Transcripts For CNBC Squawk Box 20240713

House Economic Advisor larry kudlow someone we know and love worked here a long time. Saying that the u. S. And china are getting close to an agreement. He described the talks being very constructive in his words saying the mood music is very nice that has not always been so in these things. He sded that the president is not ready to sign the deal just yet. Also getting word in china, vice premier lu will be holding principal level calls today we are up 60 points about all it is worth, i would say. Right now, hong kong confirming overnight that they have plunged into the first recession in a decade. That marks the second straight quarterly decline. The Financial Hub has been suffering from violent protests, the u. S. china trade war the week of rage continues to boil over. Well get over to matt bradley for more on that andrew, yes you are right. This has been six months of protests this started with the extra diction bill that started over the summer that has been drawn. You can see universities like behind me they are becoming citadels theyve put up cameras to block video. Students here, especially foreign students are having to leave. Other students in hong kong will be taking courses on line. They are basically ending classes for the year protesters are learning things like how to make a maltov cocktail and how to throw one. The entire city, we are seeing a slow down as the six months of protests are really taking effect on this business. Behind the university is the cross harbor tunnel connecting calhoun and the main island of hong kong. That has been closed now at least more than a day. Protesters have threatened to shut that down now we are really seeing a lot of the infrastructure taking a hit. That decline, the first time in 10 years, it is unclear whether hong kongers are going to continue to stand with the protesters if their pocket books are affected in terms of being on the ground there daytoday, what percentage of people going to work are going about their daily lives or not you know, it is surprising. When you see these images, they look like les miserable. It really is quite dramatic. The reality is less so the protests here are easily avoidable. You can walk around them for the most part, it is mostly an optics issue. It is not so bad protests come from time to time but you can avoid them mat bradley, fresh your report this morning. Amazon says it is challenging the pentagons award of the cloud contract that could be worth up to 10 billion to microsoft accusing the government of deficiencies and errors and unmistakable bias amazon was seen as the front runner of the contract known as jedi it was known the bid was under review it was later awarded to microsoft. Microsoft said it would have been challenging for a u. S. Agency to be objective in the process after the president disparaged the amazon ceo jeff bezos. I have not heard that recent claim by whoever made it with regard to the jedi competition second, as you know, i recused myself from the involvement. But i am confident it was conducted freely and carefully esper mentioned he removed himself from the deal because his son works for ibm who was also bidding for that contract ed lee is going to come on and say immediately because of bezos hate from trump. It is a very longdrawn out story. Microsoft 13 months ago could not have gotten it theyve also designed something that is supposed to be really good and there is also something known as the resolving door relationship that amazon has you definitely cannot prove that we shouldnt even be having a conversation about whether the political process has corrupted these government contracts unfortunately, thats where we are. Weve talked about it before the book by the speech writer where he gets the phone call, literally from the president the president says on the phone. How do we screw amazon out of this do you think if jeff bezos didnt want any appearance, do you think it was a good idea to buy the post in the first place. If you are a share holder of amazon, you could make the argument that theyve made amazons life more difficult you could make the reverse argument that theyve given them more power and more sway. The problem is it would be much cleaner if we didnt have to deal with improprieties. There are all these legacy guys getting a piece of the pie. They decided all of this jedi thing around am son. You think amazon does everything above board. Did you get talking points last night i knew what i would be up against. It is why do we even have to have a conversation . Microsoft is a Great Company. To say amazon was cheated, it is not fair to microsoft. The warning by the president on twitter about his own hatred of amazon. Why did they go to the court and not go together gao. The same as elon musk you would be much better off if you werent making all these public comments. The gao would not allow for this do you believe the gao is truly independent . Let me ask you that. This gives them more time to get their act together microsoft has made great strides. This is not a knock of satya nadella. This is not what it is about at all. Is it possible to push back against the knee jerk and everything that goes on with this guy as a voice in the wilderness quid pro quo. Now withes bribery. They got nothing on the entire Obama Administration was it bribery then . We have talked about that people in politics should be stay ago bof board i had the interview last week about antitrust issues he wants people to think he is using his mind and brain to make the right decisions. Why did he go after comcast after saying it was a perfectly fine deal. He was caving to the president on that too. The point was that he was completely within his rights because the president is out there saying these things. When we get pressure from our government to use boeing and in europe, all those countries pressure people to use airbus. You never know what is going on behind the scenes. The same argument with powell it looks like hes caving to his influence. It would just be easier if there wasnt so much noise. Just live in the real world and be happy with where unemployment is. Coming up, we are going whale watching well tell you about the biggest moves of some of the stocks reacting well tell you after this. When i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. Also revealed a new stake in Restoration Hardware it was relatively small. That caused the stock to pop about 7 last night. The firm also disclosing it bought a stake in Occidental Petroleum and about 300 shares of oxy that stands in contrast from kacarl icahn who said he is planning a process to, quote, right this teetering ship. He sold shares because it has become too risky an investment confirmed the shake in hp worth about 1. 2 billion as the Company Value waits a take over by xerox which is again another icahn investment you know what shocked me was the berkshire move the first time youve seen berkshire own less than 9 you have to wonder is that a move away from Portfolio Management or does that say hes becoming sour. That is a move as charlie sharp becomes ceo. If you like charlie sharp, you would think. I dont know what the answer is but that struck me as probably the most significant move the apple one, i know people look at but that is relatively small number of shares that could be anything happening. Any of the managers making a move the wells fargo thing jumped out. Thats a big move. Joining us to talk about some of the things working or not in the markets right now. Senior vp and Portfolio Manager. Thank you for being with us. You have a take on what Warren Buffett is doing i think it is always good to watch what hes doing in terms of apple i agree that looking at the timing with charlie is interesting. He has such a good reputation on wall street. It does strike me as a little interesting but i havent looked closely at the filings from yesterday. He joe, what are you thinking nothing im minding my own business as you should mind yours. Nothing. Nothing. Not everything needs to be shared help us ellen with how you think the market is looking at faang stocks and apple is one of them what we are seeing right now is that it is slowing. Weve seen that with the gdp and indicators when you see slowing growth, what you want to own are secular growers. Faang has historically been secular growers. I like to separate out those two things if it is the case that profits are going to be impaired, revenue will be slower, then they may not be the secular growers they have been that has historically included the faang stock and oernls within tech like . The hoe retailers home depot walmart had a great record do you buy into walmart we had an analyst say yesterday, that is going to fall in do you prefer to be walmart or target prefer to be target the other place is in technology not only in the faang stock but other areas that enable the cloud adobe, sales force, intel and microsoft which are growing quickly with the cloud and 5g related why do you prefer target over walmart . Merely a question of looking at the relative growth rates you are like the third person who said this to us . If you look at the forecast of earnings growth, target is a few points hire. Thats the main reason ellen, thank you for coming in only once a quarter actually. Not any time once a quarter. With whales, i wonder whether warren is on his way to zero hes loved it forever. He loved it for one specific reason because it was the best bank in the country because of solid management and the beyond reproach ethical behavior of wells fargo. I just think i doesnt like fielding questions about something so tainted i think hes woke to an extent you think seize back a little bit . Hes saying it is not what i used to be that is not zero but it is a big move it is significant i wonder if hes saying it is a tainted name now we are 12 years old. Thats the problem meanwhile, by the way i know what you are thinking. Hes always loved jp morgan and jamie dimon. But you probably then should like the new ceo of wells fargo. Charlie is really part of the jamie dimon news coming up, the average price of a new york city town houston has dropped 32 . Robert frank, what do you have coming up . Is. Joe, we are going to take you inside of the rental rich inside this profit that rents for 123,000 a month why the rich are choosing to rent ratthher an buy and what it means for new York Real Estate after the break. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. 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Better life. Welcome back. Luxury retail steals may be shrunking but rentals may be booming. Robert joins us from inside one of those as you know, Luxury Real Estate sales have been declining but there is huge demand for highend rentals prices have gone up 4 the very high end up 14 in contrast to luxury sales down 10 . Why would the wealthy who can afford to buy. It has gotten a lot more expensive with the mansion tax a lot of uncertainty with all of this uncertainty and prices coming down the wealthy would rather camp out in a rental and wait for prices to drop on the seller side, a lot of sellers with big fancy new units that they cant really unload, so theyd rather at least rent them giving rise to the 100,000 a month rental like this one this is 6,000 square foot penthouse in tribeca in manhattan. 4. 5 bathrooms, four bedrooms 14foot cellings, incredible views. An Art Collection that comes with the apartment even at that crazy prize of 123,000 a month, theyve gotten a lot of interest for people to start renting the first of the year. 123,000 a month, thats almost 4. 5 million a year do you have to lock it up for at least a year theyve had a lot of offers for shortterm rentals theyve turned down. They are going for something at least six months but refer a year rental. You could buy a small house in some Communities Just for one month. We are on the 56th floor, the views of downtown, uptown, both rivers are just amazing. Until recently, you couldnt find an apartment like this that you could rent but because the sellers cant get the prices they want, they are putting them on the market. Did you hear that music you were playing did you pick that out . Lifestyles of the rich and famous is that what that is . That was very gray pupon that music. I would ask for that to be played whenever you are like walking on the set or doing your reports. You know they play hail to the chief for the president. Why not do that when you enter the official wealth guy anthem robert frank who cover the wealth for joe, we play darth vader. Or the simpsons, maybe. Thats a good one love and marriage sometimes i sit like bundy so glad we have higher chairs bring back the ticker. I think we should do that for robert did you hear the music . I did what do we play for you . Some kind of rent controlled apartment music. I knew you were thinking about that im going out looking why not . Buy on the dip, baby in florida . I know you but there is no taxes. How would you feel it i did this show from florida and fake it they dont even tell people they are down there. Lets go to commercial break. Taylor swift taking her feud with record executives public. She is asking fans and the carlise group for help as we head to the break, lets look at yesterdays s p 500 winners and losers that was wonderful. I loved it. It was great. It wasnt that bad. Alt here was parts i didn rely like. It was bad. It was awful. Boo through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Sometimes, they just drop in. Obvious. 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. vo the flock blindly flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. Good morning, everybody u. S. Equity futures looking higher dow and nasdaq were down a couple of points each. This morning, dow futures look up about 67 points, the s p up about eight and the nasdaq up about 26 taylor swift saying borchetta and braun wont allow her to perform her old music where she will be honored with the artist of the decade award. They refuse to allow her old music to be used in a netflix document meantry she plans to rerecord versions so she can use them. She says the message is clear basically they are saying be a good little girl and shut up or be punished. Shes asking for help from the carlise group who put up her contract for sale. Angry taylor swift fans i dont know how to feel about this i remember when it happened you were very empathetic and sad. I feel terrible for her she said she never got the opportunity to buy it for herself. I feel terrible for her at the same time, i recognize she originally sold the rights to these things to these people. They are contracts it is the contract at the time she was young. You get rolled when you are younger. These guys, Scooter Braun is being a jerk about it. He is trying to twist the knife when it goes in with this. Also, shes trying to twist the knife on the other end shes trying to buy control of it. I can imagine as the artist, you want it to be yours. She wanted to buy it to have it go to somebody who thinks misled her and who did not do right by her would be particularly painful i would assume the rational thing to happen right now is shes threatening to go make copy cat versions of this. If you think can you do this legally, you would think braun would say lets have a different conversation lets consider selling this to you. Even if he turned a profit, that would be the smarter move rather than to let this play out. It doesnt play well anyway around shes going to garner more fans and support than he is hes got clients standing by him. Why would you mess with this because of what she is saying, isnt this bad business for Scooter Braun . What could carlise do is it possible carlise has any resource if they said we are going to help you, what can they do negotiate with her. They provide some of the money for scooter. Could they call they could call scooter and say, look, we dont want to be in the middle of this. You got to do this thing the question is does david reub reub reubenstien do that. It is interesting. She gets the rights to do this a year too early for her to perform it. Something losens up next year . Right i saw both camps on twitter defenders of twitter and others. I read through all of this because i was interested if she is able to reorder all these songs, that would completely devalue right. Then the question if you are a spotify, or apple music, who are you buying the copy cat song. And risking alienating her and ticking her off. Or are you going to tick off skooter braun. Nobody wants to take sides more coming up in a moment. Now going Stevie Ray Vaughn cant say anything he was great. That was a long, long time ago. Amazon strikes back contesting the jedi contract in court to microsoft next. Stay tuned you are watching squawk box on cnbc she wanted to move someplace warm. But he wanted snow for the holidays. So we built a snow globe. Ill get that later. Dylan but the one thing we could both agree on was getting geico to help with homeowners insurance. What . Switching and saving was really easy i love you what . Sweetie hands off the glass. Ugh call geico and see how easy saving on homeowners and condo insurance can be. I love her high protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Joining us now with the details. This is a Court Challenge to the 10 billion Cloud Computing contract joan as jedi. On friday, amazon filed a notice in the u. S. Court of claims. There is no deadline for when the formal protest must be filed. In a statement, amazon said it is critical leaders administer procurements objectively they say the jedi process contained clear deficiencies and errors we know President Trump has been in a public beef with jeff bezos and there have been public reports that the white house was scrutinizing this deal amazon is not the only company that is upset. Oracle is moving forward with its own suit claiming the process was anticompetitive they argue the contract should have been broken to smaller projects oracles beef is with amazon and the way they got it. The way the pentagon the Companies Including oracle that had a nice piece of the deal suddenly thank you. For more on what amazon is calling unmistakable bias. Well turn to ed lee cnbc contributor. Now it will be two against one its okay. Im on the side here. With the New York Times you are always on the side of right. I understand in truth and darkness and all that crap. And truth you are together and you are over there we called each other this morning and coordinated ties the reason microsoft had gotten to the point they had a competitive product is because oracle started this 13 months ago complaining that this was going to microsoft but there are a lot of amazon employees at the Defense Department it is a revolving door he already owns Washington Post. Now hes moving to washington and bringing 20,000 jobs in. Who is he, is he going to control everything in the world . Where he came up with this. Amazing how you are able to tie all of that together i think satya should get some credit forgetting it up to certification six and getting it to this point and winning fair and square i think you could do this whole segment on your own. Who got to me, satya or trump . You tell us nobody. Nobody but the god of fairness dont you have trump on speed dial we have a couple of words ed has to get a word in edge wise im not going to dispute with these kind of contracts, we should look at the facts amazon was the front runner because they already have the cia contract the security around that was really good. Let me ask, this is kind of scorched earth to say we are taking you to court and fighting this does that mean amazon will have a more difficult time down the road getting future contracts. They are probably waiting out the fact that, well, look, administrations come and go. I wonder if this interfere yates all of the lifelong staffers who stay at this level. Why not the gao and block it from even starting . It goes back to that the gao is also biased these are fair questions. The other side is that you have to consider when the administration was asked, why are you halting the rewarding of this contract. We want to get the best possible deal it went to microsoft it is still 10 billion microsoft is still better theyve been doing this longer they invented this market. What happens next although microsoft has decades of working what could happen what kind of discovery could take place are you really going to find documents and emails and texts . Is that even plausible the other problem is with this administration, getting the communication and the documents. If it even went as far as the white house saying i dont want it to go to bezos Washington Post dhow long does this slow down the whole process . Is. It is not clear to me there is a possible they might have split this deal with microsoft, what do you do take the contract and run. You keep your mouth shutd i would start work. Just work on it share the wealth. It is such a Great Company ed, thank you good to see you. When we come back, the fight over political ads battle lines have been drawn as the campaigns arstt to heat up well be right back. I knew about the tremors. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein bars. Try lemon cake. Welcome back, everybody. Twitter is expected to unveil its policy today on banning political ads from its platform. Ceo jack dorsey announced his decision to ban those ads last month. Right now joining us for more on how technology is grappling with political messaging as we get closer to the campaign, lets welcome steve mcmahon. He produced advertising for the Democratic National committee in support of barack obama in the general election and wall street journal reporter emily glazer. Why dont you start things off for us, just explain what happens. You have twitter about to ban these ads. Where do the laws come down both on federal and state laws . That is a great question. It is a complete mess right now, and thats leading up to this huge election where theres going to be billions of dollars in digital political ad spend. Right now the federal Election Commission overseas political advertising. There isnt a quorum to operate. There arent rules and they dont regulate issues ads so those are ads from Advocacy Groups and trade organizations that fall into this. What are the rules . Weve had people come in and tell us Different Things some people tell us the rules are different for digital versus if you are a publisher or a broadcaster. Weve had other people say, no, the rules actually are the same. Whats the truth you know, we talked to a lot of people about this for our article and i can tell you there is no agreement. So what we have learned is that for a digital political ad, if its for an election specific candidate, that falls into the federal Election Commission. They do have some rules on disclaimers and disclosures but they were debating for years making them more widespread, especially for ads that are in very small spaces. And they never came to any agreement on that. When it comes to issuesbased ads, so that could be things around climate change, immigration, education, anything that would come from an Advocacy Group or a trade organization, there really isnt any uniform policy and in the middle the states have come up with their own policies. Emily, real quick one of the things ive been thinking about is if facebook or any of these other sites could have a toggle on or off feature so you could decide whether you want to see political advertising and whether you think that would actually change the dynamic of this entire conversation or whether it would become a slippery slope where all of a sudden users say i want to turn off all advertising. Andrew, thats a really interesting concept. I hadnt thought about that yet. What were seeing is the Tech Companies are coming up with their own rules and policies because there isnt anything uniform. Right now we have facebook saying we wont fact check any political ad but were going to let almost everything run pretty much we have twitter expected to come out with their policy later today banning political ads except for ads around Voter Registration it will be interesting to see what they do the wall street journal reported the other week that google is under discussion to possibly change their political ad policy. So the tech platforms, you have a lot at stake. Steve, if twitter has banned these ads, does it matter . They only made 3 million in revenue in 2016. What do you think . I actually think it matters because number one its a really smart, symbolic gesture. The Tech Industry in washington is being looked at on both sides of the aisle for potential reg gu rags. I think it was a really smart thing to try to get ahead of this. As long as it doesnt cost them a lot. Its not going to cost very much it does put pressure on some of their competitors. One of my many flaws as you guys probably know is im a lawyer. Its pretty clear whats going on here. If youre running a Television Ad for a politician, you have a law that says stand by your ad which requires the politician to say, im so and so and i approve these ads. What they want to be is Bulletin Boards and not broadcasters and publishers theyre held to a different Legal Standard i think what dorsey is doing is saying we have a responsibility particularly after what happened in 2016, we have a responsibility to step forward and do something to protect democracy and i think dorsey did it is going to do it today. I think youre going to see other Tech Companies follow. Steve, i didnt want to i love you youve been on many, many times. Just philosophically, i just dont know when your party, democrats, you know, stop being a party of the aclu and the party of tolerance and the party of differing opinions. I look at college cam puts and whos allowed to show up and say anything i look at the woke and the cancel culture and what youre allowed to say this is all about 100,000 worth of facebook ads that caused hillary to lose. Maybe she was a bad candidate, steve. Maybe it wasnt facebooks fault . She was not a very good candidate. Okay. Lets just agree on that. No, no, no, im not heres what im saying im saying that anybody should be able to say anything they want in political content but people have the right to know and should expect the publisher were big boys, too big boys and girls. But one of the things that donald trump likes to talk about is fake news and, you know, if youre going to say fake news is a problem, then fake news should be a problem whether its coming from the left or the right and what you see on a lot of these sites are fake news. You see articles that are not real. I think you see fake news in major newspapers, steve. You know where its coming from. Its no different than andrews fake news. Alternative facts. You know where its coming from it. Theres a name on it a reporter wrote it. You know where its coming. Move back you have no idea. Move back towards the aclu. Ragan said farfacism starts with liberalism. Great to see you in l. A. This morning. Appreciate it. When we come back, markets pushing higher on trade optimism weve got the telast comments on the white house, the u. S. Trade talks. Well talk about it next as squawk returns sometimes, the pressures of todays world can make it tough to take care of yourself. But natures bounty has innovative ways to help you maintain balance and help keep you active and wellrested. Because hey, tomorrows coming up fast. Natures bounty. Because youre better off healthy. Oh, wow. You two are going to have suyeah, have fun . Thanks to you, we will. Aw, stop. This is why voya helps reach todays goals. All while helping you to and through retirement. Um, you guys are just going for a week, right . Yeah thats right. Can you help with these . Oh. Um, were more of the plan, invest and protect kind of help. Sorry, little paws, so. But have fun send a postcard voya. Helping you to. And through. Retirement. Hi hopes stocks rising on trade talk optimism. Private equity under attack. We see it happening on the campaign trail and now were hearing it from the Music Industry why theres bad blood this morning between taylor swift and carlyle. Plus taxing wealth. It is time for a wealth tax in america. Your tax are directed to the wrong person and the wrong issues. Elizabeth warren and the nations billionaires are taking off the gloves as the second hour of squawk box begins right now. Good morning welcome to squawk box right here on cnbc take a look at u. S. Equity futures this hour. Lets show you whats going on ahead of the opening bell. Still 2 1 2 hours before we get there. The dow looks like it would open 71 points higher, nasdaq 31 points higher and the s p 500 looking to open 8 points higher. The big market driver, once again, were talking trade white house Economic Advisor larry kudlow said the United States and china are getting close to an agreement. He described the talks with beijing as very constructive saying, in his words, the mood music is pretty good and that has not always been so on these things kudlow said the president likes what he sees but is not ready to sign a phase one deal. Steven mnuchin, Robert Lighthizer and chinese advisor liu he are holding principle calls today. Trade optimism lifting the s p 500 to record highs. Now were up over 23 for the year joining us is larry cantore, operating partner at Atlas Capital and jeff sau, Portfolio Manager at Capital Wealth Planning 23, if i had been following you, jeff, and listening to you, i you didnt put necessarily a number on it, but you were so bullish most of the time that i would have probably figured 23 was about right for what you were thinking. Yeah, thats about right. Weve said since the beginning of the year we thought that the s p 500 could close out the year around 3200. Im still in that mode our very shortterm trading model says were looking for a peak here today but not much of a pull back. Maybe 1 to 3 . Well have to see if that happens next week. Longer term i think the market is going substantially higher. Well get the fabled santa claus rally in december. Why didnt you ever buy into the yield curve recession is right around the corner camp because normally what happens is that short rates go up above long rates that was not happening here. What was happening, if you talked to Foreign Investors like Insurance Companies in germany, they had to put money where they could get a positive return because they cant get a positive return in fixed income in their own country so they were buying the ten year and higher treasuries which caused the longterm rates to come down and invert the yield curve rather than what typically happens, short rates are increased and that inverts the yield curve. So it was different this time. Larry, i remember we were talking last time. I had the feeling that you thought that the tax cuts and some of the things that you know, that people talk about for being responsible for the strong economy, that it was a sugar high, it was going to wear off your point is that there was a recession, a manufacturing recession around the world is that correct . And that that now you think has either bottomed or turned up youve gotten much more positive about the overall economy globally absolutely. Except for hong kong and china wild card there even in europe, which as you know depends a lot more on exports than the u. S. Does in most of the world and very manufacturing oriented two months in a row where industrial productions gone up the purchasing managers surveys are either flat or going up. You know, the u. S. Heres what it was, joe it was sort of a balancing act yes, we are coming off the sugar high, but manufacturing was getting hammered and at that time the trade rhetoric was rachetting up. And the fear was that manufacturing is down, theyll stop hiring and that will feed into the other sectors and part of its revisions. Now you look at the Employment Data and it looks like declines were pretty much limited to manufacturing and the slowdowns a lot less than what you thought before were starting to see housing indicators go up due to the lower Interest Rates earnings have been good. Thats no surprise. Are you more bullish now on stocks than you were and wouldnt it have been better to have been bullish back then and be less bullish now . Sort of i look at a longer run view. Okay. Youre right, were up a lot this year. Remember, we had a very bad Fourth Quarter last year i see it rising now and i think the big thing was, i mean, Interest Rates went from over 3 . Right. To 1 1 2. Theyve sold off a bit. You dont think we do 23 next year, do you, or do we . I dont what i see now is we go up and then we sort of have sort of okay gains, but i think the big thing is recession fears to me have abated. Yeah, i think you should throw that out the window. You do . For now eventually well get a recession. Im talking about the next four to six months. I dont think you see it here and now if what would change my mind is one is if we started slapping more tariffs because you get an effect and then theres a longer term effect but it sort offades and so, you know, i think its in the mutual interests of the u. S. And china to get some at least phase one deal. Okay. Chinese data have not improved at all. Right we have an election. We have an election but theyve got some bad data. Exactly exactly. Right. So, jeff, do you see double digit gains in 2020 . Well, if you go back and look at the past 50 years after a 25 gain year, which i still think we can do this year, the historic average for the following year is 9. 4 theres only been one time when you had a more than 10 pull back after 25 up year so if we close up 25 , i would say next years going to be about a 10 return that would be consolidate to 25 , get another 10, wed probably sign on for that right now, wouldnt we you bet you bet. Absolutely. You know theres an election coming up. I dont know what that implies about the outcome of the election its up 10 if Elizabeth Warren is president , do you think we can go up 10 i got hate mail for saying i dont think Elizabeth Warren has a chance of winning the presidency. Here you are saying it again. You like hate mail what are you doing you know youre not a billionaire, are you . Youre safe. She wont go after you. She wont go after me she wont go after me. I think a wealth tax is crazy. Hes in line so you dont think she has a chance so who does have a chance besides trump. With the team that the democrats are putting up right now, i think donald trump is going to get reelected. Oh, boy more hate mail headed your way youre just piling on here what do you think, larry can we do 10 next year i think so, but one thing, jeff, just to answer, were pretty late in the cycle youve got a very tight labor market so i think low participation rate. But i think stocks will do fine. You do . I dont know about 10 . Id probably be looking maybe 5 or so, which would be pretty good this late. To consolidate. To consolidate the gains this year. All right, gentlemen. Larry, jeff, thanks. Let me know about your mail, seriously. Whats your email address we can exchange we can exchange the mail we get i do this you respond to it. I know you do. You get it, too i see but i dont block it. I want to know it. I want i want to see the hate its masochism. Its not a masochism. You want to see the hate . I want the feedback i can only get better if i see feedback tell me the worst thing tell me where i made a mistake. I dont think theres any danger of that happening though. Thank you, sir. Okay weve got some headlines why has it lasted for this long shockingly. Amazon planning to challenge the pentagons decision to award a 10 billion Cloud Computing contract to microsoft. Amazon contending that politics have played a part in that award. President trump, of course, a longtime critic of amazon and its founder jeff bezos weve talked about that contract in the last hour well talk about it again. And we should mention its not just whats public but also some of the comments the president s made privately about that contract to people like general mattis and others that have been reported separately. Well get a preholiday snapshot of the retail landscape. Government is going to be out with october retail sales. Expected to be up. 2 of a percent. Reverses september decline well see whether the numbers match there. China lifting a more than 4yearold ban on u. S. Poultry imports. That had been put in place in 2015 follows the outbreak of an avian flu. Remember that back then, guys . That was like doing pandemic movies about things like that. The move effectively is going to happen Effective Immediately it could lead to 2 billion in annual poultry sales thats the good news. Coming up, Goldman Sachs promoting fewer workers to the role of managing director. Plus, dont forget to subscribe to our podcast youll get interviews, behind the scenes access. Look for us on Apple Podcast or on your favorite podcast app and subscribe squawk pod today. Siba f bngg e riinth muc ck do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. The music is so much sweeter now after having it taken away welcome back to squawk box. Former executives at under armour said they took steps to cover up slowing demand back in 2016 in a bid to meet aggressive sales targets. According to the wall street journal they say that included borrowing business from future quarters, frequently leaning on retailers to take orders early and redirecting goods to off price chains to book sales the journals report comes amid the federal investigation of under armours accounting practices. The stock is down 12 cents lets talk a little bit about Goldman Sachs. Now promoted 465 employees to the role of managing director. We should tell you, its a smaller class than previous ones as the bank looks to cut costs 29 of the new directors are women, slightly higher than roughly 25 the last two years 2 3 are millennials and just over half work in the United States i know David Solomon has worked very hard on all of these issues and really trying to restructure the company in many ways we have a programming note, former Goldman Sachs ceo Loyd Blankfein will be on the Halftime Report and he will be speaking at a cme conference that scott wapner will be at well hear his comments on Elizabeth Warren. Hes a very funny, smart guy. I thought he might get some push back from that tweet yesterday. He did. He did . Nasty woke i retweeted it and i got nasty comments. Can you be ratioed. Ratioed. Where you have more retweets than likes. I dont know what the ratio was on that but there was people on both sides out. People praising him and people slamming it. Right specifically slamming the last line about tribalism. Thats what im talking about. It was like totally tongue in cheek. Of course it was. Tongue in cheek shes not native american its hard to be racist when shes actually not you know what i mean . Is it hes just like sort of just it was like you said, it was tongue in cheek shes very tribal. Shes against in terms of being against billionaires, maybe its in her dna. She had that test and showed that you and i it was a tongue in cheek. You were asking how the reaction was online. When i retweeted it i got people who gave blow back. They didnt know what they were talking about. A lot of them were like, hey, Pay Attention to the company, dude hes not at the company. Some people dont even know whats going on. He is also one of the last people youd want to for this i would think you would attack the whole thing makes no sense im sorry. Im talking about Elizabeth Warren. I just will tell you me yes, you. I read that and went holy holy molly. Crap, not because i feel that way, because i know how the woke culture is going to feel about that right look, i get why he was a target to begin with. He was the face of Goldman Sachs during the downturn. He was a big giant squid. Red meat again. People. When we come back, a lot more on squawk. Some bad blood youre listening to taylor swift right now. Shes upset at private equity firm carlyle right now we will tell you why when squawk box returns. Time now for todays aflac trivia question. The first stock ticker debuted on this day in whayet ar the answer when cnbcs squawk box continues coach saban, how is aflacs Program Different from Health Insurance . Well aflac gives you money directly, for things Health Insurance doesnt cover. Aflac we put together a little highlight reel for you. Heres aflac helping you with your deductible. Copays. Out of pocket costs. You look good paying bills. Get to know us at aflac. Com theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Cool. Robinwithout the commission fees. So, you can start investing today wherever you are even hanging with your dog. So, what are you waiting for . Download now and get your first stock on us. Robinhood. Each day our planet awakens but with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Todays aflac trivia question the first stock ticker debuted on this day in what year the answer, 1867 the lyrics to that song make a lot of sense in the terms of where were going with this next segment. Taylor swifts feud is hitting a new level this morning she had said Scott Borchetta and Scooter Braun are exercising tyrannical control and wont allow her to perform her old music where shell be honored with the artist of the decade award. They refuse to allow her old music to be used in a netflix documentary. She plans to rerecord copy cat versions of her songs next year to regain control but theyre trying to prevent that as well she says, quote, the message being sent to me is very clear be a good little girl and shut up or youll be punished shes asking fans to intervene shes especially asking for help for the carlyle group. Hoping that david reuben stein would call up and say, do something. Private equity, i dont know i dont know where were going with that. Its sort of a its a fascinating situation. Weve talked a little bit about it private equity is no stranger to public attack. Its often the target of political campaigns against them pe firm hamilton lane calls the current market environment one of the strangest environments it can recall the company out with its 2020 Market Overview. Joining us to discuss this is eric kirsch, vice claire man of hamilton lets talk about taylor swift. Why not. How carlyle gets in the middle of this. Look, i think you see she made a decision to sell. They own it. The simple answer is youve got to convince david that shes an american icon, no different than the magna carta, Washington Monument he should do what he should call up Scooter Braun and say, youre going to sell the rights back . She is a beloved public feature who has a tremendous amount of support. Im sure they can work out a deal somehow. Is it bad for carlyle does it matter this is constant noise. Its an seat class surrounded by constant noise its easy to find out the angle why private equity is bad, why private equity is evil. Lets talk about that because in this Campaign Season its just starting to begin its not where it nearly was when mitt romney was running private equity was the worst thing rolling. Yeah. Now im not sure were at that stage i dont know if you think its different. I think the seat classes continue to get a lot bigger, a lot more mature. Its impacting more people and businesses, more of a fad. Reputationly. Reputationly, that bigger, that scale, that maturity helps smooth out the reputation. The danger is if Elizabeth Warren, some of the plans she were to announce would put in place it would end the private equity industry, am i wrong . If you take those literally and you put the handcuffs around the asset class it would provide huge challenges. Put a fine point on it. One of the things shes proposing is if one business were to go out of business, to go bankrupt, youd have to support it using the other funds, correct right thats sort of the biggest shift. Yeah. What is the industry trying to do to push back on this i think the industry overall has been its own worst enemy it doesnt have great data it doesnt put that data out i think one of the things weve been trying to do with this Market Overview is bring real data to the discussion and talk about what does performance look like what does risk look like how aggressive are people spending or not to try to actually bring a base how does this really get at though the fundamental question, we had this we had a person on from california talking about the Retail Industry. He had a list of the 600,000 people he said lost their jobs under private equity in the retail sector. Thats diabolical because its been decimated across the board long before private Equity Industries showed up on the scene. Right. Having said that, do you think there is real data that shows that private equity is not doing it the buy it, strip it, flip it model . 100 , because we all talk about this every day things are super expensive so theres no way youre buying super expensive assets today trying to then rip out value rather than creating value or buying down your Purchase Price by laying off a bunch of people and then trying to go sell that asset. The math just doesnt work so the reality is that people are paying pretty high prices for businesses the reason why hold periods are so much longer is they have to grow their way out of that high Purchase Price and then they ultimately sell it the vast majority of data shows private equity, net job creator and the bulk of the return of the asset class is coming from growth. This is a statement its an immutable fact that the net effect of private equity on society over the last 50 years has been a positive net effect i would agree with that the data supports it. Do you . I dont know. Were going to hear its not. Were going to hear anecdotes. One of the problems with the Asset Classes is we talk about it in terms of exceptions. We talk about this one company, this one company right. Bad things happen. Would you say thats an immutable fact. That its a benefit that net net its been more of a benefit than negative private equity true or false . I want to say net benefit. Then say it. No, no, but im not i cant tell you its 100 . Net net, it could be 51 . How about 50. 1 . Ill give you that. Okay, thanks. To me the question is if you believe in capitalism and you also believe in darwinism, which is what then youd say its net benefit by default and its pushed companies you might say that better to save 60 of the jobs than 0 . Thats the fundamental question i dont know the answer. I want to think overall benefit. Do you think that the failing businesses that are in the po portfolio should be subsidized by the ones that are working so that theres no cleenarance, things that dont work, dont operate should be allowed to exist like over in europe . No. Ill tell you what my only hesitation is on this. The debt. My hesitation is on the debt. My hesitation is in the fact that there have been so Many Companies that would look, my beloved toys r us, you can change a lot of things about the Retail Industry being under fire the reason why that company was put in the position it was was because of the amount of debt the private equity took on to buy it had they not had that debt i think they would be part of our life today these are so and the good private equity and bad private equity. In the rogues gallery of billionaires there are quite a few that made that billion in private equity. Sure. So the money came from somewhere. Maybe it could have gone through maybe income inequality wouldnt be as bad. Restructuring can be a good thing. Can be a great thing. Sometimes private equity has done fabulous things. Other times theyve lined their pockets on the backs of the and theyve left the business to flail and theyve walked away. Do it this way. The amount of rent, if you think of private equity as rent seekers, the amount of money that they have made relative to the profits of some of the companies is shocking. You say to yourself, how did that money get moved from one place to another and from a societal perspective, is that a good thing or bad thing . These are questions. What about that, erik why is the flow of capital so extreme coming out of other Asset Classes into private equity the answer is pension funds, sovereign wealth funds, banks. Theyre smart people. Smart people. Theyre looking at net performance. Yes. And that net performance has been better to feed their beneficiaries than theyre getting in any other asset class. Go for Business Managers or do they know how to layer debt on and gain the system it depends. A combination of both. Life is not black and white. Its somewhere in the middle not all layers are equal. You have thousands of practitioners. Thousands and thousands and thousands of Fund Managers all around the world all of them pursuing the asset class with very different styles. Right its not a one size fits all asset class. Thank you great conversation still to come this morning on squawk box, weve got some stocks to watch. The names you need to know before the opening bell. Plus, trade optimism giving futures a boost this morning. Were up by about 83 points for the dow. Well talk more about the chinau. S. Negotiations with former senator max brockhaus dont miss Tim Armstrong he will join us live at 8 15 a. M. Eastern time. Stay tuned, youre watching squawk box on cnbc vo the moth without hope, struggles in the spiders web. With every attempt to free itself, it only becomes more entangled. Unaware that an exhilarating escape is just within reach. Defy the laws of human nature. At the season of audi sales event. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Welcome back to squawk box live from the Nasdaq Market site a number of stocks are on the move this morning. Dom chu monitors that for us on a daily basis. Joins us now with some of them to watch im just watching you again this morning. Why are you always in such a good mood . Youre always headed to the golf course later reporter no, thats not true as much as you, becky, andrew thinks im going to the golf course, i love going to work you have a sunny reporter disposition. Theres frost on the greens today. Reporter im not going out there to play golf, i can tell you that much. I do enjoy working with you guys which is why i do love coming to work. Dom is sincere by the way. Reporter i am. Which makes it even more syrupy reporter joe, to your point here i am watching some of these stock movers were going to start our friday morning addition with a share of apple which are up fractionally around 75,000 shares of premarket values analysts at Piper Jaffray are boosting the price they do it to 290 from 270 they cited among other things a survey they conducted which shows a solid rate of customers upgrading to the new iphone 11 models and expectations for more upgrading in the coming years. Then weve got shares of qualcomm which are up by 1. 5 , roughly 15,000 shares of premarket volume. The semiconductor getting an analyst rating they reiterate the overweight rating they up the target price to 108 from 97 bucks. They cited also 5g wireless as a driver of more smartphone demand then were going to end on shares of grub hub which are up 4 , roughly 35,000 shares of premarket volume. This is the embattled group. It goes from 51 bucks to 27. They penned a letter to the board outlining suggestions like suggestions in unproven areas, merger pop pew larts and so, andrew, those shares up 4 in the premarket. I will send things back over to you. Thank you for that, dom tragic shooting in a Southern California high school two students were killed this morning representative Jennifer Wexton of virginia is planning to introduce a bill in congress that would require banks and other Financial Institutions to help identify and report suspicious or illegal activity related to firearms in a statement she said, quote, banks and Credit Card Companies and retailers have unique insight into the behavior and purchasing patterns that can help identify and prevent Mass Shootings. We know that Financial Intelligence can be an effective tool to combat gun violence in the same way it is for Money Laundering, human smuggling and fentanyl trafficking as you know, ive written a lot about this to some degree without blowing my own horn, i helped inspire this bill. I had been told about it in advance that it was coming to it was going to be brought to congress and introduced today. I dont think the timing originally was anticipated around this shooting yesterday but its just representative of what an epidemic we have in this country around gun violence and these Mass Shootings you know, last year i began this sort of these columns about how you could use the Banking System to help identify suspicious activity in terms of firearm purchases and fire and related items and my original intent always was to think that actually the banks could lead the way private market could actually take the lead and decide that they were going to do this on their own. They have not, as you know there have been some efforts to do things on the margins, but this bill would effectively require the banks to work with finsen, which is the which by the way, banks are already used for Money Laundering, Human Trafficking, they do this already for suspicious activity. They have not done it related to guns well see. What kind of support . Human trafficking and Money Laundering are both illegal. Its co and, by the way, its also illegal to buy guns if youre under 18 years old. Its also illegal to buy guns through straw purchases. Its illegal to buy guns if your intent is to do a mass shooting. If a normal purchase and i mean by normal, which is probably 99 of correct by the way, its also legal i want to stop you for a second because youre actually wrong on one thing. Okay. Money laundering is illegal it is not illegal to move money from your account from one account to another people move money all day long and guess what, guess what banks are used every single day to report what they think are suspicious behavior when money, which is not illegal to move, is moved. Okay. What would be this is the exact same thing. What would be the red flag . The red flags would be trend lines. Are you using credit cards and other things where you dont have enough money to buy these things are you buying multiple of them in short periods of time is there other evidence that you are buying other materials, if youre buying body armor, if youre breaking up it could watch to see if you were buying a bunch of things breaking up the purchases in five different places. Theres lots of Different Things you could do by the way, its also illegal in this country to buy more than two guns in 48 hours from the same store. But the Computer Systems dont exist to necessarily check. Nobodys checking and yet this heres an opportunity to potentially get ahead of this. And to me, if you look at the true epidemic we have in this country, i think its almost impossible to suggest that theres not a problem in this country given how many deaths there are, this is potentially a very good thing. Whether theres going to be enough by the way, whether theres going to be enough political will for Something Like this to happen, its unclear. Thats what i tell you. This could get through the house, get to the senate does it sit on Mitch Mcconnells desk and go nowhere . Thats very possible but the idea to me the idea there is anybody out there thats against the idea of trying to stop these terrible Mass Shootings is crazy to me. I think bill clinton joined the chorus last night. Everybody wants to stop the Mass Shootings, obviously, but the way you need to do it is through laws. Hold on and here before you the laws forcing the banks to do something. Before you didnt like it that i was suggesting the banks do it on their own now you dont like the law its a step removed from having the private sector suddenly deciding what your personal ive talked about things that you might disagree with that other people think cause a lot of death. 100 . Then the question is then you should be out there arguing against using the Banking System to prevent Human Trafficking you should be out there saying it is terrible thats against the law. Hold on there are law abiding people that are going to be are going to be surveilled based on this. Correct correct. Hold on. Then you should be against the Banking System used to prevent Money Laundering. You should not worry about privacy with your do you believe the Banking System should be used to prevent Money Laundering. Thats totally different. Why is it different i dont think it should be used to cut off money for planned parenthood. Hold on its absolutely legal, 100 legal for you to move 10,000 for one account to another and yet if you do, if you do, it gets registered with the government. Okay. Do you have a problem with that you should based on what youre saying. No, thats not what im saying well im saying that all of this is nuanced and that shaming the private sector into advocating for one of your causes is not its not a cause. It obviously kids are being killed every day in america what if it was abortion, andrew what are you even talking about . What am i talking about what if that was my pet cause. This isnt about a pet cause. Im not cutting off this isnt cutting off funding. Pick another one. Youre not as i said to you, you can move money and its completely legal. In this country different than other countries, its still legal to there are costs that come with freedom. There are costs that come with freedom. By the way, there are now people in washington that are putting this on the table and thats what were talking about. I know. And theyre elected. Wheres it going to go. Well see. You know where its going to go. You get to yell and point im not yelling. Im yelling because its so diabolical that were not being able to we should be able to meet in the middle on this one easily. Easily all right when we come back. This is not preventing you from buying the guns. Im not saying that shaming private companies into doing your bidding for your advocacy for whatever youre doing is not good either when we come back were going to talk about the protests in hong kong theyve been going on for months but were now seeing an impact on Financial Markets the chart every Global Investor shoulkn authed owbo wn squawk box comes right back. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Welcome back, everybody. We continue to watch protests in hong kong, and as they happen, take a look at this chart. Its hibor that is the rate banks charge each other it has been spiking in the last few days rising more than 1 since the start of november. For more on hong kongs unrest and the potential impact on the Global Markets, also the u. S. China trade talks, lets welcome max baukas hes a former u. S. Senator from montana. Ambassador, thanks for being here. You bet. What happens now . Lets just start with what larry kudlow said last night the mood music seems to be on. We are closer to a first deal. How do you read it i hope so we all want the probably could be a first phase, modest, maybe some roll backs slightly some purchases of soy beans, agriculture products i doubt theres much addressing the structural problems in china but its a first phase and that gives President Trump arguing against the hard liners to say, hey, this is phase one, more later. Do you think more later will come well see i dont know depends on the economy depends how much trump wants a deal frankly before the election well see. The numbers weve been getting from china recently show that their economy is increasingly under pressure from this. No question its under pressure. Its under pressure only 10 because of trade under pressure 90 because of deleveraging theres no question, its true however, china chinese are tough. Its an authoritarian government i have a high regard for their ability to take care of problems in terms of what weve seen in hong kong, video weve just watched, its almost six months of protests at this point. Right. How does that eventually or does it eventually work its way into some of these trade talks as well . Well, i was just in hong kong a couple few days ago. China for a week actually. This is hong kong is a slow motion train wreck its a train wreck because the outcome i think is pretty much inevitable, that is the protesters are going to finally be pushed back and someone is going to be arrested not going to be an outside intervention and i think thats pretty clear. Does the United States have to weigh in and Say Something about it or not . Sorry does the United States have to wade in and Say Something . I think not if they do, that would make it more difficult to get a trade agreement. Add to that i dont think our president cares about human rights so i dont think thats going to happen. Whats the most likely scenario a trade deal or a first phase will come in the next few months yeah. Yeah i think, again, itll be modest. Both sides want some relief. China certainly does chinese tell me that when i was there last week. Theyd like some relief. You sense a strong nationalism in china they think they kind of know where they are to be honest, they think they have President Trumps number a bit, that they can outweigh him a little bit because he keeps changing his mind. They also know he needs a deal he thinks he needs a deal before the election that gives the chinese some leverage. Do you think theyre turning the screws at this point i think they are a little bit. Add to that, on the other hand, some chinese would like trump reelected why . Well, they see that trumps with his America First is losing america is losing its position worldwide that allows china to fill in the gap. So were at the lowest unemployment record ever weve got alltime highs in the market china has some of the worst numbers that weve seen in years but theyve got the upper hand now according to you i think theyre tough. Theyre authoritarian and theyre youve said it every time you come on. I dont know the facts dont seem to be with you on that one. Ambassador, thank you. When we come back, senator Elizabeth Warrensc ealating her fight to raise taxes on billionaires billionaires the latest next. 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. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. His haircut is nice. This is the mostawarded minivan three years in a row. The van just talked. Sales guy, give em the employee price, then gimme your foot. Handsfree sliding doors, stow n go® seats. Can your car do this . Man, yall getting a hook up and you dont even work here. Dont act like im not doing yall a favor. Yall should be singing my praises. Pacificaaaaa purchase and get 5,361 below msrp plus 0 financing for 60 months on the 2019 pacifica limited. Fi spent two years alone on theand homeless. Announcer as americas veterans face challenges, dav is there. Man 1 my victory was finding the support to get back on my feet. Announcer dav helps veterans of every generation get the benefits theyve earned. Man 2 im a veteran. When i got out, i felt like nowhere was safe. Announcer so veterans can reach victories great and small. Man 2 my victory was finding the help i needed. Announcer support more victories for veterans. Go to dav. Org cnbc, bloomberg, cnn, fox news, they are all calling me. I dont need it. I dont nieteed it im like the guy in godfather right before they shot him at the airport. He said im a retired executive living on a pension. Im a retired money manager living on invested income. That was leon cooperman yesterday responding to a new antibillionaire campaign ad procedural hopeful is selling 25 billionaire tears mugs on her Campaign Website referencing cooperman getting emotional talking about the 2020 election. Joining us now, jason furman, a Harvard Kennedy school and Congressional Budget Office director and American Action forum president. Did you ever think that i would be talking about you constantly in reference to im talking to jason here. Quoting jason furman and Larry Summers in some of the analysis done by the berkeley professors that work, i guess, at least advise Elizabeth Warren on the wealth tax and you pushed back on their methodology and their conclusions, right i think its a shame because i think taxes on high income households are lower than they used to be they are lower than they should be but their analysis exaggerated quite a lot. Made a lot of assumptions that no serious economist would make. Do you think it was the right thing for the New York Times to publish it as a fact in the oped pages . I think its a tricky issue you have a lot of economists its made its way into the jargon now that its a fact that the 400 richest americans pay less than the bottom its a fact but not a fact we have a progressive tax system i think we should make it even more progressive and i think its a shame thisanalysis distracted from where we should be going is her is her plan the waem tax wi wealth tax with te two cents. Key with fill in loopholes. We can tax Capital Gains to death and we should give serious consideration to mark to market taxation of Capital Gains. Serious idea some are working on it right now. Hard to implement i think its enough of a benefit economically that its worth seeing why not capture so youre going to get those gains eventually when the stock is sold the idea of mark to market on that stuff seems so unruly when you watch the big swings that you see in the stock market averages let alone what you see in some individual stocks. There are plan out there. Economist from the American Enterprise institute that worked in the Bush Administration has a plan builds some smoothing in that helps take the rough edges off of it. But makes it more complicated. Why do you want it right now as long as you eventually get it and theres no way to weasel out of it. Everyone should be for that along the way i think its a problem that we have a system that essentially makes taxation voluntarily for a set people you choose whether or not to be taxed by your selling decisions. Doug, whats your view . You heard a lot. Youve been patient. No. I want to agree with jason on the wealth tax analysis. Theres a lot of holes in that its been badly oversold the idea of publishing this tax rate for 2018 before the Filing Season even closes that tells you the quality of that analysis people should just put that aside and if they want to get serious about having a more progressive tax system with more revenue from higher income individuals we have existing vehicles to do it. We have an income tack we have a Corporation Income tax. We can take those and do things like base broadening on higher income individuals i dont know if jason was able i heard enough. How about overall where the party is right now, im talking about the Democratic Party, doug theres a lot of new programs. Is any of that going play in peoria, do you think two things. First, if you take at face value the plan of say Elizabeth Warren as the future policy portfolio of the Democratic Party thats just unthinkable i mean its fantasy land kind of budgeting. There isnt the money the to do that there isnt taking on the existing problems in the federal budget so, you know, no, thats not really going to happen its also, i dont think, yet the majority view of the Democratic Party i think you heard pretty clearly Speaker Pelosi saying she wasnt for medicare for all and i think that reflects her caucus if you look at for example the newly elected democrats in the midterm of the 60ish freshmen, 40 are folks who would be new democrats by the clinton standards. They are not progressives. Elizabeth warren is trying to capture the Democratic Party but its not yet done and not representative of what will happen because it cant nor what they really want to have happen yet. You uncomfortable with the Geographic Center of the Democratic Party yet jason doug made a very important point. No matter which one of these people get elected they are announcing plans that are way more ambitious than what a lot of democrats in congress would be willing to vote for what were seeing now is a statement of ovals and direction. Some people are overshooting the direction or overshooting the market the values may become a problem. I like that okay we got to run. To be continued. See if i can Say Something to jason. 6 growth in china, but average cap is 10,000 they are much better off than us right now. I have a thraer 6 growth rate with 10 capital. And capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Getting to the finish line on trade a top adviser to President Trump says the u. S. And china are approaching a deal the health of the consumer heading into this holidays can retail sales due out this hour next chapter in americas tech lash, Tim Armstrong will join us to talk about the crackdown on Big Technology companies. Final hour of squawk box begins right now. Good morning and welcome to squawk box here on cnbc. Limp from the nasdaq square in times square u. S. Equity futures at this hour are indicated up about 80 points on some china related optimism, i guess. Treasury yields, which have come down in recent sessions from almost the 2 level of basically where they were for the last couple of sessions at 1. 84 some stories to tell you about investors will be talking about today. White house economic adviser larry kudlow saying u. S. And china are getting closer to a trade agreement. He described talks with beijing being very constructive saying quote mood music is pretty good and thats not always been so. Were getting word treasury secretary Steven Mnuchkin and robert Robert Lighthizer and chinas vice premier will be holding principle level calls, phone calls today. So well keep our eyes on that separately Goldman Sachs now promoting 465 employees to the role of managing director. Smaller class than previous ones as the bank looks to cut cost. 29 of the new directors are women which is higher, slightly higher than roughly the 25 in the last two years twothirds are millennials and just over half work in the United States. Take a look at shares of rh, luxury home goods retailer seeing shares get a boost that warren bust fffett Berkshire Hathaway taking a new boost. I like Restoration Hardware. I big fat catalog comes to my house frequently they reduced their stores and going more towards catalog impeachment proceedings are set to resume this morning we have more on what we can expect good morning reporter that hearing is set to begin in just about an hour and the goal today for democrats is to try to bring to life a serious of events that led to that july 25th phone call. They see this former ambassador, marie yovanovitch, as the First Casualty in that timeline. Remember, she was removed from her position back in the spring after calling on the ukrainian prosecutor general to root out corruption in his Office Democrats see her departure as paving the way for those irregular channels of diplomacy and political pressure to blossom. Also appearing today is david holmes but in closed session he overheard a conversation between President Trump and the ambassador to the eu in which President Trump mentioned the investigations now for their part republicans are maintaining that democrats are gaming the rules here and cherry picking witnesses in a rally last night President Trump said this is all a sinister plan by democrats that is ripping apart the country. Guys President Trump said he did not watch the proceedings back on wednesday because he was too busy well see how and if he responds today. Back over to you thank you our next guest is looking at the various possible outcomes of the 2020 election and how they could impact the Financial Markets one of his bottom lines is whether the government is united or divided he thinks thats going to be extremely important. Joining us now is chief public analyst at morgan stanley. Gridlock nobody gist a full mandate the president comes from one party and at least one chamber of congress controlled by another party. If youre looking for an analog, u what were experiencing now and through most of the Obama Administration so if you think about this from an investor perspective, for example we get asked questions about a preemptive fiscal stimulus help the cycle move along take that out of your equation divided government keeps the fundamentals of the economy as is and the however the cycle is turning it keeps moving in that direction. I can understand why its thought to be the safest thing for wall street you wont get huge change and given how the two sides are more extreme in. What they are proposing i can see why thats important whats changed over the last decade or so is probably the use of executive order thats gotten to be a much bigger issue thats fair i think thats more of a sector story as opposed to a big macro story. If you are thinking about just republican versus democratic control you should be looking at Sector Performance on financials, and hearing. From macro perspective which kind of outcomes lead to gdp uplift, which might lead to treasury yields move higher. We find a lot of investors conflate Party Control with gdp uplift or down trend and were saying its more about unified divided is a positive data what is the odds of us getting a divided government everything is so open who the candidates are and what the polls say. At this point in 2015, the polls were quite wrong about who the leaders were at this point quite wrong in the no leading up to the election the broader point is you tend to polls underappreciate the incumbent this far out if you look what you had in 2012 and 2004 the betting markets will tell you divided governments are highly likely. The fundamentals of the race would tell you theres a status quo bias its unlikely that the democrats will lose control of the house getting control of the senate is a heavylift democrats need three seats three toss ups available to them one they have to defend a seat in alabama so that also tells you by the way even if they get control of the senate a lot of policy ambitions of some Democratic Candidates will be moderated at least. When do the predicted type when does it get liquid enough to be indicative of whats happening. When do you start believing it the overunder around april really when you get the democratic candidate that person becomes a lot more clear because you get enough polling evidence that some of these thirdparty models start tracking or the betting markets are tracking them pretty well thats a relatively good indicator. The highest i dont know if you follow at any time highest democrats is 17 cents or 18 cents versus 43 for trump but the predictive model who wins the white house a democrat or republican is 53 cents democrat you would have to add three of them together to get to 53 im just guessing eventually whom ever becomes the lead candidate that starts creeping up. Thats fair the electorate isdivided, whoever the democratic candidate is they will have a fighting chance whoever it is Elizabeth Warren could win the presidency generic democrat regardless of who it is its not always an advantage its a generic democrat. In this case there is because theres no single democrat that the entire party couan coalesce around 2016 taught you theres a number of different paths to win the presidency theres the path you can persuade moderates, suburban moderates and not necessarily activate your base theres a path you can activate your base and get more voters that way thats the play that trump ran in 2016. Which again rake candidate, i. E. Democrat which one is generic enough to fit that mold in your view at this point i dont know. Why i think the guide we put together that we published at the beginning of last week is incredibly important to us the candidate specifically is less important than the total government outcome and policy path that generates. So as a consequence even if you had someone further on spectrum as the nominee, you probably likely even in a unified government scenario to have a policy path that net stimulative from a fiscal standpoint because the more popular initiative, generically for democrats are spending ones. Less ones are tax raising ones you get partial funding as opposed to fully funding of anything thank you very much coming up the growing spotlight on google. A gig antitrust investigation into the search getting bigger former aol ceo Tim Armstrong will join us on his thoughts on the latest story on tech and how social media giants are handseling political ads going into 2020. Stay tuned youre watching squawk box on cnbc see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade you still have service . Call the Insurance Company sfx [phone ringing] its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool welcome back box. Twitter has announced a ban on all political ads ahead of the 2020 election but questions remain about how the company will implement this new policy today twitter ceo expected to announce new details joining us for more on all of this, this large debate is Tim Armstrong former ceo of aol and the founder and ceo of gtx company. He has a big announcement. Well get to that in a second. Tim first i want to get your take on the recent back and forth over these political ads on social media and a couple of other big tech titans. Great to be here. Where do you land if you were running any of these services, would you accept political advertising right now . I think one, all the political campaigns are very good at using the Internet Services in the nonpaid areas. I think from a Consumer Choice standpoint consumers will get a massive amount of information. Thats interesting. They are all very tuned into that they are going to get it anyways. On the advertising front, i think twitters announcement was smart of the moment in terms of what will be a lot of attention for their ad program in general. At google when i at google we had a big political ad program im sure they still do i think political ads matter because its a way for candidates to get their voice out overall. Its interesting to see if twitters move if youre Mark Zuckerberg given youre on the firing line what would you do and recognizing, i imagine, google will come out with its own policy one way or the other. All of these companies have very sophisticated policies in these areas. To be be honest if i was running with these companies i would stick with these policies and tighten them down. Advertise is one huge way to get information out to consumers if youre a candidate that doesnt get all the press that the bigger candidates do advertising might the only way to get there better policies to be put in place. Bill gates was talking about this idea its about targeting, thats problem get rid of the targeting by the way, you get rid of the targeting makes it less effective. Heres the larger tech issues going on right now is because the targeting is so sophisticated in general, most people dont understand how the targeting works. And i think thats leading to a lot of the questioning thats happening is basically if im a courtroom what do i get, when i do get it, thats the target is an issue compared to how Television Advertising works, political or newspapers so thats what makes things unclear. Ive been toying with the idea that google, facebook should allow some sort of tag on tag off for users. Optin i want the to see political advertising, i dont by the way on facebook already right now you can say this ad is helpful to me or i dont like this ad, dont show me more of those. How much would that change the financial prospect for these companies if they were forced to do Something Like that if you take Mark Zuckerberg at his word hes saying political advertising is almost irrelevant the thing to realize is companies dont make all their money from political advertising. No, but i think if you were allowed to optout of that the eventuality you might be allowed to optout of everything twitter announcement is whats the next category that people arent going to want to have ads in general. I have a few suggestions. Twitter very smart announcement i think is a fraction of their revenue. Dominated the advertising business for the last few weeks about it i dont know i think for them it was a brilliant play puts pressure on guys making money off of this. May not be a big part, half of 1 , a lot more than the 3 million for twitter. I imagine the bigger, sort of component that Mark Zuckerberg is thinking about is not actually the dollars hes thinking about what if he takes advertising down completely for politicians, all of a sudden a whole class to the extent hes already in the target zone for regulators does this make ima greater target and are there much larger implications for regulations that could come . Part of the reason i came today is because i think the Platform Business which has been amazing and i think consumers really like it although theres a lot of noise in washington when you look at those Companies Net promoter scores, consumer like those services, they get them for free the reality is there needs be other alternatives than outside of the platform. Tim has a very big announcement this morning. You are launching a new shopping holiday called dtc friday direct to the consumer. Thats the announcement. Its about having an alternative to the platforms today were announcing we have 120 companies that joined together for dtc friday. All of these companies are directed Consumer Companies that sell directly to you outside of the directly going over the fang platforms. We put together a coalition of the willing, starting with us in february saying we would invest i direct to consumer we made some investments in doing that we recognize theres a huge need for these companies. They have rising acquisition costs in platforms how do you do it . If you dont use any of these platforms how do you reach were reaching 125 Million Consumers today. Were on 21 tv networks. 170 out of home locations. Dropping tens of thousands of print into peoples homes. Catalogs then were using digital platform but using a different form of the digital platform by putting content on them. Using influencers, and were doing a lot of things. If i pick up my instagram today yes or facebook yes a fraction of that, the majority of that basically everything is off line or online but using content. Underlying the second announcement we have today is were launching flow code which is a Technology Platform that will allow consumers online and off line to go directly to the brands they like were starting with flow code is chewed up user codes but a lot of telling were building underneath them. Weve connected people in all 50 states and 30 countries in the beta verse of flow code. If you see direct to consumer ads on friday, youll see flow codes on that content and on those ads and you beautiful are able to go directly from a brand directly to their web property to buy the product i think about nike this week making big news saying its not selling its wares on amazon. Would you have big brands like that that come in to the picture or dont they want to pay you. You hit on something really big. When nike came out and said they are not going on amazon. Something weve been talking about for the last ten months. We saw that as a big moment for nike two, we have big brands testing our platform one of the Largest Companies in europe testing flow code and being part of dtc friday these big platforms i know take a pretty hefty price and dont get the data that comes through. What do you off terrify same sort of access im assuming you charge less and give them all the data we try to be lower in Customer Acquisition costs than the platforms. Two is we share the data back with them in our very privacy protected way. When you look at gdpr we built ourentire company on the premise that were going to move, the customers we have from being in a platform space into an eco system space. If you think about the platforms today in the United States, its the equivalent of nasdaq and nyscing the most valuable companies on those exchanges we want to move everything out to the edges do you expect companies to move off of the amazons of the world long term . I think if they have the option to go direct they are going to go direct again, look what disney has done with disney plus look what nike has done this week the direct to Consumer Movement will be the replacement for the retail issues and commerce issues going on because the platforms and again i think its a mega trend right now im in it every day. I was at the beginning of the internet this is another mega trend starting nike announcement is the tip of the iceberg. If you can go to direct to consumer friday or dtc friday. Com and go to flow code. Com well give you technology to connect directly Tim Armstrong, thank you. Did you move you live in cincinnati you want me to live in cincinnati you didnt move notice live in connecticut. Why . I saw you we did some stuff in the midwest, indianapolis womens marathon and other things and so our team is parked youre still paying a lot of taxes. More and more every day tim will be participate in the evolve summit in los angeles next week. Check it out to learn more becky will be there as well interviewing Doug Mcmillan of walmart. Platforms to eco systems. Thats the next move you need me to be your foil im not comfortable being your foil for your pulitzer push. You dont have to be. Why did you do it for you point and yell next time dont. When we come back amazon gets ready for a fight with the pentagon over a lieu okay tariff cloud contract well bring you the still emerging details straight ahead. Announcer coming up the economic number of the morning the october retail sales report is just minutes away and investors will be watching closely as we head into the allimportant Holiday Shopping season stay tuned for the data and instant analysis squawk box will be right back. nervously ready . Ok, ready sweetie . Nice, you ready to go again . Are you ready, dad . Im ready. Imagine if your Life Insurance could help you live for today and safeguard tomorrow, so youre ready for anything. Life insurance designed to protect generations of families. Thats the power of pacific. Ask a financial professional about pacific life. By the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Wat t. 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Without me . Um. And when we knock out this wall imagine the closet space . Yes oh hey, son. Yeah, i think theyll be fine. Voya. Helping you to and through retirement. Or trips to mars. No commission. Delivery drones, or the latest phones. No commission. No matter what you trade, at fidelity youll pay no commission for online u. S. Equity trades. At fidelity youll pay no commission but shouldnt somebody this is be listening . Pression. So. Lets talk. Were built for hearing whats important to you, one to one. Edward jones. Its time for investing to feel individual. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Welcome back to squawk box we got data out in a few seconds. Looking for the latest retail sales report we have seen futures up. Dow up by 88 points. Lets get down to Rick Santelli. Reporter good morning. Lets start out with the most realtime empire november number expected up six, were only up 2. 9. Basically half following an unrevised floor october reads, import prices down half of 1 . More than double the expectation. If you strip out petroleum youre down one tenth. About as expected. Import prices yearoveryear down 3 , sequentially falling minus 2. 1. Export prices month over month down one tenth, yearoveryear down 2. 2 no pricing pressures here. Global issues are affecting those numbers in particular. Retail sales, the moneyball number, october. Were looking up. 3. A tenth better than expected near image of the minus. 3 x auto up. 2 x auto and gas up 110 a bit light. Control number plugged into other numbers up the food chain is up. 3 it was unchanged last month. Now it stands at minus. 1 so we move up to. 3 which equals our august read which super. 3. High watermark was january at 2. 9. Thats a high watermark for the series Interest Rates, actually moved a tick lower, a tick lower on this data that reflects the pricing issues remember were down a dozen basis points from last weeks close at 194 joe, back to you thank you thank you. Joining us now, chief economist. Weve been talking about the phantom recession. Was it a phantom recession or did the fed step in and save us. Was it ever real it was getting real by that the Manufacturing Sector was clearly in recession globally. Globally yes. The question was would it spill over into service. There was some initial worry about that in the august and september employment reports because service in employment was slowing. Looks like were set, the best case is activity in the u. S. And global issue should bottom out in q4 and were set for a little bit. Saved us the consumer or jay powell theres a risk we can see downward momentum. Manufacturing is still in trouble. Business investment still in negative territory this mornings courtroom numbers while they were an improvement from last month didnt set the table for out of the wood yet. Consumer still is on very moderate footing remember the consumer is the sole support to the economy right now. We really needed to see more robust numbers on the spending side to suggest well see a more favorable activity level overall. The bond market seemed to decide or who have settled on the notion that the slow down has been averted would you disagree i think the market is buying in the to the notion which market . Both. Buying into the more positive rhetoric weve seen from the fed theyve done enough to stabilized the economy in the near term. But i dont the market is sending the signal that the longer term outlook is favorable. If we did i think then the stock market is way ahead of itself. The stock market is always ahead of itself. Its pricing in not only a phase one deal bath longer term lasting meaningful trade deal providing a rebound not just to domestic growth but to Global Growth as well you dont think this is just a pause or that the stock market is happy to just have a detente at this is not it could be seems the stock market is looking for any signs, any green shoots to trade up on. I dont know if this changes the picture of fundamental which in my opinion still remains very tepid. You dont necessarily feel quite as strong about that, do you. Not quite as strongly to lindseys point. 3 month on month for core retail sales is what we averaged in q3 but july data was the strong number right . So if you keep getting. 3, decelerate into q4 i do believe that equity markets are responding mainly to phase one. I dont see a phase two in the cards. So i would agree with a little longer term view that lindsey has there. Markets want to know did we reach peak tariffs and are we backing off from that. If he we have then i think market price is reflecting that. Were spending a lot of money. Everybody. We had jones on the other day saying thats the bubble, the next problem we have is going to be, you know, rates ever go up we wont be able to cover the debt service and theres no one is talking about it. Thats not true chairman powell talked about it yesterday and wednesday. He doesnt control any of the fiscal he dont control it he pointed out if the economy takes a turn for the worse theres no additional appetite, if you will in washington to provide stimulus the onus will fall on the fed. Theres very little ammunition the fed has to prop up a faltering economy at this point. You have to go to nontraditional methods. Permanently lower yield for foreseeable future five to ten years 180 on the ten year is high what about pension fund, seniors, retirees, what are they supposed to do different return. Tighten your belt over time, yes. What will be thrown off massive portfolios will be lower what about retirement or Insurance Companies, everyone that is dependent own saving returns have to come down its nobodys fault. Its a reflection of the world the way it is. Is the advantage of debt surface not going up for all the borrowers does that offset that savers cant make any money . I would say it depends the answer to that it depends on what you do with what you borrow certainly if we do have another downturn my argument would be go ahead and use your fiscal resources, lower Interest Rates give you more space. And then it would depend on what you want to do with that i do think theres a Counter Cyclical role that fiscal can play in the next downturn. I wouldnt let the size of the current deficit which is size by current standards dissuade you from doing that. The outcomes of not doing that would be worse all right im not inviting you guys in here on a friday again mondays okay. Match our mood exactly. Anything positive going to happen down the road i dont think that we need to be depressed leaving this conversation its friday nothing you can say. We have to recognize that its very moderate growth. And the down side risks again as the chairman pointed out wednesday and thursday they are growing from trade, from slower growth, from rising debt levels both at the corporate level and federal level. There are a lot of barriers we have to overcome but were still in positive territory at least for the near term. Okay. Lindsey, thanks. Thank you lets talk about the other big corporate story. Amazon planning to challenge the pentagons decision to award a 10 billion cloud contract to microsoft. Amazon contending politics played a role. President trump is a long time critic of amazon and its founder jeff bezos joining us is a Washington Post reporter aaron craig Washington Post is owned by jeff bezos good morning to you. The big question thank you for joining us i think the big question here is how political this is going to get and to the extent that theres now going to be a lawsuit, what kind of discovery could or could not happen . We talked earlier in the show about this book by the speech writer who talked about how President Trump actually called the president at one point and said how do we basically screw amazon with this contract. President trump called who President Trump called mattis i thought you said President Trump called President Trump President Trump called mattis he might do stuff like. How do we screw amazon out of this contract. At the time mattis said, you know, were not going to do that well do it all above board. But by default it feels like this whole thing has been politic politicized. Take us through the next steps amazon has waded head first in what promises to be a highly politicized lawsuit. If you cover Government Contracting or follow it at all you see protests all the time. Its a fiduciary responsibility to protest when you lose but its usually focused on a minor technicality amazon is going for the jugular and clear bias it puts them on a fight with the pentagon but President Trump the other question and joes question aaron you highlight all of the other thing that have been going on for the past 13 month, whether its oracle or revolving door criticism or ibm or whether its the idea of going a single contractor my point was that the president is going to have cover to say that isnt what this is, the this makes sense, microsoft is now going to be certification six or swhavgts they will have the highest level. They had a chance the to get their act together aenzy to say microsoft deserves it at this point. You know, to get out of the criticism ate revolving door, incestuous relationship between amazon and department of defense. Its easier to say smaz legitimate player for this contract now than it was a year ago but even when you ask people who are against amazon they will tell you Amazon Web Service is no wear Market Leader in Cloud Computing. Still seeing this as a surprise. Yes very interesting to see what comes out in discovery thats the other question, sort of how long the other question is why not go to the gao and stop it in its tracks as opposed to go to court i made the argument, i imagine, that you may not be fully independent. They dont have to get their act together immediately amazon can, you know, they have months to do this now instead of they have to have it ready right now . Thats right. When i said earlier theyve gone for the jugular thats with the court of federal claims. With gao its a closed door process where you see what happens at the end and becomes a scripted bureaucratic process. Court of federal claims well see a slow drip of discovery with the oracle lawsuit which wasnt in the court of fed claims that was damagele for the pentagon and for amazon because every time a new filing came out, you know, you saw ten news articles about it. Its clear this is going to be a little bit of a sensation for quite sometime how far along will the implementation or installation be by not stopping it in its tracks can microsoft say were done or halfway finished the at t time warner can no work to be done until its finished . Thats what i dont work i think its likely they will move forward ahead of time right now. The other thing to remember there are other contracts that havent been quite as highly politicized. I bet amazon is hoping that whatever other opportunities they have, whatever other irons in fire they can keep it much more quiet than this one that was my question. My question is by going out there as public as they are, does that change the dynamic for future contract . Is this a little bit of a manager of a Baseball Team running out on the field and screaming at the ump not because they will think they get the call reversed but hoping to get the next call. It could be the other thing to remember oracle has been raging in the court of federal claims for almost a year now. Its only a slight uptick in the amount of, i guess, vitriole youve seen between contractors and dod and different contractors. This is a charge thing for quite some time bulk up underneath the surface. Just now with President Trumps alleged involvement its broken into a national and highly politicized fight between these three entities, dod, the white house and amazon thank you for joining us this morning. We appreciate it i imagine well be talking a lot more as this sounds it will progress for quite some time by the way, he wrote that piece straight down the line thats what i thought can you learn something. All right when we come back google in the spotlight. Its looking like state officials may be about to take a much deeper look at the search giants Business Practices but do investors care . We got that story next do you care . Announcer dont forget to subscribe to our podcast youll get interviews, original content, and behindthescenes access look for us on Apple Podcast or onou yr favorite podcast app and subscribe to squawk pod today. So servicenow put your workflows in the cloud, huh . Mmhm. Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. With sofi, get your credit cards right by consolidating your Credit Card Debt into one monthly payment. And get your Interest Rate right. So you can save big. Get a nofee personal loan up to 100k. Welcome back to box futures 45 minutes before the opening bell dow will open up higher 103 points nasdaq about 43 points up and s p 500 would open up about 11 points higher. Joe. Under an hour actually now to the opening bell you know what that means mike santoli standing in front of that cool equipment when your going to start doing stuff, moving things around. Working up to that. In groundhog day bill murray goes like that. Im practicing. Remember how the weather mapp used to write backwards. Its reverse. What we do have is a look at some of the biggest tech stocks. Another round of pressure on google in terms of news anyway attorneys general looking the at the business this is Google Alphabet against the nasdaq 100, microsoft and facebook over the last year. Its hard to look at this chart and say you have a discernible effect of concern about threats to the business model. Foogle here has basically tracked the nasdaq 100 not as well as facebook under some regulatory threat alphabet, if you want to subsequent say some of the premium has been taken out of the company. Forward pe for alphabet has trended from its highs in 2018 this is against the s p 500, so it peaked what about 1. 7 times the pe multiple of the market. Now its around 1. 5. Again very hard to see the market done think it has to price anything in, in terms of future earnings at least right now without knowing what the nature and potency of this threat might be from the attorney general mike come on over to the table. Joining us to talk technical strategy as well is our next guest. A partner and head of Technical Analysis chris, what do the charts tell you theres this move towards syclicality. The news, the headlines as we all know whether its impeachment or recession pmi under 50 but the message of the market is different. We see in every corner of the week, german David Axelrod 52 week high. Authors pro growth stories and the surprise is next year growth is better than people think. This is just growth versus value and you think growth will keep winning more broadly this is participation getting broader within the market. All growth stacks arent bad tech is still quite good now we have participation of financials, and other geographies. A year ago it was only u. S. Tech working. Today a lot of other places around the world we heard people com in and say they like industrials again. You do too i think with the biggest story in industrials is, theyre working with the absence of boeing the average industrial stock is acting better than people think. Last week, you had about 70 of industrials make a new threemonth high big expansion to new highs reflect broadening exposure, this is a good group, it is an adorable move, dont fade it yet. Adorable . Oh, a durable. I thought you said adorable. It is an adorable move, it is higher. A cute little rally i do think what you want to see too, though, think about it for last december what we were doing, november, december, the market in retrospect was pricing in a sharp slowdown in global gloeth la growth last year, right . Right now the market seems to be saying, next year were probably going to get a pickup, third and Fourth Quarter, and corporate earnings can you believe the message i guess is really the question and right now it is kind of persuasive but the right now is maybe the key part we have an analyst in earlier who said he doesnt see a recession now for four to six months, thats not a long lead time hes looking at next year saying maybe well get 5 growth or so in stocks. Lets think about it from this perspective, the big takeaway, dont get too cute the market spent 24 months in a range, a lot of these groups have just broken out, right . So i think to look for the correction or to fade it this soon is a mistake. When you look at what the message of the charts is, it is saying growth is Getting Better and people arent exposed for that so what is the risk for 2020 i think the market runs away is the risk. Runs away when you say that, youre talking north of 20 . I think youre talking 3350, maybe 3500 level on the s p. I dont think i meant percent but lets remember, lets put this in context of a year ago, we had a bear market we had 70 of stocks went down 20 or more. All of the cyclicals, semis, autos, banks went down 30 , 40 . If we put this in context of a new bull market, not one that is ten years old, one that is ten months old, maybe this move to cyclicality makes a lot more sense. Mike what are you watching today . Were heading into a weekend a lot of news out there. The market has been very firm and steady, unusually steady at the highs, which is a positive im looking at the treasury yields to see if theyre going to be telling a different message than they have the previous two days, they have been coming down i dont know if thats a growth issue or we overshot with this huge jump and now i have to settle back in terms of back into ag buys or the president not going to sign it, it is partly china too. It is trading a little bit also on the fact that the equity rally stalled out as Rick Santelli talks about all the time and bonds look at that and say, okay, i guess we dont have to keep repricing yields higher. One high was disney thats why the dow is up one day. I think you can pick it apart a little bit i think it has been steady near the highs. Unusually flat near the highs and refusing excuses to pull back in a more substantial way, at least so far. Chris, thank you for coming in. Thank you. Mike, thanks. See you in a little bit. To the New York Stock Exchange jim cramer joins us now. I dont know about the upside, talking about sports i cant help it. Do you have plans on sunday at 4 00 yeah, look, it is all about the biggest game of the year and other than the one they just flexed, so im back on at 1 00, patriots, i think it is patriot games everyone has to watch. It is in philly, 3 1 2 point underdogs. But the patriots are coming off that loss, right yeah. Well, they had a bye, though theyre 154 after byes. Theyre not easy to beat all right lets not talk about that. Lets lets talk about attempted homicide last nights game. Oh, yeah. That was attempted homicide attempted murder that was not within the realm of four game suspension thats not a fedex envelope on monday that is, i need an actual prosecution. Do you have a take on guns . Maybe thats whats coming im not going there right now. They think jims no, i thought he wrote a column, may have to go there again. I want to talk about sports, want to ask you about under armour, this new wall street journal report which really sort of exposed or raised new questions about all this is a statement out this morning from under armour saying their management and board reviewed all of this, extensively over the past two and a half years and stand by the companys financials what do you do if youre a shareholder or thinking about it it is very hard because we do know that the article does have questions about that make it sound like it is revenue recognition. To me, it is not revenue recognition. I did this analysis with hasbro and toys r us. This is the same thing it is very simple. Under armour, and sports authority. It is hard to know how much you ship they should have been able to get all that stuff off didnt seem to do anything wrong there. When you have totality of the evidence, it looks like hes a bad guy. What matters to me right now is the company stabilizing, but the last quarter wasnt that good. Im a buyer of it below 17 jim, can i ask you Something Else there is something that came out, apparently the Trump Administration is releasing a far reaching plan, they just did this today, for the first time will force hospitals and insurers to disclose secret negotiated rates, saying the final rule will compel the hospitals in 2021 to publicize them i think the insurers include anthem, cigna and others what do you think this means wow sorry, just coming out, yeah. The hospital stocks have been red hot. Any sort of transparency obviously is going to make these people make people want to own these stocks very afraid i got to do some work on that. Transparency is the enemy of hospital stocks, i think all right, jim. Id ask you about china, but another one of those days, who knows, right i know. I love it. Got to love the who knows situation . Friday afternoon, always fun on twitter. Got to stay close. Got to stay close all right, and ill be thinking about you. You wont tell me what to do you think i should take the patriots then . Is that what youre saying yeah. All right all right. Thank you. Oh, no. I know. It is hard i know cant help it. Dont miss i had pittsburgh last night. Portnoy in my box. I did not have the steelers dont miss two big i hope youre wrong on that call i got portnoy in the box, hell torture me no matter what. The heads of covetrus and live person will join jim. Could be live person, live person i think it is live person. 6 00 p. M. Eastern. Stay tuned squawk box will be right back. What do advisors look for in an etf . Dont just track an index, help me meet a clients need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. Give me a quality fund that helps me get clients closer to their goals. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Want to take a quick final check on the markets this morning. Were about half an hour before the open things looking up 104 points higher on the dow, s p 500 nasdaq looking to open about 47 points higher. Make sure you join us next week. Have a fabulous weekend, everybody. Squawk on the street begins right now. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. Despite one of the flattestmajo month, kudlow says u. S. China trade deal is getting down to short strokes. Here is europes action and yields as retail sales for october are mixed. As is Empire Manufacturing road map begins with the recordsetting rally a deal is