, for example, under 25 making purchases in a row that they would at least be able to have some kind of phone call of something where someone would do what's called a knock and talk >> just from watching this, watching this play out, i think what you're trying to do is to get the industry be proactive about this but maybe in lawmakers stepped in -- >> right >> it's more of a legislative approach placed on the banks >> that may ultimately and i imagine given some correspondence i have had may happen both on the federal level. this fall -- we talk about it in the piece, senator kennedy from louisiana actually proposed a bill to prevent federal

contracts to banks this make decisions on what he termed social issues. >> but the bill is called no red and blue banks act because once you start down this road, you can go further down it here's an interesting point about the piece. the level of detail in it is fabulous because at least it helps us understand even the point about the patriot act and the $5,000 limit. there's existing tools that could be maybe enforced better than they are now. that's fine. by next-door neighbor bought a gun after a break-in ten years ago. goes to the shooting range has a daughter whose a freshman in college now who wants to get into national security so these under 21 if she goes to buy guns because she's going to the range, is she going to be flagged, stopped what is the difference between her behavior and the kinds of things described in the piece not the extreme examples but it

sounded like maybe a single firearm used in the shooting of gabby giffords it's not that there's some that are so obvious, but what about the rest of them >> let's be 100% clear of that list that i gave you, in that particular instance, the gabby gifford case was not included it was not included on purpose, because there's no chance in the world that you would have caught that one gun >> right that was in your piece >> there are laws that say if you buy more than two guns at one store, you're flagged. legal purchase, you're flagged immediately for more than two guns >> but all you do is go to the other store. >> all you do is cross the street and go to the other store. if you go to walmart here and you go to walmart ten miles away, no flag. >> separate. >> but when you think about who actually has the access to this information -- if the goal

was -- that rule was put in place as part of the 1968 gun control act. if you go on the internet, all bets are off in many cases the world does not evolve to appreciate and understand -- if those types of rules were put in place for a reason, today the modern day version of that would have to try to incorporate what the credit card industry and the networks ultimately know >> is it simple do this in a modern way does it get into all of this stuff but how yes at the extremes it's obvious on who should be flagged but there's a ton of gray area >> if i could catch 8 of the 13 and save 270 people killed, 500 injured, i would take that i don't think you would get so many examples of knock and talks and other -- yes there are people who will try to buy -- if you're a hobbyist, you will go to a store, you might buy ten

guns at a time, you're flagged >> that just means what? they send somebody to check you out? >> they might. you get reported to the atf. the atf decides what to do in all of these instances it's not clear that even if you report all of this to the banks and the banks report it through a system that there's a deluge of data, unclear what they'll do with it. >> that's the part of the story that is interesting. an investigator said we're trying to find a needle in the haystack and the haystack is getting bigger and bigger. >> that vainvestigator who overw aurora would have preferred to get the data though. i have yet to meet an investigator who says don't give me the information they're all saying give me the information. just so we're all clear, you can get all the data in the world and guess what 123467 it may not help you. but if you don't have the data in advance, you have no shot,

excuse the pun >> state regulations are one thing. you're right from the federal perspective. >> at this moment with the politics of our country, it would be hard to pursue this on a federal level. >> that's why the joe kennedys of the world are saying why should these commercial enterprises be litigating the second amendment if there is no movement on the federal level. >> on a state level i think you could see movement on this >> yeah. >> to put it in context, in many states, 29 states, it's actually illegal to use a credit cardto buy a lottery ticket that's a state law policymakers decided for their stated th state they felt this way >> would that one step -- we'll come back to this later. would that one step alone avoid the -- having to go to the extreme of visa reporting every transaction? if they said you have to use cash to buy these weapons?

>> i'm not sure you would outlaw it that way. this is about trying to say -- >> would that be a simpler fix saying you can't use credit cards to buy guns. that's one position to take. given the poll tibitics of our country, i don't think that's an answer a lot of people may not feel that way i think if you said to yourself, in these states you would have to provide information back to the banks, in these states -- then that is much more complicated. what ends up happening, if three, four, five states do it -- >> it made sense as an anti-money laundering law. even before 9/11, if you were taking out $10,000 from the bank, they would flag you. somebody might come knocking on your door saying what did you want that money for.

that was money laundering rules. >> right the point of the piece more than anything elsewas to say we decided -- you can agree or disagree, as a result of the patriot act we decided to deal with international terrorism by using the u.s. financial system. if you believe this is domestic terrorism, i would argue to you that there are steps that the financial industry either voluntarily or with the help of legislators could take to help save lives then you have to decide whether you think that's worth it. >> page one of the "new york times. we'll come back to it. let's turn to the markets, joining us is simien hyman good morning we looked this morning at a market that's relatively calm. at least given the way people were following over the weekend this story we mentioned earlier about secretary mnuchin reaching out to the banks

what did you think the message of that statement was? are you concerned about the president trying to replace jerome powell? >> there was no shortage of goofy news over the course of the last week or so. you have the shutdown. you have the odd and unexpected mnuchin call and given that markets are down, there's no source for kind of a window dressing santa rally, maybe even tax selling in the short run all of this contributes to potential leg down this week >> it's unusual for a december to be as bad as this one has been this is the worst since 1930 or something. because it's down that makes it less likely we'll get that santa claus rally? >> for the next week or so but going into 2019, how can you not like sub 14 pe with this level of interest rates, i find it hard not to

like a 13.7 times 2019 earnings. >> greg, will we look back and see this as a screaming buy opportunity? >> i think so, both in the stock market and the bond market there's wonderful buying opportunities out there. we've been active in the bond market buying credit the markets have not been liquid for us in the last week. >> that goes to one of the critiques in the market we've had lately it's interesting that people are so quick to blame algorithms and liquidity. sometimes you get an opportunity to buy if you're disciplined and patient. if you are what are some things you think are attractive right now? >> markets don't move in straight lines this volatility is our friend. on the credit side we've been trying to buy dow. we bought short puerto rico paper last week, iron mountain on the high yield side so we've been nibbling in this

market >> we mentioned this last week, facebook is trading below 18 times forward earnings this company has been growing revenues at breath taking speed. yes, they have challenges, but what do you see in terms of buying opportunities >> everything is a bit on sale right now. you're still looking at double the price to the rest of the market we talked about this before. you're ten times earnings in emerging markets, and very interestingly now a 3% dividend yield. and -- >> can you ever do well in emerging markets over time can you hang on to eemergencying m emerging markets for 10, 15-year cycle? >> yes right now we're sitting at returns only half of the s&p since the financial crisis >> so that's why it feels like

they've been a dog in terms of giving you that -- >> the emerging markets are up 175 from 2009. even that 3% dividend yield is a floor. >> the journal today is highlighting dividend stocks has been the place to be in the market this year would you count on dividend names for next year or are you mosh interested in buying those good values you mentioned? >> we think if you look at stock market now and add up dividends and stock repurchase, we're at 4.6% in distributions to investors. there's value there. we've been buying nike and starbucks. there's opportunity in pharmaceuticals. absolutely >> are you worried about a recession, greg? >> we look at the second half of 2019 as an economic slowdown, but we're not using the "r" word the first quarter effect will

probably take hold we'll see a strong fourth quarter in 2018 with holiday shopping, we think that will be a catalyst for lower interest rates. >> because of the first quarter effect >> yeah. >> thank you both. >> thank you coming up, "squawk" goes shopping we will look at the season's holiday winners and losers brian neagle will join us next to break that down as we head to break, here's the premarket winners and losers in the dow.

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time for "squawk" goes shopping brian anything that haneagle ha outlook for the retail sector. i want your last holiday shopping between now and the end of the year and whether the wealth effect that may have buoyed us will have an impact over the last week and a half that we have not been able to read >> that's a great question we were doing the prep for this interview, i said the same thing, let's not worry about 2019 yet one big comment, in my mind there's a significant disconnect the market is clearly saying that something bad is coming

i'm not seeing it from my window into the world, following home dep depot, nike, lowe's, i'm not seeing it when i speak to my management teams, it's not that we're not seeing it in the results but these are well-run companies. they're not seeing that. >> what are the early indicators >> home depot said to me, i asked that question what is your early indicator? >> they would see a trade down in their stores. customers instead of buying the best product buying good product. right now they're seeing trade up >> so people are more willing to pay for the higher priced item and walk out with that they have not seen that. >>gional

disrpuptions around the country there were funny comments in 2008 like we saw spotty weakness here or here or things like it's fun nishny,e are weak on tuesday. i'm just picking a day of the week people are still shopping on saturdays, but for some reason stores are dead on tuesday >> going into 2019, who do you like and don't like? >> with that as a backdrop, my space has gotten cheap on fears that i think are overblown it's easy with that to like a lot of stocks. if i had to pick names, home improvement >> you like home depot over lows historically >> historically. what are their v >> what are their valuations these days >> you could say their stocks are trading mid to upper teens

multiples. >> because they've been so loved for so longed but maybe not spared in the selloff. >> definitely not spared >> so do you think there's plenty of time to get in >> absolutely. >> and this is the first time for lowe's to close that productivity cap with a new management team. >> and the big box dguys >> nike. nike had phenomenal results. >> they did well in that horrible market. talking about slow global economy. is nike a unique case or is it telling us something >> i think it's telling us something. here's a $40 billion company. the comment i made before,

they've been pushing price points higher. it's not just in the united states they talked about strength in china and else where around the dmroeb nike sets up well here as a stock but also a read on a consumer that is healthy what don't you want like to tou? >> best buy has gotten really cheap. the one thing that kept me off best buy is apple. >> because of apple's weakness >> because of apple's weakness >> it's so bad you don't think you can buy best buy >> you think best buy is a proxy for apple. >> best buy is a big seller of apple products >> what percentage of their business do you think is apple right now? >> if we take into consideration not just what they're selling for apple but how many people come to their stores because of

apple -- 10%, 20% of their business it's a big number. >> you think weakness in apple's latest offerings could weigh >> that could impact best buy. >> can i tell you you're right i went to look at the new ipads down the block, just over here >> apple store or -- >> at the best buy store because i was walking past it. i saw the apple sign with the new ipads, i looked at it >> was it busy >> it was not that busy. you're right, there's a psychology -- >> andrew is the common man after all. >> i know. i know >> let's be clear. best buy is doing a lot of good things my worry is that apple is a driver of their business, and that driver doesn't seem to be as strong at moment. >> happy holidays. >> same to you. coming up, the big stories that could move markets.

markets only open for 3 1/2 hours. we'll talk about prospects for a trade deal with china as well. as we head to break, a look at friday's s&p losers and a couple of winners.

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on

cnbc among the stories front and center, treasury secretary steven mnuchin said he held a series of phone calls over the weekend with the ceos of the biggest banks. in a statement the treasury department said the executives confirmed they have ample liquidity and the markets continue to function normally. mnuchin will meet by phone with the president's working group on financial markets today, a group that includes the fed and the s.e.c. all of this talk about liquidity and whether the banks are safe has some people more nervous than maybe they would have otherwise been the trump administration is warning the partial shutdown of u.s. government could stretch into january weekend talks failed to yield a spending deal. the senate is adjourned until thursday mick mulvaney says it is possible the shutdown will go beyond the 28th and into the new congress.

the "wall street journal" reports that president trump's advisers have discussed arranging a meeting between him and jay powell reports this weekend sai trump has privately discussed firing powell who he criticized for raising interest rates treasury secretary mnuchin said trump told him he never suggested firing powell. he did that on twitter look at u.s. equity futures this hour none of this making the markets nervous as those on twitter seem to beover the weekend. dow seems to be opening higher >> at the same time, that's not much of a bounce from friday or last week. it could be showing up in the fact that we're not up a couple hundred points like we had been the past couple of mondays for the latest on u.s. trade tensions with china and the

president's trade truce let's welcome dean pinker. dean, good morning >> good morning. our last guest, we were talking about nike nike had said we don't see a really bad impact so far from these china tariffs. but the entire business industry is really concerned about the direction, in this is going. how much damage do you think is being done to the u.s. economy and how much to the chinese? >> certainly any time you have tariffs put in place, there's an impact but it's been moderate up until now. now, of course, we're in a pause. there was not the increase that had been projected earlier i think there's an opportunity here over the next two months to really make progress on the structural issues that the united states is raising with china. >> the structural issues, i don't know if you saw the piece on "60 minutes" last night, but the spying that's happening by

the chinese. they talked about corporate espionage and how widespread that is it makes you think how much of our trade secrets have already been stolen by the chinese and how much more damage could they do? how do you fix an issue like that >> when you talk about the national security and the economic security issues, a lot of that is a quiet, confidential discussion between the united states and china we can't speculate about the issues that will be resolved or begin to be resolved in that discussion, but on the trade front there's a clear path forward. i think progress is being made china demonstrated at least in its statements to date that it's interested in making the structural reforms, in terms of intellectual property, in terms of market access, in terms of

empowering the consumer in china which will benefit both sides. >> the statement that xi jinping made last week seemed to give no sense of tradeoffs, no sense, yes, the chinese economy is slowing and we'll move it was a reassertion of all the things we know about the chinese and the dominance they're trying to pursue. i'm not sure why they would say to the u.s. we'll make a ton of concessions without having the threat of something like tariffs that could damage their course ? >> i think the united states has leverage in using u.s. market access as a lever to try to get structural reform out of china in order to have real reform, we have to have enforceable

commitments by china we're not going to resolve everything in the next 60 days but there can be substantial progress, there can an fran be a framework. >> the markets wanted a sense of everything is fine but the larger problems remain eye opening again all the spying stuff. dean, thank you very much for joining us >> thank you very much >> good to see you this morning. today is christmas eve the north american aerospace defense command, norad, is tracking santa's arrival as we speak. for the latest let's welcome rear admiral james clark he joins us from norad operations center. thank you for being with us. i've been watching santa on your website it look like he's just about in samoa

already 215,000 gifts have been delivered. nice to see even with the government shutdown you guys are still there. how did that get around the shutdown >> well, for today's special mission with santa, we have over 1500 volunteers to make sure that we can track santa. but our mission goes on 24 hours a day, seven days a week year-round >> i know this goes back to the 1950s, this is how long you guys have been tracking santa what started things? i read over the weekend this started because of a sears ad that printed the wrong phone number and had kids calling in on the hotline, the red line for norad. >> that's correct. there was a typo and somebody had called in asking about

santa. of course we were already tracking him, that's when it started to go public and we've been doing it every year since >> what kind of calls do you get from kids at this point? >> we get all kinds of calls with some interesting questions. why are elves so small is mrs. claus a good cook, and they want to know when santa is going to be at their place of course santa doesn't go anywhere unless the kids are in bed and asleep >> we appreciate all the work you're doing rear admiral james clark joining us from norad. if you want to check it out, it's noradsanta.org. thank you. when we return, nike shares are resisting the selloff pressure after a block bust other earnings report. we'll talk about what's ahead

for that apparelmak maker in 20 and could we see a santa claus rally to put an end to a hell of a past couple weeks, we'll talk strategy, technicals, we'll do that at the top of the hour "squawk" returns on this christmas eve morning. -here comes the rain. [ horn honking ] [ engine revving ] what's that, girl? [ engine revving ] flo needs help?! [ engine revving ] take me to her!

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welcome back to "squawk box. elon musk says the company will reimburse customers if delivery delays cause them to miss out on a tax credit incentives for buying electric vehicles were included in last year's gop tax overall that tax credit drops from $7,500 to $3,500 at the end of this year. musk said customers who were promised a vehicle by year-end will be credited with the difference he's been on twitter saying you can still get your order in and get that delivery to capture that credit. >> i don't understand if these credits are important to tesla and not other companies. every time we talk about them going away and it changing, people say that's not why they're buying the cars. >> it is an incentive. >> musk historically -- it comes to an end more quickly for his company because he's already gotten through the first set of

cars it's a sign of success, at the same time it's a bit of an extra incentive. at the price point at the "s" level is different than the model 3. >> i spoke with somebody last week and it said they did this all wrong offering the discount early, and all the rich people have already gotten their vehicles when we come back a closer look at nike, one of the big story stocks of 2018 from the controversial colin kaepernick ad to last week's blockbuster earnings report. we'll talk about the next step for the shoemaker after this. and a quick look at what's happening in european stock markets. the cac in france down by 1%

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♪ welcome back to "squawk box" on this christmas eve morning. nike posted better-than-expected earnings last weekend and is on pace for its ninth positive year in a decade. joining us now is sam poser from susquehanna. good morning to you. you're not wearing nike this

morning. we'll get you some self-lacing shoes. >> i appreciate that >> they used to be $750. >> do they work? >> they're coming down to $350 >> it's a bargain. >> how many do they sell >> if you compare the hype versus the pairs -- >> is there any margin on the shoe >> probably a lot. that's why they're so expensive. >> i thought it was used as a loss leader to get us talking about it now let's talk about 2019. in a market where nobody seems to be safe, nike does. why is that? >> because everybody gets nike first of all second of all, they made some errors, i would say, about two and half years ago that now everything is getting into

stride as that's happening everybody can see it the amount of product, how they're coming to market, how they're working to serve the customer we get caught up talking about the lace-up shoes and so on. >> this is an operations success story. but layer on top the macro economic sense of where you think the consumer is and what do you think will happen in 2019 >> if nike has cool shoes and comes out with them in the proper way, the consumer is going to buy the shoes they also have to look at it, adidas lost a little velocity. under armour in footwear has not done a great job there's a lot of open space for nike here. on top of everything, they're arguably executing as well as they have and it's improving as quickly as it has. >> we're seeing a chart of under armour, which has been a stock that's been a bit of a roller coaster. where are you on under armour? >> i have a negative rating on

them >> you still do. >> i still do. >> you don't think it's a turn-around story? >> it's a turn-around story that i don't think will turn around >> because >> because they're focusing on -- they doubled down on performance. >> performance wear? >> performance apparel and footwear they think fashion and function are mutually exclusive nike understands the way they come to market that it's cool, if it's done its job, it works if you think about foot locker, most websites, if you buy a pair of sneakers, the likelihood you'll wear it for the given sport is 3% to 5%. what do you think the sales channel is going to be is amazon going to become a big part of this nike play >> maybe on some non-marquee product. but it's foot locker it's their own distribution. >> is there a pair of jordan's or something we could put under your tree tomorrow

>> i do size 12. >> good. sam poser, thank you merry christmas. >> merry christmas. coming up, is a santa rally in the works we'll talk about that after the break. and as we head to break, a look at equity futures, a small, feeble rebound the dow is up 37 points.

it's the day before christmas and with markets unsteady, "squawk box" is here to make sure you're ready. stocks have been tanking, the yield curve is flatter, we'll talk to some experts to see what is the matter. is it the trade war or central bank tightening or is it because high valuations are frightening? from wall street to main street and silicon valley, investors are seeking a santa claus rally.

but how do we get there? just what will spark it? what will it take to escape the bear market? joe kernen is off, but kelly is our pick to sit in with andrew and becky quick. markets close early, so get your trades done, "squawk box" starts now. merry christmas, everyone. ♪ live from the beating heart of business, new york, this is "squawk box. good morning welcome back to "squawk box. we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and kelly evans who is in for joe kernen it's a holiday shortened trading session. wall street's closing bell will ring at 1:00

look at u.s. equity futures. they were greener before still green. dow opening up about 6 points higher nasdaq up about 18 points. the s&p 500 looking to open up about a point higher right about now. today's big stories have one common factor, that's washington, d.c. a government shutdown continues this morning as the president holds firm on his demand for funding for a border wall. the white house did say over the weekend that president trump would be willing to accept less than the 5$5.7 billion than originally demanded. mick mulvaney said he is still waiting to hear from democrats about a counter offer. administration officials are pushing back on reports that president trump discussed firing fed chairman jay powell. steven mnuchin tweeted over the weekend that the president told him he never talked about dismissing powell. powell has been repeatedly

criticized by the president over the fed's interest rate policy all of that follows a busy weekend for mnuchin. the treasury secretary held a series of calls with the ceos of the nation's six largest banks, saying they still have ample liquidity and can function normally everybody now wondering whether there's a plunge protection team out there. >> it's been raising more questions than answers this mnuchin kuenough mnuchin call. let's bring in steve liesman no christmas break for you yet >> no. this is one of the more extraordinary statements we've seen going back to 2008 when the government would issue these sorts of statements when there was concerns about liquidity in the market

the interesting thing is there were no concerns about liquidity in the market. but the administration issued that statement so i think there are a bunch of eyebrows that are raised right now. >> what is your thinking on this steve mnuchin knows capital markets well the crisis of '07 and '08. he wouldn't do this lightly. it's not like he's not aware of the memories that would spark amongst all of us. what do you think he was trying to do? >> i don't know. the speculation runs from placating the president. in other words, the president was giving the treasury secretary heat over the decline in the markets there might have been concern on mnuchin's part as well that this discussion that the president

was considering firing powell might create some sort of liquidity crisis what's weird here, we know there are a variety of channels by which the government monitors the markets. the new york fed has a markets desk the treasury has a markets desk. typically they monitor -- the biggest thing they monitor is liquidity. they're not so much concerned with prices, they monitor prices to see if there are liquidity concerns you would hear about liquidity concerns i would hear about them. that's the kind of thing you hear in the market when this happens. >> why are we talking about liquidity? i understand the markets had a steep selloff, but a bear market -- decline of 20% is not that unusual we go back to the financial crisis, there was talk about not trusting your counter parties because of their balance sheets and leverage i don't understand why we're

having this conversation >> well, we are because the treasury secretary issued an ample liquidity document >> but what anyone saying there was not ample liquidity in the markets? >> i talk to people regularly in the -- the place where it shows up, you'll remember from the crisis, is in the federal reserve, the fed funds market, it shows up in the overnight markets. those are the places where it shows up i had no indication at all -- and the concern is that you sort of create the panic by doing this the markets seem to be functioning well here. i think they're looking past this but you probably know that it was 1987 that alan greenspan issued the most important liquidity statement ever after the crash of 1987, he came in and said the federal reserve stands ready to provide

liquidity. that helped to steady markets. by the way, the result of that was that the fed didn't have to do anything. i assume -- >> that was after the dow dropped 25% in one day the dow futures were down 100 points, we have come off that level. we had the dow with the worst week i'm not downplaying the severity of the selloff we're trying to look at why that would be correlated to the treasury secretary reassuring us about liquidity. >> can i tell you about my biggest concern? my biggest concern is who is advising the treasury secretary? i was talking about the market desks out there. people are supposed to be around to tell him that you have a liquidity problem and you need a

statement. then also people are out there who should be telling him you issue a statement like this, people will think there's some problem out there that people don't know what do the bank ceos say after being asked these questions? >> from reports that i read, they were a little bit perplexed by the call, but they did say there is ample liquidity of course there is because nobody questioned its existence. >> the big question i had when i was talking so only ceos, there was an effort to play don't call and the statement. they were perplexed about the statement, they thought the statement didn't reflect the conversation on the phone. not to say there wasn't a conversation about liquidity,

but that wasn't the emphases of the phone call >> yeah. it's hard to know precisely what was discussed. the weird thing to the bankers is there was never a question. one way you can look at liquidity is bank spreads. like an insurance thing. when they blow out, that's the kind of thing that would suggest some doubt about the liquidity at the banks by the way, it's worth saying the banks are as liquid and as well capitalized as they have been in a long time. this selloff has proceeded in an orderly way. there have not been jumps and jerks that have raised questions about liquidity.

it's happened in a way that's been orderly and not suggesting liquidity issues at all. that's the most important point. the suggestion that people might take from the treasury secretary's comments that there is some question of liquidity does not exist as far as i can tell and what most market observers can tell >> steve, appreciate you calling in joining us is katie stockton and alison deanst. ladies, welcome to both of you alison, how big of a concern is this how perplexing is this from your perspective? >> you hate to shrug off any worry about concerns about liquidity. however we've seen very unconventional approaches to a lot of different issues coming

out of this administration they have not had experience in the markets. while steve mnuchin might have been an investment banker, he may not be quite as knowledgeable on this part of the market and was coming from the direction of the head of the country. >> so you're going to wave it off. you're saying they don't know something we don't >> i agree with steve. we would have heard rumblings. this feels like a normal market correction >> so let's set that aside for right now katie, let's talk about the damage we've seen to this point steve is right, it's been orderly, but it's not been fun to watch we have broken through all kinds of different levels. you're talking about the dow's worst close since december of 2017 what do the technical levels

tell you >> i would say it was orderly until we saw the breakdown of the s&p 500. we saw a series of retests, and then two weeks ago the s&p 500 took out a support level of 2640 that's when you saw the market accelerate to the down side. that's when that deteriorating momentum prevailed over an oversold condition when you see a market that does not react to oversold extremes, that's an issue that means momentum has taken hold on the down side. when we saw that retest process end, that's when i took issue with the markets seeing that down side follow through is another check against it >> what is the new floor can you tell what it is yet? >> already secondary support around 2510 has been tested. below that we're getting into the 2250 area. by no means is that a target, but it does show us downside risk if we were to see the market

climb back above 2510 by the end of this week that would be a short-term positive. when we do see a relief rally, it should be very significant. i say that because of the proximity of resistance we have broken down. if you look at the 50-day moving averages as a possible gauge of resistance, they're well above current levels for the indices so i think we'll see a relief rally. i think we'll see a better selling opportunity. there is the potential for this environment to be more like a 2015/2016, where we're more range bound but difficult in terms of stock collectioheck se that the worst is over however there is risk with support where it is. >> katie, you said when we see a relief rally it should be significant. what are you talking about >> by that i mean the oversold bounce once that oversold condition manifests itself as a relief

rally, maybe a couple weeks, several weeks long by that i mean 50-day moving averages, in some cases 7%, 8% above current levels so that oversold bounce could be impressive and still short-term. the good news is that it should afford a better selling opportunity for those stocks that have broken support levels of their own >> allison this is a situation that katie is calling severely oversold stocks. would you call this an oversold situation? >> i don't know if stocks are oversold there could be more down side. i think today's news might spook the markets. but at 16 times earnings, 9% profit growth forecast for next year, it looks attractively valued i see 8% to 10% upside from these evaluations. i don't know short-term sentiment with the latest rumors circulating if that doesn't push stocks lower >> the question i've been trying to figure out, every person at

the table thought there's not much risk that you will miss the opportunity to buy in and get the upswing again. no one is worried about that are you? >> i tend to not feel comfortable with my ability to call the bottom. i know when valuations started looking g i truood, i trust my ' its. in stocks you felt like you missed i would start looking and picking. i would be more conservative >> what do you think the down side is? >> if the stocks get 14% forward earnings, that's a good value for equities in an economy that is still growing profit growth of 8%, 9%. >> where would s&p have to be? >> i do everything purely off multiples. right around 2250 it starts

looking inexpensive. my sense is buying higher quality names right now probably will do well for you longer term >> thank you very much, allison. katie, thank you for joining us. coming up, trade was one of the defining market themes in 2018 what's in store for next year? we'll open up the playbook next. stay tuned you're watching "squawk box" here on cnbc this is a tomato you can track from farm, to pot, to jar, to table. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port. this is the ibm blockchain, built for smarter business. built to run on the ibm cloud.

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welcome back dow futures down 170 points. as we get ready to close the book on 2018, we're looking at some of the biggest market drivers and asking what might be in store next year let's focus on trade and tariffs. >> reporter: trade turmoil rocked the markets in 2018 you can bet it will continue in the new year first, china deadline drama. u.s. trade representative robert lighthizer leading the negotiations with beijing, and the two sides are facing a march 1st deadline to reach a deal at stake, u.s. tariffs on 2$250 billion in chinese goods and retaliation from china deal or no deal, expect plenty

of posturing and lots of testy tweets along the way second, expect a rocky road ahead for the new u.s./mexico/canada trade deal. the usmca will need to get approved by congress next year so far democrats have been skeptical. they're looking for stronger labor and environmental protections. finally, bilateral trade deals look for the trump administration to move forward on a bilateral deals with other countries. trade talks with japan and the european union may ramp up if they go well that may put the brakes on new auto tariffs one thing is clear, trump sees tariffs as a way to gain the upper hand in negotiations the president said it himself, i'm a tariff man we will see if he lives up to that name in the new year. >> that's the question we talked about china a short

while ago. i referred to this "60minutes" last night and thinking we should be doing more about the spying on one hand we want them to behave better and on the other hand the markets are concerned about these tariffs. is that just a negotiating tactic what is the goal here? how likely are we to slap higher tariffs on the products we import >> we'll find out march 1st when that deadline for the talks between president trump and president xi comes up. part of the concern for markets is that these things are getting conflated. normally trade talks are trade talks, national security talks are national security talks, but in this administration they seem to be wrapped up together in one big negotiation what might types of tools might the administration use to gain leverage in those discussions? would they be willing to use an

instant like the huawei case or the ramp up of the cfius designations, the expansive industries that we are looking at in order to conduct national security reviews of investments in u.s. companies and investments in the u.s so you're seeing that both sides are trying to use more and different tools beyond tariffs in order to come out the wayner at the end of the day. the challenge for markets is that some of these tools may or may not be appropriate and may or may not be destabilizing. >> elan, great stuff when we come back, hollywood and silicon valley are teaming up to revolutionize the way we consume media. we'll tell you how next. and check out the futures because when we came in this morning just an hour and a half ago futures were up by 60 points now we're talking about the dow

futures indicated down 200 points yeah, more of the same we'll see what happens as we get closer to the opening bell remember, we're only trading until 1:00 p.m. eastern time today. s&p futures down by 20 points. nasdaq looks like it will open down by 34 points. more to talk about when quk "saw box" comes right back. shield℠ annuities from brighthouse financial

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coming up, the top stories and why the down is almost 200 points and 2018 has been good to everyone but facebook -- or anything but good to facebook. shares have been hit hard. another 1% down in premarket trade. we'll look at the prospects for 2019 as we go to break, a look at the futures. a difficult morning again. the dow implied to open lower 183. nasdaq down 31 s&p down 18. you're watching "squawk box" on cnbc shield℠ annuities from brighthouse financial

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♪ good morning it's going to be a red christmas if the futures are an indication welcome back to "squawk box," we're live from the nasdaq

market site in times square. we're watching three big stories. number one, a partial government shutdown weekend talks between the white house and congress failed to yield a spending deal. the white house says the shutdown could last into the new year that's pretty likely when you consider the senate won't be back until thursday. two, steven mnuchin will meet by phone today with the president's working group on financial markets. this includes the fed and the s.e.c. yesterday mnuchin held a series of calls with the ceos of the nation's biggest banks the treasury department put out a statement saying executives confirmed they have ample liquidity and markets continue to function normally. and president trump versus fed chair powell white house advisers have talked about arranging a meeting between the two men. reports this weekend said president trump privately talked about the possibility of firing powell whom he has publicly

criticized that is being denied on mnuchin's twitter feed futures right now, they have gotten worse about an hour and a half ago the futures were indicated up. right now dow futures down by 136 points just a couple minutes ago, they were down by 4ralmost 200 point. remember, this comes after the biggest weekly loss in more than ten years for the dow and the nasdaq last week it was the biggest loss for the s&p 500 since august of 2011 when you look at weekly basis. also look at what else has been happening. european markets just closing in the last minute or so for a half day of trading there weakness extended there. the cac last time we looked was down by 1%. now closing down 1.5%. stocks in italy down by 1% also in spain off by 1%. oil prices, we've seen weakness

there. wti down by 1.36%, 44.97 some wondering whether it's been oversupply or lack of demand we've been talking about weak demand from china and india and what that could mean for the global economy >> the problem is the timing of it it would be fine if it was just the supply story, the fact it sold off with everything else. i wonder if europe closing maybe won't help here. we've seen so much pressure from those markets the last couple of weeks. >> let's bring everybody's attention to an investigative story i have on the front page of the "new york times," titled devastating arsenals bought with plastic and nary a red flag. i was writing about guns and itself role in relation to the banking industry after the parkland shootings this report goes in depth in a way i didn't expect.

it looks at how credit cards are a crucial part of the planning of these shootings of the 13 major mass shootings in merge, eight of them, the killers financed their attacks using credit cards some of those credit cards, the killers could not have afforded to buy the guns without the cards. those eight shootings that involved credit cards killed 217 people and injured over 500 people here's a list of the recent mass shootings that involved credit card plannings virginia tech, ft.hood, aurora, san bernardino, orlando, sutherland, las vegas. one of the reasons we wanted to bring this to everybody's attention is because of the role they could prevent ultimately some of these attacks in the

future here's a handful of companies that do not allow gun sales, paypal, square, apple pay and stripe after 9/11, part of the patriot act, banks file suspicious activity reports for transactions involving more than $5,000 that the financial institution has reason to suspect are part of a plan to violate or evade any federal law. these mass shootings today are considered domestic terrorism, and what is the role that the banking industry and the credit card industry may be able to play voluntarily or as becky and kelly and i were talking about in the last hour, perhaps lawmakers could step in. i received a handful of notes overnight from a handful of lawmakers on the state and federal side who are looking at this issue visa put out a statement saying we do not believe visa should be setting restrictions on the sale

of lawful goods or services. our role in commerce is to efficiently process, protect and settle all legal payments. asking visa or other payment networks to arbitrate what legal goods can be purchased sets a dangerous precedent. when you see the patterns we tried to lay out in terms of how the killers use the credit card system in a way i don't think anyone would have imagined, there's some opportunity here. >> what is visa supposed to do about this are they supposed to know whether i, kelly, am buying anything in an amount on credit cards i shouldn't be able to afford do they need to know it's specifically weapons how do they know it's guns >> that's what the piece -- >> is that visa's fault or -- >> no. this is not to lay the blame at the hands of the banks or the credit card industry today the system we talked about doesn't really exist properly. there's coding that on vsays whr

it's a firearm or not. the laws in place say you can buy no more than two guns at one store before being flagged by the atf, but today you can sit on the internet and go to 20stores in one minute -- >> so you mentioned the skews, the tracking system. is there a way with firearms specifically -- >> that's what you would do. >> six months ago, there were banks and systems who said we won't deal with anyone who makes a gun. there's probably a better way saying if we track this at the individual level to attach that information. >> what you would do, there's a system built into the credit card network today, it's called the box car, it would allow the retailer if they wanted to, but they don't currently and there's no leverage over them to do it, you would have to have the industry do it or have lawmakers say we need to do this, if it's a gun, ammunition, something related, they would provide that

skew level data to the bank or have a merchant category code that registers the store as someone who sells guns then you would have the opportunity to track it. that's what every law enforcement official and prosecutor we spoke to said. had you been able to give us some of that information, some of those 18 -- >> the other pieces at the outset is the way the san bernardino shooter is googling this stuff and wondering if it's own googles -- >> no, he's not wondering about the googles. so we foia'd all these documents, but you see these people are on google figuring out how to do this, how to take out multiple credit cards in advance. spending 10,000, 20,000, $30,000, much of it they can't afford to spend to begin with, and will never pay back. the question is if you're a credit card company, how can you deal with this the credit card companies and

the banks, many of whom have tried to limit and distance themselves from manufacturers -- >> which is very broad >> we don't want to finance manufacturers. i don't think they understood until we put this together for them is that they have been financing these shootings in ways they had not understood before so the question is whether this will actually change the discussion i think we're really talking about a discussion it's a discussion that has to happen across the industry and probably happen with lawmakers as we talked about in the last hour there's a number of states that have serious requirements around what credit cards can and cannot buy. the industry has voluntary restrictions on what you can and cannot buy you can't buy bitcoin with your credit card. you can't buy marijuana in legal states with a credit card. >> what happens with the examples we were talking about for people who need a weapon for self-defense and can't afford them >> i brought that up

i think there's lots of pitfalls and minefields throughout this process. when you see the numbers you would try to have a conversation and try to figure out what can and cannot be done this is not a wholesale you can't use credit cards to buy firearms the laws in place, many of which are not even enforced properly let's also say, there's lots of other issues here. there's mental health issues, law enforcement. there's a plethora of things having said that, the piece of this that was the most shocking about doing the reporting was if you looked at the patterns of the credit cards, the visibility that the credit card industry should be able to have on this if they chose to has more visibility than families, law enforcement and just about everything else. the question is how could you use that for good. >> without infringing on peoples

liberties. >> 100%. >> how do you use only that data and not catch, you know -- >> because we already have laws that do that >> if they attach the information to it. you need the information >> we already have laws in place to try to avoid this but they need to catch up to this larger system of how they're actually being used. >> let's get back to markets and futures. the dow down 166 points. down nearly 200 at the lows this morning. when we first checked on things, we were opening positive that's not the case now. s&p is lower by 17 points. the nasdaq by 40 >> all right we saw plenty of technology disrupting the entertainment industry in 2018, our next guest says there is much more to come in 2019. joining us is larry jones of blackthorn technology.

can you do a little alvin? >> i can no my partners worked on the video effects of that film >> you look out in 2019, it feels like 2018 has already changed the whole media landscape. what is the biggest shift you see? >> i think the biggest shift is the fact that the technology that is coming out of silicon valley is coming down to hollywood and they're combining. and the reality is that years ago five years ago, ten years ago, you had to be so incredibly highly trained in order to use whatever technology that was available at that time now it's pretty easy >> and cheap >> it is cheap it is cheap and accessible the kinds of things you can do on an iphone x are mesmerizing you couldn't even do that with a huge bank of computers ten years

ago. >> there's more content than before story telling now is binge watching as opposed to two-hour films. do you see a point where it gets to be too much content >> i don't believe so. >> i can never get enough. >> we are becoming more and more of the spoke society everything is specifically for a specific demographic, a specific person it will only continue down that path we have the ability in virtual reality to be surrounded by the basic elements of a story. but you can manipulate the story any way you want to >> can i ask about the economics of this? you look at netflix and the amount of money they're spending, you look at the amount of money that hulu is spending not making money on the other end of it. this is all being financed effectively if you will by shareholders and by others

at some point does the music stop >> i think that technology will continue to bring the prices down year after year after year. >> prices for what for consumers or -- >> for production costs. production costs are coming down you can do crazier more over the top things at the end of the day, a consumer, somebody who sleeps for eight hours, works for eight hours, has eight hours to consume content, they will have a limited amount of time >> eight hours of work, eight hours of sleep, eight hours of -- >> it's a simplistic way to look at it. i do look at it that way >> what about eating >> that's work that goes into you're not sleeping, you're not working, you have eight hours of consuming content. >> 5g, how does that change the game >> the amount of data we can collect with 4g on our phones

is -- 5g will be ten times if not 100 times more content faster >> what about ar >> augmented reality -- >> is this real or -- we've been talking about it forever apple does it better than just about everyone else on the phone itself the folks that put out their product, which is mesmerizing in many ways but i don't think a commercial success >> not yet it's been out for six months when i got my first computer, i got it at my office. i learned how to use a computer at the office. i didn't bring it home it was years before i got one to come home with these headsets, these glasses, it will start more on an enterprise business-to-business standpoint we see it in the oil industry, the medical industry it is revolutionizing training, high-end training in the oil industry like never before

that is real money, that is real savings. that will eventually trickle down to consumers. >> nice to see you merry christmas. thanks for coming in >> 4 hours of sleep -- >> four? >> thinking about you. 12 hours of work >> five hours of seple five hours and 15 minutes. >> starting at midnight?

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box. we started out with green arrows, but now you're seeing a lot of red as we get closer to the opening bell dow futures down by 150 points we were down by almost 200 points a short time ago. s&p futures are down by 15 the nasdaq down by 33. not exactly inspiring any sort of confidence given the weeks we've seen recently including last week, which was the worst week in ten years for the dow and the nasdaq way to slide into the holidays 2018, we should say, has not been good for facebook that's almost an understatement at this point. joining us is victor anthony, internet analyst at aegis capital. is there going to be a happy new year for facebook? >> i think 2019 will be a much better year for facebook >> you do. >> this is probably the worst year for facebook since the botched ipo in 2012.

>> from an investor perspective a screaming buy this is? >> i think so. it started with the cambridge analytica crisis, and ended last week with the rev lielation that they were potentially sharing our information with netflix and spotify. the media, investors, users question whether or not facebook has a credibility problem. maybe they do advertisers are starting to ask the question, is facebook the best place to put ads? can i get a better roi on another platform >> the answer is >> it's still the best place the most targeted platform on a granular level >> here's the question as i see it, instagram working, facebook -- putting aside the

politics and privacy issues, it's starting to lose that cool factor what does that mean long-term? is there something they can or will be doing that is somehow going to brighten this -- shine up the toy, if you will? >> it's a good point that's been happening for several years now. i think with watch, video, making video essential to the platform as well as stories, making stories a bigger part of that platform, i think that could go a long way to capturing the younger users who migrated over to instagram to come back to facebook. >> kelly evans is not on twitter. >> really? >> really. >> you sound shocked >> do you like twitter >> i still do. >> where does evan spiegel and snap stand in your world >> i'm still at a hold >> it's not a raging buy >> not yet

the data i looked at -- >> the story on the front of the "journal" about evan spiegel, his style been a thing of the past not the future? you agree with that? >> partially he needs to do a lot more innovation on the platform the data i'm looking at suggests users are still fleeing the platform so even though the stock has collapsed, i'm not ready to put a buy on it yet. >> great to see you. happy holidays when wcoe me back, a sector to watch in the new year after this ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

welcome back joining us with what we should be watching in the defense sector for 2019 is sheila kaylu. does the government shutdown affect any defense spending? >> not yet the defense department has appropriations through fiscal year 2019. the d.o.d. is right now. >> do you have concerns about what this means longer term or not? >> i think the negotiations have shown that any sort of dispute could lead to uncertainty in the defense budget, which should be

fairly stable. >> let's talk about what stocks you like for 2019. which ones are best positioned >> our top picks in the space ar boeing and commercial aerospace, harrison, and scic and harris. >> why scic? >> pat shanahan has been positive towards modernization, i.t. spending. they play in a 2$250 billion market they're in deal mode they acquired this company, agility, that deal is set to close in january that's why we also like harris, they acquired l3 bigger is better >> i normally wouldn't ask you about these issues taking place in washington. i think you have a good read on a lot of these issues. pat shanahan, the acting defense secretary is somebody who grew up at boeing and came through the ranks there.

what do you know about him >> he started his career in boeing in 1986 he has a 30-year career there in commercial aircraft and d.o.d. helicopters. so he brings a business oriented approach rather than a policy approach to the defense department he's been about trimming fat he's been there as acting secretary since 2017 i think his focus will be slightly different >> there are concerns that he may not understand some of the military issues like his predecessor. >> i think he'll bring a more financial business oriented approach to defense spending he's been pro i.t. services, cyber, classified. he will focus on those rather than large programs. >> sheila, thank you very much >> thanks. coming up, we will talk

about a call between treasury secretary mnuchin and the nation's most powerful bankers raising a lot of questions we have some awensrs when we come back after this shield℠ annuities from brighthouse financial allow you to take advantage of growth opportunities with a level of protection in down markets. so you can be less concerned about your retirement savings. talk with your advisor about shield℠ annuities from brighthouse financial, established by metlife.

it's the day before christmas and with markets unsteady, "squawk box" is here to make sure you're ready. stocks have been tanking, the yield curve is flatter, we'll

talk to some experts to see what is the matter. is it the trade war or central bank tightening or is it because high valuations are frightening? from wall street to main street and silicon valley, investors are seeking a santa claus rally. but how do we get there? just what will spark it? what will it take to escape the bear market? joe kernen is off, but kelly is our pick to sit in with andrew and becky quick. markets close early, so get your trades done, "squawk box" starts now. merry christmas, everyone. ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning

welcome back to "squawk box" on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and kelly evans. we are squarely in the red dow off by 250 points. nasdaq opening down by 63 points s&p 500 looking to open off by 26 points. want to show you treasury yields investors seem to be rattled this morning we'll talk about why that may or may not be ten-year note at 2.761 stocks in london now closed. short session there. the ftse down a half percent spain, france, now down more than 1%. the reason for some of this may or may not be what becky is about to talk about >> steven mnuchin calling american bankers over the weekend talking about market

turmoil. the department saying banks confirmed ample liquidity is available for lending and consumer markets joining us now is wilfred frost. >> the first thing i would say is this took the banks by surprise definitely took their heads of communications by surprise none of them knew about these callsuntil the treasury secretary started tweeting about it the bank ceos themselves were also taken by surprise >> the fact that the call came or they put out an announcement? >> the call was happening at all. i think ones it happence it hapy knew by the end of the call an announcement would be made one source said that the ceo cited four reasons as to the reason the market pulled back, china, the shutdown, italy, brexit, trade wars that's the reason the market is down on the topic of liquidity, this is the general message, markets are functioning fine, but there

are pockets of illiquidity two big things bank's own liquidity is not in question they have been forced to boost capital levels, and liquid assets as a portion of that have risen it used to be 10%, now it's 20% there's no question thabout that on the flip side, the market itself is more illiquid because of automatic trading and the like on that topic, a separate ceo i spoke to two months ago addressed what effect that would have on the market >> growth product, the growth of systematic trading and machines more involved in what we do, all those things are untested over

any duration of time with severe stress when we see stress, you can see reactions that might lead you to believe that with more risk and significant stress that could play a role. when you look at last week, some of the selling is the result of problematic selling, because as volatility goes up, some of these algorithms force people to sell >> overall bank ceos, no question their own liquidity is fine when you see big moves in the market, it defines the point we're not as liquid as we were >> the topic of liquidity takes us back to the financial crisis. but when we talk about the markets themselves, it's a separate issue >> i think from my take on reading this statement, yes, secretary mnuchin says the banks are fichblt mene

i feel like this call was more made because the markets have been volatile, the main people that deliver trades every day are banks. >> almost like he should have called td ameritrade or something. >> i made a handful of calls and i spoke to some people who spoke to him over the weekend, i don't think he made calls to state street or blackrock or -- but you're talking about -- >> the etf providers >> where the real liquidity issue is, if there is going to be one, i don't want to suggested there's a problem, that's where you want to try to understand that issue, don't you think? >> money supply growth has massively fallen it's not declining yet, but that's a factor for the market as well. the kind of wondering why is he calling the banks about liquidity?

>> at the top you said there are four reasons they cited. china being one of them. is that the trade war or slowing economics? >> didn't get specifics on it. the shutdown interestingly was cited as a reason. >> the government shutdown here. >> yeah. >> these are factors we're aware of the market has pulled back in a more pronounced fashion because there's more to trading. it's not a new factor, just bizarre that the treasury secretary felt to make a statement about it and make some calls. >> i saw "love actually" yesterday and thought of you >> for the first time? >> everyone has to watch it around this time of year >> merry christmas >> talks over the government shutdown broke up over the weekend. the president tweeted we need border security.

as everyone knows you can't have border security without a wall safety for america he had lunch with conservative republicans yesterday. jared kushner was there, mick mulvaney, but no democrats attended vice president mike pence met with the top senate democrat, chuck schumer. after it was over schumer's spokesman said we remain very far apart. both chambers are adjourned until thursday and the president canceled his trip to mar-a-lago. the first lady is coming back to washington from florida so they can spend christmas together president trump announced yesterday that defense secretary james mattis will depart the pentagon by january 1st, that' two months earlier than previously announced today is the final day for shoppers to grab those last-minute christmas gifts. i still need a couple things let's look at retail winners and losers this holiday season joining us is the ceo of storch

advisers we have been talking about this. we don't know how strong the consumer is or really isn't and whether the market impact of the fall over the past couple of weeks is impacting the psychology, especially when it comes to last-minute shopping. >> i believe it will be a very strong holiday season. it was strong going into it. all the numbers have been strong i went out this weekend, i could not find a parking spot. traffic was gridlocked >> costco, same thing. >> same thing at target. >> no one was talking about the market or the government shutdown they knew they had jobs, money and they were buying christmas presents there's a big disconnect between what's going on out there and what we're talking about in

here >> maybe that's a good thing maybe that means the economy actually is much stronger than we think >> it is now the only way to explain what's going on is the market is forward looking and somebody is predicting something worse out in the future becauut you don'te it now walmart, costco, you mentioned them, amazon, very strong retail it's the dollar stores the off-price retailers. these guys will win no matter what is going on in the economy. you can also win if you're a differentiated player. like if you're nike. their product is fabulous. >> we had brian neagle on earlier talking about home

depot. he said in all the calls they are not seeing signs like you would expect if they were weakening. normally you would see consumers trading down he says they're still trading up >> home depot has been on a roll for a long time. they're doing fantastic. consumers are out there and buying home depot, kohl's, lowe's, best buy was crowded. walmart was crowded. people are out there and they're shopping >> who is the loser? >> you have to worry about department stores who are not offering anything different. so look at sears that used to be an easy one to give you i think penpenny's is in big trouble. nobody cares about them. they haven't kept up with the times. these guys are in trouble. macy's is doing a lot of work. there may be room for one lone survivor, they may be it

amazon is the new department store. they'll be in trouble. anyone who is mall dependent >> even santa. the "journal" had the story about how santa is sitting there bored at the shopping mall >> probably this weekend >> do you ever see a day when amazon, which has gotten into the business of opening stores, opens the equivalent of department stores or buys one of these failing giants, closes down much of it and just uses the rest of it >> i think that's a huge mistake for them i believe in the convergence theory that all retailers will be internet or bricks and mortar amazon is doing that with grocery. in terms of buying a department store, i don't see it happening. there could be someone else. people have speculated about target i don't want to fan those flames i don't know anything substantive about that, but that -- >> you mean target jcp --

>> or amazon >> target and amazon that we heard forever. target is cool am son waazon wants to be cool. why they would want to absorb that, they don't need to we talked about merchants. their growth is coming by being in the marketplace for everyone in the world that's where the marketplace has taken place. >> should they start changing a fee? >> essentially they already do that is the idea, to basically be the merchant, tax the entire company like the credit card companies, and who can't win that way >> jay storch. can you call yourself the ceo of

your own firm? >> of course you can >> i guess you can you can. you can. sorry. you know -- >> i'm sure just like you, they're hiring you >> at least he didn't say founder, ceo and president >> thanks. >> thank you. reports over the weekend said president trump considered firing fed chair jay powell. we will talk about the fed chair's future and the path of interest rate hikes in the new year that's next on "squawk box." as we head to break, check out the ten-year yield, still below 2.8% 2.761% right now [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence.

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♪ there's no place likargh!e ♪ i'm trying... ♪

yippiekiyay. ♪ mom. ♪ welcome back to squx squ"sq box. the dow is implied lower 170 points the nasdaq down 48 the s&p down 19. even after europe is closed, still seeing a lot of red. the fed closing out 2018 with a rate hike and talks of more to come in the new year and some questions about jay powell's future as fed chair joining us is michael matowicz with the center for american

progress let's talk about what we heard over the weekend first reports coming that the president inquired about possibly firing jay powell and the treasury secretary saying while he disagrees with him he's not planning on firing him what do you make of this could the president fire a fed chair? what would happen if he did? >> there seems to be some ambiguity. it's my understanding that lbj tried to do something about the fed chair, but there are questions about whether there are other paths the president needs to pursue to sideline powell >> terms of stripping his seat on the board >> so i think it's very easy or less controversial that you could get him not to be the chair but that he would remain on the board getting him off the board entirely is a heavier lift i think you saw sort of a

reaction to this there were stories late yesterday that the advisers of the president thought he didn't have the authority to do this. they before trying to walk this back while they were doing that, mnuchin was speaking >> you are talking about the mnuchin statement saying he spoke with the ceos of six major banks? >> yeah. the everything is fine statement. you had other people in the white house working to walk back the powell speculation i think there's a story from maybe an hour before the mnuchin statement that obviously didn't get a great deal of coverage there are people who recognize that sort of communicating that the president is interested in getting rid of powell is not a productive strategy. >> do you think that's a message that resonates throughout next year

>> that we're worried about the president getting rid of the fed chair. >> we're saying he wouldn't do that, he's been walked back. do you think that's a message that sticks or that we'll be discussing this again a month from now, two months from now, three months from now? >> i think this is going to be around for a while it's clearly in the president's head i think there's some merit to the idea that the fed has been aggressive in tightening one challenge is that if you were really interested in getting the fed to stop tightening, you wouldn't be tweeting about t yshg it becausu know the ged guafed guards its independence we saw this with the last rate hike, the president saying the markets are not ready abofor ths we didn't see evidence that we needed a hike in the fall let alone last week. >> do you think the fed stops raising rates at this point? the statement and many answers

at the press briefing last week were not as dovish as people had anticipated. what do you think will happen? >> i think that hopefully they remain data dependant. if you're looking at the labor market or inflation data, there's no reason to believe they need to be tightening rates. you run into this risk of when you get the optics of the fed having stated they wanted to be more hawkish, and then being challenged by the white house to be less hawkish, it makes it harder for them to back down >> you're not anticipating rate hikes in the next few months >> i think the general expectation is a late spring and maybe early summer hike. but i'm not looking at the probabilities to see how these have moved over the weekend. i would say having looked at these on friday they probably changed somewhat >> michael, thank you for your time >> thank you coming up, a lot more to talk about on "squawk.

futures under pressure but well off the lows of the morning. things have been bopping around a lot. we'll talk about the reasons for the move at 8:30 a.m. eastern time look at crude right now. we'll show you that price tag. you can buy a barrel if you wanted, wti crude, 44.89 "squawk" returns on this christmas eve morning.ns. help you with that. well sn jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

welcome back minnesota prosecutors will not charge the ceo of jd.com with sexual assault he was accused of rape by a university student during a recent u.s. visit, but attorneys said there were problems that would have made it highly unlikely that a criminal charge could be proven beyond a reasonable doubt prosecutors said they would not provide more details out of consideration for the young woman. lu said he did not violate laws, but he apologized to his wife for his actions. jd.com up 3% this morning. it is a remarkable story. when we come back, were you worried about bank lending liquidity before yesterday not a lot of people were, but the treasury secretary calling bank ceos for a checkup any way.

steve sedgwiliesman will try to explain why after the break. let's look at u.s. equity futures. we're down but not nearly as much as earlier. dow futures were down as much as 200 earlier, now down 64 "squawk box" will be right back.

♪ ♪ >> welcome back to "squawk box." among the stories we're following, this year's holiday shopping season appears to be the strongest in many years. according to new figures from mastercard spending pulse, total u.s. retail sales were up 5.2% from november 1st through december 19th compared to a year ago. not surprisingly online sales continued to bloom jumping 18.3% during that time and accounting for 13% of the total a judge says that he will let cvs continue its integration

with aetna the judge says he accepted an offer by cvs to allow aesna to make crucial decisions independently while he continues his review.pressed concern about the combination after the government approved it and after the deal was completed. and aquaman topping the box office the movie taking in $72 million in north american ticket sales mary poppins came in at number two with $22 million. aquaman has garnered about 4$420 million in international ticket sales. i wanted to tell you about an investigative piece i have on the front page of the "new york times. it's titled devastating arsenals bought with plastic and nary a red flag it reveals how credit cards have

become a crucial part of the planning of these massacres, in a way i did not appreciate myself the times reviewed hundreds of documents including police reports, bank records and investigator notes of the 13 major mass shootings in america over the last decade, at least eight of them the killers financed their attacks with credit cards. some of those credit cards, the killers could not have afforded and those eight shootings killed 217 people when it comes to the patriot act, banks are required to file suspicious activity reports for transactions involving more than $5,000, but that does not happen in the case of selling guns. it is something that i hope they will undertake to try to see what role they can play in preventing the next one. >> what are the prospects for

what joe kennedy proposed, this no red and blue banks act? >> one thing that chilled -- we should explain what happened here one thing that chilled the conversation about what the industry can and cannot do bank of america and citi group stepped away from financing gun manufacturers, not the sale of guns, but as a result of that kennedy came out with a proposed law that is going nowhere fast but is a red and blue state in the name and it says the government shouldn't provide federal contracts to banks that are involved in so-called social considerations >> would he extend that to something like visa and mastercard if they got -- >> it's clear that the way his -- the statement is written that he's put out that he plans to go after everybody. that put a chill on the industry there was a move afoot among the banking industry to try to head

this off, to take some of -- i don't want to say responsibility but to try to use their systems to try to -- >> your article makes it sound like there's a more targeted way to do that other than not financing the gun manufacturers. >> correct this would provide the most realistic way to have the greatest impact -- >> this being what >> specifically if the banks and credit card networks were able to see either the skew level data or the merchant category code for firearms, that they could track patterns of behavior the pieces that we tried to lay out go into detail about how killers are taking out many credit cards in advance, they're buying 10,000, 20,000, $30,000 worth of merchandise at a shot you could see those patterns and hopefully stop them. you won't stop all of them in terms of taking a first step this could be an opportunity to

do that it probably does require a state of federal mandate to get some of this done. there are things that the industry can do on its own i hope this piece creates some conversation around it >> i'm sure it will. among the other top stories, the treasury department's answer to a question few were asking about bank liquidity steve liesman is here with more. what we think the precipitating factor is is a big stock market selloff. then you have word over the weekend about the president maybe looking to get rid of jay powell those two things led to this call over the weekend? what do you think? >> i think that's right. the thing you need to layer on it are reports that the president was pressuring the treasury secretary to do something. >> about the selloff >> wiabout the selloff. and the broader context is whatever else the president did not have going for him, he had

the economy and he had the stock market in terms of the legs of the stool that were keeping this administration going -- we talked about this before, people out there who are like yes, but trump supporters yes, we think it's crazy, but the economy is doing well. and now you have this palpable fear in the markets about the economy, chi thiwhich i think is overblown and the treasury secretary said that in his statement. and the other aspect is you have the markets, which were soaring one year and now they have come down you're getting this weird lack of response in the capital spending numbers, you're not seeing the kind of juice, i guess, in the idea of capital spending that you should get from the tax cut that thing is kind of falling apart on them. then they come forward and the treasury secretary issues this

statement on liquidity going back in the record here, andrew, you remember, it was like post lehman that they issued the statement about liquidity. you pointed it out 25% plunge was in '87, i forget how much it was -- 25% i forgot that. then alan greenspan comes forward and says the federal reserve stands ready to provide liquidity. here we have a liquidity statement without the absence of an absence of liquidity. >> the question always, is it liquidity around banks is it liquidity around the markets? the etf market is this just trying to say i'm on it, folks i'm ahead of the game? >> the trouble is that -- >> that, to me -- >> why call banks? why not call the market providers? >> to me he's saying i'm on it i'm working on it. i'm doing stuff. >> did anybody question if he was on it? this is the assumption you don't have too many of these sorts of shots to take

right? it's a very special case look, the administration has broken a lot of the old rules. sometimes we learn when they do that that the old rules were kind of silly. >> you know, i would go back and say if you were looking at this, remember what mnuchin said a year ago at davos. he wasn't necessarily as supportive of a strong dollar. that he wasn't as concerned about it those are the things you do it and you realize this is why we stick with some of these conventions. maybe this is one of those situations, thinking it will resolve any jitters out there and realizing when it comes from the office of the treasury secretary, it carries a lot of weight and people wonder what did you know that we didn't? >> exactly and there's two others a peng ao this aspect number one who is around the treasury secretary advising him? you would think those people are kind of -- i said in the last hour or so that there are market

desks in the treasury and the fed. >> can i throw one more? >> yes >> we are in the midst of a government shutdown and those folks are working. >> they're working somebody should have said to mr. secretary the markets don't need this statement you need to hold this in your pocket >> did his boss need this statement? >> that's the other thing. secretary mattis was forced to do something he didn't agree with and he resigned to the extent that mnuchin may or may not agreed with issuing this statement -- >> you think this was president mandating -- >> i think this is the secretary, you know, doing what the president wanted him to do >> the only thing i'll say with that analogy, a lot of times these cabinet members do things they don't agree with. >> wasn't mnuchin trying to -- let's speculate again here, trying to please or impress his

boss it may not be the case that trump said to him i wanted you to call -- maybe the president said do something about this now mnuchin can say i did something. i called people. i put out a statement. the market hated it. i shouldn't have to do that again. >> comes down to this issue of adults in the room mattis was thought of as an adult in the room. mnuchin was thought of as an adult in the room. another way to think about this, which is from a conservative point of view of the fiscal authority, aka the treasury, sort of creating this plunge protection team. they're standing behind the market one thing that people interpreted the verecent rate he as as the powell put with that gone, is the treasury providing the put to the market? it gets we'red in my min eweirdd >> that's interesting.

we have to get back to the normal way of doing things after a decade of having the put it won't be a smooth transition. what can you do? i don't know >> i want to make this one point before we go powell said we'll hike rates and it makes sense for the economy, though not necessarily the market so now you have a situation where the fiscal authority comes in and says, you know what we'll stand behind it here if you're not and the key here is that powell and the fed only care about this if there is a liquidity problem. they did not -- did not see a liquidity problem. >> all right steve, thank you steve liesman coming in special this morning after this flurry of activity. when we come back, the end of the year has been a rough one for shippers with fedex down 35% and u.p.s. down more than 20% in the last three months. we have the story on why next. we'll talk about what that means for the economy, too right now as we head to break a look at the price of crude down 2% this morning

wti trading at $44.70 a barrel "squawk box" wl rhtilbeig back. move to the enterprise-grade cloud that's built to handle all your apps. ♪ ♪ the ibm cloud. the cloud for smarter business. the ibm cloud. tap one little bumper and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪

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it is your last chance, all you procrastinators out there. just a few hours left until chris machristmas morning. leslie picker is at a mall

are the crowds out >> the danbury fair mall has been open for about 45 minutes people are trickling in here. it was a bit snowy this morning. it's not surprising that the crowds are a little thin we're expecting that to pick up a bit more as the day gets on for that last-minute christmas shopping interestingly about 7% of americans said they planned to still shop on christmas eve, cutting it down to the wire for that shopping. that's according to a national retail federation survey and the biggest procrastinators, it's men buying gifts for their family that's why items like jewelry and purses tend to outperform in the final days leading up to christmas. that's according to customer growth partners. toys and electronics, those items tend to be bigger sellers around black friday because shoppers expect those items to

be out of stock when it gets closer to the holiday. so they like to purchase those in advance we spoke with shoppers today to see what brought them to the mall on christmas eve. >> i would pick a person, walk around, see what i want. when it hits me, i know what it is i can't do the list thing. >> that was the goal to get in early and out before the crowds come >> now as for how the stock market volatility is impacting the shopping environment here, well, the small sample size of people we talked to so far don't seem to be paying too much attention do the draw down in the stock market when making purchasing decisions they're looking at things like gas prices and consumer confidence remains high. a lot of people said they plan to spend more this year. back over to you >> that's a great point about gas prices they're way down >> leslie, thank you very much >> be careful of the crowds.

>> leslie picker there the holiday is bringing strong margins for shipping stocks typically. joining us to talk about that is john brafton i'm so glad you are here welcome to you >> glad to be here >> fedex is trading at 10 1/2 times. the thing is down 35% the last couple of months what happened on the call the other week nike tells us everything is fine fedex is collapsing what is going on >> well, in a lot of ways it seems like 1998, the currency -- the asian currency crisis all over again fedex talked about volumes especially domestically, north america continues to be strong and look good. they did hint at international volume rates slowing, and that they were -- they didn't know when they were going to stop getting worse especially in the european area. but that said, people are still

throughout the world making things, shipping things, buying things >> right >> it's still a prosperous economy if you look at it from a goods flow perspective >> here's the thing i guess that is important for investors to understand are we supposed to take from fedex and its concerns about europe and layoffs, let's call them, buyouts in the u.s. and say, well, the economy is not strong, or are we supposed to say that fedex, typically one of the bestcuters in the business, are these problems with fedex itself or is there a competitor with amazon coming on to the scene is it economy wide or sffedex specific >> there's a couple things the layoffs are associated with what i would tell you is massive investment, billions of dollars invested in technology and through that investment they're able to get it done with fewer people

those -- the layoffs are to the really layoffs, they're -- >> buyouts >> voluntary severance packages. so people who have been there 20 plus years, here's a nice way to retire and retire in more comfort. the people who helped build the business over the last several decades. they did express things in europe were decelerating and that's just them being transparent about what's happening. overall it's like 1998 in so many ways. the price of oil went down dramatically as it did then. we were talking about whether or not we would impeach the president. it was clinton instead of trump. again and again there are so many parallels the market was uncertain about what would happen. you had wild swings in currency. brexit, the pound, the euro. you know, the thailand bot the markets go into full defense mode valuations at that point, fedex

valuations fell by 37%, you said 35 a few minutes ago by the end of the year people realized, wait, the economy is fine people are still making things, shipping things and buying things goods flow always consistently allows us to know what's actually happening in the economy. >> so fedex at a 52-week high was $275 a share, now it's 156 so you're telling us that this is n is a definite buy, right >> i'm telling you that this is selling at the lowest valuations it sells for in a recession. so if we're having a recession, which the goods flow says we're not, then it's really a buy. if it's -- even if we are, that's pretty much priced into the shares what about a global recession? if this is a slowdown in europe in particular, and let's even say europe goes into recession

the leading indicators there are not great. is that going to hurt the u.s. is that already priced in to shares of fedex? >> i really think it is. again, i would go back to the thing that helped us navigate the markets successfully year in and year out, cycle in and cycle out is following that goods flow it's not emotional it's actual tons being shipped you can go and get verifiable sources. if you go out and look at the freight wave sonar data, you can see what's getting shipped from where to where, how much, what people are paying for it you know it's happening. it's not a sentiment index or how you feel index, it is a this is what is happening and that allowing you to navigate the markets. >> we have to run. real quick i'm a huge admirer of fred smith, he blamed everybody and their brother for their problems how much do you think it's the operations of the company?

>> no. no it's quite the opposite they invested so much in technology, they really have an advantage that is misunderstood or underappreciated by people who have not studied the company. >> don, good to see yo it is christmas eve, but you can't check out just yet we're seeing volatile moves in the futures this morning big ones and we' gngo lkreoi tta strategy with blackstone in just a minute my experience with usaa

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welcome back u.s. equity futures under pressure down dow down by 136789 nasdaq down by 34 let's get to the markets with joe. joe, this is a fairly frightening time for people who have been watching this stuff. how much would you put in unusual activity the worst week we've seen in a decade and how much do you think rebounds >> good question i think there's a massive grapp between sentiments and fundamentals if the market closes down for the year, which locks likely r barring a christmas miracle or whatever, it will only be the 13th time we've seen a full year decline since 19 0i. so in 58 years, only 13 times has the market been down on a total return basis and seven of

those 13 times occurred before a recession or when we were in one. it tells you that the markets are saying there's a greater than 50% chance we enter a recession and fundamentals don't support it and fundamentals win. >> i hear what you're saying i think i agree on that point, but there are going to be people who say look, there's a lot of negative signs that have been coming in. all sorts of concerns. the fed has been raising rates maybe faster than it should have and that's going to catch up >> that argument has been present all year long f. grow back to september 13st when the markets piqued, when the s&p was at 29.40 one, earnings growth was going to slow. two, gdp growth was going to slow three trade war, five, brexit, bad hikes. the s&p is down 18% from that september 21st close the difference is the ten-year treasury is at 2.75.

the fed's taking a more dubbish path >> where there's no al teternat? got to go back to stock sns. >> we could be in one of those environments or the point i was going to make is lower rates and more dubbish past to the fed is more bullish it's not that you don't have an alternative. profits and interest rate, your interest rate components come down basis points, which is significant. i think the big issue that the market is dealing with is that it's confusing pique earnings growth rates, pique gdp rates, versus growth profits are still going to grow next year. first two issues >> gdp and economic growth but not necessarily. >> i think the marktss have represented massively overprices sentiments swung to this like extreme other end on that.

what the market is ignoring is this growth is going to slow to say 10%, but earnings are still going to be up it's going to grow maybe two or mid 2% range but still growing yet the market is say iing a greater chance of recession. >> thank you very much a calming voice. pree appreciate it. >> coming up, we'll have a couple of stocks to watch today. including a takeover deal and social media stock under big pressure we'll be right back. [leaf blower]

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welcome back to squawk some stocks to watch today on this new year's morning. mind body, to be acquired by partners for 1.9, 16% premium. provider technology platform for fitness, beauty and wellness industries i used it to book a class. you don't use mind body? it's fascinating, fascinating transaction this morning snap share, they are lower in premarket trading. today's "wall street journal" quoting analysts critical of the management style it's worth a read no matter which side of this debate you're on when it comes to snap >> under five bucks a share. down 67% this year

let's take a quick check on the markets. the futures for most of the morning have been in the red right now, dow futures down by about 170 oints. s&p futures down by 18 nasdaq off by 48 depends on you if you see this as more of the same. we'll have a short day today and see you on wednesday >> merry christmas >> happy holidays. >> squa"squawk on the street" bn right now u. we're at the new york stock exchange, cramer and faber are off today. futures did take the spill after a mostly positive overnight coming off the worst week for stocks since the crisis. dow future us don. stocks close at 1:00 eastern for the christmas holiday. we have oi