>> and welcome to "power lunch," i'm dominic chu. stocks under pressure, but off their worst levels of the day, the dow is down almost 225 points at one point, the s&p 500 and nasdaq trying to carve out gains as well. united technologies the biggest drag on the dow today, the industrial giant down around 6% after saying it's going to split into three separate companies. commodities getting whacked on fears about the looming trade war. copper hitting its lowest level in almost two weeks. steel stocks getting slammed as well the etf that tracks them hitting a new 52-week low and on pace for its third straight down day. all of these metro and declines as well. tyler. >> tyler mathisen here welcome, everybody we begin in d.c. today as the president stokes fresh fears that there won't be a trade deal with china, not this weekend, maybe not anytime soon and ylan mui is at the white house. >> reporter: we are waiting for the white house to brief us on the president's plan for the g20. it will be a critical test of his hard ball negotiating strategy right now we have more questions than answers first and foremost, will the president stop the current tariffs on chinese foods from rising from 10 to 25% on january 1st. he told the "wall street journal" it is highly unlikely that he would do so, but that is not a definitive no. second, will the president move forward with another round of tariffs on chinese goods he told the journal and it was also said before that he is willing to put tariffs on the rest of the products that we import from china if that dinner with president xi does not go well, that would be the next step and the rate on those tariffs would be between 10% and 25%. now, would that mean that apple's iphone and other popular products would be included the "wall street journal" reporter brought that point up in his interview with president trump and president trump responded maybe. it depends on what the rate is at a 10% rate people could stand that very easily now, a lot of the focus of course has been on that meeting between the two leaders, president trump and president xi, however, there are other open questions and trade tiffs that could come to the fore during this meeting, such as will the president lift the tariffs on foreign steel and aluminum the president is expected to sign the new nafta, that usmca during the g20 could that lead to a resolution of those tariffs also, auto tariffs, german media are reporting that eu's top trade official is heading to the u.s. to talk auto tariffs with the white house before they head off to the g20, could progress be made there? guys, once we have answers we will bring them to you back over to you. >> the polled more cautious today. seema mody is tracking all the action. >> investor attention quickly turning from the fed to trade. the dow is currently down 77 points on those fresh comments from president trump expectations are now so low ahead of trump's meeting with president xi that any high level agreement could be enough for stocks to rebound. what traders don't want to see is trump putting on that 25% tariff 10% they can handle, 25% that's seen as a game changer the s&p 500 sector heat map will show you that healthcare, technology are actually trading higher, industrials and financials, though, trading to the down side and there's still this defensive tone in the market, utilities, the etf, xlu trading at the highs of the year and this rotation into more stable dividend paying names that reasons, clorox trading at an all time high today, aetna also trading at a new high as is red hat. we are watching two sectors, the home builders and semi-conductors. both groups started to see significant weakness ahead of the broader market downturn, if they can stabilize these two sectors it would stand to reason it would be a good sign for the market in general. earnings a big talker. sales force up about 20% on the year on the lower discount side of thing we have dollar tree and on the luxury side of things tiffany. last quarter did see a big jump in chinese sales tyler, back to you. >> seema mody. two of the most important members of the fed speaking this week, vice chair richard clarita weighing in today on where rates are or where they should be, but the big one is tomorrow, fed chair powell will speak about the economy, might acknowledge a bit of a slow down who knows. there is only one word that the markets want to hear from him right now and that would be -- well, look at that >> look at him >> is that a red pause -- is that a pause button? >> will investors get the pause? steve liesman taking a closer look >> did we make your relationship with the fed easier or harder with that? >> it's not important, it's whether or not it's good television. >> yeah. here is the question, will powell push the pause button markets are hoping he does in that speech before the economic club of new york tomorrow. i'm saying they could be disappointed maybe get there, not quite all the way. first of all, the speech is billed as, quote, the fed's framework for monitoring financial stability. so it's not all about the economy. to the extent he does talk about the economy in the speech or q & a, powell may acknowledge modest slowing but is unlikely to alter his generally upbeat view on the economy, that came just the week before thanksgiving so theres no reason to change it. he might reiterate he is watching a slow down in global growth but it would be a big change for him to change his opinion that this would be an imminent threat to u.s. growth he might say that the fed is on a pre sket course hellbent to raise rates three times by next year richard clarida talked about how they are data dependent. >> if incoming data were to reveal that inflation and inflation expectations are running higher than projected at president in the ways that are inconsistent with our 2% objective, then i would be receptive to increasing the policy rate by more than i currently expect will be necessary. >> note the little tag in on that, he does expect to be increasing the rate. here are the probabilities for the futures market 80% chance of a december rate hike, 60% chance when that first rate hike comes in june of 2019, and then we can't even get to the 50% threshold on -- in october. so one and a little bit built in here for next year whatpowell can do is affirm against that market view on wednesday, but don't look for him to push the pause button that would be getting too far ahead of his committee, his committee meets in a couple weeks, chairmen don't like to be too out front. i guess we are just going to let that run and run until it does complicate my relationship with the federal reserve. >> where is he speaking again tomorrow >> the economic club of new york. >> you will be there >> no, i will be here monitoring it, plus the chicken and stuff they serve, i don't need that. >> we should let them license there. >> yeah, we could do that. >> there has been a lot of parsing of the words have clarida and the notion that he left out some -- >> right. >> -- fire from his speech in october where he said some -- what was the word -- some further gradual adjustment in rates, he said two times in october. >> he didn't say it this time. >> some are saying that that's a i wish -- >> i thought this was dovish this morning the fed is below neutral, he said just below neutral this time around. i do want to share a quick chart with you, which is where are members of the fed how did we get to this three number here is the distribution four folks at three, two at four, four at four can you see that, brian bell ski, who is coming up next that's how you get to a three. which means there is a wide view of opinions on the committee -- >> who is the five hiker >> we don't know >> we don't really know. >> i don't think it's powell it may be something like george, i don't know for sure, but that's based on the number of hikes if they hike this extra quarter here the fed is all over the place. the he >> it reads better than dot plots on a chart. >> i don't say dot plot. >> we just like the chart the way you laid it out. >> steve, thank you. all right. so we have the fed and the fallout from all those rising rates. all those fears, will there or will there not be a trade deal if president trump and president xi meet this week at g20 all of this is happening and if anything we may see more tariffs possibly what does all of that uncertainty do for any potential santa claus rally? that's in play this time of year let's bring in brian bell southeast ski with bmo capital markets, also brad newman, director of market strategy with alger as well. brian, because steve referenced you first i'm going to go to you with this. >> oh, i can't wait. >> this is a santa claus rally season but this feels anything but it at this point, even with markets off of their lows. is the santa claus rally still intact is there a case to still be made that stocks should be in a bull market >> yes, we think so. we think, actually, the correction that we saw in october was a very normal correction, followed all the normal scripts that i've seen in my three or four decades in the business, but i would say also, too, that we are so binary now with our opinions, it's on a or off, bullish or bearish, everybody and their mother, brother, sister, uncle thinks the tantrum will continue. we published our piece in terms of 2019 outlook two weeks ago. our meetings are predominantly bearish, bearish everyone is ratcheting up their recession talk for later in '19 into '20 wing it's way too early. we think that the stock market is a market of stocks and there are great companies in america that can be bought that will outperform the, ma that's how we will be positioning into the santa claus rally which we believe will happen. >> what parts of the market, then, brian, are representative value plays in this current environment? >> you have a stock like apple getting crushed, you know, i think at the end of the day you want to own apple for the next three to five years with the balance sheet and cash flow. that's creating a value opportunity. we think financials are value, we think other parts of technology, even healthcare are value. you have to think of it that way. >> brad, we know and viewers at cnbc know brian's take, he has been i wish for quite some time unabashedly. should we feel as confident about the market the way it sets up right now >> well, i think, you know, long-term we are constructive on the market, it's obviously heart to know what's going to happen with the g20 meeting this week, but it's much easier to look at the market from a longer term perspective. for instance, tariffs, there is a powerful trend in place, down trend over a period of many decades, for instance, october 1985 the cover of "time magazine" said trade wars and uncle sam had his hand out as if to say stop global trade we're constructive on ultimately there being a deal, who knows what will happen in the next several months our strategy is to invest in more asik clickel companies that benefit from innovation where we are less dependent on the the varying degrees of the economy. >> like what >> healthcare, for instance, as a sector, software, that sector where the cash flows are less cyclical, health insurance companies. device manufacturers. >> you say that the market is not focused enough on the potential for a good outcome on trade. what i just heard out of the white house does not sound like a good outcome is coming anytime soon. >> i will just say that the market seems awfully pessimistic to me. for instance, there was a very recent poll of individual investors and there's more bearish individual inversers right now than bullish from this particular setup and this statistic on bullish inv t investors being more than a standard deviation glow normal that end dates positive returns, double digit returns usually 12 months from that period. >> in terms of digesting all the headlines it seemed like the market -- if you were to have guessed where the market would be yesterday when we got that "wall street journal" interview released you would have thought the markets would be much more impacted than what it is right now. it almost feels like the market is discounting everything, we will believe it when we see it. >> there's so many mixed opinions, but i think today is a telling day that we've come back from the lows a little bit, we are not short term watchers, but the 1:00 and 2:00 hours have been so important lately as you've talked to your viewers about. i think today would be a major positive if we're able to close this market positive i think it would add a breath of fresh air, but i'm telling you people are so negative with respect to president trump and the tariff situation that we believe there's going to be some sort of surprise and the market is not prepared for it, not just because i'm unabashedly bullish, it's because i have an air of common sense to me we're following the script with respect to how he has negotiated in the past and it's following it to a t. >> could you say that thing about how important the 1:00 and 2:00 hours are. >> important 1:00, 2:00 hour because of the wonderful "power lunch" program on cnbc. >> brian belski, thank you, also brian over at alge thank you so much. president trump blasting gm for cutting jobs, saying if people don't want to buy the chef cruz they should make a car peop dwa tbuleo nto y. is the president part of the problem, are his tariffs and trade policies hurting manufacturing? we will get the union's take coming up on "power lunch. this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. white house. economic adviser larry kudlow speaking to reporters just a short time ago ylan mui here with the details. >> reporter: kudlow did not give any more detail about what exactly might trigger a new round of tariffs or whether or not the tariffs would increase from 10 to 25%, but he did frame the upcoming discussion at the g20 as the ball being in president xi's court he said that this is an opportunity for president xi to change the tone and substance of the discussions with the u.s. and that so far president trump has been very disappointed in the progress of the talks. now, some key issues that he expects for the two leaders to discuss during dinner are ip left, forced technology transfer, the ownership of american companies in china and the jv arrangements, high tariff and nontariff barriers and cybersecurity. he said that china should take president trump's threats seriously. now, kudlow also spoke about gm and president trump's reaction to the news yesterday. he said that president trump had disappointment in mary bar row and in the company, maybe even spilling over into anger he said that he felt like gm had turned its back on the white house. the white house had negotiated the new usmca which is expected to help the auto industry, had negotiated some new fuel efficiency standards and that gm was sort of not living up to its end of the bargain also on the g20, kudlow said that the president is expected to attend a signing ceremony for the usmca that is tentatively scheduled for friday on the economy kudlow said that he believes it is strong and that, quote, i do not see any recession. kudlow, the optimist as always back over to you guys. >> yesterday general motors announced it will halt production at several plants in the u.s. and canada and put more than 14,000 jobs massive restructuring. the decision brought a quick rebuke from the president. >> we don't like it. i believe they will be opening up something else and i was very tough, i spoke with her when i heard they were closing and i said, you know, this country has done a lot nor general motors, you better get back in there soon. >> well, let's get reaction from damon silvers, director of policy with the afl-cio, they represent 12.5 million union workers across the country the uaw is not part of the afl-c afl-cio, but we are delighted to have you with us here today because certainly some of your workers will be associated with these 14,000 employees who will lose their jobs, at least temporarily. shouldn't general motors be allowed to close plants or reallocate based on economic conditions >> well, you know, first let me just say it's great to be with you and i just want to correct something briefly. the auto workers are part of the afl-cio, they were out for a while some years ago, but they are very much with us. we stand with them all the working people of the american labor movement stand with the auto workers in this situation. this situation, you know, is really about whether or not gm is going to put new work into these plants or whether this is a smoke screen for off shoring work the way that the contracts work, gm is going to have to negotiate this with the auto workers and that's going -- that question of where that new work goes is going to mean an enormous amount to not just the 15,000 people who have been laid off here, but to perhaps as many as 70,000, 80,000 people whose jobs are indirectly or directly dependent on those plants. this is top of the food chain work and this decision is incredibly destructive to american communities and to working people of the united states are ready to fight it. >> so, you know, the president has been very critical of companies that have off-shored work do you believe that general motors would take an opportunity like this to move the production of sedan-type cars, which are apparently not selling, into production facilities in mexico or elsewhere around the world? >> you know, that's -- yeah -- >> is that what you expect them to do? >> we're quite concerned about that you know, these kinds of decisions about locating final assembly for auto brands are big capital investment decisions that are not made quickly. it's pretty clear that they knew that these decisions were coming when gm recently decided to put the blazer line in mexico and not in the lordstown plant, where many people in the auto industry expected hem to do it in terms of where president trump is, obviously president trump said a few words yesterday, but the policies of his administration have essentially encouraged companies like gm to move work off-shore by giving tax breaks when they do it. i don't think you should be terribly surprised that this kind of game playing is potentially going on. >> take me into that a little bit more because his public posture has been, as you know, quite the opposite i'm surprised to hear that and forgive me for not knowing it, about tax breaks to move things off-shore. >> the tax bill that president trump fought for and signed last year gives effectively a tax rate of 22% if you make your money creating jobs in the united states and a tax rate of between 0 and 10% if you make your money creating jobs off-shore. it doesn't take a financial genius to see that that's a subsidy to move work off-shore. >> so the president also said yesterday that he wanted general motors to put something new into the ohio area specifically i believe is what he said. what would that be >> well, gm is suggesting that they are going to put new models -- they are going to introduce new models to replace the models that they are ending, and the question is where will those models be built? they could be built in these plants where you've got a whole infrastructure, a whole set of skilled workers, you know, ready to do the job, or they could be built off-shore. gm has a history and it's particularly bad relative to ford and chrysler -- gh has a history of looking for every kind of excuse to move work offshore for decades and to take advantage of, you know, all the things that are wrong, way, with nafta or with our trading relationship with china. so, you know, auto workers are really worried that that's what's going to happen here. as i said earlier, gm recently announced they were going to put the new blazer line final assembly line in mexico, a lot of people thought that line should go to the very plant that president trump was talking about, the lordstown plant in ohio you know, gm has not been forthcoming about what models they're going to launch, for obvious competitive reasons, but as soon as they do there's going to be a fight about this what president trump does in this fight in a sustained way, it's not about what you say in 30 seconds in front of a camera, but what he does in a sustained way is going to matter but there is a deeper issue here among the plants that are being closed are plants -- the one not very far from where i am in maryland are plants that make drive trains and they make transmissions and they make drive trains for electric vehicles that's the future of the auto industry if that gets moved offshore you're talking about a strategic catastrophe from the perspective of the u.s. economy and u.s. auto industry. the trump administration has done everything it can to discourage the manufacture of alternative technology vehicles in this country. the very thing president trump is talking about, the attack on the café standards, is essentially undermines the argument for making that critical 21st century technology in the united states. >> damon, let me get this right. if gm were closing plants simply because it needed to remain competitive and not go into chapter 11 before, i mean, go. m's former ceo dan acre son was on the network earlier and basically he said this is one of the things that go m does in order to avoid chapter 22, they need this financial flexibility. if you got the assurance from gm -- now you're laughing. you don't believe him. you're already jumping to the next possible thing which is you think they're going to move the production of those same vehicles that are not selling anywhere offshore. >> oh, no, that's not what i'm saying at all. we believe them when they say they are ending production of these vehicles the question is where do the new products -- where are the new products made? that's the issue gm has been pretty clear they intend to make new products, the request he is where? talk about bankruptcy for gm at this moment after ten years of record auto sales and quite significant profit levels at gm, that's really not a serious conversation >> as long as the company is profitable you think that they should be able to produce cars at factories which may not be as profitable for the company because they're profitable and they can afford to do that >> well, no, that's not what i'm saying, either. >> okay. >> what i'm saying is that really auto companies worldwide pursue two kinds of strategies, really successful auto companies worldwide have high skilled workers paid decent wages and benefits and are at the cutting edge of technology the bottom feeders do things like exploit $2 an hour wages, which is what gm pays in some of its factories in mexico. gm by this decision is potentially doubling down on what will ultimately be a second tier strategy. what we want them to do is to be in a first tier strategy that really takes advantage of the skills and capacity of american -- of america's workers and america's communities. now, if gm chooses to be a bottom feeder, i think we ought to recognize that they are not really then a company that's really contributing to the long-term growth and prosperity of the united states they may make money for their shareholders, but the american -- american society shouldn't be that concerned about what happens to gm. >> final question for you. and it has to do with the u.s./mexico/canada free trade agreement that addresses some of the wage inequalities between american workers and mexican workers. is that going to be helpful or not helpful, in a case like that or for the american auto worker more generally >> in general it's good for everyone, both mexican and american auto workers and mexican-american society for wages to rise in mexico and for wages to rise in the united states the problem with the nafta agreement is that we don't know what the enforcement mechanism is for the proposed language around wages until we know what the enforcement mechanism is, like president trump's remarks yesterday, it's just talk. >> all right damon, thank you very much very informative i appreciate it. thank you for correcting my mistake on the uaw. >> not at all. >> no worries. >> pleasure to be with all of you. >> damon silvers, director of policy for afl-cio. >> great discussion there, guys. president trump's tariffs also threatening apple, not just the car makers the president suggesting a so% tariff on iphones imported from china at a time when iphone sales are already slowing. how bad could this be for apple? 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[sfx: mnemonic] christmas still four weeks away, but the shopping extravaganza that starts thanksgiving day, extends through black friday and cyber monday is over those numbers are starting to roll in, courtney reagan has been tracking them. >> we have new numbers coming out, too data and commentary suggests the holiday shopping season off to a pretty strong start. e-commerce setting records offsetting some store traffic softness with some strong early shopping, those numbers out even before thanksgiving. the national retail federation literally publishing the weekend results. 165 million people shopped, that's slightly more than 164 million that were forecast, but less than 174 million last year. spending an average of $313 and change, that's down about 6.6%, but they've got lots of shopping left to do americans say they still have more than of the half left cyber monday made history as the largest ever online shopping day in the u.s. growing 19% over last year to almost $8 billion the on line sales growth rate was even higher for thanksgiving, black friday, even small business saturday according to adobe amazon a big part of that online growth the online marketplace says consumers bought 180 million items over that five-day shopping stretch starting with thanksgiving through cyber monday yesterday more than the same time period last year and cyber monday is now amazon's biggest day in history, topping its own cyber monday last year and prime days. online sales are good, but remember typically lower margin especially if the retailer is the one that's paying for the shipping one offsetting factor is the buy on line, pick up in store which retailers including target and kohl's have said grew by pretty large amounts and even record amounts in some cases over the shopping weekend so far so good, we have a lot left and a lot of shopping was actually pulled earlier and earlier this year. remember walmart started their black friday online sales on wednesday. so even before thanksgiving. some so of those numbers aren't captured in some of this data that we're getting. >> wednesday is the new friday. >> i know, right why not start on halloween >> it's true >> absolutely. courtney, thanks. shares of apple down 20% over the past three months that is about $200 billion in market cap gone, out of here fears of slowing iphone sales a big reason why now the president threatening tariffs. we will talk to an analyst who just lowedisri tgeer h pceart. to the white house press briefing room right now, nec director larry kudlow is taking the podium. >> thank you, sara thanks, everybody. let me just walk through some quick themes and then i want to mention some things the president talked to us just a little while ago as sara said, g20 -- funny, it's not actually the g20 when we count it up properly as ambassador bolton points out, it's much more than the g20. in terms of the u.s.'s positions we will use this as an opportunity to talk about our measures of tax cuts and deregulations and reskilling and job training and so forth that have generated significant economic growth and prosperity, and that includes women's economic empowerment as sara mentioned, free, fair and reciprocal trade and trade reform there will be discussions of infrastructure, finance and also the u.s. emergence as the dominant energy power in the world today, actually. in terms of the much discussed meeting that's going to be a dinner meeting between president trump and president xi and representatives from both sides, it will be bilateral, i want to just mention what the president told us a short while ago and that is in his view there is a good possibility that a deal can be made, and that he is open to that he is open to that having said that, some caveats, as always. certain conditions have to be met with respect to fairness and reciprocity, as we've said many times. for example, issues of intellectual property theft must be solved, forced technology transfers must be solved, significant tariffs and non-tariff barriers must be solved, issues of ownership have to be solved the president will probably reiterate his view, we want a world ideally of zero tariffs, zero non-tariff barriers and zero subsidies now, whether they can get through all that remains to be seen, but that's the president's point of view, as i said just a little while ago u.s. is coming to the summit in very good shape, our economy is quite strong, it's growing at 3% over the past year, second quarter was 4.2, third quarter was 3.5, perhaps it will be revised upwards. we have had a very strong holiday season, so-called black friday, very strong. we've had tremendous investments, business investments, energy investments, oil prices and gasoline prices coming down, that helps consumers of course. we are in very good shape. china, not so good i'm not here to critique or second guess the chinese economy, but most observers believe china to be in a slump, whereas the united states is in a very strong solid position going into this summit however, again, to repeat, the president said there is a good possibility that we can make a deal and he is open to it, but on the other hand if these conditions i mentioned a few moments ago are not met and not dealt with, you know, the president has said, look, he's perfectly happy to stand on his tariff policies, which 10% last $200 billion scheduled to go to 25%, that's not a certainty, but that's the schedule, and he has said as recently as yesterday, the day before, if need be, if things don't work out in this u.s./china summit meeting, he will invoke another 267 some odd billion dollars in tariffs that may not be the first choice, i'm just saying that is his view if we can't get something done and things have been moving very slowly between the two countries, until the president himself called president xi and said, let's restart, let's try to get things going again, and then since then he has made positive comments about that so we will see as i said, the key u.s. goals surround growth and prosperity and, you know, our economy is in good shape, theirs is not. i will just leave it right there. john, do you want to add stuff to that or do you want me to take some questions? okay good let me take some questions and try to help out on this. yes. >> i'd like you to address some concerns recently from representatives of italy and france and germany who say that we are actually backing away from the national stage and they fear that russia will be the dominant economic force in europe and the middle east in the coming years could you address those concerns, a, and, b, can you tell us a little bit, if you can, about the layoffs at gm >> well, i will talk to you about gm layoffs regarding the russian story, i'm going to leave that to my long time friend and colleague john bolton i met with mary barra yesterday and we had a lengthy conversation about the layoffs, the cause of the layoffs it's a great disappointment obviously, the president indicated his own disappointment he believes, as frankly the prime minister of canada, trudeau, believes that the usmca deal was a great help to the automobile industry and to auto workers. by the way, they made those statements separately. and yet gm comes in right after the deal -- by the way, that deal will be signed in argentina with the u.s. and canadian representatives. so there's great disappointment there. there's disappointment that it seems like gm would rather build its electric cars in china rather than in the united sta s states we are going to be looking at certain subsidies regarding electric cars and others, whether they should apply or not. i can't say anything final about that, but we're looking into it. again, that reflects the president's own disappointment regarding these actions. ms. barra told me, on the other hand, i want to be completely fair here, it's her business, it may be possible to transfer workers to other plants in texas and michigan i'm not an expert on general motors, i'm not an auto analyst, but that's what she said, but obviously there is a lot of disappointment, even anger i've heard it, again, from mr. trudeau, from president trump, from democrats and republicans >> just to foil, do you think it's going to adversely affect our economy coming into the christmas season and after >> no. i mean, look, i don't want anybody to get laid off. i want workers to do very well i want worker wages to do well, and they are i mean, that's one of the great things you know, there is a certain amount of pessimism that i'm reading about, maybe it has to do with really a mild stock market correction. let's not forget a couple weeks ago just on this very point, we had 250,000 new jobs, which was a blockbuster number nobody really expected it. 3.1% yearly gain in wages and 3.7% unemployment rate those are very spiffy numbers by any benchmark in any metric. so, again, holiday season layoffs from gm, brutal. brutal all right? very disappointing will it affect the overall economy? i don't think so i do not think so. yes. >> yeah. back to the question of the tariffs. if these talks with president xi go nowhere and we move forward with this escalation of the tariffs that you just described which correct me if i'm wrong would be the biggest addition of tariffs that we've seen in our lifetime, what will the impact be on the u.s. economy i mean -- >> it's a long period of time you mentioned. my lifetime. >> you have been a committed free trader for almost all of those years so what will be the impact on the u.s. economy if we see tariffs go up to the degree that you just described? >> you know, we'll see what happens, okay? i don't want to presuppose anything the president is going to make up his mind after the meeting. but i will say this, our economy is in very good shape right now and when you multiply through whatever numbers you want to use, $250 billion or tack on another tranche which may or may not happen at a 10% tariff rate or more, it's really just a fraction of our economy. okay it's just a fraction of our economy. i'm not suggesting that there aren't winners and losers in that game. it's a complicated game, but on the other hand, i think we are in far better shape to weather this than the chinese are, and i will also say one thing. i appreciate your characterization, i am a free trader, but you have to ask yourself -- and this is what president trump has been talking about -- is it free trade when there's clear evidence of unfair and wto illegal trading practices by china for several decades? is that fair is that free is it free when intellectual property theft occurs or when chinese ownership of american companies force transference of technology from american companies to the chinese companies? is that fair or high tariffs on agriculture and industrial supplies, is that fair so president trump is the first president in, i don't know, at least 20 years -- and i'm including democrats and republicans -- who not only has made this case but continues to make this case forcefully and to take actions to defend american workers and our overall economy. other presidents in both parties have raised the issue and then walked away from it and president trump obviously doesn't intend to. you know, this is under the heading, i think, for him of promises made, promises kept it's something he has talked about for several years and he now continues. if china will come to the table or in this case the dinner table with some new ideas and some new attitudes and some new cooperation, as the president said, there is a good possibility they can make a deal he is open to it so nothing is written in cement or stone, but, again, for a tree trader where is the free trade for several months now since i've been here the president and i have talked about this, you know, we would love to see a world of zero tariffs and zero non-tariff barriers and zero subsidies. we would love to see that world, but unfortunately we don't have that world, particularly with respect to china, but not only china. so he's taking actions that he thinks will get us closer to that world >> just another gm question. when the president said yesterday they better damn well open a new plant there very quickly, was he just venting his frustration or does he have some consequences in mind if they don't? >> you know, i'm going to leave that to him. you may find additional announcements coming on that topic. yes, ma'am >> i wanted to ask you about what the ambassador said recently to the -- >> who >> the chinese ambassador to the united states. his thought was that there would be a real risk to global -- to the global markets if there wasn't a deal, that they could become fragmented as well. how big are the stakes if you can't reach a deal >> look, the ambassador makes a point. now, if he would do his part or his government would do their part, then we can all make a much better point. that's what president trump is saying i mean, i will read you the quote again, there is a good possibility we can make a deal and he's open to it, but certain conditions, you know, have to be met, certain things have to be changed. and the president, again, in the spirit of promises made, promises kept, is going to defend, you know, the interest of the american workers and ranchers and small businesses and the economy writ large let me just add one other point to this. the rest of the world agrees with us. i mean, we signed at the u.n., for example, the tri-lateral agreement with the eu, the united states and japan. worth looking at, that document, which outlines, you know, what they call nonmarket abuses re just recently before the shanghai conference where president xi was to give an important speech, i'm not sure there was much new there, but in any case, just before that conference, with no prodding from the usa, the ambassadors -- the french and german ambassadors to chooina wrote a very tough piece is going after, again, nonmarket, unfair, nonreciprocal trading practices. there is broad-based support for the american position here, which is china should change its practices and come into the community of responsible trading nations. necessi they can do that they're a major economy right now. it's not like they were 25, 30 years ago. we would welcome it. the president said we would make a deal but they have to take certain actions and give certain assurances. >> didn't you spend the g-20 getting position around other countries around your position at the g-20? >> i'm sure we will. i want ambassador -- yes, please >> mr. kudlow, thank you, yes, he was talking to me >> tariffs are, in effect, attacks on imported products paid for by the consumer, so does the president realize these escalated tariffs are going to be paid for by the american citizens >> well, look, he realizes the ramifications. as i said earlier, given the strength of our economy, given the size of our economy, we are in position to deal with this and handle this very well. that's the key point and i'm not so sure about china but i'll leave that to china experts and so forth and so on the benefits -- let me just look to the other side of the ledger. it's very important. the benefits of true, free trade globally will be enormous. you know, if we go back to the idea zero tariffs, zero tariff barriers and zero subsidies, if china plays by the rules, even the wto rules, and all that needs reforming in our judgment, but they are violating those rules. if we do have a free trading system or we move in the direction of a true free trading system, we will benefit enormously frankly, we will benefit, they will benefit and the rest of the world will benefit you know, free trade throws off enormous benefits when it's done properly, consistently and in a reciprocal manner. that's the key point so, you know, i think as it possibly is a long rainbow at the end of the rainbow is a pot of gold. you open up that pot and you have prosperity for the rest of the world, but have you to get through that long rainbow. we're not there yet. we can get there the president is reaching out, but we'll see how that works >> yes, go ahead. >> earlier you mentioned low oil and gas prices as evidence that the president's economic policy is working you mentioned the u.s. becoming the global dominant energy player but merely days ago the president said it was necessary to let saudi arabia and its crown prince get away with ordering the murder of a washington post journalist because saudi arabia ensures low gas prices now, which one is it, sir? >> i'm going to let ambassador bolton handle that question. i'm trying so hard to swim in my own lane, and i think john will help out with that whole discussion he's sitting here much too calmly and quietly, so i want to get him up here. we've known each other a very long time. you're on, john. >> i'm delighted to be here. i don't have much to add sarah gave you the list of bilaterals - >> we're going to dip away from the white house pressbriefing room president trump's economic adviser larry kudlow speaking about the economy, the trade disputes with china. he says trade will be discussed at the g-20 summit in argentina this week over dinner between president trump and president xi of china and the president is open to a trade deal and thinks it's a good possibility in the president's words. let's bring in elan, who is at the white house for us >> reporter: i think it is notable that kudlow said while there is the possibility of a trade deal, as you mentioned, it has got to be on the u.s.'s terms. that has been one of the key sticking points for the chinese in all of this they feel the u.s. is not really interested in a negotiation, that the u.s. is more interested really in a surrender. some of the issues kudlow mentioned like technology transfer, like the elimination of tariff and nontariff barriers in the u.s.'s eyes what is considered movement or progress is the elimination of all tariffs on u.s. goods in china clearly for china, that is not going to happen. the u.s. has also talked about the need to reduce the trade imbalance between u.s. and china. some leaked documents showed the u.s. wanted china to reduce the trade imbalance by $200 billion over two years that is an incredibly fast pace, an incredibly large amount of goods. clearly, china's not going to agree to that. so, how much is the u.s. willing to move in addition to china's potential moves. what will the u.s. need to see in order to trigger some of the changes to tariffs, some of the changes to u.s. policy going forward? all of these are open questions. it's really not clear that the administration itself has settled on ar answer yet, guys >> it was very interesting, as larry was talking there, there were a lot of conditionals, it felt like to me, in some of the things he said the conditional is, will the tariffs move higher from 10% to 25% on that first tranche of chinese goods? will they potentially put more tariffs on another $277 billion worth of goods there are little points of negotiation or places where if there are signs of progress, the president could say, okay, we're hearing some nice things from china. we're going to hold off as a gesture of goodwill. did you hear it that way >> reporter: there are points of leverage i guess the question is, it's not clear what those rest on what specific chinese actions need to be taken in order for the u.s. to move in response also it's not clear what exactly the u.s. would accept. you know, i think it's also important to remember that these talks have been on again, they've been off again china's vice premier had thought about coming ahead of the g-20 meeting to set the stage for that dinner discussion between the two leaders. that didn't happen so, a lot is riding on this dinner i think perhaps the personal chemistry that president trump and president xi may try to develop over the course of that meal. >> it's a very curious tactic. and i know i a lot of market watchers have said this is in the president's playbook in terms of doubling down to exact a deal from the other party. but, uyou know, in the past, chinese officials have called off visits they said the united states is not negotiating in good faith. this almost sounds like a repeat of that playbook where u.s. officialings say, we're going to meet but in advance say, we're not going to do x, y and z unless the chinese basically give into what we want. >> what we do know is the u.s. has been preparing for this meeting. they've been putting together briefing documents there have been weighed range of staff level discussions so they're taking this seriously. they are briefing the president. but president trump is someone who likes to operate and play to his own tune, right? so it's going to be up to president trump to decide how far he wants to take those discussions. they can prepare the president all he wants but it's up to trump to make the fim decision. >> it's up to chef. >> reporter: good thing argentina has good steak, right? >> whoever that person is, there's a lot on the line. thank you. let's get a little more reaction to larry kudlow's comments and bring in steve, president and ceo of the conference board. we'll also talk about consumer confidence, steve. i assume you heard some, if not all of larry kudlow's summation of the state of play between the united states and china. what do you think? do you think business heard what it wanted to hear? >> this is what larry has been saying privately to ceos and other administration as they've gone out behind the scenes and said repeatedly, we do not want a trade war with anyone. we're trying to take steps in order to equal the situation and sit down at the negotiating table and work these tariffs down so it's a much fairer situation and much fairer trade. what he said today is very much consistent with what is being said behind the scenes if you just think about negotiation 101, the administration can't come out and say, here's where the lines are or here are the decision points that would be giving away all of your negotiating strategy. essentially what they're looking for is ip protection, looking for movement on the chinese tariffs and opening the market all the logical things you would expect in some regards, you know, china has allowed this to happen on their own in the sense they've only allowed 5% of the u.s. exports to go to china they put barriers such that it's not a big deal to the u.s. if those tariffs get raised further because there's not much of an impact back. in some ways, this is the best of all times to do this before it becomes an even more important trading relationship our hopes are that it will become a very important -- even more important in the future but a fairer relationship. >> i mean, what you're saying there is such a small amount of u.s. exports go to china, that it isn't really material economically to the u.s., in other words, an awfullot of ou imports are from china >> that is true. that's the flipside of it, isn't it really just a price increase? in it goes through and works through the supply chain and if there are no substitutes from other countries all of which, by the way, is being worked on by u.s. businesses. if all that came through then, of course, there would be some inflation in the marketplace i think the point of the negotiation and the reason there was equivocation on, you know, are we going to put in the 25% versus the 10% is because they really don't want to they really would like to get this deal done and all of this conversation has been going on outside of the dinner behind the scenes of course, that is all, you know, complicated with moves that have happened in the south seas and islands and is so forth. this isn't just a one-issue deal between the united states and china. it's a very complicated relationship. >> confidence is very important to the market, steve, whether it be consumer confidence or business confidence. you're head of the conference board which measures confidence. if tariffs currently in place ratcheted up to 25%, if the next round of tariffs were put in place, what would that do to confidence while, yes, the argument that the amount of chinese imports, $500 billion versus the u.s. economy, i mean, the dent on confidence could be huge that in turn could have various ripple effects. >> it's a great point. we just came -- conference board just came out with consumer confidence index this morning for november it showed a very slight dip versus october it was more consistent with september. these are at 18-year highs the expectations index for the next six months are very strong. that revolves around the jobs market we don't see any impact so far from the discussions or the threats of tariffs largely because there hasn't been any reaction or activity in the marketplace. there has been no result that consumers can see. you are right. 70% of our economy, our gdp is driven by the consumer confidence then drives that and so we've got to get into this situation. if they do ripple through, which nobody expects them to, would have an impact these numbers are very strong. continue to be a long-term trend, 18-year high. it says we're going to have a great holiday season we've come off a very strong black friday, small business saturday, cyber monday, all of these things are being branded now. but it's going to be a record holiday season it's going to be a great finish for the year >> steve, it's dom we know the narrative is positive we know the consumer is strong but we still did see a downtick for that consumerconfidence number so, what is it about the outlook three, six months from now and beyond that has consumers worried, possibly? is this an idea we could see peak consumer confidence at this point? >> you know, the downtick is back to september levels this is a monthly ripple these are 18-year highs. what we are seeing is it is a plateau. it's not growing from here that means this is about as good as it's going to get the conference board's gdp expectations show it should be 3% growth in the first half of the year and that should decline to a 2.4% growth in the second half of the year we are predicting this flowing of growth. but that's lapping this great stimulus through the tax situation. some things that could help in the first half raises 3% job growth or wage growth rate, whoever gets bonuses, tax return and so forth. so, we've got a lot of positives in the front end the question is the back half of the year >> a lot of stuff to consider there. thank you so much for that breakdown. not just of larry kudlow's comments but the consumer confidence numbers as well >> folks, as the volatility continues on wall street, what should investors do with their portfolios let's head to bob pisani, live at vanguard's headquarters with chief investment officer greg davis. >> hello there vanguard will be releasing its global economic outlook, 2019 economic outlook next week, but we have a preview for you. we have greg davis here to talk about that larry kudlow said we're hoping to a trade deal. we saw the market rally on that. your number one risk factor, trade tensions along with greater expectations of tightening by the fed. suppose we do get some trade deal here. what's going to be the effect on the markets? >> i think what you'll see is you'll see this dark cloud lifted off the market from an uncertainty standpoint there's been this uncertainty because of the trade tension and it's had an impact in terms of widening credit spreads on the corporate side, high yield spreads sxr put a depressing factor in terms of equity returns and things of that nature it's been a bit of an overhang >> you said your second great risk is the fed overly aggressively tightening. you think they're going to stop near 3%. that's still 75 to 100 basis points more. a lot on our air saying december they should stop one more and it's done was there something wrong with that theory? >> you have a labor market that's still unbelievably tight. an unemployment rate at 3.7% which is below the low we saw 30 years ago. the labor market in terms of tightness, in terms of earning growth, those types of things are relatively strong. we still think the fed has the ammunition, unless something else breaks in the system or the economy that the fed is going to continue on the path of gradually tightening interest rates. >> the market is trading like the earning growth expectations next year are going to be much lower. analysts are expecti ining 10% earnings growth yet the market is acting like 3%, 4%, 0% growth what's your point? >> our point is we'll get growth over the next 12 months but after that point you'll see the benefit of the tax cuts we've seen in the economy are going to start to diminish and you'll basically see standardeconomic growth being the primary driver in terms of economic earnings growth it is going to slow down. >> you're talking about 2% gdp. >> that's right. >> economic market returns you made a big point about this a little earlier expect lower returns in the next several years now. i know we've had good returns in the last five or six years but why should we be positioned for lower? want negative but lower. >> if we look at our expectations on a median basis we're expecting returns in the neighborhood of 4% for the u.s. equity market. when you look at the international equity market we're looking at returns closer to 7%, 7.5% or so. there's a big delta between those two. it's primarily driven by two reasons. one, equity valuations in the u.s. are much more elevated than the rest of the world. and we're far from where we need to be on a monetary expectations those two are leading the decision. >> you said -- you don't see any recession -- >> not in the near term, no. >> we're not talking about any bear market. the bear market comes when the fed gets ridiculously aggressive or a recession. >> right. >> you're not anticipating a bear market? >> no. if you get to late next year where the fed is restrictive, you're getting closer and closer to the risk of a recession we say that probability will start to rise in early 2020 and mid-2020. >> how about sectors, value versus growth, international versus u.s any advice for u.s. investors? >> go back and take a look at what's happened over the course of the last five years or or so. when you think about the fact that the u.s. equity market has returned 10% over that time period annualized and you look at the international equity markets returning 2%, there's been a lot of movement in overweight to u.s. equity just by the natural growth. >> we have to let you go last question. high yield, a lot of our viewers are invested in high yield your thoughts? >> high yield, again, high-yield spreads have widened out, about 80 basis points but we still think there's risk in high yield especially if the fed is tightening interest rates. >> vanguard's economic outlook out next week. tim buckley, ceo of vanguard will talk about fund flows and what he sees happening in 2019 back to you. >> great insights, bob thank you for all that. we do have breaking news the president is tweeting about general motors he did it just moments ago we have the details. gm stock is moving lower on this >> reporter: dom, it is clear the president is quite upset he tweeted that he is very disappointed with general motors and their ceo mary barra for closing plants in ohio, michigan, maryland nothing closed in mexico or china. the u.s. saved general motors and this is the thanks we get. we're looking at cutting all gm subsidies, including for electric cars. general motors made a big china bet years ago when they built plants there and in mexico don't think that bet is going to pay off. he says he's here to protect american workers now, we also just heard from larry kudlow who went even further saying the president's disappointment spilled over even into anger at gm's announcement. he said the consequences would be forthcoming here we have a little taste of it now from president trump himself. back over to you >> thank you so much for that. of course, a lot of -- a lot of movement in gm because of this. >> if i can get you still, that tax credit, that's the federal tax credit, correct, which typically -- when 200,000 vehicles are sold? >> reporter: there is a federal tax credit for electric vehicles president trump, again, in his tweet did not give much more detail on exactly what he's talking about. again, saying subsidies for electric cars would be going away. >> this is interesting because if he's saying specifically that subsidies for general motors' electric cars are going to go away, that would put at a competitive advantage other electric vehicles on the market then if they still have the subsidies available to them. >> reporter: is there a particular way they could tailor there remains to be seen the auto tariffs are still looming out there. could the administration look at that as a potential consequence or use that as a leverage? that's a question we have to ask. >> if he's talking about cushing a tax credit, i would wonder l whether he could do that with executive power because that's part of a tax law. who knows. >> a lot of questions. >> thanks. >> thank you coming up, when the blue chip companies pile on debt, it's time to worry that's the headline from a new op-ed shining a light on corporate debt a threat, the author says, is eerily reminiscent of 2008 he'll join us up next. microsoft versus apple microsoft slightly up but far outperforming its nearest competitor what's the best bet going forward? barbara corcoran on the state of small business, the consumer, the real estate market and more don't go anywhere. ow lchisacinwo minutes. certainly it's disappointing to see gm decided to lay off these workers. the president has been extremely committed to bringing manufacturing jobs back to the united states, which is why -- since he took office we've seen 400,000 new manufacturing jobs created in the united states it's because of his policies that we've seen that grow. this is not about the president. it's about the fact they're making a car, frankly, people don't want to buy. hopefully they'll make adjustments and changes and bring those workers back >> getting back to paul manafort and -- >> that was sarah huckabee sanders making comments regarding to general motors and the president's tweet saying he's looking to eliminate some if not all of the subsidies gm has. gm moving to 2.5% on those comments we'll continue to follow those comments from the press room as they impact the markets overall. some of america's biggest companies have been on a shopping spree over the past decade taking advantage of cheap credit some are starting to question if they may be overleveraged as interest rates start to rise this headline, when blue chip companies pile on debt, it's time to worry. joining us, william cohen, special correspondent for "vanity fair" and a cnbc contributor. thanks for joining us here take us through the argument what exactly is so alarming to you with what's happening with the corporate debt side of things >> you know, as i talked about in the article, basically the federal reserve from 2008 to 2016 was encouraging everybody to borrow. we keep interest rates so low, corporations are going to borrow as much as they can because it's inexpensive, cheap and helps their bottom line. they went on a borrowing binge and some is coming back to roost. part is potentially overleveraged. look, too much leverage is a matter of a ratio compared to debt to cash flow. if you have plenty of cash flow, like at&t has $183 billion of debt, perhaps the most debt of any company in the world, and it also has leverage of three to four times that's probably not that worrisome. some have worried about ge which has $115 billion of debt jpmorgan chase says it has free cash flow. the question is, companies piled on debt in the last eight years. some of that -- and why not. it was cheap and you get a tax break for doing it it's coming back to roost. integrating at&t time warner together could be a bill challenge for a phone company. that may not work out so well. my point is, it's time to look at some of these things. is it time to hit the panic button of course not. but it's time to wonder why all this debt these companies have taken on >> talk me through, bill, the analog to the 2007-2008 mortgaged-backed sxurts mortgage crisis where it was a small number of defaults in any one of those tranches of mortgages that were bundled together. a very small number that actually caused the whole system to gum up. what would happen if one or two or a dozen of these issuers of high-yield debt were to default? >> tyler, you've hit on a great point. wall street is a confidence game markets are driven by the confidence that investors have in the securities they're buying. and mortgage-back the securities gummed up on wall street balance sheets used to finance short-term loans when ge or at&t goes to refinance some of the debt it has and finds it can't do it or finds it can't do it at rates that are acceptable, rates much higher than it used to, that would trigger a lack of confidence when you think back -- i remember when i started on wall street in 1987 and then in '89 came to the debacle involving the ual going private transaction when citi said it could not finance that buyout. that dried up access to capital for people all over the country. that was a very, very difficult time who knows what's going to trigger the lack of confidence in the markets but when it happens, capital dries up. >> bill, there is no doubt that confidence is an integral part of this whole equation but it's different to talk about a investment grade company that's single a, aa rated in the u.s. and comparing it to the tranches of sublateral in the mortgage crisis don't these companies with higher ratings deserve on to have confidence with them despite the fact they -- >> some of those mortgage-backed securities had the same very high - >> but they had tranches that were put together engineering to have those aa, aaa ratings. >> i'm sure you know this as well, s&p just cut ge's credit rating to aaa plus the real trigger could be a big downgrade of the debt by moody's or s&p, which would then cause it to move into the junk, which would causemelissa. >> you mean technical factors driving fund flows and -- yes. >> but they would have to unload bad debt. >> just like funds that can't own a stock without a dividend that's why ge cutting its dividend has been so monumental. yes, s&p cuts ge's ratings three notches. dom, i was talking about not the investment grade but the bbb couple notches up from junk-rated debt. that's where at&t is, that's where ge is, keurig, dr. pepper is there's where a lot of companies that have taken on a lot of debt in the last eight, ten years and the risk remains the risk may be overplayed there may be risk among smaller credit already in junk land that could trigger this but there could be a problem -- who knows what triggers these things when the trigger comes, confidence is lost and then the markets freeze up. >> bill, thank you so much for that obviously something we'll be keeping a close eye on bill cohen with "vanity fair" and wrote that great op-ed in "the new york times." >> thanks for scaring the death out of us. coming up on this show. >> coming up, microsoft has outperformed apple the past three years and five years is it the better growth stock going forward? it's a battle of the tech titans next and swimming with the sharks barbara corcoran joins us on set to talk about the state of small business, enter practice newership, reaestel ta let's begin. yes or no? do you want the same tools and seamless 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ultimately, i would think this predominantly related to electric vehicle development but sort of an indirect, you know, perhaps comment here, they're benefiting because foreign imported pickup trucks, there's a 25% tariff on those foreign imported pickup trucks they do get a benefit from manufacturing pickup trucks in the u.s., which is fairly substantial. don't know if that's what the president is implying. we would have to get more granularity from the company. >> in terms of order of magnitude, what sorts of tariffs is gm receiving for electric vehicle manufacturing? this is separate, just to clarify, this is separate from the federal electric vehicle tax credits, correct, per car purchased? >> that's correct. i think at the end of the day, you know, i don't have an exact dollar for you on those chevy bolt, for example, but i would think on the order of magnitude of $5,000 to $10,000 equivalent unit in terms of protection for evs specifically and it would be hard to estimate what the negative impact would be if there was ever a removal of truck tariffs hard to understand exactly what is being threatened here in the tweet. but certainly it would put cost burdens on a company already facing cost burdens from fuel efficiency investment, safety, so forth. >> really quickly. in are if there were to be actions taken in the removal of some of these subsidies, the competitive issue comes into play, who are the most formidable beneficiaries in case gm gets put at this possible hypothetical disadvantage. >> you think in their key segments and margin drivers it would be the domestics ford and chrysler, fiat chrysler hard to see how this could be undertaken legally as well it would take probably some time, probably be drawn out, appealed and so forth. this isn't something i think happens overnight. where we would be most concerned is where the margin drivers are for gm and that's on the pickup truck and utility vehicles. >> let's say it's want subsidy effectively the president is saying, gm, you're in my crosshairs that's what this is, isn't it? is the move in the stock 3%, is that justified for now be knowing this company is in the president's crosshairs >> lease take a step back and just remember what gm announced yesterday was many years in the making and in the coming i don't think it was an if but a when situation they had to at some point make a decision to pull out of cars ford made this decision and they don't seem to be in the same crosshairs we're very late innings in the auto cycle so, they're obviously signaling with cost pressure they see today and potential downtick in auto sales, they need to do what they can to right size their portfolio. i think this is in the best interest of gm longer term, essential the country. a lot of the av developers are in the united states won't be as many jobs but certainly high quality jobs we can argue. it wasn't an if but when and the best for gm in our view. >> thanks, jamie. let's get to mike bertolli >> thank you very much it is a big tech face-off, as microsoft inches closer to overtaking apple as the most productive company which of these two names is set to rule them all in terms of market value mark tepper, frank capilari. mark, if you had to cheese, which one is it? >> microsoft stock price movements are all about rate of change microsoft is becoming stronger while apple's growth is decelerating i used to think of apple when someone mentioned innovation but the problem is they forgot how to innovate. their mac books don't have a touchscreen option that's probably to prevent the cannibalization of an ipad that's a miss. two bullish is on cloud and gaming and microsoft is huge in both cloud usage continues to grow. there's a lot of median size businesses that are going to resist shifting from everything they've invested into into 100% cloud over the course of the next few years and microsoft offers them a hybrid solution. when it comes to gaming, i don't think everyone realizes how real this industry is more people watching legal legends than nba and olympics. the legal legends will sell out the barclay's center for four straight nights. the nets can't do it for one night. we'll stick with microsoft for now. >> all right i guess the only question is whether all that good stuff in microsoft maybe is already in the stock. microsoft has held up amazingly well obviously, apple has had a huge dr drawdown here. which one would you go with looking at the charts? >> i'm going to pick apple apple has been hit especially hard over the past couple of weeks. if you look at the entire s&p 500, apple is the sixth worst performing stock since the beginning of november. even more glaring, apple is down 26% from its high back in october. annualized it comes out to 90% we think that pace is not sustainable. we have to go back to february of 2015, february of 2016 apple was down 30% again, that took 12 months to transpire. we're talking about 26% decline over eight weeks that's too severe over a short period of time apple is due for a new-term bounce here. >> would that just be playing for a bounce at this point >> i think initially, yes. if you look at maybe a reference point to key off of, 194 was the breakout point in summertime it coincides with 200-day moving average. that's a 12% or 13% move that will help the major indices if they do so. >> sure would. frank, mark, thanks very much. appreciate you joining us today. for more requested trading nation" head to our website. coming up, the market is up. the market's down. the markets may be giving you whiplash one of our next guests says don't panic, just rebalance. the market moves he's making and now the latest from trading nation.cnbc.com. >> when markets are volatile, resist the urge to use too much leverage when volatility picks up, losses can mount quickly. sionit wl ke bed to close out poti, illilye the worst time in price. place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. welcome back to "power lunch. first lady melania trump and second lady karen pence helping assemble comfort troops for kits overseas the first lady says it's one small way to say thank you to our military personnel >> i'm very thankful for the men and women in uniform who sacrifice daily for the american people and our freedoms and way of life. our prayers remain with all those serving overseas and for the families who wait for them to come home >> a federal appeals court upheld most of the convictions against two former allies of former new jersey governor chris christie it involved the george washington bridge lane closing case they were convicted in 2016 in the alleged plot to cause the traffic jams to punish a local mayor for not endorsing christie's re-election bid. starbucks unveiling the juniper latte, featuring es express toe and steamed milk infused with juniper syrup >> i'll stick with the pumpkin latte. that's the news update this hour back over to you >> i'll stick with my regular black coffee thank you very much. >> let's get to leslie picker with a market flash and what's happening with papa john's. >> i want you to take a look at shares of papa john's, down quite dramatically in trading today. you can see down 12% that's the worst day for the company in three years on headlines from dow jones saying the sales process they reported had faltered and some key bidders in a sales process have been more interested in buying a piece of the company rather than the company as a whole the story also goes into detail about trian no longer participating in the sales process of buying the whole company. we have reached out to them and they declined to comment we will update you with what we learn. >> thank you very much we appreciate it. president trump preparing for a key summit now with china's leader xi later this week he's not backing down on tariffs. the president says he expects to raise the tariffs to 25% on $200 billion worth of chinese goods what would that mean for the markets if there is no progress on trade talk at the g-20? mike is portfolio manager with qt investors let's see what you think of the effects of no progress on trade or if not no problem, no good sort of noises coming out of argentina. >> sure. that's been an issue all year. we would like to see progress on this front to us, we think we will see it it just makes no sense to us that in this third year of a presidential cycle that president trump would want to push this through to an ugly trade war position we know he's going to negotiate to a greater extent than seen before with other presidents, policymakers that's going to be painful as he does that. but we would think that he would want want to bring on a recession and see an economic slowdown we think both sides have great incentive. maybe push it to the limit but have great incentive maybe not to make a great deal but for things to be less than feared when all is said and done we do, obviously, hope to see that from a psychological standpoint. >> maybe taking the pressure off. mike, do you see it that way and if so, do you think this is a time to reallocate away from some of the sectors that have been successful and more into defensive sectors just in case things don't turn out the way jeff would like to see them turn out? >> yeah, i can't read president trump's mind but what we've seen so far - >> he's not really there. >> he's not interested in ratcheting the rhetoric down as we saw with gm, he's interested in bringing it high up the other reason is president trump believes in this his america first strategy is very much about protectionism. he rejects globalization and the idea that free trade is a good thing. investors should expect more volatility we've seen is that in the markets this quarter every asset class is negative. that's u.s. national bonds, that's also u.s. and international stocks that is causing a lot of indigestion for investors right now. >> what should i do with that money in light of volatility, in light you what you see larry kudlow said, this is all a piece of promises made, promises kept, that he's going to keep the pressure on china until they do what he thinks they ought to do and what many in the international community thinks china ought to do with intellectual property and trade barriers >> while the administration tries to figure this out and while the market tries to deal with the implications of that, it's time to move to less volatile stocks. the one bright stock are defensive equities stocks in sectors like consumer staples, even real estate are positive between 1% and 3% while the market is actually negative over 10% this quarter. now is the time to start reallocating to those stocks you own a lot less than you did a decade ago technology is up 500% this past decade utilities aren't even up 170%. what that means is you own a lot less in your portfolio it's time to look for stocks with high dividend yield, strong earning yield as well as less cyclical demand to ride out the bumps. >> do you see it that way? are you more inclined to stick with growth names that have been as powerful as mike described? >> we do believe in a blend of growth and value this is what makes a beautiful market it is a market of stocks not a stock market so, we find great value within pockets of technology. micron technology, for example, is priced at four times earning and priced for just collapse and demand so, we see pockets of technology, not f.a.n.g. that are just on sale with very good fundamentals, great balance sheets i could say the same thing in consumer discretionary, carnival cruise is an example of a name within leisure we think that somewhere around 13 times earning with 13% earnings growth, great dividend yield, dividend growth. marsh louse. and then within defensives, rather than running to the utilities and staples, health care, merck, great example of a name with dividend yield and growth and catalyst there. >> gentlemen, we have to leave it there. >> that's the beauty of the market >> appreciate it, guys thank you for your time. make of qs investors, and jeff of marine wealth advisers. host of cnbc's "shark tank," barbara corcoran joins us next her take on business, entrepreneurship ip, the state of housing that's coming up if you're on medicare, remember the annual enrollment period is here. the time to choose your medicare coverage... begins october 15th and ends december 7th. so call unitedhealthcare to learn about... a plan that could give you the benefits you're looking for. it's the aarp medicarecomplete plan insured through unitedhealthcare. what makes it complete? it can combine medicare parts a and b, which is your hospital and doctor coverage... with part d prescription 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[sfx: mnemonic] whoa! presenting the iwhat's he doing? come on, let's check it out! nice. he's pretty good at this. hm! it's like a game! (gasps) woo-hoo! got it! which car should we get? all of 'em! ooh, yeah! that one! this one looks nice. yes, and yes. i like this game. i think we're winning! delivery? where? (doorbell rings) (man) it's here! what? (announcer) buy your next car from carvana before ralph breaks the internet. then go see the movie, now playing. welcome back to "power lunch. from rising interest rate to trade uncertainty, businesses have a lot to navigate right now. let's talk about all of it and more with someone who's seen it all. barbara corcoran founded her real estate firm, the corcoran group, back in 1973 and sold it for 66 million bucks in 2001 she's also, of course, a "shark tank" investor and host of the podcast business unusual with barbara corcoran thank you for being here right now. >> my pleasure. >> obviously, we know the show and we know you're investing how many companies are you now invested with through the "shark tank" franchise? >> about 74. the real question is how many are successful >> so, how many are successful >> roughly 14. >> how do you define success >> making money, baby. >> so they're profitable >> yes, of course. consistently profitable is my idea of success. >> what do you do with the other ones >> i stay with them for a number of years and i wait until they hit their greatest encounter of opposition the first big obstacle and then i wait to see what they do with it i don't mind any obstacle but when someone starts feeling sorry for themselves, which takes on it is form of blaming the next guy, i don't -- i don't work with them anymore >> what's the biggest mistake the failing companies make >> lack of competitive spirit. lack of taking responsibility. >> overspending on the heels of "shark tank," it's like a fairy god mother whack you over the head and then you spend it on ridiculous things. anybody in business knows they're going to get whacked regularly. if you can't get up and dust yourself off, you won't make it. >> is it this still a good time to start a small business or be a small business owner in america? >> why wouldn't it be a good time why would you want to work with somebody your whole life if you get up and make your own world exactly as you want it why wouldn't it be a good time if you can enter any industry you want, have a singular talent and make hay with it it's a great time and the world is open to it. and if you can get on "shark tank," he could really do well much faster than you're entitled to. >> is the economy good, from what you've seen >> the economy is always good for an idea or a service that makes common sense >> even at the margins increased costs, maybe the impact from tariffs if they're manufacturing in china and bringing those goods back? >> i can tell you something. you could think of 15 reasons why not to do something in any category all you need is one good reason for doing it and having belief in yourself. if you have that none of the obstacles in the end amount to very much. >> what is the common thread was among the failing companies? the common thread among the winners is sm. >> high energy going to outwork the next guy 2 to 1 if you can't compete you won't be in business very long more importantly, people skills. >> why did you succeed >> you had very few skills >> your back story >> that's what got me my first and second husband fascinating stories. >> and you're maybe number three. maybe not. i'm very good at spotting people i can size them up and know what they are good at and not good at the other thing i can do is take a tiny pile of bologna and make it look marketable those are powerful cards even if you don't have any of the others >> great if you're selling real estate if you can take a pile of bologna and turn it into a palace >> i continue to invest in real estate do i like it does building look good? do i get a good vieb second is can i get enough financing to pay it off. people say that's not a formula. what's is what is it i don't even know what they are talking about. i know i have viable buildings >> are there tunlts that you are seeing it could be in real estate given the enrye vonment we are in or are there businesses that where you see that you would want to be in at this point? >> it depends if you are using left brain logic but i say you should be in a field. i'm just a believer in sticking with it. if you do one thing well do it again and again and again. people are nervous there's a deal around here somewhere >> what's going to happen in manhattan? >> people are nervous. if you're in the lower end which is in manhattan is about a million dollars. it is an unbelievable market where you can't get you hands on anything it is clearly a sellers market if you have 10, $20 million to spend it is clearly a buyers market you could clean up right now in manhattan. >> what happens in between >> it happens in between it depends on the deal, condominium, block, neighborhood >> very specific >> it's all her. >> i was just getting warmed up. how are we going to date after this >> i don't know. we'll figure it out. >> breaking news ton show. >> you know my wife. >> if i wasn't wearing so much makeup i would be blushing >> we can see through it it's so cute let's take a look at the merging markets. it is now on pace for the best month since july so is now the time for investors to shift from u.s. to global great to have you with us. >> they told us they close tore neutral than many have thought you pointed out they outperformed by almost 6.5%. it has been a very impressive story. you think especially outside of asia whether it has been south africa or brazil and even russia has outperformed the s&p by 4.5% >> at the same time should we be concerned about the data that has been weaker than expected? it has been negative for past six months or so or since june at least should it educate our investment in the end >> well, ultimately we have the dynamic and say it is must have more painful than an inflation scare. the world is better and we have been concerned about global growth i think people have priced in the complete falling off the cliff of the global economy. a lot of these immerging and they have given back a significant amount most are apctually on the currency side. global growth isn't going to get away from us here. how much negativity was here it is clear when we said u.s. versus rest of the world how long could this continue it stopped continuing about a month ago. the rest of the world is outperforming the s&p. >> do you think it is priced in a further slow down in china which would be a spiral effect >> china in terms of if you're looking at retail sales and some of the headline indicators has fallen off a bit but hasn't been that different than it has been the last two and a half years. chien d china was in a tightening mode they do have a few tools in the tool box to counter act this right now i think it's priced for slower growth. we are running into this 50 day moving average the bottom line is technicals have dominated immergin g markets. >> check please is next. ♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. most kids today will have jobs that don't exist yet. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work. what do you look for i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ sitting at session lows. i dug through the annual report in the latest calendar year. they say in the risk statement theybenefit supporting the development and adoption they could be reduced or exhausted which may reflect the ability to sell [ no audio ] the consumer very strong we'll watch out for that as well >> thanks for being with us today. >> always. >> the closing bell right now. it is time for the closing bell a speech tomorrow and a meeting between president trump of the united states. we will break down the market moving implications of both. plus the ceo of investment john vanguard. we'll get his thoughts on the market volatility plus bit coin, the fed and much more. >> i'm in for kelly evans. shares as tariffs take

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