Transcripts For CNBC Squawk On The Street 20171011

Reform plan will further spur growth forecast for the e commerce giant and shares of ge on the move jp morgan report seize a dividend cut as increasingly likely the Company Tells us it remains a top priority historic run in the markets includes the 47th record close of the year. Weve got black rocks larry fink talking about risks in the market earlier this morning on squawk. Lets be clear, the United States deserves a premium. Our companies are stronger they are better managed over across Many Industries so i actually believe the u. S. Deserves a premium to the other markets. Not just that, jim, says he wouldnt expect to see any major reversal in equities until sometime next year. I love the guy, what can i say . Every time i talk to him and see him, he has a sense of whats going on there are moments when hes pessimistic and not like hes permable, i like what he had to say and liked his quarter. I wrote a piece this morning for real money saying its events that i cant see and north korea and the possibility of saudi arabia invading qatar. That could happen. When it comes to earnings, we deserve a premium. Hes absolutely right. Jp morgan is going to report you like jp morgan or royal bank of scotland . Do you like citi someone early on wills show this morning trashing citi, his name is whalen and im listening, are you trashing a company that has 7 in earnings power give me a break. We have Companies Bank stocks are trading between 12 and 14 times earnings and going to kick off the season and so im with fink im with fink. He did say if there is a risk, its an inverted yield curve because of the demand for long dated assets. Something cap lynn has echoed today. I think thats something well hear when we get to the december bump. Im not as fearful as yield curve because i believe were going to see a pick up in loan demand because of this change in the fed in terms of restrictions i think youre going to be able to get a loan by putting down 20 . Thats almost been impossible in this country impossible and you know its interesting, this guy who is going to be the replace i looked at his portfolio he had for his private equity fund. He owns they own 400 burger kings. Why is this important . Because thats who needs the loan you need a loan to opennew burger king or popeye. Were changing the fed in a way that is very progrowth and very proloan maybe loan demand picks up. The knock on financials is that low volatility means trading revenue will be weak and loan growth will see a Fourth Quarter of desell race, youre not worried about the latter i think Goldman Sachs is coming up with creative ways to make more money. Betting against Lloyd Blankfine sei seems like a sucker bet. Were going to know what the stress tests are you could say thats like getting the acq with the sat with the answer. You still have to fill it out. I think the stress tests will reveal that jamie dimon will be much more free with his capital, citi will have Brian Moynahan has done a remarkable job, hell put money to work. I like this group. If this group sells off, im going to come here and pound the table because they are too cheap. Financials are leading along with materials yes. More earnings this morning out of delta, 157 beats by four cents. Ed did talk to squawk earlier this morning take a listen. The thing im most impressed with is the demand for our product was really great 17 of the 20 busiest travel days in our history we had this summer people are traveling on delta and loving the product the outlook is strong on demand. Demand is out pacing any pricing pressure. Look, it is a really good example. Phil lebeau tweeted, selling at ten times earnings is that dangerous . The old days yes this should have been a terrible quarter for delta because of storms. Think about it. It was a great quarter it wasnt supposed to be a great quarter. Who knows what southwest air could report here. Gary kelly, i hope he comes back and sits here and stops talking about the bad hedges continental is down so big that seems like a bargain to me. Im seeing stocks selling at 12 times and 10 times earnings do not worry me and those are the kickoff earnings period. I have a feeling im feeling barring exoj nous events there was a story out this morning well look here, it was Morgan Stanley, as of earlier this month, 65 of the risk associated with the average s p stock was inexplainable by a set of six macro factors. Dont you love that were in a nutty time. We have a president who cared about the kneel sen like no other president or play are or spokesman ive ever seen, the apprentice, tbut the amazing thing he had good neilsens better than espn why does he hate espn so much . He should be a buyer stock is at 19 what he said about the market earlier today, increased by 5. 2 trillion since the election, 25 increase, lower unemployment in 16 years and went on to say maybe the Fake News Media will report on that. Yeah. Mike santoli tweeted, this election day to date dynamic existed a few years ago. Thats true thats absolutely true i would say to the president , you won the night. Thats what he cared about winning the night. Youve won the night now, how he ought to do a 6 00 on Stream Program so he can prove he can beat the 6 00 at espn hes the most competitive guy ive ever soon and neil sen numbers are hitting all time highs. Tonight hell talk in harrisburg to some Truck Drivers and according to excerpts released hell say the average household will get a 4,000 pay raise out of repatriation and Corporate Tax cut. Its unclear whether thats p penper annum, hell make the argument that Corporate Tax cuts are positive for the average household. I think hes right. I wish he would stop fighting with people like corker. Why fight with corker . Im adamant he play golf with corker and peyton manning. Roommates, this is the kind of thing that can be settled by a president just like if you read a great book about Chris Matthews about tip oneill and reagan, the president has to read that book you can accomplish great things on the golf course and bar theyve got to get off the desk and stop the fighting. Tom barrack, one of his long time whispers talks to the Washington Post and says hes better than this i dont like the rhetoric. I happen to love tom. Just saw him recently having a cocktail and i cannot agree more i think tom is a man of great reason just a guy to really look up to and i know that the president likes him because ive seen them at dinner. I just really hope he listens to tom. Tom, i do not agree with tom on everyish issue but i certainly agree that this is wrong the tweeting is wrong. Im not the failing jim cramer i mean, were not the failing network. So this is constructive criticism, right constructive i dont work at the New York Times. Move on to fang stocks this morning. Amazon, Morgan Stanley with a note saying the private label business could add a billion annually to bottom line by 19 as alibaba moves closer to matching amazons market cap Credit Suisse to 13. 50. I read the piece and felt uplifted its a fabulous piece. I think Amazon Web Service is worth two thirds the price of amazon i think that thats a reasonable price target amazon is hitting on all cylinders and the whole foods deal is going to be good it may even be great my talks behind the scenes on what they can do are rather extraordinary. The only company that can compete them on the scale is walmart. And walmart wants journal has a piece today walmart upping its game. Wasnt that a great piece immediately reached out to walmart and got shot down within 30 seconds i thought he would be shot down in 90 seconds but it was 30 seconds i got shot down. I think mcmillan should come here and talk about it and easterbrook. Look at the dow stocks, ceos, 3m, alex, were dealing with ceos who went through challenging times and are titans a and done amazing things. Im a huge believer in a Doug Mcmillan and what hes done in walmart and big believer in bezos. I dont know if youve been to walmart lately. I have. I went to a walmart where was yours . In florida ahead of the hurricane. How fabulous, right ive told you before, you wonder how one organization can keep track of so much i bought things i bought things that i could sell on ebay for 5 i bought tshirts. Walmart is amazing, they have upped their game and the help you get when you walk into a walmart, its like how can i help walmart is fabulous. Got to stay away from the cookie aisle. Yes, coming off i think the best day in a year, right . It deserves it. Walmart is buying back 20 billion and figured out a web strategy and using scale i dont think people realize how low the prices are the stores are clean the Fresh Produce aisle is very good too much snack too much snack but thats it appeals to people who want snack. But i think the stores have never looked as good as they look now its encouraging. When we come back, well talk speaking of snacks, well talk p g and what ge is telling us about the dividend strategy. Nasdaq is up, october gains already exceeded its september gains. Come on. More squawk on thetrt ainute. People dont invest in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. General electric is responding to a jp morgan Analyst Report that it viewed a dividend cut as increasingly live they say the dividend remains a top priority putting the yield at 4. 11. Back in december, o Morgan Stanley thought it was dangerously high but didnt go so far to say it would be cut. Jp morgan has been incredibly negative and incredibly right. Their criticisms have been so rigorous and i read this and said, you know what, even though ge says its a top priority, thats not good enough i mean thats just not good enough. Its not reassuring enough. Its not. What would you have them say . I would say the board agrees that dividend will be paid we havent heard that. No, we have not the statement would be very simple, like the board has listened to what people are saying and the board has tremendous confidence and the dividend will be kept intact at these prices i have done everything i can to try to get them to say that and ive lost. And so ive lost and i dont know what to do. My Charitable Trust owns it. I own it personally. Rarely have a felt this stupid i remember when i was trapped in the dumb class in fifth grade and went back to my mom, mom theres four tracks, im in the fourth track, i dont know if thats good or bad thats how i feel about ge now i made a lot of friends notice fourth track but i feel im back in the fourth track because because of how you thought the stock was going its my fault as it was in the fourth track because i didnt do the homework and i regret that. I stayed in the fourth track for three years, carl and learned a lot. I learned what it feels like to be in the fourth track, the lowest track thats the track that says i believe in ge. This i believe in flannery, i think he makes the change. Thats a lot of selfflag lags. You can love but you cant hide what is that like carol king is carol king going to be named ceo of coach thats a little strange well look into that one but given what flannery has done already and about with corporate jets i like what flannery is doing. Ed garden coming on. But you know what, this company, i mean whether it be the acquisition or buying oil at the high or selling finances at the low, there is an abbott and costello keystone cops martin and whatever, smothers brothers, this has been a terrible run for ge and flannery is going to clean it up. But maybe you have to do a total reset and start over meaning unless i get a statement from the board today which says were committed, none of this top priority come on, a top priority you know its a top priority if the eagles will be in the super bowl, one of my Top Priorities come on, board state it. A top priority a top priority im going to get this suit cleaned after the close. Top priority top priority, im going to bar s san miguel tonight. Bill ackman had a statement heres what he said. The decision to vote your shares here is as important as the decision to vote for the president of the United States and vote for a senator or congressman to represent you your vote is very important. Its your company, you get to decide. As important as the decision to vote for the president. I call that hyperbole actually i call it stupid. I like bill but that was wrong bill has got if he had been interviewed rather than had this ham i will thing hes doing, come on, bill, youre better than that. Its important as the president. Come on. I mean, automatic data president of the United States that demeans the office. Its as important as the six on espn im getting discouraged by the news flow. As far as coach goes, changing their name to tape stri, we found a name to speaks to creativity and authenticity and inclusivity on a shared platform and values. Tapestry. Came out in 1972. I saw her do it. James taylor was the opening act theyve been partners for a long time. Carol king cried once when i told her my kids listen to her this is what i think of tapestry its a great album we were looking at some of the tracks, what does anybody say so far away. Its too late. Coach is so far away. Earth move under your feet. Shotgun was one of them remember shotgun coach. Coach is down a percent. On that name change it should be down 5 how about ven eegs blinds. Criamers mad dash after the commercial break were back in a minute whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. about six and a half minutes to the opening bell. Lets get kram erss mad dash. Its too late baby for that change this is a day to end all days when it comes to craziness, Credit Suisse says snap is stabilized and doing better than people think snap i mean, like we got to do a little rabbit ears, what do you want to do this is amazing when you do snap this is an upgrade snap and look at this valuation, they suggest 20 versus the previous target of 17. This means today is a suspend all belief day. Youre not buying it after evan spoke at vanity fair last week. Thats a perfect venue. He should speak at the delivering i have a i have a selfie with evan. I know. Its the coolest thing thats ever happened but that does not necessarily what does that have to do with price earnings ratio of snap. I like this piece because nobody has said a good thing about snap its very contrary and at the same time, would you rather be in facebook . I say i would rather i would rather be in facebook than snap. What is the good argument they make. They say the advertisers are warming up stabilization, longer Term Investment pieces, predicated upon snap shares at current level dipping asymmetric risk reward i dont know ive been waiting for snap to get back to the level where it came public. This is a very encouraging report im not being facetious, its an encouraging report maybe evan is starting to realize that a public company, put a suit and tie on and maybe hell come to the tablg and look like a ceo. Youre not sounding like a millennial. Im sick of the damn ed millennials. She has a tent on her subaru and camping around the country. Dont know how to use a hammer or drill. They know how to call what about ikea, they must be completely baffled. Well get the opening bell in a couple of minutes. Dont to anywhere. Im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested something we all think about as we head into retirement. Its why Brighthouse Financial is committed to help protect what youve earned and ensure it lasts. Introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. While maintaining a level of protection in down markets. So you can head into retirement with confidence. Talk with your advisor about shield annuities from Brighthouse Financial established by metlife. Youre watching cnbc squawk on the street. Opening bell in 90 seconds coming off record closes and interday highs for the s p and nasdaq, earnings season is kicking off. You have the wildfires in california to watch. The president speaks tonight on tax reform and well watch as spain, jim, hasnt really touched us in terms of equity. Its amazing. Theres another time when that would have taken us down 2 . Homage to cata lonia, its bullet proof kroger, coming out bringing out value with an excellent, mcmullen happens to think hes going to pull it off a nice personalization per store coming even kroger. Even kroger. Wow. Even the dog recoiled. The dog being nvidia which spoke out yesterday. Coach is changing its name to tapestry and tell the New York Times were well aware it was the name of a carol king album but most millennials havent heard of it. What do they know they google things right now they are playing call of duty while she they should be working. Theres the opening bell and s p, celebrating the anniversary at the nasdaq. Its the food network and Cooking Channel new york city, wine and food festival. Like them both. Brad jacobs has been a frequent guest and stock has been amazing. When you get a big tv from amazon, its probably from them. Hes done a great job in trucking and transport i wish they were in the index. The index would be higher. The transports on fire. Yep, key bank initiates fedex overweight, 260 price tax on fleet modernization and yields, all of that. I think thats a fantastic upgrade. The last quarter looked bad but was actually terrific. International numbers are great. The story about how amazon may be using more of their own trucks for third party, thats just a glancing blow fedex has got the Holiday Season figured out. I like that call i like the price target. I think it goes there. Theres a lot of research out today. J and j gets up to buy i like that. Pharma is unappreciated. Someone downgraded it recently and it was based on nothing. I dont like the 3m downgrade we saw. Some of the downgrades are the only chance to get in Great American companies. J and j is the dow leader followed by visa, which gets resumed at wells with an outperform with master card. I thought when charlie sharp retired, which hes now back in new york, that visa would skip a beat al kelly has upped the game of visa you know, what can i say, mastercard, these are two of the greatest stocks of our time. Lets throw in paypal which is finally upgraded someone had a hold on it these are all still paper to plastic trade, visa has done remarkable stuff kelly is an amazing man. I dont think he spent a night at home. Hes going all around the world. Sharp was fantastic. The management at these companies is what im singing praise of. People spend way too much time talking about corker versus trump or whatever, they should be speaking about kelly and banga and mcmillan and these are people who are creating value every single day and they dont care what country they are doing it in or what the tax regime is. They are gamers. They are gamers in stock. One other things wells does, add axp to the priority list says the company has been through the perfect storm and set to begin to start winning. Stock is at 92. Chenault asked when he was going to earn, in the 90s, it makes sense. That metal card weighs down your wallet but i think all of those Payment Processing companies are buys i hope that they one day come in in a market selloff because you cant get them otherwise the numbers are fantastic. The growth rate is consistent. Really good companies. So we havent had a show together in a few days what worries you you like the financials. I dont like retail because i do fear amazon and kroger is on a bounce im very concerned about what i would regard as being anything involving Consumer Spend that cannot be related to millennials. I point this out because the costco call. And i work a kirkland tie in honor of costco. And the Conference Call was about how millennials dont shop at costco. Millennials brush their teeth, i think, some wont deowed rant because of chemicals im not kidding. I believe you. The Consumer Product stories and retail storieswhich are a lot of what individual investors own, i am concerned about. Because they are not they are not in a company they are not in flow serve in companies doing really well like they are in retail. Even though at age 26 is the largest age cohort in the country right now. The whole point of that journal story was they are in demand because theres more of them theres so many of them and its so tricky to figure out what they like one day they Like Dollar Shave Club then the next day they like harrys and next day growing a beard. Their level their fickle nature is extraordinary. They have no brand loyalty i grew up in ia house that was a colgate house and we used colgate. Old spice, my grandfather wore old spice. Same here, my dad. I have brand loyalty. These people dont like every day they come up with something new. They change soap every day we were a dove family. Dove thats what we did all right, if youre going to zero in on industrials, what do we do say for instance when nafta renegotiations are set to begin and looking to change rules of origin. Are you worried about a trade war . No, im worried about currency the peso is such an advantage right now. I wish Mexican Government has to do something about the peso, 181, theyll kill us. You can make cars for a fraction, 500,000 cars being made now there were no cars being made there five years ago you can make cars for a fraction what they can make here. Its the tufrnkey thats the problem not nafta. It was 41 and now its 181 i will tell you nafta is completely out of date completely how can you compete with 181. You cant. We are going to get fmoc minutes at 2 00 and a lot of discussion of the long dollar trade anybody whos not long dollar, and if they are are they out of their minds . The euro is still very ripe it is way too cheap. The fact you can buy in italy for less than a brownstone in brooklyn does that make sense to you . A brad street in brooklyn. You can get a 38acre winery in italy for the price of a two bedroom in manhattan thats wrong the arbitrage put the currency too cheap. I have a vineyard in tuscany, 2. 5 million and produces great wine and youre telling me that i can get a two bedroom on the Upper West Side nonetheless . Come on. Thats a ridiculous arbitrage. By the way, a fire last night in smoem that, one of my favorite wines, had it last night. Were going to talk about the wineries later but at least 16 wi wineries damaged or destroyed. The president today declared a disaster which provides some relief. Were not talking about fires enough there are people trapped in them and dont know whether to go or stay these are an incredible this is an incredible area in terms of tinder, its dry. And not enough is being done to try to solve this. Yeah, some interesting, youve got fastenal and juniper on the down trend. Juniper downgrade was serious and i worry about corporate spend for telco, particularly if tmobile merges with sprint. Thats an area i am concerned about. I am a little concerned that the cloud stocks have moved too much the stock is up 60 , service now incredible amount. Sales force, obviously dream force coming up and i think its going to be fabulous but i think also the new stocks are so red hot. I wish they would cool sales force service now and work day are now all companies doing incredibly well but the stocks are doing even better. Theres a lot happening in media, although some of the names are under pressure, amazon today said they are reviewing the partnerships they may have with Weinstein Company in light of those allegations. Yeah, thats apple, front page of the journal today will partner with spielberg to do some new episodes which i think that we have to watch what tim cook watches. Hes hooked up with the people who did breaking bad and spielberg. This is really incredible. I think apple is making lots i wish they had bought spotify, because its so amazing. How do they know what music they like more than what i know how are they in my are they in my cortex, cerebellum. They would argue they have radio product as well spotify knows what i like tomorrow it is scary how much spotify tells me what i like and it doesnt matter if its classical, jazz, rock. They know i like eddie vetter. Theyll play the new eddie vetter album and im still thinking about brother and daughter it is incredible. Do you usually give each track a thumbs up or down my daughter tells me i have to tell them and we spotify is something my kids cant live without spotify. Isnt that incredible. Thats a bill that i have to pay. Spotify, netflix, i have to pay these bills and amazon prime or else i get the call from my kids its the only thing they call about. Otherwise they text, hey, dad, did you pay the spotify bill. It used to be the gas and now its everything but that. Thats the three bills they care about, spotify. Got leaders in kroger and colgate as jim was saying. Lets get to bob pisani. Mixed open. We have positive slightly positive Consumer Staples moving around and energy on the downside here you see a familiar pattern, folks, banks going into earnings, banks usually drop going into and immediately following the Major Bank Earnings reports will start tomorrow with the semiconductors are a little weak. One of the main reasons is micron they noungsed a secondary offering, 29 million shares, dilute about 2 of the shaeres, when you have 90 , you can do a secondary that will be a 2 dilute ion and not get hurt too bad. Blackrock, historic highs today and boy how would you like to have the numbers that they put up let me show you some revenues this company this big, asset manager up 14 on the revenues and i he they have a 45 margin, anybody in the country would love those kind of numbers. The Exchange Traded funds, thats the area i cover the most ishares, the big sector of blackrock, 52 billion in inflows and number one market share. They are battling vanguard, a lot on reducing fees, big issues around that. The tote ap global asset, 1. 6 trillion the total market for etf globally 3 trillion they control 55 of the global etf market thats a remarkable number here. By the way, everybody says theres not enough active imagi management, people are putting money in active, not as much as passive. But it is not dead by any means. The big four ill show you the numbers from yesterday. I want to compare apples to apples blackrock, 1. 25 trillion, state street, invesco, they control north of 85 of the market its a fight between those big four larry fink was on air, how much cash is there on the sidelines larry said one of the great problems we have is how many money is sitting on the sidelines. Even in places like japan, theres 5 trillion in cash earning a negative return and in germany, 72 of the savings are in bank accounts, never heard that stat before thats terrific. That gives an idea people could invest more. Were going into earnings starting tomorrow and issue is very simple. Are we in peak earnings or not is it going to get better or get worse in terms of the direction . Its not that magnitude so much. In the Third Quarter you see the third line up 4. 9 its not really the right way to say well, its slowing down therefore were in trouble the bottom line is the direction is still toward record numbers and thats what you care about and what the market cares about. Thats why the stock market isnt dropping overall the numbers are holding up pretty well in terms of whats going to be the contribution, we talked about energy the numbers are really big because the second and Third Quarter of last year were disasters and decades trough, youll have a crazy number like up 139 . Tech is what you want to Pay Attention to 12 and semiconductors will increase earnings by 25 huge contribution from Technology Materials will do better because we have numbers overall the commodity business has been going up health care is up. You see financials down 7 , thats because insurers are reporting negative numbers from the hurricane. The banks will report mid single digit earnings increases overall. Again, important thing is that the direction of earnings continues to rise and thats keeping the stock market up, s p holding just shy of record highs. Back to you guys. Lets get to the bond pit to check in with Rick Santelli. Good morning, rick. We know that the markets have a rhythm and that rhythm in many ways is associated with big technicality and fundamental events like nonfarm payrolls, big jobs report. Ecb meetings, bank of japan meeltings, it isnt surprising once we get past those, markets change thats exactly what happened to Interest Rates and Foreign Exchange lets look at one week charts that include last friday it failed at 240 you could clearly see it there 244 was the close last year. We had a couple of areas over the last four months slightly below and above 2. 40 on a closing basis we didnt challenge those. Another failure, were moving lower. Look at 50 basis points and the way the yields failed at 1. 40. Lets switch gears and go backwards, the dollar index back to july. How many times have traders have conversationed with me and ive had conversation with you about the resistance at 94 look at that chart where did it turn . Right at 94. Lets look at a one week chart of the dollar index. See the 94 one day, that was it, the only interday that dabbled above 1. 40 and all currencies are making moves pushing the dollar lower, whether its euro versus the dollar, the pound versus the dollar, the dollar yen i could even throw up the dollar versus yuan. It doesnt mean theyll go on and thats it and the trend is in that direction because guess what well have a whole new raft of meetings, none more important than the ones coming up in october. Carl and jim, back to you. Thank you very much rick san telli, still to come, Roger Mcnamee has a message for Mark Zuckerberg when it comes to russian ads on facebook it was a good call. Dow is down two points and s p down a point back in a minute you know who likes to be in control . This guy. Check it out selfappendectomy oh, thats really attached. Thats why i rent from national. Where i get the control to choose any car in the aisle i want, not some car they choose for me. Which makes me one smooth operator. Ah still a little tender. vo go national. Go like a pro. So you miss the big city . I dont miss much. Definitely not the traffic. Excuse me, doctor. The genomic data came in. Thank you. You can do that kind of analysis . Yeah, watson. I can quickly analyze millions of clinical and scientific reports to help you tailor Treatment Options for the patients genomic profile. You can do that . Even way out here . Yes. Even way out here. The political pressure continuing to build for big tech uk Prime Minister theresa may says her cabinet is considering regulating google, facebook and other social Prime Minister thr steep fines to stop fake news. And google and twitter set to testify to Congress Next month we mentioned, jim, price target increase, they say controversies at facebook now seem behind us i think thats right. I think that facebook is theres always, when they were poor, after the report, theres a window where often you get selling. Those who dont own facebook yet should wait until the window opens. Thats really been the style because the sellers come in, they want to do selling, whatever did you get the consumer list from piper, what the teams like they like amazon, adidas, apple, american eagle, birkenstock, gucci starbucks, supreme dont know that one, and tommie hill gfigger, but they dont lik tory birch and underarmor. They dont like under armour this is one of those things like tomorrow they could put it out and it could be completely reversed thats part of the problem they change every day. Thats why its impossible to figure them out. But i will point out that under armour keeps surfacing as something thats not doing well. Over and over, thats the brand that im most worried about. There have been multiple data points that would lead you to that conclusion. Nike can hurt them, but theyre on everybodys list of the one thats not coming back and it is, i happen to think the world of kevin, but there is a squeeze going on against them. And its done by Companies Tha are really, really good. The guy that has this i wish they had this, teens dont wear it lululemon has open field running. I think theyre going to have a big quarter. That particular cohort is doing well, and its more of an ethos and mindfulness. Its mindfulness per share, i typically wouldnt use that, but its working these are the problems, these surveys. Every day, teens change their mind under armour isnt the worst of the year, but its close. I dont wear it anymore well get stop trading with jim in a minute. Well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Lets get to cramer and stop trading. I was going to do mcdonalds, but i stick with around m, its micron billion dollars of stock filed usually, it would be down 3. Its barely down theyre go to have unbelievable numbers. By this point, the cycle should have rolled over its obviously not you get this bullish and that happens, sure, thats a little worrisome because the story about micron was the supply was tight. Suddenly, they issue a lot of stock but theyre going to see a big quarter. I see colgate go up. I have not seen this action since the 80s when they were so capable of moving stocks its really incredible is that good or bad i think thats normal we were in a period of abnormality for a long time where nothing companies did mattered i think this is normal that people who recommend stocks have a good edge and you should buy them its normal. A lot of triggers missed it for years. I remember these days when yod wusay, youre telling me that guy just upgraded chapel just upgraded from sun trust. I have to buy colgate. Welcome back to the old days whats on mad tonight i have Seattle Genetics i do a lot of bioTech Companies. Theyre creating tremendous wealth for people. I wish he would come on. I had a dynamite egg mcmuffin. Maybe he would. I was at bucknell because my wife just joined the board i love america egg mcmuffin, walmart, philadelphia eagles. Is this a great country or what . Said the man whose team is helping lead the division. We have to play tired night football tomorrow. Well see you mad money delta adding to the upbeat news out of the Airline Sector oull talk to gordon methuen abt what is working for the Nations Carriers in a minute. I, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. 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. Thats the power of and. Welcome back to squawk on the street. David faber is off today lets take a look at the markets here not a whole lot of action on the headline indices but some decent moves in staples and retail names. Well get to all of it our road map does begin with the markets. Opening mix as investors await Third Quarter earnings plus, the president getting ready to make another pitch for tax reform what it means for stocks in your portfolio next the bulls are running for amazon credit sweeps ups its price margt. Well discuss. And breaking news out of california the death toll continuing to rise as Deadly Wildfires continue to tear through the heart of wine country. A live report from napa straight ahead. First up this morning, markets are mixed. The dow coming off its 47th record close of the year as investors await the fed this morning. Lets bring in liz and don schreiber, founder and ceo of wbi investors. Good to see you both liz ann, you have a lot of positive data points to look at. Larry fink of black rock saying he doesnt expect a major reversal in active ecwouldies until some time next year. Are you that confident about the short to medium term to the extent hes talking about active versus passk, one of our themes has been with declining correlations, actually in some cases, a crash in correlations, it has leveled the playing field. At greater share of active managers are now outperforming passive strategies i thing that more opportunistic environment across asset classes, i think thats likely to persist i think it reflect a number of different things, not least of being Central Banks that are moving toward policy normalization. I think it was Central Banks in coordinated and massive easing mode was probably one of the reasons why we went into this highly correlated environment that did make it difficult for active styles to outperform passive. I think that changes probably a long lasting one don, you go along with that and is that a relief coming out of this big cloud we have been in of central banking overshadow you bet i think that the Central Banks have really distorted the markets to a great degree. Locked people into kind of a brain washed viermentd where they think the market is going to go higher forever, and passive indexes typically are going to outperform during that period of time we have seen some reversion on the growth trade, in the momentum trade, and value starting to come back. As we see this morning, retail popping. That was a sector that was really performing very poorly this year. So some of the underperforming sectors is where the capital is rotating to. And so were going to see those stock areas pick up. Thats going to help active managers liz ann, i wonder how you think were set up on the verge of earning season. Obviously, the index is at new records. In the past couple earning seasons, we have kind of chopped around in terms of the broad mark as you had the winners versus losers story. How does it seem right now as the Earnings Growth for the coming quarter looks like its decelerating interestingly, this quarter heading into, we saw a more normal deterioration in the forward looking estimates. Last quarter was more of the anomaly where they moved down in estimates as you approached earning season was so, so small. That was ostensibly seen as a positive thing however, that means the bar stays higher and is more difficult to hurdle, which ultimately, companies did. Now i think the bar is set lower at a pace similar to what we have seen historically but i do think key will be whether companies ultimately not only hurdle on the bottom line but also the bar on the top line that was another positive story for the market last quarter, was that not only was it strong earnings but a Strong Revenue beat and both the groat rates on bottom line and top line were strong key looking at this quarter will be whether we maintain that trend on the top line as well as the bottom line. How good is good enough in terms of sales growth, liz ann so you had certainly less Revenue Growth overall than you had Earnings Growth last quarter. I think if we can kind of stay in the mid single digits, i think the marked is probably okay thats sort of where expectations are built but its obviously going to vary from sector to sector. Don, we have had the fed president kaplan say the tenyear yield is a little ominous. You have had, again, black rock say if there is a risk, its the inverting yield curve because of the demand for long assets how much do you worry about what yields are trying to tell the markets . Ini think yields are trying to tell the markets that the economy is really pretty weak and that the fed path in terms of rate hikes and unwinding the Balance Sheet could be a little dangerous. This could be a slippery slope i think without significant move up in growth, which we would think would be dependent on tax policy being passed, that the feds path in terms of Interest Rates could give us a recession, and that could be something that unhinges these overly optimistic expectations in the markets. Could be in real trouble if that happens. Do you go along with larrys oped today that this tax package could take us back to 3 2 in terms of growth for the next five years . I do. I really think that we can look back to reaganomics which gave us the greatest economic recovery in history and the highest return sets in terms of equities, and i think if we get a portion affthat, that were going to get the kind of growth rates we would normally see in a recovery, which we havent seen since 2008 or 2009 bottom in this recovery. We havent seen this strength that we normally do, and that strength is whats needed to really broaden the economic effect across all income levels, so we hope that the tax package actually does get passed the Corporate Tax reduction is really key to what this tax package is all about in my mind, and its the big driver of potential economic growth. I was just looking at the S P Aerospace and Defense Industry index, liz ann up 30 so far this year. More than double the overall markets returns. Is this a new trump trade . So, you know, if you look broadly at various trump trades, whether its small caps or areas Like Aerospace and defense, you did get an initial pop in some of those names, particularly in september. Now, september also marked a lot of reversals that happened, not just because of prospects for tax reform but as we were going through the budget process, but also the reversal that we saw in the dollar, which had implications for growth versus value, small versus large. I think it may be too soon to suggest thats a start of a whole new trend. And as it relates to tax reform, you know, to the conversation just before, i think right now its still a big if as to whether it happens were still talking about a framework. Theres a big gap between a framework and a bill the good news is i dont think any expectation for tax reform is built into the forward assumptions, either for overall gdp growth nor do i think analysts have incorporated into their forward earnings assumption i think its a net positive. I dont think we have to start peeling back the numbers if tax reform gets delayed into 2018 or perceived to maybe not happen at all. Theres a lot of wood to be chopped before we decide if its really going to happen or not. Liz ann, don, thank you guys good to see you both thank you very much those wildfires in california continuing to spread at least 17 people are dead, and more than 20,000 people at this point have been evacuated. Our aditi roy is live in napa with the latest for us edyta, good morning. Good morning to you, sara we are at signorello winery in napa you can see it is burned to the ground all that remains is mangled metal here and rubble. This is one of four wineries in napa that have either been completely destroyed or significantly damaged by the fires. That list could grow even as i speak, in the last few hours, there have been new evacuations in nearby calistoga, and around napa, dozens of hotels, restaurants, and wineries remain closed because of the impact of the wildfires. Not necessarily because theyre burnt, though. If you look at the list, you may recognize many of these brands they are iconic brands in napa they include hotels like the meadowwood, the car narrose resort and spa and the silverado resort and spa just to name a few, and that could obviously have a material economic impact, especially on tourism in this area last year, tourists spent close to 2 billion in napa alone. And in neighboring snoema, wine makers are facing their own challenges we caught up yesterday with Paradise Ridge owner his winery has been ravaged by the fire, but he says he will rebuild. A little bit of a curveball in our model, but were hoping that, you know, that people are aware of whats happened and then they come and taste our wines and enjoy them and that our sales will continue, you know, to grow. He says hes not so much worried about the longterm impact on crops or any longterm crop damage because he says that the soil will regenerate right now, his main concern is finding a place to make his wine back to you. Aditi, its a heartbreaking story. Thanks for being there for us to cover it watching the wildfires in california when we come back, a Solid Earnings beat for delta. What the ceo told us about the quarter and the impact of the hurricanes on the bottle line. Outhstalk to Gordon Bethune abt atdow up seven points. Go ahead, spoil yourself. The es and es hybrid. Experience amazing. Delta reporting an earnings beat on the top and bottom line. Its up almost a persnlt we spoke to the companys ceo and joins us with more morning, phil. Good morning, sara. Not only the Third Quarter earnings, the fact they beat on the top and bottom line but also the forecast for the Fourth Quarter. Lets talk about the Third Quarter numbers. Earning 1. 57 a share. Revenuecoming in slightly better than expected at 11. 06 billion. With regard to passenger revenue, this has been the focus on wall street for some time in the Third Quarter, delta was up 1. 9 . They took a hit because of the storm. That was expected. For the Fourth Quarter, the kaerchl is expected passenger revenue to grow 2 to 4 with Strong Demand for its transatlantic routes. The thing im most impressed with is the demand for our product was really great 17 of the 20th busiest travel dates in our history we had this summer so people are traveling on delta. Theyre loving the product, and the outlook is strong on demand. And we talked about transatlantic demand. That is an area that has been a bit of a trouble spot for the company. In fact, in the Third Quarter, guys, they turned in positive results for its transatlantic route, and for those transatlantic routes for the first time in three years. Guys, back to you. All right, phil, thank you very much for that setup well talk more about the Airline Business now here at post nine, were joined by former Continental Airlines chairman and ceo, Gordon Bethune. Welcome back nice to see you. Theres a lot of hang wringing going into some of these results about the effect of the hurricanes especially hurricane harvey. The Airline Industry managed to get by in better shape yeah, i was surprised i know united took a bigger hit because of harvey down in houston, but everybody came through with pretty strong, good job by all around operationally. These results, 5. 5 delta for revenue. Passenger revenue rising almost 2 what does that tell you about where we are in this business . I think the fundamentals are good underneath this, you see the growing market caps. The market, general positive outlook in business. And were kind of like the canary in the mine shaft so things are good you know, part of that equation that sara mentioned is that relatively limited increase in capacity. You got wall street focused on revenue. Obviously, the airlines focused too. How long can that last has capitalism been repealed nobody is going to add capacity too much youre going to see some encouragement, especially with this new norwegian air, transatlantic thats the camels nose under the tent of having discount, maybe european fares by a third party. And i think thats a threat longterm for the airline. But right now so the overseas carriers adding capacity at kind of cutrate fares actually, norwegian, irish subsidy as a sham like a liberian tanker. Were flying under a flag of convenience. Offen eeu company when were not an eeu member. Everyone warns about the gulf carriers its the new end where you can get a flag of convenience. Being an eeu carrier, but you dont belong there so you use low labor costs and discount tickets i think theyre starting chicago europe next spring so youll see some erosion over time across the north atlantic, which is where the money is. How does that compare to having people express and kiwi start up and destroy some of the short haul routes . These guys have learned their lesson because american, united, delta, and southwest are not going to tolerate somebody buying their customers thats why things are so stable. Those four guys dont try to buy each others customers because theyre not stupid and we finally got some brilliant people running some airlines, doing some smart things lookingback at history, we went through this period, obviously you know, where it was seen as a toxic asset to own, buffett was scared of it, got burn ed at u. S. Air, and then things change said i wonder if you see things flipping back. We should learn from our mistakes you have a horse and a jockey. Buffett picked the wrong jockey and horse. We have really good companies. These four big boys run by really good people, good jockeys. And theyre going to optimize the marketplace. You have been advocating for change, government change at the faa, for instance. Whats the status of that . New proposals on privatizing faa . I think privatizing the air Traffic Control system, not the faa. Thats a safety aspect of it i agree with that. But etc reform has been around for long time. Unfortunately, all congressmen use that for pork with their local airports and trade, so its a difficult thing to wrest that control away from congress. Are we structurally constrained in terms of how much capacity could be added just by the kind of Airport Infrastructure we have right now . Obviously, the airplane can be on the runway for so many mnltsz when it lands thats a constraint, but the air space is not used wisely were using world war ii radars to trail five miles when you could be two miles and put more traffic in the sky so theres a lot of optimaization. I think everybody realizes it. To realize and implement it takes control from those who have it and gives it to an independent agency to optimize it one works in canada. Phspeaking of canada, they got caught in this dispute any idea how this resolves itself what a bomb there thats through 200 , 300 excise taxes. Thats war i dont know what. But delta is going their own way and doing a good job of it the stock is higher on the back of those result this morning. Gordon, thank you. Always nice to check in with you. Gordon bethune former ceo of Continental Airlines bill ackman taking his bush for a seat on the board of adp on the line. Stocks in a linjed range here. rba ia nus. Oint wee ckn mite volatile markets. Something we all think about as we head into retirement. Its why Brighthouse Financial is committed to help protect what youve earned and ensure it lasts. Introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. While maintaining a level of protection in down markets. So you can head into retirement with confidence. Talk with your advisor about shield annuities from Brighthouse Financial established by metlife. Some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. Experience amazing. Hi, im the internet you knoarmless bowling. Lt . Ahhhhhhhh you know whats easy . Building your website with godaddy. Get your domain today and get a free trial of gocentral. Build a better website in under an hour. Check out shares of kroger, leading the s p 500 right now. Up a little more than 4 the Company Announcing it is pursuing Strategic Alternatives for its Convenience Store business including a potential sale its hired Goldman Sachs to look into it. Krogers Convenience Store business, 784 Stores Across 18 states, generates about 1. 4 billion worth of revenue, guys the company is holding its analyst day as we speak here at the New York Stock Exchange just upstairs that i would say is the biggest news they also reaffirmed their guidance, talking about their Digital Strategies and how theyre going to play against the changing world of online delivery that sale of the Convenience Store business and the quote in the press release from the cfo saying theres just a premium right now in terms of valuation on Convenience Stores. We feel we have to look into this just an accelerating investments in the newer business i wonder if investor heads, walmart, for example, isnt right there. We saw walmart got very aggressive in proving its inincumbent that can figure out the competition with amazon there and with the stock at a low in kroger, it seems like people say maybe they have something figured out and the core business has stabilized also, 500 million in Human Capital in three years souns remarkably what walmart did in the early going and tookits lumps. When it comes to customer service, kroger has been dealing with higher wages. I think that the fact that walmart says e commerce sales are going to surge 40 next year and talked a lot yesterday in its meeting about grocery doing that thinks that investors are going to look beyond just the price cuts, whether they come at whole foods, walmart, when always leads on this, kroger and others, to look at some of the initiatives. Billionaire activist investor bill ackman taking his fight for an adp board seat online last night. Leslie picker joins us with the details. Hey, sara online and after hours, acumans 7 00 p. M. Web cast was scheduled after the work day ended for the Retail Investors representing about 28 of adps ownership. Thats become a critical contingency to win over in his battle to get three directors on the board. It was a different side of ackman we saw. His sleeves were rolled up he gave a slimmed down presentation with anecdotes in addition to his signature power point slides and he fielded questions from listeners from sydney to louisville he reiterated proxy fights are about sending a message to the board, and he said adps hostile response is a bad sign whenever a Company Fights back to keep a major shareholder off the board, the more insular the culture, the more necessary is it to have disparate points of view in the board room. You can tell by the companys response to us that change is needed here. Specific change that he is seeking, he calls it basic blocking and tackling. Essentially making the company more efficient to grow earnings and the dividend ackman shows an animated video to explain how to vote for his slate. He told shareholders that this decision was as important as their decision to vote for the president of the United States Retail Investors have fairly low turnout in proxy fight when they do vote, more often than not, they side with management thats why historically, retail has largely failed to capture the attention of activists in these fights but as you all know, after the closeness of yesterdays p g vote, which had an even higher percentage of retail, its become clear neither side can afford to ignore individual investors anymore. I agree that was a big takeaway from yesterday. Leslie, thank you very much. Just to follow the p g story, this aint over yet. Were still waiting a final vote count. Nelson peltz is still disputing the results, saying it is way too close to call. After p, and g claimed victory and said he was not voted onto our board. Just listen to peltzs response as we wait for this to play out. By the way, i can tell you, the final vote count is going to take weeksering not just days, according to a source. Listen to peltz. It is as close to a dead heat as you can find. Hopefully, the numbers when theyre finally counted will come out in our favor. But if these guys really cared about shareholders, and they heard what was said inside that room, they would say, you know, enough fighting. Come on the board. So i asked david taylor, p gs ceo and chairman yesterday, would you would you invite nelson peltz onto the board because the vote was close, even if he loses by a small margin here was his response. No, the shareholders will vote well honor the shareholders vote hes a large shareholder well listen to him as a large shareholder. Im fought calling his narj. Hes a successful investor and major shareholder. There are ideas he advocates that i do not think are in the interest of the short, mid, and especially longterm of the company. That was a firm no, though it does raise some questions. A lot of analysts writing and some of the big investors as well that because it was so close with almost 50 voting to add pelt to the board, the company will have to respond coming out today and saying, they will own Procter Gamble long after current management has moved on or retired. Well continue to make sure peltz are a valuable asset to the board, get the opportunity to represent us and other likeminded investors. Saying the message was clear why does it take so long . Are we talking hanging chads yes we are . No, not exactly hanging chads. They have to go over every single vote. Physical ballots, sent in the mail, reconfirm what the count is this is the biggest ever amount of paper ballots printed in a shareholder vote. And were told it came down to a 0. 4 margin. So they have to make sure that people didnt vote twice, for instance and they have to go over the institutional votes. A hot of which came online so yes, you Better Believe theyre going to be counting this up on both sides and also via independent auditor for weeks. P g, though, was confident enough to come out and say we won. And the stock down a little bit for a second straight day. At least some disappointment that it wont be that kind of quick trigger of maybe a potential catalyst for some truteejic change taylor said he got the message that investors want us to move faster on the transformation, which he said is in the final stages and youre going to start to see results. Analysts are writing this morning, clearly, shareholders are losing patience. That came from wells fargo no longer willing to settle for subpar shareholder returns and losses the vote may be over but the pressure is on big time on this company. Thank you very much well, lets get to sue herera at hk for a cnbc news update good morning. A very busy day, everybody heres whats happening at this hour a drone has captured some stunning new video of the widespread damage in santa rosa from those wildfires at least 17 people are dead. More than 2,000 homes and businesses destroyed nearly 200 people are still unaccounted for in Sonoma County alone. Iranian president rouhani telling a Cabinet Meeting in tehran if President Trump presses ahead with hes threats to scuttle the nuclear deal, it will be clear which side violated International Rules he also says it will be a failure for america, not for iran cobay steel is suspected of falsifying data on iron. The Company Publicly admitted it has been selling aluminum and Copper Products with falsified data kobe steel is japans Third Largest steel maker. This was a heartbreaker, for the First Time Since 1986, the u. S. Will not be in soccers world cup. Team usa lost to Trinidad And Tobago 21 it only needed a tie to qualify. Trinidad and tobago, they had nothing to play for. They were already eliminated from the tournament. Can you tell i stayed up to watch the game thats the news update this hour mike, down to you. And sue, as a lot of people reminding us, the mens team didnt qualify that is very true that is a very good point, mike. All right thank you very much, sue you got it. When we come back, two big banks making bullish calls this morning on amazon. We have the details and what it means for the stock. Up autbo half a percent right now. Squawk on the street will be right back to err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Got some big calls out on amazon credit sweep raises its price for amazon to the second highest on the street, saying the company will rally 40 in the next two years offering same Day Delivery Services in more areas Morgan Stanley puts out a note saying its private label business could add a billion annually by 2019 cred suisse is 13th highest. Based not so much on price cuts but more availability of service in some of the zip codes where there are whole foods overlaps youre having to project out to the next wave of expansion to get to a price target on that. Obviously, the stock was well above 1,000 not that long ago, but still, calling for a 35 or 40 ramp in a stock thats already at almost a half a trillion market cap is a pretty bold call. You have to basically say, look, theyre going to make encouragement to all these new areas. I think its interesting they use the word service thats what Credit Suisse says where amazon is going to wage war with its competitors thats a little underappreciated, they say, by the markets. Especially when it comes to the potential opportunity around whole foods and fulfillment. Speaking of the food business, big victory to tell you about for big soda just two months after the countrys largest soda tax went into effect, were talking cook county, chicago, well, the county has decided to repeal it. Lawmakers in cook county, illinois, voting 151 yesterday to roll back the tax effective as soon as december 1st. That tax has had many challenges implementation, legal problems also big money fight and big media battle between the soda industry and Public Health groups guys, today, theres an 11 00 a. M. Chicago time formality vote to confirm this. But the public backlash, im told, against this, which was originally presented to do wo things, help close the budget gap in cook county and also deal with Health Concerns and obesity, has been ferocious, as the public, im told by the industry, just looked at it as a way to plug that billiondollar plus budget gap. Big problems in illinois on that front. Pretty regressive way to do it i was going to say, not normally seen as a progressive way to tax, after the famous failure in new york, retailers pushed back on that. Now this i mean, it does speak and philadelphia, too which people so you wonder if this is going to be the thing that takes the wind out of the sails of the whole movement to do this. Some of the numbers had come out of philly. As of august, from that january implementation, sales of soda down 55 just outside of the city, they went up 35 , 38 , showing people were just going outside. Bottled water did not surge. And i think there was a lot of skepticism in particular around that 1. 8 billion dollar budget gap. Mayor bloomberg actually funded some ads in the opposite direction here in cook county, but that appears to have not worked its also interesting in a week when were talking about behavioral economics, you want to tax things that are longterm bad for you. And consumers just dont buy it. It just doesnt work yeah. Well, meanwhile, coach announcing its changing its name the new york based luxury accessories and lifestyle brand announcing it will be changing the name of its company to tapestry this comes amid strategic shift at the company the company, of course, has acquired stewart witeman and kate spade back in may somewhat interesting in the sense that coach obviously far more recognizable than a newly christianed tapestry but just shows you wants to be a portfolio of these higherend brands like a european model this is the european luxury model. A lot of people were looking at these American Companies to see if they could do it. Coors is another one to watch. I dont know if they can get there, but they acquired jimmy choo you wonder who will get rolled up and whether theyre as successful as their european peers. Coach was one of the most successful stocks after its spinoff from sarah lee. But now they feel like the name at the top of the corporate banner i dont know. What do you think . Tapestry well, lots of things, you know looking for something thats somewhat artistic. People coupling this and trunk as two of the most kornt rebrands and wondering where were going with name selection. Tapestry is an actual word. Maund elise, you remember that noise around that and the criticism. Verizon verizon was laughed that. Thats true. Its lasted. As we go to break, take a look at shares of black rock. The Asset Management company did report earnings, a bet on the top of the bottom line larry fink did make comments about the markets, what his greatest fear is plus, jpm and citi getting ready to report tomorrow what we should keep an eye on as earning season gets under way. Dow is up ten. Squawk on the street is back in a moment. This may surprise you walmart shares have been crushing amazon over the last three months, but which one is the better pick for youron mey right now . Find out at cnbc. Com or squawk on the street coming up when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. In chicago Rick Santelli with the Santelli Exchange good morning, rick good morning, sara. Thank you. Thank you for being here today todays kind of an interesting day. We already had data. We have minutes. Lets start at the top another 6 million handle on job openings and labor trover. Incredible for a series that started out in 2000, a handful of readings, all recent over 6 million in terms of job openings what is that telling you its another piece of data telling us that the u. S. Labor market is fundamentally healthy, improving. Improving at a slow to moderate rate, but you see it in a range of statistics. The lower unemployment rate, and the data today is just another piece of data that supports a gradually healing and improving labor market we had a handful of important central bank meetings. Important data in the form of jobs now it seems like markets have retraced off significant levels. Interest rates on sovereigns have moved lower dollar index kind of getting hurt by all the relative relationships, whether its euro, the yen, the juan. What do you see in that move, and what does it speak to that we may see in the minutes today . I think it speaks to two things one, it speaks to the idea that these global Central Banks and Monetary Policy are all highly linked the global economies are linked, markets are linked, policies are linked the rates and currency stabilizers remain in play for the minutes, two things were focused on the shortterm issue is what does the fed think about a december hike . Does the market need to reassess its probability they go into december, and intermediate is the inflation discussion and what the fed is thinking about why inflation is missing their projections even with a very strong labor market. And thats how were going to approach the minutes later today. Its hard for me to talk about Balance Sheet reduction because it has gone unnoticed. But its a netting effect. If the tree falls in the forest, nobody is around to hear it. Other Central Banks are still buying large amounts, which makes what the fed isnt reinvesting really small potatoes but the notion of making the turn is very significant, and i give them a headsup on this, a thumbs up, because it isnt easy to reverse policy, especially when your reputation and Global Economics hang in the balance. Yeah. Its a great point because the fed is going to start reducing its Balance Sheet by about 10 billion a month, but the ecb is still going to be buying even after the next announcement, somewhere between 30 billion to 40 billion a month. Global liquidity is still there, its changing, continuing in the european arket, but its been remarkable the fed has accomplished a lot and its going to try to pass the baton to the ecb into 2018 when you look up at Interest Rates and see where theyre at, part of me always wants to say, you know, close my mind off to all the things we talk about in the Trading Community and look at it from the political standpoint you know, if rates eventually are going to move and its going to cause the treasuries of all the big develops economies to make important decisions was servicing the debt is going to be expensive your thoughts on that end game it comes back to what you and i were talking about just a minute ago, which is the globalization of these markets whats really happened in earnest after the crisis you were making the point its been very hard to get up to a 3 tenure note our view is thats going to remain hard to do until the ecb and bank of japan can normalize. That makes the servicing of the debt issue a longer term issue do you think any of the legislation in the Current Administration can hold a powerful button for more upside to stocks . Many believe that taxes or tax reform or any type of tax changes are priced in. I personally am not sure they are. Whats your thought . Our view is tax reform or tax cuts can lead to a cyclical increase, even from these levels tax reform, if its done in some of the ways its been proposed, has some very powerful longer term implications for debt and equity in the Corporate Market and credit spreads but well see if that happens. Certainly, a cyclical upswing if we get it. Matt, always a pleasure thank you for joining me on the floor today. Mike, back to you, sir all right Rick Santelli, thank you very much President Trump heading to pennsylvania today to make his pitch for tax reform we have more from washington hey, mike well, President Trump will be debuting a new argument as he makes that pitch during his speech in pennsylvania hes going to be saying that the typical American Household will see a 4,000 pay raise if the country moves to a territorial tax system and forward earnings get repatriated. We dont know exactly how they got to that number, but this is an area kevin hast has focused on quite a bit and the white house is expected to release a more Detailed Analysis of that argument soon, perhaps even as early as today now, during his speech in pennsylvania, President Trump will be speaking before about 1,000 workers, many of them truckers and its really how the white house is hoping to connect their message of Corporate Tax rates eventually, if you cut that, helping the middle class see higher wages and see more middleclass jobs. And tax reform is really the one area that republicans can rally around right now, especially as the president is facing escalating feuds with lawmakers here on capitol hill and even some tough talk from his own inner circle tom barrack, a close friend of the president and one of his longtime Business Partners really unloaded in a Washington Post interview that came out today. He says that he disagrees with many of the president s positions including the travel ban and the border wall, and he said, quote, i think hes better than this. Barrack did say, however, he believes the president is still learning how to govern and so perhaps we might see some changes in the future. Back over to you you mentioned that we dont know how the president is going to arrive at that 4,000 benefit to a typical American Household, but there has been a lot of talk in the administration about one or two studies that say Corporate Tax cuts that happened overseas did accrue to the benefit of workers but also, i guess, if you say the economy is going to grow much faster, thats another assumption you can make right there. I guess it also maybe hinges on the definition of a typical American Household thats right. So i was very careful in using that word because were not sure what that household actually looks like or what they actually earn the question here is really what is the order of magnitude . I think most economists do agree that moving, cutting the corporate rate and moving to a territorial system, repate reattic the earnings will increase investments in the u. S. The big question is exactly how much obviously, the white house is banking on a very big windfall yeah, also not clear whether thats 4,000 a year over the life span of the package i have seen over what timeframe it might be over eight years perhaps. 500 a year. I guess well find out more tonight. Is the thinking that it will flow down to workers in the form of higher wages . Yes i mean, thats the idea, is that eventually there will be more investment in the u. S. Which will encourage more hiring of American Workers and an increase in wages and more demand for workers which will eventually rise wages again, until we see that report from the cea, we dont know all of the details of that analysis. Yeah, and some would say it might go into stock dividends and buybacks which to gary cohn is just fine it boosts your Pension Funds and 401 k s. We did hear that, too. Maybe all of the above. Well see if we get further detail on that later on. Thank you very much. Now lets send it over to john fort with a look at whats coming up on squawk alley. Well, jim clark, the famed internet pioneer and investor is going to join us to talk about the state of startups and his latest venture thats coming up on squawk alley. Howd that go . He kept spelling my name with an i but its bryan with a y. yeah, since birth. That drives me crazy. Yes. Its on all your email. Yes. They should know this . Yeah. The guy was my brotherinlaw. Thats ridiculous. Well, i happen to know some people. Do they listen . What . Theyre amazing listeners. Nice. Guidance from professionals who take their time to get to know you. Upeace of mind. S we had a power outage for five days total. We lost a lot of food. We actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. Lets get over to dominic for a quick market flash hey, dom. Were watching shares of apple up half a percent on pace for Third Straight day of gains. Relief rally for apple shares over the course of the last 1,000 points the dow has risen since around september 7th apple has been the single biggest detractor to the dows gains overall, minus 38 points to the overall total watch some of the news with positive analyst from piper jaffray, content deal news as well from apple. Those shares focus marching back might be a relief rally. Thank you very much well watch it tomorrow is the official kickoff to official earning season, jpmorgan to report before the open will fred frost. Investment banking and trading. On trading in particular, analysts are expecting as much as as 20 year on year or 10 quarter on quarter comps to last year were always going to be tough. Some by comments from jamie dimon recently trading will be down about what analysts estimate, around 20 this quarter remember, last quarter for us a year ago was a particularly good quarter. Citi and bank of america guided down mid teens but it is Goldman Sachs in particular spotlight focus following recent relative underperformance president and ceo Harvey Schwartz said fixed income trading felt a lot like first and Second Quarter on the retail side, the recently disappointing Net Interest Margin is expected to improve as the june rate hike is fully priced in and deposit rates remain low furthermore, the rise in yields in recent week should allow improvement in guidance even if it has come after the quarter. Loan growth expected to slow below 1. 5 to consumers and in particular corporate wait more clarity on the trump agenda. On which note investors will hope for tax reform given banks are high taxpayers would benefit from a cut to 25 let alone 20 . A topic jamie dimon was talking about writing on nbcs new think platform guys. Tobias of citigroup said hes going to be looking for loan growth to start to pick up what do you expect from there . I disagree with that. Loan growth is expected to slip a little bit as it has been doing over the course of this year 2016 was a very strong year for loan growth. Year on year comparison, it is down expected to be down this quarter. Whether or not its sequential improvement from relatively soft q2 well wait and see. Corporate lending as opposed to consumer which is still relatively strong. Talking to jim in the 9 00 a. M. Hour. He did say he believes this trend towards deregulation we might see reacceleration in loan growth, at least in residential where you can once again put down 20 and be reasonably assured youll get a mortgage. Hard to quantify in advance but does seem youre waiting to see benefits sorry about that well get you next time. Busy week ahead when we return, one early facebook investor call for Mark Zuckerberg to come clean on facebooks role in the election. Roger mcnamee will join taos explain that dow is up. Dont go away. When a fire is going on, youre not thinking clearly, so they called the Fire Department for us. My first truck was on the scene within five minutes. I am grateful we all made it out safely. To protect what you love, call 1800adtcares i cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise shares weighing most on the financial side of things, that stock, navient, hitting a 52 week low S P Regional Bank down a percent in early trading of course all of this ahead of jpmorgan and citigroup earnings expected out tomorrow morning. Were also going to keep a close eye whats going to happen with the fed and minute announcement. Definitely financials in focus that does it for this hour of squawk on the street. Lets head back to the New York Stock Exchange for squawk alley. Good morning. Facebook headquarters in menlo park, california, 11 00 a. M. Wall street and squawk alley is live. Good wednesday morning, welcome to squawk alley. Im carl quintanilla, sarah and john ford joins us