♪ >> announcer: live from new york where business never sleeps, this is "squawk box. ♪ good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. take a look at the u.s. equity futures at this hour you'll see that things are pretty firmly in the green at this hour. dow futures indicated up by 62 points the nasdaq indicated up by 21 and s&p 500 indicated up by 4 points to give the s&p another chance to try to take out record highs. we did see the s&p 500 trading above its july 26th record high during the trading day on friday but it fell short at the close we'll see where things are headed today also, the dow after friday's gains trading in positive territory for october. right along with the s&p 500 and the nasdaq

take a look at what happened overnight in asia. you'll see at least at the close, the nikkei was up by .3%. hang sang was up by .8%. same story for the shanghai composite and europe active trading taking place today or at this hour, you'll see the dax is in positive territory up by .2%. little bit of a negative red arrows for the rest of the averages ftse is down by just over .4%. and then in treasury yields, here in the united states, you will see that the ten-year, at least at this hour, is yielding 1.84%. big news this week is going to be wednesday when we have that meeting. let's talk about breaking news coming out of the europe. literally overnight, the eu granted the uk a brexit extension new deadline january 31st this will be flexible, though. so, say it's a new deadline, the uk can leave before january 31st, if a brexit deal is

ratified ♪ and update on those fires raging in northern california the kincaid fire now burning 84 square miles last night only 5% contained 200,000 people were forced from their homes and pg&e says power is out for nearly $2.7 million in california governor gavin newsome declared a state of emergency as several new fires broke out yesterday afternoon. officials worried that a fire could jump across the 101 freeway and rapidly move west into an area that hasn't seen fire since 1940s the vegetation there is dense, old and dry. that's obviously one of the problems out there we actually while you had ron barren, one of the previous holdings doesn't have any generac anymore. >> i knew that aaron was on. >> but it was the reason i'm

reminded of it is the market opportunity for turning off everybody's power. and it's not being knocked out >> what did they say about that? >> the stock is up it's up 80% in the last year i think they're having trouble filling think of the market opportunity out there. >> right i mean, the winds in california and sonoma they don't get winds like this. >> right. >> it's whipping things up into a frenzy >> like 80 miles an hour >> yeah. did you see gavin newsome actually said if berkshire hathaway wants to put in an offer to take over. >> for pg&e, now is the time. >> now is the time there was a period looking for him to do that remember that? >> yeah, i'm sure they would love to see somebody come in and step in. that's an infrastructure that's been underinvested in for decades and decades. they have a major problem on their hand yeah, they may seem the easiest answer for a lot of these people. in the meantime, lvmh confirmed it is in preliminary takeover talks with tiffany. reports say the luxury goods

maker whose brands include christian dior, louis vuitton offered $120 a share in cash for the upscale jeweler to value the company at $14.5 billion tiffany shares this morning up by 21% on this news. gain of almost $21 to $119.50 lvmh is trading flat at this point. >> i spent the night as you imagine on the phone about this deal i think what you're going to see just to sort of tell the viewers what's going to happen here, over the next week, as you imagine, tiffany will go through, quote the motions they will reject this bid. they look at this bid already most of the insiders look too low. stock price of this company just last summer, you were locking at a stock of $136. so, i think the big question is going to be, in this grand negotiation with the company, with lvmh, does lvmh come back at a higher price. i think what will happen you'll see them say they'll explore it

and after a week or two of theater and say talk to the hand and then we will see whether lvmh really wants to buy this company and how much they want to buy it for. of course they could go through a proxy contest, but that would be something that would go along sort of much longer lines of having to go through the motions of that and you're going to the fiscal year next year. if you look at the stock there, you can get a sense of what's happened here. >> the stock cratered at the end of the year as you saw everything happening into december 21st was its low right around the same time the rest of the market but it came sharply up to highs. obviously trade talks have been a concern for it it used to be more travelers here in the united states meant big deal if those travelers would spend a lot of money at the fifth avenue store we'll see. >> chinese travelers. >> you tell me if lvmh comes back at $140, there's a deal

if there's $125, i think it gets more complicated. meantime, let's talk about this other deal that took place over the weekend or happened on friday the pentagon warding a lucrative contract for its joint enterprise defense infrastructure program otherwise known as jedi. being awarded to microsoft as you all know, amazon had long been the favorite for that deal. more than 5,000 government agencies use amazon web services which is certified at the highest security clearance level. but the victory highlights the rise of microsoft's azure cloud as a major challenger to aws in a statement microsoft said we are proud that we're an integral partner in d.o.j. mission cloud strategy amazon said we're surprise ed about this conclusion, aws is the clear leader in the cloud computing and detailed assessment purely on the comp rative offerings clearly lead to

a different conclusion president trump said he was looking at the contract after companies protested. president criticized amazon over taxes and other issues jim mattis's book, the president specifically says to him, how can we get rid of amazon and wedoe. >> he said specifically to screw amazon. >> to screw amazon. >> specifically. >> that's exactly what they said. >> matis also said forget it, we're not doing it this will be by the book >> but mattis is no longer here. >> there may very well be lawsuits about this. there may be depositions about this there may be all sorts of litigation so we'll see what happens. it's obviously -- >> the competitors complained when it looked like amazon would be in the lead the other competitors complained about the process. microsoft went on to say in its statement they had been working with the department of defense for over 40 years on all kinds of things. >> microsoft had come out much more publicly than amazon and

frankly specifically google about wanting to work with the government, about thinking it had a patriotic duty to do so. there were people at amazon not on aws per se but holding back on other things or protests. >> certainly with google. >> yeah. doesn't like "the washington post." >> no. >> he doesn't like "the washington post." >> you see the trending after baghdadi was killed you saw "the washington post" headline, austere religious leader you didn't see any of this you have no idea trending on twitter. >> no. >> in the obit they really refer to him as an austere religious leader who presided -- nothing else in it. >> wow. >> so trending on twitter was washington post obits for everyone you can ever imagine who died was for jeffrey dahmer devourer of creative cuisine, something like

that it mean, there were thousands of fake obits from "the washington post," stalin, just like -- got -- you should go and look. >> i'll check it out. >> i'm going to check it out right now. >> there's some really good ones you can make great once out of some of the most notorious men in history. >> austere religious scholar dies at 48 okay i hear you over the weekend, facebook said it removed an ad that falsically claimed that lindsey graham supported the green new deal the ad was placed -- it was a stunt. i wondered why it would matter or who would believe it. a stunt by a left-leaning political action committee to demonstrate that facebook would fact check ads from political groups but not politicians this scenario was raised last week by representative o kaz owe cortez during hearing with mark zuckerberg.

>> would by able to run advertisements on facebook targeting republicans in primaries say thag voted for the green new deal i mean, if you're not fact checking political advertisements i'm trying to understand the bounds here, what's fair game. >> congresswoman, i don't know the answer to that off the top of my head i think probably. >> so you don't know >> this is the great complication, though because you have to decide how much you want them to police these ads or not, right? he effectively was separately asked whether you could actually tell the voters the wrong day to vote on. you could actually target a specific audience and say that actually the election or you could say the location of the election is in the wrong place or something like that he said for that he would correct you. he wouldn't allow that kind of ad to run or he would actually run a correction on the ad because he thought that was too dangerous. the question is other kind -- where is the line? that's the fundamental question. >> if you're accepting ads, why aren't you held to the same standards as any broadcaster

would be it seems simple. you don't have to fact check everything posted on your bulletin board but if you're accepting advertising could and should be held to the level to police those ads >> what do you say, joe? you want them policed or not >> it's ads. >> they can do what they can there's a lot of them. >> you can say whatever you want on your facebook posting they're accepting money for it they should be held to some standard it's advertising. >> i was looking at "the washington post. >> but hold on, if it's wrong, whether it's an advertisement or not, does that change anything meaning if i was running for mayor of new york and i started just posting things that were blatantly inaccurate. >> i think that's a tougher situation to try to assess that's where you can make the claim that you are simply a posting board and that these things get up. anything you're accepting ads for, why aren't you held to the same standard as other broadcasters would naturally be for that you're accepting advertising

there is some nteraction you're accepting money. >> big bad wolf lung capacity legend and bacon enthusiest dead at 6 there's some that you can't repeat on here i saw one for ted bundy. how many are there there are literally thousands of these. i'm surprised on twitter. >> i missed it i'm on a different version of twitter than you are. coming up when we return a lot more -- >> this got a lot of -- >> really? >> so you're like facebook you would sensor anything that comes from that side >> i just wasn't on twitter. the squawk planner will tell you what's happening we'll get you ready for the fed meeting, the jobs report, huge week ahead the busiest week of earnings season on tap today. you'll be hearing reports from at&t, wall greens as well as we head to that break, here is a look at the biggest premarket winners and losers in the dow.

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welcome back to "squawk box. time for the squawk planner this morning. it's a monster mashup of earnings, economic data and the fed. today we'll hear from at&t and wall greens. we'll get that before the bell and google after the close

also, we're hear from merk, pfizer and the biggy, we'll hear from apple and facebook, chevron and exxon and then by the way the fed meets tomorrow with a rate decision due on wednesday then on friday, we get the october jobs eport joining us right now to talk about strategy ahead of all of these events is matt toms, cio and also katherine rooney head of research and chief market strategist at baltic capital markets. good morning to both of you. let's start with you, matt ahead of these numbers, focussed more on the numbers or focussed more on the fed, first of all? >> the fed is first. we need the fed to stay ahead of the market expectations. the steepening is useful to 18 bases points finally the fed is not behind. the fed will cut this week and look for one early next week. >> what happens if they don't? >> if they don't, i think you'll

see a negative response. you have seen the dollar weaken a bit. that's helpful you don't want that retrade higher in the dollar and the global bond structure trying to move higher in urine as well this would be the fed fighting the market if they did it. we don't anticipate they'll do that. >> katherine, do you think they will or won't? >> of course the fed is going to cut rates, joe when has the fed not cut rates when futures are pricing in more than a 60% probability of said cut. so the fed is married to the market expectations. the fed will cut doesn't mean the fed will cut that three additional 25 bases points currently priced in but wednesday they will. i agree, i think that if the fed doesn't cut, those three times, it would be a negative reaction by the markets if the fed sounds slightly hawkish this week and indicates it may not have to cut, which it really doesn't, three times in total, then the markets will not like that either. >> katherine, i'm with you i'm with you

i think it cuts this week but that the commentary is going to be a little bit more hawkish than the market wants in which case it becomes a problem. therefore my question to you is, if we're in the same place, what are you doing about it in terms of how you set up your portfolio ahead of all of this. >> yeah. becomes a problem for the -- >> katherine >> for the markets yes. it becomes a problem for the markets because it's actually a boost to the credibility of the fed. so, yeah, look i think what i've been telling my clients is it's a really good idea to protect your upside, protect your returns. so, you have -- you pay volatility is very low right now. you can buy a march expiree put option which gets you through multiple fed meetings. iowa and new hampshire caucuses and primaries, first week of february, and super tuesday. so, you can get through both political risk and fed risk, which by the way, i think is the most important risks in the market right now it's not trade war

it's not u.s. recession. those two narratives i think have been pushed to the back burner and, in fact, i've been outside of the recession camp for some time and i do think we'll get a framework deal as i said for a very long time with china. so buy some put options. you just forfeit less than 4% of your return to buy that put option you protect yourself and you don't have to be outside of the markets. worse case scenario, joe, you let that put option expire. >> matt, you agree with that >> i think there's too much passive money on the sideline right now. there's a lot of caution in the system people have made a good amount of money this year i think the pain trade is to see equities push higher and start to crowd in some capital that's looking for the clock to run out on the year and says nice gains. look for people to be pushed in. >> hold on you think that the fed is going to cut and the market is going to go up on that, you think it's baked into the cake? >> i don't i think the yield curve can steepen more and you have areas of weakness in the senior bank load market, for example, that

will take a cue from the fed and earnings not being a problem and you can crowd quite a bit more in. >> in terms of earnings because i know we keep having conversation about whether recession is coming, whether the numbers will be good, so far the numbers have been pretty good. the question is really what you think the guidance is going to be from a lot of these companies that we're hearing from today and throughout the rest of this week and what that portends for the next quarter and the next year matt >> yeah. guidance continues to be subdued, but still positive. so earnings kind of morassis is not the worst case scenario. we get some abasement on brexit and trade. and early next year you can turn a bit more positive. >> katherine, are you positive for 2020 >> yeah. what matt is talking about that trifecta of what can produce a meltup, which is of course a trade deal, which is of course continued earnings growth pointing to a very strong picture. and fed cuts so, what is a meltup, can we get to 3,100 we probably can, but i do think

that going into 2020 with the volatile any in the markets, the political risk from the left and the democratic side from the right with the impeachment process from a fed that perhaps disappoints the markets, i just think it's prudent to protect your gains it's not something we're saying liquidate your portfolios. hold on to your s&p. you can go higher from here to year epd but 2020 is worthwhile to get more defensive. >> matt and katherine, thank you, guys. appreciate it very much. >> my pleasure thank you. when we return, today's biggest stock stories including an ecommerce play and the first publicly traded space tourism company. "squawk box" will be right back. ♪

but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

♪ we're watching shares of spotify this morning, music streaming service that reported unexpected profit for its latest quarter. revenue also came in above analyst forecast as with monthly active users up 30% in premium subscribers up 31% from a year ago. you can see it's been a bit of a roller coaster for that stock. right now trading at $123 up about 2% on that news. other stocks to watch, moving this morning, europe's largest lender says it's profits fell 18% from last year, hsbc

said the third quarter results came in that way despite strength in asia, specifically noting resilient performance in hong kong. bank said it's european performance was unacceptable and will accelerated its turn around plan. a commercial real estate deal prologis agreed to buy liberty property trust for 12.6 billion and that deal could help expand its presence in the u.s. amid the boom in ecommerce and new york's insurance regulator has launched a probe into unitedhealth. "the wall street journal" says the investigation focuses on an alga rorithm used by the company that allegedly prioritized care for healthier white patients over sicker black patients. >> what? wow. this morning investors will get their first chance to buy into the next stages of mankind's space endeavors. shares of richard branson virgin galactic will make history as

the first and only commercial space tourism company to do so this isn't an ipo. virgin galactic is merging with stock traded under the ticker symbol spce. "the new york times" reports boeing helped to craft a law late last year that uncuts design of new airplanes. the company and its allies shaped the language of the legislation to their liking overcoming criticism from regulators including the faa. coming back in a second. what do you think by the way, he'll be testifying this week? we'll have having to answer a lot of these questions and so many other things as well. >> but the whole idea of self regulation, a huge part of what happens in the airline industry is fascinating i started looking into this over weekend, not happening in the united states. a lot is because airbus and what's happening in europe is following the same similar approach. >> look, i understand the argument that there may not be

qualified people in the government to sign off on some of these things, but it argues for a change in structure. if boeing or airbus is going to pay for it, they should ultimately answer to the regulators. >> you also had members of the faa writing letters saying this is not the way to do it. >> right and i think the biggest question in this is even if the government has issues about safety, this gives the manufacturers an upper hand in this particular legislation. >> exactly >> we're playing this. >> your favorite song. >> we could have been playing big old jet airliner for this discussion the song at the box office "the joker" tell you about -- >> beat out a movie called maleficent. >> rolls right off the tongue. i just can't believe that a headline in the journal is bringing back a spicy chicken sandwich, headline. >> it's the headline. >> we have to get one of these if it deserves -- if it's a headline. >> good luck. >> it's impossible to get a stupid spicy chicken sandwich. >> yes, it's been sold out for so long.

that's the marketing genius in this. heading to break, look at friday's s&p friday winners and losers ♪ ♪

♪ >> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square. good morning u.s. equity futures at this hour are solidly higher again i don't know if we refer to it as a meltup, but certainly seems like the default position most mornings you do see the futures a little bit stronger and dow jones up about 74 the s&p up 6 if you round up the nasdaq up 23.5. >> if we were to open at this level, new high. >> gasoline prices have fall bin 4 cents a gallon over the past

two weeks to put the average price at 2.68 a gallon and the weekend at the box office "joker" reclaimed the number one spot, 18.9 million in north american ticket sales. it had been pushed out of the top spot last week by disney's maleficent, mistress of the evil joker is now the most successful r-rated movie ever with a global take of $849 million you're from manhattan, andrew. there's the stairs in brooklyn that everyone is going and taking selfies have you seen that as well >> those stairs we just isn't that true. >> did they just show it i was looking over here. he does some weird, scary. >> i have not seen. >> like the stairs in georgetown. >> yeah, exactly >> from exorcist. >> all the neighbors in brooklyn are like, go away. would you? can imagine how many people are taking shots >> so far so good with this scary sick movie he's very talented that guy.

he's a whack job right? >> oh my god >> very talented and a whack job. i don't know about the talent part >> all right when we come back, today's top media stories, we'll bring you the latest on facebook's fight against make fuse and what's heating up in the streaming wars next. 8:00 a.m. eastern time, don't miss our interview with squawk news maker ben carson, secretary of housing and urban development. stay tuned you're watching "squawk box" on cnbc ♪ ♪ my i don't have to run day ♪ just another manic monday

welcome back, everybody. facebook removed an ad from its site over the weekend from a political action committee falsely saying that senator lindsey graham supported the green new deal a facebook spokesperson said because the ad came from a political action group rather than a politician, it was eligible for facebook's fact-checking review joining us right now to talk about this and other media stories is joe ann litman, journalist and distinguished journalism at the fellow at institute study in princeton also ed lee, corporate media reporter at "the new york times," both are cnbc contributors joann, what do you think this is getting into fine lines, how do you figure it out where it's coming from if you paid for advertising, why don't you fact check it?

>> 100%. how we're seeing is how difficult this policy will be to endorse. facebook says we're not going to check political ads from politicians but fact check other things and take other things down if you're a facebook user, are you making that distinction? no, no you're seeing sort of all this information coming at you. so facebook has been incredibly inconsistent in how it handles fact and fiction on its site it's going to have to make a change. >> i think so. >> the lines they're drawing in terms of what they will and won't fact check seems arbitrary. for this we'll do this and for that we'll do that and as joann pointed out correctly, readers won't know the difference about the context around what they're viewing. >> do you think facebook wants regulators to come up with a solution for this? >> you think there's -- well, we're confused ourselves please come in and help us sort this right. i think there's the section of the -- 230 that's a thing that everyone is looking at in terms of how will that be revamped or

revised. that could hold platforms like facebook liable for the content that's on there. i think they're saying, look, do what you want. we'll be there to meet that demand yes, i do think they want some kind of regulation i think some kind of legal sort of framework in place so that it's easier for them to make those calls. >> so the onus is not on them to come up with a legal framework. >> they don't want the onus on them and youtube and google and twitter for that matter. >> they don't want to be seen as a content company. ed is right about the section 230 of the communications decency act which allows them to be seen as essentially telephone wires, not responsible for the content. >> disposable, that compuserve, ruling from way back when. you're a posting board but if you're accepting money for any ads that goes on, that seems like a different standard. you have involvement if you're accepting money. >> if you're a television broadcaster, if you're any other, if you're a newspaper, if

you're any other sort of media company, you're held liable for the content that you run and so, you're going to reject the ads that say that -- >> factually absolutely incorrect, right you're going to do that. that's your responsibility and it's very, very confusing to the ordinary consumer who is reading the newspaper, seeing television and then looks at facebook and facebook is a totally different point of view. they don't understand. we -- we need guardrails here to understand fact versus fiction. >> guardrails from facebook or guardrails from regulators >> that goes to the question increasingly facebook is moving toward more toward a content company if you look at it's hired now journalists. it's hired fact checkers for other sorts. >> they recently couldn't deal with a bunch of news organizations including "wall

street journal," new york times other websites to ingest headlines and summaries of news articles to appear in the news tab. they're paying for the content now actually. >> they're starting to pay for the content but also choosing the content. >> they're choosing the con ten. >> that in turn tells you they're doing the function of an editor and an editor is in a content company. >> but some is paid for and some is not being paid for. >> breitbart may not be. separate question, fcc and others regulate. how often is it that television networks or others get fined by the fcc for broadcasting advertising which is inaccurate? does anybody know? >> first of all, broadcasters have a slightly different set of rules around that relative to say cable networks, right? that's a slightly different. >> how often is this actually policed? >> i don't have figures on that actually it's a good question but they doggedly look at -- >> i have a suspicion it's not as much as you think. >> but they also are far from

proactive. cable and network are far more proactive than facebook. >> it's easier to fine and to review it's not like facebook where there's tons of political advertising or issue advertising that appears and you just don't know half the time where they are. so there's all this analysis has to happen just to see if these ads appear, who they came from, was ate politician, was it a pact, was it some other organization you might consider an issues ad so again, it's so much more stuff happening it's harder to police it's harder to get a sense of. there needs to be legislation. there needs to be a way to understand and tick through all these things and decide what's fair game and what's not fair game it comes down is it a content company? should they be liable? >> we are also expecting results from at&t any minute we may get some guidance on the company's activist battle with elliott management as well what should be we on the lookout for, ed? >> elliott, they took a 1% stake in the company smallest stakes

campaigns they have taken in the past >> right $270 billion market gap. >> massive company i mean, they wanted some better corporate governance they wanted a more specific business plan, how are you going to figure out this media thing they bought time warner last year direct tv a few years ago. doesn't seem to be working or not clear how that's supposed to be working that's what they wanted some response on. maybe sell direct tv i think we'll see some -- >> is it pay down of debt they're looking for? >> pay down of debt. >> they have been clear what their plans have been. >> capital allocation, paying down debt for elliott and more visibility at&t signaled some of that in recent weeks i suspect my sources tell me there might be something on corporate governance, board directorship, so i think that will be their responsible, see some kind of response whether it's something elliott fully buys into it, not entirely clear. i don't think at&t would make this announcement if there wasn't some kind of agreement.

>> this would be something they hadn't discussed with elliott. >> they have been talking for weeks. they have been negotiating we'll see some kind of resolution. >> i think the big picture really here is elliott management has been questioning this purchase of time warner now warner media to say, is this the right pivot for you to go sew into fully into content. >> late late. >> but they have been questioning that should you be direct tv has been hemorrhaging, hemorrhaging subscribers, right was that the right move to purchase that? i think that there are -- >> they bought it at the worst possible time you can buy a satellite operator, it was coming to the fore unlike a cable bids where they have broad band business, you as a consumer still need the internet even if you don't want the video, satellite, it's video or nothing get rid of your video, there's no need to have satellite. >> i thought the concern, andrew, i think you talked about this, the concern was the free cash flow. >> generates tons of free cash

flow. >> how quickly you can get rid of it. it is a melting ice cube to a large degree but a big ice cube. >> it's a big ice cube a big part of at&t's sort of their value system is going to be around their dividend, right? if you're in that stock, you want to make sure that dividend is met, the cash flow helps from directv. also, who are you going to sell it to? right? if you want to off load directv, the question mark is someone likes the cash flow, maybe a p.e. firm comes in and grabs it. the most obvious would be a partnership with dish but then you get into regulatory issues that's something at&t explored even they were like i don't think that's going to work let's keep it and take advantage with our new streaming service announcing tomorrow hbo max they'll have more details on what that's going to be, the pricing of it will be important for them. >> that stock still yields 5 1/2%. >> still not a bad thing to have i think elliott wants more i think it's not bad to want more or better visibility into their planning hopefully that they'll offer some details on that >> the estimate is for 93 cents.

we expect to see those earnings just about any time. but joann, ed, thank you for being here today good to see you. >> great to see you. >> coming up, legislatures are calling for divestment from chinese companies. we head to break, a quick check of what's happening in the european markets right now we'll see you in a little bit.

a bipartisan group of legislators are pushing for

divestment this is what henry fernandez had to say on friday >> we definitely create the tools for people to then use them to figure out what are their decisions because we cannot tell investors what decisions to make. we offer investors choice for them to decide what they would like to do. >> joining us now is an investor who says asian stocks may be a safe haven james tom is investment director based in singapore >> i am. >> just looking through a lot of your comments,we need to retur to the realization that the fastest growing area is the asian pacific. even after accounting for these, you point out 63% of global economic growth and purchasing power is generated in the asian pacific. so even with all of these other tensions and geopolitical concerns in the backdrop, it's a fast growing area where

valuation has come down because of these other factors you don't need to be -- >> quite simply. >> you don't need to be here >> thank you. >> you're welcome. >> it is the world's fastest growing region i think imf recently published a report citing 5% gdp growth 2020 that's fueling, if nothing else, a strong consumption story in asia i think for the most part from the bottom up we have companies with a healthy balance sheet that can weather the macro headwinds. there are headwinds. from a fundamental perspective asia looks pretty compelling from a valuation perspective, too, the region is trading at a significant discount now certainly relative to the rest of the world and the u.s. markets hitting all-time highs i think we will see a rotation into asian equities. >> your base case doesn't include any type of resolution

into any of the trade issues you're assuming that doesn't happen and still recommending these? >> yes i think clearly if we have a deal struck and come up then clearly markets -- >> what do you mean that the orthodoxy of monetary policy in asia means that it's better positioned than western peers. >> i argue that asian central banks and governments pursued orthodox policies so there was never the raft of quantitative easing. >> so they have that left? >> so interest rates are still high and that gives them the flexibility to cut and to support fading economic growth and on the fiscal side, too. balances are reasonably healthy. there are tools in the tool kit to respond to short-term weakness in economic growth. >> i hate to interrupt, but let's tell you about at&t earnings that have crossed now adjusted earnings came in at 94 cents a share. that was a penny better than the street was expecting

revenues slightly below forecast the real news is the three-year financial guidance in capital allocation plan they put out they're looking at adjusted earnings of 4.50 to 4.80 by 2022 if you look at the street's earnings, it's a max investment. they expect revenue growth every year one to 2% over the three-year period. they're looking at dividend growth they're looking at continued modest annual increases. did i have dpends is free cash flow capital allocation 50% free cash flow allocation. they expect to pay off 100%. it's 2022. and for the portfolio review, this has been talked about by elliott management they are saying continued

disciplined review with no major acquisitions that does not mention anything about what they may or may not spin off for the board, they say continue board refreshment with one perspective new director to be considered another in 2020. the ceo transition the decision is not expected in 2020 >> you tell me, does this placate elliott management and investors who were looking for -- >> if you're looking at the adjusted earnings per share growth if you believe it for 2022, that's a big increase in what they would be expecting to earn by 2022 dividend growth. if you had any question about what was going to happen to the dividend, they are expected to continue to monitor. >> that's covered, too >> so i guess -- >> 50% of free cash flow >> right >> stock is up almost 2% take that as any indication?

>> we'll get back to that. finishing up with james on china here we think of the united states has an advantage because we can be a domestic economy. it's the middle class. that's the question. taking a while >> it's taking a while it's a big shift to move that transition you break down the gdp you see the services and domestic focus that transition is happening it's been going on for a number of years it will continue and help insulate it from the trade. >> how would a normal investor in this country decide to do that

actually >> we run a domestic fund and i think actually an active approach is the right approach to these markets rather than buying into a passive income. >> really? >> i think you have to be selective on the companies it is a relatively risky market. plenty of people have lost money in the chinese equity markets so being selective, picking stocks. fund managers, balance sheets and cash flows i think it's the right approach. >> there is an elliott management note that's out saying they are supportive of the at&t announcement. they are looking for the separation of the chairman ceo roles. >> that's in 2020. >> thank you >> appreciate it >> two different tracks. >> sorry >> that's okay >> the stairs are in the bronx >> we'll talk more about the stairs we'll also talk about at&t when we come back and get you ready

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the all-time record. >> market flash. at&t kicking off the busiest week of earnings the quarterly results, an instant market reaction straight ahead. plus, it's your money, your vote one of the architects of elizabeth warren's wealth tax proposal squares off against aos economic plan. the second hour of "squawk box" continues right now. ♪ ♪ live from the beating heart of business, new york. this is "squawk box. good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in time square. i'm andrew ross sorkin along with becky quick and joe kernen. we have earnings reports of at&t coming in this morning we'll be hearing from the fed later this week. dow jones looks like it would open up 73 points higher nasdaq looking to open 25 points

higher s&p 500 looking up about 6 points right now. in headlines this hour, microsoft winning a $10 billion pentagon cloud computing contract amazon had been favored to win the contract said it was surprised by the decision and can appeal the outcome. hasn't decided whether or not to do so. at&t out with its quarterly earnings reported 94 cents a share a a penny ahead of estimates the company unveiled its outlook for the next three years seeing revenue growth every year and also planning on continuing modest activity growth yielding over 5% right now and tiffany shares are surging in pre-market trading. french luxury goods maker lvmh approached the company about a possible takeover. didn't give financial details but multiple reports said the potential bid was about $120 a share. >> the street thinks it's going to be more it's up at 127 and change.

>> based on the idea that $136 is where the stock used to be. >> get to previous high. >> previous high was in june of 2018. >> if you think lvmh is coming back, that's the only way they're going to get there. >> dow component walgreens out with quarterly earnings. profit came in at $1.43 a share, 2 cents above estimates. revenue slightly above forecast. >> it's a big week ahead for investors. in fact, it's the busiest week of earnings season plus there's a fed meeting and a jobs report. a lot to try to digest steve liesman joins us with what we should expect from fed chairman jay powell. that's the most important thing from the market's perspective this week? >> sure. not that we can take the mid fall vacation that you were thinking about at least i was this is the week the fed will meet to decide interest rates and probably wishes it was meeting next week. key economic data will be reported either on the second day of the meeting or after the decision comes out on wednesday. let's take a look.

adp and gdp, they come out on wednesday. they both look to be soft. just 80,000 predicted for adp payrolls 1/6 for q3 then jobs just 85,000, maybe a little bit higher. the ism manufacturing which sparked all the concerns about recession seems strengthening but still remaining below 50 which is the contraction in the manufacturing world. the fed will have some indication of this data ahead of time what it won't have is any indication of how the most important issue of all, the trade war between china and the u.s. plays out in mid november when presidents trump and xi are likely to meet in chile. put it all in the hopper global economic weakness, softening u.s. indicators and the odds favor a fed cut later this week. 91% probability in october, which is 19% for another follow-up cut in december. so this idea of a fed pause

after this third rate cut has now become the market's central forecast and the fed probably going to endorse that by signaling future moves happen meeting by meeting, but it sure wouldn't mind having more data in hand before making this call, guys. >> christian amani, chief economist at stifel christian. you've been bullbullish. you've been long it's working >> we're almost at a new3100 but i think outlook for 2020 is meaningfully better because the global economy probably reaccelerates. and the reason for that is going to be the easing of financial conditions that has taken place on a global basis. while the fed would like to have the data, i think for -- even for the december meeting i think they are probably cut in

december as well the reacceleration probably doesn't come out in 2019 it's really more 2020. >> has anyone noticed that if you were to look at year-over-year earnings for share growth we are coming out of really a flat year and the market was exactly flat for the entire year. i think it might be -- it might be related i mean, if you could figure that stuff out you might actually be able to -- >> the market is working relative to earnings >> yes it really does work. it really does work. >> how does this happen? >> i know. i know when it all comes down -- and then you're saying we accelerate next year and earnings per share is expected to be mid to high single digits. >> exactly exactly. so i think 2019 was the result of the fed tightening that took place in 2018. >> we also have big gains. we are consolidating some huge gains the previous year from what people -- either you like the tax reform act or it was a

sugar high either way, it did result in some big earnings. >> absolutely. i think the future earnings growth is not going to come out of tax cuts, of course, because there's not much room to do that anymore, however, i think any acceleration in global growth can get you to that mid single digit level rather easily. i think what to focus on this earnings season is the third quarter earnings that probably ends up being the bottom of the cycle or at least bottom of the near term cycle. the guidance is okay not spectacular, but i think excacceleration is coming. >> lindsay, let's get back to liesman and the report you were probably frantically taking notes with everything steve was saying did you -- is that sort of -- are you in the same camp did you hear anything new there that surprised you or look for one more cut and then a pause? >> no, actually, i do think the fed will continue to ease as we see this further loss of momentum in the data

as steve pointed out, it's very likely that we continue to see a further slowdown in hiring manufacturing remain in contraction naryury territory. business investment has been very weak. we've seen early indications that the consumer is tightening their pursestrings taken together this not only justifies an october rate cut but i think the fed is going to be increasingly concerned about even being able to maintain this lower level of more moderate momentum going into the end of the year and concerned about when we turn the corner into 2020 if in fact we do see that loss of momentum continue, the risk of the r word, recession begins to become a real concern. and in fact we saw that in the meeting minutes from last month. a number of fed officials increasingly concerned about being able to maintain this positive expansion and in fact a number pointing out the rising risk of recession. so i think the fed absolutely cuts in october, cuts again in december and if we're not able to stabilize, further cuts are very much warranted in 2020.

>> i think the fed looks at this more like one of those meals where you wait a little while for the meal to come, you fill up on bread and then you go ahead and eat your dinner and then you feel a little bit sick afterwards i think that's overstating the case here, but the idea is i think the fed believes it has a lot of stimulus and i don't think it's adverse to cutting more what i do think is it wants to see what it hath brought before it goes ahead and commits. i think december is a possibility of a pause until we figure out how much weaker it goes lindsay, i don't know -- >> isn't this all about language >> it's all language. >> it's all language language equates to billions and trillions of dollars of movement of instruments all over the world. >> i think it is about language but i think they already have a whole bunch of things in motion. so i have the non-quantitative easing, quantitative easing that

is taking place in the marketplace is actually quite significant. if they are going to add $80 billion to -- or $60 billion a month to the balance sheet, i think that is significant. the fed is playing it really smart. they are not boxing themselves in with -- >> i think that's right. >> -- in the fourth quarter of last year with talking nonsense we will continue to tighten. i think having done all of the things they have done, the smart thing for them to do is to continue to watch. >> christian, that's sort of the fed's attitude is that the reversal from the expected tightening was a piece of the easing the change in the balance sheet, another piece of the easing. the cut in interest rates, another piece of the easing. so it feels like there's three different trains of stimulus that have been set on their journey and it takes time they think for it to -- and i think what's interesting is it sees the market, at least for the moment, comfortable with that and if it can take a pause, i think it's going to take it.

>> i think that is true. however, i think given what they did in 2018 and the significant slowdown that it brought on the global economy, it would be prudent for them -- >> they're going to go >> i think -- >> can we get one more comment from lindsay we should have -- >> i know. >> that was my bad >> lindsay >> well, i think at this point the fed has recognized that policy went well beyond neutral as they tightened very aggressively in 2018 so july, september, those rate cuts just get us back closer to neutral. we're not yet in accommodative territory so the fed still is very concerned that they need to get ahead of this weakness they don't want to continue to chase the economy down, particularly given that we're starting from such extremely low levels of raids. they don't have the ammunition in their tool belt to slow play this they need to be aggressive they need to get out ahead of the weakness and that's why i don't think they're going to have the opportunity to pause in december they need to continue to lower rates until we see the data

stabilize. >> we're going to have to end it there. everybody on the fed, they're such a disparate of opinion. i need one person who talks for everyone. >> don't listen to the fed. >> is it powell, is it clarida. >> don't listen to the fed pay attention to the trademark if there is an impending recession, you will see significant widening there there's no sign of that. >> lindsay, thanks >> we have a lot more coming up on "squawk box" this morning could this be the next investing frontier sir richard branson thinks so. we're going to talk about space and how many are looking to profit to the race out of this world. stay tuned you're watching "squawk box" on cnbc. today's big number $24.6 billion. that's how much money has been invested into private space companies since 2009 aorngccdi to a report by space angels.

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welcome back, everybody. a big step for investors interested in the space race morgan brennan joins us. she has more on that front

morgan, good morning. >> yes it is a milestone. version galactic begins trading at the new york stock exchange market cap $2.3 billion as of the merger close ticker civil bo eer symbol spce the first ever publicly traded space tourism. the first in the class of new space commercial companies to test public investor appetite. what is virgin galactic. sir richard branson's attempt to send paying customers to the edge of space. also the space ship company, which is the subsidiary that manufactures the carrier aircraft and space planes that are launched from them ticket price, $250,000 to go to the edge of space. more than 600 people have so far signed up. $80 million in collected deposits over $120 million in potential revenue off of that. under armour designing the custom space suits flights will take place from space port america in new mexico

which the company is in the process of moving into it's going to be their hq. it is not a traditional ipo. this is combined with social capital, a special purpose acquisition company that is already on the nyse. this will be watched very closely not only by the space industry but by wall street and silicon valley guys, at 10 a.m. eastern first on cnbc we will have sir richard branson, the ceo of virgin ga lass particular and chamat chamath palihapitiya. >> i don't know if you saw the video but they had people in space suits floating around in a blue tank. what was that? >> that was two weeks ago when virgin galactic along with under armour showed their suits. >> that looks pretty cool. i have no interest in going to space, but that looks pretty cool let's talk a lot more about

this joining us with a closer look at investing in space is mark bell. he is the founder, president and ceo of mark bell capital been listed in a top ten vc investor in space technology thank you for being here. >> thank you for having me. >> you first got hooked when you were 10 years old. you saw "star trek." >> i became a trekkie and dreamed of space ever since. >> how far have we come? >> space has become economical it's become affordable things that you couldn't do 20 years ago are now doable look what's happening today. virgin galactic is the first company that's going to go out there and put the average citizen into space. >> are you going to sign up? >> already on the waiting list. >> you've already put down your deposit? >> i'm waiting to hear back. >> let's talk about what your biggest investment is in. >> in the company terrat orbital. it is an incredible opportunity.

things you couldn't do before like synthetic aperture radar. space situational awareness. things mapping out space or imagine looking through the clouds, never losing a ship, never losing a plane imaging 24/7 at night. that's the future. that's what it gives us. >> in terms of sort of ranking how you look at this whole world, who's doing well and who's behind, i don't know if you saw these comments from gwen chatwell she was taking shot after shot after shot at blue origin, jeff bezos's operation, saying they are three years ahead. that these guys are so far behind she was just sort of -- it was like a drive by shooting at everybody. are they that much -- is spacex that far ahead relative to everybody else >> spacex has done phenomenal. elon musk has created -- given everyone hope that it can be commercialized, that you can go out and launch many satellites

at once and it's giving everyone like us an opportunity to launch satellites. >> are they that much more ahead than everybody else? is there anybody else in the league -- if you listened to what she was saying, you would think that, you know, there was no competition in this space. >> the big defense contractors, the boeing, lockheeds, ula for example has limited launches spacex is doing it over and over again. >> so the answer is yes. >> yes. >> okay. >> i'm curious you mentioned you were invested in satellite company that's a big part of the space company. you can talk about launch services, spacex, ula, some others developing rockets. in terms of space tourism it seems like it's a little more niche. how are you thinking about it? would you invest in a company like virgin galactic >> space tourism is opening people's eyes. it's bringing it to the average consumer maybe the high end consumer. people who dreamt of going to space now can actually do it and that gives people hope and just

like the original moon shot. everybody watched people land on the moon the first steps kne people neil armstrong took -- >> but at $250,000, that's not doable for most people or is this going to be a ritzy, show it off to a few people. >> price point has to come down. the first cell phone cost how much money versus what it costs today? it is just -- the more people get into it like blue origin, other companies, other startups will happen and it will become like airfare prices come cheaper and cheaper. >> back to morgan's point, would you invest in a company like that now >> we always look at things. we're always about companies that want to make money today. we are about companies that will be profitable. we believe manufacturing satellites for low orbit is profitable constellations can sell their data today and the cost of a satellite, the satellite i brought here today, is a million

dollars to build satellites this size can generate revenues. >> so no on space tourism? >> not yet but it's coming. >> thank you very much for joining us it's a pleasure. morgan, good to see you. >> good to see you, too. california's governor declaring a statewide emergency. that story when "squawk box" comes right back. get the best of "squawk box" every day in our new podcast subscribe to squawk pod wherever you get your podcasts.

>> tearing across california they've got 200,000. >> the scale of emergency. >> it could jump the 101 freeway

and the area hasn't seen fires until the 1940s. it's dense, old and dry. live report from the ground there in just the next hour. still to come on "squawk box," we have this morning's biggest stock movers and then later it's your money, your vote one of the architects of elizabeth warren's wealth tax proposal squares off against a supporter of president trump's plans. gabriel zuk man versus andrea posner we'll be right back.

♪ ♪ welcome back to "squawk box. good morning, everybody. among the stories that are front and center this hour, spotify posting an unexpected profit also reporting revenue that came in above analyst's expectations. forecasts now monthly active users up 30% premium subscribers were up 31% from a year ago. that stock up 5 1/2% right now take a look at gasoline prices they have fallen by 4 cents per gallon it puts the average price now at

$2.68 per gallon then warner brothers, "joker," it claimed the number one spot at the weekend box office. it brought in another $18.9 american ticket sales. it had been pushed out of the top spot last week take a look at u.s looking expected to open up 95 points higher nasdaq up 350 up 3 points. if we open these levels the s&p 500 will be sitting at a new record interday high we'll keep an eye on that. when we return, at&t posted quarterly results this morning as the company deals with activist investor elliott management it has some answers for that, too. we'll talk numbers with veteran telecom analyst craig moffitt next don't forget to subscribe to our new podcast. you'll get interviews and much more stay tuned, you are wahitcng "squawk box" on cnbc

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welcome back to "squawk box," everybody. this is the busiest week of earnings season. dom chu joins us he has a look at what's still to come this week what do you see, dom >> so exciting so many different corporate micro economic catalysts to talk about this week. the busiest week of earnings season we have 150 companies in the s&p 500 or thereabouts reporting their numbers give or take and six of them are actually dow components as you can see behind me here there's going to be no shortage of stories to tell today at&t already out earlier this morning alphabet, spotify, t-mobile, gm, amgen. apple and facebook headline a big slate on wednesday we can throw a starbucks in there after the closing bell on thursday, pinterest just because of that ipo hype, what exactly they can do. that will be a big one there altria chevron and exxon typically report together on friday.

if you take a look at all of these, it's because we are now getting through that large part of earnings season if you take a look at things so far, as things stand according to data from refinitive, with nearly 200 companies in the s&p 500 reporting, if every single company reports as expected for the remainder of the earnings season, earnings growth will be down about 2%. revenue growth up about 3.5% that's how things stand as we head towards the busiest weekend of earnings. by the way, andrew, that 2% decline in earnings, if you strip out the energy sector hypothetically, right now it's poised for a 39% drop in earnings growth. if you strip that out earnings season could actually be up half a percent this time around worth watching on friday when chevron and exxon report their results. back over to you. >> dom, thank you for that want to talk about at&t for a moment earnings beating by a penny but revenue a bit shy. the company had pushed back its report because of negotiations with elliott management. you're going to look at that

stock up though this morning because of a little bit of what they said in terms of forecasting and because of the support they're now getting from elliott. elliott disclosing a stake in the company back in september. joining us right now to talk about the earnings report and specifically i want to get to this fight with elliott which seems to have reached a detante. he has a neutral rating and a $31 price target on at&t looks like the battle, craig, at least temporarily, has been halted this idea they're going to have some new board members and no more acquisitions, at least for now and we'll see what happens to randall stevenson doesn't sound like he's going anywhere, at least not in 2020, craig. >> that's right, andrew. and they also committed to share repurchases. >> which is a big one. >> which is a big one. >> that and the dividend as well >> yeah, that and the dividend look, the challenge for investors now looking at today's

report is going to be how believable is this guidance? because they're saying they're going to grow revenues 1 to 2% a year they're going to expand margins by 200 basis points by 2022. and yet against that revenues are currently shrinking at the consolidated level they're about flat in wireless they're shrinking and margins are shrinking in the entertainment group. they're flat and shrinking in -- or margins are shrinking and revenues are shrinking in the business services group. warner media is down 4.4%. so every part of this business is shrinking and getting worse and yet the guidance says don't worry, it's about to get better. >> so you're not believing it is what you're basically trying to say in a polite way? >> i think it's hard to see exactly how they get there look, telecom companies are at the end of the day high fixed

cost industries, right they have largely fixed costs and so if revenues go down, the only way to keep margins from also going down is to radically cut costs. now at&t's a reasonably good cost cutter and a lot of what elliott has said is you have to get better at being a cost cutter that's a lot of what's in this operating plan presumably. the margin expansion comes mostly from cost cuts. but it's really -- take the entertainment group, which is the second largest part of the business behind wireless the entertainment group is now the subscriber base of premium video, mostly directv, is now shrinking at more than 10% a year and in the quarter it's down 5.3% just in the last three months so it annualizes to something like a 20% decline it's really stretching credibility to say, don't worry, next year we're still going to be -- with 20% fewer subscribers

we'll be fine and can keep flat ebitda this is seeing ebitda seeing revenue shrinking at 7% a year and that is a secularly challenged business. it's not that at&t is not running it well, there are serious headwinds to business services as that industry gets could he mod did i advertis commoditized you will fight against secular headwinds with all of these numbers. what the market will be grappling with is how feasible is that. >> greg, your price target is $31, is that correct >> that's right. >> the stock is now 20% plus past that. are you reconsidering that are you saying, okay, forget it, throw in the towel >> what we said in our last report is that it was called tina loves telecom meaning there

is no return in a yield of global yield starvation. at&t stock will continue to attract capital because the dividend is so high until it becomes clear that the dividend needs to be cut. this -- the guidance is very positive but i don't think it's going to put to rest -- and, look, let me be clear, they've also done a very good job in asset monetizations and what have you in paying down some debt, but the secular challenges for all of these businesses are bad and getting worse. and so eventually the debate about how sustainable is the dividend will come back until they can show that there is some way that they can actually sustainably find a way not just to grow the overall business but grow any of these businesses individually. >> so, craig, the piece that i'm curious about is are you surprised that you're hearing support from elliott, which came out very aggressively against the company but now seems to

support it, or do you think this is just a wait and see situation? >> well, what elliott said in their original letter, andrew, was this was not a breakup story. in fact, one of the curious things about at&t, at least by our numbers, was that the sum of the parts actually yielded a lower share price than where the stock was trading. again, that was sort of emblematic of the fact that the dividend was supporting the stock in the way that sort of fundamentals wouldn't have this wasn't about just break up the company and sell off some pieces because as a sum of the parts story would often be in an activist letter. what elliott asked at&t to do was mostly around cost reduction and governance and capital allocation at&t has committed to doing exactly those things so while i guess it remains to be seen how efficacious those things turn out to be in the face of, you know, you can't cut your way to greatness as they say, whether

they can cut enough costs that it actually makes these businesses turn around is to me a difficult proposition. but they are essentially executing on what elliott asked them to do so, no, i don't think it's terribly surprising that elliott is supportive of the trajectory. >> okay. craig, we appreciate you waking up early on the west coast for us >> my pleasure. >> thank you great to see you. the great tax debate democratic presidential hopeful elizabeth warren is grabbing wall street's attention with a plan to make the wealthy pay more one of the architects of the plan, gabriel zucman will join us on the set again and debate andy puzder. that's coming up next. robinhood believes now is the time to do money.

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welcome back, everybody. now let's get to politics and your money senator elizabeth warren's rise in the poll grabbing the attention of many on wall street here'sinvestor ron baron on "squawk box" on friday >> i don't think elizabeth warren would be successful in getting -- doesn't matter how many people are going to be elected or democrats, she's not going to be successful if she were chosen president as -- in getting through the policies she's proposing. i think they're pretty nuts. >> joining us right now is gabriel zucman he helped design some of those policies, including senator warren's tax plan and is the co-author of "the triumph of injustice, how the rich dodge

taxes and how to make them pay." also with us is andy puzder. good to see you both. >> good to be here. >> thank you for joining us today. gabrie gabriel, that was ron baron on friday he doesn't think these proposals would ever make it through what's your answer to that what's the feedback that you've gotten since the book came out >> people have said the same thing of the federal income tax before 1913, that it would never work, it would never be a reality, that people would evade it, it would be bad for the economy and for jobs and so on and, you know, now we know that it's a big success it's working very well so the wealth tax could work well wealth concentration has increased a lot in the u.s the top .1% wealthiest americans own about 20% of u.s. wealth there's a ton of wealth at the top and their tax rate currently is not high. 400 wealthiest americans pay 23% of their income in taxes and so

the most direct way to make them pay more is through a wealth tax. >> take it away. >> can i ask you a question? you've been advising elizabeth warren on these issues to some degree does she want to take money away from the wealthiest because she wants to redistribute or does she want to take wealth away from the wealthiest because she sees this as a larger inequality what's the -- if you were to get inside her brain -- >> i can't -- no, i can't talk for her. i'm not involved in any campaign or official position if you have a high tax rate, then you reduce inequality a lot and you don't collect a lot of revenue in the long run. if you have a lower, more moderate wealth tax you do less to reduce wealth concentration but you can sustainably collect quite a lot of money it can be spent on child care, health care, student debt. >> how much of this for her is about raising revenue versus this sort of -- some people

would describe it as a social engineering project as well. >> in terms of the rates that she proposes, they are quite -- 3% of 1ould call moderate billion. >> andy, your thoughts on the wealth tax >> first of all, with the income tax, it's a good comparison. when the income tax started the idea was only the wealthy would be taxed by 1940 it was everybody was filing a tax return. that's the same thing with this wealth tax it's only supposed to be on the wealthy now. you have to be some kind of naive to think that we all won't be subject to a wealth tax overtime if this takes place i think it's a terrible idea i think it will discourage growth the economic tide lifts all boats. we want to generate economic growth things that encourage investment are the way to lift people from the bottom to the top. and as far as taxes, we've got the top 10% of wage earners pay 70% in taxes

the top 50% pay 97% in taxes we have a very progressive tax system we're seeing people from the bottom being lifted up you look at wage growth over the past 14 months or production and non-supervisory employees, in other words workers, have been up over 3% for 14 consecutive months they were up 3.5% last month so we've got real growth it's harder to find a blue collar worker than a white collar worker. the current population survey showed that economic inequality decreased when you take into account the size of households we're seeing the kinds of things you would like to see. the poorer getting richer and the richer getting richer. i don't think wealth is a zero sum game where the rich only get richer and the poor get poorer we're on a good track. >> gabriel, with the wealth tax you take 2% away every year. cumulatively that adds up over several years and you're talking about a pretty big number.

if you're concerned about the wealthy, why don't you just focus on capital gains because that's where -- that's the reason a lot of the wealthiest pay much less money, because they are collecting more from their stock investments or other investments than they are from ordinary income and that's taxed at a lower rate. >> what i think you should do both have a not progressive income tax. higher capital gains taxation and a wealth tax the reason why the income tax is not enough is because when you are extremely rich, you can own a lot of wealth while realizing and reporting very little taxable income so you take warren buffet, for instance, he's worth $80 billion but his company berkshire hathaway doesn't pay dividends so he just sells a few shares every year and realizes a bit of capital gains, maybe 10, $20 million. he pays 20, 23% on that. >> right. >> his effective tax rate, you know, like 2, 3 million taxes

paid, his true economic wealth -- >> you are talking about people who are founders look at warren buffet, jeff bezos, those are people who are founders trying to keep control of the company what you would do is effectively force them to sell shares and lose control of the company. you force them to sell shares. they have to pay taxes on top of that. >> you do eventually pay taxes on those gains you pay capital gains tax at some point or you pay estate tax when you die it's not that that money isn't taxed. it is taxed. it's just when is it taxed. >> by the way, i don't disagree with you but the issue to me -- >> that's good to hear it happens so rarely. >> so to me you can solve a lot of your brob blems that you're talking about by changing the step-up basis on -- at the end of life. that's a huge component of it. >> yes. >> possibly changing even -- and i don't know where you stand on philanthropy but that's a huge component. if you give all of your money

away, to some degree you can argue that myself as an accountant think you can limit it by philanthropy you have 1031 exchanges, carried interest, you could do something on capital gains if you wanted to in a progressive way. the question is why wouldn't you go after what i would call all of those things, low hanging fruit, relative to a larger wealth tax >> but, again, i think you want to do both and you take the case -- >> both becomes complicated. >> look at mark zuckerberg your argument is let's wait for him to pay the estate tax. it's going to be in 50 years, 60 years. >> right okay >> it's long right now he's not paying much in taxes just because facebook doesn't pay dividends. corporate income tax. >> but i have no idea -- what happens if i told you -- what happens if i told you that in 20 or 30 years from now facebook, i hope it's not worthless, but let's say it turns into -- he would be very upset for me saying this, it turns into kodak

or my space or something of that sort you're saying he should pay taxes on what it's worth today even -- >> even if the valuation -- >> even if he ends up with nothing. >> he should pay taxes he is extremely wealthy. doesn't pay much tax this is money that can fund -- >> spend it on -- he should spend his money. this is being cash poor. this is not like -- he may crave wealth but he can't use the wealth. >> of course he can. he can borrow money if he wants. he can give to charities lots of ways when you are wealth, you have $50 billion to spend whatever you want. >> i'm not suggesting he's cash poor either. >> not cash poor. >> look, becky was right if you have a 2% tax for 25 years on somebody's wealth, that's 40% of their wealth that goes away. who's going to stay in the country if you can do that this is why 12 countries in europe had a wealth tax in 1990 and three have it today. it doesn't work. people leave

it's hard to enforce it's hard to calculate the wealth what you would do is you would encourage people to buy assets that department be have a market you can value stock. you can say what they're worth if you are rich you would in vest in your money or leave the country. this has terrible economic ripples. you will take the most successful country in the world and you will make it france, venezuela. >> make it like france in the '50s and '80s. >> there was no wealth tax. >> you had -- >> nobody paid it. the rich people didn't pay it. >> oh, corporations did pay it. >> they didn't pay it. there were incredible exempti s exemptions. >> corporate tax. >> so you want to drive -- you want to take those corporate inversions so we're driving companies back to ireland again. >> 50% tax. >> this doesn't make economic tax. growth was 2.2%. >> nobody paid the high rates.

>> since 1990 growth has been 1.1% a year with much lower corporate tax rates. >> can i ask you a question about that argument. you've made the inequality argument which is to say they were to tax people more, more redistribution of wealth, you think that would create growth is what i've heard from you in a way. >> you can have a small positive effect small. >> when you look at the 1950s, '60s, '70s as the baseline cases that you're running against, i've said this on the show a lot, during that period the rest of the world was out of business so we were a monopoly power in the united states with monopoly rents. you got to 1980 when wages started to stagnate. what happened? the rest of the world came online they're now competing with us. germany, japan, all of them are now back in business and then you're playing against a global competitive field in a way that didn't exist before. >> no, it's a good argument. what i would say is one of the big lessons from economic history is that what makes

countries wealthy is not low tax rates, it's investment in education, in health, in infrastructure, in the public goods and services that make communities prosperous and the u.s. to some extent did that from the '50s to the -- >> not doing enough. >> not spending enough now not enough revenue. >> gdpr ratio. by 4 points. >> i think we need more revenue because we need to spend more money. the question is how do you get that revenue >> how do you get the revenue without discouraging the growth that creates the revenue which is exactly what would happen if we implemented these plans you put in a wealth tax, the growth that creates more tax revenue disappears you become like any other socialist country. you become a no growth state >> you distribute a smaller pie more fairly. >> instead of growing the economic pie, you want more equal, smaller pieces. it makes no sense.

>> made sense for the u.s. >> not this country it doesn't >> what do you make about the debt load? i have a great fear of the amount of debt this country has taken on but there's others in the sort of economic world these days who actually think debt can be unlimited. >> yeah, for the wealth tax it's relevant -- >> do you plan to use the revenue to pay down the debtor do you want to use the revenue to pay for services? >> mix i guess >> okay. >> i guess it depends how much you're going to spend. by the way, between the last year before the tax cuts, 2017 fiscal year and this fiscal year, tax revenues are up 4.5% without these huge taxes we've had it because we grew the economy. american business men and business women invested, they grew, they hired and we're going in the right direction. >> andy, gabriel thank you both for being here. >> we're taking oen a lot of debt to do that. housing and urban development secretary ben carson will join us live. his department has a big

announcement this morning and he's joining us right here on "squawk box" first

earnings alert we'll get you caught up on the numbers from at&t and walgreens

and the reaction on wall street. plus, we'll get you hrodey for reports from three faang names. new announcement from the trump administration on housing. ben carson joins us live. >> tiffany shares soaring on the talks of a potential luxury merger we'll tell you what happens next the third hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures are now pushing close to triple digit gains up to 90. the s&p indicated open in record territo territory, 7 points. nasdaq indicated up 27 and

change treasury yields have been backing up, 1.80 or earlier on the 10 year. 1.83 on the ten year. >> let's get you caught up on some stories investors will be talking about today. at&t shares are higher in the pre-market trading after quarterly earnings and detailed three-year outlook shares beat earnings by a penny a share. they projected 1 to 2% revenue growth modest dividend increases. no major acquisitions and no ceo acquisitions through the year 2020 that stock up by 1.2%. ford and fiat chrysler are next at the negotiating table ford and fiat chrysler may be more reluctant for the terms of the agreement. and the european union has agreed to a brexit delay of up to three months. that comes three days before what had been an october 31st

deadline for brittain to leave the e.u. an earlier departure is possible if they ratify a separation deal. >> a few stocks on the move this morning to tell you about. tiffany shares are surging lpmh approached tiffany for a possible merger. the bid is about $14.5 billion $120 a share prien nadel will join us my understanding is that the expectation is they will say no to this particular bid in the next week as they examine it the question, of course, is whether they will come back with a higher bid that stock traded as high as $136 a little over a year ago. so $120 on a relative basis if you're the board may seem too low. also jumping this morning, shares of industrial real estate owner liberty property trust has

agreed to a takeover by rival prologis it is an all stock deal. $12.6 billion. this is big. expected to close in the first quarter of 2020. had you had secretary announcing an agreement with the department of justice with the fha program. they want to bring back the program that some banks and lenders abandoned. joining us is ben carson not everyone -- it's good to see you, mr. secretary, by the way. >> you too. >> not everyone aware of the problem and aware of the solution can you quickly go into what happened and who's involved and how do we get the big players back in? >> after the financial crisis the department of justice began going after many of the banks who had been engaged with many of the loan practices and they

were so vigorous in their pursuit of these individuals they did get a lot of money but they basically drove them away because in many cases the banks had been involved in minor nonmaterial defect in the process and were slammed with enormous fines and suspensions those things were problematic and they drove our base away almost 50% of the people who originated loans that were insured by fha were depositor ri banks. that's down to less than 15% because of the way people have fled so we really looked at all of that we said what can we do to fix this so we really revised the annual eligibility certifications, the

loan limit certifications and the defect taxonomy so that we even out things. raw material, errors are looked at very differently now and this doesn't mean by any stretch of the imagination that we're not going to vigorously pursue fraud and do things that people do intentionally, raw material, infect actu infectual things, we're not going to torment people about those. we'll make sure they learn things our servicing of the servicers is much improved in the new financial revision package there are a lot of people talking about affordable housing n now. this is something that will actually make a difference. >> just to summarize, these are mostly first time and low to moderate income home buyers. with only 15% -- less than 15%

of the lenders now being depositors, who picked up the slack and was it picked up and what's the problem with the entities that are doing it right now, mr. secretary >> yeah, well, the nondepositories have helped to fill in the gap and we love them they're wonderful people we enjoy working with them we want to expand the credit pool for low and moderate income people the major mechanism for building wealth in this country is homeownership and doing it in a responsible way, that's the key. and this is all looked at in terms of sustainability. not only do we want to put people in homes, but we want them to be able to stay in those homes so they can accumulate that wealth. we need all of the people in the market but we most definitely need depositor ri lenders to come back.

already many of them have contacted us about getting training for this. condo rule came out, too these will make a difference for low income people. >> the non-depositor ri institutions are not regulated as highly. are there more problems with these lenders? do you expect to get back to 45%, 50% that would be more highly regulated than the banks themselves do you expect to get back there or it's slowgoing? >> i suspect things will normalize once we've again established a normal environment for people to work in. we live in a society where, you know, market forces rule and market forces mean that people look at the things that are advantageous to them, things that are not advantageous to them and they act accordingly. i think we'll get back to a very

good place very quickly. again, i do want to emphasize, you know, we love the non-depositor ri lenders, too, but we want to normalize the market. >> good luck, mr. secretary. come back and update us on the progress here and other things you're working on. >> coming up when we return, some big names report including three of the faangs. facebook, apple and google we'll get you the numbers. stay tuned you're watching "squawk box" right here on cnbc

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♪ welcome back to "squawk box. this week marks the moment of truth for a few of the faang stocks we'll run us through some of the

expectations we have dan icen let's start with alphabet out after the bell today what are you expecting what are you looking for >> yeah. it's really all about advertising growth and then you look from a mobile impression perspective, that continues to ramp. look, youtube continues to be front and center i think that from our perspective is going to be better than expected this is something that's been a jekyll and hide story. look back at 1q and 2q, it's -- >> is this a guidance story? >> a guidance story, a bib there's questions happening broader regulatory issues. is that impacting the model? are you seeing it in terms of advertising. the key thing is youtube and overall mobile impressions that's something that continues to ramp. you look at tac, that's another thing that investors are focusing on. i do need to take a step back as a positive catalyst for the stock. >> what's your expectation on the stock right now?

we're at $1,274. >> i think the stock 1500 could be the next step i view this as something sort of where this is sort of a quarter where the street is not convinced that the advertising story is going to be -- >> is going to hold up. >> but the key variable is cloud. if you look at google cloud, that's the key variable. look what's happening with microsoft. that's going to be a key variable. >> what about costs? people are looking at costs, google spend. >> i think you'll see that maybe tick down a bit. i think that's something where along with the advertising as well as google cloud ramping -- >> does that make you feel good long term or short term on the cause side. >> the next 6, 12 months zuckerberg and facebook contending with this as well the increased amount of spending giving what you're seeing from a regulatory perspective, that definitely is a risk investors view that as more

background noise nc. >> there's a story out over the weekend. concerned about some of the unrest with the employees, how big of an issue is that? we've heard grumbles do you think it shows up >> i think it will spend time in the valley that's been a turbulent situation. you're not seeing it in terms of numbers, but the big thing is especially some of these core initiatives, you can do cloud and others, they have some pretty big growth initiatives. you can lose employees and you definitely need to see that where everyone is behind it. right now it's contained that's something the street is laser focused on. >> i want to touch on facebook and apple. facebook first given that they have been in the news for the past two weeks especially when it comes to what's happening in washington. >> ultimately if you look at core user growth in terms of

maus, that continues to be better than expected you look at what's happening in advertising, you look at numbers and fundamental, you've seen the stock. a lot different than the noise that's going on in the beltway and brussels no doubt they're continuing to invest significantly in terms of the bottom line. >> what do you think the stock is worth >> 220. >>first stop z >> in my opinion in terms of faang names, it's 10 to 15% higher and this is a catalyst in terms of what we're seeing with the investment profile. >> let's talk apple. >> apple i view it as, you know, ultimately i view it as a silver bullet growth in terms of iphone 11 we've talked in terms of china tracking 15, 20% above an iphone 11 and this is the drumroll into the streaming tv later this week being launched some of the parts, that's a

stock 2.65 in terms of what i view the next six to nine months this could have a 3 in front of it when you look at services business. >> one question on the services and tv piece because we are going to be hearing a lot about it this week since it's launching, the question on that is since people are buying these devices and the tv piece is going to be given away for free, how are you going to be able to do any measurement as an analyst or investor about what that's going to look like what's the turn on that? do you say if they have 50 million people that are locked into the tv service that 90% stay, 30% stay, 50% stay >> we think it will be 20% churn and that will ultimately continue to subscribe. >> 20% continue to pay >> i think 20% churn out. >> churn out

80% pay. >> if you have 100 million people, that's the expectation at the end of the year >> our view is 100 million subscribers in the next three to four years the first stop this year will be 20 million. >> 20 million paid. >> 20 million consumers. half those will be paid. you go into the year one, year two you're going to have somewhere between 40 and 50 million paid on a trajectory to 100 million paid in three to four years that's the key for apple here. content's the whole. we think they significantly step up original content as well as it's our view that they will buy a studio in the next six to nine months. >> you think they will >> we've talked about mgm, sony, a24. >> you think they need the content? >> they built the castle they need to fill it with content. that's the thing that in our opinion will be the key variable here for cook and kup perfect tino. >> thank you. >> still to come, we will take you live to california for an update on the deadly fires that

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an update now on the fires tearing across northern california forcing hundreds of thousands. jane wells joins us with more and, jane, how are you >> hi, becky i'm at the soto rock winery. very well known here in healdsburg one of the 94 structures destroyed. welcome to the fifth largest economy where apparently one way to deal with hurricane force winds during fire season is to flip the switch and turn off the power to over 2 million people we drove through active fire to get here this morning. 54,000 acres 5% containment

80,000 structures threatened unprecedented 80,000 people under evacuation orders. two firefighter injuries incredibly no known deaths much of the bay area, technology capital of the world remains in the dark pg&e shut off the power. power will stay off to a lot of people through the next wind event which starts tomorrow. a lot of people are throwing out the perishable food, letting the beer in the refrigerator get warm and hoping your house is still there. news that despite the preemptive blackouts there's a possibility this fire was started by a pg&e transmission line. down south so cal edison, it's warning over 300,000 customers about the potential of the power being shut off if the winds kick

up again down there. i should be looking at a map of the active fires in california right now. the governor has declared a state of emergency for the entire state he told bloomberg he'd like warren buffet to make a bid to buy pg&e out of bankruptcy the mayor of san jose is suggesting pg&e become the largest customer owned utility with 5 million customers pg&e reports earnings a week from today guys. >> jane, just in terms of pg&e and how people feel about the company right now there, what would you describe it? you hear gavin newsome making the calls. you hear the san jose mayor saying we should take it over and have it publicly owned i think pg&e's response was their transmission offices weren't for sale, none of their operations how do people generally feel about the company? >> reporter: i feel -- they're mixed. people -- the governor's furious blaming a lack of upgrades to the infrastructure

pg&e says it has been doing some upgrades at the same time if you talk to somebody like, hey, i'm going to lose power for 48, 72 hours, that is a pain, but at least maybe houses and lives will be saved. pg&e is claiming that despite the possibility this fire might have been caused by a pg&e transmission line, it has shown pictures of tree branches on deenergized lines. if we hadn't turned that off, it might have been worse. the bottom line is a lot of people in california are saying we are the wealthiest state in the nation we're the fifth largest economy in the world and we haven't figured out how to keep lights on during fire season. >> not a short-term solution this is decades and decades of under investing in the infrastructure. >> reporter: it is yeah and there was an op ed in the wall street journal saying the utilities have been forced by their political overlords to invest in other things ironically this is the solar power in the world

most solar power systems in the world are in the grid. if the grid goes down, they go down now people want to buy batteries from maybe tesla so their solar system can continue to work off the grid but those are very expensive. they're like 13, $14,000 for a home battery system. >> jane, thank you jane wells coming up, tiffany shares soaring on news of a potential luxury merger. we'll get analyst reaction next. plus, don't forget to subscribe to our new podcast you'll get interviews, ogirinal content and more stay tuned, you're watching "squawk box" on cnbc 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. keeping your people happy is what keeps your people. that's financial wellness. put your employees on a path

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♪ ♪ welcome back to "squawk box" on cnbc. we are live from the nasdaq market site in times square. let's get you caught up on some stories that investors will be talking about today. the average price of gasoline is down 4 cents in the past two weeks. that's according to the latest lundberg survey. that puts the average price at

$2.68 a gallon which is 24 cents lower than a year ago. some reports of interest will be hitting the bell we'll hear from alphabet and beyond meat and t-mobile u.s walmart and procter & gamble are butting corporate heads over dish washing soap. "the wall street journal" says that walmart has put up signs warning customers of a national supply shortage. many signs were posted on shelves fully stocked. procter & gamble told retailers of a possible crunch that could result in a shortage of supplies for a period of time the paper says that p&g was not pleased at walmart's actions saying it could result in a run ondish washing soap. tiffany has concerned the receipt of that takeover bid from lvmh. they have offered $120 a share in cash for the upscale jeweler. that would value tiffany at

$14.5 billion. joining is right now on "squawk" news lines oppenheimer analyst brian nagle. the board while they're going through the motions of examining it, examining i put in air quotes, that they will reject this bidias being too low. the question now, you can already see it in terms of the stock price, where things go, how much do you think lvmh can afford to pay and how much will they pay we'll look at tiffany at $130. $10 over that price. the high, by the way, was about a year -- a little over a year ago at $136 a share. >> well, good morning. this is very interesting and it's been very fluid over the past say 24 or 48 hours now. to answer your question, andrew, i don't think tiffany sells at 120. i do think tiffany is interested in selling to lvmh the price -- i put out a comment to our client this morning, i

think it's around 140. >> yeah. >> there's a couple ways i get there. one, it's relatively simplistic. it's what you said july 2018 tiffany traded just below 140. i'm hard-pressed to see the company sell for a price with a stock -- sell for a price that's lower than where the stock traded on its own. that's one way to get there. the other way i look at it is lvmh bought bulgary which is similar to tiffany back in 2011. they paid a multiple 4 to 4.2 times sales. if you apply that same type of multiple to tiffany you get a price around 140 i think that's where -- i think that's a likely takeout price for tiffany. >> so $140 a share in terms of what lvmh can afford to pay, dilution and everything else, obviously lvmh is ten times the size of tiffany. >> that's -- for me, that's harder for me to say because i

don't follow lvmh closely. you're 100% right about the sheer size of the company and show the mentality of this company. personality of this company. they have clearly made a lot -- a number of acquisitions of high quality brands in the past they have a willingness to buy, but it's hard for me to say exactly where lvmh could pay up to i think they could very much pay the 140. >> pay the 140 in terms of time line, i don't know if you've focused on the board of tiffany if tiffany were to say, no, we're not interested, could you imagine lvmh go hostile and look at their fiscal year when the proxy season begins? >> from my vantage point, that's -- i don't know the answer because i don't know lvmh well going back to what i said a second ago, i think you have what i would consider a-- with tiffany a motivated seller here. and it's very -- it's an interesting dynamic. relatively new management team running tiffany. they've done a lot of good things they've repositioned the company

successfully but we haven't seen that yet in the results. fundamentally i tend to think the second half of 2019 will be challenging for tiffany. i lookat the other side. i think tiffany is a potentially motivated seller here to get paid for the work that they've done that's unlikely to show up. >> appreciate it. >> thank you >> nice talking to you >> shaping up tore a critical one. major streaming companies like at&t reported earlier today on friday we have the debut of apple tv plus. november 12th disney plus. we have big stearns and rich greenfield tom rogers, first president of nbc cable. you look okay. are you all right?

is it the end of cord cutting? i don't know, the beginning is going to accelerate, rich? >> based on at&t this morning, we're just getting started at&t, i think they lost 1.3 million subscribers per quarter. >> this is something that could accelerate except all of the companies involved are the cable companies, some of them. >> look, i think this is a fundamental shift in consumer behavior the idea of subscribing to a large bundle of channels when you can pick and choose your streaming service, some customers may like netflix, some may like hbo max you're going to build your own bundle like you build the apps on your phone. you're going to choose what you subscribe to the good news is no waiting for an installer to come to your house anymore. you're going to click on and off what you like. even companies like comcast are enabling it. rolling out a flex box where you bring your own -- you get a device when you sign up for broadband and it lets you stream all of the services that we're talking about that you're highlighting they're launching. >> are you going to have

everything, tom? >> i'm going to take it all in of course. but hbo has a lot to proof tomorrow on this streaming announcement day i should say at&t. it's very unclear what the strategy is here verizon is now boxing them significantly by announcing that it's going to offer disney plus free to all verizon unlimited data customers and the big promise when at&t announced this acquisition was somehow the combination of wireless with programming was going to create this unique combination that was going to propel both now both seem ton either stagnating or in decline and they have a lot to prove, i think, that they couldn't have accomplished this by just renting somebody else's content the way verizon is versus $110 billion acquisition where most of what they acquired is in

secular decline. and it's going to be much more important than the individual shows they may announce tomorrow what is the strategy of all of this coming together >> how about at&t? i'm sorry, how about apple do they have enough? they had to undercut everybody else >> apple has more cash than everyone else put together. >> they don't have enough shows. they don't have enough content. >> do you think they end up buying a studio? >> no, absolutely not. >> we had an analyst on and they thought they were going to buy lions gate. >> they're just wrong. when you look at all of the tech companies they're realizing all you need is to spend money look at netflix, they didn't buy a studio everyone said they were going to buy a studio for years upon years. they had to buy a studio to compete. the reality is when you put cash on the board, talent is more than happy to work for you especially when you provide a large platform apple is provide being access to a billion devices. >> you need a library. whether -- look, there was a

time where if you were netflix you had a library. by default you had a library you were picking up lots of different shows. even when you didn't have original programming originally. >> you're not paying for this service until the library starts to build you're starting with over 200 million people buying apple device they don't have to wait for it you're going to wake up and have the service free that's compensating for the fact there isn't a library. it's relatively inexpensive if you don't get it for free. that's also compensating if you think about where the puck is going, the puck of the future is creating new original programming, it's not the catalog. that's part of the problem for disney why they're pricing low, they're relying on catalog they don't have a lot of originals. apple obviously has no catalog, they're betting on all originals. the ultimate goal of these services, netflix, the goal is to make it as much about original programming and build their own library as possible. if you look at viewer ship, viewer ship has shifted

dramatically over the last several years. that trend is continuing i wouldn't bet against apple simply because they don't have catalog. new shows are good, people will watch. >> he hits a key point and you have to look at what at&t just committed to elliott management to really put this in perspective. it is all about spending on original programming i don't quite understand this number but it looked like warner had an 8.5% decline in program spend. if you're going to cost manage that company, it is going to be a very different beast when it comes to opening up the pocketbook for original programming relative to apple, relative to amazon, relative to netflix and it's very hard to see against that kind of environment where hbo, which has been around for 40 years and got the 38 million subscribers over that period of time, netflix in less than 10 years got to 60 million subscribers. if you didn't subscribe to hbo because of game of thrones or

veep or succecessiosuccession, e something about adding "friends" and charging $2 more that's going to drive hbo max into offsetting all the secular decline of the cable networks? >> you need a lot of content to stop churn the single biggest killer is churn. you canliterally cancel it in second what happened with hbo, when "game of thrones" ended, they canceled all of us like "succession." that's a small show for hbo. they need more things to keep you from churning. so i think the idea is with netflix, right, you talk to somebody about netflix, there's so much to watch there's this, there's that -- >> you think for at&t or for hbo just a matter of trying to avoid decline rather than gain john stanke thinks he needs more subscribers. >> you get more subscribers by

reducing churn if people churn out -- >> very interesting at least i did not see in their earnings announcement that they indicated how many hbo subs churned after "game of thrones" went away. that's obviously a key number that they're going to have to speak to tomorrow. >> i think that's the single biggest challenge facing streaming services is how do you prevent churn? disney's doing it with a three-year offer they're offering an annual plan at a discount. everyone is trying to figure out how do you reduce churn? the hbo example, the strategy they're going to employ on one side is using the at&t wireless network and trying to bundle it with at&t like verizon is doing it with disney plus or t-mobile with netflix the other piece is going to be broadening the content so there's something for the kids, something for the non -- >> you don't want every single thing you watch throughout the day to be "game of thrones." you look at discovery. there's news obviously there's lots of other forms.

i think the goal is going to be diversify hbo max. >> by doing what by buying something else >> by spreading the content. they're going to take content that isn't all hbo dramas and come dis, it's going to be -- >> i all the thought that was the plan i thought they were using hbo as the signature name. >> think about netflix there's marie condo and tidying up documentaries, standup comedy. movies like irish men. there's a real diverse set of programming. hbo, you wouldn't say that about hbo. that's much more of a quality over quantity. i think that's going to shift under hbo max. i assume that's the approach we'll hear tomorrow. i think the big question is how do you balance new versus old? who's deciding inside of at&t what goes where? disney has this same issue, right? what goes on -- what goes into the theaters what goes onto the cable networks what goes onto the streaming networks balancing these businesses, that is hard. i think that's what all of these companies -- you all are going to have the same issue when

peacock launches for nbc these balances of new versus old are really intellectually challenging. >> if all hbo announces tomorrow is some discounted bundling strategy with at&t, which they will announce, it really does beg the question that they need to own $110 billion company in order to accomplish that and i think they got to come up with some more significant strategy for driving their service, driving wireless. the one thing that at&t now has versus verizon which nobody thought a year ago was a better 5g story and if they can come up with some way that 5g combined with programming combined with wireless gives them some kind of new edge that maybe they thought of and nobody else has, that would be significant but other than 5g, you see a whole lot of challenge at at&t with no clear path to any of those revenue growths getting better >> the good news is the consumer wins, right? the consumer has more content at cheaper prices than ever before.

everyone watching this is benefitting from massive investments in programming really cheap prices. in many cases, free. you already are a verizon subscriber and you're getting disney plus for a year this is awesome to be a consumer apple is free. it has never been better to consume content than now it makes it hard on the legacy bundle >> thank you fun couple of weeks. i'm excited. >> yeah. >> i need a program guide that includes everything. you know >> pick and choose. >> with stars. >> tv guide? >> yeah, a tv guide. you've seen everything happen in your life. >> just like the networks. when everything was going cable, it worked out well for them. >> nbc launched the cable. could we launch another cable network? and we did >> worked for the network. >> the stone age, tom. that's unbelievable. >> the good thing was ge didn't catch nbc in the midst of this secular decline. that's a big difference for at&t >> thank you up next, it's the busiest

week of earnings season and we also have a fed meeting and a jobs report coming this week so is your portfolio ready ta saty ghafr t te this this is the age of expression. but shouldn't somebody be listening? so. let's talk. we're built for hearing what's important to you, one to one. edward jones. it's time for investing to feel individual.

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patterns. you can see what others can't. ♪ welcome back to "squawk box. take a look at futures s&p futures are at the level indicating a new record high at the open the dow is up 105 points s&p 500 would open up 8.5 points and nasdaq up 32 points higher let's get a check on some of

today's biggest movers dom chu joins us dom? >> reporter: andrew, we're going to start our monday movers off with walgreens, dow component up close to a percent premarket 40,000 shares premarket. profits fell a year ago. better than analyst estimates. walgreens saw increased spending and saw a dropoff in sales due in large part to a decision to diem if a sifa sieif a size -- z tobacco sales. spotify is up almost 8% premarket 100,000 shares they posted a surprise profit. it was helped along by a key user metric and a number of premium members that pay a subscription fee spotify announced the retirement of cfo barry mccarthy who will step down in january. we're going to end on shares of restaurant brands international. the fast food company has been

moving between gains and losses pre-market 6,000 shares of volume profits matched estimates on worse than expected sales due in part to a drop in sales at existing tim horton's locations. that offset burger king and the impossible whopper and popeyes given the popularity of its chicken sandwich which makes its return, guys, next month after selling out for two weeks. >> spicy spicy chicken. >> i like the spicy chicken personally. >> have you had it >> you haven't had one. >> i haven't had the popeyes one. >> no, but just about every other variety. i do like the kfc with the national hot that's my go to. >> if i need advice on this, i'll come to you. >> you don't get a figure like mine without turning down chicken sandwiches. >> the president is at andrews air force base he's getting ready to depart from chicago let's listen in. >> they're looking to hurt out the republican party and it's

turning out to be just the other. one thing i said, i'd rather go into the details of the case rather than process. process is wonderful we have 15 republican senators i haven't called one of them, sign up, 50. out of 53, 50. perhaps the other ones will do it, too. but process is good.hat, which was the same thing it was nothing they tried to take that conversation and make it into a big scandal. the problem was, we had it transcribed. it was the exact transcription of the conversation. so in a nut shell, a whistle-blower wrote a false narrative of the conversation. now they don't want to talk about the whistle-blower because they didn't think i was going to release the conversation when i released the

conversation, i blew up schiff's act. just to put a topping on it, the russian, as you know, the new russian president, a good man, made a statement, there was no anything there was no pressure put on him, no anything the foreign minister of ukraine made a statement, there was absolutely no pressure put on -- they didn't even know what we were talking about and just to finish it off, adam schiff went up before congress, and he made up my words. he didn't copy what i said he didn't know probably at the time nobody thought i was going to release the conversation i got the approval from ukraine. once i release the conversation, this thing all died. and that's what they should be looking at and adam schiff went before congress and adam schiff, what he did will never be forgotten he made up a conversation that was a phony fabrication, a fraud. and people shouldn't be allowed

to get away -- they say he has immunity because he's a member of congress. people shouldn't be allowed to do that, that's a criminal act, what he did is a criminal act. >> mr. president -- >> i hope they approve u.s. mca. it is in there, it is a great agreement for the united states, for our farmers, for our manufacturers, the unions, for everything it has been approved by mexico and canada now waiting. we don't seem to be able to have time for nancy pelosi. i call them the do nothing democrats. they're the do nothing democrats. and frankly, they put it up, it is going to win very easily it going to have bipartisan support. i have no idea what they're doing with it. i can't imagine it takes this long but they're so busy focusing on a witch-hunt and a scam. thank you. >> can you clarify something that the -- >> president trump at andrews air force base leaving for chicago. he was making comments to reporters, talked about the phone call with the ukrainian

president and the whistle-blower and then brought up usmca, the new nafta bill, saying he hopes the democrats will pass it back to the markets right now. for that we bring in chris zacharelli, jeff sout at capital wealth planning and our senior markets commentator mike santoli. a lot of big things happening this week. the biggest week of earnings to date and the fed and the jobs report which matters most >> i think the earnings continue to matter as an ongoing issue, just better than expected, reassurance that the freakout in august about recession was probably overdone. the fed is interesting, because the past five fed meetings you had an occasion for a pullback in the market, a couple of them pretty stiff seems like the market isn't demanding much from the fed here, maybe we're okay can a but this week and then going on hold >> there is no cut >> no cut would probably cause a little bit of a flutter. but on the other hand, i don't think it is happening in the

context of a vulnerable attitude about the economy. just because the yield curve is uninverted and you had this situation where it is not as if -- it is not as if people will think that that somehow is tough love at this point. >> what is top of mind for you right now? you often don't care about the macro things happening but what are you thinking right now? >> i think michael hit it on the nose, it is all about earnings they were talking about earnings being down somewhere between 4% and 5%, now 2% of the 500 or so companies that have reported, 73% of them, becky, have bettered the expectation estimates. so i continue to think like michael does, it is all about earnings, and that we're still in a secular bull market that has years left to run. >> chris, there have been so many concerns, so many worries about what is happening out there, but this morning you're looking at the futures and we're going to open in record territory for the s&p 500. what do you tell people who come to you and wonder what they

should do at this point? >> well, we see a lot of people who are probably overly pessimistic. look at the bamel fund survey of managers we have a lot of retail investors we speak to that are cautious, they say markets are at all time highs, worried about putting their money to work and wee try to reassure them there are things to worry about, you got to worry about trade, worry about the fed what is happening with earnings. but along all three of those lines, it seems like things are moving in the right direction. trade for now, seeing a little bit less negative news, seeing the fed poised to cut this week and then probably go on hold, finishing their midcycle correction that's a big change from a year ago. lastly earnings as other two people mentioned, not as bad as expected so really things are moving in a positive direction we believe that most people are a little too overly pessimistic and we're very optimistic heading into year end. >> you say people should be paying attention to stocks that would benefit from the weaker dollar what sectors, what stocks are you specifically referring to? >> i still like technology

energy started to come to life the last few weeks the financials that we have been on for a long time have not done much until the past few weeks. so those are the three top sectors that we like right here. and we continue to think as we have since october of 2008 that we're in the greatest secular bull market of our lifetimes, and people don't believe it. chris said it exactly right. i'm out speaking to the public, and they're not just cautious, they are scared to death >> no cramer all right. we're going to -- i was going to ask him, i'll ask you, mike, either one of you, s&p new highs, what are the guys that have been consistently bearish, i'm thinking mike wolf, he said still defensive, new highs, morgan stanley do you say, okay, maybe we don't see 2750 maybe we don't see -- >> i think you revise up the floor a little bit, but, you

know, the market hit new highs months before recession. not as if it is compatible. >> the high end of the range or new bottom of a range? >> what we're hitting now? >> i don't think it is the ceiling, if that's your -- >> you don't maybe it is, you know, middle of -- something like that. all right. up next, stocks setting up for a record open, full market rundown next tonight on "mad money," don't miss cramer's interview with scott flanders of ehealth. fla flanders. stay tuned we'll be right back. and what they've already purchased. like this lamp. and we use those insights to show you what they might consider buying next. mid-century modern, nice. that way, you can keep sending them offers for the perfect products. and that keeps them coming back. how's that for changing what's possible?

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welcome back to "squawk box. get ready for a wild ride at the open we should tell you right now, you're looking at futures pointing at a record high, 144 points higher. join us tomorrow "squawk on the street" begins right now. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. get set for all time s&p highs at the open as the president and china both say there is progress toward a phase one signing we have a likely three month extension on brexit, weekend of m&a news and busiest week of earnings europe mostly green. ten year yield, gdp and jobs numbers this week. road map begins with all tie high