final check on the markets, down 262 on the dow this morning. and nasdaq indicated down 90 now. s&p down 25. that would be two straight days of some pretty significant losses maybe totalling 2% at this point. see you again tomorrow hope to see all of you tomorrow. "squawk on the street" is next ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. coming off the worse day for the dow in a couple of months. the president at the nato summit says a china deal could be delayed until after the 2020 election europe's reacting to that and the possibility of some new u.s. tariffs on french goods. two-year yield, the lowest in

two weeks. road map begins with to wait or not to wait. the president says might be better to delay a china trade deal until after the 2020 election >> stocks have been spooked by that, futures pointing to a sharply lower open as investors weigh this new political rhetoric. >> and trade tit for tat, the trump white house proposing a waive of tariffs on french goods in response to do facebook and google trade in focus, in what say rough start to december for stocks just hours ago in london, president made that market moving comment regarding china trade. >> china trade deal is dependent on one thing do i want to make it i have no deadline, no in some ways, i think it is better to wait until after the election, you want know the truth. i think in some ways is it is better to wait until after the election with china. i'm not going to say that. i just think that. i just tell you. >> so we got brazil and argentina, france on the table

and as you said on twitter, a while ago, the chinese pulled the rug out. >> they did. let's understand, the hard-liners were saying once you -- were saying the chinese are going to have the upper hand if we actually have the mnuchin/swartzman/thornton -- kissinger/paulson days, these are the guys that want deal one, phase one is about opening up the market to the american express. if you give them that, they're going to come back on saturday and say, you know what, we're not happy. now you got to roll back tariffs. that's what happened the president feels betrayed, i believe by the mnuchin wing. that's why he lashed out he thinks the chinese are clever he knew that -- the -- >> i'm trying to understand what has changed. what am i missing that has changed. >> the hard-liners were saying -- >> hard-liners, where? >> in the white house. >> all right navarro. >> saying if you just shut up,

you can get a good deal. but, no, they -- the navarro wing believes that you made it so it is difficult for the president to have a tough negotiation. you put out the word that there is a deal on the table and the chinese -- the hard wing said, listen, here is what they do, they'll say you have to roll back the tariffs that's precisely what happens. the president feels betrayed >> meaning what? he's trying to carve out different negotiating territory for himself by saying things like this? >> no! university saying to, you know, don't try -- you want to play hard ball, again you agreed that you -- that we were happy to stay the december 15 tariffs, okay in return for a deal now it is not enough they have to roll back the tariffs. the chinese, david, are as mercurial as president of the united states. >> right and but we should point out the administration is not on one page then. you would conceivably want to have the same negotiating posture the whole way.

>> yes some of the harderliners in the white house said, look, mr. president, chinese think there is -- they don't understand the way this government works, they made a mistake here. senate, david, they have not broken ranks this is not nixon in '73 there isn't a single senate republican who has broken with the leadership they don't have the votes. i don't know if the chinese don't understand that. >> there is going to be an election give us a try. the candidates, other than biden -- >> you think he's serious about that >> no. i think he's angry he's president, so you got to take him seriously it was a great moment. did you watch it when it happened the feet, the carters, the feet pajama guys, in there, jamming the future up. the president drops this bomb, the president is upset agen as you would be. >> close to session loews here

now. let's be straight, you do not think the december 15 tariffs will be delayed. >> i said that yesterday i said i can't believe the chinese moved the goal post again. i cannot believe they played right into navarro's hand, that wing and -- >> moving the goal post by having said or -- >> they said, listen, you give us the no december 15, we'll agree to a deal. and that was the -- that was the plan on friday saturday, they changed it. >> that's what the chinese want and what the market expects. >> yes saturday the chinese changed it. that's not good enough we want to roll back on the tariffs. >> jim, december 15th we get the tariffs, i mean, one would imagine the market is not going to respond particularly well to that >> genius. >> thank you keen sense for the obvious. >> i think the market will have discounted i didn't like the market i didn't like the market now the chinese are putting together the unreliable list everybody has to guess who sis o the unreliables list is it apple? >> this black list reported over

there, seems to target more diplomats and politicians, marco rubio on it. >> yeah. there are a lot of people in -- the pla win. it is not like you if you use xi, you necessarily get mahatma gandhi you know what i went to hear last night >> i don't, no. >> you better stay afloat here james comey. >> jim stewart. >> no friend of the president. just in case you were -- >> at the -- >> he said that he wished that he -- jim stewart, pulitzer prize winning writer, by the way, comes on the show a lot, said what would you agree with trump on and comey said, the obama administration was not tough enough on the chinese stealing of intellectual property and not tough enough on chinese 5g and the president is write abriu

that. >> there is bipartisan support on that, if you want to call it that and the idea of waiting until after the election regardless of who wins, you could argue that the -- if a democratic nominee were to win, whoever that will end up being, they may be as tough as well. >> why not >> don't hear it from the left, we're being too easy on china. >> they decided to get out of -- suddenly they're back, that stuff, 18% of that ends up in california. >> china now, get back into the business. >> when you stay -- >> do you understand what i do on the show? do you know my role here it is to translate you to them you know that, right >> there is a google cramer translator 18% of the pollution ends up in china, in california there is a new one for you >> -- initiatives on new energy, by the way, they still are doing a lot of solar, in china. >> they have that --

>> they are starting, coal has -- you would imagine they wouldn't given the air pollution problems. >> how did you get andy jassy? >> jon fortt is out there. >> anyway, i do believe that things are a little disarray the president didn't like the -- there was a great moment when he said i don't like these companies either but -- >> his actual quote is if anyone takes advantage of the american companies, it is going to be us, not france that's what he's referring to regarding the digital tax. >> zuckerberg comes out, defiant, i'll take money from anybody, versus jack -- jack moved the office there >> moving to, yes. you guys covered that yesterday. >> yes, saying he would spend six months potentially -- >> why not, they have offices in 30 different countries but i do think that what has happened is that the president was very angry very upset, used the 2020 card because i think he's tired of

hearing the chinese playing the long game, tired of finding out that the mnuchin wing once again has screwed up but he doesn't want to say -- larry, no. larry kudlow, chief economic adviser, very important to stabilize the market i would like to hear from larry later today. >> we'll hear from wilbur ross later. >> not good enough >> we'll hear from wilbur, reuters has a piece that treasury considered kicking huawei out of the banking system and that it is still something that is on the table could go back to >> yeah, how about the fact that huawei was able to build things, we thought they couldn't build without u.s. technology. >> you know as well as i do, we could get reports saying we're this close to having a deal. >> i think you can't -- my advice, stop talking to reporters. the mnuchin wing goes, hey, i didn't talk to anybody they could have a reporter from the d.c. school district and they would talk to -- >> back to the navarro rule. only believe it if you hear it

directly from the white house. >> yes >> all other reports are false. >> yeah. i think mnuchin was -- i think he was talking to the montgomery county sentinel. >> i'm the one, i'm the one. >> that's good >> i think that the mnuchin wing is -- they love the press. they like it and the president doesn't like that i learned that from comey. >> that's interesting. >> president doesn't like leaks. they keep their mouth shut if they want to keep their jobs >> they held their jobs longer than most. >> well -- >> in that job the whole time. wilbur ross too. secretary tillerson did not. we can go through a long list of people who haven't but mnuchin -- >> you should read deep state. it is interesting. >> i'm almost done with iger's book. >> i loved iger's book when he was almost fired the stuff with his dad >> i read the -- i'm reading the whole thing, unlike you. >> i read the whole thing.

>> you think jim goes to the back and looks for his name? >> no, no. i went to -- i went to the back and i looked up david faber's name and there it is on page 168, you said -- >> it was 218, but i'm not saying -- >> really pathetic. >> i am reading the entire thing. >> it is a good book. >> it is really good. >> it should have been written after you retired. >> it is a good -- >> a lot of people in it, like, holy cow, i didn't know he didn't like me. >> i didn't read deep state. >> what is this oprah's book club, come on, guys, geez. >> more things about the president. >> yeah. >> just a flopleasure to have someone say you don't have to move on yet. >> we're waiting for the bilateral meeting between the president and macron, a different issue. macron said nato was suffering brain death. the president said that was a nasty statement. this might be a little spicy. >> it is interesting macron was our friend, merkel

was our enemy, remember that >> hard to keep track. >> inconsiderably hard to keep track. i do know that nato was -- germany hadn't paid enough that seems to -- >> this -- so ustr has the section 301 investigation, it is online you can look at what they're saying about the digital services tax in that, a line that says we were exploring whether to open similar probes into australia and italy and turkey and now you got brazil, argentina. >> 100% on -- >> 100% on french goods. why has the trade war -- why do you think the trade war has gone global >> they figured out you just ship the steel to argentina, gets dumped. >> like fighting water. >> it is like fighting water. >> not like they're taking french wine. come on. >> i don't like french wine. >> i would think with 25% now, french wine is not doing as

nearly -- >> have you seen this morning, lvmh, d'or. >> bernard, that was pretty smart to get tiffany's last minute american company i had cade this weekend. >> opus one? >> all of them i got to tell you something, the hell with french wine. you can use that stuff, dump it in the stew for all i care >> that's really rude. >> why >> if you want too get rid of your french wine, send it to me. >> i will. a lot of it is -- >> we're eating freedom fries now? >> cheetos my favorite place on earth if we beat the giants on monday -- >> that's not going to be too hard for you. >> the other big story tonight, as you know, is going to be sales force, workday, whether we get an update on cloud, short interest is up

expectations are high. would you argue? >> cooper reported an amazing number last night. every line was better. cooper does procurement, fantastic company, able to save everybody. i like to read the quarters in a vacuum i said, my god, this is beat and raise, beat and raise, stock down nine. if kupa, it was an amazing quarter. if that's down nine, i don't think it matters if marc benioff says, you know what, i think mark zuckerberg will change his view and no longer a cancer. it is not -- kupa was horrible in terms of stock and great in terms of the conference call i think that makes it so the bar has changed. people should watch kupa, important company. >> very nice going to an interesting afternoon. and morning. when we come back, amazon and the cloud, jon fortt has an exclusive with andy jassy. we'll show you that. cramer's mad dash, countdown to

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12 minutes before we get to an opening bell, time to get in a mad dash we'll state seated today fedex. >> fedex is a company that a lot of people want to own. we all know it, we all like it key bank put out a difficult piece to try to fathom they say, listen, not expecting a near term inflexion when it comes to the holiday season. however, they do say that margins are bottoming. you wonder how about buying u.p.s. instead it is more levered to the consumer and the enterprise. and fedex has this big china business, that takes a hit today. i would point out, these are great american companies, and at a certain point you have to buy fedex, but this key bank piece discouraged me >> was key about the piece that was particularly discouraging? >> macro weakness, negatively impacting mix, and i hear macro weakness, that means trade and i do think that a lot of people believe, you know what,

when i saw cybermonday, it was the most, most, most yesterday, why not buy fedex, this piece says don't don't do that. >> we talked a good amount about fedex, which is down over 30% over the last 12 months, as a company. as a stock and we have wondered aloud about the leadership there at this point. >> yes, we have. >> and you have. >> yeah. i have because i'm trying to figure out how an unbelievable leader in this industry does not have a better handle on macro economics. but then you can say, how about if fred smith was here as an economist how do i get a better handle in some degree, he's saying, i got to deal with amazon, got to get rid of amazon, people say, don't get rid of amazon. he's -- >> there are some critics who say, hey, you know what, u.p.s. took the pain, spent the money. >> david abney did -- >> that fedex perhaps didn't do as much as it might have to ready itself for the --

>> abney spent fortunes, missed several years. >> yes. >> turns out he was right. i think he's a very soft spoken gentleman who if he gets that -- he needs, by the way, u.s./mexico/canada deal. that seems to be stuck in nancy pelosi's -- but i guess u.p.s. is what i'm saying is the one to buy if fedex goes down david abney has really demonstrated a very longer term vision than people thought from the soft spoken man who had a kind of a much more of a rank and file feel to him >> he is originally rank and file >> they make you return the hat if you're a temporary worker people impersonate always have to return the hat. one of my best friends kids had the hat. >> right >> my favorite is they teach you how to hold the keys as you approach the van to shave the half second off -- >> yes. >> if you don't tip your u.p.s.

parcel man, shame on you shame on you there. that's today's tip of the day. >> thank you >> you're welcome. >> thank you >> stick around for a lot more tips "squawk on the street" gets you ready for that opening bell a few minutes from now each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. cme group - when i lost my sight, my biggest fear was losing my independence. mmm... good. so i've spent my life developing technology to help the visually impaired.

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we take you to the nato conference where the president is beginning his bilateral with macron >> we talked about it. please give my condolences to the families and to france great fighters you've done a fantastic job in that whole area. it is a tough area we appreciate is very much we'll be talking about a lot of things including nato and trade. we do a lot of trade with france we have a mine or dispute, i thn we'll be able to work it out we have a big trade relationship i'm sure that within a short period of time things will be looking very rosy. we hope. that's usually the case with the two of us. we had a lot of good things. we have done a lot of good

things together as partners, our countries have been partners in many good ventures, including some having to do with radical islam and others and it is always worked out. so i look forward to our discussion we made a lot of progress at our first 25 minutes and we intend to make a lot of progress in our next hour, maybe hour and a half. so thank you very much >> thank you.

[ speaking french ] [ speaking french ]

[ speaking french ]

>> thank you very much >> your understanding of what president macron was saying about nato >> we just began discussing nato and what i'm liking about nato is that a lot of countries have stepped up i think really at my behest and also yourself, you're close to the level. but they stepped up and they put up a lot of money. $130 million $130 billion and that's a lot and they're now stepping up again, going to be $400 billion over very short -- we have commitments for $400 billion and we just left the secretary-general. and he -- he's got some things that are very important and i discussed with him the flexibility so we have it not just with one area of the world, you and i discussed this all the time, we have all areas of the world, because nato is a lot

different than it was, and now it is certainly a lot different over the last three years. so we have a lot of countries stepping up and putting up a lot of money, the number as of this moment is exactly $131 billion that's a year. and that's a tremendous amount of money, but it is not enough and they also raised -- and have commitments for $400 billion so nato, which is really heading in the wrong direction, three years ago, is heading down you look at a graph, to a point where i don't think they could have gone on much longer now it is actually very strong and getting stronger many people are committed to that 2% and i think the 2% will be raised. and the president and i, i think, feel that we need more flexibility and i think we both agree on that, we can use it for other things, not just looking at one specific country, a lot of people say it was meant to look at originally the soviet

union, now russia, but we also have other things to look at whether it is radical islamic terrorism, whether it is the tremendous growth of china, there are a lot of other things. so nato is becoming different than it was, much bigger than it was and much stronger than it was because people are now fulfilling their commitments there are some countries that aren't fulfilling their commitment and those countries will be dealt with maybe i'll deal with them from a trade standpoint, maybe a different way. i'll work something out where they have to pay we don't want to have something delinquent you have countries that aren't paying their way less than 1% you have a couple that are less than 1% fair so nato made a lot of progress over the last three years and the word flexibility is very important. not just looking at one area now, they're looking at the world. and that's very important. to me it is very important

>> i know my statements created some reactions a lot of people. i do stand by and i have to say, when you look at what nato is and should be, first of all, it is a burden to share and the fact that the u.s. over invest and number one by far i do share the statement i supportive of the europe component in nato, what we are doing. so in terms of cost sharing, we are investing, we are increasing our gdp. when we speak about nato, it is not just about money we have to be respectful of -- the first burden we share, i do

believe in such circumstances we do pay what we have to pay when i look at the situation, in syria, iraq -- we have to be done it is impossible just to say we have to put money, we have to put soldiers, we ought to be clear on the formula of what nato should be this is not the case what about peace in europe i want this. after the decision of the imf treaty, we have to build something new. now this is a risk for germany, france and a lot of european countries to have new -- from russia we need such a clarification

and i want european continent -- a new imf treaty when we think about the -- what is the objective to profit against external threats? and france will do it. and we will have -- northern states in europe that's a common enemy today. i'm sorry to say that we don't have the same definition of terrorism. when i look at turkey, they now are fighting against those who fight with us, who fought with us show that against isis and sometimes they work with isis. this is an issue this is a strategy issue if we just have this about what

we pay and we don't have near the decisions about the situation, we are not -- we are not serious for our people this is the reason of my statements i do believe we need clarification. who is the enemy today and let's be clear and work together on that i no know we do share -- more european investment and more input, i do agree. being very efficient against terrorist groups means having clear, clear definition of the groups i think we do. >> one thing i will also like to say that you've been really doing a great job in africa, and you've been very much involved there, more than most. that's been fantastic.

i appreciate you saying the united states for decades have been paying really way, way just disproportionately too much for nato and you have other countries paying far too little that are very directly benefited by it. and by the united states' involvement. and we're changing that around somewhat and it is very important. but we're very important player, i think without us nato certainly is not the same thing as we discussed and discuss it at length this morning we discussed it with secretary-general sultanburg, but we're behind you 100% and all of the money that has been raised and all of these countries all of a sudden putting up money, it is a great thing to see but we do have a great -- we really had a different objective, i think, right now. we're looking at a much bigger picture and that includes -- you mense e mentioned iraq, but it includes iran, too, i think if you look at iran, they have

massive riots, they're having protests all over the country, and they're killing a lot of people everybody knows that that's why they turned off their internet systems, nobody can find out but if the media would go here it is hard for the media to go there, frankly, right now, but they're killing a lot of people. but nato has come a long way in three years. and it is something that we're very proud of. because we're with them. nato serves a fantastic function if everybody's involved. if they're not involved, and i believe that the president is very much involved and likes the idea of nato he wants it also to be utilized properly if it is not utilized properly, we all agree right? that's no good so we had a very good discussion a lot of people and we're meeting with a lot of countries later, as you know and they're really stepping up for the most part, they're all stepping up. we have one or two that aren't and we have to deal with them in a different way. as we said, we'll deal with them on trade

we have a lot of power with respect to trade they make a fortune with the united states and don't pay their bills, that's no good. nato has come a long way in three years and it has become very powerful. very, very powerful. and it has become a much fairer statement in terms of the united states, we're able to go down a little bit, we were paying 4 to 4.3% of the largest gdp everybody, nobody had a gdp like we have right now. and nobody has come close. and other people were paying 1%, some people paying less than 1% of a very small gdp, not fair. and if they get attacked, we protect them, but it is not fair so a lot of changes have been made, phil >> mr. president what is your message for president macron about tech companies and what will your process be in determining what additional products from france you -- >> right, we're working on that right now. we have discussed it

i think we'll be able to work something out, i hope. and maybe not. maybe we'll do it through taxing work it out easily through taxing but the american companies, th tech companies you're talking about, they're not my favorite people they're not exactly for me, but that's okay. i don't care they're american companies, and we want to tax american companies, so that's important we want to tax them. that's not for somebody else to tax. and as the president knows, we tax wine and we have other taxes scheduled. but we would rather not do that. but that's the way it works. it is going to work out or we'll work out some mutually beneficial tax and the tax will be substantial and i'm not sure it is going to come to that, but it might >> mr. president, has france committed to step up -- >> well, i haven't asked that of the president today. we have a tremendous amount of captured fighters, isis fighters

over in syria. and they're all under lock and key. but many are from france, many from germany, many from uk they're mostly from europe and so the countries are agreeing, i have not spoken to the president about that would you like some nice isis fighters i can give them to you you can take every one you want. >> let's be serious, there are a large number of fighters, fighters coming from syria, iraq current fighters coming from europe i think number one priority because it is not finished, is to get rid of isis and this is our number one priority. and it is not yet done i'm sorry to say that. we still have fighters n syria and now in iraq and more and more

it makes the situation more difficult to fix the situation against isis second, some of the current fighters are being -- in iraq because of the -- and we would advocate -- we have a humanitarian approach for children, very organized and we will have a case by case approach for me, the objective is to finish war against isis and don't make any mistake your number one problem are not foreign fighters, this is the isis fighters and you have more and more fighters due to the situation today. >> this is why he's a great politician that was one of the greatest nonanswers i ever heard and that's okay. >> sometimes there is -- you can

have some -- from the u.s. side, i don't say about president trump, but could be the press, to say this is europe and -- we have some of our people, but if you don't look at the situation that is number one, not to be ambiguous with the groups, this is why our relation with turkey, i think any agreement with turkey, with these groups, is for everybody and the situation on the ground. >> france has taken back some fighters but we have a lot of fighters. we captured a lot of people. and we have captured 100% of the caliphate, but you know that means that it is still going and going. we set a small contingent in and wiped out another portion of isis we don't want to happen to me what happened with president obama, where re-formed and became stronger than it was in the first place. we don't want that to happen and as i said before, we have

taken the oil, we have the oil so we have total control of the oil. so that they're not going to be able to use that they use that oil to really fuel up their wealth, to fuel up their money. that was their primary source of income and they get contributions so we have now lists of where the contributions come from. which is very important. you have people contributing, if you can believe it some of the people are wealthy people that make contributions and we have lists of where -- we learned a lot. we got el baghdadi, that was a great get and when we killed him, we have a lot of information that i'm revealing now for the first time, but we also got a lot of good information. so a lot of things are happening. and france has been very helpful. i have to say that they have been very, very helpful. okay go ahead any other questions?

[ speaking french ] [ speaking french ]

[ speaking french ]

[ speaking french ] [ speaking french

>> largely agree with that answer i have to say, though, i came into a position where the european union was making anywhere from 100 to $150 billion a year in deficits to the united states. they were making it, we were losing it, and so we had to do something that is fair not severe i think fair we're losing tremendous amounts of money as you know, the european union is very strong on barriers, barriers meaning certain of our products can't come in, including agricultural product it just can't come in. we can't sell it and yet the european union sells openly to the united states. and generally untaxed or taxed at a different level so these are problems that we're talking about. these are problems that we're working on and the digital tax, the least of it. i inherited a situation where the european union, which was formed partially for this reason, a lot of reasons it was formed, but partially to make

better or take advantage of the united states. and they have done that very brilliantly. but frankly it is not right. so i exposed it. a lot of people didn't know it and we're doing things about it. we have no choice, the united states can't continue to lose the kind of money that they lost over the last literally since the formation of the european union. and i think we'll work something out. they want to talk as you know, the new head wants to talk it was supposed to be very respected woman, very highly respected, and i look forward to meeting her, they want to meet, but we have a very unfair trade situation where the u.s. loses a lot of money for many, many years with european union. billions and billions of dollars. need to be specific, over $150 billion a year so we don't want to be doing that, and we can make a deal, we can take a harsh approach, we can solve that problem

instantaneously if we wanted to, i don't want to do that. these are friends of ours, people we had very extraordinary relationships with, and i do personally and i'm sure we can work something out. >> you mentioned earlier the iran -- does the united states support these protesters in iran >> i don't want to comment on that the answer is no but i don't want to comment on that >> mr. president, you want the united states to do more standing up to president erdogan and clarifying the terms of that relationship are you supportive of the relationships by the nato allies >> we have a very good relationship with turkey and with president erdogan i do i can't speak for the president of france. we have a re good relationship we pulled our soldiers out and said you can patrol your own border now, i don't care who you do it with, but we're not going to have soldiers patrolling the border that has been fought over for 2,000 years. but we took our soldiers out,

put some of the soldiers around the oil, where we captured the oil and taken the oil and we have the oil but we -- we brought some home, and we will be bringing some home and we sent some to other areas. but we have a very good relationship with turkey. a ver relationship with turkey >> mr. president, just on turkey to be clear, we have a lot of cooperation with turkey on security and trade, with the european union and france. i do experespect the leaders, whatever they can say. i can respect. but now the question for this nato summit, i think we need from the turkish side. what they are doing. i do believe at least we have two clarifications how is it possible to be a member of the alliance, to work

with and be integrated technically it is not possible to be provided by the turkish president as far as he wants to be part. secondly, i understand from turkey that they want to block all the declarations of the summit, if we do not agree about their definition of terrorist organizations. ypg and the others there's two points if they want to be a serious member of the alliance. >> mr. president, will you -- >> this is why we're having meeting. those are points we'll be discussing that with the president today. yes? >> mr. president, will you issue sanctions on turkey over their

purchase of the 400 missile system. >> we're looking at it now and we're talking about it now as you know turkey wanted to buy our patriate system and the obama administration wouldn't let them they were only ready when they were ready to buy another system, which is not the same system, but turkey, for a long period of time, wanted very much to buy the patriot system, which is our system, which is what nato uses which is a great system, the best system, but they wouldn't sell it to turkey. there are two sides of the story. i have to say this but we will be discussing that with turkey in a little while. we'll be meeting with turkey in a little while and also tomorrow >> to be clear about this point, and to -- for you, the full view, with europe and we attempted to sell to them. the decision is not due and one

explained by the refusal a few years ago of the american to not sell the patriot, even having a european option, totally compliant with nato. they decided not to be compliant with nato. >> prime minister johnson is organizing some discussion later today about the syria conflict are you going to take part in that and meet with him and if not, why >> are you talking about ambassador >> boris johnson prime minister >> i thought youmeant woody johnson, he's risen rapidly. this is his house and i can't believe he's not here. yes, we will be meeting with prime minister johnson in a little while i will be seeing him later on. we're going over to number 10 which is a very exciting place to be, as you know we'll be discussing a lot of

different things, yes. >> >> and one other related question, the london bridge attack from a few days ago, do you have any comment >> i don't have a comment on the london bridge attack other than to say i was very proud of those people that grabbed him and did such a good job between the fire extinguishers and whatever else. it was an amazing job they did it was very violent. you could see that i mean this was captured very much on tape i think the way the -- i think they were british citizens, the way they stepped up was incredible that was really great. so terrible thing, terrible attack lot of people very badly hurt. i believe three or four killed is it four now today so it's terrible it's a terrible thing. i know it's an act of terrorism, but it's been declared an act of terrorism, radical islamic terrorism by the way it's very bad, very bad. i think the way they stepped up to me, that was something very

special. okay >> mr. trump, a question on russia mr. macron says that russia shouldn't be designated as an adversary of nato. do you agree with that do you think russia is the enemy and who is the enemy today >> i don't think he does feel that i think we get along with russia and we could get along with russia you feel we can get along with russia. we've discussed that before. we have to be prepared whether it's russia or somebody else, we have to be prepared. but he and i have a pretty similar view on it i think we feel we can get along with russia. and i think it's a good thing to get along with russia. i campaigned on it i mean i would go into big stadiums, people like it and i think the russian people would like to see it too lot of good can come of it but the purpose of nato is that, but the purpose of nato can be much more and that's where we're showing the flexibility over the last period of two years

>>. [ speaking foreign language ] [ speaking foreign language ]

[ speaking foreign language ]

[ speaking foreign language nato is also engaged and france is present, pushing against these terrorist groups >> mr. president [ speaking foreign language ]

>> as it were, what you're talking about, europe, the american totally consistent. [ speaking foreign language ] [ speaking foreign language ]

[ speaking foreign language ] [ speaking foreign language ]

[ speaking foreign language ]

>> i think the situation in ukraine is very important. i think the meetings coming up with russia and ukraine are very important. there's a possibility that some very big progress can be made. it's very important for ukraine -- i think it's important from a standpoint of russia also -- that they work out a treaty, they work out peace, because they've been fighting a long time, too long, and i think there's a really good chance that that will happen also respect to nuclear weapons, i've spoken to president putin and i have communicated with him and we are -- he very much wants to and so do we work out a treaty of some kind on nuclear weapons that will probably include china at some point and yourselves, by the way, but it will include china, and some other countries. but we intend to see if we can work something out to stop the proliferation, to stop what's happening because wear making a lot and we are renovating a lot

and frankly the whole situation is not a good situation. we ended the treaty because it wasn't being adhered to by the other side, but they want to make a treaty and so do we and i think it would be a great thing. i think it's one of the most important things we can do frankly. we will be dealing with russia on a treaty where we really -- and we're focused on nuclear and nuclear weapons, missiles, but nuclear weapons, and we think something can be worked out. we know they want to do it and we want to do it also. i spoke to china about it. they -- during one of our trade negotiations, they were extremely excited about getting involved in that some very good things can happen with respect to that i think it's very important. the whole nuclear situation, very, very important thank you all, very much thank you.

>> that is the president with macron covered a bunch of topics, isis, syria, turkey, nato, the digital tax. not much of a chance for the president to walk back his earlier commentses they morning about china trade and because of that the dow is down 375 hasn't really had a chance to balance it all you lost 3100 since november 22nd semis, biggest gap down since august, according to bespoke, and the vix almost 17.5 is going to take you back a couple months the market reaction echoing off what the president said earlier this morning about china trade. >> but as you pointed out i think on twitter, we did not really get a key question in that setting just now that we were watching for the last 30 minutes or so, about china specifically, so that if there was an opportunity to walk anything back in terms of what the president said earlier, you

didn't have it not that he would have necessarily. there were some questions, of course, more about, as you said, nato and also the digital tax that's being applied in france, which is a hard thing to sort of figure out in some situation in terms of french users of services and 3% tax and additional taxes that could go back and forth. >> or tariffs i should say. >> digital tax, minor dispute could be worked out. we got some information out of that presser right there in the meantime welcome back you're watching "squawk on the street." i'm carl quintanilla with david faber, leslie picker in for sara eisen at post nine of the new york stock exchange. moments from now we will talk to the commerce secretary wilbur ross about today's trade headlines and the market response in the meantime as we said earlier, dow down be 400 and below 3100 for the first time in a couple weeks. >> not recouping any of those losses, given the, you know, conversation that we just heard with the president, but, you know, we'll see. we have a lot of questions for

secretary ross so hopefully, you know, we get some answers from him. >> we begin, though, in london, to get the latest from that nato summit steve sedge wik has more for us this morning steve? >> yeah. actually quite extraordinary time here in london, everybody, because we've literally just saw merkel walk into number 10 downing street in a meeting hosted by the uk prime minister boris johnson, mr. erdogan, the turkish president and mr. macron we were hearing there talking with the president mr. trump will also be joining that meeting and discussing the thorny issue regarding syria, regarding turkey, as well. enormous number of issues being covered at these meetings as you've been alluding to already. mr. trump making comments about china this morning as you say, making the market shutter. actually steering clear this morning for once on the matter of the uk elections saying he could work with anybody and that he had no interest in u.s.

pharmaceutical companies had no interest in taking hold great lums of the national health service and the president being cognizant we are amidst a general election at the moment boris johnson very nervous if the president would show some form of support and get involved in the uk election the comments just now, though, regarding a host of issues as you mentioned digital taxes, the future of nato, being raised across these three days of meetings the president again being, i thought, incredibly diplomatic saying they intend to make a whole host of progress with macron, of course, macron saying that organization nato was braindead which is interesting because the previous big critic of nato had been the president over spending but since he made the comments about the lack of spend going on, $130 billion extra was being spent by nato

members. back to you guys. >> steve, doubt we're done with headlines for the day. steve sedgewick in london. markets down on the presidential comments from this morning regarding china. dow session low down 427 joining us to discuss this and a lot more is goldman's equity strategist dpaf strategist david kostin at post nine >> good morning, carl. >> how much of your 2020 outlook is contingent on a phase one deal >>reality, not so much think about what's happening, certainly contributing to a high level of corporate uncertainty ceo confidence lowest in a decade the consumer confidence is extremely high and 70% of the u.s. economy is represented by the consumer you think about unemployment rate lowest in 50 years, we have wages rising 3.5%, well above inflation, you have the fed on hold for probably the election, and consumer balance sheets have been delevered for the last

decade from the consumer side very, very strong and that's really a driver of the overall profit economic forecast. certainly the trade is a topic for lots of discussion and i think it's contributing to a lot of the ceo economic anxiety about business activity for the next year. >> matt mally points out this is the third time in seven to eight months that comments by president trump have sent the market lower on average you see declines of 6% over the week for the s&p do you expect the same this time based on some of his comments this morning or do you expect it to be potentially steeper declines or do you think the market will shrug this off over time >> we have a president and different days you have different tweets and commentary. hard to forecast that. target the end of this year, the s&p 500, is 3,100, so we're pretty much around that level. if you look into next year, the backdrop of economic activity

growth should suggest profits will rise 5 to 6% and will support a u.s. equity market that will rise towards 3,400 at the end of next year that's the general trajectory. looks at the trading around that, if i were to put that on a path, you're looking at market rising perhaps towards 3,250, maybe up 5% from now through the primary, basically end of february, early march, get a pretty good understanding of who the candidate will be on the democratic side and that's basically where the market is likely to be for most of the year through the election. at that point, this uncertainty, the grate uncertainty about policy, et cetera, will be resolved one way or another. most likely you will have a divided government in some fashion, senate, house, white house, and as a result of that, you'll have another p/e expansion toward the end of the year my lay of the land road map for -- talk about the road map for the next hour on cnbc, this will be the road map for the next year. >> speaking of next year as well and reading through your very

nice booklet here, they give you a nice publishing budget at goldman, don't they, david, growth versus value, you asked the question what should it be given we've seen a resurgence in part of value but punt and say neither one go for growth at a reasonable price why not choose growth or value. >> i would respond it's not a punt it's growth at a reasonable price, a combination of both here's the thought process the thought process you're spread between high and low value companies is extremely wide one of the widest it's been in decades. that would historically be consistent with value stocks outperforming. but value indicators is not necessarily a time indicator value is likely to do well over a multiyear period if i sit here today and say three years from now value is likely to be the winning strategy can i say that specifically for 2020, not necessarily. the data does not support that view that's sort of the value side of it on the growth side, normally in

an economic environment sort of modest, what i call 0 to 3%, not a contraction, not an extraordinary expansion, in the modest growth backdrop, that's when growth stocks do better and so in that environment, sort of value and growth, that's the rationale for why we arrive at growth at a reasonable price when you think about coming up with a bunch of stocks that are in that category, would be those that are among the fastest growth within a sector but aren't at the most extreme on the highest valuation nor the one that's the cheapest stock. look at some of the companies there, alphabet, raytheon is there, lockheed martin, companies in industrial, companies in technology and consumer area, that's basically how we would set up a portfolio now and the discussion it's a legitimate question, lot of questions from clients about growth versus value in this environment. >> they want to know it's going to be a value oriented market. >> the way to think, is to look at dividends and a dividend strategy, a way of capturing

value but getting paid to wait if you talk about a portfolio of companies with a basically high dividend yield, high expected dividend growth and think about that as an investor today, what's your yield on cost? you buy the shares today, what's your return on cost say at the end of next year that's an approach to doing it that's a bunch of stocks that are those characteristics. >> if we're in for a more prolonged back and forth with the chinese, does that change fed calculus at this point or is that already set in stone do you think? >> well, you know, the comments from chairman powell would suggest there's a pretty high bar for them to move one direction or another that would suggest in our forecast at gordon sondland tld there's no hike until after the election, 2021 that's a pretty benign back dprop a rates perspective supporting a higher level of

valuation in the market. think about it, it's two drivers in the market, the earnings and you have your valuation. so what is it telling us about earnings basically a pretty modest, you know, inflation story and a rate story and a pretty strong consumer which suggests earnings will rise 5 to 6% next year. that's the earnings growth the valuation, p/e multiple around 18 times, what are the key drivers of that? consumer confidence and uncertainty. the points to your question about the president and, you know, some of the uncertainty about trade that would lead to a higher level and lower valuation. that will get resolved in our view as an investor, look at some of the fundamentals and that will lead to a slight expansion in the p/e multiple at the end of next year. >> that's good stuff david, thanks for clarifying some things. >> okay. >> coming out of that bilateral. >> good to see you. >> when we come back the commerce secretary wilbur ross will join us and talk about

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simple. easy. awesome. call, click or visit a store today. markets, of course, are down this morning this largely on comments from president trump that a trade deal might not get done until after the 2020 election. joining us now at post nine to perhaps shed some light on these latest comments regarding the trade talks is secretary of

commerce wilbur ross mr. secretary, always good to have you here. >> good to be back. >> nice to have you in person as well it seemed as though, given the recent commentary, things were getting closer and closer to a phase one deal being signed withes the chinese should we view the president's comments out of london as a moment where things have changed in some fashion that we may be unaware of so that it becomes less likely a deal is near >> well, the president's objective always has been to get the right deal, independently of when or anything else like that, so his objectives haven't changed. if we don't have a deal he's perfectly happy to continue with the tariffs as he had. he feels we're in a pretty good position one way or the other. i think the new variable is the whole hong kong situation. that's complicated life for

president xi, and then as you know, they got somewhat up set when the president signed the bill. >> right. >> well the reality is that bill was going to be enacted anyway because they had a veto-proof majority in the congress that's only a technical issue whether the president signed it or not nonetheless, they did announce the retaliation about the navy vessels not going into hong kong that's not a big deal. we can very well live without the port of hong kong. that one i thought was fairly modest you know, when you're dealing in international things, everything affects everything. >> understood. but it does seem as well that the chinese have made it clear they would expect some sort of well not just no tariffs on the 15th of december, which is only 12 days away at this point, but

potential rollback of the september tariffs. is that the case as you understand it of what their ask is and is that something that has put a new impediment of reapi reaching a deal in the near term >> the idea of addressing existing tariffs over a period of time is not a new idea, that's always been part of things the real question is the total package. i don't think it's too useful to pick out one little piece or another. we should really focus, either we're going to have a total package that works for both, or we'll continue on as we are. i think it's also important that the president make clear, he's under no time pressure to get it done because otherwise there's a dend tendency of the other side to say he needs it for political reasons so we'll give them a worse deal than we would he's not going to play that game. >> he made it clear today. is it your expectation the december 15th tariffs will be applied? >> unless there's some real

reason to postpone them. if there were a little bit of time needed for more talks, he probably would postpone it if enough substantive progress had been made he might you have to look at the exact situation as we get closer to that time. >> do you -- is he serious when he says it might be better to delay it until after the election what would the consequences be from that? >> well, i think he's serious in this regard, that takes off the table something that they may think gives them some leverage once the election occurs, the president seems to be in very good shape for the election, once it occurs and he's back in, now that's no longer a distraction that could detract from our negotiating position. >> but ultimately, i mean even if he does get reelected that's four more years. there's still -- they still kind of have that leverage on the table because we have a democratic system here, right? >> well, we have the leverage

because we have much more ammunition left against them, than they have against us. it's one of the few good things about a trade deficit is you have more bullets you can fire than they have that they can fire they're pretty well out of bullets. >> how are you feeling about things we have talked about this issue now with you for years at this point. we've had sort of the same conversation are you optimistic still that something will get done in the next let's call it few months? >> well, i'm optimistic we'll eventually get something done for several reasons. one, they have their own economic problems in china, particularly the hallowing out of the supply chains that's occurring. even before the trade disputes, there were people starting to think maybe china is not the cheapest place in the world to manufacture anymore. now with all this uncertainty, there's a clear movement of supply chains over to vietnam,

to malaysia, to bangladesh, to all kinds of other countries that's a trend that's going to continue, especially as long as there's the trade uncertainty. >> aren't the new steel and i aluminum tariffs on brazil and argentina, some would argue that's an admission they have partners, china, global partners willing to work with them and supply them? >> i don't think the brazil and argentina things have anything to do with china we're brazil's main customer for steel. that's why they're so upset about it brazil ships us over 4 million tons a year of semifinished and that's over 4% of our total steel consumption. they're very important player here the president's reasoning that he announced for putting the tariffs was not anything about china. it was about currency manipulation >> i would like to come back to

this idea of the next 12 days and december 15th because it's being watched closely by the market as a barometer of how far or how much progress has been made i mean it's only a week and a half or so what do you expect between now and then that conceivably could change the way you're looking at it so that they would not be applied, those tariffs >> well, there is always the chance of a breakthrough and everybody is hoping for that i agree with the president the chinese want a deal, we want a deal, but it has to be a deal that's ppropriate. >> i thought we had a breakthrough already that seems to be the sense of many people, we made that breakthrough >> we don't have a breakthrough until it's in black and white on paper, signed, sealed and delivered. what we had was an agreement at the 40,000 foot level, 40 to 50 billion of agricultural purchases, things like that. going from there to what will it actually be, what will be the

products, how do you deal with pricing, how do you deal with market conditions, how do you deal with the contingency they don't perform, those are questions you don't deal with at the 40,000 foot level but must deal with to make a real deal. >> why then announce the agreement in principle a couple months ago when there was so much space between that and a signed deal? >> well, you always announce things as you make progress and that was a big step. that's the first time the chinese have gotten to that big a number that was an important breakthrough 40, $50 billion is a huge number relative to american agricultural it's an important figure. >> you don't regret announcing phase one, given the expectations set up for the market >> no. look, here on the floor of the exchange of all places we're a full disclosure country. the idea that you would want to keep out of the market the news

that that kind of agreement in principle had been reached i don't think would have been a very good idea. >> what are your expectations in terms of near term talks can we expect trade rep lighthizer, secretary mnuchin and yourself to be engaged at all in the next few days >> there's constant engagement at the staff level, and that will continue. there's no big meetings schedule right now, and there certainly is no signing date scheduled. >> given that and the hurdles that you outlined earlier, what do you think is the likelihood in the next week and a half we reach some sort of agreement before those tariffs >> it's your job to focus on each week, each day, each hour, each quarter, it's our job to try to get a proper deal done. we're really focusing on getting the right deal done, not whether it's done at quarter of 5:00 on a particular day. >> turning to europe for a second if we can to where the president is right now, of course, he seems per terred by

the digital tax. >> rightly so. >> raised the prospect of 100% tariff on wine and cheese coming from france. is that a real possibility >> well, remember, the context in which we're talking, we just won the w.t.o. case of airbus versus boeing. that gives a great deal of latitude in terms of what the president scan do. europe has consistently not lived up to the w.t.o. rules they've consistently said they were and consistently not followed through so we have a very legitimate complaint. they dragged this out for, what, 12, 13 years, but now it's the reckoning day. he has flexibility to do tariffs. >> macron just said that the digital tax does not target the u.s. specifically. do you days agree with that? >> absolutely.

when you said criteria, if you have so many sales internationally and so much sales in a given country, and there's only a handful of companies that meet those criteria, and by and large they're all american, hard to say that it wasn't designed as an anti-american thing >> and france isn't the only country that's considering a digital tax. you've got italy looking to impose one >> they're not the only country that's anti-american either. >> you view them as anti-american? what does that mean when you say that >> i view -- well they are anti-american in the sense that europe doesn't have the real high-tech champions and the real e-commerce champions that we do. there's a tremendous amount of jealousy about that. i view that as having this as one of its roots and they're all running budget deficits and looking for a way to tax someone other than their own voters. there's that motive as well.

our companies don't get to vote in france or germany. >> they're selling services which is hard to sort of -- it's not a product that we're accustomed to on a shelf but that's the way more and more of the world's commerce is about services. >> it is if what they said anybody doing any of those industries from penny one paid the tax on every dollar, that would be one thing. but that's not they've set very specific criteria and the criteria, deliberately or not, essentially only include american companies. >> if you start this -- down this path of imposing tariffs on france as, you know, retaliation for the digital tax, you then see yourself imposing tariffs on the other countries, italy, uk, turkey, that are considering a similar -- >> remains to be seen if they do the same thing i would assume he would react the same way you can impose tax on individual

member states. there's prlenty of press department for that. you can't negotiate a trade agreement with individual states that has to be at the commission level. the air bust retaliations are against the member countries individually tailored to the individual countries there's nothing strange about that. >> reuters has a piece, says the white house considered kicking huawei out of the banking system where they would be unable to transact in dollars and that it's not completely off the table. >> well, the only thing we've done on huawei so far as we've put them on the entity list and that means any american company that wants to sell them stuff that's on the list has to get a license to do so we have very serious concerns about huawei as a security risk. we have very big concerns about what they contributed to the

horrible treatment of the uyghurs in china there are a lot of problems with huawei they have a checkered history. >> is that a confirmation of the reuters peace? >> i didn't see. >> barring them from transacting in dollars >> we're always considering all sorts of measures against all kinds of companies but i don't believe there's anything imminent this morning on that. >> do you believe china is going to have an entity list of their own and who do you think would be on it >> well, it's an interesting question i'm not aware that we deal -- use our national defense anything that comes from china if they do have an entity list, it would be very interesting to see who they think from america belongs on it. i think it's a very difficult problem. >> finally, mr. secretary, just to get your general views, what are you hearing from american or

u.s. businesses, particularly those that operate around the globe, we talk often here about the strength of the u.s. consumer, but the enterprise there has been some concerns about wanting to spend money with the uncertainty out there about the trade war itself, what are you hearing? >> the multinationals are obviously very concerned by their very nature. everybody in business, what do you want you want certainty, you want peace and quiet, you want to be allowed to do what you want to do it's not surprising that some of them would have concern about anything that could interrupt the pace of things >> mr. secretary,always appreciate you joining us. >> thank you good to be on. >> thank you for stopping by wilbur ross, the secretary of commerce. >> i was having withdraw symptoms. >> yeah. well, i know, it's been a while. we're glad to see you. speaking of all that, dow down 409 let's get a news update at this hour. >> hi, carl. well the fed and other

regulators are clarifying rules for financial services related to hemp businesses banks will no longer be required to file so-called suspicious activity reports for customers solely because that are' involved in the pot business the financial firms will only need to take action if there is suspicious activity. >> tik tok has been accused in a lawsuit of transferring private user data to servers in china. tik tok said in the past it stores all u.s. user data in the u.s. one person dead, another injured after a shooting yesterday at a pennsylvania movie theater. so this happened in west manchester township. employees say the shooting happened inside the regal cinema building but not the theater and finally another piece of history has been added to the george bush presidential library in college station, texas. it's a bronze life-sized replica of bush's faithful service dog sully. the service dog spent the final six months with the president before he passed and you are up to date

that is our cnbc news update at this hour. leslie, back to you. >> thank you good-looking statute there >> it's now time for our etf spotlight. take a look at the semiconductor ticker smh falling sharply as the broader market sells off on trump trade comments all in the red amd posted a 15% jump in november making it the nasdaq 100's fourth best performer last month. we're going to keep our eyes on the markets dow session low around 420 and change we're going to watch the nato summit as the bilateral continues between macron and the president. we'll be able to handle some headlines this afternoon regarding corporate news salesforce and workday in particular have earnings after the bell we'll get a check on cloud a live shot of what's happening at the site in london at the nato summit. >> it's been a red december so far with the first two days in the red. >> we support them totally and

have sunday them from the beginning. the question was asked, do we support them, i thought, financially, and we haven't supported them i don't know that we've been asked to support them financially. and, you know, somebody asked, maybe we would we support them very, very seriously. the people that are protesting in iran, they're looking for freedom and we are fully in support of them. i wanted to just in case anybody had any question, we haven't been asked to support them financially, which i assume that's what the question was just to make sure everybody understood it. it's an honor to be with a friend of mine who just had a great election victory, congratulations. >> thank you >> and done a very good job and we actually have a very good relationship and a good relationship in terms of our countries and we're working on the usmca, trying to get nancy pelosi to put it up for a vote if it get put up for a vote it

passes she hasn't decided to do that. it's a single individual has the -- the speaker of the house, it's that person's decision and she's the speaker of the house it's a great deal for mexico and for canada and for the united states it's a lot of jobs for everybody. it replaces a deal that's a lousy deal a bad deal, for -- i can tell you -- i would say for the united states that the deal that we have right now is terrible nafta. terrible it's been a terrible deal for the united states. so we look forward to being able to vote on -- or take the vote on usmca it's been there for a long time and at some point perhaps the president of mexico, we have a wonderful man there, you know, he's been a wonderful man, they'll get tired and the prime minister will get tired and say look, let's forget this deal and i could understand it if you did. it's been sitting in congress now for six or seven months.

it's a great deal for everybody. hopefully they can get it done and get it done fast it's one of the few transactions i think all three countries benefit. really as a unit against the world if you look at it. it really is a unit against the world. and that's the way we looked at it from the beginning. we hope that's the case. again, congratulations we're going to be talking about a number of subjects, including additional trade to that and the military and military presence it's great being at nato we had some real success and very successful talks having to do with nato as you know, a lot of countries have stepped up and they're putting in at least 130, probably the exact number $131 billion more, and that's great they have commitments for $400 billion. it really has become a force and as we've discussed in the past, there's going to be great flexibility shownnow with nato

we can go to other parts of the world, not just one focus. it's a lot of focuses. we need a lot of focus we need a lot of focus we'll be looking at other forms of terror. we'll be looking at other countries. we'll be looking at countries that are aggressive and not just one particular part of this world. so i think nato has become a very big factor over the last two or three years you've been involved, i've been involved and a lot of good things have happened and it's great to have you here thank you very much. congratulations. >> thank you it's a real pleasure to be sitting down with president trump. the president between canada and the united states is incredibly strong i don't think it's ever been stronger our work together on the usmca as we move forward towards ratification has been really tremendous it's been a great process working with -- between your team and our team, working with

the mexicans as well we're here for nato, 70th anniversary, extremely important. the american strength in ensuring people are stepping up in terms of their military investments is something we've recognized in canada, increasing our defense investments over ten years because we know that making sure that everyone is there to step up and deliver is really important we have an intense forward battle group in latvia, we're leading the command mission in baghdad, canadians are a strong part of this alliance and we'll continue to be but this is just a great opportunity for me to sit down with the president and talk about the many issues in which we align and work together [ speaking foreign language >> that sounded very good. any questions?

>> mr. president, climate change is a top priority for the prime minister here as well as for president macron earlier we've nod heard you talk about it on this trip and it doesn't appear to be on your agenda. are you thinking about that issue? >> i think about it all the time climate change is very important to me. you know, i've done many environmental impact statements over my life and i believe in -- i believe very strongly and very, very crystal clear, clean water and clean air. that's a big part of climate change i also see what's happening with our oceans, where certain countries are dumping unlimited loads of things in it and tend to float towards the united states i see that happening and nobody has seen anything like it. it's gotten worse. but no, it's very important to me also. i want clean air and clean water. number one and number two. very important >> are you concerned about rising sea levels at all >> you know, i'm concerned about everything i'm also concerned about nuclear

proliferation which i think is a very important topic and a topic that we're going to discuss today. i'm -- you know, the whole situation with nuclear to me is very, very important as we've been discussing today at the various meetings that we've had. i think that's something that has to be taken care of and it has to be dealt with very strongly >> mr. president, are you happy with canadian defense spending as it is right now >> they're moving up, and they're moving up substantially and starting to do very well economically and that has something to do with it. they're getting up to a level that's getting to be very acceptable they have been under the 2% obviously, but they're moving up we discussed it. i'm glad. >> excuse me >> do you plan to discuss [ inaudible ]. >> we'll discuss that, yes we'll be discussing that yes >> what's your message to the

prime minister about whhuawei ad using it in phones in canada >> we find a security problem with it. canada is going to make a decision at some point we find -- i just speak for the united states, and we have the ability to do a lot of things, we've advanced very far on 5g, much further than anyone really knows. headed it up and he's very good and we have a lot of action going on with respect to 5g. we're not using huawei we're really -- some of our great companies are getting much involved with 5g right now but no, we find it a tremendous security problem with respect to huawei. >> mr. president, on the nuclear issue, your comments earlier about the governments of russia and china on a agreement on a nuclear nonproliferation, your description of those conversations that you had, doesn't really mesh with what they've said publicly i was hoping you might be able to

elaborate? >> not what they said publicly >> yeah. >> we've had discussions and we've also had communications. i can tell you on behalf of both they would like to see something done with it does that mean agree to do something? i'm the one that terminated the agreement and i terminated it because they were not living up to it and we don't want to be living up to an agreement and they don't so it wasn't fair. it was also very obsolete agreement. it covered things that, frankly, didn't matter anymore. we are looking at doing a new agreement with russia and we're looking at doing a new agreement with china and maybe the three of us will do it together. they do want to do it. i can tell you with china, we were in a trade meeting and the subject -- i broached the subject, and they were very excited about it they would like to do it we may do it with russia first and then go to china or may do it altogether or it may not happen to be honest with you, maybe it won't happen

but we are spending a lot of money on nuclear and we have new nuclear and we have tremendous renovations of our older capability and i have to tell you, i see the kind of damage that we're talking about and the kind of power that we have, and it's a very -- it would be a very sad day if we ever had to use it it's a very good thing if we could do something to stop making that, fixing that, we'll see what happens there are other countries, but in terms of the world, we're number one by far. russia is number two and china would be number three. china is not -- china will be pretty even over a period of four or five years but it's a tremendous expense for them and for us, for everybody. the destructive capability is

really unacceptable. we'll see if we can do something. i think russia and i think china would like to do it very much. >> mr. president -- >> on the spending you called member countries and allied countries delinquent for not meeting the 2% standard. where would you put canada in that. >> slightly delinquent they'll be okay. you're slightly delinquent some are major delinquent. some are way below 1% and that's unacceptable and then if something happens we're supposed to protect them and it's not really fair and it never has been fair and they're paying up. we are talking to germany tomorrow and they're starting to come along they have to otherwise, if they don't want to, i'll have to do something with respect to trade. >> canada is okay right now? >> with trade i have all the cards. we have built something in the last three years that's been incredible you've seen it

we're up $21 trillion and china is down about $32 trillion as you know for years, i've been hearing 2019, in 2019 china will become the largest economy well that didn't happen. we're much larger than china now because we've gone up and they've gone down and they've had their worst year in 56 or 57 years now. by far the worst year they've had that they know of and we don't want that, frankly. but what they were doing was wrong. >> mr. president -- >> i think they're going to stop it they want to -- they want to make a deal very badly. >> on that question, would you commit, if there's a country that's delinquent as you put it in paying for their defense spending would you commit as president of the united states to defend them if they were attacked >> well, you know, i'm going to be discussing that today and it's a very interesting question, isn't it you know, it also depends on

what your definition of delinquent is. for instance, if you have a country paying only 1% and you have some paying less than 1% and they shouldn't be, you have some paying less than 1% and they're wealthy countries on top of everything, now we go to a new year and they don't pay and yet another year and they don't pay, well now i ask you, do they have to pay for the back years okay so why is it that they owe us for this year but every time a new year comes out they don't have to pay? it's wrong it's not right i could say that, you could go back 25 years, i won't do that with canada, of course, but you could go back, you know, right from the beginning, where they were short of whatever goal it was at the time, it's 2% now 2% is very low tshd be 4% 2% is very low you have some well short of that

but they were shorter last year and the year before and year before, right. so they're short all these years, well in theory you don't just say, that's okay, you don't have to ever pay i mean they really owe all that money from the past. that's the way i look at it. if germany is an example paying 1% and they're supposed to be paying 2%, you're talking about billions of dollars, well, that means that last year the year before, the year before, all of those years they would owe us money. you're talking about really you're talking about trillions of dollars nobody has ever brought that up. they just keep talking about the present. so if they're short one year, and then you go into the new year, they never talk about the year they didn't pay but they actually in theory owe us that money. it's not fair. it's not fair. >> mr. president -- >> with regards to china, when you met the prime minister in june, you talked about being -- trying to help with the two prisoners that are canadians that are in china.

>> yeah. >> have you made any -- >> well i have and i think we've made progress and i had mentioned that to president xi, as you know, because it was a big subject at the time, and i just hope that they're being treated well i put in a very, very strong word for those two prisoners now i haven't spoken to him recently. >> that is the president with trudeau, another bilateral at the nato summit, covering 5g, climate change, usmca, but any further news about a china trade deal, david, has been the hole in the doughnut this morning and that's why the dow has been unable to rally. >> we certainly put many of those same questions to secretary of commerce wilbur ross when he joined us a few moments ago. i can't say i got anything that i would think was positive although the market did come off the lows broadly speaking since the earlier moments in the session. well, actually, yeah we're kind of back towards them right now. >> close to session lows i think one headline out of ross that kind of didn't help was

that there are no high-level talks scheduled, he said, between now and the 15th. >> just staff conversations. he did indicate that there could be progress over the next 12 days prior to the december 15th tariffs going into place that could forestal he certainly did not make it clear as seemed to be the expectation only a couple days ago that they would not go into place. >> of course mentioning all of the various hurdles that are in place between now and december 15th but as we mentioned secretary of commerce wilbur ross joining us earlier and saying the president's objectives is to get the right deal done regardless of timing. >> the president's objective always has been to get the right deal independently of when or anything else like that. his objectives haven't changed and if we don't have the deal, he's perfectly happy to continue with the tariffs as he has he feels we're in a good

position one way or the other. >> the when is looking ahead to the 2020 election and how the u.s. is positioned from a leverage standpoint given the fact they are able to potentially hold the election over the u.s joining us is the author of "the fifth risk" which is out today in paper back, michael lewis thank you for joining us >> thank you for having me >> how do you make sense of some of this news this morning about these trade talks? >> i'm so glad i don't have to do it. i'm so glad i don't have your job. may i just watch what's happened to your job in the last three years. it's constant response to trump, it's tweets, and the president has taken upon himself to make the market go up and down for fun. i have no idea if any of what just got said is meaningful or meaningless. i don't know i wouldn't be trying to trade on it in any way. i view it almost as spectacle.

rather than information. >> although if you were still at a desk, you would have to trade on it. >> you'd have no choice, right i guess -- what you want ideally is have a team of people trying to predict the patterns in trump's tweets and figure out which days he wakes up, oh, we're going to have deals and which days, oh, we're going to have tariffs it's the simplest trade in the market but i don't -- in truth i'm not paying a great deal of attention to this. i'm sorry. i'm just not >> something you did pay attention to, i read your book when it came out in hard cover >> last year >> you spent a lot of time talking about things we don't really talk about, in fact, don't talk about with the commerce secretary and sort of questioning whether we're being well served and what

is getting lost in the -- well, now it's been years. >> the beginning of the book they didn't have. >> transition. they didn't have any interest in it in hearing about it i used that as a jumping off point to figure out myself what was going on and the things in the end what really interested me about the story and why it became a book, when you go into the government and start knocking on doors and seeing what people do behind them, a different sort of person a person watching the show, they're not money people and they aren't attention people >> one of the things you looked at was this idea of staffing and the presidency and how things have -- >> well, it's an interesting thing about our country that distinguishes it from every

other democracy. there is not a permanent civil service running things from the top down it's a shallow state rather than a deep state the president can appoint 4,000 people to run the operation. it's funny we have this notion of the deep state whereas they don't have it in france or england or wherever. our state requires the most guidance so when the president comes in and exhibits just total indifference to running the government it's more of a problem than it would be in the united kingdom or france they have a deep state that will take care of things. >> i'm thinking of your -- you played basketball with obama >> i wrote a piece about him >> yes >> have you seen a piece that helps you understand this white house? would you be interested in

writing that piece >> if donald trump would invite me in the way barack obama invited me in to spend some time with him, i would love to write that piece i think it's unlikely but you never know you need to be there his presidency is so different with obama you want to be there when you imagine you want to be there. with trump you wanted to be there when he picked up his phone or went to bad at night watching television. the nature is so different you sort of want a different kind of access i don't know if he wants me in his bedroom. >> you've been successful at creating a brand around yourself, writing a lot of books to support it. now you've moved significantly into podcasting. it comes up in the work we do,

spotify, heavily investing in podcasting, pandora, investing in podcasting. what has been your experience there? is this something you think really does have legs in terms of its connection with consumers? >> i got in here because i had a good friend who started a company and i had no sense whether it was actually going to work, i have been amazed at the reach of the audience, how big the audience is. you can see building tv sized audiences in this medium the advertisers are figuring it out. because the level of attention you're getting and the relationship withthe audience is very intimate so i think that actually it isn't a fad. i think it goes very well with how people now spend their attention. they divide it you can listen to a podcast and drive to work or listen to a podcast and do your work there's not much else like that out there. it's a fun medium. i do think -- i don't actually

think -- people think it's peak podcast when one goes for a couple hundred million bucks i don't believe that i think they're going to be -- they have the potential to be really important media companies. >> even though curation is so difficult, right not everybody has a michael lewis brand and can float to the top. >> you're calling me a brand i think i'm a writer floating out in the wilderness. >> come on it's been a quarter century. >> i don't think of it that way. >> that's how we think of things you may not have recognized you were developing it but you did >> detry my brand. >> don't do that >> how do i think -- i think for me it's just another way to tell a story. and there are different kinds that work well there that wouldn't work so well in print it's an additive >> you can make money at it. >> you can i think you will be able to make much more because the advertisers work out what's

going on >> and you can be inspired for print pieces later on. >> you've seen the boom in quality. talent is moving to it and there's a reason for that. they smell an audience >> the president, circling back, made a comment about the dow drop >> the china trade deal -- >> well, it's up -- let me tell you, we took it up about 16,000 or 15,000 and now it's almost to 30,000 no, i have to tell you if it's not a good deal, i'm not signing a good deal. it's peanuts compared to picking up record numbers in our stock markets. so that's okay that's the way i feel. i have to make the right deal. i'm not going to make a deal that will not be great for our country. it can't be an even deal if it's an even deal, it's no good china -- other presidents and

leaders of our country have let us down because they let china get away with something that should have never been allowed to happen. billions and billions a year were lost in dealing with china by foolish people or by people that didn't care or people that didn't know. we rebuilt china i give china great credit and i don't blame china. our people should have done what they did what they've done is we've lost $150 billion and $200 billion and then $400 billion to china they rebuilt china with the money they took out of the united states. that's where they were and now we're taking in billions of dollars in tariffs remember you used to tell me it will cost -- they're eating that money because they don't want to lose their supply chains i don't want them to lose their supply chains. if it happens, it happens. and that's where it is

they want to make a deal, but i like the deal that we have the deal we have is even better and i can do it myself we'll see what happens, we're at a critical stage they've called us today and they've called us yesterday. we're having ongoing discussions and we'll see what happens if the stock market goes up and down, i don't watch the stock market i watch jobs jobs are what i watch. i watch making the proper deal we've been taken advantage of for so many years at numbers if you were doing this you wouldn't have believed it i looked at numbers -- ever since the founding of the china's entrance into the world trade organization, the wto -- >> that is the president with a pretty nice crystallization of how china builthr