Good Tuesday Morning welcome to squawk alley. I am Carl Quintanilla with Morgan Brennan at post nine of the new york stock exchange. Jon fortt joins us from investor day for qualcomm, first one since 2016 a lot from jon throughout the hour, including a sit down with the ceo exclusively in a few moments. We start with tech on a tear, on pace for the best year in a decade, shrugging off mixed earnings concerns. Sectors off another record close. The dow is selling off, down 120. Buyers beware. Some say were set for overbought conditions when it comes to tech. We talk more about this and the market at large. The chairman of Global Internet banking, good to have you back. Thanks for having me. How do you put the run weve seen, especially in things like semis into context whats driving it . It is amazing, nasdaq up 28 , driven by bigger cap companies, apple up over 60 , microsoft up over 40 , facebook up over 40 to add to the point, semis has been a sub sector, up 58 , driving growth other sectors up 40 give or take, so it has been strong across the board, internet trailing 11 or so try to put it in context, what did we learn in recent quarter earnings as well as what we learned through the year, q3 earnings, you saw dichotomy. A couple of names were beat up, changes in business model, problems theyre having like a far fetch or grub hub. Also some some you didnt see coming ironically, names most beaten up have done the best snapchat up over 150 so far this year. We learned a lot of different things, particularly what investors are focusing on. Theyre focusing on a couple things one, core Unit Economics are you making money in what you do if so, what is the roi number two, how visible is revenue looking forward, how reliable is the forecast we have and number three, path to profitability, the returns we are having with the money. One of the things were learning through the quarter and the year if youre not checking boxes, we have seen some companies punished that werent able to answer those types of questions. Retrenching to the giants is it that simple . You have smaller guys that ripped, roku has done tremendous you had Nice Movement there. I think the interesting part is when you break apart a little more interesting about the tech ipos, what happened there, and what were seeing tech ipos as you know this year to date are up 9 or so. However, for retail investor, after day one of trading, down about 20 . That 9 , when you think about it, how do you break it apart. For companies with more recurring revenues, sass type Nature Companies were up 40 or so the ones arent of that nature are down about 20 even the conviction point too. For stocks that pop more than 40 , theyre up 30 versus ones that didnt pop much are down 10 . Interesting the poles that layer it back. When you contrast how have Growth Stocks done versus tech ipo, Growth Stocks have only grown 2 you had a 7 increment to alpha for investors to chase. You talk about checking boxes, and ipos in terms of performance, has it rippled back to the private market . Great question. I think the intuitive guess is disconnect between private market valuations and Public Market valuations. You look at the data from 2019, 75 of them today even with pull backs, enterprise value is greater than the last private round. When you think about that, it makes sense to a degree. Private rounds were more than a year ago, some cases two years ago. Theres a time value of money there. I think one of the lessons we are learning is private investors are taking a longer term horizon when they make investments versus what we see on the public side bob, if you thought you were clever a year or more ago and sold off facebook, amazon, maybe google on antitrust concerns, regulatory concerns, right now youre not feeling so smart. Whats the market telling us about that worst Case Scenario around the stocks. Is it time to put that behind us or is this just exuberance it is a great question because google is up 25 this year facebook is up over 40 . I think what youre seeing is the reason why so many active investors are trailing their benchmarks, looking for the incremental alpha, hoping to find it in the tech portfolios i think youre right, jon, some cases investors maybe outsmartd themselves versus what was baked in for expectations. We had huge policy risk we thought. We thought the semi cycle wasnt going anywhere because of cars what happened to the two narratives yeah. I think on the political risk, it is still there. I think what investors are realizing is it takes longer time to play out probably not something thats going to happen. Great to make grandiose stations and say were going to break up this company and that company. In reality, it is very difficult to do, and even if it were to happen, would take quite some time today, banwood comes out, says take tech to market weight. We think the trade war could escalate into a tech war after the 2020 election. Yeah. Trade war aside, we are cautiously optimistic on tech going into 2020. Theres a backlog of ipos in the first half when you think of the ipo market next year, important to realize i think the market shuts down around july, give or take, because of the election in november too much uncertainty, particularly depending who the candidates are at that time. Theres a lot of risk around the election look for the front half of 2020 to be more back loaded with ipos and last thing i point out, the point i made a minute ago, active investors are trailing benchmarks, looking for incremental alphas you can get some of that first of the year that was my question for you. You talk about big runs across industries within tech is there value to be had in the sector more broadly . Thats a great, great question i will point to august you look at the tech ipos from january 1 to august, theyre up about 50 , give or take, right now to today, only 9 as i mentioned earlier. Big pull back in growth. You saw the same thing not only in tech ipos but Growth Stocks a big pull back. Whats interesting about that, still high Growth Stocks growing more than 30 are still up 60 year over year theyve done well, just not as well as preaugust. You look at smile direct, down about 50 since the ipo, started beginning of september if you see, a lot of stocks trail with it. Now investors are sitting here looking at it, saying reasonable multiples for software companies, multiple for Internet Companies as well. That will bode well for 2020. You bring up grub hub and google algorithms, slack, microsoft today. Whats the incentive to chase a new name when the entrenched names are powerful youll see with the newer names, it is not a lot of loss generation youll see either Profitable Companies come out, airbnb would come to mind, or other companies with a path to profitability underpinning all that is the strong Unit Economics. You need to be able to demonstrate that thats one of the areas ridesharing guys had trouble explaining. Time to look at other sectors, industrials comes to mind, look at them as the other software place it is interesting you think about software, you think about tech in general, it is more pervasive across all industry you can see how tech is having impact on all of the other verticals. You talk to the management teams and the board, we think of tech as a vertical, may not exist in ten years, right used to be pervasive across all industry if youre not using ai to inform your internal and external decisions, it will hamper you in the long run bob, thats great way to start the hour. Thank you. Meantime, can qualcomm keep growing . Thats the question the investors are asking at the first analyst day in three years with qualcomm 5g strategy in focus. Jon fortt is there live with more, ahead of his exclusive interview with Steve Mollenkopf. Jon . Yes, morgan february 2016, the last time they held an analyst day here today in new york, first time in a while, executives make their case it has been nearly four grueling years, investors are asking the question the company is dying to answer can qualcomm keep growing. Analyst meeting here today, the companys first since 2016, Ceo Steve Mollenkopf will outline the strategy for the 5g era. It comes at a pivotal time in the past three weeks, the stock has risen above 80 a share, signaling that maybe, just maybe qualcomm has turned a corner on the campus in san diego where i visited earlier this month, long time employees are eager for the narrative to change. Soon they hope it wont be about lawsuits from governments, withheld payments from big consumers, takeover attempt. I am very proud to say that it is partially the engineer cultures ability, engineers ability to focus on the next generation, on 5g, for example, thats really carried us through some of these existential challenges anticipation of 5g has blanketed qualcomms campus. The company set up a network beaming a test signal from rooftops a manufacturing facility is putting out parts for 5g technologies they hope give qualcomm an edge over huawei, ericson and nokia. The capacity of 5g and capability of 5g is so large, theyre thinking in terms of, a, what are the Business Models that need to evolve to make sure this technology can be embraced, and what is their role in that. Despite promise of the technology, wide adoption wont guarantee the Profit Growth investors want to see from qualcomm some use cases, making factories more flexible will take a couple more years to implement. Others like this broadband require excessive spending. 5g will disrupt some Large Industries that provide opportunity for us why do they provide opportunity . It is mainly because we are one of the only companies that has the product portfolio. What we are looking for today is meat on the bone about the 5g strategy, exactly when some of the benchmarks for the roll out will hit, how much revenue, how much more qualcomm thinks it can get from 5g. They talk about having more components, more ip in every phone. When will investors really feel that then the regulatory picture. Theyre saying a lot of that is behind them, but weve got more action in the courts coming up beginning of 2020. Well figure out how Steve Mollenkopf sees that. The regulatory picture and spectrum picture a Satellite Service business is down 70 in the past week because it is part of the consortium trying to sell spectrum for 5g use and fcc says no, you have to do it public, the stock is being hammered on this now we talk about all of the different pieces of 5g, jon. I wonder whether we are talking enough about that actual piece of it. Yes, spectrum is interesting. Spectrum is a local issue. It is different country by , qualcomm is a global play they talk a lot about china, the opportunity there, the work theyre doing there in areas like streaming and mobile gaming theyre talking a lot about automotive here today, entertainment inside the car the opportunity for them there as theyre able to design chips that are smaller than competitors. Dont take up as much heat because of the more efficient design they argue. Yes, that matters. The u. S. Is a big market, also a big world that qualcomm is trying to continue to dominate dont miss johns exclusive sit down, only about 15 minutes st wh ayitus dow down 116 welcome back to squawk alley. Disney opens the vault and gets hacked hours after the initial rollout, thousands of disney plus users reported their accounts were hacked, information put for sale on the dark web. Joining us, joanna stern, cnbc contributor and tech columnist and porter bib, founder, managing director of media tech partners, first publisher of Rolling Stone magazine both at post nine. Welcome. Good to be here. Joanna, we talked about it, were anticipating it, what happened here . How big an issue is this for consumers . Something had to go wrong for the disney plus launch not everyone in the world could sign up with no problems but the latest is theyre still investigating this theres no evidence theres been a huge breach. It seems like at least some of the security researchers that are looking into this that this is a classic case of password misuse again, theyre still looking into this. Chances are or theres a likely possibility people were using the same passwords, same User Accounts or user ids on this platform they used on others in the past, those have been breached on the dark web, there are lots of places, you can find user names, passwords they were plugging them in, getting into accounts. Porter, we talk about content is king. You need the technology and platform to work at the end of the day, right no, but the hacking, it was a few thousand against 10 million new subscribers day one. Basically, it was caused because bantech is the streaming service they bought that never had more than a Million People on it at one time so they were overwhelmed and it was pretty easy to hack. The hacks mainly happened in the uk and norway where disney had a prelaunch test with no promotion, doors were wide open. This happened to everybody who opens up a streaming service when theyre not prepared for the flood of subscribers growing pains like we saw netflix go through years ago. Absolutely. The Biggest Issue is not the hacking, it is password exchanges. Netflix, if you remember a few years ago, came up with significant losses because everybody was trading passwords. Disney plus audiences, teenagers, preteens giving it around to their gang right and left, disney will have to figure out how to deal with that. Netflix, hulu, disney plus dont offer two factor authentication that you have set up on twitter, facebook, emails, get a second code texted to you. Might be a reason. They know about password exchange you log into my netflix, im going to get the password, i have to text how to get in there are ways to ramp up security reuters has a piece up that says one week in, it is becoming clear the two can coexist, netflix and disney plus. Do you agree absolutely. Theyre going to be at least five in 2020 with peacock and all of the others that are coming on stream theyre going to start to bundle as well. The field is getting crowded. The greatest opportunity helping consumers navigate the possibilities, how to go to one place . I was here a couple weeks ago saying that the biggest loser in the streaming wars could be the consumer it is on us as consumers to navigate this crazy territory. You mentioned all of the new services again, my number one rule is do not pay if youre not going to watch. Do you think we would be having the conversation if it wasnt for streaming the Movie Theater business is collapsing, on life support right now. Justice department was quite right saying circumstances of the last 50 years have certainly changed. The bad news is that theyre going to make block booking illegal. Major suppliers of film, still three or four major studios will be able to put blockbusters and other films and wipe out art films, niche films, foreign films, and little standalone single theaters, not chains, will be the losers, so are the consumers, if you like going to a movie, seeing a different, not a comic book this is Martin Scorseses worst nightmare. How do you get to the Movie Theater . Who do you think of the streaming giants would be most likely to want to own physical distribution, a chain, part of a chain . Amazon no, netflix, they want the oscar qualifications, and to do that you have to be distributed at least three weeks in the Movie Theater. Movie theaters are not playing netflixs game they put the irish man in theater on broadway, it is a sellout, huge success. I wouldnt be surprised if netflix doesnt start buying Movie Theaters another place to sell us. Right maybe apple converts stores to theaters. Genius is now service. Coming back to the passwords and hacking, the big thing that disney has all of the content and including more sophisticated marketing, what they have to understand is that theyre in a new game direct to consumer is not something disney has ever done theyre going to have to vastly improve the Search Options on disney plus. Netflix solved all of the consumer management problems disney has a long way to go before it is working perfectly. And they have to solve how much tv my son has been watching oh, my gosh, you and me both. I think it may be on us, i am blaming him. He is two, i blame him and i blame bob iger. You mentioned apple were going to move to that. Hosting a surprise event december 2nd to honor the favorite apps and games of 2019. Apple is not expected to release any new products at the event, but joanna, i dont think theyve done this before it was always a release in the past. If you look back at the past years, every time around this time of year they do the top apps list, top apps, top games, the different qualifications of apps, make a big web page, quietly say we love these apps, download them on your devices. This year theyre rolling out red carpet for the developers, probably bringing executives i think it is an interesting time for them to do this, with app store scrutiny around regulation i dont think it is much more than that though i dont think well see new hardware, i dont expect major announcements about app store. Maybe a little about momentum, apps, number of down loads. I dont agree i dont think tim cook will miss the opportunity with attention he will create to pump new blood into apple tv plus because it is on life support right now, not doing well what do you mean, because of the morning show reviews werent good enough . None of the content what he is doing december 2nd is say look at the new content we are bringing in movies, were bringing in music, going to do all kinds of things that nobody has heard of with apple tv plus. And he has to do something to jump start it because reviews and audiences and subscribers are not there. If youre wrong, well, you are going to be wrong, im going to be right. And if you are right, i will pay for your apple tv plus subscription for the next three years. Isnt that nice . It is done. And i actually liked the morning show. So three years if youre right. But youre not going to be so the bets over you heard it here thanks for joining us. Still to come this morning, inside qualcomms 5g strategy. Theyve made some headlines in the past few minutes n johas Steve Mollenkopf in a moment just wait. Dont go anywhere. To help out with chores. So, we got jeanpierre. But one thing we could both agree on was getting geico to help with renters insurance. Yeah, geico did make it easy to switch and save. Oh no. Theres a wall there now. Thats too bad. Visit geico. Com and see how easy saving on renters insurance can be. We believe in education built for all people. , [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. 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. Lets get an update on whats happening at house intel as the house impeachment hearings continue. Ylan mui is covering that. Good morning, ylan reporter good morning, carl. The most confrontational moments were as republicans tried to get more information on the whistleblower devin nunes tried to press the National Security official about who he spoke with after listening in to the july 25th phone call what agencies were these officials with department of state, department of state Deputy Assistant secretary george kent who is responsible for the portfolio of eastern europe, including ukraine, and individual from the office of individual in the Intelligence Community. As you know, the Intelligence Community has 17 different agencies what agency was this individual from if i could interject here, we dont want to use these proceedings it is our time. But we need to protect the whistleblower. Reporter republicans questioned Jennifer Williams about mike pences visit with president zelensky in warsaw she said she did not prepare any materials for him about the bidens or about burisma, it didnt evencome up and she said that that is a sign they were more focused on the security sustaiassistance and hn that, they were focused on the need for other countries to share in the burden of aid back to you. Ylan, well come back to you in a bit thank you very much. Meantime, awfully active attorneys general around the country. Rahel solomon has an update. Exactly Washington Attorney general announcing a lawsuit against Food Delivery Service doordash the ag accusing the company of allegedly lowering labor costs, encouraging tips for delivery workers, and then pocketing money for themselves doordash operates in 4,000 cities, is considered one of the largest players in the on demand food delivery space. The ag is attempting to recover millions in tip money. In a release that crossed, said the real beneficiary of higher tips was doordash. The more consumers tipped, the less they had to pay workers doordash backed by softbank is worth around 13 billion according to the last funding round. Carl, as you said, ag is busy this morning back to you. After the new york ag sues juul seema mody has todays Market Action overseas. European stocks are pulling back from four year highs, although in mixed session, ftse 100 and german dax, reuters reporting merkel and the finance minister continue to dismiss calls for increased public spending, according to recent up tick in Business Sentiment it is worth noting it is improved economic backdrop, one of the major factories behind the outperformance of 7 european financials coming off lows, thanks to better than expected earnings. Similar in russia, despite oil trading in a narrow range, russia is up about 8 , outpacing gains here in the u. S. And sticking with russia, an interesting deal to take note of t. J. Maxx is acquiring 25 stake in a russian discount retailer for 225 million it marks one of the first cross border deals with russia since the u. S. Put sanctions on russia five years ago shares of tjx up 1 . Back to you. Thank you. It is time for a news update Bill Griffith has that at hq. Thank you heres whats happening this hour in the philippines, defense secretary mark esper says participants in a recent meeting were concerned about excessive claims in the region. Most participants in the room are very concerned about chinas excessive claims in the region that there are lack of compliance with laws and norms, concerned about course of tactics used by beijing throughout the region to advance their own interest in iran, thousands of government supporters rallied on the streets of two iranian cities in opposition to protests of antigovernment protesters. Got that demonstrators marched and chanted antiamerican, antiisraeli slogans protests erupted after the government raised gas prices. And here we go again mazda is recalling nearly 117,000 vehicles in the u. S. For a second time to once again replace deadly takata air bags that covers vehicles recalled previously from 2013 to 2017 they received takata replacement inflaters because parts from other manufacturers were not available. The problem, carl, morgan, inflaters contain i am owed yum nitrate which causes them to inflate when theres a collision. But that decomposes over a number of years and causes an explosion of shrapnel and the air bag nonsense continues, the nightmare thats been dragging on for years back to you. Wow wow. Yes. Bill griffith, thank you. After the break, jons exclusive interview with Steve Mollenkopf dont go anywhere, we are back in two lets get back to jon fortt live at qualcomms analyst day in new york, sitting down with a special guest. Hey, jon hey, carl we have Steve Mollenkopf, ceo of qualcomm, here at your analyst day. It is great to be here first one in a long time youre talking about the opportunity, the long term opportunity especially when it comes to 5g. I believe you said the Service Available opportunity, like total adjustable market is going from 65 billion to 100 billion. Explain. Thats right. Goes from 65 billion in 19 to 100 billion in 2022. In three years, it grows dramatic amount. It gives you a sense how important 5g will be to qualcomms business. By the way, also gave a number that said total amount of Economic Impact of 5g in 2035 will be 13. 2 trillion. So 5g is going to be an important thing. Qualcomm at this point does not have an opportunity problem. Okay. I want to understand more about that for a long time, we have been talking about lots of things besides the technology and the product. Broadcom tried to take you guys over, you guys tried to take out nxp, but regulatory issues, china got in the way now the argument is we can talk about the technology again what is it about 5g that really is going to be opportunity how much is you having more ip per phone that brings in more profit, how much is entirely new areas this gets you into think of it in two phases first phase is we make more money out of the existing cellular business just because it is going to 5g. It will go to 5g in the next decade we sell more expensive products and get a bigger portion of the phone bomb in the products we sell. Billable materials. Billable materials. In addition, Technology Required to be successful is important in other markets that are taking on 5g auto, the best first example of that, there are many other behind it. We essentially have ability to take the r d we are producing in smart phone space, leverage it multiple times for benefit of the shareholder. Based on how you see 5g ramping, when will investors feel the benefit of you having more ip in the devices youre going to see it in the next two quarters and through the next year. Last earnings call, we essentially gave a strong guide for licensing business, which kind of sits as a proxy for Christmas Season selling then gave a soft indication of what we thought the march quarter would be, which essentially said youre going to see 5g start to impact product business at that time. It will come in two phases in the calendar year. One beginning of the year, another in the second half of the year when flagship launches both places. Talk about the automotive business youre going to give more detail about that here. You havent given it yet going to try to tease it out you said that business is growing to about 6. 5 billion pipeline so far. What is that is that entertainment inside the car, is that driver assistance technology, and whats going to drive growth for you it is currently in the business, it is the telematics or equipment that connects the car to the internet and then entertainment, everything in the dashboard, all of that is what qualcomm supplies. Big opportunity. We talked about 6. 5 billion of design pipeline. Were going to break it out this afternoon, later on when the cfo speaks, he will talk about how it breaks down on a yearly basis. I think what people will conclude is what we concluded, this is already a business at scale, compares favorably to competitors, think it will grow nicely for us the next several years. I talked to some folks about whether automakers will buy based on Technology Already available or whether theyre going to buy to future proof, and where the opportunity for qualcomm sits. Is it in you guys having the data and owning the Service Going forward and making profit, maybe selling to the oems at 4g price but having 5g in there it is fairly basic and straightforward. We sell to the automobile manufacturers because they have such a long design pipeline. We know much of the forecast is secured already by design links. Theres not a fancy pricing model, we get pricing for value, it works well. There is opportunity down the road for people to monetize some of the data that comes off the car. But thats not what were talking about here we also will give, have given kagt indications that enter into the computing and driver assistance yes thats a third step in the auto strategy which is going to be i think a good earner for us. When i visited your campus a couple weeks ago, thanks for having me, by the way. I was looking at the 5g technologies youre ramping up Factory Technology was one of those pieces, being able to do flexible manufacturing, should enable more customization. The sense i am getting is thats a couple years away because of design cycles, standards that need to be in place. Give us a sense how 5g will ramp how long will it be before youre firing on all cylinders as far as businesses were talking about being part of the 5g ecosystem really buying it. You can think of it in two phases, one is a hand set phase, second is a phase related to Industries Using 5g to accelerate digitization. Lucky for us, hand set phase, the first one, is probably the largest market, will instantly happen and will happen the next decade, starting next calendar year, a month, youll see that in the results of our business then youll see that play out over a long period of time as the hand set market goes then you go into adjacent markets, digitization, you mentioned industrial what youre seeing, theyre requiring the second rev of 5g first one is based on hand sets, second one is really about all of the features to make high, reliable factories we talked in the past about health care, gaming, those things there are special features we put in the standard that come out in a second, third, fourth wave in the next decade. It is that second wave thats about other industries besides the hand set. Lets talk about legal, regulatory, ftc issue is still hanging over your head a bit it is supposed to be back in court in january or early 2020, i believe. How confident are you that you got that issue contained and can give wall street here a clear idea of growth thats coming. I think we feel very confident how we argue, and we were buoyed by filings by the doj which made a strong filing most importantly is we got the stay we got a stay which allowed us to continue to operate our business and that was very good for us. And in the meantime, we have been signing up anchor agreements when we think of our licensing business, we tend to think of it now as a stable earner, you know, and of course were using that to invest in r d, a lot of capital return based off it. We feel like the hard part of our business is behind us. Still have legal risk, the hard part we think is behind us. Finally, give me a sense of the Macro Economy youre operating in now apple gave some numbers and projections that surprised people, particularly when it comes to china but overall, i am sure it didnt hurt you guys. Is there anything constraining you when it comes to trade war between the u. S. And china not so much if you look, of course, our view of the market is so focused or so concentrated by the Technology Markets that we work in, so for example, our outlook is so dominated by the ramp of 5g, which is happening in a big way. We tend to be a bit more isolated from the macro picture that other people see. Similarly, even with trade discussions, because we have such a Small Business with huawei, we tend to see less impact, direct impact from trade discussions. It is a benefit of having a Broader Consumer base, broad geographical exposure at the time when the technology that we lead in is so important. Closer to getting huawei to pay you . No, no clue Steve Mollenkopf, analyst day. First one in almost four years in new york. Morgan, ill toss back to you. Great stuff, jon. Thank you. Slack getting crushed today, well tell you why aerhe ea t stay with us borhood. Borhood. 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Learn more about aarp Medicare Supplement plan options and rates to fit your needs oh, and happy birthday. Or retirement. In advance. In a few minutes, we will come to you live from cme Leadership Conference in naples, florida, with a very special interview. Lloyd blank fine, former goldman ceo live and exclusive hasnt been on the network in about 18 months. Theres so much to talk with him about. The markets, politics, how he ended up in a campaign ad for Elizabeth Warren carl, well see you in 15 minutes. We cannot wait to sit down with lloyd. Thanks. Meantime, lets get the Santelli Exchange with Rick Santelli hi, carl. If you cut through the clutter and get at the heart of the matter, there are issues with trade, with candidates that want to be president that are pushing economic agendas the country is not necessarily familiar with, maybe a bit uncomfortable with but right at the core, one thing emerges, and that is Capital Spending investment by companies, putting money to work, creating future products, future opportunities, more jobs. But the problem is theres a lot of reasons ill give you an example this time is different reinhart, famous book, eight centuries of final folly you walk away after you read it with two notions, that after major financial debacles, it takes a long time for a global economys feet to hit the ground and start running fast again and a lot of debt usually gets accumulated and that makes the entire process of getting your feet on the ground that much slower and i agree with my last guest from Academy Securities that the phase one really is more of a truce and the problem is that it leaves the uncertainty door open if you really want to get to it, why is the stock market doing so well when we face a lot of questions when that even if we get a truce, phase one, even phase two, does that mean capital fending will start to trend up i suggest there are underpinnings of the u. S. Economy that are better than nay sayers think at 1. 46 million units. So there is a good underpining but whether its the last president , who really didnt help postrecession get some of the economic stimulus that this president did through tax cuts, at the end of the day its going to take more time and potentially less debt and the latter certainly isnt going to make easy or quick progress. Morgan, back to you. Rick santelli, thank you. Rough morning for retailers. Home depot and kohls both tanking. Stay with us woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Been watching shares of home depot and kohls get hid heart Courtney Reagan joins us with the details. The calls did flesh things out they did. I just got off the phone for even more color. Its phil mcveils First Quarter as cfo of home depot he said we are absolutely not seeing softness with the consumer, we think the consumer is healthy and the houses environment is healthy and stable so what he said is todays lower guidance is only a reflection that the retailer is taking our time to roll out initiatives and that it already getting about a half a point of comparable sales increase as a result of the strategy the new web site home depot is building for its home customers, he said theres already been a pick up in spending but it has capabilities it would like to roll out but cant do it because of i. T. Complexities that are taking more time to work through than plan. Secondly, i spoke to kohls ceo, michelle goss, and she said i am absolutely convicted and while we havent officially laid out 2020 guidance, we will return this business to profitable growth this quarter kohls cut prices for what goss gave for things like fleece, sweaters, long pant and a competitive environment that intensified and shes saying they lowered guidance to be able to increase Current Customer loyalty and capture new customers its getting. It says it stand for value, has to keep standing for value and if competitors are lowering pric prices, you can bet theyll do the same along with boeing, bloomberg headlines, the ntsb is saying the 73 7 ng needs safer engine inlets home depot remains the drag as retail continues to be on pace for pretty much the worst day of the month. Retail is getting hammered. Youve got names like macys, nordstroms, gap, they havent even reported earnings another name to keep an eye on is slack its trading around 20 or 21 and change so well below that ipo price earlier in the year. And of course were seeing that as microsoft hits a new high and youve had reports out there that microsoft has added to its Computing Network so investors are reacting in that share price today as well. Indeed. I think 20 million users versus 13 million for slack thats right, greater tore 20 milli greater than 20 million. Lets go to phil lebeau what do we got this is the ntsb doing a final report, carl remember the Southwest Airlines accident where you had a passenger who was partially sucked out a window following a fan blade on an engine that came off and then went into the fuselage of the plane . This report has to do with the inspection of those engines as well as recommendations from the ntsb now, these are 737 ng models thats the previous generation before the 737 max while the headlines call for perhaps some reinforcement on the engine inlets and inspections, this is likely going to be an airworth einess directive that will call for modifications maybe on those inlets and inspection. I dont think youre going to see it taken out of service. Initial reactions where it sold off boeing shares may stabilize. In its final report it said we want some modifications when it comes to securing these engines and reinforcing the cells of the engine so if there is a fan blade that comes loose in the future it, does not impact the fuselage guys, back to you. Meantime, 737 max, get mortig more order for that . Not surprised the dubai air show is going on thats not as big as the the show in england or the Paris Air Show but its significant for the middle east and boeing announces commitments for orders, options for future orders this is what you get with a due only youre east going to go to airbus or boeing and a couple of airlines have said were going to boeing. Bernstein has a report out issii asking whether that duopoly is over and the answer is essentially no lets go to the judge with blanc fund im scat wapner front and center this hour, a halftime exclusive, former Goldman Sachs ceo lloyd blankfein, well cover it all over the next 30 minutes we fwin with mr. Blankfeins reaction on cnbc b