good morning it's 11:00 a.m. at the deal book conference here in new york city, 11:00 a.m. on wall street, and "squawk alley" is live ♪

♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla along with morgan brennan here at the new york stock exchange. one more day of jon fortt's time out west, this time in san diego at qualcomm headquarters 58 points only for the dow but we'll begin with uber and the expiration of that post ipo lock-up period meaning that an estimated 90% of shares are now available to trade at a new record low in the stock today. it was off the lows but down another buck and change means it's hanging on to $26.78.

foundation partner paul holland is with us along with mike isaac of "the new york times," author of "super pumped, the battle for uber." good morning, guys, good to see you both. >> good morning. >> hey, hey. >> mike, because we're all trying to gauge the interest in owners alleviating themselves of shares in this expiration, do you get the sense that they want to sell or are shares so underwater that they're going to hang on? >> yeah, you know, it's been kind of mixed. there's a lot of employees i've been talking to that are basically all sweating right now. i was getting these messages last night and one of the sites that they used to sell uber shares, to sell their shares was having trouble staying up, right, and that was the company -- i know, the company was sending out notes saying, look, we're looking into technical problems we think it's not volume, but it's -- you know, everyone is refreshing their page and not able to get in there and do it so there's a lot of people nervous.

that said, the stock is just not where most people wanted it to be when they were imagining an uber -- newly public uber six months out and ready to sell their shares i think there's a number of folks who are going to be holding on just because anyone past 2015 or '16 is not seeing any sort of gains on that. >> yeah, paul, foundation capital is an early investor in uber when you see shares trading below $27, it ipo'ed at $45, what's your sense of this? what's your take >> if i look more broadly and skip foundation as an individual investor from that perspective, i think mike's -- i mean his observation is correct in terms of what he's likely to hear from inside i think there are broadly speaking two classes of folks out there. there are people that got in very early, in which case the current stock price is still a very hefty premium for them. and then there are folks that got in anywhere, you know, from the last few years from that

perspective. and so i think when you're involved in these kind of stocks, i've probably been exposed to a thousand ipos over the last 30 years in some form or another you get either a behavior that goes down toward the lockup because there's this pressure and there's going to be selling. and then you get this v-shaped recovery that occurs over time sometimes it's a broad v and sometimes it's a sharp v and other times people lose faith in the company, the company doesn't execute and they continue to lose value over time we don't know where this stock or any other stock is going to go, but very often what happens in this situation is people look back and think, gee, why did i get so pessimistic about the company. it's still a very good company generating a lot of revenue and generally doing what they said they were going to do. >> a dramatic shift in the thesis around uber, the argument for it i'm trying to remember the last

time i saw something like this, and maybe it's just a coincidence in a way that you've got this lockup happening, expiring now and you've got softbank reporting these terrible earnings. but so many of the people who were at uber running that business, the employees joined it under this premise of world domination and growth. how is this shift in what the whole story is about going to affect those employees and the way uber operates? >> i think it's going to affect not just uber, but it's going to affect more broadly across -- >> that's for mike isaac >> sorry about that. i couldn't hear the opening. >> yeah, my bad. i couldn't hear it either. i think paul is totally right. they're definitely different classes of folks that got in anybody who got inspe super eary is riding high no matter what the stock price is right now but i do think it's an open question as to what the future

of uber looks like and are they going start paring back on the sectors they were going into as soon as dara joined, it's been two years now they started selling off different parts of the business this idea they're going to take on or eat amazon is starting to fade for long-time employees there. and i think there's really like a split internally on how people view it. there's the old crowd who is really partial to t.k., travis, and the idea we're going to take over and a newer crowd more sold on the idea we're going to be a platform, we're going to do what dara is saying and be what the line is, your o.s. for every day life maybe that works, but we'll see. >> let's get a sense of what dara is telling our andrew ross sorkin guys, don't go anywhere. >> i'm imagining there's one part of this that you didn't expect because clearly the markets didn't expect it, which was when you first joined the company, this was a company that people were valuing and bankers

value it and investors and private investors were talking about a hundred plus million dollars for this company. >> i wish i kept that pitch book >> and clearly the market has shifted in a profound way. >> yes. >> you announced earnings this week arguably they were better than the market had anticipated the stock goes down. peloton, same thing happened this week. market goes down -- or stock goes down, rather. so the question is what you think -- what do you think is happening to the unicorns of silicon valley and what do you think that shift is really about? >> so i think what's happening is that there has been a fundamental revaluation of revenue growth and the value of profits and the -- in an increasingly uncertain world so the world around us, everything going on in politics,

the global landscape has fundamentally changed over the past two years and i think that the appetite for the unknown and high risk in the public markets has just gone down, and that has consequences. you've got some of the safety stocks doing much better, utilities, et cetera. >> do you look at this and say this is a private versus public situation, meaning that somehow private investors are fundamentally different than public investors do you think this is a shift in just the way investors are thinking because it's fundamentally going to change the model, the growth trajectory of your company because everybody is having to now react to this new reality. >> private investors fundamentally have a greater risk appetite. they pay a higher bonus for growth, so to speak, and public investors historically, the premium for growth isn't quite there. they look at growth as well as

profits, et cetera that shift -- now, private investors, what i found, always do follow public investors with some kind of a delay and i do think that you're seeing the same kind of reckoning that is hitting the public markets is happening in the private markets. and from my stand point, i think a couple of things thank god we went public when we did, right >> really? >> absolutely. >> do you think you'd be wework otherwise? >> we're very, very, very, very different from wework, okay? so this is -- you have -- you have a ride-share business that this quarter delivered 22% ebitda margins up from even a couple of quarters ago, 8% margins. fundamentally the ride-share business is of scale, is global, is an attractive business, and it's only going to get better within a competitive environment, right

but the expectations and trade-offs between growth and profitability, those formulas have changed we've got over $12 billion in cash we've got $12 billion in investments as well in the bank. we've got a great balance sheet. we've got all the cash that we need to to get to profitability. so i actually think, one, thank god we went public and two, in this environment we are advantaged against our competition and at the same time in this environment the hurdle for success and the demands for the market are higher. one of them is great, one of them is tough. but i think it's going to force us to perform. >> so when you went public, we sat together outside the new york stock exchange that morning, and i asked you when you thought you'd ever get to profitability. >> yeah. >> and back then you seemed to be in no rush. there was at least a couple of years out. nobody was saying when profits were coming. >> yeah. >> now you've put a marker in the ground about those profits. >> 2021. >> how much do you think you've had to dial back the idea of

growth as a result of that >> the good news for us is that if i look at where we were about a year back, the ride-share business had not rationalized on a global basis the way that it has now, and the profitability that we have seen, the margins coming in ride share have increased frankly at a substantially higher rate than we expected internally and we now have a team that is executing at a level like every single p & l were going after, the teams are building technology that is automating a bunch of tasks that were done manually so we'll do it cheaper, better, et cetera. and so the ride-share business is actually looking better today than it was six months ago and substantially better and that has allowed us essentially to move up the path to profits that said, before all the wework

stuff, we made some painful choices internally. >> cut a thousand people. >> yeah, over a thousand people. it happened before the wework stuff. and it was because we started recognizing that this is a business that's expected to return on capital. this is a business that we are enormous transactions, but at very, very low margins and if you're running a big scale global low margin business, you have to start acting like it. >> do you remember, when we would talk in years past, you talked about uber being like amazon. >> mm-hmm. >> and i always thought that one of the reasons you liked that comparison beyond the ultimate success of amazon was that for a very long time amazon was allowed and given license by the market, if you will, not to make profits. having said that, they weren't losing on the order of $7 billion a year, which is the number that uber has lost. and so the question, though, that i have about that is do you

think it's fundamentally changed the ambition of the company in terms of what it ultimately becomes? >> no. the reason why we admired amazon was, one, they built a great company and they have gone from books to all of retail essentially. and we want to go from car hailing to all of transportation we've got a corner shop now as well to go from food to essentially local commerce as well their formula of opening up into additional categories and opening their marketplace to third parties is a formula that we want to follow in the transportation space and, by the way, it is a global company that has been able to thrive with low margins that they deliver to consumers and consumers love them as a result of it. so from a model standpoint, from modeling another great company, it made all the sense in the world. and thefact is that amazon didn't make money for a while but was very much focused on their cash flows they did flow cash for a long

period of time i think for us between now and 2021, our plan is to improve our margins by 30% we're going to do so and we're going to be able to lean forward and invest where appropriate there will be some investments that we make that won't work and we'll kill them. but i think the momentum that we're going to have in margins in 2021, 2022, is going to be a very profitable year, et cetera. so i think we are set on a very strong path, and now we have to execute. you know the market is betting against us. >> right >> and that's fine with you. >> it's fine with you? >> yeah. >> how much even in the past couple of weeks ahead of this lockup and there's an expiration today so early shareholders can get out and sell their stock how much have you felt like you've had to go on an offensive to try to suggest to them that they stay in >> it's better than my first apology offensive. i can talk about the numbers we are reaching out to

investors. and i think that the lockup, because there's a lot of supply that potentially could come into the market i think there will be less than people think, but there's a lot of supply that could come into the market there were some larger investors who were waiting because there was no fear of missing out now the supply is the lockup is behind us. i think we're going to have a couple of weeks that, frankly, i have noidea exactly what's going to happen during those couple of weeks. but then i do think that we are going to find great fundamental long-term investors who believe in a story and believe in our numbers. and i think we're showing how the ride-share business can be profitable and i think that the eats team is right behind the ride-share business. the eats business is much younger than ride share. i think the same kind of methodology that were driving margins on ride share will work on the eats side as well. >> take us inside the room when you've been thinking about how

you -- >> sounds like we really caught the sweet spot of that conversation, guys, as dara talks to andrew ross sorkin at deal book. paul, those who are arguing that they need to rethink strategically the eats business, he's pushing back. >> yeah, i think -- i mean he's doing what he's supposed to do and needs to do as ceo of this company. it's a complicated business. it's grown faster than almost any other business of its type and it's really created an entirely new category. so i think what's challenging in these type of situations is you have to pay attention to the short term you know, the whole sector around all the lower gross margin businesses has gotten kind of sour wework has had its troubles. these guys are having to the some resets around expectations for growth and so forth. then you have to take in the longer term. we can point out many, many stocks that went through dips and particularly around their lockup where the fundamental

value of the business was still there and there was a long-term value proposition that was worth a lot more than what the stock was worth at the point that the lockup came off. so that's what's hard about being a public market investor in these kind of things is which way do you bet, where do you see this go. >> mike, i mean the comments -- the comparison to amazon but also the comments that the market is betting against us and i'm fine with that, do you think that's, i guess, a shared philosophy among some of these big disruptors, whether it's uber or some of these other newly public tech unicorns to think about it that way given the share price sell-offs we've been seeing? >> i have to say my favorite thing in that clip we just watched was scurrying away from a wework comparison as fast as possible. >> yes. >> i feel like every unicorn out thereof wants to be like this is why we're not wework and here's four different reasons why we're not completely insane. i don't think uber is a wework but i also don't think any of the unicorns out there were ready for this type of market,

right? even back when, if you can remember earlier this year, i think before uber was making the rounds to go public and pitching itself, $100 billion to them is the valuation, $120 billion didn't sounding cra crazy now they have to rad yaically adjust their expectations. i actually agree with dara, what he said, which is that investors value something differently now. and the world is kind of crazy right now and unpredictable. when that happens, you're not going to go in on high growth stocks or high growth companies that burn money at insane rates. so i don't think they're ready -- or i don't think they like the environment i think he's probably overstating it there, but they have had to shift pretty quickly. >> guys, we're not done talking about it by a long shot but appreciate the touch today we'll see you soon paul holland and mike eisen.

up next, 5g and china in focus ahead of qualcomm earnings after the break today. jon will break down what to expect in an important quarter for qualcomm on the other side of this break. we're back in two minutes. woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. vo: take control of your online reputation. get your free reputation report card at reputationdefender.com. find out your online reputation today and let the experts help you repair it. woman: they were able to restore my good name. vo: visit reputationdefender.com or call 1-877-866-8555.

welcome back to "squawk alley. a big earnings report for qualcomm coming after the bell with the street mixed on the stock. 52% of analysts have a hold on the name jon fortt is out in san diego at

qualcomm head quarters with a preview of what to expect later in afternoon jon. >> the stock has been on an interesting run over the past few months of course over the past couple of years it's been through a gauntlet, whether you're talking about broadcom and the attempt to take over there, the legal fight with apple, the u.s. government among others, on and on and on. what we're expecting, what analysts are expecting from this quarter, around 71 cents in eps, 4.71 billion in revenue. this is a company that tends over the past couple of years 100% of the time to meet or exceed on eps. last quarter there was an issue around anticipation of 5g, seeing a particular slowdown in china ahead of 5g, some oems, customers saying maybe we're not going to be as aggressive about this year's launches because we're going to invest in next year's 5g launches

but then at the same time qualcomm was able to settle this beef with apple. now we see apple and the iphone doing better than many expected. that should have an impact on qualcomm, particularly i would expect on the eps side how big an impact? well, we'll see, but those are a couple of the things that i'll be looking for in these earnings >> hey, jon, just really broadly, microchip last night talked about calling a false bottom in the quarter and saying, i think the quotas, if you're confused what's happening in semis, join the party are we having to rethink this all over again >> you know, i think in a way we are but qualcomm in particular is very close to the smartphone market and there's unique dynamics in that overall china has been tending to have an impact, just how the consumer is behaving. what oems are doing ahead of

that 5g launch this apple factor, it hasn't been that long that apple has been a part of the qualcomm earnings picture they're having a big phone launch i wonder how that's going to affect these numbers now that that is worked out between them and how the guidance will look because of that, because qualcomm has some sense of what they expect post-holiday certainly how are those numbers going to look as we start looking into 2020 and what the demand picture will look like as we head into the 5g ramp season which, frankly, will pick up more as we head into 2020, carl. >> jon's excellent adventure continues west coast from san francisco to l.a., now san diego. bringing you a view of tech from the west coast it's been great, jon get back here soon coming up andrew is with brian chesky live from deal book don't go away.

there has been evidence that if you deploy a lot of capital in the consumer space, you can leave your competitors behind and over time you will turn that business more profitable as you grow hasn't worked out in every industry hasn't worked out in ride hailing, for example, around the world. hasn't worked out in -- i guess in the long-term leases up front and make money on a day-to-day basis business money in the right hands, right founders, right potential long-term platforms works but it doesn't work willy-nilly on every pet walking and hotel room renting website. >> that was former softbank exec and current palo alto ceo throwing a little shade at his former firm's investment strategy sitting down with jon

last week from the exec council summit softbank reporting a $9 million hit this quarter deirdre bosa has more on the results from san francisco >> morgan, he was sounded humbled but defiant. he admitted that his investment judgment has been poor calling out uber and wework and saying that he misjudged adam newman. >> translator: i overestimated adam's good side which i should have known better and more, and his negative side. in many cases i turned blind eye, especially when it comes to governance. >> he also said that softbank has experience with difficult turn-arounds, though one of its most high-profile sprint was called an unmitigated disaster by wall street analysts. now, he touted gains from other investments like slack and

guardent health. when asked if there could be other potential weworks in the vision funding universe, masa said this. >> translator: is there any other similar concern? in fact, yes, there is, like a dog walking company and other companies. we may see similar problems surfacing. >> now, he's referring to wag, the dog walking app that is reportedly up for sale but questions are also swirling about the valuations and losses of other vision fund backed unicorns and didi just as uber another big softbank bet continues to flounder as a public company the hit to softbank's bottom line and massa son's reputation comes at a critical time he provided a few details this

morning but he said it was on track and they put a greater focus on corporate governance, probably the least they can do, guys back over to you. >> some remarkable candor out of masa son quite a story. seema mody has a breakdown of today's action overseas. >> following two days of gains, sort of a mixed session in europe for the broader indices it comes after the imf cut its 2019 forecast again, now projecting growth of just 1.2% we did get some encouraging signs in germany take a look at this, produced by our market producer j.r. reed. it shows you the data in germany for factory orders saw an unexpected pickup in factory orders in the month of september, but economists are really pointing to the longer term picture at play which shows on a year-over-year basis manufacturing orders are still more than 5% lower than they were in september of 2018. that's primarily due to

softening demand from china. let's pivot, though, to earnings one big mover that we're watching today is adidas sales rise 6%. however operating profit came in right. remember, rival nike has been growing faster in both china and europe over the past year, but adidas has been trying to reassert itself here in the u.s. what's interesting if you take a look at a year-to-date chart, adidas is vastly outperforming nike shares, up 47%. in fact the best performing stock in germany so far this year morgan, sending it back to you. >> seema mody, thank you. it is time now for a news update sue herera has that for us back at hq. >> i do indeed here's what's happening at this hour, everyone the state department's third ranking official arriving on capitol hill for his closed-door testimony in the impeachment inquiry. david hale is expected to say that secretary of state mike pompeo determined that defending ambassador marie yovanovitch would hurt the effort to free up

u.s. military assistance to ukraine. turkish president erdogan telling an audience at ankara university that turkish troops have captured the wife of abu bakr al baghdadi earlier this week they said they captured his sister, husband and daughter i'll send it back down to you, carl. >> let's get to brian chesky at dealbook >> there was a house party there. i know that you have probably not slept these last five days thinking about how you wanted to change the company fundamentally. and i just got a draft of what is going on here, so why don't you just tell everybody, a, what the past five days has been like and, b, what you decided to do about it >> yeah, so there was a tragedy on halloween night somebody threw an unauthorized house party. the house party got beyond out of hand, that would be an understatement somebody brought a gun, there was an altercation, there was a

mass shooting and five people were killed. it was a huge tragedy. in the wake of this -- let me back up for a second so airbnb is founded really on the premise of trust when we started airbnb, i remember tellingpeople about the idea and people said you're crazy i said why am i crazy? they said strangers will never trust another -- one another to stay in homes. and over the course of the last ten years, i think what we created, what we invented wasn't really a way to book a home. i think what we invented was a way for strangers to trust one another to stay in homes and for the most part it's reinforced this basic belief that we've had, maybe naive, that people are fundamentally good statistically speaking it's true about 2 million people a night stay in airbnbs and most without incident but, you know, very often there

are moments in your company's history, and there was a moment in our past that defined us and this is another one of those moments where a tragedy happens and we say enough is enough, we galvanize, and we are making the most significant change to our platform to increase the amount of trust in our platform and so we're rolling out four different things the first thing we're going to do is have 100% verified we will make sure that 100% of hosts and 100% of listings will be reviewed by the end of next year with the intention of having 100% of the things on airbnb being verified. >> when you say verified, you mean verified by the company, not by a star system of users? >> it will be essentially a combination of the company and the community. so we're going to use technology, we're going to use guests, we're going to basically get a confidence score but we'regoing to make sure that we can stand behind every single listing, every single

host, to make sure every list k is accurate, the information is accurate, the photos are what you say they are, the addresses are accurate, they meet minimum standards, they meet basic safety protocol and the host is who they say they are. you know what the identity is. we think this is a really, really critical step for our industry because i think ultimately the internet really can only function on the premise of trust there's an old saying things move at the speed of trust how can you possibly trust something on a platform if you don't even know it's true. so i think many of us in this industry over the last ten years are going from a hands-off model where the internet is an immune system to realizing that's not really enough. we have to take more responsibility for the stuff on our platform i think this has been a gradual, maybe too gradual transition for our industry so that's the first thing. the second thing is we're launching a guest guarantee. and the guest guarantee basically means that we want to give peace of mind to guests knowing that if you check into an airbnb and it's not as described, that we will first

try to make sure that we find a new airbnb of equal or greater value. if we don't have it, we will give you 100% refundi guarantee. the third thing is we're creating a neighbor hotline. we've had a hotline in the past but we need to go much further so we'll have a 24/7 neighbor hotline where any neighbor in any town in any part of the world 24/7 can call us it will be staffed by real people and be a rapid response team trained by police chiefs to make sure that we can deal in a timely manner with complaints. and the last thing is hopefully something that could have helped -- it's hard to prevent every bad thing happening in 2 million homes every night, but we're going to do extra and manual reviews of every single high-risk reservation. so, for example, if a single person books a 10-room home for that night in the city they live in, that is a very high-risk reservation. well, that's the most extreme

version, but there are less extreme versions and we have a lot of technology protocols that can elevate things but i think that ultimately technology has its limits. at least technology today. and so you have to put a lot more humans behind it in the review i hope that all of this takes what has already been a pretty significant step forward for the company and does what i think is the most significant step forward in the trust design of our platform probably since we started the company. >> you just talked about a lot of things here but what i'm hearing underneath this is -- and maybe i'm wrong there's a bit of a model shift this may be upending a little bit of the model for so very long your service was based on trust, and the trust that other customers could do the review, could do the verifying that the company could not, right we just talked to dara we all see the stars on the drivers, and that's again about trust. but it's us, it's this crowd

sourcing of trust as opposed to a single entity that's actually then verifying what's going on that's been an asset-like business it's actually a very good business model typically >> yes >> i imagine to do the things you're talking about, to verify every single property, and you say this is going to happen now literally in the next 12 months. >> yeah. we'll make sure that every single property is reviewed with the intention that 100% of things on airbnb are verified. there will be a day where there hopefully will ever be anything that is not verified i think we'll do this in collaboration with the community. 70% of guests who book on airbnb do leave reviews, but they leave a five-star review we're going to ask specific questions, was this address true, was this true, was that true we'll use that with our team and try to triangulate information.

>> i have never put my apartment on airbnb, at least not yet. let's say i'm a first-time customer in this respect, although i've been on the other end of it. would you verify me the first time you're going see whether my apartment is really my apartment? >> so this is something i've literally been holding the company together, been on calls day and night getting to design this we're going come back with more details. the team is working on these details now. what will probably happen is in the near term, we're going to demarcate a listing that is verified and one we don't know information about. we're going to be very, very explicit that this is a new listing without enough data. over time with enough technology, hopefully upon publishing the vision would be eventually you could verify upon publishing now, some of our businesses, like airbnb experiences, airbnb plus, airbnb luxe, we manually

review and vet every single thing. this isn't the model we started with on airbnb but this is the model that it's going towards. i think ultimately most of these technology platforms it's going to have to be a collaboration between the company and the community participating together but what happened previously is they weren't talking enough. it wasn't active enoughin se i incentives with the community and the company wasn't hands-on enough. >> what's the cost of this going to be? having manual human beings ready 24/7 around theworld to answer phone calls is expensive having individuals verifying all of this is expensive this company, as you've indicated earlier this year, playing some form of public listings, we can get into that in a minute, but how investors are looking at growth versus profits, margins, i assume that you've been doing some modeling over the weekend. >> yes. >> not just on how to do this but what it's going to cost to do it. >> yes it is a significant investment but i'll say this.

airbnb, we raised $3.2 billion of capital from investors. we have more money in the bank than we've raised. the time is now to make these investments. and i ultimately think we are investing for the long term. this iss inherently a mostly capital-like business and i think it makes complete sense. ultimately we're in the business of trust so we have to make these investments to protect our users. >> does this change any of your planning in terms of timing for this listing next year >> absolutely not. i think this is the very best possible outcome for our community with the changes we're making i think it will actually be a great outcome. i think it will provide a lot more peace of mindi. >> speak to this idea of a public listing next year you've put out a one-sentence release saying this company intends to be public in 2020 why? most companies don't -- >> ceo brian chesky speaking

with andrew ross sorkin on stage making some news announcing on the heels of a fatal shooting in northern california a couple of days ago that they're going to basically unveil a number of changes, including 100% verified hosts and listings that will be reviewed every listing on the site over the next year, 24/7 neighbor hotline, real people, rammed response team, extra manual review of high-risk reservations he's calling essentially a model shift. this combination of more collaboration between community, technology and also more people within the company in terms of the cost, significant investment also saying, carl, $3.2 billion is what the company has raised from investors but they have more money in the bank than they have raised which is why they're able to make these investments and basically engage in more verification. >> which as wapner points out on twitter has become the word for anything regarding social or

digital internet is verification the trending toward anonymity is definitely coming to an ending. >> guys, i feel -- >> jon, sorry. 7. >> yeah, yeah, i've got to get in here. i feel like part of the subtext to what he was talking about, not just that tragic incident at the house party, but vice's investigation showing that there was a bait-and-switch happening with certain properties where people would try to reserve a property and someone would push them into a different property, rundown property that wasn't what they reserved there's threats to airbnb's model on both sides, unverified properties, and then people who aren't going to do with that property what they say they're going to do. chesky spent a lot of time talking about making sure the property and the host are verified, which isn't so much about that tragic house party incident, it's about something else which perhaps is an even bigger threat to their model if they don't fix it.

heap sounds determined to do that. >> something we investigated with our documentary last year certainly big developments ahead of airbnb's expected ipo next year. when we come back, elizabeth warren's response to our interview with jamie dimon from yesterday. "squawk alley" is back in a up omites. when you look at the world, what do you see? we see patterns. relationships. when you use location technology, you can see where things happen, before they happen. with esri location technology, you can see what others can't. ♪ (vo) the flock blindly flying south for the winter. they never stray from their predetermined path.

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you're going to see the market go through a little stumble here, although modest given the headlines out of reuters reporting that the meeting between the president and chinese president xi could be delayed until december, as discussions continue over the terms of the deal and the venue. this is quoting a senior white house official they say it's still possible that a trade pact will not be reached, but that a deal is in their view still more likely than not looking at potentially europe as a likely venue as well switzerland and sweden, along some of the sites they're considered iowa is not seen as a likely venue for any kind of signing. and then going on, morgan, to say that china's push as we now know for some rollbacks on tariffs is not seen derailing progress toward a deal but clearly net negative for the

market it's been a pretty tight range all day, down 50 points. >> it is it's going to be one to watch as we get more of these details and developments of course the next rounding of tariffs are supposed to go in place in the middle of december. the clock is set and ticking even more so. >> we'll keep our eyes on that let's get to the cme and get the santelli exchange. good morning, rick. >> good morning, carl, and thank you. i'd like to welcome my guest who was front and center during the bell ringing this morning at the new york stock exchange, jerome snyder he is head of the short-term portfolio management team at pemco and the pemco mint etf, actively managed etf, the largest, by the way, celebrated its tenth anniversary. jerome, why is the mint etf so successful and how is the active management going to change now that the yield curve has gotten a bit squirrely over the last six months >> thanks, rick, it's good to be with you here in new york at the stock exchange really what we did is launch the

mint etf ten years ago to really be a focal point for investors to focus on cash and capital preservation over the past ten years right after the financial crisis until now, we actually see a changing market environment after the financial crisis, clearly things like credit risk were on the forefront of people's mind. then we have quantitative easing and now we have lower rates for longer that concept of lower rates is really imperilling savers along the way. so what we need to be thinking about is this balance, what we see between potential growth opportunities and continue to be a little bit more cautious as we enter into 2020, '21 and possibility of lower growth rates persisting but really for investors and savers it's about capital preservation. stay at the front end of the yield curve considering rates are relatively stable there now. >> many would say the biggest bubble in history is the sovereisolve debt bubble and low and managed interest rates

we have seen some countries like japan and the european union rates start to move higher does that change your opinion on who low er for longer? >> well, ultimately to have that equation be resolved, you have to see growth move higher. at pimco, we think the growth rate is going to bottom out at 1% when we see perhaps the founding building blocks for some growth trajectory in 2020 and maybe '21, it's too early to be ramping up, taking a more risk appropriate posture. mobut more importantly, be pivoting to the point that you can create optionalty and take on those risks when we see a firmer foundation being hilt billionth. it's about maintaining a high degree of liquidity and yes, to answer your question in order to move rates high eer, you have to see term premiums increase and growth rates begin to increase and it's just not in the cards right now. although we've had a modest steepening in the yield curve, it's more normalized at this

point. the rates are going to move down by technical force and that rates remain here below 2% at this kournt point in time so there's a lot of challenges for savers and risk tabers alike >> if investors are a little nervous about getting involved in interest rates, how u would you change their mind with regard to your mint etf, the fact it's actively managed, what type of returns should investors expect and how much risk will they be taking on? your final thoughts. >> sure. safety is of the forefront of everybody's mind there's been over $400 billion moving to funds. we know that the fed is going to be increase iing their tebow purchases as a point to increase liquidity in the marketplace the key determining factor is if those yields remain structurally lower for a significant period of time. taking a step out and manage

other etfs that can discern risks but most importantly maintain diversification allows investors to have 2% in yields so it's about embracing a fifth aspect of fixed income that has safety and a balanced risk and adjusted returns for the foreseeable future >> thank you we have to leave it there. thank you and congratulations on the tenth anniversary of the mint etf at pimco. carl >> appreciate it >> all right, rick keep your eye on the equities. market's dipping on the headlines out of reuters that we mentioned a moment ago that the president and xi the meeting to sign a deal could be delayed until december kayla we're looking for color from you on this one >> well, carl, the administration is is viewing december 15th as really any deadline here to have this signing. aipac was a convenient site where the two leaders were r already preparing to be, but since the cancellation, they've

been searching for a new venue u and we're at a odds over where to hold this the u.s. was proposing mainland u.s. locations like iowa which was its preference as well as north carolina and chint countered with hawaii and alaska in hopes of f reviving a natural gas partnership with alaska that it's recently installed governor had scrapped in the last months. so certainly china had it own priorities in selecting a location the u.s. had its priorities and they couldn't reach agreement according to these reuters headline i know that over the course of these discussions as they've been trading possible ideas for these, whether it was mar-a-lago this spring or some of these u.s. locations in recent weeks, that president trump has said why not switzerland? the most neutral location you could think of and he said it with a laugh but i'm told by administration officials he was serious and that switzerland has been one of the places that has been at least on a longer list if not on a short list recently.

reuters reporting that switzerland and sweden are under consideration with europe now likely instead of iowa, which the president said just less than a week ago was the likely location >> we know you've been following this closely thanks for bringing us the late latest >> still to come, shares of uber getting beat up in today's trade. ♪ >> that hurt >> early uber investor in the start of that movie, ed norton, talks that investment, streaming wa a h nrsndisew film, motherless brooklyn. next stay with us with more than 85 years of experience over multiple market cycles. with portfolio managers who are encouraged to do what's right over what's popular. focused on helping me achieve my investors' unique goals.

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which technically means the second because rider zero is travis' parents. i was rider one and i took my surf board and went surfing. >> ed norton with us here in the last hour. an early uber investor rider number one after travis' parents and said he met the founder over tacos before investing. still has shares and constructive thing to say about the efficiencies that ride sharing brings >> and was able to bring a surf f board in the car it was quite a fascinating interview. i know one of f the other reasons he was on u was to tuck about edo and this idea of bringing new more targeted technology to tv and film as well i thought that was a fascinating

conversation given the one we started the week off on the show having the role of data and micro targeting and how that's playing out on systems like facebook >> plus fun to talk fight club as always. meantime, faber has this report that red sox has made a formal offer on hp. cash and stock i know you got some thoughts on this one >> i do. fantastic reporting as always. i see why you like this potential deal if you're carl icahn. if you're anybody else though, some questions because from a business standpoint, combining xerox with hpq's printer business makes sense, but xerox really needs the pc business for its free cash flow they're going to generate close to $4 billion of free cash flow. a lot of that has to do with the negative cash conversion cycle in the personal systems business, but this looks like one of those cases where you go

in, slash employees, milk cash out of the business and i'm not sure what the growth component of this deal is going to be. that's question i would have >> faber's interest was on s synergy but we have to watch for developments on that one >> seems like investors are bear hugging this bear hug of a proposed deal. >> market's been patient let's get to the judge >> market's primed for a seven week stock surge or has your money run as far as it can this year it's 12 noon s in the halftime report now i do it's good to have you with us. i don't know what they heard or didn't hear.