i'll share what i can but expect a much bigger update in early 2019 exit baker hughes over the next fewears. he did note that the timing might change culp also announced struggling power businesses or business, excuse me, two business reporting to him big focus on the call today saying he's spending most of his time on that right now another big topic, ge capital, especially in light of the fourth quarter insurance reserve review that will be coming up. ceo noting as that unit shrinks, ge may need to support capital further if necessary to achieve capital levels or execute options around that portfolio. other big headlines around the call, no plans for equity raise, no up guidance and lastly news that the s.e.c. has expanded its ongoing investigation to include the $22 billion goodwill power charge and that the doj has also opened up an investigation into those accounting practices ge is cooperating. i think they would probably say it's not unusual to see those agencies working together, also that really nothing reported today is really a major change in direction nonetheless, that disc

i don't think if joe and i are right we see higher oil prices baker hughes gets a higher bid a quick update vse, the calls are up five times. i've taken it off, exited the trade right now, judge >> pete, what do you have for us >> i'm going to hit with you some alcoa it hit the other day, on monday, october 1st. some buyers came walking in as well and now today we're seeing even further they're rolling out of those calls already, scott, that were purchased on monday and they're rolling out these november 48 calls trading a little over $1 for these. nice numbers, i think 5,600 when we saw it come in. with 48s, you'd think so $4 higher than it is right now you can see why they're taking off some of their profits. that's a pretty big jump today so over the last couple of days the stock has made a nice move i'm in these, by the way, and i will be in there through november so i will give you a quick update on something else because intel when we talk about this one on september 17th, we talked about some massive call buying coming in there, right it was just after the earnings in terms of

and baker hughes has gone sideways down small. i actually think the negative volatility is out of the stock i realize there could be a balance sheet issue around the corner but i look at the ownership in line what guy was saying i don't see ownership or sponsorship of the stock i think the shorts are out which means they could pile in too. but i think that's good news for the stock. i think the stock has been obviousened by the people that could including the big institutions. >> i think if if they cut the dividend that's good news for the stock as well. >> yeah. >> hopefully that happens. >> we'll see the options market speaking of dividend cuts is implying a g.e. dividend cut and implying it could happen sooner than you think. mike in san francisco. >> sure looking at the options one of the things we see is that there is at least a 50% probability that the dividend is going to be cut by september of 2019 and possibly earlier given the fact that we have kulp in there now. and i think that some people are looking at that optimisti

o a wants to shrink its health manufactung program further and reduce its ake in baker hughes. an oil field service. >> has been overpromising and upped delivering for quite some time. >> reporter: there were questions about avant wcuch was in half a year ago. where ge is going and what it will look like is unclear. >> it was not the market.ing to what is the clear vision of what is the new ge going to be, i don't think that's clear to anybody. it.'s part of i think it is a huge disappointment of course to investors. how long do you let somebody twist on vhee? 13 months is a pretty short window. >> let's tornado now to joshua aguilar for more on the management shakeup at ge and what h thinks it means for stock. he is an equity rmp analyst over at morning welcome, nice to have you here. >> thank you so much for having me i really appreciate it. >> in reading your report you are kind of cautiousl optimistic. you approve of mr. culp going in. what does the timing o all of this mean to you? >> you are correct. i mean, wculp think is the right man for job. i think the timing is sima

. >>> investors are basical saying at this price power, ,enewables, transportation, baker hugh ge, all of that collectively is zero and we harsh.hat's too >> the price target is $16 but the firm puts the stock at $20 in a so-called blue skies scenario. shares ofos ge 3% to $13.61. >>> apple's tart was priced higher to $16. the stock fell a fraction to $223.77. >>> square's pricearget was raised to 108 at goldman sachs. the analyst there cit margin expansion and revenue growth. the firm maintained the buy rating on the stock in the meantime buy but concerns overua 's credit risk sent that stock lower by about 8% today to $86.06. conagra was upgraded from buy to neutral at ubs. theyro cited the long term gwth potential following the acisition of pinnacle foods. price is $40. shares rose by 3% t $34.65. >>> still ahead, the benefits of interest rates and what they could mean for you. >>> two american economists have won theze nobel pn economics for their work on understanding how c economies grow sustainably. william nordhaus is best known for climateeconomics. he developed a model that e

ge needs to help their business to retain a high valuation and get good prices out of his baker hughes energy shares. it's not a hell mary that will save the company. this goes back to you need to run these businesses better. one thing that has been most shocking is the degree of the lack of business plan and the opportunity to cut cost. guy: when we think about the company and you look at the business,rts of the these are businesses that need to be run better but what about the gas turbine business? are there specific issues that investors are discounting that will provide problems going forward? is not easy but where are the weaknesses right now? i don't think breaking it up as a possibility when you look at their capital structure. on top of that, their liabilities are the largest at 20 $9 million and they have whatever off-balance-sheet risk in terms of leases. to terms of leverage so breaking it up is not a question, it's about fixing it but when you look at that, it boils down to the power business where they take a $23 billion write-down today. they need to have more disciplined

update in early 2019 he did double down on previously announced plans to spend on health care, exit baker hughesnext few years. said the timing might change, we'll have to see. he announced reorganization of the struggling power business, two units reporting directly to him. big focus of the call saying he is spending most time on that segment. cfo jamie miller plans on $3 billion of capital contributions in 2019. ge capital was another big focus. as that unit shrinks, they need to support capital further to achieve desired capital levels or execute strategic options around the portfolio big focus there, insurance reserves, since we'll see a fourth quarter review of that piece of the business in capital. other big headlines, no plans for equity raise, no update for guidance real strength in health care and aviation which was overshadowed by power lastly, disclosure that the sec expanded its on-going investigation to include the $22 billion charge we saw in power, and the doj is also investigating that now as well ge is cooperating. property it is unusual to see the sec and doj working together,

baker hughes says there's 1,052 oil and gas rigs operation, up from last year how interesting is thiss tiny compared to 1981 in december of 1981 there were 4,530 operating oil and gas rigs in the u.s dallas was the hit tv show and midland, texas had a rolls royce dealership why bring this up? it's random but interesting and all day tomorrow we're live in midland to talk about whether this permian boom hit its peak or if it's built to last and texas becomes bigger than most of opec. that's all day tomorrow on cnbc. have a great day "squawk box," coverage on rates, markets and hurricane michael. that's next. i'll see you tomorrow from taxa tawh what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visi

plans to shrink its healthcare manufacturing business further and questioned about the stake in baker hughes're buying the stock today, you're buying hope. ge has been overpromising and underdelivering for quite some time >> there are concerns about the dividend that was cut in half a year ago, just where ge is heading and what a new ge will look like are questions that continue to lingerment. >> it was not communicated well to the market. it's a huge disappointment to investors. how long do you let investors twist on the fine, but 13 months is a short window. >> i want to talk about what's happening with european markets today. we are seeing big moves in italy. let's recap what's going on. ftse mib, now trading at the lowest level it's traded since april of 2017. more than a year and a half as the bank selloff continues to pick up speed. yesterday we were talking about the proposal put forward by the italian government, 2.4% that proposal at odds with what europeans were expecting overnight we had some positive comments from european commission by saying we're willing to engage in dialogue

. >>> next up, baker hughes buying a 5% stake in abu dhabi's state run oil company. it values it at $11 billion and it marks the first time ever abu dhabi has sold some of its operations to a foreign company. >>> walmart teaming up with mgm to create content for video on demand service it will be on family friendly movies and shows a formal announcement is expected to come on wednesday. >>> let's stay on the retail story because stacy, the riddler is joins us now. president of sw retail advisors. we left our viewers, stacy, with your riddle going into the break. it's going to be a great christmas for retail but maybe a bad christmas for retail can you solve your own riddle please for $400, stacy >> yes so i think if you look at the consumer, everything is good money is burning a hole in the consumer's pocket, however, certainly amazon had to go last week and ruin the retail party and say that, hey, we're going to raise wages for retailers, once again they're going through a wave where their costs are going to be going up again so that is going to put pressure on the

even early in 2019, you'll now have larry's plan for the company over a longer time period the baker hughes shares having gone, i think we'll see some of the health care business be well on its way out and a much clearer line of sight to a better leverage level with operations improving >> i've had this debate with other analysts over how much mr. culp can really do he's maybe the greatest ceo that's ever lived in the space or certainly one of them he's not a miracle worker. he has nailed this thing from the beginning, middle, and now the end under $10. i want to read you what he wrote. i'd like your reaction to it because it speaks beyond mr. culp and goes to the heart of the fundamentals he says are worse than expected on profits the same dynamics including results at power and renewables, well below expectations and upside from aviation there's a lack of guidance nowhere near as salvageable as the bulls think. we don't think aviation can sustain those types of results and, lastly, no change to the balance sheet picture. so are you viewing this -- i just don't see how you're viewing it on

deliberate action as we'll see from larry some spin offs and the disposition, transportation, baker hughesthink the key for general electric, they have to generate cash and have to generate cash quickly if they want to hold a dividend. they have to look at the pension liabilities that they've got, 30 some billion 125, 123 billion in debt down rated, so cost of money has gone up for them they've got a cash situation in front of them. i think what larry will do is bring stability of communication and direction. you know, i get a lot of calls from close friends and colleagues they're just looking for clarity of direction and mission i think people will pull together under larry in a successful way i wish him and all of the people at ge the very best. >> bob, thank you. great to get your thoughts on a day like today bob nardelli. >> thank you. >>> quick check of the markets as we monitor the selloff. some buying going on dow off the lows to the tune of almost 200 points. dold day for pulte, and mcna's "squawk alley" is back after a short break. whooo! want to get a move on your next vacation?

coming out and announcing as much as $50 billion worth of deals to go ahead with the likes of baker hughesnd total they're in oil, infrastructure, energy it will be interesting over the next few moments as we continue to hear more from president erdogan who will be weighing in on what happened, according to him, to jamal khashoggi. we heard already today a couple of the ministers coming out. we saw the foreign minister speaking to prets on tss sayinge again that the saudi government is committed to finding the clues and the answers to this investigation. we also heard from saudi arabia's oil minister as well weighing in and saying nothing justifies the death of mr. ed ar much. >>> michael greenwald joins us now, he's a fellow at harvard kennedy school's belfour center, a man who lived and worked in the middle east for some time. you know the middle east well. you know saudis well you know the likely response well what is the likely ultimate response from the u.s. government around the khashoggi situation? >> when i was at treasury we would take a scalpel-like approach at sanctions. so at t

baker hughes, also total the total ceo decided to be strength because he said in a statement even if it's not politics as usual, it's business as usual these are areas we have to continue to operate in i have to mention something you said earlier the ceo of softbank has decided not to speak at the davos in the desert that comes a s a major blow to the crown prince a lot of questions about how this investigation into mr. khashoggi's death and disappearance is going to weigh on investors, but also in terms of the power play that is taking place when we step back and look at what happens between president erdogan and the saudi government a lot of questions about how that will impact markets not just today but ongoing >> masa son was one of the first people to go and kiss the ring when donald trump was elected president of the united states so he went to trump to you tore pay respects to the president, congratulating him on achieving such a big feat. the fact he's pulled out and taken a stand on saudi arabia, calling for transparency here effectively by not turning up. that vision fund a

investor when we sold it, that was our thesis was that this was a different investor, getting rid of baker hughesselling off health care. you're looking at it but i think from that perspective there might be some additional interest here. >> let me ask you this by virtue of the stock's dramatic decline you held the stock -- >> we did. >> for most if not all the way down to this current area, right? >> right >> what led you to say, you know what, i don't think it's getting any better at this point it's come down so much and i'm still getting up why no belief in the turnaround? >> i didn't think management was focused enough on making a real turnaround in the company. if you think about where it's come from, this conglomerate, all of these pieces, it became less of a sum of the parts story. for us and then thinking about the potential decline and the dividend over time for us as investors, that became just much less compelling. now, to be fair, again, this looks like this could be more attractive for me, i would want to see some additional changes if you go from the signal world they operate in and

one is energy stocks devin, cab on the oil, pioneer natural resources, baker hughes. down 20 to 30% but financial sfks pnc prungs, fifth third, morgan stanley also 20 to 30% off recent highs you notice anything missing from this categories -- these categories it's health care not on the list. and little wonder, the whole sector is only 7% from the 52-week high with wig gains this year in pharma that's what saved this sector. back to you. >> it was a top performing secretary ner the third quarter. bob pisani at the nyse deja vu. but can you trust the bounce in and do you go in and do you buy? how do you know when the name is bombed out and bombed out value or bombed out for a reason >> well a couple of the names -- we talk about facebook -- you know why injury it's gone down but l brands, they didn't just go down. they've been a disaster. down 70% finishes the fourth quarter of 2015. because the core brandt victoria secret is struggling you saw vs turn a corner the comps are down 4.5%. came up plus one bath and body works is growing this is -- this reminds me of like a

power, renewables, baker hughes and ge all that have is collectively worth zero. we think that's too harsh. >> you think the dividends is any more at risk >> absolutely. our dividend assumption is we assume it goes to 10 cents on an annual basis when we talked to investors since the news came out, no one we've spoken to is expecting the dividend to remain intact. some people even think it could go to zero, but that's not our base case. >> if it does, what happens? >> i think a dividend cut has been largely factored in by institutional investors. so i think if you saw a clearing of the decks on the dividend, we get a clearer path from a new ceo on the higher financial flexibility. what that will be used for is a power restructuring, i think people will like the message they'll understand why the earnings and free cash looking out two years should see a sharp increase >> i agree maybe another cut, another cut to the dividend is potentially factored in and/or expected by investors. what about an outright extension if it does go to zero? is that any sort of change in

plan in which you separate out health care or separate out and sell down the ownership stake in baker hughesmove more quickly it doesn't appear they're going to, for example, walter, take a look at could we really get rid of aerospace they feel at this point they've got the businesses they want in place that do work together. jet engines and turbines for electric generated facilities are similar as you know. that's a lot of where the business is right now. they feel like they did the bulk of the work with that decision to separate out health care. so we're not necessarily expecting -- and culp and horton were part of that decision, by the way. we're not expecting further moves to separate. >> i have 28, 27, whatever how much of it was ge? it was half, probably. >> of david's tenure >> yes probably our parent company for at least half of it. i'm just wondering -- >> oh, more than that. yeah >> i'm wondering how much you got left i can't find 800 shares. it's somewhere, i can't find it. so i'm stuck with it >> i got nothing >> you got nothing >> i got nothing i got very lucky again, we should

he is undertaken a breakup of ge, spinning off the health care business, winding down the baker hughessiness. at the end of the day it was not enough. and, ge said they will have a shortfall of free cash flow and guidance for 2018. they are good will power business will be wiped out. what kind of company is culp walking into? brooke: it's a big task. the number you pointed out is a very important, because that is something flannery rolled up at november investor day. it was supposed because they coming out party and he has stuck by that guidance ever even as evidence has mounted continued deterioration in the power market. continued reason to think ge would fall short of the cash flow. look at analyst estimates, they've been nowhere new the ge target for months now. david: i think it is fair to say it is a turnaround for general electric here he did a turnaround at danaher. do we have any sense of how much time he has to come up with a plan? brooke: i don't think has a lot of time. but larry culp is so beloved by everybody in the industrial center. , theye did at danaher appreciate his

the plan is, the company is pursuing the sale of its health care business and its owner ship of baker hughes, for reasons that seem obvious that they just need the money, these are crown jewel assets why are they pursuing this there are so many unanswered questions, it's hard to establish those questions. >> is it not some of the parts analysis one analyst said yesterday the value of power -- excuse me, aviation health care is equal to or more than, less than the entire enterprise value of general electric >> i think that's a false narrative, because of the liabilities associated with ge capital. power aviation -- health care and aviation may be indeed worth money. whether it's for new insurance, other types of liability it doesn't matter, right >> just being the best house in a bad block, doesn't mean you're going to be worth a lot more money. >> that's the first point. are some of the parts, the market is obviously corrected. some of the parts says it's not worth much more than where the stock is trading today, and that's subject to revision, because there's so much uncertainty with respec

it said in june it will spin off the baker hughes division. keeps going up is ge making a wrong move at the wrong time or did they decide to keep it? >> it was always one of the criticisms is that his deals were so perfectly badly timed. every single one of them >> perfectly imperfect if. >> yeah. >> quite something all right. >> what do you have? >> you good check please >> we are starting to think about the holiday season a couple of stories up on our web site we will stay close for thanksgiving not everyone is turning to that. nordstrom has always said hold off decorating >>. >> have you seen a store with christmas decorations? zbli don't think ihave wow. >>> it's time for the closing bell ge faces yet another ceo shake up i'm phil elon musk settles. we'll be talking to proctor and gamble, one of the world's biggest marketers about where it is spending ad dollars right now. former secretary of state john kerry joins us t

the gamut from hyundai to total, the energy concern, narenko, a energy concern, schlumberger, baker hughes in the united states, swiss-based company also part of that. a long-term effort to look at oil, gas, infrastructure expansion opportunities in and beyond just the kingdom. this is why we don't turn away from saudi arabia when they're talking that kind of money, on top of 110 billion-dollar defense deal we scored with them last year. if you add it all up, better than $400 billion worth of deals scored in the last two years. let's get the read on all of these deals, what is going on across the globe, how it is impacting us, former investment banker carol roth. this is another reason why it is easier said than done turning away from the saudis, right? >> it absolutely is. if you think about the saudis and also some of the other counterparts in the middle east, i mean these are bad actors that have done a lot of horrific things over long periods of time. so certainly the killing of the journalist is a horrible situation but if you look in the grand scheme of things, it is one in many thin

baker hughes has agreed to buy a 5% stake in adnoc drilling.anking group confirmed they are in talks in the wealth sector. the statement came as a result that their combining the wealth management units. the deal would see the lloyds are owning 50.1% of the venture. that is your bloomberg business flash. francine: thank you so much. "bloomberg surveillance. continues in the next hour. we will have a full roundup on what is going on in china with easing.a will talk about banks and brazil and a second round of elections coming up in a few weeks. this is bloomberg. ♪ francine: chinese assets have slumped and stocks drop as pboc easesume in the again. will brazil's far right --didate how it will justice kavanaugh's confirmation plant the polls? hello, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. we look at emerging markets because of what is happening in brazil and overlaying that is the move in u.s. treasuries and any market moves that would be on the back of the price of oil. would say the u.s.

oil services, baker hughes, schlumberger, 15% to 20% lower on each of the stocks this month.t by a little bit less some hope there that bailedouts wi -- that buildouts will continue guys >> now let's move from oil and energy to energy josh lipton here to wrap up a month to forget for most technology investors >> that's right, brian so a lot of green today but a tough month certainly as you said for tech investors. even with today's gains. nasdaq got hit hurd, worst month since march and faang names taking it on the ship. facebook, higher earnings and a tough month for the social network and amazon also ugly, its worst month since 2008 netflix down 20% in october and alphabet down nearly 20% apple, actually outperforming its faang peers, the iphone-maker, of course, reports after the close tomorrow big test there for apple can certainly help set the tone for tech investors as we kick off november also the semis in focus. check out the smh, down some 12% in the month of october. one notable name there, amd dropping hard. down more than 40% still up nearly 80% so far in 2018 sar

baker hughes is buying a 5% stake in the drilling of abu dhabi state oil company.business at $11 billion. it marks the first time that abu dhabi has sold part of its operations to a foreign interest ge owns 6.5% walmart teaming up with mgm to create contend for vudu. they'll be focusing on family friendly movies and shows. formal announcement expected to come on wednesday. right now we're in the red dao up 72 points >>> box office posting the best october weekend of all time. leading the charts super movie "venom" brought in $80 million they succeeded despite bad reviews from critics warner brothers "a star is born" brought in $41 million this is the fourth rendition in its debut weekend. >> fourth? >> fourth. >> it stars lady gaga. >> fourth. >> lady gaga and director bradley cooper boasts a 90% rating on "rotten tomatoes." i saw barbara streisand and kris kristofferson. >> i cried in the kris kristofferson one. they wreck a ferrari >> oh. >> they actually did it. they used a real ferrari when they wrecked it. i had a lot of questions the critics loved this then i

the gate on this call he addressed the plans to change its portfolio to exit health care, exit baker hughesiscussed that strategy right off the gate take a listen. >> i know there's been renewed speculation on our future strategic direction. the strategy we announce on june 26th to create a more focused portfolio, it sets up our businesses to win. and strengthening our balance sheet is today the right plan going forward. >> now, he announced two plans today to basically accelerate the process of generating more cash and turning around ge the first, that dividend cut down to 1 cent to drum up more cash starting in 2019. that would directly report to him. while shares had been trading higher premarket shares are actually now trading lower premarket. and this is because jamie miller, ge's cfo on the call disclosed they have expanded to include that good will charge in power that was recorded today. that $22 billion non-cash charge and also saying that the doj is investigating that charge and the other areas that had been previously part of the s.e.c.'s investigation. now, the call's still goin