tv Squawk on the Street CNBC October 19, 2016 9:00am-11:01am EDT
all right. trenner, thank you for joining us. steve liesman, thank you too. >> oh, come on. it was great, joe. >> great, steve. make sure you join us tomorrow. "squawk on the street" is next. ♪ even flow good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is at the goldman sachs builders and innovators conference in santa barbara, california. he's going to talk exclusively to lloyd blankfein later today. futures in a range meanwhile ahead of the final presidential debate tonight plenty of earnings, europe relatively flat, road map begins with the debate. what to expect from the
candidates tonight in las vegas. morgan stanley wabeating the street. we'll look at the state of financials. and this leaked salesforce document shows acquisitions the company considered targettarget. are more big buys on the horizon? first up, hillary clinton and donald trump square off in their final presidential debate tonight. clinton does lead most polls with 20 days to election day. bloomberg has her up nine ahead with men for the first time, that poll was tied in september. jim, the market hasn't adjusted as much as some of these polls have. >> no, and i think that one of the combinations here is labor, bank stocks have done well. has reaction been great? they've been okay. but if the -- if bernie sanders gets elevated to go to the senate, goes democratic -- >> a lot of talk about budget committee what that would mean. >> yes. and elizabeth warren becomes more of a force than she already is, then i think a lot of these
banks are going to be back in this, well, let's relook at what happened at wells. could it happen there again? whenever you get that washington intervening with banks, you start thinking they just don't want banks to do anything other than be community banks. goldman sachs is not a community bank. that was a great quarter for goldman, but the muted reactions to these i think is a recognition of the power of hillary clinton to be able to lead a whole ticket. and if that occurs, there will be segments we don't like. drugs, when you get off the desk with drug ceos, they are very concerned that a bernie sanders will be powerful. so that's the two groups i'm most concerned with. >> john harwood who we'll talk to in a moment talked to chuck schumer about some of this at least on the senate side yesterday. infrastructure was one thing schumer spoke about in terms of early policy agendas. >> maybe that's why caterpillar's not that down if you're doug oberhelman, i'm trying to get my arms around why he was let go because i think he was really making a turn there at caterpillar.
but people watch volck material and mlm, if there's infrastructure, but there really hasn't been -- just all talk, no action there. i come back to the drug stocks and bank stocks. look out. i mean, that j&j quarter yesterday, that was a good quarter, but there was a question about a proposition in california that would really make it so california would pay much less for drugs, pay the v.a. rate, if that passes, you're going to see drug stock earnings ratchet down. >> for more on what the debate will bring in the near-term tonight, let's go to our chief washington correspondent john harwood who is in las vegas. good morning, john. >> good morning, carl. we're getting close to the finish line. less than three weeks left. and even though the third and final debate is the least important of the three, it is still a huge moment in the campaign. one last chance for these two candidates to connect with tens of millions of people get their messages across. let's step back and take a look
at where the race stands right now. if you look at the average of polls which is the best way to do it on realclearpolitics.com, you see the story they tell, which is hillary clinton in the high 40s, now above 46%. donald trump stuck below 40 at 39%. so that's more than a seven-point lead. that's pretty significant. johnson and stein in single digits, of course, after that. and where is the hillary clinton advantage coming from? first of all, and most importantly, college-educated whites by three points are favoring her. that looks like a small number, but it's very unusual for a democrat to be doing so well with college-educated whites. that is a traditionally republican group. then you go below that and you see big advantages, a 20-point advantage among women, 20-point advantage among people under 50 years old, almost a 60-point advantage among non-white voters, and urban voters huge advantage as well for hillary
clinton. now, what can donald trump do about all that? it's very difficult at this point in the campaign especially with all the negative publicity that he's been dealing with about his actions with respect to various women who've come forward and what he's been captured on tape saying. the question is is he going to try to diminish that disadvantage among women? can he do that? or is he simply playing to his base and counting on this theory that his campaign has operated under, which is they can just supercharge that base they can make up some of this deficit. down-and-o daunting task. for hillary clinton she's trying to protect her lead, provide a positive message and get some of those undecided voters to tilt her way in the end. >> john, we were talking with jim about the congressional ticket, down ball lot races, ar there individual races either on the house or senate side that will act as a proxy?
>> on the house side it's much different because of gerrymandering and the way the differences are drawn. democrats have to gain 30 seats to regain the majority. that's a very steep hill to climb, not expected that's going to happen. on the senate side they just need to pick up four seats. kp they've got tons of targets. you've got wisconsin, illinois, seats that are leaning toward the democrats, those are pickups, that's two of the four they need. then you have states like pennsylvania, new hampshire, pat toom toomey, kelly ayotte, and even in a state like missouri, red state, roy blunt is on the defensive. so democrats are favored at this point to win the senate. and here in nevada where harry reid's retiring and that seat is the one republican opportunity, we'll see whether they can pick up that with joe heck who's a republican congressman. >> john, we will see you tonight.
be sure to watch cnbc's special coverage of tonight's presidential debate 9:00 p.m. eastern time right here on cnbc. we move to the banks this morning. morgan stanley beats expectations with its results, like other financial firms this earnings season getting a lift from bond trading activity, fic up 61. and as the -- as dow jones today said no longer the runt when it comes to ome. >> no, stressed over and over again wealth management, wealth management, watch this happen. sure enough revenue management 3.9 billion. pretax margin of 23%. what you're seeing is people at these banks starting to make more money. they're making more money on these divisions we had become convinced maybe there was no way they'd ever return. that's why, again, what you were talking about is so bornt, not that wealth management be crimped by any fed change in the senate, but you won't pay as
much for these banks. try to get multiple expansion, pay more betting going to be something not one off. and the wealth management business at morgan stanley despite what you hear periodically of the brokers going out of the elevator in the morning and not coming back, i feel very strongly that this morgan stanley quarter is once again an affirmation of what gorman's done. he's turned it into a very special wealth management company with some very good fixed income. he's a good executive. and this is a nice turn from the previous quarter. some people didn't like it. >> yeah, david, i assume you've had a chance to look at the numbers this morning, we'll see if he gets to that 10% roe but next year. >> yeah, not quite of course. goldman sachs was, what, 11.2%, i believe it was yesterday. and to remind everybody we'll be sitting down a bit later today with lloyd blankfein, the ceo of goldman, which by the way did end the day up. but wealth management they've
stressed in part because they want the consistency of results to be there. they believe a higher multiple will result from the lack of assisttutes in the business. fixed income securities and commodities had a monster quarter for morgan stanley jumping 154% from the third quarter of last year, of course that was not a particularly good quarter. but even sequentially very strong. look at all the notes this morning from the analysts who follow morgan stanley, it is pretty much uniformly positive in terms of their reviews of the quarter particularly because they were restructuring and have been cutting costs on the fixed income side. but it didn't seem to stop their ability to succeed there in terms of trading. they've always been strong in equities, but as you know well, the ups and downs morgan stanley's had through the years in fixed income have been something that investors certainly have not liked and perhaps another reason why they haven't been willing to pay up for the earnings from this company, very strong on that front. strong beat on all fronts. they did see the comp ration go
up a little bit. not too much. tax rate may have been lower than some anticipated helping a little bit. >> i focused on wealth management only for what you said, i'm always concerned anything fic, that could be more than one off. maybe, maybe not, but brexit you had a lot of turmoil. if we go back to calmer times, i'll still like wealth management. so i want to asterisk. i'm not saying it was on steroids, but i want to asterisk that all that kind of trading because morgan stanley is not really made its hallmark. that was a windfall. but you know, david, they're trying to position themselves as a very good wealth management operation that really has very little government -- very little interchange with the government, which does matter. >> right. they want to do revenues in fic, above a billion a quarter, they were way above it this quarter to your point, jim. wealth management has been the stress, no doubt about it. don't forget investment banking,
m&a advisory, underwriting still an important part of what morgan stanley does. and a billion dollars a quarter is not anything to ignore. but agreed. wealth management certainly one key way to measure the progress of this bank. don't forget it wasn't that long ago flemming left, they have new management in that part of the business. this does appear to have been a good quarter as well for ted pick of course running and overseeing fixed income currency and commodities. >> yeah. it's good. hard to pick which one is best. goldman -- david will be talking to lloyd blankfein. he's very -- by the way, don't be surprised if he isn't critical of himself. that's one of his hallmarks. i do feel that was a very clean quarter. went over it this morning. some people are saying there's this lending business that wasn't so good. david, that goldman quarter really distinguished itself as the old goldman when you get that roe. so maybe make lloyd a little less critical. maybe give him a little push because you know how he likes to joke a little bit about how well the bank is doing.
but that was a good quarter. >> it was. but let's get back to the performance of the stocks themselves. i mean, generally speaking now guys we've had pretty good numbers from financial institutions that we focused on. wells fargo again we kind of put in a different category given the problems they're having outside of their actual results the fundamentals didn't seem to deteriorate that much though it may be happening more now in terms of deposit taking, but jim, the stocks haven't done that much, have they? >> no. >> you mentioned this at the outset of your comments, is there a multiple -- there are people re-examining what really should be paid for these companies, and simply saying even in a rate environment where it would seem that you've got the wind at your back, i'm not willing to pay up. >> no, look, i think this election is critical for these guys. i mean, will someone say, you know what, these banks, they're too big and we got to break them up again. don't forget, i mean, wells and j.p. morgan, bank of america huge part of the banking business. if you get a very activist senate and the house actually
changes, the gerrymandering probably makes it so it doesn't happen, but if it does change, you're going to say someone's going to call hearings and say these banks are starting to make too much money. let's look into that. and, david, i don't want to pay up. if these ceos are back in congress talking about their business. >> david's got a lot to come this morning. not just blankfein but george lee, david sol mon -- >> george lee? >> yes. >> i like him. >> investment banking. intel falling in reaction to the company's current quarter guidance. chipmaker outlook overshadowing better than expected results helped in growth by data center and cloud. questions about whether or not this pc cycle is sustainable in their view. >> yeah, that and i was really let down about the enterprise. i thought the enterprise for the data group was going to be very strong. bad read throughs here, i actually like those companies. there were two intels on this conference call. there was the intel you're listening and it's like, wow, this was just the quarter 65%
margins and revenues were terrific and i like it. and then they just drop a bomb by saying, listen, we're kind of overearned here. and the fourth quarter, which is the quarter i've always revered from intel, the one you always want to buy, the one i remember having great preannouncements, they just took the air out of the balloon. it was almost like nothing they did mattered. and that's a shame. but, again, this enterprise business should have been stronger. a lot of the analysts critical saying why did you even think it's going to be stronger. the answer is because private cloud a lot of companies moving to private cloud, not just public cloud. they do a lot of business with amazon, google, alphabet. it was a surprise to hear how weak they thought the fourth quarter -- i wonder if brian -- i would not have spent much time lowering the boom and spent more about the ten-year journey stacy smith has had. and brian is another one of these guys. we have this era of
nonpromotional ceos. brian, he should be in there saying, listen, we've made a lot of good moves, diversified away from pcs, but no, he's another guy. it's like i got to send a psychiatrist out there to say, listen, guys, you know what, the era of self-effacing management is over. >> you're smart enough? >> i'm going to run their conference call next time. i'm going to change the narrative. stock will be at 38. >> when we come back, speaking of not self-effacing ceos, salesforce m&a wish list gets leaked. we're going to fill you in on that. as we said david's got lots from goldman's conference out there, co-head of investment banking david solomon in an exclusive. another look at the premarkets. it's the anniversary of black monday '87. more "squawk on the street" from post nine in just a moment. alpha seems more elusive today. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing
it appears salesforce eyed 14 companies as possible m&a targets back in may before it considered buying twitter. the journal cites a salesforce internal presentation which came from a trove of former secretary of state colin powell's e-mails leaked in september by d.c. leaks. adobe among the possible targets listed on the 60-slide document. others included service now, but not twitter. >> no, let me give you a rundown on these. adobe, first of all, adobe's
bigger than -- the ceo of adobe, they're very good friends, marc benioff. next one, workday, very good friends in neil. unlikely these are going to happen. service now, these guys come on "mad money" every quarter, service now is very, very expensive. but benioff does respect that. the two i find most interesting, peg sis systems because that is swallowable and that does infrastructure for customer relations management. and viva, which i had on recently. he used to work at salesforce and that's a life sciences vertical. marc doesn't like to have -- he likes to give the verticals whether it be human resources to workday, whether it be life sciences to be unlikely, so i got to tell you, it really is telling the tweet -- twitter had already been down to 14 and was not on the list because twitter was the one everybody talked to. now, tablo data, which i know
salesforce not crazy about because it's not social, mobile or cloud, and that's what -- or artificial intelligence or machine learning, so i know that one was dismissed very early not by them but somebody else is interested in play, that company's very quiet. that was another stock that broke down in february when linkedin went broke down. this is an interesting list. sit embarrassing? i don't know. benioff stressed to me over and over again we look at everyone. there isn't anyone they don't look at, but some don't make sense at all. and adobe i was surprised to see that in there. adobe ain't looking at salesforce either. i talked to -- that's not going to happen. >> yeah. david, your thoughts on this one? >> you know, guys, i mean, i think it's interesting. listen, people should understand this is not a typical many corporations of course put together potential lists of acquisitions they will never pursue. but it's a good idea to have your board sort of come along with you so you don't surprise them one day by presenting something they've never heard of, never thought about in any way, shape or form.
you want support of your board when you're going before them to get approval for potential deal. so this is not something that's atypical. but what is of course this new world where we're seeing things getting hacked all over the place. now, this was made public as a result of mr. -- secretary powell's e-mails being made public to some extent. you know, it does lead you to wonder, guys, whether there is also hacking being done for profitable purposes that we never hear about. i'm just saying if they can get into his e-mail and other people's e-mails, how many other directors are having their e-mails hacked? and perhaps people are just benefitting from profiting somehow. i don't know. but this is certainly a new world that we're in here with so much of this stuff conceivably being able to be gobbled up by those with not necessarily good purposes. >> boy is that a great point. i'm interviewing preet barra next week for a presentation for us. i felt the same thing, this is really good info.
you'll see service now up. one thing i thought was creative nobody's talking about, marc benioff is looking immediately the rating for glass door, the first thing he thinks about for ceo and that is where they like the guy. and the ceo glass door is something a lot of people feel is touchy feely, but i'm going to look at glass door reason whether or not to like someone or not. again, i want to stress, there isn't anything that has hit benioff's desk that he says he won't take time to look at. so twitter hits the desk and boom. but, david, you're so right. these lists -- we could put this list in front of anyone. but how about this, david, when it says in play and you get to a code name like tuscany, like sonoma, what is champagne, a code name indicates there could be something going on. >> yeah. i mean, there could be. i mean, they always use code names, of course bankers do and companies do when they are pursuing a deal and in talks. >> right. >> in this case they certainly decide to code name even earlier. i don't believe there were any talks involving these companies,
but internally they wanted to put those code names on it. that's great. really did a great job keeping it out of the public realm, didn't it? >> tuscany, i like the wine very much. i don't like sonoma wines very much. maybe tuscany is better. >> it does give a quick sense as to their thinking. i mean, when they have a deck that says digital commerce remains significant gap in the salesforce portfolio, jim, it gets you thinking about what they think their needs are in the future. >> right. they did demand ware, i'm telling you i had peg sus systems on, i thought that was a natural fit. that's the one people are buying tablo on that, that's not social, mobile cloud. i want to be on this one. >> we'll get cramer's mad dash in a few minutes. shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits
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just about a minute before the bell. let's get cramer's mad dash, watching? >> halliburton. this is a remarkable quarter. given the fact we all know oil's at least come back from the february lows. but listen to this, north american results improved took advantage of the rig count growth. north american business delivered 9% sequential revenue growth results grew by $58 million, 41% incremental margins. a lot of people felt they weren't making any money because they had to cut their rates in order to be able to get more drilling done. but this is a very encouraging number. very encouraging for halliburton. >> for halliburton. >> yes. and it does say that, look, business at $50 is not bad for these guys. that's amazing. you would think they need $80.
but halliburton's done a great job shrinking its workforce and making more money with less. >> mean crude go from $51 to $55? >> new sweet spot because there is a little bit of dearth in inventory right now. interesting. >> there's the opening bell. and the s&p at the bottom of your screen. at the big board today it's stor information services and the society of industrial and office realtors at the nasdaq social reality, an internet advertising company. just a brief mention 29 years ago today, black monday down 22.6%. >> you came in that day and all you wanted to know was what the -- you wanted to speak to a broker, couldn't get a broker on the phone. you wanted to know what's your -- by the way, i add it was sometimes it's better to be lucky than be good as karen cramer would tell you. and we had all cash except for some j&j puts and was able to ride that for a very long time. trump says he sold everything.
i have a piece of paper says sold everything. but i think the week before that was one of the worst weeks ever. >> but the economy didn't fall off a cliff. >> it was dynamic hedging, it was futures, chicago overtaking new york for the first time, we didn't know what it was. it was actually some weakness of the floor brokers for treasury department investigation. the most upsetting thing you came in on monday and you don't know if anything you did was true. i mean, the back offices all overwhelmed. it was a dark period for our business, but not for the economy at all. >> with that in mind, just remember what that meant for the markets and not maybe so much for the economy. yahoo of course bottom line beat. page views up since the september 22nd announce of that breach. >> i mean, yahoo was -- that was the surprising line. no surprise things continue to deteriorate and a lot of their businesses, but i mean if verizon tomorrow says, listen, we have issues, this -- these numbers make it seem like that they shouldn't. >> some suspect it was people going in to change their
passwords having not looked at their accounts for a long time. >> that could be. >> m.a.v.e.n. revenue is different. >> there wasn't anything in there that if this company were alo alone, stand alone like alibaba this is a company simply in decline. so was aol and look what -- you get tim armstrong in there putting these two together and you could have a powerhouse. i'm not giving up on verizon's whole internet strategy. att when they bought directv that changed trajectory. both remain stocks i really like. if you buy verizon well ahead of this quarter, i mean, i don't know, that's more of the hostage to interest rates now. >> david, what are you watching out there? >> you know, on the yahoo stuff, guys, there was one as you referenced i think there's one slide in the deck from yahoo, user engagement trends and carl i think you referenced before and after september 22nd and when we learned about of course
that huge breach that took place two years ago. and they say of course there's no change. and there does appear to be no change. but you still have those comments from the general counsel at verizon. perhaps they saw the background of the transaction and realized they paid more than they would have liked to or maybe they needed to and wants a price cut. we'll see. there have been no conversations i will tell you between the two companies about a price cut at this point, although verizon certainly seems to be stirring that possibility up. and as jim says, it wouldn't make that much difference to yahoo's overall stock price but there are investor who is short alibaba, go long yahoo, they play the arbitrage there. for them of course it would have a more significant fallout. so we'll see where this ends up. but it doesn't at least appear at this point that there have been a lot of conversations about a potential price cut. whether that comes to be something that happens, we'll see. >> yep. starbucks naming their first ever ceo of starbucks china.
she was already president, belinda wong. >> there was an article this morning said starbucks is going to go back to making domestic numbers of 5%. the analysts are all keying on a return to growth -- my charitable trust owns this forever, return to growth in the u.s. but i think that schultz is over and over again -- he is on today, over and over again stressed china is where you should be looking at. so this might heighten the look at china, might make it more important. don't forget yum is about to split. we have a positive note about yum this morning. credit suisse, i think the people have to recognize yum is about making china more visible, starbucks has to make china more visible because that's where the growth is. we could name every city that has a major league franchise, and many of them would be like tier seven chinese cities, and there are still lines around the block at a lot of starbucks. starbucks has not been able to communicate to date how important china is or the analysts aren't listening. maybe this will help the narrative of howard schultz.
>> by the way we did get gdp overnight, 6.7 for the third straight quarter, which some people say conotes stability in china. >> i think the worries about china seem -- look, you always have to worry about a country because you don't know anything. the communist party -- the other day, by the way, the communist party not intrigued by samsung telling them, hey, don't worry. i mean, communist party, remember they run the court system, the prosecution, there is really judge and jury, they have it's called a totalitarian state. so they can control the numbers. it's not like there's somebody out there saying, you know what, i don't like the numbers. i think that they're untrue. because i think that might be a white collar crime. by the way, white collar crimes over there are often treated the way blue collar crimes are treated in our country. >> yeah. shanghai had decent gang -- actually relatively flat overnight. david, not seeing a lot of action in the financials. we should mention wells fargo
did delay the sale of ten-year bonds. stumpf by the way also leaving the boards of chevron and target. >> yeah. you know, be curious to see how the financials overall perform. there's a look at wells. not getting all my quotes as you might imagine out here in the dark. it's still very early and all our systems aren't up. but the performance we've seen this week and last week after earnings that were generally positive have not proved out in the marketplace, though i guess goldman did end the day up yesterday. changing tace ining tracks quic week with st. jude and problem with defib ri laters, abbott is buying st. jude on the conference call affirmed they're going ahead with that deal if there was any concern. let me read quickly, he says they've done all the right things, that being st. jude. they've been in great communication with us and based on everything we know i don't
see this impacting the close of the deal or the business long term. i've seen a lot of expectation in the press, i mean, every time there's a product issue i'll say based on everything i see this deal is going to close. that's miles, he won't say the same thing about aleer certainly, but he is saying it about st. jude, jim. >> i thought the abbott call was good one. we have to go back to selection, david. go back to this proposition 61 in california. i mean, when miles white delivers a quarter with a lot of good growth, when alex delivers a quarter j&j, great growth, great pipeline, these stocks don't go up, i'm telling you that's a sign. that's a sign people are saying what happens in november, if we get people who want to have v.a. pricing, that's what the proposition in california is about, for the single government. because the v.a. offers a very good deal, and they're very tough on the drug companies. obviously v.a. pricing, david, would kill the margins of all these companies.
>> yeah. that's interesting. is that really something that's a strong possibility? >> what, that proposition 61 wins? yeah, i'm starting to think it might be. there's really a wave of populism going around. bernie sanders is a factor. can't panny for this. i didn't think prop 61 had a chance for this, now i'm starting to think -- a lot of people are realizing the veteran administration gets good prices. no kidding. if your father's a vet, shouldn't he get a better deal? you served the government and put in harm's way, i sure hope the vet gets you a better deal for drugs. but if everybody else does, yeah, you're going to see the margins come down $3.8 billion is at stake in california purchasing of drugs if they prop 61 passes. >> do a little tech here. intel is below the 50-day for the first time since june. obviously the dow's weakest component. apple discussions about an october 27th product launch.
>> new product. >> max. >> yep, new product. i still think china and the story about samsung is going to come into play. seagate by the way a really good quarter but people are reading through the negative part of intel into seagate. maybe that's a mistake, but seagate had a big move. i come back to intel and lower the boom on this one section, they did say gross margin come down. saw 65%, wow, that was the holy grail where intel can go. intel had been recommended the day before on very good -- expecting a very good quarter. that didn't play out. that was an ill advised recommendation. >> what do you think of belichick saying i'm done with the tablets? >> i think he hates everything. you know, you got five rings, you can hate everything. he can hate netflix. i'm surprised he didn't say i also hate netflix. >> he went on for five minutes. >> look, i was watching -- i was on the sidelines, they had really good seats. scott wapner thank you for recommending me to go to the game. and they're all looking at the
service. john who killed on ellen yesterday, he's the long snapper, he looks at the surface, johnny jones, punter, they all look at the service, except for the coaches who were looking at the old photos from up at the top of the booth. so i think belichick's onto something. look, belichick's never impressed me as a happy guy, but who cares? did anyone see the espn thing where they had einstein's face on belichick? i thought that was fantastic. he's real. he can even dress like a slob and get away with it. if he doesn't like the surface, i don't think -- is sacha going to lose sleep over that? well, if another coach does, yeah. waiting for belichick, we know what -- we know -- this is like a dennis green thing, they were who we said they were. the surface is not as loved as people would like to think. now they're coming after me. but i saw actual hard copy
photos used as much as the surface. >> if you missed this really quickly yesterday this is bill belichick on the surface. >> you know, as you probably noticed i'm, you know, i'm done with the tablets. i've given them as much as i can give them. they're just too undependable for me. i'm going to stick with pictures. several of our other coaches do as well. because there just isn't enough consistency in the performance of the tablets. so i just can't take it anymore. >> tablets are everywhere on the sideline. >> oh, yeah. >> that was not a ringing endorsement. he could have thrown in the samsung galaxy note 7. i mean, he's basically saying the surface isn't safe to use. this was a little shocking because microsoft paid a lot of money to make that happen. >> yes. >> david, don't you think it's amazing -- let's say you attack
nike. listen, nike clothes are bad too. can he get away with anything, this guy? >> i guess i don't know. he's the most ornery fellow i think this sport has ever seen. he had a three-letter explanation as to no longer going to be coach of new york jets. i don't know, man, belichick's a genius, i guess. whatever he says goes. i think that, carl, that it's going to become a gift, right? is that what you call it on twitter of him throwing that tablet down? that thing is going to be all over the place for a long time. >> yeah. there's a lot of opportunities. michael dell is no longer -- michael dell is a private company, but i don't expect meg whitman to start throwing hewlett-packards, but in the ends what this says is a very high profile endorsement was really kind of wrecked by the most high profile coach. but any time you talk about belichick with other coaches they always say, yeah, he's the meanest, but he's won five rings. it can excuse anything.
like sacha should come out and say he's won five rings he can do whatever he wants. this guy is allowed to do whatever he wants. >> indeed. and he does. >> you got to love him frankly. microsoft by the way basically unchanged today. we'll keep an eye on that. >> is he short microsoft? no, he has no time for anything other than football. i don't want to be near that guy's life. i don't think he has -- don't bother me. everything's don't bother me. during the football season i don't know what kind of life he has, but i do love him. look, here's what everybody says about belichick including sacha, i'm sure he's saying i wish he did coach the "squawk on the street" even thou-- seahawks. >> dow being dragged down by intel obviously. let's get to bob pisani on the floor. >> mixed open here. china was up, asia was up in general. china's third quarter gdp estimates matched expectations.
remarkable there. once again the stocks that matter, the ones providing earnings are moving the market. energy stocks energy over $50 on oil and halliburton news spurring oil, materials are up nicely too. financials also holding up. good earnings reports. again, a big beat. it's hard to move tech stocks when intel's down 5%. that's why tech is weak right now. so banks beating again. we saw not just morgan stanley but i like the regionals, bb & t, u.s. bankcorp., this is important for the earnings situation because it's turning the picture around overall. i think the most important thing this morning was halliburton's comments, oil service here, the surprise profit from halliburton, only one cent so maybe beat by seven cents. a lot of people saying there wasn't a lot of revenue beat, it was mostly cost cutting. that's true, but it's the tone they struck more important. cautiously optimistic. take a look at dave lesar, the
ceo, as we look forward, we expect increased rig count growth, things are getting better for us our customers. he did say caution on holiday and seasonal weather related downturns, but bottom line is they see more confidence in general about oil now in a new range of $50 to $60 for 2017 rather than $40 to $50. and i think that tone is what really matters for the markets. on commodities separately bhp a production update in london. they didn't really change anything. i would say modestly optimistic. the ceo on the commodities overall here, we have seen early signs of market rebalancing, that's andrew mackenzie. what does all of this mean? we're about 15% of the way through the earnings season. obviously it's still very early, but we have turned positive on earnings estimates. we're in an earnings recession, is it evergoing to turn around? right now it has. earnings up 0.2%. this is the blended number as
well as the revenues also six consecutive quarter of negative growth also starting to turn around up 2.5%. a lot of this is because the financials have been so much better than anticipated. the estimates have really yo overturned the s&p picture all around. today financials expected to be up 6% in earnings for third quarter. just a couple weeks ago only up 1%. so all these big beats we are seeing from the banks are having a big influence because financials are the second biggest group in the s&p after technology. those big earnings are moving the s&p earnings outloforward overall. the big question right now what's happening with the earnings picture. so far right now the number of companies beating is well above average. it's about 81%. the average is about 63%. that's way above average. and the magnitude, how much are they beating is also well above average. the big question is, okay, is this an anomaly, are we going to see this throughout the rest of the quarter? it would be very important if we did. we don't know, but early signs with tech companies, intel
notwithstanding, has been encouraging. next story is going to be the industrials. general electric on friday, we'll see some other ones, honeywell has already had comments, negative comments recently, but illinois tool works will be reporting on thursday as well. a lot of this whole question is going to turn on this global economic situation because we're going to see very carefully what general electric has to say about that. and that, carl, may really determine the tone of the third quarter outlook, and in particular the fourth quarter guidance. very encouraged by the cautiously optimistic comments from halliburton. . carl, back to you. >> bob, thank you very much. bob pisani. let's get a check on bonds this morning as well. go to rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. you know, if you look at intraday of tens we've had a couple of basis point creep, but once again seems the 1.70s are somewhat home. look at a one-week chart you can see that. so today's topic is 1.70s are the new 1.50s. remember that entire month of
august other than one session all settled in at 1.50 somewhere? here's that chart. the 1.70s are very much like that. what happened after it ran its course of consolidation? it leaped 20 basis points. many believe that the 1.90s or close to 2% will be the next leap, doesn't matter when it leaps, matters how long it stays in this range. that's what traders are grappling with as of course we see volatility on the options has come in a little bit. now, if we really want to talk about the box of chocolates that mario draghi's been giving some of these financial institutions whose tradings look pretty spectacular on some of their latest reads, every piece of candy is a bit different. maybe it's this chart, the one-month of investment grade. see how those spreads are collapsing? thank you, barclays by the way, our one-month of high yield, there's another box of chocolates. another taste of chocolate, or the five-year high yield. these tightening spreads and the notion of what the ecb continues to do and other central banks either are doing or hint at doing really makes the trading a
little bit easier, don't you think? and if we really want to look at maybe the driving force we're supposed to pay attention to as treasuries seem to be moving in a range of course and what pops them out of range seems to be unemployment data, fed meets, ecb meetings, bank of japan meetings, it's the dollar index. this is a 15-year chart. i want you to pay attention to how we are close to knocking on that 100 door for the third time. pay very close attention to that level, whether it's in the options market here or the orvegt options, that will be a big level depending on whether it holds or we slice through. carl, back to you. >> rick, thank you very much. rick santelli. when we come back, david faber's exclusive with david solomon, dow up 31 points. a lot more still to come on "squawk on the street."
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the way before we get to the main, i don't think there's anything of the yahoo deal to change out the price. i think verizon has to pay it. now, when nike took the contract from reebok, okay, it was 2010, this is for the nfl, it was for the 2012 season. it will be interesting to watch whether apple doesn't try to get the ipad with the nfl. that surface deal is from 2013. expires in 2018. using the logic behind reebok and nike, it would be right now for tim cook to be able to call the nfl and say, you know what, that $400 million that microsoft paid, we're willing to do ipads when that contract ends out in 2018. they would have to start talks now judging by what nike and reebok did. that is the one i think people want is the ipad. >> i guess who has more sway with goodell? tim cook or paul allen? >> that's a very interesting question. i do feel that it will hurt the surface to be honest. i just think what's going to happen that's going to replay
over and over again and belichick is the most visible guy who uses the surface in america. not unlike when steve ballmer to my reunion harvard, he brought a microsoft phone. i said what the heck is that. he said, well, this is a microsoft phone. i said well i found someone who uses it. >> i love that story. what's on mad tonight? you got schultz. >> yes. that's going to be with kelly. now, kelly -- we have another kelly, kelly king. now, corbus is a guy any time we have a lightning round we have corbus on. but kelly king, we have to ask about whether it's the regionals time. the regionals are doing much better than the big banks. i think one of that is a lot start doing acquiring again. but i got to ask about politics. and i hate politics, but you got to ask. i mean, because banking, we keep waiting for banking to be turned into the greyhound bus business by a couple of those people in congress. >> 20 more days, jim. >> holy cow, we're going live. i heard "mad money" going live and i hear we're going to have
domino's pizza. my executive producer has ruled that out, which is insane. >> we will see you tonight, jim. "mad money" 6:00 p.m. eastern. when we come back, faber at the goldman conference in california with the co-head of goldman david solomon in a moment. and can you explain to me why you recommend synthetic over cedar? "super food"? is that a real thing? it's a great school, but is it e right the one for her? is this really any better than the one you got last year? if we consolidate suppliers what's the savings there? so should we go with the 467 horsepower? or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. ok. sure. but are you asking enough about how your wealth is managed? wealth management, at charles schwab.
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♪ good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen at post nine of the new york stock exchange. david faber is with us in santa barbara and will join us shortly. in the meantime, take a look at the markets. intel taking its toll on the dow, which is up just about 12 points, s&p is in the red just slightly. and oil trying to make a run past 51. our road map for the hour begins with a third and final debate. the election just 20 days away, things are certainly heating up. what will the candidates say to draw in voters? we head to las vegas straight ahead. morgan stanley joins its peers adding to the bank earnings win streak, easily
topping expectations. we'll dig through those numbers. >> plus, goldman dealmaker david solomon investment banking division co-head at goldman sachs will be joining us from that builders and innovators summit with david. but of course the big story today and tonight will be that third, final and likely heated debate kicking off at 9:00 p.m. eastern time. our john harwood is in las vegas this morning and joins us with the preview. hey, john. >> well, carl, the best predictor of what this third debate's going to be like is to look back at what the first and second debates were like. what we saw in the first debate was that donald trump was donald trump started out with an effective argument by saying hillary clinton was a 30-year proponent -- resident of washington and participant in the political system but hadn't produced change. hillary clinton's strategy was to bait donald trump to tell
donald trump that he had insulted alicia machado, that produced a twitter war, accused of not paying income taxes, saying that was smart that was thrown back at him. then at the debate you had the release of the "entertainment tonight" tape in which he was captured saying lewd comments about women on the debate. hillary clinton then in the second debate used that and said that's who he is. we've seen who he is. but we saw a more aggressive donald trump in that second debate when he came back and said you'd be in jail if i was president. i'm going to appoint a special prosecutor. problem for trump is that the bad news has kept coming, more and more women have come out when he denied in that second debate to anderson cooper that he'd behaved in a way he'd been shown on that "entertainment tonight" tape. that then has produced a cascade of news that has driven his poll numbers down further. so the question is, what can work for him? what -- can aggression towards hillary clinton work?
he's going to bring president obama's estranged half brother as his guest, a benghazi victim, the mother of a benghazi fatality will be in the audience as well. so tough task for donald trump. hillary clinton wants to try to as much as she can express a positive vision that might pull some of those undecided voters her way. we'll see what happens tonight, guys. >> john, of course we recall in the last debate trump asked the moderators why aren't you asking her questions about the e-mails, for instance. chris wallace is moderating. doesn't her prep have to change this time? >> sure. and certainly the wikileaks e-mail will create some moments where hillary clinton will be on the defensive. and donald trump has indicated he's going to go aggressively after as he tried to in the last debate bill clinton's past conduct. it's just that that hasn't worked terribly effectively. wikileaks is a news source of material for both trump and
chris wallace to question her on. and i would expect her to emphasize in response the fact that russian hackers have been -- or believed by u.s. intelligence agencies to have been behind that. and cast that as a larger issue than the content of those e-mails. >> and since you're in las vegas, john, i've been asking you every day about the tight senate races. this one is interesting. of course harry reid's seat, how that factors into this one as well as the donald trump factor and what looks to be a close race. what are you hearing? >> well, this has been the soul pickup opportunity for republicans. harry reid retiring, joe heck, who's a fairly well regarded congressman on the republican side has been doing well. but hillary clinton's been rising up in the state. the chances of democrats holding it have risen although it's still a very competitive seat. republicans need to carry this seat, given the vulnerabilities they have in wisconsin, illinois, pennsylvania, new hampshire, north carolina,
missouri, they need to carry this to provide some sort of insulation against the possibility of a sweep of democrats of those other races that would give democrats a majority. >> john, we'll see you tonight, of course. make sure you tune in tonight's cnbc special coverage of the final debate right here on cnbc 9:00 p.m. eastern time. one of our top earnings stories here, morgan stanley reporting a huge beat. our david faber joins us now from santa barbara, california, where he is at the goldman sachs builders and innovators summit. david. >> thanks, sarah, that's right. we're going to be speaking with lloyd blankfein, of course the ceo of goldman sachs, a bit later this morning. goldman reported earnings yesterday. they were quite strong. and interestingly morgan stanley stock price did fairly well yesterday based on the fact investors expected given the environment in what we've seen is generally positive results for many of the big banks, morgan stanley would also have similar results. and they did. in fact, as you said a beat across the board really for this
company. which is far more focused on wealth management than some of its other competitors namely goldman sachs for example. but it was fixed income, currency and commodities where the company did extremely well despite what has been a significant cost reduction in the area taking out as much as 25% in terms of costs. they were able to put up a very big revenue number there. and that did drive a lot of what was behind the better than expected results in terms of at least when analysts had been looking for. i think they came in at 81 cents a share for the third quarter, consensus was somewhere around 63 cents a share, to give you some sense there. wealth management though also continues to be a key focus for the bank. and there the margins were quite good above 23% on the conference call james gorman also saying in fact that they had record revenues. and it was down to the manage money side of things, the banking depospoeposit side in tf
that, in terms of transaction levels that in fact haven't really picked up that much. so, again, pointing to the fact that it was a fairly good quarter in that regard as well. so overall quite strong for morgan stanley, but interestingly if you pardon my turning here, the stock price as you guys know not doing much of anything this morning up only about 9 cents as i mentioned yesterday it had benefitted from goldman's better than expected results, but investors at this point seem to be taking a wait and see approach. perhaps wondering what the future will hold there or simply worried about to the last segment with john what the election is going to bring in terms of new regulations perhaps. who knows. but the actual results have not been met perhaps by what the companies had hoped for at least in the stock market given how strong financial services has been. on that subject by the way we are going to be speaking not only with lloyd blankfein, the ceo of goldman sachs after
earnings came out yesterday, but in a few moments from now sitting down with david solomon who runs investment banking at goldman. we'll talk about the overall environment for transactions and capital markets. and then a bit later george lee will also join us. he oversees tnt, which has been a very active area, particularly the technology part of things when it comes to m&a. we'll talk to mr. lee about the landscape there and what we can expect for this fourth quarter. send it back to you guys. >> david, thank you very much. can't wait for more. david faber out in santa barbara. speaking of the banks, we do want to get to eamon javers who has a news alert from our washington bureau. good morning, eamon. >> good morning, carl. federal regulators circulating proposed new cyber security regulations this morning. regulations would apply to banks with more than $50 billion in assets. and they would essentially do two things. one, they would require the banks to have the most effective cyber security controls that are available commercially at their disposal. and, two, they would require the
banks to be able to recover within two hours from a devastating cyber security attack. now, think of these as the st t startistar starting point for a conversation with industry and the federal regulators of just how secure secure means in the era of cyber security. these proposed regulations are out for comment from industry. and the comment is expected to go on for several months. they expect maybe finalized regulations in january, so this is the starting gun of a cyber security race here for the big banks in terms of cyber security regulation, carl. >> every day we get a reminder why that's on the table, eamon, thank you very much. eamon javers. when we come back, a lot more on tonight's final debate. will a change of tune come from either candidate? will that sway voters as david mentioned we will go back to the goldman sachs builders and innovators summit. we'll hear from goldman's co-chief of investment banking david solomon, take a look at where stocks are trading. intel still weighing down the dow, which is hanging onto a 15-point gain.
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d.c., charlie black has advised every republican presidential nominee from reagan through romney. with us here at post nine, kerry and obama presidential campaign advisor mark hannah, author of "the best worst president." good to have you both. >> thank you. >> charlie, start with you. kasich himself was on the morning shows today and said the notion of a rigged election is like saying we never landed on the moon. do you believe trump carries that message into tonight? >> well, you know, he might bring it up a little bit, but i doubt it. i think what donald trump is going to try to do tonight is to talk about issues in policy. he needs to make the differences between his policies and mrs. clinton's because this could be a change election. she represents the status quo, he represents change, he needs to explain how he's going to make things better with economic policy, trade, immigration and all the other things he has talked about. >> so you do not believe he
essentially tries to torch the party tonight? >> oh, i think he might get a jab or two in here and there, but look, he's behind now. he's behind. he knows it. when he was effective in august and early september in talking about issues and sticking to his teleprompter, he gained in the race. he caught her. he needs to do that again. he still has time, but you got to do it on the issues and framing this is change versus status quo not by hurling insults at her or the election system or other members of the republican party. >> mark, you have to admit, i know you're coming from the other side, if trump had made it that, he's an outsider, he's going to come shake up washington, force change, come outside the world of the elites and so the untrustworthy policymakers with business chops, this would be a very different race at this point. but he's gone so off message. >> absolutely. it would be more competitive, we saw the populism he stoked in the primaries. i hope charlie's right. i hope he does make it about issues because this is an area where hillary clinton's people
have hoped it would become about issues. but donald trump just keeps digging himself down deeper and deeper in this ditch. the more he kind of acts like a poor sport, the more he acts like a sore loser before he's already a loser, the more he tries to, you know, burn the whole place down. that gets headlines. that is newsworthy and we're going to be talking about it. most people i know that are following this campaign don't really know what donald trump stands for. they just hear these stories about his behavior in the past. >> i'm not sure that's true. he's made a pretty strong stance against some of our trade deals, and that's a consistent message we've heard from him, against high taxes, against the washington corruption, i mean, if it does turn to issues and the economy is one of the 15-minute segments on tonight's agenda, how does she win the economic debate? >> well, she knows that there are all sorts of independent economic analysts that have shown how her economic policies create jobs where as donald trump's you'll shed 3 million to 10 million jobs over the course of ten years.
the national debt is a very big issue. this is something for all the presidents' successes and triump triumphs, we are left with a big debt. hillary clinton is prepared to talk about that and all the sort of weeds and all the details that she's familiar with. donald trump i think is going to potentially go nuclear here, desperate times, desperate people call for desperate measures. i hope it doesn't go ugly, but you know, the end of this trilogy could be quite dramatic, i think. >> charlie, we just said you worked for reagan, a lot of people remembering reagan down six when we were about at this point. >> yes. >> and of course came back to beat carter. >> yes. >> you think this is doable for trump? >> oh, there's plenty of time for him to win, but he has to get the momentum back the way he got the momentum in august and september was by talking issues and contrasting his policy positions with those of mrs. clinton. and president obama on things like health care and obamacare. he needs to get back to that. he's a smart man. he knows it. i think we will have a substantive debate tonight, and
maybe he can turn the corner and begin to catch up again. >> do you believe -- yesterday he talked about this he called it an undercurrent of his supporters who were not counted, pollsters unable to model in what is a likely voter this cycle, do you believe that's true? >> i don't. i mean, our pollsters are very, very astute in both parties. they use the technology to select whom they interview. there could be, you know, 1% or 2% of people they talk to who are secretly for trump, but not really. it doesn't work that way. >> i actually disagree with charlie here. i think there are people who see donald trump so unpopular, so much of a pariah, we call it social desirability bias, people respond to pollsters with what they think the pollster wants to hear sometimes. i'm nervous about that. as a hillary clinton clinton supporter i'm concerned that donald trump might have this latent base of resentful support. so i think hillary clinton needs to go for the knockout punch
tonight. i think she needs to go on the offensive. she's kind of been waiting in the wings trying to, you know -- >> not mess up. >> not mess up. wait out the clock. i think that's a strategic mistake. i think she should own this issue. there's near universal assent that the behavior of donald trump in the past is discrediting to the office. and i think this is -- this could be an opportunity for her to give a gender speech much the same way that barack obama gave a race speech at the end of the campaign in 2008. quite historic speech that in personifying and using donald trump as a proxy for everything that women face in all the challenges women face on the cusp of a historic election where we are about to elect the first woman president. >> in the moment we have left, mark, we need to talk about the e-mails. she's also coming into this debate after americans have been reading tens and thousands of e-mails from her campaign manager and her staffers. and it's embarrassing. and there's a lot of light being shed. and there's been a lot of news reports. so how does she handle that issue and also stick to her themes? >> she's going to get a lot of tough questions. both candidates will get tough
questions from chris wallace no doubt. look, your audience is quite savvy. they know what a negotiating position is. if there are things that come out where she says she took a public position and a private position, they know that when it comes to compromise, you need to get out there and make the most ambitious and ask and make the most ambitious opening statement. i think she can explain this away in such a way that shows the role of her as a diplomat is much different than her as president. and i think, you know, i think she can infare that fairly well. >> i don't think charlie agrees with you. >> i didn't expect charlie would. >> as a diplomat she ruined the middle east. >> oh, yeah, that had nothing to do with paul bremmer and the coalition provision authority. >> nuclear deal was her deal along with president obama. listen, i do agree to this extent. you can be a liar and still be a good negotiator. i do think that's true. but she's lied to the american people over and over and over,
and that's why she's not popular. >> one last question, charlie. i know there's no love lost between trump and kasich. you did advise kasich for a while. are you supporting trump? >> yes, i'm for trump. i'm going to vote for trump. look, given donald's background and history and some features of his character, i understand why some leaders in good conscience do not want to vote for donald trump. i've been a republican my whole life. i worked for paid jobs in republican party, i owe it to the party to vote for the nominee. i'm trying to help. >> well, charlie has been republican his whole life and donald trump has not and he said some pretty nasty things so i would be offended if i were a republican. >> it's true, charlie, republican party after november 8th the establishment has been exposed and looks increasingly out of sync with its voters. >> well, that's a long answer to that question, but no, when it's over, it's over. hopefully donald trump is president, he is a negotiator. he'll go work with republican
leaders in congress and for that matter with democrats in congress to try to get things done. that's what he does for a living. but the party will be fine. we've always had some tensions between purists and mainstream conservatives, those might continue. but we can still get things done. >> some tensions. euphemism of the day. i think this is a major civil war, major implosion of the republican party, but i could just be, you know, exaggerating that. i could be lying, right. >> be a democrat. >> i could be a democrat, right. >> mark, charlie, great to have you both. >> thanks, carl. >> thanks so much. of course be sure to tune in tonight cnbc coverage of that third and final debate begins at 9:00 p.m. eastern. >> good discussion there. when we come back, check out shares of intel getting slammed down nearly 6%. we'll dig through the earnings report straight ahead. the dow up 34 points. has helpes simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head,
without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce.
was really the issue. it was a beat on the top and bottom really, but a couple issues stood out. one was pc demand, particularly in consumer and particularly in the non-developed market. so stacy smith formerly the cfo now chief operating officer just talked about the continued weakness there, how it's not where he wants to see it. then of course you had an inventory build in the quarter that they expect to have to sort of draw down a bit in q-4, which they said they still expect to see a strong quarter. and then in the data center group you have weakness on the enterprise side. cloud growth still pretty strong, but enterprise they're just not buying. bryan krzanich says he expects that as companies start to build up their private clouds that will come back. and they said they expect that they can still get strong growth over time if enterprise remains flat to even down slightly. but they weren't ready to call exactly when that crossover is going to happen. of course they usually give better guidance for 2017 in january, and then at their
analyst meeting in february, so people are going to be watching that. we also have to keep in mind this is a stock that was at ten-year highs coming into this quarter. so now it's looking like it's down 5%, 6% this morning. we'll see where it ends up where it shakes out when people digest this, guys. yeah, up now only 3% for the year, jon fortt out west today. we'll see you in a bit. another company we're keeping a close eye on, tesla, getting ready to unveil a new product today. our phil lebeau joins us with more. phil, what do we know about it? >> very little, sarah. we only know it's a new product and elon musk has said in the past it's not expected by most people. so that has people guessing, well, is it perhaps a new vehicle, are we talking something else? i doubt it's a new vehicle, but when this new product announcement comes out some time today, and that's what we've been told to expect this announcement some time today, it is a product that according to mr. musk is not expected by most. and there is a fair amount of speculation amongst those who closely follow tesla that it might be an advancement with the
company's autopilot system. in other words, not a whole new vehicle but them saying, look, we have tweaked autopilot in certain ways to allow it to be more advanced and perhaps that's what we might be hearing about a little bit later on today. take a look at shares of tesla in the last year. while we point out the stock price in the last year is because relative to other automakers tesla is not outperforming them as it has in recent years. now, you can make an argument given the valuations it's hard for tesla to go a whole lot higher and to have the success it's had in previous years, but it will be interesting to see this quarter, guys, when you look at tesla all of the news coming up, it will be interesting to see what happens with the stock between now and the end of the year given solarcity merger, given possibility of a capital raise, some big news coming up over the next couple of months. >> hey, phil, he's a master of hype. he's done this thing before on twitter, sort of teased announcement like this. >> right. >> what's his track record when it comes to delivering?
>> you mean do we get the excitement out of it? do we come away going, wow, look at that? >> yeah. >> it's hard to say. because, look, there are sometimes he's come out, take the hyperloop, which i know is not a tesla product, but when he came out with hyperloop he said i've been thinking about this, he does a conference call, it dominated the news that day and people are like, wow, look at what elon musk is thinking about for transportation in the future. there have been other times when there have been conference calls and they've said we've got a new leasing program. and i've had people say, really? we're doing the news on a leasing program? so it's hard to say. it really depends on the particular announcement. >> it is a cult, as cramer likes to say. phil, thanks so much. our phil lebeau. when we come back, goldman sachs investment banking division co-chief david solomon's going to join us. we'll get his take on what's driving deal making and a lot more. dow up 48 points. opportunities aren't always obvious. sometimes they just drop in.
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i'm courtney reagan and here's your cnbc news update at this hour. plumes of smoke pouring out of a building in early mosul early today as iraqi forces try to retake the city from isis. the u.s.-led coalition is supporting the iraqi operation, which could take months. mosul is iraq's second largest city and the largest urban area controlled by isis. well, the man accused of setting off bombs last month in new york city and seaside heights, new jersey, is waking up in a state prison this morning. rahimi moved out of the hospital yesterday, he was injured in a shootout with police on september 19th. the democratic national committee apologizing this morning after one of its campaign buses dumped raw sewage on a road outside atlanta. the bus which features the likenesses of hillary clinton and her running mate tim kaine was in town for an early voting event. and people living in the northeast, southeast and southern plains will get one more day of record warmth. the national weather service expects temperatures to reach
highs 10 to 20 degrees above normal before a cooldown tomorrow. that's your cnbc news update for this hour. now let's send it over to jackie deangelis with the eia inventory report. >> good morning, thanks so much, court. that's right, the department of energy out with weekly crude inventory report. a drawdown of 5.3 million barrels. we were expecting a build this week. this draw was even steeper than what we saw from the api last night. so you saw big jump in crude prices trading around 51.15 before the report, all the way up to 51.50 after. a couple of other supportive factors in the market, chinese gdp data also strong, and also the saudi energy minister making some comments saying that he thinks the downturn in oil prices is coming to an end. so certain factors taking us up here, but 51.50 a key technical level when it comes to crude oil. there's a lot of momentum in this trade to the upside right now, whether you believe in these numbers from the department of energy or not. one thing i'll say, gasoline saw in a build 2.5 million barrels, sometimes later in the day that can balance out. david faber, back over to you.
>> all right, thank you very much, jackie deangelis. well, we are at goldman sachs' make sure i turn here get buildings and innovators conference. we're joined now by david solomon who is the co-head of investment banking at goldman sachs. of course this is a conference where you invite a lot of entrepreneurs, private companies to hear from various people and talk about network, of course, in terms of the world they're living in as private companies and what they can do to continue to try to grow their companies. eventually they may become public, david, but there seems to be a desire on the part of many private companies to stay private longer. is that true? >> there's no question that the ipo process has gotten more complicated over a period of time. and in that context, if you look at the availability of capital and the things that young companies need to go -- need to grow, they've been able to maintain and build their businesses in a private form longer than they might have in the past. as a result of that people put
off the process of going public until later. it's a complicated process. when you become a public company, there's a lot more you need to do. and so if you can grow your business, if you have access to capital, and you have an ability to compensate your people and really move your business forward, certainly i think many entrepreneurs, founders are considering delaying ipos for a period of time. >> some are looking at what was an extremely anemic first quarter for ipos. and it still what are we running about $17 billion, i believe in total volume for this year versus a five-year average of 52-plus billion saying it's different now. companies are never going to come public that might have otherwise. is that true? >> i have a hard time looking at the way the world is today and interpolating because ipo activity is slower that it has to be that way as you move forward. we had a very -- as you pointed out, a very slow start to the year. it was less than $1 billion of ipos in the u.s. in the first quarter. things have picked up in the second or third quarter. you're now seeing more activity here. but there's no question we're running below the kind of yearly
average as we've seen over the last five years. there are a bunch of things going on in the world that i think have an impact on that. if you look at brexit, you look at the u.s. elections, those are things that to some degree tweak markets, tweak confidence, and that also slows down that activity. >> i notice though, i mean, when we talk about so many companies now that are important companies already in their own right, an uber for example, or an airbnb, none of them are in the public markets at this point, or a spotify. i can name so many, snapchat may come of course in the not too distant future. are they as a result of not going public earlier in their gestation, so to speak, not given the opportunity to investors they otherwise would to see the incredible growth curve? >> well, a lot of these companies have raised significant capital privately. and that capital comes from mutual funds and other constituti institutional investors allowing people to participate along the way. you know, you pointed to a handful of the largest private companies. >> i did. >> it's actually interesting if you step back and look there are
175 approximately unicorns out there today. these private companies with a valuation over $1 billion. only 23 of them have a valuation over $5 billion. and only four, okay, have a valuation over $10 billion. so when you really kind of step back and say and talk about that group, it's a very, very small group. there are lots of companies that are growing. they need capital. the public markets will always be a source of capital for those businesses. and the cycle of this will ebb and flow. capital had been very available privately. it's still available privately, but it's a little bit tighter. >> is it tighter? why? >> it is. i think we went through a period of time where people were willing to look at -- look for growth in a very aggressive way, and they were willing to fund companies without really understanding a clear path to profitability. i think investors have gotten more disciplined. they've seen a number of companies that have not been able to meet their growth goals and have not been able to grow as quickly. and i think there's a little bit more discipline out there than there was, you know, maybe 18
months, two years ago. >> it's funny you mention the audience for the equity so to speak of these companies that are not coming public, it's the same audience that would be there if they were coming public. >> a portion is definitely the same audience. look, markets are very efficient, institutional capital exists in many forms. and the people that are managing institutional capital are obviously looking for exposure to places where there's growth in the economy. this is one space. and so they're going to find ways to participate in that. >> but at some point do all those companies -- i think i named the four that are above $10 billion, but do all of them come public at some point? or do some manage to stay private far longer than we'd ever anticipate? >> there are different paths businesses can be bought, sold, or consolidated up with other industries, businesses can go public. i think when you look at some of the investors invested in these businesses, there has to be over some period of time a path to liquidity. so for most of these businesses that will force something transformational in order to monetize the ninvestments investors have made.
>> m&a is another part of investment banking we haven't gotten to. it's been a not bad year. i mean, we came off a record in 2015, but '16 hasn't been bad, but we've had a lot of bumps in the road. antitrust comes up a lot in conversations i have now as key consideration for anybody thinking about a big deal. because we've had so many stop this year. >> sure. >> what are you seeing when you get in the boardroom or talking to companies about something and the willingness of ceos to move forward given the antitrust environment? >> well, it's important to keep in perspective the fact that while m&a activity is down a little bit more than 20% year-to-date, it's still running at a level that over the course of the last five years is relatively robust. we haven't seen as many big transformative deals so far this year. and certainly when our bankers are in boardrooms talking to ceos, antitrust is something that comes up to the degree that there have been a handful of transactions that have been stopped or blocked, the bar for a board to move forward certainly feels higher. but in addition confidence has a
lot to do with how people think about these big transformative transactions. and we talked about brexit, the election breeds uncertainty. you know these are things too i think to some degree have slowed a little bit of that activity this year. >> i can imagine brexit we figure out, the election will thankfully occur not too long from now. >> absolutely. >> but antitrust, i mean, do you expect the regime to stay more or less the same but not just here eu, not to mention china which figures prominently on antitrust as well. >> yeah, it doesn't feel like there's an obvious path to a change in the near-term, but once again, you can't -- i think it's very hard to look forward and say just because we are there won't be an evolution of that over some period of time. >> where's the evolution going? any sense? >> don't know. >> will the election have a, you know, a -- have an influence one way or the other? >> you tell me. >> well, if it's hillary clinton is it more of the same? >> i think it's hard to see in the near-term a material change in the regulatory environment
that really accelerates m&a. now, that's not going to stop m&a altogether, but at the same point as we said it's raising the bar. people want to be sure they do their homework, that the transaction's in a position where they've got a good chance of bringing it to the finish line. >> finally, i'm going to give you a chance to plug the conference here. because when we sat down you did say to me, you know what, people feel the world is so difficult and they're worried and all, but whn you come here you leave feeling much better, why? >> well, i personally think there's a lot of negative rhetoric about what's going on in the world. there's a lot of negative rhetoric around what's going on in the u.s. economy. and i personally say, you know, i think the u.s. economy's doing fine. we're growing slow, it's sluggish, but you can listen to a bunch of that rhetoric and you can say, you know, wow what's going on that's good. well, entrepreneurship and entrepreneurial businesses here in the united states are creating jobs, they're growing, disrupting, having a real profound effect on the economy, on the society, this conference is something we created five
years ago to bring interesting entrepreneurs together every year to collaborate, learn, find ways to accelerate their business. and so we've brought about 100 entrepreneurs together, they spend two days here, they listen to more seasoned entrepreneurs and it's a terrific event. go back over the last five years there's some very prominent business leaders that started here in the 2012 cohort, our first cohort of entrepreneurs, travis was here, drew houston from dropbox, neil blumenthal, at the time they'd raised about $14 billion, didn't have a single store. they now have over 50 stores. we've watched a number of these entrepreneurs running young businesses. we've seen those businesses develop. and we have some very interesting entrepreneurs here today. and we're excited about the next two days in front of us. >> all right. and eventually they go public one way or the other. >> one way or the other. >> david, thank you. >> absolutely. appreciate it. thank you so much. >> david solomon co-head of investment banking goldman sachs. we'll have george lee joining us and lloyd blankfein later. back to you guys. >> great lineup, david.
thank you. see you in just a bit. head north now the vanity fair new establishment summit is underway in san francisco. and our jon fortt is there giving us a look at what he's got coming up from the conference on "squawk alley" at the top of the hour. hi again, jon. >> hey, sarah. the sun has just come up in san francisco. it's going to be a big day for content here. les moonves, bob iger from disney, big time investor here former head of growth at facebook, we're also going to dig in with walt mossberg and whether google can take advantage of samsung's stumbles. all that and more coming up on "squawk alley." matters. in, every millisd both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision.
what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley welcome back to "squawk on the street." markets are edging higher as you can see consumer staples, stocks
sticking to the downside in this particular trade so far. the sector is the worst performer in the s&p 500 down by about 0.2% nearly all components negative. tobacco companies renld among biggest laggards. other stocks weighing on the sector include mead johnson, sector the second worst performer this month. could be a driver for consumer stocks with more and more names reporting over the coming weeks, guys, back to you, sarah. dom, thank you very much. let's get over now to the cme group. rick santelli has the "santelli exchange." good morning, rick. >> good morning, sarah. thank you. like to welcome my special guest david trainor, thank you so much for taking the time this morning. >> glad to be here. >> all right. david, let's start out with just getting the landscape numbered up. roughly what's the size of the u.s. economy these days? just close. >> you mean in terms of gdp or
global -- >> total gdp. total gdp. i'm thinking it's close to 17.9, 18 trillion, does that sound about right? >> that sounds about right. >> what's the last thursday right around late afternoon we get the size of the fed's balance sheet. do you recall what that was last thursday? >> i think it's pretty big. i don't exactly remember the number but it's big. >> it's about 4.5 trillion. so we have an $18 trillion economy, we have a feds balance sheet that's $4.5 trillion. david, who's the boss of the federal reserve? if mandates were to change or issues crop up, who is -- whose name is on the door as the boss of that organization, that entity? >> janet yellen. >> well, i mean, if janet yellen -- wouldn't congress in some way be considered the boss, for example, if they wanted to change the directives of the federal reserve? >> i think ultimately, yeah, i think there's a lot of political influence on the fed. since they kind of have the final vote, yeah, i think they're not afraid to exert some
influence there. >> a year ago we had a debate at cnbc, i asked two questions regarding the fed. you've written rather extensively as of late that clinton and trump talking about the fed is a sideshow. it should be meaningless. i think talking about the fed should be one of the highlights of this political season. the reason i think that is just because most people have no idea the power they wield over their lives and how their policies have taken care of just a select few. goldman's trading returns were up 17%. i think they should thank central banking policies and mario draghi and the corporate securities they're trying to find to buy. why do you think the fed should be off limits? >> i think -- i don't know if it's off limits. i think we need to focus more on fiscal policy because i think our economy, our country's evolved past the need for a central bank. i think markets are better at setting rates on the margin than central bankers. capital's not disseminated through loan officers anymore. those loan officers were risk
averse. you needed a minimal return to make sure they didn't allocate capital to lower return activities. we don't have that problem these days. markets are better at returning -- >> no, you make a great point. you make a great point, david. we were just talking about investing, unicorns. you know, the fed's the head regulator. regulation's cited as the number one or number two problem in the country by every entrepreneur that's successful that i've ever heard over the last several years. but at the end of the day, even though the fed's the biggest regulators, a lot of these -- these investors and entities know the go-around. but the point is that central bankers may have control over less in that regard, but they have control over more in so many other areas. we're running out of time here, but i guess my last issue is, i understand fiscal policies. don't you think the fiscal policies would have been under the microscope if we would have started talking about the fed years sooner than we have? your final comment. >> final comment is that the fed
really doesn't have as much influence as people think. low interest rates are here to stay. and as long as we understand that, we don't need to worry about what the fed's going to do much, because they're not going to do much, and if they do, it won't matter. let's focus on what will move the needle, fiscal policy. >> at least on one issue we agree. i think an algorithm could duly replace a lot of their short-term issues that they seem to be so wishy-washy on with regard to where rates ought to be. thank you, david trainor. sara, back to you. >> thank you, rick. >> thank you, rick. donald trump saying he would spend up to $1 billion on his own campaign. we have the details on how much money he actually spent. and tune in today at noon eastern for "the halftime report." scott wapner will be joined by another great lineup. jim chanos, nelson peltz, keith meister. much more ahead on "squawk on the street." we're near session highs, the dow up 80 led by goldman sachs and chevron as wti charges past $52 a barrel. we'll be right back. ♪ so what else is new? how's your mother?
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through the numbers and joins us now with more. good morning, robert. >> good morning, carl. as of yesterday, the billion-dollar target by donald trump had been downsized to $100 million. take a listen. >> remember, by the time this ends, i will have spent over $100 million on my campaign. hillary spent nothing. she gets all her money from the special interests and donors. >> now, when it comes to actual spending, election filings show that trump has spent less than $60 million of his own money. that's through september. and if you look at the contributions to his own campaign, they've actually been falling this year. in the first quarter, he was giving his campaign more than $5 million a month. that peaked at $11 million in march. but in july and august, that was down to $2 million a month. even trump's $60 million may be overstated, his campaign has spent more than $8 million to reimburse trump-owned or trump-related companies. so, some of the money he spent on the campaign will actually go back to his own companies. now, he still has 19 days left and clinton hasn't spent any of
her own money, or certainly very little of it. the trump campaign saying "mr. trump's contribution more than covered the costs of any reimbursements to him or his related entitieentities" and th has contributed an unprecedented amount to his campaign." but guys, given that this campaign started with the self-financ self-financed candidate who's going to spend up to a billion, we're now looking at a slightly lower number. >> all right, robert. thank you very much. >> thank you guys. >> for truth-spotting those trump ad dollars, how much he's actually putting into the campaign. check out the price of oil right now. i mentioned wti passing that $52-a-barrel mark. it is now up about 3.25%. we're looking at the highest level since july of last year and potentially the best day in terms of the jump in the price of oil since august. august? august or september, i think it is, when ewe saw a 3% move higher for oil. no surprise, energy and financials are leading the s&p right now. >> yeah. and all the leaders are
transocean, halliburton, chest peek, marathon. we got that surprise draw in inventory, and with that, stocks went to session highs, up 75. >> yeah, after a draw last night in the api inventory data. chevron is the best performer in the dow. intel is the biggest drag. and that does it for us here on "squawk on the street." coming up, more big interviews from david at the goldman sachs builders and innovators summit, including george lee, goldman's co-chairman of global technology, media and telecom. and then later, an exclusive interview with goldman sachs chairman and ceo lloyd blankfein on earnings, politics, the economy and much more. stay with us. the dow's up 76 points.
good morning! it is 8:00 a.m. at the "vanity fair" new establishment summit in san francisco. it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ i spent last night in the arms of a girl in louisiana ♪ ♪ and though i'm out on the highway, my thoughts are still with her ♪ ♪ such a strange combination of a woman and a child