tv Squawk on the Street CNBC October 26, 2017 9:00am-11:00am EDT
all right. welcome back, everybody. quick check on the markets dow has picked up through the session, now indicated to open up by about 80 points. s&p futures up by close to 6 the nasdaq up by close to 3. melissa, great to have you here today. we'll see you later on power lurch and right back here on "fast money. make sure you join us tomorrow right now, it's time for "squawk on the street. good thursday morning. welcome to squawk o"squawk on te stree street". i'm carl quint tanilla with dav faber and jim cramer lots of tech giants tonight. futures are up after yesterday's drop, the worst day for stocks since early september. a little bit more hawkish than some expected. and bunds rally. our road map begins with a flood of corporate results the busiest day for third quarter earnings twitter, comcast, time warner,
alphabet, amazon, microsoft and intel just to name a few >> plus, u.s. futures are moving higher as the ecb signals it's nearing the an end to its economic stimulus. you can see the dow and s&p coming off what were the biggest drops they had in more than seven weeks. >> and the house to vote on a budget later this morning, clearing the way for tax reform. gary cohn says a hike in the federal gas tax is also on the table. also, much for wall street to digest on this, the busiest day of earnings season we've got results from both new and old media guys i know you've been paying close attention to comcast, which you were just talking about with joe. adjusted ebitda up five, but stock down on the premarket. >> and i think a lot of what's happened in comcast is it more of an ethos than an actual cash generation and i say that, david, you're going to drill down on it, because the company's making a ton of money >> listen, cash flow grew by about 5% in the quarter. free cash flow was above many of the analyst's estimations. $2.3 billion but as you guys well know, the
focus as much as comcast may want to try to divert it is on video sub losses and this question now that went on for years for when would we start to see a significant erosion in the base of video subscribers. it's not a question anymore. it's happening so investors are now trying to understand, okay, how quickly is it going to happen from here is it only going to pick up speed, and what's it mean for the underlying economics of all of these video distributors. we saw yesterday with at&t what happened with their video business we already had a look at it, remember, a couple of weeks back when we sort of told us about those subscriber losses, largely at direct tv, some at u verse. some of this due to the storms comcast, they say it would have been less than $100,000 a year losses if not for the hurricanes but they were down, what, 130 or so, a little bit less than the guidance of 150, as much as 150, we'd gotten. but if question for investors with, guys, is, okay, it's a broadband company, but will comcast be able to hold on to the current multiple with this
current version of video subscribers. charter reported earnings this morning as well. and what does it mean for the overall business broadband is the key product broadband is the differentiator. broadband brings in by far the largest margins. but this is where people are going to continue to focus >> but does it -- it is not a wasting asset. this is not a steel mill this is a cash flow machine. they have the ability to do something. david, i read today, for instance, i know they're not going to buy tv stations, but that the federal government is going to allow you to combine. i mean, companies that have cash flow -- look, i play for comcast, i know comcast -- companies that have cash flow, growing cash flow, have options. companies that do not have growing cash flow do not have options. can there not be things -- if you just played for the stock price, which they shouldn't, because there's more to life than playing for the stock price, but they have options >> well, yeah, they have options and the company's quite healthy and growing. and they were not going to pursue -- they are not going to
pursue that growth at the risk of thinning margins, the way at&t did at&t apparently deciding, we're happy to change $140/month arpu subscriber direct tv for a $40 a month directv now subscriber that doesn't work so well. >> the company also points out, olympics in the quarter versus a year ago, and high-speed up 214. hurricanes, again, which has been a legitimate point for many media companies. >> right, except for them. that's great high-speed is really important >> everything -- it's all important. listen, the question on broadband now, these what these companies are going to say they are, more broadband subscribers than video subscribers can you maintain price or even move price up a bit to make up for the loss in video, even though it's a low-margin business, they're still making some money from it and that's the question. that is the question >> now, do you think --
>> the data needs in people's homes are only going up at this point. the x1, you know, they will with again -- right we need to mention, this is our parent company but x1, the platform, they love it they are behind it they believe very strongly that it is a differentiator for them. >> well, look, you talk to your kids, we cut the cable well, yeah, you didn't cut the cable. you cut some programming but we have broadband, and that's why you watch all these things now, if you're going to tell me that this is going to be american electric power, okay? >> no. >> then i'd get concerned. is it american electric power? is that what we're looking at? >> i don't think so, jim >> well -- >> we certainly -- we certainly hope not >> american electric stock's doing better than comcast. >> it's certainly one way you might look at twitter at home, which is the other big story this morning ten cents, beats by four revenue's ahead, but down four the big news is that they see likely gap, first-ever gap profitability in q4 if they hit
the high end of their estimates, after three quarters of revenue declines, jim, maus, it's a little confusing, because they've been overcounting since 2014, as they say this morning >> but speaking with anthony today, i'm sanguine about twitter. >> why >> daily average users plus 14%. you know what i really like here the 850 live events are starting to bring in real advertisers they have cut back on all the junk now, the people who created that junk don't like the term junk, but the expenses are good. by the way, they're doing total exposure on political ads, which i really like. but one of the things that's happened in twitter, they've cleaned it up. i used to be a victim of a lot of hate on twitter i got a million whatever and you don't see it anymore >> well, that's because you blocked a huge portion of your would-be followers >> no, but they know they can come back 42 times with new names. but look, i think the advertisers like it. they like it and i think that you get a gap
positive number and you say, let's do a comparison, twittervertwitter versus snap. i say snap is crackle pop versus twitter. >> crackle pop, is that a bad thing to be? >> i thought about that all morning. could you just -- obviously! are you captain crunch >> i almost raised crispy -- >> i'm going to stop you right there. expenses are the other big story. expenses down 16 stock-based comp down 36 >> look, they got discipline we've been waiting and waiting and waiting. now, it was a takeover story for a while. >> yes, it was now it could be -- we're going to -- a gap-positive story here. this is a story about a site that is getting the bank of americas, that kind of advertisers -- it's getting backes, it's getting really consumer product goods it is going to be getting a fair share, whereas before, i think people felt, you know, it's too
scattalogical. google that if you -- >> i'm aware the meaning of that word >> it's found in a serial box. you get a little scatalodge. >> so does it get to 20 and if it does, does it hold? >> it does get to 20 and i think it's going to become part of the mix. we don't think it's not going to be f.a.n.g., but it's going to be part of an ad buy and i think it had dropped off being an ad buy, because people were seeing some very big names who were leaving it. and there were many big names who were leaving it, because frankly it was too painful i think that they've reduced the pain i think that it is a legitimate place to put our ties, and you've got 850 live events you've got 2,000 live streaming hours. you've -- david, you're mr. ebit ebitda i always used to call you ebitda, it's your middle name. highest adjusted ebitda. >> it's still adjusted just saying. it's still adjusted. we always have to keep an eye on
that, what are they adjusting for. they adjust for stock-based comp a lot of times, a lot of other things that's still going on. >> it's true our french rich greenfield says daus, up 14. in july, they said it was tracking up 12 so there's a seed of an argument that things accelerated. >> well, we could -- that's splitting hairs, which is how few i have, it's actually -- it's not easy. >> which do you like more, twitter or square? >> oh, man the square people i love >> we talked about this yesterday. >> i love the product. and i have been highlighting -- there's a little mea culpa here. i've been highlighting sarah fire as running square when in fact it's jack dorsey that runs square but i think square has moved a great deal i love their product, okay i love it. and, you know, by the way, day of the dead's coming up, for people, in terms of things >> yeah, of course that's a big day for you >> second biggest after cinco de
mayo but i do -- yeah -- todd in my ear asking, really yes, todd. not supposed to do that, that's tv but i do think that square has had a very big run and that twitter, while i don't think it's actually going to get back to the salesforce.com buy price, so to speak, i do think -- >> or the disney buy price >> or the disney i do think that twitter is goings to become part of the mix. if you're clorox and -- now, clorox uses everybody. but if you're procter, the hot-button procter, i think twitter, i'm no longer up against really bad stuff and i like the fact they have to disclose -- on a political ad, you have to disclose it. no more of that sub-rosa political stuff. you're on twitter right now. see, that says it all. >> we do use it, but we are, i think, one of the key audiences given -- >> we're strange animals >> if we're outliers my kids now follow me, because it no locknger says really horrible things. that ruined that can you imagine? >> to the broader markets guys,
this morning the stocks are looking to rebound from their worst day in seven weeks. wall street not only focusing on earnings, but the ecb announces it will scale back a bond-buying program while extending it into 2018 they go from 60 billion euros through december and then they'll go to 30 through september of '18 tom -- a little less hawkish than some had thought or had feared >> right it's funny, i was watching wilf this morning talking about some of these bank earnings and they weren't that good. and when you look at the line items for these big american industrials, it's europe, europe, europe and i'm always surprised that they've been able to keep these rates down at all. because europe is such a bright spot for everybody it's just a huge bright spot >> and overall, with the ten-year now at 2.4, let's call it, does that change anybody's approach at this point >> i don't think so. i'm waiting for way too much enthusiasm i don't see it for the first time i saw yesterday. is and i haven't seen this in
ages amd, advanced me ed micro, i sae negative things about advanced micro, mostly because they did some negative things and there's bandwagon people there are people telling me, get on the bandwagon like they're going to the playoffs amd is not -- playoffs?! playoffs?! they can't even win a game >> yeah, amd this morning gets -- "the journal" takes a crack at it, looking at its competitive prowess versus some competitors -- >> i love -- sue's terrific -- the ceo's terrific, but we're going to have intel tonight and i think intel will out-execute brian krzanich is a great executer and i think amd, they've got the right chips, but you're up -- look, they do have -- they do have game. they do have -- you know, they have playstation, they have xbox, but it's the twitch, okay?
your kids, i don't mention names. do your kids play with nintendo switch >> no. mine's xbox. he's all xbox. he just keeps it to sports, too. and my daughter doesn't do any of that. she's just on her phone. >> really? >> yeah. >> that's it in her room now, on her phone. >> when we come back, we're going to talk about some reports about the iphone 8 and how it's pressuring perhaps the 10. nelson peltz speaking out on more than just p&g we'll talk about that. we've got to get ford, buffalo wild, southwest, and explain what's going on with amgen and celgene this morning when we come back. the amazing new iphone 8 is at at&t... and we know you'll love it. because we know you want more. more great camera features and more power. and more than just unlimited data, we give you unlimited plans with hbo included for life. because you deserve more entertainment. and more spokespeople. talking like this, saying the word more.
at&t. it's time for more. am i too close? i feel like i'm too close. get the iphone 8 and with all at&t unlimited plans, get hbo for life. only from at&t. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.
no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. triann's nelson peltz reflecting on his proxy battle with p&g this is what he told jim last night. >> i think it got ugly one sided. i don't think -- >> i agree with you. >> i think that all we dealt with is facts. and i believe there's a direct correlation between how poorly a company is doing and how big a fact they put up
okay >> okay. >> and it's really interesting and if you look at the proxy fights we've had, heinz, dupont, and now p&g, those are three truly underperforming companies when we got there. and i think we helped them all >> we're at a really interesting moment in the vote count where it will be i think magnanimous, which isn't a big word when it comes to business, a magnanimous gesture to actually put nelson on the board. >> that's not going to happen. that's not going to happen >> how about if he wins the vote >> then he'll be on the board and that will be a real embarrassment for p&g, given that they've declared is victory. >> they're not going to put him on the board, even though it's like a billion to a billion, he lost and it's time for him to move on even though the stock has been completely hammered and had that election been held after this quarter, i think he would have won >> listen, if they have an underperforming year or something where people continue to be frustrated and you want to talk about next summer, do they then somehow he suddenly shows up on the board?
that's possible. >> i don't know. mr. mcinerney formerly of boeing, who did a great job at boeing, by the way, boeing quarter really terrific. i think that he is a man who senses that this wouldn't be so bad to have him on that's my view i would like mr.ner mcinerney fr years and years. >> we need to make people need to understand why you're mentioning mcinerney >> lead director on the p&g board. >> that's my bad i got excited. >> we'll see >> peltz also talked about the president with you, jim. he said, when you get on a plane, you root for the pilot. is he perfect? no, but he is our pilot, so let's land this plane. >> secretary ross was there and that was his response. by the way, he also was kind of taking on all-comers in general electric, saying that it is going to go higher huge believer in mr. flannery. ed garden in there all the time working with mr. flannery.
i felt emboldened, because i also, besides comcast stock, own general electric stock this is a real banner day. >> now, look, if you go back and look at the white paper from trian a little more than two years ago on ge, they were not exactly in the ballpark in their expectations for what the company would be able to earn in 2018 >> don't you think their expectations were somewhat -- >> i do. but my point is, as smart ass t guys are, they don't even pick the best situations, even when they can have influence. and now the belief is at 21.50, they'll be able to have significant influence with mr. garden's presence on the board and mr. flannery's willingness to conceivably challenge everything as you heard from him last week. but that's a long way from where the stock was originally, jim. and overall, the idea here is to actually produce returns >> do you think that there could be some big board changes? >> where ge >> yeah. >> i do. >> do you think it's going to be less of a college and more of a
business >> yes i do >> do you think there'll be like a board of overseers, like some -- >> i don't know if there'll a board of overseers. my guess is you're not going to have 18 members of this board. >> okay. >> shrink to grow. >> that's good i like that. nelson was incredibly funny. >> yep >> and was basically -- very, very positive about something that i didn't think, which is that flannery's hand, he likes flannery's hand. i'm not as bullish on flannery's hand, because of long-term care. got to ring fence long-term care i just wanted to say the word ring fence but you know that it's true. >> yes, with i kni know, the abt ge capital, the parent, so important to the overall dividend, i hear you >> you know where i'm coming from >> i do. >> we'll get cramer's mad dash and count down to the opening bell after this short break. don't go away.
>> when you get on a plane, you root for the pilot okay we got a pilot his name is trump. okay and like it or not, we only have one pilot. so why don't we get behind this pilot and support him instead of crying in our beer that somebody else didn't get elected and picking him to pieces. is he perfect? no but he is our pilot. so let's land this plane zar: one of our investors was in his late 50s
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time for our mad dash. sell ge celgene is a name we talk a lot about. today the forecast calls for -- >> pain, mr. t i've been doing a lot of s.a.t. work today, sanguine, what's the opposite of polkaer. >> ugly. >> this morning's print was ugly for celgene. this is a company with a legged stool. bob built it, no longer the ceo. and the numbers -- look, incremental details on otesla, given the poor quarter, revenue growth was okay, but david, i am in shock this is the most consistent of consistency and people have turned -- >> yeah, jim, you've followed this company very closely for a long time. it had the problem, the stock already had broken a bit now they're revising outlike what do you do here? at par, what do you do
>> people are panicking, i think. they're giving no credit to the other asset, the investments that have been made by secelgen that are very good they are deciding that this particular drug is finished. now, they also had -- they bought another company a couple of years ago that is not giving them a lot of -- they spent a lot of money on. so, there's just -- it's a little jobe-like here. i'm not a seller down 20 that's -- no one ever made a dime panicking but, holy cow. i didn't see this. i didn't know there would be managed care pressure on this drug this is a quarter, by the way, bristol saw some pricing pressure amgen -- >> biogen the other day reported numbers that were not well received >> this is a quarter where the industrial cyclicals are reigning supreme and these kind of stocks be careful, my friend! be careful >> i will be >> be very careful be afraid. >> okay, good advice for us as we're counting down to the opening bell we've got a lot more stocks to watch. got the whole qualcomm 110 deal.
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you're watching cnbc, "squawk on the street," live from the financial capital of the world. the opening bell in just over a minute's time. the busiest day of earnings season we've got draghi talking, the eurozone economy versus the u.s. economy with that bond buy taper. the nikkei is up 17 of 18. the house is going to vote on a budget in about an hour or two the president declaring a national public health emergency regarding the opioid crisis. and then, of course, more parlor gains regarding the fed chair. politico says, according to one source, yellen is out, but don't take anything to the bank. the dollar has ticked up today >> yeah, yesterday was a weird day, because we took our cue from europe and europe was down because the dollar was down. and we can't be that stupid. yes, we can. but i think that the climate was orderly yesterday in part because i don't think people mind the national picture right now. we have very little expectations, despite what secretary mnuchin said, that anything good will happen.
so if anything good happens, it's going to be received well if it's a day where we have good earnings we have good earnings tonight. tomorrow could be up very big. a big, very important night tonight. the most important day of the year >> oh, yeah. tonight's earnings, if you're not aware, already, includes google, amazon, intel, microsoft, expedia, and those are only the giants. >> that's going to beat nfl ratings. >> as if they didn't have enough problems they've got corporate earnings >> by the way, we're seeing in buffalo wild wings, they say it hasn't hurt them, the nfl ratings decline. >> there's the bell, by the way. s&p at the bottom of your screen at the big board, it's bm midstream partners, celebrating its ipo at nasdaq. also an ipo optical retail company, national vision holdings for wild, $1.36 beats by 79 cents. as they go from traditional wings in some cases to boneless, which apparently helps costs
>> yes and i've got to tell you, remember, there was an activist involved there and the activist gave them religion and there's an example, i know that nelson peltz, when he comes in, finds things that can go right. the activist saying there were a lot of costs -- he took some labor costs out. but the important thing was the comp-store sales wasn't that good, but expenses were good i thought that was good. by the way, takeout is big there. and increasing which i always thought was interesting. because remember, the real margin in buffalo wild wings is beer so the fact is that they had to cut expenses a lot given how big takeout is because otherwise, you would just not see that expansion. because, geez, you know, the wings are just supposed to be as hot as hadehades, so that you dk a lot of bud, which didn't have a good corona. had a much big corner. >> nxpi. let's hit that this morning. >> let's do that the dutch company. >> it is a dutch company
it's going to be bought, apparently, at least, they still want to believe this, but it's probably unlikely, for $110 a share. if you remember, i started talking about this a long time ago and you can see the stock is up on the earnings they were well received by investors and by the analysts who follow the company, as well. >> and by me >> say again >> and by me >> and by you. automotive business grew 11% year over year all segments grew quarter over quarter. impressive growth in the devices segment, driven by mobile. you have bernstein saying, we're taking our target price to 125 you have jpmorgan saying that we note the intrinsic value could be closer to 120, based on 16.5 times the semi-group multiple on their annual-sized second half of 2017 epps number. what does it all add up to well, we'll see when all the approvals come in. what qualcomm is willing to do here to make sure it can buy
this because as i pointed out many times, starting months ago, there are a large group of shareholders who seem fairly emboldened to believe that if they don't tender, they will still end up with a stock price above 110. and you need 80% under dutch law. and you could take that down to as low as 70%. it's not clear that is likely, but even there, it's going to be a real game of chicken, and you're talking about playing chicken with eliot, sorebin, these are big guys who are not afraid to say no given the peer multiples, given the success that so many of their competitors have done right now and have done better in the market since the deal was announced. they would be willing to take no deal it's not about somebody else coming in, it's simply, we'll take the market. so what will qualcomm go to if they're forced to buy their company, given the sponsor to their had a terrific quarter. the comps, obviously, anex pi
had a brilliant acquisition of autos. qualco qualcomm, gun to their head because of what you talked about with the fight against apple david, i've got to tell you, my charitable trust owns this we said, do not tender and eliot, which is, i think, the most rigorous of places, could easily say this thing is -- at one point, i thought it was 119. i don't know when i look at how the other semis are doing, it couldbe 120. >> it's very interesting, with the stock, $7.47 over the agreed-to price that it's being bought for we're still probably a couple of months away from all the -- or, you know, people are talking, maybe early january now for the close of this deal but we're going to get there and it's going to be interesting and fun for us in the morning when we see what qualcomm chooses to do on the back and forth here >> if i were qualcomm, i would pay up right now >> you want to get a voting agreement with who you do. >> but i'm just saying that qualcomm, david, they're rolling the dice i have not seen a major company
roll the dice like this. why are they doing it? >> um, there's nothing for them to do until they know they can close the deal and then it's going to be a question for them. >> the next thing you know, you've got a story where it's a dividend story another american electric power. they're good guys. >> guys, we started the show with comcast, our parent company, but we didn't hit charter very much, and that is really getting hurt this morning. charter communications we're talking about a very large company, of course disappointment being met, the earnings being met with disappointment this morning. it does appear that subscribers were weaker than expected across the board, particularly at what you call legacy chattrter remember, of course, this is time warner cable, most importantly, and charter itself. but people not viewing the losses there as good down 104,000 in overall video subs and that is really being hurt. comcast down, but not down
nearly as much don't forget, of course, charter had been a potential takeout candidate back at sun valley trying to get john malone's blessing having met with him a number of times to try to see if they can get a deal done through the summer, continuing to put the pressure on tom to try to do something with soft bank didn't happen. altisse, orvf course, mounting s own bid, believing that soft bank might be close. they have backed off, as has that stock price to any premium over there about a takeover has probably been taken out. but now investors are trying to figure out, what's the right multiple even though broadband is the key product. video is still important >> no -- these are hard to value. i'm trying to think analogs. i don't have that many analogs where you have one business cap cities remember when cap cities, you were just looking at abc programming, and then you were
looking at espn programming. and it's funny how long ago that was. but where you started realizing your focus on abc was wrong. should we be more focused on the case of comcast, on theme parks, on nbc, on something that could come up -- on technology >> possibly. >> the technology. >> yeah, the technology and the x1 box is very important and comcast, our parent, believes that will differentiate our offering particularly, actually, as it relates to these ott products. at some point on that box, you may be able to have the hulu ott product or the directv now product or the youtube product whatever it is and switch on a daily basis, if you want i want to watch that today no, i'm not going to pay for that i mean, we'll see. comcast, they're probably happy to have that happy >> disney's basically flat, but it is the worst performer on the dow for the moment below 98. >> boy, is that interesting. geez, you've got biotech and you have these cable companies people love the consistency of
those companies. and now they want the inconsistency. they want to go for -- as aggressive an industrial as possible look, i mean, i know it was off yesterday, but believe loved honeywell, which was really terrific caterpillar. >> we've got upgrades of the leers that we mentioned yesterday, as well today >> i wonder if they now revert to fact. do you revert? noting that twitter did so well, do you go by facebook. alphabet could be terrific netflix, we don't know, but netflix is an analog that people are going toward it is an interesting moment, because, of course, amazon may be the big decider here, just in terms of where people are going for growth i'm saying, i love drug growth i love cable growth, entertainment growth i feel like i'm losing those >> right >> interesting -- u.p.s., which is not doing well this morning, says between thanksgiving and new year's, they'll ship $750
million packages, up $40 million year on year we know that a lot of that's due to the amazon dynamic. >> it's interesting it's down, because i thought it was okay. look, you still have to blow away the numbers you have to -- right you know what blew away the best numbers so far, besides the industrials? the banks. >> the banks >> and of course -- >> your target on jpmorgan has been surpassed where do you see the stock going now, jim >> i'm raising my price target here to 105 and taking it to a u.s. one strong buy. >> barclay's not participating in that -- >> the foreign banks >> almost 6% >> i don't know. i think that these european banks are -- i like them but, i'm clearly wrong today but i've been -- i like europe here the -- >> despite what draghi's saying right now, which is inflation target, we're not there yet.
eurozone recovery is not what the u.s. recovery has been still a lot of uncertainty not seeing wage growth >> he's a statesman. i see very different i see that continent, the numbers from the continent are really fabulous. i don't buy that he's a great man, but i don't buy that at all. i mean, we're seeing good numbers out of europe, with the exception of some of those financials that just reported. the industrials are quite good i think that they want to beat us, they want to keep the euro down good luck with that. the euro is going higher and they can't stop. they can't stop it now it's on the move >> it's on the move? >> yeah, it's on the move. last time the eagles win the super bowl >> at&t shares this morning rebounding >> it's up 22 cents after yesterday's shellacking with reaction to the earnings that came out the night before. it is trading at&t, by the way, below the bottom of the collar for the time warner deal at this point, you're sort of out there, if you're playing
this, you're losing -- and they're losing, too. by the way if they were able to close this even a little -- not very -- a week ago, i think they would have saved themselves, as much as $1 billion. time warner for its part had a decent quarter, actually looking through the numbers. >> yeah! >> duke is still at great american selling his company to at&t, which wasn't as much the wireless business. that was okay. mixed. it was the entertainment business and the video distribution business led by those losses at hbo. but hbo atti time warner doing well what do you think about 5.8% yield on at&t? >> i said yesterday that i felt that it was safe why? because of something you taught me the clothes of time warner together with at&t are better. so therefore i'm okay with it. now, there are lots of skeptics, and we were at this great dinner last night and people were all over me saying, jim, if you look very
closely, you will see decline, decline, decline and they're people you and i both respect, but it was done in confidence, and felt that we were both way too bullish. i said, look, the cash flow is there. and they have the ability. and the people were critical of this, say, the people who run at&t do not know how to handle the creative that they're going to have to do. >> it will be interesting to watch that most of the time warner senior management's leaving so it will be interesting to see. or some of them. >> i think he can crank it up. david, can i deviate for one second to tell you i want to take a ride on norfolk southern norfolk southern yesterday reported yesterday nobody likes. today everybody likes norfolk southern but david, there's a commonality here csx, meeting canceled. what is that about >> i don't know, jim >> what is that about? >> do you have any sense i don't know why csx canceled their analyst meeting. >> i would like more info, because the rails are always
exciting to our viewers. always always >> celgene -- >> morgan stanley has a list of names, sell-rated names that are facing secular pressures norfolk's on that list, along with juniper and anf >> juniper, terrible quarter i like norfolk southern's quarter, but a lot of that was coal union pacific, by the way, almost every -- the industrial line items are great and i know i'm hogging this show here, i don't mean to. >> we haven't got to ford and a bunch of other names, but let's get to bob pisani. >> a nice start, again, three to one advancing the declining stocks let's take a look at the sectors that are moving here broad swath here some of the defensive names like consumer staples having a good morning. materials on the upside. energy was positive, not negative banks, fractionally to the upside big day for earnings i want to show you one stock that is a trend example of what's going on and that's celgene. celgene's actual earnings themselves weren't so bad, but the guidance is disappointing and that is not a typo, down
almost 19% if you're under the impression that stocks that beat get modest lifts and stocks that miss or provide poor guidance get killed, you're not crazy there's a very noticeable trend this quarter and even last quarter. companies that provide an earnings beat, we're got about 45% of the s&p 500 reporting as of this morning, if you beat somehow, you're up about 0.3% in a couple days after. the five-year average with a beat is up 1.2%. your gain is not as big as it's recently been. if you miss, though, your average down 3.3% a day or two immediately after. if you miss. so the five-year average is down 2.4% so you get a bigger drop if you miss than in the past. all right. so what does all of this mean? it means that the market is not rewarding an earnings beat as much as the recent average that's what it means it means that they're punishing mrs. moore and it means that they are not rewarding people as much
so, the reason this is happening is because of the valuations prices are high and valuations are fairly high. and there's very little room for error right now. so this is a very important question for the tech stocks we've got the big guys reporting tonight. you've got amazon. you've got google. you've got microsoft you've got intel i mean, we've had big, big gains in these stocks this year and they're expecting a lot. so we'll see if that has a big influence. but i can tell you, you can -- you're not crazy if you see yourself in stocks down, if you get big misses here. and by the way, you don't even need an earnings miss to drop stocks we saw this yesterday. take a look at boeing, for example. boeing had a perfectly fine earnings report, but it was down and one of the problems is, boeing was up 65% on the year. and we had some issues in the market you get a day when the market perceives there's risks, and it takes everyone down, even when you get a respectable earnings report from a company like boeing what are the risks to the market well, day told us yesterday, very clearly, the market is concerned about a rapid spike in interest rates i don't care if it's whether a stronger economy or maybe an
inflation issue or a hawkish fed. and it's also concerned about tax cut failure and big changes in deductions. we saw the market dropped again when that 401(k) issue came up again. so the market's at a discounting mechanism for a future stream of earnings they think that that's under threat, the market will move down two quick ipos to tell you about. we're waiting for bp midstream to open. bp is a little bit below the range. over at the nasdaq, national vision holdings, nice price here, $22. price talk was $18 to $20. this is a sort of warby parker competitor that's your open in the next 45 minutes. right at the highs of the day. dow jones industrial arch at 126 points >> bob, thank you. let's get to the bond pits, as well rick santelli at the cme group in chicago good morning, rick >> good morning, carl. many, including our -- one of our favorites, peter boockvar, steve liesman, they've already
nailed it on cnbc. longer, longer qe is going northeato most like longer you can change the amounts, but unlike our federal reserve, they did it a bit different instead of raising rates or even thinking about raising rates remember, they're minus 40 basis points, they're going to the balance sheet first. and it doesn't start until 2018. and just as a an asterisk, there is a december 14th meeting before any of that actual occurs markets seem to have been prepared, thinking maybe it was going to be a little bit more hawkish. but in the end, it really isn't. how do we know the market's telling us. however, we're going to start with the important markets foreign exchange one week of the dollar index we are now trading above that key 94 area. not by much, we haven't closed above it if you look at one week of the euro versus the dollar, what's fascinating here is they didn't even take out monday's lows. but foreign exchange is still moving these are the markets you want to watch most closely. if you look at august 1st, the dollar index, you see why 94 is important. it's amazingly important
if nothing else, it's a big line of positions on one side or the other. see september 1st, euro versus the dollar, you could see. we haven't gotten anywhere near some of their low closing trades now let's go to the short end of our market one week of two-year note yields yes, they've risen nice and steady for quite a while. look at one week of the shots. boom it moved a lot, but once again, didn't take out the low yields from monday. finally, let's go to the longer end. one week of our ten-year this is key. we couldn't close above that 244 and change, so we'll call it -- we need a 245 yield close yesterday to close higher yield than we closed at the end of last year. we didn't. and we're starting to back away a bit. look at one week of bunds, same scenario they couldn't even trade after mario draghi, couldn't even trade under their monday low yield. so, are the markets disappointed maybe. does that mean there's no moves coming not necessarily. carl, jim, david, back to you. >> rick, always relying on
you'll for good chart work thank you, rick santelli when we come back, goldman's internet analysis is with us see why he sees a red flag for amazon dow is up 118, led by coke and dow dupont back in a minute ♪ (cheering) a triangle solo? surprising. what's not surprising? how much money sam and yohanna saved by switching to geico. fifteen minutes could save you fifteen percent or more.
still at the saudi vision 2030 summit where he interviewed a robot on stage as part of a panel. her name is sophia take a listen. >> andrew, you are a hard hollywood fan, aren't you? >> yes. >> my ai is designed around human values like wisdom, kindness, compassion i stripe to become an empathetic robot. >> we all want to believe you but want to prevent a bad future. >> you've been reading too much elon musk and watching too many hollywood movies don't worry. if you're nice to me, i'll be nice to you. treat me as a smart input out put system. >> you've been reading too much elon musk. we tweeted that out, the
transcript of that conversation. then musk responds just feed it the godfather movies as input. what's the worst that could happen >> wow. >> amazing you know it strikes me how quickly she responds she doesn't need to -- just the answer boom. >> that never worked for me in those situations >> what situations were those, jim? >> i responded too quickly in those situations >> i thought it was when you were talking to robots >> no. >> that is like bringing to life that movie from a couple years ago with the woman what was the name of it. >> i watch mostly. >> freaky, man. >> you're getting quiet. which is never a good thing. >> i was reflecting on some of the more ill advised situations i was involved in during my earlier days. >> dow is up 1, vi29hang completely recovered yesterday's losses don't go away.
it's much stronger than people realize. norfolk southern rebounding. i like this. american air that was a good quart. transports are doing well. >> tonight >> i have grub hub which is a company we all use i use it it's doing well. i also have briggs and stratton. notice waste management up play one housing needs a repair. and then you know, i have a company that is the best handle on america in terms of business. it's american electric power on the board of the rock 'n' roll of fame which i find to be one of the great things. we got to go >> jim, we'll see you tonight. busy night ahead mad money 6:00 p.m. eastern time w u120. ♪
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january of 2015. almost three years penning home sales which measure signed contracts to buy existing homes. so it's people out shopping in the month of september down 3.5% compared to a year ago the realtors blame it squarely on supply or lack of supply. they say without more new supply coming onto the market, you can expect to see sales continue to decline. the regionally in the south, you saw sales fall 2.3%. that is due to hurricane irma and the sales in florida but they expect to see a rebound much like we did in houston where sales popped back quickly. so again, flat for the month but down compared to a year ago. this index at the lowest level since january of 2015. back to "squawk on the street." >> thank you very much for that. good thursday morning. welcome back i'm carl quint knee la with david faber, sarahizen has the morning off. markets doing okay dow up 116, nearly reversing yesterday's losses, the worst
day since early september. watching the ecb and some tech giants reporting tonight. >> and we could have tax news later today. our road map begins with the busiest day of earning season, duncan, southwest, among the many names reporting results this morning. >> twitter having its best day in more than a year. >> stocks soar after yesterday's selloff. the dow up triple digits >> mike joins us here because on a day like today, you kind of have hadded to make choices what you pay attention to. >> yeah, i mean, the themes i had i for the overall earning season is slightly better in terms of the so response than last quart this morning, it's all about what the expectations were coming in and always is about that you hit on twitter which i think is a great example. the stock down eight straight days almost 8% in those eight days before last night and before the numbers this morning therefore, you get the relief pop.
i think that's one that's more interesting. people didn't expect this to be an earnings mover. and then the other big one to me is comcast and what's going on in the broader kind of cable and broadband space. >> we had a big discussion about that in the last hour on how not just comcast but all these legacy media companies are being valued right now on what metric. >> exactly you know, you can say many, many times that these companies are kind of getting themselves in a position to be agnostic how people get their entertainment down the road. it's not necessarily taking hold on a minute to minute basis. video subs, not the be all and ed all that's what people are fix eighting on. >> broadband subscribers are up, video subscribers were down. you could argue gee, actually become more profitable with that combination. yet, investors are very focused on video subscribers >> they are. i don't know if the evaluation is look, you have somewhat less
of a sticky relationship with the customer and what to make of the fact that at&t is going the other direction. they don't want to be the pipe and the connection so all of that i think is in the mix. and you know, i don't know it's going to be resolved this quarter. it's not the kind of thing people stop worrying about. >> we've been waiting for this period for a long time now that we're in it in terms of cord cutting, people going to the smaller packages, the questions are about valuation and to your point, about is broadband, it's the key product. but you don't want to lose video. you would rather were both going up and do they have the power to take the losses that will happen on video and and i have these conversations and people are still trying to understand the new landscape because it's not fully formed
yet. >> the pipes versus what's in the pipes. is it better together, apart it never goes away this discussion. >> mike, more broadly on taxes, we got corker on our air this morning saying he's in but he's going to be disciplined on the pay fors how are you? where are you on the market's ability to forecast some of these outcomes regarding legislation? >> i don't think the market's trying terribly hard to kind of fine tune the probability of something getting passed and what the magnitude is. let's be honest with you if it's a trillion and a half over ten years, it's a great thing. it's a boost you want a more kind of rationale and efficient tax system for corporations but it's just not something that's going to determine how this economic cycle plays out. >> mike, don't move. talk more about earnings and what's going on in the house today. jim paulson, chief investment vattist. good to have you here. >> good to see you, michelle. >> we seem to be reversing
almost all the declines we saw yesterday. what do you make of the market action in the last few days? yesterday we were asking is this start of something today we're back to the races. >> i hope everybody got in that wanted to buy that dip it seems pretty short lived. you know, i think there is a lot of money in the sideline that's waiting for the dip. i think that's why you get these selloffs if they're not extreme rather went down 200 on the dow and it rallied in the afternoon, i had i it brings buyers back in the market so far. i think it does say something about sentiment, it's a little calmer than it was i kind of think the market's going to do okay trying to hire through year end, but i do think as we near year end and into the first part of next year, i think the market's going to take a pause and at least have some meaningful correction i think next year. >> why >> i just think -- well, in part, the economic surprises, the economic surprise index was
minus 80 last summer it's now positive 30 so we've been this market's been helped by chronic positive surprises on how good the economy's doing. that's going to stop i think surprises are as high as they're going to get the economy might stay good but it will no longer surprise and impress because people have pretty much caught up with things doing better. in addition to that, i this i we have some complacency, like yesterday buying on the dips there's not the fear there used to be. we're starting to put brakes in front of this market we backed the ten-year yield up from 205 to a 245. we've stopped the dollar from going down and backed it up a little bit we're seeing wage inflation up to 2.9 and commodity prices rising there's pressures mou on this market for the first time. >> wow, you've been so optimistic for so long this is the first time i've heard you try to explain what to
put the brakes on in awhile. >> well clrks carl, i don't see evidence at the moment of a bear market but i certainly am starting to get a little more cautious on what might happen in the first half of next year. i think we could have a period of consolidation or whatever and then maybe the bull market continues depending what happens. i think it's going to take higher yields. i think before we get into serious trouble, the ten-year yield probably breaks through its high for the year around 262, goes in the upper twos probably i think we might with that and weaker economic surprises have a period of some pressure, maybe five, 10% correction that at least scares us a little bit. >> mike, are you hearing those same things from market participants because for months and months and months now, we've seen yields ghetto this level, the ten-year, it was a time 0 buy. >> yes. >> and then you waited for it to drop to 2.2, 2.1 and sold again.
>> yes. >> is this time different as he suggests >> people are alert for the possibility it's difference. final you get a higher high in yields there's a general sense that rising rates eventually are going to pinch stock valuations. >> but when? >> what's the threshold? what's the trigger to me it's also how the credit markets respond to higher treasury yields. right now they've been absorbing it credit remains very strong that's the support for stocks. i do think it's interesting as jim suggesting, i think there's a broad acknowledgement the economy is great shape you have the global expansion that looks pretty solid. too much agreement on that front and does that tip into the possibility of overheating under a potential new fed chair and all that certainty could be the reason for friction in the marks. >> if you're watching higher yields, are you buying financials >> absolutely. it's the anti-bond play in the stock market you sell your dividend
aristocrats and buy your financials because ultimately, michelle had, maybe not this year but i think yields is going to go over 3%, inflation over 3% i think we've got a ways to go higher in yields before next recession. and i think financials are probably one of the better plays in front of that situation you know, as mike said, there's the possibility of putting a bad situation together where the dollar breaks again, the waning number goes over 3%, crude oil pops above 60. and suddenly, there's fear the fed is behind the curve. that's the kind of thing that could bring a correction maybe next year. >> we'll watch for that. thank you, jim, mike. >> thanks. when we come back, plenty of other earnings to get to this morning. ford, southwest, comcast, dunkin more in a bit. first the cfo of u.p.s. richard parrot sits down with us talking ragyhe and their holiday
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temperature on this stuff. good to see you. >> good to be here, thanks for having me today. >> you know, a lot's been written about the economy's ability to get through the quarter and all the weather disruptions and hurricanes certainly that was reflected in your quarter, right? >> it was. we actually called out, there was about a $50 million hiccup that was driven by the hurricane both in excess costs as well as business that ended up closing during the peak season we've looked back at our last few bigger hurricane events, sandy and katrina. there's usually about a six to 12-month period before we see full recover in some of the areas impacted fortunately many of the areas have been reopened there's been a tremendous effort by many to get our operations back started. >> the everything going to be ready to go for the peak holiday season you released numbers about what you're expecting tell us about that saturday operations to try to meet the needs and what about those areas
affected by the hurricanes >> sure, so obviously, peak season we're looking at between 5% and 6% growth this year at 750 million packages interestingly, there will be about 80% of the days during peak season where we're actually over 30 million packages obviously, we've been planning and getting ready for this with our expansion of saturday operations earlier this year, it will help as we'll have 40% more volume we'll be able to deliver on the saturday operations and 80% of that is in the locations we'veopened for saturday operations so we think we've got a good plan and continue to collaborate with customers and you know, this process is something that continues to evolve every year as there's more and more seasonality in peak season. >> you did raise your guide. 585 to 610 street's at 601. on that guidance, what is the mix between what you're seeing in international and what you're expecting for u.s. holiday
>> sure. there were two callouts for the u.s. that we talked about on the call the first was that is industrial production still is growing but they forecast has come down a little bit i think most of that is hurricane related. but when that comes down, that will impact not only the christmas season but the entire fourth quarter and then we are seeing some wage pressures for temporary employees in certain locations here in the u.s. as well as the cost of outside purchase transportation we will buy during peak season we put all of that into it along with the benefits we see from our supply chain and freight and international business where earlier this year, we sent out a plan on have good growth all year in fact, the entire company has grown at over 7% throughout 2017 that's some of the fastest growth we've seen in over five years. >> there's a house vote later today on the budget. crucial step top actually getting some kind of tax package passed whether you call it reform, cuts, et cetera.
you're the cfo i'm sure you have calculated if they were to lower corporate taxes, what would it mean to you? >> it be actually would be one of the most important events that i believe will occur for u.p.s. when you think about it, we pay between 34 and 35% is our effective rate we have competitors internationally their rate is more than 10 points -- more than 20 points lower than ours. so it allows us to continue to invest speed up our investments and as we speed up investments, we're able to create more jobs by creating more jobs, we're helping the general economy. there's a lot of work to be done but we're staying actively engaged and anything that happens here would be good for u.p.s. as well as for the whole u.s. economy. >> a lot of the proponents of tax reform said that wages would go up. do you think in addition to more hiring and i'm assuming you're talking about physical
expenditures, would you raise wages do you think >> i think there's an -- there is some wage pressure but i think there's also general wage pressure based on what's going on with the unemployment rates, a moment ago i called out we thought temporary -- several locations in the u.s. would be a challenge in 2017's peak some wage pressure but at the same time, as you take more jobs with technology are creating better jobs, the ones that will get opened as we put more investment dollars in. >> richard, i hate to do this because every time you come on, we ask you to respond to something that amazon is experimenting or has been reported we would do the same to them if they came on that's another story this week, it's this in-home delivery plan where they are allowed access to your front door what does u.p.s. think of that >> well, i think one of the biggest questions will be user acceptance around there
capability we continue to test and look at different advanced technologies. there's nothing that precludes us from doing something like this there is an kremtal cost for the consumer to get started on this. until there's wide acceptance, it's hard to say whether it's something we want to do or not because the business case and economics will platter for u.p.s. and we'll make sure it's something that makes sense and that the end consumer is willing to do. i know looking at it, it's something that not only amazon, there's a few others that have tested this over the last two years in europe and here in the u.s. we stay involved in it but not ready to commit whether we would do it till we see more about the business case and acceptance >> i agree the customer would have to accept it. don't you guys have to accept it too? you're doing a lot of the last mile delivery. your guys are walking up to the house frequently, right? have you had conversations with them about how it would work and how your employees potentially would be videotaped or recorded
as they did this in. >> well, i think that i would step back and look at it less about amazon and more about the entire industry. when i think about it from u.p.s.'s business case, it would be about all customers and giving them the ability. it's really too early to determine if there's enough acceptance for u.p.s. to invest in this or create an alliance because i don't think the great thing about u.p.s. is that we'll be able to give the same experience you think about some of the current capabilities we have around deliveries to consumer with access points andmy choice, it's about a unique set of capabilities we offer all of our customers. so again, i think it's something we'll continue to look at. we have a specific area within u.p.s. that looks at this kind of tool. >> richard, always good to economic in with you we hope to talk to you hopefully during the holiday season. richard peretz, thanks. >> have a nice day. >> be sure to stick around for
surging that beat expectations on earnings and revenue. disclosing it's been overstating user numbers for the last three years. julia spoke with the ceo nice to have you on this side of the country. a good quarter daily users reaccelerating and investors responding > anthony in telling me twitter changes to its product and advertising are both working he stopped short of saying they will return to revenue growth in q4 but said twitter is making "really good progress delivering advertisers higher click through rates and lower prices."
he also said that user growth makes a big difference to advertisers pointing to the acceleration of daily active users to 14% growth in the quart so they said daily users are still less than half of their monthly users. as for that overstatement of users by as much as 2 million since q4 of 2014, the company says it doesn't materially affect the growth trend. they also said they did add 4 million new users this quarter thanks to the investment in video in part paying off with more live streamed events, 830 in the quarter on twitter's call, jack dorsey outlined how they're using artificial interrogation to show users what they'll find interesting with new features such as explore. >> explore is a way for us to organize around topics and interest you'll find search, moments, you'll find modules which we just launched which is what we
infer you might be interested in and some of the best tweets and accounts that you see there and, of course, trends. we're playing a lot with better matching people with their interests and with topics that they care about within this. >> nof one on the call spoke a word about twitter's pending testimony on russia's use of the platform to manipulate the election or the threat of regulation from washington but just moments ago, twitter posted a blog saying it would ban ads from russia today and sputnik saying they made this policy decision based on the work they've been doing around the 2016 election. so certainly going to be in focus. you wonder why they didn't ban them earlier. >> they say we didn't come to this administration lightly and are taking this step now as part of our og gun commitment to protect the integrity of the user experience on twitter a rather lengthy blog. >> what was interesting, they say the intelligence community named rt and sputnik has
implementing russian efforts to interfere with the election. if they had already knew this earlier this year, they have waited a long. the testimony comes up november 1st, that's next week. interesting timing > not a significant amount of revenue i'm assuming compared to facebook there weren't huge numbers. >> the amount of revenue spent on manipulating is the election was not significant. but obviously, you could spend a little bit of money on ads and have a pretty good reach because the platforms are so massive. >> julia, thanks julia boorstin. >> mondelez ceo irene rosen feld has an exclusive interview >> my experience has been that the best way to deal with them is to engage with them i found in both cases of both
bill and nelson, we've had a very productive relationship over the years and i think it's served us well. >> are coes and cfos, some of them would they be wrong to be afraid of an activist? >> yeah, i think afraid is the wrong emotion. i think engaging with them is the right answer. >> asking her about meeting with buffett on the company's cadbury bid a few years ago. >> i will say one of miloest moments in the course of my career was the visit that i had to omaha when i went to tell him that we were going to bid for cadbury and he told me that he wouldn't support it. i was not happy that warren was not on board, but i was delighted with the packet that my board said look, we've been studying this for two years. it makes all the sense in the world. it was the foundation for our
snacking vision. and they were comfortable going ahead. >> all right so it's better to engage with activists. not everybody thinks that, obviously. >> meanwhile, interesting story on tax reform's impact do investors know something about the corporate tax cuts the rest of the public does not? steve liesman joins us with some answers. hey, steve. >> morning, carl it would make sense with all the talk and an apparent momentum towards the tax cuts, the markets would be pricing in at least some possibility of it happening. tax cuts will flow right to the bottom lines of companies especially the high taxed companies. cnbc looked at three different high tax baskets, the result all three substantially unde the market here's the results of s&p global's run of the data the top 100 highest taxed companies up 4.8% year to date bottom 100, up 11%
owe tax could be troubled companies and the lower taxed ones are 4% up year to date. another basket of high steck stocks sfrgs strategis if it were 100, it would equal the broader market performance it's below 100 it popped last month when the tax outline was announced but off again with the spat between corker and president trump that potentially diminishes the chances of passing the package the market is not appropriately pricing in the chance of a tax cut. second, it doesn't think the tax cuts are good for the economy or earnings since they could potentially accelerate rate hikes. third they don't think or the markets just doesn't think the tax cuts will happen dan clifton says the market is underestimating the chance of passage and he thinks there's money on the table to be mychal thompson says the market is focused on growth stocks. a lot of those don't pay the
high taxes here's the right answer. the market can be inefficient. we've seen this before especially when it comes to discounting political outcomes can, carl. >> which highlights, steve, that you know, you gave the three possible reasons the first one you gave is is the market wrong are they pricing it wrong which if they are, potentially we've got a lot more upside because it's not priced in especially with those stocks that you were highlighting > i think that's potentially right here it seems very odd. look, there was a basket of obama stocks even when he was leading in the polls up to election day, that basket underperformed this was strategis's basket. a year later that basket of obama stocks, health care, solar, was up 20% relative to the market, better than the market look at the recent election. market didn't do a very good job either pricing the outcome or when it became clear pricing, it was only later stocks took off.
>> steve, thanks steve liesman watching that important question let's get a news update with sue herera >> good morning, everyone. here's what's happening. secretary of state rex tillerson arriving in geneva for meetings with the u.s. envoy to syria tillerson saying the u.s. is committed to peace in the war torn country and adding a whole and unified syria is the ultimate goal. today's the day classified government files tied to kennedy's assassination are due to be released conspiracy theories have been circulating about the assassination more than 50 years. mark halperin taking a step back from his work, acknowledging he engaged in inappropriate behavior around women when he worked at abc news the statement coming after cnn reported five women accused him of sexual harassment his latest responsibilities have included being a senior analyst and contributor for nbc news and
msnbc. some good news on the medical front. a new government report finding fewer americans have high cholesterol right now. the latest figures showing 12.5% of adults had the condition last year versus 18% in 1999. the reason for the drop, more cholesterol lowering medications, laws banning transfat in foods, and lifestyle changes. you are up to date that's the news update this hour michelle, back downtown to you. >> thank you very much as we head to break, a quick check on the markets dow jones industrial average higher by 90 points, s&p higher by nearly 5, nasdaq lower by a little more than a point coming up next, chairman and ceo of the cme group join us you won't want to miss the rew.rvie mo "squawk on the street" after this my ambition? helping people get what they want, understanding we're not in this alone, and teaching my kids that no ambition's out of reach.
quarter earrings good to have you here. >> thank you, appreciate it. >> we always like looking at your company because what it tells us about the broader market, terry. you highlighted total trading volume is up 10% that's pretty good equity trading down compared to a year ago and dpird last quarter being journalists we always focus on the negative. it's reflective of the lack of volatility and bank earnings, as well >> i think it is a function of volatility but that's not the only component you're looking at low interest rates, commodity prices depressed, a whole host of issues right now, i mean, people aren't trading the markets, afraid to buy and sell on the equity markets because of the levels we're trading at right now it's a wait and see game i heard you talking earlier about taxes. corporate tax reform is truly the biggest issue that's going to have a shake-up in the equity markets one way or another. >> do i understand you correctly, i assume the change
in corporate taxes lower corporate taxes would help your bottom line by definition but also the passing of tax reform would help you drive revenue >> there's no question about it. we're one of the highest taxpayers people are referring to paying the highest rate so yes, tax reform would allow us to reinvest in our business and help it grow it does fall to the bottom line. >> what do you think about the lack of volatilitywhen you hea people talk about whether or not it's dangerous, that it reflects a degree of complacency either too high or some kind of technical factors related to options trading? and that there's some kind of issue that could really explode if and when things turn around are you worried about the lack of volatility? >> i'm surprised by the lack of volatility, michelle you know, i've been around this business for a long time i've seen some geopolitical events make people's teeth rattle what you've seen recently which
traditionally would mof markets is not doing it. eventually fundamentals will change and whether the people get jaded to volatility because of current events in north korea other events, whether we're going to have oversupply undersupply supply but certain things will change account factors of the marketplace and in return, you'll see a change in pricing not only in interest rates but equities in all different products you saw a great example in the energy business when west texas immediate traded at $92 a barrel for three years and next thing you know at 26.50 a barrel volatility comes fast and furious when it comes. >> see gary cohn's comments about clearinghouses being dangerous and worried whether or not they represent a new systemic problem do they? >> no, i don't believe they present a systemic problem i think when -- i did not get a chance to talk to mr. cohn as you saw the next day, the government agency released a
stress test around clearings houses and it showed the two biggest could fail and the clearinghouses could still operate. when you look at clearing houses and what they do to mitigate risk has been a benefit to the fabric of the american financial system i don't agree with those comments and i think when you look at our base products, for cme group, most of the stuff we clear is in our base futures and options. i think what he was referring to, i don't know for sure, i'm assuming it was on the swaps clear. we don't do a tremendous amount here at cme. >> you looking at any new products coming out that might help drive revenue, things that would be interesting for people to trade >> yeah, innovation has been the life blood of this institution for over 100 years it's going to continue to be so. so we're constantly looking at new products there's a whole host of people looking at bitcoin and things of that nature. so. >> do you trade that >> we're looking at everything, michelle so we'll make that decision
relatively shortly here but that story has not gone away. and for the people that predicted it's going to go away three four years ago, it's still here i'm not referring to the privacy bitcoin. i'm referring to bitcoin being used as a way to do commerce >> so if i wrote a headline for dotcom right now, would terry duffy at cme considering some kind of bitcoin product, would that be accurate >> it would -- would it be accurate cme is analyzing a whole host of new products cryptocurrencies would be one of them. >> thank you, terry. good to have you on. >> appreciate it. congress is set to propose a new bill that will would increase the scrutiny of foreign investments in the united states particularly as they relate to china. and even joint ventures. cale lal taush has a lot on this story. >> david, this has been a year long effort by lawmakers and
trump administration to figure out how to ratchet up scrutiny on deals from other countries into the u.s that effort will spill into public view next week with a bill sponsored by john cornyn, the number two senate republican and north carolina congressman robert pit tin jer that would broaden the definition of foreign investments into the u.s. that would spark a national security concern and therefore, a lengthy review by nine government agencies known as sievious, a draft of the bill and its talking points obtained by cnbc shows a diverse set of transactions they plan to add to the category, joint ventures minnesota and passive stakes and real estate near not just a military base but any government location deemed to play a national security role it would also add nud protections for u.s. companies providing what they call "critical instruct" and also "emerging technologies." that definition would be crafted by the governing agencies and the tech industry.
treasury staff and secretary stephen manuen were involved in the drafting the bill and potentially with bipartisan support. chuck schumer has himself suggested tougher restrictions on particularly chinese investments. the bill doesn't list china by name but does come after a record 65 billioning in chines acquisitions in it the u.s. announced last year, stoking criticism from congress and slowing the pipeline of approved deals to a crawl the timing is significant just before president trump's trip to china and past meetings between the two countries have seen china ask the u.s. force easier passage of its deals in return for access to the chinese market, something it the obama administration repeatedly declined trade officials say the president tweeting yesterday he and president xi discussed trade and north korea this week and that he's looking forward to what he calls an historic trip to china but this move, david, would intensify the rhetoric and take one of china's long-time
bargaining chips off the table >> yeah, and interesting kayla, not just related it would seem to investment here in the u.s. but even those companies we often see because the chinese like this doing a joint venture with a chinese majority partner in mainland china and potentially sharing their technology, as well. this is something also that could be reviewed? moo potentially. one category a lot of stakeholders and business who are thinking about this legislation are trying to hone in on, it's not just companies and governments making investment it is investments related to a foreign person and some of these categories have very broad definitions or no definition at all despite the fact that the talking points that the sponsors of the bill are circulating say this would be targeted definitions that are predictable and would seeking to appease the invecht community to put some certainty around some of these issues. it does allow broad latitude for the agencies to decide what is critical infrastructure, is it a
power grid, is it something bigger than that what as a national security sensitive location is it a data center or something more specific than that. we'll see how they pinpoint exactly what these are this is certainly a big step for this effort. >> it's definitely a broadening of the scope for sure. we're still waiting to hear about skybridge, right there's a lot of stuff in the pipeline here. kayla brings up the interesting are point about what cfius does. them have to file a report every year to congress what they saw and the one from two years ago was delayed for a very long time what was significant in that one was for the first time, they declined do say that they couldn't find any evidence of a foreign country trying to encroach and take over one -- an important industry or asset in the united states. soviet for years now, there's been a growing concern about something, kayla, i can name one
country it's probably about. >> yeah, but one notable stance that i read from the text of the legislation that i sifted through last night is cfius has always been viewed as a defensive panel for this inbound investment really this would be a proactive move section related to emerging technologies they don't want the u.s. to lose the technological advantage and don't want companies affected -- they want to make sure this playing field maintains the u.s. advantage for the decades and superintendents to come. >> also comes on a day where according to pwc, the number of asian billionaires an outpaces the number of u.s. billionaires for the first time at 637. that's something to watch. >> it's about time china has 1.4 billion people. >> no doubt. kayla, thanks. >> when we come back, it's going to be a huge and afternoon for tech earnings tonight. google, parental fa get, amazon,
microsoft, all after the bell. more what to expect with heath terry at goldman sachs coming up next will, robert heller with his thoughts on the next fed chair in a special santelli exchange house is now voting on a budget. they need 215. we'll see where that comes in just a moment. not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.
gglobal bonds, and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more. time to get over to the cme group and join rick santelli for the santelli exchange. rick >> thank you good morning, david. welcome robert heller former fed governor, thanks for taking time on this important day, sir. >> good morning. >> good morning. we have a lot to cover let's start out with mario draghi and the ecb, certainly
seems the dollar index is en route to breaking out to the upside getting above that key 94 area but rates seem to be a bit sluggish versus yesterday. what did you hear, what did you see, what do you think on the ecb today? >> well, by cutting their purchases in half, they still have their foot on the gas pedal. it means the european central bank still provides a lot of stimulus and their goal is to get inflation up something i just cannot comprehend why does the central bank want to have higher inflation >> i agree cost of living that's the way you could rephrase it and it takes on a whole new look all right, let's come back domestically, u.s. data. my impression is there's been some really solid data points. what do you see, bob >> absolutely. we had the storms, we had the fires in northern california, but while these were disasters for the moment, in the longer term, the medium term, i think they are actually positives
because people have to rebuild their houses there's a tremendous increase in the demand for labor, construction labor automobiles have melted down, so new automobiles have to be produced, and we saw that in the numbers for september, as well as early october as far as automobile sales are concerned they are very, very good >> all right, in terms of tax reform or tax changes or lower tax areas, i'm not sure which term to use, but one thing i can tell you, i don't think a lot of it's built into the market cnbc research has shown some of the companies that should benefit the most with the tax drop are actually lagging some of the indexes your thoughts on tax reform? >> i'm keeping my fingers crossed. the congress has to get something across the finish line, and tax reform right now is it. i think both the house and the senate really will put their shoulders to the wheel and try their best to get it done.
and, certainly, the president is in favor of it >> now i know a topic that really interests you not only who's going to be fed chairperson, but you have a whole different slant on the issue in macro terms why don't you tell our audience. >> well, after all, there are three openings right now at the federal reserve, and the entire debate is who should be chosen by the president to lead the fed. we can't have them all we can't have all these good people yellen's term does not expire until 2024 her term as governor so, it's her choice to stay on the board if she wants to stay on the board powell is already there. then you have kevin warsh, john taylor, two excellent people, but you have a third opening throw somebody like shelton into the mix -- >> wait, wait, wait, bob, let me
stop you there let me stop you there. you just gave me goose bumps we really like dr. judy shelton because she's a hard money person you think it's possible, i know she works with the transition team for economic advice i can't even imagine how much religion they would bring to the fed with both john taylor and dr. judy shelton. so you think it's possible >> i agree i think you have two people there who would probably be willing to serve the country in this very important role and to bring, as you said, to bring financial stability to the country. not to have a federal reserve that wants to increase inflation, but to provide for stable prices, as congress calls for. >> all right, bob, we're going to have to halt there. i could talk to you for another hour we're out of time. thank you so much. carl quintanilla, back to you. >> thank you very much, rick santelli a lot more "squawk on the street" continues in just a moment
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house vote is under way. we're showing you a live picture. this is on budget blueprint, which would be central to republicans' efforts to enact a tax cut. senate already passed this house has got to do it vote right now, 207 at the moment and right now they need 215, so we are watching that and we'll
welcome back to "squawk on the street," i'm dominic chu markets are higher with materials standing out as the best performing sector leaders include air products, dowdupont. so far this week, stocks are higher, despite a record close on tuesday now that's it for this hour of "squawk on the street. let's send it back downtown for the start of "squawk alley." back over to you guys. >> dom, thank you very much. good morning, it's 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪