boeing also trading lower. we're going to have a weak opening and this is the big earnings week and it is all dependent on earnings, not the greatest, not the greatest move out of the box for caterpillar thank you. >> my pleasure. >> thank you >> see you next time. >> you're not driving time >> no, underground >> make sure you join us tomorrow "squawk on the street" is next good morning and welcome to "squawk on the street. i'm david faber with jim cramer. we're live from the new york stock exchange carl is on assignment this morning. futures as we get ready to start the trading for this week. you can see we are looking at a down open, at least so far european markets, mixed bag. europe also in the red as you can see right there. still open, of course. right now spain is the worst performer thus far during the course of the day.

ten-year note yield hanging in there, 2.73% is where i saw it 2.755% and wti hanging above, well above $52 a barrel to our road map this morning it does start with the busiest week of earnings season. china trade talks resuming fed rate decision middle of the week and january jobs report end of the week but futures, as you saw there, pointing to a sharply lower open, as investors are getting ready for a lot of news yet to come as for that news, well, we got some involving caterpillar tariffs seem it have hit the industrial bellwether. increase in steel prices as it reports a big earnings miss. and perhaps even more importantly weak guidance. jim and i will talk about that howard schultz, 2020, the founder of starbucks, says he's seriously thinking about a centrist independent bid for the white house. well, stocks are set to open the week lower it looks like they will half hour from now, dragged down by caterpillar's quarterly miss on

earnings, reflecting weaker demand for construction equipment in china revenue slightly exceeded consensus. caterpillar issuing full year guidance largely below estimates most of the analysts who follow the company. our outlook assumes a modest sales increase based on the fundamentals of our diverse end market as well as the macro economic and geopolitical environment. all right. i mean, 20% topline growth year over year, but slowing, slowing to 11% this quarter and guidance, though, up perhaps not what people had anticipated. the stock high in 2018, the very beginning of the year, in '18. this last year has not been as kind to them. >> very good is that last year it was a lot about conference call, the one about how, look this is the high water mark for the year they said it twice it was and i think things -- this is really good paradigm for what has happened in corporate

america. and you can read the same thing from union pacific and from norfolk southern, things are good they're not as good. but they're good those who extrapolate, we have to go to the session, they're missing the point. things are good. we were talking before the show, these are big numbers. they're making a ton of money. but, look they're very realistic. it is not terrible it is just not as good and i know nobody wants that because it sounds like -- it is like what we made the playoffs, but, you know, that's about as far as we got. >> okay. understood so what am i willing to pay then for a share of caterpillar given that it is still okay, but not as good? >> i think that if you think that -- let's say there is a deal with china, paying ten times earnings, why not buy it >> right. >> also, i think that you can

easily make the case i'm willing to wait. got to tell you, i don't know if you know stephanie, i worked with stephanie for year and years, she was talking about the analog to the semiconductors a lot of semiconductors reported really bad numbers and people were not -- they went nuts for it my take is you always have to say to yourself, wait a second, is this the one where it is already down because of? and is that good enough? then you get something like nvidia, up really big last week, and just really big. people felt it is great. and then guided down >> they guided down. >> no one is going to want to buy nvidia >> nvidia guides, 2.2 billion versus prior. >> can't get the cryptocurrency. >> that's a fairly large guidedown. talking about -- >> the data center is down. >> $500 million. >> data center -- >> 2.7 billion to 2.2 billion.

>> look, they got hit. >> we'll watch that stock. >> a year ago we had this much inventory. nvidia had this inventory of cryptocurrency you could return the cards they were expensive. >> sometimes i think we should back up for people to explain. >> you're right. >> they benefited enormously from the run-up in bitcoin because everybody was running out there and trying to mine cryptocurrency and used nvidia cards to do it your point is you can return them. >> you can return them one thing, nvidia is a great company. incredibly honest. i would speak to them, how much of the 500 billion -- 500 million, chips, how much of them are used for gaming, meaning they're capped and then how much for cryptocurrency you get the chips for much less. they had a gigantic inventory. they said they had a gigantic inventory bill, they said this quarter would not slowly dissipate. two other things we got to

follow data center not being that good, not what i wanted. and gaming we have seen a slowdown in the ea, electronic arts, take two, we don't know whether grand theft is taken down, and, of course, activision, blizzard they have problems now not just crypto, they have gaming, and they have data centers so, darn, i like this company so much, but i saw it go up, david, and on nothing so many of these went up on nothing. how do we know if you buy caterpillar to go full circle, how do you know this is the last bad quarter? nvidia has real issues because they didn't know cryptocurrency. this is new to gaming. >> i'm trying to read the full release here >> they're the best in show. >> to sort of explain to people what is happening here >> this is not -- >> they embedded a subsequential decline in their previous -- >> they sure did. >> due to excess midrange channel inventory following the cryptocurrency boom. the reduction of that inventory

and impact on the business preceded largely in line, however, this is what is going to get people's attention, deteriorating macro economic conditions, particularly in china, impact to consumer demand for their gaming gpus. >> again, this is -- you can take it all the way to the fed the china situation is really hitting home okay >> it is >> the two things we mentioned this morning, of course, caterpillar and now nvidia with this news we're just getting are both china related and we know that the chinese economy has been slowing and that consumer demand there perhaps is abated a bit as well. and the economy certainly not growing as fast as it once did and these are signs of it. there also is a crackdown on gaming in china. but was then reversed. hurt tencent for a while it is -- >> how about this, data center

line, data center revenue came in short of expectations intel data center was okay but amd went up last week. i hate toy sa it, this is in the sweet spot of amd. amd is going to go down. >> they talk about customers not closing deals, shifting to a more cautious approach. >> this is what happens in america. >> yes overall this is reflecting a lot of the fears you could argue that were to a certain extent in the sell-off, reflected in the sell-off. >> until lam research called the bottom and xilinx said things were good. xilinx is all 5g and china and machine learning and xilinx was a false tell a lot of companies went off because of xilinx including nvidia lam research was saying we're at the bottom of the cycle. bottom of the cycle, we had a huge run of micron tech was subdued a lot of people took that as okay

i would have sold. and the move up in western digital was a short squeeze. not them calling the bottom. if you go full circle, other than lam and xilinx, there was to reason, and nvidia up almost every day, like, oh, man, come on down. >> finally, we're doing this in real time, our viewers know that, having read this entire release now more or less, not part of their business is doing well i mean, they told us they were expecting a decline. >> we don't know autonomous driving. >> they told us they expected a decline in cryptocurrency. but high end gpus using the new architecture were lower than expected. >> touring is a product gap. >> consumer demand for nvidia gaming gpus, china, lower than expected. >> they cut the price. they cut the price of the touring because they had a very big transition. >> and data center, revenue was short of expectations. really >> did i tell you things were

good what have i been saying for months >> i don't know. >> i've been saying things aren't good. i knew nvidia was no good because the gaming, because of the crypto the gaming is big. you look at activision. >> it is the least of their issues they already guided towards and they say it more or less followed their expectations. they embedded a subsequential decline and that has actually preceded largely in line with their expectations it is everything else. >> this is the kind of thing we're going to get this quarter. jensing, turbulent and disappointing quarter and after that, looking forward -- we're confident in our strategy and growth drivers you can't have your cake and then throw it in the refrigerator and hope it comes back to life. >> this is the best performing stock of 17 and 18 >> for years >> this is a lower the boom. you can get the gaming -- you

can get the crypto chips they could not get a handle on how much inventory by the way, they never said to buy it in the last quarter they never said you should buy it >> okay. >> they made it very clear they didn't know when the inventory -- >> let's reset. >> the whole tech semiconductor -- >> on caterpillar we dealt with it to a certain extent the conference call doesn't start until 11:00 a.m. we'll see what we get. >> it is an infection. it spreads. >> you mentioned a number of others we looked at amd you mentioned last week things seemingly having bottomed, giving numbers we saw from lam and the like so tell me now with this release, from nvidia, now less than $100 billion market cap company, one set approach, what? >> i think everything has to reset. and you look at lam, when lam comes down, we know lam was up 20 xilinx up 10 they all went up because people felt that things had bottomed. nvidia is not necessarily -- nvidia data center is going to

really hurt people >> i'll tell you, and this name is also, need mike santoli to do his etf thing. how many >> i also think the read through with apple will be negative. nvidia is apple supplier but you're going to be saying china is bad >> china is bad, they're saying people in china aren't playing games the way they did they're saying high end gpus is lower than expected. they're saying data center, they haven't given us anything there except that one sentence, they said a number of deals also didn't close in the last month because customers shifted to a more cautious approach. >> look, people are not -- >> your buddy jerry powell listening to this? >> of course not he has his own models and listens to the media that loves it, sorry to be so direct. nvidia and touring architecture is very important. they had a high price point. they lowered the price point

therefore jensen has some call on touring gaming has cooled. we keep hearing this >> look at shares of va or activision. >> a rumor that gta, grand theft auto, wasn't that good they have red dead redemption, this is customers shifted to more -- if you had to issue -- almost like did jensen really issue this if you wanted to issue a call for why you should sell stocks, this is it you're going to have a lot of people really on the -- immediately, immediately saying, listen, all the stocks that moved last week should not have moved. >> right they do, by the way -- >> ai is -- >> they do give guidance that is a lot more specific. again, 2.2 is where they are now. $2.2 billion in revenue from $2.7 billion that's significant gross margin, i'm looking at

various things here. >> people have to recognize, not only are we in real time, as the data comes out, there will be analysts around the world who will downgrade downgrade everything in relation to this. >> nvidia was planning on and is still currently scheduled for releasing the actual earnings on i believe november 14th -- february 14th. excuse me. >> exiting q3, channel inventory would be largely depleted within one and two quarters, february and april. our view of the day on that today is good. remains unchanged. here is what they were saying, we thought there would be inventory, inventory is worse than we thought, perhaps because something they felt that if you were using it for crypto, you knew it was -- it flowed back. but they thought that gaming was bigger gaming slowed down so all the gaming stocks should be down hard there were a lot of people who bought things on 5g last week, it is going to pace.

>> yeah. 5g is going to pace. we should point out again that they do cite the macro economic conditions in china impacting consumer demand for the gaming gpus they make it specific on the gaming side to china this sets the table for a week we have already talked about going to be very significant one in terms of earnings from a lot of important companies and nvidia warning this morning is starting it off, not on a great footing, not if you're long the stock market. >> those who don't know nvidia, one of the great est performers of our decade. >> your dog briefly was named nvidia. >> i did but he came back to everest, and he's dumb as a bag of -- one of those beepers went off for the fire larm, he was howling. i was up for a while had the issue of release, wow. >> buy half a billion off $2.7

billion revenue number >> easy come, easy go. >> we're going to be talking more about this, we have to get to the other story this morning we're following. >> what other story. >> howard schultz. >> oh, man, give me a triple venti with a cappuccino with skim wet, of course. this is -- >> look how pleasant he looks there. >> i'm ready to talk howard. always ready to talk howard. >> 2020 race for the white house may soon have an entrance from the business community, howard schultz says he considering a run for the presidency he explained why during last night's edition of "60 minutes." >> i'm seriously thinking of running for president. i will run as a centrist independent outside of the two-party system we're living at a most fragile time not only the fact that this president is not qualified to be the president, but the fact that both parties are consistently not doing what is necessary on behalf of the american people and are engaged every single day

in revenge politics. >> jim, listen, you know -- you followed starbucks very closely for years. you know mr. schultz fairly well i know him a bit through the years. but i'm curious what are your thoughts here on terms of a, the likelihood he does this. by the way, he considered it last time. we know that >> sure did. >> prior to '16 and perhaps regretted not having done it. >> i think that there is this whole undercurrent of if he can get acclimation, the president, the democratic nomination, take it i don't think he really likes retail politics. i think he's a little -- i think that criticism comes hard. i'll give you criticism. let me give you an example let's do real time examples. scott pelley says to him, there was an incident in philadelphia, a terrible incident, there was -- let's call it a racist incident, okay let's call it what it says and here -- what howard schultz

says, about this incident in philadelphia, it -- the execution was flawed, and who owns that execution? i do because i was the one who was pushing us not -- to not play it safe wait a second. it wasn't him. i don't know about play it safe or not kevin johnson was the ceo. the ceo for a year this is the kind of thing i will say this, and it will really bother howard that i pointed that out >> he was chairman then. he was leading the way still. >> wasn't ceo. and the guy who solved this problem or at least made it so there was a dialogue was kevin johnson. kevin went to philadelphia he really dealt with it in a terrific way and, yes, i am saying right here, right now that this is what i most fear i most fear something that says hey, listen, i was running starbucks and i addressed it kevin addressed it we had kevin on friday so what i'm saying is -- i'm using this as an example of where i think that howard is going to say -- come on, come

on, i think howard in general, and i've doknown howard for a ln time, can be quick on things like this. i'm using this as an example he was calm, considerate, an interesting and powerful interview, he's got a book tour. but when i -- why did he do that why did he do that >> as you might imagine, a lot of the people who follow politics more closely than we do say if in fact he does run as an independent, it conceivably will make trump's candidacy much stronger and it is interesting to note, jim, that perhaps there is an antipathy in the democratic party towards corporations that is not going to allow those who would be aligned more towards that -- he's a liberal in every way except, you know -- >> he talked about -- >> democrat all his life. >> he went fiscal conservative, liberal on the human rights

issues, that's where he addressed himself and feels the democrats have gone fiscal liberal. very good ideas about costs. howard has long been ambassador to the united states for around the world, so many stores. but i think that the issue here is going to be the democratic party just saying, listen, are you kidding me you'll make it so there is no chance, no chance that we win. and that's why i think he would like the nomination for the democrats. >> maybe -- >> a lot of power. firepower matters. >> they can actually have a debate about some of these things. >> what did you think of the instant reaction this morning from -- >> let's see, the president trump tweeting, by the way, scott pelley asked him what are you going to do when trump -- filed form and came right in doesn't have the guts. >> what does he mean by that >> watched him, agree with him, he's not the smartest person and trump says, yes, he is the smartest person. >> how does he know what channel -- >> starbucks at trump tower.

>> he actually watched do you think -- >> you think he turned to cbs? >> i don't know. is that channel 4? >> in washington, a lot of tvs >> look, howard is not as important, right, for this moment for us, it is very important, because starbucks is a great business story >> way more important. >> nvidia. i'll beat the dog senseless. >> do not do that. >> i would never hit a dog that dog is a rescue dog and he's skiddish and will do anything for him or -- >> get ready for a mad dash on a morning, of course, where we got this mowarning from nvidia. count you down to the opening bell, futures for which has worsened since we heard from nvidia about 15, 20 minutes ago. more "squawk on the street" straight ahead ♪ (vo) here's a question. was it necessary to create a luxury car

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time for mad dash. six minutes to go before we start trading at the new york stock exchange ge. >> well, steve tusa comes out, i'm surprised ed he's as negatie people felt it was very good for ge an for shareholders -- >> they came out on friday, i think, and redid the terms of it. >> yes, but he says, revised terms of the deal, this is amazing, david, the revised terms of wab are mechanically and mathematically negative. david, no one thought it was negative that's why the stock was

rallying >> does he indicate what is negative about it? >> below consensus numbers, assumed value would come from the script here. there are things he thought would be -- split approach does not create value what he's saying is this is just not going to save the quarter. and it is not going to raise the money you would think. and i think steve -- >> wasn't that large of a deal to begin with. >> it wasn't i was surprised -- i read it, i have to admit, that sounds good, that sounds good, that sounds good tusa does more homework and says you may think it sounds good, it is not as good as you think. it is no nvidia, though. >> backing off from 9. jim mentions nvidia. that's our focus we'll see how the stock opens a few minutes from now when we have the opening bell here from the nyse more "squawk on the street" straight ahead i'm a veteran

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♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you are watching cnbc's "squawk on the street. and we are live from the financial capital of the world we got an opening bell that is going to ring less than a minute and a half from now, begin

trading for this week. five full days of trading. unless i'm wrong but i think i'm correct. not a holiday-shortened week typically i like to when carl is out turn to you and ask you what the key of the market is i know what it is today. >> nvidia. august 2018, a terrific ceo said though crypto revenue may not be large, still has a derivative impact on our stock in terms of what we're selling to replenish the overall challenge and such they stabilized overall channel, we get the effect of selling everything and our margin has been able to benefit they knew crypto was a problem they just didn't know how big. they didn't know how big >> all right, but now -- >> as we worked our way through the release this morning in real time, it is well beyond crypto crypto is what -- in line with expectations. >> and that's why i have to warn

people that this is going to be a far bigger effect, because data center has been a place where people say, wait a second, the cloud, the cloud, the cloud. we heard some indigestion in cloud, bob swan did not speak about -- the interim ceo of intel, he did not make you feel good about the data center >> well -- >> he didn't xilinx made you feel good about everything. >> not feeling good this morning if you're long this market given the warning from nvidia, a significant one. opening bell, look at the real time exchange, back at our headquarters in eng lewood cliffs, new jersey >> a lot of people feel it is a good way to play ag. deere could be down today. deere is an excellent way to play >> sympathy with cat ofs credit company, investment

management company. >> nvidia is down 23 points. it ran ten again on the we're okay, all clear xilinx and didn't take into account any of the other negatives. and the short squeeze last week was profound this is dramatic and comes very much at the wrong time it could take the market down far more than this. >> if you're just joining us, nvidia, of course, the incredible performing stock in 2017 and '18 sorry, 2016 and '17, really, is where it did amazingly well. last year was more difficult year for the stock but the company going well beyond what had already been concerns that many had and that had already been addressed by management previously as jim made clear about the slowdown in crypto people no longer mining as much for bitcoin, not using their cards. well beyond that, talking about slowdown in china in terms of macro economic conditions, impacting consumer demand for

nvidia's chips, for gaming also talking about its new touring architecture and high end gpu using that, touring architecture, also had lower than expected demand going on to say in the data center, revenue also coming in short of expectations. and jensen huang quoted as saying it was an extraordinary, unusually turbulent and disappointing quarter. >> now, again, they had this gigantic architecture touring and it is for the highest endgaming and only a few companies, gaming companies are writing for it so they both have a product hold, switching to touring and issue about not adoption, they cut the price touring very big in order to entice people, so there is a frozen market in touring. china, china, china. china, china, china. >> china this morning figuring both that and caterpillar's outlook as well or

caterpillar's -- >> don't forget oil down 1.58. we're going to repeal the -- we will re peel the se will repeal the semiconductor movement a lot of companies on the coattails of lam, lam being a great company, and on the coattails of xilinx, xilinx had the best product line. it will be interesting, david. >> qualcomm nvidia chip. >> the company will not actually release earnings until february 14th and when it comes to the actual decrease in terms of the guidance, we're talking 500 million in revenue off of what was $2.7 billion forecast for the quarter. you can do the math. that is a very significant percentage decrease based on these aforementioned reasons >> they were atces, a lot of good things. look, i want to emphasize this is the cream of the crop nvidia uses graphic chip,

graphic parts, they have been adamant that the traditional semiconductor is done and that very defensive last conference call, mentioned multiple times, our cards are the answer to the runout to the end of moore's law. interim intel does not believe moore's law is done. but it is -- it should not be as shocking, the data center line that is shocking and it confirms what a lot of people felt about how activision and blizzard deserves to be down, ea, the games aren't working. there is no enticing games, saw a note out this morning. there will be a run, after we get the smoke clear, a run to procter. >> okay. >> that's where the money is going to go. procter being a derivative of a lot of companies, game, when the economy softens, procter having a great quarter. a move back to health care merck will report this week. i think merck will be very good.

but people are scrambling. >> people focused, amd, micron, all down on this nvidia warning. by the way, nvidia, high was around september of last year -- of -- yeah, september of 2018, jim. so it did -- wait -- am i looking at the right i think i am it plummeted, kind of -- that fourth quarter was brutal for it $280. >> their august 2018 comments were bad and they gave you a hint but, remember, you couldn't tell, now what happened -- these cards were used for crypt yes or f gaming they were returned if they're crypto now we realize gaming has slowed that may be the product line between what they have and what -- where they're going to with touring there are so many read throughs. the one that is very interesting, intel is regarded as so cheap that it doesn't get

hammered swan told a good story good enough. it sells at ten times earnings >> right. >> what was really interesting is the multiple kept shrinking for nvidia it is at 18. last week, remember, this thing ran 10 that was a mistake okay mistake. >> clearly a mistake >> short squeeze. >> we're talking about an s&p down about 1.1%. so intel down -- >> nvidia was at the end of last year, in the christmas -- the day before christmas slaughter, this stock did drop to 124 more importantly, it was at 126, that stock even down 28, don't touch it until it goes down 35 >> really? >> yeah. has to take -- has to touch that low. at that low, people felt things could get better. >> right right. >> didn't talk about that negative article about autonomous driving. >> that's good i got electronic arts down a little less than 3%. >> that should be down

activision, blizzard, the one you could see. >> they were all down dramatically from their highs. >> those have been taken to the wood shed. take two had just started being taken to the wood shed last week, down 32 points from its high >> yeah. >> but, david, also a read through for cat we have to mention. boeing will report on the 30th. >> okay. >> boeing will report on the 30th. >> only 200,000 shares, but boeing down bad off of caterpillar. which is a -- not necessarily a correct read through china does continue to order play planes one out of every four we see the repeal of the run last week. the key to the market is xilinx. >> xilinx? >> xilinx has to stop going down xilinx was terrific. we got to watch that and we have to watch lam, which was called the bottom, and up and down i wonder if people run to xilinx they're getting a chance to be in xilinx.

it is the kind of thing that is kind of really working here. you take a look at some of these food stocks, went down so much the drug stocks, they are doing well david, pfizer reports this week. a lot of people feel that pfizer will be trouble. >> they are. spend a lot of time on pfizer this morning talking about its growing oncology franchise, something it hadn't started to focus on until ten years ago it was a long story devoted to pfizer. >> put that one up watch apple again. apple preannounced >> yes, they did. >> that does not mean that therefore things got better. i want to really preface that. if you own apple, do not necessarily think things got better they have -- you do a prey announcement at the end of a quarter, typically that means your order book, what you're seeing is bad for next quarter so i think it is not even necessarily good for -- >> apple shares are -- they're only down 1.7% for the year.

>> stock is up 4 on friday i didn't understand it friday may have been a false -- may have been a bear trap. >> you think so? >> yeah, let's watch the financials too but xilinx is good 5g is good >> it is real. is it real i don't know. >> they have china orders. fortnite, the impact of fortnite was spaezed to esupposed to be gaming it was just good for fortnite. i had logictech on, they make the stuff for the e games, for e sports no degradation there as all. that's still very powerful i think we have to watch this group and decide when does -- when do the analogs bottom deere shouldn't be down as much as it is that's one to watch. lam, lam bottoms i'm trying to tell people when we get a bottom. in the meantime, i fully expect that anything that was good in

soft goods, like procter, that money will go there. kimberly went down too much. watch the airlines southwest did report a good number american was a good number so you're going to see some -- colgates wi was a bad number. good enough to do the job. watch the stocks rally some point midday. >> from the many things we could read through to -- from this nvidia warning, what do you make of this one sentence, in data center revenue also came in short of expectations. i shouldn't say was one sentence -- they talk about a number of deals that didn't close in the quarter as customers shifted to a more cautious approach. that could simply mean that peoplethat companies -- we kno this, they put off a decision because of concerns about china or concerns about overall the economy or any number of other reasons. it doesn't mean that it isn't going to come back, maybe the government shutdown starting

to -- >> remember, intel did tell you that there are issues and just to go to -- back to what bob swan said. bob swan said that there was volatility causing a lot of indigestion for investors now. there is a glut within the data center looks like the data center took a little break took a little break. >> yeah. >> who is spending most in we know, right it has got to be -- >> google trying to catch up has to be alphabet and motorcycle so microsoft. >> a lot of people are saying amazon is paying a lot and won't pay off. >> look at alphabet. that's going in a lot of different directions those numbers are bigger than at&t or verizon. >> they got to catch up. >> some of the biggest capex numbers in the world, but some studies done recently that says capex has not increased depreciatably year over year -- from the result now a year in

roughly almost from tax reform, which was expected to -- >> and china, slow this is about how there is a refresh, microsoft coming on with azure, doing a great job. >> see that? >> yeah, it is a compendium. >> wow. >> i know. >> you're going to read that >> am i going to read it i have no life, why not. no monday night football you're seeing a lot of companies that -- look, texas instrument stock. i read that conference call, it was downbeat the stock was up i'm not buying that. it was down because it was downbeat nvidia is downbeat, nvidia is more than downbeat >> people running for the hills. >> they are. where is the bird box there? >> doesn't seem to be having -- on a percentage basis, not nearly as bad. intel not --

>> intel prepped by saying indigestion in the data center no one took that as a read people thought amd is taking share. but i think it is absolutely -- got to look at caterpillar and the reed reaad through there, a recognize both the groups have bottomed and were moving up and people felt that things would not be as bad and therefore okay my concern is if jay powell had done the homework, what wove se h would have seen is what we're seeing. >> oil is down. >> no, oil read through -- >> auto. >> auto, i'm sorry, i didn't hear you. >> auto, trucking has tightened. even that has gotten a little looser. >> there say look at shares of cat. that conference call, 11:00 a.m. eastern. not going to hear from nvidia until february 14th. more on what is moving overall, check in with bob pisani on the

floor. >> happy monday, everybody not so happy in the market 7 to 1 declining to advancing stocks, a little off the lows. big week overall, not just earnings a number of catalysts out there. we have the fed meeting, middle of the week, the fomc, no rate hike, what about that windown in the bond portfolio, gdp in the first half, that will be issued, the china delegation is coming in for the trade talks we got busy week for earnings. number one story, you see this today, the global slowdown, not just with china, but the euro area as well, broad decline in business confidence over there that may well figure in. if you look at the sectors, you see the global concerns that are out there. just in what the sectors are doing. utilities and staples holding up better energy has oil down. we have nat gas down industrials weighed down by the machinery group. there is the semiconductor, smh, down 2.7%. that's nvidia there. if you look at the big semis,

the big five, they're the ones that move these indexes around, nvidia, intel, texas instruments. taiwan, semiconductor and broadcom, these are the big five and before thinking about nvidia, it is very much a china story. some of them are not so much nvidia, look at the breakdown here, 30% of their revenues are from taiwan. 19% from mainland china. 50% of the revenue just from taiwan and mainland china, u.s., japan and the rest of the world rounding that out. we like to educate people about what is in these etf portfolios, we mention this smh. it is 40% are five or six companies here this is what happens when you have indexes that are market cap weighted big, big names with outside influence they drop really big on days when they're down, nvidia, 6% of the weighting of the smh now. i'll show you the industrial machinery stocks caterpillar news and guys have gone over all that, deere,

cummings, oshkosh, which makes specialty vehicles often moves in line with caterpillar, caterpillar is more diversified geographically, not as much of a china story as nvidia is. 40% of revenue in the united states, canada, mainland china 5% of the revenues here. you get the idea here this company sells machinery all over the world. if there is some kind of slowdown, particularly in europe, they're going to feel it as well. that's the bottom line here. that's what we're seeing right here want to sum this all up, we have been talking a lot, mike wilson at morgan stanley was correct being bearish back in the fourth quarter. and his attitude today, just has a note out, with most stocks up 10% to 15% from the low, we think the risk reward is much less attractive at this point given the numerous hurdles still confronting equity investors right now just off the lows, down 328 points.

hard to see there. back to you. >> all right, thank you, bob bob pisani looking through now a letter from jensen huang, also out at the same time as the press release, giving a little more detail in terms of that nvidia decision to lower their guidance to 2.2 billion from what was $2.7 billion in revenue for the fiscal 2000 fourth quarter he says the global economy decelerated sharply. his words, as we work through the fourth quarter particularly in china, affecting consumer demand as we said for the gaming gpus. also talked about some customers may have delayed their purchase of the high end chip, the touring, in part because they were waiting for a lower price point and further demonstrations of the technology and actual games. data center customers buy those chips for high performance computing to train deep learning ai models. he says those purchases can be large and are not always

periodic or predictable as the quarter progressed, customers around the world became increasingly cautious due to economic uncertainties and a number of deals didn't close this is more or less what we have been telling you, but a little more. >> you can't -- nvidia has a broad product line you can't type because the strongest parts of the economy were the oil and gas area, but oil is down to 50 and change and data center spend, cloud spend. this is going to put a damper on the people who bought cloud-related stock, i think that is still a hot market it should be limited to what happened with the data center. not with the companies that use it they overbuilt things. and nvidia got caught because, look, i worry about apple and i think that apple is down a bit, i like apple. >> i know you do >> something happened in china, which we all thought was going

to happen. starbucks wasn't that great in china. china has a slowdown that is unfathomable for americans i don't think people recognize that the numbers out of china may not be nearly as good as the ones that they're putting up. >> that's always a debate, certainly. jim, let's hold that thought get to rick santelli, get a check on the bond market and come back after that rick >> david, the bonds really haven't reflected some of the softness in equities, but the session is young look at a two-day of 10s, pronounced holding some of the gains that we experienced on friday when we came back from the lower end of the range if you look at two-day of bund yields, you'll see a similar pattern. if you open it up to one week, you see something in the bunds you don't see in treasuries. bunds at 18 basis points, the bounce hasn't been that big, only trading 20 basis points and it really did follow the ecb it dipped before and it tried to sell off pushing yields up a little bit after you can see the difference look at a year to date chart of

10s. acknowledged the fact that the first five sessions of the year were all in the -- one or two in the 250s, three in the 260s. but unlike bund yields, this is the 15 session we we could close in the could close in the 2.70s we've already done it 14 sessions in a row. outside the early volatility it's been steady eddie and within that range we've risen and fallen with equities prices. one week of the dollar index, can you see that we really fell out of bed on friday we haven't really come back a lot here it's really a euro story as you can see in the start of the euro versus the dollars. it's been in a range and has gotten much wilder before and after the ecb meeting, expanding range but still sideways many are looking for a bit of a breakout we'll pay close attention to the statement of the federal reserve in the u.s. this week. david, jim, back to you. >> thank you, rick rick santelli at the cme group all right. as we head to break, let's take a look at this morning's worst

performing stocks in the s&p you can guess number one that's nvidia, and you can see caterpillar behind it and advanc advanced micro as well we'll be right back with a lot more "squawk on the street." ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

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our core drivers come from video games. it comes from professional graphics visualization like what you see over my shoulder it comes from our data center business which is now a multi-billion dollar business, doubling each year as well as in several years our autonomous vehicle business, so those are our primary growth drivers over the long term, crypto currency will still be here but our four growth drivers will make nvidia step times larger than they are today. >> drivers may still be in place, but they are not driving growth right now for the company in nvidia. a feature this morning, if you're just joining us, had already lowered its expectations in terms of revenue guidance for its fourth quarter to 2.7 billion on the lack of growth in

crypto and lowers it by another 500 million because of weakness in the data center corporations not making decisions to add more, not closing contracts. weakness in china in terms of people playing games. >> that's new. >> and weakness in the higher end chip as well. >> right. >> people waiting for a price reduction before buying. >> and they got that at the end. i think what's interesting here and i know it's a long day, bu the stock has not taken out its low from last year or even its january 3rd low. some people would say, geez, that actually -- i was going to say this sounds ridiculous acts well it was up 10 last week there's a tremendous, tremendous belief that we should not give up on the semis and the short squeeze is that we got western digital up 40 cents. that's important that was a short squeeze now looking a lot better we had -- you know, you're looking at some of these that people are going to say it is nvidia-specific. sylinks is up big now. it's roaring again they are saying don't look at

this lam will be up only down 1.40 bob swan said there was indigestion in the data center okay, confirmed. the tour hole, absolutely confirmed. we knew that activism blizzard and ea going down, absolutely confirmed. so all that we were waiting for was jensen to come out and jensen has lowered the bar that people will buy inindividualia i think he's saying wait a quarter because there's an inventory backup david, people want to own these stocks the peak in these stocks is usually mid-february so you'll get people that want to be in them i say wait, long day come on. nvidia, i don't know, there's probably 30 people who follow it and the vast majority of buys on it 22, 23 buys, so people are -- the analysts who follow it will say, listen, still above where it was in january. i'm going to downgrade it. why don't you wait to see the downgrades and then do the buy. >> we're also going to wait for what's on "mad money" tonight

real quickly. >> i've got rusty brasiel, the best oil guy in the world. we'll talk about the permion and the decline in oil price and what it really means david, this is going to be a long day, and it's not necessarily going to be a positive day i'm glad to have my partner here, because we've got apple, negative read-through. nvidia is not apple, but this china issue is really the issue. >> yeah. it would seem to be. >> union pacific and nvidia. >> nvidia shares down 15.7%. we'll have a lot more on the selloff th mni ept ghhereorng ♪ junior achievement reaches young people all over the world to prepare them for the future of work. we go into classrooms and we teach entrepreneurial skills and leadership skills. when you actually create a business when you're in your teens, it raises your self-confidence.

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♪ ♪ >> good morning and welcome to "squawk on the street. i'm sara eisen here with david faber and mike santoli live at post nine at the new york stock exchange carl is on assignment today. let's take a look at the markets. not starting off in the most bullish mood here on wall street for the week the dow is down 359 points, almost 1.5%. the nasdaq getting hit even harder, down 1.6%, getting ready

for a flurry of big tech earnings this week, a fed meeting and a lot more to chew on we've got some breaking news at this hour to get to on the cbo out of washington releasing its ten-year budget and economic forecast ylan mui has that from washington ylan. >> reporter: sara, the cbo estimating that the cost of the federal government shutdown is $11 billion. now that comes from federal workers' lost output during that time, delayed federal spending as well as reduced overall demand $3 billion of that hit came during the fourth quarter. another $8 billion is being impacted during the first quarter. the cbo says that a lot of that activity will eventually be made up, but it estimates there is a $3 billion permanent hit to economic activity that will not be recupid now, the cbo also says that its estimate does not include some of the indirect effects of the shutdown that we've talked a lot about such as businesses unable

to access federal permits, businesses able to access certain kinds of loans that's not a part of this estimate, but the cbo did warn that the risks were increasing significantly as the shutdown dragged on now the cbo also put out an estimate of the impact of tariffs on economic activity it said that tariffs would reduce gdp by .1% over the next ten-year span. overall, the cbo says that economic growth this year will come in at just 2.3% that's down from 3.1% the previous year and is part of the impact of the waning benefits of the tax cuts guys, back over to you >> okay. ylan, thank you. ylan reporting to us from washington, d.c. let's get to our road map this morning starting with stocks kicking off that big week, and, of course, we're doing it with a big selloff. caterpillar is weighing on the dow after reporting weak results and a weak outlook we'll break down what's in store for wall street this week. >> deteriorating macro economic

conditions shares of nvidia plunging after citing december's volatility. >> brewing up a bid. former starbucks ceo howard schultz is thinking about running in 2020. >> first up stocks plunging to start the week dragged down by the weaker than expected earnings from caterpillar. also nvidia tanking after cutting its guidance on economic conditions in china. it is the busiest week of earnings season. tomorrow results from pfizer and apple. later in the week, we'll hear from giants microsoft, boeing, mcdonald's, facebook, amazon and more investors are also preparing for the fed kicking off their two-day meeting tomorrow it will wrap wednesday with a rate decision and a news conference get ready. powell is going to speak every fed meeting. the fed is expected to leave interest rates on hold this time around joining us to discuss all of these market risk factors going into the week, jong than gollob from credit suisse and bryn beleskey, bmo capital markets chief investment strategist.

jonathan, actually i think both of you are pretty optimistic as far as wall street strategists anything shaking your confidence this morning as we hear from caterpillar and nvidia >> well, you know, i think what you saw this morning is confirmation that the earnings trend in the economy are weakening, and the market interestingly is actually rewarding companies more favorably on weaker results than they have in past quarters, so the market seems to be looking through this a bit obviously not today. >> but didn't we know china would be weak and slowing down for companies like caterpillar and really any of the industrial names? i mean, the action today suggests it wasn't all factored in. >> yeah, a little bit. i think the real issue is beyond this quarter the next quarter, the first -- the first quarter which we'll hear the results from in april, the growth rates are expected to come down more the key though is the market seems to be looking through this and saying, yes, but we're not going in a recession the fed is not -- you know, the fed is likely done for the

cycle. volatility is likely to come down a little bit more, and, therefore, the market i think is going to be perfectly fine, but the earnings growth story is going to be weaker. >> brian, one of the great growth stories of'17 and '18 was nvidia. >> yes. >> now it's not. i mean a $500 million reduction in guidance off a $2.7 billion top line expectation that's pretty significant. does that impact overall people's view of growth? >> well, i think a couple of things number one, i think it's really difficult to throw tech into all one basket, and i think people are learning quite frankly very quickly that the semiconductor space especially with respect to mike ron, amd and nvidia remain the most cyclical parts of that sector if you strip those out, you actually see that technology earnings are exceedingly stable and have become the more stable earners on the s&p 500 in terms of apple, microsoft, intel, those types of names, cisco. so what we've found out was very

painfully in the fourth quarter that many investors, david, became exceedingly reliant on the returns and momentum that nvidia per se were providing, and then the buyers' strike came and. market became exceedingly sick and received some antibiotics with respect to the rally. now we're kind of stock-picking and jonathan said it best. i mean, companies are delivering at different levels. now is not the time to be focusing on the index. now is the time to be buying individual names. >> jonathan, it's interesting because i would say six weeks ago whether you had been bullish or bearish coming into the end of the year, you said, wow, we have to bounce hard here the market is so oversold, such a concentration of panicked selling and now markets 14% off, 6% year-to-date and gone a little further than they would expect for a bounce. what does it take besides less bad news from here on out to get further upside >> well, first of all, right now the expectations for the first quarter, and that's really the

key here, not fourth kwaerer first quarter earnings are for 2% eps, and if you take out the buybacks that's 50 basis points. we have to wait a little bit are we really going into a full-flown earnings recession that's reason for concern, or is this overdone and are we overly concerned about this and ultimately it will come through? i think in the april earnings season you'll get a big bounce and it won't be as bad as predicted, but it's going -- there's very little information right now that's going to tell you otherwise so i think you're right. volatility coming down a little bit will help, but the real news you need you're not going to get for a little while. >> does that mean you roll right back over at this point, or are you going to kind of go along? >> you know what always happens is the estimates naturally decline during the quarter that they are exhibiting, and then they bounce at the end so that 2% expected growth the first quarter, by the time april 1st comes around, that's going to be a negative number, and we're

almost guaranteed to have that the news flow is going to be just god awful on first quarter earnings, and the question is going to be how bad is it really are you going to get a bounce or not? >> i think the bad news is actually what people want because they want the fed to be dovish, and this all comes back to stock picking in the market building credibility in these companies and building credibility for their fundamental wherewithal. that will take a couple of quarters to settle that? >> i mean, if we're trying to figure out if earnings are going into recession and what corporate behavior is. didn't get a very encouraging sign from the national association of business conference they put out their survey. 82% of respondents said they had not changed investment or hiring plans due to the tax overhaul. what that is about that was supposed to be a big boost for capital investment >> forecasting takes a while how you're going to forecast going out in terms of your growth. the majority of ceos in the s&p 500 have been there 11 years they were hired there in 2008. their job in 2008 was to cut, cut, cut, cut, cut and now

that's all they know how to do if we're going to spend and grow our way out of this, we need to see more cap "x." >> why is that not happening we got the lower corporate tax rates. >> because people are playing defense. so afraid to be wrong they don't want to be right so what happens is we need to see a sea change, we need to see confidence, a deal out of china and credibility out of fundamentals with respect to earnings and people will feel better. animal spirits will help drive the market in terms of not just stability but higher prices. >> i have -- i have a different take on this. >> oh, there we go. >> we're both pretty optimistic. here's the reality we saw from the cbo report today. we're in a 2% or sub 2% long-term trend, so when we had a 3% year, rather than saying oh, my god, look how great this is, the reality is you're now overgrowing or overearning companies aren't stupid. they realize that we're not going to sustain 3% so they are not investing around that, so we're not going to see this cap "x" cycle. i think it was wishful thinking? i think what you do have --

>> just for a second it was wishful thinking, all that talk around tax reform and the fact it would unleash a productivity boom because of the money spent. not going to happen? >> i don't think so. ultimately businesses are investing. if you're going to build a plant with a 20-year life or buy a piece of equipment with a step-year life and you think you have a boost in the near term to being able to accelerate. >> can you write it off. you can write off all of it. isn't that enough? >> you were able to write it off all before over a period of three or five years, so all you're doing is accelerating the write-off in a shorter period of time david, in an environment with low interest rates, the net present value that have is almost nothing you need longer term confidence. >> if we counted software at cap "x," would cap "x" look as bad >> no. >> that's a different kind of point. >> this is the defensive nature of corporate america, and i don't think we can keep that binary negative negative negative for long. it's animal spirits and the reversion to the mean. we're not going to build a bunch of plants. we might build one, and that

makes sense with respect to bringing back a capacity of the united states. >> good discussion, guys thanks for joining us to kick off the week. >> brian belski and jonathan golub. former starbucks ceo howard schultz is considering running for president in 2020 as a centrist independent in an interview with cbs' "60 minutes" he says president trump is not qualified to be president and that he's not interested in what he calls revenge politics schultz also critical of a number of trump policies, including tax reform as we were just discussing. listen >> i would not have given a free ride to business from 35% or 37% to 21. it the would have been more modest, but i would have significantly addressed the people who need tax relief the most which is the people i talked about earlier, who don't have $400 in the bank. >> trump taking to twitter this morning to call out schultz.

howard schultz doesn't have the guts to run for president and i agree with him that he's not the smartest person. besides america already has that i hope -- i only hope that starbucks is still paying me their rent in trump tower. sounds like a dare joining us now to discuss former medtronic chairman and ceo bill george he's also a harvard business school fellow and cnbc contributor and also with us it is yale school of manager seniorship leadership studies and cnbc contributor jeffrey sonnenfeld you know his background. running as a centrist independent. >> there's five quality of american mythic hero and he's got all five of them one of them is the common touch. can relate to anybody. housing origins growing up in had a housing project. he's overcome adversity. his dad was disabled when he was young and howard had a rough

route early in his career. he's a fabulous communicator seen him electrify audiences as the third quality and as a fourth one he -- he's terrific, yet basically trying to show that he's got sweeping social visions to get people quite excited. he's passed and principled about what he believes in the downside, of course, is he's not going to be going down easily with the democratic party if he's going to war with the democratic party if he can get that 40%, the 39%, 40% of centrists will be the big argument and challenge if trump runs, it's better for him. >> bill, your take >> first of all, i'm still stunned over the $11 billion we totally wasted on a federal shutdown and the fact that we're launching a trade war with china and our growth is slowing. howard is truly an authentic leader, and i think he'll bring a really important voicish to use that need to be heard in our country. look, we're two years away, and it's going to be very volatile

lord knows what is will happen if you get an elizabeth warren versus a donald trump, i think howard schultz looks awfully good as an independent because he's a fiscal conservative, social liberal, something we haven't had in 20 years, and you see that deficit climbing, $2.2 billion under a republican president the last year, up to 21 billion somebody's got to address, that and i think issues like healthcare and education, howard is very good on those, and very supportive of all people he lived, as jeff said, the life of a, working class person, and we have a ban on the working class in this country. that's terrible. we gave upper class tax cut. why didn't we give it to the middle class, to people who are really hurting why don't we do more to encourage millenials for their education and so i think howard will bring a really important voice to the issues that america needs to hear, and i can't wait to hear them in the debates and really addressing these issues because we've been abandoning those issues by the kind of left-right stuff we've had in our political environment that's

unhealth f unhealthy for the united states. >> i completely agree with you. >> we actually want a centrist ceo of a multi-billion dollar company, both bases would probably have reason to be hostile about that >> if -- if it's the polarity that bill suggests with donald trump on one hand and someone such as elizabeth warren on the other hand, and by the way, for the last two years the media is mislabeling them as progressives progressives through our history were centrist republicans. >> right. >> these are democratic socialists, and if that's that extreme particularity that's set up he'll run away but if it's joe biden it's a lot more complicated. i don't think jiden and howard schultz want to run against each other. i know joe biden quite well, and he's quite serious about getting in here, and this definitely complicates things as for what ceos are doing, howard does not have a constituency of ceos while his causes are very empassed, he doesn't join anybody else's team as this third-party candidacy suggests,

his independent candidacy suggests causes on racism and employing vietnam veterans and all these other great causes, there are existing groups out there. he never joins them. it's always sort of a little too howard centric is the knock on him, and that's -- that will be a challenge. >> i think it's worthwhile, bill, to take a look right now about -- about the history of business leaders in the white house. i mean, we don't have that many to judge from, but president trump and i guess herbert hoover i mean, what are the transferrable skills and what's the verdict? >> well, i think -- i wouldn't want to compare either one of those people i think you'll find that howard is a great leader at bringing people together. he's done it all his life. he's a job creator he created 350,000 jobs. he's a wealth creator, created $82 billion of market cap, amend i think he has that pragmatic zins sense of people he's created a community in crisis and when there's a crisis he and kevin johnsson flew out

to philadelphia to address the issues of the improperly treated african-americans and he address that had issue and shut the place down to talk about real issues, and so i give him a lot of credit, and i think he'll pull a lot of people with him who want someone who is fiscally responsible and is concerned about the american people and where we're going, and that's what i'm concerned about. >> jeff, jeff, jeff. >> he's the real deal. he is the horatio alger story. >> you can't beatsonnenfeld. why not run as a democrat? why not try to pull that party more back towards the center as opposed to running this certainly higher risk candidacy as an independent? >> he's creating a scapegoat of the democrats by looking at elizabeth warren who is on the edge, on the extreme of the democratic party and suggesting that that's the norm if he did run within the norm of the party, i think he'd have a much better chance of winning.

as an independent, i think it -- it is very hard for him, but as bill suggest the, he's had very successful disruptive visions. he's the epitome of the american dream. we have had successful business leaders. now as an independent, michael bloomberg, of course, was extraordinarily successful public servant people didn't think so the second toughest job in america is the mayor of new york city and people say after being president, and we'll see what bloomberg does here. >> is he going to run, do you think, jeff? >> i think he was very tempted up until "60 minutes," and we'll see. i think he certainly has more than ten times the wealth of howard schultz and howard schultz has more than twice that of donald trump, so the staying power of some of these people is pretty significant i think that -- that howard definitely wants it. i think michael bloomberg is ambivalent, and that's the difference when the president trump suggested that howard schultz doesn't have the guts, well, that's certainly not the case. howard schultz certainly is a

ten as tenacious fighter and he can be fight tough. he's had much tougher origins than anybody that's running out there. he's the real deal that way. >> it is shaping up to be a battle of the billionaires 2020. bill george, jeff sonnenfeld, thank you both for weighing in. >> thanks, sara. >> tomorrow howard schultz will be sitting down with our own andrew ross sorkin starting tomorrow morning at 6:00 a.m. eastern. >> when we come back, we'll have more on the big movers this morning. caterpillar, envied yeah, they are the major weight on many of the major averages, this after announcing a poor outlook. "squawk on the street" back right after this the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim,

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download doordash. first order, $1 delivery fee. shares of caterpillar down sharply. morgan brennan joining us now. she's got more on it of course, you'll have a lot more after the call at 11:00. >> stay tuned for 11:00. >> a lot of poem wanting to hear more as we say gran layerity on the outlook in particular. >> absolutely. you just mentioned the shares are getting slammed,ing down 8% right now. this is a big move for this company, and it is leading the dow lower right now. a big miss for the manufacturer of earth-moving machinery.

255 per share. 44 cents shy of estimates. revenue was in line, but cat also giving a disappointing it 2019 outlook 1175 to 1275 per share on, quote, a modest sales increase blame china. as asia-pacific shares growth is slowing for the company, demand for construction equipment, specifically even falling 4% in q4 not expected to go away, this softness another key issue to watch costs, thanks to tariffs on metals and this tight freight market the company plans to raise prices or plans to raise prices on excavators, bulldozers, other items this year to offset cost has the growth cycle already peaked expect to hear a lot more of that commentary on the conference call which does start at 11:00 a.m. eastern. going to be a lot of issues to bring up there we'll be monitoring the

headlines hand bringing them to you as we get them meantime, cat is fueling a selloff of the industrials pulling down shares of 3-m, deere, boeing and ge just to name a few it is going to be a busy week for this sector. we're getting readings from more of these big multi-national manufacturers including boeing, 3-m, ge, but also ups and some of the defense contractors like lockheed martin as well so this is seen as something of an economic bellwether. we'll see if it continues to play through as we get more of these numbers. >> china, china, china as the source of weakness what about the u.s.? is it holding up relatively well >> strength in the u.s they saw double-digit growth in the u.s. i would expect them to call that out as a bright spot on the call, but we'll see how all of this plays out as we've seen with some of the other companies, be it apple or fedex, it's been china that's been area of issue in light of all the trade war, angst and all the tariffs. >> morgan, you're hearing people now saying well, they are trying to set the scene for the year,

in other words, maybe under promise and set the base of expectations, so, i mean, i guess there's no way to handicap that the market is taking back let's say half of its stocks recent gain off the december lows but not all of it. >> yeah, absolutely. i know you had this conversation on "squawk box" this morning is this guidance perhaps much more modest than what they may be -- you know, what could maybe play out here. the other thing that i would note here is back in q3 on those results, we saw the company sell off very dramatically because it didn't raise guidance because there were such big expectations and they still missed that guidance, so we'll see i think there's a lot of question marks here going into 2019. >> i think it's so interesting to see the china effect on u.s. companies because it's not weakness for all of that it really depends on the price point. >> absolutely. >> this is what we heard in davos as well. if you're in the durables business, heavy machinery like caterpillar or very expensive iphones you're getting hit, but if you're selling toilet paper and diapers and sneakers, you're

not feeling any effect of a trade war. >> apparently if you're selling gaming chips, you're also getting hit because nvidia citing that as one of the reasons for their significant shortfall. >> and they have the big freeze on gaming last year. >> which certainly didn't help, but they do seem to be citing consumer demand as a demand issue, not specific to the government saying you can't play video games. morgan, thank you. see you again at 11:00. >> when we come back, we'll talk more about the nvidia situation. shares down 14%. that company growing the list of u.s. companies facing challenges in china we'll have more on that after a quick break.

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welcome back time now for our etf spotlight taking a look at chip stocks this morning actually a lot of etfs that capture chips and other types of businesses nvidia slashing guidance, stock tumbling close to 14%. there's the smh, kind of the most widely traded semiconductor etf. nvidia accounts for about 5.6%

of this etf because it had been such a great performer, it went up to the ranks in the big holdings also look at the soxx semiconductor eat yes. very similar in terms of ratings. it's more than 7% of the soxx but it's not just the semiconductor etf. if you look at the arc invest web 2.0, just one of the best performing etfs of the last couple of years. very faang-like portfolio with a lot of these big platform companies. nvidia had gotten to be more than 6% of this one, too, you see it down almost 2.5%, and finally there's an etf that covers video gaming and e-sports it's very, very small, espo ticker, extremely small etf but a lot of big stocks in it. here again, more than 7% and close to 8% of this one was nvidia obviously one of the big growth stock stories the last couple of years is going to make its influence felt. >> i'm glad you -- i requested

this on "squawk on the street." >> i heard you were listening. >> so thank you. >> i got it secondhand. >> are you producing the show today? >> no, it's always interesting -- >> always good to know what an important component is i didn't realize that there was that small gaming etf on which nvidia would have a significant prent presence. >> kind of the way the industry works. kind of grab what's working. nvidia was not obviously really a peer computing company so it had all these different applications it's going to be a little bit of a test. >> mike, it's interesting, the stock itself it had been down to almost as much as 18% so it has backed well off the lows. >> it has. in fact, the whole market repriced down and inched up in the last half hour. >> it's been a comeback story lately. >> it has during the course of the day. >> can i request the chinese currency tomorrow. i don't know if there's an etf for that the david? >> let's deal with this one tomorrow. >> okay. >> let's send it now over to contessa brewer for a cnbc news

update hi there, good morning. >> the chief negotiator for the afghanistan peace talks told the "new york times" that american and taliban officials have agreed in principals to the framework of a peace deal in which the taliban would guarantee to prevent afghan territory from being used by terrorists that possibly could lead to a full pullout of american troops in return for a cease-fire brazil has raised the number of confirmed deaths in a dam collapse to 58 more than 300 people are still missing after iron ore waste from a mine flooded a southeastern city friday havana battered overnight but what appeared to be a deadly tornado. three people were killed another 172 hurt powerful wind and heavy rain downed power lines, and that caused a blackout. ben & jerry's is moving away from single-use plastic. the company will no longer offer plastic straws or spoons in any of its more than 600 scoop shops. that will happen as it announced early this year.

it will happen worldwide also announced a plan to address plastic cups and lids by the end of next year they are going to give you wooden spoons, paper straws only on request, but, you know, when i go into an ice cream shop, guys, i'm going to get a cone and eat the holder for my ice cream, consume it all. that's the cnbc news update. >> that's very environmentally friendly of you. contessa doing your part thank you. i think we'll see a ton more announcements like this from companies. this will be the trefntd year. contessa brewer. when we come back, washington watch former starbucks ceo howard schultz says he's eyeing the oval office. plus, the government is officially reopened, but for how long we're going to discussex nt. i'm a veteran

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. welcome back to "squawk on the street." i'm sara eisen here with david faber, mike santoli live at post nine from the new york stock

exchange about an hour into the trading session, and stocks are down across the board more than 1%. off the lows, but the dow is still down almost 300 points nasdaq down 1.3% starting tomorrow microsoft, facebook, amazon, all sectors lower in the s&p led by technology, digesting some weak earnings from caterpillar and a guidance cut from nvidia. >> yeah, although nvidia off its lows as we said earlier. the government temporarily reopening. i guess that's what we call it we're temporarily reopening for three weeks as congress and the white house work to come up with a deal to avoid another shutdown meanwhile, new numbers from the cbo show that the estimated economic toll of the shutdown nearing $11 billion. could even be more with us now for their take, austan goolsbee, former chairman of the economics council and james pethokoukis and cnbc contributor. 11 billion on a $19.5 trillion

economy tonight sound like too much the maybe we should do it again. >> that's the mechanical view of what's impacted the shutdown, and it basically goes, you go you've got 800,000 workers, that's less than 2% of workers, and they were only out of work for a short time and now they are going to get some back pay so how bad could it be if that's all that happened, i kind of agree with you but, of course, the spiraling effect of people starting to freak out if consumer spending goes down. if consumer confidence collapses, if business gets worried that the government is totally dysfunctional and so they stop investing, it could be a whole lot worse than just what that number is that's the thing that everybody has kind of got their eye on. >> i was saying just that. jimmy, we were getting there with the air traffic controllers starting not to show up. i mean, could you imagine the economic consequences of a lack of air travel being felt pretty quickly. if we were to go back three weeks from now and have a shutdown, one would imagine we'd

be right back there. >> yeah. boy, i have a hard time believing that's going to happen the president will just put himself right back in the exact same box you know, you have to be a real masochist to want to do that if austan is taking the more dynamic view i'll take the super dynamic view that the real risk here is, one, that we look like a banana republic. for sure, we shouldn't have anymore shutdowns and while we're at it get rid of the idea of debt ceilings, terrible idea. i think more broadly, especially if the president takes the next step and declares a national emergency, if you're an investor in united states assets you have to wonder about rule of law issues when you have a president who is willing to push the boundaries as far as they can be pushed i think that's really sort of bad long-term drag on how safe people view their investments in the united states. >> speaking of a long-term drag, austan, just at the top of the hour here we got a new report from the congressional budget office that says the u.s. budget deficit this year is set to hit

$897 billion that's more than -- that's about $118 billion increase from the year before. this is part of what howard schultz, former starbucks ceo has been talking about, as he considers strongly an independent bid in 2020. i mean, are americans going to care next year in the election about this deficit that is growing into the trillion dollar mark >> well, look, howard schultz thing is a whole separate thing. i think it's a really bad idea for him to do that if you look at the deficit, the problem of the deficit is that we're running this up during a boom, okay, so when we have a recession, the deficit does get bigger because incomes go down, we've got a bunch of automatic stabilizer spending that goes out the door, but we've never had a situation doing this during a boom, and if the economy were to slow, let's say we were to have a recession in the next 12 or 18 months, that number is going to skyrocket, and then you're going to see the

same -- you would see the same deficit scolds out hounding barack obama during a deep recession would come back out, but i don't think people will care because i think mostly that, like everything else, it's become a totally partisan issue. the republicans once there's a republican president will say, oh, no, it doesn't make any difference. >> glad to hear austan show some concern about the deficit. if we bring him back he'll be part of the monetary cult, won't care about deficits at all. >> it's true it's hard to decipher which group, if this is a partisan issue, which party cares about the deficit? >> none. none. >> look, as i want to say, you've got to distinguish two things about the deficit the first it is how much of the deficit is being driven by the business cycle, and then the second is what's driving the deficit? if you're driving up the deficit by cutting taxes for very high-income people and big

corporations, which is how we got to where we are in this situation, i think you're making a mistake. that's a long run mistake because the supply side line of thinking that says that in any time frame these tax cuts will pay for themselves, that's a fantasy. it's been disproven over and over, and what we need is to be making some investments that are going to help the productivity growth and the economic growth if they were doing that, if they were making investments, i would be far less concerned about what the deficit impact is. if we're just having big tax cuts to give one-time windfalls to people to bring their money that they have been hiding back onshore, i think that's pointless. >> but you like the lower corporate tax rate, right, austan >> i like the lower corporate tax rate i called for it. i just wanted it paid for, not paid for by somebody else. >> jimmy, granting your point that the idea of being alarmed about the deficit does not really seem to have as much of a

home as it used to, if one were to be concerned about it right now, can you now make a better case that it's a revenue problem if you look at tax revenue as a percentage of gdp, that that's below the long-term trend and does that inform what the debate is going to look like? >> listen, we did find the one person still concerned about the deficit in howard schultz. i'm not sure if he's going to recommend tax increases. listen, over the short term, yeah, there's definitely a revenue issue. these tax cuts aren't going to pay for themselves and that is playing a role in the increasing deficit. longer term as i'm sure austan would agree, it is a spending issue. it's an entitlement issue so short term if you're going to say we need to go after the deficit you might propose some sort of tax increases. i think longer term, you're probably looking at a value-added tax that doesn't seem to be where democrats want to go. they want the more punitive taxes on wealthy people, on corporations, economically inefficient taxes, but i think either way, i mean, higher taxes are in our future.

>> yeah. >> you are write it down, jimmy just said that now his friends are going to come after that. >> i don't feel good about saying that. i feel very bad about saying that. >> i will protect you, jimmy. >> you're no shield. >> it's going to be cold in chicago, but i will put you in my basement. >> i think these guys have got a speaking gig maybe, one of those -- austan, i want to ask this last question on howard schultz. i mean, the guy is a democrat, liberal socially and yet he feels he doesn't have a home in the democratic party to be able to effectively run a campaign, he's a moderate, doesn't hate corporations and thinks capital markets may be okay. does that say something about where the democratic party is right now? >> no. i think it says more about howard schultz wanting to get howard schultz's name out there in the public. his logo is literally howard schultz and then he signs howard on top of howard schultz that's the campaign logo

i don't view this as an indicator of anything about politics i think it's more of an indicator about what his own desires are. >> i've only been drinking coffee for four months so i find this whole prospect very exciting >> guys, thank you both. >> really into it. >> austan goolsbee and jimmy pethokoukis. >> a conversation with the audi soil minister in riyadh. hadley >> hello from a sandstorm in riyadh we did have a chance to catch up with the saudi energy minister on the sidelines of a massive infrastructure and industrial conference they are planning for a lot of things over the next decades looking at hundreds of billions for investment in saudi arabia and also abroad. they don't seem to think they will have any trouble getting that kind of investing, even after what we saw over the last couple of months with all of the negative press for saudi arabia, but i had to ask him the one question we all wanted to ask him last week at davos when he didn't show up, what's going

happen next with the saudi-russian relationship, and are the russians really going to play ball? >> listen in >> they have promised me they will pick up the pace. i'm hoping they will do better in february than they did in january. they have some issues they are dealing with and just like last year they will catch up. >> saudi arabia's energy minister there saying he's confident that they will pick up the pace and do what they promised to do hey, listen, i have alexander novak on speed dial. this is the conversation that continues to be ongoing and all of this across the sidelines of this $100 billion investment conference in saudi arabia these guys aren't stopping so you have to really wonder how much that negative press is really going to play on this fdi. guys. >> good to get him on the record big interview. hadley, thanks for joining us tonight from riyadh. much more on "squawk on the street." dow down 267 points, climbing

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it's the busiest week for earnings so how do you play some ng the big names reporti find out on "tradingnation.cnbc.com. more "squawk on the street" is coming up.

welcome back to "squawk on the street." rick santelli here live on the floor of the cme group welcoming my first guest of the week dr. judy shelton judy, thank you for joining me we do have a minor delay the big topic today, of course, is the lack of capital spending by business. now, we have one group, the national association of business economics, nabe saying it's not improving, and we've all been keeping up with this along with repatriation after the $1.5 trillion tax reform package. another group representing the smaller side of the scale, the national federation of independent business saying that capital spending by the smaller businesses has recently turned

up, and they are optimistic in some of their polling of the respondents. what is your take on the lack of monies moving into future projects and future potential to set up new new businesses? >> i think it was a very important and powerful step to reduce the corporate rate. it really hasn't been in effect very long so you can't expect companies to instantaneously change future investment plans i'm happier that it is the small business and manufacturing companies that are taking advantage of it. i mean, i think it was meant to address that they were in disadvantageous business climate. it is all about not just what happens the first year but establishing an environment that's friendly to business, that encourages enterprise i think we're already seeing

high employment rates and benefits benefits to employees. plenty of people got bonuses as a result of that tax program and i'm sure they're quite satisfied with that. >> when i think back, the effective rate versus the actual rate of corporate taxation before the tax reform bill of this administration, many big companies paid smaller than the advertised rate. but it wasn't that way for the smallerbusinesses so i agree with you and that certainly gets lost in the shuffle. and quickly, at a time we see the democrats getting ready to put forth a presidential troop of knlcandidates, the common the reversing tax reform your final thought why that's a good or bad idea >> it will just be disastrous. that's the point as well, even when things are better, better conditions for business

particularly small business where the productive growth comes from and jobs are created, they have to feel certainty about the new business climate and within a year after it was initiated to have people talking about reversing it is very damaging to the long term growth prospects for the country. it is a big mistake. >> dr. judy, i appreciate your thoughts i'm sure these topics aren't going away and i will do my best to put them in a way voters can understand sara, back to you. >> rick santelli thank you very much. the dow down 306. nbc universal and comcast are investing in acorns, it let's you invest spare change in markets. as part of the deal, the strategic partnership with cnbc to produce financial content targeting financial literacy the investment is valuing the startup over $860 million.

and the acorn ceo will be on power lunch to discuss that today at 2:30 eastern. time to send it to jon fortt for a look at what's coming up on "squawk alley." >> hey, david. nvidia is down 12% this is on a big earnings week what are the implications, fallout perhaps for cloud providers since data center has en cce for them. we dig into that coming up on "squawk alley. the latest innovation from xfinity

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like never before store. the xfinity store is here. and it's simple, easy, awesome. welcome back to "squawk on the street." i am dominic chu stocks are lower but off the worst lows revenue warnings from caterpillar and nvidia coming in let's drill into another underperforming group, energy stocks on pace for the worst day in a week following a sharp drop in oil prices, supply concerns, u.s. companies adding rigs the first time this year signaling crude could fall further in terms of capacity among names leading energy, hall burt ton and others. back to you at the new york stock exchange >> thank you now i turn to sara eisen who is back from davos if you

haven't noticed. >> what did you do last week, you had to watch all day to find out what was on "closing bell. today, the market action this morning and walter isaacson talking about howard schultz and possible presidential run in 2020 does anything make this time different for a centrist independent candidate? especially one we know well. former ceo of starbucks. "squawk alley" in the meantime is up next i'll be joining that too don't go away. alpha seems more elusive today.

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