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tv   Squawk Box  CNBC  October 20, 2017 6:00am-9:00am EDT

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the nelson peltz portfolio it's friday, october 20, 2017, "squawk box" begins right now. live from new york where business never sleeps, in is "squawk box. sfloo good morni good morning welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. you are look at strong gains for the futures. the dow indicated up by almost triple digits. looks like we'll open up 99 points if we open here s&p indicated up by six points after both the s&p and the dow set new records once again yesterday. we'll keep an eye on all of that on this last trading day of the
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week look at what happened overnight in asia. the nikkei eking out another gain a gain of 9 points, but that's the 14th day in a row that we've been looking at gains for the nikkei these are the highest levels we've seen in 21 years nikkei closing at 21,457 the hang seng with a gain of 1.17%. and the shanghai up by 0.28% the dax is up, the cac in france is up by 0.21% spain is up, but just barely look at crude oil snapped a four-day winning streak. it is still above $50s a b s a on the wall street agenda
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just one piece of economic data, september existing home sales out at 10:00 eastern time. we'll watch that carefully after getting some week housing numbers lately fed chair janet yellen is the keynote speaker this evening at an event at national economists club in washington ge, honeywell, procter & gamble, suntrust reporting results before the open. later today an exclusive interview with ge's chairman and ceo, john flannery 10:00 a.m. eastern, "squawk on the street." just to give -- explain why everyone was laughing, they were trying to put screens over me. i cut myself i cut my ear with a razor. is it still bleeding i was holding this against my ear, hoping it would stop. >> pretending he was talking on the phone. >> are you still getting dressed in the dark? >> any way, i didn't think it was going to -- >> what kind of razor? >> we have some news
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let me do the news >> are you sweeney todd? a big, long straight razor. >> we will be fine >> what have you got here? this is a liquid band-aid. >> we will do -- >> watch this. >> don't want do this on the airments. >> really hurts. >> come on, make him squeal. >> we have stocks to watch we'll tell you what's going on we have a couple things to do. a big stock mover to tell you about. shares of skechers are soaring this morning, the shoemaker posting earnings of 59 cents a share. 16 cents above estimates revenue at $1.09 billion the big beat coming thanks to a 29% increase in the company's international howholesale business i will now put on a -- >> liquid band-aid >> i don't know what i think of a liquid band-aid on my ear. i don't want to do it on the air. >> turn his mike off, he will
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scream andrew, i haven't said anything and your ears are bleeding >> please don't -- >> ahh >> let's go to eamon go for it. >> ow! ow >> i told you. i told you i told you >> that -- that stings so much >> i don't think you got it, gail come back. >> does it really sting? >> really stings does it look okay? >> looks fine. what stings more or the senate passing this budget for you? >> we'll see >> late last night the senate passing a budget bill that paves the way for tax reform it's like a zoo here eamon javers has the latest from washington i'll tell you what i thought, for one brief moment, it's like -- clowns is a strong word. did these guys really -- did the fear of god actually descend upon some of the republicans in the senate usually fear of good is not
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collective you have a mccain or guys that got their own things going on. there's no such thing as a collective fear of god >> they didn't get all 52. >> rand paul did not vote for it >> you heard people say you guys will all be defeated in '18 if you don't do this. >> i think there's something to that republicans have not been able to pass the signature bill of the year, repeal and replacement of obamacare, they need this they needed to get tax reform done, if they wanted to do that they had to pass this budget last night the vote was 51-49 the sflenate budget leaves room for a 1$1.5 billion tax cut rand paul defecting from his side, but they were able to hold everyone else. the house budget is deficit
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neutral. republicans in the house and senate will have to work this out. do they want to add to the deficit or keep it deficit neutral. a lot of pressure on the house members to go along here with what the senate did last night that is something to watch going forward. the president this morning, very pleased with what he's seeing. he issued a tweet already today. he said great news on the 2018 budget, senate majority leader mcconnell first step towards delivering massive tax cut for the american people, #fax people, #taxreform. the president yesterday continuing to go after insurance companies. this is something to watch the president has been on a streak of about a week and a half bashing insurance companies nearly every day or every other day. this is an appearance alongside the governor of puerto rico. but it was a wide-ranging
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question and answer session. >> the insurance companies are extremely good at making money extremely talented at making money. i wanted them to be careful with that we will probably like a very short-term solution until we hit the block grants it doesn't just kick in the following day. there's a transition period. if they can do something like that, i'm open to it but i don't wanted it to be at the expense of the people. i want to take care of our people i don't want to take care of our insurance companies. they've been well taken care of over the last number of years. >> so the president there continuing his opposition of a bipartisan healthcare deal that had been moving up capitol hill. that deal would have extended the csr payments, payments to subsidize health insurance for low-income people.
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the president cut that as of last week saying those are a political payoff doesn't want them to continue. said the insurance companies are making plenty of money they don't need this revenue coming in from the government to subsidize those plans. people inside the white house talk about the idea that the insurance companies should have to eat those costs we'll see what the insurance company rob by sa lobby in washy about that. >> the quandary for me, you want private companies to do well, that's their mandate, maximize profits. you love it when stocks go up. we are all watching the dow trade higher but our own brian sullivan did some calculations for the big insurers, i mean, in the last four, five years, the gains are outsized they are so there's a difference between maybe just being really good at what you do in the free markets, and then maybe cronyism. sort of capitalism
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i don't know >> brings up that whole debate about excess profit. >> normally in the old days i would say you're trying to maximize profits competition keeps you from doing things that are illegal, because pr wise -- look at wells fargo did that help? usually -- >> it helped the executives -- >> it's self-correcting. competition comes in if you overcharge >> here government is involved in the system that change, is that dynamic so, that's why these things become really complicated. they put in all these different measures designed to sort of mimic the effects of the free market, make sure insurance companies are not profiting too much by whatever the definition of too much is then it becomes unwealdy and
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complicated. these things are massive >> mnuchin the other day, i don't know what he should say. whenever you talk about markets going up and down, you should be careful. but we went above 23,000 on a huge day, didn't back off much yesterday. and now you got this overnight, we're up another 100 there's something to, i think, the market responding positively towards these small incremental moves for tax reform it may be something that the market would like. >> here's the question i have for you, joe i don't know this. you guys are the market experts. does the market bake in already the assumption that tax form is getting done. >> not after healthcare. >> i wonder if that's why stocks are up this morning. >> i knew -- okay. when i looked at, i knew, after i saw the budget
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passed, i knew they would be up. >> looking through the dow components t looks like financials are benefiting more this morning across the board just about every one of the dow components is indicated higher. >> i heard a lot of people saying tax reform was baked in you hear if it failed, you would see a selloff if it succeeded, it wouldn't go much higher what we're seeing doesn't indicate that. it indicates room to the upside. >> everybody has a horse in the race >> nobody is an expert >> people that have said -- people that have said the market is up 25% say, yeah, i would attribute that more to domestic things if japan wasn't up, europe wasn't up so, depending on if you're trying to pooh-pooh it or attribute it everything is political these days
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>> tell me about it. >> i know. you're in the middle of it. >> i'm in the swamp. >> you are definitely in the swamp. watch out for the gators and snakes thank you. >> aren't there? >> there are >> we're lucky because we have vice president dan quaylehere to talk about things -- >> no. >> you're not -- i'm sorry you're not -- >> no, no. >> i looked over quickly and thought, wow -- >> jim tooney who is an expert we will talk about the markets and why we're seeing the dow up by 100 points this morning after closing in on its sixth straight positive week. joining us is jim tyrannerney a dave joy jim, why are the futures up?
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does it suddenly look like tax reform is more likely? >> i'm of the opinion that tax reform is not fully baked in there has not been much differentiation between u.s. companies and international companies. who knows where the number will fall out a whole bunch of companies are pay 36%, 37% tax rates >> what is the upside and down side potential at this point policy built or not built into the market >> i think you have 5%, maybe 7% earnings upside. stock price upside if it doesn't lap, you lose 2% 3% trump is tweeting again. the budget passed last night 51-49 with zero democrat votes with only rand paul. he will vote for tax cuts. voting against -- >> he spent some time with him >> trump was out on the golf
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course with rand paul. >> maybe rand paul saying i won't vote for this budget, but i will vote for tax reform >> david, how much do you think tax reform is baked into this? is that why we're seeing futures higher >> i'm of the same camp. i think the upside is 5% the down side, the large part cap of the market is symmetrical with that. if we don't get something done, small caps getting a break down side might be as much as 10%. that's on the back burner now. i think the upside may be 5% that seems right no, i don't think this was baked in i think the market was saying there's a decent chance it happens. by no means given the state of affairs in washington was it a slam dunk. it's clearly why the market is up today >> you think this is likely to get done this year. >> we've been of the mindset it
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gets done the first quarter of next year. which is fine with us. it doesn't matter as long as something gets done. it's really on the corporate side, not the individual side. one does have to balance out the other. we're of the mindset that first quarter. that's okay that holds the market in place, i think, for a while. i think it's okay. >> jim, talk about the conviction that the american public has in this rally there's a story in the front page of the "journal" talking about how trading volume has been down. even though we've seen stocks dontd m continued to march to new highs, trading volume is down maybe not everyone is buying into it. do you take that as a positive or worrying side >> i think the retail investor is buying in if you look at schwab's cash held by clients, it was 13% at
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year-end, 11.1% now. >> the stock flows have not been great when it looks at the retail investor. they have been pulling money out of the stock mutual fund >> if you made some money and you pull a little off the table, net you're still up. we're seeing the retail investo really engaged >> what would you compare that to what moment in time? >> well more than any point over the last seven, eight years but not back to the late '90s. >> so maybe nothing to be concerned about at this point? >> i think it's a healthy engagement >> david what do you think >> i think that's right. you're getting questions, we're getting questions about the longevity of this bull market. >> from retail investors >> yes and thinking should i be worried about something because this has gone on for so long? what do you tell them?
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>> we tell them, no. the fundamentals look good valuations are stretched no question. this is an expensive market. we caution them to be well diversified. rebalance your positions from time to time we think the recovery is still intact it has a couple more quarters to go >> what do you think about the earnings season we've seen so far? >> well, it's early. it's been a bit mixed. some good and bad. i think the market seems to be rewarding companies that have seemed to have executed well you've seen that in names like morgan stanley, ibm surprised a bit. the market liked that. j&j so where the results have been good, a little bit surprisingly good, the market rewarded it. i think the market understands the third quarter is full of noise because of the hurricanes. so i think this is a stock by stock type quarter not an aggregate earnings type quarter. and i think the market is
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looking forward and through this to the fourth quarter. the market is kind of looking through this but not on a company but company basis. >> david and jim, thank you for being with us. >> that would be the first tweet, that had some dot dot dots this is not like -- the words are not attached to the first one. it's an additional thought with only rand paul voting against is how the last one ended, this now allows for the passage of large-scale tax cuts and reform which will be the biggest in the history of our countr country. >> coming up, when we return, the dodgers are headed to the world series for the first time in nearly 30 years highlights next, and a video game is going viral based on a china party congress we'll explain what we're talking about after the break.
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welcome back china's 19th party congress is
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underway in beijing. a new video game is going viral. the two things are related tech giant tencent has a game called excellent speech, clap for xi jinping this is a mobile game that asks users to clap for the chinese leader by tapping on their screen as many times as they can in the span of 19 seconds. you tap it really fast users first played a short snippet of xi's speech to the party congress before they're allowed to show appreciation by clapping then you try to get the record about 24 hours after the chinese leader's speech the game had been played more than 400 million times. as of yesterday users logged on more than a billion claps. this is telling. we were talking about how xi jinping is poised to become the most powerful leader, most long lasting leader >> we need a "squawk box" app. >> i thought you were going to say -- >> that would be embarrassing. >> can you imagine if there was
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something like that for trump? zero claps was al smith last night? ♪ >> it's usually november >> i saw something that paul ryan was pretty -- i -- you know, you never know when you look at news >> a lot of fake news. >> looked like he made a good joke he got a lot of applause he said applause like this, this is like when president trump walks into a cabinet meeting >> pretty good pretty good you told it. >> i'm not saying the applause is not warranted >> no. >> the -- speaking of applause, new york, l.a. >> could happen. >> probably will happen. >> two chances >> tonight i got plans tonight to watch it's been a while since i was excited about baseball the dodgers won the national league pennant last night.
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11-1 they did so in hollywood fashion against the cubs cubs did it recently but they making closing that taco bell. the hero was enrique hernandez who hit a three-run home run, propelling l.a. to an 11-1 rout of chicago >> taco bell's busy after that >> maybe some of the bars, too >> hernandez was the first doernlg ever to h dodger ever to hit three home runs in the postseason, and the first to do so in a league championship series. the dodgers head to the world series for the first time since 1988 they will face either the yankees or astros. astros would have to come back two games. >> doing it at home. >> i didn't check, should be time for verlander back tonight.
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you remember how he pitched last time unhittable >> right >> i don't know. i can watch tonight. >> two of the yankees games this week were at 5:00. that's for us. >> watch with your dinner. >> we did. >> we did, too >> did you >> it lasted until:00. >> i didn't see the ninth inning either time. >> you didn't have to. >> no. >> you didn't watch the first inning of the first -- >> i did bottom of the eighth is when everything happened. >> some venture capitalists are blaming cash infusions from places like startup to for allowing ipos not to go public
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barry diller said there's no reason to go cpublic unless you need capital >> ceos talking about the headaches you're dealing with, quarterly conference calls, investors who want changes right now when you try to make a long-term play >> you never had liquid bandage before >> no. how is it going? >> it works. still trying to figure out how it happened. >> i was trying to get the -- what do you call that? >> you don't have one of those weapons that people -- >> no. side burn, thank you very much i nicked like that >> okay. >> you have an electric razor. >> i do. but that was not that. i -- i oscillate -- >> it is more of a pinch >> all right coming up, general electric,
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interested in this do they throw -- is it a kitchen sink quarter maybe. it will be interesting to see ere numbs. we'll bring you the numbers and the instant reaction when we return
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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning let's look at u.s. equity futures this hour. we have been looking at the futures up by almost triple digits for the dow gain of 97 points right now. s&p futures up by six. the nasdaq up by almost 16 after the senate passed a budget bill last night that would clear the
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way potentially for tax reform this year or early next year again, you're seeing this with the futures up across the board on this last day of trading. ge is reporting some numbers. the estimate was 49 cents for the third quarter. and the year is all the way down to 1.53. i think the number that was promised a while ago, before these different changes was 2 they're at 1 pa.53. this number says 21 cents, way below 49 cents but there's some items in here that you may add back in they talked about 20 cents of operational impact to earnings then a loss of 20. then another loss of 4 cents driven principally by power. so it's possible, i guess, to add 24 cents back into 29 and get to 43.
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>> 47 number referenced -- >> then you have to take out for immelt's second plane. you have to back out the second plane. >> that's an extraordinary item. >> peter, where did you find that >> usually a nonrecurring item that may have been a recurring item nothing reads that great but a lot of what they're saying, the decline in equipment orders driven by power, down 32%, the power business in terms of equipment orders. and industrial was 1.7 billion lower than expected. due to lower volume. a lot of parenthesis in a lot of these numbers, that means not -- you don't like -- you don't like parenthesis, right in terms of organic sales, and earnings down 9% the stock down 83 cents, it was
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on -- close to a low, a multi-year low citing this 47 cents number, which is earnings from continuing operations. >> cramer has been on a rant i've seen some charts about just in the last five or ten years, did you see these -- how many when you look at gaap versus reported, they looked at a bunch of other companies the difference between gaap and reported was bigger than -- >> remarkable. >> cramer has been on a rant, tweet being how the numbers were different than most people would do the accounting. the sad thing is even doing it that way, the stock is at 22 we'll see. the questions about the dividend i've heard people say the dividend cuts -- if the dividend is cut that's a tough dividend to cover when you're not making as much
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as you were hoping to. i'm not convinced it would go down more if the dividend was cut. >> would have to get probably a different shareholder basis, because you've been telling shareholders this is a standard issue, so you have some who want the dividend >> if you're strapped paying the dividend, you're doing investments for the future, you don't want to spend all your money just on the dividend >> one comment very quickly that they said, they paid 4 billion in dividends to ge share holders year to date deferring decision on additional dividends until the insurance reserve review is complete so maybe they won't be raising the dividend >> remember in -- ge responded to the conjecture of a dividend by saying it's our top priority. >> a top priority. >> to maintain it or look at it. i don't know this guy -- poor jack.
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joining us to break down the results, jack degann, chief investment officer of harvard advisory do you have a towel there? if you do have one, are you ready to throw it somewhere? once again, this is a place where you add positions. got to be a little bit disappointed at this point i thought the company had been transformed into a modern day digital juggernaut i don't know >> well, apparently not. this doesn't seem like it's much of a juggernaut. particularly disappointing when other industrials or peers are meeting or exceeding earnings expectations, holding or raising dividends, here we have ge, longest standing membertchetingn
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and entertaining the possibility of a dividend cut. >> don't you think it's time to cut the dividend people have been talking about it more and more that indicates people would be prepared for it if it happens, or do you think people are in it for that reason. when that's done, maybe they do sell it off the bat bach what do you think would happen if they cut it >> it probably has vulnerability to $20, $21 with a dividend cut. a dividend cut would free up flexibility for john flannery to execute what he wants. he has the most political capital. between now and the 13th at the update meeting he has to think very hard about this he has one opportunity to cut the dividend, this is it though i think it would upset
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the shareholder base and it would -- the stock would be dead money for a while, this is when he should do it f he's going to do it. >> one point, it is 29 versus the 49 that the street was expecting. >> that's year-to-date >> for nine months >> kitchen sink quarter? that's what you do >> it should be. >> how many more kitchen -- >> think about flannery's position >> how many more kitchen sink quarters does he have? does he have one more? >> he has one more after he announce his full restructuring on the 13th. i don't think we'll get all the answers we would like to get i would be anxious to see you interview him at 10:00 i think a lot of things you'll ask, he'll defer until november 13th when he releases his investor update.
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we do have one more kitchen sink quarter. >> what's the story with power that's the big problem they said orders are down significantly. was do you make of that entire unit >> i think part of the problem for ge is they have gotten themselves into more and more very highly cyclical businesses. trying to run this thing like a portfolio of stocks, they should be looking for a bit more stability and durability in some of these revenue and earnings streams. oil and gas is hugely cyclical turbine business, very cyclical. they can't expect these things to line up every quarter this is the kind of pain you have to endure if you own this many cyclical businesses >> i mean -- i don't know. god, jack. we've been hearing for at least ten years that the company
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needed to be restructured, transformed. they needed to get out of insurance. they needed to shrink ge capital. do something with appliances they need dodd something with lighting they needed to replace this with that, that with this, set up for the future now you're saying after all that, all you've got is a $22 stock and a mess of assets, it's just as bad as what they started with that they were trying to fix. i read what flannery is saying we need to focus on redefining our culture, running our businesses better and reducing complexity share holders have been told you will be rewarded later as we transform this company, now it's not transformed at all you're in the same position you were in before, but worse. it's a joke. the legacy of -- there's no putting lipstick on this pig at all.
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>> the sounds you're making sound like capitulation. i think -- >> buy maybe if we did this sooner, it would have bottomed a couple years ago when we talked to you and we thought it was bottoming. >> i know. it's very disappointing. i think that's why you see the cfo being removed. i think there's a belated understanding that the earnings power in this portfolio is less than they thought. that calls for drastic action. flannery has a mandate from the board to do anything he wants at this point i hope he trims out of the portfolio anything he thinks can grow better than gdp >> it almost sounds like you're calling for him to cut the dividend and to what he needs to do am i incorrect in thinking that? if he has one shot at this and one shot only -- what do you think? >> i think it would give him
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more flexibility and this is probably the time to do it >> i think it would upset the shareholder base there's a lot of individual shareholders, retired employees. institutional investors hate this stock, which, i guess -- joe, you remember the dogs of the dow that was in fashion when you and i were retail brokers, this is the biggest dog. as painful as this is to say, probably next year is going to be a good year for the worst dog of the dow >> maybe there will be an entry point with flannery in there he's the opposite of the last ceo. more low key i hesitate to say -- i'm not a ceo, but i play one on tv. that's sort of what -- hopefully flannery will not be on tv, in and out of the obama white house every week, imagining the keeco-
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>> he won't be in and out of the -- >> i know, but it looked good. tall i know i won't say anything >> presidential hair, the whole thing. >> had it all going on, except for -- >> you have to stop buying high and selling low. >> really. get into real estate in 2006, get into energy before the collapse sell nbc for half of what it was worth basically. >> pretty good timing, joe >> jack, thank you a programming note, john flannery will be on "squawk on the street" at 10:00 a.m. eastern. still to come, more earnings we'll hear from consumer products giant procter & gamble at the top of the-hour. then ken fisher will join us with his best investing ideas. probably not going to include annuities. he'll talk about lessons of the 1987 crash
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and later closing out "squawk's" space week with the deputy director of nasa's jet propulsion laboratory. you're watching quk x""sawbo on cnbc we come into this world needing others. then we are told it's braver to go it alone. ♪ that independence is the way to accomplish. ♪ but there is another way to live. ♪ a way that sees the only path to fulfillment- is through others. ♪ that our time here can be deep beyond measure. ♪ no one who chose interdependence ever found despair. ♪ because what the world taught as weakness,
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> arianna huffington teaming up with samsung to schedule some down time and brag about it. then helping users disconnect from the internet and telling your friends that you can't be reached. it's called thrive it can schedule times to be disconnected if someone tries to connect you while you're in that thrive mode, they'll get a text sent to them saying you're busy thriving >> i don't know if i wanted people knowing that. >> the app will be released for samsung devices this december. >> what if i'm napping >> i'm with my children, my family i'm trying to do work. trying to meditate >> the problem is we're always worried it's that one time --
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>> the fear of missing out fomo >> something you do want >> it's bad. in my entire life f i was 30 miles away left somewhere and i forgot something, eh -- >> even your wallet. if it's your phone, oh, my god i don't like having something like that. >> you don't like the idea of telling your phone for the next hour -- >> you can do that yourself. do you need an app. >> i could use a forcing mechanism? i don't know about you i'm addicted to this thing >> would it lock you out you have no choice i said this is the time, here's my -- >> you can override it. >> i can do that myself. click. >> you have more discipline than others >> don't you think a how-to shaving app would be good for you? >> given my edward scissor hands morning? >> sweeney todd.
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johnny depp was both of those people. cnbc has new data on the president's new fed chair, we will bring you those numbers when we return stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.
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. welcome back the latest report saying that jay powell leading the sweepstakes to replace janet yellen not so fast. >> we did a snap fed survey. all this talk about -- we want to know two things who do you think the president is going to pick, and who do you want the president to pick we have two distinct different -- two distinct answers. who will -- >> i'm guessing -- >> i would guess they think powell they want yellen >> bingo that's it. >> 20% for taylor. take a look, though, at the next two folks who used to be the front runners.
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you guys can go to the next screen as well put all that up together 17 they every think they will nominate, and you can see the stars of both former fed governor kevin warsh and current nec director gary cohn have fallen less than 5% on cohn. >> he is not out of it he is a good fourth. just behind. we asked nine different attributes of a fed chair, and who is the top candidate if you take a look, yellen wins all of them except for one boosting economic growth they thought yellen would be the best economic choice keeping inflation stable, that's taylor keeping unemployment rate at the natural rate, yellen, and then the next five, i don't know if they're all on one screen, growing incomes for americans, keeping interest rates low, managing the exit, managing the financial crisis, supporting the right financial -- >> yellen wins on all of them. >> i understand all those except managing the fed that's what we don't know.
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>> when the white house has said it's -- >> i'm trying to coin a word it's called intentioning there are different interest groups >> where do you come down on these issues >> i think the markets always like the status quo, so i'm not surprised at the results of the survey i think the trump administration wants someone in place who is more stlekt to their overall agenda someone that favors tax cuts, supply side type tax cuts, someone who is in favor of the lower regulation, and that's why
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i thought that from the very beginning that yellen probably was not going to be renominated. i think the choice is really between stability in powell or someone who would probably try to reform or change the fed in either taylor or warsh >> what is the instant market reaction that you think would happen depending on who those people are, because part of this -- there's a headline issue. i would imagine for the white house. >> right i think that the markets are thinking about this almost exclusively in terms of hawk versus dove, and they see powell as someone who is pretty much in line with yellen, so relatively dovish, and they see taylor and warsh as more hawkish. i actually think that the markets think they know more about powell than they really do i think he has been a team player i'm not sure that we really know what he really thinks about monetary policy. >> i don't think warsh is as hawkish as everybody either. >> we have to go, but away would a supply side monetary policy look like?
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>> well, i think that someone like taylor or warsh might actually let the economy run if we started to see a big acceleration in growth that came into the wake of the big tax cut that encouraged investment you know, basically you're raising productivity growth. you're raising potential gdp growth, and someone who is more kind of idealogically in line with that sort of policy might actually turn out to be a lot less hawkish than the markets think. >> this is really important. a supply side fed chair is going to be different and not only that, but maybe see the tax cuts not as inflation, but as deflationary that could be the big change and possibly could impact supply side monetary policy >> we don't -- it was al smith last night paul ryan was pretty funny we'll have -- i'm going to have a couple of these jokes that he made andrew, you'll like them you will like them coming up, consumer products giant procter & gamble getting
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>> these guys are making me laugh. general electric falling short of estimates reaction from the street straight ahead we're going it talk about it then on deck fellow dow component procter & gamble rolling out results this hour. we have the numbers, the instant reaction all coming up plus, stocks getting a boost from washington. futures trading higher as the senate moving a step closer to tax reform second hour of "squawk box" begins right now
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good morning welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm bik yes quick along with joe kernan and andrew ross sorkin. equity futures have been up sharply all morning long you can see that the dow futures are still up by almost triple digits it's a gain of about the 7 points above fair value. s&p looks like it will open up by six points after both of those indexes closed higher yesterday. the nasdaq up by just over 17 points among the reasons the senate passing a budget bill late last night that paves the way for tax reform we'll have more on that in just a minute first, though, let's get to some big earnings reports general electric earning 29 cents a share. 20 cents short of what had been expected also, cutting the full year forecast they're not going to get anywhere near the earnings that had been anticipated for the year you can see ge shares down by 4.5% on this we'll talk to an analyst in just a moment on that honeywell's revenue topping forecast and earnings in line. results were driven by its aerospace business, honeywell shares are down by a quarter
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percentage point and a loss of 34 cents >> you can do the year chart comparison did you just see it? did you see the -- or do the ten-year either one procter & gamble just out. adjusted earnings per share $1.09. the estimate was for $1.08 a penny ahead. then sales 16.65 billion, which is just in line. 16.69, i think, is what people were looking for then all in sales growth of about 3% is the estimate for fiscal 18. they did $100 million of incremental commodity cost headwinds resulting from the hurricanes >> yeah. >> that they point out, but that -- you would back that out probably the company is backing fiscal year per shares growth of 5% to 7% you see any of this? you want to talk about nelson? >> i'm thinking -- i was trying
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to put myself? nelson's shoes this morning. thinking if i was reading this would i be satisfied i imagine the answer is no >> probably doesn't matter what they reported. >> i think that answer is -- >> that answers my question too. >> all right let's get back to general electric joining us right now to talk more about it on the squawk newsline is nick heymann he is multi-industry analyst at william blair, and, nick, the numbers were bad quite a bit below what the street was anticipating. some people say, look, kitchen sink order what do you think? >> well, you know, oil and gas and the power were the weakest links. power, they recently combined energy connections with the power business
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you don't have too many details on how that all shook out except for the fact that the earnings there were down collectively about 51.5% from a year ago. >> orders were down 30 plus percent. >> and the orders have been, you know, certainly very weak there. you know, orders overall, i guess, were flat on an organic basis with services up about 10. you know, the equipment down about 10 they got some benefit there from the acquisition of -- in a merger with baker hughes >> nick, i remember last time, you know, you have been on, and you admitted last time you were on that you were in higher, and now -- i think we were at 24 or 25 now it keeps going down, obviously. maybe this is the bottom this time just a theoretical question. let's say you kept nbc let's say none of the things, the insurance spin-off ofs, none of that stuff happened do you think it would be below 22 or above 22 without all the restructuring of the last ten years and moving into oil and
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gas at the top of the oil market i'm just wondering do you think that it would have even been worse off had you not restructured all those things? >> i think that's a good question i think when you think about it today, we are at the point where the banks and the financials, the large money center banks are actually maybe going to see -- >> time to own them. right. >> which in turn could make them more valuable, ironically, than their -- some of the interests into the industrial infrastructure sectors >> well, so what would it be worth? put in nbc to that too, which was probably double -- >> i thought it was going the other way, joe >> what do you mean? >> that -- in terms of the -- you probably got, you know, media sector and certainly the social networking business probably on the cusp of more regulation >> i know. no, i'm talking about if you had kept nbc instead of selling it
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for, you know -- it's valued at double what it would probably be sold for i'm just saying if you hadn't finagled with all these supposedly brilliant moves and visionary moves about what the future was going to look like, i mean, honeywell and united technologies are -- they did a few things, but they stuck to their core knitting, and shareholders have benefitted, you know, five-fold probably over general electric. that's probably where the biggest market des incarceration was. >> not so suggest they've sand bagged the earnings, but when you have a transition like this, how many more quarters do you think that you throw everything in right now, try to clean it up so that at least the things start to look better later, and in terms of just the audience and investors understanding and
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appreciating that particular back this morning? >> well, they are they're sucking now the fourth quarter will be in the neighborhood of 29 cents to 34 cents where, if we're going to be at 105 to 110 for this year, so in turn, that is something in the neighborhood of half. >> that's 20 times earnings. >> i would say we're working hard to try to get most of the bad news on the tape here this year >> we talked to jack degan earlier, and he brought up an interesting points i know the last time we talked to you, you and i were both in the mindsets that the dividend was going to be sancrisanct. he says he has one opportunity, the new ceo. >> right >> that if he is going to cut the dividend, it has to be now otherwise, he is going to have to live with it, and if he did cut the dividend, while it might upset a big part of the shareholder base, it would give him a lot more flexibility where do you come down on this is this. >> i think a lot of it has to
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did with what he is going to do with the portfolio, and there it's more pruning, but i still think there's probably, you know, $5 million to $10 million that might come out of asset sales. we'll have to see what he is probably -- not going to probably buy a lot more stock back, and that frees up a lot of cash you p, the most important thing is where can he get the cash flow from activities next year they're talking now seven this year. we originally were talking 12 to 14 on the low end i thought it might be 11 with the restructuring. it's clearly washing through at a lower level than, you know, $ billion for the dividend you need about 15, 16. if he sees 15 or 16 next year, then it is dividend is probably safe >> let's talk about that again you just said that the biggest mistake the last administration made, the last ceo made, was in buying back stock at the wrong price because it was way too high it's come down significantly if you think that this is the bottom and the stock is going to turn around, it wouldn't it make more sense to be using that capital to buy back stock
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instead of paying off your dividend >> it's a good question. honestly buy-back is, you know, highly discretionary the dividend is a commitment to return capital on a continued basis to shareholders. i think they'll think really hard and long about it there's nothing at all signalled today about what they're going to do. >> one more philosophical question you've been following a long time you go all the way back to reg jones. >> reg jones >> legendary ceo followed by welch. another legendary ceo. the spin was that welch when the stock was at $60, when he retired, like, in 2001, whenever it was, that he left it in a position that needed a lot of work that he left a mess at general electric, and it needed -- someone needed to go in and fix all the stuff that welch had done now looking at how the company was left with the next ceo, where it is and we're seeing
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this right now, who left it in a bigger mess? did welch really leave this company in a mess that needed to be fixed, or is it even worse this time? >> there's a $10 billion hold at erc insurance that had to be filled by cutting r & d and cap x for four years jeff filled it, and then he divested the businesses. here this time around at least he spent $14 billion on new products across all your businesses the last four years, and you have state-of-the-art stuff in the marketplace that, you know, you don't have to fund that if that was not done and if you were facing a lot of the challenges today that, you know, united technologies does to rebuild their franchises, okay, then i would say the dividend didn't have a chance to be sustained. this is basically now behind them the products are successfully in the market that is one thing that is an offset the question is how much
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>> the company -- the dow is at 23,000 the dow is at 23,000 >> it wasn't until 2012 when he started and from there did he make the right decision to invest what would be $67.6 billion in ge digital from the end of the year from 2011, did he make the right move on the oil and gas side of the equation you know -- what about going into subprime in 2007? that was a tough -- a tough, you know, certainly exposure, but they way increased their exposure on the finance side to try to drive higher growth that wasn't there
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>> have a great day and a great weekend. >> real quickly, before i let you go, what do you do here if you didn't own the stock, would you buy it, and do you hold on to it? >> it's not broken it is definitely bloated there are challenges with oil and gas. they have the best product by a mile in the marketplace, and, you know, i think on the oil and gas side of the business it's certainly, you know, at some point here going to come back to life with baker hughes, they get more off shore. i don't think this is des tut. i followed a lot of companies that have kind of, you know, come from a bigger pile of ashes in tyco, and certainly they brought that back to life. >>. >> maybe not des tut, but where would you put this among the stocks that -- what's your best opportunity? >> how the might have have fallen it's not as bad as tyco. edison's company, the oldest stock component. you're saying not it's as bad as
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tyco >> that was obviously a different situation. >> we're not talking about the story. >> this is about reaccelerating. >> it's 20 times earning at 20, though, innic. it's at 20 times earnings, and it's at 21 is it going to go to 30, and why? >> you basically -- let's find out about the dividend, and in turn, you are going to normalize that dividend. the market right now is assuming the dividend will be cut, and the second is let's find out what the normalized run rate for earnings are next year i don't think they're going to be $1.05 to $1 .10 i think they'll be materially higher than that >> okay. nick, thank you very much. >> hey, thank you, guys. >> programming note for you, by the way. ge chairman and ceo john flanflr will be on "squawk on the street." this is a cnbc exclusive interview. >> coming up, washington opt e optimism futures rising on tax reform we will talk to two market pros. you're watching "squawk box" here on cnbc dow looks like it ulop uwod enp nearly 100 points higher this morning. hi, i'm mindy kearns. it's great to finally meet you.
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to 49, and that much was expected, but republicans actually took it one step further, and they hashed out air deal that lets them move on to tax reform as early as next week now, normally the house and senate would have to conference the budget i'm team passes its own version and they come together and negotiate a compromise, and then each team would have to pass a final document republicans are now saying they can skip all of that the house and senate ironed out their differences last night, and that includes a way to decrease defense spending later on that would make the house happy and in return, congressional republicans dropped their call from mandatory spending cuts in both chambers agreeing to a tax cut of 1.5 trillion dollars. now the house will be able to vote next week to just adopt the senate's budget. they'll then be done they'll have the vehicle for tax reform and can move on to writing the bill >> now with this budget we're on a path to delivering much needed relief to american individuals
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and families who have born the burdens of an unfair tax code for entirely too long. >> he also said that senator rand paul had voted against the budget and will eventually support a tax bill the details of that bill are expected very soon after a budget is passed if that's all wrapped up by early next week, lawmakers could potentially start rolling out their plan before the end of the month. guys, this could be the first time this year that republicans actually move faster than we thought they would back over to you >> okay. thank you for that meantime, we want to take a look at the market implications for tax reform and what it means for everybody right now. art is here from oppenheimer funds, of course good morning to you. >> good morning. >> great to see you. also, thomas lee, managing partner and head of research good morning to both of you guys >> good morning.
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>> so where are you on the up side-down side of tax reform in terms of what the market has baked in or not? >> certainly the big surge in markets we saw right after the election had a lot to do with, you know, the signature policy platform which was cutting taxes or more specifically a reduction in the corporate tax rate. that was something that the democrats were on board with obama was in support of that yet, of course, you know, the administration has gotten bogged down going back and forth and trying to get something passed you know, i remain skeptical of what we actually get accomplished, but it would generally be a good thing. markets clearly have gone up quite a bit this year already, so i would say a lot of it's baked in >> but it sounds like when you say you're skeptical, you're skeptical about this all happens, and, therefore -- i'm just trying to understand the -- >> up side potential is we are -- our last guest we talked about in the 6:00 hour thought that there was more up side than there was down side. >> well, maybe there is. i think there's some
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vulnerabilities to this, but that's a short-term blip, right. the bottom line, of course, is that earnings continue to do pretty well. markets are not over stretched you know, i think that's -- there's volatility perhaps in the offing >> tom, where do you land? >> i think that there's been a lot of progress, and that's good, and i think it's going to just show businesses do like trump. it's hard to say it's not a positive >> but your expectation of what happens or doesn't -- you're saying it doesn't matter >> you know, i -- it may not matter for months because we really won't know what the impact on business ultimately is i think it's hard to say it's not positive i was just on the west coast meeting with investors, and almost all of them would embrace and view this positively >> just where do you think about where we stand right now given the earnings that we've seen, given the guidance that we've gotten to this pount one rub that people come on who are concerned about things, they say, look, we've gotten through all the earnings surprises
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it's going to be chb more difficult to surprise because expectations have come up so much you're going to be facing some tougher sledding in the secondgr not? >> i think earnings are definitely slowing because in q-3 earnings are growing at 3%, and i think there's somewhat of an unrealistic expectation for it to now go to close to 12% in the fourth quarter there's other things supporting markets. you know, for instance, credit continues to rally that's very supportive of equities between now and year-end, the market is very strong. i think it's hard to argue that the markets should be down between now and year end where. >> you know, art, we've been having lots of conversations especially yesterday about what 1987 looked like >> yeah. >> 87. >> 87. 30 years later sort of where we are relative to that >> we are had he higher end. as an old bond guy, i have to
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look at things in an interest rate context you know, relative to 1987 or relative to 2007 equities are not very richly valued in the context of interest rates. consider this. you can flip bond yields to make it like a price earnings ratio well, the earnings ratio on treasury bonds is, like, 40, right, against stock market of 20 when -- you know, if bond yields were at 5%, then they would be equal. 20 and 20. bonds are the thing that are pretty richly valued here, but then you have to ask yourself, what is the pressure for upward rates in this country when inflation expectations continue to go down there was a tips auction yesterday. came in at less than 1% real rates. there just isn't a lot of inflation pressure in this economy that makes this worry that interest rates are going to be being pushed up any time soon >> okay. are two bulls on the states this morning. good conversation. thank you, guys. appreciate it. >> thank you >> coming up, last night house
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speaker paul ryan sort of gently roasting all things political, including the president, including hillary clinton, chuck schumer. all at the al smith dinner it's an annual event where people get together and sort of are free to say a lot of stuff and it doesn't get taken too seriously, hopefully we've got the best one-liners straight ahead >> time for today's af aflac tri question, what company was founded by a candle-maker and a soap-maker in the 1800s? sw wn bcsqwk "ua box" continues k in with his par. what? no. i just broke my leg. no, this is a full blown move in to the basement, you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool.
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or they could get even more. >> what company was founded by a candle-maker and a soap-maker in the 1800s? the answer, procter & gamble coming up when we return, tax reform and the markets what global investors need to know the conversations going on in washington right now we have inside dope on that. then on monday on "squawk box" you don't want to miss this. the start of a big week of programming. i'll be live in saudi arabia we'll kick things off monday with a very special guest,
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prince alwaleed will be with us live for an hour starting at 7:00 eastern time. >> wow >> and we're going to be bringing you all sorts of other guests throughout the week from saudi. it's going to be quite a remarkable trip, and we'll tell you a little bit me orabout it later in the program back in a moment right here on "squawk. 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.
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welcome back to "squawk box. we have one more economic report set to hit the tape before the week includes the national association of realtors set to release existing home sales for september. it's going to happen at 10:00 eastern time panelists looking for a decline of .9% also, japan's nikkei stock average was up just a hand of points overnight, but that was good enough for a 14th straight day of gains it matches the nikkei's longest ever winning streak, which occurred back in january of, are you ready for this, 1961 and the faa is urging airlines
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to ban laptop computers and checked baggage. the agency citing research on the danger of fire on rechargeable batteries the international civil aviation organization which sets global aviation standards i don't know if that makes things easier or harder. it was first the issue of you didn't want to is have -- >> you have access to it in the cabin. >> how you don't want them to have access to it on the plane >> you can't have them anywhere? >> you know -- >> lithium ion batteries >> they've become more powerful. even you've heard reports not just about sam sing, but even either phones. >> general electric earning 29 cents a share. that was 20 cents short of estimates.
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cut to 105 to 110 versus the 153 that the street was anticipating >> honeywell topping forecasts honeywell shares are actually slightly higher this morning they're up by about 13 cents to 143.75 dow component procter & gamble also reporting this morning. earnings beating by a penny. revenue roughly in line. the company, of course, is under pressure from activist investor nelson peltz the stock down 1.3% this morning. speaker of the house paul ryan was a featured speaker at last night's al smith dinner in his speech he roasted both president trump and hillary clinton. >> enough with the applause, all right? it's not -- >> everyone is going to report this thing differently breitbart will lead with ryan slams the president amongst liberal elites
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"new york times" is going to report ryan defends the president in a state hillary won. the president will tweet 300,000 at al smith dinner cheer mention of my name >> he had a couple of other ones i just want to quickly say he said i don't think i've seen as many new york liberals and wall street ceos in one room since my last visit to the white house. there you go yeah he also said i know why chuck schumer has been so hard on the president. it's not idealogical chuck is just mad he lost his top donor. that was another one he also said some people said last year it was unbecoming of a public figure that the president's comments were offensive. at least he learned his lesson that's another good one. then one last one down at the bottom the president doesn't get enough accomplishments about job creations and stuff, and then ryan said look at all the new jobs we've created just among his staff. those are all --
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>> those are good. >> none of those are -- >> they're not too harsh, but they're all funny. >> trump had some good ones last year about, you know, although some of them maybe were -- people said last year there were some cat calls there weren't in the cat calls >> speaking of washington, senate republicans passing a budget last night. that means congress can now move forward with the president's tax agenda joining us now pwc tax policy services leader and former mcconnell aide rohit kumar this was -- people minimize things, but they -- my point was -- and i don't know whether it's true, but is it possible for republicans in the senate to collectively find religion did that happen last night i mean, this moved pretty quickly. did they -- >> did they learn something from health care? they really -- they're actually moving on this >> yeah. look, they did it was a good night for the majority leader. he got the budget resolution passed
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then one other thing happened that i think is under appreciated because it happened really late at night, which is that at the very last minute there was ae final amendment adopted offered by chairman of the budget committee that appears to pave the way for the house to take up the senate resolution and pass it not only for the house to take the resolution and pass it, but to do so in a way that would allow one house committee to be involved in this exercise, the weighs and means committee, the tax writing committee, which means that the weighs and means committee writes the tax bill, they can skip going to the house budget committee they can go straight to the house floor. between the two moves made in this final amendment, they shaved two to three weeks off the legislative process, which really still preserves the possibility thatter that going to get something done this year. at least if not get a bill signed into law this year. they're going to get a bill out of the house and out of the senate this year, and then they can use the early part of next year to reconcile the differences between the two bills, and get something signed into law pretty early next year. this was a good night for tax reform it was a good night for house
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and senate republicans paul ryan, i think, has a better sense of humor than people appreciate, but i have to wonder if he wasn't in such a good mood because he knew things were really moving on tax reform, and we all know that's one of his passions >> it brings up a lot of things. if it was -- if you could assume that republicans would stick together like democrats, you would think this is going to go straight -- it's going to happen, but what's -- what could be the sticking point? could it be tax cuts for the rich that's going to be, you know, talked about nonstop from critics of the -- of the plan, obviously. is the state deduction, you know, that's important to get some of that money to be able to use it for cutting taxes on corporations is that going to survive do you believe rand paul who didn't vote yes last night do you believe he will vote yes when this comes -- when it comes up the president said he would. where are the stumbling blocks from here because republicans don't seem to have quite the --
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when it comes down to it, the intestinal fortitude that democrats have >> clearly, this is a budget framework document it allows both the house and the senate to pass assuming the house passes it next week. it would allow them both to cut the tax cut over the next decade, but there are a lot of details still to be worked out in the mechanics of the bill what is the -- what are the marnl natural tax rates. what is the business tax rate look like. at the end of the day people will make independent political jumts separate from the budget vote that happened last night about whether they like the tax bill or whether they don't it's impossible to predict right now who votes for it or who votes against it what you have seen is members starting to lay out here's roughly where i think i can go in a tax bill, and you have a lot of senators -- you have republican senators voting almost parts par line, for example, last night to continue to repeal the state and local tax deduction and put it in the middle class tax cuts. senator paul voted no, but senator mnchin voted yes there's clearly politics involved there you know, you talk about tax
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cuts for the rich. clearly there is a sensitivity to that point, but on the one hand, you've got people complaining no tax cuts for the rich, but many of the same people are saying but preserve the preference for state and local tax deductions, and yet, those two, you know, instincts are kind of intentioned because the preference for state and local tax deduction will disproportionately benefit upper income taxpayers you know, we're going to have to see where people -- what do they really prioritize? right now some of the commentary is not consistent with itself. >> rand paul did not vote for the budget last night, but the president tweeted this morning that he will support tax reform. can we count him as a given, or does this all depend on the details too? >> i think it all depends on the details. senator paul has said he wants to make sure that no one experiences a tax increase you can't know that with certainty until you write the tax bill it's a different question. is there any provision that raises taxes on any given person surely there will be is anyone net-net paying more
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taxes. that's one you could only answer after looking at the bill in total. they have a 52-48 majority they can afford to lose two senate republicans if they pick up no senate democrats, they did lose two senate rnlz and still pass the bill with the vice president breaking a tie if they pick up any senate democrats and are at least a handful who have seemed potentially interested in being part of the conversation, then they have even more margin for error. >> after last night you put it at what number probability and how much did it increase last night? do you put it at 70% >> that's interesting. i'm actually between 65% and 70%. i think -- >> it went up last night, what, 10% or something >> wherever you were two days ago, you have to be higher today. what happened in the last 12 hours was clearly to the benefit of tax reform. clearly makes it far more likely look, assuming the house passes this resolution next week, you are going to have a situation where house and senate republicans with their own votes, if that's how it goes, could pass a tax cut of up to $1.5 trillion. given the failure on health care, given the politics at the
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moment, given the upcoming midterm elections, it's really difficult to imagine that they don't avail themselves of the opportunity to do that in order to have something to run on in the midterms >> we know who the question marks are. mccain seems like he is onboar because it's, i don't know, following protocol or something, but who knows? by the time it comes around, you don't know what he is going to do, right? >> yeah, look, nobody knows what they're going to do for sure until they see the bill. >> corker. maybe he, you know -- he doesn't care if he gets re-elected, so who knows what he could do too it seems like he may go that way. collins and rokowski both seem on board >> all the people you might normally say i'm not sure about that, everyone seems to be headed in the right direction. more importantly, everybody is taking the posture, i am looking for a way to get to yes. they are not saying no way, no how, don't bother talking to me about this they're all sending signals. here's a way to get my vote, and so far no one is setting up insurmountable obstacle to getting to that.
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>> thanks. >> thank you >> okay. we'll see you around thank you. beyond the budget we are also watching the horse race for the next fed zhar. steve liesman joins us last time you set me up for something i didn't understand. can you explain it >> i think we don't maybe spend enough time with this. there's another side to the idea of monetary policy, and there's a supply side notion of monetary policy just like there is for tax cuts and government. one of the things they think is that the fed ought to tinker less with the money supply and with rates, and ultimately that monetary policy does not add much to the economic growth. it's more an issue of essentially supply is what ultimately determines it the other thing they think is that increasing supply, increasing growth through supply is not an inflationary phenomenon they see it as deflationary. there are three factories out there making widgets, and everyone buys widgets in the world today's. you increase supply. you create a fourth factory that
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creates widgets. that should drive down inflation. i think president trump at least the economists i know who were working for him want two things out of the fed chair the fed chair sits for better or worse as the nation's economist. >> they could come from supply side tax cuts. without clamping down and racheting up interest rates. ultimately, if you do get a person -- >> wait a minute you want a federal reserve person who is is not going to pay attention to the growth economy tax cuts >> not pay attention, but not clamp down on it let it run let it run because of the theory that adding to supply is deflationary or at least not inflationary >> which of the candidates do you think falls in that category >> well, you know, this raises
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taylor a little bit. taylor is more of a supply cider. i think warsh is i don't know where powell stands on this. as a republican, remember, he was a compromise candidate he would be in that camp conventional economics. >> want pulling the trigger before you see it? >> and let the idea of supply side i do want to make one point, chgs little known about jay powell look at predicting, guys he is way up 72% probability now. i thought that was the chart in the back there it is. yesterday it was, like, 44, and i went to check it before i wrote a story, and it had jumped up because of the political story saying that the presiden
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was leaning towards jay powell, the fed governor, and what we learned there was, you know, what i have been able to -- is he being seriously considered? yellen, i don't think, is being all that seriously considered from what i can tell there is warsh one thing worth thinking about, when powell was nominated or renominated in 2014, he was opposed by 23 republican senators >> really? >> including all the big names that you know. >> wait a second >> crepo >> is this because these guys were all opposed to the fed at that point was this a proters vote because they were -- there were so many -- >> now you have figured out what i'm going to do with the rest of my day is trying to figure out why these guys oppose them crepo. cruz rubio. all the big names. i think -- mccain was against him. >> i have also heard, though -- did. >> perhaps it was an obama nominee and reflexively they opposed him. >> i have also heard that at this point the senate is very likely to be much more open to
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whoever president trump puts forward. that they are going to let him make his mark on this. >> i think that's probably right. i will say, though, some guys will have to reverse their votes. not good enough for fed governor, but good enough for fed chair. never happened that a politician -- anyway, worth thinking about worth thinking about >> thanks. >> sure. >> when we come back, if you think halloween is only for kids it's now a multi-billion dollar business and nobody knows that better than the man behind the rise of the jack-o-lanterns. he will join us with some scary pumpkins next.
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>> spooky. the national retail federation predicts that americans will spend a record $9.1 billion on halloween this year. joining us right now to talk about the big business of halloween is mike pom ak, the author of "rise of the jack-o-lanterns. it's a decorated halloween event in the new york area every year. thanks for being with us where. >> thanks for having me. >> he we just had the national retail federation on yesterday, this week, and they talked a little bit about how spending is
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expected to rise something like 8% huge number above $9 billion on spending for halloween you have seen this taking place over the last several years. >> as soon as we started selling tickets, there were -- we were up our customers are coming back, and they're coming back in droves >> it's essentially ongoing. it's the craziest thing. i had to get off of a wait list. i was trying to sign of. >> i should have known i needed to do it in august, but it was insane i mean, every hour you can go -- i mean, it was crazy >> how many people come through, and what's your waiting list >> we're going to have over
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100,000 visitors at our long island location, and then we're going to have another 30,000 visitors on you are with wait list for this year, and we just can't fit more people through the events, and we have to have that wait list the one that you are going to on governor's island in new york city, you get on to a ferry. it's a limited number of passengers >> how many people total for that one >> for that one we're going to be about 25,000 people it's just for one weekend. >> if you have that kind of demand -- >> because we physically can't put more people through the event. the solution is to open up -- >> why not another venue >> we're going to do that. we're going to open up the new venue in new jersey first on cnbc exclusive nobody knows about this. new jersey will be back next year >> and what about pricing. i would think that given these wait lists and, by the way, i probably -- i don't want to say i would have paid more, but i probably would have paid more.
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>> any way you buy it, it's a growth, right now. i don't know what happened last year either. looking at twitter, can horror movies save hollywood is on page six. they got get out i look forward to halloween than most other -- >> most consumers do as well in fact, i think halloween spending is getting -- outpacing christmas. >> you saw that there is -- did you read the rationale some school banned halloween it's called black and orange day because it's not inclusive enough i mean -- >> it's all hallow's eve >> i'm not sure what they meant. we got to worry about the -- they're guarding the columbus statue over here, but i'm wondering where the heal wean is next to -- >> i know there's a lot of costumes that trigger people >> how many people do you have carving these pumpkins >> we have about 75 people carving on all different levels of skill set the ones that you see here on the table, these are carved by
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one of our full-time staff who has been with us for six years his name is tom ult, and he does a great job. we have about two dozen artist on that level. >> i don't know how you do it. it's more than 435,000 pounds of pumpkins how does 7 p 5 people knock that out? >> so we basically bring in two truckloads of pumpkin on a monday morning on wednesday all the staff arrive we carve half of them on wednesday, and the other half are carved on thursday lit up then we dispose of them on the following monday we do it every single weekend at our long island loekds >> where do you even get all these pumpkins >> all across the united states. >> you just -- >> tough market? tough to get them? >> it's tough for the consumer right now to get pumpkins. it wasn't tough for us because we buy them before the seeds are even in the ground it's been a tough year, though >> when dispose, do you take the seeds out or do something? >> we scoop it out before we put the lights in it, and then we try to do different green waste initiatives to try to make sure that they go into -- >> you are not baking the seeds like we do at home
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>> no. just volume. >> that would be a good business have you thought about that? >> of course >> selling pumpkin seeds >> we want to make, like, pumpkin piez and things out of it for sure. >> bingo >> mike, thank you very much. >> i want to go into business with this guy. >> you don't know why it's being -- that's why i ask you. >> it's all hallow's eve >> i thought you would know why. it's in massachusetts, an elementary school. boyd and elementary sent a letter to parents saying it can be difficult halloween for students and they want to make sure all students individuals differences are respected so they changed it to black and, on day. i thought you would -- why don't you know >> don't look at me, you snowflake. >> coming up, there's another story here about how you sht allowed to have any native american headdresses, but, like, trump outfits are fine just make sure you don't have any native -- anything you want to do with trump is welcomed edtually, encourag coming up this morning's stocks to watch "squawk box" will be right back. for your heart...
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skbroinchts one step closer. concurrent resolution as amended and agreed to. >> breaking overnight. the senate passes a budget bill. the markets jumping on the news out of washington. legendary investor ken fisher will join us straight ahead. earnings season kicks into high gear. two more dow components report ge and procter & gamble. we'll bring you the numbers and the stock reaction plus, the countdown to mars. >> we have to go now >> nasa's next mission to the red planet taking off in just three years. an update on the rover as the
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final -- right now ♪ live from the most powerful city in the world, new york, this is "squawk box. 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 have we hit triple digits yet? it's going to be tough with ge down $1.30 we're up 95 so far this morning. the s&p indicated up seven the nasdaq up 21 we'll see. going to be a strong opening after the senate actually voted a majority of republicans that did the same thing never been -- never happened before in this congress, i don't think, where they actually -- there's only one dissent, and that was rand paul, and president trump tweeted he is on board for the actual tax reform
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package. who knows? >> right >> okay. let's get you caught up on this morning's big earnings report. we have a couple of things to tell you about the one we've been talking a lot about this morning, ge general electric earnings 29 cents a share. 20 cents -- >> the new ceo doug flanery will happen at -- that will happen at 10:00 a.m. eastern time. i'm sure david will be asking him a lot about this report. >> there have been transitions in the past where there wasn't a whole lot that you needed to
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throw into a sink. you know what i mean >> if you have a company that's in a "turn-around situation" historically -- >> in a -- >> -- the first and perhaps second quarter -- >> i know. i have watched >> sand bag. >> 25 years. i have seen it i don't need to inform me of that i understand that. there have been successful transitions where the first quarter is like, wow, this place is really got a lot of problems. let's throw it all in. there have been timeswhere a company can actually be doing well and successfully pass it on to a successor it was a 16-year turn-around 16 year turn-around. >> but it was a turn-around that didn't work. >> yeah, i know. that's the point it's not always you got 20 different items to throw in the kitchen sink maybe you only have two if it was successful right? >> right okay >> procter & gamble beating earnings by a penny. revenues were roughly in line. that consumer goods giant is under pressure from activist investor nelson peltz.
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give nelson a call and see what he thinks of those earnings this morning. also, honeywell toppings forecast earnings were in line results were driven by its aerospace business honeywell said earlier this month that it would focus on four business lines, including aerospace and spin-off two other businesses big news out of washington the senate passing a budget resolution late last night along party lines, as joe mentioned. the final vote was -- senator rarnd ball was the only republican to vote against it. this is a crucial step towards the president's goal of passing a tax plan this year senators will now have to reconcile their budget with the separate one that was passed by the house already. president trump tweeting the budget passed late last night. 51-49. we got zero democrat votes with only rand paul he will vote for tax cuts. voting against it -- voting against this budget was only rand paul. he said that rand paul p --
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>> getting back to the markets almost up triple digits. joining us now is ed fisher. chief investment officer at fisher investments do you have some top-down comments about valuation and where we are right now your tie seems to be sort of somewhere in the middle of bulls and bears. >> well, you know, i buy my ties for the long-term, so i have to be balanced between bulls and bears. valuations don't tell you where the market is going, and they never have people are always confused by that the fact is we have a very, very long history of valuations you have a history of price wiggle you can run our squares and see the correlation between the one and the other is zero over one, three, and five-year periods any way you cut it there's this human tendency because we come from sort of
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apes to think that fear of heights makes sense and p.e. is a it heights frame, price to book is a heights frame. we i this in heights frames. we think higher means falling more in reality you actually have this very long history that shows that any way you count p.e., one, three, five years, even the cape model on a one, three, five year basis shows nothing. >> i think we had similar ancestors to the apes. i don't think apes evolved into humans >> i think in my family they were pretty much mostly apes >> that's fine >> is that a long way of saying you like stocks, though. >> i believe this is a bull market, and stocks go up until it's over in a bull market, and they do that regardless of valuations, regardless of other things >> it's not over until it's over it's over because of two things. one or both of two things. one, you get euphoria, and we're not there yet.
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>> secondarily it collapses the wallet worry that's a big bad thing that no one sees coming at us, which is enough to drive global gdp into recession, and that takes a couple of trillion bucks of the wallet, which usually would come from something like -- something buried in regulatory shift that nobody anticipates it's an unintended consequence >> not a war or a bomb or something. >> it could be a world war if you look at the history of wars, and, again, we have a huge history of wars, skps we have a huge history of price action you look at wars, and you say to yourself, little wars, well, we have them all the time things like middle east conflicts. we've had them going on all of our lives, right what do those do to the market pretty much nothing. a little bit of fear in advance, but pretty much nothing. world war, absolutely. when we have world war, it knocks the market. if you just have regional conflict, regional conflicts doesn't do it, right the fact of the matter is the world trades around regional conflict on a global basis
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geographically, and gdp goes on. >> then so complace ensy and sentiment and euphoria without a fundamental negative can cause the end of a bull market in and of itself. >> you know, john templeton had that famous line that, you know, bull markets are born on pessimism, grown on skept schic and mature on optimism it's to the point where demand has gotten too high and supply comes along and buries it. investment bankers and companies can create infinite supply if they need to >> the analyze is a declining stock market can then usher in slower economic activity too it doesn't have to be -- >> it can. it doesn't always. >> how do you think it happens this time, ken, if you had to guess? >> if i had to guess, this time i think we probably get a little to a lot of euphoria, i guess. i don't know >> how long would it take?
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>> that might be bad we don't have people talking about robots that's going to be great, right? we're going to be able to just play around and have robots do everything for us and make us everything and do everything for us >> i really don't know which of those you would do, but i'm pretty sure that a lot of people think i'm going to die and go to
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hell anyway. going back to the tax point and, you know, the same thing on tax as on p.e.'s two weeks ago on my usa toted column, i just detailed the numbers, and the fact of the matter is, you know, you got a very long history of tax reform. it's personal income, capital gains, corporate hikes and cuts, and the aftermath of them is no different. hikes aren't any worse than cuts, aren't any better than normal you know what happens after tax cuts and hikes the market is up two-thirds of the time >> do you get any pressure from the powers that be at usa today to promote socialism and collectivism or central planning do they ask you to actually skew your articles to push that agenda or not at usa today >> let me describe that for you this way no, no, no, no you laugh. >> because i fully expect -- >> you want an answer to your question >> no, i don't >> you know me too well to know that i'm going to answer your
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question >> just kidding. >> fact of the matter is the money section, which is what i write for, is here in new york and is managed completely separately than the rest of the paper, which is managed out of d.c. >> venezuela >> no, no, no. d.c. do you know a difference between d.c. and venezuela >> i'm thinking of that other. >> the money section is great. >> money is okay it's not -- profits okay >> the lana patterson that runs the money section -- anything i want >> his ear is cut. he has all -- getting on a plane later. >> they treat me very well >> all right we'll see. >> my snowflake friend over here >> i got >> what goes on in d.c., i don't understand at all. >> me neither. >> thanks, ken apple's newest store opens today in chicago our josh lipton is there josh, what's happening >> so, becky, there are now 497
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apple stores in 19 countries all around the world the one you see right behind me here is the newest it's actually located right along the chicago river, and the entire exterior of this store is enclosed in glass. there's an outdoor plaza, and a gathering place around a giant video wall called the forum. foster & partners, that's the firm that designed apple's new corporate campus in cupertino. they also designed this store. we know apple has been busy opening stores since 2001. there are now 270 in just the u.s., and they attract a lot of traffic. 500 million people visit these stores every year. the company's retail work force has surged to 65,000 strong, but don't use the word store around apple retail chief angela ori orintz they refers to them as town squares. these are supposed to be gathering places this is where you meet up with friends and family, attend live
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concerts, maybe take a class or a workshop on everything from coding to photography. retail analyst liz dunn tells me she thinks angela has the right vision, but she says creating a compelling in store experience is really just part of the battle apple also has to -- can keep making products that can stand on their own and excite consumers enough to come into these stores in the first place. guys, back to you. >> okay. thank you for that coming up when we return, security company proof point out with earnings and check out their shares they are in the red. we are going to talk through the quarter with the ceo we're going to do that next. later, squawk space week continues. we're going to talk to the deputy director of nasa's jet propulsion laboratory. he is leading the way for the next generation of space missions meming up at 8:30 a.m. eastern ti stay tuned you're watching "squawk box" on cnbc pgim sees alpha in real ass. like agriculture to feed the world. and energy to fuel its growth.
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welcome back to "squawk box. everybody. we've been watching the futures this morning, and they have been sharply higher all morning long. we've been watching with the dow up nearly triple dej its it's up 91 points above fair value. this is a day after both the dow and the s&p closed at record levels once again. the nasdaq was off by 15 or 16
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poins yesterday. it's indicated up by almost 20 points, and it's coming because of the budget being passed in the senate making it that much close dloers to a potential tax reform bill. >> tomming earnings expectations, but its fiscal 2018 outlook disappointing it's about 2% or so. joining us now is proof points ceo gary steele. good morning to you, gary. as we say -- >> good morning. >> you did beat in terms of whah
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narrative looks like do you agree with that >> well, what we -- well, what we see is a continued demand for better security posture. people are coming to us given the challenges that they face with phishing attacks, and we think that that this plays out through the course of 18 >> when you something to the meeting of the white board and sort of write down who you are playing against, who do you think is the competitive set these days >> you know, we have had great success competing against the larnler incumbent players. people like cisco, microsoft, semantec what we're delivering today, we prove every day that we can drive a higher level of efficay
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skpshs that is what has driven customers to our solution. >> long-term, when you think of -- one of the things that i hear and i, as you may know, love the deal game, the m&a game, is that your company one day may get bought by one of these larger players how do you think about that? >> you know, we wake up every day and work hard to solve our customers' problems, and we think the best way to deliver great shareholder values, continue to execute, and you can never predict what happens in the m&a landscape, but at the end of the day what's most important is that we're out beating our numbers, which we've done on a consistent basis over the entire time we've been public >> all right the reason i ask, i just wonder over time whether you think that more and more of these players are going to be able to take the type of functionality that you have, which is truly unique and build it into their products and then, therefore, what that does to the competitive landscape >> no. it's an interesting question i think the challenge that those
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organizations will have is the discipline with which we operate is very distinct and different therefore, it requires a significant amount of intellectual property to be able to deal with the kinds of threats that we do, and one of the things is not well understood in the securities segment is that each -- there are many submarkets within security, and it's tough for the big guys just to move from segment to segment and do a good job and given the landscape that we're operating in, you've got to be best in class. >> what do you mean by that? what is the -- what is the offer if you will, from proof point that microsoft doesn't have or that google doesn't have >> it's really -- it comes down to ethicacy against the most recent threat.
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>> that's meaningful, and cherz are willing to take pay for that >> news you can use for those who may not be investors in your company, but probably care about securities >> i would call multi-factor as probably a better way to think about it, and anybody, whether you are a consumer, where you are a company, should use multi-factor >> k on. we're going to leave it there. in some cases having one texted to you, but some people are saying that's not enough >> lululemon up 2.5% this morning. an upgrade from citi is responsible here it goes to buy from neutral. >> you just like saying it, don't you? >> lululemon >> lululemon >> i think we had them on.
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you know, outdoor voices >> yeah. >> you know -- i just bought a pair of shorts from outdoor voices >> i have a t-shirt that she gave me that's not cotton, and i like it. >> you know who says involved with outdoor voesz now, nicki dreks ler. >> really? >> yeah. >> leently became chairman of the company. >> i look at possibly buy more and it's really expensive. i decided i'm too cheap. like a t-shirt is, like, $65 or something. >> but it wicks away, and it won't smell. >> it better do a lot more than that for $65 >> maybe i'm just -- i'll put that on the christmas list >> get me one. >> yeah. >> k on. >> coming up, did. >> so you won't smell. he is doing it for himself >> see >> what else what else do you want -- >> is that naughty or nice
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>> yeah. >> check out the shares at ge. the company posting a miss now down almost 7% you know when you are good, you are good when you are bad, you're great that's what she say. "squawk box" will be right back. another day at the office. why do you put up with it? believe it or not you actually like what you do. even love it. and today, you can do things you never could before.
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a canadian man is suing sunling airlines after being served sparkling wine rather than champagne when the man boarded a flight to cuba, he was expecting a complimentary champagne toast as the canadian airline advertised. however, he was served sparkling wine, and even worse, it was in a plarsic cup. the airline says the suit is frivelous and without merit. >> i have to agree it's not truly champagne if i not from the region in france, but, however, get over it. you have to be kidding ma indin. snooty snoot sfwha he wouldn't take lesser cigars coming up, ge is out with earnings this morning, and the shares are down. now over 7%. under 22 it's a new low a rundown of the quarter coming
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up later, we are wrapping up space week on "squawk box. we'll get an update on nasa's mars 2020 mission from one of the deputy directors right after the break. as we head to that aforementioned break, i'll take a look at u.s. equity futures. they're up [vo] when it comes to investing,
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>> don't want to hear what we do during the commercial breaks around here. we are live from the nasdaq market site in times square. among the stories that are front and center this morning, per shing square's bill akman has a suggestion for adp he is telling the payroll processing company to buy one of its rivals privately held ceridian they're trying to secure three board seats. akman thinks $4 billion is what
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it would take to get ceridian, but it would allow adp to attract for customers by offering a better product. here's what i want to know, does he own a stake in ceridian, like he tried to do with some deals in the past. i would hope he would tell if that were the case we've heard this before with other deals that he has announced in potential things that are out there, but that would make the entire thing make more sense from why he has been pushing it so hard don't have any idea, but that's what strikes me? >> great way to do it. >> yes >> get in there first and then -- >> start buying this i don't know anyway, the company that makes taser stun guns is under review by the s.e.c axon says the s.e.c. is looking at its 2016 full year report as well as the first quarter of this year. it adds that it only just became aware of three letters from the s.e.c. asking for information with the latest admonishing the company for not responding to its request for information earlier. >> what happened to the tasarians. the people that owned it were the tasarians.
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people would get so mad if you ever said in anything about it >> the stock is down as a result of this latest news. >> don't takes me, bro >> there it is >> don't taze, bro dmeists think that sales fell .9%. on top of that 1.7% decline that we saw back in august. >> you know, on golf now when they go to commercial, a lot of times they leave the -- in the little small picture they leave the action on while the commercial is on they say we're going to stay with you through break >> why don't we do that? >> why don't we dothat with audio and then -- >> oh, no. >> to hear what -- >> no. the stuff that we talk about -- >> just now. you don't think people would be -- would want to hear that? it's cable it's cable >> they might. >> it's cable. >> they might. >> cable what you just said -- >> all right we're watching shares of -- >> it's not nearly as exciting as we're now making it sound >> no, it's not.
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>> shares right now down $1.59 david faeber has an exclusive interviewwith ge ceo john flanery that's coming up on "squawk on the street" in -- what time snl right about an hour and a half from right now it should be interesting to hear it's weird people were -- wall street journal wrote that this is the first report card for the new ceo. >> no. this is the first report card that's come out since the new ceo took over. clearly, he wasn't responsible for the things that were happening there. this is where you are going -- >> who writes headlines? you don't write your headlines in a print publication >> i will tell you something very interesting, which is that more and more the headlines are now starting to get written by -- >> streamline being the process. >> as a way of streamlining the process. >> that would be important
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>> they write some ridiculous headline i mean -- >> when i was 23, i was writing headlines. that's what you are getting. the people who are, like -- who are still young and on their way working their way through. maybe not understanding always everything there >> separately, facebook planning to test subscriptions for instant articles that's the feature that would let news outlets distribute stories within the mobile app. facebook will look at two models one that allows users to read ten free articles a month. the other letting publishers decide which articles require a subscription the roll-out is over the next few weeks. not iphones where. only on android phones recode reporting that they want 30% of any subscription revenue that facebook helps generate, but facebook wants all of the money to go to the publishers. i will is a i this fee sets a very sort of interesting situation because facebook up until recently has been on the
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other side of the news organizations and apple had been trying to suggest that they wanted to be the ones -- that they were more friendly to the news organizations it's going to be an interesting thing to watch >> an answer of sorts to the ceridian thing ackman's hedge fund, per shing invested in ceridian a decade ago. thomas h. lee partners owns the firm now no he does not have any stake in it >> it's bad news for finishers of sunday's pnc milwaukee marathon the racecourse was about .8 after i mile short that means runners won't be able to use their time to qualify for the more prestigious marathons like boston's. the race director apologized -- >> you have to be kidding me >> apologized for the human error. this is the second year in a row that the measurement was off last year it was a half a mile too long >> no way. >> yeah. if you ran that -- if they ran
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25.5 miles, and now they can't use it >> and your time -- in my case >> people were doing awesome >> if it was half a mile too short -- >> i think they said .8 of a mile that's 26.2. >> my time would be four minutes better than it would have -- >> because you run a four minute -- >> four and a half yeah right now as we -- >> on a motorcycle >> right now as we wrap up a great week of space guests here on "squawk box," we are taking a look at where we're headed next. we're joined by larry james, who is the deputy director of nasa's jet propulsion laboratory in southern california. jpl is the leading u.s. center for robotic exploration of the solar system and has a number of exciting mission says on the docket in the in exfew years, and, larry, thanks for being here >> happy to be here and looking forward to telling you all that we're doing at jpl >> let's hear about it we know that mars has always seemed as far off, distant idea that we might be able to make it there, but it's becoming more and more a realistic picture why don't you tell us about
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where we stand right now >> well, where we stand right now is we have two orbiters that really look at the surface of mars and operate there, but we also have two rovers that are currently operating on the planet you talked about the marathon there recently, but our oldest rover on mars, opportunity. >> it's as well as our current rover curiosity or mars science laboratory that says doing an incredible amount of exploration and understanding the history of mars, the surface of mars, the fact that mars once had a lot of water on it, and the fact that there is organics on the surface or near the surface of mars. following that mission, we'll launch another mission in 2020 to go do further exploration >> when would you expect to actually see humans make it to mars can you kind of game that out based on what we've learned so far? >> well, nasa has a program to really look at getting humans at a minimum to orbiting mars in
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the early 2030s. then obviously landing on the surface of mars, which is a much more difficult proposition sometime in the 2030s. that's the long range plan, as you look out to the mars program. >> i think it was commander kelly when we asked him what he thought was the most realistic space movie. he mentioned the martian as one of them. is that your agreement too >> i dwul saw that interview, and certainly, you know, the writer really did a lot of work in terms of marg sure he talked to engineers and understood the complexities of operating on mars and what it took. i think most of us would agree in terms of operating on mars perspective. >> we see headlines constantly, it seems, these days about new things that are happening in space. either from the government sector or the private sector there was news about the casini
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probe. i know that was by design, but what did we learn with that? >> overall, the mission was an incredible mission because it really we found to the amoon is actually a water moon with water below the surface. we can see the jets of water shooting out into space like geysers. we understood a lot now about the complexities much the ring structure and how moons are forming ntsd those rings the fact that there's water in those moons and the outer solar system is a very important finding. what about europa? >> it's a moon of jupiter. again, a water moon.
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>> following that up we'll send the europa lander in the mid 20s to go down to the surface of europa and examine it directly it's a water moon. it has probably two to three times the amount of water that the entire earth has that's one moon of many in the outer solar system >> you know, been doing this for a long time, and when you look at the setup for where things are today, there are so many more private enterprises that are getting involved and partnering with nasa or doing things on their own. when you look at space exploration, are you more optimistic than you were 20 or 30 years ago or less how do you see things? >> absolutely. i mean, if you look at what nasa is doing in terms of the program to really develop the systems that go to mars and beyond, if you look at what we're doing
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from a scientific perspective to explore our solar system and our universe, and then you look at what's happening with the commercial industry. the spacex is the blue origins you know, virgin galactic. all those companies that are developing commercial capability to get humans into either suborbital space or orbital space, and that can only be good for the nation and for exploration because ultimately, you want to start to commercialize as much of this as you can, and that's what they're focused on is at least the rocket part of this is getting humans and equipment and experiments into orbit cheaply, and that's one of the key drivers that we have to have to further exploration. >> larry, thank you so much for your time today. >> absolutely, and glad you had a great space week >> we are too. thank you for joining us >> very cool >> coming up when we return, we have a budget deal clearing a hurdle for president trump's tax plan we've got the latest from washington we'll see where it all heads next next week i will be live in saudi arabia with a line-up of
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news makers. we're kicking off a very big week of coverage on monday with prince alaweed he will join us at 7:00 a.m. eastern time for a full hour "sawbo rurutalk with him abo quk x"etns in just a moment your brain is an amazing thing. but as you get older, it naturally begins to change,
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other association represents firm that is collectively contribute over $668 billion to the american economy we speak on behalf of american small business nobody is impacted moore by this ar contain and archaic system
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than american small business we haven't seen meaningful tax reform since 1986. it's high time we're very encouraged by what we have seen thus far >> talking about small business, the pass through rate, 25% does it make sense to you? >> here's what we're encouraged about. very encouraged about. today here's what we know. two-thirds of all new jobs in this country are created by the small companies. >> right >> not the larnl ones. we know that we also know that 95% of those small companies are technically sole proprietorships then we also know that sole proprietorships can be taxed at a rate of 45%. this proposal would slash that down to 25%. if we can accomplish just that, that would be transformational for american small business so, again, woor very earn couraged by what we've seen, and we're hopeful that we can focus on this and get something done. >> okay. what do you make, though, of the argument that the pass-through
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rate at 25%, effectively, is a give-away to the extraordinary wealthy in that more than 80% of small businesses in america -- the rate currently is 25%. when you really start to think about who is going to get that money. >> you know, again, we're focused on the needs of american small business what we're hearing from other small business owners is that if they get some relief on tax they're going to plow that back into their businesses and creates more work, creates more jobs, and drives the american kmi. that's what we want to stay focused on is it a complete plan that everybody is going to be happy with absolutely not it's a starting point, but i'm very encouraged by the fact that, again, this white house is at least talking about this, putting it out there, and if we can get any kind of relief, american small business needs it we need it desperately >> what's your answer on puerto rico what do we need to do? >> well, you know, if you look at puerto rico, here we are a
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month later. some 3.4 million americans are i will is it without drinking water, without any real form of communications technology, and without electricity. these are americans. we are failing these americans there are more americans, in fact, on the island of puerto rico than there are in 21 of our other states there are more americans there than in alabama, in arkansas, in nevada, maine, and the list goes on we need to really get busy helping the americans in puerto rico i am encouraged and one bright spot for me, anyway, is how our corporate partners and american business have stepped up in the absence of the political courage to get anything done down there. you are seeing by way of example american airlines. they've airlifted hundreds of tons of equipment. bp has donated over 200,000 gallons of fuel. you're seeing goya foods
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they were busy at work on the island long before fema got there, and to date they've already donated over, i believe, it one million pounds of food to the people in puerto rico, and, finally, verizon has given over $5 million to relief efforts very ep couraged now american business has stepped up. >> how would you handle the debt situation? >> you know, i'm told should the country take a haircut is it wiped out? how do you do it >> everyone takes a haircut here it's not going to be the panacea that anybody is hoping for these are americans. we need to all come together and find solutions that are sustainable and that make sense for the long haul. >> okay. we're going to have to continue that part of the conversation another time we appreciate your time and your perspective this morning >> thanks for having me. >> you bet >> a new warning now on north korea. today this comes from in time from the prime minister of singapore. the leader telling cnbc that ongoing nuclear aggression from pyongyang may potentially result in south korea and japan hosting
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nuclear weapons on their own land the prime minister also commenting on president trump's approach to north korea. >> the president has made his position quite clear he has made a formal decision, and and i think we leave it at that. i don't think it is -- the time yet to start new initiatives multilaterally with the united states perhaps one day the time will come. >> singapore's prime minister is due to meet with president on monday jim cramer will join us live from the new york stock exchange here are the futures and where they are indicated right now up more than 93 points, almost 94 on the dow. "squawk box" will be right back. ♪
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let's get down to the new york stock exchange. jim cramer joins us now. a couple of people we've had on today, jim, i guess maybe they are right because they -- just looking at the ge stuff and finally going oh, my god you know what, you're ka pit lating, maybe a bottom is being made or something. but i don't know
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after a lot of, you know, f finagling of different assets, i keep reading a lot of work has to be done by flannery to get the company back in shape. i thought that's whaft was happening for the past 16 years. >> there's ill advised ways they booked turbine orders and a small note at the end of the new concerns, paid $4 billion dividend to ge year to date on deferring decision on additional dividends until insurance reserve review is concluded. that seems to be an open-ended long term care problem, probably closer to 25 or $30 billion. it's entirely possible this is -- i'm not saying it's a house of cards, my charitable trust owns it, i own it.
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>> i saw a pretty interesting comparison of different industrial companies from you or someone that showed that gap versus actual and -- >> they, yeah, ge uses a separate kind of accounting but mr. flannery is going to fix that i think he's going to create a type of ktding that looks like a honeywell or united technology and there's a very difficult transition, got to be made between now and november analyst meeting and the dividend has been to be cut somewhat sanl substantially. that's what's being built in right now. and i think what we have to recognize, there was a suboptimal way in which they booked their businesses, including the very large turbine business. >> let's say they are able to do the accounting differently three years from now, what do you think the earnings power is with flannery in charge? do you think it's $2 within three years?
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>> with mr. flannery in charge, i'll temper my comments about it i believe going forward he'll change the company rather radically and i do believe after they cut the dividend which is imperative at this point, if not, they are being reckless, we'll be able to rebuild this company and see much better numbers. right now it's not in shape to do that. they've got to cap the long term reserve that they cap when they spun off genworth and clean up the turbine accounting and do a substantial write-offs and sell locomotives and they do not have the ability to be able to or cash flow to break up the company. flannery probably has to take out $3 billion in cost not $2 billion in cost within the next 18 months to make this company be a viable company again. after this quarter will be flannery's quarter i've said that to them >> i just figure if it's a dollar at 20, it's 20 times earnings which is pretty rich. >> it's very overvalued but after this, i'm tempering my comments because it's not mr.
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flannery's fault, he rebuilt, straight shooter, i like him so let me get this straight. you're a rabbit? im vern, the orange money retirement rabbit, from voya. riiight. and that means...? i'm the money you save for retirement. i help you get organized so your money could multiply. see? got it. who's he? he's green money for spending today. you know, paying bills, maybe a little online shopping... makes it easy to tell you apart. that, and i am better looking.
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ibm jumping after earnings on wednesday after a bullish move, it continues with big blue adding 5.5% final check on the markets on this friday morning with
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about the 20 seconds to go it's green 95 points now indicated of positive momentum for the dow in spite of general electric being down not quite 10%. >> are you going to do a jig >> no, it will be done in a couple of days, 23,000, i would have done a happy dance. >> be safe. >> be sure you join us on monday, i'll be in saudi "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber is in boston where he'll talk with john flannery, on what will be a tough day for the stock down 8% fre market futures are up as the senate passes the


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