Transcripts For CNBC Squawk Box 20171013

Particularly hard. At t points out their phone start, the turn is lower they are going to get their numbers. And everybody is trying to move to some of these issues i would say it was more media, but it is all the same, i guess. Telecom and media are the same now. Tmt. Thank you tmt. New network . No. Lets take a look at what happened overnight in asia you saw the japanese stocks this week have been sitting at new records just about every day that continues once again today with the nikkei up another 200 points this is now putting the nikkei at its highest close since september of 1996. 21,155 hang seng slightly higher. So was the shanghai composite yesterday. And in some of the morning trading we are already seeing, in europe youre going to see as we wait things are up for the most part. Looks like the ftse is down by. 20 right now. But these are modest advances from the other markets take a look at what is happening with crude oil prices. Yesterday crude oil settled down by 1. 4 . It was above 50 this morning it is back up by more than 1. 5 wti trading at 51. 45 a barrel okay we have political news to bring you that will bear on the Insurance Market and the Business World today late yesterday President Trump moved to cut off billions of dollars in subsidies to Health Insurance companies for lowincome patients. Many have scaled back Health Care Offerings and blame this on the uncertainty of the subsidy payments earlier, the president signed the executive order on health care making it easier to buy bare bones Health Insurance plans exempt from obamacare requirements the president will outline his plan for iran in a speech that will happen today at 12 45 p. M. This afternoon and eamon javers is here with details. Good morning. The Media Outlets are breaking some of the news of what the president will say today heres what we know about what the president decembs decision iran he will issue no new certification on the Iran Nuclear Deal that means the decision on whether or not to reenact sanctions will go to congress, but we dont expect the president is going to Push Congress to impose those new sanctions. Hes instead going to ask congress to modify the socalled legislation passed in 2015 on capitol hill to establish some trigger points for reimposing sanctions on iran. That is the United States will stay in the Iran Nuclear Agreement but will not certify it under the law that mandates that every 90 days up on capitol hill that pushes a decision to congress the president is going to Lobby Congress to make changes to the law. But the United States will stay in the Nuclear Agreement this is complicated stuff. And i should say, i mangled some of the sequence of it in an earlier shot, guys, but the president is saying mideast going to live up to his Campaign Promise to do what he can to bring this deal down but hes not going to end it completely and thats goingto restart possible negotiations with the iranians its going to cause some reaction among allies as well. But the president here trying to sort of have his cake and eat it to by staying in the deal and decertifying it on capitol hill. What are the options that the iranians now have at this point . Well, if the United States doesnt impose new sanctions, thats going to be the key then the United States will be abiding by the terms of the deal itself, right . So the iranians wouldnt be able to walk away saying the United States walked away first if congress imposes new sanctions on iran related to its nuclear ambitions, then the United States would be breaking the deal and that means that iran could walk away and restart its Nuclear Program and all that could go forward for right now, though, what the administration is saying that they want to stay in the iran deal and yet decertify it remember, there was this separate piece of legislation called inara passed after the iran deal itself you have the iran deal that exists between the United States and iran and then a piece of legislation up on capitol hill that was passed after that by skeptical republicans who said the president has to certify every 90 days that the iranians are in compliance with this deal that was to be a check on the Obama Administration now its the Trump Administration that has to live with that. They dont like the idea the president has certified, i believe, twice already that the iranians are in compliance with the deal, but he doesnt like the idea of having to certify that every 90 days under that law so what they are going to push for is an amendment of that law, not the Nuclear Agreement itself, and well hear a lot more from the president on this later on today at the white house. As you say, i expect there will be a lot of rhetoric surrounding irans Ballistic Missile program, irans support for terrorist regimes around the world and the like and the United States very frustrated here that they have to live with this agreement. That the president has called one of the worst deals ever. But yet they get some benefits from it that they like so they dont want to get out of the deal altogether. Okay. Eamon, appreciate it well see a lot of you today and well talk about iran and health care with axis editor Nick Johnston in a couple minutes. Samsung says its ceo and vice chairman plans to step down this was a surprise resignation announcement as he was expected to take on a bigger role after samsungs heir was jailed for bribery. Samsung now forecasts record Third Quarter profits on Strong Demand for memory chips in this case i dont know, personal, i dont know the faa has ordered inspections, meanwhile, of the fan hubs in the engines of some of its a380 jets you recall last week the engine on one of these fell apart on an airFrance Flight forcing an Emergency Landing. The engines are made by a joint venture of ge and United Technologies in the pratt and Whitney Division there and bsf has agreed to buy a large part of bayers herbicide business for 7 billion. They are selling assets to get Regulatory Approval for the 66 billion bid to buy monsanto. Aaron rosengren weighed in on this. Heres what he told Steve Liesman on closing bell. I would say they are fully priced. Fully priced to necessitate Monetary Policy action something we should consider is how much prices are likely to go up if we dont continue the path of raising rates gradually. Wow okay thats a message for you rosengren said theres a high possibility that the fed will raise rates in december. Now for more on the broader economy, well bring in the chief economist at barclays. And ed kehan is Portfolio Manager at qma what do you think, is it chicken and egg in terms of the market following the economy or the economy following the market you get both to some extent, dont you . The market tends to follow the equipment, but the market has been ahead of the economy. So its the other way around. And then there are hurricanes, and we dont know what the employment page looks like right now the last number showed a popular wave growth that could be partially because of the loss of lower paid jobs during the hurricanes it is very hard to say at this point. I do think there are wage pressures building and we have been so used to having wages be low and low inflation mare pressures for so long, i think theres a potential over the next few months. Thats a good news bad news thing, too obviously, america would like a raise, which is great, but just that it will perhaps prompt a reaction from the fed in terms of higher rates and lead to somewhat higher inflation rates. You sort of said for months that youre okay with the markets but i think you liked a broad more than you liked here yeah. Are the markets abroad doing 25 in the last, since november . Well, it depends on you look at it. Year to date with the dollar, i mean. The dollar, it depends on whether you buy it and what terms you take the currency. Actually, the u. S. Markets are doing a little bit better. So i think we like that positioning. We are not underweight the u. S. , but we have a bigger weight outside the United States in japan and emerging markets some people have been saying that the yearoveryear growth in earnings, which is pretty good, will still be positive and slow we may have seen the best. We probably have seen the best quarterly yearoveryear growth, but we are still seeing pretty good growth in the outlook for next year looking good so that the big surge we got from the Energy Earnings bouncing back, thats what we got in the first quarter. You didnt think we would do better than midsingle digits this year. I thought we would do 8 to 10 this year. This has been a surprisingly good year. Are you back to 8 to 10 for next year . Probably. In the long run, the market can only go up as much as earnings go up. You cant have evaluations go up continuously into the future in the long run, they go up at the same rate of nominal gdp you cant have 10 Earnings Growth forever as long as the economy is growing at a nominal rate, including inflation at 4 to 5 . So still, im bullish. Im overweight stocks. But i think we should be realistic in doing longterm financial plannings. Theres only so much you can get out of the stock market in the long run. Michael, you have seen the overall outline of the tax plan, have you been aware youre at 4 gdp, 5 . Where are you if it passes if it passes 2. 2 . A little less than 3 it think it will go high, too. Go you think it will pass i think it is probable but not plausible. I think by Christmas Eve or something. How do they know that . They dont. I think youll get efforts of reform and if that doesnt happen, then perhaps cuts and q1. We have waited for cuts by q1. But at this stage of the cycle with the fed saying, were on a path to normalizing Financial Stability concerns or inflation that will lead us to do that, youre probably looking at a low multiplier add a half percent or so to growth so thats where i would put it. The fed has been all over the map lately people say, theres going to be another one this year and four next year. Other people say, dont do anything what do you think finally really happens . I think they go in december i think the Committee Makes the outlook next year a little more concern. You could have three if you had tax cuts, but thats the wiggle room right now. Because if the tax cuts come, it will force them to start raising rates faster because it will bring the economy up . Yes so it will just make it easier for them to justify it so whether it is financial conditions, whether it is inflation, some of the transitory elements coming out, it will keep them more normal. On another network they have, they give your panelists 100 worth of chips so how would you spread out your chips on your fed head betting right now . So in my view, everything in this is personal. How much are you going to put on this, 50 50 to 60 do you split up the other 40 . Give most to yellen. Yellen get . A dollar. 2 . If they want current policy, you go with yellin or it seems that way if you want to go a different direction to keep rates really low. I would pick ivanka then. Go a different direction to keep rates low look at somebody like jim bullard. Hint, they said to write something where it should be hes fickle. I agree but hes changed his tone two years ago. And where the fund rate is now is appropriate so if you want low rates but want to make a change, thats where you should look. Do you want to play, andrew i want to understand why you think the wars would be loyal. But i also think hes i want to get to the soap opera here why do you think he would be loyal to the president i didnt say that but the personal connections give him a leg up kevin is smart. Hes really no. His stress is about inflation and staying at zero so long in terms of assets. And the hawkishness about the willingness to use the Balance Sheet in the downturn. It is, what do you do with unconventional policies . I do care who is your choice . I put bora. If powell gets the job, the market does what in the next this hours after that announcement and if kevin gets the job, what does the market do i would think that kevin warshall has intellect and positions. But in the short run, america will like the powell better because it would be less likely for him to take restrictive military policy. He is unknown yeah. You said, what does the president want we are the closest to continuity 24 hours then after it may go well. I dont know i dont know either do you think the policy has helped the market . If you think that a switch to a lessaggressive policy is going to be negative for stocks, then a person who has that belief is more likely to be negative is he on squawk box. Yes, he joined us from the studio. Was i there i dont know who wascying with me that day i was there. I believe i was there i might have been there, too. Things like that sort of all melt together. But i know walsh actually, all three of them have been on squawk. Dont act like you dont think about yourself, okay all right. Dont virtue signal this early it is only 6 20, 6 16. Coming up. Thank you, guys. Chief of staff john kelly said yesterday hes not quitting and didnt think he was being fired either we have the latest from d. C. On health care, tax reform and much, much more. And later, dont miss the special interview coming up with senator ted cruz joining us for an hour starting at 8 00 a. M. Eastern. We have lot a to talk to the senator about. Back in a moment th u clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to Wealth Management. President trump is expected to skrab subsidies in a move to unearth obamacare. The democrats obamacare is implo imploding. Massive subsidy payments to their pet Insurance Companies has stopped. Dems, call me to fix help us understand the decision itself and where we go from here right so the president hate os obamacare. He wants to repeal and replace it since running for office, so hes taking a sledgehammer to it administratively hes going after the important insurance subsidies to pay for the more expensive people in the market and hes passing new rules to undermine the market. So what is the political calculus at this point in terms of, is it really about bringing democrats to the table as the tweet just suggested and given that some of the lowincome, the lowestincome folks will ultimately get hurt by this, how is he going to balance that i think what the president s political practice is he wants to say this is a democratic problem. That it is the democrats fault our reporting shows a lot of the things he is doing is making it unstable remember when a lot of Insurance Companies pulled out of the market last year they did that because of the uncertainty about repeal and replace. The president s strategy now is make it so bad, hell tell chuck and nancy to come to the table to negotiate on this but earlier today you had a statement from them calming this spiteful they are not negotiating on this so i think it will turn to senators lamar and alexander to look for middle ground here. You mean alexander and Murray Murray and alexander, right i dont see how this is that different than the daca thing where, he says, okay, hes like lighting a fire under congress or the iran decertify case deal. Thats exactly right. All these things are pushed to Congress Iran is the next thing. But congress could save the subsidies if Lamar Alexander and patty murray get a deal together these arent paid for right now, right . Nick, right now, its like an off Balance Sheet. It is 7 billion that hasnt been allocated. Exactly. It is not legal until congress legalizes it. Thats the argument these are things being litigated right now as a way to get them through. Congress couldnt get it done first and now they are off the books. And many people in california say they are going to be suing. When they are done administratively, people end up in court so now well be in court on the obamacare thing until we figure out the congressional solution this year. Nick, i want to pivot to big tech facebooks ceo Cheryl Samberg is facing pressure about the russian interference to the 2016 election does facebook owe the American People an apology certainly any time theres an abuse on our system for foreign interference on our system, we are upset. And it is not just that we apologize, we are angry and upset, but what we owe the American People is determination. We are determined. These are threats, these are challenges, but we will do everything we can to defeat them because our values are worth defending. Nick, did Cheryl Samberg e quit facebook . I have two quick takeaways from that. She says she will cooperate with the investigators, whatever congress wants, she will give it to them. We asked her three times if they had data on whether there was targeting on the Trump Administration for what the russians were doing, she didnt answer that, but if Congress Gets it, it could come out through there. And facebook will not change what it does is facebook a Media Company . No, its a tech company that hires engineers. Dont expect them to change their Business Plan over this. What im looking for next is when the congressional investigations are done and we know everything that facebook knew about russia involvement. Then its their call to regulation then we have the hill and the regulatory tax reform. The critique at least online and the twitter sphere is where it is, so we wont take too much away from it but it was harsh as the interview was taking place, especially when it came to the second part of what you were just suggesting in terms of how the company, the companys disposition, how it thinks about these issues and whether you think that lawmakers are going to look at an interview like that or the conversations theyre having with cheryl or others and feel more or less compelled to think about regulation what would that regulation even look like . Thats difficult. We have written a lot about how you cant go and regulate google, twitter and facebook under the rules that exist so this will require one more thing on congress plate. But they dont want to change their Business Model they want to be open for allowing things to show up on facebook they disagreed with twitter taking down the Marsha Blackburn ad so it will be interesting to learn what congress learns from this investigation and if theres a desire in congress to crack down on this do you think it is a bipartisan issue are you hearing from both sides saying we want to do something in big tech . When we went around the hill ahead of the Cheryl Samberg interview, democrats were quick to tell us things they wanted to add. Republicans less so. I havent heard as much of sort of a bipartisan sentiment to go after Tech Companies yet but i want to see as more stuff comes out. We may see more. Thank you for coming on with us this morning. Bank of america is set to report i havent sold it quite as much as i did with jpmorgan. Sell it im hoping, well, im just hoping that viewers remember what they should be doing right now. And that is gathering the family around the tv set. Because its coming up bank of america will bring you the numbers and reaction on wall street plus, well bring you a first look at Aston Martins new luxury convertible in a firstoncnbc interview with andy plumber heres a look at the s p 500s winners and losers from yesterday. That was wonderful, bravo that was great. Well, i wat wasnt bad. T s bls pretty terrie. Iwabad. It was awful. A terrible waste boo 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. Has grown into an enterprise. Thats why i switched to the spark cash card from capital one. Now, im earning unlimited 2 cash back on every purchase i make. Everything. Whats in your wallet . If you could book a flight, then add a hotel, or car, or activity in one place and save, where would you go . Expedia gives you the world in your hand, so you can see more of it. Expedia when it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Ive been thinking. Think of all the things that think these days. Businesses are thinking. Factories are thinking. Even your toaster is thinking. Honey, clive owens in our kitchen. Im leaving. Oh nevermind, hes leaving. But what if a business could turn all that thinking. Thinking. Endless thinking into doing. To make better decisions. Make a difference. Make the future. Not next week while you think about it a little more. But right now. Is there a company that can help you do all that . i can think of one. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning, everybody right now its time for the squawk planner september retail sales and cpi are out at 8 30 eastern time followed by stop it, both of you. Consumer sentiment in august inventories. That is at 10 00 a. M. Eastern time chicago fed president Charles Evans and dallas president rob kaplan are speaking today. Sara eisen has the exit interview with Stanley Fischer at 10 30 a. M. Eastern time hes leaving the central bank this weekend well also hear from bank of England Governor Mark carney sitting down with Steve Liesman at 1 20 p. M. Lots and lots of fed speak today. All kinds of central bankers talking. Also, we have the earnings front happening. Bank of america is set to report in the next few minutes with results of wells fargo around 8 30 eastern time today. Well look at the u. S. Equity futures now. The dow futures indicated up by 28 points. Nasdaq up by 7. 5 wilf cede yesterdsaid yesterday we werent arguing. You stepped in when we were agreeing and you ruined the moment. Chatter, chatter, chatter. You ruined the moment. I ruined your moment as you talked through my read i wish somebody sat on the other side of you. So while you read this, i could continue. Sometimes people do go ahead, try reading aston martin hey, did you know taking the wraps offthe db 11 convertible in new york today. Phil lebeau is joining us with a look at the car in a first on cnbc interview with martin does it have the things that shoot out from the hubcaps and they have spikes on them do they still do that . Do they have that on this one . Is it an option . Reporter its an options package just for you lets bring in andy palmer, well get to the question of whether or not you have it rigged for those who want the special details there. But lets do the global unveiling of the db 11 volante ladies, please tell us what this vehicle represents in terms of the market here in the u. S. . Very imfupulsive market we are in the turnaround of the company with seven cars in seven years. The dp11 is the first of those cars the dp11, v12 engine coup has been out for 12 months now we recently introduced the v8 ingin and this is the first and last derivative of the db11. We call it the italian for flying very important for this market because obviously, the u. S. Is a big convertible market we expect this to represent 50 of the volume sold in the country. Reporter you bring up a good point, a 218,000 beautiful ultra luxury convertible shouldnt be hard to get attention. But in this market, especially in the United States, you find it harder to cut through the noise that is out there, right yeah, we are a relatively small company. We sell very expensive and exclusive cars we sell around 5,000 cars a year globally so about 1,500 in the United States getting that message across, so this is we are independent british company. We make our cars by hand we speak to all the customers. So if you want your option pack, as long as it is legal, we can provide almost anything you want demonstrating the value of such a beautiful motor car, is sometimes difficult to cut through, but when you create a beautiful car and people see it, it gets attention. And hopefully people ask the question, what is special about this car being made by hand and in the uk, you have two plants over there. A lot of focus in terms of what brexit could mean for aston martin and the negotiations are just beginning. What is your sense in terms of how quickly some type of a finalization is agreed upon between the uk and the European Countries . Well, first of all, brexit hasnt been bad for us because brexit has been balanced by weakening of the pound. And we are a company that exp t exports 80 of what we produce and the weaker pound helps us. But everybody wants clarify of what the uk will look like postbrexit. I think theres a little bit too High Expectations right now in assumed that the negotiators will quickly come to an agreement. Clearly, there is posturing to do and eventually its in the best interest of everybody that we get a solution but its going to take a little bit of time, i think. Do you need that clarity before a potential ipo i know you have discussed going public at some point in other words, do you need brexit before you say, yes, its time to go public. We know brexit is going to happen thats a done deal that the public has voted on it good or bad, brexit is going to happen what we dont know is what the trade deal will look like. We could have no tariffs or the 10 . To be frank, we as a car company can cope with the tariffs. But we worry about the nontariffs. The clarity we need from the government is what does the nontariff, what does that look like postbrexit. Andy palmer, ceo of aston martin afterwards, can we talk about the special james bond features in the car do you think you look like james bond reporter oh, he set you up, joe. He set you up. He doesnt think i look like james bond there are many james bond there were many james bonds and i think phil could be one. Roger moore was a big fullfigured guy right . Reporter what did he say he said im full figured. Thats the nice way to say im a big guy. Thank you, phil and roger moore is a little guy. Hes tall hes a tall guy. And roger moore is big. He was tall, yeah. Daniel craig is like photo this is a good segway thats true thats what we are on. Amazon is suspending its studio chief roy price following allegations he sexually harassed a producer hes also accused of ignoring a claim by Actress Rose Mcgowan that she was harassed by Harvey Weinstein. She is in shows like transparent and the man in the high castle. This is additional fallout in the wake of the Harvey Weinstein scandal that just continues. You can be cynical of hollywood. Not just hollywood. I think the stuff stretches well beyond. People with power and couch interviews and things like that. But, i dont know, hollywood seems to set the Gold Standard it seems to be the worst of it. And you wonder, are there perfectly clean hollywood types . Are there any out there . Probably a few, i guess, producers that are happy married and go totally by the book but this really makes it seem like its pervasive and unspoken, which is kind of sleazy and gross i would have been afraid, too, not saying everybody should have had the courage to come forward. Again, this happens to women when they are young, not in a position to be able to and it probably happened without being able to fight and being totally discredited. Like we talked about for ari weinstein, everyone were reading about, there are probably some young people that really want to succeed and just thought, this is what i have to do and didnt even youre still being taken advantage of, even though in his view it was consensual but all the power is on this side i think this is pervasive i am a woman, i will tell you it is very pervasive in other places. We talked about the stories in silicon valley, there were stories for many, many years on wall street, frankly i mean, the old boom boom room and all these stories. Anywhere theres an imbalance of power, theres the tendency for someone to potentially take advantage of that position of power. Absolute power corrupts, absolutely you see this again and again in places look to the churches i mean, any time that you have power that goes unchecked. This is what you can rise up with i agree that hollywood, the standards, the stories are much worse than anything i could have imagined but thats where the i guess, didnt a couch interview come from hollywood. Casting couch everybody has a couch, i guess. But the casting couch seems, i dont know particularly, yes theres people i have never heard of i just saw another five people that came everybody theres no one that wasnt somehow. Jane fonda talked about how Harvey Weinstein didnt treat her that way, but she said i was old when that happened that doesnt happen to old women. Kate beckham dodged him by saying i have to get up for school, she was 17 at the time. There was another news presenter, he presented her with some type of contract. Some type of, like, confidentiality contract like if we do this relationship . The business angle of this, i dont know if you saw one of his contract last night with weinstein, which is the most bizarre contract you have ever read because it says, a, it is not a fireable offense Sexual Assault is not a fireable assau assault as long as you pay them off. And if the company is sued, so long as hes the opposite of the moral clause he has the immoral clause. As long as it is not a criminal offense i have never seen anything like that i didnt want to trigger you, but i was going to send you just this piece about, you know, a lot of hollywood that when they talk to us the pleads during the award ceremonies and talk down to us about morality and virtue and are sanctimonious. And they know this is happening but they are up here where the gods expect them to do this stuff. We have strict morals. But they can preach to us about how we should be acting and do all the affleck and clooney whatever it is annoying your word is shaken up here. All of our worlds you see bank of america expecting a report in the next few minutes. Well bring you the results and reaction on wall street. Plus, londons battle with uber well tell you why today is a key day for the companys future in that city throughout my career, ive been fortunate enough to travel to many interesting places. Ive always wanted to create those experiences for others. With my advisors help along the way, its finally my turn to be the host. When you have the right Financial Advisor, life can be brilliant. Ameriprise 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. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back time for the executive edge. It is decision day for uber. They have until tend of today to try to repeal londons decision not to renew the operating license. Arjun is live in london with the latest on this arjun, good morning. Reporter good morning. Well, becky, just in the last hour uber officially launched an appeal with the court here in london now they are repealing the ban put in place by transport for london, which is the regulator here in the uk capital they failed to renew ubers operating license. Now this appeal is likely to be heard around december 11th so early december. So theres a few months. And while this process is going on, uber can still operate so i am still seeing cars driving about. This man here, the mayor of london, sadiq kahn, is about to defend londons decision in the courts so theres a fight going on now between the two. Uber can continue to operate and now theres a couple of fallouts potentially from londons reputation as the Innovative Center could be hit, but the real damage could be for uber it has about 40,000 drivers here in london. About 3. 5 million customers. If theres any Material Change to the business, if they have to pull out of the market, if they need to make changes about the way they operate, that could substantially hit the business here in the uk one more major point i must mention, aside from this issue, uber is appealing an employment tribunal to classify the drivers as employings. If they are employees, uber has to pay things like vacation leave and extra benefits that will cost them significantly more that appeal was still going for the courts and if uber loses that, that could be a potentially explosive issue for the new ceo, Dara Khosrowshahi what is the political backdrop for this as someone who understands what is happening on the ground how much of this is because of what the taxi drivers are thinking and how much of this is a bigger issue and taking a stand and not allowing things like this happen to companies that have concerning Business Practices . Reporter its a little bit of everything. Sadiq kahn said that uber is not fit and proper and he cited things around background checks for drivers, for example, but at the same time theres absolutely no doubt that there is intense pressure from the black cabs. We have seen over the past two years a number of protests from the black cab drivers here in london they have blocked up roads and had very heavy protest so theres a lot of political pressure on transport for london and the mayor of london. And aside of that, uber has been criticized for its tax practices in the uk. And we have seen some of the issues in the u. S. Around some of the software that it has to try to fool regulators theres a lot of bad blood around uber and a lot of negative press coming out over the past few months. And that is playing into the hands of regulators, not just in london, but across europe and other parts of the world, too. Arjun, thank you very much. The price of bitcoin hitting a record high. The currency market topping 97 million. They say this rally was sparked by speculation that china could reverse a recent ban it put on chip crypto currency changes and jaime dimon called the bitcoin a fraud, but yesterday he came out to say he wasnt going to talk about it anymore and if youre flying delta, this is good news. You dont have to check in for the flight anymore deltas mobile app will now check in travelers automatically. Users still have to open the app toing a knowledge federal restrictions on banned items like luggage, but delta made the change in response to customer demand checking in, if you will, is sort of a relic of sort of the logistical process of years past. Right so how often, 24 hours before your flight, you would go on online and now you dont have to this is progress. Its gotten much easier with the app on your phone. What about luggage . You dont put in how much youre bringing i never know what im bringing until i get there so it doesnt matter. Coming up, a lot more to tell you about, including bank of america set to report its earnings and our special guest is texas senator ted cruz we have a lot to talk to him about. Hes going to join us at 8 00 eastern time this morning. You dont want to miss it. Squawk returns in a moment its friday the 13th and were talking to the filment producer behind this weekends hot new horror release, happy death day. Jason blum from blum House Productions is changing the model in hollywood when lowbudget thrillers that hit it big at the box office. Hell join us onset at 7 40 a. M. Eastern. Squawk box will be right back. 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. Pthey dont invest inn stalternativesds. Or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you 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. We come into this world needi others. Then we are told its braver to go it alone. But there is another way to live. A way that sees the only path to fulfillment is through others. Bank of america out with its earnings it looks like the bank is coming in with earnings of 48 cents a share versus the 45 cents the street was expecting revenue just light of expectations 21. 8 billion versus the 21. 975 billion that had been expected Brian Moynihan, the ceo, making some comments about how they think revenue for the four lines of businesses grew 4 , even with the challenging comparable quarter for trading. If you look at trading, which is what got jp morgan into trouble yesterday, excludeing net dba sales and revenue down 15 versus very Strong Quarter a year ago fixed income, down 22 equities up 2 shares of kobe steel continues to plummet they falsified data about now the company says its Steel Division has falsely labelled products the firm saying 200 companies were affected by its cheating. Now, airbus denied rumors that it had used parts from kobe steel and said it had not identified any suppliers affected by the scandal, but reuters now reporting that boeing has used kobe Steel Products that include those that were falsely certified also, another story for you. Tokyo electric trek power saying it received metal pipes for use at a nuclear reactor, but they had not yet been put into use. Let me just say bank of america does use a different revenue figure fully taxable equivalent basis, revenue came in at 22. 079 that did slightly beat expectations lets take a look at that stock. Yesterday it closed at 25. 45 its trading up by about 5 cents right now. Just remember, the stock traded down yesterday after we saw citigroup, but this morning it looks like its up 5 cents on the Immediate Reaction to these numbers. Coming up, more Bank Earnings still to come. Wells fargo expected to report at 8 00 a. M. Eastern were bringing you the numbers and the market reaction. Then our guest host for the 8 00 hour will be senator ted cruz. Well get his take on taxes, chmu me. Are, immigration, and mu, chor squawk box will be right back. To err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. 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. Earnings alert bank of america rolls out better than expected Quarterly Results. The street reaction is straight ahead. Washington watch President Trump moves to end key obama care subsidies to insurers the industry implications coming up and it is friday the 13th, so its a perfect day to talk to the hollywood producer behind a movie called happy death day. Its a film thats breaking the blockbuster budget mold as the second hour of squawk box begins right now its friday, im in love monday, you could fall apart live from the beating heart of business, new york city this is squawk box. Good morning. Welcome to squawk box right here on cnbc thats Joseph Kernan over there, just in case you didnt know were right here usually better to smile than nod. Looks like a mugshot. At the nasdaq this morning, im Andrew Ross Sorkin, along with joe kernan. Also becky quick taking a quick look at the futures, lots going on this morning. Were going to tell you about some of the news in just a minute dow looks like it would open up higher 34 points higher nasdaq up a little over nine points were now coming off marginally in the s p 500 about two and a half points. Bank of america earnings rolling out, joseph. Yes bank of america reporting this morning wilfred frost joins us with the details if its just sort of in line, it already sold off yesterday i figure its going to go up today just based on things being just pretty good yeah. I would say this is better than just in line, in fact. We look at the headline revenue number 2. 8 billion it was expected to be 2. 19 billion. There was a small provision for Legacy Mortgage issues, which sort of means the revenue number is slightly better for the core business in fact, Brian Moynihan pulls it out and says in each of the core four lines of business we grew at 4 . The sort of recurring revenues were slightly better growth than the top line revenue numbers, suggests the eps number a little ahead of expectations at 0. 48 versus examinatipectations for 5 if we look at the trading numbers, dow is now 15 . That was bang in line with what they guided midquarter if you look at the individuals, equities up slightly 2 . Fixed income currencies commodities down 22 again, pretty much in line on that part for the with their guidance in terms of what moved citigroup down 3. 4 or so yesterday, it was very much the credit card business if we dive into that and see some comparables, overall bank of america actually has provisions for credit losses down 2 . Thats a good thing. They havent increased they did have a reserve build for cards, but only for 200 million. Jp morgan yesterday was 300 million. Citi was 500 million. Now, citi does have the biggest card business, but thats a number that should be slightly encouraging relative to the citi selloff yesterday if we look at Net Interest Margin, that is about flat at 2. 36 . Perhaps a little disappointing on that given that jp morgan got a pick up in the Net Interest Margin from the june rate hike citi was sort of flat, and bank of america seems flat on that, but loern growth is strong lik the others were yesterday, and cost control seems pretty good as well. Particularly in the consumer business this is an ongoing solid number given it sold off yesterday and thats why were seeing a nice jump in the shares this morning. Thank you for that. You are too tall he does admit. He is too tall to be james bond. Very good reason. You would be a shoein. If i was sitting in that aston martin, my head would be out the top, and the villains would be able to shoot me too easily i was thinking if you were to be cast and they used hollywood for the rest of the movie, theres no one out there everybody they would need stepladders. There would be no villains no villains no bond girls. Everybody in hollywood is shorter. You could not shorter than usual. You know who should have been let me see if you think i think he is too old, though clive owen 62 he looks to me like james bond the big race was between clive owen and daniel craig, and i think daniel craig has been awesome. Clive is a bit old now too tall. There would be no villains well, there would just be jaws in every single film. Me versus jaws he is dead, i think thats it as i say, otherwise it was a lock i had to come and do Business News instead jesus, you are deluded. It was a lock. He is 53. Thats too old to be you cant start at 53. Sean connery could probably still pull it off. Maybe until a couple of years. I think he is, like, 80. You cant be 80. Believe me, you know, at 80 im going to be just like i am now hopefully. And right here. Lets get to washington. Two big stories out of the Nations Capital this morning. President trump ending key obama care subsidies to health insurers, and later today he is going to be outlining his plan for iran ayman javers has those details were going to hear from the president later on today in terms of the iran deal, and the question has been will he certify or will he not certify the iran deal . Remember, there is the iran deal between the United States, iran, and other countries, which stands separately from a piece of legislation up on capitol hill which requires the United States president to certify every 90 days that iran has, in fact, been still in compliance with the deal. What the New York Times and other outlets are reporting this morning is that the president will not certify that iran is in compliance with the deal, and under that law that will trigger a decision by congress of whether or not to reimpose sanctions on iran that were taken away when the iran deal was agreed to in the first place. What were told is that the president will ask congress to establish trigger points for reimposing sanctions that is, that he wont say he wants those sanctions to be reimposed necessarily, but a new law or a mott fiction of existing law that would establish some trigger points at which if iran continues bad behavior, those sanctions would be triggered all of this is a way to sort of finesse the idea that the United States is not getting out of the Nuclear Arrangement itself simply, dessert fewing it under this law up on capitol hill. That means the iranians will still be subject to the agreement, and the United States will still get some of the benefit from the agreement, which includes things like inspectors, who have access to iranian facilities once they coordinate that with iranian authorities. There are some benefits here that the administration very much wants to keep the president , however, campaigned and said that this was one of the worst deals ever agreed to, and so now weve got some solution, which were going to hear more about later in the day from the white house by dessert fewing t inin inin ininn the deal they may have found a political solution to what was a very difficult problem for the president , and ultimately, if they can get congress to change the law, they might be able to change that 90 day clock so that President Trump doesnt have to certify every 90 days that the iranians are in compliance with the deal because theres no evidence that iran is not complying with the deal. That is, it appears by outside analysts that iran is complying with the technical terms of the deal its just that the Trump Administration doesnt like their behavior on things outside the deal such as funding for terrorist groups and their Ballistic Missile program. Those are things that really are causing a problem with the administration at the same time they want to stay in the deal overall a finessed solution here well hear more from the president later on today death from the great satan chanting that over and over again. Probably that israel anyway, yeah, we should have thought about that in the original negotiations maybe asked for a few things did we get anything . Whats Congress Going to do with this . If the Trump Administration kick it to congress, people t there will be people that say that this is a rogue regime, they hate america, we cant vote for anything other than new sanctions. There are going to be people up there who want to put those sanctions on iran. If they do that, that pushes the United States out of the iran deal the iranians will walk away from the deal, and then the United States loses that leverage of those inspections and some other things that they like under the deal its a question of whether you can have your cake and eat it too. Its not only that. Look, this is these are more and more issues that are getting pushed on to congress. Congress is going to have a fuller and fuller plate, which makes you wonder what happens to things that are part of the agenda things like tax reform what happens when congress has all of these other issues that they need to deal with too remember, the president just said that he wants congress to deal with immigration before the several months he wants to deal with health care he said he is going to come back and do obama care in january or february theyre pushing for tax reform each one of those things now, the iran deal. Each one of those things is an enormous dead lift politically on its own, and in a normal Political Climate it would be an enormous project here in washington this is not a normal climate, and those are all happening at the same time. In recent history they havent done anything, so they might as well have had like a bunch of things on the agenda to not do you know what i mean why not it doesnt matter whats on the agenda it could be nothing or less. Put everything on there throw in everything and then dont do anything, and then its at least, you know, you are doing nothing on more things i just dont know. I think its a good idea there are something on no things the question is if you are the administration and you know that that is the political dynamic and you are kicking things to capitol hill anyway, are you trying to solve those problems, or are you just trying to avoid those problems thats the challenge for the administration theyve got a president who campaigned against this deal, but in reality they want to keep broad aspects of the deal in place because it helps the United States. Theyre trying to figure out a way to ramp up the pressure, ramp up the rhetoric but keep the deal all right, emon thank you. Just a reminder, if you look on the out there i see curb your enthusiasm. Hbo has that great have you watched this i have not seen it. Im not going to give you too much info, but larry has written a broadway play called fatwa and its about salman rushti, and its about the ayatollah in iran, and he goes on jimmy kimmel and kind of makes fun of the ayatollah, which is not good now theres a fatwah against larry. Theres only been two. I dont think you can do what that other thing binge. It only comes out. You cannot binge some things you can binge. You can if you wait not as theyre you can if you wait, but they didnt drop it is that the right lingo . Yo. On my dax can i do it on my dax . No. The dax is the German Stock Exchange thats a way to access lets check on some of the stocks that could be sensitive to the news out of washington today. The insurers are not moving at least not in premarket thats an understatement really there you go. As for the news on iran, here are some of the biggest defense names that you can keep an eye on today boeing, northrop drummond, and lockheed martin. Lets talk about the market because yesterday was, well the week has been interesting. Nonetheless, low volatility seems to be the name of the game right now. The vix has traded below the ten level for 19 straight sessions joining us right now is david biaco, chief investment strategist at deutsche Asset Management ryan levitt is here from oppenheimer funds. Weve been getting these earnings reports the banks are now coming in. We are also talking about kbreed Companies Getting slammed after the at t report. Then we have this vix issue, and then you layer on the fed. Where are we . Tax policy. Tax policy. An electromagnetic pulse that kills 90 of americans possibly. Look, i am tactically cautious on the market what is that . Stop it. Tactically is that different than cautiously optimistic . I remain strategically bullish. This is sell side these are sell side were Asset Management. Deutsche Asset Management. Kinsley thought leader crap let me put a number on it are you mohammed el arin . Im at 2450 on the s p at the end of the year. Lower where we are now by almost 5 the reason is i dont think we wake up now years day with new Corporate Tax law in the United States i think that suggests that you think that tax reform to some degree has been baked into the cake meaning, theres a true expectation that it is happening in 17 . Small cap stocks are priced with a good 15 benefit for Corporate Tax cut of 25 greater or less. The s p probably only more like a 5 benefit baked into it this is why i think the s p is about 5 ahead of itself for the shortterm i dont want to be a critic on this, and i keep looking at the situation, and i wish we could get a simple and effective tax cut proposed, and to me thats just going to a 25 Corporate Tax rate, and that solves repatriation issues a cclass company would be attractive to Small Businesses that want to grow. Where were you two months ago . On the s p . Yeah. I had the same targets for a long time. 26 for the end of next year, and 2800 for the end of 19 i would shift the focus a little bit from the fiscal side, which i think is important, but also to the monetary side, and one of the things i would be worried about is a tighter fed at this point in the economic cycle. The good news is inflation remains generally benign you talk about a rate hike in december three and three next year. We dont even know what the composition of the february will look like. I think that is where some volatility might come back into the markets. The reality is on the optimistic note, this is the First Time Since the financial crisis weve had synchronized growth around the world. Its not just the u. S. Not just europe, japan, china, the emerging markets that is likely to continue to be supportive of corporate earnings so long as we do not get too tight here on the monetary side. You are at 2,450. Youve been youre wrong by 100 points right now will you just hope that what are you for the end of 2018 . 2600. K on. So were 2,550 when we go through and its january 1st, will you hope everyone forgets 2017, and then you can say ive got a we are comfortable why didnt you raise it so you are bearish . Im tactically cautious you are bearish because you think its going to go by the end of the year its going to go down 100 points. Yes, i believe that without a tax bill in place, does the situation reset in 2018 thats the thing. I think when people this is kind of head fake 2. 0 on the acceleration reflation from a big fiscal boost i think the market has a dip, and we have a nice rally we just need people to put back into they need attractive up side on the s p, and they need to be more realistic about the 100 points below this you think is attractive up side . Yeah. How will we know if you change your price target for the allocator ill send it right to your email i was wrong im now 2,600 for 2017 you still think this whole thick is a fed story i did think it was a fed story, and i think what you are looking at whether or not we get a credible tax plan, deficit funded tax cuts, you will see different parts of the markets do well. Right . Those classic value names that have not been great performers prior to the last couple of months short of that its going to continue to be growth in a slow growth world brian, answer the question that we were actually talking about in the last hour, which is lets say kevin warsh gets announced as the new fed chief, okay what is your note telling investors about that or if the announcement is drawn out, lets say its down to those two. I think if its powell, we would expect a slightly more hawkish tone out of the fed than what weve been receiving underiunder i janet yellen, and personally i dont think thats necessarily the right path to go on. So powell is more hawkish where do you put kevin warsh in that probably slightly more hawkish than janet yellen, but its probably hard to be more dovish than janet yellen i would think so you think powell is more im trying to who is more . You think kevin is more hawkish than powell . Theyre going to keep on watching inflation we dont think inflation picks up a lot, but we do think the fed can get to 2 by the end of 2018, which is good for big banks, but the curve likel flattens further and a challenge for smaller banks. Would you own into the banks right now . The big banks the big banks in the u. S. , yes i would continue to favor the growth parts of the u. S. Equity market, and i would continue to favor emerging markets in europe over the United States were going to leave the conversation there david and brian, thank you thank you coming up, the inside line on bank of america, and analysts will react to todays numbers. Thats coming up next. Stay with us anyway. Ah, dinner. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Welcome back bank of america shares trading higher this morning after coming out with better than expected Quarterly Results. Joining us right now for more on the quarter is steven bigger, who is director of Financial Institutions research at argus what do you think of this, st h stephen . How would you rate this quarter . Good morning, becky i think its a fairly Strong Quarter for bank of america here earnings were above consensus. 48 in my estimate of 46 cents. Loans were up 6 not quite as high as jpm recorded yesterday the margins did improve yearoveryear which is a very good sign. Revenues a bit sluggish at 1 growth the credit quality was pretty strong net charge off is only. 39 of average loans. That includes from the second quarter. It strikes me that theyre able to get lending growth and still maintain some underwriting discipline margins 236 versus 223 of course, the one glaring weak spot was trading revenues. Down 15 hurt mostly by the fixed income currency and commodities no surprise there. There wasnt much volatility in the quarter. There was no major Global Market event that would encourageany kind of asset reallocations thats slowly grinding higher market thats good for Asset Management businesses, but not great for trading results. How would you grade bank of america based on what weve heard from peers like jp morgan and citigroup . Well, its sort of right in the middle i think. Again, loans were not quite as strong as jp morgan. I think jpm is taking more risk on the credit side particularly credit cards to grow that business you think thats the right call with jp morgan is doing well, i think its only on the credit card side, yes. Theyve got tremendous product line up, and theyre going headtohead really with American Express and can do a lot of damage there, i think the overall loan growth of 6 for bank of america is not bad considering theyre basically most of the mortgages. What do you do about this stock today . Well, we like the stock here. Our target price previously 27 thats a huge following these results. Weve had a buy on the franchise since about 18 its up close to 50 since then. I think this is a story that continues. This is an earnings improvement Earnings Quality improvement story. A lot of winddowns still with legacy asset issues, lower Legal Expenses theyre doing a lot of investments on the franchise and management side. Substantial improvement at capital levels over the course here, that results in higher dividends and share buybacks. 60ers approximate increase in dividends. More than doubling of share buybacks Wealth Management franchise very strong thats benefitting from a good market condition the expense management story where the ceo is looking to get operating expenses on the 53 plan by the end of next year stephen, thanks for your time today. We appreciate it thank you coming up when we return, taking flight. How delta is helping travellers skip a key part of the airport process. Stay tuned youre watching squawk box here on cnbc back in a moment zwro time for todays aflac trivia question. Which Bank Launched the first general Purpose Credit card, which was ter melanad visa the answer when cnbc squawk box continues youre 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 its cool. Health can change but the life you love doesnt have to, keep your lifestyle healthy with. Aflac there was no magic up hisgends. Sleeve. He didnt have wings, or a cape. He was but just a man. With the will to go beyond. You know win control . Be 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. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley now the answer. Which Bank Launched the first general Purpose Credit card which was later named visa the answer bank of america coming up, this mornings top stories. Plus, the washington agenda Gop Policy Committee chair luke messer ranks the most important issues on the table right now and then at 8 00 eastern dont miss our newsmaker of the morning, senator ted cruz. He will join us on set for an hour 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. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Lets talk about the stories that are front and center. The house has approved 36. 5 billion in Disaster Relief funds for puerto rico and other areas hit by the recent storms the senate is expected to vote on the measure within a few weeks. President trump is expected to sign off on that aid despite comments that there might be a limit as to how much longer puerto rico could expect help from washington. The faa has ordered engine inspectings on some airbus a 380 jets this comes after an air France Flight was forced to make an Emergency Landing last month, when an engine came apart. The engines in question are manufactured by a joint venture of General Electric and pratt and whitney. And equifax in the news again. It says its systems were not compromised yesterday despite reports of a new issue Credit Reporting Agency says that malicious code originating with a Third Party Vendor was running on one of its web pages. It says it took the page off line out of an abundance of caution, and that no user information was at risk, but lets be clear this was their website if you were going to it trying to figure out if you were one of the people affected, it was sending you to a site that was a spoof site, a spam site that was going to rip you off in another way. They may not have been responsible for the actual code, but if you were going to their website and trying to find out information, you could have been the victim of yet another fraud. In other headlines this morning, two economic reports coming up at 8 30 eastern time were going to get september retail sales as well as a Consumer Price index retail sales expected to jump 1. 7 while the cpi seeing an increase of. 6 . Bank of america reported better than expected Earnings Results with tight cost controls and higher interest rates. Take a look at shares of b of a right now. Were going to show you whats going on that stock up well call it 1 right now. Bank of america with that in the books. We should say we are waiting earnings were going to be hearing from wells fargo. That comes up very shortly at about 8 00 a. M wells fargo expected to post the profit of 1. 03 per share, and about 22. 4 billion. Separately, boeing has reportedly used products made by japans kobe steel this is important. They were falsely certified by the Japanese Company thats going to a source quoted by reuters boeing does not yet consider the issue a safety problem, it says, according to that source tesla is recalling 11,000 model x suv sz in this case. The Company Sites faulty back seat lox that can cause the seats to fall forward in a crash. The electric carmaker, though, says it hasnt received any reports of any related issues or accidents. If you are flying delta, you dont have to check in for your flight get this deltas mobile app will now be checking in travellers automatically. Users will still have to open the app and acknowledge federal restrictions on banned items and luggage. Delta said it made the change in response to customer demand just different ways that we do things these days in media and entertainment news, amazon has suspended its studio chief roy price. That followed allegations he sexually harassed a producer he is also being accused of ignoring a claim by actress rose mcgowen, that she had been sexually assaulted by producer Harvey Weinstein price has been instrumental in growing amazons entertainment business with shows like transparent and the man in the high castle. Our next guest is breaking the blockbuster budget mold. Were thrilled to have him. Joining us on set jason blum spou founder of blumHouse Productions. We talked about this amazon story and the harvey story i do want to ask you about that. What i want to talk to you about right now is the model, which is to say you have this film thats out. 5 million 5 million budget. Is what you are doing is the rest of hollywood capable of what you are doing meaning, is this just a subgenre, or is this a scaleable model for others to follow well, two different questions. In terms of the genre, its definitely the easiest genre to do this in is dark genre, thriller, scary movies its much harder to do it in other genres in comedy or even drama is much harder to do to make bigger movies its hard for studios to make manufactures at this low, low cost its pretty hard to do you seem to have hit on a formula. Its the Decision Making process that has to be very lean and quick. We shoot 20 days the average studio movies shoot 50 days. Its just also, if you are working for a studio, you want to get paid. The biggest way we keep our budgets low is we dont take a fee, and no one else gets paid, unless the movies make money thats a model that works much better as an independent than it does as a studio why in this genre is it so successful i think i know the answer. The first reason is that scary movies are better when theyre intimate intimate means not too many sets not too many locations the biggest reason is that we dont need movie stars if you paid 15 and go see a comedy, you want to see someone famous and funny a horror movie is actually better with people that you dont necessarily arent super famous because it makes it scary, and it doesnt take you out of the movie by seeing some celebrity you see every day. Plus, you dont know who is going to get killed and who is not. Plus, exactly i expect theyre going to live through the whole thing if theres a star thats exactly right. You do hear of actors who say pay me scale i want a big part of the back end. I would think that actors would come to you and say isnt there a way for me to participate in this ill come in for next to nothing now, but look at the results of what you are doing i want that piece. Yeah, no, you misunderstood we definitely do that. With any actor who has ever made more than scale, they have back end in our movies. Thats how we pay everybody. We dont pay them up front or we pay them as little as possible because they make a lot of money eventually. Otherwise, we would be shut done down on a film like this these actors who may be lesser known, lets just suggest right, right. Do they have an opportunity to make are they making more money than some of the big names that we know later no. Heres our rule. This is a common misunderstanding people come to us and say, well, you make so much money on our movie. My actor should participate. If the actor is agreeing to work for less than they have worked in the past, they participate. If all the actor has ever made is scale, they only make scale in our movies, and they dont get any back end hence, the opportunity. Lots of people will see you, and this can put ow the map. If they have a quote of half a million bucks, we get them to that quote and beyond. If they dont, they stay at scale. It if they dont die, they are in the sequels too thats a big point of negotiation for us shes in our new halloween movie. Yeah, exactly how about kevin bacon kevin bacon has been in several of our movies. Were doing a television were rebooting tremors with kevin bacon. Then you have sydney in the scream movies and courtney cox. I just watched one yesterday. Which one it was called wrong turn. Why is that kind of weird im almost offended by that. I was home watching wrong turn about mute ants in west virginia, and emmanuel i have seen that. She died. She died. First of all, i think thats a wonderful thing that you are watching a home alone terrific thank you. Even though i didnt produce it. I cant get enough content. Im worried were running out of scary things to do dont worry i have plenty up my sleeve there are plenty left. This one i love the reason is the plot wasnt there for me it was more like a super natural or a gooneys or Something Like that you are going to like this, though it was not particularly scary, i agree with you. I loved some of the i love the guy that played the clown. Happy death day is groundhogs day meets a really scary movie. I have even said, you know, i had to watch sense and sensibility with you. I had to watch run away bride. I had to watch knnotting hill. Those are like her watching the horror movies. Let me ask you about the film business right now just to say this summer has been terrible for the film business yeah. Is it a fun sort of two views of school. One is that somehow, you know, netflix and just our changing nature of what we watch and what do we watch at home versus the theater has changed. Or theres another view, which is theres a lot of lousy films this summer. Five years ago there are actors who would only do film that are all on tv whats happening is the longer that we keep people the longer that we tell people you have to go to a theater to see something, what is really happening is its kind of cannibalizing itself because the more thats migrating talent to where they can do something and be seen immediately. I think also its not fair wait a minute you mean it only shows in the theater before it can go out you want it to show up everywhere im not pro or against especially my movies are really working well in theaters i wouldnt i am not pro or against it, but it is it is like having that affect, pushing people to work in tv, and then more people stay home to watch tv before we let you go, the you know these guys. Harvey weinstein do you think this changes hollywood . Well, i would hope so i mean, i hope so. I think its really sad, and i think what are the chances . I was just thinking about remember godfather i. If you read about some of the old stars, the biggest stars that you know, the joan crawfords, theyve all got stories that it was happening back then, and its happening now. Same thing i hope that i mean, i think one certainly the time says is not an accident, and i hope that every woman who feels that Something Like this happened comes forward the result do you see corey feldman. He was saying about approximated fe pedophilia oliver stone came out and said he is seeing that Harvey Weinstein is suffering vigilante justice. Everyone deserves their day in court. Is there a point where you can follow this up with trials i read what he said, but the numbers are too its getting i disagree with oliver stone when there are this many people that have come out. Its almost as whacky as donna karen. She recanted. Even this day and age . Really i thought that was inappropriate too. In terms of are how it changes, are there things going on behind the scenes this week where companies you think are actually thinking about either putting things to different measures in place . Is there whats the conversation how many people do you think are still imaging there may be other people who have been in Harvey Weinsteins shoes, if you will how many people do you think are worried that theres going to be more to come i dont know. I really dont know. I think the answer to your first question, i think policy, and i think everyone is being looked at i hope that everyone who this has happened to, i hope that they come forward. Is it going to be zero tolerance from here on out theres going to be zero tolerance, and i think theres a terrible connection between the worst thing that can happen when you are assaulted in some way is to not talk about it, and the idea that you can be assaulted and then be paid not to talk about it which only makes it much, much worse is a terrible thing. The people that turn him down are not as famous. It makes you wonder about the people your career could have been impacted some peoples careers were kbakkba impacted can i just get back . What is your favorite horror movie that i havent seen, do you think . My favorite horror movie that you havent seen i think some are obscure that are really good. Did you see did you see it follows . No. I dont think so there you go. Theres your recommendation. Theres a big recommendation you saw the strangers, right . That was very good. Theyve been trying to mike a sequel to that for about two years. You would say that to me, and i start getting a little scared. Im about to put you on our fan list you know why why it happened to those people . Because they answered the door thats the only reason because you were home. Thats what they said. Because you were home jerry cisco died. He died horrifically with arrows it follows, its you guys jason blum, thank you for coming in. Come on back the producer says it follows is really good. I am a fanatic 97 on rotten tomatoes. Were fresh on rotten tomatoes, and thats unusual for scary movies, says and obviously you have seen get out. I like it a lot i got to recommend one of my own. So tongueincheek. Absolutely brilliant joseph, you are up. Do we really . Where are we going we have something so important we cant keep this going senator ted cruz is joining us in the next hour. We got questions about all right all right. All right. Jason will be back jason . Is that really your name yes thats pretty cool. A packed agenda in washington right now. Health care. He wasnt the killer in the original exactly the iran deal, that thatse questions in scream. Whats up . Well ask congressman luke messer then at 8 00 eastern our newsmaker of the morning, senator ted cruz will join us on ayunfor an hour. St ted youre watching squawk box on c nshs 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. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Aggressive styling, so you can break away from everyone else. The bold lexus is. Experience amazing. Today, innovation in the finger lakes is helping build the new new york. Once home to the worlds image center, new york state is now a leader in optics, photonics and imaging. Fueled by strong university partnerships, providing the worlds best talent. And supported with Workforce Development to create even more opportunities. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. House Speaker Paul Ryan says the house is on track to get tax reform legislation to the senate by november. Joining us is congressman luke messer, republican of indiana. He is the Gop Policy Committee chair. Congressman, its great to see you. Good morning. Just reading that intro, ill tell you my thoughts its just that so well get it through the senate that they can screw it up even earlier than if you get it to them in december is that so they can move they can decide not to do it in november, not december thats what im worried about. Well, listen, you got a sitting u. S. Senator calling the white house a daycare center, and i wonder what he thinks about whats going on in the senate listen, its not okay to house keep sending them bills and the senate doesnt act didnt act on health care now they need to pass a budget so with he can do tax reform you know, we just sent them a budget that balanced in ten years and cut 200 billion, and that is the pathway to tax reform we need to get it done i also on one of the web sites they bring up the point that mccain could be in the same position at the very last minute and give a thumbs down, but then again, they mentioned that this is going to go through committee and be marked, and it will go through the normal channels of legislation, and his view, may give him cover to go with it this time . I think even rand paul could be on this down the road. Then i dont know who you worry about. I dont trust theres, like, six of them that you cant trust in the senate right now to go along with the party first, lets start with the substance. The substance of the bill that were talking about is a good bill its a bill that will be good for middle class families. It will increase the child tax rate also, cut taxes for job createors because, as i have said before on your program, our number one target needs to be 4 growth after that its tax cuts so we can create more jobs and eventually even with all those great jobs start to pay down the debt youre right too many things are failing by one vote over in the senate. Im a republican im frustrated with the republicans over there look, every single one of the senators there have a responsibility im actually running for the u. S. Senate in indiana against joe donnelly because too many items are failing by one vote. If i was in the senate, we would be passing tax reform tomorrow, and i still believe well get it done hopefully this year. Youre right, its not functioning very well in the senate right now so when it will actually get written up when . So we can see whats in it we still dont know, you know we dont know about the guardrails on the passthroughs. We dont know whether theres a higher rate than 35. We dont know state and local taxes. I mean, its hard to know, and then, you know, the devil, as we keep saying again and again, we say that more than kick the can down the road now. The devil in the details were using that just about every day because someone is given the you look at the senate the republicans in the senate. You got the moderates over here, and you got the hard core Freedom Caucus type guys over here each one of them will be able to find things that they dont like that the other guy likes, and if you fix one, then the other guy is not going to like how you fixed it i think the answer to that is just keeping promises. Its not okay we promise for seven years to repeal obama care, and we work on it a little bit and shrug and walk away. We promise to fix taxes. Lets come together and get that done you just had a guy on from the movies i think one of the things that we have to watch is that we dont try what i call jackie chan tax reform. In his movies he fights 1,000 people at the same time. It only really works in the movies lets keep focused on cutting taxes, promoting growth. Im optimistic that it will get done now, to your specific question about when do more of the details come out the senate needs to send us back a budget so that kevin brady can use that budget for tax reform i think youll see those details come out soon. Okay, good. Tell you what also is disappointing, i mean, guys like paul ryan and kevin brady, they seem so sincere and optimistic you know, thats when you are selling it a lot of times im not sure i believe them you know, there are optimists, and theyre in the rollout mode where theyre selling it yeah, were definitely going to do this. We now know that that wasnt the case with obama care repeal. They never had it. They never had it. Well, listen, i think there is a difference between what weve done in the house and whats happened in the senate. We did pass a bill on obama care yeah, you did it was tough we will pass taxes in the house. I believe that will happen listen, the American People, the people of indiana, theyre mad at the u. S. Senate because its not getting anything done. Its not okay. We need to do something about it all right we got senator cruz on for an hour you know, he just has a preview of the kind of stuff well be talking about. Thanks for coming on this morning. Appreciate it. Thanks. Coming up, Quarterly Results from wells fargo, and then at 8 00 eastern we just mentioned senator ted cruz will join us on set for an hour. Well talk health care, taxes, geopolitics, immigration, and much more. Stay tuned u wchg quk x on cnbc ah, dinner. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Aspark therapeutics got a recommendation from an fda panel for its gene therapy treatment for a rare form of vision loss a final fda decision on the treatment is expected by midjanuary, but this morning its good for stock pop of 7. 3 . Goldman sachs is out this morning with positive comments about netflix. Goldman thinks the streets consensus of subscriber estimates are too low. Netflix is due to report quarterly earnings, which will include those subscriber numbers on monday. That stock up 1 this morning. Coming up right after the break, were going to welcome our newsmaker of the morning senator ted cruz were going to be getting his take on taxes, health care, immigration, and a lot more. He is there in our greenroom overlooking times square stay tuned youre watching squawk box right here on cnbc a lot to talk to the senator about in just a moment the governor has declared a Winter Weather emergency. Extreme risk of burst pipes and water damage. Soon, Insurance Companies wont pay for damages. That is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. 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. Fresh details on President Trumps plan for the Iran Nuclear Deal plus, another big blow to obama care special guest host this hour, senator ted cruz were going to talk about tax reform, health care, and the trump agenda that interview is just minutes away plus, earnings alert. Wells fargo rolls out results. Well bring you those numbers. It is friday, october 13th the final hour of squawk box begins 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 were live from the Nasdaq Market site at times square. Im Andrew Ross Sorkin our guest host this morning, senator ted cruz, and were going to spend a lot of time with him and hear from him in just a bit first, want to check on the markets. Take a look at the futures had a number of banks coming out with earnings along with others. Dow looks like it would open up 50 points higher nasdaq up by 12. 5 points, and the s p 500 up by four points. We have had a lot of banks, and it looks like wells fargo is just the latest with that. Coming up with 84 cents a share, but that includes 20 cents a share sfor previously disclosed mortgage related regulatory investigation and litigation approval theyre saying its previously disclosed. If thats the case, were looking at an 84 number versus the 1. 03 that the street was expecting. It says very plainly that that 20 cents includes was previously disclosed. Well have to get a figure to feel if that is something the mark was expecting or not. Came in with revenue of 21. 93 billion versus the 22. 394 billion that the street had been kbpg the number may be in line or above. If wanot, its below jp morgan and bank of america have different its down quite a bit now actually, its down 3 something thats not, you know, absolutely awesome, and, you know what, a lot of times the knee jerk reaction, the traders are looking at the same thing, and they might they do say that they remain committed to their target of 2 billion. Expense reductions by the end of 2018 yeah, its a bit of a surprise to see those numbers, and it may take a little time for that to work its away you through. The highest its ever been, even with all the problems, was 59 and change. Right . Its not today trading at 53 or so they had quite a they lost billions of dollars in market cap from the scandal, and its still at 50 it was at 55, off the alltime high at 59. Its now at 53 and change. The ceo making comments over the past year we have made fujs changes to transform wells fargo as part of our effort to rebuild trust and build a better bank. We know about how he was just called before congress, and some of the heat that he was dealt while he was there they say the Financial Performance in the Third Quarter included the impact of that litigation approval. On is. Texas senator ted cruz joins us this morning. Its great to have you on set. Well get in the specifics i dont know whether you saw our interview with congressman messer you know, he said the house should be able to get it to the senate by november, and i said what does that mean . The senate can decide not to do anything even earlier than if he got it to him in december . Were cynical of having seen what happened, and its like wrangling cats in the senate right now. Look, joe, you have good reason, and a lot of people across the country are ticked off. Weve got a republican president , republican heads of every agency, republican majorities in both houses of congress, and right now were not delivering were not getting the job done people are frustrated. Im frustrated i promise you as frustrated as you are, im banging my head into it every day. I think weve got weve got an incredible opportunity. An opportunity that doesnt happen very often. It has been the senate that hasnt been able to deliver. You look at the battles over obama care those were maddening we were not able to wevego an excruciatingly narrow majority that means if any three republicans jump ship, were toast. Wrangling together 50 out of 52 republicans with this very diverse fractious conference is not easy all of that being said, i believe we will get tax reform done i do think virtually every republican wants to get to ts, and i think thats important on what meaning what do you think ultimately it looks like are we talking about a 20 Corporate Tax rate is that the number that you think can actually get passed . Most of the conversation, at least i have heard is maybe 23, 24, Something Like that, and then how do you deal with the individual rates look, i hope we see a big tax cut. I hope we lower the corporate rate i would like to see the corporate rate, yes, at 20 i would like to see it at 15 i would like to see real tax cuts for working men and women i think we need to be you know, the test for delivering is are we delivering to the plumber in michigan . Are we delivering to the single mom waiting tables in texas . If we are, thats a good tax cut. Now, the things that matter on that are, a, individual rates that people are paying b, i think front and center the biggest concern should be jobs and Economic Growth. That we need progrowth tax cuts we need tax cuts by the way, the word cut is important. I think this should be an unapologetic tax cut not just tax reform, but a real tax cut to generate booming Economic Growth. But there are others in your party who think there also may be delivering hugely on the debt and the deficit. Well, and so thats a big argument were having internally within the conference is whether this should be a tax cut or not. You know, there are a handful of moderates in the Senate Republican conference that style themselves deficit hawks i actually disagree with them. You know, weve had some real knock down drag out battles over lunch where im taking the other side nobody cares more about the deficit and debt than i do it was one of the big reasons i ran for senate because we got 20 trillion in debt, and were bankrupting our kids, but heres the honest truth this congress is never going to cut enough to turn around the debt were simply not going to do it. You look at the agony the senate had over very modest reforms in medicaid what one of the three big entitlement programs the only way to pay down the debt is Economic Growth. Think about the last time we had a surplus. It was in the 1990s coming out of 12 years of reaganbush, out of major tax cuts, and the booming Economic Growth gave us a surplus, paying down the debt. If we want to do it again, if you want to see reagan style Economic Growth, you have to have reagan style tax cuts, and the socalled deficit hawks saying, well, lets not cut taxes. Theyre working against what they say theyre advancing the scary thing is that the reagan style growth is now people have changed the narrative on the left right now. The dogma now they can just say it without really proving it, is that trickle down didnt work in the past it caused the financial crisis it blew out the deficit. The reagan boom was a losery that generated large deficits. All you have is one side of the aisle that even believes in any of these things. That even believes that lower corporate rates will be growth or that tax cuts can grow. Its only the right, and you cant get those guys thats why when the democrats do something, theyre like a they come prepared when theyre going to do something, and they dont break ranks, and thats why we have obama care, and thats why we have other things. Theres legitimate analysis, by the way, from conservatives and liberals about the ramifications of the tax plan, and even if you believe in dynamic scoring, its unclear at minimum to suggest that it easily pays for itself i think even i think even a this is an example of what im talking about that there will be people that say that the past actually isnt what you think it was, and that those the growth we thought we saw in the 1980s wasnt really there, and that these tax cuts dont work the progrowth doesnt work. You are not going to get democrats. You need every republican. You need every republican. So, joe, the beauty of this argument is the facts matter this is a show that focuses on facts and real data. Prior to obama, the last fouryear period where Economic Growth wasaveraged less than 1 a year, was 1978 to 1982 it was coming out of jimmy carter it was the same economic policies i mean weve seen the gdp comparisons overlayed the obama gdp for eight years versus the reagans it doesnt matter. Theyll say that its well, the deficit blew up. They dont take into account where the solution matters because what happened in 1981 reagan came in we saw major tax cuts. We saw, again, major tax reform in 1986, and the economy exploded you know what gdp growth was in 1994 the deficit blew out, though. Lets focus on gdp. Ill address the deficit okay. Any idea what gdp growth was in 1984 . Give me the number. 7. 2 . What did it average over four 7. 2 those are china numbers, india numbers. You look at even the most bullish voices in washington, they say well get 3 growth my view is why aim small if we actually have a real tax cut and in terms of the deficit, by the way, federal revenues, skyrocketed. You want to know why the deficit grew because we grew our Defense Budget in a huge meaningful way. Because tip oneil was speaker. As revenue grew, they spent even more yes, it is true that if Congress Spends even more than the new tax money you raise, the deficit will go up, but if you look at revenues, reagan cut taxes and revenues what the federal government got went up, and not only that, the wealthy ended up paying a higher percentage of taxes. The working men and women did much better because we cut taxes and had Economic Growth. Lets talk about taxes today then you have a smaller base of people paying taxes. Its not the situation that you have been dealing with in 1986 if you are going to hand tax cuts out, the bulk of those benefits will go to the wealthiest people because theyre paying the bulk of the tacks, and thats a pretty tough message it on try to get out where. I actually think its an easy message if we focus on growth. That growth is should be the central concern. Why is it . Because growth impacts the people at the bottom of the economic ladder. People like in 1957 when my dad was washing dishes at 50 cents an hour. If you are a young person and you go the your first job out of school, what you want to see is booming Economic Growth, so you suddenly have two, three, four other job offers you have competing employers driving up your wages. Its a tougher message to say that youre not going to necessarily see this in your next paycheck. Youre not necessarily going to see this at the end of the year in your federal taxes. Its not going to make as big of a difference thats why we need to focus on a real tax cut, and a tax cut that impacts working men and women, that impacts, you know, a family trying to say do i have enough money for braces for my kids thats what our focus needs to be if we do that i mean, the beauty of growth is it expands opportunities for everyone, but especially those look, if you are already rich, Economic Growth doesnt make a huge difference ewe going to be rich with or without it the people it naks a difference the fed stays at zero you get free money. The obama Economic Growth of the last eight years essentially calcifi is or the rich do great. Working men and women, by the way, the people that fuelled trumps election in 2016, they get left out in the cold you do appreciate at least the tax plan thats been proposed as such people look out and see the passthrough rate, for example, and they say the majority of people that are going to get the passthrough rate at 25 are that are going to improve their bottom line are truly the wealthy they look at the estate tax, and i can make the philosophical argument over why there should be no estate tax, but in terms of Economic Growth, it becomes a harder argument to make. With all respect, andrew, thats not true. You know what, the billionaires, they dont pay the estate tax. The really rich, they dont pay the death tax. They hire lawyers, accountants they have generations skipping trusts you think the George Soross of the world are paying the death tax . The people who pay the death tax who i talk to all the time are farmers on ut in west texas who are growing cotton, who are struggling hard, and when they pass on the next generation has to sell the farm in order to pay the federal government the pay that pair the estate tax are Small Business owners that have a small factory that when the patriarch passes on, the next generation sells the factory and fires the workers. Thats what the death tax is all about. The super rich dont pay it anyway, and thats the one thing Bernie Sanders said in the last campaign that was right. He said the system is rigged he is right. Washington is rigged for the super wealthy. If we want to answer the mandate of this last election, we need growth for the working men and women. All right were going to slip in a very quick break right here we will have much more from senator cruz relax at least for this hour. I can relax a little i can sit back we still have to talk to him about his take on health care reform, about whats been happening with the iran deal thats getting pushed back by the way, check out some of the insurer stocks this morning following news that President Trump will be ending key obama care subsidies you can see that that has put pressure on some of the health care stocks, particularly centene, down 3. 5 you are watching squawk box right here on cnbc excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. There was no magic up hisgends. Sleeve. Can we do that . He didnt have wings, or a cape. He was but just a man. With the will to go beyond. Pthey dont invest inn stalternativesds. Or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you 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. New york, new jersey, connecticut, california. Can you promise that the waitress in new jersey, that the plumber in connecticut will be paying lower taxes look, if we cant, weve got a real problem the next several months are going to be hammering out the details of the tax cut, but thats going to be front and center for me. Are we improving the lives are we improving the takehome pay . Are we improving the prospects of working men and women you asked about deducting state and local taxes. I think we should end that dedid deduction. In significant part because that federal deduction encourages high tax states to jack up the taxes even more. We can end that deduction if were lowering the tax rate enough that people in those blue states are seeing a net tax reduction. If were not lowering the rates enough, if we come out of this and a working family in Orange County is seeing their taxes go up because republicans got elected, we did something really wrong. Its why what were debating right now is the anticedent question to tax reform were passing through the budget resolution, and the level of the tax cut matters. Now, the Senate Budget committee has set it at 1. 5 trillion on a static basis, which means ignoring Economic Growth, ign e ignoring incentives. I think thats a mistake i think we should be going much bigger and bolder because on a dynamic basis, youre looking at essentially little to no net tax cuts, and if you are being deficit neutral, what you are doing is everything you empty out of one bucket, you are pouring into another the reason that matters is were not going to have the votes to eliminate the state and local Tax Deduction unless were cutting the rate enough to lower the tax payment even in blue states we need to be lowering taxes for everyone then its even harder to make the numbers work lets focus on business for a second theres the debate within congress do you have immediate expensing for capital expenses or do you lower the corporate rate my answer is both. If you look at the analysis, you look at the scoring, immediate expensing is incredibly progrowth the farmer buys a tractor. You can immediately expense it if a steel factory buys new equipment, the factory can immediately expense it that produces jobs, raises wages. It helps working men and women folks on the other side say, gosh, we would rather lower the corporate rate if were doing a small tax cut, you have to choose between one or the other if were doing an unapologetic reagan style we are cutting taxes because we want to see the economy going growing 3 , 4 , 5 , we can do both, and thats profoundly progrowth. You mention there is so Much Division even within the Republican Caucus on this. If you get to a tax cut that winds up raising some taxes on some of the working families because its not going low enough to lower their bills, would you vote for that . Look, if we dont lower peoples taxes, we will have failed at our task getting to on 50 is not going to be easy. Nobody is going to get everything they want there are going to be compromises and tradeoffs back and forth. I believe we can do it what i can tell you is i am spending literally every waking moment trying to bring republicans together trying to develop consensus and bring together people all across to use the phrase to unite the clans and to say, look, lets just deliver on what we promised. We can do it if we you know, we have an election coming up next year whether 2018 is a great year for republicans or a terrible year for republicans i think its in our hands and in our control if we deliver, if we get a big tax cut, if we repeal obama care and the economy is booming, we could pick up four, five, six senate seats if we do nothing, we could ghetget obliterated. The republicans watched in horror that President Trump got elected. They said we dont know if he is a republican or a conservative would you in your view has he been governing or at least trying to govern as a republican and as a conservative . These same Establishment Republicans that were pointing a finger at him, havent brought the goods to further conservative causes. This is not his fault. He has tried to govern as a republican, hasnt he you are right if you look at the substantive policy from this president and this administration, by and large the substantive policy has been Gorsuch Gorsuch was a home run. Actually, judicial appointments across the federal bench at the District Court and courts of appeals are strong, principled constitutions. Its one of the brightest points a guy who cant stand success. What do they they dont want to win they want to reg reform is a big deal. If you care about Economic Growth, my number one priority is Economic Growth, there are two big levers for government. Tax reform and reg reform. Reg reform, theyve done terrific pulling out of the paris climate deal that was a big deal. I spent 45 minutes on air force one making the case to the president why we should pull out of the paris climate deal. He was getting lobbied like crazy by big ceos on the other side saying lets stay in it he was getting lobbied within the administration a number of folks in his administration he did the right thing yet, to some degree we are staying in it. Well, but i will dell you i would think you would be frustrated with that where. We have to follow through theres no doubt followthrough matters, but, you know, he pulled out on a thursday the next day, friday morning, the president called and said, well, ted, i did it. What do you think . I actually responded by invoking many i wife, heidi, and i said, mr. President , let me tell you what heidi said. She picked up the wall street journal and saw right across the front a quote from your speech where you said i was elected by the people of pittsburgh and not the people of paris. Heidi said, you p, thats exactly right. My message to the president that morning i said mr. President , everyone who hates you is ticked off right now. People for years told us they know how to govern how about step up and do it, and lets get together and get to 50 and get the job done we have had, you know ive talked to you not on air about health care and obama care these recent moves that we have seen yesterday with the president , what is going to happen because of lower cost plans being available now and groups getting together and selling across state lines its going to make obama care its going to exacerbate the problems there its going to help certain people, but its going to make that system even tougher for preexisting conditions and maybe for older for older people. How is this going to play out . Whats he trying to do right now . What will this force well, the administration steps on health care i think theyve been positive. What they announced this week expanding Association Health plans. Well have to come back to this im sorry. What data do we have data ill tell you about the data. The senator will be back can we cpi and retail sales. Well get you that at 8 30 wreoio get back in the conversation with the senator. Back in a moment its Life Insurance and wharetirement solutions toic . Help you reach your goals. Its having the confidence to create the future thats most meaningful to you. Its protection for generations of families, and 150 years of strength and stability. And when youre able to harness all of that, thats the power of pacific. Ask a Financial Advisor about pacific life. Tmobiles unlimited now includes netflix on us. Thats right. Netflix on us. Get 4 unlimited lines for just 40 bucks each. Taxes and fees included. And now netflix included. So go ahead. Binge on us. Another reason why tmobile is americas best unlimited network. Autowere seconds away from retail sales and the Consumer Price index. The futures are rebounding a little bit this week has gotten a little less bullish than weve seen in some of the recent weeks were up 46 points jim, the numbers please. Hey, joe. I think this is an important combination because were seeing inflation and the retail sector. Cpi month over month came in. Patterns emerging everything is lower than expected the retail sales advance, and it comes in 1. 6 from an expected 1. 7. These numbers are close enough to not have that big an affect the stock market came in at plus 3. 25 it stays at plus 3. 25. I think that bid is kind of because theyre excited a little bit about earnings season after how good the last two have been. Tenyear yields were 2. 33 and went down to 2. 30. What we want here is to think that the economy is heating up, particularly in the retail sector, and that theres not enough flation to push the fed further. We have the inflation part of it its not a big deal. You know, the 1. 6 in the retail sales i guess is good. 1. 7 is a pretty high estimate. The last one is down. 1. Back to you, andrew. Thank you for that. In the meantime, wells fargo trading lower following Quarterly Results. Overall the eps adjusted eps just ahead and some of the core metrics are kind of all right. The key thing to focus on is twofold this litigation expense theyve taken and the efficiency rates the litigation expense of is billion. The key things to focus on trying to clear up legacy issues and trying to take the hit for that this quarter. Now, the efficiency ratio is more important its, of course, the ratio of costs over revenue you want it to be as low as possible it spikes to 62 the costs were higher than the target range of 55 to 59 thats why they fell after last quarters earnings we have a lot to talk to him about. We need more time, in fact squawk box will be right back. , and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. 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 welcome back. Senator Susan Collins says she wont run for maine governor, but will stay in the senate. That little piece of news for you. In the meantime, were going to get back to our guest host texas senator ted cruz we want to talk about health care and many other things i want to ask you bun thing about the white house. Earlier this weekend senator corker called the white house and the president an Adult Daycare Center i want to get your reaction to that how well do you think that the white house is functioning, and what do you think about what he said i think its unfortunate that you have republicans squabbling. I was at dinner last night, and the woman i was talking to said, all right, it is washington is it like a high school or a junior high . My answer, i said, oh, no, no, i wish we had the maturity of high school it is a junior high right down to the clicks. It is like the movie mean girls. You know, i wish people would stop bickering and engaging in the personal insults its not productive. Weve got a job to do. You know, what i hear from texans is enormous frustration that this moment in time with unified government is fleegting and if we blow this opportunity, it may not come again. My standard approach, every day as you walk down the halls in the capitol, reporters run to you and say what do you think about the latest tweet and the latest insult . I dont care about any of that im not going to kmenlt comment or getting in the political circus, auto giming to focus on substance and policy lets deliver on tax cuts, deliver on reg reform, lets get the economy growing. Lets repeal obama care. If we do that, i think good policy is good politics. The politics takes care of itself if were delivering results. Lets go back to this issue of repealing obama care. Its something that you talked about for a very long time that is still something that the party has been unable to do. The president has tried to undo as much as he could effectively in the last 24 hours what are the implications . Well, i think the president and the administration have taken positive steps he announced this week that theyre going to promulgate regulations to expand Association Health plans thats a good thing. When an Association Health plan lets people do, if you are in the individual market, if you are in the small group market, it lets you join together in a larger group and get big group prices the biggest reason people hate obama care is its caused premiums to skyrocket. This is a positive step to get around that, but it will not solve the underlying problem its going to take congress to solve the problem. The lowest income people in america, though, it will urt had them, and their ability to receive health care. Thats simply false lets go 6. 5 million. Thats how many people the irs fines every year because they dont have enough money to afford Health Insurance. Let me talk about texas, my home state. About a Million People a year who get a fine from the irs. Of those about 40 make 25,000 a year or less about 80 make 50,000 a year or less andrew, i mean, lets say youre a single mom youre making less than 25,000 a year youre waiting tables. Youre struggling. You dont have the money to afford health care because obama care is driving the premiums through the roof, and the irs comes along and fines you on top of that because you dont have enough money that is not helping her. The first move that you just talked about is take some of the healthier people out of the obama care exchanges leave the people who are less healthy there paying bigger billings, but more importantly, the president s second move was to get rid of the subsidies, to help people at the bottom end pay for some of the things that will push premiums higher just from some of the states that already asked some of the states asked insurers to get under the subsidies continuing, what would your increase be in 2018 without that what would it be . Some went for just under 10 to just over 20 . You can ask legally whether these things are even should be there since Congress Never sanctioned any of it, but the end result is it will weaken the obama care exchange. Its worth noting, though, these subsidies are not actually for people they are bailouts for Insurance Companies. Its billions of dollars to Insurance Companies, and heres a bit of trivia. So the democrats rhetoric for obama care is we care about the little people, not the rich. You know whats happened to Insurance Company profits under obama care he with talked about that we talk about that on the earnings that we cover every time here, but if you dont have those Insurance Companies there, who provides the insurance so many dont even want to do it i will say this if we end up just doing massive bailouts for Insurance Companies and not doing anything to help the people whose rates have skyrocketed, we will be profoundly failing i believe we can still get obama care done. I havent given up on it my message to my colleagues, we cant give up. For seven years the central promise republicans have made if you elect us, well repeal obama care was it frustrating and maddening that twice we fell one vote shy . Yes. But i still think we can get there. I can tell you in the last several weeks, i have met with numerous of my colleagues, especially the people who were no votes asking, well, whats it going to take to get you to yes . I think the approach that gets it done is starting with consensus reforms. Im trying to findreforms that all 52 republicans agree with and build up from there and the key where can we meet versus where are we divided and the key is to lower premiums the way you lower premiums is more competition, more choice, more consumer freedom. If you give consumers more options and prices fall, thats a win for everyone just politically, though, to this point, obama care has been the democrats issue now the democrats are increasingly going to say that it fell apart because the republicans because donald trump stripped all of these things and made it collapse upon itself just from a political perspective, do you own it at this point the democrats are going to blame everything on donald trump. You know, i mean, thats going to be their talking point. The reality is obama care is collapsing its not working there are a lot of counties in texas, a lot of counties across the country where youve got one or even no options on the obama care exchanges, and its one of the Reasons Congress has to step up and actually you know, we were weve talked a lot in the show about working men and women. You look at the 29ers and the 49ers. The 49ers are the millions of Small Businesses that are at 47, 48, 49 employees they wont grow to 50 because a50 is where obama care kicks in the 49ers are those forcibly reduced to 27, 28, 29 hours a week because obama care defines fulltime as 30. The people getting hurt are not the rich guys. The people getting hurt are the people struggling, and thats who obama care has done enormous damage to. 49ers are 05 people said now that you you know, if they stood up during the anthem, they now that the republicans screw this up, then youll have single payer thats going to be the end result how do you argue necessarily and win against over in the u. K. , weave been talking about this. A Million People a week cant get a general cant get an appointment with the gp. Its 54 the amount of time that you wait over there, and people will swear by how thats the way to go over there is it better to have everyone covered where no one can really get an appointment, or is it better would you rather have 27 Million People not covered heading back to Emergency Rooms . Is that the answer what do we want as a society thats what we have to ask ourselves. I dont know what is the answer . So, youre right that washington democrats, they are moving towards socialized medicine one of the biggest changes coming out of 2016 is almost every single senate democrat, the lesson they took was that Hillary Clinton was too moderate, and they need more Bernie Sanders and more Elizabeth Warren thats that is the heart of the Democratic Party for example, you got a ton of Democratic Senators that are all signed on board with fully socialized medicine, and the reality if you look at any country that has socialized medicine, you end up with less quality, rationing, waiting periods. You end up with a government telling you if you are an older person, you want a hip replacement, you know, youre too old. You dont get the hip replacement. Theres a reason why, for example, you get about 50,000 people a year from canada coming down to america to get surgeries and health care because they cant get it in canada because its better that some people have Great Health Care and some people have none, or is it better that everybody has average health care . Theres a reason, joe, that people from all over the worldcom to america for health care i know. Because we have innovation. We have better results in farnsz, wealthy people come to the u. S. For Health Care Everyone else if they could afford it. The point is the health care here is better wealthy people in the u. Kfrmt go to doctors because they dont use the system they have their own private insurance. The president has punted it back to congress to figure out where the red line should or should not be in terms of reimposing sanctions it is the right thing to decertify for him to decertify. The certification is every couple of months the president has to certify to congress that iran is complying with the obama you believe he is doing the wrong them he is doing the right thing he needs to decertify the next question is what should we do . I think we should reimpose sanctions. That would be the right thing to do congress can reimpose sanctions. He is not going to do that. And, listen, in the president ial campaign, this was an area where we had a significant disagreement when i was campaigning, i promised that if i had been elected on day one, i would have ripped to shreds this iran deal. I didnt like the iran deal in the first place, but now that its been put in place and other nations around the globe have kind of signed off on this, if we decertify, it gives iran the position of saying, hey, we did what we were supposed to do. Were going to go ahead with what were doing and go back to rebuilding our Nuclear Program, and we cant get anybody else to sign off on this theyre doing that now. The iran deal u. N. Watchdog says no they cant actually monitor the sites. The iran deal sent military sites off limits for inspections. Well, guess where theyre doing the military work. It has other sites where iran selfnpz they literally send in iranian inspectors, and we take their word for it. It was designed to allow cheating were reliving history look, all of us are dealing with the enormous challenges income presents because you have kim jong un, an unstable dictator with Nuclear Weapons its worth pausing and saying how did north korea get Nuclear Weapons . The way they got it was in the 1990s bill clinton led the world in relaxing sanctions against north korea in exchange for a promise from kim jong ill not to build Nuclear Weapons. What did he do he took the billions of dollars, built nukes. The very same person that negotiated the failed north korea deal is who president obama and Hillary Clinton recruited to come back to government to negotiate the iranian deal literally, the only person on earth out of seven billion people who screwed this up already, they broughter had back and said do it again this iranian deal if the ayatollah gets Nuclear Weapons, i think the odds are acceptably high that he would use them. I believe we should reimpose sanctions and we smud use every tool, economic, diplomatic, and if necessary, military to make clear that the ayatollah will never get Nuclear Weapons because if he does, when he chants death to america and death to israel i believe him. I dont think thats rhetoric. I think he means it with a religious zealotry thats scary. Im glad we sucked up to them whoo i will we were pushing israel away. So you agree with paris. You agree with the attempts with obama care you agree with this health care stuff. Do you agree with that military escapade in syria i think it was a limited response short of the other than the tweets and maybe the personal attacks, what policy you like gorsuch what policy decision has trump done that you disagree with . Is he governing like a president cruz would have governed you know what, theres no value in second guessing you want him to get reelected you think hell finish out the first term i think the test for success for all of us is going to be did we deliver on tax reform, did we deliver on obama care . The test for him or test for republicans . Testfor both. The president s success depends on that also i think the president is very frustrated with congress ill tell you what im trying to do do everything i can to pull that consensus together, and i will say, joe, i think im in a fairly unusual position in being able to speak with real credibility to conservatives right but also able to speak to moderates and leadership and to the president and the administration and just say, look, lets all get together nobody gets everything, but whats the ven diagram whats the overlap of what you want and you want where we can deliver real results details matter in this nabbedi i understanding how tax reform works and obama care works that matters you are in a unique position, and weve talked about it not on air. Your stock soared after i thought it was in trouble briefly, and it sort of theres a lot of republicans that used to say ted cruz is, oh, well, he is just way conser. They look at you now and think youre very viable possible future would you ever run against the president . No interest in doing so i did, we had a Vigorous Campaign and he won. And i want to see this president be a smashing success. And the way that this president and this presidency is a smashing success is we deliver Economic Growth. In january, i called the president right after he was sworn in mr. President , we get tax reform and regular reform and obamacare done the economy is growing 4 or 5 gdp. Youll be reelected in a landslide, nothing else will matter if we have booming growth that remains my focus. Well continue this conversation and slip in a very quick break. When we come back, we have more of with the senator. Very quick programming note for you, dont miss the exclusive interview with the bank of England Governor Mark caeyrn well be right back with senator ted cruz ain world . Pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over 120 billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Whether its connecting one of or bringing wifi to 65,000 fans. Campuses. Businesses count on communication, and communication counts on centurylink. You know win control . Be 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. In the two month up next well wrap up our special hour with ted cruz a lot to talk about including Immigration Reform wow, forgot about that squawk box will be right back. 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. just thinking, its going too quickly. Our guest this hour, senator ted cruz, can you come back and well do this again . No, hes got to go to the senate is thinking maybe you should come back. Getting more done here. Thats what i was thinking. How is houston what are you hearing about the recovery were hurting the storm hit us hard and entire gulf coast 250 miles from corpus to louisiana and it hit hard. Were rebuilding it was inspirational to see texans come together it was inspirational to see the sacrifice and courage. I think the face of harvey will be the thousands of upon thousands of texans who went out and saved their neighborhoods. I called them red necks and its the very best, the face of texas. It also has been encouraging the congressional delegation has been standing together and united so first major Disaster Relief came out of the house of representatives at 7. 5 billion i joined with john cornyn and we doubled that to 15. 25 billion, that passed into law to get money on an emergency basis to the people who were hurt in texas. And then just two weeks ago, we passed major tax relief targeted at those hit by harvey in louisiana and texas and irma in florida and georgia and maria in puerto rico and Virgin Islands and it does several things number one, if you suffered damage in the hurricanes, you can immediately deduct the damages on your taxes without being subject to the oirdinary limits of 10 of injuyour adjus gross income you can withdraw from your retirement account to rebuild without paying the 10 early withdrawal penalty nationally it incentivizing to give to charities between now and the end of the year, those are not subject to the caps for individual contributions or corporate. Number four, businesses that pay their employees during and after the hurricane when the employees couldnt come in and businesses were shut down, theres a tax credit for those businesses that kept on paying employees thats legislation that i wrote with john cornyn and marco rubio and the cruz cornyn rubio legislation passed both houses and president signed it into law. You voted against the final sandy aid package and some people would suggest and use the word hypocrite. It is not surprising in politics to see a tax. What i said at the time of sandy, of course Hurricane Relief is an important and vital federal function what happened with the sandy bill is it got loaded up, it was over 50 billion and it was loaded up, 70 of that was nonemergency spending and things like for example, funding for a fishery in alaska. Im pretty confident that Hurricane Sandy which hit the east coast didnt affect a fishery in alaska. What i urge then and just about an awful lot of republicans voted the same way, we said, look, lets actually have a relief bill that is targeted to the victims of the hurricane i think we should do the same thing for harvey and irma and maria. Im glad you explained that. You knew most of that, knew about the fishery and republicans had a philosophical disagreement. I think if you read the headlines, people didnt know the history. Thank you, senator. And thanks, senator make sure you join us on monday squawk on the street is next good friday morning, welcome to squawk on the street i