>> good morning, everybody welcome to "squawk box" on cnbc. we are live from marketsite on times square tom farley is filling in, the ceo of acquisition group, contributor for cnbc and former president of nyse. u.s. equity futures look like the dow almost up by triple digits this comes after major gains gains for the markets yesterday breaking the three-day losing streak you saw the dow up s&p up almost 20 points. nasdaq up just over a half a point. this morning nasdaq up about 30

points you'll see right now the treasury market is showing the 10-year at 1.783%. >> we had a 2% pull back from all-time highs is that enough >> you mean, did you miss the opportunity? >> i don't know. does that come from the two months of continuous new highs all we need is one we just need president trump and for someone to ask about china trade where even an expression might do it. the moves are not. what was it the other day. >> maybe a little longer maybe it will be better for me i'm say it but i'm not going to say what i'm thinking. we got the two different wings leaking about what is happening. two wings in the white house.

>> i'd be surprised if the 15th would happen >> the party will come truce. most people think truce. >> if we are talking cold wars new this morning u.s. senator and hopeful elizabeth warren reportedly drafting a bill that would call on u.s. regulators that would retroactively review almost 20 years of megamergers and ban such deals it says ban such deals going forward. we are being specific about it we need to put that in there we are not talking about going backward backwards. we are talking about going up. that would be bloomberg.

they won't be looking at any of those. only at republican deals confirming several details including a ban on mergers involving the company of several million in revenue or two companies each with $15 billion in mergersnd a allowing the gig workers. the bill would be reportedly introduced before the end of the year likely will be rolled out in the new year the big gulp nannie state doesn't look as bad. this is truly nannie behavior. we are going to dictate to the private sector if they can merge or demerge who is she to understand the pressures or future strategy of u.s. companies >> it is a campaign proposal

it is the former head of the united states. the nerve? the idea i am not going to cry about it i might cry from laughing. >> you've already had people who decided and weighed in on this point. >> we do this already. we have a whole antitrust division to decide on whether to do this. >> stand up for yourself you are the new york stock exchange president. >> you are too fired up at 6:04 in the morning i can't get a word in. >> what time do you get up >> let's start with the consumer what if a large deal really helps the consumer you have another bank that is really good. you put this together. if there has been no inflation

for 25 years things get more efficient. it is true sometimes, we move forward. there are job losses in the late 19th century when we introduced those machines we understand the creative disruption it is ridiculous. >> i don't understand what she's looking at it doesn't matter. really she goes down the list >> they have to approve anything with consumer finance. that is consistent >> it is looked up by regulators there is oversight to look at it on many levels >> she's like her support is down >> 50% from where it was three years ago. >> she needs to focus on winning. looking for the far, far left

follow os if is. with what has been happening back down from 14% everything she does should be aimed at how do i win wisconsin? >> don't give her advice, please >> elizabeth warren weighed in on twitter on the announcement that brin and page are stepping aside. warren wrote, congrats on the move reminder, we still expect you to testify to congress and changing your title will not exempt you google's parent company discussing the way it handles data slack posted a loss of two cents a share. better than the eight-cent loss expected the forecast fell short of expectations on that front ceo stewart butterfield told

analysts that most customers use microsoft products but chose slack over microsoft's team app. he expects to see more users switch to slack. we'll speak to butterfield later today. >> general motors and lg chem are ready to announce a 50/50 venture to make electric vehicle batteries. it is a gm lg av for >> what? >> a gm lg gm for av >> got it? >> does that come up with anything >> there are no vowels

>> one vowel e. that's it. i'm so bad at wheel of few opportunity. i need the letters i do i read them as they are. i'm so bad at it jumbo is better. we already said this the facility is expected to be located in the lawrence town area we'll see an investment of more than $2 million. >> that was the closure of the plant. >> i hope it is okay with aoc. she doesn't delve into ohio. why are you laughing >> just shots early. following yesterday's bullish report

officials now saying tariffs will be rolled back. the two countries remain in close contact. the live report is coming up in the next half hour >> let's get a check on the markets now. joining us, the chief market strategist on cross mark global analysis still expecting december to be volatile but not like last year. >> that's right. exactly what becky was talking about. we are constantly getting new deadlines. things are moving better we saw treasury yields go higher now as some of that is coming back, we are not sure where we stand as far as tariffs. volatility is coming back. looking at where the vix has

been we are now at one-week highs i do think there is some volatility we have some pull backs. we have 2% pull back over the last few days. we'll get closer to december 15. there is question whether trump will go through with that. i don't think trump will take it off the table. we'll get some kind of carve outs for companies like apple or others that will really hit the consumer >> i like your stock pick. at least we can stay in the microworld everything else at this point, we hear so much. why, i talk to an individual yesterday on another show about real estate and housing is not supposed to be so great next year and it has a lot to do with a lack of inventory.

lenar, who are they selling to there is a big millennial story that plays into that >> i saw that interview you did yesterday. >> you are coming back >> she thought it was a great interview. >> i did it was great >> really. how was the lighting look good? what about my hair >> always good >> i didn't really understand how titan ven torry means prices might decline. >> right real really lenar plays into the space where they need to be building some of the lower end and starter homes. saying we've still got inventory on the higher end, it is the lower end where they really need it that's where lenar plays well.

that's why we've chosen their name with mortgage rates where they are, we anticipate that will be higher especially in that lower cost bracket. >> exactly what diana accurately pointed out. >> the other thing i thought was interesting, they waited longer to do some of these things like buying a home. they are not at the real ultrahigh end. they are not complete starter homes either they are moving into the len ar house. >> what about these other things moving into these others >> lenar is geographically across the united statess. we are here in houston, we've seen the housing market grow as people move into the city from the west coast a big influx here in texas

especially in the south, we are seeing growth. >> you also like apple and coca-cola. neither one of those you had to beat the bushes to find them apple will continue even at a trillion dollars and above >> it really does. when you look at apple, that is a strong consumer brand. a lot of loyalty there there was a lot of concern there won't be as much demand as anticipated. the air buds have been really good they'll pick up into the holiday season with the new mac books that they have a lot of people have chosen not to add to their apple names because of the potential there a longer term holding like coca-cola. >> in a quick 20 seconds, you like that it is more a pure play it doesn't have all these snacks

but a few new drinks as well >> right trying to branch into other markets like pepsico the longer term holding, think of it as a koer holding. it was an add to especially if there is volatility going on. that is a great name to have >> rice is a great school, isn't it >> it is a great school. go owls. >> if you look at rankings and stuff. >> you are all texas all the time texas a&m. i was going to shift into some sports talk but i'll save that for the 8:00 hour. >> sounds good >> actually, we are going to do a little right now isn't that quick billionaire hedge fund manager cohen nearing a deal to purchase

a majority stake in the new york mets wouldn't it be cool to have that much money to be able to buy the mets under the deal, he would own 80% of the team. current owner would remain in position for five years before transferring to cohen. in a note to clients, he made clear that becoming majority owner would have no impact on first passion, investing the mlb hasn't approved the deal yet. if they do, he will become baseball's wealthiest owner. we are local, you are either a mets person or yankees nobody likes the yankees from cincinnati is all i'm saying they remember what happened back in 1976. they are still hurting from

that >> on behalf of all mets fans, thank god. >> you think that might help >> the payroll of the mets is $120 million payroll of the nationals that within the world series $210 million. the yankees $170 million you can't win unless you pay money. >> that's not necessarily true remember billy ball in oakland that wasn't about money. >> everybody has a money ball guy. >> wherever you are saying whatever business you are in, to win, you need to pay talent? >> yes, worth saying competition is good. step up to the plate you agree with him on that >> sure.

a little uncomfortable >> why what are we negotiating on air now? >> i'm saying in general >> when we come back, crude prices on the move as the crucial opec meeting begins. brian, what do you have coming up for us? >> you gave me the perfect introduction you did that segment on houston and real estate, well g'll get o the meeting getting under way and why what happens here will impact midland, odessa and houston. that is coming up on "squawk box. >> announcer: today's big numb, 11er$7 billion that's how much opec earned from oil imports last year. what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing.

watching crude prices today. opec leaders are gathering today with big items on the table like a new saudi energy minister. brian sullivan, we had a little bromance ourselves in vienna you sent me a nice shot. i hope you get a chance to go up

there. let me know, if you get a chance >> i won't go back without you it is not the same it is like that spot, that magical thing that we have together the joe, do and co i'm not going to go, bro i crack myself up with that one. you laid it out, joe, perfectly. it's kind of like the same thing. how much are they going to cut and for how long number one, new saudi menergy minister the son of the king. he expects it will be a good meeting. his first meeting and having a member of the royal family as energy minister ramps things up

a bit. they are looking at the high end of the range there that undercover everything here you wonder will the aramco ipo, will that help opec influence the decision to keep a floor under production and keep prices up a little bit. that last part is key for the united states. you've seen what happened with these stocks they've dumped the energy names. about $200 billion coming due in the next couple of years you have an energy sector that has been absolutely decimated. they are not making any money at $55 a barrel opec does not have the ability to save but help in a big way the u.s. oil and gas industry if prices firm up some of these companies in midland and houston

might be able to create a cash flow or convince wall street to refinance their debt it matters a lot here what will happen in texas. >> that is a pretty good gig when you picked that one because you knew, vienna >> it is 20 degrees. >> that's okay that will get your attention that is like the top everything runs on time, everybody is nice. it is the top city to live in. >> stop that you've got a beautiful scarf and coat maybe you need a canada goose coat >> can't afford it >> thank you complaining about it >> looks like you'll be complaining about davos. >> that is close and we are outside in davos too.

>> he was standing outside. >> we are out there for like three hours. >> you guys look great real liamlifys your beauty >> keep it up. when we come back, it is jobs week. one of the biggest questions for the global work force. the rise of artificial intelligence that is next "um houston, we've had a problem" it's human nature to hate problems. but why is that? problems inspire us to re-write the rule books. the history books and future books.

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jobs friday is tomorrow. the numbers are expected to show unemployment keeping steady at a healthy rate new tech is disrupting industry and the workforce. how can companies keep up. joining us now, the founder and ceo of amisite >> we are an artificial intelligence software and we provide learning environments for business education we are an industry 4.0 late 1700s, we had farm to

factory, then education, now things talk to things. there is no such thing of having a job where there is not some kind of technology or service involved >> we do hear all the time that companies are having a hard time finding workers that are trained for these jobs >> not surprising. the technology is out there. the challenge is finding people who can execute on it. these are things people aren't l learning in school the people are learning on the job. the companies are doing well and innovating the investment on people churning the workforce is extremely expensive. the cost of replacing an employee is about a third of their salary >> take this down to the example of the university. what is your software doing, how is it teaching

>> as a software company, we provide a platform and portal tore clients and customers students and learners are given a log in and they see a platform of what they are supposed to learn. the ai does a lot of the administrative work. traditionally, the professor, the most expensive part is doing the administrative work. imagine if a human was following you around saying here pick this music. we use natural learning to serve up materials that are relevant to augment and keep every single educational experience fresh >> would this bring down college costs? >> absolutely. >> how >> it is one of the reasons i started the company.

operationally inefficient. right now having expensive knowledge workers doing administrative work in teaching. >> meaning professors would be able to teach more classes >> and more importantly engage with learners. people want to engage with other people and learn from them if you ask millennials what they want they want to learn more on the job, engage with management more and feel a part of the community. >> i heard a key to surviving in university is remote learning. i would imagine there is a lot of competition >> i hope so there need to be several million dollar businesses in this space. we are training people in the fundamentals in college, i think the american higher education system does a great job of that. the challenge is that the skills

has to be continuous >> you mentioned it took 100 years for this and that it is coming down to about 20 years when this gets rolling >> correct >> do you believe in sings like sin singularity. when machines know more than we know, we have no idea. >> i know this, in order to ethic will i and constructively use machines and machine learning, we better learn the technology and engage that in our own learning >> do you think they'll need us around you are laughing >> i do. i watch the show, so i do. machines have a rough time with humor. >> what do they need us for? they have to feed us >> no, no. every one of our junctures our

species have seen, we end up being more creative. >> we better think about it. >> we don't know how creative we can be >> they like us or just get rid of us. have you seen terminator >> joe, you are worried about things >> we have to use machines and al gore rhythms not only to learn but to conduct business. >> thank you you missed 2001. coming up, let's give everyone a headline that's what the judge in the musk case said when he overruled the objecting.

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good morning welcome back u.s. equity futures are up higher dow futures are up comes after a day of gains that ended three days of losing sessions for all three of the major averages nasdaq indicated up. s&p up by 11 elon musk's defamation trial continues today. testifying that he didn't know his own network. he estimated it may be $20 billion including spacex and tesla. the judge allowed the question saying let's give everyone a headline >> saw five minutes of all the money in the world a great movie.

the octoberactor replaced kevin as getty there is a quote where they say, you are the first billionaire in the world. he said, if you can count your money, you are not a billionaire. elon musk says i don't know either might be 20. such a good place to be. >> i don't understand how he let this get to trial. why is this worth his time said he's a child rapist >> elon confronts things deliberately at times. >> which is probably why he's been so successful >> right your strengths are your weaknesses as the december 15 data approaches on the tariff hike. how likely is it that a trade deal can be made don't miss our interview with

cvs health president as we talk about the aetna 5:0 wezition stay tuned you are watching "squawk box" on cnbc hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

new comments this morning from china's commerce min sfri following the report on trade talk progress. saying tariffs have to be rolled back as part of any trade deal

and the two countries remain in close contact. youn eunice has more on this. >> thank you beijing leaders are very scripted and very consistent when it comes to their messaging. today reiterating the tariff roll back has to be part of the phase one trade deal for both sides to make a deal. relative tariffs must be lowered. the spokesperson didn't say much at all about the discussion in the state press that china could soon unveil its unreliable entities list. a lot of people had been believing that this could be rolled out in retaliation for congress's recent passage of the bill criticizing china for the

way it treats its local muslim population whether or not -- the way the commerce ministry's comments are being interpreted depends on whether you are a glass half full or glass half empty person. if you are a half full, you would say at least the trade talks are still on track despite all going on in hong kong and the tensions over the bill regarding the local muslim population and the latest one with huawei suing the fcc over a decision where it was designated as a national security risk. if you are a glass half empty person, would you say we see china is very consistent that it must have the tariffs lifted and it is unclear whether the trump administration would accommodate that and get rid of that stick >> i like the half full one though

a lot of stuff if we are going to worry, a lot to worry about for more, let's bring in john rutledge, chief investment officer and. you are calm saying even in the face of what we've heard you think things are kind of on track moving ahead i don't think the fundamentals have shifted there has been a lot of reaction by the market. i would tell everyone please be calm don't overreact to every resource the reality is it is still in both sides to get a deal there is still tough issues out there when it comes to tariff roll backs and technology.

my understanding is that they are making slow progress everyone has to remember the focus isn't on china what bob lighthizer is doing right now in talks with the democrats where his focus is all this emphasis is kind of missing the mark in the back of all of our minds and you point out it is an election year next year. there is some uncertainty surrounding this that maybe does affect cap x and president trump will need to maybe remove some of that to keep the economy humming to get reelected is that your view? >> a degree with that completely one thing i do hear is that they like the president's tax cuts. they like the deregulation some of this trade uncertainty is causing this emto hold back

the press needs to get some uncertainty with china i think it is great that democrats move that forward and that will put them in a very strong position. i've heard folks in the white house that they see this stuff and china adding a half a percentage and a point >>. >> what do you think jo do you think we shouldn't be quite as concerned >> there is a deal to do since last february. ending up about where they were since last february. as far as trade goes, it is fine the word ideal ratio how many words remain on this and how many still understand it after two years of negotiations. most important is to understand

chinese politics >> great that's all we need to do >> the push back is because sovereignty is the only word that matters right now in chinese politics it is tied into hong kong and he cannot look like he's being soft or he'll get push back from his own right wing in china. >> does that mean we cut a deal and do things down the road quietly so it looks like a tit for tat? >> always in a transaction, let the other guy win something. what does he want to win he wants to win face >> unfortunately, our president wants to win too and he's got an election he's facing >> they know that. every day is a bit closer. you are not going to see any give backs from the chinese at this point >> from december 15, not only have we not hit a deal but we

actually put the additional round of tariffs on because of the battle to save face and the machoism going on. >> all of your ability to predict means you are averaging over 20 million people this is one guy we are talking about. we have no clue what is in his head my sense is he would not want to go into an election year with a new hike in tariffs from what we already got. you can expect that to slip back we'll stay roughly where we are. >> you think president trump was right when he said this is probably something that gets pushed off until after the election >> right and i think they decided that about three months ago >> thank you

it was good to have you on today. both cnbc contributors like you >> both excellent. >> all good. when we come back, one of the only analysts with a sell rating on that rating yesterday and he will tell us why next

the uncertainty around china trade is creating some opportunities for some technology stocks. our next guest is here to tell us what's working in technology. but first he says apple isn't. managing director of consumer and enterprise technology at maxim group. these are some interesting calls. let's start with your apple

call you are reiterating your sell on this stock you've got $190 price target even though it's trading at $263 and change tell us what you're seeing, why you think this is something people should be selling >> sure, first of all, the downgrade to sell has nothing to do with china. it is a risk it's a risk that we highlighted, but it's not in our estimates. the reason why we have it down graded to a sell, we have four years of proprietary survey data our most recent survey shows the iphone is going to be down year over year. no big surprise -- >> the iphone purchases? what are you talking about >> sorry? >> purchases or uses >> purchases we double clicked through the data the past week four years of dat. what we were surprised to see, the retention rate appears to be declining. 2016, 2017, the effect was 5%.

in this most recent survey it's now 9% if you annualize that to retention rate it's dropping from 98% to 59% over the survey data here. that eats away at this -- oh, it's going to be down just because of iphone cycles no, it's more than that. we are actually starting to see shrinkage of that user base, at least in mature markets. that's what our data says. that's one element here that really concerns us and the net services thesis is completely hinged on your user base being flattish if not growing. if we have evidence it's declining that really puts it at a threat >> your price target is so far below where the stock is now why do you think the market views it so differently than you do right now >> sure. so, i think that the market is putting a -- doing a rough sum of the parts analysis and not thinking critically bl what kind of multiple should be on the product and what should be on the services portion you look at the high growth

services portion and say, apple has high growth services it only grew 18% year over year in the last fiscal year. it is slowing and is attached to the iphone user base so should you be putting 30 x multiples on there, probably not. you should go to when you have the mature services revenue, which would probably be in two to three years that's when anniversary apple tv plus, music, et cetera >> we told people we were going to tell you what worked. we're almost at a time i should ask you a few of your thoughts what is working right now. >> sure. so pivoting to u.s./china trade war, you know, we don't think this is going to come to an end any time soon. and one of the key things here is protection of american intellectual property. and the inability to enforce that means that cyber security stocks will continue to have critical importance. so two names in the cyber security space that we really like a lot, both of those names have been working and w we

expect them toe continue working extremely well >> today's hot cyber community sector is tomorrow's -- they're moving so rapidly. do you have any obsolescence because of those picks >> palo alto has the greatest brlt and the greatest mind share. there are a lot of new cyber companies that go. palo alto networks has understood the test of time. they have a strong brand and a very strong management team. and so i don't see that being an issue. in the case of splunk, they are the machine learning company, and they found a niche within the cyber security space that represents probably 40% of revenue. it's the tip of the spear for them attacking the overall i.t. management operations market so they continue to have a very strong leadership position there. so both of these companies have been leaders for an extended period of time and they are rapidly gaining share in their respective markets

another area -- >> actually we're out of time. we're going to have to have you back for the next idea thank you for joining us >> former dallas fed chair fischer will join us he'll weigh in on what the fed should do next year and atwh's going to happen maybe on december 15. the seven-time grandfather will be on. ttack ttack on business every 39 seconds. ouch. i don't even want to think about it. comcast business has a solution. we go beyond fast with a cloud-based security system that automatically updates, so you always have the latest protection. phishing. malware. risky sites. it can help block all of that. it's one less thing for us to worry about. comcast business securityedge automatically protects all the devices on your network. call 1-800-501-6000 today.

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stocks making a comeback on upbeat trade news. but can future's gains hold through the open >> the future of health care and drug prices. the c.e.o. of cvs will join us >> the biden tax plan is out how does it compare with elizabeth warren's plan? we'll debate as the second hour of "squawk box" begins right now. ♪ ♪ >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and tom farley who is in for andrew this week tom is c.e.o. of far point acquisition group, former president of the nyse and cnbc

contributor. i'm looking over, i look over now and i see you, just even -- this is four straight days, right. >> great week for you. >> not really. not how i feel about myself when i look at you, but -- you know what i'm saying, richard it's tough u.s. equity futures -- richard fisher is here, who is no slouch in his own right anyway, we will take a quick look at the futures, up 100 now on the dow the s&p indicated up 9, and the nasdaq up 33 after kind of a false alarm monday and tuesday it looked like it could get -- with all the gains we've had and all the new highs we've had -- >> the beginning of -- >> december of last year, coincidentally was the first couple of days of december people did jump the gun a little maybe and think this could be the start of something maybe it still will be who knows. the latest trade headline. >> shut off by yesterday, what happened >> yesterday up 150, today up

another 100. >> declined over 1% -- >> total pull back >> market volatility has settled right back down slightly where it was friday. >> complacency here's what's making headlines at this hour earnings out a few minutes ago from tiffany the company missing estimates by 20 cents with quarterly earnings of 65 sintsz a share revenue and comp store sales also missing forecast. tiffany recently agreed to a $16 billion take over by french luxury goods maker lvmh. the stock down 1 and a quarter percent. the merger of cvs and viacom is official the combined company will be known as viacom and cbs. it will trade on the nasdaq today. u.s. airline websites are back up and running after a brief outage yesterday american, delta and united all experienced down time due to an issue involving flight data software from google however, the issue did not affect actual flight operations. >> new comments this morning from china's commerce ministry following yesterday's bullish

report on trade talk progress. officials now say tariffs must be rolled back as part of any trade deal, and the two countries do remain in close contact. joining us is richard fisher, barclays senior advisor, former dallas fed we haven't spoke in a while. where do you think we are in terms of december 15th i think people think likely we get somewhere before then. it would be kind of a a symmetric risk to the market if we don't do you agree with that >> the president realizes there is no up side to downside and extending the trade war at this point. i think we're well past the acute phase of the trade war by which i mean things have stopped getting worse. really, the scenario we should be cudiscussing is do they get better or stay the same. both of those are neutral to positive for the market, but i think where we need to turn our attention to is the potential

for the extremely negative dynamic between the u.s. and china to then spill over to other relationships like between the u.s. and europe like we saw over the fight over france's services tax which could now result in u.s. retaliatory tariff ifs talks over that break down we also saw the president sort of dial up the pressure on steel, saying he's going to put tariffs on argentina and brazil. so the thing i think we all need to worry about is the far from sort of like putting out the trade war fires, we have brush fires erupting all around the world now. maybe none of them are serious enough to bring down the markets the way the china stuff have they're definitely long-term negatives. >> i wonder if we're making it too complicated, greg. there is an election next year the president needs a strong economy. i think sometimes when he says he might wait till after it, i think he's sort of bluffing a little bit so to throw us off that he really sort of is in a position where he should for his own reelection do something with

china. don't you think? >> yeah. i mean, the president -- everything the president says is designed to establish leverage in some way or another by telling the chinese i can wait, he's perhaps like saying don't try and drag your feet and refuse to make concessions because you think you'll get a better deal -- >> again, i don't know for sure. after i said it, in any normal universe, you'd know that november of next year is important. you don't need uncertainty with c.e.o.s. you need the economy percolating. that's how you get reelected so you figure then all bets are off. i know, you never know taking on china, i don't know what the whole up side for him politically was in the first place. i guess with his base. it was a tough one go ahead, richard. >> the democrats are harder over human rights than on china issues than even republicans are. the politics of the things are not -- >> not clear-cut tariffs all of a sudden. >> the difference is i was a negotiator with china in the clinton administration and previous administrations you didn't do it in public

this is a publicnegotiation. so you have to be careful. the president says x or y, it's all part of a negotiating strategy and greg made a good point i think this is what he's referring to we've sort of achieved a stasis here we're not going to solve the underlying problems of intellectual property theft, who develops 5g, et cetera, et cetera, but both leaders probably need a deal to look good politically so you could have soybeans, some goods, whatever it may be. i think what greg mentioned is important here the tariff man, as the president likes to pose himself, suddenly lashed out against argentina and brazil right after the usmca threatened to levy tariffs on mexico. who's next we don't know. i think china is fully discounted by the business community. >> you negotiate as you just said, you negotiated some of these china trade issues it's hard for the viewers to

understand this ip issue with china. how serious is it, this kind of i.p. theft issue >> you have to remember the historic enemies of china are japan and korea. it's a tri partheid economy. they're stuck in the middle income trap in china you're going to use every tool you can. what will allow them to leap an infrastructure cycle e-commerce, alibaba, sin sent, walk you through it. they can advance the economic well-being of their people using the e-world and using technology japan, china never had that available in the old days and they're going to do that relentlessly and i don't think we can stop them the question is who determines the protocols for the internet going forward. who develops 5g. if the chinese do it, we're setback. everything from traffic control to god knows what. so this is the challenge that's

ahead of us. then you've got the suppiah expect what does huawei do, do the regional telecoms they provide -- they do surround our missile sites, by the way. so all this stuff is not resolved in one easy negotiation. >> all right so next move the fed makes in 2020, up or down >> zero. >> all year? >> well, right now -- look, they've been driving around -- they made a bad turn -- >> in the next five years. up or down, come on, which -- will the next move be up or down >> i think the next move is expand the balance sheet >> okay. greg, what do you think, up or down >> i have no idea. i don't think they'll move at all next year. >> greg and i -- >> neither one of you -- >> i'm very bullish on the economy next year. on the margin it's probably going to be like neutral to positive next year i think that the fed is in a place where they say, hey, the real interest rate is zero we would like inflation to go a

little bit higher than 2%. so they're willing to let the ee con34i run hot for a while that's a story that's consistent with rates around this level i think they badly want not to be part of the conversation during election year >> it would be great to know that's all i'm saying. i had someone on yesterday putting out bank of america, merrill lynch's forecast for 2020 saying that inflation is going to be so quiescent, the next move is going to be down in rates. whereas most people think at 3.7% unemployment, wages are starting to go up, the next move from the fed is to normalize higher if you knew that, you could know a lot if you knew up or down >> joe -- >> go ahead. >> a lot of this will depend what's going overseas. one thing the fed has not fully appreciated is the extent to which the fed is watching what foreign rates are doing to prevent the differential between u.s. and foreign rates from getting too wide a lot of this will depend, for example, what do the europeans do, what do the japanese do. even if they can make a macroeconomic case for why the u.s. rate should be higher, they would worry about putting upward

pressure on the dollar and worsening the economy here if you do not see the rest of the world falling in line and the rest of the world's economy improving that raises the global rate structure it makes it that much harder for the fed to raise rates irrespective of how good it is here >> we're the best horse in the economy, greg made a good point. this is the most preforecasted coming recession i've seen in years. we're still moving forward as long as consumption is good. it drives the economy. and one last point you look at c plus i plus or minus x, consumption, government spend being, net exports that's the formula for our economy. export is a tiny variable. >> you're not saying you can't guest host because you're heading to fao schwarz is? you have seven grand kids now? >> a baby girl two days ago. there's a picture, that's my son. that's miles, my movie actor son.

>> i want to -- i don't know how many hits the youtube video has. this guy, you have to look it up >> 10 million, right >> you have to see -- you have to see his tom cruise -- he is -- i'm telling you -- >> no, i see that picture. it's out of the magazine >> the way he pretends to be tom cruise just laughs and all those mannerisms youtube, it's the funniest -- >> he has a nickname, too. >> he's working on something for -- develop a longer segment of that. >> if tom cruisewatched it, he would think -- >> tom cruise actually told him once, you're better than i am. >> apparently the producers have done something for him to we will welcome you to the show. moving on -- >> let's check on the markets. >> i think you have an overinflated opinion what you're able to do here. you cannot move on

we may sit on that for -- >> get in the shot here. >> there's nothing wrong there either nothing wrong with that shot all right, gentlemen, thank you. enough of this >> richard, thanks for coming in >> thanks for having me. >> i noticed >> embrace it, dude. flaunt it. what's wrong with you, if you got it >> up for a vote, to curb billions in loans to china from the world bank we talked about it yesterday now when we come back, the lawmaker who is actually making that push to stop it will join us after the break let's get a check of the markets. we've been in the green all morning. dow futures up 99 points s&p futures up 10. nasdaq up by 34. "squawk box" will be right back. , i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time.

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welcome back, everybody. our next guest introduced a new bill the accountability for world bank loans to china act. the purpose of that bill is to try and curb funding to china. yesterday on "squawk box," hedge fund manager kyle bass spoke in favor of this bill and limiting funds to the nation. >> it is insane that u.s. taxpayers are backing the world bank to lend money to a country, again, that's as advanced as china. the world bank is supposed to be lending to poor nations that have aggrieved populations, that have 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 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's crazy >> joining us right now is congressman anthony gonzalez of ohio who serves on house committees on financial services and science space and technology congressman, thank you for being here today >> thanks for having me. >> let's talk about what you think is happening here. why do you think that china is still continue being to get loans from the world bank even though it clearly doesn't meet the guidance that have been laid out? >> one much china's strategy development goals is to essentially influence, in some ways take over many of our international institutions and i think they've done an incredible job at the world bank frankly. what they have done internationally, not just in the u.s., is basically forced people to make a trade and say if you want access to our markets, which are enormous, you have to play by our rules. and as part of that, that is

staying in the world bank as a member that can draw loans to me it makes no sense whatsoever why the u.s. taxpayer should be backing subsidized discounted rates to the chinese government so that they can continue their development model which is unbelievably oppressive, but also damaging to our economy and our country. >> how serious do you think the united states is, your fellow lawmakers in terms of pulling back holding -- pulling back support for the world bank if this continues >> well, the one thing i think is helpful is that we're getting strong leadership from the administration on the china issue specifically it has bipartisan support. you're seeing chuck schumer support certain things right now we introduced our bill a couple weeks ago and we're rounding up coe sponsors i suspect we'll be able to turn this into a bipartisan initiative time will tell things are odd in congress these days but having said that, i am optimistic because i haven't heard much pushback at all on the fundamentals of the bill frankly, i think the world bank issue is one that is not on a

lot of people's radar. it came under my radar as i started reaching ways in the financial services committee to push back on china this was the most obvious one, glaring hole we have in our system we went for it i think be others will jump on board as well. >> congressman, i'm glad to hear you say that this seems like a billie liz beth warren and president trump could agree on are you in your private conversations optimistic that there will be that bipartisan support? because without that it's dead on arrival >> yeah, i am. now, we did have an interesting fight in the committee on the xm bank with respect to china and i was a little disappointed some of my colleagues on the other side of the aisle weren't more enthusiastic about putting some provisions in there. but this is a different issue and i think this is a more obvious issue. and so by the world bank's own rules, china was supposed to graduate years ago the limit is, if you're $6,900 in gross national income, china is near 10,000 today

there's no reason why they shouldn't graduate, but they've influenced the world bank to such a degree from an hr standpoint, but also politically that they haven't graduated so i think we need to make sure they do >> here's what i don't understand this seems like such a clear-cut case these are the rules. according to the rules, they shouldn't be getting these loans. how complicated is it to clear that up? and for those who are defending this, what is their argument >> well, so there's a second provision which says that on top of the gross national income threshold, they have to have developed markets and sophisticated markets. china is saying, hey, wait a minute, our markets aren't sophisticated enough we can't graduate. i think that's a horrible argument considering the fact that they have two different development banks that compete directly with the world bank not to mention how developed their economy is so they pass the data threshold, the 6900 mark, but they also pass, in my estimation, on the sophistication mark. i think it's laughable that they

would try to make that argument. but they have support in the international community inside the world bank for just that i think it's crazy >> what will it mean if they can no longer get loans? what will that -- the impact on china be >> so, money is fungible if they can draw discounted rates from the world bank, that means they can deploy capital elsewhere. and so what this would do, i believe, is it would cut off a particular capital source that they acquire at a discounted rate and force them in some ways to play by the rules of the international order. in addition, they use their status at the world bank to influence the w.t.o. so i think you'd have fall-on effects not just at the world bank, but inside of the w.t.o. to get them, again, to play by the rules which they agreed to themselves, which they keep breaking >> i'm going to buy some futures on you you know about this guy? >> he's a slot receiver, he's a congressman, he's smart. >> lehigh state university, all

pack 10. >> come on, joe, you're an ohio guy. >> i meant big 10. i'm looking at it. i am goes to the patriots after the colts. >> what was belichick like >> you weren't there very long because -- he said f this, i'm going to stanford business school >> yeah. >> and then you did that right? >> so, bill belichick is the first person i told i was retiring from the nfl. he can you tell me, brought me in and actually had a smile on my face. why are you smiling? honestly, coach, i'm injured i'm going to go back to school where are you going? stanford it's a good school >> good lord i love talking sports on this show so, did you see ohio state last night, north carolina, 30 points >> unbelievable. >> i had ohio state, i did i won $20 on ohio state last night. >> congrats. >> got to go congressman, we'll have you on again. thank you. the salt of the earth, midwest, ohio if you're not from ohio, you have a lot to earn, i think. you have some remedial work.

coming up the c.e.o. of cvs joins us to talk drug pricing, medicare for all activist investor on starbucks board. >> announcer: time now for aflac's trivia question. the prohibition era ended on this day in atwh year? the answer when cnbc's "squawk box" continues 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

♪ ♪ >> announcer: now the answer to today's affleck trivia question. the prohibition era ended on this day in what year? the answer, 1933 ♪ ♪ >> still to come on "squawk box" this morning, we'll make a c.e.o. call to cvs we'll talk drug pricing, the company's plan for 2020 and the new activist stake in the company. and the biden tax plan is out with over $3 trillion in tax increases. the good news, it's just a fraction of elizabeth warren's plan we're going to talk about that in just a bit. and in the next hour c.e.o. of slack c.e.o. butterfield will break down the business of the cloud. "squawk box" will be right back.

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welcome back, everybody. it's been a little over a year since cvs health's acquisition of aetna created the largest pharmacy in the country. what has the merger meant for the health care company? joining us is larry merlot, the c.e.o. of cvs health great to see you >> good to be here, becky. >> where has it been over the year >> the integration of the two companies has gone very well in many respects we're ahead of schedule on many of the integration activities as a result, the synergy dollars associated with integration is ahead of plan. at the same time we've begun the transformation journey we're bringing innovative products and services to market. the most visible is the health hubs they've gotten off to a great start in houston we've laid a solid foundation for growth in the years to come. the credit for all this goes to our 300,000 colleagues that are absolutely committed to our vision, our strategy, and they're working hard to bring it to life. >> where are you ahead of expectations in terms of the

combination of factors >> you know what, there were many, many synergy activities in terms of combining the companies as it relates to the back office pharmacy, programs and priorities those are the things that have garnered a lot of momentum ahead of plan there. and, again, we're excited with what's happening with the health hubs in some of the other products that we have in pilot and the response we're getting from our customers. >> we're looking at the stock right now. the stock over the course of a year has not performed strongly, but you have picked up pretty sharply over the last nine months if we compare you to what's happening with walgreens shares, it's a different story they've been under pressure in terms of what's happening in the pharmacy it does look from that relative perspective you made the right move by pivoting what have you heard from starboard when they came in? what are the conversations they've started? >> becky, i'm not going to comment on market speculation. what i will say is we have a regular dialogue with all our

investors. we certainly appreciate their input and, you know, and their feedback look, i think investors see the momentum in the business we've had three consecutive quarters where we beat expectations you know, they're seeing tangible signs of our vision coming to life with things like the health hubs. you know, we had an investor day in early june. we laid out our strategy, and more important, the path forward over the next three years. the stock has been up about 40% since that meeting >> larry, when i look at your stock, you're trading more with the aetna purchase, you're trading more like a united health care. or you're trading as opposed to a drugstore company. how should investors at home think about your company and how to value it? >> well, you know, tom, we are a health care company. that journey began many years ago. we celebrated five years this past september of eliminating the sale of tobacco -- >> i was there with you. i was there on the floor of the stock exchange

>> september 3rd, we rang the bell it was a great day and a day that made us all proud. >> it was fun. >> we look back, you know, five years ago, it was absolutely the right decision it's open doors for partnership, for acquisitions obviously the pinnacle of that is the acquisition. we are a health care company today, and we have an opportunity, putting the consumer at the center of our strategy, to transform the way health care is delivered in our country. sea cvs moved very quickly in terms of saying they weren't going to sell tobacco. i remember at the time it was a controversial move although it has seemed to pay dividends for cvs. what do you think is happening with vaping right now? >> becky, it's a great question. i can remember the question we got back then was, well, will you carry the e-cigarettes i can remember going into a retail establishment that was selling the products and i saw the device with the hello kitty logo and the bubblegum flavored

liquid it absolutely raised the question, wait a minute, what are we doing here? five years later we see what has happened post the tobacco announcement, we started a campaign. our goal working with community partners, be the first, create the first tobacco-free generation we've made a lot of progress we have more than 200 college and university campuses that are tobacco free today as a result of that program. but, you know, vaping is taking us backwards you see some of the statistics vaping is up more than 70% with school-age children. i saw some stats recently that more than 70% of high school students that are vaping will turn to tobacco upon graduation. so we've got to reverse this trend. >> it's a tough one. you know why because as an anti-nanny stater, i'm drawn to wanting to rex tillerson late vaping. i feel like i'm going against -- >> this is different for you >> totally different >> you're on the same side >> also kids also kids. >> marketing to kids

i've become a nanny stater >> you and ken langone >> me and bloomberg. you're right it's like -- just getting everyone off the nicotine from the delivery system of the cigarette, and now we've found a new delivery system for nicotine, you know, that's flavored like cotton candy >> and, joe, the challenge and the problem is -- we're seeing it play out with some of the tragedies that have been unfortunately well publicized -- is we don't know the longitudinal effect of these products, and something has to be done. >> larry, as an investor i think about that move to eliminate tobacco products and i think it was courageous. i like the aetna deal the last six or nine months have been fabulous but yet the stock is down over a five-year period so talk to us about the amazon risk talk to us about the other risk to the business. as an investor, as we think about -- >> you say that like every sentence that's amazing >> what's that

>> as an investor. it's weird sorry, go on >> what should i think about the business a year from now, two years from now >> tom, you think about with the customer, the consumer at the center of our strategy, we spend a lot of time with our customers. what are their needs what are they frustrated with? how do we bring solutions to that and maybe said another way, how do we make sure we're not leaving any white space to be disrupted by other forms of competition. you've seen us do a number of things in terms of the elements of how do we make, you know -- how do we redefine convenience you can think of some of the things we're doing omni channel is a term that is probably overused to some degree in some respects, we could look at our strategy and say we're really defining what omni channel means for health as an example. so we're pretty excited about the innovation that we have

underway you know, as i compare where we are today to where we were five, seven, ten years ago, innovation has now become part of our dna you know, that becomes the first part of it and then strong execution is what brings all that to life so we're very confident, we're very excited about, you know, about the future one of the questions that often is asked is, you do this big megadeal, you know there's a lot of excitement. and one year later, you know, is that excitement still there? because now you get a different view of what's there, the complexity of what you're trying to do. i can tell you that there's more excitement today than there was a year ago because the opportunity is in frosht nt of s >> you bring up a good thing the one you're dealing with you're putting the two together. what surprised you the most? >> becky, i'll tell you the thing i've been most pleased and proud of, we do an engagement

survey with our colleagues every year we had a quarter of a million of our colleagues this past summer participate in the survey. almost 90% of them understood our purpose, are committed, okay, to their role in helping people on their path to better health it's a great foundation with which to work off of the fact that we've got these engaged employees that are proud of journey we're on and are committed to being a part of the solution, doing their part in being part of that solution. >> is there anything that's harder than you thought? >> you know what, becky, there's -- as you think about things that are really worth doing, often they're not that easy >> sure. >> you know, but again, for the reason i mentioned, we've got a very engaged work force. we're working extremely well together as one organization we're going to get it done >> larry, i want to thank you very much for joining us today it's really a pleasure to see

you. >> great to be here. thanks >> thank you when we come back, big tech under fire again this time from doctors elan louie has a preview of what's to come good morning >> good morning. could all the time our kids spend online be bad for their brains and their behavior? that's what doctors are worried about and i'll tell you what they're doing about it next on "squawk box. when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today.

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big tech coming under fire once again this time from doctors elan louie has more on that front. good to see you. >> the american academy of pediatrics is joining forces with privacy and consumer groups today to call on the ftc to take a hard look at tech companies that target kids they want the ftc to subpoena companies for information on how they advertise to children, track them online, and collect and store their data this kind of sweeping review could target big players like disney and google as well as start-ups like tiktok and twitch the head of the american of pediatrics said they must design robust protection s to keep kids safe based on an up to date understanding of the digital

spaces they navigate doctors and consumer groups specifically raise concerns about playable ads that are built around games they told the ftc they want to understand the impact these new kinds of ads are having on the psycho-social development of children some of the biggest platforms are already making changes youtube will start banning personalized ads and certain features on kids' content next year instagram announced yesterday it will start requiring birth dates for new users to help verify they are at least 13 guys, what we're seeing here is an evolution in the way that doctors think about kids' department of justice t digital environment. it is similar to the way they look at their physical environment. doctors lobbied for seat belts to keep kids safe. now the medical community is trying to figure out what protections kids need online as well >> what is the push back from the technology community are they taking this head on, are they lobbying gerns against are they laying low hoping the storm will pass? >> what you've seen platforms

try to do is create safe spaces for kids for example youtube touts its youtube kids platforment one of the interesting dynamic we're seeing is some of the people who create the content for kids are worried that tighter regulations could actually wind up disincentiveizing them from creating that very type of family friendly content that doctors and a lot of parents want to see online >> elan, thank you very much it's good to see you >> thank you for having me >> when we come back, a break down of joe biden's tax plan and how it compares to elizabeth warren's you can check out the futures at this point right now dow futures up by 84 points s&p futures 8. nasdaq 29. "squawk box" will be right back. happy veterans day.

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happy veterans day. happy veterans day. please visit studentveterans.org after a month of speculation, joe biden has released his tax plan. robert frank joins us now with the details. is it more directed at corporations, partly >> actually it's more from the wealthy, but there is a new corporate tax. biden releasing plans for over 3 trillion in tax increases over the next decade to pay for his health care, climate change and the education plans. about half would come from the wealthy and half from new corporate taxes. on the business side, he's proposing a new corporate minimum tax that would be aimed at companies like amazon and netflix that are profitable but sometimes pay no federal income taxes in certain years that tax would be 15% on companies with $100 million in

net income the campaign estimates about 300 companies would be subject to that tax and it would raise about $400 billion in revenue over ten years. now, he also raises the corporate tax rate to 28% from the current 21 he would double the minimum tax rate on overseas income and he also hopes to raise about 200 billion from cracking down on countries like ireland and bermuda that help companies lower their taeksxes. on the wealthy side he would raise the tax rate back to 49.6%. capital gains would be taxed the same as income for those making more than a million a year that's where a lot of this revenue is going to come from. he ends the step up in basis which we talk a lot about on this show. that would tax unrealized gains at death cap the wealthy at 28% there is one small gift to high earners in high tax states the campaign saying biden would likely eliminate the $10,000 cap on state and local tax

deductions that would be enough for you to support biden. >> a gift to the blue states >> i love the warren anti-merger proposal so much i'm switching back to her, i think thanks, robert for more on the potential impact from biden's tax plan let's welcome jared bernstein. now i'm really worried other people's tax plans, he wasn't the chief economist for them jared, you must love this thing because it's your guy. he served as vice-president -- biden's chief economist and economic policy advisor. he's now at the center on budget and policy priorities, a senior fellow and a cnbc contributor. and adam michael, senior policy analyst with the heritage foundation jared, you have a -- you're so smooth that you have a way -- >> thank you >> even with elizabeth warren apsz stu's stuff, you didn't really like it you say it in such a nice way, you have a couple problems on the edges, but you think it's something we need to try to do

you must love this one >> i get people like you to think i like them because i just have this, you know, crazy technique. >> i do that, too. and i love you anyway, go ahead >> look, this is a plan that raises, as you just heard, over 3 trillion in revenue over ten years, and it does so highly progressively with the exception of the salt cap repeal i'm glad robert had that that didn't come out until late yesterday. that kind of goes the other way. but if you look at the amount of revenues proposed by the other candidates, biden's low relative even to buttigieg. buttigieg is 7 trillion over ten. of course, warren and sanders up around 30. so, look, if a democrat gets elected, they're going to try to raise taxes and they're going to try to raise them on the high end. that really is going to be the case no matter who wins. and now we have a whole continuum of plans from those that raise, as we've said, 3, up to ten times that of revenue that's what we're looking at in

terms of the scope >> all right adam >> i think this plan is anything but moderate t. shows how far left the progressive elizabeth warrens and bernie sanderss have dragged the center of the democratic party the plan the vice-president put out, it raises dramatically taxes on eight existing taxes. adds two new taxes to the mix. and so i think these types of tax increases, a 10% increase in revenue, it would dramatically change the economy, halting the economic progress we're currently seeing >> adam, what do you think the increase in the corporate tax rate, what impact will that increase have on capital formation, business formation in this country >> there's two different pieces. one is the increase in the corporate. it gets at limiting deductions third quarter earnings conference call take for new investments in the united states these two things paired together would have a dramatic

consequence for the things that we know benefit workers the most it's new factories it's updated equipment, research and development all here in the united states that ultimately leads to productivity increases, that leads to the wage increases we're seeing across the board for american workers so raising -- every time we've seen corporate taxes go up around the world, across the u.s. states, we see workers, the growth in workers wages go down. and that's what i fear would come under in proposal >> so, look, it took us about 06 seconds. but we're now having the old argument about trickle down supply side. i'm not going to re-rehearse that with this team, because we've done it so many times. >> yeah, that crummy reagan era was so unproductive for the united states. your history supply side doesn't work any more. higher taxes are actually good >> let's be specific

exhibit a, when trump cut the corporate as sharply as he did, everybody on this show told me that it was going to mean a boom for business investment. in fact, it's been nothing of the sort >> nothing to do with -- slow down in europe here's the thing -- >> it doesn't impress you? >> i will never be able to convince you this is supply side fairy dust >> never >> you and others, everybody sitting there, has expressed to me great concern about the budget deficit and the rising debt so, at the same time, you reject every single tax plan that comes down the road, even this one which i've already explained to you comes in far more moderate in terms of its tax question than any other plan out there. so i am convinced that you won't support anything in the interest of a more responsible fiscal policy now, i know you want to cut spending okay, we can talk about spending

cuts but it's surely going to have to be both at the end of the day. and i'm just a little bit aghast that you -- antipathy to every single tax plan. >> do we have enough revenue or do we need to raise revenue and how should we do it in a way that doesn't cut off our nose despite our face >> good question our deficit is a -- materializes because we spend too much. not because we don't tax the american people enough i think it's worth noting that the plan the vice-president -- >> i knew you were going to say that >> -- the vice-president put out covers new spending, not the deficit that tubbs to grow going out into the future. we still have deficits to contend with in whatever universe you're talking about. i think it's important to go back to what's happening in the economy right now under a deregulatory environment after the tax cuts that were passed. we're seeing wage increases

across the board these aren't wage increases that are going to c.e.o.s and other executives we're seeing some of the largest wage gains for low income americans. we're seeing jobs being added. >> cash for clunkers we did in the obama era. >> how did you know -- i just want to underscore one point here adam has confessed there is absolutely no tax increase he would sign onto. i like the way you asked the question, joe. >> there you go, sucking up when i know you don't -- >> it was a very -- especially for you, you had me fooled >> adam and his colleagues on the right are simply unwilling to compromise. i'll bring spending cuts to the table. but the idea you're going to reject biden's tax plan which is by far the most moderate out there is a telling -- >> jared, it's easy for people to hate those who pay zero taxes

when most people pay taxes sometimes there are reasons in a given year where they invest so much >> by the way, is this like an amt? >> we do have it on the personal side >> yes >> how do you deal with the occasional year where there are good reasons where it's stock based depreciation, capital based plan, how are you going to deal with the reason some companies don't pay taxes? >> this is the tax that comes off the book income that companies report, like to come pew stat if you're reporting over 100 million to your book income, chances are you're not having one of those years i'm less worried about that, by it's a valid concern >> i think getting at this book income directly hits this investment question that's so important. any time we're talking about rolling back the deductions businesses can take for research

and development, for new factories for enhancing the things that make american workers productive, it is incredibly problematic >> unfortunately, again, exhibit a, trump tax cuts, investment just flat as a pancake >> why not after the tax cuts before the trade war >> all right, jared, adds a.mam thanks for being with us this morning. c.e.o. of butterfield coming up "squawk box" will be right back. >> announcer: tomorrow on "squawk box" it's the most important number of the month. the jobs report. we'll break down the numbers and tell y witouhat means for your portfolio. that's tomorrow right here on "squawk box.

fox aiming for a second day of gains futures in the green and volatility is down after a rough start to the week. >> elizabeth warren versus megamergers. a candidate looking at antitrust rules for big companies and investors. >> and give us some slack. the c.e.o. of the workplace messaging company will join us live to talk quarterly results and more as the halftifinal hou "squawk box" begins right now. ♪ ♪

good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with becky quick. andrew is off today. abe filling in, tom farley, cnbc contributor. you get mail, right? people love you on here. >> thank you for the boost it's fun to be with two of the best in the business >> we have breaking news let's get to phil lebeau phil >> the company announcing c.e.o. oscar munoz will be turning over the job as chief executive officer effective in may munoz will be stepping down as c.e.o. he will be elevated to the position of executive chairman, replacing munoz effective next may president scott kirby.

kirby was brought over to united from american airlines back in 2016 with the mandate to improve the performance of the airline, to make it more profitable, particularly here in north america where it was trailing its competitors. just a few minutes ago, both munoz and kirby sent out a video message announcing the transition to employees at united here's what they had to say. >> this is meant to be a very seamless transition until may of 2020 scott and i will continue in our same roles doing the things you've seen us do before specifically from my perspective on our customer culture and importantly for you and our employees. >> we have an incredibly strong position, an incredibly bright future ahead personally, i'm excited to spend even more time-out with all of you listening to you, sharing your enthusiasm for the future, and together building the best airline in the history of aviation >> if you are not familiar with the airline industry or with

united airlines, you might be saying, well, who is scott kirby and why is he going to become c.e.o. sta c.e.o. starting next may as i mentioned, kirby was brought to united in 2016. but the back story behind kirby is that from 2006 to 2016, he was the top lieutenant for doug parker as they turned america west into u.s. air u.s. air into american airlines, and they really racked up impressive performance that's why munoz brought kirby over in 2016 since then united's been on a pretty nice roll, especially here in the last couple of years. so again, scott kirby, the architect of the company's rebound. he will now move from president to c.e.o. effective next may oscar munoz will move from c.e.o. to executive chairman the chairman of united's board of directors currently jane garvey, she will be leaving the board in may guys, back to you. >> i guess the biggest question, oscar munoz has been on a bit of a roll

i guess why take this move now he's only in five years. >> well, look at it from the perspective of if you are the united board of directors. you've got scott kirby who is -- he's not the only reason united's done well but he's a big factor behind it. rumors have been swirling in the airline industry that american airlines which has been struggling this year, the stock is down 26%, rumors have been swirling that perhaps american might be interested in bringing scott kirby back to american airlines now, we put this question to the spokespeople at united they say no, this was the case of a board and oscar munoz saying it's time for this transition to make it a smooth transition but let's be clear here, becky scott kirby is going to be a desired executive within the airline industry given his track record and i suspect that the united board said, look, this is a good time for us to transition, have scott kirby come in as the c.e.o. oscar will stay around at least for a year as executive chairman

and hopefully we can have a smooth transition. >> this settles it for where kirby goes there's nothing above this, phil >> right, right. right. look, i'm sure there will be people who will say, look, american didn't reach out to scott kirby. we don't know that american was going to hire scott kirby. the numbers speak for themselves over the last couple of years. united is performing much better than it did in the past. and if you were not american, maybe you're a different airline. at some point you might be saying who is the best person out there for us to straighten things out if we're not doing well it's a pretty short list in the airline industry, and scott kirby is at the top of that list >> investors are going to say united is up 50% the last two years, american is down. we like oscar. why is he leaving? and i think an obvious question that's going to get asked is, is this health related? i mention that because oscar had a serious health care a few

years ago. >> we asked that question. it is not health related i think to an extent oscar munoz will look at this transition as a chance to do something very few executives really get a chance to do have a smooth transition and perhaps take a bit of a victory lap. this company, guys, this was a clown car of ineptitude when oscar took over. they had a federal probe where they were trying to influence the new york port authority -- >> they had ticked off employees who made it miserable to fly that airline has changed a lot in the last couple years >> you had the dr. dao incident where he was dragged off a plane. the flight attendant saying to put the dog in the overhead compartment. it was one bad move after another. they for a long time, guys, they were known as the sleeping giant in the airline industry. they couldn't get -- they were the gang that couldn't shoot straight

so as a result they trailed in profit margins they trailed in kufcustomer service, et cetera >> munoz has hit his stride. the "star wars," he looks more comfortable, more relaxed. things are going his way >> there is no doubt that oscar munoz will go down when he leaves as c.e.o., provided nothing weird happens in the next six months, he will go down as a fantastic c.e.o. for united airlines in the last couple years. in the beginning all the wait up through the dao incident they struggled. >> he's a railroad guy, moving freight. >> stay with us, phil. we're going to bring in seth kaplan as well kaplan research, seth kaplan, he joins us on the "squawk" newsline seth, what do you think hearing this >> i agree with everything phil said oscar munoz has done a lot right over the past few years. but probably the biggest correct decision of all that he made was

hiring scott kirby kirby is somebody who, although not a household name, at least until now perhaps, in the airline industry is a titan. and a lot of how the industry looks today in terms of its overall prove tanlt and success has scott kirby's fingerprints on it, dating back nearly two decades to some of the things that he did at america west. don't forget when he found himself helping out american, the biggest airline in the world, it all started. america west gobbled up american areas. a merger of equals gobbled up american, the biggest airline in the world. we see what oscar and scott jointly have done at united. you have to give oscar munoz a lot of credit, allowing somebody who is a big personality in his own right to come in having the

self-confidence to do that, to accept that help, and it's really just been perfect oscar the leader and scott the details guy doing all the right things there >> so, what do you think of the performance of the different airlines now we talked about how united seems to be firing on all cylinders. how would you match it up to some of the other airlines particularly with what phil was talking about, american being unhappy with how things are going there, the board or shareholders >> yeah, united that finally disproven a theory that kind of existed that maybe there was just something about the airline that northbound could run it right, because you go back to -- really, to deregulation, 1978, there's no other airline that still exists of course there are less successful airlines, they're not around any more.

of the airlines that suri viechl survived, there was no other that was mediocre like united. the question was could american catch delta? when kirby was at america, if anything was nipping at delta's heels, delta turned itself around and remains the most profitable airport in the world by net profits and now american has taken a big step back. the question is can united catch delta? it's improved operationally, financially, still has some gap between it and delta, but very much going in the right direction as its share performance indicates. investors clearly, clearly recognize what's been going right at that airline. >> seth, let's talk more about kirby, what he's done right at airlines he's worked at all these years. >> if you think now the -- you can call it an obsession in recent years by investors with unit revenue performance

you know, anybody with sort of a long memory in this industry remembers that you go back a decade and a half, the obsession was not with unit revenues, but with unit costs. and it was really -- and so this is all driven by growth rate, capacity rate. investors see an airline growing, they get nervous because it might hurt unit revenues, oversupplying the market america west with kirby running it, unit costs matter and yes, southwest had become the most successful airline in the history of the world by growing very rapidly all the time and keeping its unit costs low but sometimes capacity cuts could have more of a beneficial impact on unit revenues than they would hurt unit costs and people were skeptical. america west said trust me on this and they did. there was one quarter where they cut capacity by unit revenue and

it shot up 8%. now you have kirby a year or two ago sort of doing the opposite again. saying, yeah, that's still true. now that's over played we're going to start growing again at united and this time trust us that the benefit to unit costs, of putting more supply into the market, is going to help our costs whereas it's going hurt the revenues. this is growth that's going to feed the international network and he was right again those are just the kinds of things, so many of them, along with united, of course, improving the operation which matters a lot in terms of corporate revenue share. that's something delta had taken a lot from the other airlines as being more reliable, saying it's worth paying us a little more because your people are going to get there on time. united now is playing in that realm, too >> phil, you had a question, too? >> i don't have a question, but i just want to echo what seth was saying scott kirby, in the beginning of 2018, actually might have been

december of 2007, they held a conference call. they said we are going to grow capacity 4 to 6 per year in '18, '19 and '20. the reaction of the stock was horrific it tanked. you heard everybody. i was on fast money. there were traders saying no, no, you can't do this. you're going to kill fears you're going to have a fare war. this is a terrible move. scott kirby on the call, he said trust me, this is the right move we need to get flights going into our hubs in north america it will improve efficiency, it will drive up profit margins that traffic flow is going to be the thing that united needs. look at the results since then, they speak for themselves, becky. that speaks to scott kirby, why he's viewed as one of the top operational people in the airline industry >> phil, thank you seth, thank you. >> thank you >> when we come back, a special interview with slack c.e.o.

butterfield. this is his first interview since last night's third quarter results. we'll talk about top line and beats. stay tuned i'm happy to give you the tour, i love doing it. hey jay. jay? charlotte! oh hi. he helped me set up my watch lists. oh, he's terrific. excellent tennis player. bye-bye. i recognize that voice. annie? yeah! she helped me find the right bonds for my income strategy. you're very popular around here. there's a birthday going on. karl! he took care of my 401k rollover. wow, you call a lot. yeah, well it's my money we're talking about here. joining us for karaoke later? ah, i'd love to, but people get really emotional when i sing. help from a team that will exceed your expectations. ♪

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welcome back, everybody. slack, the collaborative workplace messaging cannot, reporting better than expected results for the third quarter. joining us right now to talk about the quarter and the competition that his company is facing is stewart butterfield, slack's co-founder and c.e.o stuart, thanks for coming in today. >> thanks for having me. >> the losses you reported last night were narrower than the street had been expecting. the stock is up 4% this morning. let's talk a little bit about the losses, though smaller than anticipated but you also said that costs were a little harder to control in some areas than others on the conference call. what were you talking about, where are those areas? >> it grows so quickly some of those is one off charges, the listing process

itself but the pace of office openings is intense there is capex with that we opened in munich, in paris. our tokyo office wasn't enough to service the business in japan so we opened in osaka. we're not trying to tie it to quarterly boundaries >> not good to look quarter to quarter. do you feel like you get enough slack from your investors at this point to actually have that sort of leeway >> yes, this is our second earnings as a public company until yesterday people had one point, now they have two so you can start to draw a line but i think it's going to take awhile for people to understand the story. we spent a lot of time with the analyst community. we have great institutional holders. i think it's going to be another four, five, six quarters before people understand the trajectory >> business growing at 60% year over year, that's incredible pardon me, revenue growing of

0% goldman has you at neutral credit suisse at neutral price target above where you are now. there is a healthy dose of skepticism i suspect it has a lot to do with your competition with microsoft. how are you addressing that threat >> that's what we need to spend time on, and the thing i want to spend the least time on. there's the team, organizational structure, bringing in the best executives, more than anything else, the customers, the service we're delivering to them we do need to address it because there is a lot of confusion generally. >> do they cheat on the numbers? >> what we said on the earn catherine garcia called, they announced 20 million it's a migration of users from skype for business >> if they're on microsoft team, but they're really not, is that a factor >> i think they are using it they're using it for something that is fundamentally different.

link had 100 million users five years ago. >> was the usage much better with slack >> it's fund amountsally different. there are thousands of people who come in the office who check slack when they wake up. it's the last thing they check at night it runs all the work flows through the course of the day. >> one of the big questions people have, how many customers can you get? you mentioned you have 50 plus customers spending a million dollars or more on those accounts what are you seeing in terms of growth in that arena, can you continue that pace >> that's the highlight of the quarter. 800 customers with 100 million and up in both cases 70% growth year on year we're seeing big expansions, we're seeing new customers lands. it's all over the world. southeast asia, grab taxi, vodafone these are big companies, significant expansion here there was a great article

published yesterday about t.d. ameritrade 30% production after moving to slack. >> it's getting bought is that going to continue, charles schwab seriously, will you be able to maintain that and keep that when they start consolidating with charles schwab >> yes, i hope so. we're seeing real success both with acquisitions and divestitures they're not here yet what i would love to have the world think -- i take these private. we want to get them on slack we want to transform how they operate. it's a good sign foursome. >> you are the new poster child for the direct listing you bypass would you do direct listing again? >> we came in with 800 million in cash on the balance sheet we didn't need to raise any more capital which is the point much a traditional ipo. we'll see an evolution the next

couple years we gist recently announced the possibility to raise capital in a direct listing there is something that really hasn't transformed since this process was in vented. that's taking into account the way the information flows today. we work with the bankers they provide a lot of key help you don't need the bankers to disseminate information. you can publish it on the internet people won't have to wait to look up stock prices in that world, the asymmetries that are created can be flattened out. >> thank you very much >> good to see you, stuart thanks for coming in >> all right, when we come back we have quite a few things to tell you number one, sage, therapeutics look at the shares >> ouch. >> we need to switch that around and that at one time be good if it was 94, down 54 but it's not

it's 54, down 94 how would you like to wake up to that >> i'd be stuart with the stock premarket. >> then a push for stronger antitrust rules senator elizabeth warren is taking shape. we have viacom cbs at the nasdaq today. i hate to tell them the whole thing is offer -- liz. details straight ahead esses, we're a reliable partner. we keep companies ready for what's next. (man) we weave security into their business. (second man) virtualize their operations. (woman) and build ai customer experiences. (second woman) we also keep them ready for the next big opportunity. like 5g. almost all of the fortune 500 partner with us. (woman) when it comes to digital transformation... verizon keeps business ready.

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shares of sage at therapeutics plunging in the premarket after its depression treatment study failed to meet the primary end point. meg tirrell joins us now with more i know i can ask you bhwhat the mechanism is when you get done with the report, meg >> hey, joe. a lot of people had high expectations for this trial obviously. it had gone from success to success in earlier stages of clinical trials. stage 2 and 7 is an oral drug so it could have been an easier way to take medicines. and given once a day but it didn't meet the goals of the phase three study. the company is saying there are a couple reasons why this could have happened. some patients didn't stay compliant with their drugs through the trial. they say when you exclude that

group, the results look a little better they're going back through and trying to figure out what happened here. we often see this with large phase 3 studies in depression and other disorders of a similar nature when you get to the studies they don't bear out the placebo group performs better than expected or other things occur this was a market cap this morning. shares are down 63%. obviously bad news but there's more studies ongoing for this drug so it's certainly not the last we're going to hear about it this is bad news for the company and investors. >> this is an idea for people that don't respond to the ssris. what's the patient population we're looking at >> i believe so, since most people are going to need to take those drugs first. although i'm actually not sure >> because it's such a big market so many ssris around

some people resist it, it just doesn't work pria iyou, meg apectet. >> when we come back, we have breaking economic data attempt to free itself, it only becomes more entangled. unaware that an exhilarating escape is just within reach. defy the laws of human nature. at the season of audi sales event.

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welcome back to "squawk

box. rick santelli here live on the floor of the chicago cme if we look at the initial jobless claims number, it may be distorted by holiday timing. think thanksgiving drops to 203,000 from 213,000. now, the 213 is unrevised, and the 203 is the lowest number since 193, which was the low going back to 1969 established in april of this year. so a good number can we completely trust it that's the issue if might get ramped up a bit if you're going to be skewed after a hollywood distortion, data we've been getting on the jobs front whether it's last month's bureau of labor statistics report or adp yesterday, this will be scrutinized a lot more they move from 1.642 million up

to 1.693 durable goods come up, stock markets up a bit japan has a stimulus plan. how far behind germany these are questions we'll be discussing on cnbc becky, back to you >> thank you steve liesman joins us on this, what do you think? >> on trade data, you had a lot of distortions coming from tariffs. this is a minor annoyance about things we can talk about you had improve in the trade data and now it comes in a little better than expected it's helped the gdp number is the bottom line, but economists don't expect that to continue with this decline in imports >> here's the thing. the jobs number, the really important part only because of what we heard yesterday from adp being more than expect is it because they can't find people to hire or people are

getting fired? >> the claims number does not suggest firing i think there is a guy coming up in a little bit. real quick, i want to show you how going into the number tomorrow, the indicators i use are a little bit mixed manufacturing ism manufacturing employment component, contracting for four straight months ism services expanding for three straight months. we have a bifurcation. the top line has not affected the bottom line. claims rose. they were up in that 220 range joe talked about it yesterday, we had a scare it went back down again, adp lowest number since may. a lot of people don't think it has manufacture of goods because of the return of gm workers. >> dan roth joins us from linked in, the editor in chief. what do you see in terms of your data, whether people are getting month hired more frequently, whether employers are having a tough time finding those people or people are starting to get

fired? >> it's a 7 point rise month over more. they feel it is a good time to be out there looking employers are having a hard time finding people still that said, it is definitely not all boats rising if you look at any industry hit by the tariffs and trade they're not doing well energy hiring is down 10%, manufacturing is down. construction, retail is down, software and i.t. services, professional services they're all up >> am i right that linked in is going to track white collar more than blue collar >> we have all the world's professionals. they're on here, too we're tracking what's going on with their profiles and normalize it across all industries >> what steve is seeing services be on the rise, you see the same thing? >> exactly the same.

>> c.e.o. of paychex was here, he saw the lowest quintile earnings to the largest quintile earners. are you seeing the same thing? >> we see employers going in other markets hiring workers this used to be all san francisco, new york, seattle is hiring, now you're looking at secondary cities where big companies are trying to find pools of talent. >> how does that work, though? because one of the interesting trends we've seen is people don't want to move any more. mobility is down across the board in the united states economy. are companies moving out to employees, are they giving better packages to improve -- >> they're looking at other places to find employees goldman, when they started marking, they go into denver you're seeing younger people moving there for life-style changes. they've been there awhile.

if you're google and amazon, you're saying where can i go to find these pools of talent >> if you don't mind, we had a chart up on the three-month average. there are three stories on that chart. would the real employment number please stand up? i know it's an old joke. take a look at that. we started the year north of 200,000, and everybody was like what's going on here then things calm down to be south of 150,000 oh, that's the right number. and then the jobs market defied expectations and came back to around the 175 range >> what do you think is happening? >> i think there is a bounce back the one earlier this year was more than it should be run i thought that the 150 range was about the right sustainable rate look, i've been continuously surprised by the job market and i'm not going to make any predictions but it's going to be -- looking for 190,000 is the

expectation. if it came in at 125, i'd be like that's fine if it came in at 200, the market has a much better zen right now with jobs because there's no inflation out there. there is' no expectation if you come in sat 190, 200, the fed is going to pull the trigger on rate hikes i looked forward there is not a rate hike in sight. probably a 70% -- sorry, rate cut, my bad. december 2020. that's like an out of the money option it's not even prediction did you say 70%? >> of a rate cut >> it's all the way out there, sort of november, december >> richard was here earlier he said he doesn't think anything is going to happen one direction or the other if it was possible, a little risk with a hike

>> i think if we knew that, we'd be rich. >> i think we know that, joe i think that's why we are rich that's why the market is up. >> we have all the data points the eventual next move in the fed, up or down? >> i can punt and say that's the exact question we asked in our -- >> everybody's punted today. i'm saying as an investor -- >> i think it's the odds on probability is no move >> not forever go out 20 years if you need to what's the next move, up or down >> 20 years? >> however long it takes to get a move >> dan's move -- >> i said that people said no, it's inflation >> there are two worlds we live in number one, we're able to raise wages without having -- and have a tight market without having

inflation. the second one is the fed has essentially abandoned -- do you remember the word normalization, how much we used it. we don't even -- >> let me tell you where we are stack right now. zero >> i know. people thought the '70s to the '90s might be the aberration and we're going back before then >> that's possible ethan harris said the next move will be down because inflation is so low. >> greg had a nice point this morning where he said it's very dependent on europe. if europe could get its act together, it would change -- >> you were listening? i mean, you want to know the real truth i had a beautiful red tie i was going to put on this morning turned on the tv, saw you wearing that i changed to orange. >> and you match becky

perfectly. >> i call it salmon. i thought salmon like the f.t. >> not salmon. >> orangey pink, isn't it? reddy orangey pink >> i'd sooner say what the fed is saying. you are an economist coming up, details on new antitrust ideas from senator elizabeth warren we have to do something about these mergers. big implications for american companies investors and alike. stay tuned you're watching "squawk box" on cnbc >> announcer: don't forget to subscribe to our podcast you'll get interviews, original content, a behind the scenes access look for us on apple podcast or on your favorite podcast act and subscribe to "squawk" pod today.

we're learning more about some new antitrust regulation ideas from senator elizabeth warren elan louie joins us now with more i'm ready for anything just propose anything. i have no strong beliefs about anything any more. >> these are ideas warren's office has been circulating the proposal that would ban mergers of big companies. $40 billion in rev newell for one company would be the bar $15 billion in annual revenue for both companies that are merging would be the bar for two

companies. that's what a source tells me would apply in her proposal. now, in addition, it would also include provisions that would help workers unionize. it would apply across the industry the big caveat is this proposal is still in draft form key details, including that $40,000,000,015,000,000,000 bright line measures, those could still change the time line for the bill is also unclear i am told that warren's office has been working with congressman david cicilline on this he is leading the house antitrust investigation and that is still ongoing guys, the final underpinnings of this bill, drawing mergers and shifting the burden to business to explain why a merger makes sense, those ideas aren't going to change. back over to you >> you know what, i was going to say you put in ideas and you float them and they don't really probably have much of a chance of ever becoming law

but when is the last time we saw a law anyway isn't that all they do in the usmca. >> this is part of sort of setting the goal post of the -- >> let's have the conversation that's all i hear from the politicians in washington. let's have the conversation. okay, that is all you guys do. >> isn't this just earned media for the campaign we're talking about it >> you know it's preposterous. >> she's digging the grave for her campaign medicare for all -- >> 28%, 14, she said it at like 3 . >> do you think the voters in vermont -- first, do they care do they want the government deciding for consumers >> tom, anything is on the table. like millennials, 78%, sounds good >> not wisconsin, michigan joe biden's tax campaign, i

think jared is right his plan was quite moderate relative to the rest of the field. >> that's the key. >> you know why? because there's no mularkey. >> they are going to be comparing him -- >> do you use that word ever >> mularkey? >> yeah. >> i kind of like it i'm going to use it. >> it's better than getting in trouble. >> this plan of warren is mularkey >> that's greats elan, thank you. i don't think elan has even heard the word mularkey. he's dating himself, biden >> that's part of his charm and that's why he appeals. he's still at 26% in the polls nobody is close. >> he was down for a while, and he's back because everybody else is -- it's like wait a minute. i mean, warren and sanders, seriously? >> trump, warren, watch that debate would be good viewing >> it would be bad for the country, tom just because you get tickled by

it is not a reason to have that. anyway >> when we come back, we have a live update from today's big opec meeting in vienna brian sullivan is there. brian, whabs' coming up? brian, what's coming up? >> we're going to dive into the oil and gas industry we talk about the energy stocks and how much they've been hit. i don't think people know how hard they've been hit. coming up we have some stats poan are tough to hear but are imrtt. that is an why what happens in opec in austria is going to resonate all the way to houston, odessa and midland

it's a busy day here at the nasdaq vi via com, cbs just in time completed their merger the ceo bob backish is getting in under the wire. >> o', there he is >> all right

>> oh, yeah, that is >> that is phil. i see his son all the time. >> yeah. >> it's amazing when the guy you watched play has a son that plays and then retires and then becomes a tv person and that's the guy you are watching it's like wow! i'm watching ken griffey, jr., his son will be playing. i used to watch ken griffey. >> ken griffey >> they both hit home runs >> first ken griffey was great >> of course i remember bobby bonds that's how old i am. father, he was a good player >> they are meeting in vienna today this one will be watched closely by the oil and gas industry brian sullivan joins us right now from opec in vienna. there the a lot riding on this

meeting. >> reporter: there is. maybe more than ever, becky, for the u.s. oil and gas industry. opec has always been watched by americans. for 40 basic years, opec was a four-letter word, if you will. sort of a price fixer over here in a group it's sort of an adversary to u.s. oil and gas i think, guy, ironically now opec may be the one organization that can help rescue the oil and gas industry from itself from those heavy debt loads here's been the problem. the price of oil and gas has been stuck for a number of years. inflation at $55 is worseth less every year about 2% at the current rate of inflation. look at a long-termer champ. why were there so many oil and gas places in the first place? we were at 140 or 100 bucks for the better of five years between 2018 and 2014. a lot of these companies in debt trouble, they had to pay a loot for happened and borrow moneyed

aen plated lavenltnd -- inflated land they come due. 39% of publicly traded u.s. gas companies are down more than 50% in the past year 25% are down more than 70% one-fourth of u.s. publicly traded oil and gas companies have lost more than 70% of their value. investors, they've dumped them they're not getting a return on their investment there is no positive cash flow at the same time you have esg dumping fossil fuels it's been the triple whammy for the industry if opec or others with russia maybe tomorrow is able to get the price of oil up, maybe five or ten bucks a barrel long term. it's not going to hurt gas prices consumers will be just fine. but it might save some of these companies that have no free cash flow i'll leave with you this number $654 billion that itself the amount of total gross debt the u.s. oil and gas industry has you know how much net income

they have? 64 billion, nearly ten times the gross debt to net income you got to get oil prices up a bit. that's why we're at opec >> i'm not going to say anything about the effectthe fossil fuels have had on the average person's life. i will not say it. >> you will just think it? >> i will just think it, like president trump. i'm not even going to say how much better life has been. >> i'm glad you didn't say it. >> as you are swimming back across the atlantic because of your foot print. good luck. let's talk stockmarkets as we get ready. if you go the other way, it will take longer, wouldn't it for the morning. they end up in california, which you can be in san francisco, join us for that is larry cantor, operating partner and david bianca chief investment officer for the americas at the dsw group.

were you worried on monday and tuesday? did you think it was going to be dicey? we would have a rerun of last november in. >> it's still dicey. >> what else >> i was listening to brian about the opec meeting my opinion is saudis are trying to pull a donald trump effect. they are getting closer and closer to a huge production cuts deal we'll be waiting for a long time for production cuts. the other three things that are keeping things dicey, the economy is still slowing it's not accelerating. it's still slowing maybe the space slowing down but it's still slowing >> i think there is a huge disconnect between that and stock prices >> i know. >> but do you? >> everybody thinks there is the balancing growth and earnings is about to be here one thing on trade >> let's get back to that, you are saying we are way auto over our skis in the stockmarket? >> it's 5% >> no big deal >> we'll catch up. >> you didn't hesitate to tell me 5.1, 4.9.

>> 5%. >> they know nothing but never in doubt right? >> i'll not done we're not getting a trade deal >> all right okay >> i think it's more likely the tariffs go up. albeit there will be more exemptions >> nobody gets paid for just looking at what the data are saying now we can all look at it. right. what you go to do is look through it and say what's coming down the road? you're right the numbers still are weak but which is the sector that's dragged everything down? it's manufacturing you take an average of all the pmis around the world, there are over 50 now. okay not in the u.s., because we have the gm strike. the second thing is, if you look at production it's gone down a lot more than demand so it's happening right now. you will get a weak fourth quarter. why? because inventers to will go down >> that bodes well for the

future so the manufacturing recession is bottoming now, maybe, i'm assuming, like i think we all are, that trade doesn't get a lot worse here we're moving into a period where things kind of stabilize as a truce with china and so forth. but things are getting better. and there's two, and so, we're actually in a position now where all this weakness actually is going to extend the expansion and there's two reasons. one, we got a lot of -- more than people realize. it's not just the fed, which we all know about although a lot of countries peg to the dollars still tons of central banks have these. remember in the financial crisis, we thought qe was just the financial crisis we got the bank of japan, the ecb and even the fed-ex panding their balance sheets again japan just announced a fiscal stimulus package for next year china has a fiscal stimulus. both parties in the uk whoever

wins has a plan for fiscal stimulus. >> what else is needed >> the second thing that's, right, yearn the another one that's less obvious is -- what's caused the last two recessions really, it's not been inflation. it's not been tightening it's that long periods of very low interest rates have caused leverage speculation we got asset bubbles we've had a pullback i don't know, there was just an article in the "wall street journal" the other day, buy activity is down 25% leveraged loans have fallen dramatically so if you look at the whole world and looking for signs of excess, it was really leveraged loan, clos that looked over extended those are way back down. >> that encourages me, in other words, what i would say is we've gotten into the pause here it's actually refreshes, the policy stimulus. you got to pull back if leverage and you've set the stage i'm not seeing the big boom here i'm not saying we will have another reward we already set the record for

longest expansion. it's going to keep going here for a while. very hard for me to see a down turn in the next six to nine months it's the stocks. >> enjoy the crawl the economy will continue. >> but you are also describing the old playbook >> sure. >> which is that after a slowdown you get a big bounce. but this is the third slowdown >> let's say it's big interest it's a very, very slight bounce. >> david, i want to know how you come up with this 5% because i'm looking at a 17 and change pe. >> forecast too high. >> on tenure, 1.85% and healthy economy. i think you can argue it's 5% under value. >> so i'm using an 18-and-a-half to 19 pe on the earnings we are expecting next year. >> it's 5, 6%? sflex clued the financial sector it's below a 5% real yield here's the thing, though, here's the next - >> you can see it says 15. >> you'll get a better opportunity.

>> just out of time. david. larry, thank you for being here. >> this is it for us >> yes >> it's weak >> it's a pleasure to be on with you, two of the best in the business >> you have been -- it's hard to go back to the farm, my friend >> it's more this week because of the french tariffs. >> you've had the best >> you will be back here. >> now you go back to the rest >> we will be back with more "squawk on the street" [ music playing ♪ i feel like bustin' loose >> good thursday morning, welcome to "squawk in the street". i'm carl quint n-- quintanilla retail, oil, biotech and more. 23 will get to all of that europe has been mixed this morning. watch bonds, claims come in at $203,000, that is the lowest number since