good morning it is 9:00 a.m. at liberty media headquarters in douglas, california, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ good thursday morning. i am carl quintanilla with morgan brennan and jon fortt sirius xm ceo sits down with david faber in another cnbc exclusive this morning, that's moments away a ton of news, impeachment, trade, retail. we'll start with this bombshell, schwab in talks to buy td

ameritrade becky quick will join us in a few moments. a lot of conversations about what we think the brokerage business is now with zero commissions, how it leads to advisory services and implications around financial services. >> it is best performing stock in the s&p, e*trade the word speaks to the fact there's expectation of more consolidation. what it means for tech startups, names like robin hood and names out there, brought in disruption, now being given a run for their money. >> i don't know why e*trade is the word in terms of more consolidation. you would think that's a big plump turkey ready to be stuffed. >> i think the market expected that name to be first to be taken out. >> often times when these things happen, the next one ends up getting bit up thinking back 20 years to when e*trade was robinhood. they were the new kid on the

block, shaking up the way the others were operating. now we're in interesting space where little companies are having an impact, but the older companies, your fidelity, van guard, that are private, and td ameritrade and charles schwab potentially getting into interesting space. >> let's head back uptown. meantime, caulk about that story more this hour but david faber is at liberty media investor day, sitting down with sirius xm ceo jim meyer >> that's right, morgan. we get these chances usually once a year. nice to do it. nice to see you. >> good to be here. >> a good year for your company. start with pandora, we talked about prospects of the deal, you hadn't yet brought it all together that's not the case any longer what synergies can you tell viewers about that you've seen

in terms of two platforms, sirius and pandora >> start with first i'm probably more excited about strategic rationale for pandora than i was, i was excited a year ago, now i feel that it is absolutely the right thing for our company. we owned it about nine months. integration has gone well. we have done what i call easy but hard things, combine corporate functions and frankly exceeded what we thought were the cost synergies we could get. we have been careful about leaving product development and marketing alone. we're beginning to integrate those into one team. so we have one team focusing on sirius xm app and pandora app. if you look at sirius two years ago, we probably had 250 people maybe working on digital

transition take that now combined with pandora, we're at a thousand when those road maps converge, we will have the opportunity to use thousand for more powerful things i'm pleased about that cost is not easy but easier to identify in terms of revenue synergy, harder to come by are there any real benefits in terms of either platform benefitting from having the other that will generate higher revenue growth and other -- >> i definitely believe there will be. we're continuing to test a lot of things. we began recently moving and testing sirius content as part of pandora offering, creating windows perhaps when available at payroll and when it is available free and we're learning a lot i do believe it will yield big

results. we're big in digital advertising. we're the leader in digital audio advertising with well over a billion dollars. i tell you why that's important, david, one thing i'm sure of, i have two grandchildren i'm positive they're going to consume audio. one of the great things about what we do, we know people love our product. what i'm not positive is what the revenue models will be five years or ten years from now. in my opinion you have to get really good at subscription, we are. you have to get really good at digital advertising. we now are and you have to get really good at cross promotion between the two. that's the part where we're going to have to work hard on in the next 18 months. >> podcasting is something we seem to be talking more about than a year or two years ago sirius, you have the shows, the personalities already, in terms of howard stern and so many

others does podcasting become a more important part of the value proposition of pandora as well >> yes, without question there are debates what the slope of the lines will be it is going to grow exponentially. >> why >> people have always loved talk content. it is good for you, by the way they've always loved talk content. younger people consume it differently than people from my generation by the way, i continue to lead in talk. there will always be shows, episodes, and always be ways to cut it in snippets for different attention spans and different intentions so we're in the middle of that whole thing getting mixed together and where are we going to end up. one of podcasts i'm really excited about, we announced in the last earnings call an association with marvel. these guys, everything they touch is magic, they're creative

geniuses we're really excited about the effort they're putting forward i think what you're going to see is kind of what i just described, you're going to see an effort with marvel on a channel, an effort with marvel that's episodic and another one that's podcast oriented, then we'll put it out there and we'll see which way, you know, consumers go the beauty is today, by the way, with the combination, we now have 100 million listeners we have 38 million self paying customers between both platforms, another 65 million that are in the free service in pandora or in a trial somewhere with sirius xm gives us tremendous leverage to take things, test them across and find out which way people enjoy them more. i think we'll find they enjoy them multiple ways. >> we can expect a proliferation of podcasting listening

opportunities. >> yes we have a little work to do to catch up on some of the technology side. i think you'll see us very focused on that in the next three to six months. >> what does that mean, what are you lagging in in terms of technology, what do you need to do >> you need to be very good, one thing i learned in the last nine months, ad tech is crucial, and you need to be good at it. >> being able to insert ads in different ways >> we're great at it in music. we have a transition that pandora never did for spoken word, we have to get that bridged the next couple months. >> something we always have to talk about is automotive in general, what you see in terms of trends both new, used, you know, anything alarming to you >> great country i know what's going on in washington this week, hard to believe, but it is the american customer in our opinion is feeling good the car business is great.

sure, it is going to moderate between 17000016.3 do i like 17 better than low 16, even at low 16, still fabulous the business now, i can tell you is good. what we're seeing for what we saw in october and then my contacts in the car industry are bullish, the used market is really good now. and so i just don't see, maybe i won't ee, but i'm not worried what that business looks like. when you look at the car business itself, the retail and wholesale inventories are in fabulous shape which is always a good sign of health to me, so i don't see the storm clouds right now. >> finally, we end every interview with the same question keeping stern happy? >> keeping him happy, we just love him opened a brand new studio in hollywood three weeks ago.

i think even howard impressed himself what a big star he is. the quality of shows, lineup of stars to support it was outstanding. we love howard we want howard with us as long as he wants to be. >> lucrative partnership for you both. >> thank you very much. >> you're welcome. jim, thank you always appreciate you taking time jim meyer, ceo of sirius. nbc news has a story out that the president hosted a secret previously undisclosed dinner with mark zuckerberg and peter teal, a facebook board member took place during the recent visit to washington in october when he testified in front of congress regarding libra the agenda, why the meeting was not made public remains unclear. white house declined to comment. facebook made a statement to cnbc saying as is normal for ceo of a major u.s. company, mark accepted invitation to have dinner with the president and first lady at the white house. that's on the heels of a meeting with tim cook in texas, and zuckerberg's appearance in the

oval back in september >> the only odd thing about this is often when the president has a dinner of note like this, it will be made public. so not clear why that wasn't done, especially given the fact that we saw trump with zuckerberg in the oval not too long ago >> i think it's sort of given the timing of when we got news yesterday versus the president in austin, texas with tim cook of apple looking at manufacturing for the mac pro, it just sort of draws a stark contrast between the relationship at least publicly based on what we know between both of these ceos and president trump, it is just interesting that would be kept secret or at least not be public knowledge when simultaneously you have this very public relationship with another big name from silicon valley >> also want to point out again for the record, the president tweeting about 16 hours ago today i opened a major apple

manufacturing plant in texas, et cetera et cetera it wasn't opening. it had been open they're making a computer there, a new version of the computer. the jobs that are there have been there they would have gone to china if apple were subject to the same tariffs that other companies are. there's a bit of optics. the president tweeted about three hours ago that was more accurate about the new version of mac probuilt there. the messaging there, it is election season already. >> and these companies have to operate in a political context as we are seeing more and more we'll get more from david at liberty media investor day, including exclusive with charter chairman and ceo tom rutledge at 1:00 p.m. eastern. don't go anywhere. most people think of verizon as a reliable phone company. (woman) but to businesses, we're a reliable partner. we keep companies ready for what's next. (man) we weave security into their business. virtualize their operations.

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let's get back to a big story, news that schwab is in talks to buy ameritrade. becky quick broke the story earlier this morning, joins us now with more. hey, becky. >> great to see you guys this is such an interesting story. there's been so much turmoil in this industry leading up to this you saw the big kickoff of zero commissions, that was kicked off earlier this year. charles sh wachwab was the firsf big brokers, interactive ones did it a few days before turned up the pressure, charles

schwab did it, and everybody followed suit. what happens if you go to zero commissions, how do you make money. deal like this is a big step toward that. this is something where you see the assets getting combined, you would see lots of slashing when it comes to spending at all of the different places that's why a deal like this makes sense. that's why you see the stock up today. charles schwab up now, td ameritrade up almost 20% you did see td ameritrade higher a year ago, that was before zero commissions came along the idea here, this is the number one, number two of the publicly traded online brokerages getting together, but there's so much competition coming these days from all directions, van guard, fidelity, lots of other players out there. we talked about the idea of whether or not you would see justice department stepping in on this. a lot of people we have spoken with say they don't think so, it

has gotten to be a difficult business these days. obviously zero commissions is great news for any of the consumers playing in this space, anybody making trades on these things, but it leaves a question how they make money, how they maintain profits something like this would mean their asset management would be close to $5 trillion, and that's a big deal. >> 7.5% higher for schwab is kind of unusual when there's the idea somebody is buying somebody else for billions and billions for the stock to be up does that speak to how steep people expect cost cuts would be at both places that so much would flow to the bottom line? >> probably. obviously the shareholders on both ends of this like the deal. it would be good news. again, you would see consolidation in a lot of arenas jim cramer spoke with us, one of the points was that, you would see a marketing spend cut. these are businesses where they have the platform, the portfolio that's set up.

a lot of it can get ramped up. it would be easier to put together than some of the traditional banks, traditional investment banks >> becky, the word of the day seems to be scale. i know you touched on it the fact we're seeing e*trade trade down 9%, interactive brokers down slightly as well. there's expectation to see more consolidation, right >> i think consolidation had been a big idea. e*trade is the third biggest, market cap of $10 billion, and the thought was maybe td ameritrade which has been taking other brokerages could have been a buyer for e*trade. if they're not there to buy it, that raises the question of what comes next. >> becky, thank you. i know you'll continue to follow this story for more, let's bring in business insider henry blodget as our own kate rooney henry, does this take you back like it does me?

what's your take on significance of this, the individual investor level, not sure people feel it that much unless you trade a lot. >> that's right. easy for folks that trade a lot, benefit from this, this has been a commodity a long time, now the price has gone down from price in the 1990s, now they have to make the money elsewhere it is about scale. look across the businesses, there are so many things they don't need to do twice those things will be consolidated or dropped and ultimately be more profitable. >> kate, part of the reason we're seeing this is because of disruption from silicon valley and names like robin hood that pioneered the idea of zero commission if you well what is this doing to the startup landscape and is there argument to be had all of the millennials and gen zers find it

more attractive to go to schwab? >> they set the stage with zero commissions, but you have square and sofi in that space could feel pain. wealth front and betterment on the wealth management side there's pressure now that there are zero fees, that's not enough to get them in the door andkee them they're launching more banking products a ton of them launching cash management or deposit account. they need to up their offerings in the banks spaying, which as you know isn't easy, takes some time analysts said for a long time there's potential when these guys hit a certain level of assets in the accounts, there's not a lot stopping them moving to charles schwab, now that they have scale, can spend more on technology they call it the henry, high earner, not rich yet when those people get to a certain amount, if charles

schwab has that, there's not much to slow them down analysts are surprised there isn't more m and a in private markets. could you see it on robo guys inside or some of these startups. >> you used to be henry, sold, cashed out now you have to change your name sorry, go ahead. morgan. >> i was going to touch on the same thing, get your reaction to the henry, the idea big brokerages potentially becoming bigger. >> one thing happening in the financial services industry is generational shift, robin hood, betterment and others have gotten that early millennial audience the best is we'll let them get rich then they'll move the money to us my guess is you're going to see a lot of folks stay where they

are. if robin hood develops other capabilities, money maybe be stickier than folks think. i think we'll see a lot more consolidation here firms benefit from being enormous >> all right kate rooney, thanks for being with us. henry, before you go, we want to get your thoughts on facebook. dow-jones reporting the company is considering changes to its political ad policy. not perhaps a huge surprise, given twitter, jack dorsey moved quickly, google out on -- not saying they're not doing political ads, narrowing ways they can be targeted by location, couple other categories, not down to exactly how people are voting. >> yes and i would be willing to bet a little money this was a prime topic at the dinner between the president of the united states and mark zuckerberg because changes reportedly would have a

big impact on the trump campaign strategy on facebook and it was used effectively in the last election a lot of concern around that it is interesting to see facebook doing something again, they made the point, you can lie on the platform, that's fine there was huge blow back for that now they're approaching from another side, if we control targeting a little bit, it is something. >> a wild hour of social media headlines. this from dow-jones on facebook. wire saying twitter will enable users to hide replies. some incremental movement in the way people use platforms >> as there will continue to be. stepping back from all of this this is a multi year trend i think the social platforms and platforms like youtube gradually raise the bar for level of discourse and content they're distributing original idea was we have no responsibility, do whatever you want then the platform realized actually there are some things we don't want on there, i think that bar will continue to get

raised >> i'm not sure where this is going to take us though. maybe google has done some work, run numbers, figured out what they get when they eliminate ways of targeting political ads. i wonder, at some point do we need to see models for what happens when you start limiting the reach of political ads, whether it is good, whether there are unintended consequences i'm not saying regulation necessarily but transparency >> the problem is it is extraordinarily complicated. all these decisions are second guessed. two sophisticated teams say you're penalizing our team, helps the other team, huge political conversation companies are in a tough position no question. but we saw with facebook when you come out, say it is totally fine to lie and use our platform to spread misinformation, people are going to say wait a minute,

that doesn't feel right. there has to be somber solution. >> lying and politics? would that ever happen >> never >> it is different now we're at a different level here. >> good to have you with us. >> great to be here. >> we're saying good-bye to jon earlier, he is sitting down to sit down with michael dell at the economic club of new york top of the hour, a good conversation on squawk a couple days now, you have more time now. >> if it is not a good conversation, i will take the blame. we're going to talk about the future of the next decade. he has been running della long time 35 years i wonder how he feels about tim cook getting all up in his house, austin, there with the president. that's michael dell country. a lot of people want to be in austin now people used to talk to me how they wanted to be the next silicon valley now cities are talking about how they want to be the next austin. he certainly had a front row seat to that trends around ai and

globalization, around data, data privacy, data protection we're going to have the camera there, we'll bring you all of the best >> looking forward to it, jon. we're going to miss you here though meantime, we're going to check where we stand across the major averages they're all lower now. dow down 57 points s&p down two-tenths a percent. so is the nasdaq back in a moment ay, she's the next mozart. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. if you're on medicare, remember, the annual enrollment period is here.

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the headlines keep coming at house intelligence back to ylan mui in washington. >> carl, the hearing is now in recess two witnesses that were testifying today are fiona hill, former national security council official and david holmes, state department aid much of the questioning from democrats this morning has been focused on the role of russia, how it could potentially benefit from the debunked theory ukraine was the one meddling in the 2016 elections.

>> why would it be to vladimir putin's advantage to promote this theory of ukraine interference >> first of all, to deflect from allegations of russian interference second of all, drive a wedge between the united states and ukraine which russia wants to essentially get back into its sphere of influence. thirdly, to besmerj ukraine and political leadership to degrade, erode support from ukraine from other key partners in europe and elsewhere. >> democrats sought to establish there was an understanding that any request to investigate burisma was actually a request to investigate the bidens. >> it was very apparent to me that's what rudy giuliani intended, yes, that burisma was linked to the bidens, and he said this publicly repeatedly. >> mr. holmes, you also understood burisma was code for bidens >> yes >> republicans tried to dismantle that when they come back from recess, guys earlier this morning, ranking

republican devin nunes said democrats are the ones pedaling conspiracy theories against the president. >> thank you for bringing us the latest. time for a news update sue herera has that at hq. >> i do indeed good morning, morgan, good morning, everyone. here's what's happening. massachusetts lawmakers passing a groundbreaking ban on sale of flavored tobacco products, including vaping products and menthol cigarettes the big would levy an excise tax on vaping products, requires health insurers, including the state medicaid program to cover tobacco cessation counseling. secret service is investigating a suspicious vehicle that tried to enter the white house complex. the black suv attempted to follow through a checkpoint this morning. it was stopped with the driver taken into custody. players tribune will be part of mint media portfolio.

it was founded by former shortstop derek jeter. he will join mint media board of directors. and parisians enjoy a taes of the newest french red wine whose unveiling is anticipated by wine lovers around the world. first uncorked every year on the third thursday in november it goes well with turkey, just in time with thanksgiving. that's the news update this hour send it back downtown to you guys carl >> thanks very much. european markets are about to close dom chu has the action overseas. >> they may or may not be drinking that, but those markets in europe are closing on the weaker side generally speaking it is more mixed seeing that red tick into the situation with majors, concerns are in play about faith of u.s./china trade talks and

laggards in trading are economically sensitive sectors, look at industrials, materials, mining related companies, tech stocks as well stocks individually on the move, fiat chrysler, after headlines that general motors is filing a lawsuit the company had unfair treatment from auto unions in exchange for corruption and bribes you can see those shares moving. watching shares of lvmh. reuters reported it raised the bid to acquire tiffany, and has $16 billion in terms of deal size, and will get a look at the tiffany books. those shares moving to the down side and royal mail, said plans for international expansion are a little behind schedule that's overshadowing more positive comments related to profits posted overall, interesting trade

we will finish marginally to the down side in european trade. back to you. >> thanks very much. a big day continues for liberty media. david faber is there talking to just about everybody highlights from a sit down with john malone in a minute. - [spokesman] if you've tried college but never finished,

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david faber sitting down with david malone at investor day. he joins us with highlights from the conversation

this is where it gets interesting, right, david? >> yeah. we jump all over the place as you well know, carl. big picture down to the nitty-gritty liberty has its hand in so many things as does malone. charter, the big cable company they own at liberty, 27% we talked about their business the stock performed well in the last year. there's also the question of consolidation, whether or not it would consider acquiring an altice, or even though there's huge discrepancy in size, maybe the other way around i asked malone. >> i don't have enough fingers to count the number of times i talked to patrick about this sure, there's a lot of synergy and altice getting together with charter or comcast frankly

you know, i think patrick is wanting to have a level of control. and he is willing to pay premium to get control he is too small a footprint. >> can't buy charter. >> that's the point. >> i know he mieght like to, has to be the other way. >> he is an ambitious, smart guy. >> you think the sotheby's deal, personal purchase, what, you're smiling. >> i think he stole it >> you do? >> i think he did. i mean, in the sense that he ends up with it, it cost him very little. the way he structured it. >> why do you say that >> it has been explained to me how, why it was worth. >> what did he pay, four bills >> three and a half, yeah. my understanding is there's a lot of real estate, a lot of

receivables, there was a lot of overhead and when he is done with it, he will own it for free he's a very smart guy. >> interesting there on sotheby's, unexpected place the conversation went. speaking of rich guys a lot of people are smart, masa is one we talk about given that softbank is under pressure, i talked to mr. malone about masa. >> i like masa, putting the numbers about. he has a balance sheet nobody can understand so, you know, he's had some home runs, no question. >> he has. difficult, more difficult times for softbank >> yeah. he took some big rides some of them are not performing for him, you know, at the moment

but those are cycles. >> you think so? >> i don't know. i mean, i look at each one of these deep loss businesses, it is the old hot dog story if i lose ten cents on every hot dog i sell, i make it up in scale, but it doesn't work you've got to have an argument that scale will improve marginal economics, and i never quite understood uber, never understood why dara took the job. >> you didn't? >> i didn't. it was a hell of a challenge he is a very good guy. so it will be really interesting to see how that goes. >> it is fascinating with uber in particular that softbank in terms of my coverage, funding the biggest investor, yet funding some of their competitors forcing them to lose money, whether it is doordash in terms of competing -- >> masa maybe thinks they'll all

combine at some point to get scale. meanwhile, you're capturing volume and ultimately you put them together, you've got -- the problem is, your asset is your drivers. and if the drivers work for 2 or 3 different digital players, it is not really your asset. >> you don't like the uber business model i'm gathering >> well, i think if it was tweaked in some ways it could be very good, but they really need to capture those drivers, even if it costs them something, right, so they're not moving around, so scale really means something. you know, if i've got 70% of all cars in a metro area, customers want to use me, i'll provide better service, and drivers will like that because ultimately they're going to make more money, but right now in a world where you have three or four

competitors in a metro and drivers working for all of them, i don't see where scale changes the economics. that kind of thing but i don't know the business that well. >> but you were surprised he took the job >> i was surprised he took the job. he did such a great job at expedia. >> expedia has been under pressure for reasons we discussed. any conversation these days, perhaps wander into politics, malone, largest land owner in the united states. one of its wealthiest residents. he did talk about his concerns in terms of the attacks on wealth or potential attacks we've heard from any number of guests that come on in recent days, months, to talk about rise of elizabeth warren or bernie sanders and socialism. interestingly though malone would support a democrat take a listen. >> vote for bloomberg, i'm a

libertarian. i don't know that he has much of a chance, but i think a good solid, you know, look, i think a lot of things trump has tried to do, identifying problems, trying to solve them, has been great. i just don't think he is the right guy to do it he just doesn't build a team i think that's the number one problem. half the people that he's hired and thrown under the bus are now trying to kill him i mean, what kind of thing is that it's chaos so we've got a great country, i think we have a great system of laws, the constitution should be protected at all costs, and i think we'll probably figure it out. but right now, it's scary. right now it's scary because the

political dwigivisions in the country are so extreme, you don't see intelligent people trying to work together to solve problems >> interesting thoughts there from malone. send it back to you. >> david, great stuff. definitely covering a lot of ground given the fact that you cover this event, this conference every year, you sit down with many of these people every year, is there a certain theme that's emerged this year or something that surprised you in some of the conversations you have been having more broadly? >> you know, i mean, a lot of it is the same conversations we have so often, rise of streaming, significant changes in the landscape they play, certainly liberty does for them, morgan, it is funny, music is an important part of their world. i spoke to jim meyer, between sirius, pandora, 5% ownership. i heart radio. and live nation, they're connected to one of your great loves, music

>> and david, your conversation about masa on a day where we get confirmation of layoffs at wework, 2400 around the globe. should find out more tomorrow as he meets with employees. would you call it criticism of masa's model certainly this part of the cycle we think he is in. >>yeah i think it bears close watching and examination in softbank, what will happen i talked about it with you many times. certainly the wework investment, had masa on a couple weeks ago, say it was fault in his judgment to some extent i think malone is sort of saying something critical when he talks about not having any understanding, what did he say, about the balance sheet no one can understand he is not necessarily alone in that, carl wework as expected, we'll see who takes over the leadership there. we've got to keep a close eye on sprint the trial starts fairly soon

that's a very important deal that needs to get done for softbank in terms of selling a stake. trading into what will be the larger t mobile, sprint combination. >> no shortage of news as we head to final weeks of the year. interesting to hear comments from mr. malone, given his career and history in deal making, how critical about deals we covered and that you talked about in the interview david, great stuff, thank you. >> sure thing. >> again, be sure to tune in later today for the exchange david sits down for another exclusive with chart chairman and ceo tom rutledge at 1:00 p.m. eastern this afternoon. a lot more "squawk alley" igs ahe -- is ahead stay with us 67 cents stays local. shop small and watch it add up. small business saturday by american express is november 30th. step up, please. empty your pockets.

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what a day for data. lei, home sales. the santelli exchange with rick in chicago rick >> good morning. you know what, yes, we had a lot of data. we've had important data this week and some very firm data points this week think about some of the housing numbers earlier in the week but certainly seems the market is not paying a whole lot of attention to fundamentals. as a matter of fact, i think we can sum up what's going on soft rates, really lofty stocks and at least for now low vol so to the white board there's ten-year note yields this is generally what happened. kind of went down then flat. the important part what happens starting august 1st. we clearly lost yield ground and the big halloween surprise, one day after the fed lowered for

the third time a quarter point on the 30th. 169. yesterday we came close to it but bounced a bit but no doubt it certainly seems as though there's downside pressure. now, let's look at what's going on with regard to the vix. you look at the vix. we are really, really at low levels and if you look at the treasury vix, the ty vix, we are also at very low levels. normally low levels of volatility and lofty stocks makes everybody kind of giddy with happiness but there's some very odd things going on okay, here's the dollar index. monday, tuesday, wednesday and today, here's closing levels and that's why we have the ish last i looked it was a bit under 98 even. close, 97, 93, 97.79 squished look at the dollar/yen, 108, the pound versus the dollar, ranges from 129.24 to 129.03.

look how tight these are and add in some other variables. you have a fed that's on pause and if you looked at fed fund futures on halloween you'll see they also basically flatten lined sideways and that is causing the yield curve to flatten for obvious reasons. short rates will hold steady without the notion of a fed and long end is just melting so where does that leave us? here's the payoff. risk parity. what is risk parity? usually when the vix is high, ty vix is high, because the new models show that when volatility is low, large portfolios especially of equities get bigger and bigger and bigger and when volatility falls, yes, you guessed it you deconstruct those bigger and make them smaller. we haven't quite seen this part yet, but all the variables are there. time to pay attention. carl, back to you. >> all right, rick, thanks we'll see you in a little while.

we are range bound today dow is down 77 right again near 3100. "squawk alley" is back in three minutes. it was sophie's big day. by the way, she's the next mozart. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine,

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musk's tesla, spacex in the news as well. the starship mk1 prototype partially exploding during a test yesterday at the company's launch site. can you see that right there on your screen erupting with plumes of gas and smoke sending some shrapnel soaring into the air. quote, the purpose of today's test was to pressurize systems to the max so the outcome was not completely unexpected. no injuries, nor can this a serious setback. this prototype is meant to test the design of starship, the massive spacecraft that spacex is developing to transport cargo and people to deep space destinations like the moon and mars this vehicle actually was the same one that elon musk showed off in september claiming it could do flights to low altitudes within the next couple of months and that some version of starship could reach orbit. erpt orbit within six months

musk tweeting it may no longer fly in prototype and conduct tests with a newer up to date model the company plans to build. this had some value as a manufacturer pathfinder but flight design is quite different. space is hard and that failure is part of development and design process at times. >> it is people say it's not rocket science. this is actually rocket science. he has a showdown with blue origin and with gm i don't know if you saw mary baron'mary's comments the pickup on sale in 2021 and that's when we'll get his own. >> that tesla version tonight so certainly one to watch. >> the other headline we got lost on the speaker of the house, nancy pelosi, saying that the house might not vote on a retooled nafta by year end of course, the trade headlines have been so confusing over the

past 24 hours, whether or not we'll get a phase one sign this year as well so the markets having to take all of that into account. >> meantime, you have impeachment hearings continuing in d.c we'll monitor that and the dow is down 87 points. s&p is lower as well. >> our thanks to david faber for a great day. to the judge and "the half." >> carl, thanks so much. i'm scott wapner the brokerage bombshell. schwab in taubs to buy td ameritrade that could alter the investing landscape. how does it impact your money? it's 12 noon this is "the halftime report." >> announcer: a major shakeout in the battle for your money what it means for trading. financial advisers and investors. a miss by macy's sales fall short and a slashed outlook. the stock taking a hit where it goes from here as we head into the crucial holiday shopping season. and another legendary hedge

fund