tv Squawk Box CNBC October 30, 2019 6:00am-9:00am EDT
>> good morning. welcome to "squawk box." i'm becky quick. welcome to our new set we are still live at the nasdaq marketsite old school where we are all looking at each other. back to the future you and i this way, becky in the middle >> i got to get used to this >> very much like our set years ago. >> i like the round table. >> i have been the umpire in a tennis match for years at this point. >> this is nice. we get to look at each other and our guests
>> someone thought there was a method to this madness we are back on the first floor you should watch this show just to see what goes on on times square take my word for it, there is stuff that goes on out there you don't want to miss you got to be 18 for some of this stuff >> we are ready to go. brand new set. it is good to be here. >> we thank everyone for the love >> beautiful coloring and lights >> nothing was spared in terms of money for this. look at this it looks like we are going to take off here. an elon musk designed set. >> we have that federal reserve board meeting coming up.
we'll hear that decision in a couple of hours. in the meantime, you are watching the futures dow indicated up by about 14 points nasdaq by about one point. nasdaq up about one point. we touched a high yesterday and gave it back a little bit. still looking at the s&p a couple of points off the all-time high. dow futures indicated up by 16 looking at the treasury market, still looking at the 10-year yielding up to 1.83% something we'll be watching so closely as we get ready to hear from the federal reserve and continue to get this flow of earnings coming in >> ge is reporting there is usually a 7:30 report the estimate for ge is about 11
cents a share on revenue of 22.927 billion that came in with earnings adjusted that is better than anticipated. you are looking at revenues. >> they are also talking about industrial organic growth and margin expansion company raising the free cash flow out look. this time from zero to 2 billion. backlog at $386 billion. organic revenue growth up to 7%. >> two notes on analysts some still apparently have baker
hues in their estimates. it is worth noting that ge is reporting the discontinuing operations when you are doing apples for apples. reflecting another quarter of progress the margin expansion and cash amid the macrouncertainty. they say we are raising the out look even with external head winds and tariffs. we are holding to the outlook. >> much more work to do. >> reduced income from moving baker hues much more work to do. stocks up about 6%
stocks are up. ge has reported as a dow no longer a dow component. $79 billion market cap under 100. almost a midcap at this point. that's not a large cap >> we can report the next piece breathlessly at&t says it will launch new streaming service in may at a higher price point than disney and apple. hbo max will cost $15 a month. exact same price as a regular hbo subscription triple of the new apple service and disney offering movies and shows from hbo as well as warner library
including friends and big bang theory and dc movies and will be the streaming home of south park it will launch with a new 10-episodes game of thrones prequel. hbo announcing it will not pick up a separate prequel that was going to be starring naomi wats. it is materially more than apple. having said that, the amount of content is materially more than what you'll get on disney and specifically apple because they don't have the library at $15, it forces the issue for ska cable operators. it is very hard for cable operator whether charter or comcast to say, we are not going to take this i imagine the goal over time
will be to collect as many people into this as possible and hope it becomes a this or a netflix. >> you also have disney that is a big challenger especially if you are a family with kids the question is, how many do you sign up for? >> i think if you are a family, you'll do a disney and then is it a netflix versus hbo max? we have peacock coming that will be free. i wonder whether hulu gets pushed out if we are playing an either or game netflix, i understand. because hbo, people already have it but then it makes it so much harder for hulu. the big issue is where the content is down the road with netflix, you can turn it
off any month. >> i don't think anybody knows where to price this. right now, you are right you can turn right out at any given month. what will happen over time like with disney, they are saying buy in for a year. >> they have introductory offers that never last. a couple of quarters under their belt. >> you've seen that with netflix. if you've got the content, people will show up and pay. >> $3 or $5, they look introductory a lot of people saying profits you don't want to maximize those. you want to try to get to the point of ee las tisity where people will keep it and at least have some margins. >> the real question to me on
hbo, how many more people will get hbo because of the bigger library? >> that seems to be what was sticky what they had paid for to keep in-house from as much as we no about the netflix viewership aside from these big releases >> then you have people come on and say you don't need any library. you just need a handful of shows people feel they are addicted to later on, we'll be joined by barry diller at 8:00 a.m. eastern time we'll learn more about hbo max when david sits down with john stankey coming up at 10:30 a.m
>> this news of the two "game of thrones" guys and bailing out of star wars. big news for my son. >> i said to you, there is a backlash against those creators. i think they are brilliant >> no doubt. he mentioned some stuff that happens on "game of thrones. the guy who becomes king >> stop. >> everybody has seen it >> you haven't seen it >> returning for round two of grilling about safety. talking with senators and people who were at that hearing yesterday. concern over the company's 737 max jet. it was a little surreal.
opening remarks before the committee, he apologized to the family members of the families that died in those two crashes >> on behalf of myself and the boeing company, we are sorry, deeply and truly sorry as a husband and father myself, i'm heartbroken by your losses >> much more as alluded to on the boeing earnings at the bottom of the hour coming up, adp, gdp and the fed. we'll get you ready. and later don't miss our exclusive interview with barry diller the spin off on his company's dating business. we'll be right back. the world is built for you.
>> welcome back, everybody an early read on the jobs data at 8:30, our first look at third quart quarter gdp. and looking to the fed decision. and it is earnings season. dom, i feel like we have hit our stride >> we are just about half way to earnings season. we have themes developing. not unlike some of those seen in previous seasons this week rolls on this week, north of 40 companies reporting their results. particular focus will be april
the closing bell with the likes of apple and facebook and starbucks in there as well those three companies the headliners today the first read on the initial iphone 11 sales. take a look at the score card. interesting development here about half the companies reported in the s&p. 16% miss every other company reports earnings will decline just shy of 2% and revenues will be up at 3.5% you look at the movement, the earnings growth has been generated. health care has seen a 7% growth rate real estate will be a 4% earnings growth gainer
utilities will grow. those are the ones and let's talk about the market implications roughly unofficially october 15, these are the sectors that have done the best since that time. health care is up 5% in that span so far. financials and materials up 3% and the ledger so far have been some of the more defensive sectors like utilities we'll watch to see if those play out. health care, financials, materials are the best performing sectors so far this earnings season. back over to you >> thank you let's talk more about the quality of earnings. whether we can continue to lift the markets. joining us for that, are you 80% sure we are bottoming in terms
of these metrics you have a lot of numbers you pay attention to do you have a high degree level of confidence? >> i do. >> about 80% sure earnings have bottomed and you point out more importantly, you can see it in revenue that you say companies can't gain revenue like they can with earnings. >> that's right, i focused on revenues quite a long time if you see revenues beating expectations that is strong. you've got 9 #% growth amazon is an example of that
they've all been reporting decent growth. telling me they've made the adjustment to the 2014 to 2016 25% increase to the weighted dollar. >> honeywell in particular, they produce and they are affected. is this a momentary calm could they get worse or is this a new normal >> if the trade talks and negotiations were to deteriorate much further and had a shock that left the whole global economy, that would be a different story. based on what has happened so far, it is a big deal.
a big drag on china. but in the u.s., not nearly as much but the main channel it worked through was the confidence channel you had a stock and the flow they'll assume they remain in place. unless there is additional tariffs, companies will normalize. confidence starts to rebound then we move on from there i'm in the position or of the view that unless things deteriorate further we'll see that acceleration. we are not at 5% >> we are at four.
we'll be close if we get that recovery and business confidence and spending will tick up, we'll get back to five >> you think the regulatory environment has been sort of held back and that will insert itself and we are in good shape. >> the trends in that are pretty robust you had return on equity capped the entire 10% until the third quarter of last year the u.s. banking system is profitable there is an interesting dynamic in that as well. you may have seen mnuchin gave an interview yesterday saying,
that isn't the core of the repo problem. that's how they should be fixing it >> you weren't a math major, where you? >> no. son of an engineer >> he points out that 10% level was crucial. only then do you see things trade above book value >> where are we? we are at 12 >> that's good too this is an inflection point. what does that mean for the s&p? is that the new high >> that's why we are at new highs. the rate of change matters for the multiples. last year, growth was peeking. this year, it is troughing and reflecting back up expanding and markets will go
higher it is likely you'll see earnings growth go and the market will have discounted it >> even when the fed says it will hold later. >> hold on, we got an inflection point and a new set. we are here and ready for positive action. >> you are going to hear positive news from the fed with the potential. >> it is not about the fed >> andrew, the rates aren't what matter what caused the melt down a year ago was globally synchro the fed is about to pump $600 billion in the reserve that money is not going to go to just fix the plumbing.
it will work its way out into the system the dollar probably goes down as a result that losens trade credit the whole global trade recession should end the market telling you it should end. autos are rallying in japan and germany. sweden and germany are outperforming the rest of europe >> there are two kinds of people in the world those who blame the recent slow down on the fed being too tight or on trump trade wars you are making the case that it is both? >> in the fourth quarter of laelast year, it was global. >> my whole thesis of this year is that it was an echo of '87. and in '88, the market spent the whole year recovering because
the fed responded to it. you had a trade war under way then too reagan put $100 million tariff on semiconductors then >> okay. thank you. appreciate it. >> we got a story. your story you appreciate this stuff too. a hands on review of apple's new air pods pro he's going to tell us why the noise cancellation may be a game changer and why they may or may not fit in joe's hears when we come back.
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>> welcome back to "squawk box" this morning big tech companies are fighting for your ears. amazon is out with new echo buds and apple just launched the new air pod pros we've talked about these a lot you have both. i have this one. i have old school. >> which are still great >> and you also have to solve for joe's ear issues >> i think these will work there are three different buds
now. noise canceling is the thing then there is a transparency mode so if you want to allow the outside noise in say if you are on a subway and you need to hear >> are these as good or better than in ear bose on an airplane. >> i carry these around by day but for those road warriors watching us, then i carry the bose for a plane >> i am the same way i'm flying this thursday out to seattle. so far, they do have the noise canceling that works well blocking out all the noise you know when you turn on bose and it blasts you and almost
feels like you have a head cold. this has a vent that blocks that out. >> in terms of the health of your ear >> your health as you walk around new york city whackialkig around your phone and you can hear nothing >> i am with you but they do have this transition mode >> these are going to be in your ear always these have a much smaller stem harder to hang on to these >> the controls are different.
you squeeze them to turn on the different modes. >> you can put different ends on them >> there is three different tips >> did you put these in your ear already. >> you might have heard, she's a germophobe it will walk you through in set up to let you know how good the seal is. they are 3.99 to replace them. >> how do they compare to these? >> not as attractive i just didn't find them to be as high quality the case is chin si. it uses micro-usb instead of
lightening that doesn't seem like a big deal but most people don't carry this cord. that also has wireless charging. i didn't find that very comfortable. one pro, you can talk to alexa you could say alexa, she'll come up the way siri does >> one thing for amazon is to put alexa everywhere these are $129 versus $250 >> you are saying but they are not as good. >> you can distinguish between
fashionable to unfashionable >> yes they are totally goofy >> least bad least dorky. >> i like that they shortened the arm. >> i think it is important so you don't drop it, lose it >> we'll talk about this i want to hear about your airplane right >> ge shares rising after the company's earnings and revenue beat expectations. check that out now as you see the shares gained almost 7% at almost 9.70 a share. we'll look at yesterday's s&p 500 winners and losers
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>> good morning. we are in our new home on the floor of the nasdaq marketsite take a look at u.s. equity futures at this hour the dow looks like it would open up higher. nasdaq looking to open about two points higher and the s&p looking like a margin of green there for now. a couple of pieces of corporate news a top executive at juul filed a lawsuit saying the company knowingly sold tainted or old products to retailers. he claims the company charged the suppliers $7 million for providing tainted liquid he also says the company sold old product without labeling dates and said that the company
retaliated against him just adds to the whole story and concerns around vaping >> 100%. >> not the same story but you need to worry about everything you use obviously, maybe in this case, was this a false positive johnson&johnson shares are rising they say they retested baby powder and found no signs of asbestos in one lot which prompted a voluntary recall of 33,000 two third party labs conducted 15 tests and found no asbestos >> the thing that jumps out at me is that they bought it on line i wonder about the sourcing.
>> it could be tampered with >> it could be tainted >> they've had experience with that >> do you have that big nypd, new york's finest? >> i can't really see it >> the wide shot you can see >> you got the hard rock that's cool. that is nice >> not in the close up, just in the wide shot. >> getting used to our new home. >> getting 5used to it what do we think about the arms on the new chairs? >> i like it >> karl, how is the gut? when can i breath. just so people know, the camera
adds at least 10 pounds. >> 12. >> 12. i've been checking twitter haven't seen anything yet. >> now you are egging them on. >> you have -- >> you have nothing in one of your legs and you store everything there you are so svelt >> thank you i'll take a compliment >> i was saying too skinny >> this is why we have to move on bayer shares jump. now says the number of lawsuits related to roundup weed killer has jumped to 43,000 shares up about 2.1% this morning. >> coming up, big day for
earnings we have a fed decision today we'll get you up to speed ahead of the earnings bell we don't want to miss the media interview to talk about media wars and streaming landscape stay tuned heronnbe cc. there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪
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fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you. >> welcome back. we've been watching shares of general electric reported quarterly profit on an adjusted basis of 15 cents a share. revenue came in above what the street was expecting ge raised its full year free cash flow forecast saying the capital unit remains on track to reduce capital this
year with us our guests what did you think, scott? i know you had a buy on this before >> i'm relieved. we didn't really know walking into the quarter >> always good for an analyst. phew i'm relieved with ge >> it is not been the best quarter for industrials. it is a tough economy. they are the largest supplier to boeing this is a tough environment. the numbers look clean they look good >> you not only have a buy rating on it you own this stock too >> yes, i own it >> would you buy more base ond this report today? >> yes, i would. if you could look out to the years, i believe the stock will be in the midteens we were thinking maybe 50 cents.
maybe closer to 70 cents next year, 80 to 90. in you have a little bit of luck, maybe there is upside from there. >> let's talk broadly about what we've seen from the industrials. larry nap was here and he thinks this is the bottom >> i think the market has been telling you something like that. it is plausible that third quarter is the bottom. the way the stocks have been reacting to news they've declined every excuse to sell off broadly that's been mostly the cade ans to this quarter. we are more than hoping, kind of expecting that this might be the worst. >> american exports at large but after what you saw yesterday and you know there is a tougher dose coming today from the house, how
do you factor that in in terms of when you are expecting to see the 737 max brought back >> this is hard. watching the testimony yesterday -- >> watching the families >> it is terrible. these are front and center companies on the debate. we've had four earnings cuts ge has had eight of the laft 12 quarters have been miserable you findly string together a couple of those in a row >> with the boeing situation in terms of production interruptions, with the strike and the tariffs. you have mulligans all over the place. i'm looking at how the street kind of digests that
information. it seems like you are going to get a pass at that level >> mike, good to see you >> does denis keep his job >> that's above my pay grade he had a tough day yesterday. >> below my pay grade. >> i don't think -- >> okay. so we are digging deeper he can't probably. coming up, boeing ceo grilled. that stock climbing throughout the day. we'll break down the performance and bring you today's grilling in the house >> announcer: still to come, economic data that could move the markets. first, an early read on jobs friday we'll get adp early read and a
senator, again, i support taking a hard look at the delegated -- >> i'm not asking you for a hard look i'm asking you for a commitment here because you have the opportunity to make things right. >> i'm reading these things, i'm not a pilot, i'm not an aerospace engineer and yet i'm scratching my head going, whoa, something really wrong happened. you knew a whole lot why didn't you react faster? >> you've not been telling this committee the whole truth. time and again, this is my frustration, boeing has not told the whole truth to this committee and to the families and to the people looking at this. >> you're the ceo. the buck stops with you. did you read this document and how did your team not put it in front of you, run in with their hair on fire saying, we've got a real problem here?
>> that was boeing ceo dennis muilenburg on capitol hill yesterday facing questions from senators on the grounded 737 max jets he's set to testify again in front of the house transportation and infrastructure committee later today. joining us to talk about what this could mean for the company and his leadership, eric desenhall, and ron epstein, research analyst at bank of america. eric, i'm going to go to you first. does dennis survive? >> well, there's a lot more we have to see. look, you have to understand what a congressional hearing is and isn't. it is not a fact finding milgs, it is political theater where the objective is to take a witch into the salem village town square and stone that witch. if you are the ceo, you have two objectives such as muilenburg, number one, is to survive your beating without saying something profoundly stupid. and number two, to come across as a basically decent person
who's trying there is no other objective. it is simply -- when we train people to deal with these things, we always tell them, you are not going to do -- deliver a zinging point and solve the problem in the hearing your goal is to simply survive it, that's it. >> hey, eric, i just want to push back on this. you're talking about a situation where 346 people died. >> that's right. >> not in one plane crash, they died in two. it was the company not acting faster between the first and second that allowed the second to happen. >> i don't dispute that. >> ted cruz was very effective when he drilled down and asked him, dennis muilenburg, what he knew, when he knew it. finally got out of him that he himself had not talked to the pilot who had those earlier problems with the flight simulator or with the mcas still unclear exactly what happened there. i think that was damaging in itself because it showed that dennis muilenburg himself has not gone ahead and tried to figure out what happened and what went wrong. it's one thing to say you are very sorry but if you are in
charge of following up and figuring out what happened, he doesn't know because he hasn't spoken with the principle people involved with this. >> what i come back to is what is the achievable objective, not media training this is a forum owned by the senate this is not a forum owned by the person under fire and so a lot of what happens is the pundant class, the media has an expectation of what you can achieve in a congressional hearing. more broadly, i think you're right, but what the solution is going to be is beyond what the hearing is i mean, for example, one of the things i've seen is a lot of comparisons to bp which is not a great comparison, but i said on this very show when that happened, plug the leak, clean the mess, compensate the community. the minute that leak was plugged, that story fell out of the news. >> eric, i want to go to ron for a second as someone who looks at this as a company and a stock, do you want him to be running this company right now, dennis muilenburg >> you have to ask that
question, what's the broader market want? and the share price has been, you know, very resilient through the whole period. >> do you think that's a function of him? do you think that's a function of the company, its legacy and what people look at as the future how much of that is about dennis muilenburg, the balance between wanting somebody who's been there, who knows everybody versus the transition of bringing somebody in but maybe having more trust with the public, having more trust with regulators >> i think actually dennis and his team are a big part of it. >> that's the question >> yeah. i think the street thinks so for sure, right? if you look at the change in the company's financials under his tenure, it's been pretty remarkable, right? everybody today values boeing on its cash flow generation and under dennis's tenure and his team's tenure, it's not just him, their ability to generate free cash flow has gone up markedly. >> you don't think if you look at where the stock is today would there be -- if he left the
company, would the stock go up or down that day >> that's -- that's a great question how do i answer this one >> if you were a betting man because we've got to get to commercial >> would the stock go up or down that day my guess is the stock would go down that day because people would think there's more going on behind the scenes than just what we know. >> ron, thank you. eric, thank you, appreciate it. when we return, our guest host for the rest of the show on this special morning, mohamed el erian. you won't want to miss what he has to say ahead of the big fed decision later today we'll be right back. each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group.
zwree sigs day for the fed what it means for your portfolio. boeing heads back to capitol hill and in the united states we trust. a bipartisan bill looks to preserve the federal trust fund. senators mitt romney and joe manchin are behind it. both will join us first as the second hour of "squawk box" begins right now. good morning welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen.
welcome to our new set on the ground here in beautiful -- a little bit rainy time square this morning, guys >> we're back with the world. >> we're back with a roundtable where we can actually have a real discussion. no ping pong i get to look at. >> joe: right in the eyes. >> both of us. >> becky doesn't have to do the umpire/referee situation >> maybe when we'll see each other's reactions we'll be more empathetic. >> ha! >> the feeling. >> i know you both too well. >> can i ask you a question? >> you can ask me many questions. >> this is time square out here. >> it is. >> is "the new york times" doing all of this construction what is this when is that going to be gone? >> they're hoping by the end of the year they're putting in safety -- you know those big things-- >> the ballasts for -- >> so that -- that's it. >> it's going to be another year. >> no, i don't think it's going to be a year >> all right elmo will be back and all of that stuff >> all the fun stuff for the
kids let's show you u.s. equity futures at this hour that's what the kids want to see. let's show you where the dow is standing right now as we speak up about 23 points you're looking at the nasdaq up about 5 points s&p 500 just marginally up right now. let's get you caught up to date on what's happening we have some headlines for you at this hour general electric shares are up premarket trading. ge reported adjusted quarterly profits of 15 cents a share. that was 4 cents above estimates. revenue coming in better than the street expected. ge raised the free cash flow forecast for the year. the stock is up by 4.5%. we've seen it up by 6.5% we'll continue to watch it as we get closer to the opening bell the stock is trading at $9.48. at&t will launch the hbo max streaming service at a lower price than man expected. it will cost under $15 a month as it seeks to compete with netflix, disney and apple. john stankey will be a guest on
"squawk on the street" coming up at 10 a.m. eastern time. david faber will be sitting down with him two key economic reports are up this morning. adp's october report will show that the u.s. economy added 100,000 private sector jobs. that comes out at 8:15 and 15 minutes later we'll get a look at third quarter gdp that will show a 1.6% annual growth rate. the fed will wrap up its two-day meeting that happens later this afternoon steve liesman joins us from washington with the latest steve. >> reporter: good morning, andrew the stars look like they're aligned by a rate cut from the fed followed by a shift policy that will make the next move less automatic let's take a look at the pr probabiliti probabilities. 94% of a rate cut in october followed by only a 21% probability of another one coming in december
you have to go all the way out to april, which is through several contracts. not great data but a 56% probability of another rate cut coming all the way out in april, which is to say the market's undecided about when or if another cut is coming. barclays writing ahead of this, we think chairman powell will emphasize that the committee is moving away from insurance driven easing towards an emphasis on data dependence and meeting to meeting decision making some possible improvement in the trade talks along with the fed believing it will provide a lot of new stimulus to the economy and an end to balance sheet reduction. it would appear to want to see -- have some time to see what effect all of that has, the data since the last meeting has been mixed take a look. gdp, it's gotten weaker. we were at a 2% cnbc rapid update now it's 1.6 unemployment has gotten better it has improved. payroll growth a bit weaker. inflation pretty much unchanged.
what does look different about the attempt by the fed to gain some flexibility is the market looks ready to give it to them at least for a little while, andrew >> thank you for that. joining us right now, for more on the fed and the markets, chief u.s. economist at s&p global ratings and our guest host mohamed el erian. here's my question, let's assume that the market gets what it wants today in terms of cut but doesn't get what it wants in terms of the guidance going forward. what happens >> so i think we are going to get what's called a hawkish cut, which is exactly as steve said they'll cut but they'll say we are going data dependent. >> right. >> reduce the emphasis on an insurance cut. i think the market will live with that. >> live with that? live with that down? live with that up? it will be a flat day? >> i don't think it's going to be a big surprise. you have to understand if you look at all the indicators, market indicators, there is no
justification for a rate cut the curve has normalized equities are very near all-time highs. the trade issue is less threatening right now. brexit is less threatening right now. the dollar has weakened. it is very hard to justify a rate cut from an economic perspective. what the fed is doing is validating the markets. >> i do think the fed's going to move but not today i think they're likely going to move we're saying in december. >> don't move today? >> yeah. >> in which case the market does what >> they're not going to be happy about it but are markets happy no, i don't think they'll like it in terms of what's behind it, i agree with what mohamed said i would add that inflation is warming up if you look at cpi core, it's 2.4% you have even seen core personal consumption expenses deflator up a bit, 1.8 getting closer to the 2% line.
i think that might give a reason for the fed to hold off. the fed is rather divided. you already have two who voted against the quote cut and i suspect they will be even louder i think the fed is going to ask for patience and i think powell is going to ask for patience. >> i don't think you're totally wrong. over the past few weeks steve liesman has reported and so many others have tried to suggest that inside the fed there's this massive debate, which i think is a signaling tactic to the extent that people are being open with reporters about where they stand. >> the market's expectations is 90% cut. i agree with her in terms of what the fed should do the fed should not cut it should wait but in terms of what the fed will do, i would be amazed if this fed -- >> well, that's the worry. are the markets wagging the fed. that's a real concern. >> the way i look at it, it
would make more sense if they did their one cut in december and see what happens between now and then but they didn't tell the markets that they didn't convey that enough i think they're going to be in a position of saying, okay, we'd better take the cut now because if we wait, we'll get the temper tantrum, we'll cut in december but then it's going to look like we caved to them >> i would say a number of fed members, you have i guess it's president from chicago, charlie evans, has talked about he's comfortable with where they are. you've heard dallas fed president kaplan also say, you know, i was okay with the cuts but, you know, i think he's also sitting on the fence again, we have two votes that were against it. i don't think the fed knows what they're going to do today. >> one of the votes against it was because he wanted much deeper cuts. >> that was bullard. fed president bullard. he said i'm okay with 25. >> for years, mohamed, you have been frustrated that the fed was unable to handoff the baton to
the congress or for fiscal measures we have less going on there than ever because it's all focused on one. they're not even going to get usmca so why don't you if you can't get a handoff from the fed, why are you frustrated that they're continuing to support things when you're not getting the cooperation you were hoping for from the fiscal side of things >> other than markets and asset prices, i don't know what they're supporting they're not supporting the real economy. >> ten years we supported markets to get the wealth effect we werelooking for. >> ight. look at the ecb. we don't want to go there. >> are you sure it won't work at the ecb? there's a delay and things are looking better because of the ecb. >> what is starting to look worse is what negative interest rates is doing to a market-based economy. it eats away at the integrity. >> are you seeing that where are you seeing it? >> the banks, with less provision of long-term protection you see it with the household
center saving more they are saving more at negative rates. you're seeing it in terms of bad resource allocation. you're seeing it in terms of zombie activities. >> all right does the significance of being the first guest host on this news set, has that sunk in to you yet? are we ever going to hear you complain say you don't get enough respect, enough love? has it sunk in that you get two hours on the very first day? who do we go to? who do we ask? who do we bring out here to highlight, mohamed el erian. >> since the email only arrived on friday i suspect someone else was asked and -- >> i am delighted. >> we didn't know when we were going to launch. >> i am delighted. >> nice to have you here as well. >> i'm going to get a chair out there to watch >> that's what's going to happen >> don't wear those headphones where you can't hear what's going on around you. coming up -- coming up, more
rolling blackouts are planned today in california. some of the strongest winds since 2007 are expected today fueling some dangerous wildfires in california. jane wells has a preview, it's so scary, the pictures, jane i hope you're okay >> reporter: yeah, thanks. the winds are starting to kick up we could see gusts of 80 miles an hour today and we have new information on not only what caused this fire but a huge fire down here last year, both involving utility compans.ie we'll have that information when "squawk" returns she wanted a roommate to help with the cooking. but she wanted someone who loves cats. so, we got griswalda. dinner's almost ready. but one thing we could both agree on was getting geico to help with our renters insurance. yeah, switching and saving was really easy! drink it all up. good!
good morning >> reporter: hi, becky this is still the getty fire area they're concerned that as these winds pick up today maybe there's some still smoldering embers in these destroyed houses which could come across and get houses which are not burned yet, but we have a bunch of new information now. this is covered by los angeles department of water and power, which does not turn off the power preemptively and as we got video of some of the power inspectors coming through this neighborhood yesterday, investigators now believe this fire may have been started by a dwp power line which was knocked down by a tree branch, but we're also getting bigger news about a bigger fire last year, the woolsey fire desfroid 1600 homes, killed 3 people edison international said it could be liable for that fire. >> there is evidence and we believe it is likely we could be
associated with the ignition of the woolsey fire final determination would only be made during lengthy and complex litigation >> reporter: that sent shares down after hours edison is saying the $1.8 million reserves are enough. pg&e popped yesterday. meantime, going forward governor newsome created a bill to create a massive wildfire fund. and so that the utility companies can dip into it for if they have acted prudently. well, what's prudent turning off the power in advance. that's why this is happening and finally this being l.a., the most famous person still under evacuation was tracked down at basketball practice. >> i talked to my wife a little bit. i haven't been in fire drills since seventh grade. challenging to get my family and my kids and everybody having to
evacuate at such a rapid rate. not much time to really think about what you can do, you've just got to get out and get to safety >> reporter: thousands still evacuated and, by the way, lebron sent a taco truck to help feed the firefighters. guys. >> jane, what's today -- today's wednesday. it's going to calm down a little, right? >> reporter: no. >> no, worse >> reporter: we have a red fire -- we have a -- well, allegedly tomorrow mid morning. >> tomorrow? >> reporter: yeah, red flag warnings at the same time we also have a frost warning which never happens. you have a frost warning and a red flag warning it's a very weird thing. >> jane, hi. in addition to the human tragedies, i'm hearing from friends that insurance companies are becoming very hesitant to renew home insurances and those who do are doubling the price. are you hearing the same thing >> reporter: i'm not hearing
that yet but, you know, mohamed, last year we had so -- it was a -- for farmers and allstate and state farm it was a big deal, and more and more people are having to get into what's called the fair plan, as you know, if they're built up against this open space. this fair plan is sort of an insurance of last resort provided by the state but which is funded by insurance companies which is funded by you and me. so i think you're going to see more and more people on a fair plan just because, yeah, it seems untenable at this point. but what's amazing to me is the fires so far this year have not been as bad as last year in terms of damage and destruction and nobody's died. you can possibly credit the technology and the apps with people -- with the authorities telling people to evacuate and this year people actually are evacuating as opposed to last year. >> jane, all right thank you. you've been reporting for us all
day out there, jane. be careful. gas and electric utility giant southern company reporting $1.34 a share. was above consensus estimates. $1.14. joining us is tom fanning, southern company chairman, president and ceo. let's start quickly with your numbers. give us highlights quickly, tom, and we'll talk about the situation that jane was just talking about with pg&e. how are the numbers? are you happy? >> yeah, joe, great. terrific quarter the revenue thing you mentioned is really a benefit to customers. a lot of our revenue is tied up in a pass through fuel costs and gas prices are super low represents about half the energy we generate right now so that benefit was passed along so really all in all a good quarter. about half of our significant exceed dance of guidance was really due to weather.
the other half was due to kind of a continuing benefit of tax reform and o&m discipline. >> so, tom, as a utility ceo, you know how to manage -- southern company manage the utility. so you probably have a pretty good idea of what happened out at pg&e. i don't know if you've seen more private sector type newspapers, like "the wall street journal" has really taken the politicians to task for what's happening out at pg&e and less so pg&e saying pg&e was responding to mandates from california regulators about renewables, how much had to be solar so they haven't really built out the infrastructure that they should have because they had to focus on all of these green initiatives and that's what's causing this would you have managed it differently? or do you have an opinion on whether that's the case? >> yeah. boy, that's a complex question
here's what i will say about it, you know our hearts and prayers go out to these folks for the customers -- >> right. >> -- everybody working the fire, everything else. here's the deal. we have to think more in this nation not about reliability, which is how this industry has been kind of run for over 100 years and more about resilience. in other words, how does my system operate during unusual conditions over the weekend we've been on the phone and working with pg&e. we had a big ceo call. this industry has an enormous history of mutual assistance and so as an industry we're all pulling together to see what we can do to help pg&e. when you think about the political, legal, regulatory framework of california, it is exceedingly complex and certainly is different than what i would say is more of a business friendly environment here in the southeast. so that does compound the issue. what we've got to do right now somehow is put all of that aside
and get about restoring the power and helping the people be safe. >> forest management so the state now threatening to take over the utility and critics would say that, you know, the mismanagement by regulators out there are what's causing the problem in the first place. >> yeah, joe, i think, look. you kind of hit the nail on the head i think the company is acting appropriately with the environment they find themselves in they're kind of a function of the legal, regulatory, political, the whole deal. i can't blame pg&e for what they're doing. they're doing everything they can with the best of their judgment let's just get through it and get the power back on and help the folks be safe. >> tom, the governor has very actively started calling for people who bid on these assets to come in and maybe step in he asked specifically for a warren buffet and berkshire hathaway to step in and make a bid for these things and would
like them to take them over. would you be interested in taking over these power plants does it make sense is it a situation you'd like to be -- >> you know, it's almost like the broader economy we've talked about in the past where business loves certainty, you know? we'll invest long-term capital if we see kind of calm waters to invest in. i think that california's not in that situation right now sure, there may be some people that want to come in and speculate on how this thing be's going to turn out but, boy, there are a lot of more cards to be turned over before, i think, you'll get credible long-term investors in this sector over there. >> tom, separately we had a congressman on yesterday from california who seemed to suggest it should be taken over by the state and that these should be run by the state. does that make sense to you? because i was sort of pushing is there a public/private partnership? how do you feel about the private sector being there
this was a democrat by the way making these comments but -- >> well, look, i think this issue transcends politics. in other words, what would public power do differently than what pacific gas and electric is doing? i think anybody is going to be operating as a function of the environment they find themselves in, political, regulatory wise, et cetera. you know, i think bill johnson, the ceo of pg&e are doing everything they know to reasonably do to take care of the situation. >> all right thank you, tom >> you bet always good being with you guys. >> okay. thanks. coming up when we return, boeing ceo dennis muilenburg heading back to the hill today for another round of testimony what you can expect in today's grilling we'll talk about it next right here on "squawk. time now for today's aflac trivia question. john adams was born on this day
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good morning and welcome back to "squawk box" on cnbc boeing ceo dennis muilenburg heading back to capitol hill today. he'll face another grilling after yesterday's testimony and phil lebeau joins us now with more on the boeing 737 max fallout and, i don't know, i don't know how well he slept last night probably, phil, after yesterday. i wouldn't want to go back. >> reporter: no, and i don't think he is looking forward to it he knows what's coming up. yesterday was brutal, especially the last half of the senate commerce committee hearing because it was one senator after another just hammering muilenburg and boeing about the 737 max. >> those pilots never had a chance these loved ones never had a chance they were in flying coffins.
>> i would walk before i was getting on a 737 max i would walk. >> you're the ceo. the buck stops with you. did you read this document and how did your team not put it in front of you, run in with their hair on fire saying, we've got a real problem here? >> now most of those were commentaries, if you will, as opposed to specific questions for dennis muilenburg, but when he was asked about what happened with the max, how did this take place? what is boeing doing to make sure that this doesn't happen again? he said time and again, look, safety is at the core of what boeing does. there are changes that are being made to the 737 max so that it doesn't happen again today guys, i'm not sure that that resonated much with the senators who were listening to dennis muilenburg yesterday take a look at shares. he goes in front of the house transportation committee today, and in some ways this may be even tougher than yesterday because there are a number of representatives, their staffs have been doing investigations
looking into the max and they have been waiting for this opportunity to talk/lecture/beat up dennis muilenburg again, that happens a little bit later on this morning. >> all right, phil thanks continue along these lines here with one of the senators that was actually there yesterday that grilled boeing ceo dennis muilenburg marcia blackburn, you were able to hear or see some of the sound we ran from yesterday. >> yes. >> senator, it got pretty contentious. >> it was contentious, and appropriately so we had many of the family members of the victims and we have to bear in mind, 346 people lost their lives, and from the testimony that we heard yesterday it appears that boeing tried to go in and manipulate or rig the system in order to speed a product to the marketplace they knew that there were
problems with this they knew that the alert system had not been working properly. they said they were going to move to fixing that in 2020, but much of this was shielded from the faa regulators and you had a couple of the chief technical pilots actually talk about jedi mind tricking and the regulators and keeping information from them. incredibly disappointing, and i have no doubt that what you'll see in the house today is many of those members are going to pick up on questions that some of us asked and did not get complete answers to and continue to press for those answers >> no doubt. and we've seen the house as compared to the senate so we have a pretty good idea -- >> right. >> -- of what to expect, senator. over 400 trying to make a name for themselves or however many versus the senate.
let me ask you this. boeing is making the case that the expertise of their engineers is essential when dealing with the faa and that it's actually additive to the overall safety considerations when we're introducing a new jet. critics would say there's a conflict there because you're boeing and faa is too incestuous it's not objecttive enough is there a middle ground we need to strike for using the expertise of the people who designed the plane and the regulators deciding whether it's safe >> yeah. you know, there is indeed a proper balance that is there and this is part of our concern. was there too cozy a relationship and did these technical pilots, these test pilots feel as if they could manipulate the system in other words question. i think you'll see this approached in the house today.
why was that simulator not embodying that exact mcas system that has become the focus and the problem that all of this is centered around? did they have those exact team of engineers and also with the simulator as they were working this through, why did they only use highly experienced pilots and not pilots from a variety of expertise? and a variety of number of flying hours and then the other thing i think you're going to see is why was the ceo not read into all of these documents until just recently and i even asked him yesterday, has he yet been read in to all of these documents and seen everything >> senator, you long called in many industries for greater deregulation as opposed to regulation. >> yes. >> you now look at this particular situation would you call for greater
regulation greater and more strict rules around how the faa operates? how the airlines operate >> what we need to do is realize that consumers do not have the opportunity to go to the airport and look at all of the planes lined up on the tarmac and say, i'm going to take that plane whether it's airbus or boeing or whatever they schedule a flight and they get on that plane and they trust that that plane is going to be safe if there is a coziness and if there has become an understanding or a perception or a thinking that a system can be rigged or -- >> that perception exists now, senator. are you going to call for greater, stricter rules? >> we're going to call for cleaning up the system and being certain that all of the flying public, the american public and then those around the globe, are
going to be safe safety is a top priority and i really took issue with mr. muilenburg saying they did not sell safety. safety is a top priority >> senator, thank you. >> thank you >> appreciate it. your morning movers. mohamed el erian's market call coming up. at the top of the hour, media legend and billionaire barry diller is going to join us for an extended interview. "squawk" returns after this.
those shares moving. we'll talk about other shares on the move yum brands is off about 5% this is the parent company of taco bell, kfc and pizza hut it's lower there by around 5 shares on volume it had weaker than expected growth at kfc. then we'll end on shares of garr min higher by 5% 1500 shares. this is navigation systems and fitness wearables. it showed stronger profit margins which is leading all of it to raise its full year forecast they all saw gains led by aviation and fitness those units, guys, both had sales rise by around 28%, joe. garr min is doing pretty well.
back over to you. >> let's get back to our guest host, mohamed el erian doesn't want the fed to cut. does that mean you think we're in a pretty good economic environment as a backdrop to equities or fair value >> two separate things i don't think the fed should cut. they will cut. i'd rather they keep the ammunition dry i worry about future financial stability. when it comes to the markets, i think you have to respect the talgs. the path of least resistance is higher that is being powered by two things one fewer concerns about the policy outlook that's why they're calling a bottom to the global weakening but that's what the call is out there. two, there's an underpinning of strong corporate earnings. so i think you have to respect that technical and move up in quality as the markets give you that opportunity
>> you don't think respecting the credibles in the credit markets is behind some of the fed's accommodation here you don't think they're trying to get in sync with the rest of the world and the yield curve? just for saving ammunition you don't think they should cut? >> it's normalized. >> so even based on strength of the dollar, whatever, you think -- >> the dollar has weakened. >> everything is in equilibrium? >> no. i think if you look since the last fmoc meeting, what they've worried about has improved. >> this is purely about not taking the air out of the stock market >> it's purely about not repeating the fourth quarter of last year -- >> because it took the air out of the markets and so some degree -- >> i would say out of business confidence, too, maybe not consumer confidence but business confidence. >> if you could take the air out of the market without raising
concerns about the functioning of markets and without raising concerns about spill back to the economy, i would say, yeah, do it but people are worried i mean, the fed is worried and the fourth quarter was a wake-up call for them, be careful because the spillbacks from the markets are significant. when was the last time you talked about the rico market >> yesterday we talked a little bit about it. >> yesterday do you feel better about -- >> no, i feel a lot worse. it's taken a lot longer to normalize. what you're getting is bits of illiquidity and that is telling you that certain sectors are over stretched very important signal there. >> it sends the wrong signal to ease >> no, it sends the signal to the fed you better ease, you better ease. we're putting in a ton of liquidity that way that will make its way to asset prices and we're lowering rates. >> i have to think about you and where you've come from you do switch once in a while.
you move around. >> no, i think as the data evolves and the facts change, you have to respect the technicals i mean, respect the technicals. >> okay. we will have more from mohamed throughout the show. coming up, senator mitt romney, really yeah, and senator joe manchin are working together on something. new legislation unveiled earlier this week to preserve federal trust funds. first on cnbc interview is straight ahead then barry diller live who better to talk about the streaming wars than to talk tech under fire as well the fed, we're not that far from where he resides and works so it's nice of him to opst by. he'll be on set. "squawk box" will be right back. we're carvana, the company who invented
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with the power of your voice. that's simple, easy, awesome. say nba league pass into your voice remote to upgrade for a great low price - or go online today. welcome back, everybody. a bipartisan group of legislators are trying to prevent short falls on trust funds. let's welcome senator mitt romney and senator joe manchin they are co-sponsors of the trust act. senators, thank you for being with us today. >> thanks for having us. >> first of all, it's nice to see a little bit of bipartisanship on capitol hill today. i'm imagining you don't see too much of that what led you to work together with other republicans and democrats to come up with this what is this legislation >> as former governors, we had to work every day with a budget. we had to make sure we balanced our budget our financial people would come
to us on a daily or weekly basis and make adjustments we don't see any of that concern here so in the last budget act we just voted on what we voted against, both of us did, we had four governors, two democrats, two republicans. we can do better we need to sit down and face our problems and face the future what we're put passing on to our children is unsustainable. >> we have a series of trust funds. if you ever want to see a balanced budget, get out of debt, you have to deal with this if you want to save social security, medicare, the highway trust fund and the other trust funds, you want to save those programs and save those trust funds from financial ryauin, we have to make adjustments now what we've put together is let's put together a rescue committee forty-five trust funds and find a way to get them in balance in a 75-year period. >> it's going to take a
bipartisan effort. it takes a majority of senators working in a bipartisan way to understand that we need to do something and do it as quickly as possible. social security, we may get to 2032, 2035 maybe before it starts being depleted and people will be cut automatically 20, 30% or more, but then you have medicare which is going to run out of funds by 2026 and the trust fund something needs to be done this is not that far away. we're accumulating more debt than ever before since world war ii. >> it's been ten years since simpson bowles was put together. am i wrong to think that this sounds very much like a similar sort of effort >> it is -- in many respects it has the same aim, which is to bring fiscal sanity to washington and to begin to make some changes now so that we don't have to cut programs down the road but the difference between this and simpson bowles perhaps is that, one, we go automatically to a vote, all right this doesn't have to go through
a process that keeps it from getting to the floor two, instead of taking on all of the trust funds in one single task force, instead this bipartisan, bicameral effort is going to be divided between each one of the five trust funds. so one group looking at social security, another committee looking at medicare, another looking at the highway trust fund, another looking at the pension guarantee trust fund so all of these are looked at individually and then if the group can come together in a bipartisan basis, it comes out of privileged basis to the floor for a vote we think on that basis we're going to be able to tackle some of these long-term problems that we've been facing. >> when i first got to the senate bowles simpson was bold and large, if you will i liked it i liked the process. when you look back at bowles in 1997, he put together a budget within john kasey and they were able to balance the budget and have surpluses from 1997 to 2001
these people, they have a grasp for this we looked at it. it was tough this was the right thing at that time. >> senators, why though does it seem like fiscal sanity is so out of vogue in washington right now, both on the democratic side there seems to be an effort to spend money we don't have and frankly on the republican side there seems to be an effort to spend money that we don't have and we're seeing it in terms of the deficits in which you are so aware of. >> we're not in vogue. we're out of vogue >> we're not going to be in the magazine any time soon. >> you know, if you recognize, you know, that todd young who's a member of leadership on the republican side, an original co-sponsor, kirsten cinema we have a good deal of folks who have signed on and said, look, we have to tackle this on a bipartisan basis we're not saying what the answer is we're not telling them what they have to come to. we're saying this is a process that finally saves social security, not just for current retirees, but for the coming
generations. the same thing with medicare, the highway trust fund. >> we have a lively campaign going on for the highest office in the land, the president of the united states, 2020 election you haven't heard one candidate, not one candidate speak about the financial conditions, the deficits we're incurring and basically what we're passing onto the future generations and the trust funds being in dire jeopardy you're not hearing one person talking. on top of that, i'm not hearing the media ask one question concerning what is your position on the financial conditions of our country. no one seems to care when mitt and i got together on this i thought it was a great idea and great thing for former governors to take on because we have had to be responsible. >> senators, we care here. >> yeah. we just got -- you just god asked the question by the great andrew ross sorkin. >> don't take that offensive. >> we're not running for president, that's the difference. >> what i was going to ask is a separate question.
because both of you are in the senate, where do you really stand on this impeachment issue at this very moment? and i'll start with senator romney what's your official position at this point >> well, i am probably going to become a juror, if you will, in this process and as a result of that i'm doing my very best to keep an open mind be and i'm going to wait to make any comments on any evidence until we see all the evidence and the facts are laid out. >> what do you make of your peers? we've had many peers, especially in the republican party where we've asked this question and they say they could not -- they could not vote for impeachment most of them it sounds like don't even want to see the evidence, frankly. >> well, i want to see the facts and everybody makes their own decision i respect my colleagues. they have the capacity to make their own decisions, but in my view it's time for me to stay silent on impeachment until the process is done. >> senator, with what you know now in terms of what does go to
the level of an impeachable offense, if it was an implied quid pro quo, trying to have ukraine investigate joe biden, does that rise to the level of an impeachable offense in your view right now, senator romney >> for me to respond to that would violate what i just said which is i'm going to keep a completely open mind until we get all the facts in and then i'll make that judgment. >> good answer >> do you second that, senator manchin? >> yeah. i think basically people are wanting some of our colleagues on the senate have jumped in and had a resolution our dear friend lindsey graham, which we think the world of and respect. basically it's not our job to tell the house how to do their job. the constitution is very clear let them do what they're going to do. let them see the evidence. we will be the jurors. they better have the evidence that goes with it. if they don't, it's not conclusive, it will be hard for anybody to vote. >> senator manchin, from your
home state, and there are times when you're not in lock step with the democratic party, is it possible you might vote -- >> quite often. >> quite often is it possible you would -- they'd need you in addition to 20 republicans >> i'm not going to be counting from what counts in, does your vote make a difference i've never looked at my vote in that manner. i've always looked at my vote based on could i go home and explain it does it make sense is the evidence there, conclusive i want to make sure i make the right decision so i'm not jumping. people are making assumptions whether they like or don't like the president. they're coming to conclusions before they've seen anything because they don't want to go through an impeachment trial or whatever this is not easy stuff and it's very difficult for our country to be going through it, but if you're going to preserve the democracy we have, the constitution if you believe in that and the rule of law, this is the process. >> senators, thank you for being with us this morning. >> thank you. >> we appreciate it very, very much. before we head to break, take a quick check on markets right now.
breaking economic news the adp report and the first read on gdp. let's make a deal. and our newsmaker of the morning, iac chairman barry diller joins us right here on set as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc and our new set our new look new music, new lighting. live -- on a diet. live at the nasdaq market site
in time square all of these side shots. back fat i'm joe kernen along with becky quick and andrew ross sorkin >> everybody's eating breakfast. >> u.s. equities -- >> eggs and bacon. >> can i talk about the futures? >> i see everything you do now you know that? >> i see that. >> you're across from me. >> oh, yes before you were on a rake. >> we were on -- >> barry diller. >> now we're on a triangle. >> but we're hoping there's more empathy for each other's positions. >> i think until you get more politically correct that's not going to happen. >> barry diller is here. >> probably introduce him in a moment. >> u.s. equity futures at this hour are slightly positive once again. as we've been pointing out, close to new highs on the s&p. >> i'm going to read this as fast as possible so we can get to barry today's top stories, general electric posted better than expected revenue higher prices for aircraft parts
and by stronger volume for the health care business shares rising on the news. we had been up by as much as 6.5% now it came back a little bit. actually, up by over 7%. fiat chrysler and france's pew g peugot are in talks. they are expected to meet and talk about that deal. now to our special guest, media mogul barry diller is here the former chief of fox, paramount pictures, chairman of iac. he's built what's become a $20 billion internet technology conglomerate. >> why do you forget expedia >> expedia >> we have a chart here, let me see if i can find the chart. do you know if you invested $1 in iac when you first joined. >> you'd have $1 today. >> if you had a dollar today s&p you would have $8. warren buffet, you would have
$12 if you were berkshire investor and if you were iac investor you would have $22. there you have it. >> stop. >> you can stop right now. >> we can call it a day. >> we have about 100 issues we want to talk to you about. we have the streaming wars, china, what's going on in washington with internet companies, we have what's going on with match.com. let me start with streaming for a second i don't know if you've followed what's gone on with hbo max? >> yes. >> yesterday with the big announcement and their plans i remember when we sat together about a year ago we were talking about netflix and you had a position where you thought actually that most of all of these competitors couldn't compete with netflix you saw what hbo max put out apple is now out. >> yeah. >> can this work >> the question is, what does work mean? you know, the thing is that for the last basically 100 years before the invaders from the
north, meaning netflix and amazon came into the media business, the media business was controlled literally for that long, long period by essentially six companies. and when netflix and amazon began with different business models, in fact they totally took away the hedge money from all of these companies and they -- i don't think they'll ever get it back now of course what they want to do is compete and of course, you know, they should but they're competing against an all -- they're competing against an already built machine and i don't think that they're ever going to actually compete with netflix. doesn't mean that, for instance, disney, which i think bob iger, you know, such guts and determination and pushing everything on the table, i think disney has a good play because -- and i think, by the
way, the question is how many subscribers does it take times x dollars to equal the massive costs that are now taking place? because those costs are literally insane three television programs, three episodes of 20 each television programs will cost a billion dollars today. >> right >> hard -- so it's hard to compete. >> so -- >> of course they're trying. they want to get it back. >> david favor is going to talk to john stankey later today. >> ah. >> sorry >> you said you're sorry. >> no, i don't mean that >> no. >> if you were randall stevenson, do you think we're going to look five years from now at the at&t/time warner merger and say this was a good idea this was a terrible tragedy? >> it is not my business to do that i think that -- i think everybody other than disney has
a very, very tough hand. the only one that i think of them all that's got a good play, it's not simply because i'm sitting in their house, but i think comcast nbc, it's much less risky it's much more conservative but it's ad supported and so it doesn't have to really compete and try to grab subscribers away in a rich subscriber market. >> what about apple, will that work >> well, i don't know. their feet are very kind of dangling slightly in the water actually, the thing is i think they should get back to fixing the iphone before i came on here my iphone torch was lit and it took three producers to turn it off. >> me, too, after the new i0s -- the new operating system. >> glitches. >> so anyway. >> so apple. everybody -- i mean, they're not charging what these things cost right now, right >> well, no. you can't spend -- as i say, it'll change if you're a producer, make any
deal you can in the next six months. >> if i was a talented writer, shouldn't i move out to hollywood? >> immediately. >> tonight. >> i'm not but you are >> you're trying to send me away immediately. >> a talented writer. >> of course >> i mean, that's great though >> it's great for consumers because they get tons and tons of stuff but, you know, the talent market is finite. >> you think the window is closing? >> oh, it will close in. look, when the bills start getting paid and these public companies have to announce losses because these losses by definition have to be in the billions there's no way around it okay, their business plan for them, i would presume internally, makes sense because they think they've got to compete but the truth is i don't think they all really have to do so, not in the same way. not on a concept of literally trying to equal netflix who's
spending without any question will quadruple anybody els. >> but they're looking at a dwindling ice cube thinking we have to be where the consumers are. >> they want to get it back. can't blame them. >> i want to pivot to talk a little bit about social media. i know you followed what was taking place in washington -- >> yes. >> -- last week with facebook and mark zuckerberg. his position that he wants to allow political advertising on facebook and not only allow it, but allow it such that you can say effectively as a politician whatever you want. what do you think? >> well, here's the thing. he's right not only is he right, it's against the law on broadcast television you cannot censor political advertising. did you know that? >> even if it's a lie? >> doesn't matter. you can't censor it. by the way, how are you going to prove a lie? given most of these commercials
in negative advertising are filled with exaggerations and things i think mark zuckerberg is completely right he's become this poster boy. i actually think of all the services, of all these big monopolies stick services, facebook is really the most benign facebook does not compete with the dvertisers. >> let me read you "the new york times" today the internet barons have ignored the weaponization of free media which is turning the free press into a house of mirrors where citizens can no longer cognitively discern fact from fiction. >> thank you, tom. what are you going to do about it seriously. here is the thing. you cannot -- look, we're at the very early days of this kind of bull horn that anybody can use for any purpose so there's just tons of stuff out there. you know, to indict these people
who are in charge of these systems -- by the way, they're not -- you know, believe me, the one thing they don't want is this huge dpraft raft on them oi responsibilities i think facebook has spent billions of dollars to try and tame this. everyone would want to tame it it ain't easy to do. >> when you see elizabeth warren take out an ad that's factually false to prove that it's doable -- >> are we now going to get into truth in terms of political positioni positioning? >> you're a big boy. are you going to get hurt by this >> i don't believe what i read i'm a big boy. i can take it. i don't want mark deciding whether i can handle it or not. >> he can't. he can't. >> he can't ride herd over that. it's just the way it is.
>> if i tell you the election date is a different date and the location you're supposed to go -- >> somebody is going to get it right. come on. yes, it's very hard to discern things, but by the way, you -- one of the reasons you choose what you take in, what you read, et cetera, is because one hopes you've done a little due diligence and you think that they're fair and balanced, been so damaged by those guys down the road. >> fair and balanced is still a good thing. >> you think so? >> it's not tainted forever. they're english words. they don't own them. >> well, i think it's proprietary. >> okay. god, that's horrible nothing is fair and balanced >> separately, the other thing i wanted to ask you about now in this digital age, we've had a number of ipos this year. >> yes. >> there seems to be a huge disconnect between the private market valuations and the public
market valuations because zsh. >> there's a good reason for that. >> two proteges from uber and foley at peloton. >> yeah. >> what do you think of all of this >> when you have a bunch of guys sitting in a room like you would be sitting in a room and you decide to sell stock to some elite people in your company, you can make up any figure you want if somebody will take it, by the way, they're all engaged to take because they know there's another round coming that's going to juice it even higher, it bears no whatever iota to reality. if you have people making up values in a room and then you take it to public market and public market says, no, we're not doing that it's obvious >> barry -- >> it's a rigged process anyway so -- >> the process is rigged >> well, of course that's the ipo process >> did it work better this time?
in some cases -- >> i like the direct listing that's a really good idea. auctions were tried by google and it worked and i think they could work, too. the thing is, you're in this situation where you go on a road show to, quote, fill a book and then the banker that you've signed wants to drive the price lower because he thinks that those people will give him money for other things so he doesn't care about his -- i shouldn't say this but, i mean, he cares about his client but not as much and the result is that, you know, companies often when they go public, as you've seen, for instance, facebook got in all sorts of nightmare trouble because they sold it essentially too high, right? the truth is that they argued for the high price, it dropped afterwards, but it's way past that the whole business is --
>> if you were 30 again and -- would you go out to hollywood? do you have the skill set to become barry diller in this day and age do you think would you like to try? is it exciting is it daunting >> would i -- no well -- >> is there too much >> no, i wouldn't because truly there -- this -- this technical kind of move on to hollywood has really changed everything. it's changed the ground. >> i wouldn't want to do it. >> so i don't -- i'm sure -- of course there are opportunities, et cetera, but you used to be able to basically own your programming. now netflix, amazon say, we're buying your programming outright you get nothing whether it's a success or a failure so you can't do the things that people did in those olden times, which is built asset values because, for instance, you own
the simpsons you owned a part of the simpsons jay brooks who produced the simpsons has probably made billions of dollars, the most profitable series on television, because its after life was so valuable that's over. >> can you hold that thought adp numbers are out. steve, why don't you take it away tell us what you have. >> 125,000, becky, adp payrolls coming in for the month of october at 125,000 bit stronger than 100,000. quite a bit stronger than the nonfarm payroll of 5,000 supposed to be reported by the bls on friday. september revised down from 43,000 to 93,000 down more on that. services sector, 138,000 right there. moving on looking at size, every size business gained jobs there. the most by medium inside the small is a small
number there the 1 to 20, they did minus 12,000 quick look at jobs in industry, education, health, never a surprise trade and transportation, 32,000 up mining, construction and manufacturing down hasn't happened since march of 2016 and before the recession in 2009 that's when we had big-time declines in all of those three sectors. back to you guys. >> great thanks we're in the media we love media so much. could we do those -- let's do those later. having you here is great what's your favorite thing to watch at night what top three things? do you sit and watch -- >> last night i watched "katherine the great" with helen muron. not that great a show but helen muir -- i literally -- she would have been irritated with me because i literally watched -- i kept rerunning scenes because to
watch her perform was just a joy. >> because there's a lot to watch and i'm always looking for things -- what do you -- do you watch us in the morning? >> yeah. >> you do? >> well, i don't know if i watch you but there you are in the background every once in a while, you know, i see -- >> that's as good as it's going to get. >> and it perks up. >> i have a totally different question for you. >> yes, sir. >> which is one of the things -- we talk about this and you see it on this show all the time a conversation about wealth in america and this sort of big wealth debate -- >> yes. >> -- that you know so much about. >> yes, i have heard you talk about that. >> you've been very critical of president trump over time, on this show and elsewhere, but i'm curious what you think of elizabeth warren, if she is the front-runner >> well, i think if you take her at her word, if this country wants to be kind of socialism somewhat light but not that light, done and done i'm not so sure based upon
things i read, but i don't read well enough here, that you can take her at her word she might be moving at some point once she gets into it more centered she kind of moved around the dial a bit i gather. but if you take her at her word, god for bid, it would be bad >> and so what -- >> but, by the way, i've been tested by my friends which said, okay, it comes down to that moment, trump or her -- >> yeah. >> you know, i was going to say my dog or him but the truth is, you know, my dog would do -- >> you only have one dog >> no, i have three. >> which one they're all your children. >> of course >> no, so really what would you do >> i'd vet for her. >> you'd vote for her? >> we have to -- he -- we cannot -- it's one thing for this accident to have happened, you know, this election of him that happened, the confluence of odd events if we reaffirm that, if we
actually actively knowing what we know reaffirm that, i -- i think the -- >> you'retalking about character then because you're not talking about results? >> i'm absolutely talking about character. >> the results -- >> i'm talking about standards, character, decency, all of those values that have been blown, and so i think nothing else matters. >> you think hillary would have had higher character and higher values >> absolutely. >> really? >> for sure. >> and the clintons have demonstrated that in the past? >> look, let's do this he was a good president. >> then you're back to talking about trump actually in terms of what he's accomplished, unemployment, stock market. >> are we going to get into -- >> no, i don't know. what is a good president >> fidelity or -- >> no, not going there. >> what are we going to do >> talk about the end result, you say clinton was a good
president and accomplished good things. >> yes, i do think so. >> character wise -- >> no, no, no. >> with both of them. >> i am fine with the character of president clinton and hillary clinton and the truth is that the clinton foundation has raised a ton of money and done a number of really great things which, by the way, it continues to do. the problem is is that bill clinton was never a great manager/executive and he made some managerial mistakes, but by the way, even now after all these investigations and everything, the clinton foundation has never been found to do evil work, bad work, et cetera and -- >> no, but things kind of dried up once it was clear she wasn't going to be president. there was a reason every middle eastern country gave a lot of money to the clinton foundation. >> that doesn't have to do anything with when they took the money. >> that's in dispute. >> how much actually went to causes. >> what do you think it went to? do you believe -- are you going
to go into this conspiracy thing? >> come on >> fair and balanced that's not fair and balanced. >> that's ridiculous. >> let me ask you about match.com. you're spinning off match.com like you do. >> yes. >> build great companies, build them up. >> that's our little model >> what do you see next? because i can't imagine that you spin out match without saying, here's the next big thing. >> here' where i'm pouring things in. you have 4 or $5 million in cash ia iac is there we spin them off we get down to very little >> opportunity >> there's always opportunity.
>> you want to buy it now? >> one of the things fascinating me >> you have control. >> you go against. >> not sure. >> you have the transactions >> it will have a class dog. >> and, therefore, what's the point? i also don't want -- it's a responsibility you have a company and you have enough responsibility. i don't find a way of dual
stock. what the dual class stock does and the instances. >> what it generally is is it allows you to take the long view there are so many instances of that it is overall a very good thing. for early stage company. >> you won't move left >> i said i would either do that >> if he comes back on the set, you will be around >> i'm not so sure >> can we agree on this? >> sweet >> dogs. >> wow, those are scary. >> david dillner, the one and only thank you for coming in. >> enjoyed it. >> congratulations on your
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welcome back to "squawk box. breaking news. our first look at third quarter gdp. we're expecting a number that's, well, roughly around 1.6 we ended up with more, 1.9 1.9 on our first glimpse and this isn't far away, 1/10 difference from the last quarter which was up 2%. let's look at personal consumption, shall we? solid number, 2.9. why do i say solid expecting the number in 2.5 camp we were amazed at some of our last looks in the last quarter, 4.6.
2.9 isn't bad. if we look at the price index, 1.7. that's a moderating number from 2.4 in the rear-view mirror. expectations, it's also a bit light. finally, personal consumption expenditure quarter over quarter, you can say many like to look at this one exactly as expected at 2.2. but it is actually 3/10 hotter than our last look the only hotter number there the response in the marketplace has not been large but i do see yields moving to the up side it was for all practical purposes against expectations and a lot of the naysayers, it really is better than expected of course, the fmoc decision will be the big ticket item on the day but we'll have many more trading minutes before we get there, becky back to you. >> all right, rick thank you very much. let's get reaction from steve liesman.
steve's on the phone, mark zandi is here and mohamed el erian what do you think? of these numbers, a little better than expected do you think things are picking up >> i think there was too much pessimism and all of this talk of recession and what you see is that the household sector is doing fine i think that personal consumption number that steve just cited is really important it is driving the economy. >> steve, i know you were on the phone a second ago what does the fed do in terms of these numbers that are just out today? does that go into their calculus of what they do in terms of whether or not to cut today? >> reporter: sure. i don't think it changes their attitude what they are looking for is an economy that's slowed down towards trend. i kind of agre mohamed i'm he not sure how we got from an expected and logical slowdown into sort of certainty over recession. i was never in that camp this 1.9 here, i think you can look at this table of numbers
and you can tell the story of the u.s. economy very simply a strong economy, a strong consumer that is detracted from buy weak business. the business investment numbers were negative. not as negative in some cases as they had been. some cases more negative business investment overall down 3% structures's down 15 the intellectual property number where they're tracking the software spending was up 6.6% and strong government spending as well. not as strong as the prior quarter but still up pretty good, 3.4% on federal down from 8% in the prior quarter. it's a very simple economy, one that could really turn around to the 2.5% range, 2.3, 2.5 if we could solve the trade problem and turn around the business investment. >> mark, let's talk about the adp number better than expected 125,000 jobs that's better than the 100,000
consensus estimates. what was happening here? >> i think there's some confusion around how adp accounts for the strike, the gm strike it does not. it does not account for the strike bls says that the strike cost gm 47,000 jobs. then there's other indirect jobs that were affected my sense is that accounting for the strike, the adp number would come in around 65,000. >> what does that tell us about friday's number potentially, government jobs number >> i think it's going to come around 65,000. i don't think we're going to get any government jobs. census is probably laying off people i'd say 65 k i think underlying job growth is distracting and it's around 125 k which is barely enough if it goes further, unemployment will rise. that's why recession is so high. we're right on the cusp of seeing unemployment increase once unemployment increases even from a low level, that's the fodder for recession. >> vicky, let's add this up and
pretend you have a vote on the fmoc what would you say >> i would say definitely we're going to cut today the question is what happens going forward. that, i would argue, is basically, you know, very directly tied essentially to the trend that we've been seeing in growth so we're talking about the gdp numbers better than expected, consumers holding up the simple point i would make is that if you look at the trend and what's been happening over the last 12 months, we are going down i would argue that, you know, the markets are sort of priced for a quick rebound. i would say a lot of people given where the markets are talking about a quick rebound but, you know, it's 12-month trend. i think it's kind of a bolt view to say that we are going to stop here and turn around. >> that's exactly right. if you go back a year ago, average monthly job growth was 225,000. say we're now 100, 125 k it's been cut in half. all of the trend lines are for slowing growth
why would we expect it to pick up maybe the president decides we're not going to escalate the war but i doubt he's going to de-escalate the war. as long as that uncertainty is out there businesses remain very cautious. >> the outplayer was 200 plus. that was an outplayer for this stage of the cycle we had a guest earlier on that certainly surprised me by saying that that house call is no cut today. >> no cut. >> i was stunned because like you, i think the fed has no choice but to cut. >> yeah. >> and i think they'll keep cutting until, you know -- >> so they'll keep cutting >> validate the market. >> so market doesn't really have much priced in for december currently. >> sure, sure. yes. and i think it happens sooner because i think all -- you know, like i said, the trend has been do down it's not obvious maybe we'll get a pause because, you know, when the trend is down you get data on both sides of the trend and it -- i would actually argue that the risk is
actually down side because we got a couple of numbers that were, you know, better basically. >> that's pretty bearish. >> mohamed, you agree you think that's what they're going to do but you don't think it's what they should do. >> not because of what they're saying, i'm more optimistic for the economy. >> they shouldn't cut rates? >> i don't think they should cut rates. i don't think the economy needs it, i don't think it's effective and, c, every indicator has to agree. the yield curve, market levels so -- >> but all the economic -- retail sales -- >> i would rather they keep that ammunition for later on. you know, if someone said this is like target practice. you really want to use this on target practice? that gdp number is pretty good >> well, i think from their perspective it makes a lot of sense to be out in front of a slowing economy, make sure it doesn't slow anymore once the dynamics take hold, no
matter what they do, they won't be able to stop it. >> once you use recession, you lose me. slow down, i'm with you. recession is very -- >> mohamed, there is very little difference from an economy that's growing from 1.5 to 2% to recession. unemployment begins to rise. bad things happen. so we are right on the edge. >> that's stall speed. stall speed is not 1.9%. >> i hear the floor. that means rick has something to say. >> reporter: mohamed, the one big elephant in the room, you've written about it, think about the european rates, the handoff in the control their schatz is at five month highs, rallying for three months in terms of yields and we don't even know if there's policy changes. just the notion that global central banking has finally seen this little light go on and eventually the big light's going to go on that the policies aren't working, they're detrimental to the banking
system and when your banking system gets sick your economy sputters, isn't that some underlying pressure that the fed should pay attention to is they waste this quarter point decrease we're most likely going to get >> yes, rick you've heard me say before the minute you look at the ecb it's not that policy is ineffective, it is actually harmful for the long-term stability of the economy. it's undermining the financial sector, it's undermining the provision of long-term protection services. it's allowing zombie firms to survive. it is contributing to resource misallocation. on top of all of that we're seeing an increase in the savings rates in germany people are compensating for lower rates. i don't understand why it is we'd want to follow the path of the ecb. we want to avoid that. >> can i push back on that let's make a distinction what's going on in europe which is very different than what's happening in the united states of america. lower rates matter here and you
can already see that in the housing market housing was flat six months ago, down, home sales, housing construction, house price growth we've seen a revival in the housing. it's adding to economic growth very sensitive mortgage rates moved up or down around 4%, makes all the difference in the world. >> targeting asset prices -- >> it could be the wealth effect as well these take time to move through the system >> i'm sorry. >> what's the lag on the decreases? the lags on the drops in the overnight rate, there's a lag there. to think that all of the housing response is due to this recent wave of cuts when we have the wealth effect in stocks, the reversal of the fourth quarter disaster in the economy and the markets at the end of last year, there's a lot of other reasons that housing is picking up, and i do understand the psychological notion of the fed easing, but in the grand scheme of things, the central bank here has to realize that their reach just isn't what it used to be
and they really need to hold on to their bullets. >> gentlemen, we are out of time i want to thank all of you for your time. good to see you. rick, steve, mark, bingy >> a lot more coming up on "squawk. big tech might be under fire from regulators, but these stocks are not apple shares up 55% this year. facebook stock is up 45% both companies set to report after the bell mike santoli joins us with three in twah ensquawk box" comes right back.
wi welcome back to "squawk box. apple and facebook is posting quarterly close. mike santoli is back >> yes, andrew going to get some tech earnings after the close. we are going to before the price, the powell pause. assuming we do get the third 25 basis point rate cut in four months and then a signal of a
pause, how will the markets react? the pattern has been the market has backed off after almost every call facebook will say it's the fourth of the traditional fang stocks they all beat on headline earnings the market found something they do not like so much underneath the top line they have sold off a little bit. see what facebook has. then apple obviously been a very strong stock. what they say about projected sales for the current quarter, the holiday quarter, is probably going to be the main thing that investors fixate on. take a look at the stock of apple since october third, that was the prior peek right here. $232 big dump guided down into early january and then this has been a very,very, very nice up turn backed off by 2% yesterday the stock itself has dragged sentiment in a more positive direction. it was a much more cautious streak i do think people are going to believe again.
>> all right mike santoli, thanks joining us now to talk tech stocks, paul minks, portfolio manager of the wireless fund paul, there's a raging debate about growth versus value. whenever you talk growth it always includes fang, tech, things like that are the best days gone or do you ride that horse into the future? >> i think to a limited extent you ride that horse into the future i think you have to have some of these stocks, but with the pop year to date and some of the fangs at least i think some of them are at least somewhat overvalued at this point so what you do is you wait until you absorb the quarterly earnings, see what the fundamentals are, recheck the valuation. but i think they're now more holds and maybe even if they continue to spike up maybe better sells than they are buys. >> there must be if you beat the bushes there must be suppliers or other areas of technology
that are undiscovered that you could at least participate in what you see without, you know, buying the major names that have all i guess already reflect all of this positive sentiment do you have a lot that you're looking at there, paul where would you go >> yeah. i'm most interested right now with the impending term probably in six to nine months in the semiconductor industry, within the tech sector. so i would have a portfolio tilted in favor of the semiconductor stocks and not necessarily out of the fangs but make sure that you're not over weight the bench mack at this point in the fang names. >> yeah. so is it -- fang is a monolog. you don't have a preference? you have a sell on any or neutral what's your favorite out of those five >> yeah, i think i'm neutral on the group. my favorite out of all of them, and over time it might become a better buy because the stock has
reacted negatively is amazon it's not a valuation call. you can't possibly make a valuation call with that stock, however, i feel there are more old school industries that can disintermediate. it has the greater growing market than the rest of the group. >> if you were to worry about washington or regulation, is it bipartisan would one party or the other be less likely to rock the -- or upset the apple cart out in silicon valley >> that's an excellent question. you know, it's not really to me between the democrats and the republicans, it's we have to resolve and i don't know when it's going to be i can't possibly predict this problem with the chinese and the tariff and trade because a lot of folks don't realize that particularly within hardware,
semiconductors and other components within the technology sector is the supply chain is very intertwined and with the chinese and other asian partners and the americans and so we have to resolve that. so when it comes to political and geopolitical variables, that's what i'm looking at most closely. >> paul meeks, thanks. any comments, mike >> no. i would just say when it comes to faang, only alphabet is near the all time high. amazon, netflix, facebook are pretty much nearly double digit so it seems like the market has absorbed that. there's a new elite that maybe microsoft and visa and these other stocks that have had a similar profile but they're not really in the acronym. >> very good thank you. mike santoli. some news just coming in moments ago. former secretary of state and former exxon ceo rex tillerson arrived at the new york county courthouse he is expected to testify in the
new york versus exxon trial over climate change we will bring you the coverage of that trial throughout the day but, again, that's rex tillerson arriving at the courthouse in new york. right now let's get down to the new york stock exchange. jim cramer joins us. jim, you guys have john stankey coming up today. >> yes. >> we had barry diller just a short moment ago if you miszed it, barry said disney is likely to take on al nbc strategy with peacock is smart, different because it is advertise based. what do you think? >> i was struck by the amount of money it takes to do these things you listen to apple tonight, i think apple -- it is the one everyone is betting against now. one program that ran, the reviews were negative and the stock dropped five points.
more to tim cook than just one show maybe the show is actually good, but, yeah, look, i never disagree with barry. i met barry, he doesn't remember me, in 1978 when i was covering hollywood for the -- covering homicide for the l.a. examiner you don't bet against him. he's solid i recommend his stock for 150 points he's going to be right i don't disagree with him. and i'll sound smart when it all plays out. >> what do you expect to hear from john stankey? >> stankey is -- he's being interviewed, david i think it will be promotional i wish there were more to that i think att is a fabulous stock here i hope he talks about elliott. what those guys are doing. it may be something he doesn't necessarily want to talk about, but, geez, you got elliott on board, pushing and pushing and pushing, they're relentless and relentlessness will drive that stock to 60. i think the stock is going
higher. >> speak to that you think it is going to 60 and getting to 60 how? i was talking to somebody yesterday, we were talking about how the statement from att and the support from elliott seemed at odds or not at odds but surprising given it didn't seem like it got them that far, somebody else is saying, look, you get two board seats, they push it, because they now forced att to create these expectations around what they're forecasting, how you get there means they might have to do some breakups and splitoffs and things that they otherwise didn't want to do. >> i think you're right. and you're not going it like my answer it is actually the kind of answer that is wall street -- but it is go to be multiple expansion. i think a higher multiple on these guys they're in the as dumb as they used to be i know that's kind of a -- but got some truth to it they did a lot of dumb things. i think by themselves they would admit that now i think they're not going to
do a lot of dumb things and getting out of the things that are asterisks for them they're going to be smart. a smart company gets a higher multiple let's give it five buck earning power. i think that's possible. and then everyone will say, what was i doing not buying that stock with the -- one of the best yields around i'm not saying stankey is a side show i'm saying that these guys might be able to handle the entertainment assets better. it is an exciting story. it is one of most exciting stories out there. went from being really boring to -- andintrigued by. there is a lot here. and i think these guys have a lot to unlock. this is a great one to follow and great one to own. >> jim, thank you. we'll see you in a few minutes but great to see you on "mad money," don't miss the ceos of trex and wing stock. both talking to jim. stay tuned you're watching "squawk box" on cnbc
sitting at a brand-new high. longer term, though, you have some concerns about the structural things out there. what do you think? >> short-term i think we have enough momentum. i don't think policies are going to derail. i don't think earnings are going to derail. longer term, i don't have an answer to, have we pressed the pause button on globalization, are we going to doe glob ing tie what happens when central banks run out of emission. we don't know. three, europe is a mess and will get a lot weaker that will contribute to more political hollowing out of the center when i look beyond the next few months, there is an unusual uncertainty and that's why i think the right trade here is it ride the wave, but go up in quality in doing so. >> what do you mean go up in quality? >> so sell the companies with less strong balance sheets and emphasize resilience continue to move up the credit curve. >> you think it is going to get
rougher riding from here >> i think it will get more volatile the big uncertainties, maybe that resolves in the right way but you still got exposure in the high quality names, but if they don't, the lower quality names are going to get hit really hard. >> we have the fomc meeting coming later today, this announcement out there you have christine lagarde taking over at the ecb she has big shoes to fill and she's a different person than mario draghi was what happens what is the upside and downside potential? >> i think she is the right person to take over. she has strong support in terms of the economics she is able to take on a brief, like, i've seen no one before, sheworks extremely hard. she has a better chance to convince europe to do the right thing, the big policy handoff, than -- >> to convince governments to take --
>> i think her task is very difficult, very challenging. but she is well suited for that task >> if she does that, does that mean that our fed can stop lowering rates and eventually raise rates again? >> look, our fed is being driven mainly by the perception of what happens if they can fund the markets. the markets are holding the fed hostage, okay. and last year when the fed tried to go its own way, the markets held it back completely. i don't think that lesson is going to dissipate anytime soon. >> it seems to me jay powell would like to shake some of that, he wants to say don't expect it again. >> right and when he came in -- >> a redux of the market from last december. >> he came in he tried to break the co-dependence, he did. and it was going relatively well as the fed is normalizing, a number of communication slips and then the market had the massive tantrum. and then we had the 180.
we are still in that world >> i want to thank you so much for being with us today on our first day in this new set. fantastic guest host >> final check on the markets, if the s&p were to open where it is now, i think it would be close to a new high. gave back a little bit yesterday, from an all time high we're right on the cusp of another one. join us tomorrow, we liked it here we'll be back here tomorrow. ♪ and congratulations to "squawk box" on their new set. welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange carl is on assignment, he's going to be back later fire squawk alley." we'll have an exclusive with the warner media ceo john stankey,