Transcripts For CNBC Squawk Box 20240713

6 00 here are the results just reporting. 2. 53 a share. A penny above estimates. Just short of 27. 52 billion here are the keys for Guidance Company now expects sales to grow by 1. 8 the previous guidance was 2. 3 1. 8 versus 2. 3 comps are 3. 5 previous guidance was around 4 . Lets bring in senior analyst. So the Forward Guidance is below where it was previous . Yes quickly looking at these numbers, there was a sales miss in the quarter also lowering guidance for the rest of the fiscal year. Sales guidance Sales Guidance. Im not sure whether that is a total company or domestic. The street was around five that is a point and a half the street is a full point above where the company had guided the company had guided four. For the quarter ill look at the quarter first the street was around five for the year, the company had previously guided for four they missed roughly a point, point and a half in q 3. They are taking guidance down about 50 basis points. The real message here. It is a clear sales miss here is what they say sales are below our expectations driven by the timing of certain benefits associated with our strategic investments. We are largely on track and seen positive results some of the benefits anticipated in 2019. As a result, we are updating fiscal guidance. We vest to extend our competitive advantage. In terms of sales, that is coming down a bit. Is there anything that can explain the Third Quarter sales like a weather event this is the second Third Quarter in a row of lower pricing. We have seen lumber pricing go up so that issue should have abated for them good question what is interesting here and what joe is saying, we have to look closely at the home depot comments it sounds and this is very rare, that home depot is saying this is an internal issue the back drop was quite good the lumber price issue is not a big deal weather has been favorable we have this improving overall housing environment. It sounds like this is a miss step on home depots part. One question i would have again, we get lowes tomorrow lowes has been getting its act together you like lowes better i do. Up now to the averages that just came off the dow we watched that happen im glad we were able to report that and plan it had in the show and im glad you were here right planned. Schedule normally you see 120 down to 150 and say, who said something about china. Today, this is totally due to home depot it was 104 when the show started . Is. 120 i was in here early. You know i get in pretty early i know you do now we are up 38. Just do the math home d is down around 17 this is a stock that was up 15 going into earnings. And up 38 on the year. Right eamon sister for the year. Atwhat point. I assume theyll be well prepared for that to happen. This is a stock. I talk to our clients that own home depot where we are seeing Quick Reaction today i agree and most people say this is one of the best retailers in the world. Rarely any type of internal issues something will happen in the Third Quarter that will shock people do you have any question what the internal issue might be. They dont. Home depot has been aggressive that has been working smoothly you thought they had a moat that it is hard to be sup planted by an amazon i would imagine when you are going in to buy a big piece of wood you dont get it shipped to your house how do you feel about lowes well hear from lowes and then you are going to say, is this an operational problem at home depot or something larger going on the way that press release is written, it seems like more of a home depot issue that makes me wonder if lows performing better is an issue. They are spending money and the return either didnt work or in their words is taking longer is what they said . It is odd for Something Like that to happen in one quarter. Every comment has been they are working well ahead of plan. One quarter they did something granted, there are different aspects. It seems odd to me lowes is down 2. 59 well be here for tomorrows report a lot of dow components wont have an impact on the future thats why you are here to bring us timely insight like that thank you for that im got some grim reaper news on wework new York Attorney general is investigating. A report that the company is confirming it has been contacted by the ag office and says it is cooperating. Partly focused on the founder and ceo adam neumann and if he engaged in selfdealing. He bought properties and leased them back and borrowed against his own stake in the company last year, it rolled back the policy of requiring employees to sign noncompete agreements as part of a settlement youll look at those transactions where he bought the real estate and used them or effectively leased them back to wework does that represent selfdealing who was harmed what happened . Ive done some reporting around that one, it wasnt clear he actually made money doing it. He may have lost money unclear whether that matters number two, at the time for the transactions were that effectively, they were trying to build out wework as quickly as possible they were trying to get certain buildings to get wework into certain buildings as part of the show case. That was part of the rational for it at the time whether you think that passes the smell test, i dont know then there is also the issue of the trademark he didnt end up selling the rights to the trademark. I did more reporting on that issue as well as to is there any basis for charging the company it wasnt a licensing fee. It was a 6 million fee you were going to pay to acquire the trademark. Again, depends which lawyers you want to listen to. Im told there was an argument being made at the time that there was a value to the we trademark and you couldnt just bequeath it to the company because that would be its own form i dont know if i believe any of these things i just put them out there. Thats what i know around some of these conversations that dont pass the smell test. Neumann is out so it is not that much of an issue but the Corporate Governance and what the board allowed to happen because the board is still there. You have to wonder what steps did the board take along the way to enable this to happen and is that a Corporate Governance issue . I hate to use the f word and i mean fraud are people worried about accounting issues. The numbers came down very quickly. These are the kind of things that if you are an ag somewhere and you wan to make a name for yourself or you are just after justice and you start looking into stuff you think maybe there is something in there maybe we look back at wework as one of those moments. It is really interesting that it has got this much publicity and it is really just the big fat cats eating it isnt it we may end up talking about this years from now dont you think . Im going to get my billionaire tears mug out. Thats a good one 47 billion to where are we now . You are all about Market Capital gains. If you marked it to market, somewhere around 7 million is where softbank has marked it i think it is closer to 9 or 10. It brings down the average you havent done any valuation work on it you just think they are low balling it you are looking at some of the monthly metrics for individual properties coming up with 9 instead of 7 seriously . He just actually said hes done some work i did some work a little number crunching and a lot of phone calls we have more trouble for juul to tell you about. The state of california suing the e cigarettemaker that they engaged in a campaign to attract teenagers. Saying the companys on line age verification process was flawed. Sending thousands of devices to fictitious name including beer can, Patricia Jewel and no signature needed as examples disney plus subscribers may want to consider changing their pass words thousands were stolen by hackers and put up for sale on the dark web, which i thought was the next star wars sequel. That happened a mere hours after the Service Launched a report found that hackers were accessing the accounts logging in and changing the email and pass word associated with the account many of the accounts were prepaid for a year or month disney spokesperson said disney takes the privacy and security of user data very seriously adding there is no indication of a security breach. How are you doingyour pass word ars 111 really dont want to get into it why would i want to share thats right we are on tv you have to change it all the time i have a hard time coming up you know how it measures how good it is there are studies that show all this changing is a bad idea. Youve done some work i have. There are studies that show changing the pass words constantly is worse rather than better because more get out. You know why, when i change it, i write it down everywhere thats what that yellow post it note is im giving out too much info but i forget what it is too. Why dont you use a pass word generator . What happens if that gets hacked you have a bigger problem remember, news you can use. Double authentification. Two fact for authentation for everything you have to. Do you know what that is a text and a message ive seen it. I forget and i have to set the pass word again. Just want to make sure you are double authenticated it is not a bad thing everything i have has a different pass word. No. Thats okay. You should just use the key chain thing on your apple phone or one of these services or they have these pills that improve your memory too. You can try that you know how many instagram followers kylie jenner has 150 million i do know. Kris jenner is going to be on with us in the 8 00 hour this is what i told you this is where you find the real news you find it here water cooler news. This is a great story we are going to be talking to kris jenner in the 8 00 hour by the way, orange man bad. Still bad. Coming up, the dow posting the 12th record post of the year despite a decline of 6 for shares of home depot well talk strategy right after this break only one things more exciting than than getting a lexus. Giving one. This is unbelievable it really is. The lexus december to rembember sales event lease the 2020 rx 350 all wheel drive for 419 a month for 27 months. Experience amazing at your lexus dealer. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. As markets continue to push to new record highs. Offering insights about where hes seeing opportunities. Joining us now the Portfolio Manager from jp morgan bank. We have tremendous liquidity. Youve had been 7. 2 billion shares changing hands on a daily basis. Youve seen that drop to about 6. 2 billion you would normally think when earnings were being reported, traders are acting on that news. Why are we only seeing 80 to 85 of the volume. If youve had good news. You offer higher and down 5. 7 which seems like a more aggressive move. It feels as though people are reacting more than they are responding going back to last year at this time and really going into december, it felt like if you wanted the bid, it felt like you were reaching out to a lot more to reach those transactions. Going into the holidays, it dries up a bit despite the fact this perception of Central Banks out there why is this happening is it a combination of fewer shares and the buy backs is it a complacence at this point . Part of it is the rise of the etf. That might give some false sense of security or liquidity i can change my portfolio by moving up or down a factor i would say the reduction in share counts actually makes equities more valuable actually arguing that buy backs are a bid. Is that why we are sticking with the record highs . We have the idea that the way youve created wealth creates perspective. That has been very helpful it is coming that is something markets will hold on for. So you like cyclicals if you start with the data got better or stopped getting worse, youd see positive surprises it is financials and industrials that suggests that seasonal you want to be morris being on and you are positioning to make money in the stock market running the three to fouryear horizon. The idea now that markets are bracing for risk why do your accounts have a three or four year time horizon allowing them to compound and looking to the business that is available and stay with it i didnt know if it was an age issue going back 10 years or 20 years i think you can have a reasonable idea about what could happen over two to four years or ten years, ten years ago is a very different narrative ten years ago, we thought the world was over and why would anybody ever trade again today, its like okay, i want a conversation where i can trade over the next five or ten days people are looking more to what can we know . What can we have some confidence in in terms of outlook. It is hard to know the next data out look and predicting the next out look is a skill i dont have in terms of Bigger Picture friends, people supporting families are going to move out of basements you should always be happy. I try. Dont let data points determine your happiness you are living in the greatest period of history and here you are on squawk box. What better than anything else and an interview by andrew ross skorkin for a tuesday, which is not the greatest day of the week too close to monday, too far from friday. Tell you what is going on, what chinas stop legislator said overnight that could threaten hong kongs status as a Financial Hub. You do not want to miss this im a regular in my neighborhood. Im a regular at my local coffee shop and my local barber shop. When you shop small you help support your community from after School Programs to the arts so become a regular, more regularly. Because for every dollar you spend at a Small Business, an average of 67 cents stays in the community. Join me and American Express on Small Business saturday, november 30th, and see how shopping small adds up. New this morning, violent protests continue in hong kong and a key reason that hong kong has remained a Financial Hub well head over to eunice for more part of the uks deal to hand over hong kong to main land china, china agreed it would maintain the citys legal system for 50 years then today, the Chinese Legislature said they had an ultimate say over citys law they had declared the face mask ban that they had been using to control the protesters as unconstitutional this move is being seen as a big step potentially losing the separate status. There are other Companies Growing more concerned about hong kongs position i spoke to one lawyer who consults he said some of his clients had been reducing the hong kong foot print. Other companies are more caution now about moving in. More foreigners are talking about a plan b exit strategy i spoke to one Business Association who said the members there are reassessing their Business Plans exactly how big an operation they should have in hong kong and whether or not they should move out another date they are watching for is november 24, the day theyll hold local elections that is a big question mark whether local authorities and beijing will allow elections to go ahead that is another sign if those elections were blocked of a sign that beijing is interfering even further. Guys so far, so good today right . No interrupting today. I dont know about that i dont know about. That well try to keep it down in the center lane today. What was that yesterday . Oh, rick scott i cant even believe they know who he is over there hes a florida senator they do. It was the content of what he was saying i know. 1. 5 billion people would stay on over there coming up, American Express is playing catch up with visa and master card saying the company is paying merchants handsomely to use their cards thats coming up announcer coming up, do you feel lucky this isnt the real ceasars palace did ceasar live here no. I didnt think so. The company ceo joins us straight ahead we Keep Companies ready for whats next. man we weave security into their business. Virtualize their operations. woman and build ai customer experiences. We also keep them ready for the next big opportunity. Like 5g. Almost all the fortune 500 partner with us. woman when it comes to digital transformation. Verizon keeps business ready. For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Rowithout the Commission Fees and and account minimums. Te. So, you can start investing wherever you are even on the bus. Download now and get your first stock on us. Robinhood. Good morning. Welcome back take a look at u. S. Equity futures at this hour being weighed upon by home depot earnings as we mentioned earlier, it looked like it would open close to 120 points higher the nasdaq looking higher as well the home depot decline is good for about 70 points off the dow and the company lowering Sales Guidance for the full year the big question, is this specific to home depot it sounds like it is or is there something larger taking place. Is it retail or the economy or the consumer . A lot of we may get a better sense tomorrow when we hear from lowes. But lowes is a little different. A little. Im overwhelmed in home depot. You are talking Consumer Experience now yes because im not handy. You want me to say it. You feel better i still try to say that i am but i think i just have to say it im looking for light bulbs most of the time. I was just dealing with that. I have to find someone just to get a light bulb. To make sure i get the right one. We got to go. Ill send you my guy my guy will pick up the light bulb for you its a joke the Conference Call is at 9 00 lowes a little easier, softer. I dont know ive never been to lowes youve been to home depot yes of course. American express playing catch up with visa and master card the card company is offering sign on bonuses to businesses accepting its cards in amounts ranging from 10,000 higher. Internal sales targets to sign up new merchants have increased the biggest concern are small and medium retailer. Visa and master card sometimes pay businesses to start accepting their cards but usually to defer the cost of technology upgrades. There are anecdotes it would take American Express Something Like six to seven years to make back the payments they are offering they would offer somebody 10,000 but the amount of money they could collect is such a small amount to get to 10,000 in terms of fees is remarkable it is going to be interesting as you look through their earnings reports to understand their marketing cost i think theyve taken some of their marketing spend down and have moved that into this program. Just a soft line in their earnings report. Cant figure out what it is. You know when a guest just wont shut up. A poone step closer to the largest casino dealer in the country. And later. Kris jenner. Thats not her. Talking about the sale of Kylie Cosmetics to coty. That family taking home 6 million on that deal well be right back. Announcer executive edge is sponsored by at t business edgetoedge intelligenceh the, gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Is that pgim, we see alpha emerging in the trendsete . Driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. With a nationleading 150 billion commitment to infrastructure, were creating state of the art, 21st century transportation hubs, constructing new bridges, bringing highspeed internet to every corner of the state, and committing to lowcost clean energy. With infrastructure built for the future, the companies of tomorrow can thrive here today. See your future at esd. Ny. Gov. Welcome back to squawk box. Share holders voted in favor of a merger between caesars and el dorado the renobased company is on its way to owning 16 resorts in 16 states. The sale of caesars to a Company Three times smaller came after karl eye khan made board changes. Ichan apparently hand picked eldorado he has managed other acquisitions and is focused on cutting costs. He predicts a 500 billion synergy. Caesars predicts 100 million in savings by the beginning of the year implementing Sports Betting and burnishing the brand the deal is expected to close in the first half of 2020 eldorad os head hanch owe is hoping to have this done by the first of the quarter you brought us a special guest almost in third person tom is here. We are thrilled to have you here thrilled to be here how does this happen . You get a call from carl icahn, give us some backstory we had approached caesars the summer prior to this quarter when the stock had been weakening frankly post a cnbc interview prior. Are you responsible for that . Share holders had reached out and said, wed like to see you guys managing this company we made a brief approach to caesars that summer. They were not interested at the time told us so we were in the middle of buying a Company Called Tropicana Entertainment from carl. We discussed it briefly. I like the rest of you saw that carl became a share holder of caesars. There was rumors of big he would be we started talking about is this something wed be interested in and here we are. You called him or he called you for the big deal i will say he was aware of our interest from prior conversations and reached out to reconfirm it the question is is this 500 million synergy number what does it look like and does it take away from any of the profits . This is our seventh acquisition. In each one, we have announced a target we have a high degree of confidence in terms of the numbers we are going to hit. This is no difference. The numbers are just larger. Caesars is a Large Company weve had an extraordinary amount of access at this point with management with the corporate and the property level. We did it at the time and now four months later and we are confident well hit that 500 million. Sports gambling is a game changer. It provides opportunity and risk new jersey passed nevada now im going to let you talk but i think, tropicana, do people still go there desert inn is gone these new properties pop up. Some of these older properties, it is not just about gambling. To be out there, you need to have a great experience for the whole family i think caesars is such a great brand name thats right. Caesars is kind of the gold market in terms of branding. A lot of us think of the lbo and bankruptcy but it is not long ago that caesars was the Gold Standard you asked about Sports Betting Sports Betting is a reason for customers to visit your property that otherwise werent going to see it you have the very valuable caesars rewards now. You are known for cutting back on promotions and marketing. Do you anticipate making big changes to caesars rewards that is the equivalent to owning the one frequent Flyer Program in the business. We think it will be very powerful we are going to bring our 12 million customers into their database of 50 million and we think that will help us yield in las vegas and help us attract customers at the local level in our travels, weve seen properties that are exporting 25, 50, 75 million a year of play in the caesars system we have 26 properties in our database we dont do that much combined caesars rewards is great we think it will be great for occ our customers. After this, analysts are saying youll be at fivetime leverage what do you have to be at to consider your seventh or eighth acquisition . There is not much left for us domestically well come out more levered. Well come and five times we think well pay down 4 to 5 billion of debt in the first 24 months post transaction. We really want to drive leverage low. Wed like to driver leverage sub three times. Sub three we think if were able to accomplish that well be rewarded with an expanded multiple. Thank you for being here. Thank you thanks for having me. Please come back. The nats dak up 65 since 2016 up next weve got names we might consider buying at these levels. Squawbo wl rhtack xilbeig bk. Welcome back to squawk. The tech sector has been outperforming the broader s p even as the faang Companies Come under fire joining us is an analyst from jeffries lets start with facebook and google facebook, 250 price target 10 of earnings power. Mid 20 multiple is not unreasonable given whats happened. What has to happen to get there . We think the regulatory constraints have to fade and they continue to put up good numbers. What has you convinced that the regulatory cloudswill lift they wont lift covering microsoft under vollmer, the regulatory overhang will not be a big issue from our perspective. No lawsuits coming . We see lawsuits coming. You do . You still think its okay . Yeah. Look at the stock year to date, its up 50 . Most of the times we come on air we talk about the regulatory overhang i think we dont believe its as big an issue going back to the fundamentals advertisers are flocking to this platform instagram checkout and the shopping app are on fire. Microsoft lets talk about microsofts neighbor in seattle. Amazon you like amazon. Why . Its underperformed the bricks, the clicks have faded. We think that ultimately the investment of one day delivery is going to pay off. They were in harvest mode. The harvest is coming. The harvest is going to come. Then you have aws which is just dominant. No mention of regulatory clouds there for you not as big of an impact. Lastly, lets talk about the neighbor, amazon and oracle. Both of which you like yeah, we upgraded microsoft, downgraded oracle. We like microsoft a lot. Been one of the best stories growing mid teens. Hundreds of billions in backlog. If i gave you 10 grand and you could buy one, which would you buy . Id buy amazon. By round lot. Cant even buy a round lot. Fine, ill make it 100 grand. A million, 10 million. Fractional shares nowadays on certain apps. Okay. Thank you humiliating. Coming up our guest host for the rest of the show, david novak, former yum brands ceo his latest on food trends, c suite shuffle. Big interview. Jenner communications, kris jenner she takes 10 of it all. Shes going to join us talk to andrew mostly, im sure, about codys deal with her daughter kiley beauty and Consumer Trends and so much more as we take a break. Take a look at the futures which have been much higher until home depot guedowid ler in salesfor the rest of the year well be right back. Sfx [phone ringing] you still have service . Call the Insurance Company its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool whether your beauty routine is 3or 57,. Make natures bounty hair skin and nails step one. Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Fidelity has zero commissions for online u. S. Equity trades and etfs, plus zero minimums to open a brokerage account. With value like this, there are zero reasons to invest anywhere else. Fidelity. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. Record run the markets looking to set new highs. Where should you be putting money to work right now . The china challenge. Will huawei be listed as a National Security threat by the fcc. Ash carter will be here to discuss. Plus, guest host david novak talks leadership doing business in china and much more as the second hour of squawk box begins right now. Good morning welcome to squawk box right here on cnbc im Andrew Ross Sorkin along with melissa lee in for becky who is in l. A. Kingos angeles well have some of those interviews on our air as well. Take a look at the u. S. Equities futures. Tuesday morning. The market will open up higher, 45 points higher that is down from where we were just about an hour and a half ago when home depot reported more about the sales and expectations in the future down much more than people had anticipated. Well talk about that and dig into that in a moment. Jay powell meeting with President Trump yesterday to discuss the economy. It was the first such meeting between the president and the nations top policy maker since an informal dinner last february Steve Liesman joins us with more about what was said and what was maybe eaten. No, i cannot get anything on the food nobody else had the steak detail but were trying to figure out if coffee was served kind of quiet. Look, having first described the meeting as good and cordial, the president took to twitter to return to form and complain about monetary policy. Heres what he said. At my meeting with jay powell this morning, that was last night, protested fact that our fed rate is set too high relative to the Interest Rates of other competitor countries, in fact our rates should be lower than all others. We are the u. S too strong a dollar hurting manufacturers and growth that statement lacked the namecalling and over the top criticism of the fed from the president s other tweets so perhaps the facetoface meeting had some modest impact the fed said in the statement chair powells comments were consistent with his remarks in his congressional hearings last week he did not discuss his eke no, maam pick policy except to stress that the path of policy bears the incoming policy. Powell said they are not going to reduce rates to target the dollar officials have said the rates are higher, because as the president itself argued, the u. S. Economy is far stronger than in europe stocks have surged while rate cuts have declined in december, 0. 8 probability of a rate cut next month. Then you have to go out until july until the markets take a hedge on possible rate cut of 25 basis points curiously the market and the fed now in the same place on the rates. The president in another place melissa . Seems like it depends on the trade war. The markets are trying to factor in what the fed will do in response to the trade war. It gives itself time. A brilliant comment, melissa. That gives me an opening for an answer here that the fed funds futures market is not responding to the possibility of an increased trade war, and i think the stock market itself seems to be divorcing itself from the trade news, dont you think . Yes, i agree. I mean, yesterday was bad trade news and it didnt seem to if you close your eyes, right, you heard the headline. You would know. Eunice report that. You would think the s p would be down 300 down 300. 30 points or whatever it is. You wish. And it wasnt it was basically flat yesterday on the day why do you say i wish, joe . Because then youd be right about the trade war hurting so badly. I think im pretty clear about the trade war hurting. Trade wars hurt. Wheres your 3 growth, joe wheres your 3 growth all right. Take it easy. Quiet silence, joe. Calm down you got me, steve. Silence, joe. Youre a guest. The dow, nasdaq, s p all hit record highs since President Trumps election the dow is up 53 . Seven of the 11 sectors were higher all 11 sectors were positive year to date tech leading the way up nearly 41 . The sector that hasnt faird as well, energy up 2 joining us is sarat and ryan payne, president of Payne Capital management lets pick up where we left off in terms of the Market Reaction to the trade war it almost seems like the markets are okay being here with bad trade headlines because it knows the bar is very high for the fed to do anything at this point yes no, i agree i think actually the fed is whats being ignored here, right . I think what happens with Interest Rates doesnt matter. Weve had all the stimulus we can possibly have. I think the trade war is still pretty important because thats about capital expenditure. Thats a big part of gdp if we can get help around that thats a huge catalyst. Why are we all right hovering around alltime highs . Because the economy is awesome. Down 3 . Doesnt have to be 3 . There is its the best house in a bad neighborhood certainly around the world. Is it that bad . No. With historically low employment the economy is doing great. Says the people i work for. No. Is it about the best house in the bad neighborhood or do you want to be in the bad neighborhood that shows the potential for influxion . Your point is a better point. The expectation is built in that this trade war is not going to actually get as bad as what people think just because weve had elections coming up and i think people are expecting that something will come out of this. On the other side of that, if you look at the rest of the world potentially turning around as well and where do you want to be if the rest of the world turns around right here because weve got the global multinationals, weve got the ability to grow our earnings the only way to go ahead is earnings going up. Interest rates are going to be low. Where do you want to be . I think investors have to look and say, growth has been really the way to be for the last ten years. Do you want to be just in growth or do you kind of want to balance it with some value at this point when you look at multiples, the financials, Home Building products, areas that are 10, 12 times earnings versus some of the 25 to 30 pes, yeah, theyre supported by low Interest Rates but what happens when you actually have rates moving up on the back end im talking about the ten year, things like that thats where the money could go. Thats where were starting to put some of our capital. Weve been there for a while its helped this year. Rates move and the ten year moves to over 2, i think youre going to have a reshuffle of the market. What does that do to bonds as well when the bond funds this summer and you start seeing rates go up, you look at tlt, 25 year plus treasury index, its already down 10 in a month. Trade with a huge put, dont you . The bar for the fed to raise is much higher than it is for the fed to cut, right . I mean, you could have a ten year drift above 2 you would have to have i mean, just taking powell at his own words, sustained inflation at a 2. 5 rate for a while that offset the time that it was below 2 . Thats never going to happen. The fed has gotten rid of normalization. The idea of going back to some sort of idea of whatever normal is and its now just the new bar is inflation that runs high for a long time. Im talking long duration, right . Not the one to five year its really ten plus that effect on the markets could be pretty dramatic, especially if you see capital go back into the equity market if people are losing money on the bond side, youre going to get a reshuffle right away. Youre already getting it, arent you you are it hasnt been as drastic. The equity markets are supporting you. You have to remember, its not the fed that controls longterm Interest Rates global rates are starting to go up youre starting to see a turn in global economies theyre starting to do better. Goldman had the note out about peek tariffs the december 15 tariffs wont come into effect if that is the case and you want to invest in the infliction point areas, is that the u. S. Or is that elsewhere . Is that europe is that so i think you want to be in the most transparent liquid market. Thats the u. S. In the u. S. You can go into Companies Like the honeywells, the microsofts, big multinationals. Blackstone. I like blackstone. Great run. Great dividend yield. Great run. Theyre still aggregating assets you can look at the banks. Jpmorgan, bank of america. Theyre going to do well when youre at 12 times earnings you have expansion. Can i point out most of the markets one last thing. The market has not been great at predicting the political outcomes of tariffs. The markets or strategists in the markets . I mean, i dont know if you dispute a whole lot of look, i dont know theres been a whole lot of space between the two. It looks like the markets bet on a positive outcome at least twice and its been wrong. Right now at least our polling, and i guess the market, thinks these december 15th tariffs are not going to happen. Sarat just said it. We shall see. But its not been right. Look at last december. Sarat, thank you. When we come back, guest host and former yum brands ceo david novak will talk trade tensions in china and here in america and so much more hes going to join us right after the break for the remainder of the show. Later, former defense secretary ash carter is going to join us. We will talk about Chinas Huawei privacy requirements and National Security when squawk returns. Tom on squawk box becky quick has an exclusive interview with target ceo brian car fell in moments after the company reports. The stock has been a retail bright spot this year. Well find out if the rally can continue thats tomorroinhew t 6 a. M. Hour only on squawk box. people talking for every dollar you spend at a Small Business, an average of 67 cents stays local. Shop small and watch it add up. Small business saturday by American Express is november 30th. people talking for every dollar you spend at a Small Business, an average of 67 cents stays local. Shop small and watch it add up. Small business saturday by American Express is november 30th. Earnings alert earnings of kohls down. Kohls the second retailer to post disappointing earnings. Home depot shares down on a comp miss home depots taking more than 85 points off the futures kohls is down almost 12 here its amazing samestore sales rose. 4 . Thats less than half of what wall street was expecting. This is a major disappointment. Lets talk about the state of world, state of leadership, state of our relationship with china with someone that had some business over there. David novak, former yum brands cofounder, ceo. Founder of david novak leadership and a cnbc contributor. Good to have you here. Great to be here, joe yeah, before we get started ive been watching squawk box. You and andrew, youve been going at it. Yeah. Youve been for years. I want to bring you together. Thats really nice. Good luck. I think food really nice. I brought you a few taco bell coupons. Wow. How many does he have three. Ive got three, youve got three. You dont go to taco bell. Three kfc. Oh, wow. Only two kfc foryou. Three pizza hut but 4 pizza hut for me. Do these cards only work if they go together i want them to go together. Id like to see them break bread together. I think that would move things along. I think this could be good. You can have a date night. Can we trade . No. Youre supposed to go together. I know. But i i know you like taco bell ill get you more taco bell. You dont like taco bell . I do like taco bell were going together thats the point of the exercise. Isnt three hours a day enough no, were good good. My question its been a little snippy. My question is, how much is on each card youre going to have to find out. Its got a scratch you have to read the fine print. You dont see Congress Sitting across from each other talking things out they could learn from this they could learn from this. I agree i agree. How much are these worth . Be thankful. I am thankful thats a sweet thing to think about. Hes busting our chops. Dont you know novak. Theres a lesson in leadership hes trying to bring people together there you go. Teammates this is what he does. If you can do this, youre really good. I think i can do it i think i can do it. Professional coach. David coach. The nba deal, for me it highlighted almost in a microcosm all of the issues with china trade. Its very important. They have 600 million nba fans right. Wed love to just be 100 behind the protestors for freedom and democracy, but we really are its a very important trading partner for yum brands it was an important trading partner. You would have to think of tweeting Something Like that. No, i dont think i would have. Would you have tweeted support . I would have attended my business you attend to your business. Business people should attend to business and leave politics to everybody else i think thats the real learning here but we cant decouple from china, can we . I think, look, i think china is a country that we need to have a relationship with for the long term. Right weve got our struggles right now but thats going to work out. When it works out, its going to create more economic benefit for the entire world, including United States. So in my mind its just a matter of time before things are worked out. But the politics, you know, chinas going to run their country how they want to run their country and the United States is going to run theirs the way how we want to run ours thats the way it should be, i think. Hopefully the two can come together and deal with the big issues you know whats going on at yum obviously. How many other boards how many boards are you sitting on im just on one. The comcast board. Which is the Parent Company. The comcast what a company. Thats a hell of a company. I think so. Too. You have some connections at the top. Well talk you know some people so overall the state of business in the United States right now with what the input you have. Everybody im talking to feels bullish. I havent talked to a negative person in a long time. Is that good or bad i think its good i think people believe in the economy. Stock market consensus. Just look at what happened with the market. All these fears that have been whether the politics, whether its the trade, whether its recession, you pick the issue, theres been more fears in the last it seems like six months. September somehow they seemed to go away. I think people now feel that those fears are overblown. People are optimistic about the future and, you know, i think they should be. Retail is good in your view retail, everything home depot had a little bit of a miss. Yeah, but you know what, youve got to look at the overall factors. I dont think that should drive the market down. It might who knows about the market home depot is a powerhouse company. Theyve been having great results. Great leadership, great store management theyll come back. Every retailer, you know, has their ups and downs. I remember warren buffet telling me about retail. He says, look, youre in a tough industry you have your ups and downs. Tell people youre going to win in a long term thats what a home depot does. Thats what others do. The other things you concern yourself with. You do podcasts with leaders youd like to spread a lot of the basic tenants of leadership around to create good leaders that make the world a better place. Yes. Thats sort of your goal. Something you think that is not done enough is what you call purposeful recognition. Yes. That is see, with us you didnt really think both of us are great or anything. I thought that i thought that might be something you would say. But this needs to, would youre both essential. Youre incredible employees, right . Right. Thats your deal, purposeful recognition. Look, i dont know about you, but if you look at companies, you look at trains, everybody teaches people how to sell more. Everybody teaches People Finance for the nonfinancial executive but theres no theres no training that i know of that really focuses solely on recognition yet the two reasons why people leave companies is they dont get along with their boss and they dont feel like theyre appreciated. Right. Those are linked. So what ive done is ive created a Leadership Program called purposeful recognition which talks about how to do recognition. Recognition isnt something thats willy nilly it needs to be earned. People need to know how to earn it in their companies. The best way to earn recognition is to reinforce the cultural behaviors that you know are going to drive results if you think about the news business, you know, if youre good at getting that first story, you want to be innovative if youre good about knowing your subject so that when people come on you can really interview people effectively and really get the best out of them if you dont throw people just a softball and you throw them the provocative question then you come in if those are behaviors you know that drives a great performance, then whoever you work for, i think thats what they ought to be recognizing you for because youre going to get more of it thats what recognition is really powerful at its really reinforcing the behaviors that will drive the cultural behaviors that you know that are going to drive your business i spent most of my time focused on the culture because i knew if i got the Work Environment right everything would basically fall in place i dont think enough Companies Really do that theres nobody teaching recognition. And thats what thats what im doing. Ive got a great master class that im really proud of its an hour and five minutes of content and it takes you about two hours to do selfreflection to figure out how you can do recognitions thats right for you. Seems so simple why dont managers do more of it why do some do zero its like common sense. Its just not that common. People literally, you know, dont do the things that are sometimes the easiest to do. How hard is it to say thank you . The two most powerful words in business recognition shows that youre watching. Were fortunate here because we have max myers. We do who gives us the executive producer. Fantastic he gives you kudos . Yes, he does. Hes very good thats good and thats a lot more motivating than having somebody who doesnt give you anything. Right. Believe it or not, 82 of people, they dont get recognition from their supervisor. Exactly. Why why is that . Preaching to the choir. I hear ya. Can we return to more management stuff, oh, great one yeah. We can . Any time. Good david, thanks. Stick around. Well ask questions underhand softball overhand with me you get mad at me. Youve been pretty tough on me thats why i brought you the coupons. Is it good that im tough on people make up your mind, will ya i like it i come back for punishment. I do. Youre a masochist. More satisfying when you hit a fastball yes exactly. The fcc is set to vote on a rule that would prohibit cell Service Providers from using government subsidies from buying from huawei. Check out shares of home depot and kohls this morning, both down big on disappointing Quarterly Results as well as forecasts. The entire Retail Sector is being hit aside from y. C. Penny which is up almost a percent squawk box returns after this quick break. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Whether your beauty routine is 3or 57,. Make natures bounty hair skin and nails step one. Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Still to come on squawk box this morning, hacked. Just hours after rolling out thousands of disney plus accounts have been reportedly 120 stolen by hackers and be put up for sale. Plus, markets in record territory. Were going to find out whats fueling the run. Then at the top of the hour well welcome andy carr. His thoughts on the trump reelection, the 2020 campaign and so much more right after this sundown vitamins are all nongmo, made with naturally sourced colors and flavors and are gluten dairy free. Theyre all clean. All the time. Even if sometimes were not. Sundown vitamins. All clean. All the time. Good morning welcome back to squawk box this morning taking a look at u. S. Equity futures. Looks like we will be adding, building on yesterdays numbers. The s p 500 up by 7. 5. Dow looking up 43. Nasdaq higher by 32. Retail has been a drag this morning. Weve got home depot results, revenue and comp sales missed. They lowered the guidance for the full year. Some investments are taking longer to pay off. That had been down 7 , now down 4. 5. Kohls reported a disappointing quarter. You see they are all down. Kohls is down by 10 . Andrew a big vote expected today at the fcc that would block huawei and ztt. They could be named as National Security threats which would block them from receiving anything from the 8. 5 billion universal fund here to discuss this vote, National Security china, ash carter is joining us director of harvards bell for center hes author of inside the fivesided box. He will be participating in the Digital Currency simulation later today with larry somers, nick burns and more. Lets start with huawei. Is there a compromise . Is there somewhere that could be met in the middle so that huawei could still operate, at least in some parts of the World Without compromising our own National Security well, what you see going on here, andrew, is exactly as you indicate, a mix of National Security policy and Economic Policy going on. Thats new for us. Its not new for china were looking for a playbook for a communist china that we both trade with and compete with militarily and we didnt have that. We had the cold war playbook, which is all military, no economics, and we have the free trade playbook for countries like france and so forth, which is all economics and not military competition were getting a mix here now huawei is such a serious case of potential National Security consequence that both in the fcc rulings and in the trade talks you see our government taking the point of view that its a National Security problem to have all of their stuff installed in our country and in our allys countries. Thats not going to change we may make some particular and temporary carve outs for a while. From your perspective if you were in office right now, i mean, the argument or the issue here is that people it does appear that huawei is being used to some degree as a pawn in the larger trade war and so either you believe it is a genuine National Security threat or it isnt, right i mean, its sort of hard for it to be both well, youre right, and that would say, well, how can you trade National Security for soybeans in other words, how can you mix an issue like the huawei issue, National Security issue up in the trade talks. Youre absolutely right. Theres a limit to the extent to which we can do that at the same time, we are trying to connect our Security Policy and our Economic Policy because, remember, thats what the chinese do so well so when we have an economic issue with the chinese, we want to be able to also bring in the National Security side and when we have a National Security issue with the chinese, we want to bring in the economic side. Thats the kind of new playbook that were trying to develop here and it is new and you have to be careful that you dont sell your security because our security cant be for sale and isnt for sale but at the margins we can make those kind of limits. Thats what i dont understand ive read thoroughly the d. O. D. Innovation report which effectively said allowing huawei not just entree to the United States but entree to any part of the west, any part of the world actually becomes a Security Threat for us because ultimately we are going to need access to those lines, those communication lines. Thats right. By default well be using their services and that becomes a problem unto itself. Thats right. That is a problem and i dont think that can be appropriately traded away in trade talks or for anything else economically huawei is a serious case it goes to the heart of what is going to be a two internet world, a two tech ecosystem world. You think decoupling. Two internet world. Its already happening. Andrew, its already happening its already happening remember, the chinese have been running a separate internet for some years this isnt a choice for the United States, whether there are going to be two technological systems around the internet. The chinese have made that choice its going to be that way. Can i ask you a philosophical question. Yeah. Do you think over the last 30 or 40 years that our policy of engagement, which arguably was in the interest of trying to open up china has ultimately failed yes, in the sense that we tried and they decided to go a different direction. China did not turn out the way that many people hoped in the 1990s. Now i was one of those people who came to the conclusion about 20 years ago that it was not going to be what we hoped, which is end up a very a big france, a nice trading partner with which we got along in other ways, but by now i think theres a broad consensus, and this is deepened just in the last few years for the United States, that china is not going to come our way, its going to go its way and were going to have a very serious, protracted, competitive situation with what is after all communist dictator ship and thats why the huawei issue is not going to be, i dont think, resolved in the course of the trade talks. I think thats too Strong Security issue. Youre an old hand here i would say i would question whether anyone could say that china hasnt dramatically changed i think even for the positive in the last 30 years. I think its more open than 30 years ago. Its much more progressive than it was 30 years ago and, yes, maybe it hasnt gone as far as what we would like it to go. I would never say never about the future well, let me just talk about the present. Im sorry i cant agree with that thats okay. It is a communist dictatorship that has settled upon a view that it is not going to just fit into the world as other countries, especially the states have created a world of values, of freedom and also free trade, that its going to go the chinese way. That is what many people hoped, and it was reasonable to hope. Ash, but isnt that just in the 1990s. Isnt that xi jinping 2013 and forward . Well, im saying, yes, absolutely i knew all of them you can see right there in that progression you could have a conversation in which it was plausible that he may end up now by this time, in 2019 in a situation where china wasnt trying to carve out a separate kind of world centered on china but a world in which it fit in and of course had a big role naturally enough but it wasnt a china Centric International system by the time you get to xi jinping, read what he says he has announced that there are going to be two that chinas going to have its own independent tech base, including internet that it is the chinese time to shine on the world not to shine with the rest of the world but to make up for 100 years of humiliation and so forth. Thats a very different attitude from the one that min had and china is going to follow xi jinpings path that doesnt mean i think theres going to be a war or even a cold war in the sense of replay of what we had with the soviet union, but youve got to look for china to look at china for what it is, a communist dictatorship that has determined that it wants to be at the center of asia and possibly ultimately the center of the world they say that. And that theyre going to be independent in areas of Sensitive Technology from the rest of the world and especially the United States. So these arent choices that americans have anymore these are choices that china has made and we have to play the game thats on the field. Secretary carter, always great to hear from you and your perspective. Its a debate that is not going anywhere and i imagine we will continue to have it with you and we hope to speak with you soon im looking forward to what youre doing later today thanks very much for coming on. Thanks very much. Good to be with you as always. Coming up, stocks to watch ahead of the opening bell, home depot. The numbers and the Market Reaction are next and its not pretty. Then the great tax debate rages on instead of fighting over whether there should be new taxes, what if the irs collects the taxes that are owed it robert frank will break down that story then later, the matriarch of the kardashian empire, kris jenner, going to try to keep up with her, andrew is anyway makes her squawk box debut do you bond at the deal book we did. Essote the women, her and is she normally i knew about the tremors. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. Home depot mentioned about investments not paying off as soon as they thought they would. What sort of investments are they are they online investments theyve been making . Yeah, its across the board theyve been trying to invest in supply chain to be quicker and faster in the store. I think its online for better buy online, pick up in store, faster delivery to homes just some of the merchandising theyve been doing some of the incremental investments theyve been doing are some of the Pressure Point i wonder if its a bit of housing pressure as well it seems like we saw that the past couple of quarters. Why do you think it would be housing pressure last quarter they were pitting most of the blame on lumber prices which is something thats abated for this quarter. Lumber prices have been going higher over the past month or so. Historically theres been a six to ninemonth lag with the Housing Market relative to when Home Improvement sales turn out. If you go back this time last year, the start of this year, you know, housing was pretty soft a little softer than normal. Now its coming out of that dip. That six to ninemonth lag might be playing that catchup over the past couple of quarters. I think thats in the backdrop that being said, it does feel like housing has gotten a little bit better lately. Maybe things will kind of level off here there you go, two quarters in a row, two Different Reasons why sales have been slower so maybe some of it is the backdrop as well the average ticket price has gone up. The sales per square foot has gone up. Should we be worried about the health of the consumer or should we not impute that from these results . Yeah, no, thats a great point. Trans absolutes were actually up 1. 5 if you take a step back, 3. 5 come am or same store sales is quite good so, you know, while they did miss the expectation, the numbers are good and i think youre right, it does indicate that the consumers been okay and were seeing that from some of the others that have reported as of late david novak here, the former ceo of yum brands. David, when youre looking at the consumer, what are some of the indicators you look at i think the key thing in retail is transactions and home depots up 1. 5 plus their samestoresales are up. Not bad. You keep doing that quarter after quarter after quarter you wake up some day, you have a hell of a business. Sounds like you look through this yeah. I think this is over reaction. Joe, what do you think . Yeah. I understand that. You know, and i think that they are on a more stable base and theyre operating quite well theyre one of the best in retail, and to be able to put up such numbers, its kind of like you look at walmart and when walmart does like a 1. 5 or 2 comp, thats really good on such a large base i would say the same for home depot with the 3. 5 if you take a step back, its all relatively solid. Those transactions make it even more powerful because youre just not getting it from price. Joe, should we be worried about lowes tomorrow . Yeah, no, i think there could be a little bit of pressure there. Wall streets forecasting around 3. 2 given what we saw at home depot, there could be a little bit, although home depots saying it was more selfinflicted issues so if thats the case, maybe the 3s okay i would think somewhere right around 3, maybe a touch below is where we might see lowes come out tomorrow. Thank you so much for calling in i appreciate it. When we come back, the tax gap is growing but there could be a simple way to stop the bleeding robert frank joins us with a preview. Robert every year the irs collects more than 400 billion less than its owed. Most of that is from the 1 . Well talk about how fixing the irs could bring in twice as much revenue as Elizabeth Warrens wealth tax coming up after the break. Dont forget to subscribe to our podcast. Youll get interviews, original content, and behindthescenes access look for us on Apple Podcast or on your favorite pcaodst app and subscribe to squawk pod today. When you shop small you help support your community from after School Programs to the arts so become a regular, more regularly. Because for every dollar you spend at a Small Business, an average of 67 cents stays in the community. Join me and American Express on Small Business saturday, november 30th, and see how shopping small adds up. Mastering biology to advance human health. We can imagine a path to curing cancer, addressing infectious diseases, and figuring out alzheimers. And i believe our team at 10x will be instrumental in making this the century of biology. Were just getting started. Together, were going to do some amazing things. Robert amazing concept pay what you owe the tax gap is ashds 400 billion. They say that the best way to reform our tax system right now is to start withbasic collection in a new paper and op ed with natasha saran, somers said the tax cap will grow to 7. 5 trillion over the next decade. There are legitimate concerns that the tax system unfairly helps the elite. In 2011 more than 12 of those making 1 million or more were audited. Today its 3 . Somers said investing 100 billion in the irs, technology, improved Third Party Reporting would yield over 1 trillion in revenue or generate 11 for every tax dollar spent on the irs. The Treasury Department issuing a statement to cnbc saying that the administration agrees that reducing the tax gap is an important goal and it wants congress to approve measures in the next budget that would improve enforcement and oversight. Theres avoidance and evasion. Yeah. This is avoidance. No, its not. Its evasion. Its probably both. So some of it is just this is illegal, robert this is not using the law to pay less taxes this is not collecting whats owed thats fraud. It implies intent it could be errors. Oh, just errors that much money is just errors. You cant say that all of it is evasion. They have great accountants and they have great methods of lowering their taxes to the legally thats right. Thats avoidance, right . Right what youre talking about is missing out these are people that are evading taxes and could go to jail for not paying taxes, right . Evading and also perhaps not fully it sounds to me like evasion and that would be a good idea to make sure people pay now you need to complaining the law to get the loophole if theyre doing it legally stick around, Vanessa Williamson governance studies rachel bovart, conservative partner institute. Conservatives dont want to spend money. Would this be a good way to spend some money to help the irs collect more enforcement is always helpful, but first id like to congratulate larry somers from moving past the wealth tax thats a great idea. Lets talk about enforcement has he talked about the plane yet . It requires congressional resources. This congress is currently too busy doing Something Else called impeachment rather than legislating. They have to require enforcement resources to get this done. Vanessa, this seems like kind of a no brainer. You dont even need new taxes. I mean, i think that this is an important step no matter what kind of tax plan you want to see. If you want to do a wealth tax, absolutely you need the irs to enforce that there is an enormous amount of evasion left on the table. If you want to tax gains you need money for computer systems. Elizabeth warren is talking about trillions of dollars going to the irs because of the difficulty in valuing all of these assets and enforcing it. You have a government thats already collecting the taxes that it should one of the things that really irritates the hell out of me is just how the billionaires are being vilified when i think the billionaires are the greatest americans we have what would our country be without jeff bezos what would it be without guys that are creating jobs. You would not support additional funding for the irs i would support that but it has to be viewed as a problem. If its seen as a problem, then you ought to put resources up against it. If you had a receivables problem at your company, right, the one place you put money is into collection. And what im saying is, yes right. I would definitely fund that in the government, but its got to be seen as a problem. Right. If thats a strategy. Youre saying its a problem. Most people in the Republican Party have no interest in funding collection. Well, i will say somers pointed out in that piece, enforcement has gone down over the last decade. This is a problem both parties have ignored but i would point out that oicd says the United States has one of the most progressive tax code in the world when it comes from collection from the rich were collecting were just not enforcing all we could be doing. This is a resources problem. Congress needs to get its act together and put money there if they care about it. Just to be 100 clear youre making it out that its a bipartisan issue. Over the last decade both parties were in control. Not really. Kevin brady was on the record saying the irs became politicized under obama so, therefore, they didnt want to fund it at the same levels he was very clear about that he felt like the irs had become politicized so therefore they wanted to reduce the funding. He had a fair point and the courts agreed with him until we get that right. Of course we dont want to get that right if theyre going to target consumers. Youre smart, robert frank. Death and taxes. You cover taxes you will be here every day, right rachel, thank you. Vanessa, thank you robert, thank you, right youre not going anywhere. Death, wealth, taxes. The wealthy will always be with us and the tabs. Taxes. Former white house chief of staff andrew card is our very special guest. Take a look at the futures as we head to the break. You are looking at green arrows across the board with the dow 50 points s p 500 up a little erov 8 were back in just a minute. Who says our bank isnt tech enough . Everyone, look at your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. It nice . Ce. This is the mostawarded minivan three years in a row. The van just talked. Sales guy, give em the employee price, then gimme your foot. Handsfree sliding doors, stow n go seats, man, yall getting a hook up and yall dont even work here. Pacificaaaaa a tough warning for retail earnings home depot dragging down the dow futures and kohls getting clamped slammed in early trading. Mickey pant talks restaurants, hong kong and more. And a Global Business empire grows. I think that were building something so fantastic and just being able to figure out what really works for each one of them is very rewarding for me. Kris jenner the momager joins us to talk business, and kileys 1. 2 billion cosmetics deal. The final hour of squawk box begins right now. Good morning and welcome to squawk box here on cnbc. Live from the Nasdaq Market site in times square. Im joe kernen along with Andrew Ross Sorkin and melissa lee. Becky is out today on business. On business out in l. A. Doug mcmillan. Doug mcmill on. He just had his earnings target cut she will be back here to interview the ceo of target tomorrow morning. Our guest host, david novak former ceo of yum brands, david novak leadership and cnbc leader the futures are indicated up 48 points theyre up triple digits until home depot reported. Treasury yields this morning, moderating again i think down around 1. 82. Yeah, exactly 1. 82. Retailers feeling the pain this morning check out shares of home depot you can see them down over 4 . The company posting mixed results. Did beat on the bottom line. Growth came in lower than analysts had expected and home depot lowering its full year sales and comps guidance at the moment the stocks taking 70 points off the dow futures separately kohls posting weaker than expected earnings. That stock down as well. You can look at that board down over close to 12 right now. Finally the retail wreck hitting a number of other companies this morning including take a look, macys, tjx and nordstroms. Fellow Home Improvement lowes feeling some pain. Well find out if the situation is home depot specific or whether theres something larger going on in the economy. They resume their impeachment inquiry with more public testimony. Sessions will take place in the morning and the afternoon. Ylan mui joins us. Reporter it is going to be a marathon day four witnesses will be testifying in front of the House Intelligence Committee starting in just about an hour. Three of them were listening in on that july 25th phone call the former National Security council official Timothy Morrison said he didnt feel there was anything illegal about the call but it was certainly unusual. However, another nsc staffer, Alexander Vinman raised red flags about the call immediately while an aide to Vice President mike pence Jennifer Williams said the call shed light on why the Security Assistance to ukraine might have been withheld now all three of them also raised concerns about the back channels of diplomacy to ukraine that existed within the Administration One of the people allegedly in that back channel, kurt volker will be testifying this afternoon. The hearings are expected to go into the evening republicans say this is a prime example of how impeachment is sucking all the oxygen out of washington guys, we do expect one key vote to happen in the house today and that would be on a shortterm spending bill that would keep the government open through december 20th and we are expecting both republicans and democrats to support it. Back over to you all right, ylan, thank. Joining us with more, andy card former white house chief of staff and nbc news and msnbc political analyst. Great to see you this morning, andy let me just ask you, we care about markets. We care about the economy. It would be nice if washington were a tailwind, a tailwind, im talking fiscally for the economy. Anything between now and a year from now that we can expect other than the fed to help with Economic Growth or is do you think congress is just paralyzed . Well, im glad to see that they have a shortterm spending bill ready for that will only take us to december 20th theyve got to work on a real budget, and i hope theyll keep working on it while theyre dealing with this impeachment mess i hope they will pass usmca. Very important to get that trade deal done with mexico and canada in the u. S. And we also have to Pay Attention to whats happening over in china. Weve got to get the trade deal done there and get the tariffs reduced. Theres a lot of work that has to be done i hope they can chew gum and walk at the same time. Unfortunately they talk more than they chew the gum so i dont know whats going on, but they clearly have the capacity to get things done its a good sign that they got the shortterm spending bill on the books and they should vote for it with a big, overwhelming bipartisan support hopefully this next few days and get that done theyve got to work on a real budget and they have to get usmca done. Speaker pelosi gave some lip service to usmca im wondering whether we take her at her word that its really going to move forward. She seemed to indicate that she was open to doing that but cynical people think that maybe that wont happen because it would give a bit of a victory to the Trump Administration whats your true feeling about whether that whether we get that done . I actually take the speaker at her word. I do think that she would like to get usmca passed, and that doesnt mean its going to be an easy lift for her within her caucus, but i think its important to get done and hopefully people will put their partisan bickering aside to just get it done. Theres an awful lot of work thats gone into it. I think its very important to be done and the world is looking into that. We also have to send a signal that trade deals are good and we should get china to step up to meet their responsibilities to come to an agreement so its important. I think usmca would be an important signal not only to the u. S. Ability to have its economy continue to grow but to the world if congress is interested in being part of the solution rather than part of the problem. Its a very partisan process we see going on here both sides are dug in and thats why i started with the Market Impact on what congress is able to do. But just to discuss what were talking about briefly, i did see you quoted as i dont remember the word you used for the phone call, but i think you called it maybe troubling or something you can just tell us what you how you felt about what the whole issue were talking about and whether it rises to the level of an Impeachable Offense in your view and whether theres a chance of getting 20 senators, republican senators to convict first of all, i think the process has been a little more partisan than it needs to be and i dont like all the leaking and the spin i want the facts to come out let the facts determine what happens. My gut tells me that there will be a vote on impeachment and the president will be impeached. I do not think that he will be removed. I dont think the senate will pass any kind of conviction, and i dont think that he would be removed, but right now my gut is that hed likely be impeached. I want the truth to come out without the bias right now people are putting ornaments on whatever is said and id like the facts to come out. I hope the process is honest and fair hopefully well get to that point. The president should just continue to do his job i think the president should not be preoccupied with this focus on the job thats done theres an awful lot done in the world. His leadership is critically important in order to get the rest of the world in line and weve got trouble spots all around the world obviously in the middle east, the new policy changes in israel are going to create a debate weve got problems in hong kong. Weve got problems at many places around the world that i want the president to maintain his interest in solving those problems rather than focusing on impeachment. Let the winds blow where they may in congress and just do the job of being president. Here as chief of staff and youre advising someone who has a strong will and very independent, what kind of advice would you give the president i know what you want him to do, but how would you go about influencing him . First of all, i would say dont be distracted. Simply i kind of wish he were nottweeting about the impeachment process and just accept that its going to be going the way its going i dont think that he should be meddling in that process i think he should say let the facts come out i dont think the facts are going to be that compelling that he would be removed and focus on doing the job. I think president clinton when he gave the president advice said just do your job. Thats how president clinton got through the impeachment process. So, andy, as a washington person thats been there a long time, how do you see this affecting and were getting back to the markets and the economy again. Is this a positive long run for trump or is it a positive for the democratic nominee, whether its Elizabeth Warren or somebody else . Because then if do you think that this could help Elizabeth Warren eventually win the presidency if she was the nominee in november of next year and what would that mean for the economy and the markets . Well, first of all, i think the democrats have been dealt an incredibly good hand but they are grossly miss playing it. I dont think Elizabeth Warren reflects the reality of expectation in this country. I think shes lurched way too far left so i dont see her as part of the solution, i actually see her as part of the problem weve got a good economy we want to keep it going its important to keep the trade deals done its important to deal with the situation with china and get that behind us, and i think the president understands that and so i dont think the i think the impeachment process is troubling to the state of our democracy and politics, but i dont think its impacting the economy yet. And i hope that it wont i hope that well keep focusing on thats why i Want Congress to do its job. Im troubled by the spending that congress has been doing were spending like crazy and weve got to be careful with how we use the taxpayers money. Yeah. I dont think the politics has gelled and the democrats are not sold on a viable candidate yet. I dont know who a viable candidate is that i could define right now. Im going to channel andrew for a second hes doing Something Else. As an ethical person, would you be okay with the reelection of President Trump . Im not a big trump fan. I dont like the tweeting. I wish he would taste his words and lick his thumbs before he spit them out. Hes impetuous i have to agree with a lot of his policies i think its important stability is critical to the success of our policy. We want to know for certain which way were headed. I thought i did fine with you. No, let me make it more complicated. If i give you Elizabeth Warren or i give you the president , what do you do i would go with the president. All right okay. Were out of here. Andy card, thank you appreciate it. Hes a bush guy, too. No, i know. Thats why i was asking. Okay. But i think this is a larger issue about how this whole election is playing itself out. I knew how he would answer that question from some of his preview i kind of i wasnt 100 sure. Most people dont have a whole lot of trouble picking, most capitalists. We have a huge guest, a huge capitalist special interview with none other than kris jenner it is straight ahead were going to talk about the 600 million stake Beauty Company that cody is taking in ll lk ahter kileys company wetabout it when we return right here on squawk box. 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. Welcome back to squawk box. Take a look at futures we are in the green. Dow up 50 points nasdaq looking to open about 35 points higher and the s p 500 looking about 9 points higher. It is now time to talk to kiley jenners mother. Shes selling a controlling stake in her cosmetic startup to cody for 600 million. They plan to expand the bruty brand globally and branch out to new categories joining us in her squawk box debut is kris jenner, ceo of jenner communications. Kris, thank you for calling in this morning. Thank you good morning. Waking up early so its funny because, you know, when you and i talked last week or right before we talked on stage you said Something Big might be coming. You made references to private equity tell us, how did this deal come to pass . This was a moment for our family to be proud its a crystallization of all of our work but also a moment to just look forward. Beauty business. Into a huge thing. Theres something to think about. How much of this was about building a business. How much of this is a little bit. Kiley how much of this is in the business that was really important its just a few years so excited about the partnership. Going through many categories. Skin this year working with cody to develop more categories. Thats very exciting. She belongs. This is where her passion is she really wants to use her creative side to develop her brand and this is what she wants to do for the rest of her life she talks about it all the time. 20 years from now she sees this. She will be passing it down to her daughter. Kris, its joe kernen i thought of a philosophical question a lot of people that become billionaires or become incredibly wealthy, they become reclusive. Im just wondering, would there ever come a time where the car dwrarns would become not a media family, not someone that has a Reality Tv Show but just purely Business People and just run the business and just stay out of the public eye and just i mean, could you see that the media piece is so integral to the rest of the business. It is integral. Some day it might not be is it integral to the business or do you just like being out there . Well, i think that, you know, we enjoy what were doing. We have a very Successful Television show in almost 200 countries around the world and that really does expand, you know, the global reach for us for sure, but we really enjoy what were doing and weve been doing it now for over a decade were about to start shooting season 19 in a couple of months and were finishing up 18 now. Its what we do. We love working together as a family and i think that we enjoy so much all the Creative Things we do, all the brands we work on, all the different categories were able to expand in. And i think that because we enjoy success at some of these things that it really does reflect on the other family members. So when somebody like if kiley had an exciting day yesterday, her family and brother and sisters are so excited for her. That just really expands the reach of all of the kids it kind of, you know, is this blanket across the whole family and im just really proud of th them. Now that you have a relationship with cody, could you sell any of the businesses by any of your other daughters im thinking of the kkw or skims and effectively consolidating the whole empire with a private equity arm, if you will . Well, i think theres always that possible biltd, you know, as the businesses grow i think that the focus for the kids isnt always about growing it just to sell it i think they are so passion fwhat what theyre doing for example, you mentioned kims skims. I cant think of a better match than kim and her skims business because shes just dreamed about this for a decade, you know, thought about developing Something Like this, thought about creating a business like this and shes done it and she lives it and breathes it and i watch her every single day try to, you know, create something even better, you know . And its really exciting so i think that its the whole process of what theyre going through and learning theyre all still so young i think about myself and when i was that age and have the ability to be so creative and have the tools to be able to build these things i think its very exciting for them and i think that if they do grow the business and theyre able to sell something and keep having a hand in it, that thats kind of the ideal situation. Kris, youve done just such an amazing job in building brands and building a Family Business a lot of entrepreneurs struggle with Family Businesses do you have whats your secret to keeping everybody aligned and together and having that positive belief in each other . Well, you know, i get asked that question a lot, and i think that we really truly like each other and really get along well and we spend a lot of time together and i think the key is probably communication i was on the phone last night with kim for quite a while just, you know, talking about her businesses and whats next and, you know, on and on. And i think, you know, i do that a lot with the girls and i think just really communicating about what they really want to do with their lives and, you know, i have ten grandchildren so thats really exciting. And we spend a lot of time together with the kids and im just really blessed to have this big huge family and theres a lot of joy mixed in with all of the business and the filming its kind of the perfect storm so im really lucky but i think communication would be the word that you know, whatever that means to you and just being able to remember to enjoy the really sweet times and the Family Moments and its not all just about business thats very important advice. Kris, im wondering when youre building a brand is there a particular social media platform that you think is most effective . And in thinking about using that platform, do you think about the other things that the platform might now come under fire for . Such as privacy concerns or using consumer data . Does that ever enter the equation we have a great digital team. We spread our social media out amongst different platforms. There was barely twitter ryan seacrest, i said this to you, andrew, he said you might want to tell kim about this thing called twitter, shes going to love it there wasnt even instagram. I think being able to adapt to new and different platforms at like now theres tiktok and theres, you know, all of these Different Things i think that the privacy part of it is, you know, obviously ive said this very vocally, you know, concerning and theres different aspects of social media that, you know, any of us might not be real happy about, but then theres that side of it thats so amazing and just you know, the kids ability to go out there and use it for just positive things and obviously for business works really well for us so its been such an amazing asset for my family. So, kris, how many phone calls did you get from other private equity firms that want to buy other Kardashian Jenner businesses well, you know, a girl doesnt talk about everything. I knew that would be your answer i hope you collected 10 on this deal is that how this all works well, you know, ive told you that before. Listen, shes shes shes really lucky to be in the position shes at and we work hard and i just want to continue to help the girls do whatever it is to, you know, just focus on what it is their dreams are and that makes me really happy i think any time a mom is able to see the success of her daughters at this level and have them be really great people with great hearts and be super focused, im just super proud. Kris, i want to thank you i just want to say, we said it during commercial break. This familyand these women are the most disciplined business women. I got to see it in person and spending time with them on the phone and other things its almost under appreciated sort of what theyre really doing here because its a genuine its a genuine business. Kris, you probably should dvr this show. I know its early out there. Become a really faithful squawk box viewer for the entire family, i think. Im going to set it on recording. Kris, thank you so much. Every morning, guys. Thank you, kris. That sounded sincere. Thats a hell of a deal. Its amazing. Its 270 million followers the brands nothing. The company is nothing without her involvement. Yeah. If they pick up the cash you still control the company. You would never not do the reality show because its so synergistic but you might have the opportunity if you ever got but it seems to play into all of it. Its the social media, its the linear i cant imagine having a camera around oh, wait a minute. You do every day. Forgetting that anyway, coming up a rare perspective on hong kong and the china trade war from one of the most informed leaders in the business yum chinas mickey pant joins us on both of these topics. Stay tuned youre watching squawk box on cnbc tomorrow on squawk box. Becky quick has an exclusive interview with target ceo brian cornell. Moments after the company reports. The stock has been a retail bright spot this year. Well find out if the rally can continue urnlonsqwkoxrow in the 6 a. M. Ho oy ua b. Welcome back to squawk box. October read starts up close to 4 o perfection percent and a positive revision last month which took it down 9. 4 to 7. 9 at 1. 296 million thats seasonally adjusted annualized on the permit side, very solid up a solid 5 . Brings you to 1. 4 seasonally adjusted annualized units. On that housing number, 1. 314. You do remember that august number at 1. 386 was the highest since june these are decent numbers one would think it would firm up a bit. Dollar index has recovered somewhat trumped. The reason he talks is to stamp that number down well continue to monitor how to rest at lower yields when everybody was excited as Christine Lagarde took the helm. Andrew, back to you. Thank you for that. Appreciate it. Great to see you want to get over to Steve Liesman who joins you. Steve . Good number, andrew weve been in this back and forth here on housing where one month it shoots up another month it shoots down and this is one of those where its up a second month in a row here that its been on the way. We have a bit of a recovery. Look, you have this increase in Interest Rates it went from 382 on the average 30 year mortgage up over 4 but thats still down year over year from say a year ago. You remember back pushing 5 and thats so we still have some stimulus to the Housing Market housing had been detracting from gdp for quite a few quarters i made some notes here 4 of the past 14 quarters going back to the Second Quarter of 2016 residential building has been a negative for gdp. Now perhaps its on the way back Housing Starts also kind of slumped since june 18. One thing thats good here, im just trying to figure it out here the Single Family number, the one unit structure is at 936 im just going to confirm that with my glasses here guys, that looks like the best number going back to january of 2019 so its the second best month of the year for Single Family starts melissa, thats good news if we can maintain some positive momentum from the Housing Market for growth while we deal with the other side, which is the trade side and the manufacturing side it could be at least a decent offset, melissa. Steve, thank you. Steve liesman. Were taking a look at shares of tjx. Lets look at the beat and raise on the quarter much different from the results that we had prior to tjx with kohls those shares are higher by 2. 4 higher yums china micky pant squawk box and more coming up. Yes im stuck in the middle with you, no one likes to feel stuck, boxed in, or held back. Especially by Something Like your cloud. Its a problem. But the ibm cloud is different. 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What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Welcome back to squawk box. Fried chicken wars are hitting china. Apparently popeyes signing a lease in shanghai for the first store in the country the chains Parent Company says it is ready to take on kfc and become the Market Leader our next guest knows the landscape very well. Micky pant is the senior advisor. Are you worried about popeyes entering china not at all. Kfc, there are more kfcs in china than america its always good to get new competitors and companies. Well see what happens. Have you had that chicken sandwich from popeyes . I have not. You have no idea . I have seen the product and seen descriptions of it. I havent eaten it. Do you want to eat it i would be eating it, deconstructing it, trying to figure out what magic they i probably will i talked to people who are following it very closely in the u. S. Yeah it will be interesting to see what happens. Why do you think that just took off like lightning in a bottle i think food innovation in this industry always works i think theres been so many instances of long lines forming when a new product is launched i think thats what happened its a good product and its innovative everybody is hungry for a chicken sandwich. You saw the biggest problem that happens in a category or with a brand, you always have big results. Pop eyes, typical chicken on the bone concept, full meals, so this was this was sort of a breakthrough for them. Yeah, right. Its funny to hear chicken wars chicken sandwich has been around forever so theyve got one, but it solved their particular problem. Right. When people with chickfila started rolling out people were going crazy for that sandwich. The sauce. China is the worlds biggest Growth Market for fast food so everyones going there and weve been there, david knows, for 30 years. Yeah. Do you think operating in china has changed . Its become easier in the sense that technology has moved far beyond what you see in any other country. So far ahead of america in terms of Payment Systems five years ago we onlyhad cash transactions and 90 now is through qr codes and theres no cash at all in stores. And the same thing for preordering or menus and people go into stores, they dont look at the menus. What kind of fees do all of the various banks and others take relative to the United States, for example . Its evolving so its very beloved. Obviously we were there and we had the First Alliance like alibaba to roll out across the system its negotiated. Its obviously a trade secret we operate with but the two big guys are ali pay and we chat pay. Far ahead of anybody else. Have you seen any pact from the u. S. China war with respect to trade and do you think the u. S. Should take a harder stance for bills that will condemn china with what theyre doing with hong kong protesters . Do you think the u. S. Should wade into that would that make businesses harder have no effect how do you view that the first question, melissa, the market is growing nicely i think weve declared 3 4 of results. Were in the fourth quarter, cannot talk about it the business has grown and were building a lot of stores last year we built more than 800 new restaurants in one country and as you refer to popeyes and others, everyone is coming in. The market is growing very rapidly. As for whether or not the u. S. Should wade into the China Hong Kong thats a political question i dont have a particular political view. Im not saying you have a particular political view. Would that make business harder for you . The sanctions if sanctions happen, depends what shape or form they take we buy a billion chickens a year in china theyre all chinese chickens we process them, sell the food a lot of our supply food chain is local we are a Delaware Company but we have a chinese ceo who runs the company. 400,000 employees in the country, operate 9,000 stores in 1300 cities. Its a big business. It has the characteristics of a Chinese Business and american business. How many more cities . Youre in 1300 cities. How many more . Maybe 800, david. The infrastructure buildout is such a scale i hear comments about china which are illinformed people making those comments havent been to china. They should go to china and live there and travel widely across the country. If you see the scale of the buildout in small cities and small towns, before i went i was told by my friends, its an urban phenomenon, development, all in the special Economic Zones on the eastern seaboard. Its not true. Look at the quality of the roads. Frankly, their cell phones work better theyre really far ahead i mean, i saw 5g in action im going to see 5ge theyre very far ahead. Thank you, micky. Coming up, how close is dow 30,000 i can answer thats like 2,000 away, isnt it have i got that yeah. Rhetorical question Jeremy Siegel from the Wharton School with his prediction on what will make it pop or drop. Are you still we can use that now . And what the fed should be watching stay tuned, squawk box is right back. Dont forget to subscribe to our podcast. Youll get interviews, original content, and behind the scenes access look for us on Apple Podcasts or su aour favorite podcast appnd bscribe to squawk pod today. Welcome back to squawk box. Back to our big stock mover of the morning. Take a look at home depot. Shares sliding after posting some nicks numbers take a look at where shares are. Premarket down 3. 5 right now. Joining us for more analysis is peter keith. Senior Research Analyst at piper jaffray. Whats happening here in terms of this guidance whether this is specific to home depot, whether this is a larger story about the economy and the consumer where do you land . I think its a broader issue of housing from the beginning of the year. You do . Sure. Were looking at home depot, which is one of the better executers. This is the fourth consecutive same store sales miss. Theyve been blaming weather, lumber deflation which are all valid. The bottom line, our view, thats why weve been neutral for some time is that the housing metrics were pretty bad at the beginning of the year rates jumping up to 5. 5 whats interesting now is youve seen rates come down below 4 and month by month were slowly seeing housing metrics get better sequentially. Ill call it q3 is hangover period. Were looking at other retailers down big time this morning. If you believe the call youre making, they should be down. If you believe this is a home depot only story, they probably shouldnt be affected as much . This is very specific to housing that had been on a tear for eight, nine years. We saw a lot of housing metrics change. You look at macys, nordstroms, should they be down as much as they are . I dont follow those stocks certainly i think theres a broader view. Lowes tomorrow. Lowes tomorrow will be very interesting. Theres basically the largest valuation gap between lowes and home depot in five years theres lower expectations on lowes it certainly seems to be in the early stages of a turn around and closing what we call the comp gap between it and the home depot. If theres a 6 to 9 month lag between the housing data, does that mean this is a trough quarter . I think so. With rates that went below 4 in june and looking at july, august, september, slowly housing metrics are Getting Better sequentially. With a one to two quarter lag, this is the bottom q4 looks better and we outperform. You still dont like the valuation though no. I think exactly its at 22 times. Its abnormally high valuation for home depot the stock is up 450 this year despite the sales weakness lowes to us is an attractive line and you get the turn around opti optionality. So what was the issue here you think its priced to perfection thats part of the issue that im thinking about. Oh, yeah. Absolutely 22 times earnings. Theyre basically guiding the year to grow earnings at 1 . It certainly was carrying a pretty lofty multiple into the quarter. What would you buy in the space right now . Anything else you would buy i think were warming up to the idea that Home Improvement spending is going to outpace Consumer Spending in 2020. Fundamentals Getting Better. We would like to see lower valuations in a few names. Okay. Peter, thank you. Thank you very much were about 45 minutes, a little less from the opening bell on wall street. Joining us to talk about whats driving the markets and where theyre primed to go next, Jeremy Siegel from the Wharton School havent seen you well come, good to see you. Good morning, joe. For a while i think you thought the fed was a major part of the equation. You wanted one more cut. You got it in october. Now the fed is out of the equation and were back to what happens with china is that your view . Absolutely. Despite trumps visit with chairman powell. Powell feels very comfortable now. I think hes got the support of the committee. Hes got the support of the market were back to a positive slope term structure, which is a good sign i think the fed is not in the equation anymore its the trade deal. Market wants a trade deal. We get a trade deal where we lower tariffs. Were going to get a good 5 to 10 pop i think in stocks even from todays levels, which are alltime highs. Thats not asymmetric risk. Thats another 5 to 10 . If we didnt get a deal which is 70 to 80 priced in, if we didnt get a deal and if the trade war were to really heat up, it would be worse than 5 to 10 the other way in your view yeah. I think i mean, if we rachet up and its way out of expectations, you know, the 25 tariffs, i still think are on the books for december 15th. If somehow that comes about, you know, i think were going to have a swoon in the market dont forget, when we had a 20 perce drop last christmas on the fears that this was heating up, if it comes about its not going to be any better you know, i dont think thats going to happen. I think the worst is a muddle through. We keep on delaying that the market will tolerate that for a long time but i think its going to be hard to get a lot of progress on stocks without a deal youve i dont know when you first started recommending stocks for people. I mean, i i go back to 780 on the dow so im pretty sold on free enterprise, pliefrivate capital. Would your way change if were to become a lot more socially democrat whatever theyre calling it, whatever Bernie Sanders and Elizabeth Warren call their philosophy, would you become less bullish longterm on the United States if we adopted a lot of their program i agree with you. Basically the free market system is what is generated our wealth over time. First edition of stocks came on 94, i felt bullish about the United States and i still do i dont lets put it this way. I think the American Public want a moderate in there, they dont want a warren and they dont want a sanders i think what is really important, of course, is also the senate as we all know. The oddsmakers are still saying that the senate is likely to stay republican, so even if within one of those two win, of which warren is the more likely, though, really the race has become really tightened up, really between biden and buttigieg and warren, it is actually almost a tossup in the markets, but if warren should come out ahead and the senate stays republican, a nothing so basically you have a standoff, gridlock, which, of course, a lot of people think is not that terrible for the stock market youre watching i watch too. And the three you mentioned, all in the low 20s theyre almost yeah. It is real horse race there. Actually, it is my theory, bloomberg entered the market, into the primary system. Not so much to win, but to get some votes, which he could have some a lot of power to throw if there is a deadlock convention among these three or four top candidates. Not everybody is fortunate enough to go to warren or im not going to blame you entirely for 70 of millennials think socialism is a good idea but what is happening with you academics and professors can you have you did you leave that part out about how the profit incentive allocates capital to where it is most effective . What happened . What are you doing yeah. Are you surprised, are you surprised . I think it is one of the only departments. It is also a matter of definition and understanding and really faulty understanding of history. The kids are not learning history of socialism and what has been tried and failed. And i think thats a major if we can get to the kardashians, you know what im saying theyre the biggest capitalist around. They got to start they got to start preaching it from the mountaintop. Professor go ahead. Go ahead. No, im just so 30,000, youve been talking about for a long time, looks like some day in the not too distant future, that might be the case. Well, yeah. Were pretty fully priced, but what i like about is europe is beginning to look better and if the dollar doesnt soar and if the which is already dollar look like it is not going to be moving up, i think the reason dont forget, so much of s p profits come from europe, come from abroad. If we get a turn around in europe, japan, et cetera, we can drive some good pricing and good markets in s p. Professor, thank you. Get back to work you know what im saying if you can turn one person today into in order to embrace capitalism, thank you. Maybe andrew. Oh, geez. Coming up, well get out to San Francisco now, over to the cnbc bureau at one market plaza where jim cramer joins us. I want to get your views on hd here home depot jim . Okay. Look, this is one of those where im going to miss the long time cfo of home depot. I think she can put it in context. They did something that i think can be recovered once we find out more about internal glitch i thought what melissa said at the very beginning was most important. She said it is not the first time now, there is qgoing to be a certain point people say it is not the first time, every time it has been the first time in terms of some new excuse, but over and over again, a recurring problem. People say, let it settle and buy. And i think thats probably going to happen again because of exactly what you guys just said about the seven month lag. So wouldnt you want to buy it with the seven month lag after todays numbers that rick talked about. I think the answer is yes. I did do you agree with analysts that lowes is a better buy because of valuation and it should close the gap with home depot at 22 or should lowes be discounted valuation through home depot i think discounted. You know who tells me that, marvin ellison, the ceo. Saying please dont push the stock that much. I think ellison is unbelievable. Hes doing a great job the company, lowes, had no technology to speak of marvins putting a lot of tech in, as he into knew to do at hoe depot. Lowes is getting to be a better buy. I dont want to, again, get ahead of what marvin is telling me marvin has a plan. Ellison has emboldened lowes to be far better than it has been in the last decade. Jim, thank you. Appreciate it very, very much. Pro capitalism. I know you like capitalism i know you do. Couple of big things to tell you about real quick hes in disguise. Very special interview with Goldman Sachs senior chairman lloyd blankfein. And breaking news as we speak, two jail workers who are on duty the night of the Jeffrey Epstein he killed himself were arrested this morning on charges tied to their alleged failure to check on him. 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What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Final check on the markets up 40 points up triple digits before home depot. That moderated the nasdaq held up relatively well want to thank david novak, oh great one. Good to see you. Ill shake your hand andrew wont hell do fist bumps. Thank you for the cards thank you thank you. Thank you pleasure. Good luck join us tomorrow squawk on the street is next dont hold back be cool, look smarter good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with david faber at the New York Stock Exchange jim cramer in San Francisco as dream force ramps up today stocks aiming for more gains at the open, despite disappointments from home depot and kohls retail could have its worst day of the month so far. Europe is solid, though. Dax up 1 . And ten year 180 as housing permits print a new cycle high road map begins with retail