Skip to main content

tv   Squawk Box  CNBC  November 20, 2019 6:00am-9:00am EST

6:00 am
that mall owners won't be able to pay their debts november 20, wednesday "squawk box" begins right now. >> good morning, welcome to "squawk box" here on cnbc. becky quick will be joining us in just a little bit she's got a big exclusive interview with brian cornell something you don't want to miss plus exclusive interview with the ceo of walmart and activision blizzard. we'll talk about that with
6:01 am
becky. a quick check on the markets now. before the market ownings, dow looks like it would open down off about 115 points s&p 500 looking to open off about 12 points and the nasdaq looking to open down about 39 points. treasury yields. 10-year note at 1.745. we'll be hearing from the fed a little later today in terms of those minutes. >> hearing from lowes right now. lowes is reporting as we promised $1.41, which is above expectations of $1.35. sales $17.4 billion. that might be slightly below what was your number for sales >> i'm looking at comps right now. it seems like they did a domestic comp of three, which is in line with expectations. >> in sted of total sales.
6:02 am
but it still looks like a revenue miss the guidance for the year goes to 5.63 to 5.70. are they going to close some underperforming stores in canada totally 34 of them i guess that's the adjusted net. the gap number there are all those things in line it's down 3.5 points already where is the problem >> i'm looking through this quickly, it seems quite good >> not to people trading the stock. >> with the numbers we are seeing where the stock is trading? >> if i'm looking at this, the nushs stand out to me is the
6:03 am
three comp domestically which is in line with expectations compares to home depot yesterday at 3.8 that's a good number for the year, there is some noise here with what they are doing in canada. they are actually tabiking earnings up. sos that good. >> now it is up. they are listening to you. >> and you are right >> for immediate reaction to lowes, let's bring in brian angle, senior analyst. >> it looks good this luke like the turn around at lowes continues to progress >> all right, you are going to stick around >> i am. >> keep watching people are shifting through these numbers. it was a pretty big beat
6:04 am
initially. just getting to where the street is for the year may not be that great either how above where it was is what >> the street was around 1.35, they did 1.41. >> so six cents there, they are still guiding to 5.63 to 5.70. a couple other big retail stories. walmart ceo speaking out and here is what he told becky at the evolve conference in los angeles about the company's changing business model. >> we have not had one single customer try it that doesn't keep it. i really think there will be a moment where you think of walmart as a service the average household may have 100 items you buy all the time and we'll just manage that for
6:05 am
you. >> that interview coming up this morning. we'll show you a lot more of it. carl icahn placing a bet against malls. saying he's in line to make millions he took a short position on mall debt and suffered some early losses his trades have pitted him against putnam investments and alliance bern stien both which are positive on malls. the good ones are still okay the bad ones need to be closed down >> what are you going to do with them that's the question. >> when is the last time you were out in the hinter lands it has probably been years >> yes >> there are pots in midwest
6:06 am
especially where i grew up in cincinnati where malls are just abandoned. it is sad. >> what is your betting line on the american dream there is a mall now that may be the biggest in the world or country next to metlife stadium. you know what i'm talking about. it has in door skiing opening up >> so they are doing it? >> they are doing it have you seen that >> there is amazon, digital walmart, strip malls, stand alone places we are transitioning i'm not sure it is the end of retail places like the short hills mall one of the best ones in the country. that is still bustling for me, it's all that food in one place. like a bumbell bee
6:07 am
>> it's a tale ofs have and have notes. there are have very, very good malls out there. >> but carl is going to clean up with this, right >> as i travel the country, there are a number of very tired malls on their last leg. >> some call him the grave dancer he's dancing on the grave of the mall is it sad or he's just a greedy billionaire doing what hehas t do to get more rich. >> it is a market. free enterprise. >> i just do it to be devil's advocate we should just stick with who we are. go carl, close those babies down fire everybody line your pockets. shares of urban outfitters the company blaming higher mark
6:08 am
downs due to weaker sales of women's clothing >> are you leaving >> no. >> you are staying >> i'm here. >> i'm going to thank you now and thank you for hanging out. >> thank you for being you >> there is a lot of good things going on there >> tell me pick three >> you saw significant improvement in gross margins early in the year, they had an issue with their inventory they've been fixing that they are driving better sales and better gross margins, they are selling more full price products a testimony to better merchandising. and putting aside saying lowes was going to buy this comp this will help to put that to
6:09 am
rest >> brian, we'll see you in a bit. when we return, tech stocks are on track for the best year in a decade we'll have more with brian's best investment ideas. and target set to report this morning. we'll bring you those numbers and the exclusive interview with the company's ceo after this >> announcer: still to come, one of the most powerful executives in retail. becky's exclusive interview with the ceo of walmart is ahead and the ceo of activion blizzard speaks out "squawk box" will be right back.
6:10 am
♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. and who doesn't love going home.
6:11 am
6:12 am
>> welcome back. it may be turn around time uber and lyft have been struggling mark is with us sees signs of profitability. he joins us. he is the lead internet analyst. we often get to see him through the window in the box but he's
6:13 am
here live. these are two stocks that have been battered and you now like them >> all of them have underperformed in the market year to date if you believe in reversion to the mean, there's probably one or two in there you want to buy. i think uber and lyft are two of those. they've listened to the market saying we want to see profits, show us your path to profit. we think there is enough leverage they can pull to do that we like the assets the companies, we've had one or two quarters >> this short-term opportunity insofar as they get to profitability by 2021, they will have had to reduce the growth rate to get there. >> i don't think so. >> this is the ultimate balancing test here.
6:14 am
>> in the book "super pump" he highlighted how the company was run. if somebody comes in and take out in of those excess spending initiatives and still manage the company for growth the market opportunity is still as good as it was before you've got these two actors. today in new york city, juneau, the distance third ride sharing business just went out of business >> right what about the regulatory risk in certain cities, states, municipalities, countries that say, these drivers are employees. you look at what they are trying to do in california. i asked about this at the deal conference, the idea that the way of the law, the whole thing was structured to deal with uber
6:15 am
and lyft now they are saying this doesn't apply to us because we are a platform how can that be? do you think they are going to win those cases? >> out of my field, the legal stuff. absolutely drivers should get benefits, those who work 30 plus hours a week a vast majority of those drivers aren't there should be a compromise how long it takes, my guess is a year or two slog >> lift at $34 down year to date almost 40% you say the upside to this is what >> i say something like this can go up 50%. that sounds like a big jump. stock going from low 40s up to 60 you get these inflection points, you seen it in the past. like facebook. >> great example it was a mess after the ipo and
6:16 am
turned around. >> amazon was a mess for multiple years companies if they have good execution, investor sentiment will swing who wants the loss >> is it fair or unfair. on the screen we have, beaten ipos worse may be over i can go down that list. look at slack. i use it every single day. yet it is off materially what are the other ones when you look at the rest of the bunch, are there others you touch or no >> not this year but last year is spotify it has gone way up and way down. you can buy it now at the exact same price snap chat is another one pintrest will turn profitable next year for the first time ever there is a new group of
6:17 am
investors that will come in because of that. >> which ones don't you touch. i said slack >> i didn't because i don't cover it >> is there anyone else you would not touch that you do cover right now? >> there is a good number of stocks we don't recommend that we are caution on. usually ones that have gone x growth ebay comes to mind anheuser comes to mind >> does this change the model for you. we saw what happened to spotify, slack. is there any lesson that will change how investors approach ipos >> i don't think so. very few companies can pull off these positions. you have to be in the position where you don't need cash. very few investors who need
6:18 am
that >> thank you lowes was down yesterday in sympathy looks like it could trade at an all-time high this morning after those results. there it is right now. now at 120, up almost 6% still pre-market trading but we see that a lot early on with some of these names. now indicated up almost 5% busy day for news at the interception of business and politics president trump's meeting with tim cook that's all next. >> announcer: coming up, breaking news on target. the company set to report earnings we'll bring you the numbers and an excsiluve interview with ceo brian cornell on "squawk box." sundown vitamins are all
6:19 am
non-gmo, made with naturally sourced colors and flavors and are gluten & dairy free. they're all clean. all the time. even if sometimes we're not. sundown vitamins. all clean. all the time. by the way, she's the it wasnext mozart.g day.
6:20 am
as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences
6:21 am
and engineers outcomes. ♪ cool. ♪ is that pgim, we see alpha emerging in the trendsete? cool. driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to mobile banking and e-commerce... trade and travel surge between emerging markets. every day, our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.
6:22 am
president trump is heading to texas today to meet with apple ceo tim cook in a facility slated to assemble the mac book pro. they won a tariff exemption and announced it would build the redesigned mac book. using today's event to convince companies to add more u.s. manufacturing jobs as for cook, the tour may highlight a strong relationship with the president as he seeks further relief from tariffs on chinese imports. >> i have to say the
6:23 am
relationship is so fascinating they come from completely different sides in terms of some of their own politics. that is clear and yet tim cook has somehow managed to engrashate himself >> at great peril. great peril to the woke social media crowd. >> certain customers and employee base. he's walked a fine line and threaded the needle in a remarkable way >> i know share holder value is not in vogue anymore if it benefits the company whether it is tariffs or recurring favor with people in high places, i think -- people on your side are so quick to
6:24 am
park their joke sensibilities when it benefits them. for example on the nba >> two weeks ago you were saying -- >> i'm not on either side. i'm a social commentator people park their woke sensitivities. >> the actual apple employees and customer base -- >> not the president not everybody is part of the resist tense where they won't accept the 2016 election there are places if you walk in and mention trump, you'll get thro thrown out of the place. >> my real question, do you think tim cook asked the president do this or did the
6:25 am
president ask tim cook do this who wanted this photo op >> are you implying president trump -- >> no. i'm asking the question. >> have you been watching the hearings >> a little bit. >> that's a war shack too. >> we'll see where it lands. >> just when the founding fathers were talking, they didn't put if you are concerned or uncomfortable with something, that's impeachable normally it is like a high crime or law >> bribery, fraud. do those poll well >> it is not about polling absolutely about polling let's go back to the clinton years. too bad hillary and bill are not
6:26 am
in the house because of character. so irrelevant. >> this question it is. this has nothing to do with it >> most people think you need more to reverse an election with 63 million votes >> we'll see where they land okay meantime, becky quick has a very big interview. it is just minutes away and we are going to get to her now. she has flown all the way from los angeles to the big apple >> she's back where she lives and works. just to get back home and see you guys i'm home but not there because i'm here at a target store i'll be in a little bit. i'm at a target store on 34th right now. they are getting ready to report their quarterly earnings we'll be talking to the target ceo about what he expects to
6:27 am
have happen in the holiday season do you know, there is brian cornell standing behind us have you ever heard of a hurricane shot that's what was going on below very, very awkward trying to figure out how to hang out i think they had you on it for ribs 'll n cornell will join us and wetalk about target's earnings when we come back in just a moment. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.
6:28 am
6:29 am
6:30 am
target earnings are out. let's get to becky quick with the numbers. >> okay, target is out with the earnings it looks like they came in on an adjusted basis of $1.36. street waslooking for $1.19. revenue a little better.
6:31 am
$18.7 billion versus $18.49 billion you have 5.7%. full year, the company is now looking for $6.25 to $6.45 the previous guidance had been $5.90 to $6.25 that's a pretty big lift street was at $6.18. now $6.25 to $6.45 and 1.36 to 1.19 4.5% sales versus the street's 3.6% sales produce growth of 2.8% growth in stores and 1.7 percent
6:32 am
from digital sales after a gain of 49% last year pretty key in some of this is same-day fulfillment service drive up and shipt counted for 80% of target's digital sales brother. traffic up 3.71% very strong numbers coming in from target especially if you compare this to home depot and kohls. the reason the dow was down, home depot declined saying they haven't seen the investment they've made on line target is one of the rare retailers this is paying off shares off by 7.75%. better than expected numbers
6:33 am
this quarter back over to you >> so in knew high territory >> all-time high was $114.83, i think. where are we now, $119 that is well above the all-time high we had seen to date a gain of about $8.83 right now, 8% >> we'll come back to becky in a minute she's got target chairman and ceo with her don't miss the ceos of walmart and activision, you can see them here only on "squawk box." servicenow put our workflows in the cloud.
6:34 am
this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead.
6:35 am
servicenow. works for you. (vo) thewith every attempt, strto free itself,pider's web. it only becomes more entangled. unaware that an exhilarating escape is just within reach. defy the laws of human nature. at the season of audi sales event. ♪
6:36 am
6:37 am
>> good morning and welcome back to "squawk box." here with an exclusive interview. brian cornell, ceo of target
6:38 am
with us just after earnings released $1.36 a share versus the basis the previous guidance had been $5 $5.90 $to 6.20 that range is well above that number right now sitting down with us now is brian cornell. looking at the stock now over $9 to an all-time high. you are looking at the stock, it is above $118. what do you think? >> good morning. thanks for joining us here at target >> actually trading at $121 right now. surprised to see the reaction to
6:39 am
this >> certainly gratifying, the team has done an exceptional job in results nearly ten quarters now. the team has done an excellent job. we are rewarding share holders >> in terms of the investments you've put into this, so much has been raising wages, reinvesting in stores, building more stores out and what you've done with digital. your ability now to ship to people same day, allow people to pick up in the store or curb side when did you really believes that the way had to go >> presenting the presentation to our guests whether in store or on line making it easy
6:40 am
dr drive up, or ship to door, we have great value our guests are rewarding us by shopping more in store and on line >> what are you seeing now in terms of the consumer. we are heading into the holiday shopping season, what are you seeing across the country? >> we are seeing a healthy consumer environment, a strong labor environment. unemployment is low. the percentage of consumers in the workforce continues to grow. wages are rising all the indicators now would say this is going to be a very solid holiday season indicators three three and four percent. delighting all the guests and shop on line. >> where do you think you will steel market share from? what competitors
6:41 am
>> in this new, it's the multicategory. apparel was up over 10%. we are clearly delivering great value and quality in apparel and seeing that rewarded by more trips into our apparel department and more shopping on line we have a big home business. clearly in the holiday season, electronics and toys so is beauty that's one of our fastest growing territories. a great reaction to our new brand good and gather in food and beverage toys and electronics that's the magic of our business >> who are you stealing shoppers from are they shoppers that used to go to the mall >> it seems to be. traffic being up over 3% is one
6:42 am
of the most important indicators for me when i look at the health of our business, when we have traffic growing, i know we are getting more foot steps to the stores and clicks to our site that is healthy to us. >> you have six fewer days between thanksgiving and christmas. you need days to get people in the stores it is going to be tougher. what do you do to try to fight that >> we've been planning for it. it is not a surprise we know it will be an intense shopping season. every day counts we make sure we are vesting in our team $50 million in additional wages during the season. we put a lot of time into training 500 hours of additional training to make sure teams are ready for the season twice as many team members
6:43 am
working on same-day fulfillment. our teams are ready. we'll be staffed and ready to deliver. >> that's not cheap to get more people working, paying higher wages, making sure you can deliver more things. yet, i think your margins must have improved significantly at least in the third quarter the revenue beat by a little bit but earnings per share beat by a lot. what happened? >> we saw our operating income grow over 20%. i think it is the balance between strong top line growth, the margin mix in our business, great growth rate in categories like apparent, strength in home and beauty also, we are changing the way we fulfill. a big part of fulfillment is the same-day offerings where our stores are at the center of how we fulfill our digital
6:44 am
experience >> do you make money on that >> those economics when it is order on line and pick up in the store or drive up, those look more like store economics. we talked about this last year in march in our financial committee event. when we go from shipping to d.c. to fulfilling in our stores, about 40% of the cost goes away. when it is order on line and drive up or ship, about 90% of the cost goes away they like the convenience and the ease, the fact that they know they can order on line and come by a target store and we'll have it ready for them >> let's talk store economics. we are sitting at a store on 34th street in new york city one of 11 stores you have now in >> we have quite a few in new york >> people thought it would be impossible to bring a big
6:45 am
discounter to new york city. we took a tour and looked at things here. shocked to see food and how much you can bring in how do you make the economics work here? >> there is great demand for a brand in a market like this in new york city. we are in harold square. thousands of people walk by every day. when we opened a couple of years ago, the demand was enormous the demand is to get it into a smaller place. these are our most productive stores >> you are paying higher rents but making up for it for so much foot traffic >> you pointed out that the make up department downstairs is number one or two in the entire united states. >> we are next door to sephora and across the street from
6:46 am
macys. >> it gets back to the experience we are providing, great value and the brands they are looking for. it is a great experience when you walk in. we pay it off with amazing value. >> you have a lot of national brands that you are offering here there has been speculation with nike stepping away from amazon, you all might be able to be a great retailer or place to be. have you had conversations with nike >> we are always talking to great national brands. we announced an extended partnership with disney. we put 25 disney stores inside a target we'll probably add more. starbucks is in most of our locations. we've had a great partnership with cvs we've added levis. we are very selective. >> is that a yes or no on nike
6:47 am
>> we'll see >> you are not going to tell me just yet is. >> probably won't tell you today. we are always looking for great partnerships we know our guests love great national brands. great known brands like universal thread and national brands like levis and other great partnerships that will continue to build. >> you see numbers like this, people will say wait a second, you had a lot of goods that were tariffed how do you handle that >> our team has been working for years to make sure we have a very sophisticated vendor matrix to have options to offset some of these challenges. this is a tribute to the work our merchants have done and sourcing we can still deliver value to our guests
6:48 am
>> how much of your merchandize is sourced from china? >> significant portion >> greater than 25%? >> yeah but we've also got a great diversified matrix right now, we feel like we are well prepared to manage this tariff challenge going into the fourth quarter >> what do you watch in terms of washington signals i'll have to say, the move we see in the dow tends to be smaller and smaller. how do you prepare >> we watch it every hour of every day. it has been moving each day there is different headlines. we are trying to stay on top of that right now, we are focused on executing our holiday plans and looking into what is going to happen in 2020 we feel like we have great plans in place for the holiday the guests are rewarding us with
6:49 am
more traffic to our site o we have done great preparation >> you say wages are strong in america. is that a good thing or difficult because you've got to pay workers more to be here? >> i think it's a great thing. people are seeing wages rising we made a decision to go to a starting minimum wage of $15 starting by 2020 we want to be a preferred place to work and a destination in retail it is allowing us to attract and retain great talent. we think the best investment we've made is the investment in our team >> thank you those investments are paying off today. target came in with earnings better than expected the last trade on this is up by
6:50 am
about $8.65. gain of 7.8% trading at $119.50 before this, the high had been $114.83. brian cornell, thank you for your time. >> thank you >> guys, we'll send it back to you in the studio. >> great interview, we'll talk a lot more about target. up next, we'll talk about the health of the consumer and the markets. we are right back after this >> announcer: still to come, one of the most powerful executives in retail. becky's exclusive interview with the ceo of walmart is straight ahead. and later, the ceoceo of activio speaks out about the weak quarter. "squawk box" will be right back.
6:51 am
6:52 am
i'm a regular in my neighborhood. i'm a regular at my local coffee shop and my local barber shop. when you shop small you help support your community - from after school programs to the arts! so become a regular, more regularly. because for every dollar you spend at a small business, an average of 67 cents stays in the community. join me and american express on small business saturday, november 30th, and see how shopping small adds up.
6:53 am
6:54 am
welcome back to "squawk box. what a difference a day makes. this time yesterday we were looking at big losses for kohl's and home depot want to talk about the consumer and market rally here with us is the one and only mohamed el erian great to see you, sir. >> it is the tale of the tape. the tale of two days i don't know what's going on here home depot, was that just a head fake in terms of what was going on with the larger retail space? >> it wasn't just home depot, it was home depot and kohl's that disappointed it's important to see target's number this morning. my own view is every input into consumer spending is solid the labor market continues to
6:55 am
outperform. >> those are home depot and kohl's specific problems >> i said i hope i hope these are kohl's and home depot specific but let's see what target comes out with. >> probably a little bit of both and there are specific things about target that make it attractive. >> i'm sure that if you look at the numbers they're capturing market share take a step back, there's no reason to have the consumer weaken significantly income is still up 3% in terms of wages we're still creating quite a few jobs there is some softness but nothing significant at all so i'm honestly not worried about the consumer i'm much more worried about what's happening in the rest of the world. >> you're worried about what's happening in the rest of the world? >> i am. i think this romance, europe is fine, is premature i think you're going to see another leg down in europe. >> therefore, we'll see another leg down here, too
6:56 am
>> not necessarily, but do not listen to people who keep telling you to rotate out of the u.s. in favorable markets. i know the valuation cap is enormous. >> it seems crazy to be here rather than there. >> correct, but they've said that the same thing over the last few years and i've said not yet, not yet, not yet. >> we're going to continue with this conversation with mohamed who will be with us. >> ten years down 1.70 again. >> yeah, 1.74. >> we should talk about the yield curve. the yield curve is starting to flatten again. >> oh, no. that's the last thing we need, isn't it, right before christmas? coming up, a lot more with mohamed who's with us for the rest of the show i have a feeling you're going to push out of that suit. are you okay >> i'm sure i will i'm the residual. >> yes, you are. president trump is visiting austin, texas, with apple -- who wrote this with tim cook. we'll examine that relationship
6:57 am
and how cook has managed to thread the needle between president trump and china. you're watching "squawk box" on cnbc don't forget to subscribe to our podcast. you'll get interviews, original content, and behind the scenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod today. ♪
6:58 am
6:59 am
♪ ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. so it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. ♪ ♪
7:00 am
lowe's and target reporting in the last hour highlights from becky's interview. talking to brian cornell straight ahead. plus, the ceo of walmart doug mcmillan straight ahead that exclusive interview is just minutes away. plus, china, the 2020 election and what's driving markets. mohamed el erian joins us as the second hour of "squawk box" begins right now. good morning and welcome to
7:01 am
"squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen. becky is making her way back from the interview with brian cornell. she'll be joining us with another brick interview. she caught up with walmart ceo doug mcmillon at the cnbc evolve conference in los angeles. we have that exclusive interview straight ahead u.s. equities looking to be in the red. dow looks like it would be off 88 points down s&p 500 down as welby 9 points nasdaq looking to open off about 32 points down despite those good earnings from target this morning, which were better than anticipated. >> becky's on her way making her way back to the studio after her interview with target ceo brian cornell. the retailer reporting results just a couple of minutes ago earnings and revenue above beat the street and the company raised its guidance. target shares trading at an all-time high in the premarket here's cornell commenting on the
7:02 am
quarter and the state of the consumer >> we focus a lot on bringing great inspiration to our guests when they shop our physical store or online making it really easy in all of the fulfillment options, order online, pick up the store, drive into a parking lot. we'll have a ship shopper come to your home making sure we deliver great value. so when we get that balance between inspiration, ease, and value, i think our guest is rewarding us both by shopping more in store and also online. we continue to see a very healthy consumer environment obviously a very strong labor environment. unemployment continues to be very low the percentage of consumers that are in the work force continues to grow. wages are rising consumer confidence is strong and all the indicators right now would say this is going to be a very solid holiday season. >> another big retailer out earlier lowe's after home depot sales miss a disappointing forecast yesterday lowe's reported better than expected earnings.
7:03 am
the shares are rising on that and to top it off at 7:30 eastern we'll hear from walmart ceo doug mcmillon. becky caught up with him yesterday. his comments on the state of the consumer straight ahead. president trump and apple ceo tim cook will be touring a factory. >> reporter: good morning, andrew huge stakes in austin, texas he's going to visit a facility where they build the macbook pro. apple announced they could build the facility here because they got tariff cuts. both men will be at their most diplomatic there has been tension between them in the past the president very critical of apple during the campaign. tim cook hosted a fund-raiser for hillary clinton back in 2016 today though both sides are
7:04 am
going to try to do some persuasion the president is going to be persuading the american public that his tariffs are working that is, american companies like apple are bringing at least some pro tux back into the united states tim cook is going to be trying to persuade the president not to hurt apple with a december 15th round of tariff increases trying to find a way for apple to get additional exclusions and protect so much of its manufacturing. if you look at the macbook pro, overall it's an expensive product, but it's not a major seller in terms of overall revenue. take a look at the revenue of products made in china versus made in the united states. what you see is that mac products globally pale in comparison to iphone sales, which are a much, much bigger sales figure annually for apple according to the q4 report what you're looking at here is macbook pro being a relatively small piece of apple's overall
7:05 am
production but tim cook has to focus on protecting that big number here. that's the number that could be impacted by the december 15th tariff increase, guys. a lot to watch for throughout the day. >> eamon, a couple of questions. it's a little of the strange bed fellow situation taking place there in austin. >> that's right. >> who wanted to do this, meaning was this instigated by tim cook and apple or was this instigated by the white house and president trump in terms of this obviously being in large part what seems like a photo op? >> yeah, look. that's a really good question. we don't entirely know the answer to that neither side will comment. but just in terms of the body language and the communication between the two entities, the white house and apple, all of the communication on this is coming from the white house, not from apple all of our direction on what's going to happen today coming from the white house, not from apple. i think the president has more to gain here than tim cook does. >> right >> there's a lot of risk for tim
7:06 am
cook it's a one-on-one opportunity for tim cook. >> there's been a lot of articles written about how actually tim cook has threaded this needle with the president. >> yeah. >> he has devoted a lot more time than many other ceos in america have talking to the president. to some extent i imagine trying to ingratiate apple to the president given the possibility of tariffs on their products but what seems so interesting to me is how he's thread that same needle at the same time that he's managed to placate what i imagine could be employees who have different political views than the president, consumers that may have very different views with the president and how you think he's managed that. therefore, what this meeting is about i assume is also part of some deal because everything to some degree with the president is a deal. >> reporter: that's right. i'm told that tim cook has managed that in large part by going through the trump family, talking to melania trump at dinners held at the white house, talking to ivanka trump, serving
7:07 am
on the president's jobs board that's very important to the president. remember, a lot of ceos walked away from this president after his comments at charlottesville. here's tim cook showing up again and again. i asked the president what tim cook is doing differently. the president told me, look, he's the only ceo who actually picks up the phone and calls me directly when he needs something. tim cook has been very effective at making his case inside the white house why these tariffs shouldn't hurt apple you're right, tim cook comes from a liberal silicon valley. he hosted a fund-raiser for hillary clinton. these would not be the two men you would think of as boosem buddies. >> i wonder whether this creates a problem for the president not so much as it creates a problem for apple. >> reporter: sure. the question is apple's own employees out in liberal silicon valley as we've been talking about. also here in austin, texas and their customers.
7:08 am
how do apple customers perceive tim cook ingratiating himself with donald trump. there's risk there, but i think if you're apple you look at the risk of the december 15th tariffs hitting all the iphones manufactured in china and say we have to take some action here to preserve our bottom line. >> i missed something. historically i always thought ceos would want a photo op with the president of the united states you're just very disappointed in tim cook, that he hasn't joined the resistance it's such a valuable, great company and it does so well. it must be maddening to you that he consorts with this -- he's normalizing this guy. >> this is not about my view versus somebody else's view. this is the fact that ceos in america decided to distance themselves from the president in large part -- >> at that point in time many have come back. >> after charlottesville. >> some have come back, some have not come back. >> okay. like everybody in this country,
7:09 am
they do need to realize this guy is the president of the united states. >> i recognize that, but i'll tell you this -- >> but you don't accept it you but you recognize it. >> i accept it, i recognize it >> is there anything tim can do to win back your love and your favor. very disappointing. >> tim cook has always talked about apple standing for particular values, particular values, certain values. >> yeah. >> he's fought on immigration. right? he's fought the president on immigration. >> on illegal immigration or immigration. >> illegal immigration. >> so he's for open borders? >> joe, you're trying to spin this whole thing around. >> really? i'm trying to spin it around >> the point is that the president has fought -- >> okay. >> -- the immigration issue. >> illegal immigration. >> he's fought on lgbt issues. >> now you're switching to -- >> hold on my point is president trump is antithetical -- >> president trump is anti-lgbt? >> on several issues has been
7:10 am
antithetical. >> i don't consider him to -- >> antithetical to the approach that tim cook has taken on different issues, immigration being one, lgbt issues being another, frankly abortion being another. >> then you're painting a bad picture of tim cook because he seems like an opportunist who's willing to compromise his own noble virtues for monetary reasons and that's why you're so disappointed with him. >> you said that i did not say that. >> i'm trying to read between the lines. >> other employees and -- >> i'm sorry when someone that you really love disappoints you and i'm just sorry that he's consorting with this -- >> as you know, i'm an apple fan boy. i love apple i like tim cook. >> i know. i know that's what makes it so painful for me to see you -- >> how are you enjoying my seat. >> i am going to do what becky would do >> go to break >> no. at the risk of upsetting both of you, the main issue here, and i suspect is what other ceos are
7:11 am
asking, is how do you proactively balance so many competing constituencies >> that's the question. >> that's what they're going to look -- >> how do you duck and cover >> what others have done is they've gone back to the sidelines and say, i'm not going to do this tim cook has gone straight in and said president trump, china, internal constituencies, markets, i'm going to balance it all. >> i knew it. >> how did he do that? >> how does he do it >> my question is he's done it thus far and does it continue? >> right. >> this is going to be much more public today and does that -- does that change it? >> oh, boy tim. >> i want to give you your seat back i want to give becky her seat back. >> get out of here. >> i hope he's got his story straight for you guys. when we return, medicare for all will be a major topic in tonight's democratic debate. if he's hanging out with -- >> we'll speak to the dean of
7:12 am
stanford medical school. >> how would tim do with elizabeth warren would that be a love fest? plus muhammad el erian talks the markets. so virtuous in so many other ways it would be okay futures are indicated down 81. they have pared their triple digit losses "squawk box" will be right back. ♪ i can shine, i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time.
7:13 am
it's how we bring hope to our patients- like viola. her team treated her cancer and strengthened her spirit. so viola could focus on their future. cancer treatment centers of america. appointments available now.
7:14 am
7:15 am
rising health care costs remain a topic of discussion for a closer look at the future of health care, let's welcome dr. loyd miner dean of stanford medical school. great to have you in this morning. we want to play along and prevent things that's the answer to all of this do you have a list of things we can do so that costs will go down when none of us ever get sick again isn't that what we're all talking about? isn't that the best thing we can do maybe technology can help us >> absolutely. one of the fundamental problems with costs and outcomes is that most -- in fact, almost entirely our focus is on after the fact care >> right. >> it's on reactive care
7:16 am
if we're better able to predict and prevent disease, we have the science and technology that should enable us to do that, if we're better able to predict and prevent disease, then we're better able to prevent the consequences of disease once it advances i'm excited about the way technology can transform that. there's a lot we're doing at stanford and a lot being done elsewhere as well. >> i know you spent a lot of time on the east coast down at johns hopkins. is it easier out in palo alto to develop these relationships with the right companies to forge ahead in the convergence between technology and health care >> a couple of things. i think there's been a long tradition at stanford of getting things into the world and that involves commercialization very frequently and the fact that the tech community is around us and in so many ways stanford has developed that community to develop. it's more fluid to develop those relationships. we're working with apple, we're
7:17 am
working with various divisions of alphabet really to lead the revolution in digital health, both with consumer-facing dev e devices and technologies and also with machine learning, ai and enabled analytics. that's the way we're going to be able to get at this cost problem and predicting and preventing disease. >> i know you don't want to weigh in specifically on medicare for all necessarily we'll litigate this over the next 11 months and probably over the next 20 years, i don't know how long it'll take because i can't imagine private insurance being easy to take away from most people and most people are covered that way i don't know what's eventually going to happen. should that be our goal? my question -- the crux of this whole thing is does getting rid of the profitincentive actuall make it easier to control costs since you don't have to worry about profits? you don't need to make money because it should be cheaper to get care or does the lack of profit incentive make it
7:18 am
impossible to contain costs because there's no one watching the store? that's the ultimate question do you know the answer >> i don't know the full answer, but i do know that in a strictly fee for service world where we're being paid for increments of care in many cases not linked to outcomes, that's a problem. whether or not you consider it a for profit system or not for profit system, the more we can move to value-based reimbursements, the more you can move to evaluating outcomes and then rewarding based upon improved outcomes, the better the health of americans will be and the better our delivery system will be. >> doctor, the entire time we were considering obamacare and the affordable care act, that seemed like what everybody was saying through the entire time here we are ten years later, have we gotten any better on that are there places we're making progress on that front >> we have had fewer uninsured americans. more insured americans that's a good thing.
7:19 am
>> i mean in terms of paying for outcomes or paying for preventive care versus paying on the fee for service. >> right the number of bundled payment arrangements are increasing for joint replacement, certain forms of heart surgery could that pace be increased probably so. i think though that really the fundamental issue is twofold one, predicting and preventing disease and the other is getting information from all the data we have out there today you know, we've moved from paper records to electronic records but really what we've done is to substitute and get rid of paper filing cabinets and substitute with electronic filing cabinets. we haven't gotten rid of the data that's embedded in all of that data. until we do, we're not going to be able to really deliver the type of informed improvement in health care delivery that we've seen in so many other sectors of the economy because they've been empowered by information
7:20 am
we're not in health care. >> i want to get back to getting better at predicting and preventing and link it to a conversation we had here about the flu shot what are the behavioral scientists telling you about not whether you're going to be able to predict and prevent but whether you're going to be able to change our behavior, the consumers' behavior? what does it take to match the science, what you're excited about, to the fact that the human behaviors lag the science? what is that telling you >> well, behavior's the hardest thing to change, that's one thing we all know. i do think technology has a role and i think we're seeing the effects of technology. wearables all too frequently sit on the shelf, but as it becomes easier for our health behaviors to be informed by information we get about our health the more we're able to effectively change behavior let me mention a couple of examples there are several companies that have focused on this, particularly in the area of
7:21 am
diabetes control where we have one variable that we know is very important, that's glucose level. if you look at companies like lavongo, amada health, what they're doing is they're creating communities to help people change behavior regarding diet, regarding taking of medications and to better control or eliminate type 2 diabetes technology can play an important role in helping behavior change but that is, i think, the most complicated thing about really having an impact on the outcomes in health care >> i wear this all the time, this ifb you're the preeminent expert on all things inner ear, are you not? you've won awards and everything. >> yes studying how the ear works, balance system and -- >> these things are not good for us, i don't think. >> do you have anything for trump derangement syndrome is there a drug -- >> i have a different question what about headphones? should you keep headphones in your ear >> i occasionally use ear buds
7:22 am
the key is to keep volume down we can monitor the amount of noise exposure. >> you have no worries about the blue tooth with the brain. >> whether or not it's wi-fi or blue tooth, i think we need a lot more studies and evidence to know whether or not it's going to be a problem. >> your specific expertise is people have a little hole in their skull or something, right, and treating that because it affects balance and your inner ear and everything else, right >> right. >> we've got to go we'll talk off air time now for today's aflac trivia question. in what year was at&t broken up? the answer when cnbc's "squawk box" continues we're honored to have you on campus for the official visit. aflac! coach saban, how is aflac's program different from health insurance? well aflac gives you money directly, for things health insurance doesn't cover. aflac! we put together a little highlight reel for you. here's aflac helping you with your deductible...
7:23 am
copays...out of pocket costs. you look good paying bills. get to know us at mastering biology to advance human health. we can imagine a path to curing cancer, addressing infectious diseases, and figuring out alzheimer's. and i believe our team at 10x will be instrumental in making this the century of biology. we're just getting started. together, we're going to do some amazing things. his haircut is "nice." this is the most-awarded minivan three years in a row. the van just talked. sales guy, give 'em the employee price, then gimme your foot. hands-free sliding doors, stow 'n go® seats. can your car do this? man, y'all getting a hook up and you don't even work here. don't act like i'm not doing y'all a favor. y'all should be singing my praises.
7:24 am
pacificaaaaa! purchase and get $5,361 below msrp plus 0% financing for 60 months on the 2019 pacifica limited. financing for 60 months on the 2019 each day our planet awakens but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs.
7:25 am
all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. now the answer to today's aflac trivia question. in what year was at&t broken up? the answer, 1984 all right. great morning this morning on "squawk box. big interviews we've already heard from target ceo brian cornell this morning up next, walmart ceo doug mcmillon we have that interview after the break. then running against the
7:26 am
trump economy. what investors should be listening for in tonight's democratic debate. later, the big business of video games. activision ceo bobby kodek, the next big break through in gaming and how the call of duty franchise still reins supreme. "squawk box" continues after this break only one thing's
7:27 am
more exciting than than getting a lexus... giving one. this is unbelievable! >>it really is. the lexus december to rembember sales event lease the 2020 rx 350 all wheel drive for $419 a month for 27 months. experience amazing at your lexus dealer.
7:28 am
7:29 am
welcome back, everybody. at cnbc's evolve conference in l.a. yesterday i sat down with walmart ceo doug mcmillon. just last week walmart reopened the el paso location that was the site of the mass shooting back in august. on monday more gun violence unfolding in oklahoma. doug mcmillon has been a vocal leader on gun policy that's where we started our conversation yesterday
7:30 am
>> that's tragic this most recent event looks like a personal situation played out in our parking lot. as you mentioned, el paso is the event that's top of mind through the summertime it happened on august the 3rd and this store reopening we had last week was really moving. it was great to be there with our associates it was great to experience their resilience and the resilience of el paso. you know, i had heard that el paso was a special community and i experienced that firsthand and watching our associates that went through that trauma come together as a family and celebrate their opening and the reunification of that team they had been working in surrounding stores all this time was really special proud of them. >> you did institute some changes in the stores afterwards you stopped selling certain types of ammunition and you have asked customers to not carry guns inside the stores even though you're not creating a law on that. how did you get to that point? what made you think of that? do you think it evolves from here >> yeah.
7:31 am
el paso really thrust us into a situation that we wouldn't have anticipated. as you'll remember, we took some time to think through what we needed to do our first focus was on caring for the associates that were impacted and the customers' families that were impacted and all the things related to that, in store security, looking again to figure out what more we should be doing by location to make things safe and we turned to are we happy with the policies we have and what more should we do it's a very divisive issue obviously. what we've tried to do is come forward with common sense steps. we would love to see government do the same thing, just some practical common sense steps to help make the country safer. and as we've said to everyone, we don't think the status quo is acceptable we think there needs to be change and there could be change while protecting the rights of gun owners as i've tried to communicate, i grew up in a family that hunted and i own guns and we can see all the sides of this issue, but what we ultimately decided to do
7:32 am
was to eliminate our handgun ammunition and certain ammunition that can be used in certain types of rifles including modern sporting rifles and we put in place this open carry policy to try to help make the store feel safe for our associates you go to work there every day they want to feel safe we listen to our associates more than anyone else to ask them what they thought. we tried to arrive at a solution that took some steps that hopefully makes the store safer and hopefully the country safer and then we tried to speak out to the administration and to congress to say, please join us, look at background checks, look at other aspects of this and try to help make changes because these shootings that are happening in schools and other places in the world, including some at walmart, are just not acceptable. >> have you gotten blowback from your customer base >> a little bit.
7:33 am
not much people understand we're not trying to make a political statement here, we're trying to help create a safer environment. >> let's talk about your earnings came out with earnings last week numbers were better than expected but the stock was down a little bit i guess maybe it had built up headed into the earnings season before that. what do you see happening right now in this quarter as we kind of get towards the holiday, which is the most important season for any retailer. >> we're excited about the holiday. we think it will be a good one we have good plans in place. the customer overall is in good shape. we watch the calendar and we have six fewer days between thanksgiving and christmas is a big deal we'll be doing a lot more volume per day. the business continues to grow online our mix shift is continuing to grow the store traffic's up we've got some great plans for thanksgiving weekend and all the way through to christmas i'm confident we'll have a good season, a good year. we bumped our forecast up a little bit when we came out with earnings last week i think that reflects that. >> six fewer shopping days
7:34 am
i don't think people outside the retail shopping world understand how big of a deal that is. >> let's tell everybody there's a little over 30 days to shop. it's an emergency here you have to get all of your gifts lined out, all of your meals planned, it's going to be on us before you know it. >> after your earnings the president actually tweeted about what you all had done. i think his tweet said this, walmart announces great numbers. no impact from the tariffs which are contributing billions to our treasury inflation low. do you hear that powell? so is that true? have the tariffs had an impact on you >> some impact but walmart has a lot of variables to move around and ways to manage mix so we've tried to reduce the impact for our customers. we are known for low prices and we try to resist price increases. when we have to pass them on, we want to go late. so war we've navigated that. it seems to be a volatile
7:35 am
situation. we would love to see the issues with china resolved so we have sef certainty. >> do you get 25% or more on your products? >> the numbers for the u.s. we buy 2/3 of what we sell made in america. china's important and there's some categories where it's really important but it's not the only import country that we work with. >> what is that, electronics >> electronics, toys, christmas seasonal. >> let's talk more about ecommerce. you've built a pretty unbelievable ecommerce business. people have watched in au and it gets points across the board with how you're changing this, getting what customers want. it's not cheap you have the up front, a logistics system in between. it's been reported that you're losing potentially billions of dollars a year on that
7:36 am
when does that turn the corner when does it get to the point that it's an established business and you can make money? >> probably a little bit over time we want to see progress. we're long term thinkers we don't like losses but we look at them as investments we're learning to serve the customer in our case we started with a wage investment. our business is a people business and is it starts with our associates we continue to invest in wages, training, education and we're investing in ecommerce and that creates that pressure. when i think about the future, i think we're going to keep getting better incrementally with our earnings release script, we have a lot of strength in food customers love being able to do grocery pickup we've now ramped up delivery to 1400 stores. customers want delivery. we have a more advanced form all the way into the home in kansas city, pittsburgh, vero beach i got to go on a delivery into the home on monday i think customers are going to love this. you may have some questions
7:37 am
about that, but i think a whole lot of people are going to let us take care of their everyday needs and that relationship enables us to build on our general merchandise assortment, manage margin mix. we're trying to stand up a bigger ecommerce assortment in non-food we're making progress but we're not satisfied with where we are with non-food ecommerce so we're all working on trying to make that better, deliver on time, grow the assortment, add brands. so that we have the entire offer for customers in the end. >> what's the biggest problem you've found in the places where you've betaed this going in the customer's home, delivering the food whether they're there or not >> dogs. we have this place on the app where customers can tell us if they have a dog or not sometimes they misinform us whether the dog is in the house, not in the house we've had a few instances where we stopped the delivery, exit the home, call the owner and say, we'll need to resolve the dog issue before we put your food in the refrigerator.
7:38 am
>> big dogs? >> they pointed to this one particular gentleman, one of our associates who seems to have a knack for running into dogs wherever he goes. >> he's the dog guy. >> a new hazard of working at walmart. >> right there have been reports of tension between the u.s. stores and the ecommerce side of things i can understand that because what is going to work for one makes it more difficult for the other. how do you deal with that? >> i think about clay christian son's book, the innovator's dilemma. it's natural that we have some of that. there are debates we have in the company. i have a leadership team that can work through issues constructively and debate things we make a decision and we move on in our case we've invested in stores and the stores have performed in our associates and store managers have done a great job and we've invested in
7:39 am
ecommerce an grown it. i extent that will continue. i expect in the future we'll be debating other issues. i don't have a problem. >> how do you do it? is it about incentive pay? >> incentives are important but i think mostly it's about hearing each other we're solving problems when you first have the conversation about some of these innovations we don't all see it the same way but we're smarter together what we try and do is go through a process. we're together pretty frequently setting up the right topics figuring out how to grow the company and manage it in a way that we make money as we go and deliver for shareholders that tension and all of those variables when it comes to crunch time, set a budget, make it super interesting and really important because so many people are counting on us it's also a lot of fun. >> you are taking over as the head of the business roundtable in january that will require your leadership on even bigger issues, a lot of issues that
7:40 am
affect not only business but probably the united states and government and policy issues, too. why are you doing that >> because i believe in business and i work for a company that for now almost 30 years from me i have seen do good work and i'm surprised that i was asked to do this but excited about trying to help be one of the voices along with the other leaders in the business roundtable to put facts, proof points behind the fact that companies do care. companies are comprised of people and we care about our customers, we care about our associates and we care about the long term and we're trying to build something that's of high quality. we do invest in wages. we do invest in capital to make sure the companies are here for a long time and in the case of like the statement that we put out last year, i was actually surprised underestimated how much debate there was going to be about it because the lens i was looking through was a walmart lens where we've been doing things with social environment and sustainability and delivering a profit.
7:41 am
the first debate that occurred on the subject i was like, huh something that got people's attention. then you guys in particular and others just kept talking about it and it's become this thing. so now we have this opportunity to come along and say, hey, look at what we've done already there are so many stories that these great businesses can tell and leaders can tell and look at what we're going to go do next and make it come true while delivering for shareholders. this is not a mutually exclusive situation. more reaction, let's bring in bill simon. the former president and ceo of walmart u.s. bill, watching what's happened to walmart over the years, this is a company that continues to reinvent itself against pretty strict odds. what do you think that you've seen >> they've done a great job. doug is a great interview. they've done a masterful job, laying out a strategy, telling a story and executing against it
7:42 am
it's hard to argue they declared where they were going to go five years ago and they've gone there the question is really where do you go from there. they have built as you mentioned in the interview a terrific ecommerce business from next to nothing. that has come at a steep cost. their operating income was 28 billion, it's now 21 billion that's down 23%. their sales have grown 6%, a little over 1% a year. it's time to see traction from that but they have done a really good job laying it out and really changing the direction and the impression that the company's been able to deliver across the country. >> bill, in responding to becky's question about the impact of the tariff, he said we have, quote, many variables to play with? what do you think they are what have they done to minimize the impact of the tariffs?
7:43 am
>> they have many variables. you're seeing the same result. we saw target beat and lowe's beat earnings and there's not a whisper of anything tariff related in there the first thing, this is why i think china will end up eventually come to the table and have agreement they're able to move sourcing from country to country given enough time and this has been going on 18 months plus now. they're able to move supply lines. they're also able to mitigate some of the costs by shifting pressures in some cases asking the suppliers to absorb some in walmart's case, their breadth of assortment is so great that there may be a tariff on a particular item and that is a price elastic item and they can't take price there but they can shift the pricing to another place in the store that doesn't have a tariff with lessee lass stick pricing. so the overall scope and impact from a consumer perspective
7:44 am
seems to be pretty nominal at this stage. >> we talked a little bit with doug just about what he would like to see next with ecommerce. he made the point himself on the conference call last week that they've done very well in terms of grocery they have a little more work when it comes to general merchandise. how would you go about targeting that >> well, i think i would agree with him their competitive advantage is grocery and it's going to be grocery because when you think about the supply chain logistics and infrastructure that's required to get bananas from central america to every zip code in the country in a ten-day window between the time they're too green or too brown, it's really complicated and really complex. it will be years and decades before anybody else can match that so to build their non-grocery business i think they have to do it on the back of the traffic that their grocery business will drive. i think that's where they're sort of headed that would be what i would think
7:45 am
they were going to be doing. >> it's a little trickier. i was just at a target store in manhattan earlier this morning they put the groceries downstairs all the way in the back because i think it's about 32% of the sales in that store that way, everybody has to walk through the store and see something else it's easy to do in a physical store. how do you do that online? >> well, i think what you do -- really the issue i think that walmart's been trying to deal with is how do you take that grocery traffic and translate it to ecommerce they've realized that the physical store is a really important component of it and so most of the grocery is order online and pick up in the store. the key is to get a transaction out of the customer when they pick up. they have to co-market it online just like you hang ice cream scoops next to the freezer section of the ice cream, you're going to have to do the same thing online and show people products that they might be able
7:46 am
to order while they're picking up their groceries. >> bill, thank you for your time today. good to see you. >> thank you, becky. see ya. coming up, 10 of the 18 presidential candidates -- currently 18, face off tonight in georgia for the fifth presidential debate. a preview of what to expect and the topics that matter to your money is straight ahead. then later activision ceo bobby kotick is coming in. "squawk box" will be right back. u active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy.
7:47 am
7:48 am
nature's bounty. when i lost my sight, my biggest fear was losing my independence. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me.
7:49 am
welcome back to "squawk box" this morning take a look at futures right now. head of the market open. we're two hours away dow off about 84 points. nasdaq off 85 points nasdaq off 27 points let's get you caught up on market movers. the company is raising its guidance for the full year that move sparked a big rally in target shares. right now that stock is trading at all-time highs. blew through the all-time highs by a long shot up by 9% gained more than $10 to $121 a share. the stock's all-time high ahead of this was $114.83. also, retailer out earlier this morning, lowe's.
7:50 am
after home depot sales missed a disappointing forecast, lowe's reporting better than expected earnings shares up on that as well. that stock is up 3.9% this morning. when we come back, guest host mohamed el erian will talk to us about the market and much more after the break.
7:51 am
( ♪ ) sure, the content's easy. but then you have to connect, download, edit, reformat, output, save, send, upload... still uploading... and maybe eventually post. this isn't working. introducing samsung business video solutions. with the galaxy note10, you can shoot, edit and post thumb-stopping videos, all from one device. samsung business solutions.
7:52 am
welcome back to "squawk box. democratic presidential candidates will battle it out tonight. for more at what's at stake for
7:53 am
investors and what they need to be watching for, i want to get to kayla tausche in atlanta. kayla? >> reporter: good morning, andrew it's the fifth democratic debate this season. ten candidates will be taking the stage at tyler perry studios which is the first african-american owned studio and it's located on a one-time confederate army base. given that venue and the shift atop the field in the democratic race, expect racial inequality to figure prominently in the discussion tonight mayor pete buttigieg from south bend, indiana, has a new nine-point lead in iowa. he has a spotty record on race expect him to be on the hot seat polls are mixed. uga survey out shows four candidates would have a slight edge over president trump. vice president biden would have a wider lead over president trump though a poll out this week shows biden would only lead trump here in georgia by 1 point which is less than the margin of
7:54 am
error. democrats are hoping they can flip a state that's been deep red. recent races here have hit fundraising records. take a look at last year's gubernatorial run, more than $100 million in 2017 house specsal election brought in more than $55 million but both times democrats lost. house candidate john osoff is trying once again pitching himself as a populist foil to david perdue. >> i'm not taking a dime of corporate pac money. david perdue has taken $2 million in corporate pac money two weeks ago he was charging $100,000 for an opportunity to speak with him >> reporter: so the argument of us versus them, the haves versus the have nots is playing out in georgia. perhaps if it's not a competitive state it will surely
7:55 am
be an incredibly expensive one back to you. >> great thank you, kayla let's talk about the afore mentioned debate tonight once again, our guest host is mohamed el erian, chief economic advisor at allianz it's nuanced since you're so global in a lot of your perspectives i thought when we were all were worried about a recession, i don't mean all, i mean that's all we talked about six months ago. it was a specter, i don't know if the fed intervened, if it was coming, it was not coming at all. you seemed more bullish back then or more positive. more even keeled now you don't seem to be really jumping on the bandwagon that we've avoided it and things are going great because of europe. you weren't really excited back then and you're not really --
7:56 am
>> i think you've got to distinguish between the u.s. -- >> that's what it is >> on the u.s. i dismiss talk of recession. i thought that was ridiculous. i saw nothing in the economic data that suggested recession. the yield curve i could explain by what was happening and the behavior of the ecb. >> you're not more bullish now >> no. >> the same? >> i think on the u.s. we are 2% economy. we will continue to significantly outperform the rest of the world and my only concern about the u.s. is the pull back. i am very worried about europe i think europe is going to stall speed. >> are we at 2% which do you think that's potential or are we below potential because of, a, the trade war or, b, because that's just -- >> there's a reason why -- >> from slowdown globally or from the trade war >> i think we've over come the
7:57 am
impact of the trade war. that's why i asked the question what are the various variables that walmart has been able to use to avoid having an impact on the trade war? i think people under estimate how much operational flexibility there is in the u.s. corporate sector. >> at least for big companies. >> yes my big concern is we're not investing in potential growth. >> companies -- you're talking about the government. >> no, i'm talking about private/public partnerships. >> we're going to have more later. are we still with the population not growing and, b, productivity not growing sowe're stuck at 2 >> we can get above 2. >> you thought we could get to 3 and i wonder why we didn't >> we can we just need another round of pro growth policies. >> oh, no. caving in. >> infrastructure. >> okay. >> dig a few holes and fill them back up? we've got to roll. let's go. when we come back, retail in focus as a number of big reports have moved the sector already this week.
7:58 am
this morning we heard from target and lowe's. yesterday it was a disappointing quarter from home depot that dragged down the dow we'll talk about the state of the consumer. later call of duty and overwatch are big hits for activision blizzard. we'll find out from bobby kotick, we'll be right back. (people talking) for every dollar you spend at a small business, an average of 67 cents stays local. shop small and watch it add up. small business saturday by american express is november 30th.
7:59 am
it's how we care for our patients- like job. his team at ctca treated his cancer and side effects.
8:00 am
so job can stay strong for his family. cancer treatment centers of america. appointments available now. supporting innovative companies that will shape tomorrow and building workforce development and tuition-free college programs to generate the talent companies need. with a $150 billion investment in state of the art, modern infrastructure, and a nation-leading commitment to low-cost clean energy, new york is doing more than any other state to build for the future of your business. new york state, the state of the future. learn more at new york state, the state of the future. (people talking) for every dollar you spend at a small business, an average of 67 cents stays local. shop small and watch it add up. small business saturday by american express is november 30th.
8:01 am
what a difference a day makes? shares of two retail giants soaring on quarterly results 24 hours after another big pair of retail giants tanked. walking the line as apple gets set to welcome president trump to a manufacturing plant today. we ask how ceo tim cook has forged a relationship with the president. and it's game time interview with activision ceo bobby kotick and the new power of esports the final hour of "squawk box" begins right now.
8:02 am
good morning and welcome back to "squawk box" here on cnbc music. it is. live from the nasdaq market site times square i'm joe kernen. going to keep playing it they do that, don't they i should -- anyway along with becky quick, andrew ross sorkin. allianz chief economic advisor. >> mohamed el erian. >> the coatless, jacketless mohamed el erian. >> did you do that >> i did i'm warming up. >> awesome i like it. >> actually, jim jordan, i've seen him get a lot of grief for not wearing jackets. on the onion they said he's getting more casual. just a tie at the impeachment hearing which i thought was -- we should not -- >> not doing that. >> no. i'm definitely not. >> looks very comfortable. >> he is >> look at the sleeves. >> almost too comfortable. >> no one's sitting on this set is too comfortable. >> we'll come up with
8:03 am
uncomfortable questions later. we'll get there. in the meantime watching three big stories this hour. markets and trade. futures pointing to a lower open when the bell rings. yesterday all the major averages hit record highs during the session. only the nasdaq actually closed in positive territory. the market moves covering the u.s./china trade talks president trump said he will hike tariffs on china if the two countries can't make a deal. number two, president trump's big visit to a plant in austin, texas, which he'll be touring with ceo tim cook. it is going to see the mac pro the 180 in retail we've seen today. yesterday several big names got crushed. this morning shares of target and lowe's are soaring i spoke with target ceo brian cornell earlier this morning here he is on his take with the consumer and what's happening in the economy. >> i think we continue to see a very healthy consumer environment.
8:04 am
obviously a very strong labor environment. unemployment continues to be very low the percentage of consumers that are in the work force continues to grow. wages are rising consumer confidence is strong and all the indicators right now would say this is going to be a very solid holiday season. indications are somewhere between 3 and 4% growth for retail shopping in the holiday season >> target shares hitting an all-time high on this morning's results. the company raising its full year profit outlook right now. that stock is up by over 9%. $121.11. lowe's shares up sharply up by 3.6% >> joining us right now to discuss the health of the consumer and the retail specter beth ann levino is here. charlie o'shea, vice president, retail analyst at moody's. good morning to you. >> good morning. >> you look at the target numbers. those are great. the lowe's numbers pretty great. home depot, not so great and you have --
8:05 am
>> kohl's. >> kohl's not so great either. how does that match up to you? what does that say >> in terms of the company specific analysis, i would say it depends on preferences in terms of consumers, what they want also, they're looking for a deal but i would say that overall for the u.s. economy the consumer is looking -- you know, they certainly have the cash. i'm looking at overall -- >> you don't think this is anything about anything in terms of the economy i think what a lot of people this morning are trying to figure out is you look at yesterday, you look at today, it's like the tale of two worlds is this about specific issues at these companies or is there something going on in the economy, both good or bad? >> i think in terms of the overall economy, i don't think it's an issue for households they have the cash certainly you can see maybe there's a distribution in terms of lower income households versus higher income households, but the breadth of the market is strong and people are bringing people that were out of the market back in and that's a
8:06 am
positive. >> let me ask you a target question given where the stock is right now, do you like target? or do you say it's about -- it's priced for perfection? >> i don't -- i don't personally personally i am not allowed to buy stocks so -- compliance doesn't allow me so i can't -- i haven't really looked at it. i would say, you know, if i could i would probably. >> charlie, what do you say? >> i think target's one of the best retailers out there right now and i think there's room for target to run on all fronts. the food business is just gaining traction i think brian cornell's strategy with food was spot on. we thought they needed to do it earlier. they didn't. they waited a little while food drives traffic. you get better exclusive and private label brands around the home and apparel side so when that traffic comes into the stores and on the website you have more things to sell in the higher margins i think target is rocking and rolling right now.
8:07 am
>> becky's now interviewed both the ceos of target and walmart, if you could give your money to one, who do you give it to >> oh, andrew -- >> look, that's the choice for a lot of investors, that's the way they think about this. >> i know. i know from a credit perspective i think right now between the two of them you could almost flip a coin there's a two notch gap in ratings but i think the way both companies are performing they're in a very tight race and in a very tight battle for market share across the categories in which they compete i think you could literally close your eyes, throw a dart at the board and be happy with either one. >> mohamed >> i don't have a view of walmart versus target. i want to go back. last time we were here you asked about the fed. if i remember correctly, i tend to forget, you said they're not going to cut rates. >> right. >> they did. >> yup. >> now what? what's the consequence of them having cut rates when you think they shouldn't have cut rates. >> in terms of what they did, certainly it puts more cushion
8:08 am
for markets. i think that helped -- the three rate cuts helped in terms of the housing market we were a bit concerned about housing. that looks like it's gotten more cushion so you're seeing, for example, building permits going back into more of a positive territory. that's actually strength for the u.s. economy going forward i don't know if it really helped in terms of household balance sheets household balance sheets are in great shape right now. i see that the impact from the fed certainly calmed markets now that we have a yield curve back in positive territory, people are happier on markets, that's a positive i don't see the move in terms of a fed action gave a whole lot. gave a little bit of confidence but that's it. it didn't help with the trade dispute because that's still ongoing. >> we'll leave the conversation there. thank you very much. >> thank you. the next level in activision and bobby kotick what it means for fans in the years to come.
8:09 am
stay tuned, you are watching "squawk box" on cnbc but in my mind i'm still 25. that's why i take osteo bi-flex, to keep me moving the way i was made to. it nourishes and strengthens my joints for the long term. osteo bi-flex - now in triple strength plus magnesium.
8:10 am
fidelity has zero commissions for online u.s. equity trades and etfs, plus zero minimums to open a brokerage account. with value like this, there are zero reasons to invest anywhere else. fidelity.
8:11 am
welcome back to "squawk box. the futures indicated down about 90 points or so. triple digits earlier down yesterday. the weakness in home depot we've had somegood retail reports today. we still see some red across all three averages.
8:12 am
time to talk video games at the cnbc evolve summit in los angeles. i spoke with activision blizzard ceo bobby kotick about the growing popularity of esports and the strength of the consumer >> the gaming business is exploding. i think when you look across the world in the 190 countries that we operate, more people are playing games than ever before and we've seen this huge shift wherefore most of the 30 years that i've been doing my job our products were only sold to middle class consumers in developed countries. but when phones became the device that most people play video games on, it exploded the market and it changed the profile of our customers so like most people, for example, don't know. 50% of our players are women >> 50% of your players are women. how many monthly average users like 316 million. >> it's about 350.
8:13 am
>> so you're talking with that many, reaching that many all the time on a constant basis where's your biggest market right now? not just women but geographically where's your biggest market >> we map to the markets generally speaking i would say the only place under index is in china, south korea, but even there we're starting to see changes but the u.s. is the biggest market europe as a group but if you look at europe, middle east, north africa, that's an enormous, enormous market opportunity that we didn't have access to ten years ago. >> unfortunately with that comes problems, like you have run into the issues with china and some of the dealings there. you guys made a decision when someone who won at one of these positions, one of the hearth stone teams won and he made comments during a live stream. you made the decision to strip
8:14 am
him of the money and then you reversed that. how do you make those decisions? >> if you think of our mission, bring the world together through epic entertainment we have to make sure our audiences feel safe, feel comfortable, feel celebrated how do you take 350 million people and make them feel like they're going to have a great entertainment experience, they build community and connection and remember there's a great speech that nelson mandela gave in 1996. it was his first full year as president and he had to go to the world rugby championships and give a speech. he was worried about what the violence might be and, you know, certain kind of sport that, you know, may not have been tolerant and accepting of him as a president. he gave this incredibly powerful speech that was about how sport is the thing that is the most powerful force in giving people
8:15 am
purpose and meaning and belonging and allowing people to overcome their hopelessness and despair. if you think about what we do at esports, esports gives a greater opportunity to more people than traditional sport. you look at the u.s. today, six times the number of people that play baseball, football, bast k basketball play video games. now we're a business that is about providing that organized competition where people can feel that joy and satisfaction, being part of a community, getting a sense of accomplishment but also having that purpose, meaning and belonging. that's a huge change in what we do from what we've done over the last 30 years. >> did you base it on the professional sports leagues, the idea that you're based in the city you have a team. you're going to be playing so you have local guys there, too did you reach out to the local -- to the professional sports leagues to get your -- how you figured things out
8:16 am
>> i went to -- myself, i went to talk to every commissioner. i went to talk to many of the professional team owners across all sports i talked to broadcasters and i wanted to really understand what made the leagues most successful and what were things that if they could start from the ground up, they could do differently and almost every commissioner said the same thing to me, which is if you can pick your owners, you will be very lucky and i think we have the unique opportunity to pick our owners the second thing i heard was most of these owners are great entrepreneurs but in these league confines and structures, sometimes you can't actually be a local entrepreneur in your market because the league controls a lot of the monetization so we created a structure that would allow these great owners, like robert kraft, stan kronke, jeff willpine to be entrepreneurs in their markets why wouldn't you let great entrepreneurs be entrepreneurs
8:17 am
>> i know you've said looking out maybe ten years down the road you think the economic potential will rival what you see in professional sports leagues. kara switch swisher says what'sr aws? is esports your aws where that business becomes bigger than your original business >> hard to know. i think that our base business has enormous amount of potential, and i would say we're -- we're different than an amazon as an example because each one of these franchises can be its own aws whether it's call of duty, starcraft, warcraft, candy crush, but every one of those has enormous potential to grow their audiences and grow engagement and grow monetization the thing that's good about esports is it gives us the opportunity to recognize them,
8:18 am
celebrate them, reward them. the communities are building great j greater communities. you can have professional competition, semiprofessional competition. the franchises, each one of them has their own potential to be its own aws. >> how do you balance the idea of the franchises that you've had be so successful >> this is the business we have chosen we have the benefit of having a long history of doing this we have more franchises in our library than probably any other company and i think we have more talent than any other company and so we're very good about making sure that our franchises get continual reinvestment because the responsibility we have to our players is to make sure if they're investing hours and hours and hours a week in a franchise, we have to give them
8:19 am
new content. we have to do it with more frequency and more regularity. >> more reaction to that interview, let's bring in john freeman, he covers activision at cra. good to see you. thanks forjoining us. >> thank you for having me, we appreciate it. >> you have a hold rating on activision why is that? >> it's a very straightforward sort of reasoning. i look at the -- i look at the video game space from a tech lens not so much from an entertainment lens, although i think you have to look at both and the reason on a relative basis i think activision is not going to do as well as ea and take two is because of the console cycle. the new consoles from microsoft, xbox 2 and sony play station 5, they're coming out in the fourth quarter of 2020 and i think when i take a look at the hardware specs and, you know, see a lot of simulations of what can be
8:20 am
done here, i think the jump in video and audio realism and engagement with the user is going to be stunning so if you just look at active vision, you've got, you know, maybe 34% of their revenue comes from the console, whereas, it's about 65% for ea and 80% or more for take two that's really it if you look at -- obviously if you look at activision from just their sheer size, you know, i think that it's going to take a while for them to, you know, sort of restart that growth. i don't think the console cycle is going to help them as much on the retail side. you could say that with candy crush which is one of their names. call of duty just launched a mobile version it's had pretty phenomenal success. bobby said it's changed their
8:21 am
portfolio in terms of who their consumer are women make up 50% of their users. that's probably largely candy crush, too what about the idea that you may not need a console to reach a larger and larger audience. >> i don't think you need a console. i think they've already proven that i look at it from a perspective of there's kind of a -- sort of a one goes ahead, then the other takes off. so i think the console leads -- particularly on vr, it's going to be amazing. it's really tremendous the degree of sort of interaction and engagement and all of that stuff when you look at vr. vr is just going to get better it's going to get a lot better and so, you know, just on a relative basis i don't think activision is going to be as big a beneficiary because they have so much mobile franchise, you
8:22 am
know, and revenue. that's a -- yeah, it's hard to grow that big number now having said that, after 2020, you know, i think the dynamics change but, you know, our recommendations aren't based on a 12-month -- you know, on a 12-month time frame. so that's the time frame i'm looking at activision as a company, video games have already taken over television in 2018 i think 118 bhl for video game industry and television dropped to 123 billion. they're only going to grow at a higher pace so i think it's -- the so he can tore itself is a good place to be. >> how do you value esports and what that business might mean over time? >> so, yeah, it's a little difficult. i'm looking at it right now as more of an adjunct and as a way
8:23 am
to, you know-- as a way to get users excited about, you know, playing video games and sort of the ancillary effect on video game sales, which we're already seeing so that -- you know, that's the way i look at it right now however, you know, in terms of, you know, out there maybe two, three years down the road in terms of revenue in and of itself, i think it's real. it's hard to put a number on it. it's definitely going to be material in three years. >> john, thank you for your time today. >> no, thank you appreciate it. when "squawk" returns, what to watch in the latter half. john rogers is going to be our guest. you don't want to go anywhere. he has some interesting picks. back in a minute. coming up, how apple ceo tim cook walks one of the finest lines in business as the iphone
8:24 am
maker gets ready for president trump to visit his texas manufacturing plant. we'll look at how cook has been able to take investors and the president into his corner. stay tuned, you're watching cnbc shop small and watch it add up. small business saturday by american express is november 30th. dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere. most people think of verizon as a reliable phone company.
8:25 am
(woman) but to businesses, we're a reliable partner. we keep companies ready for what's next. (man) we weave security into their business. virtualize their operations. (woman) and build ai customer experiences. we also keep them ready for the next big opportunity. like 5g. almost all the fortune 500 partner with us. (woman) when it comes to digital transformation... verizon keeps business ready. ♪
8:26 am
mastering biology to advance human health. we can imagine a path to curing cancer, addressing infectious diseases, and figuring out alzheimer's. and i believe our team at 10x will be instrumental in making this the century of biology. we're just getting started. together, we're going to do some amazing things. (people talking) for every dollar you spend at a small business, an average of 67 cents stays local. shop small and watch it add up. small business saturday by american express is november 30th.
8:27 am
nasdaq back 26 and change this morning. yesterday the nasdaq actually traded high even though the dow was down. coming up, digital diplomacy. president trump set to visit an apple site today with tim cook trump tweeting the construction of our new austin campus is underway and the assembly line for mac pro is up and running building apple's most powerful mac pro is part of ingenuity we are proud it's being done here help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives,
8:28 am
risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
8:29 am
8:30 am
back to "squawk box" this morning right here on cnbc we're live at the nasdaq market site in times square a couple stories that investors already talking about this morning. the fed will release minutes at 2 p.m. eastern time. the fmoc signaled it was on hold investors will look to the minutes on any clues for what it might take for a rate cut. carl icahn replacing a $400 million bet on shopping malls going short. the activist is the largest short seller of mall debt. the american medical association is calling for an immediate ban on vaping devices. they are citing a surge in teen
8:31 am
use of nicotine. president trump made it clear that he wanted to go after some of this as well. maybe stepping away from that because his base may be worried about it we'll see. it is a big day for apple. president trump is set to visit a texas facility where the company is slated to build the new mac pro. eamon javers is in texas hi, eamon. >> reporter: good morning, becky. here in austin there are big stakes for president trump and tim cook of apple today as the president is going to use the facility visit to make the case to the american people that his tariff program is working. american companies, including apple, are bringing jobs back to the united states and making things here again. for tim cook it's all about persuading the president to spare apple really on any tariff increase that might happen on december the 15th. as we look forward to that trade deadline so big stakes on both sides for two men who have not always seen eye to eye but who have
8:32 am
developed a relatively close relationship over the past year or so. apple today officially announcing the ground breaking of the new facility. here are the new details the new facility is 133 acres. it's a campus already in existence here in austin, texas. they're going to spend $200 million in the mac pro facility here they have 7,000 employees now in austin, apple says, as of this year so major expansion of a pre-existing campus. what we're going to see later today, guys, is the president and tim cook touring a third party firm who makes the mac pros they're a big seller but not near as important as the iphone. take a look at some of the numbers. you see the global mac sales across the world pale in comparison to the phones made in china. a big number in terms of chinese production for apple that's why tim cook today is going to likely spend much of his time focusing on that relationship with trump and
8:33 am
making the case, as he has done before, that apple drives jobs to the united states and, therefore, should be spared from any tariff increases that come up in december. >> okay. eamon, thank you joining us now to talk about trump's visit to apple, editor and chief at the verge tom forte, senior research analyst at d.a. davidson guys, there's a lot of meat on the bone here. beyond meat, old -- actually, beyond meat would not be on a bone anyway, there's a lot to chew on we've been chewing quite a lot on the show. let me start with you. do the possible advantages for apple in terms of operations and minimizing tariffs or currying favor with president trump outweigh what some would see as brand damage to certain core apple constituencies, whether it's people in silicon valley, whether it's just the high negatives he has with certain
8:34 am
segments of the population is the brand damage worst than what tim cook can extract in terms of concessions from the president? >> we'll see today tim cook spends time with president trump in the way others don't. >> does ma make him complicit? if he was your idol, tim cook, he's your favorite business guy, you're woke, you're a millennial, doesn't that ruin it for you? >> i'm not a millennial. i'm older than that. >> i'm not pointing fingers. >> tim cook is a value-driven ceo. he's a good ceo. he's not shy about his values but he has a duty to his shareholders and his company to make sure they don't hit the bottom he spends time with president trump, narcissist, bad with details. he's taken a computer that was manufactured in texas, we're going to stop manufacturing in texas. he extracted some tariff
8:35 am
concessions from the united states government and said we're going to manufacture this in texas again at a third party facility okay i think he won that battle i think donald trump gets to look at a manufacturing facility for a computer that costs $6,000 at an entry price, they're going to make ten of them this year. this is a super expensive computer that most people will never even see and they're going to get tariff concessions on the iphone which they desperately need that's a brilliant move by tim cook a lot of people see he is playing the president personally and he's winning. >> how about you >> i would argue there is no publicly traded ceo who has done a better job of managing the company's relationship than tim cook has done with the president. i think apple has the brand cache that it would not hurt the brand. if you look at the company, they are the only one that can lobby the u.s. government and chinese government when you think about
8:36 am
their influence in both companies. >> why not >> why not because apple has built a brand with consumers including millennials now and has the -- >> it's a wink and a nod that he's just taking the president for a ride anyway so let's get on board and we're all in on the joke except for trump, is that -- >> well, i think it's more about apple is interested in building products for consumers across the globe and doing right by consumers. part of that is managing relationships with governments, both u.s. government and chinese government i think they do an amazing job in china which isn't easy. >> clearly one of the things which the president has extracted from tim cook is today's photo op. >> yeah. absolutely. >> right that was part of the deal as far as we can understand we're surmising here the question is does that change the dynamic? >> i think every time tim cook talks about values and then stands next to donald trump there's a mismatch but every time tim cook talks about values and allows the servers for
8:37 am
icloud to be run by a chinese state company, there's a mismatch he's navigating that constantly. >> right. >> what apple doesn't do is build the jedi program for the department of defense. what they don't do is contract with i.c.e., they don't have the employee discontent. are we building the technologies for this government or any government to misuse against its people they are building consumer technology and that mismatch of values, particularly around china and their exposure to china is is very, very high. so far they've managed to sort of avoids scrutiny of that mismatch days like today that scrutiny gets higher. >> this doesn't change your numbers on apple, i guess, does it >> no, but i'm glad you brought up jedi. if you do a come pair and contrast with how tim cook has handled this versus jeff bezos,
8:38 am
losing jedi is it. >> they were already building the mac pro book in texas. this is a very, very niche product. i doubt the average person will ever see a mac pro unless they go in the store and find the corner of the store. this is a product for professionals. super expensive. they're bringing it back to america. they're going to make tens of thousands. >> you say tim cook has managed this better than bezos but don't you think fundamentally they were in two fundamentally different categories of business >> in this case the category they're both in is very large tech companies based in the u.s. both generating significant job growth in the u.s. think about amazon, they added 100,000 jobs mostly in fulfillment and the u.s. make america great again they're adding a lot of jobs but very contrasting styles, if you
8:39 am
are an investor and you are truly woke, in your esg endeavors you should try not to have companies that make equipment for immigration authorities, is that -- did you say something like that about i.c.e. if you're consorting with i.c.e. that is something that would cause woke people to avoid those companies? >> i don't know if we hear that from investors we hear that from the employees. >> against making software for immigration authorities? >> yeah. the employees of amazon, the employees of google have famo famously who build tools and get deployed in ways they never wanted them to >> ash carter has talked about how it's a problem, the former secretary of defense under president obama. he thinks it's a problem that technology companies have gone this way and that there is an issue with trying to get them to work with the u.s. government. he talked about it pretty
8:40 am
extensively on the show. >> when i talk to sort of the executives, look, if you don't want to work on these products, you don't have to. you can apply for another job. we are not going to reassign you because you have some objection. that's very fair the line is different. apple sells a lot of iphones to the department of defense. >> these companies were, quote, unquote, more patriotic. a better relationship with not just the government but the public they can argue they're actually helping the country. do you think that's an argument or in this day and age it's not really -- >> what's that going to come down to? sell more iphones? everybody already has an iphone. their growth story has been expanding outside the united states for so long so they have transcended the borders of the country. >> do they have a problem as much with complicity for china >> i think absolutely.
8:41 am
>> they do okay equal opportunity then in terms of the wokeness. neale, thank you tom, thanks. >> thank you. we're getting woke to the woke this morning. >> god -- >> coming up when we return, new doubts surfacing over the possibility of a trade deal with china. time's getting short before the next round of tariffs is set to take effect. we will get an update on the trade progress or lack thereof when "squawk box" returns. don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes access look for us on apple podcasts or on your favoriteodst pca app and subscribe to squawk pod today.
8:42 am
8:43 am
8:44 am
welcome back to "squawk box. the futures at this hour down 79 on the dow believe it or not, some of the best levels we've seen triple digits when the show began. down 80. the s&p indicated to open down around 8 and some change nasdaq down 28 president trump is raising the prospect of even more tariffs on china as a december deadline approaches. kayla tausche joins us she's got the latest with what's been happening with the trade war. kayla? >> reporter: good morning, becky. president trump making the comments at a cabinet meeting yesterday with his top economic advisors looking on saying the talks with china are moving along but that beijing needs to do a deal he likes >> i have good relationship with china.
8:45 am
we'll see what happens i'm very happy right now if we don't make a deal with china, i'll just raise the tariffs even higher. thank you very much. >> reporter: white house officials have been hoping that the time between a phase one agreement and the december tariffs meant that they could avert new and higher tariffs altogether, but talks have stalled as china's pushing for more tariffs to be removed and is balking about purchasing the agricultural products that the president has specifically asked for. now relations are intensifying in just the last day with the senate unanimously passing a bill that supports hopping congress's protesters. it slams beijing's intervention and it calls for periodic intervention of the special status that the u.s. has afforded hong kong for the last 20 years china has called this u.s. meddling in its affairs and say if the house and president green light this bill and turn it into law, then it would have no choice but to retaliate. they say democratically elected
8:46 am
officials in the u.s. are free to their views on political and human rights in hong kong and can do what they'd like, but as far as the trade talks go, andrew, back to you. >> we'll talk more about how the trade war is impacting the markets and so much more our next guest oversees $13 billion in assets. joining us is john rogers, ariel investment's chairman. good morning to you. do you think it's baked into the cake the market believes that something is going to get solved next month >> i think you're right. >> right >> people realize it's time to get this china trade war settled. >> when you hear those comments that we just ran from the president, does it make you think that actually maybe we're not going to get there >> it might get delayed. eventually this will solve itself and we'll be back in good
8:47 am
shape. >> you don't think if we're in the middle of december and this looks like it's going south you don't think the markets will go south as well? >> it will be temporary. we've had the ups and downs. we're long-term investors. this will pass, too. we'll be back to normal ground in the next year. >> do you agree with that, mohamed? >> i agree from the short term that we're up and down around a baseline that says truce not resolution, truce. >> right. >> longer term i think that we are somewhere between a pause button on globalization and a reverse button on globalization. let me tell you why. it's not just about economics. it's about economics, it's about national security and it's now about human rights what congress did yesterday is another genie out of the bottle. so over the long term i think there's a genuine question about are markets wired for deglobalization. over the shorter term i completely agree they will go up and down and we'll have a truce
8:48 am
we're going to have a truce. >> go ahead. >> the other thing we need to be working on is what does it mean we have a president pence? we have been doing research on that over the next six months or so we could have that kind of leader. >> wow you just went there. let's go there no, no, no so when you sit around doing the math, you just said you've been looking at what happens in a president pence world. that presumes that the president is impeached under your -- >> no -- well, he's going to be impeached people think that's 80% predicted conviction by the senate is at 15%. >> i understand. we're contrarian investors we think about things from a different perspective. try to think independently and not follow the crowd i think if more and more information comes out there's a better than even chance that the president will be removed. >> better than even chance >> yeah, that's our perspective. >> okay. >> tell us how you get there. >> i think you get there not only on what's happening on the ukraine issue, you start to find
8:49 am
the courts, you know, not siding with president trump and we get all of his financial records out, more and more data out, i believe there's a smoking gun there somewhere. >> wow >> you just believe that or you have -- that's just an opinion >> everybody's got an opinion. >> so you believe this, there's just -- but this is without any -- >> i don't have any inside information but i do think as you find someone's working so hard to hide information, there's got to be something there when it's finally exposed. >> i hear it more as an opinion and hear it as a projection. >> are you putting money to work on that? >> what are the market implications >> i think it will be positive for the markets. once we get into a more settled leadership without all the drama that goes up and down every day and all the tweets that are so challenging to our economy, i think it will be much more of a zen world. >> let's go into the -- >> where are you seeing the
8:50 am
effects of the tweets challenging the economy? in the unemployment rate in the new highs in the stock market in the rising wages? in the lowest minority unemployment in history? where are you seeing the tweets have an adverse effect on the economy that you're talking about? >> i think the way it's destabilizing -- >> as reflected by what? as reflected by what >> i think you're seeing the market volatility -- >> the market volatility going up >> we've had major ups and downs. >> 12 new highs in the dow this is the best year in 20. we're up 24% on the averages. >> yeah, but that's an unfair look at -- >> it's been one of the best -- okay we're -- >> december. >> john manages 13 billion he can speak for himself, andrew? >> let me ask you though to the extent of looking at the world under pence, what does it look like >> i think he'll be constructive when it comes to the work with china. i think he'll with the fed and all the major regulatory bodies,
8:51 am
much more normality. >> the volatility you're arguing that the president is inflicting on the markets is a function of the way he's approaching the trade war with china, as a function of the way he's approaching -- look, i can argue that the way that the tweeting and all of that creates volatility i won't dispute that the question is what kind of genuine impact it had on the marketplace. >> i think eventually we always believe leadership matter and governance matters you see the revolving door of leaders within the white house, leaders within the various cabinet, various cabinet secreta secretaries, the leadership and various aspects of our washington ecosystem, all that change can't be good you need to have some kind of continuity and management. that's what we look for in the companies we invest in you want stable leadership. >> quick question, since you have to map out the -- what happens to the market in a pence world, if pence somehow is in
8:52 am
this new role as our president, what happens in the election you probably have to map that out too. >> there will be a -- it will be a more even playing field. i think much closer race with the pence versus one of the democratic nominees. i'm a democrat, and support the democratic leadership. >> what? >> no surprise, joe. >> oh. >> you' think a tighter race if trump is still in that role, who -- which side do you think is tighter or not? >> i think democrats will win in a landslide if trump is the nom any. >> you do? >> for sure, for sure. the drama that is happening, the position is so hard, you all see the poll results that we all read and see i feel very confident about that >> you shouldn't remove it >> i'm not going to -- >> 11 months. >> have to do that is right for the society. the kind of signal it sends to our country, our children, we
8:53 am
want people that are honest and direct. >> okay. >> john rogers, appreciate you coming in. provocative ideas on a wednesday morning. >> thank you, john. >> thank you >> out to san francisco, and the cnbc bureau at one market plaza. jim cramer joins us right now. what are you doing out there >> actually, listening to your unbelievable interviews. i thought what doug said made me feel like the consumer is strong brian cornell interview says pretty much everything, you got the right technology, if you have a good online strategy, if your stores are clean, then it just brings the shoppers in. i think we have to change the story line better. it is what you talked about with those two companies, things are better than expected and the tariffs aren't really hurting. the consumer spending, that's the story. these are gigantic companies and i think they speak to what is going on in the country. your interviews made me feel terrific. >> i'm glad to hear that same thing, if a retailer has invested and done that over a
8:54 am
number of years, big part of that is digital, got to say it is investing in the stores, investing on paying more in wages. that strategy has paid off for every one of these retailers that has taken that on there are some that are struggling i saw your comments yesterday on kohl's let's dig into that. they're trying to invest now, it has not paid off yet do you think it ever will? >> they're not investing nearly enough i think macy's isn't investing enough you to talk about -- think about what cornell said to you, whether it be shipped, the whole strategy of convenience, where they are, using their stores as warehouses this man has spent since he came in a fortune on rit marvin ellison is spending a fortune on it. all the things i'm seeing out here -- all the companies i'm seeing out here, literally all of them, are designed to make it so you are a target, you have a
8:55 am
walmart. i think we have to think about, hate them or like them, trump has created an environment and washington has created an environment, let's give washington some credit, where the consumer is so healthy, look at what brian said didn't do what he said last year i set himself up a little bit. he said, look, jobs are plentiful. consume hears a lr has a lot ofy i know that is enactuarialtu ene they hate crumb trump. there is amazon out there. these guys have managed to be able to compete with amazon. >> it is amazing target is at a huge all time high today, $122 and change before this $114 and change was their high >> your interview clearly illuminated a strategy that is not only paying off, but is making me start to think that we are really misjudging the
8:56 am
consumer the consumer is going to where there is convenience and value the consumer is spending and kohl's just does not compute >> what do you do if that's your thesis, people are buying walmart and target shares today, buying in big droves, if that's your thesis, where would you tell people to go from here? >> i do think that home depot is not nearly as bad. the stock had run up in advance. and i think now you have to wait i think you have to either have a great offline strategy of value, which is what we're seeing when you take a look at tjx. or online and that's what target is. target is online company walmart, online company. when doug said to you that walmart is a service, that just sent everything -- it sent me into a kind of a belief that unless you spend more time out here, you don't understand how they got to be of service. walmart spent a lot of time out here
8:57 am
>> this week. >> pervasive. >> jim, thank you. >> thank you i learned so much from what you did, becky so much. great job. >> thank you looking forward to your lineup out there today in san francisco. >> thank you. >> will see jim in a few minutes. a programming note, don't miss steve liesman's exclusive interview, later with fed governor lael brainard that's live from the federal reserve today, 10:15 on "squawk on the street. stay tuned "squawk box" will be right back. so servicenow put your workflows in the cloud, huh?
8:58 am
mm-hm. your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you.
8:59 am
dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere.
9:00 am
to the eu gordon sondland is about to testify in front of house intelligence, for that to ylan mui in washington >> good morning. blockbuster new testimony from gordon sondland, nbc news received a copy of his opening statement and in it he will say explicitly that he believes there was a quid pro quo now, here is the relevant portion of the testimony, laying some of the blame here at the feet of rudy giuliani, president trump's personal attorney. he says mr. giuliani's requests for a quid pro quo for arranging a white house visit for president zelensky mr. giuliani demanded that ukraine make a public statement announcing investigations in the 2016 election dnc serverand burisma. he was expressing the desires of the president of the united states and we knew that these investigations were important to the president. he's saying in his testimony that these were an open secret, also point


info Stream Only

Uploaded by TV Archive on