Skip to main content

tv   Squawk Box  CNBC  October 17, 2017 6:00am-9:00am EDT

6:00 am
live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. yesterday the s&p 500, the nasdaq and dow all closed at record levels. the nasdaq was higher for the fourth out of the last five sessions this morning things are flat dow futures and nasdaq slightly higher the s&p futures are fractionally lower. overnight in asia, records set there as well. in japan, yet another record close for the nikkei the record for about 21 years. this is up for the 11th straight session. it looks like the nikkei closed up by 80 points to 21,336. hang seng was up just slightly the shanghai was slightly
6:01 am
weaker looking at europe this morning, the early trading taking place, at least at this hour things are flat there the dax is slightly higher, the cac and ftse are slightly lower. spain up by a tenth of a percentage point crude oil prices were up yesterday to a two-week high, up at 51.87 this morning those gains continue with wti for november delivery up by 21 cents to 52.08. >> wow dow component united health is reporting. stock has been on a tear for years, right in fact, the stock getting close to a new high, 1$186 billion market cap, almost 1$187 billion market cap reporting 266 a share. that's tencents above expectation. for the year, they see 2017
6:02 am
adjusted net at $10. medical loss rates, they call it something different now. they call it -- medical care ratio, 81.4% that's like the inverse of profit margin. revenue, 50.32 billion you can't necessarily compare apples to apples, i like the earnings per share or the earnings increase. 26%. 26% earnings increase. that is -- what do you do with that that means you're -- if you get a market put multiple, it's 26 e earnings that warns 26 times earnings >> they do make comments about the aca, what's happening. they say employer and individual third quarter 2017 revenue of 13.1 billion was down 1$197 million year over year because of the effects of the previously
6:03 am
disclosed aca individual market withdrawals. and the health insurance tax deferral commercial risk space group benefit offerings and rate increases. >> 50.32 was in line 50.368, 50 billion in the quarter. that's a dow component that's the hoeadline from me. >> let's get you caught up on other headlines. >> or you can comment on united health. >> i don't have anything to say about united health. >> okay. that's a rare occurrence >> let's talk about uber this morning. a deal between softbank to take a stake in uber is likely to occur within the next week that's according to uber's board member, arianna huffington speaking at a "wall street journal" journal event she did not disclose a price tag on the deal but said softbank could end up with a 14% stake. recode reporting that softbank is in early talks to raise a
6:04 am
second fund. they already upended silicon valley by making bold investments across the tech sector with its existing $93 billion fund we often call it a 1$100 billion fund some sources tell recode the new fund could be larger than that facebook acquired tbh, an app popular among teens. it's an app with an acronym for to be honest it allows users to anonymously answer multiple choice questions about friends who receive the poll results as compliments, at least when they are only plyments they say more than 5 million people have downloaded the app and sent a billion messages in the past few weeks financial terms were not disclosed. >> airbus says that it will acquire a majority stake in canada's bombardier. >> we like bombardier?
6:05 am
>> yeah. >> like noah, our friend that was on >> yes, of course. he's the expert in all things. bombardier, their cseries jet program will be acquired for zero dollars the deal gives airs because 50.01 interest in the cseries limited partnership which manufacturers and cells those jets airbus's ceo, tom inder, says the deal will improve the appeal of the cseries passenger jet which has struggled to find customers. some of the planes will be built at airbus' alabama plant that's key because the move would allow bombardier to dodge heavy u.s. taxes the u.s. threatened to impose a 300% duty on bombardier imports claiming the company is fairly subsidized by the canadian government
6:06 am
boeing blasted the deal saying this looks like a questionable deal between two heavily state subsidized competitors to skirt the haven't findings of the u.s. government, our position remains that everyone should play by the same rules for free and fair trade to work. air sbus the news of yesterday afternoon, perhaps this morning, netflix posting blockbuster third quarter results. they beat in a big way joining us now to break down the numbers is will powers, senior analyst from r.b. barrett and company. when you see the ceo wearing an ugly sweater like that on that call, i think it means he has been given permission to do basically whatever he wants what did you make of the numbers? >> you are right they were going for the ugly sweater, christmas sweater contest. >> the "stranger things" sweater. >> right
6:07 am
yeah with the light bulb colors, all that strong numbers netflix, as we all know what been a juggernaut in terms of subscriber growth. 5.3 million new subscribers. the u.s. slightly better, the story was international which beat by a more substantial margin looking at the q4 guidance, that looks good it's as simple as the number of new hits latest season of "narcos," shows like ozark, and in the fourth quarter you have another set of lineup that will propel those numbers into the year-end. >> how have you changed both your expectations on the stock but also your expectations for growth >> well, that's a good question. there are two pieces to this a, we raised our revenue forecast to really align with the price increases announced a couple weeks back. there's no question that helps on the revenue side. interestingly most of that is being absorbed by higher content
6:08 am
costs and marketing costs. to give you flavor around that, they're forecasting 7 billion to $8 billion in content spent in 2018, that's above the previous forecast of closer to 7 billion. the cash cost, what they're going to pay out in cash is north of $11 billion next year. just on content. that's probably less of a surprise to investors even though it's a big number across the industry the thing that surprised us last night was how much they'll increase their marketing spend that will grow as a percentage of revenue, which does raise some questions on leverage, but i think ultimately what's going on, they're throwing gas on this fire they want to extend the lead while they can with competition starting to creep up >> just explain the distinction for those uninitiated. they talk about the $8 billion headline figure. you're talking about it being 11 explain. >> effectively what happens, as you shift to more original
6:09 am
programming, they have to pay more cash up front there's a disconnect between what actually runs across the income statement in terms of cost and what they have to pay out in cash. that's one of the reasons they're running a significant free cash flow deficit they have guided to burning about 2 billion, 2$2.5 billion i cash despite being profitable on an income statement basis. that number we think will get bigger in 2018 ets f >> going back to the leverage point you're making, is there ever a point where you think they'll be able to grow without having to continue to increase this spending on either content or marketing at the level that they are >> well, that's a good question. we don't have the evidence of it yet. if you did, you would see it in the u.s., because that's where they already got 50% penetration, north of 50 million subscribers. so that piece of it is a bit disappointing to us. they are betting to be certificate than they will see that leverage. certainly see it on tech and
6:10 am
development, r&d and those areas. ideally you would see it in marketing, too >> when you look at this marketplace for video, whether it's svod, or how ever you want to look at the market, do you believe they're stealing market share from somebody else is there a lose ner thr in this or is the market expanding >> we see it in all households with kids, the viewership around youtube, netflix there's got to be some lost share from linear networks i don't think that would surprise anyone. as you look at internet-produced tv, that's continuing to grow as a category that's got to be taking some share from traditional media. >> will, appreciate it great to see you >> good to see you >> next time wear an ugly
6:11 am
sweater. >> i'll see what i can do. we have a couple of nose >> we do i think my wife made me throw mine away. >> i still have it. on the wall street agenda import prices out at 8:30 a.m. eastern time followed by industrial production at 9:15 at 10:00, the monthly home builder survey patrick harker will be speaking this afternoon on the earnings front, results from goldman sachs, morgan stanley, j&j and ibm. green this morning, though single digits. we are joined by our guest, mark freeman and savita are you still friendly towards stocks they're the best game in town? >> they certainly are.
6:12 am
i think this is how bull markets end. that's my view what we're in now is this euphoria around stocks that's been missing for this entire bull market. people are buying the dream that stocks can go up you're starting to see a broader market >> how long can that last? >> so this is what i worry about. it's not the age of the bull market bull markets don't die of old age, but things we're looking at are late cycle leverage ratios are at cycle highs. companies are starting to slow down their buyback programs. so a lot of the drivers for this bull market, like levering up balance sheets, doing buybacks, those are slowing down, maxing out. what really worries me, if you look at earnings season for last couple quarters, there's been no reward for earnings beats which is weird you would imagine that stocks
6:13 am
that surprise to the upside on earnings go up after they announce this quarter and last quarter, nothing is happening stocks are slightly underperforming when they announce really good results which means the bar is getting higher, investors expect good news >> let me drill down on the euphoria stage of the market when do you date the euphoria as having started it sounded like you were saying in the last month or so. >> no, no, no. i think it started -- i guess the way i would typify it, there was building optimism sometime around last year mid last year, and the election throu threw a bunch of fuel on the fire >> for most people it through water on the fire. >> the election. >> donald trump was met with
6:14 am
skepticism, consternation, 5,000-point down markets >> but the market rallies. >> in the face of a lot of disbelief and skepticism i'm wondering when did the -- euphoria is powerful, a melt up -- i've seen these single digit moves. >> do you think we're seeing complacency or euphoria? do you think we see skepticism or euphoria? >> i think we're seeing septemb skepticism, everyone still hates this market. that's not what you tend to see. you tend to see this when everyone loves it. i don't see the love >> that's why i don't know if we're in the middle of what you would call a final stage euphoria here's where i see it. if you look at the average equity strategist like me and my counterparts, their allocation
6:15 am
to stocks have moved up five points >> to 60 or 65 >> to like, 56%. close to 0%. if you look at cash balances on the buy side, they've been dropping investors are getting more and more invested in the market. cash balances were 5% a year ago. of these metrics that drive risk taking -- >> how about that? >> i think you are seeing money get put to work. ultimately we come back to the pain trade i refer to it as the pain trade is still up as opposed to down when i talk to people and how they're positioned they are more defensive. they're taking money off the table, maybe being more cautious but the market is moving up. if you try to keep pace with that, it's a challenging thing to do. what we touched on this morning, ultimately we think earnings will dictate the course. so far so good on that front what do you think about the fact
6:16 am
there is absolutely no reaction to earnings? i find that unsettling the fact that fundamentals are not driving the bus. >> i think fundamentals are still playing a role, but you make a great point there typically that's what we would see. we go into earnings season earnings would beat. stocks go up you get an upside surprise, that has become less and less some people may speculate the market is becoming more and more efficient, i don't know. we're looking at the absolute numbers from an earnings standpoint they move higher. i think it's difficult for the market to move in the opposite direction of earnings growth if earnings continue to move up, then there has to be another type of catalyst that will counter that >> so, i guess -- we've done a bunch of work on earnings. the number one driver for the market is not earnings growth but the surprise factor. it's how much earnings eclipse what is expected what i worry about is next year
6:17 am
analysts are forecasting 12% earnings growth. and i think that's hard to get against the backdrop of 2% gdp growth you know, limited inflationary pressure so i think that the next phase might be driven by downward revisions. >> let me counter to that point in terms of what is perhaps -- if the market is not underestimating the actual earnings report, what is it underestimating going forward? one thing we're starting to see -- i know you're seeing this, too. i've seen your work there. top line perhaps are we seeing the return of top line growth something missing forever? i think also the fact with the dollar being flat to down, perhaps the strength abroad that we're seeing that's a catalyst and then you have the fiscal element. i don't know how you would handicap that. the market is thinking about that in terms of what comes through. >> i think tax reform might
6:18 am
happen that would be a big boost to earnings. if that happens, we would change our call, but it's still up in the air. that could add as much as 6% earnings growth for next year which would be -- which would get you to that 12% number i don't know i look at the market, the internals look fine, sales growth is healthy, but a lot of late cycle signals -- >> i want a lot more euphoria. >> where do you sell >> to be honest with you, it was funny, mark, you were a sophomore in high school during the crash? >> college >> i was like -- i was under my desk i was so petrified and scared of everything >> he was in the peace corps in togo >> yeah. we were just talking about togo last week. >> thank you for that. savita, thank you. my point was in the -- all the time in the market, i have never
6:19 am
been right about a top ever. bottoms -- bottoms you can sometimes feel the blood, they're easier tops, i have never been able to see a good indication of when one is there i always want more euphoria. when we come back, the search for the net fed chair president trump will meet with janet yellen this week we'll look at that story and what you should be watching today in washington. that's straight ahead on "squawk box.
6:20 am
your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital.
6:21 am
6:22 am
>> president trump will reportedly meet with janet yellen on thursday this is part of his search for candidates for her position. she will be interviewed herself. a white house official said trump met with stanford university economist john taylor last week. the president also met with former fed governor kevin warsh last month other candidates are jerome powell and gary cohn, but you get the sense this answer will be coming sooner rather than later. >> ben white said that taylor was like the hot -- the "it" boy of the moment. >> i saw that on a mark grant piece that they had a really good personal rapport.
6:23 am
trump was very impressed with him, but he's the opposite of what you would think trump would want, rules-based. >> knowing he won't keep rates low. >> not subjective decisions, but wow, rules would dictate we raise rates. that may not be what he wants. i don't know yellen, i don't know i'd be surprised her husband is so far to the left -- i guess you could be a madeline/carvel thing. >> sure. this is the president's choice, whoever he sits down with and strikes his fancy, whoever he feels most comfortable with. >> we heard who was pushing -- >> mnuchin mnuchin was pushing powell he's worked with him on some regulatory issues. he feels comfortable with him. >> we will know soon i wonder what percentage of the country is on the edge of their
6:24 am
seat realistically. >> 1%. >> you think 1%? >> not even. >> but the markets are >> i wonder, as we obsess -- >> a larger percentage should. >> as we abscess obsess and draw in viewer, i wonder what the actual percentage -- >> it matters. >> 0.1%? >> maybe 0.1 that could name two candidates >> andrew -- >> they can't even name the vice president half the time. >> 0.1 >> how about the collision between two neutron stars? how about that >> that was cool >> how about that? >> that's where you get gold, all of these things. >> they have the mass of the sun and the size of manhattan. did you see -- i read it, it said it produced all the silver and gold
6:25 am
i thought they meant the colors, they mean gold the high atomic number elements are produced by this collision >> look, there it is >> the amazing thing is, like everything that we see, since it takes a light year to get here, this happened 130 million years ago, even before global warming started. but 130 million years ago when that happened. you saw gravitational waves, and you saw the curvature of space time the fabric -- is it space or time >> it's a wrinkle in time. >> what was the segue in your brain between the 1% who would know who -- who would know who jerome powell may or may not be -- >> a more important 1% >> i see just trying to follow -- >> how i got that? >> it's okay >> i was trying to think of something else -- >> random that nobody would know about?
6:26 am
>> that a small percentage of people would know about. i was hoping you were part of that 1%, but you really weren't. >> it was a test i knew what you were doing this was a test. >> you were talking about unicorns not the neutron star >> eamon javers is in washington >> eamon may be excited about the star >> this is my kind of show you have the space time continuum, the fed chair i'm wrapped up in this >> see. >> i completely followed you on that. >> you're not being sarcastic. >> no. no i'm a huge nerd. i love it. >> in the paper they're publishing on this, 1,000 people contributed to that paper. so much information and confirmation of these crazy theorys that einstein came up with that sounded like are you out of your mind it's all true. what are you going talk about?
6:27 am
>> top that. >> i will talk about drug companies. >> okay. >> it's a ratings grabber. i will move on to that subject we had this surprise press conference from the president yesterday. i'm still focused on that. we were all gathered in the white house press briefing room ready for the sarah huckabee sanders briefings, they made an announcement saying reporters go to the rose garden, we'll have a press briefing from the president. he came out with mitch mcconnell. the two had just had lunch the whole point of this exercise was for the president and mitch mcconnell to suggest their relationship is better than it's been, they patched things over, they're ready to move forward on tax return they took 45 minutes worth of questions from reporters gathered in the rose garden. i had the opportunity to ask the president two questions. the first one i asked about was some of his comments about drug companies and insurance companies that had been moving the markets earlier in the day i asked the president about the drug companies that he said had been chargingtoo much for thei
6:28 am
products, that you could get products overseas that were the same as the ones in the united states and they're much cheaper overseas here's what the president said >> i didn't speak to mitch about this today, a priority of mine, you know this is coming up, is the cost of prescription drugs we will get the costs way down, way down and those drug companies, so you have the insurance companies in one case, on the other case you have the drug companies. they contribute massive amounts of money to political people i don't know, mitch, maybe even to you but i have to tell you, they contribute massive amounts of money me, i'm not interested in their money. i don't need their money >> so the president disdainful there of the drug companies. he also criticized insurance companies for participating in a political payout under obamacare, where they were taking money to subsidize insurance programs for low-income individuals the president said that was too.
6:29 am
money wasted on insurance companies. both sectors felt the heat yesterday from the president also feeling the heat yesterday from the president were republicans up on capitol hill earlier in the day, the president was asked about his relationship with republicans going into this lunch. here's what he said there. >> i have great relationships with actually many senators. but in particular most republican senators. but we're not getting the job done i'm not going to blame myself. they're not getting the job done we've had healthcare approved and then you had a surprise vote by john mccain >> so the president there very frustrated you could hear that sort of telling distinction that he made he said we're not getting the job done in terms of legislation on capitol hill. paused himself and said i won't take the blame, they're not getting the job done that's the sub text of the president's relationship with senators up on capitol hill. that gives you the sense of the pressure they feel moving on to
6:30 am
tax reform which was agenda item number one in the mcconnell meeting yesterday. they feel they have to get something done here, have a legislative victory, but it may not be by the end of the year. the president and mcconnell both hinting yesterday in their comments that they might have to push tax reform back until 2018. >> those names that mcconnell brought up, i had forgotten a couple of those. terror was struck in my heart when i remembered how that worked out that was interesting, trump and bannon reportedly -- who knows whether they're still close, but, you know, don't expect bannon to say you're right, i won't try to do this remember todd aiken? >> i don't think trump is telling bannon not do it. >> he said he might. >> and the other ones, sharon -- that was a nightmare those candidates mcconnell was on so to something. >> mcconnell had a strong
6:31 am
message. he said if you nominate -- >> winners make policy, losers go home. >> right that's his point he said he will side on the incumbents running, who historically have a huge advantage. there's almost no reason for a political party to back anyone other than the incumbent, that's often who wins in this case, bannon is out there running an insurgent campaign to pyre ure five thify republican party that's what's going on behind the scenes you can see the two men standing there. >> brutus was wielding the knife. >> brewties stutus stabbed caes. >> one thing trump is consistent with is populism i hope he understands that price controls that keep drug prices lower in other countries is why they don't develop drugs
6:32 am
anymore. that's not necessarily -- >> i don't think he's focused on that he's focused on price >> generics ought to come to the market quicker without the red tape >> and there's a big thing on nbc news last night about how pharmacy benefit managers are jacking up prices, so if you have health insurance you may be paying more than the uninsured >> all right thank you. they circle and they collide, and then gold and silver comes raining down >> that's not exactly how it works. >> do you know there's more gold created in that than the mass of the sun ppedsuosly that's a lot of gold >> how do we get that. >> i don't know.
6:33 am
6:34 am
today, the new new york is sparking innovation. you see it in the southern tier with companies that are developing powerful batteries that make everything from cell phones to rail cars more efficient. which helps improve every aspect of advanced rail technology. all with support from a highly-educated workforce and vocational job training. across new york state, we're building the new new york. to grow your business with us in new york state, visit
6:35 am
6:36 am
welcome back you're watching "squawk box" live from the nasdaq market site in times square. ♪ all right. time for the squawk planner import prices are out at 8:30 eastern followed by industrial production at 9:15 at 10:00, monthly home builders survey patrick harker will be speaking this afternoon on the earnings front, results from goldman sachs, morgan stanley, ibm and harley. u.s. equity futures at this hour, fairly flat earlier. that's flat. down a bit less than a point on the s&p they're flat.
6:37 am
olympic athletes are putting entrepreneurs to the test. the second season of adventure capitalists has innovatoe erors fighting for gold medal investor s. >> where are you based >> boulder, colorado >> my backyard >> yeah. >> my deal is back on the table. let's do the deal right now, let's go swing from some trees >> jeremy, let's get wild, man let's do it. >> okay. let's do this. >> all right >> joining us now is one of the show's hosts, you see him right here, jeremy bloom, olympic skier and former nfl athlete great to see you >> good morning. >> thanks for coming in. shows like this have taken off shark tank, you are doing this for outdoors stuff why does the outdoor arena deserve its own version of this? >> if you look at millennials, the trend is spending more and more time outdoors rv sales are at an all-htime hig
6:38 am
because the younger generation wants to be outside. the trend is being outside, being adventurous, prioritizing life over work that's a trend we're building off of it's more fun. we get to test the products in the environment. >> which seems awesome how do you tell between toys for grown-ups and things that are real business that you want to i vest in? >> that's the hardest part everything is fun. you have to separate fun factor from what is an actual product building in a big enough category to build a business in. you have to pay attention to the entrepreneurs as somebody would back as company or -- >> first season what was the best product that came out of that >> probably the gjorgenaut bike two big tires. >> in the front. >> that's working well as a
6:39 am
business >> it sounds safe. that's immediately what i was thinking about i like outdoor things as long as i live >> can you give us a hint about -- >> were hang gliders part of this. >> not season two. hopefully season three >> that's where i draw the line. you're from boulder where anything possible to do that can kill yourself is right outside the door >> yeah. >> even -- it is whether it's rapids, hang gliding, rock climbing, with or without ropes. i like all that stuff except i'm scared did you see the sky divers yesterday? three of them got tangled. that's scary is it all dangerous? >> no. there's plenty of things like anti-fog spray that lasts for 30 days with a single application you can use that in a lot of different arenas i think you were asking what my favorite product was, a cab
6:40 am
eagle bike, totally electric dirt bike that goes from 0 to 50 in 3 seconds >> was there entrepreneur that came with a product and you were like i can't try this, it's too dangerous or i'm too scared? in our debut episode, we air tuesdays at 10:00. last week's episode, there's a mellowship, it's a pontoon boat with a hammock this guy was like so out there you know, i didn't think there was a single market for the product whatsoever he had zero dollars in sales sure, we meet entrepreneurs that are ambitious. >> you have passed on anything that's worked? >> plenty, but not -- it's too early to tell with some of these companies. >> the big difference between sports, where you won 11 gold medals for world cups and businesses, business is tougher, right? >> they both have their challenges for sure.
6:41 am
the investment side of business is a crap shoot. anybody who has been in seed investing or venture investing, there's always those companies where you say, gosh this is not going to work. >> much better tape than shark tank >> because they're outside >> you can show things for your products that are perfect for tv it's a great idea. >> we're in the elements, sometimes we fall off, sometimes we get hurt. no deaths yet fortunately. >> okay. >> come back >> yes >> great to see you. >> the second episode of this season's series adventure capitalists airs tonight at 10:00 p.m. eastern time. when we return, earnings on deck we'll hear from johnson & johnson and morgan stanley then we'll find out where blackrock is putting trillions of dollars to work later on "squawk," space week continues with former astronaut scott kelly, commander of the
6:42 am
international space station. he was up there for over a year. you're watching "squawk box" on cnbc fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise
6:43 am
sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
6:44 am
6:45 am
well kel welcome back. numbers out from johnson & johnson. johnson & johnson with earnings of 1.90 a share versus the 1.80 the street was expecting coming in with revenue of 119.$19.7 billion, versus 19$19.2 billion the street was looking for they say they expect adjusted earns per hair share of 7.20 to. the street was at 7.18 clinical trial for talacodazumab has been discontinued. we'll talk to dominic caruso in a few minutes. it is now time for the executive edge snap and nbc universal making a big bet on in-app entertainment. the two companies working together to bring scripted
6:46 am
programming to mobile screens. snap and nbc-u will establish a studio for programming for exclusively for snapchat gm's self-driving cars are hitting the streets of new york city beginning next year the company will start testing a fleet of autonomous chevy volt cars >> how is manhattan a testing ground >> guys, new york city is a good testing ground because of the grid below 96th street and above -- >> because it's very straightforward? there's also a lot of cars, bikes. i drive through, i'm like are you kidding me >> isn't the village -- >> no. you don't want to go there if you go below 96th, above 14th street, you're in a grid further downtown, it's more
6:47 am
complicated. >> forget boston >> you know where they're doing a lot of this, phoenix, arizona. grid vegas, grid. >> places out west where it was built after they figured out how to do these things, not just the road from boston to medford. >> cattle paths in boston. when we come back, we'll dig through the johnson & johnson earnings with the cfo, dominic caruso that's next. that stock is trading higher after the company came out with better-than-expected earnings. as we head to break a quick check of the european markets. things are relatively flat ftse is up, only by just over a h a percentage point. when this bell rings... starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions,
6:48 am
by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.
6:49 am
6:50 am
6:51 am
johnson & johnson reporting third quarter earnings just moments ago. $1 .90 beat forecast by 10 cents. revenue also above forecast. joining us now for for on the water, johnson & johnson cfo, and meg terrell is on the set with us. you did raise your full year guidance to $7.25 to $7.30 what was the previous guidance range? >> it was about 10 cents lower than that, joe >> you beat by ten cents in the quarter. so you're not really increasing fourth quarter results >> joe, we had a great quarter
6:52 am
we had some new acquisitions and -- they did extremely well, and we will invest in the back half of the year and get them set up for a strong future growth potential as well >> you made up the 10 cents that you increased just in the third quarter. is that correct? >> we increased our outlook on both sales and earnings for the full year above the analyst estimates, although we beat the analyst estimates in had the third quarter, we were pretty much in line with what we thought we would do and were confident that we're going it continue to grow into fourth quarter and beyond as well >> sales grew at 3.8%.
6:53 am
>> each one was exactly -- that shows you that this is kind of an intalastic, i guess, company to some extent and what you sell around the world you get exactly the same sales increase. >> it's mig terrell. i didn't see any mention in the press release of quarter eco, and i know that j & j has seven plants there can you tell us are for how the manufacturing is going in puerto rico and whether you kbp to see any disruptions. >> hi, meg we have seven plants 3,600 employees in puerto rico we've done a lot to help them as
6:54 am
well as the overall community in puerto rico working with officials there. our plants are up and running now. we're on generator power we've had minimal disruption we think that we'll be fine for the balance of the year. we have backup facilities, of course, in our vast manufacturing network to insure that essential medicines are produced and delivered where they're needed >> we know that the fda is looking at 40 critical -- >> there are many johnson and johnson products that are prugsd in puerto radio echo the ones on the fda list we don't have a problem in producing, and we have backup facilities across the world, as i said earlier we're confident we won't see any disruption of any material impact >> also, i want to ask you about what the president said yesterday about 14 percent of
6:55 am
over a health care, and what's lost in the discussion is the immense benefit that they provide the patients, and they actually reduce or help reduce the other 86% of the cost that we're not talking about. >> in general it's a good topic, focus on drug pricing seems to be a focus on a narrow point in the discussion >> there is some talk about generics and all the roadblocks that are put in the way, and we know how drug companies over the years have tried to extend patent protection using extended
6:56 am
release and things will johnson & johnson continue to spend money trying to maintain exclusivity on drugs. that was the point yesterday or do you think the greater good of society will be if drug prices -- you don't have exclusivity as long. >> we think that it's important to invest in medical innovation, and we do think that generics hit the market at the appropriate time to provide room in the health care system to help pay for innovations and cures, and that's where we are right now in our drug development. >> thanks for coming on today. >> appreciate it stock, i think, 365 billion in market cap pretty amazing thank you. appreciate it. coming up when we return, more earnings still to come. we're going to bring you reports from hardlily davidson also goldman sachs coming up in the next hour. lots of eyes will be on that plus, netflix shares are rising on strong subscriber numbers we will dig through the report when "squawk" returns. two big hours coming up.
6:57 am
your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. 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
6:58 am
with day one target date funds from prudential. look forward to your 401k plan. looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.
6:59 am
7:00 am
>> live from gt beating heart of business, new york city, this is "squawk box." >> morgan stanley earnings >> good beat here from morgan stanley. expectation was dallas 9 billion. a sort of slight beat in all the areas as opposed to any one area eps 93 cents estimated was 81 cents let's dive into the individual areas, and first up on the trading numbers, this is a fall of less than 10% year-on-year versus down 11% for citi, down 21% for jp morgan. bank of america was somewhere in
7:01 am
between. that's a decent beat that was slightly expected because they are more heavily weighted, of course, to equities, which did less badly this quarter than fixed income either way the equity number $1.9 billion that's in line with expectations up a percent or two year-on-year even the fixed income number, which, remember, they went through a rejig of this. their target was $1 billion per quarter. this is now the fifth quarter in a row they've hit that $1 billion target at 1.2, given it was a tough quarter for fixed income is impressive it's down 19% in just fixed income alone jp morgan, for example, and fixed income alone was down 27%. trading across the board is good investment banking, we'll just touch on it as well, was decent beat $1.3 billion the forecast was $1.1 billion. wealth management is stand-out of course, this is a big beast in their earnings. $4.2 billion in revenue was last
7:02 am
quarter they beat that at 5.5% given the pressure on some margins, as seen many would think that this from last quarter is 25.5, and it would slip a bit it didn't. it improved to 26.5% overall a decent set of numbers from morgan stanley. unsurprising to see it up on light volume >> remember, morgan stanley was weird because it retested its financial crisis lows. five years ago they thought it was europe probably, right? remember, there were some spreads blowing out because it was the problems with european banks or something that was $12 or $14. it's back to $50 this is in five years what kind of return is that?
7:03 am
>> we'll hear from goldman sachs. >> the funny part about this is you used to be able to compare the two because they're almost different institutions completely, but the reason they got out of the trading business was they weren't good at the trading business whereas, goldman sachs was good at the trading business. >> i think they've been a leader fixed income, that's fair to say, but the thing i was going to add -- i dent disagree, but the thing was going to add to it was really on the type of clients they have within trading and fixed income, and that's where goldman sachs is disappointed because it's still true to say that morgan stanley and goldman sachs have less of a big corporate exposure than the money centers, and they are more focused on hedge fund clients, and that is where goldman sachs's recent underperformance
7:04 am
are not just compared to the money, but also compared to morgan stanley has been a disappointment >> fair enough wolf, we will see you in just a little bit meantime, we have other headlines we want to tell you about. the president -- let's show you the futures right now before we even get going looks like we open up a point higher s&p 500 -- i'm going to call it -- let's talk about some of the other headlines making news. president trump will interview janet yellen this week to talk about possibly staying on as fed chair. sources close to the situation saying the meeting will take place on thursday. however, at this point many fed watchers still think other candidates are more likely to get the job. now, job interviews, remember when you used it on do this on "the apprentice. it's the job interview i don't know dow component, united health, reporting quarterly profit of $2.66 per cents beating estimates by 10 cents. revenue slightly below forecast. the health insurer giving a full year forecast above consensus.
7:05 am
that helping the dow this morning. procter & gamble saying that nelson peltz's bed board loss was 6.15 million votes that amounts to .2% of p & g's outstanding shares that's a difference slim enough to warrant a recount, which will take place this week trian fund management considers the vote too close to call technology is far and away the best performing sector in the s&p 500 this year. dom is here, and he has a look at the companies that have been doing the heavy lifting on this. hey, dom >> if you look at the overall performance for the technology stocks, you look at the sector etf's that track it, one of the spider etf's, the technology spider, the xlk, that's the technicaler, if you look at that versus the s&p 500, it is pretty much an 11% difference with regard to the overall technology sector as opposed to the market in the s&p 500 if you look at the highest market capitalization stocks within technology, they are the ones we know that have been doing the heavy lifting, and
7:06 am
we're talking about very strong double digit gains for all of them take a look at, of course, apple, microsoft, alphabet, the parent company of google, those types of names if you look at the year-to-date performance of those stocks, apple up 38% microsoft up 25% alphabet up 27%. facebook up 52%. >> wow >> we're talking about stocks that are doing -- yes, this is the heavy lifting, and that's the reason why technology is doing so well. we want to focus a little bit more on some of the names that are the most extended, that have the most positive momentum within the overall sector, and this comes down to those chip names. they're not as big as apple. they're not as big as facebook or microsoft or alphabet you look at names like nvidea or emplied materials, some of the technology names that are focused on semiconductors, and those stocks are the ones that are helping to lead the way higher in terms of the overall performance. if you have done a little bit of homework and been in some of those names, that's where the technology etf has been maybe a little bit of an underperformer versus some of the other parts like the semiconduct ors
7:07 am
overall. take a look at that etf that tracks the semiconductor or chip industry this is the semiconductor etf. the ticker smh it's also now much outperforming what's going on with tech overall. >> wow >> we talk about apple all the time we talk about facebook and microsoft and those mega caps. for good reason. they're the most important parts of the market. if you dig a little bit deeper here, it's the semiconductor stocks that have been showing the most relative strength >> being fueled by just demand for all things that require semiconductors >> people talk about the bitcoin trade for a while. remember nvidea and advanced microdevices maybe those devices were going to advance from that spending. overall if you look at that as a leading indicator for technology, if those stocks tend to outperform, maybe there's fuel left for the bull rally people are saying that yes, apple is great. it will die lot of the heavy lifting. as long as people start to think that the tech cycle is still going, those semi stocks are probably the place to be >> dom, thank you very much. netflix shares in the
7:08 am
meantime, trading at new highs after beating wall street's expectations and posting the best third quarter results on record last night reed hastings lit up the earnings call by wearing an ugly christmas sweater, and, get this, this was reason for this >> it's a part of a sponsorship deal joining us for more on this is jason helstein, analyst at oppenheimer, and ed lee, read code's managing editor the numbers were better than expected, and what we heard about what they're planning on spending on condition tent is quite a bit more what surprised you the most out of this? >> well, i think the first thing was we knew this price increase was coming in the u.s., but it's actually international as well in some of their more mature markets. they won't be specific, but numbers are going up this morning, and that's a big part of it.
7:09 am
i think the contribution profit for international is 10% above also, i think there's confidence around the lack of elasticity. really this is a company who believes they have pricing power when you just saw google lower prices in response to this you know, and -- >> then again, are you a believer that this pricing power sticks can they do this and have no problems >> for the first time they raised prices. it was a convoluted. there were people that forgot they were paying you got the e-mail reminder and said, oops, why was i paying it does look like this time there will be less of an impact. you'll start to see it in the fourth quarter, and then it will continue to the first quarter. they said it will be quicker i think if you just take a step back, the reality is, you know, global subs grew 26% that was faster than the 25% in the second quarter revenue grew faster than global sub. up 33% for global streaming. contribution profits were up 52%. how much better than that do you want
7:10 am
>> right ed, i think the content piece was kind of amazing. >> it's not -- >> they're going to spend up to $8 million >> it's not $7 billion it's $8 billion. it's more than you thought about before than they originally said they were going to spend my question, though, on that is all the original that is they're spending on that he said in the call, about 25%, they're spending on originals. originals is pretty loosely defined at netflix it's stuff that runs first on netflix. it doesn't necessarily mean that it's going outright. game of thrones and hbo, hbo owns that outright they can keep showing that forever and ever if you are a later subscriber to netflix, it's not always clear what of those originals are still there for you to watch they're spending a lot of money. that's great how much of it they fully own is still a question >> what's the concern, though, in terms of the leverages. at some point there was always a view that at some point you wouldn't have to necessarily keep creating absolutely new content, right, or -- and keep that marketing spend of the same number to grow given that you would say you have a base.
7:11 am
the point is to distribute it. that's the business. however, they keep -- to grow they think they need to keep spending the money >> they need to keep -- i think that's right a big part of their concede is international expansion, right the part of the way they do that is leveraging the content they already own. the rights for some of the content is still kind of unclear as to which regions are what length that they own it for. it's harder to attract new subscribers in those new regions. i think that's -- >> you think it's going to go just to the region >> it's partly to boost up the region also, just sort of the long-term value to the subscriber and to newer subscribers later that, you know, this is -- we spent all this money that needs to flop more towards owning it outright, and i think that's where -- >> is that an issue for you? >> you know, they said 40% contribution margins, chgs marketing plus content is how they define it they got there in the u.s., and they said, okay, you know, we're going to now invest under that, but we have proven to you we can
7:12 am
do better than that, and so hold that out then internationally you are well below the guidance -- or they did 5% in the quarter internationally, and they're guiding to 7 in the fourth quarter clearly -- >> 5% -- >> contribution margins. basically they're taking the u.s. profit margin down. international improving. now you have this pricing increase incoming. all things being equal, that pricing increase would raise the margin, but then they're investing against it, and they talked about, well, we think if we spent a certain amount of marketing in the u.s., there's a word of mouth, the fact where we get this benefit globally. i think the bottom line is if you took a step back seven months ago, eight months ago, you would say amazon is making some pretty good progress here >> sure. >> yet, it seems more quiet on the amazon front because doing content is hard. this company clearly has an international advantage. what can they do to sustain that advantage? then you do have content that we know that they're drawing off disney, for example. over time they will lose that content. >> do you buy the stock here >> we raised our price target to
7:13 am
$2 .45, so we think there's more to go. >> it's trading at $2.05.80. >> thank you for joining us. good to see you. >> thanks. >> stranger things, huh? >> stranger things looks great did you like it? >> i loved it. >> you know what's coming on sunday dwd. walking dead is backed >> it's almost halloween that's why i haven't finished last season >> i just messaged -- the guy from amc should come on. what if i asked him -- would it be cool if we had rick on here >> that would be cool. i would like that. >> josh, bring rick. cool to have -- what we had norman reedus on. >> we had abraham on too and eugene >> yeah. >> we had both of them on. >> you should have the whole cast on. >> don't think i wouldn't. >> yeah. it's a good ytd. >> do you -- >> i mean, they don't -- that's the thing. it's cable it's a cable play, which is a standard good old-fashioned cable play, but they also stream >> it's a big deal because it is
7:14 am
a phenomenon, the number of viewers that they get. >> that's the type of show where over time it really builds up and creates. it's one of those type of things where it might be a sleeper hit in the beginning, but then, you know, eventually everybody hears about it >> there are big questions about amc, by the way. >> yeah. >> about whether they get bought, what happens, whether a netflix or even an amazon might want to buy a company like that. >> for all the contents e tent >> i see -- >> that's very interesting >> i see them as a more likely bidder for amc than -- >> then you get digital and the linear >> a lot of interesting things out there. >> the villain, i would love to have him on too. >> the guy with the bat? >> kau >> i would love to he got caught up in the whole weinstein thing because i think it was his actress girlfriend or wife that ben affleck -- i think that was the -- >> really? >> yeah. timely, too. recode every time i hear recode, do i think airplane
7:15 am
remember recode. >> i know "airplane" and the rev reference. i don't think about that, though >> you might now you're welcome past october -- what was it? >> it's october. >> nfl owners and players are gathering in new york for their annual fall meeting. although, this year the league finds itself in a very different place. that's actually right before kickoff, that ikt approximate, at one of the games last weekend. a look at what -- not really, but there were some empty seats. what's expected. then living in space former nasa astronaut scott kelly will talk about his new book and the challenges ahead when icos scexprt metopa elo explorati exploration. you live without gravity your muscles you're watching "squawk box.
7:16 am
i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise
7:17 am
7:18 am
zblierngs nfl owners and players and the commissioner are gathering in new york city for the annual fall meeting. what's at stake? eric, we went from the original goodell comments, to it looks like they looked around and thought, oh, my god, we got a problem here maybe we do want to do something, and then i think the players and players union and -- what's his name -- >> the nfl players association president, right >> they pushed back, and then it looked like goodell is not going to do anything again, right? now, do you expect they'll come up with some way to -- to
7:19 am
address the social inequality that the players are talking about, but maybe come up with some way that the people do stand? >> i have a little script -- a little skit prepared this is good because this is what it's all about. we got the owners meeting today downtown at 1:00 >> you are good. >> i don't need a script i'm like you i'm inspired by you. forget the script. downtown hotel 1:00. if you want to hang out, i'll be there. we're going to follow the news we can all do it together. hang out in the hotel and see which players and owners the commissioner will come in. >> in person or on twitter >> in person you guys can do it on twitter. they have a lot of issues to deal with because obviously this is the regularly scheduled fall meeting. the owners chat about league business league business is bad this year because ratings are down ticket prices are down merchandise is down. the president is mad at them that's not good for any business they are going to talk about this whole anthem protest and everything it means they're taking the unusual step of letting players come to talk with the owners so
7:20 am
they can hear both sides, but like you said, there's been all this back and forth. the commissioner and the players association, the owners, they kind of keep changing their story a little bit with what they're going to do, and the latest word is now, well, we don't think we're going to walk out of the meetings with a requirement that anybody stands. i think they know the players will freak out if that happens, but they do want this to go away they're letting the players come in and say, all right, let's talk about your issues maybe we can work together in the later part of the year, do some kind of socialus, social equality thing >> that's not during the national anthem. >> that's not during the national anthem. >> this is similar to what the nba has tried to propose >> right >> and it sounds brilliant what the nba has tried to propose, but will it work there >> the nba is lucky this is offseason. >> the nba has some issues where they may not follow along. >> they have a better relationship between their commissioner and their players adam silver is a player's commissioner goodell is also negotiating the
7:21 am
five-year extension with the league owners. he needs this to go away for himself. >> i saw pictures of stadium that is blew my mind right before kickoff >> sometimes they do, and sometimes they don't >> i'm going to jacksonville there was no one in the entire -- >> jacksonville has had problems for a long time. >> already all right. >> they've already said should they just move somewhere else. the charters move from san diego to los angeles that was never going to be a good idea. everyone who shows up there are fans of the other team >> is it rio, or is it not rio that does a lot of empty seats >> i mean, there are a lot of empty seats, but -- >> because of this >> but that's the question is it because of this? is it just because generally people don't want to go to a stadium anymore because televisions have gotten really good you've got a lot of trends happening in the big picture that's why it's always hard to blame something, but it's also easy to blame something. you can pick whatever story you want >> no matter what it is. they don't want this -- the
7:22 am
owners >> it's not a good thing >> sports and you are not script-ready really not i don't think >> can we talk about kaepernick? >> that's the other thing. >> that's going to be a big conversation >> one e-mail between two owners >> he filed a grievance. he has to prove that teams together said -- >> that topic, can it be addressed or even mentioned given p that there's a collusion argument at this meeting >> so the collective bargaining agreement says that you're not supposed to talk about these issues, so the nfl spokesperson joe lockhart yesterday said we aren't going to talk about it because there's a process here that we're not allowed to talk about it i'm sure they know keep your mouth shut >> what would he get during discovery -- can he get emails from all the different owners? >> it's an arbitration it's not an actual federal court. >> can he ask to see them? he only needs one between two owners >> he can is, but he -- >> hard to prove
7:23 am
>> how do you prove it if you can't force anything over? if you can't be forced to hand anything over, forget it >> it's going to be very -- >> who is going to green bay >> i don't think he is going to green bay. >> tony romo, brett favre, or colin kaepernick >> i think they would rather pick you three than kaepernick >> it's impossible to improve by the emails what do you think his goal is? >> some people say -- >> is there a settlement option? >> the ownarbitrator could say, yes, i think you would have made $10 million a year, so here's your $10 million plus 20 in damages, if he has some evidence to prove it. >> finally, who goes to the owner's meeting on behalf of woody johnson now that he is -- >> his brother >> he didn't have to leave the 49ers, right he went to free agency >> kaepernick -- most of these nfl contracts are not guaranteed, so he had one more year on his deal, but -- >> $15 million, right? >> the 9ers said we're going to
7:24 am
cut you and you're not going to get this money, so he left before they were going to cut him. >> no script chummy. >> i like it >> we like it. thank you, eric. >> got it. when we come back, general motors has plans to take to the streets of the big apple the details of what you might see coming next year in lower manhattan. look out "squawk box" will be right back. what are the ingredients of a life well lived? is it the places you go? the things you own? or the people that fill it with meaning? for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life.
7:25 am
[vo] quickbooks introduces he teaches lessons to stanley... and that's kind of it right now. but rodney knew just what to do...he got quickbooks. it organizes all his accounts, so he knows where he stands in an instant. ahhh...that's a profit. which gave him the idea to spend a little cash on some brilliant marketing! ha, clever. wow, look at all these new students! way to grow, rodney! know where you stand instantly. visit
7:26 am
7:27 am
coming up, goldman sachs as we head to a break the u.s. equity futures at this hour looking at, well -- you are looking at green arrows now. dow looks like it's looking up eight points higher. nasdaq up four points.
7:28 am
7:29 am
7:30 am
good morning welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, it's been a pretty busy day for economic numbers or it's going to be. import and export prices for september, those hit at 8:30 eastern time then it's industrial production that comes 45 minutes later. then at 10:00 eastern time the latest figures on homebuilder sentiment. also, airbus has bought a majority stake in the unit of canada's bombardier that makes the company ae c-seriesets those jets have been at the
7:31 am
center of complaints by boeing that says that bombardier is dumping the jets at below market prices in the u.s. boeing is calling this transaction a questionable deal between two heavily state-subsidized competitors if you want tickets to see bruce springsteen on broadway, you better get set to pay big-time the one man show's tickets have been as high as $12,500 on the resale market. the most expensive ticket on the box office has a face value of $875 great reviews too. >> excuse me >> i was just reading this morning. rave reviews >> supposed to be amazing. should we all go in. >> no thanks >> no? >> it looks pretty amazing >> gm self-driving cars hitting the streets of new york city beginning next year. the company will start testing a fleet of autonomous jet electric cars in lower manhattan. gm says the safety operator will be at the wheel of the cars at all times to gather data and to take over if anything goes wrong. we will be seeing some of those in the streets the fourth round of nafta negotiations wrapping up today
7:32 am
u.s. trade a representative robert will be meeting with his counterparts from canada and mexico kayla joins us now with more kayla. >> good morning, andrew. the three countries will hold a joint event today at the conclusion of the fourth round of talks that's out of seven currently scheduled where, this round has been marked by aggressive u.s. demands based on president trump's desire to promote american manufacturing and lower deficits previously seen as non-starters. that could lead talks to a stalemate. of the three possible outcomes for talks that trade experts are talking about at this point, there's only one outcome that would preserve the goal of concluding talks before they would impact sentiment heading into next year's elections in mexico, which all three countries have wanted to avoid because a deal needs several months before any vote by the various country's legislative bodies, that would require wrapping up talks by the end of the year that's an aggressive timeline that now officials say might be out of reach if the countries are at
7:33 am
laugerheads, the white house could begin a six-month withdrawal process u.s. attendees at the talks said it might not happen until a later round, but canada and mexico aren't convinced that the white house wants to keep negotiating in ernest. here's how one described it to "the globe and mail" news partner. when the partner wants to leave the marriage, they don't say i want to leave the marriage they stop shaving, they start showering, they start drink, they start chasing other women until you finally push them out the door that seems to be the strategy the white house is using." mexico is already bracing for a potential pull-out of the u.s. it's importing wheat from argentina and apple from doctor -- chile. it's keeping its dialogue open in asia where it's a member of the transpacific partnership even as the u.s. has backed out. we will see where these three countries stand, whether there is any common ground this afternoon. becky, that is at 3:00 eastern
7:34 am
time back to you. >> it seems like this is pretty suddenly come to a full boil is that a correct reading, kayla? >> well, it seemed to come to a full boil before this round of talks started. when some of the u.s. proposals began to get leaked out into the public and mexican and canadian officials said, well, those are things that we said are not even possible to implement into this deal take, for instance, the fact that the u.s. wants to have an american requirement for the amount of parts from the u.s. in any auto or truck that is produced in the region some trade officials say that might even not be legal under the world trade organization rules, so why would you try to propose putting that in this type of deal other people say why would you for business reasons have a proposal that this deal would require all three countries to renew it every five years because then you couldn't really invest or build your supply chain if you don't know that this is going to be a long-term thing. >> defeats the purpose >> we'll see exactly where those shake out.
7:35 am
>> the american origin requirements, it's pretty high too. it's 50% or north of that? >> it is 50% then it would be an 85% requirement. >> somewhere in the three. somewhere in the three to that point, the "wall street journal" in its editorial yesterday said if the u.s. trade representative bob leithaiser thinks the current requirement for all three regions, if he thinks that's low, and i'm quoting the journal here, he needs to get out more. >> it's been an issue they've been talking about for a long time wilbur ross told us this months ago, that they wanted to see the origin rules higher, can particularly for all three of them combined. they are worried that there's that pass-through thing coming from china where this is get shipped straight through to mexico and put into it we'll see how this plays out kayla, thank you >> sure. in the meantime, let's find out where black rock is putting its $6 trillion to work. joining us right now is richard turner, the managing director and global chief investment strategist at black rock, and, richard, weigh in on nafta first. what happens if nafta
7:36 am
disintegrat disintegrates? what will that mean for the markets? >> first of all, great to be here we've been in an extraordinarily stable growth environment, and the market has shrugged off many political shocks over the last year what et cetera clear when we look forward is that the outlook remains very positive, one, for investing, and the markets are looking for the next shock, and nafta is now very much on the list even if we get a negative surprise from nafta, the reality is that's bad news for certain sectors of the economy that's very unlikely to derail what looks like a very healthy sustained and synchronized global expansion >> you are talking about very strong growth. we've seen it not only with the dow, the p is, and the nasdaq sitting at new records yesterday, but with japanese stocks up for 11 days in a row and they're sitting at the highest levels they've been in 21 years >> i want to talk about sustained growth you are now seeing growth above trend in all major regions of the same time. you're seeing it above trend in the u.s. you're seeing it in u.s., and you are seeing it in asia. not just japan, but also china
7:37 am
it's also incredibly stable growth you look at the volatility of the data it's incredibly stable, and that's creating an extremely favorable environment for investing risk assets. >> we'll get back to this josh joe is looking at numbers from goldman sachs. >> it almost -- a little deja vu remember when goldman used to report numbers that was incredible $4.17 is the estimate there. the revenue estimate was 7.5, and reported over 8.33 i think the stock is up a little bit. not that much. i think you have to look in and see, obviously, the trading and all the other things that people look at lending services at this point total shareholder equity, $86 billion at the end of the quarter and we like compensation expense. you always like to look at that, don't you? are you looking at this? >> i haven't been able to grab it >> they're well paid a lot of the guys. >> what's the ratio there? >> goldman sachs, i'm looking for the one that you would use
7:38 am
compensation benefit expenses, 3.17 billion, and they made, you know, revenue is 8.33, and the net was 2.13 the ratio of the revenue was 40% compared to 41%. that's the number you always -- >> still good. >> used to be better, right? >> better for the employees or better for the shareholders. >> the fat cats. >> better for who? >> well, what is better? >> these are your comments, not mine >> what is better for the shareholders if you compensate people better, maybe you do better as a shareholder. >> that's an interesting development or question. >> yeah. >> you don't know the answer there, but, you know, back in the day this number was closer to 47. >> yeah, 47%, 48%. >> let me just ask you -- >> yes, sir. >> if cnbc had something like that, wouldn't you like 50 better than 40 it. >> i would >> don't you think you would
7:39 am
perform better too i know i would >> is that the problem here? >> no. you mean it's hard to believe i could perform any better >> that's one way to look at it. >> richard, let's go back to what you were just talking about. >> richard can't even believe he is sitting here. >> stocks are sitting at these levels it's because of the global economic growth that has been around the globe, that has been strong, sustained, and set up. how would nafta interruption not interrupt that >> well, i think nafta interruption has an impact on the traded sector within the market, but ultimately, what's driving stocks is strong earnings growth across the board. if you look at the earnings cycles, it's not about one or two sectors drawing this cycle you're seeing earnings growth across all major sectors and across all major -- >> shutting down borders wouldn't put some sort of an impact on that >> it's going to create volatility does it derail this global growth story i think, no, it doesn't. we've seen a number of big shots that have seen brexit in the u.k. we've seen italian constitutional reform.
7:40 am
these have all created short-term volatility that have an impact on some areas of the market for sustained basis, but none of these have been able to derail what is a very powerful bull market. >> why are we looking at this powerful economic global growth? >> it's because it's so stained and stable that we've entered a phase of the cycle which we think of about synchronized and sustained expansion where growth becomes self-reinforcing you are getting strong growth. >> virtuous cycle. >> leading to steady wage gains. leading to stronger consumer spending stronger earnings. >> are there particular sectors or stocks that you think are the best ones to play, or across the board, or even countries >> i'll start with sectors and i'll move on to countries. sector perspective, we like tech and financials normally people feel you have to choose between the two, but at this phase of the cycle, we think tech does very well. if you look at what's driving tech this year, actually the main thing driving tech is earnings this is very different from the
7:41 am
late 1990s broad based technical recovery >> not just hope they're delivering >> yeah, it's actually the numbers that are coming through. if you look at financials, they get a benefit from gradually rising interest rates. you see the fed raising rates up to four times over the next 12 months that's great use for financials in an environment of sustained growth >> not so much that it kills the rally elsewhere? >> not so much it kills the rally, but our option for the biggest -- i think there's more hope in u.s. stocks than in international stocks right now if you look outside the u.s., you've got good growth coming through. less optimism today. >> where outside >> i think europe looks like a great place to be right now, still. the ecb will be on hold, we think, for some time the markets are way too nervous about the ecb tightening interest rates from here european growth itself is strong, but the european stocks are exposed to global growth going forward. actually, many investors are just starting to come back if you look at the flows. we see that as a story that continues. >> fair to say that the euro, you think, will come under
7:42 am
pressure, and the dollar will rise because investors are expecting more out of the ecb than they're going to get? >> that's exactly right. we see some divergence in policy now coming through the fed eventually doing more. the ecb less that removes one of the big headwinds of the european stock market this year you are seeing that coming through. >> richard, thanks so much >> great to be here. >> can i ask you a question quickly? >> yes >> do we know this number for p & g, nelson peltz? >> 0.2%. >> if you were p & g, wouldn't that say to you that maybe shareholders think it would be okay if you did this wouldn't you think maybe -- why not just bring him on? >> would i have been -- i said that they lost -- >> he did say that >> pr-wise >> pr-wise and -- >> if you were p & g, and it was .2%. >> .2% is six million votes. >> i know. >> there's one issue, and i don't know the answer on this. you might actually know the answer on this
7:43 am
it's outstanding shares. it's not necessarily shares voted. >> right it's shares outstanding. >> but they did talk about how many votes the -- >> nonetheless -- >> look, it's -- >> a powerful message has been delivered at minimum, and the idea is that, by the way, given that he may or may not get on this board or unlikely will, that he is probably going to be hanging around the hoop for the next year and really putting an enormous amount of pressure on them whe them either way, to some degree nelson peltz has won >> my whole malta ambassadorship -- have you seen the -- >> it was in the pan am papers the one that led to the panama papers disruption. >> is that what you have been working on the whole time? >> yeah. yeah >> now it all comes into focus coming up -- yeah.
7:44 am
where else let me think there's that new place they're flying to. maybe they -- coming up, "squawk" goes to space retired astronaut and international space station commander scott kelly joins us we're going to talk about -- look he is talking about it right now. something big. something universal. the future of space exploration. the battle to fund private trips and why he wants more chocolate pudding, chocolate pudding, up there. we head to break here's a look at some of the biggest players in space exploration. "squawk box" will be right back. i've been thinking. about thinking. i mean, think of all the things that think these days. thinking planes. thinking cars. thinking phones. businesses are thinking. factories are thinking. distribution plants are thinking. plant plants are thinking. even your toaster is thinking. honey, clive owen's in our kitchen. i'm leaving. oh never mind, he's leaving. there's so much thinking. even this thing is thinking. is this thing thinking? this thing is thinking! business are up to their necks in knowledge.
7:45 am
let me illustrate that for you. scratch that, terrible idea. but what if a business could turn all that thinking... endless thinking. into doing. to make better decisions. make a difference. make the future. make all this make sense. not tomorrow. not next week while you think about it a little more. but right now. this moment. this second. is there a company that can help you do all that? ♪ i can think of one.
7:46 am
7:47 am
morgan stanley beating earnings the latest estimate scoring a 12 cent beat. came in with earnings -- revenue also beating expectations. morgan stanley's results were helped by strength and wealth management, which made up for more than -- more than made up for slowing trading revenue, and that stock is up by 1.1% much of our focus on space today has to do with building better and better rockets, but it really doesn't matter how good the rockets are if we can't figure out how to live up there for long periods of time joining us now is retired astronaut scott kelly who spent
7:48 am
a year on the international space zags he has a book "endurance, a year in space, a lifetime of discovery. scott, were you -- what can i call you that shows you the due respect that you deserve commander? >> scott works just fine >> scott works fine? is there a title i can use >> captain is fine >> my immediate question was is the fact of weightlessness you feel it at all times, and it seems like your muscles and your joints and everything, if you didn't have that feedback of what it is, it seems like you would turn into jelly or something? >> if you didn't do any exercise, absolutely in space in this weightless environment, we lose a lot of bone mass, muscle mass 1% of our bone every month we didn't do anything about it. it really mimics the affects of as if we were aging, but at an accelerated rate
7:49 am
that's the reason why we're in space. wuft reaso one of the reasons why i was there for a bhoel year is to study these effects. one day when we want to go to mars, we'll know how to prevent these things from happening, like you said. you lose 1% of your bone mass, in a month after 100 months we wouldn't have any bones left, and we would be like jelly >> how much do you work out? hours a day? >> yeah. two and a half hours a day every day. >> how long do we estimate mars is how long will it take to get there if we tried? >> well, with our current capabilities, over 200 days to get there. you would spend a year over 200 days to get back. >> you regain some of the muscle when you are on the surface? >> yes >> it would be how much compared to earth that's smaller, right >> mars is one-third size of earth, so one-third of the gravity. >> you might be able to dunk the basketball >> i probably could. i know i can't do it here. >> you know, cutting to the chase, i can't imagine that this
7:50 am
thing is viable because you do things when you are a businessman that can make money, and there's -- this is a government project this is not a private project. there's no money to be made going to mars. >> well, you know, generally big projects that don't have an immediate return on your investment is something that governments do now, having said that, when elan musk said he was going to launch the rocket and then land the first stage on a barge -- >> you didn't believe that >> i thought he was crazy, and then he did it i'm not going to ever doubt what he says ever again >> by the way, space ex has been a great business in large part because of the -- >> going to mars it different, though >> well, we'll see do you think the government logical ultimately subsidyize that >> well, we support space ex now in their development of a transportation system to lower orbit? >> we always talk about this we're going to have richard branson later on this week what do you think about what richard branson is doing relative to what elan musk is doing relative to what jeff
7:51 am
bezos is doing so they're all different >> in some cases, though, they do have the same, like, end goal if you can get into either suborbital space safely or regularly, you could potentially fly from l.a. to the united kingdom in 45 minutes. part of it is transportation system to support nasa part of it is about space tourism. if we really develop a robust -- >> do you think in your lifetime you're going to see that >> yeah. i think so >> you do? >> that kind of transportation >> for mass use? >> not at first. i think at first what we'll have is something similar to the early days of aviation where, you know, the barn stormers took people for rides, and then that will develop into a transportation system, and i would like to think within 30 years that might be -- >> can it be done safely that's always the big risk
7:52 am
>> is thereby as safe in the beginning as it will as we, you know, continue to fly into space. the more we do it, the better we get at it. you know, initially -- >> do you feel safe up there, by the way? >> i want to you can that about the launch pad is it worse than when andrew is taking off on a commercial airline flight i mean, that's scary enough, right? how scared were you? >> you know -- >> you are ready to meet your maker, are you not >> you think about your mortality kind of leading up to the event, but at a certain point prior to getting into the rocket, you kind of have come to terms with the fact that, you know, this might be the last thing i do you just go and do it. >> did you ever feel that way when you were up there >> you know, there's risk involved in my book here i talk about this case where we had with space debris possibly hitting us, and you kind of think, you know, there's a chance we could be in this 35,000-mile-an-hour collision. >> what's the most realistic space movie you've seen? >> apollo 13
7:53 am
ma martian, i thought that was pretty good. >> when you come back down -- i jump on a trampoline for 20 minutes, and you don't know what's going on. what did it feel like when you first -- >> you know, i had some -- there were some negative physician logical effects certainly. stiffness in my joints and muscles, dizziness, nausea >> what can i learn from the book about just being a human and everything else? there's a lot in there, isn't there? >> you know, not only is this book about being in space for a year, but it's also a story of a kid that if i was in school today, i would be the kid with add or adhd, and it wasn't until i read a book "the right stuff" that motivated me that i could do more than i was doing >> fascinating thank you. >> thank you for having me >> i wish we could talk a lot more we're going to go to break, but i'm going to keep talking to you. >> thanks.
7:54 am
coming up, when we return at the top of the hour, reaction goedman sacks's quarterly results, and we will talk financials and washington policy's shifts like tax reform and what it could mean for the sector that and a lot more when squawk returns nay emt month. alternatives or municipal strategies. what people really invest in from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. this is not a cloud. this is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know.
7:55 am
this is the ibm cloud. the ibm cloud is the cloud for business. yours. ♪ ♪ it's a warm blanket. it's a bottle of clean water. it's a roof and a bed. it's knowing someone cares. it's feeling safe. it's a today that's better than yesterday. every dollar you can spare
7:56 am
helps so much more than you can imagine. please donate now to help people affected by hurricane harvey. your help is urgently needed. >> are investors high on the hog? we've got a breakdown of harley's quarterly results and the competition they are facing. check out the futures this morning after closing at record levels, the dow futures, nasdaq, and the s&p all indicated
7:57 am
w 2pohier doup2 ints "squawk box" will be right back. " something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife.
7:58 am
7:59 am
flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully. two big banks roll out results. goldman sachs and morgan stanley. reaction from the street straight ahead an $8 billion bet on
8:00 am
content. netflix plans to raise its spending on original programming and reports an additional five million subscribers in its latest quarter plus, the new rich list. forbes out with its rankings of the wealthiest americans we'll tell you which billionaire brought in the most cash as the final hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernan along with becky quick and andrew ross sorkin futures started to inch a little bit higher earlier now up 20 points on the dow. s&p up less than a point, though, and the nasdaq up a little bit over four points.
8:01 am
>> the stock up 1.1% also, a beat coming in for morgan stanley the investment firm came in with 12 cents better than earnings for that quarterly profit. quarterly profit of 93 cents a share. 81 was what the street was expecting. revenue also beating expectations and results there boosted by healthy profits at its wealth management business that stock up by .9% >> we're getting some fresh comments from morgan stanley's cfo, wilfred frost >> we focused mainly on that wealth management performance, and in particular he said that the strategy there is working very well indeed he was very positive about the outlook. perhaps crucially comments that the deposit beaters they're seeing a better than expected. that was something that we've seen weigh on some of the other results. particularly in the bank of america core last week
8:02 am
it was one of the small factors that was bad about bank of america. the rest was pretty good very upbeat about the wealth management performance he also said in terms of their early year forecast within that, it was based not on a third rate hike coming. a potential kicker later in the year, and that is continuing to attract deposits very upbeat there in terms of the wealth management. also, worth pointing out in a quarter that overall, of course, has been tough for trading, despite their numbers being solid, relative expectation, who is very pleased that the roe came in at 9% in an otherwise tough environment. some upbeat comments there from the cfo. just comment quickly on that goldman sachs number as you mentioned, yes, a big beat on the line and crucially the fixed income trading performance was in line fractionally ahead the expectation, of course, still sharply down year-on-year like the others. the main reason for that revenue beat really coming in the investment and lending business.
8:03 am
>> we knew that the trading revenue would be under pressure, but what do you think about the banks today? >> september was really kind to goldman. the other five major banks, including morgan stanley today, they had a decline in fixed income trading you ask why, and that's because the client base for goldman traditionally is asset management and hedge funds the others are more in corporates or pension. big surprise there
8:04 am
>> i thought you were going to point to the fed and what the fed may or may not do and who is in the next head of the fed. >> that is the key i don't think media has been picking up on this, and essentially is the appointment of randy as the new bank supervisor >> right >> it's going to bring a more pragmatic deregulatory environment. >> if there's a change in the volcker rule, not confidence in it, they will say let's put more assets into the business, and with velocity there they can get higher returns you know, last month goldman had a conference said $900 billion of assets. i think this is really something to watch very low key compared to the high profile part of tax reform. bank earnings were good today. morgan stanley, their strategy is working goldman had the blessing of
8:05 am
september. >> of all of these stocks, the ones we've already heard from last week, including jp morgan, citigroup, wells fargo, which of these bank -- bank of america, which of these stocks do you like the best? >> he have with a strong buy on bank of many earning we have a buy on morgan stanley. also jp morgan bank of america has that tragedy engtry of improvement. both on the top line, but also on the cause side. the efficiency ratios are looking really good for bank of america. a goldman doesn't have that kind of capacity. they don't have bricks and mortar i really think bang of america looks really good here >> you pointed to the idea of the fed being so important we know on the regulatory side with randy quarrels, but with the fed, it's about anybody's guess right now who the next fed head will be >> cfra, we're one of the larnlest independent equity research firms there's confusion of the different agencies adopting from dodd frank, the volcker rule there will be more consistency,
8:06 am
more pragmatizing. i think randy is working with secretary treasurer. although those players are going to be as important for policy changes there. >> in terms of the trading, what this tells us with goldman sachs, better numbers today given that hedge funds are some of the major partners. what does this tell you about what's happening on wall street behind the scenes right now? >> i think the strategies of the major banks are where they are goldman has a concentrated bet as it relates traditionally to hedge funds and asset managements. the other larger banks have the traditional lending and trading role >> we look at it as want only the trading, but also the debt underwriekt together when you look at it on an individual basis, i wouldn't
8:07 am
want to be making the bet just on whether. >> ken be, thaur very much it's good to see you >> thank you netflix reported better than expected subscriber growth, and shares rise saysing in the premarket. up less than a percent julia joins us now with more julia. >> hey well, there's a lot of talk on the call last night about netflix's ongoing commitment to exclusive original content, including le 0 movies in t80 mo year $8 billion was spent in 2018 for content. that's how the ceo reed hastings says it netflix will get ahead
8:08 am
of its rivals and get consumers to pay more. >> price is all relative to value. we're continuing to increase the content offering, and we're seeing that reflected in viewing around the world we try to maintain that feeling that consumers have that we're a great value in terms of the amount of content we have relative to the prices >> hastings also said he is not concerned about disney pulling its content to launch a rival service, noting that netflix has not had broad rights to stream disney movies overseas >> disney is a great brand with great content, but internationally we have it only in the netherlands, australia, and canada you saw how big our international growth was in most of the world without the disney content. >> all the execs donned these stranger things sweaters ahead
8:09 am
of the misdemeanor launch in target stores. the weinstein scandal also came up content chief ted soranos said that the weinstein shake-up won't impact their streaming rights, and hastings said that netflix would be extremely unlikely to bid on weinstein assets he left the door open to other m&a saying they're looking at a lot of things. joe, back to you >> okay, julia thanks other earnings of note coming after the bell today ibm, cree and select comfort if if you are waiting for those. i don't know in the meantime, when we come back, forbes out with its list of the wealthiest americans. war enbuffett, facebook ceo mark zucker berg, and oracle founder larry ellison all making the top five we'll tell you who took the top spot and where trump falls on that list right after the break. later, harley davidson out with quarterly results. a beat on the top and bottom line we'll dig through the numbers with an analyst at 8:30 a.m. eastern time stay tuned bck"n watching "squaw o cn
8:10 am
today, smart planning is helping the new new york rise higher than ever. as the world leader in unmanned aerial systems, we're attracting the world's best talent to central new york. and turning the airport into a first-class transportation hub. all while growing urban areas into vibrant places to live and work. across new york state, we're building the new new york. to grow your business with us in new york state, visit
8:11 am
right in the heart of the was in his financial crisis,k state, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.
8:12 am
8:13 am
president trump will recordly meet with fed chair janet yellen as part of the search for candidates for her position a white house official said trump met with stanford university economist john taylor last week. the president medicine -- other candidates include jerome powell and advisor gary cohen we are the people coming in favor. they drop out of favor where it stands right now. the favorite is, like, 28% they'll have, like, a 28% number, and that's the guy that they'll call who is the favorite, but that's only one in four anyway, right united health reporting a quarterly profit beating estimates by 10 cents. revenue slightly below forecast. the health insurer gave a forecast that was above consensus, and j & j and the dow out. the company beat on the top and bottom line, citing strong
8:14 am
results in its pharmaceutical unit & j gave a full year forecast that comes in above consensus, but only to the extent that they beat the third quarter by 10 cents, and the new guidance for the year is only 10 cents higher doesn't necessarily mean the fourth quarter is going to be any higher >> okay. forbes's richest people in america top 400 list coming out this morning in a special edition of the magazine. joining us with a look at the richest americans and where trump ranks for magazine senior wealth editor is here, and we welcome you this morning >> thanks for having me. >> before we went to break, before the segment, we showed the top five, but then we blacked out the shadow on the top two. >> oh. >> do you want to do the big reveal >> well, it's not so much a big reveal for those that follow wealth watching. it's bill gates for the 24th year he is worth $89 billion. jeff bezos is number two with 81.5 billion to me what's amazing is
8:15 am
zuckerberg was up 15.5 billion they stay exactly where they are because these people have gained so much in the past year >> is there a surprise name that's either entered the list that we haven't heard of or somebody -- >> reed hastings joined for the first time talking about what you were talking about in the first segment about how well netflix is doing it's amazing to me because the minimum net worth is now $2 billion. it's crazy >> what's the turnover of the list look like this goes to smcht other big social debates we have >> there is turnover, but not a huge amount. for instance, this year there
8:16 am
are 22 newcomers that manage to break through even though it was so hard to make it in the past decade it's been 20 to 50 newcomers each year,ing and some people drop off and come back in >> where does the leader of the free world land on your list >> 248 that's down 92 spots from a year ago. >> in years past we heard stories before he was the president of his efforts to campaign >> yes, very much. >> either with the magazine. >> very much so. >> to raise his ranking. >> always. >> always. >> did that happen this year >> i have to say it actually did not. they did -- his finance office did talk with us and go through
8:17 am
some of the numbers. >> who is the youngest person? >> evan spiegel of snap. he is 27 >> mostly men? >> yes mostly white >> who was the wealthiest woman on the list. >> alice walton, an heiress. there are 50 women on the list, which to me is, like, nothing, and only eight of those are entirely self-made women still are not making it into the ranks to the extent that we would like to see. >> final question, percentage of americans versus foreigners on the list >> it's about 10% of immigrants. you have to be a u.s. citizen, and you have to have a significant part of your business or live in the u.s. to make this list >> oh, so an -- >> no, that's our billionaires
8:18 am
i'll come back in march and talk about that >> okay. >> how many people try to stay off the list >> i would say about 10% try to stay off of it, and probably another 10% or so actively don't cooperate with us. >> therefore, then they don't make the list? >> we have to be able to defend it, so we have to be able to prove it, but we have plenty of people that don't want to be on it that end up in the ranks. >> what do you say trump's net worth is >> $3.1 billion. down from $3.7 billion >> k okay thanks >> thanks for having me. >> go and check out the
8:19 am
magazine >> the company apple considered buying, and it's not what you would expect that story is next and a programming note tomorrow on "squawk box" robinhood ceo wes moore will be here at 8:00 a.m. issue. we'll be right back. building a website in under an hour is easy with gocentral... ...from godaddy! in fact, 68% of people who have built their...
8:20 am using gocentral, did it in under an hour, and you can too. build a better website - in under an hour. with gocentral from godaddy. [he has a new business teaching lessons. rodney wanted to know how his business was doing... he got quickbooks. it organizes all his accounts, so he can see his bottom line. ahhh...that's a profit. know where you stand instantly. visit quickbooks-dot-com. people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.
8:21 am
8:22 am
>> take a look at the futures indicated for more records today, if it were to open here j & j, united health, and gold m goldma >> u and h and j & j >> goldman too, right? goldman should be up just surprised the dow isn't. >> apple is -- sources say the company had talks to buy a sfart-up called crossover health, but discussions didn't result in a deal crossover works with big employers to build and run on site medical clinics facebook has acquired tbh. that's an app that's popular among teens. the app is an acronym for to be honest, and it allows users to anonymously answer multiple choice questions about friends who then receive the poll
8:23 am
results as compliments is ploern five million people have downloaded the app, and they've sent over a billion messages in just the last few weeks. financial terms of the deal were not disclosed. china is offering to buy up to 5% dwsh the move auto would give saudi arabia flexibility to consider different options for its plan to float the world's biggest oil producer on the stock market saudi's crown prince said that last year the king was thinking about listing in -- ramco at $2 trillion yesterday the company denied a report that said it was considering shelving its ipo this probably is a good time to say i'm going to riyadh next week we're going to be doing the show from there and interviewing lots of people. worth noting, there's a big question about whether they even need to pursue an ipo.
8:24 am
>> it's some kind of difference between what the market would be willing to bear and what they want right now >> it's about what you are getting when you buy this, right? >> exactly we will talk a lot about this next week. >> k on. >> that boeing story is -- boeing is down that's why >> yeah. >> it's down about -- that's why the dow is not up more based on -- >> i was just looking through apple's few pennies, but -- >> going down $4 >> that's probably part of it. when we come back, we've got some breaking economic news. a key number for fed inflation watchers is about to hit the tape we will bring you those numbers. that was boeing we just saw going by plus, hardlily davidson out with earnings we dig through the quarter with an analyst right now, dow futures up by 13 points stick around "squawk box" will be rsh win an uncertain world?k predictable income pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth.
8:25 am
real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential.
8:26 am
8:27 am
8:28 am
>> we're doing it live nasdaq -- >> welcome >> for the nasdaq market site. you got to look up that -- look up that tape let's look at some stocks to watch. harley davidson is recording quarterly profits. beating estimates by a penny motorcycle makers profits are down more than 40% >> if part on the impact of hurricane harvey comerica reported a quarterly profit of $1.26 a share beating forecast by 6 cents. this is a regional bank result held by higher net interest income european play maker airbus says it will acquire a majority stake
8:29 am
in canada's bombardier c-series yet program 50.1% interest in bombardierc-series aircraft limited partnership. it manufactures and sells the jet. tom bender says the deal will improve the appeal of the c-series passenger jets, which struggled to find customers. most notably ender says some of the planes will be built at one of airbus's alabama plants, and that's key because the move could allow bombardier to dodge some heavy u.s. taxes. the u.s. has threatened to impose up to 300% duty on bombardier imports, claiming the company is unfairly subsidized by the government. boeing blasting the news calling it questionable, and shares of airbus are higher while the shares of boeing are lower as you can see there actually, that's one of the reasons the dow isn't up more given the positive numbers from johnson & johnson. united health care and goldman sachs. >> we are just a few seconds
8:30 am
away from september import and export prices. we've been watching the futures through all of this as we just showed you plus, also, the ten-year note. you can see the dow futures right now indicated up by sh nasdaq barely positive after all three of them closed at records yesterday. the ten-year note right now, if we want to take a look -- we won't. let's get to rick. he is standing by at the cme rick >> okay. september read on import prices expected up .6%. up .7% no revision last month stands at .6 let's look at x pet plumb. up .3. that's hotter than expectation it matches our last look switch geersz. let's look at export prices. they were up 2.7 down close to expectations if you look at export prices, month-over-month they were up .8 the last 2.7 was year-over-year. now, if we look at export prices index, year-over-year, that is
8:31 am
up 2.9 these numbers are all close to expectations, and i know you were looking at the 230 yield for ten-year notes, and it is interesting. it's been really kind of tightly packed there, but look at the other end. look at a two-year note. 154. that's the highest yield on a closing basis. should have closed here since about the end of september 2008. let's call it nine years the yield curve is flattening into the mid 70s whether you look at twos to tens or even historic flattening. why it's flattening, what does it mean? what does the crystal ball say about yield curve? i'll leave that for you, the viewers, to decide one thing we all know and i've said it a lot. a flattening curve leads people talking to about inverted curves and the higher short-end rates go, the whole world runs on liquidity in the very next moment of course, it's not necessarily a good thing
8:32 am
more now from the fall-out much the deadly fires in california turns out the price of marijuana could spike as much as 20% some growers lost as much as a year's supply. that is according on to data insight company bds analytics. the number of marijuana farms destroyed is expected to rise as residents returned to evacuated areas. the fires came near the beginning of harvest season as it turns out it's expected to create a shortage just months ahead of california's launch of recreational marijuana and in that market opens up out there coming up, a new framework for companies both big and small. we'll talk to the author of the start-up ways. we'll tell us why he is betting on long-term-ism after the break. you are watching "squawk box" here on cnbc
8:33 am
most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
8:34 am
becareally want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.
8:35 am
in our headlines normal new jersey governor chris christie is throwing newark's name in the ring for the fight for amazon's new headquarters the state looks ready to offer about $7 billion in tax credits towards the bid. governor christie says new jersey offers the tech giant a world class university system. train and air transportation, and high speed internet access
8:36 am
>> disrupter 50 list this year the company helps businesses organize huge amounts of data in its databases. you don't know this one, sorkin, do you it's not a consumer type -- >> it's not a consumer type. it is amongo >> amongo. >> mongo, like big mongo. >> does that mean big? >> when i was a kid, i would say this thing is mongo. like human ungus >> that might have been -- i mean, you didn't say keen or neat either. i mean, we had -- we said different things >> neato >> neato >> we never used -- i never -- you haven't used mongo >> i can see where it comes from >> it's ginormous. >> that's on top of the japanese conglomerates existing $93 billion vision fund.
8:37 am
some sources telling recode the new fund could be substantially larger than even that. a new book is out making the case for big business to treat units like cash-strapped start-ups. joining us right now is eric reece, the ceo and founder of the long-term stock exchange he is the author of the new book "the startup way, how modern companies use entrepreneurial management to transform culture and drive long-term growth." we had him on the program just a couple of weeks ago. i had written a column about your long-term exchange, which we want to talk about that as well
8:38 am
>> thaes really at the heart of the challenges of most of these companies. >> there was a whole critique, though, of amazon's culture of being a sweat shop or a very difficult place to work. i don't know if that's true or not, but i remember reading that and thinking that's often true of a startup if it was a startup, we probably wouldn't think of it too critically because you would say that's what it needs >> that's just what we would normally see >> once you get to a certain size, there'salmost an expectation that the culture transforms >> otherwise, you get into a problem like ub autoer where you have that startup mentality that
8:39 am
flew for the long time, and there are the down sides of being a startupguardrails. >> the good part about that. if you have a rigorous system, there's not a management practice around harnessing that energy for something good. i think it can go into a disruptive way you're working too hard, starting to lose team morale, you don't have the rigor and discipline necessary to do it at scale. >> amazon has 314,000 employees. how can they possibly still be considered a startup mentality how does that work when you have that many people >> sure. we ran into that same issue at jeep we have a natural assumption that once you get to a certain size, you have thousands or hundreds of thousands of employees, you become a bureaucracy. i think we actually can harness that startup energy. amazon, these are companies at a whole are not a startup. they contain a lot of internal startups companies are facing a lot of uncertainty about whether something will work that's new >> good example of a
8:40 am
turn-around? >> i do think that ge will ultimately be vindicated >> you do? >> yeah, i do. >> that's a bold call given that we've watched that stock -- >> i -- >> as the former owner of this company, joe, he can attest. >> i am a ge shareholder too i feel the pain. look, we'll see what happens in the next generation of management, but i think the willingness to invest in innovation really at the ground floor, and i have the chance to work with dozens and dozens of ge teams to see the change in their morale and their intensity and the way that they pursue new products, you know, as a result of the transformation they call fast works i'm a believer >> they're getting in at 23. that why they're optimistic. >> give us an update on the long-term exchange that we talked about even just a couple of weeks ago what's going on? where does it stand? >> absolutely. yeah, just -- for toes that don't know, this is the idea of a new stock exchange that incentivizes companies and investors to think for the long-term. we're in the regulatory process with the s.e.c., so we're
8:41 am
expecting to file what's called the form one application by the end of the year, and hopefully be operational next year >> do you have companies ready to jump on board once that happens? how does this work what's the -- >> yes, we're optimistic about that if you think about the next generation of companies, the kind of companies we're talking about, you know, in the startup way, frankly, that want to think long-term, that want to invest and be sustainable over generations, those are the companies that are really dissatisfied with their options. >> what do you think about this? we happen to be at the nasdaq. >> hey, nasdaq >> our friends at squawk on the street will be down at the new york stock exchange. >> sure. >> outstanding sets in both places >> is there going to be a set at the long-term stock exchange >> we should probably talk to you about that our view is that, like, first of all what matters is not how it looks. really, the governance role that exchanges play to oversee the behavior and frankly regulate the behavior of managers and companies, and secondly, we don't actually see, you know, this place or nyc as competitors. it's really about creating an option for better corporate governance under the rules, you can dual
8:42 am
this we think a number of companies will be both listed in ltse with government kbrouchlt that is we offer and still on nasdaq for trading. >> the governments -- the governance improvements,in other words, we need to force you to do these things to be better, or we're just a sign of good housekeeping because you've agreed to do all these things? >> there's a little bit of both. obviously, there is a good housekeeping the good companies, they really want to be able to get credit are for the good stuff that they already do executive compensation policies, having something like long-term voting it's also important there's so much distrust between managers and investors right now on the street if both sides are going to come to the table and say, hey, we each give up a little bit in order for the company to be more valuable, they have to believe that the other side really means it it's important for both sides to be able to bind themselves to pledge to say we're both going to follow these rules. it's not something we can voluntarily unadopt if we have a bad quarter and we decide to freak out. >> we want to thank you. we wish you lots of luck >> thank you very much thanks very much
8:43 am
>> did you see this, sorkin? >> i just saw it come across the crawl, as they say >> a big endorsement, not yesterday, that's for sure the president's choice to be the next drug tsar withdrawing his name from consideration. president trump just tweeting representative tom many arino says he is withdrawing his name. tom say fine man and a great congressman. trump made a weird comment like if i find 1% of something wrong -- he made some weird comment yesterday when asked >> he said that he was an early supporter. i do think he is a great man i'm going to look into the report, though >> if there's the slightest thing, then we might have a problem. apparently i don't know the behind the scenes, but congressman marino actually withdrew his name for consideration. harley davidson is out with third quarter earnings just a short time ago the motorcycle maker beating on the top and bottom line. retail units fell more than expected joining us on the squawk
8:44 am
newsline robin farley, analyst at ubs robin, this is not the first time harley recently has seemed to indicate things aren't quite as good as they were a few years ago. the big picture at harley is what, robin, at this point how did it fall out of favor with what used to be a dream purchase for so many people? >> sure. you know, i think what we're seeing here with the retail sales decline and this is really the third consecutive year here of u.s. retail sales decline is the aging rider for harley, and although it looks like eps are in line here, about five or six cents of that is just tax rates. the real sort of operational fundamental performance is below expectation here >> so it's baby boomers love harleys. is that what you are telling me, robin? >> but they're not buying bikes at the same rate as they're turning 60 as they were buying the bikes when they were turning
8:45 am
45 that seems to be the problem you know, in the release this morning harley didn't change their full year guidance, but there's a lot of skepticism that because they're implying that they're going to ship 15% more bikes in the fourth quarter and given the retail sales decline, i think there will be skepticism about that, and we see risk to the 2018 outlook here as well. >> you know, it's a storied company that has weathered ins and outs of the whims of what people do in the past. do you ever see millennials or maybe the next generation? what does harley have to do to regain its mojo, do you think? >> well, i think going after the younger rider is something that harley has been trying to do for a while. they just haven't been able to do it successfully in the quarter they gained market share, but even though they -- the industry was down 9% they're holding on to just the industry overall that's having
8:46 am
this issue the problem also is the bikes that younger riders buy are lower margin bikes they're less profitable. for harley and this case they're not selling any better than the big touring bikes now anyway even if you replaced a baby boomer with the younger rider, it might not be as profitable as sale >> for a long time, it was the only american made bike. there is some competition. is that in terms of market share? has that affected harley or not really thinking, i don't know, what are the other -- the new entrants that have some cache, right? >> indian motorcycle is one of the vintage american brands that was relaunched very successfully by polaris in the last few years, and that is absolutely going after harley's market. i would point out that harley sales have declined more than indian sales have gained in other words, harley has problems outside of just new competition. in other words, they're -- they've lost more sales than
8:47 am
just what i understandian has bn picking up that goes back to the shrinking pool of buyers >> is it an old brand, robin, bottom line? is it a brand that is just never going to -- you are never going to see people wearing t-shirts, or will it have a basal level of, you know, coolness or whatever, do you think >> you know, it's a great brand name it's a brand name that still, i think, has a lot of power and meaning. it's just a question of, you know, if that can't be translated into sales growth, and that's what we're seeing here >> up next, jim cramer will join us live from the new york stock exchange we'll get his take on today's top stories. some of the earnings reports that we've been getting this morning. check out the futures. dow futures up by 21 points. s&p futures flat nasdaq up by 1.5, and "squawk box" will be right back.te netwo
8:48 am
when you pair it with the new iphone everyone is excited about. introducing the amazing iphone 8. it's the best iphone yet, now on america's best unlimited network. for a limited time, save up to three hundred dollars on iphone 8. and now, join t-mobile's iphone upgrade program for free. pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. today, the new new york is ready for take-off. we're invested in creating the world's first state-of-the-art drone testing facility
8:49 am
in central new york and the mohawk valley, which marks the start of our nation's first 50-mile unmanned flight corridor. and allows us to attract the world's top drone talent. all across new york state, we're building the new new york. to grow your business with us in new york state, visit
8:50 am
welcome back to "squawk box. proctor anen gand gamable sayint lost by .2%. this is a political tally which could range based on certification by an independent
8:51 am
firm last week p&g said they lost the proxy fight but peltz said the vote is too close to call and he wasn't conceding. >> there are no hanging chads or anything. >> yes, they are. >> you can vote once and only the latest vote counts and they have to go hand by hand every one of these. >> think of how much money is being spent on this to put one guy on the -- >> one guy. >> p&g spent $100 million. >> 2.55 billion shares outstanding as of july 31st. i was trying to figure out if 6 million is .2%. >> 2.5 billion. >> which i had .2%, but i don't. goldman sachs earnings coming in at 5.07 a share and revenue also exceeded estimates by a considerable margin with strength across its key markets and morgan stanley came in 12
8:52 am
cents above estimates. 93 cents a share and results are boosted by healthy profits at its wealth management business let's get down to the new york stock exchange, the dow components that reported i think -- i haven't checked them all recently but boeing is offsetting the gains a little bit and muting the gains in the dow this morning. >> yeah, boeing had been the leader and i think there's been a problem of profit taking on initial earnings so that we'll see great numbers and then they'll spike in the before market and sellers come in all morning then sellers dry up and buyers come back i think that's going to happen with a lot of stocks, including boeing. >> you think the other ones hold up what did you think of goldman? >> i think goldman was really good there's been a problem that they've been too negative and focus on the negatives i hope they don't do that today. the stock will stay up morgan stanley calls always
8:53 am
upbeat because they don't have a lot of regulatory problems and in the right markets i think unh was a think of beauty people will say aca, what's theithe issue there? yes, j and j did not do any further guidance raise that's been their way of doing it the stock comes down and buyers come in. the initial sellers are hedge funds quick to be able to say wait a second the stocks are expensive and index funds and buyers come in, we've been waiting for a price break. here we got it. >> you're correct there. j and j is off fractionally but goldman and united health care are trading higher do you have a favorite netflix show, jim? >> yeah, i just finished narcos 3, probably the best of the three and pena is fabulous pena is also my partner, david faber. they are very much look alike. pena is a cross between the
8:54 am
young burt reynolds and current david faber and if he were to grow a mustache and sunglasses, you would see what i mean. >> wasn't he in "game of thrones". >> yes, he was, an amazing actor. and what's really incredible, the security guy who managed to go to witness protection -- i don't want to -- he's swedish. the acting there is good there was someone on this morning talking about how the programming doesn't work internationally. it's working internationally better than domestically because the program is in foreign language but we don't care i actually watch subtitles and i don't know i'm watching because reed hastings has it figured out. >> every once in a while i'm look away at my phone watching narcos and then i realize i'm missing what's going on -- >> you can't do it you have to watch every second. >> but i've learned some spanish. >> i have too. it's been great. they'll knock that stock down too. they'll take nvidia down,
8:55 am
classic issues you see it every morning, the sellers knocked it down 3 bucks yesterday. netflix will be down 2 or 3 bucks and they'll say what's the problem? >> how was the second season of narcos >> i loved the second season but it was in the end -- you thought the thing was over because pablo was all that mattered. you didn't realize the cartel was much more -- >> i was wondering that because the last i saw was just -- he just escaped. >> thank you for beating him at his home game. >> pablo, you kind of google that kind of happened but -- >> what? >> that's a historical fact there. >> not much you can do. >> stop right now. >> stranger things, i've seen the end of what happens to stranger things too and i'll be quiet. >> thanks, jim [ speaking spanish ] >> shut up, you have nothing in
8:56 am
your head. >> what time is it tomorrow our guest host will be billionaire richard branson, founder of the virgin group. that is tomorrow starting at 7:00 a.m. eastern time and we'll be right back. 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. ambitions live everywhere. synchrony financial helps make them happen with data, insights, financing and technologies. ♪ ♪ synchrony financial. what are you working forward to?
8:57 am
synchrony financial. you myour joints...thing for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know.
8:58 am
>>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade. it doesn't matter what time of day or night. when mother nature's done her worst, the only thing that matters to us is keeping the lights on for you. the hard working men and women of the international brotherhood of electrical workers, dedicated to keeping the power on in communities across the country. because when bad weather strikes, we know what matters most. the ibew. the power professionals. the odds of a december rate hike are well above 90%, in the two months leading up, the biggest laggards are utilities and energy
8:59 am
check this out, everybody, we're getting first glimpse of an intense collision of two super dense knew tron stars, the collision of these two stars which by the way this isn't it -- but this is a recreation of it caused a bright blue light of extremely hot debris that combined to form heavy elements like gold, platinum and uranium. brilliant pictures researchers say the two stars collided about 1.4 billion years ago. according to the scientists that created a huge burst of gamma rays which caused a ripple effect in the fabric of space which was first theer rised by albert einstein. pretty interesting let's look at the markets this morning. we've been watching futures and it's a bit of a battle between the dow components, unh and goldman sachs better than expected earnings and boeing under a little bit of pressure and that is playing its way out. the dow futures indicated to
9:00 am
open up 24 points after closing at a record level yesterday and nasdaq indicated higher two points after it closed at the record level yesterday and s&p fractionally lower -- they went positive too they were at a record yesterday as well. the 10-year note at this point looks like it's yielding 2.235%. >> okay. make sure you join us tomorrow our friends at "squawk on the street" begin their show right now. ♪ >> good tuesday morning, i'm carl quintanilla, jim cramer and david faber. dow starts the morning 44 points from 23 k and could get closer at the open with futures up, goldman and morgan stanley better than expected results and ibm tonight. dollar at a one week high and 10-year back to


info Stream Only

Uploaded by TV Archive on