Transcripts For CNBC Squawk Box 20171113

The shanghai up by half a percentage point in europe in some of the early trading right now we are seeing things a little bit mixed across the board. Ftses hanging in there up by. 10 of a percent. They are seeing pull backs by the dax down and the cac off by 1 3 of a percentage oint. Crude oil prices on a climb again last week where oil was up by just over 1. 10 this morning wti back 1 cent i take that back, its unchanged at 56. 74 lets tell you whats going on couple stories were watching this morning couple big ones. General electric is going to announce a major restructuring is going to happen today ge will focus on three or four units, aviation, power, health care ge is planning to shed its majority stake in oil and gas operator baker hughes. Remember that big bet that shedding . Shedding. Shedding. Like skin. John flannery expected to announce the changes at a meeting. Theyre getting out of it he got into it, now hes getting out of it. You build it up and you take it down were going to get more details with flannery tomorrow when he sits down exclusively with cnbc that will happen at 9 30 tomorrow they were putting up for sale. Aircraft. Basically every business but those three businesses the joke, done it too many times . Yeah. The aircraft its tough. All right the chaser. Costs a lot more. Like double. Maybe theres economies of scale. Costs not quite twice as much. I dont know. No, actually, i think it costs exactly twice as much it possibly costs more than twice as much. I dont know. Qe please ubers Board Members have reached a deal to allow softbank investment to 10 billion. They havent released the details. They could take 14 in the company. Investor benchmark is going to be extending it against ubers travis cali anything its not getting rid of it completely theres going to be a tender offer for the shares some sold by the company but most by employees and others who invest in the Company Early on if softbanks able to acquire enough shares, then the deal will be completed and then the lawsuit goes away. If softbank is not able to acquire enough shares, and we dont know how they plan to price this, meaning are they going to offer a lot, a little you would think they offer a little and then the value of the whole thing will go down that creates its own problems. Anyway, well see how this all plays itself out over the next couple of weeks. It will be a month during this tender offer period. Then the wall street agenda busy this week with economic and Earnings Reports Producer Price reports and wednesday tpi, retail sales coming up thursday import prices and industrials like Housing Starts on friday. Were hearing from just about everybody. Home depot coming up, target, walmart, l brand, best buy, gap. Reporting this week cisco and viacom not on the retail list. Big name category. Weve talked about this a little bit already stocks to watch today, start with the potential toy takeover. Hasbro recently approached mattel terms are unclear. Mattel, they have half of hasbro it might help as you can see both companies, this would be theres obviously some synergies there. It would bring together barbie and gi joe i just said that veterans day i thought that was a nice thought. You know, dating, a military guy. I dont know if you saw any of the games yesterday. A lot of good football. A lot of vets a lot of military presence at the games, which they deserved, obviously. Three guys i mean, it was there was a lot of fanning and a lot of at least respect. These guys deserve it. They were very present i was at one of the games and the big flag flyover, a big deal. Its a big deal. In uniforms it was good. Like the nfl almost seemed to be kind of over compensating. Maybe they think they need to at this point anyways, qualcomm is reportedly set to i want that deal. 59 million claim for life but not a second claim 60 million a year. You get a claim for life. Our agent is useless, andrew. Our agent is useless bombastic bushkin. I think that might have been his lawyer. Where is ari. 50 million and a plane for life im trying to get them to cover some of my uber stuff. Should we wake him up right now . Put him on speaker. He probably is awake. Everybody in hollywood is i dont know how many clients he has huge . Yeah. And you saw i mean, not to get off topic. You saw they said this is like 5 of the problem at this point. People are like whos next . People out there are so worried. Marilyn monroe, ohara. An actress tweeted over the weekend that the reason this is coming to media and social media is because theyre taking the place of the Hr Department that never existed in hollywood nowhere else to take the complaint. Qualcomm. Anyway qualcomm is reportedly set to reject broadcoms 103 billion takeover bid as soon as this week the chip makers board met this weekend and they said that qualcomms ceo feels that the 70 a share value under values the company. Then American Tower is buying the indian assets of ideal cellular and vodaphone it gives them an additional 20,000 cell towers it expects assets to generate more than 3 billion of property revenue in the first year. We are following a developing story out of the middle east. Hundreds of people are dead and thousands of others are injured after a magnitude 7. 3 earthquake struck along the iranian iraqi border youre seeing video showing the damage you can see collapsed buildings and lots of debris Authorities Say more than 330 people were killed by that quake. We will continue to follow this story as it develops and bring you more information as we get it President Trump continuing his whirlwind tour through asia today. Hes attending an economic summit in the philippines. Eamon javers joins us. Reporter good morning. We saw the president in manila meeting with Rodrigo Duterte they put out a dinner lid for the white house. It shows you how upside down the time zones are on this long asia trip there you see the two leaders meeting already talking about his meeting with Vladimir Putin as well. The president forced to walk back comments he made in which he suggests that Vladimir Putin means it when the russians did not meddle in the u. S. Elections. He said the u. S. Intelligence leaders were political hacks on sunday he walked that comment back a bit and explained what he meant. Heres what he said. What i said, im surprised that theres any conflict on this what i said there is i believe he believes that and thats very important for somebody to believe. I believe that he feels that he and russia did not meddle in the election as to whether i believe it or not, im with our agencies, especially as theyre currently constituted. Hes with the agencies which have assessed that the russians did in fact meddle in the 2016 election as currently constituted with their leadership, implying he trusts the current u. S. Leadership of intelligence rather than the Previous Group of leadership that barack obama has put in place in either case, they both came up with the same decision. Theyre talking about roy moore, the Alabama Republican Senate candidate who has been accused of dating a 14yearold girl and other teenagers while a man in his 30s. This is what the white house has to say about that. Theres no sanctity than child pedophilia, but having said that, he has not been proven that. We have to afford him the chance to defend himself. The white house looking for roy moore having the chance to defend himself the president will come back most likely on taxes so a lot on the plate. All right thanks to eamon javers did you you didnt want to go to i mean, could you have gone to asia i would stay home if i were you. I went to germany i got to go to the last one. Those over seas trips were fun multicountry trips in a 12 day are back breaking. People come back and are sick and exhausted. Kayla tausche went and has been doing a fabulous job you just waste it on the young. Thats right its nothing for her to do. I dont think shell be sick. I think shell be right back in the swing of things. Fine. I know i know god, wed have to take off a couple weeks, probably. Yeah, right thanks. Lets get back to the broader markets. Joining us right now is phil orlando. He is chief equity strategist at federated investors. Steven parker is the head of thematic Solutions People have been saying it looks like things are starting to take a bit of a breather. Stocks are kind of petering out with this rally that weve seen. Story in the wall street journal that says the rally looks a little worn. Do you agree with that you were up 25 over the course of the last year. The underlying fundamentals support that were 90 through with the earnings 9 year over year. Based on what theyve said, weve tripled the number over the course of the year this is the best earnings weve seen in six years gdp growth is running at a 3 run rate were in the midth st of a globl synchronized run there is some justification in the rally weve seen but certainly taking a breather at any point is reasonable. Steven, we have watched the market be down slightly for a few sessions every time its down people say its the panic because the tax bill is not going to pass. We should probably keep this in perspective. Were really talking about slight pauses. Where do you think stocks are just in terms of betting on a tax bill going through or whether thats baked in or not so a couple of things this is by all accounts the least volatile year weve ever seen in stocks the biggest pull back weve seen is 3 . Thats unprecedented a little bit of a pull back is absolutely normal. What you have to ask yourself is longer term talking about synchronized global growth, thats still playing out on the tax question if we dont get something there, it may cause markets to pull back a little bit i dont think thats the big story. In fact, if you look at the company that would be the biggest beneficiaries of tax reform or of deregulation, they shot up outperforming the market by 10, 20 theyve given almost all of that back i dont think theres any irrational exuberance. You think the same as phil, this is backed up. 85 of the returns in Global Equities markets are driven by global Earnings Growth. Which gets you to the next question if we are backed up in the fundamentals by where we stand, whats the next move do we plateau . Do you see more of a pull back or is this just a breather before we see the next leg up . From our perspective a correction of modest proportions, 3 to 5 is the worst we think we can see bef e we may know this in the next month with the special session with roy moore this reminds me of the aca and scott brown session. At the beginning of that year there was a very hard deadline in terms of change and control of the republicans will need to get their act together quickly, literally over the next month, if theyre going to get this done so we may know certainly by the end of the year whether or not were going to get to tax reform. The tax reform, how much of that do you think that would be the fuel for the next that could take us up to the next level, exactly. Short of that, what happens lets say that doesnt go through. Is that enough for a market pull back or is that a pause and wait and see . If theres some colossal failure as a result of getting this through, we could see a 5 core rex then we have a setup for the next move. We have to regroup and see if we can restructure the tax reform policy but this december 12 data is critical. Youre in charge of thematic solutions. What themes do you see what areas do you like here . Were continuing to find the best opportunities actually outside of the u. S i think the cycle which has favored the u. S. Is beginning to tipin favor of places like the u. S. And emerging markets. Those are places earlier on in recovery and cycle the up side for Earnings Growth which, again, is what we think is going to drive the market is more attractive there. Whats the risk internationally versus the u. S places like asia and those markets are different and theres more secular growth here historically europe and e. M. Tend to benefit more with synchronized growth. If our bank continues to raise rates while other markets are flooding the market with liquidity, wouldnt that mean the dollar is going to go up over the course of the next year and as a result if youre a u. S. Investor looking at taking those profits and putting them back into u. S. Dollars, i think everybody recognizes the u. S. Will be leading. Its not whether the fed will tighten, its how much will they tighten. I dont think the fed is going to move so aggressively that youll see a major move in the dollar in fact, if you looked historically the dollar tends to strengthen and then actually begins to weaken which is something i dont think a lot of people recognize. Phil, how about you what sectors do you like were still over weight energy, financials, technology. Well, certainly the rotation from large cap growth, Large Cap Value has started right around labor day so those stocks have actually started to catch a bid. I agree with Stevens Point on the strength of a dollar given the fact that the fed is starting to tighten, that our economy is doing better. The dollar euro has gone from 122 to 116 here over the last couple of months thats allowed the small caps stock start to catch a little bit as well. We will be focused on large cap stocks and we still like europe and japan. Theres still plenty to buy. Phil, steven, thank you for coming in today. Coming up when we return alibaba sells more than this, are you ready, 25 billion with a b on a single day. For context, american retailers sold less than 7 billion worth of stuff last year on black friday and sunday combined were going to get a live shot from beijing you have to see it to believe it gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. I thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Welcome back to squawk box. Alibaba setting a new singles day record selling more than 25 billion worth of product in just one day. Eunice yoon is in beijing and has more on what i have to say is an astounding, astounding number no matter where youre based. Eunice reporter its absolutely astounding, andrew last year singles day was 2 1 2 times larger than black friday and cyber monday combined and this year it just smashed all records. Alibaba had 25 billion and compound rival j. D. Another 19 billion. The day originated as an antivalentines day for singles to celebrate alibaba turned it into a shopping extravaganza in 2009. They like to look at it to get a sense of how chinese consumers are stenpending their money. International companies are taking part more than ever before alibaba said 60,000 International Brands were selling their goods. 7,000 of them were american. Interesting names out there. In the top 20 merchants, nike and p g came out on that list. Also for Top American Companies that did well on alibaba sites in their category, apple was number one for mobile phones nike also number one for outer wear new balance also on that list. Sketchers, estee lauder and American Tourister were in the top five in their category now in j. D. We saw a similar pattern where people were buying similar items. Apple again topped the list. North face was up 400 columbia sports wear up 800 p gs olay sales and for bose, the sales out paced last years sales in 10 minutes. J. D. Said the other pattern they saw was something theyve seen for a number of years. Chinese people are choosing to buy higher, more sophisticated items. Specialty items did really, really well. 20,000 tons of fresh food. About 2 million hairy crabs. Luxury goods were hot items including watches. In fact, there was one company that i thought was interesting a chinese bijo Company Offered a lifetime supply, 12 bottles every single month for the rest of your life for about 1700. That deal was sold out. Eunice, did you say hairy crabs. What is that . You see them in shanghai. Theyre crabs. They look like their hairy. Theyre really popular you see them when i was saying hairy crabs, i was like, i dont know i needed a further explanation. Should i address that i mean, its phenomenal when you think about amazon or walmart over here being a powerhouse, but the numbers dwarf anything that either of those massive retailers do eunice, thank you. Long delay on some of these things eunice yoon, we give her our thanks for that report in the meantime, ch they can out. Louis vuitton toilet selling for 100,000 well, the good news is its fully functional and it comes with a goldplated bowl. Coming up, a big week for retail earnings. Well tell you what to expect and how to prepare you for it. As we head to break, heres a look at last weeks s p 500 winners and losers opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. What we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream welcome back youre watching squawk box live from the Nasdaq Market stee in times square. Good monday morning. Take a quick look at u. S. Equities futures at this hour. Setting up the week ahead. Open off 42 points down. Nasdaq will open down 7 points s p 500 looking to open 4 points off. Show you whats going on in europe fly over there tell you there, we have call it red across the board with a little bit of green in the u. K. , ftse 100 up marginally breaking overnight, General Electric is reportedly set to announce a major restructuring ge will focus on three core units according to the wall street journal, aviation, power and health care while looking to exit the rest of its operations. One source telling the journal ge also plans to shed its majority stakes in the oil and gas operator baker hughes. John flannery is going to announce the changes, John Flannery will sit down with us tomorrow at 9 30 a. M. Eastern. What is the feeling on the dividends today . Thats the question, right . I havent seen that reported in any. In terms of any of the reports saying they understand whats going to be that just happened . Yeah, theres a flash right now. Reviewing the dividends. Oh. Plans to review the dividends. Lets watch the stock very closely if this is what theyre now saying, that they plan to review the dividend. Not a huge surprise to people. See if it goes down at this point say that again, dave . It says plans to reduce not review. Reduce. Much more significant. Cutting cutting quarterly dividends. Lets continue to watch the stock. To what 20. 64. Cutting it in half. General electric cutting its dividend by 50 . Not the first time. Did it back in the financial crisis there are again, that drop that youve seen over the last couple of weeks was on speculation that the dividends might not be safe. Thought it was on other stuff . On other things, too. There are a lot of shareholders that own General Electric. They rely on the dividends i probably agree, if youre going to do it, you need to do it now as a result youre going to have to change out your shareholder group. They will come and take the place of depends how much the coverage was. Like they had no room to maneuver. By the way, do you know that 4. 685 right now you can understand why it would be cut in half at 12 cents a share. The stock at this point not reacting much, but well keep a very close eye on this through the course of the morning. Also in some other stocks to watch today, Brookfield Property partners has reportedly made a nearly 15 billion bid to buy ggp. Brookfields has offered 20 a share for the general gross properties there are high end retail malls around the country boeing signaling a 50. 1 billion deal to sell 40 787 dream liners to United Arab Emirates that surprised rival airbus when staff attended that News Conference and left the room moments before that announcement emirates chose the boeing planes over the airbus a350. Walmart is charging more online than in the store theyve been quietly raising prices for food and Household Items on walmart. Com including craft macaroni and cheese and purina dog food. Its part of the efforts to try to compete with amazon. Raft mac purina dog food. Its part of the efforts to try to compete with amazon. Kraft mad purina dog food. Its part of the efforts to try to compete with amazon ges report was awful stocks hanging in there. It should now you know, its all the way down to 19 and change everybody who had it on im still surprised im still surprised to see that its in the face of being announced that its going to cut it in half to not have any impact. All right busy week for retail earnings. Were going to get Quarterly Results from target and marble we were supposed to talk about jcpenney beating they lowered their guidance for jcpenney to beat you cant say that was necessarily a bright spot in retail, can you . Its been tough so far nobodys done well so far. A lot of Department Stores generally nordstrom okay . I mean, the result is whos up up to this point, whos beat whos been better. Macys beat on the eps line. From lowered expectations yeah. Expectations from Department Stores generally are very subdued right now. Why is walmart at new highs, almost hitting 100 i think walmart has embraced ecommerce and theyre effectively executing a strategy thats a blend of physical and digital. Look what theyre doing in the u. S. Stores, 13 consecutive positive, 12 consecutive positive increases in traffic and look at what theyre doing on the ecommerce side. Theyve really established a very viable strategy to compete effectively in this environment. Target going to have similar success . Seems like targets had a good quarter i think theres expectations for a pretty good result out of target i think target is playing catchup on the ecommerce side and thats a big concern that we do have. Are you surprised that i mean, walmart almost reminds me of mcdonalds a little bit do the same thing. It was like the old line was going to get eaten alive by amazon. Management makes a difference. And that, too because walmart was never going to be able to its like amazon was theyre never going to get their ecommerce right. Suddenly walmart has never been at these lows ever before. Alltime highs for walmart. Becky said it very well when you look at what Doug Mcmillan has done. You go back, the investment in labor by the way, there were a lot of debtors on wall street. October 15th, i remember it i was you know, and i think but generally, you know, when you look at what theyre doing with their strategy, its been very successful you have Doug Mcmillan leading the strategy, you have greg forn in the u. S. Stores executing seamlessly we have a comp estimate in u. S. Stores led by traffic and then you have mark loreo on the ecommerce side in the u. S. They put together a great strategy and a great plan and theyre executing against it very nicely. So you have what rating on walmart and what rating on target we have a buy rating on walmart and weve just recently taken our target on buy on walmart and target is target price for walmart. Yes, is 100. And then for target were actually neutral rated on target. Neutral yes, thats right who else this week is worth noting and who else do you like . You know, theres been a lot of discussion around the off price sector and whether or not theyre going to continue to be able to effectively compete in this environment we actually believe the off price sector has demonstrated resilience the two successful areas, ecommerce has been one and off price has been the other and, you know, when you look at tjx, you look at ross stores, those are two of our favorite, you know, off priced names of the three really and a lot of its been valuation tj, you know, has been a sluggish stock we think it has a pretty good risk reward. Do you have to follow amazon . I follow amazon. You should. I follow amazon we also recently initiated on ebay when you think about whats happening in ecommerce, the marketplace has been a significant area of growth amazons marketplace, walmarts marketplace. Meaning you have so many more people doing shopping online. Thats a great place to be. When you look at what amazon is doing and what walmart is doing, i think they really established themselves i think ebays been extremely resilient in the face of amazon execution and walmart expansion as well. Held up quite nicely what do you have amazon rated at we have amazon rated as a buy rating. What do you have a buy price . 1200. I thought that was supposed to go down to 1,000. I was sure that was supposed to go down. Really crazy 1125 i dont know we can short it again now and say this is our now its time to go down thats what these guys do. Anyway, seen them do it on apple 100 times. Anyway, thanks good to see you. Thank you thank you. When we come back, much more on that news that just broke General Electric announcing its cutting its dividends by 50 check it out stock is up 11 in spite of the news i guess you can make the argument that its happening in. One of the best tech inspectors now hes betting big on innovation also republican senator john borosseau. Stay tuned, you are watching squawk box here on cnbc. Arossu stay tuned, you are watching squawk box here on cnbc. Sseau. Stay tuned, you are watching squawk box here on cnbc. Asseau stay tuned, you are watching squawk box here on cnbc. Welcome back to squawk box, everybody. Weve been watching the u. S. Equity futures this morning. So far it looks like things are under slight pressure. S p off by 4 the nasdaq down by about 6 news just breaking from dow component. Ge is cutting its dividend by 50 to 12 cents a share. Well hear more. Morgan brennan covers the company and she joins us with more morgan, its kind of amazing the stock is picking up ground since that announcement hit. Stock up by 20 cents. Yeah. Perhaps thats not totally surprising just given the fact that the expectations were growing much more widely in recent weeks that ge really sort of needed to cut the dividend. That was kind of the growing sentiment on the street. So 50 reduction this is a big deal heres why ge said it started paying out a dividend in 1899 has only cut its dividend two other times. Most riebt recently did you thousand 2009 and the other time in the Great Depression its because the company is going through a massive restructuring. The big question is what do they do with that money . What will that free them up and allow them to do John Flannery, the ceo, saying this is not a decision we take light lightly. People saying if he was going to do it, he had to do it now. When you look at Free Cash Flow and the fact that estimates and the most recent Earnings Report came down from 2017 to 7 billion and what it was taking to pay just the dividend this year was 8 billion, then you take into account pension funding, capital expenditures, there was really a short fall for this dividend. It does make sense under the new ceo when you look at the stock down 35 so far this year, again, i think the street is actually looking at at the time when the market is up like over 25 , too. Absolutely. He is going to be John Flannery is going to be addressing wall street he and other Key Executives including jamie miller starting at 9 30 a. M. Eastern also what the divestitures are going to be. He said theyll exit 20 billion worth of additional assets over the next couple of years. Sounds like there are three businesses theyre going to be focused on keeping and shoring up. Yeah, it does seem that way power which is the biggest, aviation has been very strong compared to other businesses and also health care which is what he used to run. Right i guess if youre going to look at this in terms of the proper way of rolling it out, we get some of the details early this morning we find out about the dividend from the company before he even starts to talk to the street i guess you could say. This has been well telegraphed and well messaged out. Since july, late july when just before he came in as ceo when he said that he was going to take four months to have this meeting and for him to do his look at the strategy, the stock is down about 20 . So i think its been sort of sitting there multiyear lows. Its been sitting there with analysts and investors wondering whats going to be next. Right people thought you kind of kitchen sink it. You have the first results coming out you have to put everything in that and turn from there. And certainly we saw that with the last Earnings Report. Morgan, thank you very much thank you and it was a volatile weekend for crypto currency. Bitcoin plunging 15 before bouncing back. Its notable because they dont have the same Circuit Breaker protections as the traditional u. S. Stock index would which would have halted some of this after that extreme drop. Coming up, one of chinas most famous tech investors are going to be joining us on the squawk set he was president of google china. Hes going to tell us why hes investing in automation neck as we head to break, a quick check on whats happening in the european markets now i think we should do that meeting tomorrow. Well wait. What did you think about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. How is that different, for example, than what google and facebook and microsoft are doing, for example generally speaking the American Companies are ahead in the technologies the Chinese Companies trail. A. I. Is a space where people publish relatively freely, and it depends as much on the quality of the engineers and scientists as it does on the quantity of data china has a huge quantity of data three times as many users as the u. S. Even in some of the more recent data, such as phonebased mobile transactions, its 50 times more than here. Albauba can probably gleen more insight from that than amazon can. Right now who do you think who is the true leader you spent time with all of these guys clearly, u. S. Companies are the leader today even within the u. S. Companies, how would you segment it i would say google and then everybody else google and everybody else yeah. However, Chinese Companies will catch up in the next three to five years. Because of the data that they have large quantity of data. Plus, what you can do with it. New ideas to build on top. Imagine 600 Million People with mobile payments. Theres just a lot of creative applications that will come out, such as, you know, Home Delivery of food, shared bicycles, livestreaming. These are apps not seen here we were talking earlier about soft bank, which is putting some money, we think, today finally into uber, but he is putting a lot of money into Artificial Intelligence yeah. Is this good for your business bad for your business . A lot of people talked about whether this could be a bubble or not and whether he, unto himself, is the bubble well, we are a venture capitalist, and we made seven unicorns this year, so were happy to do well without his help, but were also delight to have his help. Im a little worried if some of the valuations become too high they will result in bubbles, and that will be bad for the industry and then the other question is you have a view which is different than many others, which is that a. I. Is not going to take blue collar jobs so quickly, but its actually going to take white collar jobs. Both will happen. A. I. Will be at the same time replacement for blue collar, white collar jobs, and a great symbiotic tool for doctors, lawyers, and you, for example, but the white collar jobs are easier to take because theyreal process. Lets say reporters, traders, telemarketing, telesales, Customer Service analysts. Analysts, yes these can all be replaced just by a software. To do blue collar, some of the work requires, you know, handeye coordination, things that machines are not yet good enough to do so, therefore, are you convinced longterm thatter would going to have a jobs problem in the world not longterm, but maybe in the next ten years within the next ten years. You mean its going to happen much sooner . Much sooner you always say this is an argument i thought there are going to be three people that need to be employed to keep each robot working. Thats what is the roboticists would like you to think so they dont have to answer the jobs problem. Robots are clearly replacing peoples jobs. Theyre more efficient they need some program, but one programmier can program 10,000 robots if you want to keep a robot out of your house, you close the door because theyre not good with door knobs and steps. Theres a shot of a robot, like, totally toppled over because the steps werent conventional type steps. I guess uber needs to be netflix, right uber needs to there wont be any drivers. It will be uber that does the waymo cars or something . Is that how it will work you already have a robot in your house, right . The amazon echo is the beginning of a robot i have one in my house thats not turned on. Okay. Its too nosey. That shows we have the power over the robots, but the robots dont have to be they can be just an appliance. The car that has autonomous driving will not have a humanoid person it will just be without a Steering Wheel this will be different than any other disruption in history. Faster. Different terms of not it will give people, obviously, productivity will go up, and it will give people more free time, but you think that it will in terms of gdp per capita, do you think that goes down because youre not employed, or do you actually is your life actually enriched because you have to spend less time doing these menial things . No one you used to work 16 hours a day on the farm. Not having to do that, but having more food than we can possibly imagine, that has not been a bad thing even though we dont have farmers anymore this time youre saying its going to be different because people arent going to have jobs well, gdp will go dramatically up because a. I. Can do so many things so much more efficiently. Maybe i dont want to work menial jobs like this for i think that is the key if a lot of people will find happiness without working, that would be a happy outcome im sure i could find happiness. Theres a level of dignity that comes with a job. Is there a paycheck that comes too . Now you say that even though most of the time you dont care whether people work or not i mean, in terms of disability and it is nice to get people in the work force. There is a dignity of work theres a dignity of work you dont want a permanent class that theres a social structure. Yeah, there is. It should be a bridge, not a permanent place where people stay making now youre talking about something totally different. Im just glad to see that you think you do appreciate work. Hard to keep it remind you of that coming up, much more on the news that broke this half hour. Ge cutting its dividend by 50 i want to remind de blasio that he doesnt like double taxation either our guest host for the next hour republican senator john b barrasso and the International Brotherhood of electrical workers helped make that happen. The ibews Outstanding Union professionals have the skills and training to get the job done right. Thats good for our customers and for our bottom line. Ibew members are our power professionals. They should be yours as well. Every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, on november 25th get up, get out, and shop small. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. I am the proud father of aeness very strong little girl named adelaide who was diagnosed with infantile spasms an incurable and debilitating form of epilepsy. Its been a devastating journey that has robbed my baby girl of normal development. Thats why i have launched the my shot at epilepsy campaign and im asking you to join me. Take your shot at the hamilton pose, donate to help us find a cure, and lastly, share it on social media. This is our shot to take. Learn more at myshotatepilepsy. Org General Electric slashing its dividend details on this developing story as wall street looks to kick off the new week of trading in the red. The president wrapping up his trip to asia gets ready now to head back to washington senator John Barrasso will join us for the hour to discuss tax reform and other policy issues and a big deal for uber. The company reaching a major agreement with soft bank worth billions putting the company one step closer maybe to an ipo. That story as the second hour of squawk box begins right now. Live from the beating heart of business, new york city this is squawk box. Good morning become back to squawk box here on cnbc. Were live from the Nasdaq Market site in times square. Im becky quick along with joe kernan and Andrew Ross Sorkin. We have breaking news from General Electric this morning. The Company Announcing that it is cutting its dividend in half. Had been its going to be 12 cents a share. That new quarterly payout is reduced from 24 cents. The stock was yielding 4. 685 . You will see that cut in half as well 2. 3 this is a move that ceo john flanery says he does not take lightly. All of this comes ahead of ges investor day thats later this morning in which the company is expected to announce a major revamp. According to the wall street journal ge will focus on three core units aviation, power, and being had while looking to exit the rest of its operations ge also plans to shed its majority stake in oil and gas operator baker hughes. Ges ceo john flan flannorrie i expected to announce the changes later today. Flanery appeared on i squasquan the street and explained the cash flow. 7 billion number its way off of our expectations, anyones expectations that is not the new normal 7 billion is not the new normal there are steps that were going to take to improve that significantly in 2018 and beyond Morgan Brennan joins us to talk more about this move. Morgan i think that soundbyte is exactly why we saw a dividend cut this morning i mean, youhave the new ceo, John Flannery saying that cash flow is horrible it was a shortfall this year 7 billion is what theyre expecting for 2017 the dividend is loan is 8 billion in payouts this year. This is a 50 dividend cut its expected to take effect at the next Dividend Declaration in december this is the third time since 1899 that ge has cut, and this is the first time that its not because of broader Economic Conditions under immelt the bad businesses, they would sell right at the bottom, and then, you know, the getting rid of baker hughes, at least oil is back to 57. It hasnt been here in a while thats recovered maybe it makes sense to sell baker hughes when theyre not in dire straights they loaded up on that at 70 and 08 a ba80 a barrel, right, then it went down to the 40s again. Theyve been selling things theyve been buying things at the high and selling them at the low, but im surprised theyre doubling down on power thats the main problem. Well, power is still their biggest business whether you put power, aviation, and health care together, you are talking about nearly 60 of revenue still. What flannery has said leading up to the meeting today is under the old guard in power, its one of those segments where the leadership has recently changed. They had more optimistic vision of what power business was looking like that they had beefred unon inventory more than heshd this have weve seen and heard other things power and general throughout the world seems to be going through a bit of a decline it will be interesting to see what he has to say about that. Also, the new power ceo Russell Stokes today the other big question is what are they going to shed, right . Flannery has said it will be 20 billion in divest tours. According to the wall street journal article baker hughes is not part of that 20 billion its above and beyond in addition we have to hear if thats actually the case today. Lighting is sort of on the table. Transportation, locomotives, which new ceo jamie miller was running until just recently. Theres been talk about health care, i. T. What is he going to get rid of next obviously these three core businesses, but what else can go it was weird. Remember, they were going to be software all their commercials talked about how, you know, remember all the commercials. Im going to go to work for a Software Company ge theyre exiting software too they had a layoff in that division so there was report on friday that they are laying off in their ge digital division. There are layoffs going on really across the board. Youve got thousands of folks. Youre talking about getting rid of exactly he is up to the costcutting initiative they got it together in health care because there were years where i just heard anecdotally from people that maybe the quality wasnt the same once again, were talking siemens for the imageing business is health care firing on all cylinders right now . Flannery was Running Health care that must be doing okay he restructured, cut costs, and sales began to grow again. He is sort of seen as the person who turned around that specific business as far as ge digital and the Software Push is concerned, it would seem that maybe theres some scaling back, particularly in things not related to the core assets that theyre likely to hang on to. Flannery did just say that digital is still a big part of this basically if you are going to be an industrial company, you have to have a technological component. You heard the narrative thats been put forth hard by a lot of people that immelt came into a difficult situation and he needed to clean up a lot, and the company needed to be restructured is the 17year restructuring, lots of asset sales, lots of buying new things, getting rid of, getting out of insurance, getting out of Financial Services getting out of ge capital. All that stuff is the jury now was restructuring a complete reaffecto . The stock is down 35 the worst performing dow component of any this is a dramatically different company. Dramatically different much smaller it is certainly a company that seems to be somewhat in crisis i think thats why the stock has continued to perform honeywell and well see what comes out of this how long they been selling lighting i thought they sold the light bulbs, didnt they l. E. D. Lighting, this is one of the legacy businesses they sold out like theyve been selling that for the last 20 years nasdaq off off 10. 5 points. The s p off five points. Heres whats making headlines this hour. Walmart raising online prices in an effort, can you believe this, to drive traffic to its brick and mortar stores. The wall street journal reporting the retail giant charging more for some Products Online than it charges for those same products in its stores in the past walmart has aimed to keep online and in store prices equal well see whether that strategy works. Also, Philadelphia Fed president Patrick Harper still expecting a fed rate hike at the years final fed meeting, despite caution over low inflation however, he did say he had slightly less conviction about how such a move would have been previously a Voting Member of the fomc for 2017 qualcomm reportedly set to reject about 103 billion takeover bid from broadcom reuters reporting an official rejection could come as early as today and that broadcom has been mulling the idea of raising its bid, but that was news a week ago when they first made the bid. The Senate Finance committee will start the markup of the version of the tax plan today. Joining us for the hour our guest host senator John Barrasso on one hand, senator, i can see how people that want to pass this would say theres not much difference and that its going to be reconcilable i see that the overarching themes are still in both plans. There are some things that are worth talking about here one is kevin brady over the weekend saying that he guaranteed that getting rid of the state of taxes will not be there will be some deductions left. When thats a key part of the senate plan to pay for, the deductions go. Whats also, a long question, but theres been talk that the president favors one plan or the other. I think it was that he favors the senate plan, right which way is this going to play out here thanks so much for having me. We have a great opportunity here once in a Generation Opportunity to fix a very broken tax system. The talking points again. Im going to get the bottom line is that we are close enough together on the issues, the house and the senate my issue is how close we are on the things to really i agree to change the worst tax system in the world to the best tax system will they be deduct able after this you have problems with some guys in the house. I would like to get rid of all of this em you have the mayor of new york city on the other day. I dont see any reason that people all across the country should be subsidyizing folks that want to live in high tax areas that just encourages additional taxation at that local level. I want to get rid of all of it more important than that, i want to get tax reform and tax relief for the American People. Will you lose your vote if it dpz to committee and it doomz out that the house gets its way and that those some of those state and local deductions remain because thats what they need to get their members on board for. Im continuing to work to yes. We have all of us are committed to getting this done just about every republican senator and house member its that critical weve been living under the last eight years this misguided obsession with redistribution of income this is about Economic Growth for the country. We cannot allow small things to get in the way of this opportunity 30 years to take our to make america the best place to invest instead of one of the worst based on a tax system we agree, both sides of the aisle, both im sorry both houses of congress, lower the Corporate Tax rate to 20 . Have to do that. That is going to generate additional investment and additional opportunities and then make so the front page of the wall street journal is fairer, simpler, straight forward tax system for all americans so people can keep more of the money that they earn someone earlier was it b would be a nightmare, but talking about some of the similarities to when, remember, brown got in as a senator and suddenly the democrats didnt have the votes that they thought they had in the senate for health care. Now you have this roy moore situation here is there some is this going to be an issue do you support him is he going to win the election . Even despite all the stuff that were hearing about . Is there any way to get some other republican elected in what was a safe seat . Ultimately the people of alabama have to make that decision im committed to get tax reform done now i want to get that done before you can get into the issues when one senator leaves and another senator comes in we need 50 votes i want to get every republican senator to support this. Were there. Were continuing to work to get to that, to work out the details. We have to pass something in the senate, pass something in the house, get a conference committee. The president wants it on his desk by christmas. I want it on his desk and signed by christmas as well you know, there are questions about this some people have called this just a tax cut and not tax reform, but if you look through even the joint committee on taxation says that under the senate bill over 20 of those who earn between 200,000 and 500,000 will see a tax increase in the year 2019 well, the joint the big winners the big winners are middle income americans. People that are working hard every day, getting to keep more of their hard earned money thats my focus. Thats what i feel 200,000 goes a lot farther in wyoming than it does in new york or new jersey or in california or in connecticut those are people who are middle income when you look at 200,000 what do you say to that . The great majority of americans are going to have more in their pockets, more takehome pay. The economy is going to be morrow bust. I believe wages will go up theyre going to be lots of opportunities. This is the right thing to do. Its been 30 years in the making its really about Economic Growth the territorial tax. Bringing back money thats overseas discovering the jobs you can go item by item by item. I think all of these things are things that are going to boost the economy. Were at 1. 8 Economic Growth over the last number of years. That cannot be the new normal. We need to get to 3 Economic Growth i believe this does this even if we raise it by. 4 that brings an additional trillion dollars of revenue and stimulates the economy you are allowed to keep you know, youre not getting rid of the estate tax. Youre doubling the exemption. Youre keeping the more importantly. Thats a sacred cow. People go crazy in you do anything youre keeping that at 1 million, but youre getting it all from the state and local taxes. If brady is guaranteeing that he is not going to let that happen, then youre talking about estate taxes really or i dont know. I dont know where you i dont know how you i dont know how you move things around to get it under is. 5 trillion youll need votes from both the house and the senate, and from congressman who represent people you had andrew on he likes the senate plan he came in at a much higher grade. 30 it makes more sense you almost he didnt give me a thumbs up you were dam close, though, werent you . There are elements that look i give him a lot of credit. Theres a lot of credit. I still cant get him i do think there are still elements of it that look were still dealing with the 1. 5 trillion deficit. Oh, i know. We have to figure out its a process. Thats been an anchor we certainly dont want to add to that 10 trillion we got over the last eight years. Going to get the corporate rates down let people decide what they want to save and spend and invest the senator will be the guest host for the rest of the hour. Also, when we come back, more on the big news of the morning. Ge cutting its dividend in half. Well hear from an analyst in just a bit later, uber and soft bank reaching a deal on possibly paving the way for an ipo. Squawk box will be rightac bk. Its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Breaking news from General Electric this morning. Its cutting its dividend in half the quarterly payout reduced to 12 cents a share a move that ceo John Flannery says he does not take lightly. On the squawk newsline analyst jeff sprig, founder of vertical research partners. Jeff, youve been doing this i mean, we probably had you on 20 years ago, didnt we . Who were you with back then . You were one of the guys that you should have changed coverage since you were following ge. This has been miserable for you. Well, says the good news is that i havent been i havent had a positive recommendation on a break here ill take at least that small victory. Why didnt you have a positive recommendation on it for eight years . The companys cash flow is actually weak and problematic for a number of years, and, you know, weve had this very significant disconnect between, you know, what the reporting as earnings and what the underlying cash flow of the company has been, and, you know, that was a mask over the years with a lot of portfolio changes and m a and the like my view was that the company, in fact, was eroding, and thats what has brought us to this point today. If you look at the last five years, the industrial cash flow of General Electric is not covered the dividend for the last five years. That was fine previously when you had ge capital there they pay its fair share, but with capital gone, theres no way to pay this dividend they shrunk the company and its put them in this bind. Eight years ago what could they have done differently eight years ago that would have put them in a different position was it fixable then, or was it already beyond repair . I think it had been fixable, but there were many allocation mistakes over the years. You know, the Company Ended up, you know, quite frankly, buying a number of things high and selling them low and earning exiting businesses they were a bit out of cycle so to speak or, you know, out of the cyclical tempo of what was going on in some of the end markets, and the affect of that of poor Investment Decisions just, you know, always on the result of the cash flow. No doubt. I think of nbc too all right . Absolutely. Sold at the bottom sold at the absolute bottom, and then, you know, oil and gas, yeah, so its its not illegal to be able to paint the picture that was painted for these financial for the reported earnings. There was nothing illegal about covering up the cash flow, right . It was not a fair reflection of what was happening at the company. The results that they were relicing, right, in terms of whether its gap or nongap. Would you call it legal chicanery . What would you call it i dont want to go that far the company was certainly, you know within its rights so to speak to report adjusted numbers. Other companies do that. You know, when you end up having, you know, three adjustment numbers, so you are reporting four numbers, and you have a company this complicated, you know, i think they did basically get people to focus on a number that really just wasnt well grounded in the grund u underlying financials. What was is what youre talking about the result of how they had to report earnings given what they did, or did they actually do you think they knew that this that they were disassembling to some extent, or diagnose took certain actions that allowed this emto disassemble. Or were they just showing you in their best way possible that they were showing you what the actual results were . Which was it well, i think they were they were excludeing negative items to try to show what they would call an operating or ongoing result in many respects the things that they were excludeing, you know, had cash cost with them. Whether its restructuring or pension or other items and so this created this everrising disconnect between what they were calling adjusted earnings and what the actual cash flow of the company was. It keeps its cumulative, and its not overstating to say its come home to roost now with a 7 billion cash flow and an 8 billion dividend really what really kind of pushed us over the edge is this, you know, significant deterioration in the power markets. You know, i think ge was slow to admit or recognize the pressures there, but theyve been coming for a while. You probably saw the big negative announcements out of siemens last week on power its very clear the power markets are in bad shape thats the biggest business at ge you know, to kind of have gotten themselves extended on cash flow here over the last several years and then have their biggest market turned down on them really just left them no out they absolutely had to cut the dividend i was fully expecting this this morning. Right right. Okay i thought there was one other thing. Yeah its an unbelievable story anyway, jeff, im glad you werent recommending it for eight years, but i dont know how much it doesnt help other shareholders people have been in this stock forever. Its sad to see it happen theres 300,000 employees, 500,000 retirees it has real human impact well get more details from John Flannery tomorrow when he sits down clusively with cnbc at 9 30 a. M. Eastern when we come back, more on the big news of the morning. Ge cutting its dividend in half. Well also be looking at the broader markets. Plus, crude prices jumping just in the last month. This morning a new report from osdeilarworldwide demand the tas e straight ahead. Squawk box will be right back. S and threatening to shut down news organizations that report the truth. If that isnt a case for impeaching and removing a dangerous president , then what has our government become . Im tom steyer, and like you, im a citizen who knows its up to us to do something. Its why im funding this effort to raise our voices together and demand that elected officials take a stand on impeachment. A Republican Congress once impeached a president for far less. Yet today people in congress and his own administration know that this president is a clear and present danger whos mentally unstable and armed with nuclear weapons. And they do nothing. Join us and tell your member of congress that they have a moral responsibility to stop doing whats political and start doing whats right. Our country depends on it. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. Flannery. Good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Among the stories that are front and center this morning, two well known toymakers may be joining forces the toy maker hasbro has made a bid for rival mattel no details of the bid have emerged, but mattel currently has a market cap of just over 5 billion, and you can see the stock reacting to that mattel shares up by just over 21 . Thats a gain of 3. 18 to 17. 80 wall street bonuses may rise as much as 10 this year. Thats according to a report by Compensation Firm Johnson Associates that would be the best jump for bonuses since the year 2013. Thor who topped the Weekend Box Office taking in 56. 6 million in north american ticket sales that figure comes in the movies second weekend of the release, and top the combined total of two debut movies daddys home 2 and murder on the Orient Express time to talk markets. Joining us right now to break it down for us is michael, chief just economist at barclays. Greg fisher is here, chief Investment Officer at look at the markets. Theyre marginally down. Retail numbers this week where are we what do you do you have taxes, by the way sort of the elephant in the room right i mean, the tax story is obviously the interesting one with a lot of moving parts for me just the big data point this week will be the cpi release to see whether were getting any momentum at all on inflation. That will tell you a lot about whether we get a hike in december, but whether they continue into march. I think theres a very good case that they hike in december, but go on pause to see where these underlying trends are in inflation. How much do you care if he is successful. I care if were all successful together, right i think picking up on this theme about, you know, what do you do, thinking about the next couple of months, the theme that we consistently see is just the fact that investors are completely underweight at least u. S. Investors, foreign markets. I think its a good time for investors to increase their exposure to the foreign markets. Possibly think about the tax changes and how theyll impact their u. S. Holdings and possibly think about some smart things to do from a tax point of view. Were talking a lot about taxes at the national level, but we want to think about them individually and just on the tax piece, whats what do you think is truly baked into the cake . I mean, what do you think the markets truly believe is going to happen or not i think on average markets do a good job pricing these things. I think investors typically dont have good information about what to do regarding their portfolios and tax changes ive done a lot of research on this over the years. The reality is that if you were to make decisions about whag to do with your portfolio based on your prediction of tax changes, says i think youre probably going to have a hard time with that my best guess is the markets are pricing in it most of whats going to happen at this point. Is that true . I think we would say theres still room to run on that. At least on the equity side given a Corporate Tax rate down to 20 im not sure markets have fully priced in. Well see if that sticks in 2018 2017 what are you expecting we think theres another 7 he said this is happening before christmas that would be a lot earlier than markets expect. I think theres probably another 6 to 7 from potential earnings if it doesnt happen, our treasury secretary says that we would have a real i mean, i dont know if thats sort of a threat, if you will. He says the markets are going to not tank, but that they would come off in a material way do you believe that too . Were committed to getting this done. Were going to get the corporate rates to 20 bring back money from overseas we need to do this, and we need to do it certainly early enough that the impacts are there in the economy for income yenext y. Thats anyone that wants to run forreelection 3 growth. How Many Companies are actually paying less than 20 effectively . What impact will that actually make to their financials is it really as big of an impact as were all thinking it will be in terms of bringing businesses back, in terms of having people make additional investments, in terms of how were going to be dealing with expenses in the health in the model of corporate expensing and taking that early deduction. Those are all things that i think will be helped right away. This is the other side of the aisle. Elizabeth warren and al franken put out a video of themselves. They have different views of what you think it would do they literally start Reading Press releases and earnings calls from ceos over the past year bho have been asked what theyre going to do if the Corporate Tax goes down. Most of them talk about dividends. They talk about buybacks. They talk about all sorts of things like that virtually none of them, of course, in this instance talk about wage gains, talk about more employment or any of it what do you think of that . The American People know what they think about it. We need tax relief and tax reductions al franken, elizabeth warren, they can say what they want. I mean, this is kind of the chicken little, sky is falling if we do this thing, it will get worse. Thats their model i think they had those press releases written, the democrats. Certainly chuck schumer. Before they even saw what we were putting out before we released the bills the Washington Post gives them poor pinocchios. Its important for our country, and its its important for you as investors and market watchers and economists do you think that if this plan goes into effect that it will actually create tremendous wage growth and employment. No, i dont i think the economy is in good shape as it is right now and doing pretty well on the employment front i dont think the tax package would hurt i just dont think it helps as much as propponents say. For people that own stocks, you know, pension plans, and workers that have investments and the dividend goes up how do we stop that . I mean, to its dripping what can we do . What if these Companies Start doing much better . I mean, what if the profits grow what if they get higher profits from this . What are you going to do about that we got to somehow youre not going to do anything about that. The point is to direct it to new investment and new hiring than putting it into dividends and buy backs. Short of wage price controls, thats the way things work you hope the Companies Compete better globally, that they are able to spend more money that they would have spent on taxes investing in plant and equipment and compete better, sell more stuff, bring in more people. You know, maybe the work force gets a little tighter. Thats marginal improvement over thats the way youre hoping it works if some of its buybacks and dividends, then you bring 3 trillion back, so be it. Theres a lot of working class people that have 401ks, and they would benefit from, you know absolutely. Anything we can do to encourage innovation and growth. I dont think any societies ever solve their problems by cutting costs and increasing taxes i think in the long run weve got to do whatever we can do to bring money back here. Thats a good idea and to increase innovation especially for Small Businesses. As far as dividends, i was looking at this too as it relates to taxes you know, dividends have their tax preferential rates if they were to increase for some reason, if the average american is giving up 25 , 30 in taxes on dividends, i dont know that we necessarily think of that as a good thing from an investment point of view if dividend rates go up, then it just takes it away from Something Else gentlemen, thank you. Great conversation appreciate it. Thank you coming up when we return, we mentioned it earlier, uber could be one step closer to an ipo the Company Finally reaching a deal to sell a significant stake to soft bank we have more on this story straight ahead as we head to a break, takes a look at u. S. Equity futures at this hour. Dow looks like it will open off. Its now off close to 75 points. Nasdaq off billion 19 points s p 500 off about 7 approximate t 7. 5 points is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. General electric slashing its dividend mike santolli. Few companies as storied as General Electric it was one of the first, right, and a guy named edison its just an interesting one to talk about you cant avoid it today thats for sure. Especially with all the potential restructuring news were going to hear too as well, mike, right . Without a doubt, joe. Obviously an original member of the dow industrial average you know, clearly the market has seen this kind of reckoning coming for a while, right . The stock its really almost failed to participate in this current bull market. Its down, you know, by onethird in the last 12 months. In terms of this news today, it seems as if i dont know if theres a surprise i dont know if its a surprise that its not more of a wholesale breakup that would have been a little bit of a jarring move right out of the gate to say that were going to have an outright breakup, but i do think that the intention to exit the Energy Business is certainly interesting. Just a general slimdown. As for the dividend cut, this is probably in the vein of what was mostly expected. A having of the dividend at this point really still brings that yield at the current share price to higher than the s p 500 yield. Its right in line with other Industrial Companies whether you want to look at boeing or United Technologies to me its not the reason to sort of own the stock from here or to sell it because it was an unsustainably high yield probably to me its about really the message that comes out of the investor meeting today in terms of how much clarity they have about a path to some kind of Sustainable Cash Flow growth a little more transparency about the accounting and the reporting and how these business lines are going to shake out then keeping health care maybe not a big surprise, but some people were saying, hey, this should trim down to an inf Infrastructure Company heres what i was thinking, mike, when you were saying that. Flannery says its definitely not the new normal the 7 billion. I dont know i guess we can take him at his word lets say to cut the 8 billion dividend in half, you got cash flow of 7 billion youre still using the lions share of your cash flow just to cover the dividend thats been cut in half. Does that mean is that one of the thats whats forcing their hand to sell some stuff too you think . I think i think they could cover it, right . Lets be honest. They can clearly find a way to cover it, but youre right in terms of you dont have a lot left over to invest in growth if thats basically the run rate of cash flow right now. I do think the entire premise of how flannery is approaching this is this is not the new normal. This is not where we expect cash flows to be for a while, but i think theres a general skepticism about exactly how they can prove that right now. Whether it be today in their planes or on an ongoing basis. I do think that asset sales are required i mean, look, you talk about pension accounting theres a lot of stuff that theyll go into the standard, you know, one of the years earnings estimates and what the pe on that type of analysis would be i think taking complexity out of this company to the extent its possible and then trying to this guy should be in a sweet spot in a lot of ways, right this is a Global Company big ticket items capital is cheaper on the world. Many parts of the world are growing, and they have leading positions in these market categories you would think that they should be able to persuade investors that they know how to get to a sustainably higher cash flow multiple and see okay, mike. Thanks well see you later ubers Board Members have reached a deal to allow softbank to invest up to 10 billion in the company. They havent released the details, but reports say that softbank could take it up to 4 . Lisa has more details. Good morning good morning. 14 through a combination of new and existing stock now, the deal is now signed. The tender offer cant proceed, but multiple sources tell me that is far from guaranteed given this very fractured group. Uber confirming yesterday afternoon, weve entered into an agreement with a Consortium Led by softbank and dragoneer on a potential investment upon closing it will help fuel investments and expansion while strengthening our corporate governance. Important here, guys, the words upon closing. The tender deal now has to be successful if softbank is not able to buy at least 14 of uber, it can walk away, according to sources. There is no guarantee that existing shareholders will want to sell. According to a source eligible employees with Stock Options are capped at selling half their holding and bench mark informer ceo, two of the largest shareholders its very uncertain that either party wants to sell any of their stake. Sources tell me the deal is only able to go forward because those two parties finally put aside their latest feud. That cleared the way for this deal to move forward of course, that brings uber closer to some major governance changes and a 2019 ipo okay. Thank you for that its fascinating to see what will happen with all of this whats your expectation in terms of where soft bank comes in in terms of price that theyre going to buy the shares at, do you know i heard a figure of about 50 billion valuing uber the latest round was 68 billion, and there would be that 1 billion investment that would keep its valuation at 60 billion on paper of course, as i said and as you know, a great entry, by the way, with dara. We know that employees and some of the early shareholders, theyre going to have to accept a lower price tag. Benchmark, remember, they tweeted a few months ago saying that they thought it could be worth 100 billion okay. Thank you for that appreciate it very, very much. Coming up, we have much more from our guest host this morning. Senator John Barrasso. Well talk tax reform and the president s trip to asia and i have a million more questions for you. Back in a moment introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. While maintaining a level of protection in down markets. So you can head into retirement with confidence. Talk with your advisor about shield annuities from Brighthouse Financial established by metlife. Yes or no . Gin. Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Zbliefrmt our guest host senator John Barrasso. Youve just come back from your district, or your state talking to people across the state of wyoming. What do people want when it comes to the tax bill . They want tax relief and tax reductions they want a simpler tax system something they can do more quickly and not spend a lot of money on lawyers or accountants trying to figure out thats what we do. You know, when you increase this deduction to 24,000 for a family, the standard deduction that allows many more people to not have to go through the whole concept of filling out a lengthy tax return, they want to keep more of their own money to make decisions. They are also delight at home with President Trumps decisions with the regulations that thinks he has gotten rid of so many that make it easier for jobs in wyoming that allow them to use the Energy Resources that we have the oil, the gas, the uranium for nuclear power. All of those issues, the coal certainly is a big, big part of that the jobs are coming back people are pretty happy and upbeat, and optimistic as a result of the new administration there are a lot of people who look at a tax cut as a result of this, but there are some who will get tax increases not all of them are in the upper income bracket some are in the middle income bracket. Heres someone who just said im in the increase bracket. Someone tweeted me i dont mind paying a bit more, but not when people in higher brackets get a cut that brings us back to the thing that ive been harping on again and again which is carried interest how come in both the house and the senate bill carried interest stands do you think carried interest is income or not . To me its a huge loophole that needs to be closed. The house takes it down to three years. This to me looks like earned income as opposed to a longterm capital gain this is a loophole thats going to be closed its not in the house or senate bill. You see it as income i see it as income instead of the top bracket of 39. 6 that people who earn on a w2 will be charged. Every senator, every congressman that weve talked to about this says they dont like it. How come it exists in both these bills. What happened . Was it lobbying efforts from people who make a lot of money and who, by the way, doubled their donations . The Senate Markup starts today. We had a full Conference Meeting about this this specific discussion was held on thursday of all the senators, they said, look, were going to have this debate and discussion in the senate part of the markup. Realizing its a loophole. Needs to be tightened significantly. Its a 20 billion issue that you could use. You could use that fund for Something Else absolutely. Your standpoint on it is youre going to fight for that to be closed im going to fight to close that loophole, yes what else do you think needs to happen in order to get the bill passed . How quickly do you expect to have this passed well, i agree with the wall street journal this morning i think its important that we eliminate the individual mandate on the Health Care Law this is supposed to be just taxes, not health care, but this brings over 300 billion over the tenyear window to the table that you can use to lower the rates and make permanent the territorial tax system and make permanent the 20 corporate rate its very critical to use it plus, its the right thing to do when you look at the fact that over onethird of the people to pay this horrendous penalty, the tax, if you will, for not having obama care, those are people that earn less than 25,000. When we come back, i want to ask you about the senate versus the house plan this fourth bracket. Raising rates. Reagan, you cut rates across the board. Suddenly were back to, well, we got to pay for this. We got to do this here you dont sound like the last administration we can afford to pay a little more thats not the way if you are looking for redistribution, fine if thats your goal. If growth is what your goal is, you dont do it that way Economic Growth is any goal well also talk about ges move to slash its dividend that news out this morning ge is going to be slashing its dividend in half well talk more about that check out the futures. Under additional pressure. As we head to a break, heres the european look at the market at this hour down across the board with france being the liner the cac is down by. 9 not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. I thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Swho live within five miles of custyour business . 54, like these two. And that guy. Or maybe you want to reach women, ages 18 to 34, who are interested in fitness. Namaste. Whichever audience youre looking for, well find them were the finders. We work here at comcast spotlight, and we have the best tools for getting your advertising message out there. Anywhere, any way your audience watches. Consider them found. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Welcome back to squawk box. Our guest host this morning, senator john barrassa. That will be tempting, senator, and that is if you dont get your way with the state and local taxes and grady says there is going to be some deductions youll have to look somewhere else, and these guys have already said they might go to actually raise taxes above, you know, 39 or whatever it is there was a fourth bracket potentially or something house had a bubble bracket. Will that come back we are going to pass something in the senate. That to me is my focus right now. You dont know what your final bill looks like . The markup starts today. Its going to be carried live. Then what happens when you get together with your buddies across the aisle i mean, across the in the house. Big picture year about to lower corporate rates. Were going to have a territorial tax system were going to give people across the board tax reduction and tax relief, and were going to simplify the system then were going to have to get into the nuances of this i want to im sorry how do you think 2018 is shaping up given the democrats think that, you know, the virginia Terry Mcauliffe is supposed to be our next president now because of what happened in because of what happened in virginia was it that significant . If you do pass this, will it save some seats do you think is it already looking bad in 2018 well, if she they say its the economy stupid, the economy is continuing to grow, and the economy is doing well. Weve had two quarters of over 3 , but what weve had from the Previous Administration was 1. 8. Thats not translating into peoples attitude about President Trump, though. Well, two million new jobs since election day a year ago, and in wyoming this weekend, you know, people what about Inauguration Day doesnt matter on Election Night there was a new sense of confidence did he regulation it was coming the money side people started to be much more optimistic about this. Thanks for being here today we appreciate it great to see you. Coming up, weve got a lot more to come the big news of the morning. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. General electric cuts its dividend by r50 the company set to announce a major restructuring reaction from an analyst straight ahead and ges investor day about to get underway. New ceo John Flannery set to make his case to wall street well take you there live. The final hour of squawk box begins right now this is squawk box. Good morning welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square im joe kernan along with becky quick and Andrew Ross Sorkin the futures right now are indicated substantially lower. Down about 70 points or so in spite of i havent looked at ge recently. Its up, isnt it . Thats not helping the dow 10 or 12 cents. Thats not helping the dow this morning which is indicated down its weaker. We started, you know it feels a little tired things have petered out a bit. If you look at the last two trading days last week, if you look at the weeks gains, overall, breaking nine weeks in a row of gains katie stockton, remember she said now is the time probably. Well see. She was she still was optimistic by the end of the year. Right just talking 3 to 5 . Maybe we havent seen it yet. Any pullbacks that we see are from alltime highs. We got that 90 point down draft, but were not far. Were really not far one day, if it were to pop again, we would be right back on the highs. At this point its a beginning of something right as joe just alluded to, that breaking news this morning, General Electric slashing its dividend by 50 . Heres what ceo John Flannery told cnbc last month about the companys cash flow. The cash flow for 2017 is horrible 7 billion number. Its way off of our expectations anyones expectations. That is not thats not the new normal 7 billion is not the new normal theres a number of steps were going to take to improve that will significantly in 2018 and beyond ge is holding its investor day today. Morgan brennan is there, and she joins us right now ahead of the ceo talking to the analysts who have gathered there. Morgan, go am go en. Hey, good morning good to see you again, becky just behind me, starting at 9 00 a. M. Eastern in this building ge is going to be meeting with wall street it has cut its dividend by 50 shares will now be our payout will be 12 Cents Per Share on a quarterly basis thats liej to take effect starting next month. Theres only been two other times since 1899 that ge has cut its dividend the Great Recession 2009 and the Great Depression 1939 this is a big deal its one that was widely expected by analysts and investors. That is the reason why youre seeing shares trade higher premarket. Its because of that horrible cash flow. The plan to grow that cash is going to be one of the big things in focus from ceo John Flannery at this event here today theres really three sort of big topics to watch. The first is cost cutting. Right now the plan for 2017 to 2018 is to take 3 billion in costs out of the equation through next year. Could that target get more flannery says he is going to offload another 20 billion in assets over the next 12 to 24 months wall street journal reports just this morning that the plan is to focus on core segments, power, aviation, and health care. What else is now on the table . Lastly in light of all of this, what is going to be the longterm profit forecast. Right now for the last couple of years ge has had a 2 per share eps target for 2018. Obviously, at this point thats outdated for months now. Analysts have not expected the company to make that number. Right now the consensus on the street is for 1. 14 per share next year. Is that the number were going to get these are all the questions were going to have potentially answered here today starting at 9 00 a. M. In the building behind me back over to you all right morgan, thanks ge ceo John Flannery also spoke to cnbc about the future plans for the company. Heres what he told david fabfa last month i look at all the capital indications quite rationally if it makes sense to pay a dividend, pay a dividend if it makes sense to buy stock back, buy stock back if it makes sense to sell or buy a company. I dont view it very emotionally. Its around whats the best use of the companys resources Financial Capital and how does that benefit the owners. David faber joins us now. If we get in the weeds and talk about nuance, i have thought of a lot of different things, considering we ge used to own cnbc, and we followed it for a long time. Do you remember, david, when they said, well, welch always seemed to have a couple of extra pennies in the drawer. He was always able to beat expectations well, ge capital helped a lot with that. You and i used to talk about it. We used it kid about it on squawk box years ago its not done anymore now, you know, cramer has made this point too he has gone back and looked at all the Different Companies and the difference between stated and actual, and now were finding out and it seems like thats the thing about accounting eventually it comes home to roost, doesnt it, if you do that for a while eventually the numbers are what they are is that what were seeing here was it Just Creative i mean, no one is saying that theres anything untoward done at this point . I dont think so. Youre right to the extent that perhaps people did not really fully understand the cash generating power of these businesses was not what it seemed to be at least not yet you heard flannery earlier in your introduction talking about, what, 7 billion, which is not a number that covers the dividend, which is why were now 50 lower on the dividend, right, joe . That was 8 billion. You know, joe, when i think about it and you and i have talked about it through the years, and we i think even back many years ago when we were together we may have talked about buying and selling businesses not at the opportune time. It seemed that mr. Immelt perhaps bought high and sold low. That did pile up through the years. Especially when you use debt can you name one that wasnt the case i was just thinking that if you were you would have won the batting title every year if you were able to consistently buy high and sell low. Was there a single thing that was sold high and bought low that you can think of . Not of the big names. I mean, starting with the emerson deal, which was high, and, you know, selling nbc low even ge capital the last big one. Oil and gas whatever was being marked one time is book, and now you could argue financials have come back a bit youre right you know, joe, im curious to your thoughts. It isnt just that you know, the performance of the power business this last quarter, you know, we always assumed i assumed, though, that ge was still being run extremely well now i think some investors are wondering about that too not just, okay, accounting to your point or lack of transparency to some extent and or buying high and selling low, but also just running the business that ge whats your sense on that . Anecdotally, and this is not recent, but anecdotally from people who i assume were in the know, i heard about quality concerns and imageing business and Service Concerns and that siemens was eating this is, like, seven, eight years ago, though, where, you know, the accountability wasnt there. You had someone management that was sort of more interested in, you know, global travels and, you know, relationships politically with the obama administration, but the actual in the weeds accountability for how everything was running operationally wasnt up to speed. Thats what people were talking about. I dont want to mention who told me that, but someone that may have been in a position to know. I would assume so, and that is something of a surprise at this point flannery comes in, and he is saying all the things that i think people want to hear, and those words you just used, accountability certainly will be very important one would expect throughout at the management level, board level. He is taking that responsibility i dont know that were going to get everything from him this morning at 9 00 a. M. When they begin their presentation my sense is its really going to be a first stage, and were going to get more as time goes on, but he is resetting the table, joe, and well see whether he can bring back to your point sort of the Operational Excellence that we know this company for. You remember, david, its much tougher with revenues to do the slight of hand showing Something Better than they always had a reason for missing revenue expectations and it was that we were intentionally shrinking the financial business or ge capital. Were shrinking the base, so revenues are expected to go down a little, but its intentional, and it makes you wonder all that time we were seeing, you know, it wasnt going the right way in terms of Revenue Growth for a long time. No. So you wonder what the base case is, right, joe what really is the revenue producing ability . Do they have enough money now, david say it again. They got 4 billion in def dends that theyre going to have now, and the cash flow is 7 billion. Can they do what they need to do, or is that enough financial leeway now i will believe mr. Flannery when he spoke to us about capital indication and making the right decision i cant believe theyre getting out of baker hughes. Yeah, yeah. They just thats always been a possibilities. It will take years it will take years that was bought with when oil was what was it trading for when they were building up the oil and gas assets that was before 1980s, 1990s. It was another one you dont have any left, do you . No. Do you i cant find i cant find 800 shares i cant find the certificates, and it costs, like, 1,500 to get new shares, so im, like, oh, ill just keep it. No i have some. You do . Those options that we got repriced the way everybody else is no, no. Is that out there . What did you just say . Did you really just say that yeah, i said it mine is i got wall paper in a very small room one of my rooms is wall papered with my options. Other people got them repriced is that true say again other people had them repriced thats what you told me love you, david, so much. So much i love you you dont know well, its true its true. Its true. Thats not fair you know, i dont think thats fair do you think that was fair people with do what they want, right . What did it save them . From pricing some people, not repricing other people where did it get them . Got them 20 in a dividend cut lets get to an analyst joining us now is brian langenburg principal at languagenburg and company. Did you hear all that, brian oh, absolutely. What do we have right . What did we get wrong . You nailed a lot in terms of the buy high, sell low i remember when they were tossing the wall that the oil and gas sector were talking about pre baker hughes at the time their assumptions were that the end market was going to grow 7 to 9 for several years. They were paying three times revenue. Pretty much nailed it. To the other point, except for a few good boltones in terms of integration, pretty much everything they bought theyre going to pay for, and pretty much most of what they sold, they sold too low or not at an impressive price youre right that is the past in terms of what John Flannery is going to say today, this and that, you know, when you are tracking an elephant, you dont walk right behind its butt okay just walk behind at a distance, and you think about what you are going to at least expect think about this you are John Flannery. You are a ge lifer somewhere several months ago they tapped you on the shoulder and said congratulations you get to be ceo. The ceo leaves the cfo, Jeff Ornstein goes from being promoted to vice chairman to, oops, getting thrown out, and your new cfo came from one of your smallest units noncore. Probably got her key to the ladies room at this point, and theyre on the Third Quarter call saying i think we understand this kind of business no, they have to get their arms around things, and truthfully to really truly turn this company around operationally culturally its going to take John Flannery, if he does it right, five years i dont care what the slides say. Its going to take five years, and the best template they have is to take what dave cody did years ago when he went out to the honeywell which at the time was a burned out hulk and basically said lets stop screwing around. Lets pretend that strategy is a constant thing lets not change how we present every six months it took about four to five years for it to really be credible with investors but it worked. There is a path to doing that, but it is not going to be a quick fix. You know, in the dark you really cant even with an elephant you dont know whether you are in the front or the back, right . Im sorry repeat that, please. In the dark and you are trying to follow an elephant, you dont know the front from the back if you are just, like, feeling around youre not really sure which is which, right yeah. No, no. No im very serious its a large company, right . In terms of their revenue and profit base in terms of the normalized earnings power, most of the company is around power, you know, and lets say oil and gas for now. You know, aviation and health care if you focus on a few businesses and actually do it well and execute, not have to take your power expectations down by about 2 billion in profit per year, that is the key. You look at the businesses you look at the franchises they are there to be run if you just get the cash flow from the industrial businesses to be a reasonable, say, of revenue, that works out to be about 21, 22 a shear per business talk about comparable market businesses then you put, you know, one times book value on finance. In temz of the value of the businesses, a stock should be trading at 24, 25. You get to buy cheap here because they have no credibility for good reason. The catch is you actually have to operate the businesses well and deliver the Revenue Growth and deliver what well run businesses do. And you think flannery is a guy that can do that i dont know yet. You dont i dont know that he isnt. I dont know that he is. I know that, you know, he was has been with the company a long time mostly finance some strategy. Deal stuff was in charge of health care i think in health care he did at least a decent job right yeah. I wish him luck, and, you know, i think the board is going to get better off of their very low base just with try ant to be on the board. I think theres an opportunity to fix the company all right thank you. When we return, singles day bringing more money than last years black friday in cyber monday sales combined. By the way, alibaba is not the only Company Getting in on the sales. Its rival ge. Com bringing in some very big bucks. We get a rundown this ensqwkrernking shopping event wh ua tus in a moment why do you do it . Its not just a pay check, you actually like what you do. Even love it. And today, you can do things you never could before. Youre developing ai applications on the cloud. Finding insights hidden in decades of medical documents. And securing millions of iot sensors. So get back to it. And do the best work of your life. And do the best work of your life. Gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Zbliefrmt welcome back Brookfield Property partners is offering to buy the part of mall operator ggp that it doesnt already own. News release out moments ago confirms that offer that we had reported earlier by the wall street journal. Brookfield is offering 23 a share in either cash or stock. Thats a total of 14. 8 billion. Ggp says that it has formed an independent committee to review that offer brookfield currently owns about onethird of ggp, and, by the way, those are some pretty highend malls in ggp. Okay. Alibaba setting a new singles day record selling more than 25 billion worth of products in just one day joining us right now is jay rogers, ceo. Good morning good morning. We hear this number it makes everything we do here in the u. S. Just seem like pocket lint. It pales by compare ton, right . The u. S. Sales on black friday how do you think about this i think about this as i say all the time somebody takes over the world. Its either amazon or alibaba, and now we start to think its alibaba. When they do this much business on one day that they invented, when you think about it. Its not even a holiday, right its just something they invented in 2009 they started doing this, and its gro egg like a weed now it has international players. Jd is playing as well. Its going global. They dont even call it singles day anymore. Now its the Global Shopping vestibule, and its really happening. In the battle with amazon, how do you see them playing in the u. S. Market because they have said pretty explicitly that they dont want to be here, or at least they dont want to be here selling to consumers the way amazon might be . I dont even think about the u. S. Market. Im thinking about the world market when you look at alibaba and you see that thief got, what, 16,000 stores in chooip theyre going to 1 had,000 stores they want to be the player for six Million Stores in china as well as running all of this international. I mean, i talked to the head of Alibaba Europe the other day theyve got some be doing india. Well help with logistics, but we really wont actually thats not all they really are. Theyre buying Shopping Centers. Theyve got a test store thats one of those touchless test stores you walk in with your phone. So you think they will become a capital intensive business for them ultimately . Theyll become more capital intensive, but theyll never be capital intentsive like amazon because theyre want trying to do all the inventory, but, yeah, theyre basically in more of a marketplace, but as they look at it, they dont look at it and say, gee, were just a marketplace. They look at it and say were the Service Center to the world. We never talk enough about this, i think. You tell me if im wrong at amazon we talk about how theyre a goliath here in the united states. Internationally not so at all. Even in the states, i mean, theyre not nearly as big as walmart, right . Theyre the big goliath online, but theyre not the goliath in sales. Alibaba is becoming a goliath just in sales. You dont have to think about where theyre doing the sales, whether its online or in one of these 100,000 stores theyre going to have or in one of these 17 Shopping Centers theyre going to be owning theyre just branching out to run retail jen, do we believe the numbers. A lot of times the chinese corporations we question these things you believe its absolutely legit. There are so many people looking at it and making estimates that theyre so close on what the numbers turn out to be 90 of the sales i mean, where are we going in the states were nothing like that. Thats where were going i mean, theyre showing us now how the business is going to be done its going to be done. When i go through and say 50 of the sales are going to be online by 2030 and people laugh at me, i pull out my phone, and i go do you think its not going to be done on this thing thats an online sale if its on your phone. Thats where were going thank you great to see you appreciate it. When we come back, some stocks to watchla ahead of the opening bell, and today well get back to our top corporate story. Ge cutting its dividend by 50 believe it or not, the stock is up on that news. A gain of 15 cents the investor meeting for ge about to get underway. We will monitor that and bring you any updates. Squawk box will be right back. Who could possibly be against that . Well, the National Debt is 20 trillion. As we keep adding to it, guess who pays the bill . Him. And her. And her. Congress, we should grow the economy. Not the debt. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. Coming up, new york fed president bill dudley is stepping down, and now the search is on for what is considered the second most important job at the fed well take a look at who is in the running, and you might recognize a few names. As we head to break, take a look at the shares of ge. Now up 13 cents. Squawk box will beig bk. Rhtac what is the power of pacific . Its Life Insurance and Retirement Solutions to help you reach your goals. Its having the confidence to create the future thats most meaningful to you. Its protection for generations of families, and 150 years of strength and stability. And when youre able to harness all of that, thats the power of pacific. Ask a Financial Advisor about pacific life. And i am a senior Public Safety my namspecialist for pg e. My job is to help educate our First Responders on how to deal with natural gas and electric emergencies. Everyday when we go to work we want everyone to work safely and come home safely. I live right here in auburn, i absolutely love this community. Once i moved here i didnt want to live anywhere else. I love that people in this community are willing to come together to make a difference for other peoples lives. Together, were building a better california. Good morning, everybody welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Among the stories that are front and center on this monday morning, we are watching shares of tyson foods the beef and poultry producer reported quarterly profit of 1. 43 a share for its latest quarter. That was 5 cents better than the street was expecting its results were boosted by Strong Demand and its key markets in that stock is up by 2. 5 etf company wisdom tree is expanding its footprint. It has struck a deal with European Company Etf Securities to buy that firms commodity and currency businesses. That expands wisdom trees assets under management by 18 billion. Philadelphia fed president Patrick Harker says that he still expects to vote for an Interest Rate hike next month. Although he says he has a little less conviction about that than he did previously. His additional caution steps from weak Inflation Numbers that weve seen so far. General electric reduced to 12 Cents Per Share John Flannery says he does not take the move lightly. Companys investor meeting to get underway were going to monitor all of it for updates this morning the search is on to replace outgoing new york fed president bill dudley, a position that some say is the second most important job at the fed senior economics guru who missed out on the head job at the fed is here to talk about his chances on this one. We are going to discuss my chances on this. How is it log i think im low on the list i think it may be the hair thing, joe it could be any number of things joe, replacing bill dudley, the new york fed president , it may be one of the most controversial in recent memory the job is seen as so important. Remember, it was debated in congress during dodd frank to make it into a president ial appointment. Right now it is the choice of the new york fed board of directors, and that has dudley announced last week he was going to retire. It comes at a time when the fed is under pressure to bring more diversity into the ranks of bank president. Take a look at this chart. 135 regional president s in the feds history. Brookings institutions aaron cline says six women just three minorities sorry, three nonwhites, including atlanta fed president bostic, the first africanamerican recently appointed. The search comes after the nomination of fed governor jay poul to the chairmans job, meaning a noneconomist likely to lead the fed. Dudley was an economist. Finally, the new york fed on the frontlines of banking regulation and unwinding the 4. 5 trillion fed balance sheet. The perfect resume someone with a strong banking and market experience. Not seen, though, beholden to either, but also someone who would give markets confidence in the event of a crisis. Here are some of the names being bandied about. Henry blair henry, New York School dean, moderator at jackson hole conferences, expert in global economics. Sandy oconor, Regulatory Affairs officer. She was also the treasurer, tight with jay poul. Work with him on replacing libor and knows dudley well. Shaw was the former head of the peter fisher, dartmouth senior fellow. Former treasury undersecretary he headed the open Market Operations for the fed, and seth carpenter, former treasury assistant secretary in charge of financial markets. Spent 15 years at the fed. Ph. D. In econ from princeton here are a few other names Robert Kaplans name comes up. The fed governors name came up as well as simon potter, the current new york fed exec Vice President for markets group, and he is in charge of that. Those are some of the names out there. Six to nine months, theyre saying taking it headed by sarah horowi tz glen hutchins, your friend of squawk box. Well see him. Well cover this thing over time its something that were going to watch as part of a broad, broad change at the Federal Reserve thats happening as we speak. Oh, boy ge sees as you see this the new normal was not going to be the Free Cash Flow from the current year what was it . 7 billion. 7 that was the current year right and flannery said thats not going to be the new normal 2018 six to seven. 6 billion to 7 billion thats the new normal for the foreseeable future, or just they only got that one year then fiscal 2018 share view right now as 116, which is not great, i dont think i think thats come down from analysts, and now, therefore, casting 1 to 1. 07. I dont know what multiple is appropriate for a big company like that. I dont think necessarily gaern teed 20 times earnings no. Since when . I know. I know thats why i was looking at you to see if you would say that what do you have to say . What is that company now . Remember, we had ge it was a capital indicator, right . That was the thing about it. He was able to take in companies, put them through the process they had and the internal workings, and they would make more out of it. Why is any thats back into the back when they were why are we not having the question about ge . Why is it together is it able to take in is it able now were really not together theres still three pieces. Wire able to take in new pieces and make more out of it because of the internal processes than it was before. I think the answer clearly is not. Why is any of it together why is health care together with aviation together with power . What is the benefit of having those three companies together i think thats going to be the longterm if not the question they take companies and make more out of this them, and then theres something wrong with the internal processes immelt used to make arguments about how there was sort of either synergistic value between the units that they were learning one thing in one unit and somehow it was applicable in another unit and what not. I think that thats probably not necessarily the case anymore i think that seems to be the case is there how much of a movement is there to break the whole thing up. I would not be surprised if the next 24 months it looks completely different dont you think . I dont understand the rationale, right they were capital indicators honeywell. This is the beginning of that right . Unfortunately, companies dont operate at a company this size and scale. The idea of breaking it all up overnight. Lets say you actually really did want to break up the company. There would be a massive fire sale the thing is you have to show to investors that you have this ability to take their money and do something more with it through a variety of businesses. That was the concept of a diversified holding company. Theyve shown unable to do that. The company is giving this guidance to the street today theyre talking about their 2018 segment outlook and the operating profit at many of these units. It looks like it will decline next year. For more information lets get to Morgan Brennan. Shes at the ge investor day morgan, what can you tell us this morning hi, becky weve got some breaking news on ge the company just putting forward its investor slides ahead of the presentation which starts in about 25 minutes the company is reducing its 2018 eps target it had been at 2 per share. Thats long been expected to be revised lower. It looks like its lower than street expectations. They are readvising it to an adjusted eps guidance of 1 to 1. 07 for 2018 Free Cash Flow for 2018. 6 billion to 7 billion expected in the presentation today that ceo John Flannery is going to say that power is fixable. They need a one to twoyear time frame. Some of the other big takeaways here 20 billion in asset divestatures transportation, the locomotive Business Industrial Solutions Current and lighting also ten plus other smaller transactions in addition to those divestitures, baker hughes is likely to be spun off. Theyre likely to exit that. They have not made a decision. Its still very much up in the air. They have that holding until 2019 that will be down the road if and when that happens. The other big notable thing in this presentation . Theyre reducing the number of seats on the board currently there are 18 seats thee reducing that to 12, and of the 12 next year at the april meeting they are going to have three new directors appointed. This is on top of the dividend cut that we saw earlier today. The ge cutting the dividend by 50 . This is all ahead of what is going to be a very highly anticipated meeting that starts at 9 00 a. M. Eastern with flannery as well as other Key Executives from General Electric back to you. All right, morgan thank you very much. Again, looking through some of the slides, it looks like for 2018 theyre expecting operating profit at the power business to decline by about 25 looking for transportations operating profit at 25 . Lighting down 15 . It does see gains in health care of 4 to 6 when it comes to operating profit and 7 to 10 for aviation well get more of this information as John Flannery begins speaking to wall street again, he will be speaking to squawk on the street tomorrow right here on cnbc in the meantime, you see General Electric shares up by about 52 cents. Its a gain of 2. 75 , and thats the highest levels weve seen this morning we will have more on all of this when squawk box comes right back every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, on november 25th get up, get out, and shop small. Headaches are back for the Airline Industry higher fuel costs. We want to get to phil lebeau who has the story. This is something we havent talked about in many quarters because basically jet fuel prices have been relatively benign over the last year to year and a half. Well, that is starting to change within the last month jet fuel prices have moved up basically about 10 since october 1st. This is the chart that a lot of people are focused on, and theyre drawing out the broader question of, yes, you see it coming down a little bit there you really saw the ramp up going into september the broader question is what does it do for airfares . Will the airlines have on push airfares higher because we are seeing the higher in the Fourth Quarter theyre not likely to move much. Most have been locked in the demand is strong as tliek at the airlines, that says it all, guys it has been moving lower, and this is one of those factors that people will be focused on in the First Quarter not just because of air dpars, but because of whether or not this will hold down any growth we might see with the Airline Stocks all right, phil thanks when we return, jim cramer live from the New York Stock Exchange well get his take on todays top stories, including ges dividend cut as you know, jim cramer has been very outspoken about ge. Rarely have i felt this stupid i remember when i was in the dumb class in fifth grade, and i went back to my mom, and i said, mom, im in the urfoth track i dont know if thats good or bad. There are four tracks. Thats how i feel about ge drivis of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Directv has been rated number one in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like wet grocery bags. Getting a bad haircut. Overcrowded trains. Turnstiles that dont turn. And spilling coffee on themselves. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv. And for a limited time get a 100 reward card. Call 1800directv i am a First Responder tor and iemergencies 24 hours a day, everyday of the year. My children and my family are on my mind when im working all the time. My neighbors are here, my friends and family live here, so its important for me to respond as quickly as possible and get the power back on. Its an amazing feeling turning those lights back on. Be informed about outages in your area. Sign up for outage alerts at pge. Com outagealerts. Together, were building a better california. Get down to the New York Stock Exchange where jim cramer joins us now jim, i have referenced you a few times with that. You had, like, a table that showed the difference between stated earnings and actual you remember that . Yeah. My question is how do you is there a way of doing it that you just have to do because those are the way you do it, or do you have some leeway with what you with the numbers you report you know what i mean based on your acquisitions and your spinoffs, arent there things you have to put in there so you really are not necessarily playing with the numbers . Thats just what they are . You know, i think that in the end the s. E. C. Never had a problem with it, and thats kind of the way it works. I think if there had been something that was wrong, so to speak, the s. E. C. Would have come in. I think it turns out theres more latitude, but most companies dont want to take it. Most Companies Want to show you, listen, heres our apples to apples, and its not like they necessarily hit anything its just they just chose not to report like any other company. I think those days are over, which is why even though theres a lot of a lot that is not great here, flannery is going to make it being loo like a regular company with turban sales and with Health Care Sales and with engine sales you are going to be able to look at it and say, you know, this company is maybe not where honeywell is, but it can get there, and it will no longer be like i need a glossery i have always felt i need a glossery for ge. No more. The dif depd is now half of what it was, and you see the Free Cash Flow or operating cash flow numbers that flannery is talking about for next year is this the time to Start Building if you dont have one is this the time you Start Building the position . I think numbers have to come down a lot i think that this is one where there had been a lot of people who downgraded it, but i still think that its going to have to mark time. We just dont know what it will look like. We dont know who the new directors are going to be. We do know that maybe power is a little bit better than we thought. There is no comparables here now until we see what the real numbers look like. Hey, jim. I dont know if you heard the conversation we were having with Steve Liesman earlier. He said, look, why should any of this company even be one thawing about three units. Sell them all. Does that make sense to you . I dont think you have the cash flow to maintain the corporate allocations that you have to have i mean, it just doesnt cover the corporate allocations yet. We have to see they need to they dont have enough cash to break it up yet they have to wait. Do you think thats long . Do you think that think that l if were having this conversation two or three years from now, that the goal line is to be a truly you know, monoline, if you will, each business is a separate company does health care belong with power . This is the question. I argue not. Does aviation have anything oil and gas, youre right, look even honeywell, that Great Company and darius comes in and says we have to break it up. There are not a lot of companies that have con glom rates where nothing has to do with each other. It would be good if you still have the financing, that model maybe that doesnt make sense. I think it worked pretty well for a while. Makes sense to sell engines, its a Service Contract. Turbine, you give them the engine and maybe lose money on and make it up on the service revenue. Thats what i want to see but we dont know what that looks like until they make it so its a lot less convoluted. Its a Good Business to have something not expensive and Long Term Service contract, which is what honeywell is for elevators and engines. United technologies is like that honey well is for cockpits, if you look what they do, they dont make any money on the engine they make a huge amount on the Service Contract even United Technologies, you could argue they shouldnt be broken up but they have numbers. If you do numbers, you tend to think, i dont know, im willing to handle a conglomerate. Qualcomm out with news as were speaking, the board unanimously rejecting broadcom unsolicited proposal this is something we expected. It significantly under values qualcomm relative to the leadership position in mobile technology and future growth prospects. Where do you think this goes, jim . I think that broadcom will come back with a higher bid, i believe. Is qualcomm in play . I dont know, qualcomm guys are pretty crafty. They say they are not going to use a poison pill strategy to nxp, take that off the table but if qualcomm goes down, you have to get back in it. Unless you think they are going to lose to apple if you lose to apple youre out there and got the broadcom deal. I would not sell qualcomm here. Great jim, we will see you shortly. Appreciate the time. See you in a couple minutes tomorrow on cnbc, ceo John Flannery will talk to cnbc exclusively tomorrow now on squawk on the street at 9 30 a. M. Eastern time. Thats right. Tmobiles got your Netflix Subscription covered. When you get a family plan with two or more lines. Really . Thats incredible. So go ahead and watch however you want. Youre messing with me, right . All at no extra charge. This is awesome another reason why tmobile is americas best unlimited network. Mic drop. Somewhere along of selfdiscovery a breakthrough. Its in our nature to need each other. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Wow record time. S. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Weve got news just breaking a few minutes all the qualcomm board rejecting the broadcom proposal it comes with significant regulatory uncertainty broadcoms initial offer was 70 per share for a dole that totalled 103 billion. Some say broadcom could go up to as high as 80 or 85 if they were to do that it would create a meaningful conversation, anything short of that i think it gets complicated. And the market never buying into the idea as of yet. Stocks still trading at 65. 04. A volatile weekend for bitcoin, plunged 15 before bouncing back. Its notable because bitcoin doesnt have these Circuit Breaker protections its not a stock as Everybody Knows so it can fluctuate quite wildly also, super hero staying strong at the box office, it was the second straight week in the top spot for thor. The sequel bringing in 56 million according to com score, that brings the domestic total to more than 200 million. Comedy sequel daddys home 2, took second. And the star studded ago tha christy, murder on the Orient Express, 28. 2 million in third. A group of nfl owners will meet to discuss a contract extension for roger goodell. He is seeking 49. 5 million a year as well as a lifetime use of a private jet and Health Insurance for him and his family for life goodells contract runs through 2019 and pays him about 32 million a year it would be a big pay raise. The meeting comes a week after reports that Dallas Cowboys owner jerry jones is threatening to sue to block goodells contract and the scuttle butt if youve been reading about that this was leaked, details of this and everyone is thinking its jerry jones. As part of his way of saying, wait a second, this is whats happening. Theres leaking here too but and this that is thats a deal, man. That is if you can get it, thats pretty good i would think the 50 million or plane for life both are good. I was thinking condy rice wanted to do something theres got to be someone that will do it for 25 million. Are you raising your hand maybe a turbo prop, i dont need it for life, just the next 45 years or something. I would do that, right would you . Wouldnt want to get greedy and say for life, 45 years. 45 years. Ill do it for 45. I dont know its interesting. You would do it for less. Less you think you could do a good job . I think i can do an okay job. I think i could what i dont know is what the wrangling of the owners is like. The media strategy of it and one piece i feel like redskins game, the catch made in First Quarter, that i know i cant do, caught it like that and land d, i think i could do goodells job easier than rogers. Im show roger who may be watching this relatively speaking. 50 million, if you can get it can you do her job though, taylor swifts reputation breaking big time records, pop star sixth studio album sold 700,000 on the first day potentially becoming the years best selling album in just one week the album was not made available on any streaming service and it could be held from sites like spotity and apple music for a week or longer this is not unusual for the pop star she waited a year before allowing any streaming services to carry her other albums, 1989. She could she could get a plane for life herself given whats going on with these sales, but i would say the roger deal may be better it may be better, even with music. Make sure you join us tomorrow. 100 a year. Squawk on the street begins right now. Good monday morning, im david faber along with jim cramer and were live from post nine at the New York Stock Exchange Carl Quintanilla has the day off today. Lets look at futures before trading for the week you can see setting up for a lower open after what was first down week in a long time last week of course and it was