we're out of time. thanks to barry sternlicht and andrew ross sorkin "squawk on the street" is next ♪ i just got paid ♪ i just got paid good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures are steady as we wrap up the first big week of q3 earnings coke and amex look good. downgrades of caterpillar, macy's and others. big weekend ahead for the uk as parliament meets in a special session to talk brexit ten year 175, four fed speakers

today. our road map begins with global growth concerns. china posting the weakest gdp in 27 years aed my fallout from the trade war. >> we'll wrap up the first week of earnings season, two names in focus, coke and american express, both rallyi ining aheaf the bell. >> rick perry set to leave trump's cabinet. he will join us live this hour going to start with that slowdown, china saying the economy grew 6% in q3 from a year ago, believed to be china's slowest gain in nearly three decades. markets here largely shrugging it off industrial production was up from the prior five to 58. retail sales up from 75 back to 78 so kind of mixed. >> this one we can say, look, there is something for everybody. fed can still cut. but i'm doing a lot of work on american express this morning. consumer is still strong consumer strong, business, corporate spend, as barry said,

still a lot of negativity among ceos, extends to the election, negativity extends to china, european woes. go back to the ibm call, we didn't talk about that enough. it was a very negative call. they saw weakness for brexit so we don't have any enterprise strength around the world, but we do have consumer spend doing incredibly well, x the incredible morgan stanley note which says there is value destruction going on at gap stores, destruction going on at macy's, wow. that was a sum note. >> it was. >> no brands >> for obvious reasons >> yeah, well, the mall. >> the line is our expectation is that multis will not be sufficient to off set the ongoing pressure trends from the macro. they talk about store closures, this year on track to be the biggest year for store closures in 24 years. and our analysts are bracing for another round of large scale closures after the holiday

season >> yeah. it is funny, though, you match that with the strength of american express, including really extensive spending by the consumer in the united states, as the consumer spending, they're spending at walmart, amazon, target, costco, home depot, they're not going into the mall and, by the way, you know, you read this thing, you think that at one point they say macy's is worse than pre-2008. balance sheet is not that bad. >> not that bad. we talk about the dividend at macy's because it is so high and you think it would be a potentially attractive to many people if they believe the balance sheet can withstand the larger woes of the retail economy when you're a mall-based retailer >> credit suisse. >> it is credit suisse, yes. >> i look at this piece, and i say to myself, there is going to be -- there is like a mall armageddon going to happen, i

mean, you don't get macy's down here at 10% yield. what is the green? what does that mean? is it amazon is it bargains at walmart? look, this is ammo -- >> all those thins, by the way doesn't have to be just one or the other. >> it will play into the hands of senator warren, who is talking about amazon web services having 47% share, talking about alex wiping out retail, should be wiping out mom and pops, worried about. this is extraordinary. this piece is extraordinary. i'm saying l brand, you go to the mall, there is no one unscathed. >> not just macy's they take gap and l brand, all to underperform. >> the titanic breakup of gap, that's what they're saying old navy -- >> take a walk on 60th and lexington avenue if you want to look at the retailers going out. >> you went shopping >> no, i heard >> where did you get that

blazer >> picked it up somewhere. >> about 30% poly? good keep it away from fire keep it away from fire do we have the fire extinguisher on set i'm getting nervous here. >> people enjoy watching us on tv. >> one lot, as far as i'm concerned, as someone who has -- my travel trust has it, i think it is supposed to happen and maybe it is a counterfeit, watch that stock plummet today. >> that's why i mentioned j & j at the top might want to make sure people understand what we're talking about. >> okay. j&j is down, we'll get to the dow components reported, but j&j not earnings related, that decline is because of asbestos found in -- >> yeah, out of an abundance of caution, by friday, announced that it is initiating a voluntary recall of a single lot

of its j&j powder with response to fda test. single lot is this like a cockroach it is a sub optimal situation. >> litigation risk here, offsetting the -- >> there was a giant suit, j&j has won -- >> a lot of dispute about whether there was any -- >> any talc. >> any asbestos, any talc. >> i want to hurt the award winning reuters reporter speak about j&j at the conference on wednesday. and i wanted to say to her, wait a second, there has not been a single lot of asbestos fortunately, i did not do that because now we know that it is possible to have asbestos. there hasn't been any found. >> right. >> i'm aghast. my trust is a shareholder, got

to call it like you see it there is just -- this better be a -- this better be -- >> subtrace levels of asbestos, contamination, no greater tha 0 than .0002%. >> thousands of tested, the products do not contain asbestos i'm reading this they cannot confirm the cross contamination of the sample caused a false positive, whether the product is authentic or counterfeit. for those who own it, there is more that needs to be own. but the information about this is going to cause people to shoot first and ask questions later or more important not use the talcum powder. >> correct >> not use it. >> not that important part of their business the litigation risk is much larger than the -- >> giant on appeal, missouri case, twice that missouri court,

the appellate court has ruled against the plaintiffs j&j has been winning more suits than it has been losing. but this is -- look, it is j&j putting out the release. i'm not going to tell you it is a buying opportunity i'm not going to say you got to step in front of this freight train. i'm not going to do that i hope that it is counterfeit from the point of view of j&j shareholders, and that they can't confirm cross contamination. i don't want to leave it as this is just open and shut. but this is not -- it kind of took my speech away. i've been working on it for the last 40 minutes. i tried eight -- i'm stunned. >> we're going to watch that dow component with as we said coke and american express start with coke. the beveragemaker has earnings that were in line with forecasts. revenue was up organic sales of five that does beat and raises the full year guide for revenue and operating

income as for amex, be on the top and the bottom lines, strong consumer spending, forecast current quarter ref new growvenh card spending up seven, same as q2 and commentary, jim, trends we saw are consistent with an economy that continues to grow, albeit at a more modest pace than last year >> one of the things i love about the american express quarter, millennials, they have come back to the card, when you finally kind of make it and get it, it is because of the benefits the card offers i'm surprised the stock is only up 60 cents. i think the initial judgment up a couple, was better this company has reinvigorated itself it has good card growth. doing good digital marketing these clubs, they bought rezi, new launch card giving new lounge benefits. i think the stock is inexpensive, and i think the company is doing really terrific. >> as for coke, not just the

volume, but the pricing too helped the 4x did pinch you would expect for a company with half their revenue coming outside u.s. >> you know what, james quincy is using a terrific term, using it an excitingly boring quarter. they are taking share of, you know, there is a little dissertation about who is taking share of pepsi and coke, and pepsi is doing a little bit more share in the united states, but around the globe it is really coca-cola's. by the way, diet drinks, double digit gains. double digit gains like the old days. coke zero. i'll have a coke zero around 2:30 today diet dr. pepper around 3:30. latin america, everywhere, great strength i think quincy is doing a remarkable job once again, the ads have gone from newspapers or virtually nothing to digital some tv. but they reached that classic

group of people. >> the millennials. >> yes, exactly right. you should be on jeopardy. >> maybe again one day stocks more or less in line with the s&p in terms of its performance over the last 12 months >> coca-cola >> yeah. i mean, the -- this year the s&p is up 19.5%. coke is up 17.9% over the last 12 months? >> this is what -- it is back to sleep at night someone was criticizing warren buffett the other day, i find to be a ill advised -- >> who is that >> david rolf? >> yes >> comes on quite a bit. >> i say, look at coca-cola, look at the gains, look at the unbelievable numbers and quincy, again, has really reinvigorated. i like the profile i think it is very, very good. i think that what he's done in terms of just, you know, the -- here is something. who thinks of innovation with coca-cola. the small size on fire

small size you use it >> i don't drink coca-cola. >> yes, we do. judy loves the -- >> i love it lisa loves it too. and we stockpile it along with -- it is not going to be on the call, but some great mexican soda water they have. >> sugar-based. >> no, no. >> really? >> yeah. >> pepsi or coke what do you prefer >> i think you can own both. this group has been under pressure it has been under pressure and i can't say i think procter has to be great to turn it around i think j&j can pull down this group. there is explaining to do with how this happened with talc. i don't mean to overemphasize it. >> not the same universe, but people said take the earnings weekend in perspective, unh a standout in terms of commentary. >> fabulous. just fabulous. jpmorgan unbelievable. still listening to the crowing

in my ears but caterpillar, that downgrade could be ill informed. i don't know. >> really? >> i look at dover yesterday dover is a class of industrials doing terrifically i believe deere doing well cat has just moved from 118 to 132 and i look at cat as similar to emerson which is a controversial situation. >> i want to talk about emerson later in the program wrap up some of the activist situations going on right now, including emerson. >> will you have at&t? >> that's not really a news story, but we can talk a bit about it. >> not a new story in. >> the fact that an activist is talking to management and/or the board, that is what you do, you have dialogue, yes, no, in my mind that is not really a story. >> i thought it was a story. >> it will be a story when there is something newsworthy. >> like they say on the conference call, david, let's talk offline. >> okay. you don't disagree with me.

>> no, i don't what i was doing was hoping that you knew something that i didn't know >> i know a lot, but none of it is worth -- >> stankey, what do you have >> what do you mean what do i have >> directv. >> i want to make sure there is news value. >> hbo, the new -- the competitor to netflix. >> the most important day for this company, coming up, nothing to do with the activists it is on the 29th of october. >> the earnings. >> warner and mr. stankey, mr. stevenson, will roll out their streaming service. that's a big day an important day will have ramifications for warner/at&t and for netflix. >> you had something to say. you had something to say. >> yeah, he did. >> yeah. you're good. anything on j&j? >> no, we have to look into that more i'm not sure what you do to look into it. >> j&j symbol just became omg. >> a new departure from the

white house as you know by now. >> very good friend of mine, who has been with me from the beginning, somebody that is going to be going at the end of the year, i'm going to miss you so much, a man who has been your long-term talented governor, energy secretary rick perry. rick, fantastic job. >> outgoing energy secretary rick perry will join us in a few moments. in the meantime, we'll get cramer's mad dash, count down to the opening bell, dow needs 333 points to hit its all time high close. back in a minute the lexus es... ♪ ...every curve, every innovation, every feeling... a product of mastery. lease the 2019 es 350 for $379/month for 36 months.

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♪ ♪ everybody's working for the weekend ♪ ♪ everybody wants a new romance ♪ let's get to mad dash as we count down to the closing bell opening bell i'm doing closing bell today. >> you doing closing bell. >> are you sar wah or wilf in. >> maybe both. >> i'll watch it what is the most important hour of the day. >> they have that market zone. have you seen that be careful don't get stuck in the market zone. >> like the war room there is no fighting in the war room. >> there say lot going on in the market zone. the mad dash -- >> here is a little let's just say -- way to say this investor confidence has been shaken in the cannabis sector.

these have been spindled, ne mutilated but kronos is the new king you want to be king of this? this is king midas in reverse, for heaven's sake. >> what happened, jim? what happened? >> what happened shorts brought it down but number of bad numbers -- >> shorts, they didn't bring it down, they just -- >> there san etf that has been under assault. >> okay. >> canopy is just horrendous, waiting to see -- doesn't have a real -- like a ceo, a name but kronos, they're talking about is half cash david, whose cash is it? altria. >> of course >> this is -- this is the jewel of the coke of the altria empire >> i think it is its decline in price is somewhat similar to what we have seen in jewel i tweeted jewel was trading around 300 the secondary market. >> $300?

>> yeah, a share now it is about 90 on a recent trade. jewel. >> really? >> they got rid of all of the flavors that had been so good at attracting young people. hooking young people was so good with these, and now they have stopped. >> writing that on this doesn't necessarily portend good things, jim. >> look, well, because of vaping it is vaping situation they're saying, stifle saying don't worry about vaping don't worry about vaping >> okay. >> yeah, when your kids vap -- come on, david, it is all good thank you, fda thank you, fda, for regulating that business so tightly thank you, carl quintanilla for blowing the whole story so that people knew what was really going on with juul juul, the crown. >> stick around. we have more "squawk on the street." >> bring this thing down we did it! ♪

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coming up in a few minutes, rick perry set to resign as energy secretary he's going to join us next the opening bell is in seven minutes. don't go away.

you're watching "squawk on the street" live from the financial capital of the world the opening bell in four minutes. a lot to cover on this friday as we wrap up the first big week of earnings we talked about coke and amex. fed speaker later on there is facebook, mark zuckerberg speaking yesterday at georgetown on free speech, blasting rival tiktok over its censorship in china. >> our services like whatsapp is used by protester and activists, everywhere, due to strong encryption and privacy protections, on tiktok, mentions of these same protests are censored, even here in the u.s

is that the internet we want so this is one of the reasons why we don't operate facebook, instagram or our other services in china >> jim, talked about the balance between censorship and misinformation, said in political ads it is something we have to live with. >> look, the other day marc benioff was here and he attacked zuckerberg and facebook pretty hard and i think i urged him to moderate his position that -- it is because of speeches like this remember, tiktok, most people don't realize it is chinese. and subtly they do what the government does exactly what we're most fearful of, and i think that facebook is changing. now, i know -- i know mark said, look, it is absolutely untrue they're hooking young people but the facebook i'm seeing is -- it is not a greyhound bus, not just going to be whoever comes on is fine but this is a responsible speech

it is a provocative speech and tiktok is a sham it is a sham and i -- >> that's not the standard we want to live by. tiktok is not the american standard of speech. >> no. look, i think there is a lot -- people -- it is very -- it is always been hard to understand the relation between first amendment and corporations that's touched on by this speech i just -- i don't know i read -- this is a policy speech by a guy who is known as someone who is supposed to not care about this stuff. i think it is very, very thoughtful i don't know i'm going to defend it i think it is a very good speech >> thoughtful speech goes to georgetown, gives -- is this the zuckerberg we knew two years ago. people can change. people can change. >> well, what is going to matter to the street is the quarter and yesterday morgan stanley had a list of high conviction names, it included deere, tiffany,

microsoft and facebook. >> i think microsoft deserved to be in that group i think facebook will have a better than expected, that's my look at it i don't know how they get tiffany with the dollar so strong >> i think norwegian cruise is in there too and procter i saw facebook on that list. >> procter is down a lot i question whether it isn't the right time to buy. norwegian cruise, carnival was very bad i think that they're -- norwegian cruise is good, not connected as much with the caribbean. we don't talk -- the caribbean was decimated by that storm. it is like who cares it is a big deal >> for facebook, it is easy for people to line up in favor because the multiple is fairly low given the growth rates, if they have the quarter that many expect. >> absolutely. >> now, there is this larger issue of -- of regulation. and all the other things we talk about. takes a few more -- >> there is marc benioff talking

about it is necessary to split up facebook, instagram and whatsapp because it is too powerful too powerful that's the old antitrust that's the standard oil antitrust. i'm not buying it. i think i'm not buying the idea we have to break up facebook not buying it. >> there is the opening bell and watching the -- at the big board, galileo acquisition corp., expected to day but on tuesday. at the nasdaq. relmada focusing on therapies for central nervous system -- >> incredible how difficult it is to try to conquer issues in central nervous, i wish them luck, cns, a very, very tough, tough -- the brain like we know jack about the brain. we don't i'm a student of the brain >> really? >> yeah. >> are you really? >> yes, i am i'm doing work offline with the

brain. you'll see my -- >> in your spare time? >> you'll see what i've got in six months. >> that's great. i'm glad you're finding time to do that. gardening season is over now you can devote more time to your brain studies. >> i'm the chief spokesman for the american migraine foundation that's amf, like the bowling. >> i know. >> slap me down. it is not a one day thing. not spokesperson and then you're not. you're a spokesperson and then you go away. david, 30 million people suffer from migraines not that you care. >> i do care >> do you? >> yes. >> my hedge fund, if you had a migraine, okay, go home to your ma not doing it anymore >> serious business. and there are real advances being made >> cgrp pill, okay allergan has, i think it is underplayed by what abbvie has i think abbvie merger is good. have you seen bristol-myers,

celgene, these are wheel house stories for you. abbvie and bristol-myers, they can't grow, so they buy. >> they do abbvie buying allergan, br bristol-myers buying -- >> you're a migraine sufferer, you get 100 botox shots, not where you want them, where you need them. >> unfortunately, many times insurance will not cover that either. >> yeah, tell me about it. >> that becomes a very difficult -- >> i had a fight over my insurance. look at me, do you think i used it on my face? >> yeah, the insurers are maddening. >> yeah. >> elizabeth warren will wipe them out want to do that? >> no, i don't think she will. even if she were -- first of all, we're 100 plus days away from the iowa primary. >> which she'll win. >> which she better win. if she doesn't, then she loses a lot of momentum. secondly, by saying you think elizabeth warren will do that, you're assuming she will win the presidency third, the senate will turn democratic enough so that you

can actually get a majority of votes to support. >> democrats want every single race in the senate, they still would not have the super majority needed for single payer. you're right it is a little hyperbollic. >> it is it is. hyperbole and you know each other well. >> we just trashed the heck out of elizabeth warren. >> as you settle the world's problems, ksu will lead the s&p. beats on the top and bottom line, revenue up 7 another -- in this case, rail carrier where efficiency has been good. >> it is amazing david introduced me to the concept of precision railroading. and it has taken hold. it is rather remarkable because you get a company like union pacific and revenues are down 7. and earnings are down two and, by the way, this is -- if you look at it, year over year, it is terrific, a lot of this is they don't have to price cut a lot of it is that they make more money off -- off of every

car than they used to. >> talking about in the conference call and then with us during an interview -- >> too self-deprecating. >> downsizing, not downsizing. >> the layoffs, a year ago, talking about having to hire anybody who walked in the room they have been able to reduce very, very quickly by the way, csx, really terrific really terrific stories. and i've got to tell you, the rails, you think they should be hurt very badly given the trade issues they have to do with chinese they're hurt i think the rails are -- i think the rails are -- if larry kudlow is right yesterday, which, people bash me on twitter, kudlow, how could i agree with kudlow kudlow was saying that lighthizer was saying this lighthizer is -- a lot of people think in the navarro camp, david. >> he is

>> well, he's in no camp maybe >> how about this journal piece that kudlow arranged a meeting in the oval, with outside experts, who warned the president that escalating china trade war could imperil the economy and hurt his chances for re-election. the president's response was where is peter >> steven moore and larry lindsey discussed it, at kudlow's urging and this is all journal reporting. and he was just blaming powell. >> seven deadly sins that peter navarro has outlined are where the president lives okay by the way, if they don't approve the nvidia/mellanox deal soon -- >> let me stop you on that i don't know about that nvidia/mellanox deal everything i hear is that thing is just going to be stuck in no-man's-land. >> jens en huang, the man who created artificial intelligence, able to be actual speech recognition of truth has told

me, no, go to whatever, i don't mean it literally. >> of course not your insights, your information may very well be correct, what i will tell you, jim, is that when you are a large company where you have a decent amount of business in china and you're thinking about doing a deal, on which therefore you would need antitrust approval, you're not doing that deal. period your board is like, no way it not happening. that is where things stand now i know that in terms of m&a. no board is giving a go ahead to a deal in which it requires chinese antitrust approval, if the business is large enough, you can't just have it all. >> really? >> close it down. >> people like, let's say, legendary stock barchet would say that >> i talk to more people than just that gentleman, but thank you, yes not that i even talk to that

gentleman. >> it is good. >> i talk to all the ladies and gentlemen and the boards of directors and ceos of these companies as well. >> that's a lot of deals that aren't going to happen >> very well might be. that's right >> well -- >> i mean, goldman has a piece out, david costin today, on cash m&a, not necessarily stock deals, but they see s&p 500 cash spending down, 6% for the year weakest in a decade. driven by 20% drop in cash m&a, 15% drop in buybacks ceo confidence has weakened. >> how is this market so high? the answer is what american express said on its call which is that the consumer continues to spend and spend a great deal with the good balance sheet, the millennials have become spenders, they're no longer just kind of loafers, playing video games all day, grand theft auto, and i think

the american express situation should be recognized as being a much better one than the stock indicated. >> you still don't believe the retail sales print this week. >> american express being down is nonsense. look, retail sales, i can only go for what those companies that i keep talking about tell me will you give me a break give me a break. nvidia up, they can't close the mellanox deal? >> jim, i can only tell you -- >> why did you koy bosh the -- >> i didn't koy bosh it, i don't necessarily know specifically to that, but there is just fear that about the -- if you get a trade deal, phase one, even though the chinese don't call it that. >> be careful. >> then maybe the floodgates will -- floodgates -- maybe things will get better maybe things will get better. >> why were people so let's say suspect about what larry kudlow said on our show >> he said it about a thousand

times. >> yeah. >> good reason >> oh, my gosh okay i'm going to talk about activism, guys at&t not a story, but there are a couple of activist situations we have been following worth updating let's start with marathon petroleum. >> mpc >> yes, mpc. remember elliott, of course, put a letter out on september 25th saying, hey, we like you guys, we worked with you previously and would like you to unlock the value currently trapped in your conglomerate structure we would like you to get the retail company to become stand alone, speedway, the gas stations midstream we would like to be stand alone. and the refining company would like to become new marathon. elliott has been putting the pressure on. d.e. shaw has been there a number of other large shareholders there were meetings, others reported on this the last couple of days, three of the independent directors, the three big independent -- moore, evan

bayh. >> sticen is the big hitter there. >> speaking around this situation, there are a lost possibilities that marathon will consider you're seeing them there in terms of what seems more leakly in t likely many people involved in these conversations, from what i believe to be the case, on the 31st, when the reporting earnings, there may well be additional announcements with that what will it be it could be that we will immediately separate speedway. it could be they're going to say we're going to conduct a review. you can get more, you could get more of a plan the question is mr. hemminger's future, long time ceo, chairman and ceo of the company, will there be an orderly transition of some kind that will take place in the near term that is another key question here there have been a lot of conversation around this, independent directors, largely in listening mode, but at least from what i'm hearing based on

them and -- >> david this is -- >> there will be real movement >> gary is young >> he's young. i hear he may want to run for governor of ohio, do you know? i figured i would throw that in there. >> good investigative reporting. >> thank you to emerson, a story i did earlier this week on tuesday, outlining dde shaw's objects to current management and their plan, whether it is the way they're compensated, their cost structure, whether it is, well, cost structure they believe could be diminished to a large extent whether it is a board that is staggered currently. a lot of different thinthings ce up in the de shaw report there is engagement. that's why the story is sort of

odd. you're always talking. if you're in the talking, there say problem or you're going to the proxy fight. november 6th is when the window closes there is a back and forth going on between the company and de shaw the question is, do they want to fight? do they feel like they have enough support of their shareholders to say, hey, we do not need to follow what you're saying, and or even give you any board seats. what is the ask? that remains unclear they do have as many as four candidates, there are four candidates coming up in the current term but certainly would be happy to settle for less than that one, one would expect you have to decide if you are emerson and your advisers, are you willing to say, all right, maybe we'll give you a board seat or maybe even two or do you want to fight and put it to your shareholders you had mr. farr on a number of times, most recently i think the airplanes opened some people's eyes >> how about this? >> the internship program, 40 people in the aviation

department >> suboptimal. he came on -- he came on mad money and said, listen, i'm willing to split the company in half he said maybe not now, wait until the new ceo. people are unhappy about that. >> he hasn't given a specific date for stepping down either. he said, 2021, correct >> yeah. this is like marathon. wow. i don't know he's a long-term -- >> elliott, a large are shareholder. it seems they have more company there and they have independent directors who are eagerly listening. >> that was an unfair comparison emerson is up 14%. yields 3%. it has a great reverse head and shoulders pattern. >> it does the tsr over the last ten years, five years, they use three years, that's the best comparison for them, the stock has benefitted from the move up when shaw got involved and was starting to report overall, you look at the metrics, not particularly impressive. >> it has been a fortune on china, which obviously is not considered to be a place you want to be right now

okay okay i'll give you that i'm looking at the long-term under mr. knight, but, look, right -- >> yeah, carl is talking about it, right, before mr. farr you mean >> yes >> farr is ceo for 18 years. 19 years >> i did a journal piece about them for page one when it was chuck knight, i think. >> yes, yes. >> old ceo. >> look, i think -- look, i remain -- i remontgomeryain a bi mr. farr there are companies that can do better look at 3m, i don't hear you talking about 3m at all. >> no. >> notice that >> finally, guys, we mentioned this on at&t earlier, the journal reporting about the talks, yes, they're talking, they have been talking, that's what you do, if you're an activist, management team, we'll see. can they get something done prior to this meeting? that's where investors are focused now. elliott proposals and the

conversations there are of importance not a story. i'll end it there. >> not a story >> not yet >> all right you determine what is a story and what's not. >> aparentally -- >> story god. >> i do right here >> what we do all day. >> this little chair i do. >> i had the impression it was -- i was doing work on it, there was a story, waste of my time i should have spent more time on how long mahomes will be out >> six weeks, right? >> he is >> six weeks. >> don't have the mri. do we have the mri i thought three. some people are saying longer. >> he didn't get mono, did he? >> no, came down with a vengeance. >> dislocated kneecap? >> if we had a dislocated kneecap, we would be out for seven years. there, they pull it back, they pull it back, put it back in, he's, like, walking. >> let's get to the energy secretary rick perry as you know by now going to leave his post by year end. the president confirming that news while talking to workers at a louis vuitton factory yesterday. the former texas governor turned

energy secretary served in the post since the trump presidency began and joins us this morning live from texas. mr. secretary, welcome good to see you again. >> thank you, good to be with you. >> few days ago you said not today, not tomorrow, not next month, but you didn't say not next year. so i guess technically you are accurate >> true. >> why now >> yes, sir. i've been looking at this for some time. i don't think anybody's surprised that, you know, i've got a rather intense love affair with this state, my wife, this little town of round top where we have chosen to live the lure became overwhelming for me to come back home and to spend time with the people that i really love. and with that said, there were some things, big things i wanted to get done as the secretary of energy, got a great team over there with dan bruett, number two, and the folks that make up

these national labs. for instance, getting lng into the european -- one of the most important projects that our country has, and i got tapped being the secretary of energy to lead that effort, it make sure that european countries, poland, for instance, ukraine, which had lived under soviet oppression before, and soviet gas or russian gas, was being used as a weapon against those countries, being cut off a number of times in the ukraine it made abundant good sense for us to be able to be in that market, to clearly be able to tell american companies you can come here, you can work here in ukraine, in particular, there was some powerful messages of you got to have transparency, you got to have rule of law, you got to have the sanctity of contracts, you've got to end the corruption that we have seen there and we heard about so many times. so those conversations were had over a long period of time, with ukraine, with poroshenko and

with zelensky administration and we're successful in getting those done the nuclear side of things, civil, nuclear side of things, i'm leaving tomorrow for brussels to go do a small monitor reactor conference, the first of its kind, so america can come back and take the premier place as a developer of the technology and to win this nuclear industry back to america. the third thing, this one is really important to me if from a personal basis, i had great interaction with kids that had traumatic brain injury, concussions, post traumatic stress, standing up an office of artificial intelligence at the department of energy, i was able to get that finalized here within the last 45 days. so it -- the timing was right for me i got these big things done, the agency is in great shape, will continue to be focused on the areas that are important to america. so it was a right time for me to come back home.

>> you told fox this morning, it is not related to the house inquiry. you said you won't comply with the subpoena on advice of council. are there any circumstances under which you would comply >> well, i think you may be a little bit ahead of yourself there until our -- the advice of council comes out at -- today. i don't know what that answer is going to be actually so let's just hold off on saying we are, we aren't going to address that issue until we get a final advice from our council. >> second perry, jim cramer here good to see you. i've been following nuclear energy for a long time, i have a lot of utility execs on "mad money. there isn't a soul that has said there will ever be a nuclear power plant built again in this country. we all know that it is a clean form of energy but everyone says it is dead what makes you think you can possibly revive it, when the guys who would be building it

are rather -- they would rather put up windmills, they with rather do solar, and nuclear is dead >> well, yeah, look, i hate to correct you, but we're building a plant right now, vogel, down in georgia >> sir, no georgia >> what are the over runs at vogel? come on. >> that's not what you said. i don't want to argue with you here let's get straight here. >> i can't finish vogel. >> small model reactor, settle down here. it has the potential to be substantially economically safer. you sound like the conventional wisdom guy back 15 years ago that says i hope you were not one of those >> no, come on sir, i have been favor of energy forever. i live next to nuclear plant i was five feet away when i was living in my car and it did not

affect me at all >> i need to take you to the small moderate reactor conference in brussels go with me and talk about it and be passionate about it we can get there >> i hope so boy, it is the cleanest form of energy you are dead right i wish they believed in it more. it is the most sustainable form of energy. >> well, winds is pretty good. your home state of texas does well with with winds, secretary perry? >> so we are headed in the right direction. the president wants an of the above policy that's the reason he promotes all form of energy and finding cleaner and efficient ways >> except women. he does not like women >> he's not as big a fan of wind

as i am. >> what are you going to do when you step down? you and i well known and you and i have talked many times through the year, you know corporate america, do you see yourself subbing in boards, is that what you may choose to do >> until the end of the year, i don't know what i am going to step away from my job. we are going to be, my wife and i decide on what we want to do i was reading my devotion this morning it says what's the next big thing for you and your wife? what's the most important thing you are going to do? i hope in front of me is the biggest thing i will ever do it may be something on the charitable side or opportunity to work with people to bring power to the billion plus people in the world that don't have

electricity. you know i got a lot of opportunities, i am a blessed man, i am healthy and a fabulous wife to come home to my life is pretty good >> mr. secretary, we hope you will come back often it is good to see you, congratulations on your run. >> yes, sir, thank you >> rick perry joining us from texas, today >> very nice guy >> good exchange, jim. there were some commentary yesterday whether the u.s. is actually a net exporter now but it depends on how you slice and dice the eia data. >> brussels and brazil talk about how you got to be careful. we are still in that actually got an upgrade from sale to a whole from apache. i looked at reported numbers that were not so bad

>> big charge. that's just wow. you need a lot more in deep water. chevron is so smart. put up huge number, huge well. that's what we need right now. >> market uncertainty weighing on future's demand outlook >> there you go. that's the new ceo >> to your point, we did not talk to the secretary about coal which as we know natural gas being the price it is and making the choices they are >> the coal number from css were abysmal. whatever we talked about with wind

can i just say secretary of perry that the $25 billion nuclear project in georgia georgia -- yes, it is true they are building it. >> let's get to rick santelli e checking on the bond markets this friday. good morning, rick it has been a neutral week for rates so to speak. we did have several spikes especially yesterday when we spiked up to 80. 180 was a big level but we failed on the week we are up. unchanged of the day open the chart up to september, we come very close to a significant level of 190 bund interest rates in europe is huge story day, week, month look at a two-day bund yesterday they got up to 93. we are hovering around 38. the end of august, they established their all time minus

71 yesterday's minus 33 high enter day. they cut that number more than half this move is big and it has huge implications finally the dollar index is down as you see there and it continues to lose ground many believes that the dollar slumps a bit you can see other parts of the globe do better. time will tell carl, david, jim, back to you. >> thank you you had a big week on mad. >> obviously >> i got to do more. what a week. >> did it matter to you that we did not close above 3 k? no i just think that look -- there is a lot of people who are worried consumers are weak they're not. i think the retail sales number

is wrong when we see retail company other than macy's and gap. it is going to be pretty good. >> we'll see you tonight >> good luck sunday night. i may need it. eagles and cowboys >> there is a look at the dow. down 20. we'll be back in a minute. whether your beauty routine is 3 steps... or 57, make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy.

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welcome back to "squawk box. rick santelli is here. the future capitol of the world waiting for our september release ex expectpected on chane we lose a tenth. it is a little bit on the light side a lot of data points this week been on the light side leading economic indicator is never a market mover we like to keep on the trends. we are up a couple on the week which is pretty much the entire treasury curve is. definite definitely taking a leg up over the last several weeks >> good friday morning everyone.

welcome back to "squawk on the street," i am carl quintanilla with david dow is down. as we watch earnings with some fed speak today. our road map today starts with china's real concerns. the company posting its weakest gdp gain in nearly 30 years. coca-co coca-cola's earnings pop >> one of president trump's most profitable property. we'll take a look his business at doral getting ready to host the g-7 summit >> eunice yoon is live in beiji beijing. >> we are rolling out more stimulus and to do it soon growth missed at 6%.

a weak demand overseas as well as at home the september data shows a rebound but most analysts say a recovery in september is normal seasonally they were concern of what's going to happen of the the u.s./china trade deal. statistic burreau sounded gloomy china faced big downward pressure arise in external uncertainty. beijing now plans to front load special local government bonds that are earmarked for 2020 to this year and that's from their expensi perspective to allow china to steady growth. officials are willing to dig in

and making trade deals i have spoken to some sources who are close to the trade talks, they said as though phase one beijing willing to make some tweaks to ipr or the financial sector and put in place of some reforms there because it is more in line with the direction of beijing's policy in any case in terms of some of the tougher things officials are not willing to make any changes there and are also not willing to embrace the idea of specific targets for agricultural purchases guys >> all right, important dynamic to watch eunice yoon thank you. we are joined by alan ruskin and shawn matthews happy friday, guys good to see you. from a currency standpoint which

is what we tepid to turn you to for, alan, what's happening with phase one or brexit? >> i think more brexit at least this weekend could be very exciting, right a yes or no to boris johnson's plan i think he's talking about as low as 126 against a dollar. that's a big spread there. phase one story, we can cross the t's and dot the i's on this. it is going to contain volatile till in dollar china it is such a to up ss up as to t can happen there is no guarantee we are going to see this. >> that's right. i think the odds, really favor and know so wego back scenario looking more like elections and

perhaps a referendum the election story is more constructive this time around. the concern it signs on something at this point in time. there is a plan and it is not a hard brexit plan it is more constructive from the pound standpoint it does mean a lot of it realization and uncertainty ahead. >> shawn, how does this change if at all of the relative change of u.s. equities around world? >> i don't think it changes that much i think the real story is as you see rate starts to backup and people start to talk about monetary policy and how it is not really working at the margin and fiscal policy at least we put in place i think the equity market still has an under line bit for a while. i think that'll continue unless earnings are really bad. i think earnings are not going to be great. i think people are looking through and having their glasses

on with this is a great market, we should be investing in it because there is nowhere to go i think the equity market is still okay >> earnings season, shawn, for folks says 24 companies printed on thursday, only three of mix out of 24. we know all the ceos' earnings are abysmal. >> earnings expectations are too low. they beat 80% of the time anyway that's not the issue it is what the ford expectations and what the outlooks are going to be. those are a little more murky as people still have to work their way through the trade issues and look at cap ex and where they are going. so it is still difficult environment. investors actually like the market and they're comparing it to the u.s. marketplace.

>> as we look at what's going on with the trade headlines and getting china data today with the growth slowest as we have seen 30 years. look for some more stimulus to come is 6% out for the range for the target for china anyway? >> 6% is in the range. i think we already see the effects of most stimulus infrastructure spending, some fiscal scoring that's in the works. inclusive of a weaker exchange rate that's feeding through. we need a lot of stimulus to keep growth at 6% which of course most countries will be happy with >> i know you watch that you mean i am hearing private equity deals contemplated. leverage racial tios i have notr in a while

what's your overall sense now? >> the lower credits and high yields have under performed drastically the last couple months the high end is doing well the low end is not so from a leverage standpoint. it is logical kind of late cycle thought process where all of a sudden the worse company should do worse you start to see that happen the extra stimulus that's pumped into the system. you have central bank rortdecor into the market. it allows the market to perform okay it pushes out a scenario late issue of late 2020 and 2021. >> we talked a little bit about it does sterling he'll break the dollar even a little bit or on a second point, what if warren were to win the nomination >> two different stories in a sense. absolutely

sterling has had some impacted and putting some sort of base on euro dollar. let's see how this plays out it is very fluid we have been bumping along the top and not being able to gather much i think the election story maybe does feed into that. it is here in the marketplace about the democrats and warren in particular in terms of under lining assets and what it means from the fiscal policy standpoint i think regardless of whose preside president, we are hinting where u.s. interest rates are coming down u.s. are now no longer the highest two year yield that's the first in 20 months. finally i think we are starting to see some interest rate effects in which starting to have negative impact on the dollar >> shawn, i think it was earlier

this week on cnbc's "squawk box," the market loses 25%, do you agree with that assessment >> i said 15 all along i am in the camp that financial assets will have a problem if warren gets elected. in general, it will be a tough go for financial assets if she's selected >> guys, have a good weekend amazing to watch parliament especially tomorrow. >> thanks. when we come back right here, president trump is set to host next year's g-7 summit at his florida doral resort we'll take a look one of the 'lesident's profitable facility. wel break down facebook and the free speech when ""squawk on the street" comes back no matte,

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more than twice the revenue and four times more than mar-a-lago. it did $76 million last year revenues have fallen by more than a third at doral since 2016 he bought the property near the miami airport at a bankruptcy in 2012 for $150 million borrowing $125 million from deutsche bank. it got 643 room and a golf course that's nicknamed the blue monster. he used to host the pga tournament the trump organization says we are excited to have been asked to host the 2020 g-7 summit at trump national doral mulvaney says the resort was chosen after a nationwide search and the summit will be done at cost so the president won't profit miami is of course the

offseason. rates often fallen below 40% g-7 will help fill those rooms doral only has two presidential suites, of course, for seven heads of state the club is battsling members wo quit the club after trump's reelection there is this bizarre waiting list, in order to get your deposit back, four new members have to join and there has not been a lot of new members joined >> this is one of the profitable resorts but it had low occupancy during the month of june >> when trump was there, occupancy was 30%. that'll help them in a slow month. >> does this violate the emolument clause and the constitution >> it is not a black and white case founders never in their wildest

dreams thought we would have a president owning a golf resort hosting it it looks bad on its phase. it is a blatant conflict of interest look, he already benefited he's gotten enough national exposure for the doral club the last day to make this whole thing financially worthwhile his argument is this is a perfect place. i have two words june and miami >> you also mentioned security this morning too, right? >> if you have flown in miami, you know doral is right next to the airport. so they have to secure a huge perimeter around the g-7 to keep it safe. you are operating a commercial airport right next to a g-7 meeting is not going to be easy. >> the other thing is something you see in my book

if you are going to pick your own club, you better have procedures in place that are very transparent and you can send mulvaney out there okay, here is the criteria and the search and the five finalists and here is why we picked doral and there better be a good neutral explanation who are why that was chosen as the best. >> are we hearing any of that? absolutely not it is impulsive and looks like people tell him don't do it, he's doing it anyway why is he doing it a lot is his character he can walk around it is one thing to go to a hotel and be at ritz here is his on thing, look at this i built this his chance to show off in front of these world leaders he wants their approval. >> it highlights "the washington post" piece yesterday how revenues have fallen since he took office.

>> i don't think it is so profitable >> those are the revenues. they reported as net income but it is sales. we don't know what the profitability is there is a tax attorney working for the trump organization who is hired to lower their tax b l bill she says operating income was down 69% over a two-year period. that suggests even though the sale numbers down, operating income was down. that shows diverting >> you mentioned deutsche bank financed >> i don't know if it is refinanced or the status that was 2012. he bought it for 150, he promised to do extensive renovatio renovations. we don't know how much of that money went into renovation and purchase people said the renovation were good it is a quality club and it has

a lot of different buildings to people can house their country in one building. deutsche piece given interest values is interesting. >> eric trump says there are lines we would never cross when it comes to mixing with business with anything government >> well, this is a line they didn't just cross, they leapfrogged over it. it is so striking that they knew the appearance is going to be bad. >> i recognize this is going to create a few roar so why do it again, in of itself is not the biggest deal i am sure they can go there and it will be fun and air-conditioned and it may even have underground tunnels there are plenty of other places that you can host this >> we should say a lot of people thought trump use the presidency to get rich. overall, according to this, his

businesses across the board except the hotels are all down the biggest profit center for doral has been republican events so you take those out of the equation, a lot of people given the polarizing nature of donald trump, it has broadly hurt his business >> something he says argued that he sacrificed for the country. >> correct >> he has not the best of both businesses as we should say. >> that's right. >> the day he had the famous stack of paper showing a separate entity and some kind of trust, he owns it. >> were all those papers empty >> look, i don't think -- trump is not somebody that's ever constraint by any kind of verbal agreement or written agreement, tax laws he does what he wants to do. this is consistent with the straightforward what's in this

for him. >> it is a gap in our ethics laws where any officials have to adhere a certain sets of requirements the president is exempt from that and until this president, we were talking about this on air last february in his election, people did not realize what a gaping hole this is in the ethnic laws as it relates to the president and the vice president who are exempted from the same rules as members of congress >> thank you for all your reporting. >> appreciate it >> jim, stay right there we have another story we want to watch and get your thoughts. mark zuckerberg says the social media platform will not police political ads. elizabeth warren tweeting, facebook is helping trump spr d spreading lies facebook already helped elect donald trump once and they may do it again and profit off of it

>> from the current administration to break the company up in some way not necessarily reacting the possibility of a democratic president. > >> i mean the minute you start censoring or editing or policing, use whatever word you want to use so-called political speech you are in an incredible mind field. how do you tiptoe through that area what's considered inflammatory political speech on one side today is going to be completely different from the other side tomorrow is it going to be restricted purely to fact checking actual assertion in there that strikes me as virtually impossible task. it is not like say it is a network like cnbc or newspaper or wall streetjournal where there is editors who decides who should go in or what

it is a community form it is like the soap box in the middle of the town square and people would walk up and say whatever they want people say extreme and crazy and wacky things and they still do the difference is facebook gives them a global platform we are in completely unprecedented territory here i don't know how you would define standards that would ten somehow be seen fair to everyone >> television network and newspapers sometimes refused to run some ads, you can name your outrageous party nazi party how is that different than that? >> well, it is different as i said, there is a newspaper, a network is appe pure rated prod. that's not facebook. facebook records exact tly

opposite there is no filter and an opportunity for the previously voiceless people to come forward and express their views. that's a valuable service, i think. >> you don't agree with mark zuckerberg look, i own time, i could not do that at "time" magazine. >> time is fact checked publication and that's his brand. that's why people trust it facebook, you know, youtube, these things are free for all. that's what they offer that's essentially opportunities for people to express themselves we have laws that prevent certain kinds of speech. you can't scream fire. there are established standards and i think facebook has to adhere to those. if somebody can crash a

legislation, it would apply to all of these platforms i would love to see it to expect individual companies on their own to define these standards is asking them to do something very, very difficult >> thecertainly in the way theyu their life in some way online. should they be subject to some form of regulation same way a cable company is >> absolutely, i am not against regulations. we are not talking about regulations here if congress can come up with some, you know, neutral approach that applies to all of these platform and it does manage to protect free speech and find a way to draw that line, i would be all for that. to expect self regulation from this company is asking a lot especially when it is not going to fly equally to all. people are going to find another place. if facebook outlaws and migrate

to something else. that's why we do need comprehensive legislation to address these problems >> jim, as always appreciate you being here thank you. >> jim's new book "deep state" is available now i know it is selling quickly >> i hope so >> good problem to have. >> still to come, retail wreck, we'll take a look at bigamat w s th'shen "squawk on the street" comes right back ens in f and in life. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

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welcome back to "squawk on the street." it is time for etf spotlight mike santoli >> better than most recent estimate we take a look at the etf estimated s&p, sector etf for the industrial sector. it has under performed over the last year and obviously you know the global economy, the trade war hits directly at this. i want to highlight the rgi. that's the equal weighted

version of this. that over the last year has out performed the index. a lot of that story is boeing. boeing is the largest holding in the industrial etf it is more than 8% i think it is more of a broad spread around a lot more of the transport, starting to act better recently. industrials have helped this whole thing. i think it is part of a subtle emerging theme going on in the market which is some of the more cyclical sector have acted better traditional growth stock that got us to these levels or kept the market together in the late summer is it reflect? >> that's the most definitive statement? >> semis are the most relevant because they are hitting highs and because the other seems like you can look at those charts, look, this is still sideways for

the russell and we kind of shuttle around it more i think the semis are mo more relevant. >> it is not amazing break out >> everything is like that sort of like everything is on the verge of proving it is more than just a bounce and we are not quite there. the overall market, you kind of hover in this 3,000 rings of s&p for seven days now >> eight points. >> exactly >> it is, thanks mike. >> let's get to sue herrera. >> good morning everyone here is what's happening at this hour activists in a syria of monitoring group says the kurdish led force and turkey are clashing on the border that area is part of the cease-fire agreement five people were killed and 14 injured in the layetest fightin. two astronauts are taking one

giant leap for women kim fo mattis responding to reports that president trump says he was the most overrated general in the military >> so i will tell you that i am honored to be consider that by donald trump because he also called meryl streep an overra e rated actress. >> you are up to date. that's the news update at this hour >> when we come back, it is the biggest gainer on the dow. we'll break down coke's strong quarter of almost 2% this morning as we check in on the market j&j is weighing down the index

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coca-cola reporting earnings this morning the company beat on revenue bringing in 9.5 billion verses the 9.4 billion expected you are next guest, equity of food and beverage and merrill lynch, brian i will start with you, shares of coke is only 2%. they upgraded their guidance for revenue growth of 5% from 5%

are you surprise we are not getting a bigger boost here today? >> i think the one thing about the report this morning was while the top line was much better than expected i think to get a little bit more bang posted results, probably would require a little bit more outside. margins came in a little light relative to where consensus was and eps came in line kind of took the sizzle off the stock this morning >> okay. and coke is looking to make some shift and consumption decline. which seems to work this quarter. is that a sustainable strategy >> yes >> yes, good morning i think so i have been doing very well. as you mention of consumption

and additional in-take those products are priced higher it is good news. yes, coke has been very good they'll continue next year by the introduction >> into that point, what are your expectations when it launches here in the united states and january it is already in 25 countries. can we get any read on how it is going so far on what we expect it will have on a power effect here >> thanks for the question actually the notion in the u.s. whether they call a 2.0. they are revising a adjusting to the u.s. they are moving to four in the u.s. the price would be monster

we expect sales to go up i think it will be interesting of one of our launch for coca-cola, the cobrand in tke bh u.s. >> how much of a bull case can be built around the dollar alone? >> there were a lot of drama going into today about the outlook for currencies next year and what type of a drag it may be on eps. they gave us a little bit of clarity on that. it is going to be 2% to 3% drag on earnings next year. that suggests that earnings can actually grow and coke has been stuck around the $2 level for a while. if that holds, you actually got some clarity on taking the great

top line growth and drawing it to the bottom line, that sets up a stock really well next year. >> brian, it seems like a lot of different geo cross point going on right now what was the read from coke about the global markets around the world and how it is impacting their business >> i think what they are trying to do control what they can control. brexit, for instance, they sheriff soship some inventories ahead of it beyond that more broadly it is really just you know to the extent that it affects consumer purchasing power you go to smaller sizes. you do things to keep products affordable regardless of the macro economic conditions. those are the types of things that coke can control where they can't always control government policies or the economies.

>> when it comes to the point of the returnable bottles or sustainability, consumers being conscientious conscientio conscious of the fact that we are buying a lot of coke bottles. is that something that's benefit to the business or enough consumers will change to offset the cost investing in that area. >> i think that's the case what coke is doing and moving away -- i think all this is good for the industry because at the end of the day it is much more for consumers.

it would be wrong not to address from a company like coke >> bylirian, one last question. at this point do you prefer a beverage center coke or something like pepsi >> one of the reasons why we like pepsi over coke this year was cash flow. if you look at the two businesses, they grow at similar rates. pepsi converts for cash to free cash flow which they use to pay out dividend and buy back shares i think an important factor we move into 2020 is the evolution of the free cash flow at coke. if that improves, that could change that balance. you kind of think about a balance total return model pepsi is able to deliver that in a way coke is still constraint on the balance sheet and coke

can't. >> thank you thank you for joining us today >> meantime new tariffs on european goods going to effect today. our rahel solomon is on the ground >> it will impact everything here oranges and lemons from italy and cheese huge consumer italian cheese this is an issue and a dispute that's nearly 15 years in the making the wto signed with the u.s. that yes, the european union did provide illegal subsidies so they recently granted a permission for the u.s. to recoup some of those losses that boeing sustained $7.5 billion of european goods annually for grocery stores like kings grocery where we are in new

jersey, do you absorb that cost or pass it on consumers? they have been watching it closely and stock up on certain items like olive oil and certain brands of cookies. things like cheese, not so much. each items are a different costs now. they think they can get through the holiday season without passing on that cost to consumers. guys going into 2020 is a different issue. they talk about it everyday. it is an important issue for them the european union have said they plan to slap tariffs on american goods you have that. they also launched a complaint with the world trade organization, u.s. government provided subsidies to boeing wto says they hope to rule on it next year. you have the u.s. and the eu, at the center of all of it is not

food >> get your scotch and whiskey now while you can at 25% cheap every >> axp down. reserve new growth of 8 through 10 we are back in a minute.

a handful of staples stock is havi stock -- more "squawk on the street" is coming up

welcome back to "squawk on the street." let's get to rick santelli good morning thank you, i would like to welcome peter.

thanks for joining me. let's get right into it. china, 6% gdp. you have the metrics but before you tell us your version of the weakness in china, i will tell you mine we are closing in on the all time high of the nasdaq and the s&p. it is almost exactly half of what its highs now tell me your weakness. >> the weakness since the early '90s china went on a borrowing binge over the past ten years. it was concentrated after the great recession as they try to stimulate their way out. they got in this hamster wheeler, every new amount of debt generated less and less gdp. growth continues to grow and that the stimulus they're trying to inject is not quicken the pace of growth, it is just a cushion of a slower rate of

growth yes, there is a growing sector of china their access to capital is not the same and there is a huge amount of in efficiency that's created by all that excess debt. >> it is a shame politics gets in a way of a good trade disagreement chi the biggest story of the month, european rates 10-yr bund traded at minus 33. how do you start that? what do you see as the big cataly catalyst >> what was extraordinary was the amount of internal descent where they cut rates further and they resume. for a while, what would end this central bank madness with

negative interest rates. i thought it would be a high inflation. europeans and the centers would realize, you can't kill your banking system and have healthy growth i think that push back really told everyone that the ecb, thae at the end game of this experiment of monetary policy. younow have the japanese that want higher long term interest rates. i think that that is why we're seeing less negative rates and i actually expect that trend to continue, which could potentially mean upward pressure to u.s. long term rates if that continues. >> yes that's exactly what i was thinking and it proved out by the spread between bunds and 10s. and all of this is happening, a capitulation on the dumbest theory in financial history, negative rates as san francisco's fed system is putting out research saying they're not so bad you have to scratch your head, peter. thank you for joining me david, back to you >> okay.

thank you, rick. let's send it over to john he has what's coming up on "squawk alley." >> we're keeping an eye on the markets, david, nasdaq in particular, close to session lows, off little more than a half percent beyond that, mark zuckerberg making the case for facebook in the context of free speech does his argument hold up? e ing to take a closer loo look on "squawk alley.

jim cramer calling it mall armageddon big names he is referring to, macy's, gap, l brands are getting down grades from credit suisse, lowering ratings to underperform all three stocks down more than 30% for the year and what this note is talking about is the bigger retail landscape, structural issues plaguing department stores saying look, holiday season is coming, it will be critical, the street is expecting too much from what we think these names can put out.

when they talk about specialty retailers in the mall, the gap, l brands, some trouble ahead we know l brands needs a turnaround, victoria secret, this analyst believes that the market is assuming that's going to turn more quickly than he thinks is realistic. the gap is spinning off old navy, we don't know what it means for gap x old navy, what they're going to do to turn it around it is a difficult space to be in that said, they still like names like vf corp, burlington, nike and they're hitting all-time highs. >> as nike did yesterday dollar tree, tjx, it is weird. the polarity >> and jim's new acronym is watch. he has walmart, target, costco they have more choices where

they can shop and how they can shop i wonder if some alternative retail formats, resale markets, thread up and posh mark are changing some thought process when it comes to buying disposable clothing, i don't mean that in a derogatory way, the way we looked at bash fashion, but there's a down side, it is not good for the environment. >> loss of captain market already in gap and l brands and the other one. there are only 14 billion in total market cap, all three names, macy's, excuse me >> it is amazing looking at market cap for beyond meat which was bigger than gap or macy's. pretty incredible. very different businesses, of course, but just in context of everything that's going on >> how about the store closure element. credit suisse talks about this year being the worst for

closures in 24 years but once we're done with fall holiday, we're in store for large scale closure. >> it makes sense that you will hear about store closure programs in january or february, after you had a big quarter. if you can't make it work then, it is probably not going to turn around after that. there was awhile i thought we hit a peak, maybe i was wrong. maybe there's more to go here. >> a lot got to figure out what to do with all that land interesting call. when we come back, netflix downgraded despite yesterday's earnings rally hear from analysts behind that name with the dow wndo 90. "squawk alley" starts in three minutes. owth in manufacturing jobs in the us. it's a competition for the talent. employees need more than just a paycheck. you definitely want to take advantage of all the benefits you can get. 2/3 of employees said that the workplace is an important source for personal savings and protection solutions. the workplace should be a source of financial security.

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