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tv   Squawk on the Street  CNBC  November 18, 2019 9:00am-11:00am EST

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points s&p off about three points and we need to thank the one and only walter isaacson. >> i'm sitting in becky's seat. >> you are we moved you. >> it is amazing. >> we had a ball with you. >> come on back. >> i'll come whenever you invite me i keep inviting joe down. >> i'm coming down. >> we're going to do a show from down there >> join us tomorrow. "squawk on the street" begins right now. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange cramer is at one market in san francisco. at dream force is set to begin full coverage from jim all week long stocks were aiming for fresh records this morning, but pulled south from a tweet from eunice yoon saying china is pessimistic about a trade deal and strategy is now to, quote, talk and wait. europe is mostly red
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ten year 182 road map begins with the record one for stocks dow set to try to climb above 28 k at the open. s&p in the midst of the biggest longest rally in two years >> executive shake-up at t-mobile as i've been reporting for months now, john ledger is set to step down as ceo. next year. the shares are moving lower ahead of the open. >> fedex versus the new york times. fred smith challenging the paper's publisher to a debate after its expose alleging the ship giant paid no taxes in 2018. >> next hour, an interview you won't want to miss snap ceo evan spiegel joins us exclusively. >> let's start with jim and his big week in san francisco. jim, the guys on "squawk" just asking you how you got out there so quickly after the eagles game last night. >> well, philadelphia too has red eyes and my eyes are red from crying because the -- we had a chance to be able to really seal our fate and we sold it already in the wrong way.
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you want to come out here during dream force. everybody who is anybody does come out and i think that the star of this quarter as we heard from mike santoli is tech. so we have to hope that momentum continues. the most important tech story is the tech story that david owns what it does say, there is a need for the companies in the no growth mode to get together to have any earnings per share growth. >> we have seen actually a bunch of macro desks this morning and over the weekend jpmorgan asset management, morgan stanley more notable, saying we're going to raise our base case 10% for year end 2020. we don't think that changes the trajectory of earnings growth and we think the fed is on hold as they said over the weekend, we are on our own when it comes to interest rate cuts. but i wonder if you think this is -- can we call this capitulation at all? >> yes, that's exactly what it is people recognize at these big firms that there isn't anything that is going to derail unless
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we have powell remember powell from october to december, but it seems like everybody just said, listen, don't do anything important. let things ride. the research this morning is really indicative of just hold your stocks, you'll be fine. the research is a little too benign i think eunice yoon's tweet has more to say than anything that we can possibly put together this morning >> we're going to try to get eunice on tv later on. >> as we should. that is certainly an important bit of news she is sharing in terms of her sources, government sources telling her again just it reiterate that, yeah, there is -- there is no tariff rollback is becoming a real issue for the chinese. i guess eunice is available right now. >> i think we got her now. your tweet, your tweet did move the premarket. and then you go on to talk about how in addition to sort of talking and waiting, maybe this reverse repo cut -- rate cut,
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first we have gotten in four years, they're going to continue to manage stimulus of the margin. >> yeah. that's right the focus now appears to be on making sure they're able to support the domestic economy but in terms of what the government source had told me, who is familiar with the trade talks, he had said that the chinese are feeling that it might not be possible to do a deal with president trump, that recently there were some remarks that he made that really soured the mood within the government first of all, he said that about a week ago president trump had said that phasing out the tariffs might not be part of an agreement. that was very troubling for them because he said that on the chinese side, they felt there was an agreement at least in principle to have a phaseout of tariffs. also, he mentioned there were several -- still disagreements over some of the basic points within a phase one deal.
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he said that, for example, the specific targets, the u.s., as you know, wants to have a commitment of 40 to $50 billion worth of agricultural purchases, but he said that the chinese don't want to be pinned down with that kind of number and also i've been getting a lot of complaints from trading partners, so he said that the chinese don't want to alienate those trading partners and finally, he said that another thing that the beijing people in beijing are watching is the political environment in the united states and that one of the reasons why they're thinking of waiting and watching more is because of the possible impeachment of the president, of the election that is only a week -- a year away. and so with all of that, as a backdrop, they're feeling that it might be better to hold things off and instead focus on supporting economic growth here. >> eunice, don't go too far. it does dove tail with what kudlow said over the weekend, that is that a phase one deal
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theoretically may not have to be signed by president trump and xi, could be signed at the ministerial level. >> look, the idea of them -- the chinese waiting, i think, is at odds with what they must do for their economy. it means that the mid-december tariffs will go up it is very rare to find a company of any sort that has done big business in china that isn't trying to pull out as fast as possible. so i know that we always seem to think the chinese are all powerful, but the longer that trump delays tariffs, the more time they have to be able to get out of china and even fox con starts talking about getting out. huge number of plants there, taiwanese company. i don't know what the chinese think they're going to get if they wait. i think the chinese must recognize that the -- that the impeachment is unlikely in the senate to be found guilty, and that -- i don't know if they're reading any of the things we're
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getting from elizabeth warren, similar tweets this morning, elizabeth warren is hard line on china. they may feel they can wait. i think they're making a huge mistake. when those tariffs go up, it is going to be another clarion call to get the hell out of china >> we're going to watch that obviously, jim in the meantime, we're getting a little more extension on huawei licenses more discussion on whether we truly delay eu auto tariffs. big part of the discussion this morning is if you are a capex manager, are these incremental delays enough to give you confidence to spend? >> well, look, i think that chuck robins talked about how cisco didn't have it, that the enterprise is shaking here but we have -- we have a lot of sales force kind of -- let's say software companies not seeing any slowdown there, a workday downgrade by morgan stanley, but i still think our companies are in pretty good shape and given we're in retail earnings, i think even six months ago we would have felt the earnings would be compressed.
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margins would go down because of the tariffs. it hasn't happened the -- we have a matthew boss upgrading 5 below. they haven't been hurt i keep looking for retailers that have been hurt. i know he some of the companies that go and do a lot of business with huawei have been hurt it has been very minimal been very minimal. >> interesting speaking of huawei, into wireless, into an important announcement this morning, guys, from t-mobile, although i hope not a surprise for our viewers because i certainly have been talking about it for months now. given how many people close to this company have been indicating that john legere was going to step down to be replaced by mike seifert, currently the president of the company. they made it official, however, this morning and for those perhaps who have haven't been
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following it as closely as others, it may be something of a surprise, though may 1st will be -- april 30th will be the last day that john l. legere holds that job he'll be replaced by seifert, president and ceo. legere will remain on the board of directors but he will be free, beyond that, of course, to pursue whatever it is he wants to some talk, i've been reporting on it as well of his -- at least interviewing for the job, top job at wework, very much unclear whether that would actually happen and they have been looking at a lot of candidates there. but, again this was not unexpected and in reporting as closely as i was on the conversations that went on for quite some time, between t-mobile and the department of justice to try to iron out that consent decree they finally agreed to, many people around that made it clear that mr.
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sievert was deeply involved in the conversations, very impressed with him by the way as well, they have all come away with the full impression he was going to be taking over. so this has been something they have been thinking about and talking about and planning for quite some time. legere's contract expires at the end of april as well and, jim, i've been trying to get people not focused on this, but focused on what is the most important thing, the beginning of the trial where the state ags who oppose the transaction have the chance to present their case, and that begins december 9th here in new york the star witness as i pointed out as well will be charlie ergen, who they're going to be coming out saying are you really going to represent a significant player in the wireless market in 5g and therefore real fourth competitor and have questions about that should be very interesting but that's the key here. the leadership has been inconsiderably important, but many shareholders were under the anticipation he would not be here once this deal is either
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completed or not let's call it next spring into next summer. >> what i'm finding is that a lot of the component companies that do business with huawei have made it so that because of the strictures that huawei fell behind this is something that people didn't feel possible there are so many companies, american companies, that are embedded in 5g whether it be -- everybody -- qualcomm that is involved, micron is involved marvel tech is involved. they all have been held back i just think that if an american company wants to advance and do a lot with 5g, we know verizon is there talking, at&t is there talking, this is the company that they are positioning themselves as being the leader in 5g if you let them get together and i don't know how the balance sheet is so bad. i got to admit that legere has been a great spokesman for the team i don't know i don't know where they really
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are in 5g. i don't know >> they got a great -- they got great -- they have great spectrum position given sprint's in particular spectrum is particularly good for the midband range that really is helpful in terms of 5g it will require as you say great deal of capital. by the way, that comes back to the argument when there are those who say mr. ergen's efforts are not as robust as they otherwise should be he's talking about trying to do it with 10, $11 billion, many say that's just a drop in the bucket for what you really need in terms of actually creating a 5g nationwide network. there will be more beyond that, but that's the number he's been sort of pointing to at least in his public comments when i've seen him at the goldman sachs conference or couple of other places of late we'll see. the key is going to be december 9th. what happens to the deal itself. remember, if in fact that deal is opposed, there is no extension of the merger agreement at this point. so while they're fully committed to it and just said so on the conference call, just moments
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ago, t-mobile, in terms of the sprint deal, they can pull out at virtually any time and that has got to be a key question for people we'll see how the trial goes, when it begins, three or so weeks from now and what happens. a lot of ramifications from it the future of dish, the future of sprint being two of the key ones >> david, who is sievert we know who legere is. he rallied the rank and file he's regarded as being modern leader of our times. sievert, is he following the footsteps? >> he is he was hired in 2012 and in fact legere says i hired him and mentored him as he took on broad responsibilities. he's well prepared, they say, to lead the company to the future, deep understanding of where it has been, where it needs to go i'll tell you separately from the reading from a press release quote here from legere, the people i spoke to who were
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involved in those key negotiations said he was in their opinion very strong in terms of his understanding of what needed to get done and making it happen >> well, i mean, right now, john is telling us, i don't know if you got that tweet, he's talking about analysts right now he is a close follower, maybe a little closer than we are, of what we're saying. very excited if it is his guy, happy to tweet to us. check your direct messages, pretty positive. >> i will. i know that's how we communicate with john, not that he ever tells us anything. i did go back the last time and i said, i know you're getting replaced, when are you going to announce it, he didn't respond >> you knew sievert -- when sievert was just a glint in his mother and father's eyes, you knew sievert it looks like john is still running the meeting and he's not on a peloton and maybe he hung his jacket on
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a peloton, pell sen t peloton ig back, we'll have to check. >> people have been talking about twitter's engagement if john is less involved. >> i was told by mr. cramer to check my direct messages and i'm doing so >> when we come back, david's got the latest on hp, rejecting that takeover bid from xerox and snap ceo evan spiegel with us today shares of snap have more than doubled this year. we'll get cramer's mad dash, federal express, fedex, ford, news on workday and philip morris a lot more as "squawk on the street" continues. orlando isn't just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. it's a competition for the talent. employees need more than just a paycheck. you definitely want to take advantage of all the benefits you can get. 2/3 of employees said that the workplace is an important source
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get started here with trading for the week let's get a mad dash cross country it is this time. amd is the name, jim. >> something that really just strikes me as being talking about all-star do you know kalyn said after a meeting with lisa sue, after a meeting with the ceo, they're confident and they got to raise their price target they have nothing else, 347, lisa sue is so impressive. now last week we had quarter -- i happen to like the nvidia call a lot of people are saying amd
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is ahead of nvidia when it comes to gaming. lisa sue will be on the show on thursday look at this stock, david. up 130% this year. how many of those do you have? >> i don't have many i'm not allowed to own stock, other than comcast, up 33%, we're in the complaining. >> i know this is about you, a rhetorical question. >> i thought i would answer. >> i'm so glad you were so granular i just like the fact that amd reported in the last quarter that people didn't really care for her. and lisa sue is such an mvp player, you know what, she -- brady didn't have a good game. i think she's better than brady. >> yeah. >> she's better than brady. >> he was throwing the ball all over the place and not necessarily -- >> she's a little bit like mahomes. >> 14 imcompletions in first half, the most he had in his career. >> that's why we need lisa su. she can do anything, david
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anything >> really? >> she's from queens >> pass on a dime right to the -- >> yeah. on a back heel, going full -- right at the end zone. queens' own. she even plays -- i would say at a level we have not seen in silicon valley exec other than, yes, jensen huang, her cousin, a lot of people feel she's doing a better job at. i disagree i think -- >> jensen huang can throw from all the different angles. >> he can run it in. we'll see him tonight. >> yeah. by the way, jim, you're going to want to stay tuned we have an exclusive interview coming evan spiegel, snap ceo, more "squawk on the street" straight ahead. >> get a selfie. get a selfie it was sophie's big day. by the way, she's the next mozart. as usual we were behind schedule.
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big week on tap, we'll get flash pmis on friday obviously october and earnings all week long. some minutes from the fed and the ecb on wednesday for the time being, though, china trade has futures slightly down opening lln vemite be isen nus.
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almost all the fortune 500 partner with us. (woman) when it comes to digital transformation... verizon keeps business ready. ♪ you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in four minutes on this busy monday as we watch china trade obviously, more violence in hong kong. fedex is the other big story. firing back against the times piece over the weekend about the company's tax bill fred smith challenging the paper's publisher to a debate after its tax expose about the shipping giant paper says between 2017 and 2018 they managed to cut their tax bill from $1.5 billion to zero as its effective tax rate dropped from 34 to less than zero the times says this is after they lobbied hard for the tax cuts last night, they called the report distorted and factually incorrect and challenged the publisher and business editor of
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the times to that public debate. the times has yet to respond to smith's challenge. bigger part of the story, david, how the correlation between tax benefits and capex spending hard to find. >> i agree i think, you any, again, and there is a quote from mr. smith responding to that in terms of challenging salzburger to a debate on that, in terms of fedex's tax bill, particularly as it had the impact, it had for so many others the tax act itself of minimizing the future liability, not completely clear how the times came to their numbers, but, carl, i agree with you, the larger takeaway cited in a number of different places in the story was simply that rates are lower than had been anticipated, even under the tax bill and that the expected benefit in terms of capital investment has not really been there. we all know we're facing trillion dollar deficits in part as a result of that tax bill
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itself, jim. and the question is was it really worth it given we don't seem to have seen an appreciable increase in capital investment over time. >> well, look, i think the issue here is the 6 million shares that he bought back. which is something that people are saying, over and over again, the critics of this, they'll just go to buy back stock, they're not going to do anything you know what is funny i think fedex underinvested during this period we had david abney on. he spent a fortune a lot of people feel fedex is not ready. the problem with fedex is that it made such a big commitment to china. and, if china had not had such a -- had not become pariah, i think fred smith would have spent more but that was his business. he was building up china and building up the hub here, i don't know whether he feels that a bang for the buck was going to
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happen if you were to open china, the guy was ready. but, geez, 6 million shares, i don't know if we should fault him that much. that's not as big a buyback over a two-year period. >> i couldn't help but thinking the times failed to point out, the stock has been terrible as we know. and that despite their efforts to get their tax rate as low as possible and being a champion of the tax reduction act for corporate america, they really helped them at all all we sat here and done for the last quite some time, up to the last earnings report, is talk about as you said, potentially underinvestment, losing out to u.p.s., which made the investment that they needed to >> it is a dog i think that -- i think that, look, fred smith is a great economist. i met fred through larry kudlow, kudlow and cramer, a regular guest. but i think fedex -- they developed a great international presence and suddenly china's been shut down and plus, they're also hurt by
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brexit they don't know. you go over to britain you don't -- there are signs all over the place, we don't know how much the tariff is going to be fedex is more caught than united parcel, which is very, very ready for the holiday season >> opening bell on the s&p 500 at the cnbc real time exchange the big board. maker of lyft trucks at the nasdaq, ford net provider of cybersecurity solutions. talking about policy and its impact on corporate america. a lot of discussion about elizabeth warren some say sort of retrenching a bit on her medicare for all, obama telling democrats not to give into the far left wing of the party, does this mean healthcare stocks have a reason to run >> absolutely. i think the managed care stocks, you thought that they went up because if you look at the timing of when elizabeth warren put out her plan, versus when trump started talking about more
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transparency, transparency didn't do anything for managed care when her statement came out that she would delay anything for three years, that was the clarion call she's not as left as you thought and that's what drove humana, the bellwether that's what drove -- droveever single one of these, but united health, which had taken a shot at the democratic party, that stock would not quit so softer elizabeth warren is something we're going to have to start expecting. i was shocked that she did this. she is the single payer option it was amazing >> unh is the best dow component. you got buttigieg running number one in iowa. cover the des moines registrar over the weekend, standing on top of a hill as warren and the others are trying to climb it. >> she has backed to levels she saw a few months ago biden is also -- buttigieg
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gained support in iowa there is a lot of time to come even before the iowa caucuses, let alone so many other things we looked at previous nominating processes, many people in low single dinl its at this point e ended up being at a different point later on >> can i challenge something you've been saying >> sure. >> as we get closer, aren't we closer you've been saying all along we are far from it. i feel that we are getting closer it is just that happens -- you can disagree i am happy to say that >> there is a day -- i think there is a day, jim, you're no longer far and you're close. that day hasn't come yet. >> you -- you, even from out in california, david, you -- you have horse sense >> isn't it incredible i know just amazing >> and ticktock. >> who is the first person to
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tell you about ticktock? who was it >> the same person who told me about who is going to replace john legere. >> that's right. that's right i remember, it was the only thing i said to you, and you're, like, what's ticktock? >> i thought it was tic tac. i had eaten a tic tacoff the floor of the lamborghini factory. david, i want to ask you, did john legere learn from you that he's going to be replaced? >> you know, i was looking back, i think i did it on the 19th of -- i think four months ago. oh, look, somebody tweeted it, thank you, brandon and you turned to me and said, what but now it is official john legere does the -- the company announced this morning his last day will be april 30th, the ceo. he will be -- he will be succeeded by mike sievert, the company's current president. not a surprise for many, of course here's what legere had to say in terms of, well, even more importantly what it means for and where things stand in terms
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of the long process of trying to get that acquisition of sprint over the finish line >> i feel quite good that we have the basis for settling this deal and i feel equally as good, if not better, on our ability to win this case in a trial so we're certainly a very good spot >> interesting that he raised the possibility of settling this deal again, remember, less than a month from now, the state ag in opposition to the merger of sprint and t-mobile will go to court to challenge that deal on antitrust grounds, saying it is anti-competitive he brought up this idea of a basis for settling that would be obviously seen as a real positive by the market. >> yeah, look, this is something that if you look at the arc of what happened, when it was first proposed, i laughed. could 5g be that important at this point, i think whoever can help us in 5g is going to
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get a leg up from the feds, because there is such a -- the antipathy to china and 5g cannot be underestimated. three other companies in china that i think are ahead of huawei and are regarded as being less owned by the government. by the way, david, i want to point out, i don't know if you've seen how hong kong, that they couldn't even get the jpmorgan conference road show on the alibaba deal they're saying that, look, don't worry about it, people know it, i understand that the protesters didn't want it to happen >> it's significant, no doubt about that again, from me here, saying something you know, in terms of what is going to happen and what the impact is there in hong kong no doubt >> do we talk about it enough? >> you know, well, the story this morning is from eunice yoon, as you know, jim, our own
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eunice yoon, the s&p is do down .16 we have been talking in recent sessions about is the market taking to account the possibility we won't see phase one signed in the near term. but there seems to be this stubborn optimism that in fact we'll get there, regardless of what we may be hearing from the chinese side or not. >> i think larry kudlow is the person who is the stubborn optimi optimist the other wing, david, in the white house, is saying, listen, we could have a deal. chinese have to move first it does revolve around pork. people think that's soporific and insane we're not going to have a deal the retailers will be affected people realize the fourth round of tariffs are coming. watch macy's reports this week, they're regarded as the company that is the least, let's say way to be able to get around the tariffs,
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they could be hurt the most. we want to watch that. i wish that i knew which way it would go if the chinese don't buy the pork, they don't buy the bacon, they won't bring home the bacon. >> we're going to get a lot of october earnings as we look for some follow through from the walmart numbers from last week we'll get a better sense of how the consumer has been doing on a more rounded basis ford is the other big story. we'll talk to phil lebeau later this morning the mustang mach e, pretty good range, up to 300 miles based on the configuration. we'll hear more from other big three automakers regarding electric in the next couple of years. >> it is amazing how much ford has to spend and whether their balance sheet can handle it. they have sworn over and over about the dividend the amount of money they put in for ev, any ev cars are incredible these guys are now, really, i would say very far away from the
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mulaly vision when the stock was at 18. the stock is at 9. the stock has no real support here it sells at seven times earnings people feel the earnings are l illusory i feel like let's just say the weakest of the major auto companies. >> also, warning out of volkswagen today for 2020. they join daimler and nissan autos continue to be one of the more troubled parts of the economy. >> look, they have to plan a 52,000 people in puebla, mexico, where they make their cars i thought it was interesting that bill ford said we're making that mustang in mexico and added the caveat they had already planned to do it if you can't make your cars and trucks, well, mostly your cars in mexico, you're not going to be competitive and i think one story we have been overlooking is the amount of loan going to autos that people are now underwater on i don't want to lose track of this it is not as bad as the housing
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strike of 2007 which really crushed us, we should be more focused on auto loans, they are not coming through as great as we thought they would be >> going to be a busy week as we said, jim, for apple as we do expect to see tim cook and the president in austin where the new mac pro is going to be assembled. not doing a lot today, but a series of record highs. >> he'll also be speaking at dream force where i am this is a new thing. he has not been a speaker here the stock remains the leader in this market. i don't understand how -- tim cook is remarkable he seems to have the support of the chinese and the president. it is a special relationship with both sides and i think that a lot of the bears said it couldn't be pulled off hats off to tim cook he's been able to be in the middle and seem to be liked by everybody. it is really incredible.
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>> guys, time to do one of the big m&a pieces of news really came out yesterday. not really, it did it came out yesterday. today isfirst day we get to se the stocks trading that is hp and, of course, xerox. yesterday the board of directors unanimously rejected xerox's proposal to require the company, we reported on it, of course, 22 bucks a share, 77% in cash, remainder in stock, would have had the effect of hp holders owning roughly 48% of combined company. xerox saying it had the financing lined up 22 bucks that's where it was. they say no way. at hewlett-packard but they do leave the door open to a certain extent towards potential talks between the two companies and i would note it is interesting that we have not heard from xerox they have not put a press
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release out responding in some way to the rejection of their offer. they did send this letter again to john, xerox's vice chairman and ceo, which they question some of the bases of xerox's business in terms of decline in its revenues from 10.2 billion to 9.2 billion on a trailing 12 month basis. and this does go back to reporting that i did last week, i think last week, in which i said that xerox had actually had talks with hp about being acquired by hp, but those talks had been cut off after hp asked for extensive diligence and time to do it now, there has been a lot of back and forth there in terms of what they really said or what they wanted and ndas weren't signed at the time they did do what i'm told was a fairly deep dive on synergies. xerox decided 2 billion from the
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deal at this point, you got hp, leaving the door open, by saying we remain ready to engage with you to better understand your business and any value that can be created from a combination. recognizing the potential benefits from consolidation they say as well and whether there is value to be created through it so the question, of course, becomes, well, what is it going to take to get these two companies in a room to sort of work out whether or not something can be signed to allow them to do due diligence on each other. unclear at this point. the nominating window for directors on hp's board opens on christmas. december 25th, closes roughly a month later. would there be a proxy fight the presence of carl icahn he is one who is in favor of a deal, says he would own the combined company stock not up for any cash, potentially under any deal itself. i will tell you it does appear there is still fairly wide breach here. the question is what are the
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shareholders of hp going to say? what is the board going to feel in terms of its need to actually engage in some fashion to make sure that its shareholders feel it does as much work as is required here to say this is not something we think can really work the current price, i'm told, is not even close in terms of value. there is a belief on the hp side that the plan that they have in place in terms of cost cutting will extract a good deal of val for their shareholders they're having a change in leadership at the company with the ceo with the unexpected departure. but they're open to that idea of consolidation. they do, however, want to understand that decline in xerox's business and there is this idea among some in the hp camp that there is a sense of desperation on the part of xerox to try to get something done xerox would say just the opposite and in fact it is simply the fact that they moved faster than
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hp, the bureaucratic hp. which takes forever to take a look at things and make decisions. if they move faster, their leadership team is the one that can deliver on the 2 billion in cost synergies, get it done. they argue there is enough of an overlap in the shareholder base there will be support for them jim, carl, we're going to see what happens here. interesting we haven't heard from xerox yet will there be some sort of talks that lead to at least some due diligence that gets you down the road even further, jim i don't know at this point but it certainly has to be thought of both stocks, both stocks moved up on the prospect of a combination and i think both are moving down today at least on this projection. >> you know, david, i am struck by how the language is a little conciliatory hp says, look, we remain open to something. they did no longer say in their comments to me that, you know what, let's give -- instead,
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they say, look, we can possibly do something, these aren't the right prices they do say that xerox is, yes, desperate, because of the balance sheet. they do say that their own company is good value. this is not scorched earth at all. i feel this is more like, okay, listen, you are off the mark, but the combination isn't crazy. >> yeah. you're right not scorched earth in any way, leaving that door open at least, making their own shareholder base feel better about it. xerox in a difficult position because how much higher can they go in terms of an offer, they have to increase the cash position because you throw more stock in it, end up with hp owners owning more than 50% of the combination, gets back to what management team would lead the company. they claim that xerox's management team will be better positioned to deliver than would the -- as they say, slow moving hp, jim. >> these guys are all from hp. leaders. slow moving.
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give me a break. >> that's good -- >> jim's skepticism is in tact to rick santelli before we get to bob >> i like to go first. good morning if you look at interest rates this morning, the short end started to give back some ground it is mostly been the long end it is very interesting, 30-year bonds were briefly only down a basis point, they're catching up but the point is you look at this one week chart, we're slowly melting away. failed in the mid190s. open the chart up to june, we have an upward sloping channel, maybe even a wedge but one thing that seems for sure, no matter what ten year you insert in that june 1st time frame, basically looks the same. tired running out of gas a bit but here's the fly in the ointment, zoom it back to the year 2000, there is very little doubt what you're looking at is a significant historic long-term bottom but that bottom takes you in the mid130s, we're hovering at 180,
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we could still melt away a lot of basis points. that's what makes this area tricky one thing that isn't tricky, the polls, boris johnson, the commitment that maybe many of those mps are going to vote for brexit if his horsepower holds up in the december elections,ed pound is in favor of that, as you look at the one week chart if you open it up to may, it is really on the brink of overtaking 130, break out material would be the best level against the greenback since may. carl, jim, david, back to you. >> rick, thanks. rick santelli. let's get to bob and see what's moving on the floor. >> we were up earlier on but constructive talks over the weekend. look at the s&p futures. eunice yoon, our reporter over there saying outlook kind of pessimistic over there, trump apparently not wanting to roll back any of the tariffs that chinese want market moved down on that. you can see, of course, trade
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the nominal mover of the market these days don't kid yourself the usual names here, energy, materials, industrials, banks, the big move up, down last week in yield was a major problem for the banks. down again today that moved down on the trade talks, utilities on the upside don't kid yourself still essentially at new highs the friday numbers that we were looking at here, new highs on the s&p 500. midcap is just below new highs small cap, even europe just below new highs here very, very broad rally want to see how broad it is, how often do you see value and growth hitting new 52 week highs. there is growth and value is also hitting a new high as well. tech and healthcare also hitting new highs. very rare to see value and growth at the same time. remember, value essentially banks, walmart, apple, growth is essentially your amazon and mois he microsoft here trade wars and fed here, hope for a resolution you see that moves up and down
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daily basis. big thing more importantly is the belief that global growth may be bottoming for 2020. not as bad as people thought we're seeing outflows from bond funds and some inflows into stock funds. people waiting for this for a long time. that may help the overall markets here earnings bottoming at all? we don't quite know. but the important thing is we'll be flat for 2020 and if this number holds for -- excuse me for 2019, if that holds for 2020, the market is going to move a little bit higher because a lot of people feel we're going to essentially be flat in 2020. there is the nominal mover here. if you bottom on global growth, we have a chance for midsingle digit growth in earnings that's always ultimately the mover of a market. back to you. >> bob, thanks when we come back, investors snap have had reasons to smile this year. stocks up 160% for the year to date and exclusive with evan spiegel coming up this morning dow down 19.
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jim, what's on "mad" tonight? >> twitter air bnb. levi's and sendesk what a bookend say it just say it. >> all amazing ask about hp as lead director, right? >> yes you -- you know -- you have no keen eye for the obvious but looking and the corner >> amazing guests all week i know you have, jim incredible. >> thank you we like to not twiddle our thumbs. >> does it all without any sleep, carl. >> apparently not. we'll see you tonight. when we come back, an exclusive with snap's evan spiegel
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good monday morning. welcome back to "squawk on the street." contessa is in for sara. a muted open to the busy week as the market is buffeted by head leans of trade, violence in hong kong and let's get to diana olick. >> home builder sentiment down slightly below expectations. the street was looking for flat at 71 but anything above 50 is considered positive data at one year ago the sentiment survey stood at 60 much better. of the index's three components, current sales conditions fell. and sales expectations over the next six months rose one point to 7 the chief economist said
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builders are grappling with affordability, head winds and trouble with a lack of labor regionally over three months the september. highest in the west and the south. >> our road map begins with stocks struggling for direction. reports of trade deal pessimism in beijing pausing the record run for wall street. >> "the new york times" firing back at fed-ex challenging them to a debate. >> don't miss a cnbc exclusive with the ceo of snap evan spiegel. shares more than doubling this year. the markets in the midst of a record run we have a look at the undisrupted champions of wall street and whether they can continue their climb higher? >> that's what i'm calling it. stock market tax onomy trying to bundle together the stocks the market has fallen in love with in a new way
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look at walt disney, walmart and nike and starbucks there's an interesting synchronicity here all up between 22 and 26% well outperforming the s&p 500 their valuations have gone to a similar zone to a premium of the zone between 25 and 29 times forward earnings and what maybe unifies the stories last week's news on disney and walmart earnings is the market decided that these companies once faced the threat of disruption and disrupted themselves, own the consumer relationships, to essentially go digital in their own ways starbucks was never quite facing an outside threat as much but the fact that hthey have one of the biggest electronic payment apps showing you they belong in here the market saying they're winners l winners long term. disease the market have this
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right? paying up too much with too much credit for success in a hurry? you saw walmart to peak and trade lower and then disney off the boil a little bit after the pop on the announcement to sign a 10 million new subscribers to disney plus. >> mike? >> it's a broader discussion and we're joined by two guests guys, happy monday good to see you. where are you on what the market's getting right here, specifically going into year end? >> we still like quality as a factor high return on equity. low debt to equity as a way of filtering through the stocks, some pop up for us in those themes but we do look at over the weekend there was so many bears taken out and killed, so much sentiment shift and we don't want bear extinction we want to keep bears out there for cautious view on the market and that is starting to slip sentiment is not the asset it
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was a couple weeks ago for this market. >> mike, i'm sorry jeffrey, different names in prompter over the weekend macro desks are throwing in small towels, centered around fed purchases of securities how much does that matter? >> i don't know that it matters all that much right now. we have seen maybe a start of a shift to dpis cafiscal policy. we got the budgets for the eurozone members with fiscal expansion, a third of a point of gdp but enough for a country like germany to stay out of recession. remember how close they are at so i think that shift to fiscal is important and something to keep a close eye on getting data on manufacturing and the consumer. >> matt, let's talk a little bit about international because we have seen a lot of enthusiasm for the growth that's happening around the worldand yet we hav got the wtos saying that the
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trade flows are weak, news of china that doesn't indicate that things are good as they seemed where do you stand on international? >> the u.s. over international i never thought that i would see the day where missing a technical recession by ten basis points in germany would mean that the dax at all-time highs the disconnect is getting extreme. you are seeing multiple expansion there. we want to see revisions recover and the pmis continue higher the pmis this week are huge. preliminary data and watching that closely. >> jeff, looking at international, you talk in your note about the role of fiscal stimulus here. >> yeah. this is important. fiscal stum lus has turned and what we are starting to see is better momentum on the profit side in europe yield curve inversions signaled a shift of u.s. and international, geographic relative performance if you will
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and the yield curve inversion brought this about coming off of these very low valuations that they have sustained given the challenges they face so i think we might be seeing a longer term shift here in favor of international and value equities, something we haven't seen in ten years. >> mike, what do you think about this idea that you want the bears around >> you definitely do i think the question is whether we're now just in that process of people starting to feel better and optimism building before an extreme or not the idea at a 2% economy and the world do go back to growing near trend comes as a relief when the markets are down 6% from the high like they were in august an people are worried about a recession. getting the markets and sentiment to a point of everyone looking for bigger and better things then 2% in the u.s. and trend growth outside is disappointing. nothing much to change with the world but with prices and the move. >> what's it going to feel like
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when we if you look at atlanta or new york fed and we get a .4% q-4 and the fed said we're still on hold. is there a possibility of a january freakout >> not qe so the expansion of the balance sheet going on right now and we have had 300 billion in 3 months with 3 rate cuts that should be lifting financial assets and doing its job does the consumer come in in q4? does the holiday season deliver? for now we are not overly optimistic we are staying with high quality companies, good cash flow. infrastructure as a side play on that as a defensive idea and then moving up in quality on fixed income is late cycle things to still look at here. >> i think the market telling you it's a trough whether it's half a percent in the fourth quarter or not the clear message has been of an inflection point that would be a head fake if it turned out that it wasn't. >> how important, jeffrey, is a trade deal here in order to get
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over that next hump? >> it is really important. obviously, that is what's driven a lot of this slowdown one thing to focus on is ten years looking for a turn in housing to mark the low and now the autos. the weakness is concentrated in auto production. ex-autos, manufacturing is up in china but that's critical. you don't see a turnaround until a turn in sales for autos. that is why you have to watch the nomumbers closely. >> we'll see if we get more sales an financing making the way to page one of the journal in last week's case, right are you worried about -- delinquencies, consumer balance sheet, not acute >> not bad now but the flood is helping that situation f. that flood does come back out then that situation is bad real fast and you have to watch the fed and for now is providing that injection of liquidity
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china did before open. that is helping financial assets, the consumer but is that enough so many waves of this to do, so many refiancings to do before you start to lose the benefit of it. >> thanks. good enough. matt, mike and jeff. when we come back, we're going to hear from snap ceo evan spiegel. of course the shares more than doubled this yr.ea more "squawk on the street" when we return. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.
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welcome back get out to julia boorstin at snap headquarters with a special guest this morning hi, julia. >> thank you so much i'm joined by evan spiegel, ceo of snap. thank you for talking to us this morning from your offices. >> of course i have been looking forward to it. >> we appreciate it. i want to talk about your earnings four books ago you reported 7 million additional daily active users but snap is still so tiny compared to instagram which has 500 million daily active users does snap have a chance to catch up >> i think the early indicators for example in the united states i think give us confidence that we can achieve really broad reach around the world. >> what about this competition with instagram do you have to catch up to succeed? >> looking at the broad economy,
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snap is about real friends connecting, having conversations and we think everyone will enjoy visual communication with snapchat and more act providing the value to people around the world. >> the stock is up dramatically this year and down 4% since your earnings about a month ago you beat press secretariations on the top and bottom line and the outlook raised concerns. what is it about the outlook you look is sparking concerns among investors? >> i'm not sure. we guided to another year over year acceleration in revenue growth we are excited about the progress growing the community so i think i guess if the stock's up 150-something percent in the year a couple percent here and there probably don't make much of a difference. >> your users are young people 90% of 13 to 24-year-olds in the u.s. use snap. do you think that investors are a different demographic that
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they're not fundamentally familiar with what snap is really about >> i think a lot of investor that is we speak to have children that love the product and so they get to enjoy the product with their kids and oftentimes that inspires them to join so i think it's easy to use snapchat once you try it out and i think over time the ompany's still 8 years ole or something like that so over time i think more and more people understand the value of snapchat. >> what is difference about snap is the hold on those young people, 13 to 24-year-olds how do you make sure that that generation doesn't age out of using snap >> we have shared great retention stats in the past so i think if you look at users who signed up five years ago they retained at a 95% rate over 5 years and we believe that as more and more people join the service they find value, they love using it, they stay as they grow older and reached 70-plus
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percent of 30 to 34-year-olds in the u.s. >> how much of your future growth is about a totally different demographic, older demographic, maybe those people's parents to use snap >> we think a lot of that will happen as the community grows up because visual communication is a powerful tool. once you transition from sending text msz and which are impersonal, usually convey information to visually showing your friends how you feel it is go back to going back to text based communication and broadly people will 'em brate it more and more. >> back to the first question of competing with instagram, owned by facebook, facebook on many different counts copied some of your most successful features. how do you think about competing with this behemoth >> the strategy that worked for us is to continue to innovate and trying to serve our community so i think that's why we have seen such strong growth over the past year and excited about the progress we are making.
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>> the most recent copycat move is threads, taking the most appealing part of the communications for an entirely app around it for instagram users to communicate what do you think of that app? >> you know what i haven't had a chance to try it out but if we look at the value of snapchat provides, investments in ar and evolution of the product of a platform, with content or gaming, snap provides a lot of value to the community and focus on that. >> you are doing a good job of not mentioning facebook and not using the word facebook but can you speak sort of specifically about the challenge of you're innovating, creating products here at the headquarters and then the headline comes out about facebook launching a new app that's taking some very valuable things you are doing and putting them in front of their instagram users. how do you deal with that? >> it is inspiring for the designers so the work is a broader audience and looking
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over the last few years, we have defined the standards across mobile communication, mobile content and so i think if you're a designer and you have broad reach that is inspiring. >> inspiring but not frustrating? >> i think for us we get a lot of excitement and joy of creating and much more focused on building and trying to delight our community than we are about other things. >> so do you think facebook's behavior is anti-competitive >> gosh. i think there are some things that they have done in the past, you know, that could be perceived to be anti-competitive, limiting the reach of other services on their platform, preventing people from using a snap code in the profile or something like that so services that have reached as broad as facebook are held to a different standard obviously so i think we'll sort of see what happens over time. >> are they continuing to do those things
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>> you know, it's hard for me to speak to what's happening currently. but you know, i think the government's quite focused on that we have to learn from -- >> it's pretty widely reported that snap kept a dossier of the different anti-competitive behavior seeing facebook do coming to snap and sharing this information with the ftc as they do the investigation into facebook what is it that you think the public and the ftc should know when they're looking at the landscape and facebook's behavior >> gosh. i'm not actually sure that we have shared anything yet but i think it's just important to understand the really important role that these technology platforms play in people's lives and everyone wants to make sure there's an equal playing field for
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competitors and big breakthroughs, stories or augmented reality, the products we have created, a lot of those innovations driven progress overall in the industry and competition can be really productive because it encourages companies to change, provide better products for the people that they serve and so i think for us overall we need to make sure that small companies have a real opportunity to compete in an environment with really large technology players and i think snap is the success story but many, many start-ups that haven't had a chance to get off the ground because these companies are so large. >> you were once a tiny start-up and succeeded. what do you think the remedies are to make sure that start-ups can compete against a facebook >> you know, that's not my area of expertise so it's hard to say what the remedies would be but i think a lot of people are very focused on figuring that out
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probably less of a question of regulation and now 'em ple menation and leave that to the experts. >> do you think facebook should be broken up >> i don't know. i don't know what impact that would have for consumers so i think the real question is, would facebook being broken up contribute to more competition in the ecosystem overall and benefit consumers. to be honest, i don't know if that's the case. >> do you think it would benefit snap >> i don't know. i think the thing that it seems like regulators are most concerned about is the current sort of plan that facebook has to integrate all of their services, integrate what's app and messenger and facebook and instagram and i think the question then that regulators have is if that integration happens, will regulators have an opportunity to break them up right? that seems to be the big debate and less should they be broken up than should they be allowed
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to integrate it takes years, these anti-trust investigations take a really long time and the question will be seven years from now the world will look totally different. snap is only eight years old the world will look very different and i think the question will be what remedies are available at that time in the future. >> seems like one thing that's important to snap is this idea if i take a photo on snap with a signature lenses i should be able to share it on facebook's or instagrams platforms without them blocking or deprioritizing that post. is that the kind of thing that can be regulated? >> i don't know. i'm not sure how their service works but i think the regulators will sort it out. >> mark zuckerberg talked about privacy regulation what do you think about that there's a new california privacy law for next year. >> looking at successful privacy law i think we look to gdrp as a
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ben foit consumers and still supportive i think of small businesses and makes sense because in europe competition is sort of looked at as an end in and of itself and want to support a competitive business environment. that's always a priority and the united states thinking about competition we think about consumer harm and what's interesting about ccpa is this is an example of regulation that will entrench larger players and make it harder for smaller publishers and in the united states and california can we have regulation to support small businesses and provides consumer protections and i think we can be inspired by gdrp and the progress of europe. >> you are not called to testify in front of congress as jack dorsey and mark zuckerberg have. is snap in a totally different position than they are on privacy? >> snap is about communication and not public social media and
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don't confront some of the same issues that those platforms have over time. we really pioneered things like this idea to delete people's data was at the time quite radical. people said it was just for sexting and now this idea is very broad based and widely adopted by the industry and focused on consumerprivacy because privacy is key to self expression and on our service to promote people's ability to communicate with their friends we want them to be protected. >> where do you fall on political ads? jack dorsey said twitter won't accept them at all zuckerberg said we won't decide or fact check them where does snap fall >> we tried to strike the right balance. we subject all advertising on the platform to review including political advertising and tried to create a place for political ads on the platform because we
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reach so many young people and first-time voters and want them in the conversation on don't allow things like misinformation to appear in that advertising. >> so you fact check the political ads? >> that's correct, yes. >> do you have external groups or an internal team? >> an internal team that works on that so that might be more similar to cable rather than broadcast. i'm sure you're familiar with the regulation. >> one other political issue that's come up recently is tick tock owned by a chinese company and whether that ownership of this company that is very popular here with teens in the u.s. could be potentially dangerous or risky what do you think about those concerns of tiktok >> i'm really not sure and not sure it's a political issue than a competitive issue but a great example of a chinese technology company successful with u.s. consumers and i think our country's grappling with that
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with a free architect and encourage that competition and regulate data sharing and things like that going forward. >> are you seeing the growth of tiktok competition for your users or stealing that demographic? >> snap and tiktok are so different and consider them a partner. they're an advertising partner, a snap kick partner. but the services are very different. snapchat is about communicating with close friends and seems like tiktok is a popularity con toast. >> all this -- talking about the competitive landscape and meantime trying to build a business how different does snap look from five years from now >> wow you know, i think if we look back five years a lot's changed for snap we built things like the discover content platform, the ar platform, launched gaming and changed radically in the last five years and we expect that
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change to accelerate with traction and continue to innovate and you'll see us invest around augmented reality. we see a lot of opportunities to continue expanding that capability beyond creative tools and effects and into more utilities so things like the partnership with photo math have been really exciting because you can use a camera to solve math problems press and hold on a problem and it helps you solve it and that's an example of expanding into the utility use cases that are exciting. >> what about maps it's unclear to me how this is going to really be a key part of the growth we know about google maps. a big investment there with waze what is this meaning for you and your advertising business? >> we see a huge amount of opportunity around maps and still very early and the thesis is maps should be personalized opening up maps on the phone
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today, google or apple, we have the same app but different friends and live in different places and visit different restaurants or theaters so snap maps is really architected around the idea of in the future it's much more personal and started with your friends. you can see what your friends are up to, easy to meet up and see events happening around the world through the snaps that are posted so i think snap map is the beginning of maps becoming much more personal over time. >> the vast majority of the advertising is through the discover platform and the content for people to watch that's sort of integrated with ads. how much of an ad business could grow around maps and how quickly becoming something to be as big as discover? >> there's a huge opportunity and focused on building that engagement and building the core product of maps and think more about advertising. >> you have also talked about augmented reality and specifically of these spectacles you have introduced various versions of these ar glasses and
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haven't tipped the mainstream. what's it going to take for them to be something to see around the place, not just as sort of a novelty item >> i think it takes time and innovation to get to you bickty with spectacles. looking at the journey of hardware cameras over the past 100 years spectacles may follow the same trajectory. people got the photo taken once a year and then cameras more portable, bring them outfor special occasions like a birthday and now with snapchat people use the camera all day every day and suspect calls with an event based product on the vacation, capture this amazing 3d immersive content you wear spectacles but not all day every day. maybe ten years we'll get to a place of key innovations around the display, for example, battery technology, even processing will allow us to create a product to be worn all day every day. >> do you think it's for excuse
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ming content or for creating >> i think it's about experiencing the world so i think that's more the -- if you look at the broad evolution of come putting, the first desktops about information retrieval. over time as mobile came along, computing is primarily about communication and a huge amount of sinternet traffic is about computing and then experience and overlaid on the world around you. >> apple discussed they're doing a big investment in ar, an ar headset in 2022. ar glasses by 2023 it sounds like what they're doing is a little bit like your spectacles is this another tech giant coming in and going to steal your fire here >> i'm not sure what apple's strategy will be but to date we have been great partners with them on augmented reality. they're doing advanced things
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that allow us to run sophisticated augmented reality lenses on their devices so i think we have seen that their investments in hardware have helped our business and we hope that will continue. >> but they have said that these glasses to work on could replace phones is that similar to what you're doing or is it complimentary is apple going in a very different direction or competition? >> i think it's unlikely that these gaslasses are going to reveal phones. i do think they'll be supplementary to the other experiences. and i hope to continue to partner well with apple in the future. >> great fascinating space to watch with maps and ar. evan, we really appreciate you taking the time to talk to us this morning. >> thank you. >> over to you. >> julia, almost a microcosm of what we know about evan, into innovation, the camera first, not relying on network effects but don't ask too much about
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whether or not facebook should be broken up. >> julia hit the keynotes. the stock price moved up in the course of the interview, as well didn't really want to as you said carl take the necessarily answer with long detailed answers when it comes to the facebook anti-trust question but talking about five years out and the innovation coming still to the platform. i remember camera first. we're a camera company what ar means for them in the future beyond the spectacles that - >> julia raises good questions to innovate on the fronts seeing the big competitors getting in there and taking what appeals to lots of generations, not just to the kids who are communicating privately on snapchat but gen-xors using the filters and then they're offering it, too.
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he didn't want to tackle that, either she was pressing him on the competition for his outlook and bottom line and he is staying away from it and i'm sure that's what investors want to hear about. >> you're right. >> all right >> all right we'll send it over to rahel for a cnbc news update. >> good morning. here's the news update hong kong police charge that protesters with teargas heading to a university where hundreds are trapped by a police kor doan china warning no one to underestimation the safeguarding of the stability at least one person is dead after a suspension bridge collapsed in southern france people are looking for survivors and a driver of a truck they believe was on the bridge when it collapsed. four people are dead, six injured after a shooting at a family gathering in fresno sunday evening in the backyard of a home where people were watching a football game police say someone snuck in and
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opened fire before taking off on foot. and staying in california, thousands gatheredin santa clarita to remember and reflect on the shooting at the high school they spoke to the crowd at city park that high school will remain closed until december 2nd. contessa, back to you. >> thank you. when we come back, fred smith versus "the new york times. "the times" responding to smith on theax t expose. we'll discuss when "squawk on the street" returns. - at southern new hampshire university,
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we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military, you feel that sense of accomplishment. that's what snhu is. - you will march from this arena and say to the world.. i did it. - [woman] you did it.
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i love you. - [graduate] i love you too. as we go do break, take a look at the markets on this monday dow did hit a fresh record earlier today. we are hanging on to 3114. back in a minute
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market enjoying a relatively quiet monday despite the news of this week including october and retail earnings, flash pmis later in the week. lagarde with a speech and ears peeled for that.
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we are getting word from the fed that at the president's invitation chair powell met with the president and mnuchin this morning at the white house to discuss the economy, growth, employment and eninflation for more on that we'll go to eamin javiers. >> reporter: according to the fed statement sayinging that the comments consistent with the remarks of the hearings last week he did not discuss the expectations for monetary policy except to stress that the path of policy will depend sbily on incoming information that bears on the outlook for the economy and chair powell said he and the colleagues will set monetary policy as required by law to support maximum employment and stable prices and will make those decisions based solely on careful object i and
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nonpolitical analysis so relatively strong statement there in fed terms about nonpolitical analysis. clearly everyone watching this network knows that the president has been on a campaign publicly to push the federal reserve to lower interest rates or negative interest rates clearly there was a meeting here between the two gentlemen at the white house that was not disclosed in advance and the fed putting down a marker here suggests it won't act in a political way an interesting meeting here. we'll try to find out more about it and see what the white house can tell us from their perspective, carl. >> all right i'll take it we'll explore a bit more of this, as well. thank you. joining us now former council of economic advisers austan goolsbee and jim petakoukis.
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austan, given your experience on the council of economic advisers, how often or typical for the fed chair to meet with the president and then your thoughts on what perhaps was discussed in that meeting. >> you know, pretty not typical. i wopder if chairman powell is asking himself the question why did the president ask him to investigate the finances of vice president biden or whatever else might have come up at that lunch. i think there are a lot of people who that really raises an eyebrow. it is not unheard of for a president to meet with the head of the fed it is unheard of for the president to secretly meet with the head of the fed after publicly declaring them to be a dope, to be an enemy of the state equal to the head of china and to constantly harang them that you want them to reduce interest rates and send the u.s. into negative rates so if the president is calling chairman powell to a meeting in the white house in which he tells him
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here's what the economy is as i see it and i want you to lower the interest rate, that's totally inappropriate. >> we don't know that, jimmy we don't know what went on and as eamon reported, this was not on the official calendar the statement is from the fed and reaffirming it is not a decision making to involve politics give me your take. >> look at the situation we have we have an economy which is slowing. there are plenty of forecasters out there thinking that the fourth quarter the gdp numbers beginning with a one that's going to come out in january. and at the same time you had a fed chairman saying we seem to be on hold the economy seems to be basically growing at potential so that is i think a very volatile mix eamon talked about campaign against the fed by the president and will accelerate with a gdp number beginning with a one and the fed stays put.
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i'm not sure what else the president will do but tweet a lot and will tweet a lot more and a lot more tax on the fed and worse enemy than china is severe and see how more severe it can get. >> there's a relationship it seems between the progress of trade talks with china and how hard the president may be pushing on rates and of course that's got to be a part of what the fed is thinking about. this morning we get our reporting from our own eunice yung and that there's great progress made and sit back and may sit back and wait and if you're the president and thinks perhaps things continue to be in a bad place with china do you want lower rates >> the president made clear he believes the federal reserve should be the white house's partner in the trade war against china and that means doing whatever they have to do quantitative easing to boost the american economy to give the american economy, give the president the upper hand in the negotiations
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so far the fed has not been willing to publicly be a partner with the president though it will react depending on how the trade war aexpects the economy the president wants something more tightly synchronized than that. >> i want to bring in steve liesman who knows a thing or two about the fed. steve, what do you know or what can you tell us this morning about this meeting we are just learning about >> it's something that's done i think as we earlier reported not regularly is probably too strong a statement but from time to time presidents meet with federal reserve officials and don't do so with the antagonism that exists with the -- and perhaps this is part of a process you can imagine whereby trying to cool the temperature on what i guess that's jimmy talking before was saying. i don't think that powell is going to be dragged into this trade war.
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this notion out there that the federal reserve should adjust interest rates to adjust the currency is something that the fed specifically believes is not part of its brief. in fact, talking to fed officials they'll tell you it's the province of the finance secretary and the president, not the federal reserve. i don't know the president tried to do that it would not be out of character but i imagine he met a brick wall on that. >> austan, what should we be looking for now? >> when that controversy happens, if it does, i predict there will be a no clarity and there will be differing sides of what was said and was it appropriate or not appropriate i think the thing everybody's who's an investor should be
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looking at is not really the ongoing drum beat that the president thinks the fed should be his puppet and tell them i want you to lower the interest rate i think all eyes should be on business investment and the gdp. as jimmy said, the forecast now are for the next quarter's gdp to start with a one. and you got business investment is now lower than it was before we passed the tax cut. it's not that it's the trump administration's fault you are seeing a slowdown really globe wide, especially in manufacturing. that's got to worry everybody. you know if you're looking at the most cyclically sensitive sectors in the u.s. many of those are giving at least yellow warning lights. >> yeah. you know, jimmy, when we originally scheduled you guys before the breaking news we thought we'd spend time on tikt
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story of fedex and back and forth and how much fedex paid in taxes but the larger takeaway from the story and it relates to austan said, we haven't seen the investment anticipated when we got the tax breaks for corporate america. now, that may be a result of the trade war but i'd love to get your take here has it delivered what was said it was going to deliver when it was signed into law? >> first thing, i would love to be able to run the scenario getting the corporate tax cuts but we don't get the trade war that didn't happen so teasing out the impact of both is always difficult. and two, listen, the administration did republicans and their own tax cuts no great service by selling them in sort of a weird anti-economic way that there was going to be a tax cut and there's this big pool of money and some of it was going to go toward investment and some toward wages that's really not how i think most economists thought it would work if it would work and
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supposed to do was lower the after tax income and encourage more investment that way it didn't do that. yet. it still may and if we got rid of the trade war maybe we see it, the impact of that. it's been highly disappointing. >> but, jimmy -- >> go ahead, steve. >> i just want to point out that a lot of economists, even the majority of economists point out the beginning that the tax rate was not the wedge on investment. you cut taxes into a world of dramatic excess capacity and there was an expectation that there would be a very minimal impact on investment the one place there was some impact was in the intellectual property barry knapp did some nice work on that. but on the hard stuff, goods and
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the equipment, there's not much and the data reflected that. >> and look. there's a reason why this is the most unpopular tax cut in the history of american polling and that's because it's $2 trillion and just did not deliver the things they said it was going to deliver so i think it's very controversial. >> when you're - >> i don't want to go back to 35%. >> when you're looking at the reaction to this, and you see elizabeth warren raising now her proposed wealth tax to a point where you could have people giving all of their profit to the government plus some, is the overreaction on the left problematic for those who would challenge this kind of trump take on the economy? >> i mean, the wealth taxes of 6%, 8% like what bernie sanders said and well exceed the risk free rate of return i publicly
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said you will have big problems applying a tax that'sthat big because it exceeds 100% so you will have a ton of evasion w. that said, what did the trump administration think was going to happen if you cut taxes for big corporations >> guys, going to leave it there. thanks for insights on all of the different issues steve liesman. pot stocks are looking to rebound after getting crushed from weak quarterly results. >> expectations were high the first year of legal recreational
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cannabis recently stocks have taken a hit, big weed down 42% and they lost 15% of value last week after the biggest producers reported earnings. one major issue, there aren't enough retail stores to support demand for perspective. canada and california have roughly the same size population canada has half as many dispensaries, ontario, more than a quarter sales made, announcing 50% more outlets, 10% increase wholesale prices that makeup canadian sales are under pressure croan owes and tilray said price was nearly half last year. some of that from resilience of the black market legal prices increased 5% in the
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past year, while black market have fallen 12%. they're nearly half the price. illicit suppliers have longer standing supply chains the market is expected to triple in 2020, due to revenue streams, with drinking, edible products we have to see if forecasts are realistic going forward. back to you. >> they seem to be getting some. getting a readout of sorts from the president regarding the meeting with jay powell. finished a good and cordial meeting with jay powell from federal reserve. everything was discussed, including interest rates, negative interest, low inflation, dollar strength and the effect on manufacturing, trade with china, eu and others. saving the name calling for another time. >> very cordial. >> he has been active today on
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twitter, suggesting he might testify in the impeachment inquiry. just the latest. speaking of must see tv, let's go to jon fortt with what's coming up on "squawk alley. >> it is easy. keep it here peter atorten joins us aboheut t latest in the market that's next on "squawk alley." - stand up if you are first generation college student.
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welcome back to "squawk on the street." record highs last week, sectors considered less economically sensitive like utilities, real estate, consumer staples are outperforming. for the utilities specifically, they've been underperforming the better part of the last month or so, but the spider utilities exchange traded fund, xlu, is working on a five day winning streak among sector standouts, shares of ever source energy, american electric power, xcel energy and nextera energy stocks are a focus as benchmark
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interest rates pulled back from recent highs watch the ten year note yields i will send it back downtown to you guys at the new york stock exchange, carl. >> dom, thanks. when we return, disney channeling the force we check in with recode's kara swisher when "squawk alley" starts in a few minutes. when i lost my sight, my biggest fear was losing my independence.
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