tv Squawk on the Street CNBC November 1, 2019 9:00am-11:00am EDT
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not be another 20% year. that's what this year was about. what last year's mass evaluation decline was about. it is good news that we can pull this together and we have to avoid any shocks >> steven, thank you very much for being here jobs numbers, much stronger than anticipated. 128,000. we have seen the dow pick up sharply and we hand it over to "squawk on the street" right now so they can keep you up to date. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim crame, david faber at the new york stock exchange. strong jobs number not only for october, 128, but revisions up as well. dow futures bounce more than 100. we'll wait to see if ism in an hour can rebound europe green in the meantime ten year yield just north of 1.7. road map begins with that big beat for jobs. stock futures jump as october gains far surpass expectations and investors now eye another
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key read on manufacturing in the next hour. >> plus, streaming wars, apple launching its tv plus platform today. it is the latest volley in the original content battle between media and tech giants. >> and pinterest plummeting, losing a third of its value since peaking in august. and the growth strategy for starbucks, kevin johnson will join us first on cnbc this hour. let's get to the jobs number, october payrolls well above expectations at 128k despite the gm strike. unemployment goes down -- goes up to 3.6. wage growth 3% from a year ago jim, hard to find things to quibble about this month >> i'm going to come back and say you're going to have a -- the beginning of cracks in manufacturing. there is still two economies the two-thirds of the economy that is consumer is doing very well the other third is not doing well and we can -- i don't know how long we can go with only two-thirds i think pretty long.
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but when you -- if -- if they shut down boeing 737 max, you'll see very different numbers i just think these numbers don't have that yet. there are some places that are cutting back production. the consumer is strong i don't know why anyone would say the fed is done. the fed will be -- the fed will cut again if the manufacturing numbers get much worse >> even with job numbers that are quite strong >> yes >> yes. >> unemployment rate of 3.6. >> yes >> you're in the camp that manufacturing is the economy output of finished goods is -- >> look at the lines the line by line manufacturing is not all gm. look, i -- i am perfectly willing to admit that the u.s. economy is consumer economy is doing well i'm trying to find an industrial company, other than honeywell, and maybe united technologies, to say good things so far this quarter. >> that's a good assignment.
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i'm thinking back myself. >> i can't find it >> we're not including things like microsoft, hardware-related tech >> not those, no a company that exports. >> he had a decent quarter. >> yeah. that's called -- that's not as bad as feared. >> absolutely. >> okay. i had not heard that one but -- >> ge was nabath, not as bad as feared they're still making windmills they're tilting windmills. >> yes, they may be. don quixote-esque. >> interesting comments here from james park about how 12 years ago we set an audacious company vision to make the world healthier. >> right. >> and google is an ideal partner to advance our mission.
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>> that's good >> the people have known this was potentially going to happen, the price is still above where the -- it is a decent premium to the current price, you're going to watch that stock given the 735 in cash move up a good deal. it is about ip, right? that's what this is about. intellectual property portfolio. $2 billion -- and that's up significantly from where the stock was prior to the first reports that google is interested. >> why couldn't they close this ahead of them? i think the area of google that people are -- alphabet people are concerned about is when are we going to see something healthcare when and the answer is i think is this it. this is a competitor directly this company, i would say, was made, some would say obsolete by the apple watch. it is kind of interesting alphabet teams up with what some people think is a -- not a primary -- maybe second rate,
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second tier company, fitbit. i used to have james park on all the time i decided, if you miss your quarter every single time, it begins to be, let's say, there is no draft choice when you tank. >> we remember when this was a hot stock. >> hot 27 >> yeah. >> i'm not kidding i don't mean to be too negative. but they did not care about what the street thought of them they said we're in the health care company of the future there are lots of companies. you get a discount, fitbit and insurance. this is good this is going to be varly -- >> never came anywhere near the early highs. >> giant short squeeze the whole time this is good james park has been making some money for people congratulations. but i now need -- we now need to see varly, their healthcare, moon, the other bets, the moon shots. >> we should point out $2 billion for a company like -- three days worth of cash flow.
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>> like beatz for apple. >> it is not a large amount of cash. >> for the people who follow -- who watch our shows, fitbit has been a stock i get called on every week. >> is that true? >> it is five -- they love $5, $6 stocks. alphabet were to split 1,000 times, they would love alphabet. >> still halted. when it isn't, it will show itself. >> think there are other bidders? >> i have no idea. i have not focused on this for one moment >> that's -- wow, okay so -- there you go. >> there is other things that have been taking up my time. >> i would have said, jim, i'm going to do some work and come back >> no. it has to have another zero. >> like a casual friday mind going. my mind is on casual mode. >> nobody is going to go up against google really >> why couldn't you have said that the first time? >> there you're welcome. >> it gives a chance with apple in the watch space and apple is a big story today because they're upping the ante in the streaming wars
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tv plus now available, launching in over 100 countries and territories. $4.99 a month featuring a lineup of original shows, movies and documentaries. netflix the irishman, with its $160 million budget. >> man on my block i did everything i could to try to sneak in. >> i kept walking behind it. >> did i make you young? >> i went to -- remember they used under first giants stadium, the one when the giants were a good team. >> the meadowlands, yes. >> before they became the bad team it was hoffa karma man on my street, going like this every time, get out of here, please stop it >> good discussion on "squawk" with matt blank of showtime that apple, unlike rivals, is not trying to resuscitate a legacy
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content library. that gives them a chance to try some new things, piece out this morning saying maybe they're going to put their toe in the water, a sense of what to buy down the road. >> i asked tim directly about it tim cook, the ceo. >> correct >> and it was i of course blundered right into it, would you like to -- how would you like to buy, maybe a studio you want to buy. no we're not a catalog company, jim. we're not buying a catalog we're going to develop our own programming. >> going to take a while, as it has for netflix, as it has for amazon, they have done it. and certainly possible for apple to do the same and to the point matt blank was making, they're not defending a legacy business that is changing dramatically so it is not like disney where they obviously mr. iger felt we have to go hard into direct to consumer or like warner media. which is now unveiled hbo max a couple of days ago and is
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obviously defending against the increase of cord cutting we talk so often about >> millennials eat spam, they can't afford that, they eat velveeta. >> john stankey, ceo of warner media, spoke about this on wednesday morning from the back lot at warner bros the price certainly is a key contention, but stankey also did talk about in some ways you can connect it to apple. the connection between the content and other offerings from these companies. take a listen. >> as we go forward on this, people aren't going to just buy content for content sake they're going to buy content because it is associated with other products and services. whether it is amazon who chooses to offer marketplace incentives to have video, or it is at&t that chooses to put great value with paid tv or connectivity or broadband associated with it. >> you can say the same about
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what happen apple is thinking. they're not defending a legacy business at the same time, as i pointed out, there is not a lot of there there yet. >> it is not defending legacy business as the apple thing. if you look at the credit card, it is all about not defending a legacy business. they love green field. and they have a longer term view i like what they're doing because they're trying to reinvent they're not just trying to buy the paramount -- they're not trying to buy the paramount studio jack ryan, not doing that by the way, david, one of the great things about stocks, i learned, and this really plays but viacom, they stop at zero. >> you are just brutal >> that's why he needs to get in there. it is now venezuela. not viacom. >> 16 million bucks for "south park". >> for five years. >> not accrues to viacom it is a chimney, you put money in -- have you seen this stock
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>> new lows, multiyear lows. >> when this deal combines, when this combines -- >> can't happen quickly enough for them outperform, low synergy numbers which seem to disturb people, not to mention the low cash flow prognostications that were in the -- >> it is not doing that badly. >> no. >> why doesn't it go higher? will you to that thing you did with discovery you got it from 18 -- go see malone go see malone and get that stock from 21 to 30. would you do that for me you did it for discovery do it again. do it again. >> i'll put my word out. i'm happy to talk to -- >> early december, they combine the stock. >> there are a lot of questions and concerns about that business as you know. >> steel mill? >> no, i know. whether they can keep the nfl, how much it is going to cost them. >> i asked tim cook about
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sports they could own the s.e.c., they could own -- you can -- >> they're not going to do it. >> they're not >> it is interesting because hbo max, they said in their presentation, and stankey made clear in our interview as well, will have -- will go years out, there will be live so that's news and sports. >> that's good meanwhile, frank halota did a nice piece he added the cost of subscribing to apple, disney plus, hulu, netflix, all of those, less than a traditional cable bill. >> yes, i have the fios skinny bundle i get a lot of stuff on that. >> do you? >> yeah, i do. i got a lot of them too. hulu -- i don't know i guess my kids like the catalog on hulu, right >> "snl" for now. >> my wife watches hulu. i'll tell you other things she
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watches. >> say again >> we all watch all this stuff who wants to -- >> the question about price is a key one. 71 bucks -- broadband connection as well, that's 60 bucks there, whatever the number may be because you're no longer taking video with it. it does add up. >> it is their largest -- other than the rent, it is the millennials' largest thing >> because they spend so many hours working on it, watching. needham's laura martin says if netflix doesn't cut prices next year, they lose 10 million subs. >> wow real belief they're going to have to go to some kind of ad supported -- >> i can't believe it though. >> they claim they're in the goigo going -- not going to. peacock, of course, owned by nbc, which will roll out -- >> your apple bill just keeps going higher and higher and higher and, remember, they send that to
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you at 3:20 a.m. think about the apple care, apple backup, apple credit card, i'm like apple, apple, apple that adds up that's why there has been some talk about apple offering their bundle when you buy. which would be really good i pay apple a ton. i pay comcast, fios, the charter thing, altese, i pay them. >> in the metropolitan area. >> i pay picasso, i pay altese mine was $1500 last month. >> $1500 how many wireless. >> i got a family plan like the -- like the waltons. >> wow >> i know. >> fitbit is open for trade. again, the 2.1 billion, 735 -- >> they're not giving us any
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time in 2020 reflects badly why >> this is all they can come up with >> you don't think they're done. >> i think that -- my hope is that when you go over the ark of that call, of the alphabet call, you get to the other bet section and it seems like they just lose a billion every -- it is -- this may be the way -- a lot of people in the healthcare business over there are not that happy. there is two different healthcare units they haven't melded them maybe park stays with it how about that >> that's a good question. is it -- i don't know, yeah. >> how about that? >> wouldn't that be something? maybe he runs it he's a very efficient guy. humorless, maybe the most humorless person i ever interviewed. what's the matter? that's all right. >> i don't like humorless people no offense to them hope they -- >> want elon musk? hilarious.
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>> have to be a little funny. >> parks, never -- a serious guy. james park 28 million active users. this is when you -- remember what tim cook says, my legacy will be healthcare the numbers for -- when you walk to watch companies, their business is down 50% because of apple. so this is alphabet's first -- going up against tim cook. >> he does say he couldn't be more excited for what lies ahead. his quote, we don't know the answer. >> he's never excited about anything >> by the way, went public at 20 so you're looking at a discount of more than 16%. >> suboptimal situation. >> when we come back, we'll talk about starbucks today, outperforming the s&p so far this year. up more than 30% ceo kevin johnson will tell us how the company's digital strategy is sparking sales growth in the u.s. and china after earnings earlier in the week another look at the premarket. jobs number, 128k, well above the estimates of 90k and
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>> it is going to be so fascinating, carl. obviously thatjobs number even gm just started was really solid. couple of things we didn't even hit on there was a subtle but very important positive revision year over year earnings last month we thought there were 2.9, they moved to 3%. even that one-tenth, that's a positive, 95,000 jobs over the last couple of months revised to the upside how did it all turn out? let's look at some one week charts look at two-year note yield. on the right side, of course, look at that volatility. we're not regaining all the yield increase from the positive number but most of it and carl is right, the ism is the second punch here we'll have to see if it is a good one or bad one. one week of tens, up one on the day, down 10 on the week 2s down seven on the week. there is some of your flattening what is interesting, look at 10s to 2s for one week basically we're trading a quarter of the range like float.
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20, 15, we're bouncing back and forth. virtually, what, two or three on the fed met at its last meeting prior to this. the point is, yesterday and the day before we were flattening with yields moving down, which means prices moving up we'll call that a bull flattener. today, it is exact opposite, and we're flattening on the bear camp as rates move higher and face value is moving lower but at the end result, the fed most likely didn't expect this number and if ism doesn't go poorly, i would see a steepening as long maturity yield should move higher more aggressively. one week of bunds. the interesting thing about bunds is that we spent some time right around the minus high 30s. what a huge difference from their all time low yield close at minus 71. some giveback there, but today is the first official day, of course, of christine lagarde and things are going to be changing.
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finally, one week of the dollar index, october was unkind to the dollar index it is trying to take a stand here, though the positive numbers are small. carl, jim, david, back to you. >> all right, rick, we'll see you in 40 minutes for ism. we will get cramer's mad dash, count down to the opening bell lots to talk about with starbucks' kevin johnson, first on cnbc interview in a few moments. futures look good on this friday don't go anywhere. is the monolithic view of emerging markets obsolete? at pgim, we see alpha in the trends driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to mobile banking and e-commerce... trade and travel surge between emerging markets. every day, our 1,100 investment professionals around the world search out opportunities for alpha.
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we got two minutes or so before we get to opening bell. last trading session of the week, by the way if you like to keep track of the days of the week and this is the last mad dash. what do we got >> i said the other day that grubhub has been the biggest disaster in the quarter. well, ariftia networks is going to rival that, anet. they're talking directly about a major cause in spending by a cloud titan, jpmorgan says it is facebook the confusion is this is the only company that has seen a major pause in cloud spending. we didn't see it in -- if you go over and say amd will go up because lisa sue is doing so well they didn't see it. >> what does arista do >> make white boxes inside data centers. >> thank you >> what happens here is this
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call was overvalued in call it was a call where people say i don't see it. >> we're not seeing a slowdown in spending in other cloud providers. >> look, she is the biggest. and she is very good i'm not trying to minimize they're a bad company. their a great company. they have been one of the great, great performers but without a doubt, this conference call made people feel that something is very wrong. >> could they -- >> is it because of it being an early sign, would they in some way see the demand slowing prior to other providers >> i think she would say that, that, look out for 2020 spending i don't want to put words in her mouth. she's done such a fabulous job but this was a very jarring call kind of broke down in the middle too and people are, like, saying what the heck? this was a what the heck call.
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>> let's get the opening bell here s&p 500 and the cnbc real time exchange, big board, march of dimes, highlighting prematurity infant awareness month at the nasdaq, a technology company in china you mentioned some of the blowups of the week, wayfair, grubhubs, pinterest we didn't get to in the first half hour. >> pinterest -- they're very -- i do not take this wrong they are very sweet company. what i mean is that they're doing -- they care a lot about the pinners. they have done a couple of r reorganizations to maybe the site better. it made it hard to figure out how well it is doing they never played the game todd morganfeld and ben silverman said we're not going to do upod, we're not going to
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underpromise and overdeliver, that's not our style it is not. and the analysts i think keep thinking, it is all -- don't worry, they have something under -- they have a whole card that is good no, they did what they said they were going to do, continue to work it make the site better the conclusion is they're out, that they're done. other than international, everybody who is a pinner is a pinner. >> so what -- monthly average users below average revenue per user >> not great. >> was below estimates >> not below that's what's important. people have to understand, there are two kinds of below there is below estimates and then below what they say they're very -- i shouldn't have said sweet they're very earnest. >> you're not explaining why this company is losing a quarter of its market value. >> because people expected that you bought it for the growth, not for ebitda positive adjusted you bought it for growth people kind of felt, you know
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what, they can just put the pedal down we don't really care about how much money they make we want incredible growth and it turned out they were -- look, a prudent company. did the number that they said they did but people wanted more than that this is what happens when you make expectations that are realistic and do that as opposed to blowing it away. >> another of the ipo class of 2019 that is so far now below its opening price. >> and some of the price target cuts on wayfair today, from 100 to 65. >> wayfair was one of those companies -- there is an example, they said, listen, we're going to grow really fast. but amazon doesn't like them >> that's exactly right. >> amazon doesn't like them. >> jim chanos, who famously called for a short on grub, tells the ft today that october is one of his best months ever after p&g and grub. >> good for him. he does a lot of work.
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grub was a company that kept telling you, we're an ecosystem. this ecosystem is a term, there are not -- there are not many companies in a real ecosystem. there are a lot of pretender, poser ecosystems grubhub turned out to be a post -- david, i'm over here talking. grub turned out to be a poser ecosystem. >> yes >> yes >> it was a poser ecosystem and it has promiscuous customers >> that was a -- that was -- >> i'm never getting past that one. >> that call was -- >> who made the decision who is writing these press releases >> the comes department -- >> that was a call from hell, the release was from hell, that was bad. >> but as you can see here, breadth looks really good. we're above 3050, jim. a lot of people talked about that number as being a key reflection of where we are on trade. and earnings
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>> look, we had a couple of quarters -- we had, you know, look, i don't think -- apple is gigantic facebook is a gigantic company facebook conference call was so good and it basically said, listen, you know, we are doing much better than you think. zuckerberg was consumed by the first amendment and political ads. i know this is going to sound like i'm a heartless person, i'm a dollar sign represented by a man, but facebook has to start talking about how good its business is. and talk less about whether they should take ads that say that president trump is really, you know, i don't know i don't want to go there there is just a disconnect between what the company is saying and what the company is doing. the company is doing much better than what it is saying it is mired in the dialogue of, well, should we run these kinds of ads >> want to hit alibaba, we haven't talked about -- >> i'm sorry
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i was paying attention to you as opposed to -- >> when you were talking about grubhub, i was trying to access my alibaba information >> alibaba was down two. then up three. then down four. >> call went well this morning and i talked to a couple of people, texted with a couple of people on it, their impression is strong. strong numbers. >> okay. >> you got 37% revenue growth in the core marketplace core commerce revenue up 40% year over year still growing very quickly adjusted ebitda 39%. total revenue, again, up 40% 693 million annual active customers. and so it is responding positively and apparently on the call they did a good job in terms of some -- dealing with some of the key questions. that's what we can tell you right now.
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it continues to move at a very rapid pace, obviously. we followed it, growth of the chinese consumer, are they starting to weaken has been a key question this has been a proxy for the trade fight to a certain extent. no signs of weakening among their customer base at this point. >> estee lauder yesterday. china was a standout, not hong kong, because of the protests. china was very, very strong. a lot of the headlines were wrong about estee lauder, decent quarter, they did raise by about -- these companies -- a lot of the companies are selling a lot on t-mobile. and t-mo. >> the branded platform. >> very important. the consumer in china is strong. the industrial is not. the consumer in the united states is strong the industrial is not. because the industrial sections are at war with each other. >> china is more of an industrial, manufacturing led economy, right
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one would expect the consumer would start to weaken. >> if they had a labor department, you would see the numbers are worse than us. >> the pmi did come in 51.7, best since february of '17. >> i don't trust that. >> no one trusts that number. >> no. >> true. >> no one does. >> i had colombia sports wear on last night they have a big china business and they have been saying, look, they had to -- china is bad for them china is down for them there is expensive luxury good very hard read >> want to bring in kevin in. >> oh, my -- you know what, we should go to kevin johnson. >> let's do it. >> okay. cold brew, just incredible for the afternoon day, and china, two big growth drivers for starbucks, and joining us now, just back from japan, starbucks' ceo kevin johnson. great to see you >> good morning, guys. how are you? >> we are good
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and i think that you are doing well i was surprised you happened to report on a day where the market was bad. i thought your stock should have been up 3. let's talk about -- we were talking about alibaba, which we know you have a great relationship, kevin. china looks like they're far more developed digitally than america and you have been a star, you are a technology genius from the old days talk about how great china was, because a year ago, china -- people were dallying. >> we had a solid quarter. it kacapped off a transformativ year for starbucks china was a big part of that you think about the digital savvy of the chinese consumer, you know, they adopt and they embrace technology at a very rapid rate our china digital partnership with alibaba really unlocked a wide range of new opportunities for us we launched starbucks delivers in china
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our mobile order for pickup, you know, just those two alone were 10% of our sales mix in china. and we posted a 5% comp with 2% growth in traffic. the digital strategy in china is working. 10 million active rewards members, 45% growth in those rewards members. a strong performance in china. >> now, in the united states, even not that long ago, the investment community, kevin, really felt that you couldn't get united states going, talking about 4% number. talk about the two-year comp, what really matters, and how it accelerated and why it accelerated in the united states. >> yeah, well, you know, we posted a 6% comp with 3% growth in traffic this quarter. when you look at the two-year comp, it accelerated to 10%. so, you know, many were skeptical that we posted a strong 4% comp a year ago. but then we posted a 6 on top of that
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now, the growth and scale agenda we're executing against is really all about focusing on the right things and then executing with discipline. in the u.s., it is all about elevating the customer experience in our stores, driving beverage innovation, and expanding digital customer relationships. and in all three of those dimensions, we executed with discipline beverage innovation, we now have nitro in all of our stores in the u.s. our innovation on the cold beverage platform, cold brew, pumpkin cream cold brew, nitro, but also our iced macchiato, cloud macchiato beverage platform, refreshers, shaken teas, so, you know, we have really focused on that beverage innovation that helped us. and we grow an everyday part in the u.s. >> on the call, you chose to take a bit of time to focus investors on your strategy when it comes to artificial intelligence something we talk about a lot here, the growth of ai
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give people a sense here in terms of how you see it helping your business, potentially eventually i would assume as well, contributing to margin expansion. >> yeah, well, you know, clearly we have been focused on the digital flywheel and how that customer connection is so important. but over this last year we really spun up our focus on artificial intelligence around an initiative that we call deep brew and deep brew started really by using artificial intelligence for the personalized offers that we make on our mobile app, but now we're using deep brew in a wider range of scenarios for example, deep brew is now doing artificial intelligence to really predict how many store partners we ought to have by day part in every one of our stores. by doing that, it is helping us unlock growth because we're staffed to meet customer demand. deep brew is now forecasting inventory replenishment by
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store. and that is helping partners ensure they have all the items they need to serve customers and they don't have to spend their time doing that inventory and placing those orders so deep brew is actually freeing up partner time, so they can spend more of that time focused on the customer. basically deep brew is automating the administrative tasks, freeing up our partners to spend more time with customers, and that has led to an all time high in customer connections. and when customer connection scores are an all time high, that's growing our traffic so deep brew is at the center of helping our partners better serve customers, and it is a key fuel for our growth looking forward. >> kevin, it is carl in qsr, breakfast is getting so much attention either adding to the menu at mcdonald's or wendy's. i wonder is there pressure internally to expand food, at least in the morning >> well, you know, for us, we're a beverage first company
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we differentiate on the fact that our starbucks partners hand craft each and every beverage personally for our customers and then we attach food. we saw good growth so i think the beverage platform is helping, but part of what is helping in the morning day part is the sandwiches, the egg bites and wide range of food items that resonate with our customers. food plays a role attached to the beverage and we're seeing a good growth in the morning day part. >> in a couple of days, veterans day, i think your company is the one that is maybe the most committed to hiring vets there is a labor shortage in this country could you talk about how you can find enough people to staff starbucks, and what you have done to hire people who have come back from the wars? >> well, you know, our focus on veterans and military spouses
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has been something we have been doing for several years. we set a goal for ourselves to hire 25,000 veterans and military spouses we surpassed that goal three years ahead of schedule. and we now are on a run rate we hire 5,000 veterans and military spouses every year. and they are phenomenal starbucks partners and we're very proud to be associated with our veterans and helping support them as they come back from oftentimes multiple tours of duty that's been an important part of it and they are fantastic partners and they make us a better company. >> i want to talk for a moment about something that marc benioff taught us, business is the greatest platform for change you, i think, your company, uniquely has been an ambassador to the united states what is it like being -- for the united states. what is it like being an ambassador for the united states to china right now >> you know, jim, we just
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surpassed 4100 stores in china we have 55,000 starbucks partners who proudly wear the green apron in china, we have been in china for 20 years now and, you know, for us, it is all been about being in that market, entering that market with respect to the chinese culture and doing the right things to, you know, beyond the pursuit of profit, for example, we, you know, we introduced healthcare benefit for our partners in china to take care of their aging parents. and that's one of a kind insurance program that we put together in partnership in china. the whole foundation of starbucks is built on the fact that we believe that the pursuit of profit is not in conflict with the pursuit of doing good and, you know, in many ways our purpose and our reason for being goes far beyond the pursuit of profit so when we're in china, every one of those stores is a part of
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the community. and we do work to service that community and be a part of that community, take care of our partners and show up in a way that really focuses on doing good in every community that we are a part of. >> yeah, kevin, the reason i'm going down this path is business is under assault in our country. never seen anything like it in my lifetime. companies like you are doing things that make me feel that business being under assault is a huge mistake, given the fact that again it is a great platform for change. i happened to be in mexico recently i saw orange aprons and i said, maybe they're wearing the wrong color. that's not true, right >> well, that's not true, yeah, you shared a great photograph of you visiting one of our stores in mexico and it -- in the month of october we have a great license partner who runs our starbucks stores throughout latin america. and alberto and his team do a
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fantastic thing in the month of october, they have a very special cause they orient to every peso that is spent at starbucks and other brands that they run, they donate money to help feed the hungry and take care of children, take care of their communities. and so they put on an orange apron to help amplify the fact that they are focused on serving their communities and contributing money to those communities and the people in need so we're proud to be, you know, to be a part of what we do in mexico, and in every community around the world. >> kevin, you know, hopping on to jim's question about china and being an ambassador for the u.s. in a way, we see pictures in hong kong and we know hong kong is a mess but we see pictures of broken glassat starbuck storefronts how should investors view that >> well, look, my -- obviously we monitor that closely. and i just say that my priority
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is focusing on the safety and security of our partners and, you know, certainly we're in 81 markets around the world and we deal with geopolitical issues all the time. but my focus and my priority is focusing on the safety and security of our partners. >> kevin, one last question. i know we got to go. i'm curious to know what you're seeing about the delivery business there was a debacle this week where grubhub was saying this business is maybe -- isn't a business the fact that their profit margins are so thin, is that a win for starbucks? >> well, i look at the delivery business, china is a very different market than the u.s. in china, we saw 7% of our total sales volume came from delivery. and in the u.s. it is far less than 1%. and part of that, i think, is there is a very different cost structure in china than there is in the u.s and, you know, i think that
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delivery will evolve in the u.s., but right now, i think the -- you know,unless we have a very high ticket, the delivery costs, you know, are prohibit tiff to the consumer so, you know, people are having to invest, either merchants have to accept lower margins or delivery companies are going to have to figure out a different business model that enables that price to be a lower price to the consumer for us, you know, we're pleased with our partnership with uber eats, but it is very early days in the u.s. where as i see, you know, delivery is much more mature in china and embraced, you know, by the chinese consumer much more than it is here in the united states. >> kevin, really great to talk to you kevin johnson, ceo of starbucks. good to see you, sir thank you very much. >> thanks, guys. >> when we come back, this morning, pulitzer prize winning new york times columnist jim stewart, his take on the streaming wars at large. record high for the s&p.
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jim, stop trading. >> lisa has her same birthday as tim. so happy birlthday, lisa. qrvo, that is giving us hope for 5g it was a fantastic conference call made me feel really terrific about tech people who are down and feeling low read the qrvo conference call because, boy, we're not left out by 5g we're a leader we're a leader, david. >> got it. i was thinking the simon and garfunkel song when you're down and feeling low, you had me there. >> i'm going to do my game plant tonight and i am excited by qrvo because i know china unveiled its 5g dom chu doing big stuff today
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♪ >> good friday morning welcome back to squawk on the street i'm carl quintanilla ism. let's get to santelli. >> all right here we go and it is going to be maybe the most important number of the day 48.3 48.3 well, it's better than the 47.8 in the rearview mirror and that of course was the lowest level going back to june of '09. so the comp on this is rather easy we just go back to august when it was 49.1. but it is an improvement, nonetheless. let's go through some of the internals, shall we? the employment index rose also from 46.3 to 47.7. if we look at the prices paid component, prices paid move from
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49, seven down, to 45.5. finally, new orders. not quite getting up to 50 49.1 but a nice jump from 47.3 we also actually had another number out september construction spending and that's always important and that's a whopper of a move actually up half of 1%. that's rather shocking up half of 1% is the best number going back to april but there is a fly in the ointment. last month's one tenth now turns negative to minus three tenths but i have to say that yields actually haven't moved moved a little bit lower so ism is taken as a negative and i'm sure under 50 isn't building up psychology but it s still is a sequential improvement. morgan, back to you. >> rick, thank you let's go back to steve liesman steve, we had better than expected jobs number this morning. third straight month of contraction but also seems to be a little better. >> i think that's the way to
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think about it, morgan spot on, actually. it's still contracting but we're not contracting to the downside. supplier deliveries were faster from slower and backlog was contracting. that's actually a negative, believe it or not. just want to see if there's any commentary here about trade. comments from the panel effect improvement from the final month but remains more cautious than optimistic so it's not getting worse and i think the way the market is thinking about this right now looking at how it's trading, it expected this number to be a little bit better and it was a little bit better, just not as -- as much improvement as they expected. but a potential game changer of a jobs report that really makes you rethink just how much the recent slowdown in activity is hurting the jobs market. here are the numbers nonfarm payrolls 128 but those big august september revisions plus almost 100,000 additional jobs, average hourly
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wage not really accelerating much the unemployment rate ticked up just 3.6%. let's look at the jobs in leisure hospitality. that's a strong number education, we always see that. health services up 39,000. but government and manufacturing, both down and this is where we put an asterisk on the jobs report. what we're going to do is little math here. the actual number was 128, okay? gm strike. so we're going to add that back because that's not happening again. we took off another 17 for the census workers being fired we'll add that back. the number could have been, and i say could have been, upwards of 190 without those two individual one-off events. the new strength can be seen in the revisions, what was a three-month job average of 157 well, now, it's 176. not too shaby. it's still down from last year when it was north of 240,000 but not as much and not careening downward all of this making boston fed
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president's descent from the recent rate cut look not too bad. rosengrand saying in his descent fiscal and monetary policy are already accommodated with labor markets tight. real gdp growing around estimates of its potential and a moderation of the risk surrounding trade and brexit, i believe further combination is not needed well, the pause from the fed looks proi look pretty good i'm just going to update while 'em aw talking the probability for rate cut going into the meeting, before it was 30 or 25% for december. now, it's below 17%. another cut isn't being priced in until march or april of next year, carl. >> all right steve, thanks. a lot of information that investors trying to process right now. joining us this morning. chief economist, diane swank christopher harvey, as well. happy friday, guys good to see you both diane, your piece earlier in the eke we week making case for a fed cause. does today's data even though we
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didn't get it wednesday, do you think now is the time? >> it is certainly the fed could have paused but they didn't so we have it now. i think what's important, too, though the dirt is always in the details. the upward revisions really came from leisure and hospitality most notably, food services and retail retail had been careening downward all summer really on a downward trend it peaks in 2017 but that actually was revised upward the last couple months along with food services the footd food service is also interesting because we know from yelp data, they moved down scale. they moved to lower cost restaurants and to fast food restaurants which could be accounting for some of that hiring what is a little bit surprising in the data, the manufacturing data, we did not lose as much as we thought from gm because we saw gm's competitors pick up production and manufacturing outside of the vehicle sector add jobs so i think that's important. on the other side of it, though, those service sector workers are
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seeing deceleration in wage growth they're not seeing increasing wages out there as rapidly as they had been. and they're getting less hours worked their hours are being cut back a bit. so as many of these service providers have had to pay more for workers, now it seems that they're willing to cut back on the hours that they have them and not have them pay overtime or, in some cases, cross a threshold into benefits. >> right but all of those things, christopher, are better than layoffs, right layoffs are expensive. >> layoffs are expensive what we're seeing from claims numbers, claims have gone sideways what i think the bigger picture, bigger issue that we have is the fears are really, it's not they're unfounded, they were just too great whether looking at earnings, whether looking at the job picture, whether we're looking at the economy that's why the stock market's walking higher. >> does that mean record highs are justified then >> i think record highs are justified. you have low rates you have an accommodated fed you have reasonable valuation. no inflation and people are positioned very risk averse.
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>> diane, let's dig into that a little more because just a couple weeks ago that we were having these discussions about recession fears and now it seems like the discussion has shifted and you can certainly continue to make that argument looking at the reports we got this morning towards a bottoming out of the slowing we've seen in economic growth at least here in the u.s. is that how you see it >> we are seeing it for now. i actually think the fourth quarter will be worse than the third quarter in overall -- right now, it's adding up to be worse. there is some slowdown in momentum not a dangerous slow down but a slow down in momentum. what's critical is what have we taken off the table? we have taken off the table the escalation of tariffs for the moment and as long as that stays in the background, we can handle the tariffs we have. much on a recession hinges on whether or not we up the ante on a trade war or keep things a little -- the deescalation that we've seen out there, we can handle the cost of tariffs, the uncertainty compounds. but that alone does not get us into recession unless we up the ante on a trade war with china again and that's really what the recession call hinges on is purely on that part of the
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trade. which the fed also cited as one of the abating risks for the moment. >> are we going to start seeing macro notes titled soft landing? or is trade too much is it too much optionalty in trump's approach to trade to write that piece >> you'll probably hear the phrase goldy locks a few times our belief is this economy is not real pretty but it's very robust we continue just to rumble along. and again, a lot of what we've been dealing with is just too much fear and now we're getting the facts and the facts are okay the other thing you're dealing with, we're dealing with uncertainty. we're taking away more uncertainty. whether it's trade and tariff or whether it's brexit. >> how long would it take then for businesses say, we see a runway, we'll commit to cap x again. >> do they have a lay of the land do they believe that we have a detante for the next six to 12 months i think we're beginning to see the start of that. >> diane, i wonder if we're talking enough about the pain in
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the oil patch emerging here in the u.s. we've seen rig counts come down. saying they're seeing continued slowdown in s shail production i mean, that, as we saw back in 2015, 2016, oil and energy is very closely linked with a broader industrial part of the economy. how much has that been i guess weighing on or clouding the data around things like ism manufacturing? >> well, actually, some of the oil data shows up in some of the service sectors so it depends on which ones you're looking at but the mining data actually was down in this report. we know that their shail bankruptcies are up. so we've decoupled a little bit where it's helping on cost and helping to dampen the blow of higher tariffs and wages so that's good news for the manufacturing sector, bad news for the mining sector. the mining sector i think is
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going to be a big drag now, remember the mining sector is also a big swing factor on investment in the u.s. that hasn't been what's been the primary drag so far. but it could add to the drag we see until we see the veil lift entirely on the trade picture and until we actually get more than just a detante, we actually get a deal with china, i think it's very difficult to do. >> so, christopher, i mean, with markets at record highs right now and the conversation we're having, where should investors be putting their money >> so what we've been telling investors is you want to barbell your portfolio you want high growth but you also want to add some cyclicality. we upgraded banks in early september. we also like parts of the semi-space so you need to balance risk and reward. >> but if you've ridden home builders and healthcare for the past three months, time to ring the register >> i think you want to ring the register on your bond proxies, your low vol you have some of that in those sectors. but it's really more on your bond proxies. >> fascinating set of data today. guys, thanks diane swank and christopher. thanks. >> meantime, google parent
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company alphabet buying fit bit this morning a deal valued about $2.1 billion jon fort joins us now with more. jon, your takeaway from this deal which we had gotten reports could be coming. >> yeah, we had an idea this could be coming. make no mistake, fit bit is going to be part of google, not some floating alphabet component just out there alongside google. the idea is for this to be part of google's devices business under rick osterlo he's quoted in the press release here but let's not fool ourselves about what this is really about this is not about taking on apple in wearables i mean, case in point, you take a look at just the numbers fit bit, in two years, has seen its revenue drop about 25% while apple, in its wearable home and accessories categories over two years, has seen revenue double roughly to about $25 billion. fit bit is at about $1.5 billion so they're not even in the same
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category what this is really about for google, i think, is suring up the android ecosystem that it's got. look at idc's numbers released earlier this year just at wearables in general apple is number one in wearables. the apple watch is two-thirds of the smart watch category behind apple at number two, you've got jami, which is going fast you've got huawei at number three, which is going really fast number four, you've got fit bit, which hasn't been growing that fast but kind of hanging in there. so it's part of google fit bit gets a chance to sort of rationalize its cost and trying to do hardware in a kind of challenging tariff environment no question. gets a chance to really have some marketing humph behind it that would have been really difficult otherwise. it gets to sit alongside some google devices just a couple week ago, we were talking about google's new devices for home wearables that are out. it gets to be part of that portfolio. and google really doesn't want to lose control of android in the era of artificial
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intelligence, home speakers, and wearables. so it's taking on challenges not only from huawei and from jami but also from amazon, which is releasing its own wearables. this is google's way of keeping that all together. >> you know, jon, we were having this conversation on ft. knox the other day. we've seen both these companies, even though they have different businesses, they're both hardware businesses that have fallen hard since their ipos we've seen them trade together largely. do you think there's any read through to be had here >> no. i don't. here's why go pros aren't really that wearable and what's arisen in the era of not only wearables with home products is things like your ring doorbells and your in-home cameras that are more for keeping track of things going on around the house. dealing with packages showing up that kind of thing gopro really hasn't played
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there. their expansion play was more in the drone category and they backed away from that. so it's really unclear how gopro becomes this same sort of smartphone ecosystem play because the market seems to be moving in a different direction. >> yep they have one similarity they both were down dramatically from those early days when they wept public, right, jon? >> true. true both a bargain. >> yeah. jon, thanks. when we come back, right here mark zuckerberg fights back. taking a swipe at politico aaron sorkin and later, we're going to speak to goldman's chief enocomist more "squawk on the street" is coming right back. corner of your growing business. from finding out what's selling best... to managing your fleet...
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back against screen writer aaron sorkin's criticism of his stance on political ads on the facebook platform by quoting sorkin's own words from the movie "american president. saying quote, america isn't easy america is advanced citizenship. joining us now, pulitzer prize winning new york columnist author of "deep state, trump, the fbi, and the rule of law" jim stuart, how do you come down on this debate about zuckerberg saying it's free speech? that even though they may contain vast inaccuracies, it's okay versus sorkin who says no you can't. >> well, i've been giving this a lot of thought since it first cropped up a couple weeks ago.
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but now, twitter has come in and just said we're not going to run political ads. and they're both in their own way i think trying to punt this issue. i mean, facebook is saying we're not going to police it twitter said we're not going to do it at all and it seems there's got to be a middle ground here those are simplistic those are bright line policies at least facebook has the advantage of not giving up a revenue stream but there is -- i think there is a middle way you know, we're all in the fact business and one thing i've discovered about the internet and the minute i write something, it goes online. boom the crowd sourcing on that is unbelievable if there is an error, i don't care how trivial, somebody nails it within five or ten minutes of it going up there. and if you read the comments online, there are a lot of those little things at the bottom where there is a quote/unquote -- like you misspell a name, you get a date wrong. anybody can correct that facebook could easily correct
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stuff like that. but that leaves this vast middle, gray area that we all grapple with like, what is a fact and, you know, example just from my book. a lot of people have said, well, how come you didn't have in there that the fbi tapped president trump's phones when he was a candidate? well, i do address that. the fbi investigated, the justice department investigated. they all said we don't have any evidence of that but when trump came out and said my phones are tapped, that is a fact that is accurate the embedded fact, who knows but barr comes out and says there was spying on the campaign attorney general says there's spying that's news. that is a fact well, was the fbi spying on the trump campaign we don't know. and i haven't seen any evidence to support that but now we have a whole investigation going on so i'm completely sympathetic to zuckerberg in the sense that there is a vast area that you have to let the court of public opinion weigh in on this and i -- so i'm -- i kind of
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tilt to the zuckerberg view here. >> but facebook, obviously one of its great strengths is the ability of advertisers to target very precisely the people they want their messages to reach. >> right. >> so to the extent you can do that with people who are already like-minded or are certainly going to believe certain things even though it may be filled with inaccuracies and outright lies, you don't have a problem with that? >> well, look, i think the outright lies can be addressed i think facebook has a mechanism to do that what i'm saying is let's harness the power of the internet. the same way the internet magnifies the potential for errors, it can magnify the potential to correct those. >> you mean outside of facebook? because i think -- >> no, no, within facebook. >> get their news from facebook. >> yes, they do. >> it is perhaps if not arguably the most powerful platform of distribution of all sorts of things out there, jim. and you don't think it should be regulated? >> well, whether it should be regulated is a whole separate question i mean, in general, i feel it
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would be better to have some policy that applies to all of these platforms. we don't have completely disparate, you know, or shutting down the public debate but, again, once you invite the government in and start saying let the government determine what's a fact and what isn't a fact, that makes me very queazy, as well. so i think that's sort of a separate issue but i do think there's a lot facebook could do without falsehoods and bringing to bear the power of the internet and counter those ads. send the same people a message that says this is -- this is -- this is the actual fact. they could easily do that and they can harness of power. they've got, you know, 2.8 billion users who can weigh in on the truth or falsehood. >> just to be clear, you see a world where facebook lets an ad run. it runs. people respond to it and then facebook says, by the way, that ad was a lie that seems like a messy place to go to. >> well, you know, exactly how the mechanism of this would work, i don't know but we deal with this, you know, in the media all the time. you put something up
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ten seconds later, somebody says it's wrong and you paste something up there it's not that hard i -- i just feel -- look, i don't want to see speech suppressed there have always been falsehoods in political campaigns. but i do think the internet gives you the power to -- to fight falsehoods with more speech and not less speech and people weighing in to be able to correct. >> topic two, jim. topic two. >> yes. >> the war of words between leon cooperman. of course, the well-known hedge fund manager got his family office now. and elizabeth warren, the presidential candidate in a letter obtained by cnbc, the hedge fund titan writes quote for you to suggest capitalism is a dirty word and that these people as a group are ingrates who didn't earn their riches through strenuous effort and paradigm shifting insights and now don't pull their weight societily indicates you are either grossly uninformed or knowingly warping the facts for political gain that's actually an interesting
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letter he writes well, leon i will give him that. >> yes, he does. i think some of these arguments would be more powerful if they were not being made by billionaires so i will say i'm not a billionaire and i am opposed to the wealth tax i think it raises all kinds of issues i don't think you actually have to go to the question of whether billionaires deserve to be rich. i mean, that's -- nobody's going to win that argument partly because, look, there are billionaires i think would agree they deserve to be rich. and then there are those who feel how did they -- what -- you know, what lucky tree were they born under like why did they get it so i think it's a mistake to kind of go down that particular road but i'm against the wealth tax and i do feel he's touching on something, what is the essence of capitalism? i mean, it's kind of like many things we have to -- we're questioning and again we always took for granted that it is healthy to have a debate about what are the benefits and the, you know, the harms of capitalism how does the system work why do we have the system that we do?
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and i think implicitly, he's raising some of those questions and that's a healthy debate. >> here's what i think is missing from the debate or at least the way it's being framed. rather than it being candidate versus billionaire or, you know, whether capitalism is broken, et cetera, what do the job creators actually have to say right? the people that are having this debate, have you created jobs? have you ever been in a position, heaven forbid, where you've had to let people go from their jobs like, that seems to me to be the part that's kind of missing from this because that's the key to capitalism in the u.s., right, it's' the job creation. >> right and you know, they contributed massive amount toward expanding economy. >> i'm not even saying it's cooperman necessarily. >> i'm just asking if that's the line, how many jobs do you have to create until you're called a job creator? >> look, i've been a long-time critic of hedge funds. >> that's not a good place for leon to be in terms of it but he does cite a number of people in his letter, of course, who created an awful lot of jobs
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whether it's the likes of michael dell or bill gates or mark zuckerberg. >> right and they have their arguments. but again, i think we don't really need to go there. you know, there have been plenty of wealth taxes imposed around the world. and to the best of my knowledge, they've all been a failure they've all been rolled back and europe, the experience has g not gone well. we have such an imperfect tax code that you could actually improve and generate a lot more revenue and have a much fairer system, why we need to leap out of that and start layering on this massive wealth tax, i mean i really think it's -- >> speaking of taxes, final subject here our president, my hometown, queens his entire life built on new york but now he's decamping for florida at some point. he's leaving us with not being able to -- to have any sort of ability to deduct that from our taxes. >> well, i happen to have given
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a talk in palm beach not long ago and there was a big dinner of wealthy donors to the non-profit organization where i was speaking and much to my amazement, everybody there were new yorkers. they were transplanted new yorkers and topic a was, oh, we're all moving down here because of the tax situation we're getting out of -- you know, the taxes are too high but of course, i'm thinking to myself many billionaires, millionaires in the crowd and i'm thinking they can't live wherever they want it's like you can't pay the tax? i mean, i'm living in new york in absolute terms, i'm not paying nearly as much but probably on a percentage basis, i'm paying a lot more. isn't the point of being that rich that you could live anywhere you want? so i -- i don't get that but i can tell you -- >> the same conversation with extraordinarily wealthy people who have even talked about moving to puerto rico a few of them like, why? again to that very point, where is the value consideration but, you know, what, if you're
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focused on that, that is making lots of money, it's going to be extraordinarily important to you. how much taxes. >> right i think it's kind of in their dna. >> minimizing it. >> yeah. >> minimize tax and they get -- that's -- they derive pleasure out of that. and by the way, trump is already spending a lot of time down there. he's -- he's hardly unique in assuming that he's as wealthy as he says he is, he would be planting his flag down there i don't think it's a personal slam on -- >> no, i mean, leon cooperman also, right? he went down to florida, too the estate tax also plays into it too, by the way, not just salt. >> the president has had these investigations under way in the state of new york and i don't think there's any love lost there in that specific relationship as well. >> yeah. i mean, look, new york is the ultimate blue state. he's not mr. popularity here although, one thing i like about new york, it's always tolerated, you know, people from all over the place. i mean, he could still come here, he could have his dinners at, you know, what's the restaurant he goes to? with the red tables.
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>> 21 club. >> exactly i mean, he can still -- and have a world i think very congenial to him. >> meanwhile, what happens to the tax base of new york is a question with all those people leaving. although, many of them are not making money anymore because they are near retirement >> right. >> jim, thank you. >> sure. >> jim stewart monday, by the way leon cooperman he's nowhere near retirement i don't think he's ever going to retire actually. knowing leon as i have for many years, he's going to be in the half-time report discussing that letter to senator warren that will be monday at 12:00 p.m. eastern. >> all right when we come back, the weakest sector in october. not a surprise, energy looking to rebound, though, with chevron and exxon out today going divine ways. we'll go through those numbers on this busiest week of earnings now coming to a close. do you's up 219. times, they jus. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets
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it's used by some of the biggest retailers everywhere. a nice wedge. so more food ends up on your table, is that daddy's lettuce? yeah. and less food goes to waste. ♪ ♪ good morning, everyone i'm sue herera here's your cnbc news update at this hour. another new fire in california the latest is burning in ventura county north of los angeles. the maria fire broke out thursday evening strong winds and dry brush have helped fuel that fire, which has
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now consumed more than 7,000 acres and has destroyed several buildings. >> the good thing for us is we still had a lot of equipment in ventura county because of the easy fire. so what we did was we relocated a lot of that equipment over to this fire and they're assisting us with this fire right now. >> police say four people have been killed and four others wounded in a shooting on halloween night. it happened at a home in orinda, california details are sketchy but officials say more information will be released later today and as you may have heard, president trump has moved his residency from new york citi to palm beach, florida, where he has his mar-a-lago resort. trump tweeting that he will always cherish new york but has been badly treated by city and state political leaders, despite paying millions in taxes you are up to date that's the news update this hour guys, i'll send it back downtown to you, morgan. >> sue herera, thank you it's time now for etf spotlight. today, we got our eyes on
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energy today, it's the biggest gainer on the s&p that's just quite a mixed earnings picture from exxon and chevron. joining us with more is stuart glikman. for chevron, he has a rating with $133 price target for exxon, haezs a hold rating with a $73 price target. stuart, thanks for being with us today. given the fact that we got results from two of the very biggest integrated oil companies in the world, your takeaway on those numbers? >> yeah. good morning thanks for having me so i think that, you know, if you look at the numbers, both companies beat fairly muted expectations there was a lot of year-over-year across the board. it wasn't just upstream. it was also down stream and in the case of exxon, it was also chemicals. so, you know, if you just look at the numbers, quarter on quarter, there's a lot of problems with the industry is facing however, that being said, both companies look like, you know, they're certainly investing for
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growth i like chevron's growth potential a little bit better and i -- i'm sorry, say again. >> so, stuart, taking a look, i mean look back at a year ago and oil was in the 70s today, it's in the 50s where does it go from here and what does that mean for energy stocks overall more broadly? >> i think the outlook for oil prices is pretty mediocre. i think if you argued for something in the high 50s to low 650s range, that seems reasonable to me because there is an awful lot of supply still out there and global demand is being buffetted back and forth depending what the trade discussions are like of the day. i think the biggest thing these companies have going, chevron particularly, is, you know, their exposure is very strong. they have an awful lot of -- they can harvest a lot of the fruits of the stuff they've done in australia with wheat stone on the l and g project. and i think, you know,
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historically, chevron has always been trading at a fairly substantial gap to exxon and i think that gap is getting closed. >> so looking across the sector more broadly, whether it's the producers, the oil and gas producers, whether it's the oil field services companies or whether it's the refiners right now or integrators like exxon and chevron we just talked about, where do you see value? where should investors be considering making an investment >> i think you have to be kind of picky within upstream, i think the names that don't depend on high oil prices are probably better bets so a name like eog resources, which i would consider kind of best of breed among the ents i think they've been focused on premium wells before anyone else was. i think that's a good bet. i like kind of a contrarian play, i like capital oil and gas on the gas side because they have such a low cost leadership position there and then if you look among some of the downstream names, a lot of the downstream operations are going to benefit from the
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looming change in marine fuel sulfur regulations to hit on january 1st. that -- that should really do a lot to help -- to help boost refining margins name like valero or holly frontier especially should do well holly frontier inland refiners or excuse me inland refineries. >> okay. all right. stewart glickman, thanks for joining us today. >> thank you. >> as we hit a break, let's take a look at apple. another all-time high today the company streaming service officially launches today. stocks up 60% for the year for "squawk on the street" continues in just a moment dow is up 234. ♪ ♪ ♪
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♪ ♪ ♪ ♪ ♪ ♪ by the way, she's the it wasnext mozart.g day. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. (vo) the flock blindly flying south for the winter. they never stray from their predetermined path.
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that gm strike markets obviously reacting favorably this morning got new highs on the s&p 3060 and the nasdaq for the first time since july. goldman sachs chief economist is here on set to talk about the number, which surprised even you given how we were able to walk past the strike. >> yes it was a very strong report. the current month was significantly stronger than expected and there was a large upward -- so if you look at the jobs numbers now, you really not seeing that much of a slowdown it's a little bit surprising because other indicators do show a slowdown over the last year. but the job markets just chugging along for now. >> one big tick this morning was that rosengren and george were right. the dissenters who said we don't need to cut again. >> yeah or you could say the message from powell was right. which is basically we're done here and we've done the adjustment and there are different views on whether the
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adjustment was necessary rosengren and george obviously think it wasn't. but i think it underscores that the cuts are over. >> labor force participation rate tick up it looks like having a harder time finding workers. pool of available labor fell to the lowest level since november 2011 what is that telling us? >> i think it's very consistent what you're seeing in the jobs numbers. labor demand continues to be strong and i think the long-term trend in labor force participation is really slightly down still because of demographics aging of the population. but against that, you've got this very strong labor demand, which is pulling more people into the workforce, which is obviously a good thing and is a signal that, yeah, job markets very robust. >> you've written in the last couple weeks that scarcity, labor scarcity is not a big deal right now in terms of subtracting numbers from non-farm is that true >> yeah. so i think there is -- are some signs of labor scarcity.
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nothing -- nothing major but, you know, to some degree, you are seeing it in the wage numbers. today's number was obviously weaker but the trend has been towards stronger wage growth but yeah i think workers can -- can -- or companies can still find workers where they need them but they do have to pay out more than they have in previous years. >> one of the big bear theses right now is companies are not laying off workers but they're doing everything they can do short of that. give them fewer work hours be less aggressive on wages and benefits and that one -- people say once the year clears, then we'll see this new wave of layoffs do you expect that >> i don't really see that again, the wage numbers are picking up gradually and i don't think you should put too much weight on the sort of month to month numbers. the trend is higher and i think as far as hours are concerned, i also don't see a meaningful downward trend there so clearly, growth has come down somewhat we're closer to trend. you know, gdp over the last year
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has grown 2% that's probably only in the neighborhood of trend. maybe a little above so, you know, you should see some adjustments in things like hours. but i don't think it's anything dramatic. >> these guys were having a discussion last hour about boeing and the impact the 737 max groundings on the numbers. how much noise do you think that is adding to the manufacturing picture right now? and is there any reason to think that's going to change or subside or have a bigger effect? >> i think it has weighed on gdp growth to some degree by, you know, a few tenths of a percentage point cumulatively in q2 and q3. you're not seeing a major effect in the jobs numbers, though. if you look at manufacturing, motor vehicles, it was up, you know, x the gm strike was up about 10,000 so i think it's -- it's not a major factor but it has subtracted a little bit from the numbers. >> then we got ism
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pretty decent. i guess you can say. is that cycle bottoming as well? >> it looks like it. if you look at the manufacturing indicators, they, you know, clearly weakened -- the survey's weakened sort of into the spring and summer and you saw that not just in the u.s. but globally. but now, i think we're seeing some type of stabilization, even a little bit of improvement in asia chinese numbers have picked up somewhat and i think we're starting to see that in the u.s. data also. >> kudlow's comments have been -- said the cuts we've gotten will start to kick in in q4 can we start to expect more aggressive retail sales numbers again? >> well, we've had very strong retail sales numbers up until the last report. so i think the last report is probably a little bit of payback for some of the previous, you know, very, very substantial strain so i wouldn't necessarily expect a big pickup there that said, i think the picture is solid enough so continued consumer spending growth in the
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sort of 2 1/2, 2 3/4 range. >> what's the most interesting question to you then now regarding the economy? >> i think we've put the -- the -- the cuts behind us at this point the most interesting question is i think still what is the risk of a downturn? we've taken the view that the risk of recession into 2020 is still relatively low if you look at market economists and ask their average probability of recession, most recent number is 35% that's the consensus we would be below that we recently rolled out a new model of recession risk that put us in the -- in the sort of low to mid-20s and that's not too far from -- from the sort of unconditional probability. the typical probability that the
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economy -- >> i've seen some others argue the yield curve takes it down to low teens. could we go that far >> well, the yield curve is still quite flat and that's been the driver and the earlier version of the yield curve has been the driver of some of these higher recession risk estimates. but i think it's important to put the yield curve into context because the yield curve is affected by some structural changes in the fixed income markets. in particular, the much more compressed term premium at the long end of the curve, which i think distorts some of these calculations somewhat. >> last thing. people are still going to look at liquidity pressures, repo, new york fed are those things even on your radar at this point? or are they just -- is it just technical adjustments? >> well, i think it is more of a technical issue. it's very important for market participants in the money markets. they are very focused on year end and potential tensions as we get to year end. as we've seen, you know, many times in the past. from a broader economic
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perspective, though, our expectation is is that this will continue to be sort of a non-event beyond the money markets. we do think that the feds put in place measures that should, you know, keep these pressures contained and prevent a fallout to the broader economy >> that's good insight from you as always. thanks for coming in. >> thank you. >> as we head to break, take a look at pinterest. plummeting on its quarterly results. down about 22% right now trading just above its ipo price of $19 a share missing on revenues while cost and expenses more than doubled in the quarter full year guidance also below consensus. oungk as i mentioned tradi arnd its ipo price of $19. we got more "squawk on the street" when we return
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you know, 95,000 in revisions to the upside. solid jobs report. if you looked in the rearview mirror, it wasn't only previous months that gained jobs. we also gained a tenth on year over year average hourly earnings now, granted, these numbers aren't spectacular but they're certainly above average. and when you consider what part of the cycle we're on, which i always think is kind of a mugs game mug's game, there were four or five years in between the credit crisis and today, i don't think they counted to be honest. i think there were many things going on in the economy. i think we have reinvigorated, go gained more momentum the point is whether you looked at the market yesterday when stocks were down, rates were down, curves flatten today rates are up, the curve was still flattening especially
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on the numbers you would think three eases and better jobs. long end should rise to the occasion, and i think it will. one week of tens minus twos, there's been flattening, but stability in flattening, and most likely 15 level inter day solid support, like if you open the chart to july 1st, most likely 20 would be resistant i think we blast through '20 won't happen overnight one other issue is bill issuance, running rather large manufacturing, passive there's no way to put a good face on that other than sequentially it was better we all know manufacturing that issues shouldn't be shocking 12 of 18 that ism reported contracting. there's a big landscape change in europe. not saying i think economic data looks spectacular, but there's something bubbling up, christine lagarde coming in, rates buoyant
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to the up side 1.3 billion, the best since march of 2018 in the european union group. david faber, back to you >> okay. thank you, mr. santelli. time to send it to jon fortt for a look what's coming up on "squawk alley. jon? >> david, there's been a lot of action in the payments space we have the ceo of global payments, jeff sloan, coming up to talk m and a and some of the technology pushing in. that's coming up on "squawk alley. with esri location technology, you can see relationships. connections. patterns. you can see what others can't. ♪
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flight attendants taking a stand against boeing and the 737 max airplane phil lebeau has the latest on this story phil >> reporter: this is what boeing is facing with american and a number of airlines as they try to bring it into service early next year. flight attendants' union sent a letter to muilenburg after his testimony, saying the 28,000 flight attendants refuse to walk on a plane that may not be safe. they didn't say we will not be on the plane when recertified, they said we want assurances
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this plane is, in fact, safe these are some of the 737 maxes that are grounded. remember, about 500 of the planes were in service or had been built, they're waiting to be recertified as for when they're expected to fly, american, much like united and southwest, moved it to next year american has it off the schedule until january 16th boeing still stands by return to service target of the fourth quarter. by end of the year, get a signoff from the faa when they greet the planes back into service, boeing is compensating airlines and perhaps some flight's ten dants or pilot unions. put aside $5.6 billion how much they exactly pay each airline or union remains to be seen >> all right, phil, thanks quite a story as the max saga is far from over. phil lebeau. when we come back, fitbit
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shares are surging google is buying them for $2.1 billion what it means for both companies. "squawk alley" starts in three minutes. as a principal i can tell you this. when one student gets left behind, we all get left behind. this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer. by the way, she's the it wasnext mozart.g day. p-tech students around the world. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius.
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good morning it is 8:00 a.m. at fitbit headquarters in san francisco, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ ♪ ♪ good friday morning. welcome to "squawk alley." i am carly fiorina with morgan brennan and jon fortt at the new york stock exchange. record highs for the s&p and nasdaq earlier in the session, dow on pace to post the best gain in about a month on the heels of a
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