good morning, everybody. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is off today our guest hope is barry knapp. good to see you. >> good to be here >> let's check out the equity futures. right now you will see green arrows across the board even as all of the major averages closed once again at new highs yesterday. it looks like right now dow futures are indicated up 60, nasdaq up by 34. and barry, looking at this, i mean it keeps pushing higher regardless of what happens in basically any of the news. yesterday it was helped by the retailers. >> i think that we're in another one of these periods like when we launched qe-2 or qe-3, even

operation twist, where we just had a liquidity dynamics last time i was on we talked about earnings growth bottoming and reaccelerating of course the rate of change is what boosts the multiple so we're this one of those periods where it should extend not just through end of the year, but into the beginning of next year as well. so if you think about when those rallies stalled out after qe-2, that was the point where everyone realized all that liquidity didn't really boost earnings all that much and by then stock prices were ahead of fundamentals but between now and then, i think that the path of least resistance is still higher >> let's take a quick look at treasury yields. the fed operations is a large part of why. the ten year is yielding 1.73% >> and meanwhile chinese state

media, remember on sunday the pro democracy candidate scoring a landslide victory winning almost 90% of the district down can still seats. and now beijing is calling the election a setback for hong kong's democratic development and says the results were skewed by the illegal activities of the opposition camp. an interesting note, the com uhe ni communist party paper saying that the election concluded but did not mention the results. and this is as new data coming in out of china, profits at industrial firms shrinking down nearly 10% officials are partly blaming the ongoing u.s./china trade war so you called it >> and that has been the story

i've been deriving this same data basically out of the shanghai composite and you've seen earnings growth go from 13% before the trade war started in the middle of 18 to negative -- >> in china. >> china and so margins are getting crushed. and when you talk about who is absorbing the tariffs, it is pretty clear when you look at profits and revenues and margins in china state owned enterprises, they really are absorbing these tariffs. and so they need a detente to try to take the pressure off the export sector. in addition to that, any investment that they have had in the last year or so has gone to the state owned enterprises. they have been trying to stimulate the private sector having no success with it in part because the bank beiing sym is a mess. >> and those issues existed before the trade war

>> absolutely. they were trying to reform and deemphasize the role of the state run enter prices but once the export sector came under pressure, they had no choice and now the soe profit margins are getting crushed. so they really do need things to settle down. >> and president trump telling reporters at the white house yesterday that the u.s. and china are in what he called the final throes of a very important deal later in an interview with bill o'reilly, he spoke about what is holding up an agreement being reached. >> me. i'm holding it up. >> really? >> yeah, because it has to be a good deal. we can't make a deal that is like even. we have to make a deal -- i told that to president xi we're so far down that we can't just make an even deal we have to do a deal where we do much better. >> president xi saying that it has to be an even deal

so this seems to be the sticking point at least from a point of pride or from saving face from looking like you are not caving to a deal that puts you at a disadvantage >> and it is all about face and positioning and the political as pebt aspects. but china had a 10% current account surplus in 2008 and it is down to zero now. they can't feed themselves we have 70% more airable land and four times as many people. they can't heat themselves they will need to buy those products and they are running deficits with most of the rest of the world thousand except no. >> so are we both equally desperate for the deal >> they need a deal. for us, all we need is detente >> so do you think that the december 15th deadline is a real one, will the tariffs go on or will we find a reason not to

increase the tariffs >> i think that we'll find a reason not to increase the trifls and when you think about the effect of the tariffs thus far, there is a stock and a flow. the stock is accumulation of tariffs. if you look at the industrial sector, margins went down and now right back up. so the industrial sector adjusted to the existing tariffs much like is the big increase in the trade weighted dollar. they get a shock, they had just. it is the new tariffs that work through business confidence that is the big issue >> so you think our markets would be okay with detente would china's? >> no. they're in a spot -- actually, i should temper it that statement a little bit they definitely need to continue to restructure their economy.ita little bit they definitely need to continue to restructure their economy right now they are under considerable amount of pressure. but china will be under that pressure anyway. this is why when people ask me about what do you do with all

this, i have not been tempted by the buy china for a trade deal idea at all. i'm structurally short china and would stay short china and structurally long the u.s. would they be okay they would be okay but i still wouldn't buy chinese equities >> all right >> is that question of just directionally where their economy is going or because you think the relationship with the u.s. and china will continue to deteriorate even after this deal >> no, it is structural. i don't think that we needed the trade war for china to continue to head south. that is a piece i've been running for some time. they have 1.4 billion people in a socialist system that has failed everywhere and somehow we think that it will work in china? no it is failing. >> let's pivot to elon musk because he has been tweeting a running tally of pre-orders for

its cyber truck at tesla take a look at this new number, he says 250,000 people have now deposited $100 each. that is the price tag of a deposit for one of these vehicles they have to express their interest in buying the truck although the deposit we should note is fully refundable >> is that if they can't fill the order or you just change your mind? >> i think that you can get out of it. i'm not sure >> it is still more than showing up and putting your name on a restaurant list and then walking out the door >> 250,000 is not nothing, but it is also not like the other vehicles where you actually put down multiple thousands of dollars would you buy that truck? >> i was cured of buying expensive vehicles by 30 years of commuting to new york city. i drive jeeps. that is pretty much it >> phil says it is 100% refund

bl if refundable if you decide you don't want it. >> i think that we're moving towards evs no doubt if you think about the biggest problem with the energy system in this country is that as much as we've had the shale revolution, the transportation system is still reliant on combustion engines and oil and this is a step toward creating pickups that are evs is inevitable, the question is does gm and ford do it or is it tesla. jim cramer's wife loves teslas i guess now. >> he's on board >> the cramer family has turned around at least temporarily. when we return, it is one of the busiest travel days of the year and it could get bad thanks to some storms. phil lebeau is at o'hare in chicago. phil how bad is it?

looks nice there i'm thinking of home alone right now with that -- because i see exactly where you are. >> reporter: nice to be here when there are light crowds. but around the country, it has the potential to be a messy wednesday travel day for the day before thanksgiving. how messy and how much might it slow down the airlines we'll talk about that when "squawk box" is returns. driverless cars, or trips to mars. no commission. delivery drones, or the latest phones. no commission. no matter what you trade, at fidelity you'll pay no commission for online u.s. equity trades.

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welcome back phil lebeau is tracking all of the travelers today at o'hare airport on a day that will be plagued unfortunately by weather delays and cancellations but first the faa is speaking out again on the grounded 737 max. want to get phil's thoughts on that and what will happen on the travel front and then we should talk about the macy's day parade and balloons because the weather could affect that as well. phil, let's talk 737s first.

>> sure. this is the third time in the last two weeks that the faa has put out a very public message that it is not ready yet to certify the 737 max. yesterday the faa issued a statement essentially saying look, the max is not ready yet for certification, there has been the suggestion that boeing put out there that it believes it could be seeing certification in the december time frame but if you read this statement yesterday and read between the lines, it is clear that given the number of murder bells that still need to be cleared by the 737 max and the certification process, it may not happen by the end of the year as you take a look at shares of boeing i'm not sure how much that news might bring shares down. because when you talk with people in the industry, when you talk to airline executives, very few people expect the certification to happen this year doesn't mean it won't happen, could happen shortly after the new year, but that is the latest with regard to the 737 max now let's talk about

thanksgiving travel. 55 million people overall are expected to travel at least 50 miles according to aaa for the thanksgiving holiday period. and in terms of those who are flying over this 10 to 12 day period surrounding thanksgiving, it is an increase of more than 3% compared to last year so what are the problems out there? biggest problem happens to be with the weather the airfares are not an issue. they are close to where they have been in terms of historic lows they continue to trend far lower than they were just a few years ago. we mentioned the max the grounding of the max does have an impact you with looking at least 70 max planes that were scheduled to be in service by the airlines this year, probably closer to 110 that they thought they would have they don't have them we are talking about southwest, united and american. as a result there is less capacity

good news is that the tighter capacity along with a little bit better pricing on the fairs means that the profit margins for the airlines have improved in the second half of this year. but guys, this weather, it does have the potential to make it particularly messy especially in the upper midwest as well as we look at the storms rolling to the northeast. so far we're not he seeing a huge number of cancellations or delays >> and if it is tighter capacity, what does that mean for a traveler trying to get on a new flight could you get stuck for days theoretically? >> i don't know if you'll be stuck for days, but it will be tougher. it is tougher for the airlines to rebook passengers simply because there are just not as many seats out there they do put in a bit of a buffer there when they are setting these schedules. but if you have really bad storms, mass cancellations, which nobody is forecasting at this point, then you have the

potential for some people to be stuck in some areas where they don't want to be stuck for longer than they expected. >> phil, thank you for that. at some point we do want to talk about these balloons >> the macy's parade, yeah i don't think it is going to happen a few years ago when the wind was even lower than expected this time around is when you had a very serious accident. >> knocked into a lamp post and knocked into a womanle terrible situation. >> if it is anything like what is anticipated, they won't have the balloons up for the parade >> sorkin family will be very unhappy, as will many families and expected 55 million americans will be hitting the

road, an almost 3% increase from last year. and joining us now, the aaa spokesman. >> and it will be very bad in some of the major cities we will see a tripling of travel times. so if your trip normally takes an hour, it will take three hours. >> why >> a lot of people driving, americans get the fewest number of vacation days of any workers in the industrialized world. we get a little time off, we take advantage of it we have disposable income. and we like to take a trip, so throw in thanksgiving, people like to drive to their destination, gives them the independent ebs ce of leaving wn they want. >> i don't know if you consider them a competitor. do you think waze and google maps have made it better or worse? i remember the old days when my dad would go to aaa to get the

trip tick and you would write it out and we would read to him as he was driving >> anyone who has used those apps can tell you a story but how they were misled by them so i always say don't turn your brain off, carry a man as well but those apps are good for when you are trying to maneuver around local streets but for point to point, get a man. we still make lots of maps >> they were going to cost me two minutes this morning to go around a toll on the garden state parkway. >> and we have this conversation in the car all the time. when you're in traffic but you can't really understand why there is traffic and then all of a sudden the traffic lets up what is it, what is the psychology of it sometimes there is no accident, there is no anything, it is just -- >> somebody spilled coffee

>> it slows to a nothing and then -- >> it is physics >> i think it is basic rules of the road that people don't know. the left lane is supposed to be the faster lane and you got somebody doing 50 miles per hour there and everybody else wants to do 60 or 70 >> how do you feel is about doing 60 or 70 in the left but never getting out of the left? >> if somebody is behind you and wants to get by, you should move is. >> let's say you're really hustling you're moving. >> if somebody wants to outhustle you, get out of the way. >> i'll stay in the left if i'm really moving. >> i'm going fast enough, i don't need to move >> if i'm going 75 miles per hour and we're really moving, i'm going over limit to begin with >> and somebody wants to make

themselves into police officers. look, we don't recommend speeding speeding is a major cause of crash. leads to serious injuries. but if somebody wants to go faster, get out of the way. how flashing your lights at somebody during the day >> that is a good way to get shot >> people flash their lights to say get out of the way >> because you're driving in the fast lane. he's telling you to get out of the way. >> get out of the way. >> all right is it true -- i was told this. if you're going at 75 miles per hour and you're over the limit, and you get pulled over, but the whole traffic is actually moving at that speed, i was told that what you are supposed to tell the officer is that you were actually driving at the speed of traffic and that actually you would have gotten this to an accident otherwise and you were

being pushed to do that. >> they do teach that you have to keep up with the traffic. if everybody is doing 70 and you're doing 40, it is like somebody doing 50 during the indianapolis 500 but if a police officer pulled you over, it is not a good excuse >> yeah, everybody else is doing it >> final question. what do you make of using radar -- do people even use radar or waze that i had gidente the cops are >> the apps are good for some -- >> what about where the cops are? >> we have not taken an official position on that

if you lapse and you forget what you are doing, it is very easy to exceed the speed limit. so they are helpful in that regard >> waze also tells you when you are going over the speed limit >> yes, it does. >> i think it slows you down because you see the cops >> my son was watching and said mom, you're going too fast >> stay safe this weekend, please >> this may be my favorite segment of the whole year. i feel like i learned so much. >> mine too because he told you you were wrong on every account. >> good to see you, robert when we come back, here is a problem that we don't talk about much drug prices being too low. believe it or not, it is a serious problem that is causing some shortages and patients are paying the rice we have that story right after the break. i get the feeling this is one that we'll all have to hear to believe meg turrell will tell us all

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at the season of audi sales event. welcome back it is time for the executive edge ceo of soul cycle has resigned effective immediately. she has also vacated her position on the board. a source telling cnbc that both

sides felt it was time for a leadership transition. soul cycle attempted to go public under her tenure but withdrew due to market conditions and remember back in august, soul cycle faced that boycott after steven ross hosted a fundraiser for president trump's re-election. i think soul cycle has maybe closed a couple locations as well meantime of course peloton has gone public since then soul cycle also planning to announce a sort of similar product or sort of video service that you could use at home i don't know what is going on over there i want to dig into that. >> and the drug industry has been under siege for prices that are too high, but low prices for is some drugs is leading to shortages. here is meg tirrell's special report

>> reporter: to karen, her diagnosis of bladder cancer came as a shock >> i had barely come to terms with that. >> reporter: and then after her initial treatment, she was dealt another blow the best drug to treat her disease wasn't available to her. >> that kind of took away the last little bit of strength i had for a little while >> reporter: the drug is bcg, a decades old treatment. >> it was the first and still the most effective immunotherapy. >> reporter: but there is a shorta shortage after manufacturing issues in 012, is an asanofi stopped makit merck doubled production but it is still not available to many >> to say we don't have it but i can offer you inferior products, is no question that it has caused deaths. >> reporter: and experts blame

market failure >> they are very inexpensive to make but also difficult. it didn't make economic sense for a company to make one of these old cheap drugs when they could make something more expensive. >> reporter: merck says it continues to work around the clock to get bcg to as many patients as they can more pain for cancer patients like karen >> we're perfectliaby capable of make enough. >> and these shortages are across the system. people just say in the health care system that spends the most on health care in the world in america, they can't believe that this is happening. >> what is the company saying, that it can't raise prices, it is not allowed to raise prices and as a result it can't

manufacture more i don't can getget it >> they have doubled production and they even sped up production and maximized what they can do there. they say that they won't wraz the price because it wouldn't be the right thing to do. some people say just raise the price if that would allow you to invest in perhaps another facility and merck just says we don't think raising the price is the right way to go. we're trying to be responsible and supply as many as we can >> why doesn't the fda step in and allow it -- make it easier for competitors to make the same drug >> other companies have made the drug and there are trials going off other strains of this. it is a bacteria actually to treat this disease clinical trials are difficult too because the drug is in shortage so to compare things, you need bcg for the trials so -- >> it is a different strain of the drug >> what about generics why no generics?

they have the patent still >> no, it is not a block to get to the market, it just takes three months to manufacture. you have to grow it and it is hard and cheap so no incentives for other companies to get into the market place and that is the market failure we're talking about. >> what could be done? >> well, another company could potentially be enticed into the market if prices could go up we haven't seen that happen. it's been a one player marketplace. >> you think merck is keeping prices low so nobody else does come into it >> no, i don't get that impression >> yes just think about it. actually, two years ago at the jackson hole symposium, they talked about the companies that were winner take most companies. had serious market power and they looked in the consumer sector what do they do they drive prices down and increase productivity. and in the health care sector, they used it for pricing purposes so you have to question 12 rear

patent protection and the like merck is pricing it where nobody else can clear it because they have the market power. >> i think if another player came in, i think hospitals would pay more to get it but there isn't an incentive to go through the setting up a plant and manufacturing is a complex job and making sure that it is pure every time nobody wants to get in >> are there any other pricing pressures? is this a question where medicaid would never allow the price to go up 25% or 50%, whatever it took to clear it >> i've been trying to figure out if there is a reason that the price couldn't go up because you often do see drug prices spike when the market isn't working. some say that is an abuse is of the system merck just said it is not the right thing to do. >> because you then someone else will come in the market or -- >> it is amazing to see that

there is a drug that exists that could help these people and it is not being produced. meg, thank you different way of looking at things coming up, some of the biggest stocks on the move and a recent ipo and later the wild comments from the ousted ceo of papa john's. he's said that he's tried 40 pizzas in 30 days. and a look at yesterday's s&p winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.

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take a u.s. equity futures. it looks like it would open up higher 47, nasdaq about 31 and the s&p looking to open about 8 points higher. a couple earnings to tell you about. one is deer and company just out, the heavy equipment maker beating estimates by one cent. revenue also above estimates however deere sounding cautious about its overall business environment noting that lingering trade tensions and uncertainties in the agricultural sector have been weighing on customer sentiment perhaps if we get a trade deal things might be better for them. >> other stocks to watch, allala shares surge overnight adding to its more than 6.5% gain from the day before and that puts the stock price at around 9.6

administers its initial listing price. also hp's fourth quarter profit fell adjusted earnings did beat the forecasts thanks to higher sales. the stock right now is up by about 1% and dell's third quarter earnings also beating quarters but revenue missed and they are cutting its full year revenue outlook as they deal with a short average of chips from intel when we return, the latest on the hopes for a trade deal by the end of the year. and later retailers prepping for the biggest shopping day of the year we'll go over some of the winners and losers as we head in holiday season

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welcome back president trump says that u.s./china trade deal is on the horizon. >> i have a very good relationship with president xi we're in the final throes of a very important deal. i guess you could say one of the most important deals in trade ever it is going very well. but at the same time, we want to see it go well in hong kong and i think it will.

i think that president xi can make that happen and i know him and i know he'd like to make it happen >> for a closer look at the trade talks, let welcome john rutledge, chief investment professor and also dean pinkert former commissioner of the international trade commission and now with hughes hubbard international. dean, let's start with you president trump said that it does look like in in the throes of a final reach for the deal, but he also said things have to go well this hong kong does it surprise you to hear ho ho hong kong brought up >> it is not surprising particularly because congress has weighed in on hong kong and the president has to walk a fine line on that but more broadly, the president needs to change the narrative on

trade and change the narrative generally in washington. and he needs to show that the pain of the tariffs that has already been experienced here in the united states is leading to positive outcomes for u.s. workers and u.s. companies so i expect that highly motivated president will keep pushing toward a deal so that he can show a win >> show a win, but if you think it needs to prove that the pain has been worth it, i guess you also think a deal that is too skinny won't get done? >> i think that the true test from a policy point of view on whether this phase one deal is successful is whether it has progress on the structural issues i'm talking about intellectual property, technology transfer. those are the kindi ins of issu that are tough to crack that we need to have some progress on. and i think more broadly again

that it is not just that there is progress on those issues, but that there is enforcement of any progress >> john, from the chinese perspective, how likely is something like that to happen? >> well, we have to actually have something that looks like it is happening rather than actually does happen i agree with dean that both sides really need a deal and i've met with our trade team on this. china is already making progress on ip issues, not so much because we've forced them but because they have internal pressure to do it. your story before this was about ali baba and the richest man in china. there is a huge ip political lobby force now building in china. that will eventually get the playing field changed somewhat but china is having trouble right now and the trouble is partly tariffs, but it is position that they have got a credit freeze happening for

their private companies because the bank of china's efforts to get credit flowing to stimulate the economy really haven't worked so she on oxi needs a win too but xi knows that trump's election is approaching one day at a time. so he is not really in a big hurry to deliver anything. >> john, did you read that essay in the people's daily a week ago, and what did you think of the ideas they had on enforcement of intaellectual property and where that is going? >> i thought that has been the trickiest issue from the beginning. the give up on your technology program and state owned companies and all that, they ever going to happen but on the ip side, you can get definite progress. what you will not be able to do is walk around china with a clipboard. i was suggesting to our trade

team that the way to do that is to take the 110,000 men businesspeople who are now living and working in china and use them as your information network to help understand what is being enforced and what isn't. the other thing that has happened in the last year, and this is a year ago now, china has established a central court in beijing for hearing ip cases that used to be heard in city courts dominated by local mayors who as we all know are the source of the corruption in china. so there are things that are beginning to than there, they are just happening more slowly but they can certainly do a deal with soybeans, some i pachp pros and tariff rollbacks >> and what happened to energy they were talking about lng purchases and the like but it seemed to have slipped from the stories coming out >> the interesting thing to me

about international deals, it is politically very finely targeted you can actually specify which kind of steel that you can put a tariff on. so the political motives for getting energy to happen are very powerful too especially for president trump at this point. >> john, dean, want to thank you both for being with us good to see you. a coming up, the irishman debuts on netflix tonight can it ever justify the $300 million price tag though that is the question and we'll discuss what netflix needs to see next 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.

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welcome back to "squawk box. netflix aiming to take on the big box office this thanksgiving with releases all the way from "the irishman. can we watch it this second? >> yeah. >> it says streaming now will it be enough to take on other giants like disney disney has soared 15% while netflix fell 12% i don't know if that's a hedge joining us to talk netflix holiday strategy, ed lee also joining us is joan salsman. she is the senior writer at scenic good morning to both of you. does this make sense to you? can they make the $300 million back at netflix for making this film >> this isn't about making $300 million back

this is about having martin score say zi's mat stes piece with the netflix name. the fact that he's been out there talking and maligning disney as opposed to netflix. >> it might be worth $300 million. his whole schtick has been like with spielberg, you need to see it in the theater. it's a big picture the way it was shot, it looked like uyou'd have to see it in theaters it's nice you have a netflix account. it's an acclaimed movie. >> they're moving towards this movie strategy they're adding movies, a lot of movies. >> i think there's a calculus being made whether it's netflix or disney, everyone knows the theater will shrink. theater owners want 70 plus days, maybe longer there was a negotiation, hey, look, can we come closer in the middle i think they ended something where netflix was willing to go

45 days and the theater owners is 60 is the lowest we can go. it's a matter of, what -- >> do you think this is some grand forcing mechanism, some sort of grand negotiation taking place to shift movies? >> here's the thing -- >> movie window broadly. >> broadly, yes. it will come down to disney. when disney might be willing to make that shift because right now the box office is ruled by disney once disney sees that, oh, this streaming thing will be the future of our business, starting to pump it up, they need to figure out where is the calculus between how can we make this and boost our streaming subs without losing too much. >> i want to pivot to another topic. very quickly on disney plus, what's your betting line on the next time they disclose subscriber numbers, the number will be what right? so they say -- no, no -- >> 10 million. >> but almost everybody was a free signup at that point.

>> by the way, how many signed up after that signup period. i assume -- people will think it's a million a day it's crazy what's happening. the question is next time you hear from them do you think it's going to be 25 million, 30 million, 20 million? 40 million what's going on here >> i think the 20 million if they're -- i would be very surprised. let's look at it in context. hulu, owned by disney, has been around eight years, ten years? they're around 25. >> they're a little closer to 30. >> granted, disney, they've gone all in marketing disney plus very different in terms of launch getting to -- subscription's hard getting to that 10 million was impressive but there were all those promotions. >> they were estimating at minimum about 1 million signups a month. they've clearly blown past that. it's going to be what the churn is going to look like and how much they factor in. >> we're going to run out of time i have to ask you. you're staying with us >> yes. >> you're here

you can talk about your air buds in a minute. >> sure. absolutely >> we have to thank you. i wanted to talk about google fitbit, whether they should buy, antitrust. >> he's wearing a garmon. >> apple is the new -- >> we don't have time to talk about it he's going to do a full review. >> those are great yeah thank you guys >> when we come back, amazon usually dominates the holiday season but this year a few factors are working against the retail giant we'll dig into amazon's competitioand n how it can fight back maybe we'll be right back. when it comes to your customers' expectations,

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a record run for the markets. but hassan at th santa come ear wall street? will mike bloomberg's entry into the race hurt elizabeth warren's chances we're going to debate. plus, are you ready for some turkey >> if this turkey tastes half as goods as it looks, i think we're all in for a very big treat. >> the turkey talk line is open. we'll get you tips so you can avoid this

>> look at that. >> the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" right here on cnbc happy thanksgiving, everybody, in advance i'm andrew ross sorkin along with becky quick joe kernen is out today. u.s. equity futures. dow looking like it will open up 36 points higher, nasdaq 28.5 points heavy equipment maker deere reported $2.14 that beat the street's estimates by a penny. deer said that its results are

impacted by trade tensions and ongoing uncertainties in the agriculture sector the stock is down by 4.3%. the faa says it will have sole responsibility for inspecting and signing off of any newly manufactured boeing 737 max jets boeing had previously had the authority to perform those functions. this move does not affect any of the grounded 737 maxes that already were in service but it could indicate that the jets return to the skies could take longer than expected that stock is off by 1.1%. mortgage applications rose by 1.5% last week. an increase in refinancing activity outweighed a slight drop in new purchase activity. diana olick will join us with more on these numbers coming up in a few minutes. 2019 has been a tough year for stocks but we're entering the super bowl of the retail season right about now courtney ragan joins us with a look at what's working and what is not courtney

>> hi. good morning, andrew happy thanksgiving the most important season for retail, the sector has under performed. the xrt is up 9% that's nothing compared to the s&p 500's 25% gain in that same period of time it shows that a strong consumer backdrop is not enough to make all retailers top on investor's wish list. if you're shopping for retail stocks, we did some homework for you. of the 17 retailers that have reported results in the last couple of weeks, 13 reported stronger than expected earnings, 3 below, one in line 11 beat on revenue 6 fell short big box and off price, that's the format that's been the winning formula in retail. target, best buy, ross stores and tjx all put up strong quarters beating on the top and bottom lines and all have seen shares gain more than the s&p 500 year to date target up 90% at the high end. tjx up 32% department stores, that's a

different story. you're probably aware. kohl's missed estimates for profit and sales macy's had a mixture for it but then lowered guidance. macy's has lost half the value in 2019 marking the worst year for the stock so far at least since 2008 even nordstrom which put up a good quarter is down 18% year to date its largely the mall-based retailers that are soaring and it hasn't been the tariff impacts or mitigation that's making a difference. the winners seem to be those that are offering consumer better, at least perceived value as well as convenience becky? >> courtney, great to see you. >> thank you. let's bring in monisha spts delarosha and charlie o'shea who is senior credit officer at moody's. great to see both of you. >> great to be here. >> charlie, i wanted to start with you you lowered your outlook in terms of profitability for this

sector >> yes. >> by how much and why >> a lot of it is driven by investments. we took amazon, for instance, down because of the next day shipping initiative and that can drive because of the size of amazon in our sample, that can drive a lot of our thinking. >> just the costs? >> yes >> not that the sales won't be there. >> no. >> but it costs them more to deliver. >> we focused on operating income the top line matters but it doesn't matter as much you don't put the top line in the bank we worry about operating income and there will be some softness on the operating income side in retail through 2020 because of some of the investments that these companies are making and that -- you know, it's a binary game for us. either you're making the money or you're not. if you're not making it because of investments, it's a long-term deal that will catch up at the end. we have to look forward 12 to 18 months. >> is that going to continue all the way through 2020 because the stock's already reacted to that investment it was pretty apparent and that's why last quarter's sales

numbers were off the chart stocks will move on the rate of change, right? if the investment has worked through the system and it's starting to inflect the other way, six months ahead of time the shares will pick up on that, right? that's why i ask, is it all of 2020 or is it partway through 2020 when they're actually able to start getting margins to go up again >> i think specific to amazon and i'm a fixed income analyst, but with respect to amazon, i think the next day shipping and then the same day that they've layered on top of that recently is going to extend throughout 2020 there will be continuing costs amazon's going to spend 36 billion shipping this year it's up about 8 billion from last year and i don't see that number coming down any time soon the question is how much are they getting back from the customer so what's the net and the net's about 15 billion. >> it's not just amazon that's doing this, it's everybody else competing with amazon. macy's is promising one day delivery at this point how do you wade through this,

see what's worth it, what's not? >> they absolutely are trying to compete if you look at retailers. the big box retailers like target, they've also over the holiday period stated that they will be able to fulfill a number of the items in one day. the consumer is demanding it and sometimes the consumer is demanding it and amazon is leading that, sometimes they're reacting to that, but i think that ford retailers that want to be able to gain share or hold share over this season it's an investment that they have to make and one that they'll have to hope has a long term return as well. >> we have seen the stocks of the companies that have invested be the ones that are actually rewarded walmart, target, amazon, those are the stocks that people like. charlie may be right that it's eating into their profit right now, but do you think this pays off in the long haul >> it is a long-term game. if you look at, you know, investments that target has made to build out distribution that can come from stores, that's costly to make that investment up front, but as they've freed up the cash they can re-invest that cash into the store, make

the store experience better and you do have to take that long-term perspective in order to understand, you know, what the overall payoff will be. >> charlie, we had brian cornell on from target last week. >> yes. >> he talked about how having the stores is now a benefit. we used to look at it and think, oh, the stores are going to slow you down, it costs you too much to run that. when it comes to the fulfillment orders if you can convince them to come into the store after they ordered online or go to the parking lot and they deliver to you, that brings the cost of fulfillment down to 90%. in the future does this have to be a game where you would have not only online but stores >> you've got to have stores stores are an asset. walmart's been able to do, 5400 physical locations in the u.s. including sam's. that's a powerful weapon you can use them to fulfill online orders. you can ship from store. for target it works because the stores are so locally curated. for a best buy, for instance, i think they would rather ship and stock stores out of the same distribution and fulfillment centers to take those costs up

target's nailed this and the food strategy is something that i've called out a couple times we thought they needed to get food improved quicker. instead the company waited until they had the other product in place. all that private label, you know, the stuff that you can only get at target, you drive the traffic with food. now you've got the product, higher margin stuff that you want the food shoppers to buy. that part of the strategy is just 100% home run. >> charlie, there's got to be a huge benefit from the tax cuts and jobs act for this type of investment we're talking about, right? fulfillment centers, this is an asset. you've lowered the top marginal tax rate from 35 to 21 that's a 200 basis point improvement in the after tax costed capital that's got to be a big driver of a lot of this. the companies that can make the investments are in a much stronger position than they were two years ago. >> absolutely. i think as becky said earlier,

the companies that are thriving now are the ones that have made the investments. walmart, 3.5 years ago actually, 4 -- 3 1/2, 4 years. >> time flies. >> november, right >> yeah. and the market is erupted in the wrong way. we had thought that was the best strategy you have to invest it's a long game you cannot run a retailer for quarterly results. you won't have many quarters left so you've got to make the long-term investments. your shareholders have to be patient and your boards have to be supportive. i think the three companies we've talked about -- >> they all have that. >> walmart and targets, the board's all supported the ceo strategy. >> even with walmart in particular, they really pressured the stock, hated everything that happened, billions of dollars lost on that announcement but it's the right strategy they stuck with it >> yes. >> just really quickly, if you need stores to survive, what does amazon do does whole foods work?

seems to me like that kind of match-up hasn't really taken off yet. i've tried the service it's been disappointing to this point. >> amazon is trying a lot of things whole foods is one angle >> return? >> return packages they are building out. you know, not necessarily a consumer-facing store at scale but they are working very hard and a lot of the investments that they're making are to build mini fulfillment centers very close to the consumers to try to take some of those benefits and benefit from that kind of close distance but haven't actually found sort of that key model that is consumer facing yet to be able to replicate what a lot of these retailers that started out as stores have been able to do for years. >> thank you both for coming in. good to see you. >> thanks. coming up when we return, a check on the health of the housing market this morning and then a "squawk box" tradition continues. we're going to hear from the folks at the butterball turkey talk line on how to actually

cook the perfect holiday meal. "squawk" returns right after this

welcome back, everybody. take a look at the futures this morning. getting ready to head into the holidays right now, green arrows across the board. dow futures up by 38 points, s&p up by 7 and the nasdaq up by 30. this comes on a week where you're looking at three days in a row of gains already for the dow. you're looking at new highs set for all major averages. a bit of news on the housing front from a short time ago. diana olick joining us with the latest mortgage application numbers. good morning. >> reporter: good morning, andrew the numbers are messy this week. the annual comparisons are way off because thanksgiving fell a week earlier these are up against last year's holiday week mortgage applications to refinance were up 4% for the week, still very strong thanks to today's much lower mortgage rates. they were up 314% compared to a year ago but remember that holiday issue. rephis are strong because the average rate on the 30 year fixed fell to 3.97% from 3.99.

the previous week. that rate was 115 basis points higher this same week one year ago at 5.12% now mortgage applications to purchase a home fell 1% for the week 55% higher than the same week one year ago again because people weren't buying homes on thanksgiving last year purchase volume has been consistently higher than a year ago due to the lower mortgage rates but more in the single digit percentages. buyers are facing an increasingly tight and pricey market as supply of home sales drops. usually inventory drops. we'll get a read on pending home sales for october. back to you. >> diana, we've got pending home sales coming up. what do you think we should anticipate from that later this morning? >> these represent signed contracts, not closings. there are people out shopping in october. yesterday we got the new home sales numbers based on the same contract signing and they were huge i'm not saying pending are going to be huge because the existing home sales market has so little for sale but we could see a nice

bumpup. >> thanks. we'll see you later. when we come back, will santa arrive on wall street this year we'll break down year end market moves and tell you where to put your money to work up next, 88% of americans will be eating turkey tomorrow 100% of them have questions about how to cook the perfect turkey fear not, the turkey talk line is here to give you some help. we'll get advice right after this break we're honored to have you on campus for the official visit. aflac! coach saban, how is aflac's program different from health insurance? well aflac gives you money directly, for things health insurance doesn't cover. aflac! we put together a little highlight reel for you. here's aflac helping you with your deductible... copays...out of pocket costs. you look good paying bills. get to know us at aflac.com dana-farber cancer institute discovered the pd-l1 pathway.

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it's a special time of the year everybody's got questions about making the perfect thanksgiving feast, and for the past 12 years joe has tried to make the perfect turkey he's not here, but the turkey tradition must live on >> all right thanksgiving my job is to prepare the perfect turkey happens every year the first thing, cleanliness is next to godliness. someone else is going to have to turn this off. >> all right there we go. here's the turkey. here's my stuffing

is this -- back here, right? pay no attention doctor's orders. may want to cough a little bit whoa, that is cold that's koeld that's cold and wet. and you really want to stuff it in there you really want to -- in other words, you really want to pack it oh hold on a second almost done here all right. viola, ready to go now >> joining us right now from the butterball call center in naperville, illinois, is andrea. great to see you thanks for joining us. >> thanks for having me on the show happy thanksgiving. >> happy thanksgiving to you you probably couldn't see what we were just watching, but it was joe stuffing the stuffing in the turkey he thought he was doing it right by cramming it inasmuch as he could. i'm pretty sure that's not right. is it? >> no, definitely not.

here at butterball we recommend lightly stuffing your turkey you want to have some room for it to expand while it's cooking and you want to make sure that it cooks properly. you don't want to pack it in lightly place it in. >> is there a risk that you could get salmonella poisoning if you pack it in like joe was doing? >> well, you know what, the most important thing when you're roasting a turkey and placing the stuffingin is to make sure you take the temperature with a meat thermometer so it's real important to make sure that the stuffing reaches 165 degrees for food safety. so you'll want to test it right in the center of that stuffing then you know it's food safe and your turkey is cooked through. >> what's the most common question that you get asked on the hotline? >> well, here at the butterball turkey talk line we've been talking turkey for 39 years. we get all kinds of questions but the one question that keeps coming up, our number one question, how to 245u and how long it takes. what people don't realize is

that for a large turkey, it does take several days to thaw in your refrigerator. for every four pounds -- >> too late? >> it's not too late, no so for every four pounds it does take one whole day but butter ball also recommends a cold water thawing method today you could submerge it in cold water for every 30 minutes that it's in the water it will thaw one pound. that's a quicker method. then you'll ensure you have even cooking if it's evenly thawed. >> what's the most unique thing you can do with a turkey these days >> of course over the years we have heard lots of different trends we really follow the trends and work through those over the season and we've come up with some really great ideas and on butterball.com you'll see new videos on how to deep-fry, how to spatchcock and --

>> air friday. >> what was the middle one. >> spatchcock. >> what's that >> so that's a method where you cut out the backbone of the turkey and you actually spread it out, the top of the turkey, lay it flat. it is opening up the turkey. it helps cook quicker. that's a quick method. also air frying has become popular. that makes a beautiful turkey breast or a turkey breast roast. if you go to butterball.com you with watch our video on how to air fry. >> what is the craziest question that you've ever been asked or somebody else there in the call center has been asked? >> you know, we get all kinds of calls here from panic calls to funny calls, and what i love best are the heartwarming calls where we can kind of really save their thanksgiving one call i remember, it was a family, they were just putting their turkey into the oven and they lost power and they're sitting in the dark.

they said, well, we should call 1-800-butterball and see what we can do i was able to help them come up with plan b. i gave them the instructions for how to do it on the outdoor grill and we had saved their thanksgiving they had a candlelight dinner. >> i have a tough question for you. apparently our director is on hold calling your number right now. how long is the hold time right now? >> you know, we just opened at 6 a.m. and we do have calls in cue. sometimes you have to wait so call us early at 1-800-butter ba ball >> do you have an ai assistant yet? a computer that will answer? is there an alexa version of the butterball hotline >> absolutely there is if you're in the kitchen and your hands are dirty, you can ask your alexa device. ask butterball you're going to hear the voices from the turkey talk line

experts answering your questions and giving some fun facts as well. >> i'm guessing that cousin katheryn, cousin eddie's wife mistake is the lack of thermometer. don't you think? >> overcooked it. >> when clark's turkey blew up >> what about getting to the wish bone, do people still do that you know -- >> oh, sure. that's a fun -- >> that's what we do. >> we do that. >> anyone in the family does that >> my dad did. >> my dad did that i had to take over. >> whoever got the longest -- >> yeah, i've done it. >> there's a way to win, too you put your thumb on the top. that's true, that's how you win. andrea, thank you very much. want to thank you and the butterball turkey talk line. take care. happy thanksgiving. >> thank you. still to come, investors are hoping for a santa claus rally we will break you down what you need to watch over the next few weeks and discuss investment ideas after the break. then later, now that michael bloomberg has entered the presidential race, will it help

or hurt? the democratic presidential leaders. we'll discuss that and so much morehe"sawbo rur wn quk x"etns servicenow put our workflows in the cloud. this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you.

let's get to the morning's market movers. dom chu joins us from cnbc headquarters dom, got your turkey ready >> i've got my turkey ready. i'm not cooking. my in-laws are cooking. i love the butterball segment. favorite every year. let's talk about the record high run in stocks overall because if you take a look at the overall picture, we're showing airlines. that's something we focus on because of travel season those are some of the moves that we have seen that are moving to the up side. dow jones industrials, s&ps and nasdaq, big moves in terms of year to date performance overall. what we want to take a look at is what particular industry groups led us to that record-high level. if you take a look at the sectors that were the best performers, they were some of the ones that were cyclical in

nature technology, industrials, financials, but health care. one of the best performing sectors in the s&p 500 over the last month anyway. if you take a look at those, that's perfect the stocks have been doing the best over the s&p 500 last year. that's disney, ge, advanced micro devices. some of the stocks in the s&p 500 over the last month to the record high levels of course, everything else we've been talking about with regard to the market highs. those stocks and some of the other ones in particular around retailers, andrew. we'll take a look at those i'll send it back over to you. >> thank you for that. the dow notching the fourth highest close. eight of the 88 s&p sectors were higher led by real estate which was up 1.4%. energy continued to lag the broader market down 14% from the 52-week high is energy going to be a bright spot as we head into the winter months and what names should you being looking at

joining us is dave lebo wits mike santoli is here and our guest host, barry knapp. have you had a proper introduction i feel like you might not have i was thinking about that. from ironside economics. >> needs no sbreduction. >> you need no introduction. thank you for playing along. so the question i have, not just about energy but just in the markets broadly, markets broadly for a second you have china out there with the tariff situation question is what is baked in, what isn't baked in. as we head into december, christmas, santa claus rally situation. there are a lot of funds that will sell locking the gains that they have for the year and go on vacation >> so i think that's two separate questions one on, you know, do people take their gains to the end of the year i think when you have a year like we have there's a little bit of window dressing going on during the final month of

december in terms of where the market goes from here and what is in the price, i would agree with you. there's a lot baked in with respect to u.s./china trade. there's an expectation the tariffs don't hit, we begin to see material progress, something in writing with respect to ag purchases and intellectual property protection. from where i sit the market feels a little bit ahead of itself consensus looking for the high single digits. the street is really banking on a rebound in margins which personally i think is going to be difficult to achieve if we're in the market of trend like growth and continuing uncertainty. it's not like china gets resolved brexit, protests stocks might be ahead of themselves >> china, because we've been debating what that means this morning, if we get a deal, how much does the market move on that if it's already baked in?

>> i think the market is rationally saying some kind of cosmetic deal will happen. the way i view it is we're not going to see a reacceleration, it will be an investment the market will give itself permission to look through what's going on. we've got this inflection point, we've got it out of the way. the market was demonstrably cheap. it seemed like the economy was in a bad place you had the government shutdown and it gave the economy a mulligan the market feeds off the areas now. bond yields both corporate and government debt but not because we're bracing for the recessions that's the formula for the math works, pay more for stocks, more equity exposure. the point is do you have a market trading at 18 times forward earnings going into a year when growth isn't that great. coming into this year with 14 times earnings.

>> you've seen a real down trend in the markets that was your point earlier this morning. the reason for why you would be buying stocks, why you're long the u.s. >> yeah, no, look, i think the market has rightly picked up on the bottom in earnings growth, economic activity and global manufacturing. pmis are starting to inflect the other way. chinese ordinary imports bottomed in july moved from negative 7% to negative 2%. you've already got this inflection higher. that's what the market's reacting to. as far as trade goes, the way to think about this, we started to talk about this, the stock and know there's an existing stock of tariffs. the industrial sector's already adjusted to that margins came down hard from 2018 they're back up from where they were when the trade war started. that adjustment's taking place now you have the business

competence channel that's the flow of tariffs if we miss it, it won't explode, there are all kinds of uncertainty but it could move a lot. u.s. manufacturing could recover. that's good news through the first quarter and then i think we really run into a whole bunch of uncertainty. >> the question is how much does manufacturing recover. pmi is going from below 50 to above. >> back to 60. yeah that's my point about business confidence it will come back. it's not going to where it was in 2018. >> you think this election moment slows things down is when >> it's past the first guard ter. >> past the first quarter. is that a second quarter, third quarter situation? >> no matter how you cut the mustard, we're looking at a year in 2020 where the consumer is going to be key.

manufacturing can get better but it won't be robust by any stretch of the imagination the labor market, mid 3s unemployment, wage growth flat over the past couple of months does wage growth find a way to move up. what does that mean for consumption? the survey data has gotten better we have personal spending and durable goods. we need to see the improvement come through in the hard data. you have volatility very low survey data. it needs to come through otherwise this will be a false high. >> two quick things. one is we talked about this earlier. if you think of qe2 and qe3, when the market realizes this, it's the first part of april the cap spending piece is really interesting f. it looks like the democrat has a chance and they'll roll back the tax cuts and jobs act, you could have front loading of equipment

purchases and the like next year election year uncertainty dampens that it was down a lot this year. i'm wondering if it looks like trump's in trouble that you don't get front end loading of orders to take advantage of that immediate expensing. >> when we teased this segment at the beginning we talked about going into the winter, energy. >> do you like energy. >> went completely off kilter, that was my fault. >> given we have you here and you have views, what would you do >> the way we're thinking about equities broadly is we're really focused on total yields. dividends plus buy backs when you look at the three highest sectors it's financials, it's technology and they're energy all very different sectors the banks are a little bit more cyclical play. you have tech, cash flow growth machine. you have 2% dividend buy back on top of that. if you can sit through the

volatility and not worry about the underlying, i'd be hard-pressed to see where you can find 4%. >> want to get your comments late day selloff on apple yesterday. you like apple going into next year >> i think tech in general may take a bit of a pause here there seems to be a bit of a reflation trade. tech has been a more defensive asset in the course of the cycle. if we find ourselves in the 2% economy you'll see that trade come back. >> i have two very selfish questions. underperformance of parent company comcast. what is going on anybody have a view on this? >> i think the market kind of alternatively views it as a high profit margin utility as a broadband seller and sometimes as a media company with secular challenges i think we're in the latter moment for this particular time. >> do you think it's a rotation from comcast to disney >> disney is by far the consensus favorite

one you have to own. maybe it is suffering a bit in comparison to that if you look at disney's valuation, they're giving them credit for figuring this whole thing out. >> people are chasing disruption that's very much momentum. >> would you buy the tesla truck or stock >> i would probably lean more into the stock but i think, you know, there's obviously a view there that battery technology needs to come through. >> david, my favorite thing you said is cut the mustard. do you know the origin >> i don't i had to look it up. >> it's first used by o henry in the heart of the west. i looked around and found a proposition that exactly cut the mustard. >> i live right around from o henry's favorite tavern. >> it soaked into your brain. >> good to see you. >> happy thanksgiving to you both, too. when we come back, a powerful storm will be bringing rain, snow, strong winds from coast to coast this thanksgiving your holiday forecast is next. as we head into the busiest

travel days this year, check out airline stocks over the last six months best performer, looks like southwest and united are neck and neck there up by -- united is up 14.8 southwest up by 12.6 "squawk box" will be back.

powerful storms from coast to coast will make it a tough go bill karins joins us good to see you. >> reporter: good to see you what a storm in california last night. this was the strongest storm ever measured, ever. any storm in california history. 84 mile per hour winds on the coast. 34 food waves. that's what's heading now down to southern california we had a foot of snow in denver. a foot of snow on the ground in min nneapoli minneapolis. this big storm will make airports treacherous, o'hare,

cleveland, minneapolis a little bit of light rain in the northeast and wind but because of the volume especially in the new york city airports, we'll have minor delays. with the huge california storm it will sweep down towards la and if you don't get out today, tomorrow the storm in the west is still plaguing us we are going to see gusts up to 49 miles per hour. additional airport delays. iffy at best it has to be under 34 miles per hour we may not get the big huge balloons we love so much the big storm through thanksgiving day we'll have travel implications. we're not done yet we are going to see over the weekend upcoming a storm heading for the northeast. that could bring rain and snow for the region getting to thanksgiving is extremely difficult and getting back may not be much better. >> bill, thank you, i think.

>> reporter: yeah, right. >> good to see you happy thanksgiving. >> reporter: happy thanksgiving. coming up when we return the bloomberg factor will it help or hurt elizabeth warren's chances for the presidency we've got that debate after. and later what "the irishman" means for the box office we'll discuss that with richard greenfield who will join us. "squawk" returns right after this hop. hop. when you shop small you help support your community - from after school programs to the arts! so become a regular, more regularly. because for every dollar you spend at a small business, an average of 67 cents stays in the community. join me and american express on small business saturday, november 30th, and see how shopping small adds up.

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welcome back to "squawk box. mike bloomberg's entrance to the democratic primary has thrown an interesting twist into the race made all the more formidable by the personal wealth. he can match almost any other campaign's expenditures. take a look at the chances to win the nomination this according to online platform predicted where users can trade shares on who will win the primary. bloomberg has surged at the expense of elizabeth warren. joining us is sar are fisch. >> sarah: ra fischer promising lives cut short, a cnbc contributor the question is, we look at that data and does it really cut -- i mean, clearly cuts against

elizabeth warren to some degree. i would assume it would cut against the bidens of the world. >> look, it's very early into his candidacy. the good news is i think for america that he's actually doing it this time as opposed to fooling around and thinking about it and over analyzing it i don't think we've ever seen anybody with quite this substantial amount of wealth run for president. i mean, tom steyer seems to have unlimited funds. >> he's not spending it. >> right bloomberg isn't spending it? >> no, tom steyer isn't spending it. >> he's had an impeach campaign. now bloomberg can literally spend unlimited money. the digital campaign can be run. >> sarah, what do you think of that why is tom steyer, he has a lot of money, he could be spending it, maybe he is. i don't know if it's working >> he actually is spending it.

if you were to take a look at the tv ads only, bloomberg is spending a lot, but in terms of all spending steyer is beating him by a little bit. i think what you're seeing here is these candidates recognize they have a long haul. they want to spend a lot in the primary but they need to save a lot forget out the tv ads later on down the line that's why you might see him be a little bit conservative now. tom steyer spent $32 million on ads for hillary clinton. he spent on the need to impeach campaign he has spent a lot of money. he'll continue to spend a lot of money. the question is will he outspend bloomberg? >> how much money do you think that michael bloomberg has to spend to get that true name recognition around the country >> i was going to say, he's got to spend a ton of money. he's missed out on campaigning all throughout the season and on top of that he hasn't been in public office for a little while. people know a lot about mike

bloomberg and his record from new york maybe they know he stands for guns. >> does it cut both ways if, for example, there was an article that said he spent half a billion advertising, would people look at that and say that makes him -- that's even more disqualifying because of his ability, because he's buying the election we had someone on yesterday who said that. meanwhile, people on the other side say elizabeth warren is trying to buy the election in a different way. >> they're trying to use your money to buy the elections. >> right >> we're in unchartered territory with mike bloomberg. he could spend 5 billion, 10 billion, 15 billion, it's not going to matter to his bottom line or his philanthropy, right? he can just continue, continue -- usually candidates get out of the race because they've run out of money, right? >> right >> even if the voters don't necessarily go with him early on, he can stick with it, continue to spend his money in all sorts of interesting and creative ways and he can be there until the finish and it won't affect him i think he's finally decided

after four years of dithering about it that he has to do this regardless of what happens. >> sarah, there's two pieces of this how much you can spend and the other is messaging and landing on the message that resonates with either i don't know if you want to call it the base, the party, whatever given the primaries that they're in. do you think that he's landed on the right message in terms of how the advertising is being approached >> yeah, that's a great question there's two main ads that he's running in those 100 plus media markets. both of them touch a little bit on his record but actually a lot of them talk about his plans on things like health care, stuff he hasn't talked about what you're going to see with michael bloomberg, he's going to invest $100 million in digital ads. look for him to use the digital ads to garner data about what voters want to hear from him he'll leverage that data to inform his tv ads down the line. i think a lot of people are focusing on bloomberg's tv strategy he just hired former facebook cmo and he wants to use that expertise to really lay out a

digital strategy where he can get ads to inform that messaging. >> here's a creative question for the createives who make thes ads. so interesting in the two ads out there, it doesn't talk in the ads. all voiceover. meaning you're seeing images of him, you're hearing about him, but you're not hearing from him. and whether -- maybe, by the way, that may very well be the strategy i don't know if you remember the ad on 60 minutes, he was talking to the camera. i don't know if that was as persuasive frankly. >> don't forget, this is a guy who also at the republican convention in whatever, 2004, stood up and praised george w. bush, this is the guy, i'm throwing my support about him. this is what he did for us in new york city after 9/11 all of which may have been true that can be played repeatedly, too, which isn't really going to help him in the democratic primary. >> do you think former mayor

bloomberg can ever overcome this idea within the base, at least with the elizabeth warren/bernie sanders part of the party that he is disqualified because of the money that he already has? >> never going to overcome that. >> impossible? >> probably never going to overcome stop and frisk either he's never going to overcome that the question is are there enough people in the middle of the spectrum to get him to the nomination i think if he gets the nomination, which is a very big if, i think he can beat president trump. >> i have a question for sarah, actually sarah, i had a thesis about this that the thing that really stopped elizabeth warren's momentum was tax policy and something of a taxpayer revolt when it became clear how she was going to pay for all of these plans, her momentum in the polls just absolutely stopped. if you look at the elections a couple of weeks ago, even places like washington state voted through the voter advisory system against taxing corporations, against luxury taxes. is the issue here that's driving

warren's descent and pete buttigieg and the like, is this more about taxes, tax policy and who pays for this? in which case bloomberg has a chance if he talks about those issues to gain some momentum am i off on that >> i tend to agree i think that a lot of voters have progressive outlooks but they at the end of the day do worry about whether or not they're going to have a strong economy, whether or not a strong economy will help them support with jobs. if they think a lot of money is going to be thrown at these programs, i think that's going to push some of them away. going back to what bill is saying quickly about michael bloomberg's sort of messaging strategy, can he overcome things, i completely agree i think it's going to be really hard for him to overcome a lot of these narratives, but what he has going for him, he sees a vacancy that you just pointed out. people are getting weary of the progressive message and he's going to take advantage of that. >> i also think quickly, one of his strong messages, i'm the

anti-trump, i can beat trump, we have to beat trump it's an existential crisis a lot of people are learning that they cannot beat donald trump in a regular election and mike bloomberg could. >> that suggests everybodyis rational happy thanksgiving appreciate it. >> thank you. when we come back, a preview of the big holiday season. great stocking stuffers for your holiday portfolio. later, the holiday streaming wars are taking over "squawk box" will be right back.

this is war. >> whew! yeah >> the holiday content wars. >> you want to be a part of

this a part of this history. >> whatever you need me to do, i'm available. >> deniro, pacino, persshi takig on anna. is it an epic battle or does everyone win the final hour of "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today our guest host today, barry knapp. he's the director of research at ironside's macro economics

we're watching u.s. equity futures and we are in the green. even after they hit new highs once again yesterday and closed at those highs s&p 500 up 8 points for the futures. the dow futures up by 42 and nasdaq up by about 30. you're watching treasury market. it looks like the ten year is yielding 1.747%. a couple of stories that investors are going to be talking about today. it is a busy day for economic numbers even though we're walking into thanksgiving here as we essentially jam two days in because of the holiday. here's what's happening. at the bottom of the hour we're going to get the latest numbers on durable goods gdp, jobless claims. at 945 eastern we get the chicago pmi. then at 10 a.m. eastern time personal income and spending comes out along with home sales. so a lot to chew on. shares of deere and company under pressure this morning as well heavy equipment maker did beat estimates on the top and bottom lines for the latest quarter it said that trade uncertainties

continue to weigh on key markets. you're looking at that stock off over 8% right now. meantime, new york city lawmakers have approved a ban for all flavored ecigarettes the ban taking place on july 1st. new york city joining 230 municipalities, several states that have passed similar laws. massachusetts passed a flavored ecigarette ban and governor charlie baker will sign it into law today. the debate continues in washington along with the president on what to do there. phil lebeau is tracking all of those holiday travelers today at o'hare airport in chicago on a day that's going to be plagued by some weather delays and cancellations. first though the faa speaking out on the grounded 737 max. what's the latest you can tell us, phil >> reporter: becky, the fa assent boeing a letter yesterday and essentially this has to do with the certification and approval of 737 maxes once everything has been deemed okay, they're issued an airworthiness

certificate. in the past there would be delegated authority where boeing could say, okay, these ten planes, they've been approved, ready to go off on delivery. that's not going to happen this time here's what the faa is saying when it comes to the 737 max each plane will have to be approved individually. there are more than 400 of these that have been built but not yet delivered. that means the faa will have to go plane by plane by plane that could slow down the delivery process the faa saysthere's no time frame for a possible certification on the max that's important because boeing has said for some time, guys, and maintains that it expects certification for the max to happen in december i have to make this point, we hear from the faa three times in the last two weeks that they are not putting a time frame on certification. i'm increasingly of the belief talking with people that this plane may not be certified this year and may be moving into january. the story in the airports today it's all about the long lines. we know this every wednesday

before thanksgiving. this year they're expecting, according to airlines for america, more than 31 million people will be flying. that's an increase of just under 4% compared to last year the delays are what people will be focusing on, in particular storms moving through the midwest into the northeast so as you take a look at the airline index, over the last six months it's done better largely because you're looking at increasing profit margins and improving margins for the airlines in the second half of this year. having said that, guys, what the airlines really want, a smooth thanksgiving weekend they do not want to see massive delays there have been 400 cancellations today. mainly smaller airports. if it doesn't get real bad, that will be a big help to the airlines back to you. >> phil, thank you good to see you. for more on when consumers should be booking their holiday travel and where investors can look for a value, let's bring in patrick sury also savante sithe

let me start with you. just this idea that if the 737 max is not certified this year, if that pushes into next year, even the end of january or later, what does that mean for the airlines affected? >> i think it just means that you're going to have a bit lower capacity growth next year. the airlines are working around the edges to try and grow as much as they want to it just kind of delays the growth one of the biggest delays for investors for this group is potential for oversupply in an environment where demand might be slowing in fact from an investor perspective a max delay is not the worst thing. that might play to kind of favorably for airline stocks here i think some of the second half improvement is partly due to this expectation that the max is going to take longer to return. >> patrick, the investor's benefit is bad news for consumers though because it does mean prices could get pushed higher for bookings further out.

>> potentially what we've seen in the market is 737 max is a small fraction of capacity overall it's not really affecting consumers. there are particular markets, airlines like american or southwest where they have a large fraction of these aircraft in service if you look at miami, new york forex ample we've seen a drop in capacity even though there is some shifting. you might see more for that but we don't see a big problem. >> we looked at a chart that shows united is the big gest what the stock reacts are as we get into the new year. do you think that continues to be the case? >> i don't see any negative impacts but we do seek opportunities for the group in general i think is well positioned again, there is some uncertainty about how that max capacity

comes back on, but demand seems healthy. we'll have to kind of keep an eye on the economy our kind of picks heading into 2020 would be a little bit more delta and american just for kind of valuation as well as opportunity be at this for sentiment to turn as well. >> patrick, just in terms of what we're looking at for consumers trying to get ready to buy their holiday tickets, black friday is the big day for shopping for retailers what's the big day for airlines for holiday travel >> it's interesting. we look at the data we collect we found that it's actually the tuesday after cyber monday, which is the big day for travel sales. it looks like this year's going to be no exception there's a number of airlines already announced that they'll be offering deals. we're doing a set of exclusive deals on hopper. if you're looking to plan your holiday travel for the christmas/new year's season, it's a good idea to get that done this tuesday. >> how are consumer prices holding up for fares this year

versus last year >> actually, it's a little bit down growth is a little bit up in terms of capacity. it's a little bit below what the airlines are expecting pricing is down 2 or 3% from the same time last year. there are still bargains out there. particularly if you're looking to do bucket list trips, there are some great deals to be had. >> go ahead. >> i was going to say, question for savi, maybe for you, patrick, as well is there any risk in jet fuel prices having a substantial move higher inasmuch as you have the new requirements on sul very co - sulfur coming into play. you start to pressure the demand for light oil to make the shipping fuel, could that boost jet fuel prices and cause a problem with, you know, airline margins next year? >> i think some of what patrick is eluding to, some of the ads you've seen, you've seen more in the off peak areas than peak i think part of that is a

reflection of airlines taking advantage of fuel. some of the trips become more profitable they've offered more off peak travel and capacity growth in the off peek areas as well fuel comes back. i think we'll find out why the imo 2020 that you were referring to, what kind of impact that has. we should know by december/january if that's having a big impact. and then if the global trade does improve, i think fuel could move higher. then what i think you'll feel is airlines curtailing the capacity growth plans, especially in the off peek periods so there is a potential for them to move higher some margin contraction. in a couple of quarters they should be able to push through some of the fair re increases especially if there's a global recovery. >> it's interesting how the correlation has gone from being decidedly negative to a little more positive because of the capacity issue that you mentioned. that's sort of a post 9/11

dynamic. it's pretty fascinating. >> pat trick, quick last word? >> i think we're seeing the same thing. we've seen historically low airfare. it looks like we're converging back to the fuel price we've seen that's the biggest risk. >> patrick, savi, thank you both okay coming up when we return, what is oiled is new again in toy land courtney ragan is standing by at the epicenter of new jersey real estate or -- retail, i should say, in paramus. what do you have coming up for us oh, my goodness. >> reporter: good morning, andrew does this guy look familiar? it's geoffrey and i'm in a toys "r" us store confused they were gone but they're back. coming up on "squawk box."

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courtney ragan joins us now from paramus, new jersey. it's about time, courtney. >> reporter: it is about time, becky. so this is toys "r" us are you confused it's a new store but with a familiar name. so here's what happened. the retailer did file for bankruptcy and closed all 800 stores last year after an unsuccessful reorganization. a new parent company, true kids, owns the toys "r" us and geoff ri brands now. true kids ceo richard barry was toys "r" us chief merchant today this is the first toys "r" us store it's opening at the garden state plaza in paramus, new jersey next week the second store will open in houston. these are only two of a planned ten stores by the end of 2020. so very different than the 800

former store foot print. the size, much smaller only about 6500 square feet compared to about 40,000 for the old toys "r" us that you are familiar with. the new toys "r" us stores are done in partnership with retail technology firm beta it's much more experiential than inventory based. there are about 40 brands. each of them have their own shop in shops, like hasbro, v tech, melissa and doug if shoppers don't find what they want in store and they're interested in ordering it online, they can go to certain screens here when you go to the toys "r" us.com website, click on the to you that you want, you will get the order fulfilled through target.com target is the one that gets that sale benefitting actually from the absence of toys "r" us in the year since it disappeared. target has added more space in its stores inventory and an enhanced focus in general on toys it's working

target picked up somewhere between 15 and 20% of the market share that toys "r" us and babies are us left behind. toys one of the strongest categories including in that most recent quarter. back over to you guys. >> thank you for that. where did the giraffe go >> where's geoff fri. >> jeffrey's very in demand. >> i miss him. let him know how much i miss him. is that -- by the way, it looked like an updated geoffrey for me. >> here he is. he's back. he is slightly updated still part of the original intellectual property but, yeah, looks maybe a little different >> i love giraffes i have a thing for giraffes. holiday shopping season starts in earnest tomorrow thank you for that, courtney joining us for a preview of it,

evan clark deputy managing editor we don't say the old name anymore? >> we go by whatever but wwd is -- >> wwd is it good morning to both of you. what do you think is going to happen how good or bad is this going to be >> it's supposed to be good. it's the average increase is for a 4.4% sales increase over the holiday season that's really pretty strong. i think the nuance is who gets the names. i think a lot of the traditional retailers are kind of struggling trying to figure out while the amazons of the world and the recently resurgent target and walmarts pick up more share. >> what about the -- by the way, what about the fashion world because that's your world. >> well, the fashion world is target and walmart are a big party and i think target's third quarter women's sales were up 10% or apparel sales and

women's. so there is -- fashion is sort of trying to figure out where it's going i think people are buying a lot more online, getting more comfortable with the whole kind of returns process the traditional mall for, department store still trying to figure out what's the right mix, how do they do it, what's the right experience going to bring people across into the store. >> he's talking about big boxes. another big box, i shouldn't -- i'm not going to say what gift i want to buy but i want to buy a particular gift. you were saying best buy will be the place for me. >> for electronics. >> yes >> but what's interesting, going into black friday weekend is we collaborated and found the average promotional discount going into black friday hasn't changed much going into a year ago or what we've seen. >> let me ask. black friday seems like it is less and less of the big day because i've been getting offers from retailers since last weekend trying to get me to go out and shop ahead of black friday black friday comes early how much of this is a moving

target and it's not going to be black friday >> absolutely. that's the one thing that has changed. the average promotional discounts via emails more and more going into black friday compared to a year ago and the active promotions of black friday you are right. black friday has been moving much earlier, disintegrating th black friday day >> right. >> what's key is the door busters, right the door busters used to give the consumer the sense of urgency. if they didn't buy within the two hour frame they would lose the discount now the discounts are moving earlier and earlier online. >> we'll see a lot fewer shoppers in the stores on black friday because they're buying online, buying in advance and you don't have to be there. >> but consumers are still a creature of habit and i go every year to the roosevelt field mall. >> are you serious >> yes, i do believe it or not, some of them still do it because of traditions with their families more and more generations, the millennials are showing up for

black friday they like to go -- >> that's the only day of the year they like going to the malls. >> that speaks to the experience that the new toys "r" us store is very experiential and black friday is one of the big -- it's a built-in experience. it's the busiest day at the mall and that's kind of -- >> do you think the toy store strategy will work >> beta is really interesting. it's something that macy's has invested in and used i think it's one of these, you know, kind of is this the future of retail is like much of -- it's more of an idea of -- beta in general, here's a box that you come and then brands rent out individual spaces and it's -- there's a lot of churn it's a way to kind of launch products so i think that's one of the -- how does -- basically -- >> do you think toys generally are going to -- i mean, it's moved so online it's unbelievable is that something you can ever go back into the sort of

traditional classic space? >> yes, for 90% overall retail spending still happens in store. in fact, when you look at the most popular key words going into black friday, one of them that evan is saying is events. what are those in-store events, if i buy one will i get a gift with a purchase? pretty much. >> i think toys "r" us is smart though, this new iteration to go a little bit smaller because nobody with two kids in tow wants to see 40,000 square feet of toys. >> i'm going to really date myself they should bring back the wish book that was the biggest deal when i was a kid. sears would send out the list of toys and i'd sit and i'd circle it and give it to my mom. >> that's something that's missing in retail overall now is that the online age you can get everything everything is available from your phone and how the consumers -- >> you're not going to give your 8-year-old access to the internet. >> that's where we're going. >> that's a way to edit. here's the universe of toys.

here's -- >> we've got to go i have a quick -- size scale hudson yards/over under, does this work, the new thing, american dream in jersey. >> this is working for 11 years. >> indoor. >> giant >> indoor roller coasters. >> indoor skiing. >> all kinds of stuff. >> is this stuff going to work are they going to go to the stores >> consumers are gravitating towards experiences, especially millennials. >> on the rainy day if they have a roller coaster and a ski slope and then you stop -- >> and a wawa. >> don't short the 2012 wall traunch. >> thank you, guys >> when we come back, the holiday content wars "the irishman" is now on netflix. but the box office is coming on strong with its heavy slate of movies, too. we'll check out the winners and losers in the next halhof ur s took advantage

of millions of americans during the recession. so, my wife kat and i took action. we started a non-profit community bank with a simple theory - give people a fair deal and real economic power. invest in the community, in businesses owned by women and people of color, in affordable housing. the difference between words and actions matters. that's a lesson politicians in washington could use right now. i'm tom steyer, and i approve this message.

johnsbut we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. from the day you're born we never stop taking care of you. news alert for you we are watching shares of boeing the seattle times out with a report that says a boeing 777 x fuselage split during a september test boeing has not discussed it. it shows the extent of the damage was greater than

previously disclosed the fuselage skin ripped wide open just behind the wing. we're just hearing about this. keeping an eye on shares of boeing right now boeing shares, just calling this up right now, are indicated to open a little bit lower. looks like a bitd of 369.29 and an ask of 369.28 we'll give you more on this. when we come back, we have eangcominews "squawk box" back after a quick break. i'm a regular in my neighborhood. i'm a regular at my local coffee shop and my local barber shop. when you shop small you help support your community - from after school programs to the arts!

so become a regular, more regularly. because for every dollar you spend at a small business, an average of 67 cents stays in the community. join me and american express on small business saturday, november 30th, and see how shopping small adds up.

welcome back to "squawk box. rick santoli here live on the cme group with our last groupings of data before the thanksgiving holiday gdp, second time around the block. 2.1. that's actually pretty surprising to go from 1.9 to 2.1, a decent sized revision we recapture the two handle. personal consumption, also better than expected at 2.9. if we look at the gdp price index up 1.8, a smidge higher.

quarter over quarter, core, 2.1. that's arguably a tenth cooler now let's get into october preliminary durable goods orders up .6. wow. this is a huge win considering we're looking for down somewhere close to down 1% we did lose a couple of tenths last look. minus 1.2 now stands at minus 1.4. take out transportation. maybe capital spending, everybody is trying to handicap it many think it's improving in i.t. a proxy for that, a very solid 1.2% and shipments versus orders up .8 of 1%. initial jobless claims for the most recent week, they were down by 15,000. 15,000 from 228 to 213,000 and, finally, our continuing claims always a week in arrears moving from slightly less than

1.7 million down to 1.6 million. the aftermath, we garnered .1 higher from 175 to 176 and we see the entire curve up slightly in terms of yields versus yesterday when we were close to testing all the maturities low closes for the month of november. becky, back to you and hope you and yours have a happy thanksgiving >> happy thanksgiving, rick. just a shout out great job of taking a whole lot of information and making us understand it awfully quickly. fabulous job as always happy thanksgiving. right now with more on the data and weighing in on the fed, let's bring in steve liesman our guest host is barry knapp and john taylor, hoover instituti institution's senior fellow and under secretary at the treasury. steve, start with you from the numbers we heard >> let me completely undo the great understanding you have with data from rick and i'll

confuse you. >> okay. >> no, first of all the main thing that we were looking for this morning was whether or not jobless claims had three weeks in a row of stronger numbers they did not they came back down so that's kind of like relief that the job market's not deteriorating there's a full expectation that claims should be rising right now in the cycle we're in because claims tend to rise a period after employment peaks. so it wouldn't be unusual, but it did happen so that's good i was primed and ready to explain away a decline in capital spending because of the gm strike and because of boeing. instead we got this a namm m an. you had a strong 1.4 in september. it's up 0.6. the business investment proks bring is strong. it is negative

i'll need to see another couple of months to see if we put behind us this investment scare or this investment drag we have on the economy and then i'll say gdp 1.9 to 2.1, i'm not going to get excited. i like the idea. the consumption number was better. >> john, what do you think all of the numbers we've been getting, it does seem like we've avoided the potential recession. >> yeah, i think the numbers are good as steve has indicated, it's got some upticks in important areas. i'd like to see growth higher. 1.9, 2.1 is an improvement ultimately we can go higher than that i think it's news because the expansion's continuing people have been worried about that this alleviates some concerns. >> what do you think is holding back growth at this point if you think we should be higher than 2.1% >> i think one of the issues -- the policy on the tax side has been good. regulatory side has been good. i think the budget is still out

there. people are beginning to think about it i testified in the house budget committee last week. attention is being brought to that that could be the next thing to get that straightened out i think it would be beneficial to the economy. >> question for dr. taylor i don't know if you happened to see it, but this was the first look at gdi, right, gross domestic income and it printed 2.4 which is a better print obviously than the gdp number. i actually think the income number is better as sort of a proxy for the business cycle and for corporate profits and revenues and all do you have a point of view on that gdi measure as opposed to gdp? >> i didn't get a chance to study it yet but it's more positive than the others >> yeah, 2.4 >> yeah. it's more positive than 2.4 and 1.9. it fluctuates around and i agree. it's a positive number actually, i would say we can be even better than this with the policy as long as we don't have

tax increases and regulatory roll back and things like that i think the -- this expansion is continui continuing how about monetary policy? three rate cuts. they abandon their policy of reducing the balance sheet in fact, something that i think was near and dear to your heart, the idea of normalization is kind of out the window what is your take on policy right now? is it just right >> i don't think normalization is out of the window i think this was an adjustment based on their assessment of the economy. the stuff in the money market is still working through that anxious to see what the decision going to be. now you have to think about this globally it's a situation for a large part of the world economy still has negative interest rates. there's got to be normalization there.

i think the fed is part of that. i still think we're moving into that direction. >> quick word, dr. taylor, on interest rate caps >> like 42 to 51. >> the fed governor, i think he became the first governorto publicly talk about it the idea that in the event of a downturn, once the fed hit zero the federal reserve might go out and buy paper to the point of capping interest rates she said on the short to medium term essentially to, what's the word, engineer the yield curve john, just to bring viewers -- >> yield curve control. >> your thought on that, yield curve control treasury rate caps. >> i think it's not -- i don't think it's a good idea basically it's more intervention in the yield curve what's happening now is promising. the fed is thinking about what happens if there is a movement in that direction.

actually, i think one of the promising things, they're looking at different kind of rules much more than they have in the past. that's normalization to some extent, looking at policy rules. that's a good development. i think to look for more interventions at this point is really not the way to be going that's not part of normalization, that's not part of why the economy is doing better it's done better in 2017-2018. i think we'll continue if there continues to be this degree of normalization which is clearly there still. >> john, thank you for joining us it's good to see you >> thank you >> haney thanksgiving. >> happy thanksgiving. coming up next, deniro, pacino, peshi versus anna, elsa and mr. rogers the winners, the losers, so much more we'll continue monitoring. i think we have to talk about it on the air seattle times reports saying the 777 x resulted in explosive

depressurization that tore through the fulasege we're going to explain exactly what happened when we come back.

hi, everybody. welcome back to "squawk box. the futures have been igher. right now you'll see dow futures indicated up by 42 points. s&p up by 8.5. nasdaq up 30 points. the thanksgiving holiday weekend is always a big one at the box office what should we expect this

weekend? julia boorstin joins us with more julia? >> reporter: good morning, andrew that's right thanksgiving is always one of the bigger movie-going weekends of the year. this one will be an interesting test of the state of movie going amid the rise of streaming if "frozen ii" is expected to continue its run it's projected to hit as much as $280 million in north america by the end of the weekend the big question though is how new non-franchise films perform. with a year-to-date box office down 7% and november box office down so far 25%. hitting theaters this weekend lions gate's movie is expected to bring in $30 while universal is expected to gross $16 over the five days. we'll have to see how sony's mr. rogers performs in the second

weekend. it will be a big weekend at home for streaming services netflix's movie "the irishman" starts streaming after a month-long release in a handful of theaters. we'll see if the new content on disney plus and apple tv plus at a fraction of the cost of bringing a family to the movie theater keeps families at home on the couch. >> julia, stay with us happy thanksgiving to you. for more on the holiday content wars, we are joined by rich greenfield. >> happy thanksgiving. >> you've seen "the irishman"? >> i have not. >> it is apparently out. >> it is definitely out. you can stream it along with many other titles on netflix. >> what do you think the real impact is? >> i think fundamentally this is just a sign -- consumers, you know, want to be able to watch what they want to watch where they want to watch it without the constraints of having to go to a theater this is just so consumer

friendly. >> this is the first event film, if you will, in this space, right? >> this is by far the biggest, most ambitious project that has gone direct to streaming ever in history. >> do you think this is the fundamental change in how this all happens in theater >> i think the fundamental change in many ways was the fact that movies like "bird box" did so well. "lady and the tramp" which has been horribly reviewed by critics is one of the top five things streaming on disney plus. the take away is consumers like a value. you're paying for a service and you get a brand-new movie at no incremental cost the fact that "bird box" and "lady and the tramp" could do as well will encourage more to go direct he will reach more people with this than in a movie theater. >> this is the conference.

you were there you saw this. >> yes. >> at the conference earlier this month i asked netflix's ceo reed hastings about the prospect of the streaming giant buying a theater. this goes to our conversation. >> well, you know, you could buy a theater or two, but we're not in the business of theaters. we're in the business of pleasing our members on a global basis. when we produce a great movie like "two popes," "the irishman," we want to get it out. personally, we love theaters i watch a lot of movies in theaters it's nice to have a crowd especially when it's a comedy or horror like the scare thing if you've got a good audience again, we don't mind theaters. really, we're fine with theaters, it's just that they want exclusive window which would delay our release on netflix. if theaters want to carry netflix films once they're on

netflix because people want to go out for the group experience, that's great. >> so they just, by the way, bought a theater in paris. >> leased a theater. >> that question was an informed question when i asked it because i was hoping he would tip us off to what was about to happen. my question is whether you think going after this movie strategy that what he's really -- what they're also trying to do is put pressure on the theaters to close the window. >> they fundamentally changed how you watch television, right? binge releasing was something everyone thought was absurd in the industry now it's what consumers get frustrated and they can't binge watch something without ads. what netflix is trying to do is alter how people think about going to the movies and they're going to push that window shorter and shorter. i think when you look at what disney -- disney plus, you know, 10 million on day one, probably heading towards 20 million by the end of 2019, there's a point, right there is some number of subscribers where disney goes, wait, why are we putting this in

theaters and giving half the box office dollars to the theater? they make money on popcorn why don't we just put the movie on disney plus, especially not successful movies. a movie like "malificent" failed why wait six months. why is that not on disney plus. >> that's a fast fail. you're saying if it's not working, immediately put it on -- >> sure. why wait and reboot the marketing six months later to put it out on streaming. >> julia >> reporter: pointing out that disney of all studios is the one that wanted to preserve that window between when movies went out on theaters and home entertainment? they have it all figured out they have over 30% the domestic box office, another 5% if you include fox here so disney is the one who wants the biggest window possible.

i also have to say in response to what you're saying with "the irishman" that netflix uses that as marketing "the irishman" is not a typical movie. it's 3:40 long which is impractical for movies and movie theaters movies that are over 2.5 hours long cannot perform as well at the box office because they can't squeeze in as many shows a lot of people like myself wouldn't be interested in sitting in a theater for 3:40 as much as i want to see that film. what they're doing is giving martin scorsese room they'll binge it as if they're watching a series at home on tv. i think netflix's ownership of the egyptian theater in los angeles and the lease of the paris theater in manhattan are about creating the marketing

opportunities and destinations for premieres which are really for their film makers as much as for anything else. >> i also think from the standpoint of they still want to win awards hollywood is about awards -- >> making money. >> being in a theater is the way you get nominated foran academ award. it ensures distribution. >> very quick question on disney >> yes. >> my question is what do you think churn is going to be like on disney. >> yeah. >> the reason i mention it, they have some content but not a lot of content ultimately when you go through it especially for kids that have seen a lot of the movies previously. >> i think when you look at what kevin mayer did, he was able to get a tremendous amount of the disney channel content library on the service i see the 12-year-olds bombing through the old hannah montana episodes there aren't ten seasons and hundreds of episodes the question is as you burn through the disney channel library, there isn't a lot of

originals. >> they're doing more and more all the time but it's still kind of the churn in the wheel that's out there. >> they will, but the question is it really is for a kid. >> right >> this is not -- you can watch the mandelaurian three episodes that are 35 minutes each there is not a lot for the four of us to binge through on disney plus it's for kids. it will be sticky for people with young families. for people with older families, the question will be for older families is disney, the success they've had to date, does that mean they'll have more subscribers and getting to the max far faster and do they get all of those one quarter? that's the question, how big is the tam for this service. >> julia, happy thanksgiving >> happy thanksgiving to you, too. up shares under pressure today on a report about a stress test that caused a big rip in the fuselage of a 777 x

plane. we got the details about the conditio oth tt xtnsf atesne ly ! hey! how are you? i'm good. ♪ how are you? hello grandma! for every family going home for the holidays, there are countless people working to help them get there. thank you to everyone we rely on to get us home to the ones we love. ♪

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report that says a boeing 777 x fuselage split dramatically, you're looking at a picture there, during a september stress test that took place on the ground, just so we're all clear. boeing hasn't disclosed details of the test, but this photo obtained shows the extent of the damage, greater than previously disclosed. fuselage skin ripped wide open just behind the wing we want to get to phil lebeau who has context on how the stress tests take place. there is some now color in the article about how this seemed to take place and what happened here, phil. >> this is on a fuselage for a 777 k that x that is going thro precertification process this is part of the stress test. this iswhat they are designed to do. you want to see how far you can push the fuselage before something happens, to see how well it holds up it is my understanding, based on reading this article, that this fuselage was pretty much close to the threshold of what is expected so close that it likely is a

case where the faa ultimately when they look at the data and we still don't know for sure, will likely sign off on the fuselage even though this picture is dramatic, these tests are designed to do this. this is why they bend the wings to ridiculous levels when they're going through certification. they want to see how far they can push these planes before they ultimately fail, if you will and in this case, this was to test the fuselage, the strength of the fuselage, and it was in an extreme stress environment. so this is not a case where it was just going about its business, and, boom, it cracked open this was a test designed to see how strong the fuselage is we have a call in to boeing to see if we can get more color on what happened in this case but, again, this is on the 777 x in the process of being developed and certified, expected to have its first flight late next year. >> thank you by the way, 28 feet. normally the wings are like this and they have weights and pulleys on the wings and move

them 28 feet off of where they're supposed to be the most extreme typically is nine feet a wing moving -- sorry, i'm not the plane but i'm trying to be the plane and that's what happened >> all right let's turn back to the markets as we head into the holidays we bring in mona mahagan we have seen the markets almost melt up in a slow space over the last couple of months. do you think that continues next year >> i think we're set up with a pretty benign backdrop now we had great gdp numbers, and we got that business investment number picking up. when you think about it more broadly, this year we have a fed somewhat working in our favor as opposed to last december, we had a fed that arguably maybe tightened one time too many. this year we have these green chutes from the economic data. not only in the u.s., but globally we have an inflation picture pretty benign. with that backdrop, equity markets can do well. it is a goldie locks scenario

here. >> what are you telling investors specifically we had seen a bit of a rotation that has changed in recent days. what do you like >> it has been interesting since august or september, when we had those recession sectors really carrying the market, think staples, utilities, reits, we had this rotation into the more cyclical sectors, financials now we're seeing a little bit of a rotation back into the traditional technology and discretionary that is really carrying the market. what we're seeing more broadly, a barbell approach makes sense, one hand of the barbell, technology, that long-term theme of disruptive technology continues to make sense for us especially in a low rate environment. but on the other hand, we do like this rotation out of defensives and into cyclicals. to us, global equities can participate, perhaps even more than u.s., given cyclical nature of some of the european areas we're seeing and asia. if the dollar kind of stabilizes or softens, the global equity

market makes sense as well. >> barry is short on china you said parts of asia. >> my view on this is the global manufacturing and global trade recessions are ending. and we are going to get an inflexion higher i would not buy the countries that are going through structural deglobalization trends so germany, china, i do think asia looks, you know, nonchina asia looks attractive. japan has been acting great. so my barbell approach is i like u.s. cyclicals for sure, financials and industrials, enterprise tech. i like emerging markets, emerging asia x china as i said, mexico is another one. if the dollar weakens because of easy fed policy, that makes trade credit flow, we could sign usmca. you could see a significant rally in mexico. it has been underloved in part because of amlo, concerns about political and -- political type

issues >> hard to imagine the dollar weakening even though the fed is loose, not as loose as other central banks. >> global growth picks up and some of this political uncertainty comes off. i think the political uncertainty is supporting the dollar here. so if that comes off next year, as well as global growth stabilizing, that's where you get that dollar. >> i was based on some -- an interesting study that the bis did where they said the effect of the dollar on the availability of trade credit was greater than the conventional currency competitiveness so in the case of mexico, it means you would think if the peso goes down, that makes mexican products more attractive they can't get the credit to build the products to sell into the u.s. they need -- they need the dollar to actually weaken, peso to strengthen, so they get the credit and then they can sell the product. >> mona, thank you for joining us today great to see you barry, thank you for being with us through this. i want to wish everybody a happy thanksgiving weekend if we look, very quickly at the

futures this morning, once again, you will see all of the major averages are indicated higher opens once again. even after the record closes we saw yesterday. right now the dow futures indicated up by 26 points. s&p futures indicated up by six points nasdaq up by 23. andrew and i will see you back here on friday we hope everybody has a wonderful thanksgiving holiday right now, time for "squawk on the street." ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with david faber, mike santoli at the new york stock exchange. cramer has the morning off after ten record highs for the s&p, this month alone, looking for another at the open as data is going to cross the board today. durables, jobless claims, revised q3 gdp surprised to the upsi upside road map begins with president trump's upbeat outlook for trade