on outside of the ground floor in times square -- >> that's a reason to watch. >> you do not want to miss this. you're likely to see just about anything >> yes, you are. >> i'm not kidding it is really good. >> if for no other reason to tune in, do it for that. it does look good. >> tomorrow. for all of that and more, "squawk on the street" in the meantime, begins right now ♪ let's get it started let's get it started in here ♪ ♪ let's get it started let's get it started in here ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, morgan brennan. faber and cramer have the morning off. it is columbus day banks, government offices, bond markets closed, futures red as the chinese not only don't refer to a deal in their talks, now reports they want more meetings before signing anything. earnings kick off this week. europe watching brexit hopes fade a bit oil down nearly 2% road map begins with deal to

make a deal. futures lower on reports that china wants more talks before signing. the president's highly touted phase one. >> plus, cash burn concerns. wework director set to discuss two financial rescue options today. >> facebook feud elizabeth warren says the social network takes money to promote lies and creates a fake ad to prove it. >> so investors trying to digest a lot of news surrounding the first phase of thattrade agreement between the u.s. and china. market sentiment tempered by reports that beijing wants further talks before making a deal treasury secretary mnuchin was on squawk earlier this morning talked about just that. >> we made substantial progress last week in the negotiations. we have a fundamental agreement, it is subject to documentation and there is a lot of work to be done on that front but it includes intellectual property rights, it includes financial services, it includes currency and foreign exchange. and it also includes very significant structural issues in

agriculture. on top of significant purchases. so i would describe phase one as quite substantial and the president has said as soon as we get phase one complete, we'll move to phase two. >> he did say that he expected an additional round of tariffs to go into effect december 15th if no deal by then it is why a lot of the street today is basically saying, the risk of tariff escalation is not over >> yeah. and certainly it does seem like just as you kicked this off here today, this idea of an agreement to potentially move towards reaching a bigger trade agreement, the tariffs that have been in place continue to be in place, you continue to have that december overhang, be really interesting it see what the next couple of weeks look like in terms of some of the talks and we have seen markets gyrating, it is a holiday today, we have seen markets gyrating in the futures arena, just on all of these different conflicting headlines. >> the whole thing didn't make sense from the start you saw the markets fade once we got word there was a deal in place. the thing that was tied up by the president was the ag

purchases. ip was part of the deal, you would think that because ip was -- to begin with one of the centerpieces of what a brand deal would be, that would be the most touted item in the whole phase one deal and yet that was sort of a footnote at the end and the ag purchases were the headline and then the chinese statement didn't even mention the ag purchases the whole thing doesn't add up and it was made clear on friday that there was no actual pen to paper. so there was no actual written agreement at all this is a verbal agreement so i think until we have a written agreement that is signed, the markets say, you know what, i don't believe it. >> yeah. we're getting headlines as well this morning from premier li they will protect their ip rights, which runs counter to the spirit of the entire discussion last week ca cashin said this doesn't get us to christmas we're joined by brian nick, investment strategist and brian

lefkowitz. good morning good to see you. what is the mood on the street right now regarding this >> i think it is taking it with a grain of salt. i think the agreement or the discussion toward an agreement does reduce some of downside risks that the market had been worried about over the last several weeks. but it is clear as we can see in the media reports there still is a lot of wood to chop before both sides find real common ground and agree to a final document so i think that means markets are going to continue to be kind of range bound and continue to be very sensitive to the developments that we see on the trade front. >> does it at the very least clear some brush for us to worry about other things we have brexit coming up in basically two and a half, three weeks. >> and earnings season is just starting at the end of the quarter, you see the markets turn their attention to that isn't as fundamentally based. then we see earnings numbers

come in for a quarter we know is mashed e marked by volatility inverted yield curve a lot of worries and signs of what we start to expect from the companies. >> we see another repeat of q2 in a sense you see all the estimates come down for earnings it is really yun beat adownbeat turn to the upside. >> we have seen a downward revision of q3 and q4. we think we maybe eek out a slightly positive year on year growth number, even though estimates coming in are negative 3, negative 4% range. >> 17% of s&p 500 companies mentioned tariffs as negative head winds that number has got to be higher in this quarter. got to be. >> yeah, i think so, yeah. clear the trade issues are still front and center but i think also importantly we have seen some of the business sentiment indicators have weakened as well the ism manufacturing, ism

nonmanufacturing indices are down that suggests the upside surprises are likely to be a little bit more muted than what we saw in the first half of the year now, i don't think we're going to see a big fall in earnings relative to expectations but it still does mean the head winds that the global economy has been facing looks like they intensify in the quarter that's going to be reflected in the commentary. >> what is the risk reward then. with the markets a couple of percentage points off record highs, i mean, is there a lot more upside compared to the potential downside that comes from, you know, a trade deal that doesn't necessarily happen or earnings season that doesn't necessarily come through >> yeah, i think the risk reward is more balanced i think you still have this kind of decelerating global economy at the same time markets are sort of braced for that. but i think what we don't really fully understand is if there are some -- how big the downside

risks are from trade, and at any point if we start to see business confidence begin to really deteriorate, that could start to have -- to weigh more negatively on the environment. i would say last thing is that looking at valuations, the market is trading at a pe multiple in line with its five-year average. so, markets look kind of fairly valued at the same time you have this downward momentum, we're looking for markets to continue to be range bound in that kind of environment >> upsides, buybacks had a good q3, right? up relative to last year's q3. the fed will be buying stuff through q2 so how much is that worth? >> the fed will be helpful i think probably more helpful than we expected look at the housing market, big source of upward surprises in the data in the third quarter. we'll see if that translates to better housing related earnings for the third quarter. not just the consumer anymore. we think the first quarter of gdp growth, third quarter, residential investment adds to gdp growth. >> how many quarters now

>> i think seven or eight. >> that will be interesting. of course, they always say housing punches above its weight how much can it do for the broader economy? >> yeah, it will be -- consumers will be a story, make or break story. the consumer probably decelerated in the third quarter. the import data from china was really bad about 8% lower import growth, this point, versus the last year this time. that means china is probably growing more slowly than it is reporting. not just about trade it is also going to be affecting germany's economy, the rest of europe, affecting our economy too. and whether minority we strike a trade deal with china in the next couple of weeks, china's economy has been weakening for a long time. >> you look at that and china data, other data from other major markets around the globe, you look at all the geopolitics that is playing out now as well, is the u.s. still the best place for investors to be putting their money? >> yeah, we think it is. we're overweight the u.s. versus relative to the regions, and

tends to be a little more defensive relative to some of the other parts of the global equity market on top of that fundamentals are better here in the u.s. relative to other parts of the world and the trade issues have really weighed more on business sentiment and actual earnings in other parts of the world so, yeah, we like the u.s. relative to what we see in terms of the opportunities in emerging markets and non-u.s. developed markets. >> so, brian, is the way for an investor to be thinking about this right now given all of the uncertainties and question marks about preserving wealth or actually being able to realize greater gains? >> we're trying to do both at the same time. we upgraded the more defensive parts of the bond market, we also are sticking to generally a risk on stance we like u.s. growth stocks the best in the world, so similar to david, david's view, but we also upgraded non-u.s. develop because the valuations were so low coming into the quarter, and we think if there is go to be

any balance or optimism about the trade war, that will help europe as much if not more than it will help the united states. >> that is defensive in the bond market >> longer duration, higher quality, yeah. >> guys, we got a lot being thrown at us this week thanks, guys. >> thank you directors of wework parent company the we company are set to meet this afternoon to decide on one of two rescue packages as andrew ross sorkin reported earlier. one would raise billions in new debt with the help of jpmorgan chase. reports say wework needs $3 billion to last through next year so it has got a tight time frame here. >> talk about a cash crunch. interesting it see how any potential investor deal plays out. it is also pretty amazing to see and to hear the commentary about how this is roiled, not just the private markets, reckoning around valuations, but the public markets, what it means for the ipo pipeline and if this

could mark some sort of peak as has been suggested about some traders in recent weeks. >> all right whether we return, boeing ceo dennis mullenberg gets stripped of his chairman's title. is his future as ceo in doubt? taking another look at the futures this morning the dow is indicated to open down 55 points the s&p down 5 this is after lows in the futures market earlier today of greater than 100 points. so we'll see how we open in just a little while more "squawk on the street" live from post nine at the nyse when we return. yeah, that's half the fun of a new house.

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♪ welcome back boeing ceo dennis muilenburg has been stripped of his chairman's title. what this means for the company with phil. >> this was a decision the boeing board of directors made without dennis muilenburg. he was not in the meeting when the board met and decided that david calhoun, the lead director at boeing, will serve as nonexecutive chairman. now, calhoun has vast experience in industrials, long time ge executive, currently senior managing director at blackstone. so for dennis muilenburg, now that he's not chairman of boeing, and strictly ceo, what

does that mean the fourth quarter is going to be crunch time for him he's got to return the max to service, that's the guidance from the company, they are not changing that guidance they have got a congressional hearing that dennis muilenburg will be at on october 30th he has to maintain 737 production this is important because they have said all along if they drop below 42 per month, the current production rate, the concern is that that could lead either to them or their suppliers having to institute a large number of layoffs and in this environment, where skilled labor is hard to find, especially in the global aerospace supply chain, they want to maintain 42 per month. that's going to be the challenge in the fourth quarter and into the first quarter. also, don't forget that we get boeing's third quarter earnings next week. so that's at least the first time -- we may hear from him before hand, before then, dennis muilenburg, not likely since they're in thequiet period that's when we'll hear from dennis muilenburg when they

report their q3 earnings next week >> phil, how does this speak to the broader changes that the board has -- i guess some members of the board, internal committee have proposed that boeing make in the wake of the 737 max crisis >> this gets right to the heart of it. they want to make sure that they can -- as much as possible shore up the deficiencies that have been exposed because of the 737 max. almost all of those revolve around the question of safety, how issues are brought up, how people within the company, engineers can report an issue which was the case with the 737 max that clearly did not get elevated to the level of attention that it deserved and that's at the heart of this. so that dennis muilenburg now focuses on the max getting back in service and on them, eventually ramping up production once they get it recertified, while david calhoun focuses on some of the broader issues for boeing and morgan as you know with the defense side,

they have a number of issues there and this is a company that also has issues with the 737 ng. they have problems with the 777 x which is the next new airplane which is being pushed out in terms of when we'll finally see it >> phil, we have a downgrade at delta today. had one last week as well on their cost outlook for the second half. the argument is if you can't make money or you can't make yield any better in this environment, when can you? is that becoming a real talking point for the industry >> it is a talking point for the industry in part because while you have strong demand right now, you continue to see that it is hard for the airlines, including delta to grow their fares. in other words, there is so much competition that has continued to come in here, that it is hard to get fair pricing power. and that's at the heart of the problem here, not only for delta, but for the other airlines too as their costs are increasing, it is becoming tougher for them to say, okay,

how do we raise fares. yes, do need to see the airlines to a certain extent raise fares. we want fares as low as possible for the airlines, that's why we see more segmention in the aircraft, they need to raise though fares if at all possible. >> just quickly, phil, is there any thought that dennis muilenburg could lose his job. >> well, the feeling i get from talking to people at boeing is they do not want to change the leadership,day to day leadership right now, in the midst of so many things that are going on in terms of getting the plane recertified, the congressional hearing that is coming up. my sense is they want to get through this period if they can do it in the fourth quarter, that would be great, if they have to move it nifin first quarter, then the conversation might come up. >> we'll talk to you in a bit. phil lebeau covering the boeing news for us today.

art cashin will join us after the break. we'll talk about the trade situation. a ton of names to get to, gm, facebook, libra, big call on nike "squawk on the street" back in a minute you should be mad that this is your daily commute. you should be mad at people who forget they're in public. and you should be mad at simple things that are unnecessarily complicated. but you're not mad, because you're trading with e*trade, which isn't complicated.

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♪ nine minutes until the bell. let's bring in art cashin, director of floor operations with ubs happy columbus day bond markets are closed. we're sort of flying blind in terms of the guidance of the ten-year yield. >> yeah. everybody's waiting to see are the futures going to respond,

will the fed delay the october cut, will we go ahead with it? what will happen and of course with the bond market close, it is very difficult to tell. and in addition, it is thanksgiving up in canada, and it is sports day in japan. they're closed so there is hardly anybody around it is just us and europe and that will make for rather thin and possibly volatile trading. i think you want to be a little careful today. >> what is your take on the trade deal or phase one, what was agreed upon >> i don't think, if it was what they said it was, it would not get us to christmas. i think that it is all blue smoke and mirrors. nothing substantive there. i admire treasury secretary mnuchin and he's talking about intellectual properties, and what not i'm getting different signals from china they don't look like they want

that to be part of the plan. and, you know, they indicate they're going to take care of it local. secondly, okay, so tomorrow the tariffs were supposed to be raised if i'm business, i already traded against that. i knew they were coming up, i bought whatever i wanted, back before they were going to get raised so the impacts are not very strong here. and, of course, we have geopolitics that -- the situation in syria is changing by the minute. a lot of things coming up here october is known for its volatility keep your seat belt fastened. >> biggest thing the mark set watching for, earnings or the latest with the trade headlines. >> i think they're still obsessed with the trade headlines. there will be more on that whether there is detail or not we'll be looking to see how the earnings hold up there are estimates of them

being down 4% to 5%. we'll see if they can hold together. >> why do you think energy is lower today? there is all this trade stuff and trying to decipher details of a potential trade deal with china. on the flip side, you have geopolitics, everything going on in syria now, we're sending more troops to saudi arabia >> yeah, but it -- not directly with the oil production. the saudi arabian thing might be but that's a little further off. you got a spike in oil, the other day, because overnight, there were missiles shot at a tanker that has subsided. there has been no follow through and that's one of the reasons along with the trade deal that we're pulling back. >> are you seeing hopes that brexit will be delayed >> i'm hearing that. this is a big day in london. the queen's speech, a lot of pomp and circumstance. and maybe something significant will come out of it.

and we'll wait and see >> art, great to see you thank you for your analysis. >> my pleasure >> art cashin. opening bell minutes away. quk t see wl "sawonhetrt"ilbe right back so servicenow put your workflows in the cloud, huh?

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you're watching "squawk on the street" live from the financial capital of the world the opening bell over two minute oz on a busy monday morning as we watch china trade and fallout from the talks last week as for earnings, guys, it is a nice mix this week as we get started on q3 prints of banks, technology and transports. going to start tomorrow. >> those transports are going to be key because they tend to be an early economic indicator and we have seen those freight flows soften, especially roll over on the rail side. intermodal will be something to watch with jb hunt ahead of that peak holiday season and what that means for the consumer as well and some industrial names like honeywell. >> rails have done well, so we'll get the results from them. they won't necessarily be an indicator of the rest of the transports, but they'll be an indicator overall in terms of just goods being moved. >> exactly such a wide swath of goods to get moved by rail and really get

moved by all of these different companies that touch the goods in multiple ways, we'll see what they all have to say in terms of the banks, should be an interesting quarter you can make the argument until you're blue in the face, banks aren't as dependent on the yield curve as they are thought to be for earnings but the fact of the matter is they trade dependent on the yield curve and the yield curve has been inverted for most of this quarter until about a week ago, and so that's going to be the trouble we're going to read these bank earnings with the particular scrutiny when it comes to nims and we'll see where that goes. but they have -- aside from the commentary on the economy, their earnings have sort of ceased to be a bellwether for earnings season in general. >> yeah. we are sort of riding hopes for better mortgage business as a result of rates coming down and we know what refi and mortgage apps look like we'll talk more about that in a second let's get an opening bell on

columbus day monday, on the big board. here it is celebrating the first listing anniversary, anaplan, and at the nasdaq, form suit cal company tricida. on to housing front, susquehanna takes call from neutral to positive this as a comment of what a nice run housing has had. and if you have -- some of the names, now it is time to ring the register. >> watching blackstone, the financials, getting a downgrade from bank of america that's been one of the monster stocks within financials it is up, what, 58% so far this year bank of mesh saamerica says they turned from decent stock to good stock. one key event was the conversion to c corp. valuation is also a concern. they're taking down a lot of the

asset managers in terms of their price targets there. just some concerns about some of the risks that lie ahead, that there was a massive fund-raising season for these guys. and that is sort of behind them. >> yeah. another name to keep an eye on today is a deal to sell management services unit $2.4 billion and many ways this is the latest in this demerging of these, you know, big conglomerates now, industrial players. portfolio streamlining, looking to make a pure play government services business, that name is surging right now, up 7% on that news gm also again in focus with this strike, continuing into its fifth week and two other names that we talk about a lot in "squawk alley" and covering closely, lyft and uber with those names saying they're going to sue new york city over a new rule that limits the amount of time drivers are allowed to cruise in manhattan without

passengers in many ways, this city has been ground stereo for a lot of the new regulations. >> and now los angeles, different rules prohibit them from picking up directly at the airport. we'll keep an eye on how they respond to municipalities, which has been a running theme in their business model, well before they came to the public markets. >> regulatory overhang, regulatory uncertainty when it comes to these businesses and business like air bnb, you have to wonder, various municipalities, different rules across the country, it is harder to become compliant with all these different rules for different areas. and that's just another head wind for these stocks. >> and i think it gets back at this key argument, you can also make this argument with wework as well, these ideas of companies saying they're tech companies, even though they may -- they may be involved in industries that are not so tech focused. are they a platform or are they actually something more than a platform and thus what does that mean for a regulation standpoint, even on a federal

level too. >> couple of names in the semiconductor industry to watch. semis overall pretty flat. they have been the poster children of the china trade deal and they're just off fractionally xilinx is up, buy to neutral earnings october 23rd. wdc, western digital, buy from hold, price target 75 to $50 a share. this analyst is saying there is something very important going on in the space, that flash asp is average selling prices going to be higher, not only through the end of this year, but 2020 that could mean a big change for a lot of these players including western digital and if we look at sea gate, that one with probably be higher as well on this call. we're watching semis these are the bright spots, semis overall right now are not doing too, too much. >> yeah. talk about a battleground. trying to decide what the thesis is on chips overall.

the other battleground is netflix. up a percent today ray j has a piece on whether or not this is -- b of a said it, make or break quarter for the company, if they were to miss guidance for a second consecutive quarter. what the future holds for price hikes, whether disney and everyone else is a existential threat, they have been dealing with tlel threahreats for the ee span. >> if you see the softness, see them miss the expectations, this is before we have gotten the big heavyweight competitors launching their services like disney and apple and the others that are expected next year as well what does that say >> they have few levers to help them at this point throw that out the window. how do they raise prices when everybody is coming out with a cheap price plan and they have to compete that game is over at least for now. for netflix. they have to deliver on what they have to deliver on without pulling any other levers to help >> a lot of the names lower today, on the dow, especially,

dow and cat, for example, are the names that were up on friday being helped out by the blue chips, by nike as finally ups it to neutral, having basically missed the very nice run in the maker sock they go to -- they go to neutral from underperform. price target, 70 to 98 >> neutral to underperform okay see that run see that run from august yeah good job i don't know if you saw the stats on -- we're talking about this nba controversy in china. lee ning has been a beneficiary. it is the best apparelmaker in terms of stock performance in the world. and has been helped by this athleisure trend taking hold in china, and nba backlash that is also helping them. if you connect the dots, you got to wonder in china, if they are benefiting, who is losing that business

so that's an open ended question, the longer this nba boycott goes on, the more these questions you got to ask. >> yeah. sounds similar in some ways to the debate we had around the iphone market too and apple and whether apple lost market share and what that looked like to huawei and other more local competitors too, just given all the trade tensions we see play out in china we feel this is a conversation not going away. >> facebook had an eventful weekend with the tweets regarding elizabeth warren zuckerberg will be going to the hill soon. and visa and mastercard and stripe are the latest ones to essentially leave libra, can you build an argument that this thing is -- still has wheels on the bus? >> um -- i would say when the payment guys leave, you know, that's real trouble. i think you want those payment guys in it that just tells you what the regulatory hair that is all over this quote/unquote crypto -- the thing being billed as a

cryptocurrency, this is never -- this had been more of a catalyst for bitcoin, we saw that ramp, the idea was that people would have wallets, be easier to on ramp on to bitcoin we have seen bitcoin pull back i'm not sure this is a huge -- at this point, the huge mover for facebook >> treasury secretary mnuchin commented on this on "squawk box" earlier today he said he thinks they realize they're not ready, not up to par and, quote, i assume the partners got concerned and dropped out until they meet the standards. talking about some of the regulatory conversation, i think, also this idea of fincen and money laundering and how libra would be set up. so it seems like if it is going to happen, it has a very long way to go. but given all the broader facebook backlash, seems like that is a company that has a lot more on its plate than worrying about a potential stable point. >> small area of the market to watch, some of the stocks really

having some difficulty last week we have smaller canadian company hexo, down 38% after it withdrew its fiscal 2020 guidance we saw that dragged down all the stocks across the board. so we'll be watching that. hexo down by another 5%, only worth mentioning because of the impact on some of the broader -- the bigger players, particularly in canada. we have tilray shares trading higher this is there are a lot of questions now about what kind of earnings these guys will have, whether or not the promise in canada is really paying off in terms of pricing and in terms of store openings there is a wider gap between the legal and illegal markets in terms of pricing, making it very, very difficult for guys to compete. there is still a lot of questions about this industry that a lot of people have been touting as the next big growth area >> weird, because policy arguably has been going in their favor. the safe banking act on the hill has got tons of traction a house bill in colorado, house bill 1090 that would allow vcs and private equity to jump in in ways they haven't before.

>> no stock reaction to safe nothing. so i think that tells you the concern about just the company's basics, the fundamentals behind them. >> from the market standpoint, you certainly covered both markets very closely does it feel like crypto 2.0 to you interms of the run-up in the stocks >> i think just that trajectory feels like that. i think in terms of fundamentals there is more fundamentals, an actual product, an actual demand, product has been in demand for centuries it is a matter hough thw this m gets executed. >> keep an eye on crude. back to close to 53, all the more remarkable when you consider some of the events that have been taking place in the middle east. putin today arriving in saudi arabia so we'll watch that. that's about a 2.5% drop as the dow is now down about 60 points. to bob pisani, see what else is moving >> trade brought us up on friday, trade brings us down today. it is the marginal mover of the

market s&p futures, see that around 5:15 in the morning, eastern time, we have reports here that china wants additional negotiations before it agrees on the wording of a phase one here. this is a truce, not an actual agreement. we lost 15 points there. we try to come back here, but you see essentially the damage has been done right now. in terms of sectors, those trade groups, up on friday, they're back down again today, banks, transports, energy, industrials, there is your deep cyclical names that move. and you get the more defensive name s doing a little better today. the important thing is what happens after this truce we don't have an agreement we have a truce right now. what happens after that here my basic theme here is it doesn't change the lower 2020 growth story, the fact that gdp, without a recession, forget a recession, could be 1% to 2% in 2020 this is the narrative that is emerging, earnings generally flat to lower in 2020 as well. i don't think it changes that necessarily. it doesn't even end the trade wars overall

we know about the debates over capital flows, export controls and industrial policies, things like that. if you look here about other trade war fronts out there, senator rubio is on our air las week, talking about other fronts, audit reviews of chinese companies that list down here. they want them to be more forth coming china's weighting is an issue. senator rubio talking about that why do we support certain u.s. pension funds, why would they support adding chinese companies to these indexs? this gets into a lot broader areas. my point is none of this goes away, even if you get a phase one agreement. right now, just look at where we are on earnings. they'll start tomorrow we'll get wells fargo, jpmorgan, things like that the numbers have come down a bit, today, 3% for the earnings estimates, down, july 16st, up slightly we're looking at close to flat, but this could be negative, potentially, first one of the year, we use refinitiv numbers here the important thing is the bank

numbers have been coming down very aggressively for a very obvious reason look at the banks, for example, on july 1st, bank estimates up 6.8, financials, actually. now only 1.2%. that's a big, big drop on a percentage basis and the reason that's happening is because of the yield situation. in the beginning of august, they put new tariffs on, look at the yields, and what was going on with the ten-year yield, it dropped precipitously in the beginning of august. there it is right there. that's what kind of spooked everybody and caused a lot of the bank earnings estimates to move down. ten-year yields. and this tends to move into the direction of bank stocks as well if you look at the kbe, the etf for the major banks, exact same thing happened, big drop in august you can see this has been very, very choppy this year. they have been wanting to buy banks on the idea that the valuations are so low. you can see it has been a very difficult road to try to buy banks at the bottom right now. choppy on the side we'll see what happens with wells fargo, jpmorgan tomorrow

it is that yield that is really pushing around the prices. back to you. >> to bertha coombs at the nasdaq hey, bertha. >> watching this morning and we are seeing a little bit of a reaction at the usual suspects a little weaker this morning as hopes for china trade deal are a little less ebullient. not terribly so. apple, down fractionally interesting with apple, might want to read on cnbc.com, todd hazelton writing that analysts at tf securities say apple is set to come out with a new cheaper phone, if you call $399 cheap anymore. this is going to be a smaller phone to try to lure some of those folks who are still on the iphone 6, the new apple ios 13 does not support the iphone 6, that's 200 million people or so who have not yet upgraded. this would be the iphone se 2 according to those analysts and it would launch in the first

quarter of 2020. so that's something to watch for. chips are mixed with upgrade from nomura over at xilinx that is one of the big gainers on the nasdaq. this morning, holding up the chip sector, but it is fractionally lower, chips are among the strongest performers so far this month, up about 2.5% for the sector the faang names are kind of mixed as well. facebook, of course, feeling a little bit of pressure this morning as both mastercard, visa and stripe join ebay and pay pal in saying they are not going to be supporting libra. nonetheless, facebook, netflix, and apple so far this month are the best performers among those faang names. finally, lyft and uber continue to face regulatory issues here in new york city they want to limit the amount of time that uber and lyft drivers can cruise around the city, particularly manhattan without customers and the two ride sharing firms are suing the city

to try to not be penalized on that front lyft continues, though, to be under pressure you see it is down 45% from its debut this year. back over to you guys. >> yeah, story we'll continue to watch, thank you bertha coombs at the nasdaq. time for a closer look at oil prices under pressure this morning. dom chu has more >> oil prices near the lows of the day as of right now, giving back all the gains pretty much from what happened on friday if you look at those particular prices, the u.s. trade optimism has given and taken away this morning more about accentuate the negative. the lack of detail about the positive developments between trade negotiations from both the u.s. and china sides a big reason for the drop today after a bullish minimum of event bul week the pentagon saying it will deploy more u.s. military personnel and equipment in saudi arabia in an effort to deter

possible iranian aggression in the future now, the downward pressure in prices tod s reinforces prices have fallen by 15 plus percent since a spike in mid-september after two saudi oil facilities were attacked brent crude down by 16% to 17% carl, from that intraday spike in september as well back over to you. >> all right, dom, thank you very much. we'll talk china and trade with former treasury secretary larry summers. for the time being, obviously, look for low volume on this columbus day holiday when the bond markets are closed. dow is down 36

markets still trying to work through exactly what we got in those trade talks last week. given the holiday, we don't have aty chnd market to rifmu for now, dow down 15 obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.

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democratic presidential candidate elizabeth warren taking aim at facebook's policy of not fact checking ads by placing her own ad on the social network days ago the ad contains a false claim that mark zuckerberg endorsed the president's reelection bid followed by the allegations that the company is allowing a

candidate to intentionally lie to the american people this weekend she tweeted once again we're seeing facebook throw its hans up to battling this information in the political discourse because when profit comes up against protecting democracy, facebook chooses profit this is just the latest chapter in what we know is the battle on both sides, specifically we've heard it from zuckerberg's own voice the threat they see in elizabeth warren. >> it gets right back at the warren threat, promise, whatever you call it, if she were to get elected she would be moving to potentially break up this company as well. what's curious is it seems to be between warren and facebook. you don't hear about twitter and other social media companies. >> the policy at facebook has been to not back-check political ads, so if they did change it, it would be something, you know, pretty important in terms of conceding that this is an area that needs to be fact checked. but imagine the difficulty for social media platform and when i

say difficulty, i really mean cost from the investor standpoint to fact check every single political ad leading up to the tw2020 election to make sure everything is true. >> this would be the facebook argument here, right between the human resources, the ai resources, that they are big enough to be able to attempt to do this? smaller companies couldn't even potentially do this. that's the argument from the facebook side and it sort of speaks to how big and how difficult this issue is and gets right back at that regulation debate and whether the government needs to step in and what that needs to look like. >> stock, though, since the beginning of august has turned between the 50 day and the 200 day and currently at the top end of that range, which has been squeezing, obviously. >> as long as the company delivers, as long as the company doesn't show any signs of people leaving the ad platform, all this doesn't matter. it does not matter and that's what investors have clearly signaled all throughout all these troubles so zuckerberg goes to the hill,

it won't matter if they post a good quarter that's just the reality of these things. >> meantime, keeping an eye on the aerospace and defense names right now as well. in terms of industries moving within the s&p, it's one of the groups that's actually hanging on to gain, albeit barely. we did see an upgrade from cowan. that is a company that is hard hit and going through its own turn around situation, much like we've seen some of the other bigger industrial names. text tron, harris are all trading higher there's a big army conference happening in d.c., really the biggest of the year. we expect to see some contract awards coming into those events this weekend of course, more headlines around everything that's playing out in syria, which does seem to be developing at, you know, a moment's hourly pace here as we begin to scale back our own presence in northern syria and you see these new alliances being struck in the region plus the fact that we're sending more troops to saudi arabia,

more headlines on a daily basis around iran as well. >> erdogan is on the tape this morning saying that they will absolutely finish the job they've started in northern syria. >> sanctions on turkey are going to be one of those big things to watch here in the u.s. this week what gets slapped on to turkey from an economic standpoint and i guess how deep those run, but it is certainly expected meantime, we're talking about defense on the space side, we've actually got nasa administrator going to be coming on "squawk alley" to talk about all of the space efforts that are afoot, because october has actually been pretty busy on the space side as well we've seen more venture capital flowing into the sector and certainly more of a push as both spacex and boeing, the timeline to get astronauts from u.s. soil back up into space, that has pushed back in an official capacity going to be some headlines there, too, i think. >> when we come back, former

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good monday morning. welcome back to "squawk on the street." obviously light volume monday as it's columbus day and the bond markets are closed, but dow has managed to creep into the green. s&p just down about two points on a busy day with trade and earnings on the way. >> a road map for the hour starts with investors trying to digest the back and forth surrounding that first phase of the possible trade agreement between the u.s. and china former treasury secretary larry summers is going to join us to discuss all of that in just a moment. plus boeing's ceo removed as chairman what you need to know about the man taking the helm as boeing gets ready to report its results next week. stepping in, soft bank is set to take a drastic measure to protect its embattled investment. we begin with phase one of a

deal to end the months long trade war between the u.s. and china. eun eunice joining us with the late of the reaction from beijing. >> a state media blog closely watched by trade experts here explained -- posted a commentary trying to explain why the chinese have been describing this as substantial progress as opposed to the trump administration's term of deal. so the tower on notes said that the reason is that even though the chinese share the same spirit as the trump administration, they believe that there have been previous flip flops and also that the tech needs a few weeks to prepare. these are their words. this has been the message we've been hearing overall over here, that from beijing's perspective, the agreement has not been nailed down. so chinese state media has not mentioned pretty much at all beijing's pledge of buying $50

billion worth of american goods except for the one blog which said buying u.s. farm goods is, quote, china's unique barrigainn chip and should be complimentary to the needs in other words, china would buy according to what it needs i spoke to a former trade negotiator who has been closely following the trade talks and he said that he believes similar to a bloomberg report that was out just a couple of hours ago that the chinese would likely ask for more and more specifically for the december tariff hike to be lifted as part of the phase one. that he said that from china's perspective, they would feel that this would make the deal much more balanced now, separate to that, we were having a conversation about something that i've been hearing quite a bit over here. that is that any text of a deal that goes in front of president xi jinping at the apex summit which appears to be the target date for a final trade agreement

for this phase one would have to be completely locked down because the general feeling is that there has been concern that president trump could potentially do or say something that would embarrass president xi jinping and the people i talked to are very sensitive about that so because of that, that actually adds a layer of pressure for these trade negotiators who only have a matter of weeks at this point to get even as treasury secretary steven mnuchin a lot of work that still needs to get done guys. >> thank you for bringing us the china perspective on this. for more on the trade impact on the markets, joining us now is vice chair of investments christian and asset management global gabrielle i'll start with you. is this an agreement to try and reach an agreement

and based on that answer, how do the markets move from here >> it's an agreement to postpone the escalation that was planned for tomorrow and to continue talking over the next few weeks. for us i think it's right to temper the enthusiasm a little bit after such a huge rally we had on friday. it's not locked down number two, even if we end up having a phase one written down truce, it doesn't remove the uncertainty cloud going into the election and number three, we have also some just late cycle concerns to think about which have come to the forefront as earning season picks back up this week. >> tariffs that are already in place, they're not going anywhere you still have this overhang of additional tariffs on more imports from china here in the u.s. come december how does the market digest this? >> well, i think the most important point to remember in this regard is for the markets to go higher given the policy moves that we have seen on the monetary policy side, we just need the trade issue to not get exacerbated

>> is that all we need >> yes, that's all we need. >> that's going to lift business and ceo sentiment? >> i think the monetary policy is going to kick in by the end of this year and by the early part of next year the outlook for growth is going to be meaningfully letter. rates remain low policy is supported. economic growth actually stabilizes and picks up. the up trend in the market has to be driven by that rather than the expectations of a trade deal all we need is for things to not get worse. >> are you talking about the trickle down of fed policy two cuts restores all faith in the world? >> no, it's not about trickling down fed policy. it's really about the fed not tightening and making things far worse. i think if you go back and look at the slowdown the first half of the year, part of it was trade related, but a lot of it was related to what the fed did in 2018. the reversal of that in support

of monetary policy not just from the fed, from the ecb and the world over, i think that's where the markets are going to be built off of. >> you've been focused on the strength of the consumer as kind of bright spot here. i know you've also talked about that being a life vest for this economy as it continues to chug along. are there any head winds that you see as it relates to the trade deal and the trickle effect that it has on the consumer >> so i think the manufacturing part of the economy was slowing down for quite some time and that in my judgment has bottomed out. the consumer part of the economy continues to be very well. income growth and employment and debt load, debt service capability, all of that is very good i think that will continue to support the consumption for the foreseeable future. >> so i think we also would agree that no escalation on trade and supportive central banks, it does help to reduce the recession odds, right? we are not of the base case that

there is a recession we also temper a little bit our enthusiasm of how much these two variables can really lift u.s. and global growth from here. so for us it's a story of muted economic and earnings growth and as a result positive, but modest risk asset returns >> i think that point is an important one, even when you are looking for markets to go up it's not moving up in a big way. our outlook is 3,100 which is not far from where we are. the outlook for 2020 increases meaningfully because the global economy is bottoming out go back and look at how things panned out in 2016 once you have the big odds kind of taken out, there is enough momentum in the economy to provide decent support. >> so basically you're talking mid cycle. >> absolutely. four more years. so when we had come here before,

i said the cycle will continue for another five years that was last year so four more years. >> jp morgan is nowhere near that you're more of a late cycle case. >> we are more of a late cycle case and i think it will be interesting to start watching the third quarter earning season away from trade, away from central banks. just looking at where we are in the cycle. you're starting to see those margin pressures we saw that in the first half of the year and i don't think that goes away with a trade truce or with support of central banks. >> that's sort of the weird case right now. inflation ends up being the one that did us in. >> so if inflation picks up meaningfully, then it's all over but i don't think the likelihood of that is very high i think from an earnings perspective, let's remember one thing. focusing too much on third quarter earnings, actual earnings as to what the future outlook, i think that is misplaced. what you should be looking for is what people are saying with respect to the bottoming out that they are seeing in their respective businesses. that will tell you what the outlook is for 2020, not what

third quarter earnings were. >> do earnings expectations for 2020 need to come down or -- >> absolutely. absolutely we still have a consensus looking for 11% earnings growth in 2020. even if we do have a bottoming out here in terms of growth, lower recession odds, the late cycle dynamics are still at play you're not going to have margin expansion going into 2020. so these 11% earnings growth expectations do need to come down into our mind closer to something between 3% and 5%. >> that argument crystallizes what's going on. either it is late cycle or mid cycle. it's really not about trade. trade is just a side show at the moment. >> neither of you are saying it's end of cycle. >> exactly that's a crucial distinction. >> thanks for joining us as the markets turn fractionally higher. speaking of trade talks last week, we did hear from the treasury secretary earlier this morning. take a listen. >> i don't think that's fair at all. there's a fundamental agreement

in principle we've gone through these chapters many times. there are still some issues that need to be worked out in wording, but i would say we have every expectation that phase one will close >> joining us this morning first on cnbc former treasury secretary larry summers. mr. secretary, good to have you back. >> good to be back. >> so your read based on what we heard here last week and now how this is all being telegraphed in beijing. >> i don't think this is a big deal the agreement may well close but you don't think it will address the overhang that's been created in the u.s./china relationship and will inhibit spending plans and business investment on both sides of the pacific this is not an event that anybody will remember for a long time one way or the other. >> does this lead us into a

multi-year pattern of tariff risk, tariff threats, talk of escalation and muted kpcapex an hiring what happens now >> without some creative diplomacy, without the u.s. administration establishing some consistency and credibility in the pattern of its responses, without some effort to make this a more global approach to china, i suspect we'll be mired in the current kind of difficulties for quite some time. i think it will be one of the adverse factors affecting the economy. >> reporter: so it's hard to imagine any kind of multilateral relationship ahead of the election unless you think i'm mistaken. >> no. i think you're right we're in a difficult place given the political constrains on both

sides, given the concerns about the economies on both sides. i think this is going to be a problem that didn't get made in a month or a year and i don't think it's going to get resolved overnight. >> obviously this is just phase one. >> i'm sorry, larry, go ahead. >> i think the market is probably overly sensitive to the day-to-day dynamics of the negotiations and perhaps insufficiently sensitive to the broader risks of cleavage between the world's two largest economies. >> obviously that innerconnectivi innerconnectivity coming into focus with regard to this trade war. phase one didn't exactly include any details on what to do about huawei, what to do about the hong kong protests how much do you think those will

be a bargaining chep ips as thee talks continue >> those are going to be important issues i think the broad set of issues around leadership, around cyber security are likely to be difficult over time. i think there's a very broad set of questions about are we going to have one integrated global economy or are we going to have a splinternet with an american sphere and chinese sphere? those are the fundamental questions and that's not what the trade negotiators are haggling about when they talk about purchase support and the like that's what's much more important for how the global economy evolves. >> so let's dig into that a little bit more, larry, because if you do see tariffs persist, if you do see tensions and talks persist, one thing is certain

and that is what was normal and how the global economy operated, trade flows operated before, we're probably never going back to it. that normal is gone, right looking out over the coming not only months, but also years, what does this relationship look like and what does that mean for the global economy >> i think you're going to see a shortening of supply chains. you're going to see a reorganization of supply chains to be more local that's going to have a price in terms of efficiency. that's going to have a price in terms of how well the global economy functions and particularly during a period of adjustment can only operate to generate more slowness then you're going to have i think a greater overhang of uncertainty about the possibility of conflict, about the possibility of a very large scale splintering and reduction

of interdependence and that uncertainty is going to cause people to feel a need to invest less and perhaps to save more, maintain more liquidity that's going to exacerbate the tendency towards low interest rates without rapid growth that we've seen in recent years ultimately there's going to be security concerns in a world where the two powers could become more starkly opposed. i'm not sure that all of that has to happen, but it's certainly the path that the world is on right now. >> finally, mr. secretary, it sort of leads us to a discussion we were having before our discussion and that is about the business cycle, what this prolonged uncertainty would do to the cycle, whether tariffs are inflationary or dis inflationary

i'm going to guess you think it's the latter. >> i think the deflationary and disinflationary risks are much greater than the inflationary risk i certainly think we're very late in this cycle i think the odds of a recession starting by the understand of 2020 are probably below 50%, but i don't think they're a lot below 50%. i think the risk that recession will start in the next several years have to be better than even and i think the great concern is with what i call the monetary black hole. that zero rates appear to be where we're stuck in europe and japan and we're one recession away from a situation of that kind it's a very different world when everyone's stuck at zero interest rates we'll have to think about stabilization policy institutions are going to have

to think about their investment policy in a very different world. in a very different way when we have black hole zero interest rate world and that's what i fear we're headed into >> we took a shot there of your op-ed the other day on that exact topic. a lot more to discuss in the weeks and months to come, mr. secretary. thanks for the time. >> good to be with you when we come back, the quote unwinnable trade war, what our next guest says everyone loses in the u.s./chinese clash, but especially americans we'll be right back.

stocks obviously mixed today. china tempers trade optimism saying it wants to talk more before signing a deal with the united states. joining us in an interview is chairman and ceo of pag, one of asia's largest private equity firms and he's out with a new op-ed when he says everyone lose says in the u.s./chinese clash, especially americans thanks for your time good to have you back. >> thank you good to be here. >> give us the framework for how you see this trade squirmish or trade war and how it's developed in the last 72 hours

>> well, as i mentioned in my commentary in foreign affairs, everybody loses in the trade war. what has transpired in the last 72 hours as i mentioned last friday is i think a positive sign it seems they have made some progress, although we have seen this before back in june, so we'll have to see whether or not the parties will sign on the dotted line in time, let's say, for the meeting between the two leaders i suppose next month >> the global times tweeted a few moments ago quoting some customs officials in china that it's a bright turn from a gloomy week in their words. but the analysts are nervous about unpredictability citing u.s. flip flops in past trade talks and they tagged the president, donald trump, on twitter. does that accurately reflect the view in china, that they're

mistrusting of the united states in holding on to their commitments? >> i think there's some sense in that, so we'll just have to see what eventually happens, because as i mentioned, it has happened before since back in june. now i think they have reached an understanding, but it's in the details, so they have to work out the details and agree on a piece of paper >> in your op-ed you say that the number suggests that washington is not winning the trade war because tariffs hit u.s. consumers harder than their chinese counter parts. does that mean that china has more leverage as it negotiates this trade war >> not necessarily i think both parties lose from the trade war but the numbers suggest that the damage to the

u.s. side is greater in percentage terms than to the chinese economy. that doesn't mean that the chinese economy is not severely damaged and i think for china the business confidence in particular has been hit very hard in the past 15 months or one half years so i think some progress trade negotiation will be positive for both sides >> given your history of deal making and how much experience you have in m & a, there have been reports in recent weeks that the administration here could potentially put restrictions on capital flows to china. you're also seeing tighter standards be floated right now by lawmaker. what do you expect to happen in terms of cross border deals and also just investment flows moving forward >> of course, any restriction on capital flow is bad for

investors but for my point of view, as an investor, we invest millions of dollars in asia and the united states and europe as well capital flow restriction is always bad, but in this world there's a lot of capital there's lack of investment opportunities. and therefore, i think the provider of capital typically suffers if there's a restriction on where to invest whereas it is actually more difficult from our point of view to find good investment opportunities. i think such restrictions again will be bad for all the countries involved especially for investors and from our point of view, we represent many of the american investors and we have many state pension funds as our limited

partners investors and they have benefited enormously from our investments in asia, especially in china, in the past 10 years >> are you concerned about the ability of those limited partners to be able to continue investing in chinese private equity firms given some of the restrictions that have been bandied about in washington? >> i certainly would hope so you never tell, but i hope so, because i think it's mutual beneficial like trade is never a one-way street it's always two way. usually beneficial therefore, when people look at the benefits that you lose, i think people will think twice about taking it away >> finally the president here likes to talk a lot about supply chains being disrupted in china, manufacturers pulling out their supply chains, moving to other countries like vietnam would you argue that that's happening at scale and is it enough given china's job growth

to create any kind of disruption in overall employment? >> it is happening and in fact, it has been happening for the past 10 years as labor costs rise and as currency strengthens in china. but i think with the trade war, of course, that process has been accelerated, but jobs are not going away from china to america because of the large gap in labor costs and they're going to southeast asian countries and to mexico perhaps, so it's having some impact on the chinese economy. but it is not going to be very substantial and the truth of the matter is in my view the trade war is somewhat yesterday's war. today's war is how you get to the consumer market, the chinese consumer market is now

$5.8 trillion and you look at semiconductor companies in the united states, they sell 2.8 times more in the top 10 semiconductor companies in the united states. sell 2.8 times more in china than in the united states. so as china moves some of its manufacturing away to southeast asian countries, some other american companies and foreign companies are moving to china to take advantage of the growing consumer market. general motors sells more cars in china than in the united states so that's the reality competing for chinese consumers i think is the next game. >> we thank you for your time. a lot of information a lot of big corners that investors are still trying to see around thank you very much. when we come back, boeing's

ceo gets stripped of his chairmanship we'll tell you who is taking on that role and what it means for coanfuture of the mpy. we've got "squawk on the street" back after this break. nasdaq operates among the largest markets in the world. and our technology powers markets from indonesia to chile. great markets are built on a foundation of trust and integrity, forged through leading edge technology and a smart regulatory framework. as technology advances, regulation must keep pace to allow the markets to evolve. today we see an opportunity to modernize regulation, to make markets more accessible to investors and entrepreneurs of all sizes. from the graduate buying her first stock, to an institution investing in thousands. the markets belong to everyone and stand as a symbol of economic advancement, social progress and limitless opportunity. that's the tomorrow that we envision

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good morning, everyone i'm sue herera here is your cnbc news update. turkey's military offensive continuing today over the past five days at least 130,000 people have been displaced. turkish president erdogan said his troops are ready to launch an assault on the syrian kurdish held city. at least one person is still missing ar a large portion of a hard rock hotel under construction in new orleans collapsed over the weekend killing at least two people and injuring 20 others cell phone video capturing the moments after a crane knocked down part of the hotel. the nobel prize for economics has been awarded to a trio of economists they were honored for their experimental approach to alleviating global poverty two are a married couple she is the youngest and only the

second woman to receive the nobel prize in economics simone biles has become the most decorated gymnast in the world championship history she took gold in the balance beam and floor exercise to extend her record to 25 career medals she also became the first gymnast to win five gold medals at a sing world championship since 1958 congratulations to her that is the news update this hour i'll send it back downtown to you. >> she just continues to crush it. >> yes, she does boeing's board stripping the ceo of his chairman title. phil joins us more with more on this development phil. >> morgan, this was a decision at the boeing board of director made on friday they met without dennis mull mullenberg and decided dennis calhoun would step into the role of nonexecutive chairman he's been a director at boeing since 2009

he is also on the board of caterpillar and he's got vast experience when it comes to industrials. a number of jobs at ge over the years including being the former head of ge aircraft engines. in announcing the move, calhoun said in a statement the board has full confidence in dennis's ceo and believes this dwig ivis of labor will enable maximum focus on running the business. we've talked about this for some time for dennis mullenberg the fourth quarter is crunch time he's going to testify oncapito hill on october 30 he is sticking by the guidance they put out, they expect to have the 737 max returned to service this quarter which means they basically have what 10 weeks in order for that to happen and also next week they will be reporting q 2 earnings and th -- q3 earnings and that is likely the first time we will hear since he will not be chairman, that he'll strictly be

ceo. >> phil, meantime, there's all this company specific stuff happening right now for boeing, but it's also right in the mi middle of all of these trade talks happening around the world. you have president trump saying china deal may spur $20 billion in boeing sales. then today the green light for the u.s. to begin to slap tariffs in response to the air bus situation through the wt oright -- wto right now. >> no change for now they're going to keep the production rate, especially for the 737 max. it is the busiest plant at boeing at 42 per month is what they're building they want to maintain that 42 per month. if it drops down, then you're looking at the possibility of layoffs, potentially shutting down the line for some time, and that not only impacts boeing, but it also impacts all of their suppliers and they want to avoid, that especially in this environment where they're going to be expecting to ramp up production rather quickly once

they get approval for the plane to return to service >> phil, important story although someone's buying a little bit today it's up nearly half a percent. when we come back, hol the champagne. chinese state media warning the u.s. about secebrinleatg a parta trade deal the dow up 6 points. don't go away.

the next phase is there is depu deputy level calls that will be going on this week ambassador lig my expectation is we'll vt deputies meet between now and chile and my expectations are we'll be meeting with the vice premier in chile before the presidents meet to finish the deal >> that was treasury secretary mnuch mnuchin earlier insisting the china agreement is substantial but our next guest calls it a shallow enter ainterim agreemen.

joining us now, roger altman you see this more as a truce than a substantial trade agreement? >> well, anything that reduces trade uncertainty is better than not doing it and so this is better than doing nothing. but it's not a serious agreement. what really happened here? the next round of tariffs was deferred the chinese agreed to buy a modest amount of agricultural products we don't know over what period so it's not as larry summers just said very ably, it's not really a serious agreement i would add that it's stint with t -- consistent with the discussions on the show because i tried to observe the president would not go into an election year with a full blown trade dispute or war with china and he wouldn't do that because he wouldn't want the downward

pressure on the economy that it has been creating and would be continuing to create and he wouldn't do it because it isn't consistent with his self-style deal maker image so i remember coming here and saying a couple of times there would be some type of papered over interim agreement and that's what we just saw. >> do you think we get more than this, though does that satisfy his deal maker persona ahead of the election or is this what we can expect going into 2020? >> i don't know whether they will be able to do more than this probably unlikely, because do you see any structural reform here do you see any enforceable commitments on the treatment of intellectual property? or on the chinese approach to mandated technology transfer or on state sponsored hacking or things like that the answer is, no you don't. there's no structural reform in here i think that the two sides are

very, very long way from that. in fact, i'm pretty pessimistic that's actually going to happen anytime soon whether they do -- whether the president has another little deal up his sleeve between now and the election i don't know. it wouldn't surprise me. but not a big one. although the president, as you know, did say that this morning i think he said this is the greatest -- something like the greatest deal in the history of the world or the history of the universe or the solar system or something like that. >> speaking of deals, you speak with ceos in the board room, you know, all across the world as your job there was a new report by baker mckenzie which said m & a value will slump globally. a lot of that is blamed on the uncertainty as it relates to the trade war. so do you see agreements like this in principle as being enough to lift that uncertainty and create more m & a into 2020?

>> first of all, i think the fundamentals that drive m & a volumes remain pretty good ultra low interest rates, robust credit availability and at least in the united states good levels of business confidence the united states remains the strongest m & a market in the world. i don't think the trade uncertainty is the biggest reason or a huge dark cloud over m & a volumes. i think there are other aspects of uncertainty other than the u.s. and other than china and, say, australia, the world is slowing down as the incoming chief of the imf just observed in her maiden speech. that's not positive. and obviously an election year creates its own uncertainty. and there will be a lot of continuous debate about that but i think the fundamentals remain pretty good volumes are off a little as you say, but they're not off dramatically we'll see. >> are tariffs here to stay?

if they are and we should hunker down for them to be here for the longer term and you see potentially more companies making more plans to shift their supply chains permanently, it seems like there is some certainty in that. >> well, i think one of the real problems that's on the horizon is whether or not the world is going to evolve into two technology spheres, so to speak. china and its immediate allies and the rest of the world. and that on the u.s. side and the western side they'll have to be complete independence from china from a supply chain point of view and other points of view i fear that's the way we're headed and the huawei dispute really illustrates that. i hope we aren't, but i think we may be head tld and that would be negative. >> finally, a couple calls from

analysts today saying cyclical stocks could do well at the end of the year. the reason i'm asking is it's based on finally a little crack in the dollar as we get close to year end do you think that's possible >> well, i think it's possible but for a slightly different reason we're in the third what our economist calls mini recession since 2010 we had one in 2013, a slow down. we had one in 2017 we're having one now but it isn't likely to lead to a recession and we may see a little pickup on growth. and you can see the yield curve perhaps signifying a pickup and certain other things i think there may be a pickup toward the end of the year i'm not sure the dollar is a big factor, but we may see that pickup nevertheless. >> roger altman, thank you soch f -- soch f -- so much for joining us. uber and lyft are now suing new york over the rule that limits the time that a driver is allowed to cruise around without

passengers, at least in manhattan. let's get a check on oil we're back to 53 quk t see iback in a moment. ♪ ♪ ♪ ♪

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and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy. welcome back to "squawk on the street." shareholder activism is down this year, but the industry would have seen even steeper declines if not for two prominent funds. elliott management and star board have launched 25 campaigns in 2019. that's as many as the next eight activists combined according to a recent report. in the third quarter alone, elliott deployed more than $5 billion in new campaigns representing almost half of all the money put to work in

activist during that time. in the third quarter elliott launched its $3.2 billion stake in at&t urging the company to review its portfolio elliott launched another campaign at marathon pushing the company to split into three and star board disclosed a 7.5% stake in box and said the shares were undervalued despite the pace, about 15% fewer companies have been targeted by activists in 2019 than last year however, the third quarter did see an increase over last year's third quarter in terms of new campaigns launched so we're release seeing the third quarter drive, but still down from last year. >> we know elliott has been active, especially versus the broader industry why haven't others been more active >> it's a good question and i think part of it has to do with this idea that one of the key drivers for activism right now has to do with this thesis, whether it's bringing companies together or pushing companies

toward a merger of sorts or breaking them apart. these two firms are really, really good at that or at least they believe that they are the ones that should be in the board room helping these directors and advising them on different com nae -- combinations, especially in a world where you're seeing lower interest rates, so borrowing has become cheaper m & a has been on the table for something that makes sense for a lot of company. >> which is why you just asked roger how the backdrop is and his answer is pretty good given where his rates are. >> he said better than the numbers suggest. there isn't much of an impact on the trade war as it relates to what's driving some of the uncertainty. it's more surrounding global growth which is a derivative of the trade war. these two activists in particular aren't too bothered. >> of course the flip side is the structure, it gets talked

about and we see tech companies coming public, this is the flip side to avoid those activist investor. >> right and it limits the opportunity set for a lot of activists and so you've seen such large amount of activity within the activist sector over the last few years that a lot lot of whal low-hanging fruit in that world has been picked already. and as you start to see the potential for recession as we talked about earlier in the show, as you start to look at long, enduring bull market, a lot of activists say i don't want to be at the forefront, calling for changes, investing in companies that i can't exit very quickly >> all right let's send it to jon fortt with a look at what's coming up on "squawk alley. jon? speaking of companies going public, it has been a rough ride this year for ipos so what does that mean for valuations we talk to the dean of valuation, from nyu, find out, is it time to bargain hunt

growth coming up on "squawk alley.

welcome back to sidewa"squan the street." retailers like dollar general,

target, walmart hit 52 week highs friday joining us, the ceo of j rogers worldwide enterprises. good to speak to you the mover in retail today, realistic, were hopes too high with the phase one trade talk we got on friday? >> well, we thought the long nightmare was over, right, that we were not going to have higher tariffs and push out the december 15th tariffs forever. now maybe we're not. yeah, i think very normal. what happened friday, very normal what happened today i think the real story is we're probably going to see relief on tariffs, probably not seeing the 25 go to 30%, probably not going to see the december 15th tariffs kick in. we're going to declare some kind of truce or victory. retail stocks will probably benefit from that, that was one of the big things overhanging the stock. the other thing we were worried about was recession. that looks less likely with the fed on our side again and also

with much less concern you see forecasts coming up four and a half to five percent for christmas sales growth that would be fabulous. >> especially as we come into that holiday shopping season what do you think winners and losers will be as we finish 2019 and go into next year? >> i'm very optimistic on the back end of the year totally in synch with deloitte on the four and a half to five percent growth rate basically because i think the consumer is very, very healthy we're still adding jobs even though at full employment. 3, 3.5% growth in personnel income when you get things like that, when you get the consumer saying we're going to spin 12% more this christmas on gifts than last christmas, when they start telling you they're buying more gifts, a lot more gifts, that means they feel pretty darn good about their lives and doesn't much matter why they feel better about their lives, they spend money. they're also not a real burden

savings rate is still in the 8% rate they're not getting hurt as far as indebtedness. >> i wonder, do you think the consumer at large knows a trade war is even going on >> no, i don't think the consumer at large does but i think the market at large did and i think the market was worried about retail stocks. consumer large watches prices, they haven't seen anything happen in prices, despite tariffs. no i don't think the consumer is worried about tariffs. i was worried about stocks because of the view of the market on tariffs. i was worried about sales and profits because i don't think they can push prices through with the consumer, but if they can't push prices through and get higher tariffs, they'll have compressed earnings. i was worried about all that i think everything we have seen is good news consumer is good, tariffs seem less likely. >> jan kniffen, thank you.

>> thank you. with that, s&p has gone green, barely at 2970. "squawk alley" starts in a few moments. (soft music)

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good morning it is 8:00 a.m. at facebook headquarters in menlo park, california 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ good monday morning, welcome to "squawk alley." carl quintanilla with morgan brennan, jon fortt post nine of the new york stock exchange. session highs now, the dow is up 56 points. we'll star