option okay, do you futures down by 30 points make sure you join us tomorrow here's "squawk on the street". [ music playing good morning, welcome to "squawk in the street" i'm david faber along with billy joel's buddy jim cramer. we are live from the new york stock exchange carl has the morning off we have an excludsive interview with cisco ceo chuck robbins in just a few minutes from now. a half hour from now at the new york stock exchange, you can see we are set up for what looked to be a lower open.

it always leads us to our road map. it starts not with the stock market but with the big company named walmart and its shares, which are set to open at a new all time high. the retailer delivers an earnings beat, also forecast what is quote a good holiday season plus, global technology spanning slowdown concerns, cisco shares, they are sink ahead of the bell as we told you. rain or shine, we always like that he will be with us for an interview and elizabeth warren on attack. the presidential hopeful dropping a fierce new campaign ad today she's targeting a handful of outspoken billionaires who have criticized her publicly. many of them right here on our air. let's get to shares of walmart they are on track as i said to open at a few all time high, quarterly earnings, comparable store sales up for a 21st consecutive quarter and ecommerce sales, get this, 41%

in the u.s. was what they were up that was helped by growth on what they said was online grocery. walmart also raises its full year guidance. ceo doug mcmillan saying the retailer is prepared for a good holiday season, stock is up about 2% we'll see where it ends up >> it makes sense. >> makes sense to you. >> they came over with jet.com that was a very important edition. because, remember, amazon doesn't do food as well as these guys and that's really important. because you're doing 41% are you taking share you are growing. you are educating. this is a remarkable quarter remember, you got to give it a 6.6% two-year stack growth this is not a small cap reseller 25 million a week go here. >> hence, the largest employer, private employer mid-single growth rate so this person was left to

wonder, jim, should a trade at this larger premium to the s&p or if it does, does that mean it's upsized is are capped >> no, i think it should change, we are about to speak with chuck robbins. he has a formerly great growth company with world wide haired ware, that's kind of not what we want right now what we're looking for is a jie gaptdic domestic company putting them in gross margins. when i think about that what comes to mind is walmart so this kind of fits the bill. now, remember, we're in november if i were a mutual fund, how could i not show it in my portfolio? >> and it has out performed the s&p by almost 10%. >> you have to be like, wow, if i don't own walmart and disney, people will say, did you not read the papers in disney plus and now up to probably i don't know 14 million. >> i want to talk -- i want to talk about that yesterday and

disney, we'll make sure we have a previous day on that because i do want to get your thoughts on it back to walmart, itself, any reproof here for the rest of retail we talked about watch for sometime, it goes to walmart, amazon, target. >> costco. >> there they are. >> home do pe having a good fall you look at these companies and say flush. consumer flush the consumer is not buying at higher end, a nordstrom. we know they're not buying at tiffany. but this is kind of go to the strip mall, not the regular mall buy things, david, in the wealth effect is remarkable what we are seeing is new homes again moving lower interest rates. people feeling good about the economy and their job and not worrying about getting fired this is a barometer of how strong america s. david, i'm

going to turn the tables >> uh-oh >> you were the only person that ever had access to walmart walmart, oh, i did a couple documentaries a long time a go, jim. >> david, it was a gait growth company and i wonder, david, hasn't it just become out of nowhere a great company again? >> well, i mean, they had some dark years there remember mr. mcmillan took over i think from mike duke i'm missing a ceo there. >> he raised the salaries. >> he did, he raised salaries. he's invested in a great deal in the ecommerce. that's why you see top line growth, gross margins, by the way, better than they had been last year. they say improvements. but you know this is a family, almost family controlled company. sometimes we don't mention that enough the family still owns. it's roughly right in there. i got to check the numbers. >> 50%. >> their dividend payments, they

go to the grandkids now are insane >> the stores look great >> that really does matter, once you got that continuity of manager, then you really have stores that are no longer what i would say old looking. >> right. >> and have you someone at the front who knows exactly where everything is, because they worked there more than three months. >> right. >> it all goes back to this idea where you needed some time and you needed the patience of your investor base, not all companies have that luxury in this case, mr. mcmill lon had the buy-in of the family >> that makes a lot of the difference. >> i got it from you >> take from me. >> when we come back from the commercial, i will credit you. >> you are my brother. >> no. >> that's exactly. >> billy joel is my brother. >> that's what steve bannon said to me once that was interesting abig hug and everything. >> are we taking a break now so we make time for san

francisco? >> where are we going in. >> no, oh, okay. >> let's talk. >> next week, jim. >> ye. >> don't miss cnbc's evolve summit i don't want you to miss it. >> no, no, the guests are so great i talk to my executive producer and i said i'm gentleman to los angeles, sorry. and i'm going to get better with doug mick micmillon. >> becky quick will be doing the interview, jim. >> i always love becky, if you ask her, she will say i brought her on tv. i met her, larry kudlow's replacement when i was to be larry kudlow and cramer. she was never as optimistic as larry. as anyone? you have to be very optimistic >> let's move on. >> speaking of politic, you are buddy larry is involved. democratic candidate elizabeth warren is promoting her wealth tax and slamming billionaires.

it's in a few campaign advertisement set to debut on our network this hour. here's a sample. >> it is time for a wealth tax in america there are some billionaires don't support this plan. >> the billion fair tax makes no sense to me. it's bull. >> leon cooperman, by the way, responding today he'll be live on the halftime report all we do on this show is promote interviews coming up. >> what can i say? do you think walt disney doesn't do it my friend adam schemp. we're not alone. >> le-on-was on last week. she respopdz, she is using this, the warren campaign as they see an as effective tool to get their message across it doesn't stop, jim i try to have lunches as often as i can with ceos you do, too. >> yes. >> senior managements, head

funds and warren comes up often. the first question, does she have a chance? could she really win a lot of these people frankly don't want to vote for donald trump, i will say it right now they're not interested in that but they're looking for an alternative, they're very much middle of the road business people they can't see themselves ever voting for elizabeth warren and you turn to this conversation about the wealth tax could it ever really happen and what would actually happen if she did gain the presidency, what in her agenda would she be able to pass it's front and center all the time in these conversations. >> it is first of all, it's a very compelling figure f. fiery, raised last corn school nationalist, 1890s when we had a panic of the 1890s and she's basically saying, look, we have to take back -- mankind across

the goal it's very bryant like. by the way, it was a brilliant order. remember, she's a great professor when i went to harvard law, the one thing we learned is you have fellow taxation, individual level she had a third level of taxation, if she were teaching corporate law at harvard, i think she'd say, look, i want to make an exception. it's time for that it's certainly not the way you were taught. >> no. >> i like my new hobby is to go into billionaire's homes, i cut out 6% of their art from the corner you can sort of measure. take 6%. pull that out. >> you probably do >> i know. >> you can tuesday a little more color. >> i was in last week, a beautiful home we were talking about how much more elizabeth warren can take off the wall up next, we will have that with

ceo chuck robbins. we will see how it opens 20 minutes from now the overall mark, take a look at futures. we got a lot more "squawk in the etfr pt neomg in your way i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ ♪ ♪ ♪

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the communications company cisco down this morning despite

beats on the quarter just reported the next quarter, though, the guidance was actually quite disappointing for many of the analysts joining us now exclusively is cisco ceo and chairman chuck robbins, my partner david faber said rain or shine you come on we appreciate that greatly and thank you so much. >> well, it's good to be here, jim. how are you doing, david >> i'm doing well, chuck, thanks. >> so i just want to get things in perspective for people at home this morning we added an amazing quarter from walmart, the consul mat consumer company, people might say you know what, if walmart is not good, why isn't cisco good can you explain to people that it's entirely possible the consumer business in technology can be strong? the international and domestic enterprise business can be different from week to week. they're different economys >> jim, i think you heard from

many of my peers and colleagues over the last couple months, frankly, those that rely on business investments and capital investments have been expressing concerns over things we are seeing in the marketplace and we actually mentioned it in our last call so this is not something that has newly emerged and what we've talked about at the end of last quarter of q4 when we said we began to see some weakness just manifested itself throughout the coroner. you heard businessman powell that's the issue we're facing. the consumer in the u.s. from walmart and others has remained very strong, it's a bit of a dicot my in the u.s. market right now. >> we all know you return shareholders, you have an incredibly forthright and transparent cfo, kelly cramer. no relation. on the calm, chuck she goes, i don't see any

catalyst to change the momentum right now. >> that made me feel that you and kelly are saying, this is not a one-quarter turn, if you buy the stock, from my perspective, dot expect the next one or two quarters, maybe even three quarters are going to be different. >> well, jim, i think what kelly said was we're not modeling any shift in momentum simply because we don't see anything in the short term that is going to definitively resolve some of the uncertainty that exists around the world. you know as well as i do, business confidence, ceo confidence has been waning and it's really been waning because of the all the uncertainty, whether it's the hong kong situation, brexit, what's going on in washington there is a lot of uncertainty, all we are seeing is we aren't modeling change in the momentum. certainly, if we get a resolution in china, even an interim deal, that can potentially help

i also think our customers i think they've taken a pause. but this technology is so fundamental to their strategies. it's not just operational infrastructure technology today is fundamental to how they are running the organization and the strategies, there is only so long they can actually pause >> chuck, are you suffering an atlanta falcons fan. so on any given sunday, i think that cisco can win let me give you the full case, sis colorado i know that's a little odd there is a guy given the full case ceo i think you have a tremendous amount of your business that's in secular growth mode >> that you spent most of your time talking about the secular growth the growth mode people want to be in, the cisco growth mode had great margins is coming on strong, if you hold on you will see upside regardless of world wide growth. >> hey, jim, if you look at how we're owe we'll talk about ifb in a minute. if you look at how we're

executing around the things that we control, margins were fantastic, security growth was fantastic and i just want to take a minute to talk about this transition to software that we have been pushing for the last four years i think it's under appreciated we said in 2017, by the end of 2020, which is next july, that we would have 30% of our revenue coming from software we are on track to make that happen so think about 30% of our revenue. that's a big software number we said we wanted to have 66% of that coming from subscription and saturdays. we are ahead of track, ahead of that heading towards july. if you you go back four years ago and look at our software business, it was much, much smaller, less than a third of it was coming from subscription so by the end of this year, 30% of our revenue will be coming from software, greater than 70 from prescription at sass. so that transition has been going really well and the success we had building our core

networking portfolio i think years from now two-to-three years from now when those renewal windows come up, i think you will see the benefit of that smr chuck, i would like to come back to sort of the concern at least we see reflected in the stock price this morning in terms of what you are hearing from your customers. you did address it in some detail on the conference call. i'd like to have our viewers understand it as well. when you said things leak you saw some large deals get done. they got done smaller. you said that you were personally involved in a few things, talking to customers about transactions, the time they got done, they were smaller. the more signatures were required so what's going on out there and do you expect it to continue into the next quarter and the quarter after that >> yeah. david, what we see, when we see our commerce pause, there are a few things that are usually signatures of that first of all, our close rate on our fenneunnel or our pipeline s down, we saw deals getting pushed down, some deals that

start out bigger and they get smaller. we saw all of those things occur. and it's just a classic signal that we've seen historically i have been doing this a long time it looks exactly like what we've seen in the past now the thing that i would point out is some of these large customers that when they start saying i need one more signature. let's add another step into the procurement process, they're just expressing caution that they're concerned of what's going on in the macroenvironment that's what we saw when we saw some service the consumer. kelly and i were involved in 21 transaction with a very large customer but it started at one size, by the time it finished, it was relatively smaller it was because they were concerned this could bleed over to the consumer at some point. we hope that doesn't happen. relative to how long it lasts, as i said earlier, we are modeling it's impossible for us to model

improvement. we will continue to focus on what we can control. >>let's assume we get a phase trade deal signed with coin before the end of the year do you think that changes the calculation for a lot of these businesses in terms of how they view their expenditures? >> i think that would help i think that's one of the most significant things lingering right now. i think that any good news like that, or if you get to a resolutional brexit, one of these issues, it would give our customers more confidence. that's certainly one of the biggest issues thanking out there right now. >> you spoke to us moments ago about sort of how you positioned the company if terms of the importance of software you also talk often about cloud automation, 5g, which is something we talk a lot about here tell us in and our viewers, 5g we hear the word, but it may be a number and a letter to pa lot of people. what does it actually mean in terms of the opportunity for a cisco and what are you seeing right now in terms of how your

customer, are adopting whatever it is you have available to them and will continue to >> well, i listened to how jim described it yesterday i thought he did a great job it's, right now where the focus is, is really on building out the networks for the consumer mobile devices and the early stages of that, they're going to run that across their existing new yorker infrastructure but as they build out broad-based enterprise services, which probably begins later next year into '21, then they'll have to then upgrade their core networks to accommodate the massive increase in traffic that they'll see with iot applications, manufacturing applications, et cetera. and that's where we will begin to participate in that because of that backbone network upgrade. will you see some announcements from us over the next month or two that will position us for being very well prepared for that transition when it occurs >> all right chuck, last question what do you sa i to the christians, including you got

this continued desell rachlths you got this -- deceleration, you got this service providers is it time to do something big now have you this great secular growth story have yourself the cyclical and fought tolerate that level of what i know you think is under performance >> yeah. you know, jim, wee have a lot of this i think so that we're working on right now that we'll begin to unveil. there's a lot of innovation coming out of the company. we have a significant amount of announcements next week, more coming the next few months look, one quarter comes and goes and i think we are focused really on -- i know it sounds cle sh cle sheaic -- owe clichic the 49ers look very good this year, don't you think? >> oh, geeze, i switched to the west coast i was going to tell you talk to your friend arthur blank and

have him fire dan quinn. chuck, again, thank you for coming on. i want people to know for the long term it's made main for chuck robbins and sis colorado i appreciate seeing you sir, i hope you have a good one. >> thank you, guys have a good day. >> okay. all right, still to come right here, it's jim's mad dash. we'll get down to the opening bell in about six minutes from now. you can see we are set up for a slightly lower open. more "squawk in the street" ahead. my parents never taught me anything about managing money.

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in three minutes we get started with trading here at the new york stock exchange. let's squeeze in a mad dash ahead of that open. >> this company bought the equivalent of managing by constellation brands it's been disappointing. although they missed by looking or 100 million ebitda loss i know we have the ceo at 11 i want to point this out, david, in the 1930s when our country had to protect the farmers, we killed catlet. we killed hogs and we plowed under crops. if they don't plow under

cannabis in canada, they're never going to get any pricing what's happened is there is a zur serve ed of cannabis they don't believe in, i saw this in oregon, they ripped up the pinot noir fields. to pe it doesn't matter how good you are. there has been major misjudgments it's not as big an industry people thought maybe one day it will be these stocks are disastrous. >> a lot of industry seems to be waiting for legalization, federally here in the united states >> that will be the big moment right? if it ever happens >> they liked vaping here more than -- it's something that's happened, a very big disappointment i want to warn everyone that owns these stocks, it's not over there is way too much -- not over >> no. >> so was that money well spent by constellation >> that's a great fight. that's the number. 5 billion cade that's a very good question

because it is true that if there is going to be a company that's positioned to take over the market it will be there or kronos, but, david there is just oversupply it's kind of like the '30s i don't know what to do. everybody can say don't worry about model. it hasn't happened to us they trade together. >> you can't short tail rate it costs you so much. you wish you could have. >> this is a disaster of incredible proportions now, obviously, canopy at one point can trade cash since they were burning so quickly. cronos, too. it's not a big industry until what you talked about. it wasn't like they jumped the gun. everyone thought, it will be huge we're going to be drinking cannabis everyone will be smoking, eating cannabis, you know what? no >> it got ahead of.

>> ahead of itself is right. you remember the buildout of the fiber in 2000. >> yes >> it's a fiber buildout, david. >> it all got used eventually. >> it did. maybe this will happen with all the kin bcannabis out there they need to burn half the cannabis man, i want to be there when it happens. >> that's the opening bell here at the nyc s&p 500 real time exchange let's take a look. by the way, here at the big board doing the on honors, the internet commerce etf. that's a special purpose >> that's back >> there are so many spack, jim. everybody starts to spack. you do a spack you do a bunch of them then you have to go back and buy some it's easy to list the spack.

it's harder to find the right acquisition for it >> how is the be, right, it's featuring your business. >> well, it is >> do a spack. go over to europe. >> you got to find the right, you put a management team in you look at it and your shareholders have the right to say yay or nay they can only say yay or nay not no. >> i think someone asked me last night, how can they, the brokers, allow a smile direct to come public? and i had to remind them, it's kind of like, forget it, jake, it's china town. forget it, jake. it's wall street they don't sit there and try to be governors of the situation. if it can walk, they'll put it up. >> they can find somebody to buy it they'll sell it. >> right if you can get it. the only way you can get something to move is to sell they're in sell mode so a spack people need to know. spack is like, david, trust me, give me millions and trust me.

why? because i'm trustworthy. >> well, typically, the person ahead of it has some expertise in a particular area and, therefore, indicates their ability to find the right acquisition opportunity. but it's a bet but there is an awful u awful lot of spacss. >> let's go back to cisco for a second >> it's do. >> unthat's a surprise, because the trade has gotten to a level where i think people are saying you know what, as you asked, chuck, it's not necessarily the next quarter is going to change, i would also don't be bolting, your question about a trade agreement would make it so at 43, 44 i know my charitable trust would buy more of it. >> you would >> yes, i would. i don't expect anything great to havl happen. i think -- >> it has not been a good year for cisco. stock now up a little over 4% year-to-date >> oh, i know. that's why when i think of sis core i think of the one that

delivers food to my restaurant. >> speaking of stocks, though, that are having a good year. walmart, of course, was a feature at the top of the broadcast, given the company's earnings and comparable store sales. it's strong performance as well online it's holding in where i it appeared to be just over 2% that's an all time high. >> people want to own this group. obviously, it is a consumer economy. it could be wealth effects >> it could be agen people feel confident because the confidence they have that they are not going to lose their job given the fact there are so few workers around >> that worked i'm not talking political. i'm talking actual numbers okay you can say president trump is the reason why these numbers are working is because of his policies what matters is job confidence breeds spent and boy people are spending they're spending they're also spending where the bargains are >> right >> brian cornell has not one u

run the same old target. i don't know if you have been to cost collately, but no price increase from the tariffs that i can find >> that's really the case. we're collecting now $7 billion worth of tariffs a month i believe at the treasury on goods coming in from china >> i think it's the leverage that costco has. they can tell people, look, are you eating it. we'll take so are you eating it. i once was involved in a business and i didn't determine what price we got. they did usually there's bargaining whatle mart is very similar. they're such behemoths they can really change things. you know i think the walmart announces great numbers. there is no impact from tariffs and inflation is low did you hear that? >> it is interesting, you know, it is sad that the president spend a lot of his time in the warning watching a lot of tv screens. so while fox and friends is certainly up there, so are we. >> fox and who

friends? >> oh, we don't watch that show. we're doing it >> i was on it for two years that's where the lady started. yeah, fox and friends. >> i must have missed that period it used to go go before you came on cnbc. >> lightning round was the late -- there it was time, the day from 7:00 until -- anyway, that was you saw the president weighing in there on exactly what we were talking aboutt good timing. >> i was quoting the president while i was doing that >> now you were. he was kind of quoting new his tweet. >> we quote each other all the time. >> of course, this is a part of his plan tough be him the fed chairman after that guy that he doesn't like >> jay >> yeah. >> what can i say? i'm speechless, david. >> i hope you will still do interviews when you are the fed chair. i want to talk about disney, yesterday's performance, it was really eye opening, jim. of course, if you are unfamiliar with the company we've discussed it endlessly,

disney plus, 10 million or more than 10 million subscribers. they put that out in a press release right around noon and think it's an interesting reflexion of our current stockmarket. the performance of the stock, itself, to that news it was clearlative real positive right? >> right. >> there it is, now, look what the stock did over the course of the day. i know it's hard to see here, but in the moments after, it really wasn't up very much. >> it was up to 2, 3, 10. >> 50 cents maybe. >> it was down, but you are absolutely right i looked at it and said, wow, i'm surprised people don't like this. >> exactly are you also a prisoner of the old market yes, that, too in which fundamental players immediately read press releases and made decisions you know what, that's not the way the market works anymore. >> tell me how it works. >> it's the algorithms they are not necessarily set up

for interday news particularly well they're very good at dealing with our earnings report or news after the bell they're not as good in that sort of period of time during the day. you don't have the fundamental investors that rush in, because there just aren't as many of them anymore. >> right are you so right. >> speaking to one hedge manager this morning he says, i'm still keying off the pattern recognition i've had over the past 20 years, which says, if there is not a response, that's because people already know it. but that wasn't the case here. people didn't know it. it was really good news. and it took sort of much of the day to fully reflect the market of what it meant for disney. >> when i spoke to bob i caner yesterday afternoon, they said, i'm stuck. i'm stuck. yet -- >> how'd do you that >> ceo -- i had him on the phone. what do you mean >> why is he talking to you? >> why is he talking to me

>> he's not supposed to talk to you. >> why >> he's only supposed to talk to me >> i would give you his number you will not get it. i have the new number. he changes his number. he was sick of you calling >> i have a special number. >> this is a man can i just say. >> here we go, there is a man what a man >> what do you look? >> a man, incredible man just a man >>', david, oh man >> sorry. >> just talking about the brand the brand the brand. i added that the ceo, the ceo, the ceo. people think it was a great gamble the gamble would have been to do nothing. >> without a doubt without a doubt. >> he took the gamble in his self effacing nature, plus you got to read his book >> i have. i'm on it. in it. i'm on page 83. >> i'm sorry >> that's okay you know what, i'll make it up to you i have via com on today.

>> you do? >> no you don't? >> i do. >> i will leave here and interview bob bacchus. >> we're done, the show's over let's go to break. i've had enough of him talk to the hand are you serious? >> yes don't you wait. >> of course they talk to you. it's their last quarter they are reporting as a public company before the deal. okay so why not talk to you >> billy joel will talk to me once they are united >> dream on. >> look at that. see, bob bakish. he's going to run both those companies merge them >> there's bakish. by the way, the stock is up. i'm just kidding i love the fact that he gets interviews with all many i long term -- not at all reversing yesterday, we blocked cbs in a long term down trend. i think it hurts when you sit there throwing darts at them, it gets them to come on the show.

when you say why do i own this in my charitable trust how could this possibly be the trust case >> i have it, it's been doing dearly >> the feed numbers were a bit better than anticipated as you can see there. this stock is being rewarded >> then you know something about it that's good. paramount -- >> they had the income, not bad. first time in four years they turned it around. >> now they may want to pull via com from the bundle. >> happy to go through questions if with you, okay, if you need me too, jim. the question is, can they, do they use the scale that continues to be the key question so many investors ask. >> also i will be asking ability the idea, will they lose the nfl package? i think the nfl likes the look and feel that jim nantz, tony ro no. >> as will fox tell you the same thing. >> i have tony romo, he told me

i will have you look like the cowboys, your wife is a knockout. >> that's important in the negotiation and how big will amazon come to play in some fashion. we know abc will be involved before we bet to bob, anything else we should be keying off aside from entertainment stocks and things you are watching? >> i'm looking at again, this two-sided market has got a lot of people spoofed and a lot of it, david, is this notion of, is the president when he says, we're going to have, we're rapidly going towards a deal, we're not going to have a deal, he's creating havoc for a lot of stocks i said yesterday, you don't want to own the procter & gambles in the world. you want to own the cyclical's david, it is playing out that's what you want to own. and technology technology is so good except for the ones that are involved just with enterprise. >> right enterprise >> so the u.s. budget. the budget is huge, cisco is the

second year. >> and it's still on the internet of things he talked about will not be a significant contributor until end of next year if not into 2021. >> yes, i have john malone and david zaz. >> okay. i'm going to deal with him while we go to bob miss seen, get mar of what's going on >> happy thursday. once again just like thursday, the dow just went positively briefly, you take a look at the sectors here, mostly cyclical's weak at the open so transports, banks, semi conductors are down. retail is up wal-mart had a good print. it's brigg up the retailers, the xrt, retail etf. walmart there that's a historic high, folks, there it is, good numbers, 3.2%, u.s. comps. that's a very good number as well, even though the xrt, the

retail etf is up nicely, don't kid yourself, it's bifurcated. there is a small group of winners at the top we know who they are, toorth target thieves are not typos. walmart 33, amazon 17. it's a small group there's a few others,ing lululemon, maybe a couple other ones out there by and large, a small group of winners and losers right now it's easy to figure out why. there is a high cost of business out there we have been talking about this for years, view and convenience is what the consumer wants today. it's difficult to deliver that in a big package, you want inline delivery, home delivery you got the expectations very high on selection and price from the consumer it turns out there is a small number of companies who can deliver on this across multiple platforms and have the money to actually spend on that that's retail in a nut shell. elsewhere, have you noticed this morning an explosion of optimism

my, there is a lot of bullishness out there. look at barclays, big note small caps are at an inflexion point. the headwinds have subsided. 2020 will be the year of small cap stocks banc of america, merrill lynch this is mike wilson, the stage is set to extend the cyclical rally on cyclical stocks we think the stage is set for a restock, driven recovery in spring 2020 to extend the cyclical rally that's rather remarkable there for mike and his team over there. often they're very critical of the stockmarket in 2019. then we go to morgan stanley here we think a secular rotation from growth to value is beginning remember, of course, value stocks being bank stocks, largely and some energy stocks, they're bullish on value in 2020 retail investors seem to be very bullish. the american individual investors, very high bullish levels

40% bullish. bears, normally 30, thunder% bearish. 24%. retail investors are both. what does all of this mean this sudden outbust of optimistic retail investors are bullish the market's at a new high, the market internals include we have been going up rapidly in the last few weeks, i don't know this is a little red warning sign to me on a classical basis if you look at it. internally, they're absolutely right. we have broken out, technical analysts note we've had a breakout to these new highs. we'll see, keep an eye on this frothiness in the market, guys, back to you. >> thank you, bob. i don't know if jim and i are talking the overnight data from china, fixed assets, industrial production year-to-date. retail sales, none of it good. >> if you talk to chuck robbins about, they managed to distance themselves from china. by the way, it's up for

technologies to visit china because of technology dealing. >> carolina is getting tough. >> china is awful. we know they play the long game. >> they do, it's in relation to the pressures they're feeling and what will happen in terms of the trade talks. which thankfully, we didn't talk about at the top of the show. >> we didn't >> we have to get to rick santelli and the bond fix on fixed income >> it's fascinating. let's start out with the macro let's open up the early cart >> that givers you the significant levels, the cycle low there on the left. right around 1.45-and-a-half you could see the 190 at high close in september mid-september. we took it out we're slipping you see there is still an upward slope, definitely a failure to hold into those 190s or psychologically important 2% if we go on our macro. you look at a three-day chart of

10s, you can see we have gone from 195 to 182. we are down a baker's dozen with respect to high to low over the last three sessions. we are down 12 basis points on the week if you look at overseas bund deals, similar patterns. the percentages are rather large. the scaleing is difference we went from a minus 32 to minus 34 we expanded it 12 basis points and started at minus 22. we started not only what's going on in the eu if you look at what's going on in the uk with all the brexit issues, what i'm trying to bring out is many different fundamental patterns are the same 83 down to 72, finally let's look at the dhar index sideways rates have been going down it is losing some of the momentum, recouping some of the okay losses. in a half hour, we will have fed nominee dr. judy shelton a lot of questions we'll talk about trump's economic club of new york

comments, wanting negative rates. why would any president want negative rates that's what i'll ask her jim, david, back to you. >> i'm looking forward to the answer i wonder the same thing, rick. >> rick santelli today marks a big day, by the way, for the future of tomorrower worldcom ceo bernie evers. some of the younger viewers out there may not know who he is it is the dead lean for a federal judge to receive letters from victims as a court considers a reduction in the sentence of the former worldcom ceo, bernie ebbers what remains one of the biggest accounting frauds in history one i broke. >> yes, you did. >> he served a little more than half his sentence, 25 years he was gimpblt i spoke to him in 2003 as a part of the documentary, the big lie take a listen. >> you are frustrated.

>> i'd like to for the sac of all the people that built the company, not for my sake, i'd like the facts to be known >> well, you may be out of bankruptcy, who knows, by the end of september >> i don't know. i haven't heard. >> it's possible >> really? >> yeah, possible. you know the name is going to change to mci are. >> well, it was a hell of a ride. >> it was. it was >> well, you may not have vieiacom, but you look exactly the same >> i don't know about that. >> that was quite a moment. >> the stack was like a real -- >> it was a shot to the market 6:00 on our air. tell the world, worldcom is a massive fraud. it was a moment. this was as well talking to bernie ebbers walking through his hometown unexpectedly when he joined us on that day wow, can it really possibly be 16-plus years ago? it seems hard to imagine, but i

think it is. >> amazing >> right before that big blackout hit the northeast but, jim, you look at what he got. >> that incredibly long sentence. >> yes >> oh my god and an enron, you go got it. >> nobody. >> nobody. >> angelo ma zillow, maybe he's watching i mention him out of so many executives >> tom west who is now the general council of uber did his best but they went after the money. coming up, we'll talk about the business of cannabis take a look at canopy growth jim mechanintioned it in his ma dash we'll have an interview with the ceo. "squawk on the street" will be right back

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carl has the morning off you can see we're barely down and the s&p breaking into positive territory ever so slightly. >> our road map today starts with shares of walmart spiking to new highs, forecasting a good holiday season. >> plus more worries for we work, the company's net loss more than doubling in the third quarter. we'll go through those numbers. and elizabeth warren continuing her war on wealth in a new campaign ad. we'll speak with billionaire democratic candidate tom steyer on her wealth tax, the presidential race and a lot more all smiles for walmart today. shares hitting a record high after the retailer reported better than expected third quarter earnings, although profit remains under pressure. the company is raising full year guidance for the second time this year. walmart's cfo, brett brigs, told cnbc q 3 was a really good quarter. the u.s. consumer remains overall in good shape. we're joined by michael laser.

he has a neutral rating on the stock with a $115 price target also robbie holmes he has a buy rating on walmart with a $135 price target michael, let's start with you. >> good morning. >> you've got a raise in guiding, beating earnings estimates. is this more of a reflection of what's going on with the strength of the u.s. consumer, or is this more about the strategic initiatives that walmart has in place >> this is a combination of both the u.s. consumer is in a good spot wages are growing. the balance sheets are relatively healthy, but walmart is gaining market share and a lot of its initiatives are paying off they're seeing growth both in store and online their growth margin in the u.s. is starting to stabilize they're leveraging expenses in the u.s. it's all good but a lot of that is priced in and if we were to frame that out, this year walmart is going to earn

probably $5. if they were to grow that around 5% each year for the next few years which would be a big number given the size and scale of that business, that means over the next four years they might be able to grow $5 to $6, and if the stock were to trade at 20 times that, which would be a premium to where it's traded on average over the last three years, it would mean $120 stock. well, it's at $123, $124 right now, so a lot of the success and a lot of the momentum that walmart is experiencing has not gone unrecognized by the market. >> so you believe that the upside for walmart stock is already priced in. that's what you said in your november 8 note, your price target of 1$115 is about 8% belw where it is trading today. do you believe over the long run the market will be able to appreciate some of these initiatives that make take some

time to come to fruition >> i think the key for walmart is that it can sustain the momentum from here, and if that's the case then perhaps it can grow with earnings growth over time. a lot of the growth right now is coming from the rollout of online grocery pick-up that's accounting for a quarter to a third of growth in the u.s. business as they fully penetrate the rollout of that, it may be a little harder to sustain the 3% plus comp growth that they've been achieving recently so that's a critical question for the stock from here. >> robbie, as michael mentioned, unlike walmart's retail peers, it has grocery, it's invested heavily in e-commerce, but at what point do you think investors expect better margins from those initiatives >> well, there's a huge focus on margins at walmart but importantly, the margins are improving, the e-commerce

margins are improving. also walmart's business growth continues. they're leveraging expenses, so the profitability for walmart in the u.s. continues to improve despite all these investments they're making in e-commerce and the price investments that they're making and you're seeing that play out with same store sales which were up 3.2% this quarter. what really surprised me was how strong the transactions were, up 1.3% a lot of brick and mortar retailers in the u.s. are struggling to generate positive traffic and walmart is showing that their e-commerce strategy is not only supporting their e-commerce business but also their store traffic. >> robbie, the market has obviously kind of awarded walmart with a lot of credit for the things you're talking about and giving the valuation where is that traffic growth coming from as far as you can tell in other words, is walmart truly stealing market share either from other kind of mega store players or elsewhere, or is it just that they're kind of growing in line with nominal gdp

and there's enough to go around? >> well, they're clearing gaining some market share. if you just look at the overall numbers, i think some of that is come from a lot of the store closures you've seen so certainly toys "r" us going away created a market share opportunity in the toy business. they're gaining market share in grocery given how fast they're growing their grocery business right now in the u.s when you think about valuation, walmart's free cash generation remains strong so while on a pe basis it could looked stretched by historical standards, we calculate yield as approaching 3 to 4% as we speak right now, so it's not an overvalued stock when you look at it on a free cash flow basis. now, as you go further down the line and they start to benefit from some of the alternative profit streams that come with success in e-commerce like digital advertising, you could see other drivers that come into play that make the profit better

in the future than the market currently experts. >> on the top line they did miss estimates. michael, what do you think the street was overestimating in the quarter? >> a lot of it was currency in international markets. they're seeing some softness in areas like the u.k., chile, so there's probably not a lot to read in. the main economic engine for the business remains the u.s. and they're doing well in areas like online grocery pick-up which they're really defining a new frontier for competition in that area and they're probably taking share within the grocery space because their grocery category comped up mid single digits. others are seeing closer to 2% to 3% growth within that category still, a lot of that good news is priced into the stock at this point. >> robbie, we've gone from a point where people thought walmart would be among the victims of potential new round of tariffs to where everyone has essentially said they can handle

it, absorb it. the president tweet not guilty that rega -- tweeting in that regard this morning. is that the case even if we get an escalated round of tariffs, can handle that, it's not going to be visible in the numbers >> that's a great question i actually was in asia-pacific last month meeting with a few of walmart's suppliers, particularly on categories like apparel. the message i got was walmart is much better positioned to mitigate than most retailers in the u.s. the other thing that i think you've heard walmart talk about and that we believe is if we were to see a sustained tariff situation that caused a higher inflation in the u.s., we would expect walmart to maintain their aggressive low price positioning and it could accelerate market share gains for walmart. so very positioned from a mitigation standpoint. also positioned well if the trade war were to escalate rather than de-escalate. >> you got that trump tweet there, walmart announces great

numbers, no impact from the tariffs which are contributing billions to our treasury, inflation low. do you hear that, powell we'll see if that filters through the end of the year. thank you so much for joining us on these walmart earnings. >> thank you >> thank you. next week, don't miss cnbc's evolve summit with on stage guests including walmart ceo doug mcmillan. visit cnbcevents.com come/evolve to register for a seat. there are troubles for we work it lost $1.25 million in the third quarter and occupancy rates decreased to the lowest figure since mid 2017. leslie, you follow this closely as i have. they're saying record desk ads drove the dip in occupancy in the third quarter. what >> you wonder why you would mess

with that metric leading into an ipo because that is the metric that people look for in terms of the efficiency of your product so that's an important metric for investors so to see a dip in that is surprising and you also have to wonder with these losses how much of the decision-making involving the investment had to do with the fact that they expected that $10 million of capital to be coming in the door through both the equity raise and the debt offering that they were looking to do. you have to wonder -- it's hard in hindsight, would they have done things differently -- >> if they knew they were going to be facing a potential catastrophic cash crunch in the near future. >> exactly. >> one of the many things unique about this situation was the ipo and the attendant debt offering were make or break for the company's strategy and you almost never see a company approaching an ipo where it's, you know, if we don't get this money the entire story changes >> right. >> of course soft bank and there's the man to runs it, soft

bank and its vision fund have come in with significant investments, taking control of the company, not for balance sheet purposes they're looking for a new ceo. the journal reporting john ledger that report is amongst a handful of candidates they're taking a look at right now and trying to stem those losses as quickly as they can. >> that new ceo has a challenging road ahead as they look to stem i will say on the positive side they showed a member of members climb in q 3 which is a big part of their growth story. enterprise is seen as stickier in terms of tenants for those desks that seem to remain less filled than they did a year ago and a quarter ago, but they saw about 43% of the memberships now enterprise which is what they at least see as -- >> because of the recurring revenue they hope as opposed to

smaller startups that could come and go at the same time, there are those who say, well, you can spend as much as you possibly can, you're going to be able to achieve high revenue growth rate. >> the capacity edition which is why the occupancy rate went down shows you there was momentum in growth at any cost and that was pursued even through the past couple months. >> it's still unclear exactly what those expenses went to. it's broken down as kind of new market development and i think it's adjusted new market development is the term that they use it's kind of all encompassing, has to do with some of their acquisitions that they're involved with but also some of these expenses that as we now know in hindsight did get out of hand, especially as they tried to preserve that company culture and spend money on things that may not have been as important to the actual growth. >> essential tothe actual company.

we'll keep watching it as we should of course very important investments still for soft bank. we got a big show ahead for you right here though. elizabeth warren continuing her war on wealth. she's got a new ad premiering on cnbc billionaire democratic candidate tom steyer is also going to join us he'll react to that, discuss of course the presidential race of which he's a part. later we will hear from perspective fed board nominee judy shelton quk t see icong right back

presidential candidate elizabeth warren out with a new political ad promoting her wealth tax and slamming billionaires it's debuting today on cnbc. here's a clip. >> it is time for a wealth tax in america i've heard that there are some billionaires who don't support this plan. >> the vilification of billionaires makes no sense to me it's bull. >> billionaire and 2020 presidential hopeful tom steyer joins us right here at the new york stock exchange to discuss the state of the race and a lot more what do you make i mean, you support a wealth tax? >> i came out with a wealth tax i believe long before elizabeth warren. >> and you've actually said to michael bloomberg who may enter the race that he should actually advocate in favor of a wealth tax if he wants to join the race as well. >> if you want to represent the democratic party, you've got to be dealing with one of the critical aspects of america

today which is incredible income and wealth disparities, and you should be addressing it specifically if you're mike bloomberg or me and people who have been incredibly lucky and incredibly fortune you should be for a wealth tax >> as you might imagine, we speak to quite a few people who disagree with that. >> if you didn't, i'd be disappointed. >> also during the course of my day or whomever i may be meeting in that day as well, whether it's in the private equity business, whether it's just ceos or management in companies, they say, listen, attack it another way, through capital gains, the estate tax the wealth tax itself is going to be so hard to simply adjudicate let alone figure out. it's a road not worth going down. >> look, there are definitely a lot of implementation issues about it, david. i know that's true, but i think that it's a statement really about something over the last 40 years has really gone wrong in the united states of america, and that is we've seen a

corporate takeover of the government and as a result we've seen all of the -- >> what does that mean, a corporate takeover of the government >> it means we can't get stuff done because corporations don't want it. i'll give you an example i think over 90% of americans would like to have a mandatory background check on every gun purchase and have wanted it for decades and we've had a series of horrific mass shootings, mass killings, including of school children we've never gotten background checks on guns even though over 90% of americans, more republicans than democrats, want it the majority of nra members want it and how could that be true in the united states? they never taught me that in fourth grade civics class. the answer is the gun manufacturers don't want it and they really control the nra and the nra can block it if you look at -- look, take a look at how we pay for drugs versus every other country in the world. we pay literally ten times as much for insulin as canadians.

that's a drug that was invented in 1930. it's not just fresh -- >> you say you think that's a reflection as well of the power of corporate america as opposed to -- >> there's no question about it. >> -- inefficiencies in the delivery of health care in our country. >> no. there's a law that says you can't go to canada to buy the cheaper insulin there. did you know that? >> yeah. i also know by virtue of spending so much on prescription medicines, we're subsidizing the science behind them that others around the world are benefitting from because they pay so much less. >> first of all, how is that right, and b, you and i both know that the amount of money the drug companies spend in terms of research is dwarfed by the amount they spend on marketing. they claim that everything they make goes into research and we both know that's not true. we both know that in fact there are laws that prevent the u.s. government from negotiating with drug companies the way every other country in the world does.

>> that's a part of a plan that you have obviously in terms of changing. >> we have 25 million diabetics in this country. the idea that they should pay ten times more than someone in canada for a drug -- >> you have to keep incentive in the system, don't you, to allow those companies to feel like they're still developing a drug that -- >> of course you do. but when you get into the guts of this, you see just the way you do in terms of the gun violence that actually the government is acting -- >> why is a wealth tax the way to deal with what you say -- >> that's not the only thing i've said. i would repeal all of the republican cuts in income tax for the highest earners and for big companies. if you look across this country, take a look and see what's happened in terms of the increase in income in this country and look at where it's gone it's shocking. it really is traditionally in america when we

got more productive, when incomes went up, it got split pretty close to 50/50 between employers and working people that's the american model. >> right. >> this is 100/0 for 40 years. >> i get it. we've all thought about it so much you're certainly a beneficiary of it having run a hedge fund, globalization, winner take all economy, but those also are changes that have occurred as well over that time period entrepreneurs were able to capture so much of the value -- >> i know there's always an argument but there's been a 40-year war on working people, organized labor and the rights of working people to negotiate and get their share. when you go around the country, it's one thing when you hear somebody talk about it in the abstract, but if you go and meet somebody who's been disallowed from getting overtime pay for some spear yus reason, you go and see somebody whose raise was taken away, you go and see somebody who's being absolutely mistreated, a hard working

american, and i've seen this over and over, it's not a statistic. it's millions and millions and millions of hard working really idealistic, really decent wonderful people where the system it is -- >> they support the idea of a wealth tax because so many of them believe that if you work hard -- >> i think that. >> i know you do and yet it disappear it's going to be a winning issue to put together a coalition of voters you need. >> this hits the richest americans, the top ten-tenth of 1% of americans. this is not broad based. you know i took the giving pledge over ten years ago because i said, look, i know how lucky i've been. i know how much the system has enabled me i know that millions of americans sacrificed over centuries to build this system that i was born into and got the

advantage of all of their sacrifices and i felt like there's no way that i think it's all due to me. there's no way that i want to cut myself off from the existing millions of working americans, and there's no way that i don't want to feel as if we're in this together, that we're going to rise together, we're going to succeed together i don't want to be part of a class that succeeds if everybody else isn't succeeding. that doesn't feel like success to me. that doesn't feel like america. >> is there a risk that the wealth tax could actually make the economy worse off? there investigator reports recently saying it could make a dent in economic growth if it were to move forward is that the only way that you believe we should be reducing income inequality is through tax policy, or is there something else the government can do as well >> that's a great point. i do believe in reducing income inequality through tax policy, not just the wealth tax but others too to me that's the point as well

look, i believe in two other major points, having people earn more i really believe in a living wage if you look, you'll see that the minimum wage hasn't kept up with inflation for the last 40 or 50 years. it would be $11, not $7.25 if it were inflation adjusted. if youincluded productivity gains it would be over 20 bucks, not $7.25 which is where it is on a national level. so i believe in that but i also believe in prosperity, like do i believe that things should be distributed more fairly? 100%, both in terms of how earnings go and also how taxes go but more than that, do i believe that as someone who is an investor for more than three decades that i understand growth, how important growth is in a system that's growing there's a lot more possibilities for political change than one that's stagnant. oh boy, if the american people are wondering who cares about growth and prosperity, me, because i've looked at systems -- part of being an

investor is looking around the world and understanding how countries work if you look at countries that don't grow, there's a massive amount of pain associated with that nation. i want people to understand, look, i'm someone who knows a lot about economics, who cares about growth i want things to be a lot fairer, but i don't want to stop being prosperous for a moment. i just don't want them writing the rules. i don't want them running the government the government is supposed to represent the people, not the bottom line. >> when you talk about all the things you would do outside of a wealth tax to make the overall tax code more progressive, help workers earn more, keep the company growing, but we also want this wealth tax that you say is only going to affect one-tenth of 1%, how do you get away from the charge that that's punitive or a political point to say, you know what, they have too much, we want to take some >> it's funny because -- >> it's not going to be that

much on a sustained basis. >> actually, it is people talk about this is redistribution of wealth i got news, the last 40 years was a redistribution of wealth in the united states in an incredibly inequitable but silent fashion so we're saying, this is not a redistribution, this is the response to a redistribution when you look and see how unfair it really is and you see how much people are struggling, it's not right. and we're off the charts compared to every other advanced economy in the world on a host of measures. really, i would love it if you three would come with me and talk to some of the really wonderful, hard working americans around this country who honestly feel like the system is just doing that to them and their families, and they're right. >> in talking to these people, do you believe that a billionaire can represent the democratic party right now it's one thing to talk to

people, it's another thing to live that experience day in and day out. obviously we've seen, at least in the conversation among some of the candidates, a lot of kind of more populous rhetoric and anti-billionaire sentiment what's your take on that >> look, i've spent seven years doing this i think if i hadn't, i don't think i could understand what it means to be a hospital worker in novemb nevada i don't think i could understand what it means to run a family farm in western iowa i don't think i could understand what it means to be a school teacher in denmark, south carolina you know the old saying, a million people are a statistic, one personal death is a tragedy. it's like you got to get out and see it so you understand exactly what it feels like when these policies go into effect. >> but you never had to worry about paying for college for your kids. you've never had to worry about where you're paying your next

bill or your medical costs or anything like that. >> well let me put it to you this way when i was starting out i didn't have any money i've never inherited a nickel. i've earned everything myself so i have been -- >> that's what we hear from all these people, i earned it all myself, why is the government going to take it from me now, i already paid taxes on it. >> i took the giving pledge. i'm pushing for much more equity i'm saying the exact opposite of those people i'm saying if you're -- america has been unfair. it's been dramatically unfair for 40 years for strong political reasons. look, i'm talking about trying to change the way washington is structured i'm talking about a term limit of 12 years for congress people and senators no one else will say that. i'm talking about actually letting direct democracy, letting people vote on laws and pass them because congress won't. i think there's a question here that i don't think -- >> referendums >> yes but let me make a point. i don't think you see this but

this government is failing in the most basic ways. just take something that i care a lot about, climate, there's never been a national climate bill in the united states of america. we're looking at the safety and health of every single american and they've never passed anything and they're not even talking about it so if that's not failure, i don't know what is 35 years without comprehensive immigration reform we have 11 million people living here without documentation, without papers, without legal status and the average is 15 years. that's not a governmental failure. the gun violence that goes on in this country that has gone on unchecked for decades, that's not a government failure we pay twice as much for health care as other advanced countries, it's not better, we just pay twice as much for it, that's not a government failure? tell me the government success that you're protecting. >> we're not protecting. we're just asking questions and the wealth tax in particular

if you want to take a drink of water, go ahead. tom, as you say, you started a hedge fund you had great success. i would assume you own some art maybe, no? any art? >> california artists. >> a wine collection >> no. >> airplane? >> i never fly private in fact, i challenge every other candidate to never fly private. >> do you have a boat? >> i rent an electric boat. >> so you're living a very modest life conceivably -- >> i don't think of myself as -- >> a lot of your peers have all of those things and more fra my question though which i'm getting to is, how does the government go about assessing the actual value of all those things >> listen, david, your point is this is complicated and it would be painful and difficult i get that we manage to do it with real estate we manage to do it in terms of real estate estimates and make an estimate and people make estimates and they're required to pay tax on real estate every

year based on the value of their building, their house, their, you know, motel. >> you think it can be done. >> definitely it can be done. >> we have to increase the staff of the irs is somebody going to have to be living in your house with you? >> i know there are difficulties in this but i also know there's something simply wrong i think the bigger point here is about breaking this corporate stranglehold i don't think people in america -- one of the big reasons i'm running is to make this point people want to talk about which health care bill we should pass. we can't pass any of them. which green new deal, they're not going to get passed. they're talking about which gun violence program i mean literally beto o'rourke was talking about mandatory gun buybacks that's not happening this is theoretical. in order for any of these things to happen, in order for american citizens to have a government that's trying to represent them, we're going to have to take back the power from the corporations and that's just a fact

americans know it. everybody in america knows this. >> we have to go i do have one final question before we started you were talking about your travel schedule over the last nine days, i think five cities. you mentioned seven years you've been on the road you're polling in the low single digits i think it's fair to say. has this been worth it >> look, in the early primary states i think i'm in fifth place. i think when people hear what i have to say -- it may seem strange. i know we're sitting at the new york stock exchange. if you go around this country and say to normal americans corporations have bought the government, they go, i know that i was literally in north conway, new hampshire at 11:00 talking to a 25-year-old guy who is doing me a favor and opening up a gym so i can work out at 11:00 at night he said why are you running for president. i said these corporations have bought the government and we've got to take it back. he said i'm only 25 and i know that. >> so it's been worth it

>> this country is not broken. we're the most successful country in the history of the planet, but our government is broken and we need to take it back and stabilize this climate crisis, period those are two facts. i'm running because unless we do those two things, we're actually in a lot of trouble. if we do those two things, we're in the best position of any people in the history of the planet earth. >> tom, we appreciate you taking the time tom steyer >> thank you a quick programming note, pick up this conversation, don't miss leon cooperman later today at 12:00 p.m. eastern time responding to elizabeth warren's new ad which involves him. more "squawk on the street" when we return. so what are you working on?

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or tdameritrade.com/learn. ♪ welcome back, everybody. here's your cnbc news update gaza's militant islamic jihad group announcing a seize fire with israel saying the egypt shan brokered deal went into effect 5:30 local time after the announcement two rockets were fired from gaza setting off air raid sirens in israel israel says the country will hold its fire as long as the

militants in gaza do the same. former massachusetts governor deval patrick announced that he is running for the democratic presidential nomination he sent out his message on youtube. >> this time it's about the character of the country this time is about whether the day after the election america will keep her promises this time is about more than removing an unpopular and divisive leader as important as that is, but about delivering instead for you. >> jimmy carter's pastor says that the former president is up and walking a day after undergoing surgery to relieve pressure on his brain from bleeding linked to his recent falls. he told reporters that the 95-year-old is in good spirits there's no word yet on when mr. carter will be released. but we hope it's soon. that is the news update this hour leslie, back downtown to you >> certainly a fighter, sue. thank you for that. >> he really is. when we come back we'll hear

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now rick santelli has a special edition of the santelli exchange good morning, rick. >> thank you, michael. yes. perspective fed governor judy shelton. welcome. we've all paid chose attention yesterday to jay powell talking about monetary policy. i would like to hit on a couple of things. first are all, jim grant was my guest yesterday and he thinks like many of us do that there has been a stealth nationalization of the repo market i'd like to hear your thoughts on that and the notion that price discovery is so yesterday, like yesterday's mashed

potatoes it seems as though whether it's the fed or the government or very essential banks, rates, markets, equities, corporate securities get pegged more than they get traded. your thoughts on those issues? >> well, i don't think people were really contemplating at the fomc meeting in september that the fed would beconducting basically open market operations to the tune of $60 billion a month with this new issue of wanting to have more reserves. we've heard before about an apple reserves environment but i now get the sense that $1.5 trillion which is 7 to 8 times more than is required -- there's only 200 billion of required reserves -- that has somehow become a mandatory level i think that there's, particularly for the cp banks, systemically important financial institutions, the regulatory pressures are causing them to

say we just better comply and always maintain our intra day liquidity coverage ratios to where i worry that this whole relationship between the bank being pressured to have such high excess reserves in this relationship with the federal reserve is turning them away from traditional productive financial intermediation and into utilities of the federal government i think people will find there are other institutions willing to make loans because banks are so busy hiring compliance officers than hiring more loan officers >> now, when it comes to inflation, that is a very popular topic and i know in the past the fed has conducted meetings and they're going to announce some of their findings and newly minted research. whether inflation is calibrated correctly, as one of the main pillars, i find it odd all these varying economies in

th gravitated to this magical 2%. i don't believe inflation is calibrated right and is the main follow cru fulcrum or use that this is flawed your thoughts? >> that is a very provocative and interesting statement, rick. there are so many indices for evaluating inflation that right away it's confusing. of course for me, a dependable dollar wouldn't lose value at all. instead we have this regimented built-in 2% obsolescence i would rather -- and i think paul volker has expressed this as well -- not have 2% because that very easily can become 4% i've seen some economists saying that would make life a lot easier for central bankers they would have more room to maneuver, but it makes life infinitely more complicated for the people who have to use

money. if you think of someone who owns a house for 10 or 20 years, the difference in the value of that house from when they bought it to when they might sell it, you're talking 20 to 40% change. some of these capital gains that you pay when they're not indexed to the rate of inflation, it makes a big difference, so i would -- i'm leery that the fed now talks about symmetrical inflation. if they ever do hit their target, it now sounds like they're willing to go above that amount for a nondetermined period of time so that somehow they balance out and say, well, over the long run we hit 2%. at least people are not listing inflation as their primary concern these days, but still it's a very interesting intellectual challenge to discuss what is the right rate of inflation i guess i prefer zero. >> i would think that the cost of living increases the 2%

adjustment makes many americans agree with you now the second topic i've been dying to get to. the president at the economic club of new york basically seemed to be embracing the idea and wishing for negative rates i would point out, economies that are knee deep in them seem to be regretting it. they don't have vibrant economies, and the most important issue, we don't know the final chapter of how this will turn out with regard to negative rates your thoughts on the president's comments and rates, negative rates generically. >> well, i think that it's gratifying to see that in europe they're changing their minds about the value of negative rates. at least we're hearing more voices saying that i think we bottomed out on reducing interest rates to stimulate the economic growth. i noticed today that the governor of the bank de france who weighs in prominently on

these issues said i think we've had about enough of this i understand that if you're a tactical fighter and i will say that about president trump, i think he definitely is a strategist when he looks at potential competitors around the world. you don't want to give away and advance what you absolutely not do, that is to say we will go to negative rates i understand from a businessman's point of view when he looks at what they can get away with. in europe, he's thinking, just tell me the rules. they can borrow at negative rates. they get paid to take people's money. so i understand that, but i'm happy to see that they are realizing in europe that this is not a way to stimulate productive growth. there are arguments on both sides. some people will say, no, no, it does help, but i will never believe that truly productive economic activity is totally contingent on getting ever and ever lower rates at the cost of

capital. i think pro growth, economic initiatives such as reducing the regulatory burden, such as having a better tax environment for businesses to prosper, those are vastly more important than just trying to carry it all out through monetary policy, which in the end is not so much stimulative but in my point of view ends up affecting currencies more than accomplishing economic goals >> dr. judy shelton, thank you for joining me i appreciate your straight forward answers. david faber, back to you >> thank you, rick as we head to break, there's a look at the shares of sysco. they are down sharply this morning despite what was an earnings beat. it's not about that. the company did issue weaker than expected current forecasts and also a slowdown in spending from the enterprise. that's their business. there is he is tense there said

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or 57, make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy. welcome back time for the etf spotlight, fed chair jay powell testifies on capitol hill today, we're looking at high yield bonds etf. the corporate debt is benefitting greatly from looser monetary policy, up 12% this year making it one of the best years for corporate credit in two decades. the quality risk vehicles might be flashing warning signals to

the rest of the market more cracks in the speculative stuff. >> heard about the warning signals awhile we'll see if they come to fruition. when we return, jay powell back on capitol hill we'll get the latest on e th second day of testimony when "squawk on the street" returns r. r. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. and who doesn't love going home.

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fed chair jay powell back on capitol hill testifying before the house budget economy on the economic outlook steve liesman is monitoring at hq he has the latest. >> thanks very much. fed chair jerome powell repeating testimony from yesterday in which he said monetary policy is appropriate right where it is. the signal to the market that the fed is on hold, at least for foreseeable future and looking at the markets today i don't see any reaction that's different from how it reacted yesterday. he said the economy is in a good place, the outlook is for continued growth, up 2% he says a sustainable rate recession not in the forecast. he sees a very even really not exciting economy ahead >> look at today's economy there's nothing that's really booming that we want to bust in

other words, it is a pretty sustainable picture. i pointed out the risks, those are in manufacturing, it is declining, but not sharply manufacturing is more sensitive economically to cycles, so it does decline. >> sehe talked more in depth abu dangers of the trade war to the u.s. economy >> some of the ones proposed, gets larger and larger, haven't been put in effect if you put them all in effect, it would have a bigger effect on the overall economy. trade policy uncertainty itself is a separate channel through which trade does effect the economy. >> so he repeated the warnings that the debt of the united states government is unsustainable and maybe a little more political tone to today where they're trying to get the chairman to back up or oppose policies of the president or response to the president's criticism, david, but the chairman is not taking the bait in any way, shape or form. >> which he has not done,

period >> he is orthodox about this, he is not even saying whether or not dollar bills are good or bad for the economy. >> are they? >> i think they are, but -- >> just want to make sure. thank you, steve >> thanks. when we come back, we speak to the ceo of canopy growth. the stock having a bad day, at least if you're long, after reporting wider than expected losses for the latest quarter. "squawk alley" is up next. don't go anywhere. datadog has become the modern monitoring and analytics platform in the cloud age. when we started datadog nine years ago, our mission was to break down silos and bring teams together. nearly 9,000 of the world's most innovative companies rely on our platform daily to run their business and delight their own customers.

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good morning, it is 8:00 a.m. in san francisco, 11:00 a.m. on wall street. "squawk alley" is live. ♪ good thursday morning. welcome to "squawk alley." i am morgan brennan with mike