. good morning 11:00 a.m. on wall street an and "squawk alley" is live.

♪ good christmas eve morning welcome to "squawk alley." with scott wapner. obviously markets are a key concern. we were down about 451 points at session lows, but a major turn around about 90 minutes in. nasdaq was down before briefly turning positive part of the turn around may be related to david tepper. we consider the watch the back and forth between the white

house, the fed and mnuchin's call with bankers over the weekend. the president tweeted the only problem with the committee is the fed, they don't have a feel for the market, they don't understand necessary trade wars or shutdowns over borders. it's like a powerful golfer. who can't score because he has no touch he can't putt. we are learning that the purpose of the call between mnuchin and the ceos was a prudent measure following last week's volatility trying to ease concerns the president has considered firing jay powell a lot to work with today especially for the bears >> yeah. absolutely for more on the future of fed chair powell and what this means r for the market, let' bring in the former federal reserve board governor and joins us exclusively this morning good to have you on today. >>good to have you, be here. >> let's begin here at the beginning. the president tweeting moments ago the only problem is the fed. no end in sight to the criticism from the president it seems. what do you make of it

>> it's outrageous that the problems of the economy has been doing very well. the fed has really done its job. we're sit ngting in a situationo where it's come back the more than full employment inflation is close to where the fed wants it to be the fed has had a steady hand. so it's really not the problem here that the problem is just a lot of uncertainty about a whole bunch of issues that really are moving out of the fed's control. unfortunately, many of these are coming from the president. the issue of a trade war hugely important because it's mobile supply chains some of the instability in terms of geo political issues because of decisions that have been lately this is really spooking people and the market was at high level sometimes and if the market comes down, it's not that unusual. happens all the time really no need to panic.

the only big problem is that if people start to make things very political, that can create problems for the economy in a way that's really unnecessary. >> in fairness to the president sh, he's not the only one by the way who is critical of the fed saying that they don't get it. they're looking at the wrong signs on the economy they're not communicating well enough you had powell last wednesday then williams interview later in the week seemingly clarifying, walking back characterize it how you want, but is the president necessarily wrong that the fed should stop raising rates giving where the economy seems to be going? >> no, but it could go either way. what's critical is the fed has shifted its policy framework where it use ed to be talking about dates and gradual and every two meetings we're now in a situation where what happens in the future is very ununcertain it's no longer clear how much more the fed has to raise rates

and they have to be data dependent. that's what it's been doing. so some of this issue is just we're in a more difficult situation evaluating what to do. in that sense, the fed has been right to say we're not sure what we're going to do. people love certainty, but there are times if you're certain and wrong, that's really bad it's better to be honest and say we're not exactly sure what we're going to be doing and that's where we are right now. >> fred, on wednesday, powell talk about the real variable being rates and not the balance sheet run off. he cited yellen's stance on that from the prior tenure. but what's the likelihood that we do want to move into an environment where we walk into every meeting with two variables. rates and the balance sheet. >> i think the key to understand is that the balance sheet is a technical issue. the fed i think rightly has been trying to make it very bored ed they're letting the balance sheet run off.

i think that's the right thing to do. the main policy tool is the federal funds rate and talking about where that should be heading. and making decisions about where it should be getting involved in terms of thinki ining about what we need do is an important factor. it's just not the way to go. that could change by the way if the economy went into a deep dive and they might have to think about using the balance sheet again as a tool. but that's not the case right now and it's not something that is in the foreseeable future at least at this juncture. >> but part to have the problem with that, fred, is that powell uses the word autopilot. that sort of set everybody into a little tizz about what well that says inflexible to some respects williams also walking that back a little bit >> so i think the key is that as

long as the situation is a normal one, where the economy you know, growing strongly or less strongly, then you want to use the right tool for the job that is in fact the double funds rate i don't think the fed saying they would never use the tool if it was needed. in fact, it's now part of the toolkit that the federal reserve has and it was used extensively in the financial crisis. we're not in a situation where the economy is in trouble. inflation is basically also doing very well. so that's not the time where you need to actually start fiddling around with jiggling extra dials that would just add to confusion. so i think the fed has been right to down play the use of the tool but it doesn't mean they're going to be inflexible if it's needed >> finally, fred, really quick asset prices, we know the percentage of american households who own stock, but

what happens to the wealth effect to consumption if assets continue and maintain the supply >> so, clearly, the stock market has an important impact in the economy. but if you have the stock market declined, it means that people have less resources to spend and that affects consumer spending it makes it more costly to finance investments. that affects things as well. and indeed, the system is quite healthy. i'm not sure that it helped. sometimes when sectors say that, that's the current situation weaver in a swe're in a solid

situation now. in fact, i think the bigger problem is just what's going on in the outside world some of which is pretty wild and crazy. >> fred, merry christmas appreciate you taking part of your day with us see you soon >> my flsh >> fred in michigan. >> when we come back, aloof, impulsive, dismissive? just some of the words snap insiders are using to describe evan speeg l plus, why one research shop is adding apple and facebook to the naughty list later on, former head of apple retail ron johnson will join us. down down 305. s&p back to 23.86. 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.

from brighthouse financial, ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪

mom. ♪ market slide continues snap bouncing back after falling below the $5 mark. the journal today outlines their redesign fail. leadership issues and the criticism of mark zuckerberg and jack dorsey. joining us today, walter, former chairman of cnn and rico's editor who have helped us navigate this hectic year. good to see you. >> good to see you >> care ra, i'm reminded of when

snap the question back then is would it work. obviously not. >> well, it was interesting. a lot of this stuff is well-known that this design didn't work. he's definitely a ceo that controls the company completely and while he had some partners there and people he works with, they've had a real a will the of people leaving coming and going and stuff like that so he kind of runs the company by himself which a lot of these ceos do. it's interesting what's what's happened at these companies that these people are experienced enough to do that they do without a lot of help. initially, the stuff they created was amazing. >> maybe was it his own management style and model or the fact facebook came in and stole their lunch money. >> i think both. we've talked about this a lot. i think you can lay a lot of the

blame on a bad redesign. that wall street piece is great. i know i dropped off of snap when the design was so bad however, a company like facebook has been able to buy up what's app and really dominate the space and use its dominance in social media to hurt competitors. this is something we used to push back on over the past hundred years this this country. every since we had trust you didn't want some service to become so big that it could leverage dominance to hurt competitors. so whether it's 40% of the problem or 60% of the problem, i think we have to look at the lack of antitrust enforcements and push backs on the large companies, especially facebook, amazon and google. >> cara, why don't you address

that >> yeah, here's the thing. facebook copy, instagram cop ped a lot of snap's best futures that's what it does. i've done interviews with with kevin saying we just made a bet eversion of what they were doing and wasn't apologetic abt. one of the issue was this restein. i've got teenagers and they reacted badly to the snap redesign it was interesting how badly these were people who loved the product. i think at the heart, that's really one of the issues i don't think say teenagers rush to work on facebook. to use facebook. they do like instagram, they like some of the other stuff that facebook makes. but in general, it was evan's to luz he lose here even when they were dealing with copying it's a two pronged thing that happened both at the same time and i don't, i do think people have to wonder about how much these big companies come in and steal ideas and then replicate

them and replicate them bell that's an issue. not sure how you then do something from a regulatory point of view to stop it >> car rrkrcara, please do sh r. >> over the years sh, whether it was the at&t or microsoft or ibm, we resisted letting companies leverage things and smash competition. to the digital age explosion of innovation so i think we have to look at this period in which we have a, woo has written about this in his book we have to say let's get back to a place where competition can thrive because i think facebook is get iting hurt not just by shooting nits the foot ef week, but by not having competition that keeps it in line.

>> yeah. >> what about the notion these ceos, spiegel, zuckerberg, dorsey, have erode d the confidence of their shareholders not just their user, but their shareholders spiegel described as impulsive and aloof. zuckerberg seemingly unable to get a handle on the problem that exists at that company dorsey, whether he's really willing to take on the trolls on the troll pool if you want to call it that that twitter in many ways has become how do we assess that? >> the question is can they really manage these companies. a different thing than twitter or snap chat facebook is a bigger problem because it's a massive company

none of them really had management training, but they were all founders that wanted to keep control of their companies and that's a typical founding kind of mentality. just a question of in this complex world, if that's enough or if more of these particular leaders need more help going forward. >> walter, cara, hope to talk to you begin because there's a will the of stuff we could use help with talk to you soon thanks >> thanks a lot. >> merry christmas, carl >> all right still to come, no bottom in sight. oil hitting its lowest levels since july of 2017 did anything stem the selling. take a look at the worst performing stocks in the dow so far in today's session dow is down by as much 450 down 363 right now "squawk alley" still ahead, much more don't go anywher e.

oil moving lower today since july of last year as the market continues to sell it off. what's the argument for el sg it from here. >> i think sentiment is weak i think the big story is the fear of a global slowdown next year i do not believe a supply picture looks that bad the opec president oaf the weekend saying we'll cut more if necessary. there are reports of some drillers saying we won't be rushing to put so many on the rigs next year i believe the picture is not as bad. that said though, all this kay yous out of washington, fears about a slowdown, that can take oil much lower >> if demand becomes a serious question, how quickly can supply respond? >> there's a question about how it can respond to a physical oversupply or really to sentiment i think sentiment can be harder

to change in the near term so i believe opec can be responive. i think we'll need to see more out of u.s. drillers, but again, as long as we have story out of washington, going to be shaky for oil. >> talkingit's a supply issue. supply overseas. opec said they're going to do their cut, but the u.s., there's no end in sight really to the supply coming from here. >> here's the question going into 2019. there are some reports of some u.s. drillers coming out and saying we're going to cop rate within catch flow. exercise restraint i think the simply story though right now opec cuts have not taken effect and the saudi policy of cuts exports to the united states i think that could be significant when you have a change in weekly data. >> about geo politics. mat tibs leaving, other issues

in the middle east leaving syria. you could count all the fingers on your hand and come up with a lot of issues. >> mattis' departure could turn out either way he apparently told trump not to do such a significant bombing campaign there but also advocate d staying in the nuclear deal without mattis is trump more unleashed to pursue his policie or is he going to say toim to focus on the united nations. i don't think want to get involved if these middle east entanglements. >> pipelines next year thaifr coming on >> that is been end of 2019 and i think that has been weighing on sentiment there was the story of the summer of the big upgrade in u.s. production and now a sense of the bottleneck that never really happened. especially you have a softer demand picture >> bottom close? >> we're watching now is a

42.05, the level of august 2017. with we can go lore. ik i think end of year, but as these cuts start to take effect in terms of the policy, that should clean up the oversupply >> we're going to have a lot to watch in the coming weeks. >> thank you see you soon >> when we come back, much more on this morning's market sell off. the future of jay powell, plus why our next guest is taking apple and facebook off his best ideas for 2019

here's your news update. an afghan suicide bomber exploded his car before gunmen moved in one police officer was killed. six were injured in that attack, but officials say more casualties do seem likely. the indonesian volcano whose eruption triggered the deadly tsunami erupted again on sunday spewing ash and smoke into the sky. more than 1400 people have been injured. footage released bay private news agency shows a turkish military truck convoy being deployed to the syrian border. turkey is massing troops near a town in syria's north held by a u.s.-backed kurdish force.

the build up comes as trump announced the withdrawal of all u.s. troops in syria and back here at home, flu activity is starting to pick up across the nation. the cdc says it is now swid spread in alabama, california, delaware, georgia, minnesota and new york get your flu shots back the to you guys >> all right thanks so much >> have you gotten your flu shot >> not yet >> me either >> going to now though the treasury secretary invoking the crisis era language as reports mount the president has discussed possibility of firing jay powell steve liesman is back and since his last appearance, you've had another chance to see another presidential tweet >> yes as has the market just as the president has denied he's considering removing powell the president continues his attacks on him.

just another piece of uncertainty. is it the fed or the president the president tweets the only problem our economy has is the fed. they have no feel for the market don't understand trade wars or strong toll dollars or democrat shutdowns. worth noting, the president appears to want the fed to play a role in the programs of the fiscal authority typically, the fed would react to the fallout, not cushion blows from fiscal policies here's some of what's coming from washington towards the markets. partially denying the white house. mnuchin issues the statement saying there's ample liquidity in markets and the treasury convene sometime this morning or early this afternoon the president's working on capital markets here to be sure many market

participants raise rates and say it should not given the u uncertainty and outlook. a bedrock of the system that underpins -- several reached this morning had no comment on the treasuries or whether this was carl any liquidity problems out there about which the problems should be concerned >> what do you make of the argument that the only problem our economy has is the fed >> i think it's offered challenges to the economy. i think it doesn't go without an effect that the fed has been raising rates. and reducing its balance sheet i find the idea that the economy being up near 3% growth or percentage point above potential and with more of the tax cuts that kind of brought us here to come next year that it's a little bit hypocritical of these people who used to be in favor of hard money now saying that no, we don't need these things and the economy can't withstand

a funds rate that's right now at the low end, carl, of where they useded to cut it to before on the way up, so it's a little bit weird that the economy can't withstand this sort of increase in the funds rate. >> steve, thanks back at hq >> going to take a quick break here for a moment and send it oaf to bob and a big nyse holiday tradition. >> oh, boy, is this a december for the record book, carl. one thing that doesn't change is the tradition of singing christmas carols on the floor of the new york stock exchange. s in a tradition that goes back to the 1860s and one song represents that tradition more than any other song written way back in 1903. here's art cashin to lead wait until the sun sunshines nelly. one, two, three. ♪ wait until the sun shines nelly as the clouds go drifting

by we will be happy nell y by ad by ♪ ♪ >> thank you, everybody. merry christmas. >> and arthur, i guess the question given the fuf times we've had in december, is the santa claus rally going to emerge do we have a chance of ending on a what -- >> i have a plan to meet him and buy him a bloody mary. >> nobody drinks them in bobby van's. always a pleasure and thank you for your leadership and help in keeping these traditions alive down here on the floor art cashin, everybody. merry christmas, everybody a lot of old traders down here

they come down for this every year and spend the whole afternoon across the street at bobby vans carl, merry christmas and look forward to being with you in 2019 >> save us a seat. >> great tradition of course the nasdaq sinking deeper into bear market territory. down yet again this morning. big names like apple and amazon has been weighing on the index there's amazon and apple some stocks have gone into the green a short time ago joining us now, dan ooifs and brent. brent, you first what is 20 is the going to hold for these stocks anything bet e when tuech fell apart? >> a number of stocks like google trading below its growth, so we think short-term, there's not a lot to do.

we think most investors will wait until january, february, to see what the earnings looks like you've had a downdraft in the stock, but not fundamental disappointments. >> some have felt like falli ii knives >> i'd say it's a fear, especially in a name like apple. in terms of what we've seen b, that's why to brett's point r, we view some of the parts on apple, you take away the serv e services valuation, which we have 4 to 450 billion. if that is sort of a bottom on their bad new, not just apple,

but across a lot of these names. i guess for the year, netflix up 25% is good. when you look at some names by apple, maybe on the side, it's really where the softness is i think when we look at them to the next year, we see strength in software. in the eras like big data cybersecurity. >> brent, facebook put in a new low today. what's in store for facebook certainly has heard a lot with its credibility. with investors >> they're fleeing because you have the massive deacceleration in top line growth as well as

margins. i think the stock son ice until we see the fist half of the year most realize no earnings growth. so most investors now looking up to 2020. you get to middle of 19, look at 2020 numbers and you're trading at 15 times in the numbers old even if they go lower on earnings, you're still talk iin about a high teen, low 20 multiple on facebook and again, i think if you look at some of the peers in the industry, they've traded at 25 to 30 multiples. clearly, the multiple has been impacted so many ore arether areas to go that show better support so i think it's the second half of '19 >> i'm look at amazon as we speak. down 30% in three months >> i think anything that has a touch of consumer we've seen just massive downdrafts. you're start iing to see valuatn fall out of bed. investors want to be more focuseded on the pure play cloud.

we've seen more and more large tech cap money just given the sector trends and they've been the beneficiary here, there's a lot of white knuckles going into this season in 2019. >> merry christmas >> let's goet to rick santelli n chicago. >> i never would have expected this to be pretty given all the recipient of the dutch auction a mouth full of paper on a shortened session in a holiday week, but 44 billion two year notes. the biggest issue wans of notes going back to may of i believe it's 2010. the yield of the auction, pricing was maybe the best part of it.

indirect, 45 close to average 7.8 on directs dealers taking a whopping 72% of the auction. we'll come back on wednesday with 41 billion. seven years and now that the auctions done, leet look at the markets. who said there's no santa claus cal r rally. there is just happened to be in treasury prices instead of stock prices a will the of nervousness out there. i get it the understand that the message of the fed, it's not a transparency issue it's not that mr. williams needed to walk back jay pow. the markets just don't like the message. you can wrap it up any way you want and i know disrupting is going to make a very mess where time it's disrupting the status quo, but i'm not talking about the president. i'm talk uing about the federal reserve and look at jay powell as a new ceo of a company. a company that had some rough

times an tried new strategies and saved itself, but none the less, the previous feds aren't jay powell and nobody's going like what he is doing because it is pulling tout little logs at the bottom of a pyramid made by the fed itself all the major economies followed ben bernanke's message create new styles to price risk and put people in the sectors we choose now i look at where one month bills are six month bills, near bills and now it's the time for saverers at the expense of the equity markets and add in a disruptive commander in chief and here we are. carl, back to you. >> all set when we come back, ron johnson is going to join us. why he says it might be time for investors to cut and run on some

underperformers in retail. as we go to break, a sea of red. all 11 sectors are down ft. month, the quarter and the year.

despite better than expected holiday season numbers, the retailing etf bracing for the worst quarter since the fourth

quarter of '08 is that a sell sign, joining us for an exclusive, ron johnson, now the ceo and cofounder of especial enjoy.com. happy holidays >> i really enjoyed that rendition of the holiday carol i read this morning this is the 200th anniversary of the first time silent night was sung got a bunch of traditions here >> we tease the segment saying you think it's time to sell some underperformers if you're stuck with some of these retail names. which ones? >> you've got full employment committee. the tax cut this year. a situation where adoption of technology has slowed. that creates open to shop for

other categories you have cold weather. you got people coming back to stores so my point is if you don't have an exceptional holiday, you might want to cut the stock. the f you can't win in this situation, it will get tougher in the year ahead. >> you feeling good on these days of the holiday season >> i do. all the data shows it's been exceptional. i look at enjoy. we're in our fout year now serving customers. never been busier. we're in 54 cities across the country. i feel the consumer is very robust you see that in the parking lots, the stores you know the stores have really fought back this year and it's been fun to see. >> none of you, no part of you thinks we've seen sort of the best that it's going to be chlgt i go back to those comments. >> that's my point i was trying

to make, i think this will be the best holiday quarter in some years. it's more likely than that that the economy will get a little tougher with all the tariff talk with just the way things are going. >> ron, how about amazon seems like we start every year wondering if other retailers have started to pick that lock is that the year at scale? >> i said this last time this is the first year this is the first year where the retailer has the upper hand. ifls at target this morning. the sign out front says priced right every day.

it's super fast and low cost stores are getter better and better i was at the apple store and hasn't got a new watch for a while. they've changed how they merchandise the watches. they used to be under a glass box. now you can try them all out i got my new watch and i just love this thing. i do my ekg all the time because of i have to the reason i can is because i learned how to in the apple store. so stores are fighting back and have the upper hand. >> you're talking your old book new. that's like apple selling the watches again. >> yeah. >> i still love apple. >> that's obvious. >> what do you make of what we've witnessed with apple a definite change in sentiment real concerns about the state of the iphone and the strength in that market.

>> no stock goes up forever. apple got to be the first trillion dollar market cap company. it's not inevitable that there won't be some movement in the stock price. it still has extraordinary market share it's a great product it happens through software, in ai, in better cameras. these apple products are worth every penny because you use them so much. so as an investor, i'm a long-term believer in apple. this is a good buying point. as a trader, it could go down more but as an investor, if you're long apple, you're going to have a good ride. >> are you a fan of the argument morgan stanley is the latest one to make it, that for the next five year, 100% of profit growth

is going to come from services and wearables, but not the phone itself >> i don't know what the mix will be, but i think the fastest growing seg mgt will be services that's true for a lot of technology companies that's becoming true for amazon through advertising. people are learning to monotize the customer relationship and not just the hardware. apple does it through great products like their cloud service. it lets your photos go from one to the other instantaneously they do it through things like a music service that's getting better and better. it's a great alternative to spotify. there's a lot of innovation there and they're generating great profits from that. i think that will be their fastest growing profit segment >> your insight is valuable to a will the of our viewers. have a great holiday see you soon >> look forward to it. >> talking retail and apple while we were speaking, scott,

session lows once again. dow down 455 that's two failed intraday rallies in a row williams on friday then tepper who said he was b nibbling today. >> holding the pattern existed. any pockets of strength people have sold into it, buying the dip hasn't worked. with mr. tepper says he's been nibbles. it's come down a lot maybe too much but there's still so much uncertainty. that ed about, hit the headlines that persist the trump versus powell, yet another tweet for the markets to digest from the president a short time ago the government shutdown still going on worries about interest rates and the course of where they're going to go. good luck if you're trying to f figure out the right price

point. >> dow 22 k sitting there. boeing fell below 300. adobe took out its low for the year all things that various traders are focusing on. more "squawk alley" continues in just a moment. a short trading session. back in a minute oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪

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

the last minute shoppers trying to grab some deals before heading home leslie is live at the danbury fair mall this morning >> hey, carl that's right over the last few hour, we've started to see traffic really pick up here at the danbury fair mall in connecticut. a lot of people filing into the mall to get those deals and check the remaining items off of their shopping list before the festivities begin. about 7% of americans said they would still be shopping on christmas eve according to a recent survey from the national l retail federation chlgt we spoke with a lot of shoppers about what brought them to the mall this close to crunch time >> i got to do some last minute shopping for my family

>> last minute shopping. >> super last minute my first time shopping >> i shop my best when i'm under pressure >> last bit of shopping. >> why last minute >> everything's last minute. >> the men, they're crazy. they want to wait until the last minute >>. >> well, there's been a decent amount of foot traffic here. it's clear that the trend has been to buy online and buy more online data found that a record $111 billion was spent between november 1st and december 19th of this year and that's an increase of about 18% year over year and for those consumers who do still want to buy online, amazon is offering day of shipping on certain items in certain cities for prime members. yes, even on christmas eve and some retailers are offering buy online, pick up in store although the deadlines for those are creeping up closely.

>> big story in an ordinary year, we might be doing more of these live shots obviously stories a little bit different in 2018. leslie in danbury, thanks. market down 427 on the dow we have a sessn ghiohi on the vicks at 34. "squawk alley" is back in a few minutes. 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.

vix has some people's attention. all 11 sectors are negative for the month, the quarter and year and there's not a lot of news catalyst coming in the few days we have left in the year >> i was looking at energy today leading down again crude breaks 45. that remains a big story the major averages you said are still holding on haven't reached the lows of earlier. dow east bare ly above,000 s&p low 23.67. so that seems to be b a key area now to watch between now and the end of this shortened session. >> you know, wung thing people have been asking is where's the bid in gold. finally, you're stating to get some fall signs of it. questions about powell will do that to you.

>> hello, safety >> it's slow and coming. >> you said though that lack of catalyst and you have to wonder what that's going to be with the government shutdown. real concerns about the relationship between the president and fed , what he may want to do >> we'll be locking for more tweets from the president. perhaps more clarification about the call with treasury back to post nine and the clo closing bell >> thank you very much very merry christmas and welcome to the special edition of the closing bell on this shortened but volatile trading day >> it is great to be here with you. no christmas cheer here. stocks selling off in the final hour of trade as the guys were just telling you the dow down 400 points as we speak. >> want to start with breaking news just spoke with a senior treasury department official here's what i can te