Minute right now what we really want to do is talk about the hp xerox. Did we move that up well talk about that now because hp board unanimously rejected that bid from xerox to take over that company its weird it was like a reverse pacman a much Smaller Company buying a much bigger one. 22 a share is not in the best interest of its shareholders and undervalue hp. Letter to xerox ceo they sited the potential impact of outsized debt levels at the combined companys stock. They left the door open with the possibility of acquiring xerox. Looks like it would be a good deal but well take over you it was strange either way combined company same debt . Potentially it was odd when i was reading through the letters. Xerox saying they lined up what they thought could be financing that citi group could eventually get for them that seem like a couple stretches. We havent got the highly confident letter from the drexel days from citi on that. In the meantime, new this morning, fedex ceo fred smith is firing back at the New York Times. They published an expose yesterday. The paper reporting that between 2017 and 2018 fedex managed to cut its tax bill from 1. 5 million to 0 Financial Filings show that fedex paid 2 billion in federal income taxes over the previous decade the times said this all came after fedex and ceo fred smith in particular lobbied heart for the Trump Administration tax cuts the times said that fedex spent less in 2018 than it did in 2017 passing most of the savings on to shareholders through buyback and dividends. Smith challenges the publisher and Business Editor of the times to a public debate the times has yet to respond to smiths challenge. It was very lengthy piece. Read through the entire thing. It was put on the front page and it kind of looked at whats happened with corporations overall but used fred smith and fedex as their vehicle. To me, i dont know the history of the piece, the interesting part was less about fedex actually but about the larger issue i think the piece was effectively illustrating which was that what the authors of article did was look back at every company that had lobbied not just lobbied but every company that had gotten a big tax break and what they did with the money to me what was so interesting the companies that had the biggest tax break oddly enough spent less money on new Capital Investments they hedge that i read through very carefully. Never said what the company spent less than, more than what they spent in 2017, spent less than they had projected in december of 2016 right before it passed they never said what it was versus 2015 and the less there were numbers missing. Not in the oped pages . No. Was the point of view, in your view, a fair description of the state of things . Because the last one which was in the oped section, that was totally this piece was trying to was the point of view anticorporation, greedy no. I think the point was we should expect that, right . No. Its like you can discount it i think the larger point whats freds problem with it then the larger point of the piece you keep saying that. Go and use on Capital Spending was the point of the tax cuts. If the demand warrants additional Capital Spending. Correct. And its in the companys interest companys decision its their decision, only their decision, not people that decide they should be doing it. But the reason why fred smith i believe was called out in particular was because the number got to zero because you can depreciate they did spend. You can spend the first year and did spend a lot on capx. He was one of the most vocal proponents of the tax cut and specifically said if, in fact, we got the tax cut, everybody, across the country would spend a lot of money on Capital Spending. Well see. I think it worked for a couple quarters. Thats what the article pointed out. There was a global slow down obviously. There was a manufacturing slow down the piece also brought up that the Trump Trade War might be part of it. And we see that there was a specter of a recession that now has faded a little bit so all these things factor into what a company does. You cant get blood from a turnip if its time to spend on capital you do it. Just because you say you do things because things change sure. Thats the counterargument then the tax cuts maybe didnt do what they were supposed to do. If it goes into buy backs at least its not staying abroad where it was at least some of it is being repatrioted. No ceo was running around washington saying please give me a tax cut so i can go buy back my shares. Nobody was doing that. I would love to see a debate with fred smith. It would be interesting to watch weigh out. Just in general, you didnt have a problem you wanted a cut to like you want to go to 28 instead of 22 or whatever it was. Right. We needed to be more competitive. We had higher rates. I would have gone with lower tax cuts on corporates 100 . But not this low. You would have paid for it i heard it all before. The point i just know i would have been anowed with the point of view. Without even going into it if you read the piece. Exactly i wont read that paper. I told you that. Andy, i wont read that paper. And i will default to fred smiths position on it against the New York Times. 99 of the time. I have deep respect for fred smith. Im not going to take a position on this particular i thought it was interesting but thought ill tell you that youre missing out. Youre missing out. Maybe the style section as you can tell. I will go back to the point that there were numbers missing. I read the entire piece looking for the numbers missing. They werent in there. I would have liked to see them. I was too busy winning four out of five games. On draft kings . Yes almost back up to 600. Big roller. Four out of five, dude. Separate i want to talk about kaepernick with you. In the meantime, we have other Business News to get to. I really dont want to talk about it. The kap story is a business story. Wework in a bid to become financially stable planning a massive layoffs. The company could announce 4,000 job cuts as early as this week the times saying that number could eventually jump. We knew this was coming. We knew this was coming really this is now just magnitude. Is it 4,000 . Is it 6,000 . 2,000 jobs, ahead of the holidays meaningful. Separately saudi aramco saying its aiming for an evaluation up to 1. 7 trillion, that falling short of the initial 2 trillion targeted by the Saudi Crown PrinceMohammed Bin Salman but it would still be the worlds biggest ipo by valuation and of course theres still the sense that because its going to be a small offering that if the valuation at least stays where it is or goes higher they would be able to sell more on the open market in the u. S. Or london. Fords officially unveiled its latest entry into the electric auto sector with the mustang. Mache they transformed the classic muscle car into a performance suv. Its weird its not a mustang i guess it is if you call it that that doesnt look like a mustang. Bid to redefine the auto makers lineup, ford automotives president will join us live in the 8 00 a. M. Hour to talk about this i was trying to find the said were going to keep talking about the New York Times. We need to talk about the New York Post with Prince Andrew i cant remember what the headline was, but it was about the claim that it couldnt be me because i dont sweat. He had some type of issue with having been in a situation where he was traumatized he was no longer able to sweat so, hes been trying for years thats your defense hes been trying for years to regain his ability to sweat and only now been finally been able to sweat a little bit. So any of those pictures of him, they claim that he was sweating, one of the accusers talked about. Couldnt be true because at that point in his lifehe was not, in fact, able to sweat. You didnt see any of that you just read i didnt see the post cover it had the way they phrase it his interview did not go over well. No. There were some other things Jeffrey Epsteins behavior was unsomething the only thing he admitted to making a mistake was staying there. There was a huge piece. It crashed into a million pieces. It didnt go over well. He took a chance and gave this interview. It was a total p. R. Move actually but he still cant explain the pictures. No, cant explain the pictures he says hes not sure theyre real some of the photos could be photo shopped. Meanwhile, some violence in hong kong escalating over the weekend as activists armed threw molotov cocktails and the ban at Wearing Masks is unconstitutional matt bradley joining us live right now from hong kong his evening, our morning ill say good evening to you, matt reporter good evening to you. This siege lasted well into the evening. There were hundreds of protesters still holed upped in this university which is just beyond this buildings here theres a police line here theyre not letting us get any closer its our understanding that some of these protests are gradually being let out being treated for injuries and illnesses some complained from hypothermia from the Water Cannons employed yesterday against the protesters all came to a head very early this morning when a police launched a predawn raid trying to retake this university. We saw some really dramatic images from these hundreds of protesters who use this university as kind of a citadel or a fortress. They built up walls around the university and made homemade catapults and bows and arrows. One arrow went through one of the Police Officers legs and then just today police have said that they consider this and other acts at the police to be murderous acts thats why its unclear whether these protesters who are being let out of the university what theyre going to be charged with, if at all. A lot of these protesters have been charged with rioting which is a very serious crime in hong kong and carries a sentence of up to ten years in jail. Imagine that against some of the people who are really just teenagers. This will continue on. Were seeing that these hundreds of people are not able to leave the campus its unclear whether the University Officials are going to succeed in their negotiations with the police to create some kind of deal, some kind of amnesty to finally bring one of the most violent chapters of now nearly sixmonth long crisis in hong kong to a close guys matt, thank you for that report appreciate it very much. Looking forward to seeing you or not seeing you but hopefully that would mean the chaos has ended. The chaos is taking a toll on Business Hotel vacancy rates hit a record high so if you want to make your way to hong kong, there are discounts to be had. His royal dryness was the big headline on the saturday post clever. With markets trading near alltime highs, well talk about one of the biggest catalysts for stock. T china trade in the talks negative trade buzz from officials. Eunice yoon will live us live from beijing does your broker offer more than just free trades . 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. Stocks pushing to new highs the dow topping 28,000 in fridays session we have an update now on one big market catalyst, the china trade talks over the weekend chinese vice premier lu said he spoke on the phone with treasury secretary Stephen Mnuchin and robert lighthizer. Chinese state media say they discussed a phase 1 trade deal and the discussions were constructive eunice yoon with how chinese officials are viewing the impeachment hearings larry kudlow said were getting close. I heard that youre hearing that maybe theres we always go three steps forward, two steps back. What is your insight here . Well, actually i spoke to a government source who is familiar with the trade talks and there appears to be growing pes schism within the Chinese Government that a trade deal can be done, especially by this year and the source had told me that there were a couple of events recently that have really soured the mood within the government they said that President Trump a week ago appeared to say that a phasing out of tariffs would not happen and thats something thats really important to the chinese and was one of the reasons why the Commerce Ministry had announced it that the chinese felt that they had a deal at least in principle on a phasing out of the tariffs then a few days later they were put off again the source said when President Trump had said at the Economic Club in new york some harsh words about the chinese. He said them before that the chinese are cheaters, those types of things but just really didnt go over well. Nis this is still dits disagreement one of them is the agricultural purchasings. The u. S. Wants china to commit to specific targets. From the chinese perspective the concern or at least one of them, is that this can be off putting to some of their other trading partners in their conversations with multilateral events and conferences, one of the complaints has been about the number of purchases that would have to be bought by the chinese from the United States so, all of that is adding to a very negative picture over here and then he did say that the chinese now are looking very carefully at the political issue in the nits. He said theres a lot of dpis cushion about the election thats coming up only a year away and all of that raises questions whether or not President Trump is even going to be in office the next couple months theres a lot of questions that the chinese have thats adding to the idea that the chinese should wait it out its better to keep talking and they want to keep talking but at the end of the day, the focus now is more on propping up if domestic economy and in fact just today the central bank announced that it was trimming its shortterm funding rate. This would be for the first time in four year guys eunice, thanks. Thats obviously both of our guests have china in their sights to some extent but really more with the overall economy. Lets talk about the overall economies. And im going to start with you, jason. You think that were still not overly bullish in terms of sentiment right now. And it looks like clear sailing to higher levels from here technically. Yeah. For right now the sentiment levels are at the extreme levels you expect with the markets at all time high. Were thinking 3,200 is a good target for the first half of next year. For the first half. Its onlied my november. Ryan, i was thinking you said this is one of the begs years at 23 . Were not done yet if it continues to go higher and i dont know but this could be 25 and above when its all said and done since we have another month and half left of trading. You know, joe, unlike our 010 cincinnati bengals, i think the future looks a lot bright rt for the market s p up for 20 on the year the month of november has been higher 7 out of 7 times, december up 6 out of 7 you cant have a chase into the end of the year. Bigger picture, a, b, c a lot of countries are making alltime highs. Brazil, canada, United States, sweden, 52week highs all over europe greece is outperforming. This is a global story, this isnt just a u. S. Story, with a lot of participation Bigger Picture into next year, that is a really good sign we all know what happened last december were not seeing that now. This is a goodlooking market overall. Jason, all the recession talk, the inverted yield curve, the trading in august got everyone very defensive. Thats right. You could see it in the equity market basically the momentum trade in equities were proxy fixed income trades people got Long Duration in anticipation for the slowing economy. It slowed a little, but theres a difference between a solid economy and recession. Thats exactly right. We have seen two out of the last three periods leading into the recession where the economy positions or the market positions that way and then you see a rapid repositioning back towards cyclicals late in the cycle. So ryan, just in closing, you think are you with jason, 3,200 and bullish next year as well we are, joe also the cyclical theme, saying we like this market. We like those groups those areas were overweight as we head into next year. Yeah. I didnt touch your bengals yesterday. I think they covered, though i think you should have betd on them for once. They only lost by seven points, i think. They tried. Thats all we can say. Ravens. That quarterback. Any way, thank you thank. You bewent to xavier and miami thats right. Theyre good but they havent covered. I missed that trayvon bluitt guy. You look at everything differently now. Their good, they won but they didnt cover they barely won yeah they should be beating these teams by a lot more. Theyre 23rd i think they are ranked in the top rutgers never mind. Ohio state, it wasnt that bad. Got points on the board. So you paid attention to that. I did. This is with your mart, not your wallet. My cousin is at ohio state. When we come back, huaweis chairman talking about the east north tech china summit after this geico makes it easy to get help when i need it. With licensed agents available 247, its not just easy. Its havingjeromebettis onyourflagfootballteam easy. Go get em, bus ohhhh [laughing] cmon bus, cmon hey, wait, wait, wait hey man, i got your flag i got your flag, man i got your flag its geico easy. With licensed agents available 24 7. 49 nothing woo 49 nothing woo Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. To take care of yourself. But natures bounty has innovative ways to help you maintain balance and help keep you active and wellrested. Because hey, tomorrows coming up fast. Natures bounty. Because youre better off healthy. Welcome back, everybody. The Second Annual east tech west conference being held in china its bringing together some of the worlds most influential Technology Leaders our diedra bosa is there what did you find out . Hey, good morning, becky. While last year, the trade wars are hanging over the event this Year Companies and investors are trying to figure out what are the longterm effects of the landscape huawei has been caught the middle and its business outside of china has been hit by the u. S. china export ban. Its chairman, a keynote at this event here said no translator actually not. Huawei has not received any communication from any u. S. Entities we dont have channel to talk to them either. Now, for now the Company Relies on u. S. Technology, particularly googles android operating system, though the chairman said they are developing their own harmony operating system to give people an update in just a few day. American companies, they are still shut out of the chinese markets. But for the few Companies Still operating here like microsoft, business is booming. First of all, we help Chinese Company do business abroad this is one of the biggest streams of activity. Very interesting enough, we also see a lot more companies coming to china and doing business with us lastly, guys, ipos are a big topic here at the event, and its hard to ignore just 50 miles away from here in hong kong the unrest continues. Im familiar with the ipo tells me that the company is not going to be holding a typical investor lunch onthat is the hallmark of many hong kong listings. They say that has more to do with alibaba an unknown entity than it does the unrest. Coming up when we return, a potential reprieve from ecigarettes companies President Trump is now backing odts from a ban on flavored re going to tell you why next through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Good morning u. S. Equity futures at this hour are in the default mode. Theyre green again. Been this way for about, i dont know, at least a month, i would think. Where you come in the morning and its at least it looks like its going to perhaps be positive theres been a couple days where theres been red, but its been mostly green 42 points on the dow jones the nasdaq indicated up 16 s p indicate 3d. Most of those would be new records. Multiple media reports say President Trump is backing away from proposed restrictions on the flavored ecigarettes. They warn the president that crackdown could cost him key votes in battleground states as a result, a News Conference by the health and Human Services secretary for november 5th was cancelled. President trump tweeted last week we would meet with industry representatives, state representatives to come with an acceptable solution to vaping and the ecigarettes dilemma. The faa is weighing how to approve planes for flight in the wake of two crashes involving the 737 max jet. In an interview with the wall street journal, the agency is considering ways to fundamentally alter now new planes are certified he said that could include the faa being involved in the design of the planes from the very beginning. This would fundamental up end and change the way this self regulation and certification has taken place. Theres been a real move in the United States. In terms of how a lot of these systems have been certified by the airlines themselves. If you get the faa involved in the very beginning, it may very well be very helpful, but i cant imagine it would be very interesting to see if bowing or airbus were to push back, the leverage point i think its difficult for boeing to turn around and say, actually, you know what, we dont want that. Would the faa then have engineers and others on board who would be working for them instoei instead of working for the companies, too it would require more spending. We have to figure out as a country what we want in terms of how much money we should be devoting towards this. The head of the faa had harsh words on friday that made it sound like it may take longer than boeing has suggested for the 737 max to get back up in the air. He just made it sound like were going to go at our pace. Some of the software the faa is not ready to do some of the Software Testing that is required for this at this point. So, the market has may have gotten ahead of itself in terms of thinking this is where the time line is going to be. Reading on the way in the front page, on the way in, you can see on twitter they have the whole front page and reading it was like just sounded like almost, of course theyre saying this. Of course theyre saying that. Yeah were going to now we think we should spend more time with the pilots when theres a new system you knew that was coming. Right. Just a lot of the things that were there that you knew were coming. Absolutely. You knew after what was happening sounded like, yeah common sense stuff. Why did at that not do it to begin with. Exactly what i expected the faa to say i would have moved it thats an important snts this an important place thats the lead story column usually goes i hope. Not in that paper. Sure no, it couldnt be thats the top column this one. Yes yeah, just reading. Okay yeah expected that. Expected that. Its still newsworthy. When eliz billionth warrens tax plans could change the investment world robert frank will join us to explain that have. Later senator rick scott is joining us to talk about the escalation of violence in hong kong and potential trade deal with china stay tuned youre watching squawk box right here on cnbc this is an incredible milestone for 10x on our journey to 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. Oh, wow. You two are going to have suyeah, have fun . Thanks to you, we will. Aw, stop. This is why voya helps reach todays goals. All while helping you to and through retirement. Um, you guys are just going for a week, right . Yeah thats right. Can you help with these . Oh. Um, were more of the plan, invest and protect kind of help. Sorry, little paws, so. But have fun send a postcard voya. Helping you to. And through. Retirement. Senator warrens plans to tax the wealthy could change the investing landscape. Robert frank here is hes got more on how that might happen hi, robert. Good morning, becky added together Elizabeth Warrens wealth tax would bring the tax rates for billionaires and multimillionaires to over 100 theres the annual wealth tax on assets and then the income taxes up to 58 on investment returns. Add those together and two taxes could erase any annual gains for big investors. So if a billionaire invests 1 million and earns 5 return, thats a gain of 50,000, he would pay a wealth tax of 6 on that million and combined taxes of 89,000 on a 50,000 gain. So well over 150 . Even a multimillionaire would lose most of their gains lets say someone is worth 50 million. Invest 1 million, they get a 5 return combined tax of had the,000 on the 50,000 gain in california and new york, which tax Capital Gains the same as income, the combined federal and state taxes would be over 70 in addition to the wealth taxes. Is that legal they can tax you more than you made if you look at all the jurisdictions that are kind of claiming it i dont know that theres a law against that, yeah. Has she responded i dont know if you reached out to her office. We have. Do they say here is the explanation in this circumstance it wouldnt happen. They sent him a mug. Theyve never responded. Did they send a billionaire cheers mug no. You have to buy one we cant buy one because that would be a political donation. You can imagine there are many broader concerns about this in terms of the investment landscape if you have taxes that basically erase your gains above, below 6 why would you invest . Why would you invest, number one. If you did invest, you would chase such high yields you would push some of this money into the riskiest. Lets talk more about this. Joining us right now for more on the impact of senator warrens tax plan on investing, lets bring in our guest Grover Norquist also jared bernsteen, cnbc contributor. Jared, lets have you defend this, the idea you can tax more than you have earned on some of the investments. I think thats tough to defend actually. I think that just like the arguments that if you cut investment taxes youre going to get a big investment boom. We havent seen that at all. In fact, investment has been uniquely weak in recent quarters, even after the tax trump cuts on investment on the other side of the coin, im not common cutting tax rates at this level. I think youre missing the big picture. I totally appreciate the reporting and think it needs to be done. Theres a lot of dissent among democrats about wealth taxation. Senator warren opened up a really important part of the debate about how you would be able to tax wealth if a democrat won, particularly if she won the senate a lot of the ideas youre hearing today just are too heavy a political lift given who the marginal vote would be theres a set of other ideas to tax wealth they include mark to market taxation, closing the step up basis loophole, getting rid of the passthrough loophole, fixing the estate tax and strengthening irs tax collection thats the real agenda that this wealth tax has generated and im happy to debate any one of those. Its hard to defend a tax rate thats over 100 on wealth. Grover, lets get into is this maybe we move on and admit that its difficult to come up with some idea of saying that somebody has to pay more than they made on a trade in taxes if that happens but lets talk to mark to market aside from the fact that it seems like a nearly impossible thing to try to keep up with look, the whole idea of this wealth tax is misdirection shes talking about a 6 wage tax to pay for her medicare for all. Which she thinks somebody other than you as the wage earner will pay. 20, 30 years ago swedish more than 100 tax rate sweden walked away from all of Elizabeth Warrens world view. Theyre doing well going away from Elizabeth Warren world. This is to get you to not focus on the gasoline tax she wants, the energy tax, the carbon tax which hits all middle income americans. All the taxes she says shes going to hit rich people with destroy our 401 k and ira tens of millions of iras those are the people who are the collater Collateral Damage who get stepped on shes going to tax the middle class, which is what denmark and all of the European Countries that have social welfare economies, they dont tax rich people much more than the United States they gouge the middle class on higher income taxes and a valueadded tax which is simply a carbon tax on everything shes trying to get you to not focus on her massive tax agenda on middle income americans it wont work. Letss say it sounds like both of you agree with the idea of what shes proposing not going to get passed. Grover, what about this idea that middle class people will pay higher taxes under Elizabeth Warren. She admitted with her 6 wage tax. The idea of taxing all energy hits your Home Heating Oil as well as your car gasoline. She has a massive tax hike on middle income people. Thats all factual lly incorrect. Read her plan. Hold on i didnt interrupt you please dont interrupt me. So interestingly, candidate warren has bent herself into a tremendous pretzel in order to do exactly not what grover was just talking about and thats why this billionaires tax, was a 3 tax became a 6 tax because thats how she wants to pay for partially for medicare for all without hitting the middle class. Thats the kind of the situation that democrat candidates are in. They want to pay for their ideas, but theyre not going to tax the middle class so theyre going after those at the top of the scale. I happen to think thats a perfectly reasonable place to go because thats where so much of the pretax wealth has accumulated in the country. You also said you dont think its going to happen. I dont think thats going to happen what i do think is going to happen and grover completely evaded the question is some really interesting compelling ideas i think have legislative legs if democrats win. Mark to market taxation is something we have not done in the country and one of the reasons why most of the income billionaires makes goes untaxed. You, becky, said we cant do it, we dont know how to do it actually given the electronic transactions in jared, mark to market seems crazy to me when you look at massive valuations massive changes that take place and the idea that youll be paying taxes onmoney that youve never actually seen because you never cashed in your shares seems crazy. So its an annual tax i agree the valuation challenges are significant, but not for securities. But you would be paying taxes on money you might not ever make. What about startups what about startups . You would destroy that. Its money that you do make in fact, thats the whole point. Youre marking to market but if you dont sell the shares, you dont have the money so you have to share the sells to do it and the stocks could go down next year, too. And so. Same thing happens with capital losses. Theyre playing us out. Theyve playing us out if you dont have enough income to cover the capital losses that would be money you pay this is the debate we ought to be having. Were not because Elizabeth Warren is actually talking about. Gentlemen, well have you both back grover and jared, thank you for your time. Thank you. Coming up when we return, a huge week for Retail Companies look whos on deck our next guest giving insight into that sector were back in just a moment. Announcer dont forget to subscribe to our podcast youll get interviews, original content and behind the scenes access look for us on apple podcasts or on your votefari podcast app and subscribe to squawk pod today. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Welcome back to squawk box this morning the Retail Sector gearing up for a very big week of earnings kicking off by walmart last week the sector has under performed the Broader Market so far. Stocks could see a boost as we approach the holiday season. Joining us is karen short, staples retail analyst at barclays good morning. Good morning. We saw walmart last week. We have seen a lot of analysts come on the show and say the stock to buy that they like is target what do you think of that . So i guess mytake is you dont necessarily have to pick one over the other when we launched at barclays in 2016 walmart was our best peck 80 of analysts had an equal weight or under weight on it we stuck with that and think there is significant up side ill deviate to target in a second when you think about walmart, its trading like a staples name thats the analogy that keeps coming up. Staples names are trading at 15 or 16 times ebidta maybe you should consider a value ant. A flip side on target, theres a meaningful multiple gap between target and walmart target is one quarter in to having strong same store sales growth combined with gross sales margin and operating margin. To the extent were early stage. Do you look at operations and think its comparable to whats happening at walmart weve literally only had one quarter of both of those dynamics gross Margin Expansion and operating Margin Expansion walmart is kind of five quarters into that. I think theres still a lot of doubters on the target story and so theres up side from that perspecti perspective. Is there one that you actually like ahead of Everything Else right now . I mean, targets definitely up there on our list we have been over weight on both target i think has both the up side numbers and up side from the multiple expansion. As i say to people, i give you 10,000, you can buy one stock, what do you buy target is on the list definitely i have buys on both. What are your other over weights . We talk about target and walmart so frequently theres a huge retail world. We have over weights on walmart, target, home depot, lowes, best buy. Best buy, too yes. Even with the tariffs, thats harder to slide through the tariffs. It is i think the thing with best buy is that my whole tariff viewpoint is that any retailer who tells you that they can pinpoint to the dollar what tariff impact is going to be is not telling you the truth. Basically cory is telling you the truth, which is its very hard to pinpoint what the actual impact is going to be. When i look at best bias a story overall, i look at their roic, which is in the 20s. Its trading at a multiple that go below kroger and it has core operating profit thats growing. It is on that metric like roic relative to valuation that achieve the stock. Thank you thanks for having me. Well see what happens. Coming up, senator rick scott is going to join us to talk the latest in hong kong as the protests continue to escalate and the u. S. And china continue to hammer out its phase one. Thats coming up it was sophies big day. By the way, shes the next mozart. 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. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Markets marching on. The dow crossing 28,000 for the first time. China trade tensions how big of a risk are the protests in hong kong . Were going to hear from senator rick scott. And the pony goes electric fords ceo on the companys plan to charge up the electric Vehicle Market as the second hour of squawk box begins right now. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with becky quick and joe kernen. We have a distinguished fellow here and a cnbc contributor a among the titles the mans great very well important want to take a quick check on u. S. Equity futures. Right now we have green arrows across the board lets show you whats going on dow looks like it would open 47 points higher, nasdaq 17 points higher and the s p up 3. 5. Dow crossing the 28,000 mark for the First Time Ever on friday. Joseph thank you you have some we should be talking about that because did you read the last paragraph . I love that, it was rude and sank at this money. Conceived in sank at this money any. Do you know where that comes from twitter. No, great literary line robert you wonder why youre such a distinguished fellow heres whats making headlines so you already saw that. I love that. Its interesting. It is interesting because they totally backed off. It depends on and jack dorsey initially did it to sort of shame zuckerberg. When we properly explain lets talk u. S. china developments over the weekend. Chinese bike premiere li usaid he spoke on the phone with mnuchin and they had a phase one deal and the talks were constructive ive almost been waiting with this lets do the phase one or not think of the other things. Yeah, about the pot do it saudi aramco said its aiming for 1. 6 to 1. 7 trillion thats short of the 2 trillion targeted by the saudi prince it would be the worlds biggest ever ipo wework is reportedly planning a massive round of layoffs in a bid to become stable financially. According to New York Times, the company could announce 4,000 job cuts as early as this week the times says that number could jump to 6,000. Wework declined to comment. The dow topping 28,000 for the First Time Ever on friday. The s p 500 and nasdaq also reaching alltime highs. Right now with a look lets welcome Christian Amani and cnbc senior markets commentator mike santoli. Thank you both for being here. Mike, first of all, set us up with 28,000, what this means, how important it is and what momentum looks like from here. I think the fact that its a new high and its confirmed by new highs in the other indexes and also strong rallies around the world hitting at least 52week highs means that the market is in tune with this idea that its sniffing out a revival in global activity thats been the message of the markets. If you want to look at what the markets are suggesting and infer thats the outlook in the next several months, it is cyclical it is the global picture is firmed up. All of that is on the comp i think the only risk in terms of the levels were at is the idea were around a 2 rally in august at 2900 on the s p. Or if we get to 32,000 on the dow, that might not seem like a relief thats the relationship we have to watch were not there. You think that will be higher than where we are and were looking for new highs . Absolutely. I think its the revival in Global Growth. We have other things helping the markets as well. One is the fed on pause. They are not going to raise rates until they see persistent inflation. That is quite important as well. And, secondly, or thirdly, the trade deal clearly helps in that regard so i think the outlook for the markets is up. The question, as mike points out, is how much higher from here we can go and i think overall the expectations have to be somewhat muted. Its positive but it is not going to be as good as 2019 was for the very simple reason that its reasonably fully priced at the moment. We heard the headlines about what the chinese were saying over the weekend with the trade talks and whats happening you think really we dont need much to happen in a trade deal, we just need to not exacerbate the situation, right i think that, again, is a very important thing that is, the impact of the trade is in the baseline right now so as long as things dont get far worse than where we are tod today, thats all we need. There is enough to support that and Central Bank Balance sheets help that. Mike, it hasnt seemed like the headlines have moved markets as much. Maybe you see 60 points here, maybe 80 points there. You dont even see triple digit moves. Yeah. Obviously the effect wears off the more times you get these kind of relatively big directional reports but i also think to krishnas point, we have a deescalation of the trade wars where you stop adding new threats. Thats in the premise. Unless you challenge that premise, youre fine. By putting on new tariffs you dont quick the new tariffs in. I dont think the up side is much. No. Thats why if they said, all right, forget it. Whats the absolute then i think you get hammered for not signing huawei licenses. Any of these types of things that are total surprises to the market i think is the impact is going to be asymmetric especially since youre at all time highs. If you look at every peak, a new high and they coincided with some kind of exacerbation. Thats not an argument for putting a lot of work to money, krishna. No. The question is, where do you put the money . That is far more important than how much money do you put into the market the improvement in growth is probably going to be more over seas than it is going to be in the u. S. Because over seas the performance was far worse. Krishna, were through earnings season. Yes. Although recession, recession, recession didnt happen, all those worries, are we now saying theres not going to be a recession . Well, no, i dont think so. Im on the record for saying 2018 that we have five more years in the cycle now the key point here is as long as we dont have inflation, the Central Banks have a lot of flexibility to manufacture outcomes by easing policies very aggressively that is clearly what happened. Once the fed pivoted early part of 2019, you know, we will see the follow through effect of that over the next few quarters. Gentlemen, thank you both good to see you. Thank you. Hong kong demonstrations are turning violent once again they used rubber bullets and tear gas as they stormed into a University Held by protestors. Fiery explosions erupted antigovernment protesters had barricaded themselves in the campus for days. For more on the hong kong unrest and the impact on the trade talks and the markets, lets welcome senator rick scott of florida. He sits on the commerce, budget, Homeland Security and Armed Services committees. Senator, in your recent appearances you are truly one of the biggest hawks on china and china trade. We seem to be somewhere along the way to a skinny phase one deal is that about what you expected . And is i dont know what youd essentially like to do, just cut off all relations with china until they come into the modern world, but thats not going to happen. Would you be in favor of some type of skinny deal phase one that alleviates the fearof mor tariffs or do we go full bore . First off, its disgusting what theyre doing in hong kong. Theyre taking away basic rights and theyre not using rubber bullets, theyre using rubber disks. Theyre shooting tear gas at the protesters this is just the part of the communist party, communist china cracking down on anybody that has any rights with regard to a trade deal, how many i mean, how many months are we going to keep talking about this theyre not going to do what we need them to do. Theyre not opening up their markets. Theyre not going to stop stealing our technology. Theyre not going to stop putting people in their religion would i like a deal . Sure all of us would like a deal. But do we believe theyre going to change . Theyll buy Agricultural Products which im glad they are but only because under their system they cant produce enough to feed their own citizens thats the only reason theyre doing it theyre not going to do anything thats good for us and theyre never going to open up their markets. We deal with regimes around the world that, you know, sort of for lack of a better term we hold our noses as we deal with them. Youre saying go ahead and go forward with eyes wide open and know in the back weve got to in the future weve got to try to accomplish some other things in terms of human rights and Everything Else . First of all, we dont go around the world and do business with countries like china. Chinas a country that we always believed if we did more trade with them they would open up their markets, they would provide more freedoms and theyve done the were doing the saudi ipo that we love and they you know, there are other you know, were trying to negotiate with north korea i think its right to have conversations with people, but lets look at this i mean, north korea, have they changed . They changed their rhetoric a little bit senator, the larger question is are you effectively arguing for a genuine decoupling absolutely. Then youre also talking about decoupling with other places in the world. Youre asking countries, a, to take sides there are lots of big issues that we as a global citizen, if you will, have to contend with over time and i imagine whether its nuclear proliferation, whether its climate i mean, there are so many big issues that i imagine you would want countries to be talking about whether its the internet, how people communicate with each other. If we have a genuine decoupling i imagine all of that is off the table. First off, i mean, i believe weve got to live in reality come mu mist china wants to control the entire world, including americans. Look at all their actions. They promised obama they wouldnt go into the south china sea. They did we have to live in reality for a second theyre not our partner, just like russias not our partner. Theyre never going to be our partner under the existing Leadership Teams in these countries. We have to act in the best interests of the american citizens we cannot continue to build the chinese economy and have them steal american jobs, sell fentanyl and kill american citizens lets live in reality. They only will buy our products unless they have to because in their system it doesnt work. Senator scott, china restriblgts, of course, our Internet Companies including what google, facebook, others can do and yet the biggest growing app in america is tiktok and, you know, bike dance, the company owns it. Should we put similar restrictions because theyre harvesting data including invading privacy thats part of what these companies do should we be putting restrictions on the way that their technology can work and asking people in the u. S. Not to use it well, first off, i think all of us have to understand if we give data to china they can use this i have a bill that says were not going to buy anymore chinese drones we have to be careful of 5g with huawei we have to look at this from a federal government standpoint and State Government standpoint. As a citizen, do you want your data to be owned by the Chinese Government thats whats happening. Theres no difference between the Chinese Government and the communist party. Theres no freedoms there. Companies there have to work with their government. As an individual, i think you ought to be very careful about what data you want china to have as a country, we have to be absolutely clear we are not going to do business with china and let them have our information and thats what you do with drones, thats what you do with huawei we have to be very, very, very cautious. Senator, you mentioned that you are in favor of the administration, President Trumps caution when it comes to huawei today those huawei licenses come up for renewal once again. Should they be resigned and allow American Companies to go ahead and continue to use that technology absolutely not. I mean, this is i mean, huawei is a branch of the communist party of communist china and so we have got to understand that we need to go build out our Technology Without the support of chinese china which will control our information. No one likes what chinas doing but were not going to help them by pacifying them. Were not going to get where we want to by pacifying them. Our own best interest is not doing business with china. On huawei in particular, i dont want to be a defender of huawei, do you have any evidence thus far directly that you believe that the government has used huawei in improper ways against the west yeah, they used it they did it in they did it in africa just remember, the individual that built huawei is part of communist china, part of the communist party so they are obligated now by law in china, every companys obligated to provide whatever information the Chinese Government wants so absolutely theyre going to use it and why would you put yourself in position if they havent done it yet but theyve clearly done it in africa already these protests, i dont know, weve got to go, senator it seems like the protesters are going to keep pushing this i mean, arrows i hope so. Really . But arrows if you go to arrows, theyre almost daring the police to yeah, but i agree they shouldnt be doing it unpeacefully but lets remember, they were peaceful protests were outlawed. This is caused by president xi saying you cannot have a peaceful protest so hes caused this. I dont want any protest not to be peaceful. Who doesnt . Senator, thanks weve got to run appreciate it. Thank you. Coming up when we return, john legere isnt considering the wework ceo job but who is . When we head to break, lets get a check on the markets green arrows across the board, dow 57 points, s p 500 opening 5 points higher. 2 1 2 hours before the markets open squawk returns in a moment when it comes to your customers expectations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. I spent two years alone and homeless. Cool. Announcer as americas veterans face challenges, dav is there. Man 1 my victory was finding the support to get back on my feet. Announcer dav helps veterans of every generation get the benefits theyve earned. Man 2 im a veteran. When i got out, i felt like nowhere was safe. Announcer so veterans can reach victories great and small. Man 2 my victory was finding the help i needed. Announcer support more victories for veterans. Go to dav. Org still to come on squawk box this morning, layoffs looming at wework. The report suggests the company may slash thousands of jobs. And who could be the next ceo with Walter Isaacson thats right after this break. And then charged up and ready to go. Ford unveiling the latest electric endeavor. We will hear from fords ceo in just a bit. Later this morning, the man who made the call that carl icahn was getting involved in hpq. Now theres something brewing with netflix the events driven research, gordon has kin about the streaming service and what he thinks is happening next squawk box will be right back. Some farms grow food. This one grows fuel. Exxonmobil is growing algae for biofuels. That could one day power planes, propel ships, and fuel trucks. And cut their Greenhouse Gas emissions in half. Algae. Its potential just keeps growing. Vand im not gonna be around. E keeps growing. Im worried about my parents retirement. Oh, dont worry. Voya helps them to and through retirement. Dealing with todays expenses. Like college. While helping plan, invest and protect for the future. So theyll be okay. Without me . Um. And when we knock out this wall imagine the closet space. Yes oh hey, son. Yeah, i think theyll be fine. Voya. Helping you to. And through. Retirement. Not much, how about you . Are you answering my text in person . I am. Yeah. Lol. Come on in. This is tech that helps you be there. The nissan altima. Now offering the most techadvanced engine in its class. Tothe problem is corporationsfix most tecanything. D and the people who run and own them have purchased our democracy. Heres the difference between me and the other candidates. I dont think we can fix our democracy from the inside. I dont believe washington politicians and big corporations will let that happen. The only way we can make change happen is from the outside. For me, this comes down to whether you trust the politicians or the people. And if you say you trust the people, are you willing to stand up to the insiders and the big corporations, and give the people the tools they need to fix our democracy. A national referendum. Term limits. Eliminating corporate money in politics. Making it easy to vote. I trust the people. And as president , i will give you tools we need to fix our democracy. Im tom steyer, and i approve this message. Welcome back to squawk box john legere is not taking the ceo job of wework. Hes avoiding conflict of interest Walter Isaacson step right in. Cnbc contributor we should mention on a day when there is a report out that wework is not going to fire 4,000 people, may fire 6,000 people, what do you think of this whole situation right heres the critical thing. We were talking about it is this a real estate time sharing company or is this some big, broad Lifestyle Company adam neumann having amazing vision in fact, he had a vision that was too visionary by half. The way we live in the age of the gig economy, social media, fracturing, all of that, we were all going to work together, live together, Learn Together i think theyve got to settle back in and say, okay, but first were a Real Estate Company that actually has places for people to work. Right i think with jason qatari who runs hotel. Com, there are people like that who probably should take over the company and stabilize it and then you can bring back the visionary you dont think that two fellows who are in the ceo you think theyre not long for this they seem like they you know, theyre competent. Theyre doing it by cutting. Right. I think you probably at some point want to say, heres a vision, but lets have it be a narrow, clear vision that were in sort of a dotcom booking of Space Business not a changing the world business. The longterm question if youre soft bank, and by the way if youre Public Markets, this has frozen the Public Market for certain types of privately Held Companies that want to come public. Right. This is sort of shifting the whole balance is whether you think soft bank gets its money up they are 10, 15 billion in, maybe more. How can that happen i mean, im trying to do the math. You mean, can they make their money back yeah, i dont think they can. I do think theres a larger question here, which is so Many Industries have been disrupted, you know, by the digital revolution one that hasnt is kind of the way we work. We dont have an uber or an airbnb for the way we work, the way we should have portable benefits, the way we should have space to work, the way we should share Human Resources or things like that. This is that. This is what we need and they get their head over their skis they fell down. It wasnt just over their skis though no. They did they did this so badly look, what andrew is saying is that this will hurt the ipo market and the equities. What this does is it hurts the concept of a company like this which we need. We need these type of companies. You dont want to carpool shop. By the way, they have revolutionized the real estate. And uber. For commercial business. Im fine. Well, they have, and you dont want that to be lost. Right. By the collapse of this company. We in this day and age i went to work 35 years ago, about four blocks from here in the big old Time Life Building i never had to worry about anything again there was always a desk, always paper clips, et cetera nowadays we dont have that and we need a new way to work. Adam neumann was like music man, right comes to town. And the music man taught them how to play. He had some he had a good band. Billions of dollars in the way. At least they believed they had it. Embrace this for a dinosaur, old dog. Youre ready to go im going to get a flu shot. If were going to do all of this stuff. Youre overdue for a flu shot. You should get a smartphone i should go on facebook yeah. What about my my space account ill lose all those followers. You can go on aol or compuserve. It takes me thats the nice way to say, okay, goober. They send in stuff that its terrible goobers. The greatest generation. Okay. Thats the writeoff. One thing i will tell you is dont read your twitter feed in real time. We do. Im watching him do it. Block everyone. How come youre getting all of those because these are all joe youre the best. He retweet them. From donald trump he hasnt weighed in yet. When we come back this morning, ford is looking to combine the heritage of the past with the technology of the future with the release of the electric ford mustang. Its called the mach e fill lebeau caught up with jim hackett. Squawk box will be back. So servicenow put your workflows in the cloud, huh . Mmhm. Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Nongmo, made with naturally sundown vitamins are all 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. In a big splash in l. A. , ford unveiling the all electric suv the mustang mach e phil lebeau has the story. What do you think . Becky, here it is. Do you like it . Reporter i think that ford has done a nice job here basically getting away from what people had been fearful of, which is that outside of tesla, when you look at electric vehicles, theres not a whole lot to be excited about. The design has been fairly utilitarian for the industry ford has said, you know what, we can make an aggressive looking vehicle, an suv that we believe is worthy of the mustang name. Some people will look at this and say, well, yeah, does it have the performance that can rival tesla when the model y comes out. When they unveiled it they made a couple of points very clear. First of all, this is a mustang in terms of performance. Its not a pony car, it is an suv but they said over and over. The point they tried to hit home this has the performance in terms of 0 to 60 somewhere in the 3. 5 second range as well as the total range when totally charged of up to 300 miles fords chairman, bill ford, who is a lover of mustangs, has a number of them personally and have protected the brand over the years said, yeah, i was resistant at first but eventually i gave in to the mustang name basically said over my dead body because im very protective of the mustang brand ive always loved mustangs ive seen attempts over the years within ford to do things that would have hurt the mustang name so i feel im sort of the protector of the history and also the protector of the mustang into the future. Reporter all right lets talk numbers the price on this will come out at around 44,000. That will be the base price before the federal ev tax credit that you can add in. Thats another 7500 bringing it down to the mid 30,000 range. And it will be built in mexico now jim hackett, ceo of ford said one reason its being built in mexico is, a, they planned for it for some time also, that allows them to bring the price down into the mid 40,000 range. The decision to build this in mexico was done two years ago, and we needed in terms of the way were trying to hit price points, but at the same time with the uaw negotiations, we made a huge commitment, multibillion dollars, for employment in the United States and ford has more automotive workers making its vehicles than any other company right now. So i think the president s proud of the position that ford has in that regard. Reporter you heard him reference the president. Were talking about President Trump. He has not shied away from targeting ford in tweets in the past and the fact that this mach e is built in mexico. Lets see if the president says anything at all. If you take a look at shares of ford over the last two years, were entering a period where the cost cutting has already taken place. Now its a matter of growing revenue, and they believe that the muss take mach e is a part of that. It rolls out late next year. The base price starts at 44,000. It will go all the way up to a gt version that will price close to 60,000. The ev wars, guys, are heating up. Hey, phil, this is Walter Isaacson why in the world did they make it an suv if they wanted it to be a mustang reporter two things, walt. First of all, the market is there in terms of suvs youve got to go where the market is so you needed to make either an suv o are a crossover. Cars, electric cars, while there is some market there, its not a big market they needed to do that they believed the mustang name allows them to at a minimum cut through the clutter and say, thats a mustang i have to see that wait a second, i thought this was going to be a pony car, its not, its an suv they may not be interested in it but this allows them to at a minute say i want to go into a ford showroom and check out the new mustang. Because they didnt want to call it the pinto. Wise idea. Reporter what if what if they came up with some name like the emax or Something Like that. Lets be honest, assign from mustang and f series, those are the only two names it doesnt look like a mustang so its a gimmick because of the name recognition. Reporter you are correct about that. They didnt want to use pinto. Mach e is a made up name. I like the car it looks good. Who designed it, do they know reporter look, this is going to be interesting to see how this shakes out between them and the model y when tesla rolls that out late next year. Youre going to start to see more in the suv crossover utility segment. Cool. Phil, thank you for bringing us that. That was a fun story i enjoyed that. Reporter you bet. When we return, we are on dow watch. Well tell you whats moving markets. And then googles acquisition of fit bit causing privacy concerns straight ahead when squawk returns. Dont forget to subscribe to our podcast. Youll get interviews, original content, and behind the scenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod today. When it comes to your customers expectations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Cool. Oh, wow. You two are going to have suyeah, have fun . Thanks to you, we will. Aw, stop. This is why voya helps reach todays goals. All while helping you to and through retirement. Um, you guys are just going for a week, right . Yeah thats right. Can you help with these . Oh. Um, were more of the plan, invest and protect kind of help. Sorry, little paws, so. But have fun send a postcard voya. Helping you to. And through. Retirement. Welcome back time to check on todays morning movers dom chu joins us now hey, dom you were up early again. Reporter up early again. The sun is shining. Reporter the sun was not shining. No, but you are. Reporter i like to be a ray of sunshine. Its good. It works for me. Anyway, joe, were going to kick off our monday morning movers with shares of tesla up fractionally. Just up 14,000 shares of free market volume. They are getting some help from deutsch and theyve under their start to 290 bucks it was 270 they kept the hold rating. They cited more positive sentiment around the stock heading into that big unveil of their pickup truck later on this month. Also an increase in some valuable multiple. Next up are shares of trip advisor. They are higher by just around 1 1 4 percent. The Online Travel booking review site is getting an upgrade by analysts like cowan. The target price gets cut to 30 bucks. Its largely a valuation call. It assumes a boost in pretax profits from costcutting measures helping to offset some assumed revenue declines those shares up 1 1 4 were going to end on shares of s splunk i like saying splunk they get upgraded to overweight from equal weight by analysts over at Morgan Stanley the target price goes to 169. It was 140 they cited among other things a better competitive portfolio of products, more anticipated market shares and a revamped pricing model. Those shares up big right now, becky, premarket ill send these back over to you. Thank you very much youve got it. When we come back, hp says thanks but no thanks to xeroxs takeover bid well talk about other tech talkers after this. Later, more high level trade talks taking place over the weekend between the United States and china the latest from washington is straight ahead sunshin it was sophies big day. By the way, shes the next mozart. 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. Happy veterans day. Happy veterans day. Happy veterans day. Happy veterans day. Student veterans of america champions those who have served and also prepares them for their next chapter in life. Please take a moment this this veterans day to remember service members, who put their education and careers onhold to give back to all of us. We thank you. Feliz dia de servicio. Happy veterans day. Happy veterans day. Please visit studentveterans. Org. Welcome back to squawk box. Over the weekend hps board rejected xeroxs offer our next guest says the rejection puts both companies in play Tim Gallagher is here. Walter isaacson is also here as well, our guest host good morning both companies are now up for grabs . Yeah. Well, im of the opinion that when xerox made this bid, which looked kind of crazy on paper because theyre so much smaller, is it looked like a way to force hp to the table in some way. Hps rejection seemed to say theyve talked before and you dont have any sense. You would almost have to they were saying, buy me. The opposite its yeah. The whole objective you have less debt if youre if its a bigger Company Going so sad. Thats a cry for help. Do you think xerox was trying to put itself into play by doing this i think theyre trying to do something. They settled this deal with fujifilm that gives them some cash and kind of frees them up a little bit and because they have some management there, its been supported by carl icahn, i think they have the mentality to look and try to be aggressive when hp admitted when they did their big Analyst Meeting last month, they essentially admitted that its not a growing business and its not going to grow in ten years from now is xerox the right place to attach yourself to theres not crazy growth at xerox either no. I think the logic on combining the two companies, its not that theyre going to grow, its to consolidate. Japanese Companies Like cannon are very strong in office copying so i think to beef up and take on those. But the wrinkle is that hp is still a majority pc business in terms of where it gets most of its revenue and in the proposal xerox made theyre proposing to essentially slash r d funding to help pay for this. How do you have a pc company stay competitive when you have really slashed r d budget. Thats whats out there. What products do you think should be making now both of them i think its going to be with us in ten years. Theres not going to be more people in printing not more businesses printing its a melting iceberg in a sense. Like a little better than the few fuji photo business. What are we going to use it for . A printer no, a 3d printer. Youre going to print stuff. Organs. You can print food with it. It is so weird. Its like were going to pivot to a different topic. Apple removing 181 vaping apps from its app store this happened on friday citing the rise of Health Problems linked to vaping obviously President Trump on ecigarettes over the weekend now seemed to take a step back. Cant figure out where hes going. He was very much against ecigarettes. Then he had a meeting. Then he had a meeting, i think was told basically that part of his base, he can lose some of his base if he goes after ecigarettes. He was very strong on the issue emotionally sort of where he wanted to be now i think its usually a lot of times those bells dont go off within trumps head. It went off this time. I think it was his wife and daughter that pushed him. Maybe. Originally on the issue anyway, where but i guess the bigger question is, youre seeing apple do this youll see i dont flow if google you think will ultimately do similar things, take these kind of apps off their Service Google and apple have been polar opposite in the way theyve viewed their App Store Apple is paternalistic they wont let any kind of app at all on the app store. I dont think this was a big surprise google has been a lot more the Android App Store has been like a wild west thing i dont know if google will go down that road its not surprising to me that apple did it at all. Very much in the dna of apple ever since the very beginning that this is a curated store, that you dont want the whole apple and i0s devices and systems kpluted by people being able to its interesting that apple is taking a i dont want to call it a political position but they they do it on hate speech, nudity all the things we were talking about, twitter and facebook. Bingo i was going to say it goes back to all of these things where platforms either do or they dont take responsibility for whats for google its anything goes unless youre in china oh, whatever you guys want in china, we wont put that on, right . China google doesnt even do business. Thats what i mean. Apple does business in china and does basically i think what the Chinese Government wants. Thats not what our talking about google, we should tell you fit bit users some fitbit users saying they started looking for alternatives when they learned of googles acquisition because they dont trust google what do you think of that . When i wrote my column, i had people sending the same thing to me its anecdotal it speaks to the core problem that google is going to have with the acquisition, this lack of trust and image. Do you think its a business issue or the i think the government is going to look at the transaction in a way they havent looked at them in this space before. Theyre small in this space. Five, ten years from now they own the space people will go, you know, what were you doing . I think its the reason why these Big Tech Companies are going to have a hard time doing this size of deal because everything is going to get looked at. Its hard to argue that googles going to become much more powerful company by owning fitbit right now now theyre worried where theyll be in 10 years, 20 years. And a different aspect of your life. It also goes to what is the business google is in . Theyre not in the fitness business, theyre in Data Collection business. This is something where antitrust enforcement has been shifting, is going to shift left and right whether its josh hawley, senators on the left theyll say, we have to go back to an antitrust regime that says its not just about consumer pricing and very narrow markets, its about google leveraging its monopoly in certain fields to get into others. Do you think moves like this, google buying fitbit and facebook getting into libra are tone deaf . They figure we better run while we can. Obviously getting into libra is tone deaf because the music started playing and they had to back off right. I think yeah, i think youre not going to i agree were not going to see a whole lot more acquisition the notion that facebook can get instagram or wouldnt happen today yeah. And it was because antitrust enforcement for the past 10, 15 years mainly look at farm to consumer pricing, which is not much because its facebook and google because theyre free, but the real pricing comes from them having your data. I dont know if you saw facebook announce a month ago theyre buying something called control labs we talked about this its a device that goes on to your wrist and it effectively reads your brain half a billion, billion dollar acquisition. Very comforting. Why would you want it by the way, we talked about it on this show but otherwise ive heard basically nothing about it so the question, do regulators look at that in a different way . Thats so unique, so different from where their Current Business is. This is the fundamental question. Thats why you have to define the business as is it a business of making you fit or is it a business of getting your data . But it is a shift in regulatory scrutiny. Bingo. Thats a big lift to get to that point. Its a pretty big lift, but as joe and i always do, we go back to the past this is a way they took on standard oil this is the way they took on usb microsoft. It was not on consumer pricing, youre expanding into other endeavors using your dominance in a particular field. You try to go back. You successfully go back. We cant go back to the past. You have a windup computer there. We had a lot of time. I dont think we have enough time now to talk about you used to be the biggest promoter of aclu and free speech and now you like jack dorsey you think hes a hero. Were talking about Twitter Twitter and how they really arent going to ban politico. No. Let me because i teach this in my tulane class what would you do for twitter and facebook the reason you like free speech is that in the marketplace of ideas you end up getting closer to free speech the problem with twitter and facebook is that you dont have a marketplace. You have micro targeted so that a particular ad, true or false, especially a false ad, goes only to a tiny segment of people, say, people who hate, you know, gays in africanamerican communities in the precinct in detroit. That means you dont so i would make a rule for facebook if i were offering it to zuckerberg, i think some people talked about it, saying you can do political ads you can have all sort of political ads you think dicey but you cant micro target them. They have to go to everybody everybody has to see them. That gives you what Oliver Wendal Holmes said about free speech you put it in the marketplace of ideas. You dont think that dorseys move was purely for competitive reasons and to shame zuckerberg . They didnt have a big it didnt matter much on twitter anyway. It didnt matter much on twitter. I do think it is important to take responsibility. Now theyre backing down on that what the journal called a sanctimonious well, i mean, im not sure there are any businesses that dont have business reasons what they do. I would hope there arent. But i would also think that if youre going to take responsibility for whats on your platform, if youre twitter you should say, you can buy political ads, you just cant micro target them. Were going to make them random so we have a democracy in which everybody gets dont most people selfmicro target i do i only watch certain cable networks. Your ads are micro targeted based on your preferences but they can change that and say the ads will go to everybody randomly. All i see is joe namath trying to sell me medicare so, again and again how long ago and again and again thats all i see is joe. He looks good. Yeah. Those were the days okay. Always back to the past. Thank you appreciate it. Walter, youre sticking around for the rest of the show if joe will have me. Ill have you because youre so distinguished youre a distinguished fellow. Im the only one that wears a coat. That helps you be distinguished. Looks good. Yeah. Silicon valley. All right when we come back, a new call of netflix. The director of eventdriven research, gordon haskett, will talk to us about the buzz. Hes been right about past calls. Make sure you listin elisten i. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. 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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. Thanks to you. Thankthey have a chance. Iling. Thanks to you, st. Jude Childrens Research Hospital is changing how the world treats, and defeats, childhood cancer. We freely share our research with doctors around the world and no family pays st. Jude for anything. Because all a family should worry about, is helping their child live. Donate now at stjude. Org or shop wherever you see the st. Jude logo. Stocks breaking through. The dow crossing 28,000 and weve got new records in sight. Feeling the power, ford is out with a mustang inspired electric suv this hour the companys president of automotive joins us live. And he spotted warren buffet in the occidental deal he tagged carl icahn in the deal with hp. 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 live in times square im joe kernen our guest host from 7 to 9 7 to 9 east coast time Walter Isaacson. Professor at Tulane University and a cnbc contributor and a distinguished fellow at the aspen deal, too, right got to have a lot of jobs so you can left out. It is almost too long. Well haveto go to break after we introduce you u. S. Equities futures are indicated some of the best levels weve seen. 66 points on the dow this morning indicated open there up five on the s p. Nasdaq indicated up about 22 treasury yields, you know, look like they were headed for 2 and suddenly we got a wrong turn were down at 1. 85 well see what happens. Lets get you caught up on some of the stories investors are going to be talking about today. It was another weekend of unrest which spilled over into monday Police Firing rubber bullets, tear gas as they confined antigovernment protestors to a university some protesters tried to break through police lines and out of the Campus Police made arrests and tackled some of the demonstrators. Over the weekend chinese troops were seen on the streets of hong kong cleaning up debris although they werent in uniform, it is rare for chinas military to make any appearance there in hong kong and some people are reading a lot into that. Hps board rejecting a bid from xerox to take over the computer maker the board said xeroxs offer of 22 a share is not in the best interests of its shareholders and would under value hp they also raised concerns about how much debt would be taken on between the combined companies and a letter to xeroxs ceo hps board talked about the combined Company Stock debt level they left the door open for the possibility of acquiring xerox saying it recognized the potential benefits of consolidation. Down by 1 this morning. Xerox shares off by 3. 7 . Saudi aramco says it is aiming for valuation of 1. 6 to 1. 7 trillion dollars that falls short of the initial 2 trillion dollars that was targeted by Saudi Crown Prince mohamed bin salman more high level contact on trade over the weekend between the u. S. And china that countrys minister of commerce saying liu he spoke with treasury secretary Steve Mnuchin and robert lighthizer. Kayla tausche joins us with whats going on. Reporter good morning. The principles spoke over the weekend about their core concerns in the phase one deal in what chinas Commerce Ministry called a productive conversation they provided no readout on what was discussed as they saw some of the last and most difficult outstanding issues as this partial deal remains elusive with the white houses selfimposed deadline coming and going, there are still other deadlines approaching. Today, for instance, the temporary licenses for businesses to supply huawei expire the New York Times reports that the Commerce Department will extend them but cnbcs east tech west conference the companys chairman said that hasnt happened yet. Translator actually not. Huawei has not received any communication from any u. S entities and we dont have channel to talk to them either reporter in the meantime, hong kong has sunk into a recession for the first time in a decade due to trade tensions and the unrest there which you just mentioned if that unrest keeps escalating it could complicate the white houses effort to separate the two issues which they have tried very much to do in the last several months becky . Kayla, thank you very much. Joining us now to talk more about it is dan clifton. He is strategis researchs head of policy research dan, what do you think after the posturing, what weve heard from the end of the administration and what we heard over the weekend from the chinese good morning, becky we were on a good path to getting a deal last week we started to see some pressures building in about whether it was going to happen its largely because the chinese werent giving the u. S. Much room to negotiate. Theyre basically saying they want tariffs existing september tariffs to be lowered and they didnt want to name their agriculture purchases. The call was really to discuss the issues we thought as kayla mentioned there would be a talk today if there was a chilly conference. Today is to get a deal before september 15th thats when the next tariffs have been into effect. Huawei will get the exemption if theres going to be a deal he reiterated that over the weekend. Its really about putting these pieces together. I would argue economically both sides are aligned for the first time the China Economy is slowing fairly considerably. Their food prices are going up, particularly pork which is up 100 yo 100 perce year over year theyre trying to figure out what could be in the deal to get both sides together. I think theyll need a couple more weeks to get there. You may have their needs aligned at this point. Yeah. That doesnt mean that either side is going to say, okay, ill capitulate to what you want. Is this deal going to have anything in it i believe so. Everybody knows about the agriculture purchases. Thats significant delay of the december tariffs which would fall on consumer products, but if you start to get into reducing the existing september tariffs, youre sending a message to the u. S. Business community that not only are there not going to be more tariffs in the future but that the existing tariffs can come down thats the confidence measure that we would need to get investment thats where negotiators are trying to get to unfortunately it looked like week like china didnt want to put Structural Reforms into place which is what they need to do to reduce the tariffs thats the big question, whether they can get there or not. I say time is of the essence you mentioned hong kong protests as something that could derail this you also had a 400 page document leak in the New York Times this week about some of the about some of the reeducation camps going on in china. Yeah. All of those external events could disrupt this balance sooner would rather be later. Maybe thats the point we should focus in on the market i think has assumed that were going to at least see no further step up in tariffs, no further step up in kind of the aggravation back and forth thats right. But, again, that report in the New York Times, its good to point that out. Yeah. The rest of these things that are happening and continued violence picking up in hong kong maybe we should figure out how the market would react if that ends up pushing any deal to the sidelines. Yeah. First, let me say that policy makers on both sides have done a very good job over the last 18 months of keeping these events outside the trade talks. The pressure here is pretty significant. Think about where we are were at an alltime high on the s p 500. Were at an alltime high in the china trade basket every time weve reached those levels stocks have fallen. The difference here, and i do believe stocks would fall, but the difference here is that both Central Banks, the u. S. And china, are pumping massive liquidity into the system. Unlike in may when trade talks broke down theres a little bit built into the system until they can find a way to get to the resolution in an abrupt change would be negative for stocks all else being equal, becky. Walter isaacson, let me ask you a question how much more liquidity can the Chinese Central Bank pump into the system and how much signs of slowdown of the economy are you seeing thats a great question i wrote last week to my clients that i dont think they can do Monetary Policy because they have inflation thats why they need a trade deal they came around this morning and cut their short term lending rate for the First Time Since 2015 so theyre sending a message that theyre going to do more monetary easing, but i dont think they have a lot to go in that respect until they get a u. S. Deal because as the u. S. Shifts those agriculture products into china, it will start to bring their inflation down and then it will give them more cushion on the Monetary Policy side. I think this might be in tandem of a trade deal. Some people would argue theyre putting more cushion into their economy because they dont think there will be a u. S. Trade deal. Well see how that plays out. Im going there tomorrow for the Bloomberg Economic forum im leaving tomorrow for china and theyve actually Just Announced higher level officials that are going to come to this Bloomberg Economic forum in beijing. Are they using that as a way to try to heal this, dealing with American Business leaders . Theres no doubt they want to at least get American Businesses their side of the story. Theyve been very forthcoming in trying to brief American Business leaders throughout this process, but at the same time theyre also going to try and put pressure on American Business leaders to pressure the Trump Administration to make a deal that may not be as beneficial to u. S. Interests everybodys trying to get the best deal possible here and theyre going to put pressure on u. S. Businesses to advocate for what theyre trying to do. Dan, want to thank you. Great thank you, becky. It is time to say temporarily goodbye to becky, not forever. Shes heading out to lala land, to los angeles right now to go to the cnbc evolve summit which takes place tomorrow in los angeles. Shes got two huge interviews. Were all going to be waiting and watching it. Doug mcmillan, walmart ceo so much to talk to him about given the retail landscape, everything this week and bobby kodek, ceo of active vision blizzard. Leaving now. Packing up right now. Walter, are you coming over here i doubt it. Im lucky to be here well leave your see the vacant when youre gone out of respect. Youll be back wednesday . Ill be back wednesday. On the air. Safe travels. Thank you. Stay away from the walk of fame i do know what youre talking about. Coming up ford bets electric ask him in the break, walter. Stop down to bloomberg, would you. Geez, youre at cnbc how many times would i say that. The competition thats a stretch. Anyway, were going to talk with the companys president of automotive after last nights big reveal of mustanginspired electric suvs. Stay tuned youre watching squawk box on cnbc val, vern. Im off to college and im not gonna be around. Im worried about my parents retirement. Oh, dont worry. Voya helps them to and through retirement. Dealing with todays expenses. Like college. While helping plan, invest and protect for the future. So theyll be okay. Without me . Um. And when we knock out this wall imagine the closet space. Yes oh hey, son. Yeah, i think theyll be fine. Voya. Helping you to. And through. Retirement. Welcome back to squawk box this morning take a look at futures we are a little over an hour from the opening bell. Dow opening up 54 points higher. S p 500 up 4 points and nasdaq 19 points right now. Lets go. Ford unveiling its electric suv at the Los Angeles Auto Show the mustang mache the company joined us. You dont use a brand name like that Joe Hendricks is ford automotives president great to have you. Thanks for having me. I think part of the seriousness of this is what bill ford said. Weve pushed all of our chips to the middle of the table because its 2 . Its a small part of the market but youre going in big by using the mustang name. It is today in the next 5 to 10 years as they evolve, youll see more electrification. Expensive. This starts under 44,000. No, but just to make this move not knowing how many are going to sell. Still going to be a niche. Next several years will be smaller volume but we believe the next five years youll see significant improvement and increased volume by the end of the decade i think youre going to see pretty substantial increase in the portfolio. There are analysts that are actually making comments about competitors like tesla saying they know longer are the only game in town and they actually were this analyst happened to be very negative on tesla saying the shares could be way too high based on players like ford getting into the marketplace does it compare to a tesla the way it feels, the acceleration well, it does electric vehicles have a similar feel because of the torque and power you get and great acceleration. Thats similar. The gt version of this mustang mache will go 060 in 3. 4 seconds. I own a lot of sports cars i know the enthusiasts will love it we wanted to wait until it started to make economic sense to get into electrification in a big way. Youre starting to see it. Weve announced an f150 coming. A mustang mache. When we say because it makes economic sense, is that because batteries have come down or you think the market for these vehicles has grown in size somewhere combination . Its all of the above the charging network, were now part of the Largest Charging Network in the United States thats a big deal. The cost of the batteries have come down. Because that didnt exist before right you know, were used to having gas stations on the corners. We can find them now you have 12,000 plus charging locations across the u. S. That were tapped into. Theres a little bit of chicken egg here. It is consumers are more accepting of it the costs have come down we have more capabilities of the batteries and we can control them. Joe, let me change subjects slightly but you and i were in the Detroit Auto Show two years ago together we were talking and we talked about ford mobility. This notion of ford doing something thats not quite sort of uber and lyft but its also not your normal transit city system, something in between what are yall doing there walter, youre right. Thank you for joining us in 2017 were working with cities to find the solutions that are broader than is it ride hailing, ride sharing can we redesign the Ride Sharing Network inclusive of all of the technology, connected vehicles to make it more efficient and provide new solutions, whether thats sharing or thats pooling, whether thats hailing. Autonomous vehicles are going to be a part of that. We need the infrastructure to be part of that ford is, working with cities as a trusted partner to make that happen. Do you see a future in which people dont own personal cars but ford does . We do see that evolving we certainly believe people are going to buy their own vehicles for a number of years. There will be Solutions LikeAutonomous Vehicles, ride hailing like you see in manhattan. Those options will be more efficient. Remember, theres 90 some million vehicles sold in the world and the emerging markets are growing faster, india. What would blockbuster be a couple of years from now for sales . What would be unbelievable for ford would you say if you think about the next five years, its pretty predictable. Not going to be that high no. The sales rates have been do you make money on this were contribution margin positive. Because its made in mexico which is also kind of a flashpoint. Part of the reason its made in mexico, its a global vehicle. We can export there duty free. Thats a big part of this. We make 80 plus plus percent of our sales are made in the u. S. Do you expect to hear from do you expect any mean tweets . The white house knows this is part of our plan remember, as far as ford goes, we produce more vehicles in the u. S. Than anyone else. A lot of times those things dont matter. We export more than anyone else. The facts hopefully matter. We are the most American Auto company and were proud of that. How many design cues and things do you think you have taken from tesla the grill in the middle without a grill, almost grilless i dont know what you would describe that as. Because you dont need the air intake anymore. You dont need the air intake thats a function of an electric vehicle the design cubes of this mustang mache are from mustang. Its a mustang in its soul but of course electric vehicles do offer you more freedom in the design. Right. Because of the nature of where the batteries are low and the center of gravity is low. Now that youve put the mustang name on an suv will you still be able to make mustangs as a regular car no question this is not replacing the sport coupes. Mustang stands for fast, affordable, fun. We dont want to go far from there. From an suv, this is very affordable but so the fast and fun part is really important. I dont think youre going to see a van mustang any time soon. My wife wants a mini van. We can give her other options. Number one, you have to talk to her, not just say, okay, honey. You have to try to talk happy wife is a happy life. Hybrid is what she wants. Will there be a sports coupe ev mustang not in the near future but probably some day. Not planned for any time soon. We have the gt 500, the 760 horsepower coming out this month actually the sports coupe continues on. We did talk about making a hybrid version of the mustang, but when we do that, we use the electricity to give more propulsion, to give the feel and not to replace the horsepower. Separate question for you on Autonomous Vehicles, weve talked about the race towards autonomy everybody was talking about selfdriving it was all going to happen so fast you hear elon musk talk about it as if it was a 2020 reality. Yeah. It feels like at least in the last 12 months the whole thing has slowed down to a crawl whats happened . Where are we well, reality has set in to a lot of people. We were more pragmatic from the beginning, saying late 21 kind of time frame. This is a big challenge. A big technical challenge. Were on our path, its going to happen some day. Safety first for everybody of course. When you just said 21. Are we now 25 what is the realistic view of this i think youre talking five years to be a realistic see it in volume but you will see it in the next year or two see it roll out in pilot geo fenced areas. One person gets mowed down in a sidewalk one person and there can be zero you need a six sigma you need one mistake and 8 million it feels like the whole enthusiasm and sort of just its because youve come down to reality think. The expectations for how this performs compared to human driver are very high it is a high threshold to your point. Were all taking a very zero im in an Autonomous Vehicle in miami thats a tough environment a lot of things going on. I cant imagine. The vehicles are performing very well. Its going to take years to get this right and then we have to make the congress has to actually pass laws to make this legal and theres all kinds of legal considerations to think through. Its coming. Its just going to take time to get it right. Joe, we have now buried the recession fear supposedly. Thats what the market is worried about. One of the reasons we were a little bit worried because of peak auto sales, trying to figure out is that going to be the next sub prime because of all the auto loans hows the business hows the inindustry pricing is good volume is 17 million sar it will weve been predicting peak auto. The consumers strong whats the average how old are cars now ten years . Over 10, 11 years old more people coming to driving age. A great technology. A lot of reasons to buy a new vehicle. Safety, infotainment, connectivity theres a lot of technology bringing customers in. What does mustang stand for fast, affordable, fun. We need that for squawk box. We need three fast, affordable, fun. Something like that see how quickly he came out with that. Powerful, influential. And actionable. How about insightful. Insightful. We might need four. Trying to help. Good marketing people at ford we can help you out. By the way, anything deep in your data that you can look at thats a leading indicator for where the economy is going yeah. Certainly we look at credit worthiness of our contracts, which are really strong with our ford credit business were not seeing a change away there. Length of terms of contracts something to watch but the replacement cycle. Whats happening with people replacing vehicles and scrapping vehicles its still supportive of a Pretty HealthyAuto Industry again, the good time to buy dynamic of the consumer psyche is important the market really is an important part of that, too, as you all know as a consumer, psyche part of it gas prices low, people, good employment job, good income, feel like its a good time to buy. Thanks. Thanks. Dont bring the pinto back. That was fun. Mustang mache. I have to say one thing to throw a wrench in. You need to order one, joe. It would be great. Get the pinto explorer or mini vans. You dont do mini van we have suvs. I told you, suv dont go to the mini van. 550 mile. Dont throw in the towel in life my wife theres a you know what she really wants a vacuum cleaner. A vacuum cleaner attached inside the car our kids. We have three kids. I go and get the dust buster. The staff is buying you a dust buster. I i was in the car the other day doing the dust buster on the floor because we down there pointing over there. Somewhere else i was you were over there. We have some great products for you and your wife, most importantly your wife. Happy wife, happy life. 29 years, i get it. Its all good. Futures pointing to a new record at the open after the dow cracking 28,000. Just lastminute of trading on friday well give you your monday morning markets straight ahead when we return coming up, he sniffed out warren buffets intervention in the Occidental Petroleum deal and he tipped us off carl icahn was pulling the strings tweer ze twn xerox and hp whether your beauty routine is 3 steps. Or 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. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Investment opportunities beyfirsthand, like biotech. Ne because your investments deserve the full story. T. Rowe price invest with confidence. Welcome back to squawk box. We are an hour from opening bell things have turned negative. Dow looks like it will open down 12 points. Nasdaq down 7 points and s p down 4 points. We talked about how we had crossed the 28,000 level. You just checked them and we were all green. All green before we went to break. You just checked them. We should take a quick were going to dig into whats happening here. Some china something or other. Trying to figure it out its getting worse by the way as we speak. What are we doing wrong were going to keep our beckys gone. Becky left. Separately, we have some news on wework. A massive round of layoffs in a bid to become financially stable the company could announce 4,000 job cuts as early as this week time says that number could jump to 6,000 we work declined to comment when contacted by cnbc. We had anticipated the job losses would take place. 4,000 was the number we heard about originally 6,000 would be a lot more. Coming right before the holidays and lots of questions about the future of this Company Coming up, early indications of a bigtime activist investor in netflix weve got the guy making these calls. Thats next. Dont go anywhere. Squawk box will be back. I can shine, i can shine, i can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. The excellence is reaching dreams and but in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. The amount of Student Loan Debt i have, im embarrassed to even say. We just decided we didnt want debt any longer. I didnt realize how easy investing could be. Im Picking Companies that i believe in. I think sofi money is amazing. Thank you sofi. Sofi thank you, we love you. Welcome back to squawk box. Take a look at futures they have turned on us theyve turned into the red. Want to explain a little bit of whats going on. We want to show you where the futures stand right now. Dow off about 17 points. Nasdaq off 7 points. We think eunice yoon she did earlier at 6 00 she told us. The moon in beijing about a trade deal is pessimistic due to President Trumps reluctance to roll back tariffs. Some of this was around last week, too, which china believed the u. S. Had agreed to a government source told cnbc eunice yoon. That didnt happen in the last ten minutes. She told us that at 6 a. M. Not everyone was awake they should be maybe theyre not all we were talking about up 50 or 60. Down 16. So on a percentage basis we move around. Doesnt take much about china to move us off. Do you think were overreacting to every china tweet . I dont know, is. 3 of a percent overreacting i dont mean that dont you think i also worry that we are sort of set up for if it really did break down its not a breakdown, it feels like a Reality Tv Show were getting closer. Right new this morning, fedex ceo is firing back at the New York Times over an article about the companys tax bill the paper published an article yesterday on fed exs taxes. The times reported that between 2017 and 2018 fed ex managed to cult its tax bill from 1. 5 million to 0 as the effective tax rate dropped from 34 to zero Financial Filings show fed ex paid 2 billion in taxes over the previous decade. This came after fed ex and the ceo fred smith lobbied hard for the Trump Administrations tax cuts the tax cuts were designed to encourage Capital Investment by the companies. The times said fed ex spent less on that in 2018 than 2017 passing most of the savings on to shareholders through buy backs and dividends. Smith calls the report distorted and factually incorrect. And challenges the publisher and Business Editor of the times to a public debate. The times has yet to respond to smiths challenge. Interesting it was just mentioned. They didnt say there was anything specific in the article that was wrong, and i think that the larger issue is about whether these tax cuts have actually spurred Capital Investment what you saw from the article was not just fed ex but the larger point being companies had wanted these tax cuts and got the tax cuts didnt spend. We ran into a trade war and a slowing global economy. 100 . Anything in a vacuum. Right when we were talking about in the 6 00 hour, no ceo went to washington and said, please, please, please, lower taxes. If you lower my taxes im going to have what were doing now. Separately we should tell you. Tmobiles Ceo John Legere will stay on as ceo through april of next year. Ledger. Ledger. He will be succeeded he even spelled it out for you. On may 1st seibert is the current ceo and chief Marketing Office at tmobile this may explain why his name was in the running or being floated at that time meanwhile, i have to say, give this man a lot of credit because he really did make tmobile work when people didnt think he could. He became a brand face for it even on social media this is the way he dresses, the way he acts. Gave it a little hipness. Gave it hipness did the deal with sprint if the deal goes through. I would imagine the shareholders would have wanted him in that role to the wise because thats the question to me. I would have thought if youre going to buy this big company, have to do this massive integration which has to take place, isnt this the guy you want running it . You want his number two . Thats the fundamental question. Maybe hes going to run for president. Maybe hes going to run for president. Him and mayor bloomberg. Well see. The unconvinceal research from our next guest led him to break some news on a couple of new huge recent deals by studying flight patterns he gets his hands on those numbers. He recognized warren buffets occidental deal. He rang carl icahns deal with the zeerl rocks hp hes back with a book to drop on netflix. Joining us is don vilsen what do you know this is what i know well, we snuffed out icahn by reading the q2 13f and nomura was the largest buyer. That evidently happened last week with carl icahn so 13f for q3 were due out thursday and if you look at the filing from nomura, we obviously went there because thats where we were riding a hot hand, but you look at nomuras filings, look at elliott, at t, has a big new position at emerson. That could be d. E. Shaw. Which is an active position. Theres the big hp position which we know is carl. Its involved in a deal but at the top of the list is netflix and somebody wanted to plot a position in q3 it was 260, 270 stock somebody put in a position they didnt want anybody to know about. Thats what we think nomura did. We have our suspicions on who it might be. Do you think its because the stock was under priced or you think its because they want to change the direction of netflix . I dont think it is an active position where somebody is going to go in there and start beating up reed hastings, that would be a folly. Hes one of the most bullet proof ceos. What do you think we take away from it i think we take away that an icahn or ackman is going to stamp this with approval. I think its ackman because it fits a pattern that he has been doing he buys Great Companies now. He doesnt buy turnarounds he buys nike, starbucks, he buys birch, blue chips. Its a little beat up. It has some competitive issues its going through netflix is a Great Company nikes a Great Company right. And i think that the pattern fits excuse me, ackman has said on his q3 call for persian holdings that he was building a new position, between 8 and 9 of his aum. That kind of fits what the size would be at netflix and he said he wants to top it off opportunistically. Its possible. I want to tap the brakes that nomura kind be of let the cat out of the bag thursday. Whats the chance that its not either of these guys no its not likely too many people other than me do. Our third point was in the stock in q2 and sold it in q3. Doesnt make sense they would reload it. I think the most likely candidates would be icahn. They made a bazillion dollars here you dont think whoever this is, you dont think this is somebody whos going to agitate the change i dont i think thats beating your head against the wall you might make some suggestions to dial back on the content budget, take it down from 15 to 8, 9, 10 billion and really churn this into a cash flow engine thats about as much as you can do could you recommend that, you know, they started talking to apple . Have you been following do you have the tail numbers for mr. Ackman and mr. Icahn we do not didnt know if there was any trips to california. No, we dont have that or vice versa. Or vice versa thank you for coming in. Coming up, the next market milestone. Where do you position your money in the season of record highs . Top market strategists joining us after the break stay tuned dont forget to subscribe to our podcasts youll get interviews, original content and behind the scenes access look for us on apple podcasts or on your farivote podcast app and subscribe to squawk pod today. O. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Oh, wow. You two are going to have suyeah, have fun . Thanks to you, we will. Aw, stop. This is why voya helps reach todays goals. All while helping you to and through retirement. Um, you guys are just going for a week, right . Yeah thats right. Can you help with these . Oh. Um, were more of the plan, invest and protect kind of help. Sorry, little paws, so. But have fun send a postcard voya. Helping you to. And through. Retirement. 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. I am totally blind. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. Dom chu returns to join us some of the mornings biggest stock movers hi, dom. I have three additional ones. Lets kick things off with shares of sherwinwilliams the maker of paints and coatings gets a downgrade by analysts to a neutral from a prior buy theyre taking it off their conviction list. Its a valuation call after a huge run up in the stock and the companys multiple given an anticipated lowdown. Those shares kind of ones to watch here next up areshares of workday down by 2. 5 or 4,000 in shares. The workplace Human Resources and it gets downgraded from equal weight to prior overweight the target price goes down to 180. It was 219 they cited slowing momentum in the Human Capital or hcm business and then were going to end on shares of 5 below. Roughly 1,000 shares premarket volume it gives positive analyst commentary from jpmorgan analysts who have an over weight rating they say they have better valuations given the recent pull back in the stock and expectations that management will reiterate Fourth Quarter sales. They say pull backs in those shares, andrew, are buying opportunities. Back over to you. Thank you for that. The dow breaking 28,000 in the last minute of trading friday afternoon mike santoli joins us with the journey to the milestone number and what may happen next. Yes, andrew we can build a story around this run to 28,000 and what might come after take a look at the dow against a few companion indexes. Dow transports, industrials and s p 500. The dow is in white. You see this very orderly kind of sninice breakout. To a new alltime high whats interesting is whats rolling over which is the utilities. Theyve been the leadership group. Defensive market theyre kind of coming back. Transports i guess you would probably say just barely nudging above the upper end range. Theyve been held in check in the blue is the s p why is the s p outperforming the Dow Jones Industrials are doubling down. Not as defensive not as much tech if you want to take a look here at the four stocks within the dow that have done the best over the last year, it is actually not the industrials, as you might expect its tech, microsoft, apple, home depot, Procter Gamble not the Core Industrial stocks the hope here, guys, is the pivot towards cyclical stocks. It might refresh the market and maybe the dow has a little bit of a tail wind if that continues as Global Growth firms up, guys. Mike, does the year to date look any different it does the year to date for the dow and the dow transports and industrials is actually, theyre much closer. Now the got killed in december. Exactly very close on a year to date so i brought this to kind of capture what the longer term trend is right. Youre right. Essentially that was a big comeback. Might want to get rid of that month completely just let it fall off. Its going to make the one year returns look good in about a month. I know. Im talking to him insisting i look at the camera, that i cant talk to you i cant talk to him . While im im going to the table. Come on over here. Lets do this i mean, this tv stuff, you know what i mean every move you make im trying to look how beautiful the set looks today. It does sorry, mack god, i happen to look at you for a second mike, come join us on the set. Oh, youre here. Sorry. Lets also bring in another voice to the conversation. J. J. Kinehan. Transportation average in that recession scare, that got that really got hurt and, i dont know, it kind of skews all of these numbers what do you make of where we are . Whats more appropriate the year to date or the 12month . I would say that probably year to date, joe, and although you know what theyll obviously be the same here shortly so it wont matter so much it is kind of interesting looking at the rally with us going through this record in the dow last week. I look at a lot of the retail, our clients behavior. Whats interesting, theyve been conservative over the last few months, which is one of i think we may continue. Its not some froth that people are dying to get into. Our clients have been pretty much flat in terms of buying and selling of equities. What they are doing, which is interesting to me, is a lot of really shorter term Interest Rate plays almost 75 of the the interest bearing transactions that have taken place with us have actually been six months or less so i think one of the things youre seeing is people waiting for the selloff and often when people wait for the selloff we continue to rally and rally and rally. The other interesting thing is you spend a lot of time on tariffs this morning and one of the stocks that our clients have been continuing to sell as it goes higher has been apple i think thats that, you know, tariff fears are being played out it is still the Number One Health stock in our firm, but as the market continues to go high, apple continues to get higher, every time there is bad news on tariffs, we see people come into to sell the apple position couple of interesting things going on underneath the surface. Mike, i dont feel like the sell side really embraces for the past six months, i really dont. I think thats fair they have not. The formal positioning targets have not come around i think this happens in phases so i think if you look at the faster money Trading Community that says, look, we have a clear bottom in august, we have broken out to new highs, if you look at things like options traders, all the shortterm tactical stuff, it looks like it is getting a little ahead of itself and maybe sentiment is stretched slower money in terms of sell side and retail, and even really i think Traditional Fund managers have not dont feel like they own enough stock right now because of the way the market has behaved. I saw this morning some crosses combining with other 28,000 that were like ready to then i saw the guy who is on the commercials always talking about silver at some bucket shop company. I wont he said something and hes pushing silver for the same commercial on for five years about how silver is going to do something, you know which one im talking about . Hasnt gone anywhere look, you can always you can quibble with some of the rhythm of what is going on below the surface of the market, you know you had some poor breadth last week, i think you have a lot more new lows than the nasdaq than you would expect for the nasdaq you can always find fault with something. And i think it kind of contributes. Is this a blowoff or not . Is this a i dont think so. I dont think so, joe, only because of one reason, i think this week youll see the market get a lot of support we have retail earnings coming out. We know the consumer has been ridiculously healthy no reason you had jd come out last week and talk about the secondary cities in china, which was responsible for their good quarter. I find it hard to believe were going to go into a week with so many retail earnings and not have many, many of these Companies Beat and actually set a good, you know, forward looking picture for the beginning of next year when you have the employment rates where we have, you have people out spending money, were seeing evidence of it in every single number and we tick it off , you got done talking about home depot, a minute ago here we kick it off with home depot tomorrow are they going to reinforce everything were seeing in the Housing Market and we just go through the week with target calls, et cetera i find it hard to believe we dont get some support from those numbers, barring some bad news if it comes out on tariffs. All right thanks, j. J. S p is 3120. Yeah. What is the top tell me when. You know you cant do i dont think it is 3120. Where would you say, oh, my god, this is just really extended i think 33, 34 . 34, 10 march of next year, thats going to feel like youre way, way ahead of yourself. You were shaking your head on the earnings report. Besides the consumer. The retail that the consumer is so strong is a reflection of how despondent we were about the consumer in august it is fine the consumer is consistent, performing, not necessarily like it is off to the races what earnings are you going to look for leaving aside Consumer Companies it is the industrial earnings i think thats that has to confirm whether we have this inflexion point in Global Demand or not. Got you meantime, want to get across the country to San Francisco this morning the cnbc bureau, one market plaza, jim cramer has woken up quite early, earlier than normal to visit with us hey, jim. Good morning. Enjoying your show. Incredible to me that the market keeps going higher without the retail presence. I thought that j. J. s point they keep selling apple is really a metaphor for what is going on. They keep wanting to leave they seem to want to be able to be in speculative situations, not in any stocks with the big dollar amount that are doing well. So what are you expecting in terms of the retailers later this week targeted specifically . I think target is going to be doing pretty well. Brian cornell, whole group of models, five different models depending where he is. Thing to focus on is the inner city idea he has that people who are allegedly not doing well actually have two incomes and are being underserved. I think hes being far more visionary. Hes putting soccer fields up wherever he does these things. Hes very selfeffacing, someone has to be able to represent how well hes doing. So i will. I think hes doing a fantastic job. Did you sleep on a plane . A little bit. Hard to sleep after the eagle it wasnt a beatdown, ugly game. It was ugly i didnt think you know who looks unbelievable the ravens the ravens are there. The ravens are there. They have we won really big yesterday. I know you did. The seams can come out. Look, youre right i just the saints look good. I wonder how you got out there. You philadelphia red eye. Philadelphia red eye just got there, yeah i got a quick question, you know my daughter graduated from tulane, how about the renaissance of tulane. How great and exciting that school is. Partly started when your daughter entered tulane. We have a chart showing the great students who came, great professors and she was a leading indicator. Tulane is great, tulane is winning in football, which is really weird. Is that something almost won this weekend. Almost won this weekend what is happening at tulane and a lot of other university, it is really connected to a community. And people just, you know, like being able to be in the creative place like new orleans and i know your daughter loved it. Just goes back constantly and a lot of it is people like you have just come down and embraced the place. It is worth it to talk about new schools. This is not as much fun. You can sit on the balcony with kathy and me and listen to the bands come by. This is a cheap the music, the food. Were having, yeah. Were having joe too. So watch it. We get along, jim both like the market. Youre showing just love the show this morning. Just been a lot of fun thank you, jim. Appreciate it. Good to see you. We should tell everybody, dont miss an exclusive interview with snap Ceo Evan Spiegel this morning on squawk on the street at 10 00 a. M. Eastern time jim has a huge lineup of guests out in the valley this week. Final check on the markets now, we have turned into the red, we werent green earlier. Nasdaq looking to open down six points s p off about three points and we need to thank the one and only Walter Isaacson. Im sitting in beckys seat. You are we moved you. It is amazing. We had a ball with you. Come on back. Ill come whenever you invite me i keep inviting joe down. Im coming down. Were going to do a show from down there join us tomorrow. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber at the New York Stock Exchange cramer is at one market in San Francisco. At dream force is set to begin full coverage from jim all week long stocks were aiming for fresh records this morning, but pulled south from a tweet from eunice yoon saying china is pessimistic about a trade deal and strategy is now to, quote, talk and wait. Europe is moly