down "squawk box" starts right now. good morning, were live from the marketsite in times square tom farley is here filling in. former president of the nyse and cnbc key contributor and joe also with us, also a key cnbc contributor looking at dow futures that were down until a headline move from bloomberg saying u.s. and china are getting closer to reaching a

fa phase one trade deal the few tours up triple digits nasdaq up by 36. if there is a lesson from the last 24 hours, it is that every trade headline could swing things in one direction or the other. markets are watching this, waiting to see what happens as we we get closer to the december 15th deadline for when additional tariffs are expected to go on the dow at one point falling more than 400 points the worst day since early october and that tells you about where we've come in these markets. the idea that a 1% pull back we haven't seen that in over two months >> yesterday, we talked about a more muted impact most of the day yesterday morning. we are actually trying to gauge

how much risk is still left. how long have we been hitting the highs. a lot of that was built on the assumption that you would see perhaps a trade deal and additional tariffs >> now we are back to that according to this person this hour, we'll have something by december 15 and there won't be additional tariffs. anyway, when it was all said and done, we have a two-day turn around >> 1.9%. >> off all-time highs. >> also up 1% for the year >> welcome much needed needed it. it is a good thing overall >> shake it up a little bit. >> absolutely. shake the trees. >> this is like a hang nail. >> equity exposure has been optimistic for the entire year

you have a friendly fed under the market, supporting the market any time cautious optimism evolves. it seems to have it is good to temper that and have a little pull back that leads you to the next road higher the path still suggests to continue moving higher you don't want to move away from allocation everything you mention is higher. high yield which asset class are you in that has not worked for you? >> we are expecting to hear more from president trump we'll take you there live when it happens we'll get to eunice yoon in beijing for the latest reaction.

we'll first go to eamon javers >> there are like three senior officials that do tend to talk not sure i can name which official talked to bloomberg but here is the headline when we take a look at the graphic these are difficult headlines to process. you don't know, to your point, exactly who the source was for this bloomberg doesn't say they are sourcing people familiar with the report they are saying u.s. and china moving close tor to trade deal despite heated rhetoric. a lot of reports suggest we are getting half way there, half way there, half way there. you can go half way there

forever without actually getting there. not sure what this means the president is in london where he has been making headlines about trade during the course of the week you see him there with boris johnson and so much intrigue about whether he would have a meeting with boris johnson while in london. the president did in fact have that meeting with johnson. they talked about nato he says they talked about trade. some question about whether or not they are talking about what a post brexit u.s./uk relationship would look like that would be important for the uk if they move forward. the they are facing that election. you see the family photo hereof all of the nations done a short time ago president trump standing next to president erdogan there to president trump's right.

that relationship has been fr t fraught as they move forward to the kurdish area that seems to be agreed to or the united states made aware of in advance. that is controversial. turkey making purchases from russia they are members of nato nato founded to provide a bull war against russia a lot of complexities on the global stage for the president to sift through in london. we'll see the further bilateral meetings and whether we get any indication from any of those where any of these trade negotiations between u.s. and china and where any of that is going to land.

>> they are ascribing some of president trump's comments and ascribing them as not necessarily policy but sort of speaking off the top of his head off the cuff >> he does a lot of off the cuff >> he does you got to love it he's like, i'm thinking that but i'm not going to say it right after he said it. >> yesterday, he said i don't want to answer the question and then he answered the question. >> with macron, that was funny he said, that's the biggest nonanswer. >> that was an intense meeting. >> big handshake too >> eamon, do they get to decide where they stand in that family photo? >> i believe all of that is hashed out in advance. they have marks on the ground

and tape which tells them where to go. the diplomats must spend hours the president of the united states always manages to get up close to the front, right? >> hyper taxes on billions of french goods will make things frosty >> you are still thinking about that >> champaign and cheese. i can still get french onion soup and french fries. >> potatoes are getting smaller. say that yesterday eamon, you really concerned me about getting half way there, half way there, half way there you will never get there you can see where you are trying to get you are within a millimeter of getting there. you'll never, ever get there let's just hope you are wrong

about that >> that's the question, are we getting there or are these just officials talking to reporters on the sly you saw the president yesterday saying, i don't have a time frame for this maybe i'd want to do it after the election in 2020 that was the comment that got so much attention yesterday we don't know whether that was the comment or whether that was the president rouminating to the public >> this is starting to remind me of the fed too many of those guys yapping it is just one guy >> one thing obscured with all the back and forth is there a deal on the taking? is that deal is that skinny deal on the table? >> it is possible. it seems like the chinese would

agree on something holding off on the tariffs which of the tit for tat responses would be rolled back at what time that is a much more complicated conversation you would imagine, they would call it a day. that's not what the president got into this for. that's not what he wants >> we are global we are finished with you in washington >> that was smooth squ >> thanks though stick around let's get to eunice in china about the reaction there about the new house bill that would require president trump to toughen his response on some of the human rights abuse another bill, eunice >> that's right. just wanting to weigh in on what

you were discussing on that bloomberg report based on my sources in china have said. they already thought they had an agreement on a tariff roll back over a month ago or about a month ago on november 7. they said there was going to be a phase out of these tariffs and said it quite proudly but then the next day, president trump had backed away from it. i think it is probably worth taking this latest report with a grain of salt. this latest bill in congress the chinese are really angry about it the backgrounder ground is that the house of representatives have passed a bill highly critical about the way it treats the local muslim population.

these people are called the uighurs. china is accused of detaining about a million of them. china says they don't detain them in camps as it is alleged they said they are in training centers voluntarily. the chinese are really angry it is very estimavident in the comments about the decision to pass that bill the foreign ministry had criticized the bill saying this was an anti-terrorism tactic and that the u.s. needs to stop interfering and stop the bill from becoming a law. they said they could respond even further, if necessary based on some of the remarks yesterday in the state press it looks as though they are

suggesting that this could mean china will speed up the entities list a lot of people think something bad-to-could happen to american companies such as federal express. they are really frustrated right now with what all of this means. one thing that was interesting in the response towards the uighurs. human rights issues have not been linked to the trade deal so far. that indicates that china still wants to see a trade deal because they don't want to see the benefit for that in on the economy. the bill will affect cooperation between the two in important areas. that is as close as we have seen

to beijing saying they are angry. >> we have prove saying that this is reeducation, learning code that's not what is happening when they tell us that we are probably off the air again. when they tell us that with a straight face, why should be believe anything they say with the trade talks. it is like baghdad bob, they tell us that with a straight face, why do we believe anything >> from china's perspective, they are very insistent that this type of reeducation has been very successful to stop terrorism and today again, they laid out a number of incidents they said from this year to this year, we haven't had any terrorist attacks.

the population there is quite happy they haven't in any attacks. it is difficult to argue u when saying this is all necessary >> i got it. thanks, eunice we'll check back we are all walking these little lines now. let's find out how investors should react to the ongoing trade talks between u.s. and china, with us, darryl, an investment manager the whip seems to be a little less every time. >> the markets are taking this thought fully with a grain of salt it seems like this has been off for a while. three weeks ago, beijing was with very direct about the idea that the phase one deal to happen, they wanted to see the

september tariffs rolled back, not just december 15 i would say a phase one deal has been frosty for some time. i'm not sure why this week, we've focused in on it we tend to think less about, is it on, is it off day to day. it is more about the substance of the deal. with a week and a half to go, they need to get to some is deal >> maybe putting it to an extreme measure, what happens to the market then? >> it is probably worth 2% to 4% to the equities. >> i think that's what has changed is there is new expectation that potentially you could see new tariffs imposed.

that's the dynamic that changed a little bit i don't understand why investors should not condition themselves for this to be topical in 2020 certainly, the trump administration would say, okay, maybe march 15 of 2020, we will impose those tariffs if you do not do the following we need to condition ourselves, this is going to be with us. >> i agree we have to watch out for not just the amount of tariffs but you really need to watch is to what extent this evolves to a tariff trade conversation into a tech war tariff or the narrative 2019 is a tech war for 2020. >> i was going to say, 2% to 4%, what is the implication of that? >> tech has been the leading

segment. if you really start to take the huawei and those types to another level, now you've got real world market implications that matter more than this slow build that have a direct impact on ceo confidence and business and capital spending and all of this >> i think not even that you've got to be listening. we could have the phase one deal being implemented. president trump could see something as he perceives as dragging their feet, he could come out and say, i'm raising tariffs, putting that back on. the impulsiveness may be bad for the market but it might be good for the deal >> let's not forget, we have the government employee of the year,

chairman powell sitting and waiting, arready to respond if needed coming up, the shake up at alphabet we'll tell you what is behind that change. we have a big lineup to cover president trump's comments former fed president and home depot cofounder. con a co-phillips manager. more when we getac bk. there's a lot of talk about value out there. but at fidelity, value is more than just talk. we offer commission-free online u.s. stock and etf trades. and, when you open a new fidelity brokerage account, your cash is automatically invested at a great rate -- that's 21 times more than schwab's.

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google chief is taking over as head of the parent company in addition to his current role brin is stepping down as alphabet's president brin said it is the natural time to simplify our management structure. they say alphabet and google no longer need two ceos and president. they remain on the board and are

still controlling share holders. they are both young. an amount of money, we need scien scientific notation. >> to the googleplex >> maybe they are 50 >> no. i don't think they are let me look it up. >> for the stock itself, this is positive not much changes it gives certainty to the control. it is some what similar to what tim cook has done with apple and statesman relationship with president trump. we need to know who is the executive at alpha best who will be communicating with washington, d.c. overthe critical points coming

he's been leading them through and been in charge when you look at the faangs in 2019, it has been apple and facebook and underperformance for the rest you have to consider alphabet in that conversation of being an outperformer and they are implicating a strong buy-back plan that they had backed away from in prior years. it is good for the stock it is only half way there. they still control the company but have been more removed from the company. it is almost as if they've been an absentee ceo. they have control over the voting stock but they are not there on the day-to-day basis. this provides the certainty for him to oversee the entire umbrella i few that as a good thing coming up, we'll talk about the trade report that is moving

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welcome back sources tell cnbc that delivery company post mates has laid off dozens of employees and closed its office in mexico city. originally planned an ipo this year but had to shift gears

after struggles by uber and lift and the near collapse of wework. >> joining us now to talk about valuations and conditions for ipos and more. founder and ceo of duolingo. the newest tech unicorn. valued at $1.5 billion do you know this young gentleman here have you met >> we just met >> how is that valuation would you have been excited about this at the big board? >> in the old days, this company would have been public years ago. in this current environment, he's going to wait ten years and go public when they are $40 billion, which has been a very bad trend.

how do you feel after seeing so many failed ipos from companies waiting too long >> that's a great question we don't want to wait that long. our goal is to ipo in 2021, maybe. we've learned our lesson by watching other companies we really care about economics >> you are ready to hit your numbers every three months >> i think we are. >> are you ready >> it is worth the money to get the capital. don't you have to balance that out. a lot of companies stay private and do well. what is the motivation >> a number of them. we are trying to build the company for a long time. i think going public does that we are located in pittsburgh

i think this would be good for the city to have a publicly traded company, particularly a tech company those are some of the things we are thinking >> it is nice to do things like public currency to do acquisitions >> what kind of companies? >> companies that would be complimentary to what we are doing. we teach languages other education companies or other companies that use different aspects. >> how do you make money we used it when we went on a trip but we didn't actually pay any money. we lunched about seven years ago. it is a mission-driven company it is to offer free language

education. the first several years, we didn't make any money. we raised capital. we were told just grow, grow, grow we were the most downloaded education app worldwide in google and iphones but we weren't making any money about three years ago, once we had gotten pretty big. there were more people learning a language on duolingo in the united states than in the whole public school system we thought it was probably time to start monday tiesing. about three years ago, we embarked on that we are a little constrained because our mission is really to offer free language education. we didn't want to charge for using the app. the first thing, we put ads at

the end of every lesson. our run rate ran up. we added a subscription that turns off the ads. similar to a spotify model the subscription took over as the larger revenue generator our bookings have gone from 2016 at zero, 2017, it was 27 million. this year, we'll end between 85 and 90 >> how many languages do you speak? >> three and a half. three very well and i'm learning french >> i can learn klingon >> you can >> where would i use that?

>> do have the american form of english for wolff? >> we teach american english >> can you learn to talk to kids did you see saturday night live. it was duolingo teaching adults to talk to kids? >> do they have talking to management i have a real issue. >> they thoushould create a fute >> maybe for management, how to talk to talent when we come back, trouble in the housing inspector and it has been a positive force for the rally. he surprising numbers after this

a surprisingly down beat forecast from one of the largest

names in real estate diana joins us now with more good morning >> good morning. realtor.com, one of the nation's largest listing site says the market will slow down next year saying home sellers will remain on the sidelines causing the inventory to get even worse. dropping below 2% and that prices will flatten as millennials struggle to afford overheated prices. in some major markets, realtor.com suggesting that prices could go negative those cities including chicago, dallas, detroit, st. louis and san francisco. with prices weaker, sellers will

have less anticipation to put their homes on the market. mortgage rates will move lower sharply on the china trade news. >> joe, does that concern you if this is true >> no. because the consumer balance sheet is probably one of the strongest. savings rate is up here 8% that's a level we have probably not witnessed in 10 years. consumer spending is strong. those are favorable conditions if users are not just looking at the price of their home and running at the debt level of their house around 90% i thinks that why the boin si remains. >> when we get back, looking at the prospects of a deal with

former senator after this. and don't miss ryan lance. stay tuned, u e tcyoarwahing "squawk box" on cnbc through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

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if there is a lesson the last couple of weeks, it is that ever trade headline does matter to the markets look at the last 24 hours. president trump announced the trade deal with china might make more sense if we waited until after the election and then turning around after a news report saying that the u.s. and china are getting closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal joining us now is judd greg, former u.s. senator and former governor of new hampshire. great to have you here >> great to be here. >> do you think a deal gets done or not this year >> it has to i don't think the president can afford to drag this until after the election this election is going to be tough for the president.

if we don't have the economy trucking along, we'll be in trouble. this economy is slowing. the companies i work with are all breducing debt. it is a self-fulfilling prophecy you throw on top of that the uncertain uncertainty about trade, you have a recession or a slow down. >> if no deal is done, let's map it out from there. would that be enough to increase capital expenditures >> i don't know. i can't answer that question i do think it is unnecessary if you expect corporate america and entrepreneurs to take risk, they need a climate to take it. the impact to a lot of american

business which is tied to trade. so far, the economy looks good the market at least has kind of breathed a sign of relief that we've dodged a recession that's not the case from where you sit? >> i don't think so. this is not the case of the moving economy right now, the world is not moving forward it is in trouble europe is in trouble china is in a lot of trouble it has been hard to continue to lift the entire world. consumers are robust it looks pretty darn good. you've got to remember, the democratic party will essentially kill economic activity they are talking about taxing everything that moves and making entrepreneurship a bad word.

that can really undermine activity as we go into the election >> is there anyone on that side however moderate that can win the swing states with that party platform you just described? >> i think the president wins if they nominate a socialist. elizabeth warren or bernie sanders. i think the president has a tough race if they nominate somebody described as a rational liberal that can bring back the subu suburb independent maybe joe biden. i'm a fan of amy klobuchar she's got the right voice. >> what do you think of bloomberg? >> we'll have to see what happens. we'll see if he drops $100

million on super tuesday i would be very surprised but who knows. >> senator, thank you for being with us. it is always good to see you >> pleasure to be on coming up, google's cofounder stepping aside sundar pichai now the most powerful exec in silicon valley. we'll discuss the shake-up that's next. >> announcer: don't forget to subscribe to our podcast you'll get interviews, original content and access look for us on your votefari podcast app and subscribe today. when it comes to your customers' expectations,

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google shares up nearly 3,000% since debuting in 2004 with larry page and sergey brin at the helm. wall street will be watching closely the performance of sundar pichai. joining us now, writer at the atlantic, joy litman, fellow at the institute for advanced study and cnbc contributor what should we, if we were going to buy the stock, what should we be concerned with, the way they deal with the government and regulators in privacy or the way they refinealgorithms. >> this is a company under siege internally and externally. we know there are dozens and dozens of investigations in the u.s. and abroad. into issues like antitrust but also into potential labor violations and how they handled sexual

harassment cases there, the board is now looking at how they have been handling sexual harassment cases i actually think the issue that we maybe need to pay a little bit more attention to is internally just how you had these, you know, two founders have essentially been absentee for about the past year or so and when you don't have your leadership on, you know, right on the premises there, leadership is absentee, your culture can really go off the rails. and i think that's a lot of what we have seen we see a lot of anger there among the employees over a whole variety of issues. >> to me, it looks more like the woke culture moving into silicon valley alphabet, their culture has deteriorated at the same time as facebook has deteriorated at the same time. you don't think it is just the woke millennials seeing the

profitable companies and -- >> i think that's a fantastic scenario >> all the rotten apples rose to the surface at a bad time? >> i happened to be giving a google talk at google at mountain view the day of the walkout, the 20,000 employees walked out after andy ribbon was given a $90 million settlement to go away and essentially cover up the sexual harassment allegations. and at that time, so i was there and this mass of thousands of employees and the feeling it was almost like a college campus where it was sort of disillusionment and disappointment, but it wasn't like activist anger hatred it was more like the institution you love, you're disappointed with but in the years since then, what you've seen is the feeling that some of these people feel they have been retaliated against. >> that's different. i mean, let me ask derrick.

>> it led to activism. >> but it is also if they have any dealings with ice or if their climate change policies aren't in line, they're going to have demonstrations. so some of it is purely the woke subculture, isn't it derrick, are these all -- suddenly they all -- all the -- because these two guys weren't around suddenly the company went south in terms of its culture. >> speaking as a woke millennial, let me give you an explanation. culturally, sergey, larry, that nowhere to be seen they're not speaking publicly, they're not speaking on investor calls, they're functionally not leading the company. i see this as sundar not being promoted as being recognized look at the numbers. look at the reports, the quarterly earnings reports alphabet was created to create a conglomerate that would help identify and clarify google's core business, versus all of these other bets that they were involved in.

sort of to recognize them as an old-fashioned conglomerate but look at the latest report, 82% of the business is in search advertising. 72.5% of their business is in google related products, like youtube or google cloud, growing really, really fast. 0.3% of their business are in the so-called other bets 0.3% so sundar pichai is already the ceo of 99.7% of alphabet you're already the leader of the company, you should be the leader of its culture, here, you're being recognized for it through this promotion >> so does anything change kind of feels like this is a nothing burger two people aren't showing up and they own the company, and now they still own the company and they're still not showing up not impossible beyond meat burger or woke burger. >> it is google, so there is no meat. >> that type of nothing burger. >> what you have for sundar is

all these issues are squarely in his lap. now he has the regulatory issues to deal with i think it will be very interesting to see if he does deal any differently at all with you've got your congressional investigations, state wide investigations, and then your internal issues. >> this is a real test for this dual class structure that's where i'm coming from now two people -- >> it is the introduction of corporate governance, that did not exist prior to this. >> it is baby steps. it is baby steps corporate governance means you have an independent board, your shareholders, one vote, one share, one vote, that's not this >> as a trader, what would dictate whether you decide to buy this or sell this? >> i with buy this in 2020, i would buy this. >> anything to do with the -- >> clarity in leadership i think this is a corporate governance move. i disagree with tom. i like the representation and i like the buyback plan. >> you're not worried about

regulation privacy >> he'll navigate his way through it >> thank you >> thank you, guys. >> when we come back, we're digging into the futures up big after reports said that a china trade deal could be back on track right now, dow futures up by 137. top investors and newsmakers lloin us to tell you how to navigate the markets

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big market swings on every trade headline futures rising on a report that the united states and china are actually moving closer to a deal the latest market moving news is straight ahead the end of an era, leadership shake-up at tech giant alphabet sees its co-founders moving to the sidelines. the ceo of conocophillips joins us with a company outlook. the second hour of "squawk box" begins right now good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick with joe kernen and tom farley who is in for andrew this week tom is the ceo of far point

acquisition group, former president of the nyse and cnbc contributor. u.s. equity futures are rising on a report that the u.s. and china are making progress on an agreement about the amount of tariffs that would be rolled back in a phase one deal we'll have more on that in a moment right now, you see the dow futures up by 143 points first some other quick headlines in this hour, google's co-founders are moving away from their current roles. larry page is stepping down as ceo of google parent alphabet. the company's other co-founder sergey brin is giving up his role as president. both will remain on the board. page will be replaced as ceo by sundar pichai, the ceo of the google unit. that stock up by half a percent today. mortgage applications fell last week according to new figures from the mortgage bankers association. that drop was driven by 16% plunge in refinancing activity which came even though average 30 year mortgage rates remained unchanged at 3.97% in yet another blow to boeing, united airlines ordered

50 new airbus jets they're going to be replace united's fleet of aircraft the jets will be used on routes between the united states east coast and europe in addition to united, american, jetblue and spirit airlines recently ordered new airbus jets let's get to ken langone. >> let's do it back in the uk, nato leaders were gathering one day after the market moving trade comments from president trump this hour he is set to sit down with german chancellor merkel for a bilateral meeting and eamon javers joins us from washington he's in a mood over there, i think. so it should be -- everything -- you need to keep an eye on what's happening, i think. >> reporter: absolutely. we believe we're about half an hour away from that merkel meeting if things go according to plan. there is always delay and wiggle room built into the schedules. we think we'll see them in about half an hour so much riding on that

before i get to that, though, we just got some new information from the white house on exactly what the president and boris johnson talked about at ten downing street last night. two interesting items here on this readout they say the president and boris johnson talked about the importance of both nations working together on security, including to ensure the security of our telecommunications networks and to guard against what they call untrusted providers. both of those items seem like they could be a swipe at huawei, which has been an issue regularly between the united states and the europeans of how much that chinese telecommunications company will be allowed to have -- get access to the european market we'll see whether white house officials confirm that was a discussion of huawei or not. that's an interesting one. and then you look at this merkel meeting coming up in a short period of time, a lot to watch for here including this question of germany's defense spending as we look at angela merkel earlier today, in the uk, already for this nato 70th anniversary

the question is whether or not the president is going to hit germany hard on their failure to live up to their obligations to spend about 2% of gdp overall. they're on track to spend about 1.5% by 2024 that's one thing that we're going to be looking for. a whole host of other issues we're going to be watching for with this. also whether or not merkel pushes back on the president in terms of auto tariffs that the president might potentially put in place and then whether or not merkel raises the issue of china and the chinese trade war that has got germany caught a little bit in the cross fire, all of those issues could be on the table today as we have seen european leaders over the course of the past 24 hours be more aggressive than we have seen in the past. both emmanuel macron was more aggressive than we have seen in the past in dealing with the president one on one also canada's justin trudeau yesterday pushing back aggressively in his conversations with the president on issues that he disagreed with

the president on in terms of canada's involvement in nato we'll watch to see whether merkel takes that aggressive stance or not. or whether her sort of fragile political coalition back at home causes her to be a little bit more recalcitrant to sit back a little bit and let the other nato leaders be the more aggressive ones in their relationships with president trump. a lot to watch for here. >> thanks. for more on the saga and the market impact we're joined by ken langone, president and chairman of invimed associates. >> good morning. >> good morning. great to see you. >> that is not andrew. >> i know. >> looks like andrew >> he heard i was coming on and he -- >> no, no. >> he was -- >> all right, all right. joe terranova and senior economics reporter steve liesman is here. ken, not only did you found one -- one of the founders of home depot, unbelievable

company, hundreds of billions in market cap, so a trade war is something i'm sure you thought about. but you're still in the game with invimed, all these investments. >> look -- >> are you glad we're doing -- are you glad trump picked this fight with china and -- >> absolutely. >> you are >> it has been 40 years, we started out -- let's remember where we started give our country credit. we started out helpingthem whe they were making steel and pots in their backyards 40 years ago. we did everything we should have done to help a nation at large and that is significant, get on their feet and we did it, okay now it is time to pay the bill what is wrong? for too many years, whoever it is, whoever we sent over there, it was easy, the chinese had a great deal we didn't have a good deal we said to the chinese, hey, guys, come on, we got to have this more balanced we'll talk about it next year. so the dopes come home, we're

going to talk about it next year next year comes, you get the same thing we have got to have balance. the biggest thing to me is intellectual property. that's the biggest thing of all. i think bob lighthizer puts -- >> could we have done any of this without the blunt tariff club could we have done it without -- >> no. they'll say we'll talk to you next year and we send these -- >> do we have allies that could have joined in with us i look at some of our allies and go with allies like you, we don't -- >> let me tell you why i would want allies in this fight. youhave to control all your moves against when you are negotiating with them. if you got germany with different interests or any of them with different interests, all of a sudden, it is a mish-mash. i think trump is doing it the right way. it should have been done 15 years ago. china say powerhouse, the second largest economy in the world from where it started 40 years

ago. there is something that bothers the hell out of me look at that american flag out there, outside by the way, go look at the facade on the saks building. it is spectacular, beautiful >> yes. >> that flag, the president of the united states' first obligation is to the american people and i'm reading a book now ca called "war & peace" about roosevelt's last -- you must read it, it is a fabulous book when they were talking about invasions, they were talking about how many american casualties when you go to war, tragic as it sounds, the more of them you kill, the less of you that get killed the quicker you win the war. we're in an economic war and we have to defend and protect our interests. and trump is doing that. now, style, tactics, i don't know but guess what, what he's doing

now he did when he ran for president. he got elected the guy's not disappointing anybody by his behavior. this is exactly what he did in the campaign, yeah. >> as usual i agree with everything you just said but take us to -- >> now, give me your looks and we'll be even, okay. >> give me your money. >> you don't want my money. >> where does this end up? where are we going >> we hit a deal, eventually >> including a deal on ip? >> i'll guarantee you one thing, it will be a better deal than we have now or we had for last 40 years. anything is an improvement i think lighthizer -- >> having said that, anything is an improvement, would you take a super skinny deal where the tariffs are rolled back and they agree to ag purchases? >> if it is a first step toward a second step, i'll take it. if there is no way forward for anything beyond that, the hell with it, okay? look, china's taking the olive

out of the bottle, first olive proof is hong kong they have to figure a way out to govern 1.3 or 1.4 billion people 300 of whom have had a taste of the good life. look i'm a big investor in yum brands, they do a hell of a job. look at the market over there for products, american so we -- they know they have got to do something. i think the fact that china didn't go into hong kong more aggressively than that, maybe i'll be wrong tomorrow, the reason i haven't gone into hong kong is for one reason they were afraid maybe it will set something off in mainland china. that's a tough problem we're doing the right thing, tragically over too many years we sent the wrong people, i describe it as you got a little chihuahua. and you're throwing it in a cage with a lion that hasn't been fed in 30 days the chihuahua has about 15

seconds to say his prayers on his way to heaven. this is what we have done with the chinese for 40 years and they have taken our pants off. that's how i feel. thank god i'm not there to negotiate. it will be a tough job >> there is -- there is near term -- i don't know about the stock market, since we're at a high, i don't know about the jobs market, seems pretty good but there are plenty of people who say that the president trump worked really hard to get, you know, to deregulate and to pass tax reform and that this basically neutralized or canceled out the positive benefits for both of those -- >> what neutralized? >> there hasn't been any equipment spending, capital spending, manufacturing -- >> that will come. that will come. >> we should be willing to forgo the immediate effects of that. so we're supposed to do 3% gdp

growth, what if we do 2 because of the trade war, the global slowdown, is that okay to -- >> my dear late friend ross perot said something during the vietnam war. don't commit the troops until you commit the country okay all these things that are happening, i don't know about you, but i look out in the street, at 7:15 in the morning in manhattan, these people are all going to work. they're not going to get welfare checks or securiocial security checks, they got jobs, they're feeding families look at the records last weekend for "frozen 2. things are good. and guess what, at the end of the day, your first concern is your own home and your own family things are good. >> i've been watching you, you just bought a bunch of s&p futures. as a trader, based on what langone is saying -- >> i'm always optimistic when i'm around ken. >> kidding, kidding.

>> let me ask you, the president has been very critical of the federal reserve, specifically revolving currency manipulation, not only with the chinese, but around the world do you agree with the criticism? should the fed be doing more >> what president of the united states didn't -- about the -- that's part of the territory what i do like is he's got some interesting twists and things he says about people. but guess what, this is -- >> should the fed be doing more, you think though >> no, hell no, rates should be higher if we don't -- what i'm worried about, with this prosperity we have now, this is when we should be paying down our debt and our deficits should be shrinking. >> you compartmentalize. you just defended trump with what he does with the fed and you said rates should be higher. you -- >> i -- >> you overlook a lot. you give trump a lot of leeway, right? his supporters do.

>> i'll tell you what i give him. he won the election. >> right. >> he acted then the way he acts now. the american people can't say it was bait and switch. what you saw was what you got. and guess what, 63 million people who saw the way he behaved and that episode with billy bush, was that the guy, i said, this is it, curtains, it is all over, election night at 9:00, i said, i'm going to bed, i don't want to -- 11:00, she's waking me up, get up, get up, something's going on, the american people spoke. they spoke loud and clear. who the hell would have thought in 2016 when he was coming down the escalator that he would get 63 million american -- that's a whole lot of votes even if he lost, had he lost, 63 million. and from a party he was in that was not very enthusiastic about his candidacy.

there was no passion there for him. let's be honest about it in fact, you go back 12 years, he was supporting hillary clinton. he was a democrat. >> he was at his wedding. >> i don't think he knows what he is politically. i think he just does what he thinks his instincts tell him. >> he's pretty far right at this point. he's pretty republican at this point. >> but back to the fed -- >> yeah. >> how about these people living on pensions. >> right, it's tough. >> worse, these pension funds become as the old high rates run off, the bonds, they replace them with low stuff, you exacerbate the actualial challenges of those pension funds. >> no way to get the 7%. >> no way. what i worry about more are the states look at illinois it is a round robin. >> connecticut is next. >> they elect these guys, they say, we're going to help you get elected but you got to give us what we want they're going further and further and one when does the

bill come due? so -- meanwhile, this is the greatest country on earth, i'm fully invested i love everything i see about america, we can do a lot of things better. where is all the talk in this campaign about public aeducatio? i wish my buddy was here, i was going to ask him, do your kids go to public schools, i bet my last dollar he'll say no if it is such a great education in public schools, i went to a school in rosalind that was fabulous the teacher would smack me with a ruler, and i would tell my mother, the teacher smacked me with a ruler and she would smack me because the teacher is always right. you hold people accountable. what about these 900,000 kids in this city? what a travesty, whenat a disgrace want to give them income, educate the kids give the kids a shot

nobody is saying a word about it not a word, nobody. >> the best development in the city has been the growth of charter schools and that's not talked about at all in -- >> we have a charter -- stan drukenmiller, god bless stan, he just became a grandfather yesterday, summer, fiona, king, he was born, you know where. but he and jeff canada have done up in harlem, harlem premise academy, the kids are flying. >> same with success academy. >> they're flying. we know, we know they start out equal. >> turnsout competition can be helpful to the quality of the product. >> except to the teachers. >> what do you do with the debt, the educational debt >> first of all, i think we ill advised regarding -- i'm giving the commencement speech at a college in philadelphia called williamson college they teach kids trades and academic courses i went down and saw it and it

blew me away tim crow, who used to be head of hr, is on the board and he invited me people are waiting in line to hire these kids. carpenters by the way, 35, 40, 50 bucks an hour this is good pay these kids are good. they feel good if they want to get more education, the component of academic studies at this program at williamson, so the kids have a chance if they want to extend their education, but meanwhile, they're learning something that is going to allow them to provide for themselves i think that community colleges in america are a flop. they're a flop >> why what happened? >> what do i know? all these people are going in debt to go to colleges, where they're not learning anything. >> that's four year colleges as well there are a number of -- >> that's another thing. >> i agree with you, federal subsidies of student debt is a major problem. >> of course it is. >> it is driving tuition up. >> the kid that is sincere, that says i owe the money, even though the government backed it, i owe the money, i'm in debt

that kid has to worry. by the way, the other thing we have to do, i'm working on it big time, diversity of thought if a kid goes to a university or a college, they should be taught how to think of all the issues surrounding -- would you agree you're an economist. before you make a conclusion, you look at all the facts, this is this, this is this, this is right this time. >> i agree >> we don't have that. i'm pleading and working very hard at bucknell to get us to have diversity of thought. i was invited to speak at an event for hillsdale college in philadelphia this is a very conservative and i got up and said to the president who was on the podium, i said, i want you to know that you're known to be a conservative school. i hope you're allowing the other side to have the podium to give their point of view as well. it is all about making the right decision and the more we have facts, the more we have knowledge, the more

we have all of the factors that go into determining what is the right thing, the better the decision we're going to make how do i feel? okay >> you're awesome. >> i want to go home and go to bed. >> thank you thank you. ken will be with us for the rest of the show. when we come back, the energy sector has been the grinch of the market rally this year the s&p, oil and gas exploratio sector is down nearly 30% over the past two weeks there may be a bright spot ahead. the ceo of conocophillips will join us after this break the company releasing their ten year outlook last month, providing an update for investors. we're going to have the first interview with him since then. he'll be with us right after this break when i lost my sight,

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welcome back conocophillips hosted its investment meeting in november and unveiled a ten year plan for the company. that plan includes free cash flow projection of $50 billion and a planned $30 billion of stock buybacks just over the next decade. since that announcement, the stock is up a little under 4%. in the week after it, it was up by 7% or 8%. joining us with more is ryan lance. good to see you. >> thank you nice to be here. >> appreciate it i think what investors liked about what they heard, not a huge amount of surprises, but the idea you're keeping capital expenditures under control,

under $7 billion, but at the same time you expect to see your output increase by 3% a year how do you do that how do you get more with less? >> it is part of the portfolio getting a low cost portfolio, trying to generate free cash, we just decided to embrace the volatility that is naturally in the market and the oil price today. so we need to run at a good price, run is at break even, low cost supply resources, grow the company at $7 billion as you described, generate free cash below $40 a barrel we think that's a key to success. strong balance sheet we run consistently through these volatile markets and this led our teams be efficient and generate as much output as they can given the capital and the scope that we have set for the team >> that's a great plan to make sure you're not watching too much volatility, but i have to guess you're watching oil prices, gas prices, what they're doing on a regular baseis. >> yeah, obviously we watch it, but we try to take it out of how we think about the company. i tell them, you know, run this program at 40, i don't care if

it is 40, 80, execute this program, grow the company, and do it as cheaply and as efficiently as we can and take the volatility out we know it will stand, we know it will be here for a long period of time, but we need a financial framework and concept for running the company that takes the volatility out >> additional defensive buybacks >> our cash flow will grow dramatically at 60, 65 and 70. >> with that strong balance sheet, you're going to see opportunities for consolidation in energy. we have the occi/anadarko deal not sure what you think of the deal but would you be looking for opportunities as we see consolidation? >> i think what we tried to lay out a plan, we don't need to go after the opportunities, i have a whole other portfolio, very strong plan over the course of next year, we worked really hard to get the balance sheet in shape that we have and some consolidation has to happen in this business.

we have been in this game, you know, for the last number of years, acquiring assets, looking for distressed players in this business but really what we have in the portfolio, the plan, we don't need to go do any of that. we're not blind to what is going on. >> i share the laugh on occi and anadarko say no more. >> to your point, we don't we give investors upside to that commodity price, yeah. we get a break -- a low break even, downside protection to our investors and full up side participation. >> do you go in and rework your wells? >> absolutely. >> i think productivity -- >> absolutely. we're applying technology to increase recovery out of existing wells the cheapest highest returning stuff we can go do is already put the capital in the ground, get more recovery out of those wells. >> injection. >> absolutely. we do all of that. you have to deal with -- in venezuela what is the latest there? >> it is a tough situation now we're working closely.

we had a judgment against the venezuelans for $8 billion we're in the process of trying to recover that. to date, we recovered short of $800 million through the judgment and through the payment that they're paying us quarterly. but it is a tough situation in country. we have a number of venezuelan employees that work for our company. we have families sitting in the country in the situation is pretty difficult. >> yeah. they're on your payroll, they're getting paid, thank god. >> right. >> how are they impacted in terms of the money they have and not being able to buy basics like food? >> it is very difficult. a lot of our employees are shipping materials back into country and surprisingly are getting in the country medical supplies, food and staples. >> those people who can afford to pay for it? >> yes, the people who can afford to pay for it people are leaving the country. >> i wish bernie sanders, not bernie marcus, bernie sanders and elizabeth warren and that whole gang, give them a charter flight to venezuela and say, here, here's what you get when the company does everything for

you. >> does this -- i think today is d-day for getting their bids and maybe tomorrow, but today, right about now. does this impact your business >> we were concerned about two things one is drawing investors away, they offer value proposition that is quite compelling, while listing on the market for 1.5% will not draw investors away you read their filings, to cover their dividend and their capital program takes 55 to $60. that's not going to be competitive i'm not worried about that for me, that's in the low 40s. they don't offer really a competitive sort of situation for me i think what is going to be interesting is the impact it has on government policy now as aramco goes public >> it is clear they have to -- they need a certain price and market share is no longer an issue for them so i think it does have implications on return on how we think about the market and think about the commodity price and what it is going to take to stabilize that. >> there is really no incentive

to be messing around with pricing because if you cut, they're going to cut. >> absolutely. >> so you're all getting the same physical share but you're making less dollars. >> yes. >> i think it has been clear all along that an increase in the price is better off for opec and for the countries to fund the budget and still to balance the budget in saudi arabia level takes a higher price. >> we were talking off air, saudi aramco is structured in heads you win, tails you lose. >> they create the upside. they're taking a disproportionate share of the upside given the filings they described and the dividends they give back to the investors it is going to be limited in cap as -- if oil prices were to rise. >> brian, what do you think about the economy? we had this raging debate about whether things are improving, whether we have skipped the

recession or whether that's just around the corner. you got to look globally to see what will happen with the price of oil. >> we see slowdown it is definitely slowing down. but it looks like it is kind of bottoming a bit. we see demand fairly healthy nexti year on the oil side. the market is thinly balanced in a 50 to $60 kind of world, as long as opec keeps 1, 1.5 million barrels a day off the market like they have been doing. the us .s. is going to grow agan next year. we'll produce more next year of incremental growth so the unconventionals and what the u.s. is doing is remarkable. that's going to continue productivity is slowing a little bit. so you might say that it is turning over just a little bit as the access to capital for some of the smaller emps is reduced, the banks are not loaning, the ipo markets aren't available to these companies so we see some, you know,

lessening of that impact there is going to be growth out of the u.s. and it is probably going to consume all of the demand growth, which is going to keep a mark on price as long as opec keeps -- >> prices at the pump ought to be fairly stable. >> yes >> that's important. we're getting a dividend from that right now and the economy, because it -- they're buying cars that are more efficient, getting it two ways getting better utilization of the gas they're buying out of stable prices. >> you have a lower cost on the industrial side because of natural gas pricing. talk real quick about what you're thinking with natural gas. >> natural gas, we're blessed with a 100 year supply, for a long period of time, manufacturing is benefiting from that cost of the gas and in as we look at that, there will be plenty of natural gas, even around the globe and around the world, which helps in the transition, helps in the climate debate, and is really going to help manufacturing here in the u.s. that's why some of that manufacturing has come back to the u.s. over the last decade, we represent some of the lowest

cost gas in the entire world. >> you have a huge intellectual property portfolio curious if you have a view from the perspective of going after it theft. >> we're one of the two cases on the wto on that very -- it is a problem. and certainly i think -- i think the chinese recognize it is a problem. and certainly something that needs to be fixed and needs to be addressed going forward if they're going to achieve the ambitions they have as a country as well. they have to recognize that. >> they suddenly have ip too. >> that they need to protect. >> my problem with ip with the chinese, they'll acknowledge it, but you have no way to prosecute it this is part of the problem that lighthizer is having, if you have a valid claim, where do i go prosecute and the chinese say that's internal, you can't tell us what to do. that puts no teeth -- >> they have to address those issues >> of course that's part of what -- >> that's what makes -- >> that's what makes this agreement between our two

countries difficult. >> that sounds like you think something had to be done. >> yes you got to draw the line somewhere, at some point in time and say, you know, enough's enough we have to do something about this the degree to which you do that and how far it has to go, i leave it to the experts. it is time to -- >> when times past, the way you settle your differences warps. we're making a lot of improvement here, still a table talking to each other, no saber rattling, none of that, we have reached a point, inflexion point where we have to say to the chinese, enough. you want to be a big boy, want to sit at the table with us? you got to live by the same rules. >> if you want to be a global player -- >> exactly. >> global rules. >> exactly >> ryan, thank you very much for joining us. >> thank you for the opportunity. >> come back ryan lance, chairman and ceo of conocophillips >> president trump getting ready to meet with german chancellor angela merkel as trade continues to be front and center we'll bring you the highlights of the meeting and talk the

market impact on the futures ahead of that meeting solid, up 150 points on the session on the dow. 13 on the s&p. nasdaq up strong 47. we'll be right back. time for today's aflac trivia question. the senate approved u.s. participation in the united nations on this day in what year the answer when cnbc "squawk box" continues he 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

now, the answer to today's aflac trivia question. the senate approved u.s. participation in the united nations on this day in what year the answer -- 1945 still to come on "squawk box," president trump set to meet with german chancellor angela merkel. their comments and market reaction coming up yesterday, the president's comments moved markets lower this morning, a different story. a report saying that the united states and china are getting closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal

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we're monitoring london and awaiting president trump and angela merkel to begin their bilateral meeting. in the meantime, senator kamala harris announcing her end, the end of her presidential campaign 15 democrats running including former new york city mayor and billionaire mike bloomberg for his thoughts on how bloomberg could affect the 2020 campaign, let's turn to -- for his, i guess for theirs would have been more appropriate, but i think we want to talk to ken about this joe and tom as well. ken langone, joe terranova, and tom farley, former president of the nyse so, ken, i know that you -- we all know mayor mike. >> good man. great job as mayor. >> smart, yeah built a great business, great

company. >> yeah. >> probably make a pretty good president, think he's got a chance >> i think he would be a great president. does he have a chance? one of the things that concerns me is that people on the left, sanders, warren, booker, buttigieg, whatever, they all have -- >> buttigieg. >> they all have skin in the game and they're not going to quietly go away. it is going to be a dogfight and, you know, mike is a class act among other things and i'm just not sure that mike will go to the level that they're willing to go to -- >> do you have a problem with the nanny state moniker, the twitter feed from the midwest goes crazy with big gulps and -- >> wait a minute wait a minute. >> what? okay, go ahead >> wouldn't it be wonderful if 100 years ago we said you can't smoke. do you realize the devastation of the lives because people

smoke? >> yeah. go on. >> all right, so where do you draw the line? >> i don't know. that's what i'm asking you. >> if they say you want to have a high sugar content drink, and they got to put a tax on it, i'm okay with that why? because as these people become obese and get diabetes and need amputations and go blind, they should pay for their -- they did it to themselves >> what about wine >> same thing. yeah, why not? put it on wine now, look, the problem with wine is -- >> he's just saying tax it. >> what i'm telling you is, i think we need to put the responsibility, the financial responsibility where the problem is created people that are smoking, a man i loved, frankie pell greigrino, d two hands working cigarettes, i think if they know they're going to pay 20 or 30 bucks into the kitty it take care of them when

they get emfa sephysema or cancr worse, okay, they knew what they were doing, willing to pay for it, by the way, it is on them. >> but you're picking the easy argument >> it is. >> you're picking smoking. this is about having a coke. you think middle america is -- >> anything in moderation. what about red meat? we thought in the '80s that led to heart disease that was totally -- now salt >> sour cream, real fatty. >> where do you end with this, langone? >> by the way, we didn't talk about the medical center can we do that right now >> not if you advocate a nanny state. >> i'm not advocating -- >> we'll get into the medical issues with this just renamed the nyu medical center, did it as a surprise to robert grossman. >> we made our second gift, we were given the right to name the medical school in addition to the medical center frankly our names are on enough.

we say, remarkable job grossman has done incredible what he's done. scary what he's done. >> leading the medical school. >> i said, elaine what do you think? she said i think we ought to do it she made the announcement that night, that night, one night, we raised -- we were at 150 and very dear friend of mine just kicked in four more, we raised in $154 million in a night to complete our $3 billion capital campaign and what grossman has done with this place is nothing short of spectacular. who would have thought that getting involved at 65, so guys that are retiring, suit up, boys, there is a lot going on out there and get your share of it to think i could have the joy of these past 20 years, thanks to marty lipman, a guy that came and said, place is a mess, we need help, i thought, you know what, i did some work, but what is going on down there can i tell you one story

>> can we stop you >> no. this is christmas. this is a great christmas story. one of our patients had a heart transplant not uncommon when you have an organ transplant that depression follows it a man in building surfaces goes into his room at 3:00 in the morning to clean out the waste pail the patient is awake the man sits down and talks to the patient for an hour. does it the next night, does it the next night the patient gets transferred to a regular room, now he goes and sees the guy in that room. i got a letter from the man -- the patient, telling me what an impact on his recovery this one man had on him okay one person can make a huge difference and more importantly we all are obligated to do something for one person this man, by the way, got a -- i went down and met him. i wanted to shake his hand i shook his hand called up hr and said, look, this guy is worthy of more than what we got him doing. he got a nice promotion, i found

out yesterday he's excited, thrilled what's going on? this guy grossman, it is now the robert i. grossman school of medicine you want to talk about medical economics? look at what he's done there we took over lutheran hospital, lutheran hospital is -- it is the highest percentage of medicaid patients, zip code in the country. we took it over. it was a mess. we infused it with a whole new team of doctors and nurses and everything it is today the outcomes on that campus, population health, by the way, jackie and mike bezos gave us $25 million for that project. the results there, outcomes -- >> jeff bezos' parents >> mom and stepfather. and what is going on there, the statistics are exactly the same as they are at the main campus outcomes, infection rate, everything mortality rate, so grossman, god

bless him, get him here on your show sometime, he'll add to the dialogue big time. >> we'll have him on very soon. >> with the wealth tax, a guy like you would have a lot less money to do these sort of things you're doing, changing the world. >> look, if you would have told me as a kid, i probably can lose it again, i would be getting the blessings this company gave me, i would say you're out of your mind if guys like me that have done so enormously well, bernie marcus, god bless bernie, look what he's doing all over, arthur, jeff bezos, leon cooperman, what warren did to cooperman is a disgrace. absolute disgrace. she ought to be ashamed of herself. i would like one number from her. how much money does she give to charity? i would like to know just tell me show me. i'll show you mine you show me yours, how much we give, as a percentage of our net

worth or a percentage of our income i'll beat her any way you want to measure it. this country has been so good to so many people like me, that shame on me and elaine and i feel strongly about this, shame on us if we don't show our gratitude by passing it on and so that's it been a great run at the medical center, it is phenomenal if i ever have a bad day, i try to go to ronald mcdonald house, i see those kids fighting to live, i ain't got a bad day anymore. i go down to the medical center and i see what these people are doing down there, and boy, does it give you a spiritual lift, a lift to say, hey, something good is going on. both parties, how bad is this? pretty good. >> ken, thank you. we're thrilled to have you here today. we'll have more from ken langone coming up. when we return, a check on the markets, we'll bring you news from london where nato leaders were meeting

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all right, welcome back, everybody. back to our guest host today, ken langone of invemed associates we covered a lot of ground you're an investor watching what the markets have done, picking straight up for months at this point, what do you think? what is going to happen? >> yesterday, i was adamant in my position, a pretty good hit i don't know, i'm not saying people should buy it, but a company called option care home infusion and the stock is down 25%. i think the company, they had a presentation yesterday, i wasn't able to go to it, one of my people did, i added to that position i have so much -- it is not prudent, i added to my jpmorgan position, i added to my parker hanpin position, capital goods

company, well run by a bucknell graduate, by the way i feel, look, where else can you go to get some kind of decent rate of return than equities and, look, i think balance sheets are in good shape i think the economy has got probably 1.5 to 2% next year, hopefully. but i feel pretty good about that i think it is now -- it is now spiritual that dividends be regularly increased, by the way, parker hanpin raised its dividend every year for the past 60 years >> what is the other one? >> i don't know. >> what do you think of the environment, the customers now with zero fees, and this significant move towards passive investing, do you think that philosophy -- >> that's -- all that schwab deal looks like to me is the

more cash you get that's sterile, you get some kind of yield on for the house if i have a brokerage account, cash in it, maybe it is $39 or $89, whatever it is, you have money up, it is a fairly good number, and they can -- that's where they make the -- they're not making anything on commissions, okay. i would rather, frankly, i would rather -- at this point in the economy, rather own an index than be screwing around with private equity deals because the money out there is huge private equity, somebody is going to get hurt i saw a study that those deals that were done at over 10 to 12 times ebitda, had a 60% chance of going bankrupt. that's a high number and the returns aren't there so i worry about that. but on the other hand, i think through the noise there is some great, great names out there, another one that i like a whole lot is general electric right now.

i think culp is doing a hell of a job, presentation yesterday on healthcare >> yes, you just got back into ge >> i got back. and stan actually pointed it out to me. stan made a big bet. and i got back into it and i like it. i spent some time with culp. i think he's got his head screwed on right brought a brand-new cfo in this week, i think she's first class. >> we got to go. we'll be back. stay with us coming up, legendary investor kyle bass on china and markets 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.

markets set to rebound, futures pointing higher on a report the u.s. and china are in fact moving closer to a trade deal >> but there could be more trouble brewing between the two countries. hedge fund manager kyle bass joins us in minutes on a growing controversy surrounding china and the world bank. >> and google turns the page the company's co-founder stepping back from day to day responsibilities, we'll tell you what the executive change means for investors. final hour of "squawk box" begins right now

good morning and welcome to "squawk box" here on cnbc live from the nasdaq market site. i'm joe kernen with becky quick and andrew is off today, but in for andrew, guest host, tom farley, chairman and ceo of farpoint, which you came up with that, that's enjoined farpoint, farley, farpoint. >> third point, a little bit of a -- >> well, right exactly. and you are even more importantly for career and other reasons, cache, cnbc contributor, big, big for you. also joined -- >> filling in for andrew today. >> and that too. and that too and that too taller, better looking, right? >> by far. >> yeah. >> you don't have the new york times cache though. >> i agree with you a lot more than andrew. >> is that good, though?

we need to cover -- we need to be -- >> you two aren't that similar >> in a lot of ways, we're not i rue that -- >> he took the whole week off? >> three, four -- >> go back and check the last six or eight times i've been on -- >> he was here the last time you were on. >> that was the first time he was awol, absent without official leave. >> he was here and i thought he was well behaved. >> i could detect he was a little frightened. >> but he seemed better after that after -- >> i pointed out to him, even though he's a communist, i still like him as a person >> we better keep moving here. also joining us is joe terranova, senior managing director advertisementpartner, contributor and ken langone, also -- what is that other company, maybe better known than invemed, yeah, home depot.

u.s. equity -- >> 250 billion. >> yeah. >> market cap. three times ge's market cap. >> how many olympians? >> 480,000 associates. >> how much shareholder value? >> 3,000 kids started in the parking lot, that are multimillionaires today. >> right >> that's capitalism at its very, very best. >> and marie campbell. >> and -- let me tell you, i talked to her last week, she runs all the u.s. -- she is so spectacular. she is a killer. she is a wonderful woman and she's a great leader and does a hell of a job. craig, fabulous job. richard mcfarland, ceo, frank blake left home depot in great shape and we're seeing the rewards of his efforts ted decker, bill lenny, i'm going down the list of all -- mark haller, matt carrie, fabulous board of directors, the

company is flying. >> ken is with us, with us for the rest of the program. we'll talk more about that in the meantime, let's talk about the friction that is brewing between the united states and china outside the trade war. it is now set to be showcased tomorrow at a hearing that is focused on holding the world bank accountable for billions of dollars of loans given to china. joining us now with an inside look at this issue is kyle bass, he's hayman capital management's chief investment officer and, kyle, good to see you this morning. >> good to see you too, becky. how are you? >> good. before we dig into the details of the latest issue brewing up here, let's talk about that you think is happening with the trade talks. yesterday, it rocked the markets a little bit to be thinking a trade deal wouldn't get done this year or even before the election this morning we're back up on reports that a trade deal could be getting a little bit nearer you have been a critic of china, a very vocal one lately. what do you think is happening behind the scenes? >> well, look, from the perspective of this skinny trade deal if it was a skinny trade deal, that we got reported to,

we got the report, i guess from you guys, that this deal was done, wasn't that four weeks ago? if it is skinny, not that hard to put it on paper the chinese will buy some soybeans and pork, which they desperately need in exchange for us delaying our tariffs on december 15th. that's pretty easy to do you've been reporting, all along, that a trade deal is right around the corner. and we have been reporting that since the beginning of 2018. i think the larger question is why do we even engage with the regime that has a human rights record like china? why do we engage with someone that has 2 million to 3 million people in concentration camps? why do we engage in a regime that treats people like you're seeing them treat the people of hong kong? and this is the greatest issue and it is a much larger issue from a cultural perspective. what i hear is going on behind the scenes is china is asking us to roll back our tariffs, and -- >> existing tariffs. >> existing tariffs and also asking for a better deal for

huawei and the u.s i can tell you that huawei and zte are the two biggest cancers in the global telecom network. for the u.s. to even consider rolling back huawei, i think would be the biggest mistake we have ever made >> if you listen to the head of the fcc, he will say no matter what happens with trade talks, he's going to continue to insist that u.s. telecom carriers not be using huawei or zte and go back and rip out a lot of the equipment they already put in on that front you think that will hold up, this administration will stand pat if there is a trade deal to be had >> i do, from a -- and, again, what you speak of is the government u.s. government not using huawei and zte components the private sector -- >> they're pushing it to the private sector too. >> right, right. >> the rural telecom companies that already used it go back in and rip it out and looking for ways to do that. >> i sethink sometime in the net six months you'll see larger

news break on one of those telecom companies that will get everyone's attention but if you just look at how those companies operate around the globe, and you read local court cases, as to how much bribery and coercion and, like, literally the culture of those companies is so broken and it is so completely different than the way we do business here that that's why i think you -- we finally have this clash of cultures we're facing today. >> kyle, let's talk about the most recent news, the news you're on to talk about. and this is a bill being introduced to go after the world bank, made to china, part of this entire trade war is the perception that china has been getting an unfair deal, even as its economy has grown to be the second largest economy in the world that they still continue to be treated as a developing economy. explain a little bit about what is happening with this latest -- >> absolutely. so something really interesting happening behind the scenes. first question is, why on earth is the world bank lending china

$3 billion, $4 billion a year? you have the ida, international development authority, the idrc, all lending money to china, $3 billion to $4 billion a year lending money to the country that is the second largest in the world, putting up quantum based satellites, that is the largest consumer of watches, rolls-royce, chateau lafitte and ross child and the united states taxpayer is the guarantor of world bank loans that's how the world bank has a aaa rating because of you and i, becky. that money is going to china and the test that they have, quantitative test, your gross national income goes from 25 opinion 00 to 6900, in there, you're eligible for the irds loans and once your national income per capita gets above 6900, you're supposed to graduate china's national income, gni per

capita exceeded 6900 at the end of 2015, five years ago. since then they borrowed $8 billion from the idrc and haven't graduated yet because china has infiltrated the world bank they created positions within the world bank, the managing director, the head of human relations, believe it or not, the head of ethics at the world bank is a member of the chinese communist party. and so what is going on today, becky, what is fascinating is since congressman gonzalez set this hearing on thursday at 10:00 a.m. to discuss china's graduating in the world bank and their ability to stop borrowing from the idrc because their gni per cap is now 50% greater than the threshold. it is actually -- that's how they calculated it at world bank because of the china helping calculate it you look at the way the rest of the economists around the world calculate it, well north of 10,000 that's almost 50% greater than the threshold.

and what china is doing on thursday is the world bank is actually having a meeting that the funny thing is they're having a meeting to discuss the country partnership framework, the cpf. so despite graduation, there is a 200 page document that as yet -- until the end of time the -- they're going to force the ifc to lend the chinese corporations, billion dollars a year until the end of time this 200 page document hasn't been posted to the world bank website, the world bank website doesn't have the meeting on thursday and guess what, the meeting on thursday, for the world bank board to discuss the chinese country partnership framework happens to be coincidentally at 10:00 a.m. at the exact same time that congressman gonzalez's hearing begins it is not coincidental. >> can i interject how did the views that you have translate into your own investments? you have the well known short,

yuan trade from 15, 16, 17 are you still short the yuan, short individual companies or long individual companies as a result of these views? >> no, i'm not i'm not short any companies in china, i don't have any positions in china i've spent ten years of my life studying the banking system, financial system, and now how they operate, i'm looking at china's grand strategy and spent a lot of my own capital and time dealing with some of the most ridiculous issues that are in the marketplace. it is insane that u.s. taxpayers are backing the world bank to lend money to a country, again, that is advanced as china, the world bank is supposed to be lending to poor nations that have agrieved populations, vulnerable populations and we're trying to help lift people up out of poverty china has more millionaires around the world than almost anyone, and they are a rabid consumer of many of the world's top brands and as we all know, the largest strategic military

competitor in the world that the u.s. has and for some reason we keep giving them billions of dollars. it is crazy. >> kyle, thank you for your time today. good to see you. >> good to see you. >> don't be a stranger hope to see you again soon. >> take care, joe. >> all right. >> i was hoping i could get an idea >> next time time to say good-bye to terranova. thank you. coming up, breaking job news, payrl po iouolrerts t. we'll have it for you when "squawk box" returns where are you going? community bankarted a t 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.

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it is time for the adp private payroll report. >> big miss, adp at 67,000 the street was looking for 150,000. and they revised down last month from 125 to 121,000. good sector taking the brunt of it down 18,000 on the month. service sector doing okay at 85,000 part of a debate about the down shift in jobs we're having the street on friday in the total -- this is private sector and government, looking for a total of 187,000 this is a big enough miss where some people on the street are going to start to reconsider that 187 number, but let me just

show you quickly, small business up just 11,000 medium and large doing okay. up 29 and 27,000 respectively. one particular chart that raises some questions about the data in my mind. 15,000 job decline in 1 to 19 business we're going to go to donald trump now, the president of the united states in london. >> -- it was a very good meeting, i think we discussed syria we discussed the kurds we discussed numerous things and we're getting along very well. the border and the safe don'tzo working out very well. and i give a lot of credit to turkey for that. the cease-fire is holding very much and i think people are surprised. and maybe some day they'll give me credit, but probably not, but it worked out well they have been trying to do this for 100 years. that border is a mess for a long time we pulled our soldiers out, took

over the oil, we have soldiers where the oil is that's the way i like it and they can police their own border and that's what they're doing. they can use other countries if they want, if they want to spend the time and energy, they can do it this is a border that has been under siege for many, many decades. and it is time for us to leave and we left and it has been holding very nicely. so we're very happy. we talked about that. >> -- to protect the nato commitment, protect the baltics in poland. >> yeah, they have been very good i think that frankly a lot of people paid great respect to turkey for the work they have done and we had a number of mentions where they were mentioned specifically and they have been doing a good job and they have been doing a good job also on the border and the safe zone and they have held obviously there was some skirmishes around for a long time but they -- the cease-fire has gone very, very well.

>> did you explain why your personal attorney rudy giuliani would want to talk to -- >> you'll have to ask him. sounds like something that is not so complicated frankly, but you have to ask him, no big deal. >> mr. president, germany has -- making it nine countries certain that the u.s. sanctions against iraq have you talked about that with the chancellor and -- >> no, but we will >> what would you say? >> i'm not going to say what i'm going to say, but we'll talk about that we'll talk about a number of things, have a good meeting. >> say it again. >> will the u.s. put sanctions on north korea too >> we haven't determined that yet. i think it is a problem. but it is a problem that germany is going to have to work out for themselves, maybe for germany it won't be a problem i hope it is not, actually but we'll be talking about that. >> what is your response to president putin's moratorium for

medium range midsized systems? >> we're talking to russia about many things including a cessation on nuclear and nuclear creation it's, in my opinion, the biggest problem the world has today. i think it is bigger than any other problem the world has today and we're working very hard on it he wants to see something happen and so do i and so does china. >> mr. president, do you talk about -- >> we're going to be talking about everything, yeah trade is very important, germany is a very big trading partner, but it has been really the european union and we are -- we have been discussing it for quite a while. it has been a little tough for the united states. we have had a very bad imbalance for many years, for decades, actually, we're discussing that right now. i think we'll come -- i think

we'll come to a satisfactory conclusion. >> i think that the fact there is a knew commission in place and the leadership of a new president of the european commission that now we have a very good basis to resume our trade talks. >> meetings have been set up and we'll talk and i believe that it will work out very well for everybody and i think it should. we have some very tough barriers to get over. they have created barriers as angela knows very well and making it very hard for the united states really to openly trade. and that can't be done we're going to be talking about that and other things. i think we will solve it we do a lot of business, but they do much more business than

us and we're going to make -- we're going to change it i've been saying this for the last six months, the last year, and we made progress, but we will make a lot of progress, and we just want fairness, we have to have fairness in trade. not only with the eu, but with many other countries, we're talking to china, as you know, those discussions are going very well and we'll see what happens but we're talking to china, we're talking to others, we made a deal with south korea, we made a deal with japan, japan deal is a partial deal the rest will come next year but we made already many deals we're looking -- the big deal is the usmca with canada and mexico and nancy pelosi has to get that approved has to put it out for a vote she doesn't have to talk to anybody. she doesn't have to talk to any of her democrats because they'll approve it and their constituents want it approved very badly. so that's where we are we have -- we made a lot of deals and this is a deal i think

that is going to be the eu is actually one of the more difficult deals we have. it has gone on for a long time unchecked. but it will get there. i'm sure >> -- about prime minister trudeau talking about you last night? >> well, he's two-faced. >> do you think germany is -- >> with trudeau, he's a nice guy. i find him to be a very nice guy. but the truth is that i called him out on the fact that he's not paying 2%, and i guess he's not very happy about it. you were there, a couple of you were there, and he's not paying 2% and he should be paying 2%. it is canada, they have money. and they should be paying 2% i called him out on that and i'm sure he wasn't happy about it. but that's the way it is look, i'm representing the u.s and he should be paying more than he's paying and he understands it so i can imagine he's not that happy, but that's the way it is. >> mr. president, where are you in terms of persuading other allies in terms of -- the 5g

network. >> i'm not working very hard on that but i do think it is a security risk, it is a security danger and i spoke to italy and they look like they are not going to go forward with that we spoke to other countries, they're not going to go forward. everybody i've spoken to is not going forward. how many countries can i speak to am i going to call up and speak to the whole world it is a security risk. in my opinion. in our opinion we're building it, and we started. but we're not using huawei >> will you text germany from a plane now? >> germany is a little bit under the limit, i will say that but we'll talk about that now. okay, thank you very much, everybody. thank you. i think what we'll do just for purposes of -- we'll be having a meeting with the 2% people and we're having another meeting with denmark and then probably directly back to washington.

i can't imagine -- i can't imagine -- will we discuss greenland? what do you think? tell me. that's a good -- she must be in the real estate business that's a very good question. so we'll go directly back. i think we have done plenty of press conferences, unless you're demanding a press conference, we'll do one i think we had plenty of questions and, again, let me just finish by saying we had a tremendous two days, i think nato is stronger than it has ever been. a lot more money is being produced by a lot of countries and they're enthusiastic about it and within three years you're going to be talking about four -- committed to $400 billion more and not by the united states, by other countries. so it has been very successful today and there is great spirit. okay thank you very much, everybody thank you. >> thank you >> we have been watching president trump alongside german chancellor angela merkel at the nato summit in the uk. eamon javers joins us now with

more that was short, but sweet. a lot packed into it maybe the key takeaway for the markets has to be the line about what he said with china, after yesterday saying that those talks may not happen until after the election, he just said, those discussions are going very well very different story than what we heard just over 24 hours ago. what do you think? >> right, the key here with president trump is trying to figure out whether there are underlying developments in the negotiations that are reflecting his commentary or if he's sort of offering his opinion of the day. and that's the question that we don't really have the answer to as we sit here we saw the president referencing germany in terms of all the potential complications with trade, with that nation, and with the eu more broadly he mentioned that pipeline he'll discuss with angela merkel that's one that is going to bring gas from russia into germany, the united states has been opposed to it, the president suggesting he might mention that along with the other bilateral issues so angela merkel there keeping

her commentary relatively short and sweet, saying there is a good opportunity now for us to have this discussion and not really saying much else beyond that. the president, though, firing off some criticism at justin trudeau of canada, who, remember, was caught on this apparently candid video on an open mic at an event in london last night at a nato reception with other world leaders, they were apparently discussing trump behind his back at that reception, and some of that was caught on video, making the rounds of social media the president here, i think the phrase the president used there was two-faced to describe justin trudeau. so some harsh criticism there in response -- in response apparently to that leaked video. or that hot mic video that was surfaced on social media overnight. a lot of -- a lot going on in that short presser there short and sweet. but he had a lot of topics there and the president suggesting he might talk a little bit more before he goes home, but maybe

no formal set piece presser before he gets on the plane to come back to washington. >> all right, thank you very much >> you bet. let's bring back our guest host, tom farley, ken langone. we're also sitting here with steve liesman and mark sandy at the table. other things he mentioned in this, guys, we're not using huawei now, it is a security risk ken, what do you think >> it is a real threat i think we have seen invasions of technology that could be very, very frightening let them manipulate the power struggle, the grid, things like that you wish you didn't have to have barriers, didn't have to have restrictions but thank god we're aware of the threat and we're doing something about it i don't know whether it is overblown or whether it is overstated, whatever look, it is a tough world out there. and buyer beware >> yesterday, yesterday there

was a story that the -- basically kids app tiktok is sending user data over to china. if that's true, i think this huawei issue is going to prove to be the beginning. >> it is the real threat we do the same, we can do the same to them, don't forget that. prayerfully we're getting knowledge and intelligence that will let us be better prepared to defend ourselves, whether a cyberhit or god forbid a war, we live in a very challenging time, in a world that has polarization and a lot of different places and frankly my own feeling is he was elected president of the united states to represent the american people and protect the interests. >> we're up 130 before the adp and that was a weak number and i saw people earlier this week, guys, saying that suddenly even the claims numbers are going to be watched very closely now because there is a notion that maybe we're on the cusp of a slowdown or something.

and you get this number, the market initially went down to about -- it looked like it might go down to less than up 100. now it is back up, maybe on the china stuff. but would that adp number have been enough to cause some consternation about -- not enough workers perhaps, things are so good, you can't find workers. is there a slowdown? >> oh, yeah. >> is it 150 a month now >> i think underlying growth, monthly job growth is 125. >> 125 is that -- that's pretty good still. >> that's good enough to maintain stable unemployment if this is the end of the slowdown, but obviously the trend lines don't look all that good, manufacturing is losing lots of jobs retail is losing jobs, resource and mining is losing jobs. >> we're back to alan kruger, though, and whether the participation rate still gives us enough people to come into the workforce or whether we're at that point where we just can't get people anymore. >> it looks like underlying -- if you look at the underlying

rate of the labor force, people coming in, that's about 125 k. if we're at 125 k and stay here, life is okay we're good unemployment is going to remain -- >> will wages go up? >> wage growth will -- get on the other side of the trade war, and businesses start feeling better about things, they have to start raising wages more for us but, again, you know, a year ago this time, job growth was 225 per month. here we are at 125 k. >> we don't have the idea that we'll get another cut anymore. when there is a bad number, it is not bad news, good news anymore. >> the market sees it asymmetically. the market believes the fed is there, if things go down, but not necessarily there if things get better. >> i don't think the market wants it -- >> we don't want that to happen to get a cut. >> just quickly on the slowdown, the way people see things, debate on the street is the fourth quarter, the bottom of the slowdown or the first

quarter. and you have 1.5% gdp forecast for this quarter this is -- i did this yesterday, after our discussion on growth and i called about -- called half a dozen economists on the street, i knew mark -- there is ubs at 1-1 for next year all the way to mike engman at goldman sachs. we ran back up to 2. everybody told me three things additional tariffs in december, increases downside risks, and most importantly eliminates upside potential because people have this idea, well, hey, if we get this trade thing behind us, we can get this investment back and confidence zandi is talking about wages that goes away in general, people said, i talked to mike farrell, we were never on the trade piece

bandwagon. we always -- the new framework is this business on again/off again trade war/not trade war is something you need to build into your view of investment for next year and maybe for a long time to come. >> all right >> how do you feel about the unemployment rate? >> it is good. it is good. >> it is fine. if it stays there, about as good as it gets >> i'm schooled by zandi on this when it starts going up, it goes up precipitously don't want to get into that vain, it would be great if we go up .2, down .2 and glide along. >> we got to go. you had to think about randy, zandi, mark zandi is good, but mandy zandi would be weird >> there is a lot of good news. >> but don't want to rhyme don't want to rhyme. >> that's true. >> one syllable. tom. >> this is the riff -- >> coming up --

>> producers say we have to go and joe gets into the zandi thing. >> coming up, one of the most critical markets rocked by the u.s. china trade war we'll talk to agricultural secretary sonny perdue, nothing to do with chicken, on a trade wind -- actually it does, we'll see what a win would look like for america's farmers and u.s. commodities. a look at the futures, up about 120. you're watching "squawk box" on cnbc do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

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all right, welcome back, everybody. president trump just speaking in london ahead of a bilateral meeting with germany's angela merkel here is what he had to say about trade. >> we have been discussing it for quite a while. it has been a little tough for the united states. we have had a very bad imbalance for many, many years, for decades, actually. and we're discussing that right now. i think we're going to come -- i think we'll come to a

satisfactory conclusion. >> joining us now, u.s. secretary of agriculture sonny perdue thank you for being with us today. want to ask you about the news of the morning up first. let's talk about what the president just said, because it is pretty different than what we were hearing a day ago at this time just now he was saying that it looks like talks with china are going very well. what are you hearing and what does this mean in terms of the agricultural purchases that china may or may not be making >> we in agriculture are hopeful, optimistically hopeful we can conclude this i think president trump wants to conclude a deal that can be enforceable, that can be reliable, and be consistent with what the deal says and i think what many people don't recognize is that we have been in a trade war with china for 20 years we just didn't recognize it until president trump decided to reset the arrangement. hopefully we can get that done china has a lot of challenges and restructuring the way they have done business but it means a lot for agriculture, really doubling the

imports that they had from the united states in past years, could be tremendous benefit for u.s. agriculture. >> what are you hearing from farmers right now, in terms of dealing with those purchases, not being there, being there like they have been in years past. >> farmers had a tough year weatherwise and tradewise, marketwise this year we had prices going down since 2012 farmers, while amazingly resilient, it has been tough on the farm economically. but the market facilitation payments that president trump authorized has helped people hang on in that way, $12 billion last year, $16 billion this year, helped them survive and hopefully for better times that's why trade is so important. every farm in america would rather have trade than aid this aid has been helpful to keep them surviving during this period of time. >> sir, we have had some questions raised by the farming constituency, who just asked about changes to the program and how you dole out some of the money. they want to know why you went away from a per bushel system to

a per acre system. and then why go on a county by county basis because it puts farmers right next to each other on neighborly lines in positions where maybe one farm is earning a lot more than the other. >> we did that because we listened to our constituents last year, when we were rolled out the program on a commodity by commodity basis and frankly we heard better results this year while there was some media and some noise from the democrats on the senate about the southeast being favored, if you look at where the majority of the money going to -- predominance of money has gone, to the upper midwest and the plains where the heartland is, the per county acre because of high value of crops such as peanuts and cotton may have been on a per county basis greater, but the most of the money has gone to the midwest and that's the evidence and facts are there for that. >> let's talk about what you're here today to talk about, changes being made to the food stamp program.

what is happening? >> original 1996 welfare reform allowed for three months, 120 days of -- for able-bodied adults without independents, 18 to 49, no pregnant women, no elderly, no people with children in the household, they would be aloud 120 days when they were down on their luck, there weren't jobs to do, for food stamps what happened was this became into a waiver situation, the statute was 10% unemployment when we saw in the recession years america's compassionate, they allowed waivers for people to do that now we have got more jobs based on the trump's economy than we have got people for apply for them, we're going back to the original congressional intent. that's what the administration is supposed to do. look at the original congressional intent and go back there. so we are -- we're eliminating those waivers, except for those people who are naturally exempt.

>> what kind of pushback are you getting, mr. secretary >> what you'll hear from the narrative from people who don't like that is we're kicking people off what we're doing, people have to work 20 hours a week or volunteer 20 hours a week or be in job training for 20 hours a week what we want to do is increase employment we need these people in the workfor workforce. people who have been on the welfare, been on food stamps, we're trying to get them and sometimes it is difficult when you have been out of a job for a-long time, we're trying to help these people get pack into personal dignity of work and becoming part of the productive economy of the united states >> mr. secretary, interesting doings in your home state, the great state of georgia, little over an hour i understand the governor will likely appoint kelly leffler to senator isaacson's seat. what do you think the chances are of keeping that a republican seat in the 2020 election? >> well, many people like to talk about georgia becoming purple i don't think that's the case. i think that seat will be safe

i think, again, georgians recognize what this republican administration meant to georgia as well as the u.s. economy. i think the chances are very good it will remain a republican seat we think both of those senate seats will remain in republican hands. >> mr. secretary perdue, thank you for being with us today. it is great to see you we appreciate your time, sir. >> thank you very much coming up, which lessons from the december 2018 market volatility, nice word for it, can help with your portfolio today? already this morning, looking a lot like last year in terms of volatility maybe and we don't want it to, do we >> let's not wish it. >> i think we like it when -- chief economic adviser mohamed

el-erian with market insights you need to hear stay tuned don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes act te access look for our on apple dcpoast or your favorite podcast app and subscribe to squawk pod today. listen to cnbc live on your daily commute, on your alexa device, google assistant, sirius xm 112, tune in and the cnbc mobile app wherever you go, cnbc.

we are two full trading days into the month, some investors

are hearing echoes of last december's volatility. mike santoli, cnbc senior markets commentator, joins us now, more on this story. hey, mike. >> i can understand the muscle memory the good news is it is more different than similar if you look at the setup of the markets. s&p 500 for 2018, the full year 2018, we had the sharp second correction of the year, that was first one, january to february then we kind of consolidated and came up to this point. it was a question of was that the worst of it. this is early december here. you had that plunge almost directly what was go on here, you had declining trends, it was a topping pattern, not as if we were just correcting off of a strong high. also by the way, december 4th last year, the president's tariff man tweets, trade was getting worse. year to date s&p now this is a very strong up trend you had a series of new highs and that's just a real slight pullback from an all time high, all the trend lines going in the correct direction. a gauge of financial conditions

too. look at corporate bond yields, not the spread, the yields this is the two-year that's going into december of last year, right here. it was getting worse financial conditions tightening, spreads were not acting the right way. here you see this tremendous decline in yields as treasury yields have come down and spreads tightened. that's a different capital markets backdrop than we were facing last year, guys. >> mike, that was really, really good so good, come join us on the set. come -- take a chair with us on the set. that was so amazing. some of the work over there. >> i can scribble. >> you got to go backwards isn't in reverse >> i'm not standing behind it. >> that's a green screen that's from groundhog day. let's talk more about the markets and where investors put their money amid all this volatility we're joined by mohamed el-erian i think we're rushing the volatility story we are rushing it a little we had a couple of days, lost 2%

total in two days 1% yesterday midday, dwoun down 450 and people see that. it closed down, what, 250? so 2% from all time highs, is it on your radar yet as something we need to be concerned with or, i mean, i think you said there would be -- >> i think we should expect volatility because there are so many uncertainties out there but comparing today to what happened a yoear ago is absurd s mike pointed out, financial conditions are much looser than they have been a year ago. what is of issue and we have to remember is this is once again a single issue market. trade. trade, trade it is all about trade. a year ago all about central banks. so we are a single issue market. i honestly think that the trade issue is not as big as people make it out to be. >> even additional round of tariffs, december 15th. >> yes, for a few reasons.

the domestic sector is very, very strong. i think we'll get confirmation again on friday of a strong labor market two is the impact of price is not going to consumer directly it is being taken by the suppliers and by corporate profits. >> you're not concerned about global contagion trump is with merkel what about germany what is the impact of escalation on germany. >> we have gone from the auto sector, which is consequential, to champagne and cheese. which maybe is consequential for joe, but for the rest of the economy, it is not that consequential. i just think this whole trade issue is about -- what i worry about, good to have mike here, is that when you become a single issue market, you tend to decouple from the broader fundamentals that determine asset values over the long-term. at some point you have reconciliation >> the latest worry among many people that, you know, now that the market is almost at an all time high, it is off, we came

down a little, unemployment 3.7%, the latest is that the trade war has impacted ceo behavior and the benefits of the tax cut in terms of capital spending and investment have been neutralized by the uncertainty engendered by the trade war. we're growing slower, gdp is not going to hit any of the bullish estimates that we thought could be as low -- under 2% this quarter. all these good things that were happening, we introduced a self-inflicted head wind with the trade problems is that true >> i think we have growth rate of 1.75 to -- could we grow faster, yes. what is holding on to business investment it is the demand in the rest of the world is low >> but maybe that's from the trade war. >> it was low before the trade war. >> no. >> it is getting better. unfortunately, i don't buy into bottom up because i don't see europe reacting in terms of progrowth policies

that's the issue i think what we should be doing is encouraging other countries to implement old world policies. europe has done nothing since germany 14 years ago nothing to promote productivity and to promote growth. >> have you spent time in brussels >> i have spent time in brussels, spent time in germany. >> not a lot of conversation about progrowth. >> no. and brexit dominated and then the german political situation also sucking oxygen out of policymaking. >> so i argue that they're doing the chicken and egg, the slowdown in europe and china that we're seeing as part of the reason for no business investment is also caused by the trade war. but i say, wait, there has been so many things that have already been problematic in europe, long before the trade war >> let me tell you what bothers me about this discussion, all discussions. >> i hate when you get bothered. >> let me tell you what i find interesting, we tend to focus so

much on the next trade, on the next day, on the next week, if you want to be successful in my opinion, take a good hard look at something and ask yourself the question, is it technologically beneficial is there growth where it is going. he takes something like why am i excited about option care? people are getting older people can't get to hospitals. people don't want to go to hospitals for their infusion they get sick. all these traders and all this in and out, the tax laws work against you. whatever you make, the government gets a big bite so, look, i'm not -- i'm not pooh-poohing what you're saying. i'm saying that if you miss a certain eight days of trading of any stock, you miss 90% of the appreciation or depreciation of that stock and that year i ain't smart enough to know what the eight days are. you know what i do, i own it for 365 days and i catch them.

on the downside as well as the upside i'm not attempting to demean your professions i'm saying that all this stuff, including all of the business media, we're getting a little crazy here about this. it is down 2% in two days. who cares? the guys are panicked in december of '18, lost a hell of a ride. >> you were buying >> i was buying yesterday. >> jp -- look at the banks you want to feel good about the economy, look at the health of the banks. and the economy. the banks are strong again the banks are going to stay strong >> i agree with you about look for growth sectors, look for well growing companies i with add oould add one thing,r balance sheets the problem is the industry has shifted to index investing, and aiwa from exactly what you are saying and the minute you go index

investing, then you start getting impacted by the macro factors and you lose sight of what you say is critical that's why i say investors should look to access the economy more directly. >> earlier, mohamed, i said i was concerned about the private equity of the world where they're reaching for ebitda 12 times, 13. somebody has to pay -- plus, they're living with low interest rates. i just bought a company, wonderful business, i locked my rate in at 2.63% for five years, i'm not worried about interest rates. the business is doing very well. but there was a study done, 60% of all of the private equity deals that are done with ebitda multiple of over 11 go bankrupt. so what they're not doing, they better pray that the markets is accommodating and they can get out and get their equity out or they'll be left holding -- like musical chairs, when the music stops, somebody won't have a

seat i think things will be good over the next 10 or 15 years. the next 10 or 15 months who cares. >> thank you very much >> nice talking to you, mohamed. >> thank you, ken. >> stay bullish, okay? >> down to the new york stock exchange jim cramer joins us. jim, you were right on monday when you said you were concerned about what was happening about the feel of things here we are, 24 hours later, and it looks like a different message again in terms of what might be happening with china trade talks. who do you mix all this up how do you navigate when you are trying to do this on a day by day basis? >> i continue to believe that the harder line the president takes, the better things go for our country. i know i'm to the extreme of even the navarro camp. i have been since i spoke with the president ten years ago and suggested the chee eed the chinn taking advantage of us forever i said why don't we cut down trade and stop financing their ability to make war against us, stop financing the ability to steal intellectual property from

us, stop funding their decision to dump fentanyl on us, the seven deadly sins. nothing has changed. i think it is entirely possible that the liberal wing tries to foment a deal. if china is on rollback because of what happened with our decision to try to support democracy in hong kong, i think the president will say, we will wait until 2020. democrats are more committed to the idea that chinese are exporting coal and coal pollution. so i think the president has the upper hand here. i know the mainstream media thinks the president a fool and the chinese can do nothing wrong. they are not geniuses. they make mistakes and they're making many mistakes i think they're overreached. they have the mainstream media on their side, incredible given the fact they have a million person concentration camp and trying to tamp any sort of democracy in hong kong who are the mainstream media to back general xi over president trump? >> thank you. >> i call him general. why? he's a tool of the pla

pla is not on our side. >> apart from this issue, help me get diversity of thought at bucknell we need it all over the country. >> even that thursday night thing, ken, we have got to support president bratman. he wants both sides. i'll do everything i can on my end and so will lisa. >> thank you. >> "squawk box" will be right back rget your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back.

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oh, my god ken, thank you >> thank you for having me. >> as always. >> merry christmas, everybody. >> very good happy new year. >> don't sell america short. >> there you go. join us tomorrow. >> love you, beck. >> "squawk on the street" -- >> an honor to be here ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures did get a lift around 4:00 a.m. eastern on a report that u.s. china trade talks were progressing. despite the recent rhetoric. we lost some gains though as adp shows a slowest pace of job growth at about 6 months europe is up about a perce