Transcripts For CNBC Squawk Box 20171025

Joes excited. You are excited. He comes bringing orange juice, coffee for folks. Clapping. Its energy, man. Its energy. Really loud youre not that old time for the Global Markets report we will look at u. S. Equity futures. Yesterday the dow was up by 167 points 80 of those gains came from two stocks 3m and caterpillar gm and others were also reporting. Which is great news finally youre starting to see earnings and not financially engineered earnings, actually seeing real earnings with the commensurate Revenue Growth now the question becomes are the stocks that you just mentioned getting expensive on valuation thats what the market decides right now everything is the tailwinds are significant for the market who were you eluding to financially engineered earnings . Many. Many of these companies. You were not talking about General Electric specifically . If you would like me to speak about it. Theyre doing a lousy job of it. Of financially engineering. I was wondering if has risen to the level of ge where you object to this is a wells fargo i was wondering whether you decided its 6 01 bang. Came out of the block now its 6 02 has it risen to that level . No. The next day i thought about what we discussed about wells fargo. I reconsidered a lot of the things you said. You made cogent points, as you want to do. As i want to do you know what . I wish you could be here are you here every week . Its funny, you are the steve garvey consistent good looking yeah. Hair davy lopes. Becky, solid hall of famer you have been together a long time andrew is like Clayton Kershaw gets paid a lot of money but here once every five weeks we have to defend andrew. His mike not be on if someone compares andrew to Clayton Kershaw he wouldnt know any way. Exactly last night, unbelievable a houston team thats been really hitting yes Clayton Kershaw shut him down so he hits it hard when necessary. You think im bill buckner, right . No, i didnt say that if i thought you were bill buckner who got a bad rap he did. He a long career. A storied career. Its another show. Lets talk about the tenyear yield. Look at treasuries now you will see that at least right now the tenyear is yielding, wow, 2. 448 . Thats the highest weve seen that yield into quite awhile pushing higher a lot of expectations out there that the fed will have to raise rates. Well see what happens a lot of this based on good Economic News because of the earnings weve seen coming out overnight in asia, the nikkei finally closing lower after 16 days in a row of closing higher. A huge winning streak. Closed down by less than half a percentage point a decline of 97 points to 21 21,707 the hang seng up by a half percentage point in europe, in the early trading, you will see that it looks like things are mixed. Barely budging for the dax the cac is up by a quarter percentage point the ftse down by 0. 2 . Stocks are higher in italy and spain. I cant look at japan without thinking 40,000, 38,000. Highest level in 21 years, but almost half. I remember those days, too. You might barely remember them you probably dont you were too young probably. I remember when it seemed like japan was taking over pebble beach i do remember that all the buildings they were buying in manhattan. We thought we could never compete against japan. That shows you economies and stock markets can stall after 20 years, 25 years. Youre cal ripken, thats who you are. Great because you show up youre always here consistent i play hurt cal rip conditiken senior among other stocks to watch today, the price of crude which is not a stock, but its something to watch you can watch stocks that are affected by it 52 now wti hit a fourweek high yesterday after saudi arabia said they were determined to end the supply gut the Saudi Arabia Oil minister raised the outlook of production cuts when we do have andrew there, he says hes been having a great time i want to know how i want to hear hes not a big drinker any way are you comparing him to the rest of us. Adami is here on todays its all relative, right . Noted remember that whole thing . Noted . We talked about that yeah. Noted i owe you for that thing you that helped you twitchy thing. Its bizarre like jumper cables its Shaquille Oneal bizarre you sit there, youre going its like doing something to your stimulating your muscle. Its called the electronic stimulation, it overrides the muscle thats spasming we have to do this. I didnt believe youre not allowed to pull it off until you pulled the thing off i pulled it off you get electrocutelectrocutd i did. I should have read you the warning label. I read it, i didnt read it september durable goods earnings are out at 8 30 a. M. , followed by september new home sales at 10 00 a. M. How about these, boeing, cocacola, glaxosmithkline, Northrop Grumman will report before the open as well you made that point, when the market was flat yesterday, we had a technician tell us, maybe its time for a pullback but then caterpillar and theres no way the dow is not going up the caterpillar story is interesting. That was the third time they raised guidance this year. You think about that thats uncaterpillarlike. Its always darkest before the dawn a year agoremember what we thought . What did they buy the mining stuff for . Commodity glut all the stuff they had done. They were facing off got rid of poor doug. Hes still chairman. Yeah. You have to think what doug was doing over that time to get it moving look at it now. Its not a great comparison, but you wonder if ibm is sort of nine months behind where caterpillar is do you . I do. Look at the last quarter of ibm. Very good. Showed finally maybe theyre starting to make this turn after four, five years one quarter does not a trend make caterpillar started somewhere as well six months from now, if you have me back, if were thinking about ibm come in every week. As long as you bring things to electroshock him. And im back to ge again. Where is ge that was supposedly being restructured and turned around for the last 15 years when it comes down to it, it looks like maybe they were playing some kind of shell game with the pension expenses. I want to be careful how i answer this question you look at General Electric for years, always beat earnings by a penny or so. With revenue below. Extraordinarily consistent. You wonder what was being tweaked on the real estate equation from time to time they zigged when they should have zagged. They sold Financial Products at the low. They got into the Energy Business at the top. Honeywell which has been extraordinary has done everything right ge has done everything wrong the change in management will help but theyre way behind the 8 ball now i wonder what the multiple really is on ge now. You can argue that the right multiple for a company like General Electric, given where they are whats the earnings power today . Yeah. A dollar a share . Ill look it up i will tell you that the right multiple is low teens if not 11. 50, 12 you start doing the math its probably a sub 20 stock our top corporate story, chipotle, ive had it. Its like fresh or something i like tacos with fritos and doritos on them. We have david novak coming on. He knows how to make burritos crazy nachos. I eat anything taco bell i love it. The Company Reported chipotle reported Third Quarter profit and samestore sales below forecast the chain was hurt by food borne illness outbreak at a store in virginia the store also cited high prices for avocados and lackluster response for its new item, the queso. Hot cheese with stuff in it. The gop is working on its tax reform plan. Now the democrats have their own proposal thats nice. You know, i dont know what why would do that. Ylan mui has more. They have a proposal for us . Just to do it . To show they can got to give them credit for trying not really. They are doing this even as the house is making Real Progress on an actual bill so democrats are focusing on four areas theyre looking at middle class tax credits, education, child and elder care and retirement. Now, representative rich neal is a ranking democrat on the ways and means committee, he called this a tax code founded on fairness not based on who you know or how wealthy you are. He was taking a swipe there at the republicans plan some of his proposals, like expanding the earned income tax credit are staples of the democratic platform. They want to allow you to exclude student loan payments from your taxable income the plan calls for bigger tax credits for child and dependent care now, there is one issue on which both democrats and republicans overlap, and that is the tax credit you get for having a child. This is one of the major priorities for first daughter ivanka trump and for marco rubio. Theyre holding an event today on capitol hill to try to build support for this democrats say they are on board with this idea, but most other parts of their plan are just not going to suppfly with republicas democrats want to use revenue from tax reform to go towards infrastructure thats something republicans discussed early on and dismissed. Democrats say they have not gotten much input into the republican plan. They say these principles they released this morning are parameters for the discussion, and they are willing to negotiate. Well see if the train has already left the station back over to you i dont get a lot of that i know during a campaign, if you talk to one candidate, you have to give equal time to the other candidate. Were probably not wrong to focus whats going on with the republican plan, right thats just me i just think thats where all the action is. Thats the one that has the possibility of passing this is moot, isnt it this is completely moot. The democratic plan that just came out this morning, this is completely new i think its important to remember that republican passage of tax reform is not guaranteed. What happens i guarantee this will not pass the republicans might not be guaranteed, but i can guarantee this is not going to pass. What happens if we get to the end of 2017, there is no tax reform, President Trump is looking for other answers. Maybe this is a document he goes to wow we dont know what happens when President Trump flips the script because he approached the side about other things. Maybe thats fair. Well do both sides. Were all waiting for next wednesday or whenever it is. I think you confirmed that thats when brady will have the details. Is that wednesday . November 1st. Not sure the day of the week november 1st i think thats wednesday. Yeah i think ill wait for that one thanks earnings are out from visa looks like theyre coming in with earnings of 90 cents a share. Expectations were for 85 cents a share. Thats better than anticipated also talking about revenue coming in above forecast revenue of 2 2. 1 briillion dow component i said that you did. Transactions processed, up 13 . Thats the news headline you wanted for me. For me that was the headline that it is dow component now, thats an old weve been doing that for a while. Which ones do we use United Healthcare . Goldman sachs . Nike i forgot about nike. They change them so much, adami. They shouldnt. It should be locked in well have at t earnings, greg moffett will be on. Yes its not a dow component. Yeah. Madness i dont know. Lets get to riyadh Andrew Ross Sorkin is at the saudi vision summit. He joins us with a special guest. Im told, andrew, that you can have a drink in hotels i didnt realize that. So you its not totally is that true . I dont know if thats true i have not had that experience thus far but i have had some amazing apple juice. Ive had some amazing watermelon juice. They do some extraordinary things with juices here. Smoothies. You know i like smoothies. So weve been having wow dates youve had a date dates the food oh, my god. Youre on national tv, your wife could be nonetheless i know i know dates we have Ronald Ohanley here of state street global advisers. We can talk to him about dates, watermelon juice as well you have been here a lot you know the answer, can you have alcohol in hotels. Not that i know of. I have never seen alcohol in a hotel here ive not seen that either you are here theres a lot going on here. A lot of conversations about the markets, the global economy, whats going on in saudi you are doing a panel this afternoon about policymaking and what investors want to see do. What do you plan to say . What policymakers need to do, if they want growth theres a system involved in creating growth its not just one single thing the way i think about it when i focus on it, the foundation is your Capital Markets you need well running Capital Markets. Good governance and thoughtful regulation are you a believer that this tax plan is going change the dynamic in the United States i think we do need tax reform i think we need to start with Corporate Tax reform i hope it goes further its more comprehensive. Further in what context to think about how the overall tax plan works we all know we have an inequality problem we need to think about the middle class so i think if we can have a system that lowers Corporate Taxes, and stimulates business and particularly small and mediumsized business, yet makes sure we have the proper safety net in place, thats good. We had a conversation with larry fink yesterday you saw him on the panel he talked about the idea that 4 for the average investor is all you can expect over the next decade do you buy into that i dont necessarily buy into the number i think its highly likely what well see Going Forward is less of what weve seen in the past as investors we need to be prepared for a lower return environment. Given your business, how do you sell that . It means, if you think about the livers t erlevers to accumu the return is one, how you start saving is another part of that we have to change the mindset on how we invest and save for retirement you are the king of passive investing to a large degree. How do you think of the debate between active and passive now i think the debate is ov overwrought. For every dollar that shifts from active to passive, 2 1 2 dollars shifts from active to another form of active we have a long way to go before passive overtakes active im not sure it ever will for technical reasons. Youre not sure it will for technical reasons . What do you mean at some point if everything is passive, by definition you have an opportunity for the active investors to come in, figure out the anomalies and invest against that. If youre a company now, you have to be in an index the Big Conversation for saudi aramco is what it will list on because people want to know what index it will be a part of just because its in an index doesnt mean you cant have active management. Being in an index by itself doesnt mean that we should only have passive management. I have to ask you while youre here, you were the sponsor of the fearless girl right down on wall street got a lot of attention youve been a big supporter of women, women in the workplace. Yes in terms of Corporate Governance and the like. You also paid a 5 million fine for discriminating against women and africanamericans. Just take us inside that this related to something happened that in 2010 and 2011 but i would be the first to say were not perfect. Were committed to equal pay for equal work and we stand by that and i think if you look at us now, there is no discrimination based on that. We have not been perfect we recognize we havent been perfect. We paid the fine, were moving on okay. Well move on and thank you for this conversation. Thank you good to see you. Get you some watermelon juice, hope to see you back in new york joe, back to you. Maybe its dubai or something. That may have been that information the watermelon dubai, thats possible. Okay. Ronald, alcohol in dubai uae ronald says alcohol in dubai. All right thats not a day trip for you, is it . You better just we could do a day trip. You want to do a day trip to dubai . Joe is inviting us to drink in dubai. When you get back, ill have something on set for you when you get back well make an exception. I dont care if its 6 00 a. M. You will be like this. Thanks stocks to watch including an earnings miss from at t. This mornings biggest movers when we return 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. 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 at ts Third Quarter profit fell by 9 missing forecasts. The wireless carrier lost more video subscribers to traditional and online competitors viewer upgraded their phone also ahead of the iphone x. We will talk with Craig Moffett about this in a few minutes. Juniper networks Third Quarter results were in line with the profit warning the company gave two weeks ago they also project Fourth Quarter numbers that fall short of analyst estimates. Capital ones Third Quarter profit beat forecasts. The credit card issuer was helped by rising Interest Rate as consumers took on more debt in news out of washington late last night, the senate narrowly voting to repeal an obama era rule allowing class action suits against banks mike pence cast the final vote to break a 50 50 tie the Banking Industry lobbied hard to roll back the regulation the rule banned Financial Companies from requiring companies to surrender their rights to sue to open checking accounts or credit cards i hate that a lot of Internet Companies force you to do the same thing if you use them, you have to agree i will never sue you, ill be forced into arbitration you have to give up your right to sue i understand the customers they say its the customers, were helping them by making sure they dont have to face hefty lawsuit fees but you should have your right to sue you shouldnt have to give that up to be a customer of any company. The Senate Approved a 36 36 billion Disaster Relief package. This includes a bailout of the troubled National Insurance flood plan more money will be needed as the u. S. Recovers from hurricanes, harvey, irma and maria. When we come back, shares of at t sliding after the Company Posted weaker than expected inrngs well dig through the report with analyst Craig Moffett when we come back building a website in under an hour is easy with gocentral. From godaddy in fact, 68 of people who have built their. Website using gocentral, did it in under an hour, and you can too. Build a better website in under an hour. With gocentral from godaddy. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning u. S. Equity futures, take a quick look, well have a lot of dow components reporting in. Now, through can see, the dow moved positive it was down earlier. The s p continues to be indicated lower, down two. The nasdaq down just under 10. One of those dow components already out this morning visa, credit card issuer earning 90 cents a share, beating estimates by 5 cents that stock looks like its bid at 110 ask is 111 after closing at 108. 41 last night. Chinas Ruling Communist Party broke with precedent revealing a new leadership lineup the president and the premier were the only ones to retain their positions amid sweeping changes to the standing committee. The party elevated one close ally of the president and removed two potential successors from the ruling committee. At t posted weaker Third Quarter results missing analysts projections on the top and bottom line. Joining us is Craig Moffett. Thank you very much for being here good to be back we knew there were concerns about at t coming into the quarter. They already told us they were losing video subscribers despite new people signing up for directv. What did you think when they showed us what those numbers were you got the mix of video subscribers and saw the breakdown between the satellite business and their old legacy, uverse business but the bigger picture, step back for a second and they have a bundling strategy that talks about how you can add media and Pay Tv Services to their wireless customers and try to retain wireless customers. All that is fine, but first you have to run the businesses that you got. You have three big pieces of this business, a wireless business, a wire line business and an entertainment segment which are each about the same size now the problem is all three are shrinking now. And so you have a business with tremendous amount of leverage, about 1 180 billion of debt add 70 billion of off Balance Sheet debt, call it 2 250 billin of pro forma market cap, youre talking about a business with 5 500 billion enterprise value. Levered at 3. 7 times when they come out of this transaction and shrinking at 3 . Thats a problem its a problem they have theyre really struggling with the fact that theyre the businesses that make up at t are shrinking businesses what is not working the bundling package, some people thought they were impacted by the hurricanes adversely. They were when you look through, what is not working thats what it sounds like youre getting to. Unfortunately bundling is all too often a euphemism for discounting. Thats what theyre doing. Offering tremendous discounts on directv and o. Tt service direcv now in order to support wireless wireless numbers were good, but the ebita of the entertainment unit where directv sits was down 10 year over year 9. 9 because of discounting. Massively discounting the service. I guess it goes to i have not heard this from them i guess their thought is if you build it, lock them into things, they will stay is that it yes and no. It makes sense to reduce the churn rate of the wireless customers, wireless customers are worth a lot. The numbers were about what the company said last week the subscriber losses were what they said they also contend from here, when you do comparisons from here on out, theyll be back to gaining subscribers . Yes and no. They said theyll be gaining subscribers, but that gain includes the subscribers they have to their over the top skinny Bundle Service where they dont make money comcast is tomorrow comcast is tomorrow and charter. Comcast talked about do you remember the numbers due to the hurricane . They could lose 150,000 u. S. Subscribers. What do you expect tomorrow . They have effectively said it will they then say that they will be addtii additive after ts i dont think so comcast suggested that video subscribers are likely to run below zero theyll continue to shrink in video. But remember theres a big difference between the cable operator and the satellite operator a cable operator is primarily in the business of selling broadband. Theyre infrastructure providers, not Media Companies satellite operators are solely in the business of selling video. If the video market starts to contract the overall pay tv industry is shri shrinking, you have nowhere to turn if youre a satellite operator at t is trying to bundle those subscribers with wireless and increasing wired footprint, but you just spent 60 billion two years ago to buy directv in a pure satellite distribution business thats a problem what do you think about time warner good asset. But they fully paid for it just as with directv, the problem is multiples for the rest of media have compressed sharply since at t struck that deal the problem is what you pay for the assets so youre sure that this is just an inexplicable decline over time. Maybe i dont change for which one. Bundling. I have 70inch tv, i like my cable channels i like netflix i can see how i can go there i found something yesterday called the hunt all these predators of unbelievable photography. So i watch netflix, but i constantly go back, im on the cable grid im looking at a bunch of youre a product of somebody who grew up with cable i want to have that, i dont want to watch anything on my iphone as to how i get content im not unbundling dammit. Thats what im telling you. Im not moving into the future i wont do it. Fundamentally these businesses are about what are the implied terminal growth rates. Dont use the word terminal what do you think of these stocks at these prices i think at t we had been negative on it all year. We recently upgraded it to neutral. Because of the decline . Because it got cheap enough we thought neutral valuation but i think the market is starting to discount at least a nontrivial probability of an end cut. So theres still a fair amount of risk in at t stock. Verizon is probably a little better you cant point to verizon and say things look great. I think verizon strategy because of fios not necessarily because i think at t is i have verse fied diversifying away from the business we have a big hour coming up our guest host at 7 00 a. M. , david novak, former ceo and chairman of yum brands hes a comcast board member. We can speak about this. And Barry Sternlicht will join andrew in saudi arabia davos in the desert. We have our own davos man there. Senator rob portman will join us live from washington on tax reform the next fed chair and the battle between President Trump and senators corker and flake. Stay tuned youre watching squawk box. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Welcome back to squawk box. Lets get back to riyadh andrew is live at the saudi vision summit. He joins us with another special guest. Hello, andrew. Great to see you. We have howard marks here, cofounder of oak tree rare opportunity to speak to him about what is going on in the markets. You have occasionally scared people recently with your prognostications with where the market is headed, saying the market is overvalued that was over the summer has that changed i dont remember any markets retreating i would say by the way, let me say im not predicting where its going im talking about where it is. Okay. I think if you look objectively at the market, you see cautionary signs thats all i was writing about what are you doing about that we had a mantra for a while this is nothing new move forward but with caution. We are investing, fully invested where we can find reasonable investments but with more caution than usual and we consider ourselves a cautious investor. But if you think things are overheated yes that would pore tend thtend would go down. I think would try to position yourself for that. There are degrees of overheated some people in what we call the media try to get to you say buy, sell, on, off, black, white. There are degrees. We should adjust our risk position given the level of prices, the type of behavior going on, the fundamentals in the world. Its not so bad that one should be out of the market i think, for example, in the u. S. Our economy is trudging along. Its likely to continue to do so for a while. And i think that the danger is on the side of being out of the market i wouldnt want to be out of the market do you think if theres some form of tax policy changes that will boost the market or are you of the view that its already baked in, and that if it doesnt happen, the market retreats . I think that given expectations, i think were unlikely to have a favorable surprise i dont think well see tax reform rising market unless something happens, which is better than i think can happen expectations were high in tax reform and infrastructure. My guess is that at best well get close to ek peckstati my guess is that at best well get close to ek peckstatipectatt not surpass. One of the big superstars here is masa son you have made some comments that youre a little anxious about him putting 1 100 billion into the Technology World all at one tile i think that if he does it well, it will be the first time. Thats not to say that he wont. But its an aggressive thing to do and it has to be proved. Have you seen him here . I know hes here. I havent seen him would you have that conversation with him . Of course but i mean i would assume he would admit that it is aggressive anything is aggressive which has never been done successfully in the past well see what can be done which leads me to the final question, which is this country is going through remarkable transformation, diversifying away from oil and planning to put a lot of money to work in the same way that masa son is, if not even more so this government is a client of yours, i believe. How do you think about them putting all that money to work now given where i imagine you think we are in the cycle . First of all, i think that putting money in his fund is not the same as putting money in the market today i assume it will go in over a period of time, and that that will constitute averaging in to some extent. But, look, there are lowrisk lowreturn investments, lowrisk highreturn investments. There are not many lowrisk highreturn investments. They have decided to optt for what i call highrisk highreturn. I wish them the best one final question, because its come up here a lot. We talked to larry fink a number of other people. Over the next decade, where do you think an average rate of return should be for the average investor who is watching now it depends on whether they have access to nontraditional investments and the ability to make intelligent use of them with them i think they can get up to i understand most people are coming out at 3, 4. I will give you 5, 6 normal nall with so nominal with some alternatives stock and bond markets are not likely to deliver that howard marks, thank you. I like the optimism amid some pessimism. Guys, back to you. Thank you very much when we come back, Quarterly Results just in from the nasdaq. Well talk to the ceo next on well talk to the ceo next on squawk box. Under our museum. Well talk to the ceo next on squawk box. Eight priceless corvettes had plunged into it. Chubb was there within hours. They helped make sure it was safe. We had everyone we needed to get our museum back up and running, and we opened the next day. 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. Revenue also topped forecasts. Ive got some comments here from the president and ceo of the nasdaq adina freeman why am i reading this why am i do you know what you said i do. You achieve strong results in part due to a lot of execution priorities i need you to explain that you integrated acquisitions in 2015 successfully, and you improve Competitive Positioning across the franchise and also some key technologies. I like the sound of all that stuff, and its enough for me. I believe you. Can you help can you fill in some of those i dont really understand everything you are talking about. What went well well, first of all, were growing in some of the key areas of our business. Most notably our Market Technology business yeartodate is up 8 thats where we provide technology to other exchanges around the world and to the broker dealer community. In addition i didnt know that part did you know that part i know you feign ignorance. Im here every single day. I know you youre selling technology to all these other exchanges. Theyre not just here. All right we provide software to allow them to Risk Management surveillance thats what we provide for our own iks changes, and we also supply it on to about 90 other markets around the world thats been a great growing business for us. On the back of Strong Performance in the market as well as demand for our smart indexes. We talked to the ceo of a company who actually switched from the New York Stock Exchange to the nasdaq just in the last couple of weeks, and he said it was because of the index thing because he wanted to be a part of that, and it was important to be so because so much more buying is going through the indexes. In fact, we the nasdaq 100 is i adraw for companies that qualify. They find it to be an appealing part of the Value Proposition here at nasdaq, and we have had very strong aum. We tend to end up owning around 1 of the company as a nice passive investor in when they are in the nasdaq 100. Its there have been so many people who have been indexing in the last few years because its paid off its been better to be a passive investor in some of these situations you think that would change if the markets go a different direction . I do think that some of that is the nature of it being a long bull market. Its hard for an active manager reason to outpace the beta in the market i think that in general if you have more volatile markets, then the active managers can do things that are different in both the passive, which are done by growth mechanisms i think its difficult to be an active manager i did like ronald, though, that for every dollar thats going into passive, 2. 30 will going from one active strategy to another. Thats interesting there is general rising tide in envestable assets in the world already. There is a lot of money flowing into the system in general you have heard that people would love to have our Financial System do you think about that every day . I would think that we are incredibly vigilant, and we do talk about it very frequently. We have a lot of, obviously, internal meetings about it our ceo is in constant communication with the government can you monitor how many times they try yeah. We do. Its every day, i guess, huh . Always. I think that thats been the case for many, many years now. So we went i remember the crash, but we make a big deal. When its 30 years 30 years. You saw the coverage of that, and we have people tell us that, you know, well, it cant happen because of the fed, and it cant help because of the you know, the Circuit Breakers it cant happen because of this. It seems more automated than ever, and it seems like theres rulebased strategies that if everyone tries to leave at the same time, that theres going to be something do you feel confident that this could never happen again, at least i would say this. We have put protections in place in the market, so its in terms of thesis Circuit Breakers, which to me is apretty its one instrument in order to be able to keep the markets from declining to such a degree is there a mention of squawk box any mentioning of the crew no, for good reason i have to say we are really pleased because we Just Launched our new branding campaign, and weve used at cnbc as our flagship squawk box. Theres another show that comes from here too. I dont even apparently there is fast money. It happens to be in the afternoon. Im sorry 5 00 to 6 00. Tune in. Do you have all love all your children the same . Of course, we do. I have to say, though, i do, in fact, love all my children the same i will have to invoke that thanks for being here today. Thanks for having me, as always thank you very much things are kicking off now. When we come back, our guest host for the rest of the show will be david novak. He is the former chairman and ceo of yum brands. He will join us to talk leadership, politics, and much more squawk will be right back. 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. Live from egt beating heart of business, new york city this is squawk box. Good morning, everybody welcome back to squawk bok here on cnbc. We are live from the Nasdaq Market site in times square. Im becky quick along with joe kernan andrew is in riyadh for the future investment initiative, which tries to elevate the kingdom to a Global Investment hub. Were going to be hearing from him in just a moment with more on saudi arabias vision in the meantime, check out the futures. They have been looking higher at least for the dow futures today after question w he got strong earnings from visa s p is down by about one point below fair value nasdaq off by about six points below fair value lets get to another dow component right now. That is just out with earnings thats cocacola its coming out with its Quarterly Results. Sarah eisen has the numbers on that good morning, sarah. Good morning. Looks like a Strong Quarter for cocacola. This is the second one under the new ceo, james quincy. Ill go through some of the numbers for you guys cocacola beating 50 cents per share. The estimate was about 49. Bottom line. Revenues also coming in better 9 billion 9. 07 billion versus 8. 7 estimate if you dig below those numbers, you get a solid picture. Organic rev any growth of 4 they are refranchising some of their bottlers, and thats impacting the overall numbers, but they are seeing growing market share in their sparkling, which is carbonated beverages. A lot of people got excited about coke that coke was taking market share. That seemed to be happening. Zero unit volume, but 3 pricing. That tells you one thing quincy is continuing the strategy of smaller packages in other words, squeezing more profits out of those smaller cans i did have a chance to talk to james quincy, have some comments and color to bring you on the quarter. He did say were coming to the end of the structural changes in a couple of weeks. Thats referring to the refranchising of the bottlers and so that is set to end by the end of the year as targeted. He says he is slowly rebuilding momentum on the top line he saw developed markets kind of reasonable it was actually the improvement in the developing markets. Places like china and india, which return to growth he said what we saw in the u. S. , the weakness or the less than stellar results were pretty temporary. Blamed it on the weather and on softness in the Convenience Stores brazil is still disappointing. Guys, they launched coke zero sugar in the u. S. This quarter replacing the coke zero. I they said they doubled the growth rate. People werent confused by it, and the fans, actually, like it better how many calories in a coke zero is it a new coke zero is that what it is they tried that one other time i thought they put it i thought no, but i thought they put a couple in with pepsi light. If you get the app you remember coke classic. They still sell it is it not a domestic seller . Is it more International Like tobacco . How much of the total i know they sell it here. How much of the total is like a u. S. Just in the last few weeks i found some in that we have in can says, and its still so good i have one maybe every other week itsic, like, 200 calories the bigger problem with that is that you change your taste buds so that you are accustom to that again theyre selling it as an indulgence, as a treat smaller package thing. You know, treat yourself, like a dessert. The growth is coming from highend teas, plantbased beverages are very big right now. This is cocacola. The majority of their business whats different about the coke zero sugar, and why are they calling it sugar . You should try it i mean, apparently, i never drank the sort of zero sugar, zero calorie drinks, but it tastes more like i like the real stuff than diet coke. They thought it might have been confusing because its in the red can, like regular coke, but actually it turns out that people are really into it. Its also a fast grower overseas theyre doing well with that sarah, thank you. Youre welcome. Some other headlines that were following this morning lets get you caught up. A notable winning streak came to an end overnight in japan. The nikkei actually falling just about half a percent, but that ended its record 16day winning streak over that 16day period, the average gained a little over 7 . Also, anthem out with an upbeat earnings record this morning that was well above what the street was expecting of 2. 42. Also gave a fullyear forecast that exceeds what the street was expecting. Anthems results have been helped by higher membership numbers as well as an increase in the premium here with more this is if i were advisory to do this. This is not necessarily surprising, because i think david and some of the other ceos are at an age where you might consider this. Significant leadership change announced at carlisle group. Coceos David Rubenstein and Phillip Conway will become coexecutive chairman. Its a time bh it becomes logical to think about you can is session everybody would like to work, you know would like to work forever, but this is not this is a logical this is a good time i believe that 65 is too young for a mandatory retirement what do you think is a reasonable age now 70. First of all, i think you can go to 75 i think the age is really not the point. The question is can you keep putting on the uniform like you did when you were growing the business, building the bess. I think if you have that energy and passion the minute you cant put the uniform like you did before, i think you got to think about the transition you just dont want to throw the baby out with the bath water. Do you still with yum, do you look over the taco recipes anymore . You dont im disappointed because i couldnt bring you taco bell breakfast. Do you have any advice . I know my roots go deep into the company. I know a lot of the people i stay in touch with people. They give me a call every now and then, but, you know, as soon as you retire, you know, people are on to the next thing you know youre not that top of mind as you would expect it to be. I think youre there as a resource, as a leader. You want to help the transition. You want to be you know, you still i still owe my yum shares, and im very passionate, committed about the success of the company, and yum, for example, just celebrated the 20th anniversary last week,ing and, you know, i met with greg creed, the ceo of yum. Its only been 20 years 1997 where. Youre kidding. We were spun off from pepsico. Look what you have done a ton. Its been a lot of fun. You dont call any of your former employees and say youre great. I think i call brian i think you want to tell a lot of the research weve done has shown that peers want more peer recognition you want to create an environment where everybody is looking for it and that you can freely recognize other people. When you do that, you get much more involved, much more commitment from all levels of your organization. I think recognition is something that you want to have coming from the top down to the organization looking back at the financials of yum, would tax reform make a difference to that company . I think absolutely. I think, you know, the more you can strengthen the Balance Sheet of any company, the more theyre going to be able to invest, the more theyll be able to impact the world and their results. I mean, the this is the broader question the trumppresidency, 5 trillion and 5. 4 trillion in market cap what do you as someone that, you know, knows how to manage and probably is a little more delicate in terms of his persona than President Trump would, where are you on the state of the presidency after 9 11 . Snoo dtd won because he is authentic, which is a great strength he had a great message that people wanted to hear, which was america first. He won because he was great as a marketing campaigner he was the best i have ever seen at repositioning competition george bub bush with one line. Lying ted. Crooked hillary. He repositioned everything when you become president of the United States, i think everybody voted for him, everybody wanted him to raise his game. Pivot and tuly be the president. You know, i think thats the big challenge that i think he has. I dont think he has pivoted enough for the majority of americans. In terms of take the high ground, joe what about okay. Heres where i i tip on that a little and thats the cabinet appointments people in general, conservatives look at those and say what a great cabinet. Its not about policy i had ted cruz in here. I said as a conservative, as people question trump in terms of being a conservative, is there anything you would have done differently up to this point . You talked about policy alone. You talked about employment you look at where the stock market is. You look at where if you didnt see if you didnt read twitter or if you didnt read Mainstream Media coverage, you would think, wow, yes, america is improving, you would think. Unemployment is down. Leaders cast a shadow if you like it or not, people do what the leaders does. I think people expect the president of the United States to take the higher road versus get down in the gutter calling people names, you know, the what seemed to be like off the cuff tweets, those kinds of things dont really raise his game on the one hand, we have to get tax reform done. We didnt get health care done we have to get infrastructure done that will not happen if he doesnt align people the skirmishes with senators corker and flake impact his potential to get Something Like tax reform done or not my question is why . If its really needed. Do we have to have this . Leaders have to align people of all levels of the organization you can have to get your cabinet align and get your key Republican Leaders aligned, and then you have to bring in people from across the line thats what leaders do david, if you i dont know theres turning the other cheek, and there is just fighting back and i think a lot of people in his base are happy when he does it he talks about draining the swamp. He talks about problems being with Establishment Republicans he has in the case of flake, flake didnt even endorse him for the presidency he didnt endorse the nominees of the Republican Party. Those guys are out they won theyre both leaving on their way out theyre making a lot of noise, but i dont know they elected george w. Bush look at the response to george w. Bush. Its dig need. Its sort of look at the way look what theyve done to reagan over the years. I think his authenticity, his ability to take off the gloves, thats what makes him. They have a knife fight the democrats know exactly what theyre doing, and they they know exactly how to play things, and you go to a knife fight with a tooth pick after a few years. You finally, you know you see anything to that i see that. You are the ultimate canary in the coal mine they couldnt run fast enough from it. They have to worry about they have to worry about customers on both sides. I think its because you have to set a bottle for your organization you have to you have to be sensitive to other people. Okay. You have to im not saying that trump is not that or he doesnt have that in his heart im not i think you got to take people with you to get things done, and thats the challenge that he has. It has nothing to do with he could keep his tough style he could take the gloves off do you see that ever happening . I think its hard to teach an old dog new tricks i think of it as dna he likes to fight. You dont need to win every argument its only nine. Look what weve been through what does it mean that im going to take him out . Does that mean on a date i dont think so i think it means something entirely different that you shouldnt be on the other hand, parents dont want their kids to be bullies, and they dont want to have namecalling. They dont want any of that. When we come back, Glen Hutchins its not just a donation. Its a warm blanket. Its a bottle of clean water. Its a roof and a bed. Its knowing someone cares. Its feeling safe. Its a today thats better than yesterday. Every dollar you can spare helps so much more than you can imagine. Please donate now to help people affected by hurricane harvey. Your help is urgently needed. Its not just a donation. 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 we are live with our guest host this morning david novak. We were just continuing a conversation that we were having as we headed into a break. Looking to call i got it. I think we to get tax reform done now i think america expects it theres a real opportunity here. We need to get that done we need to get that done that will be a step in the right direction. I think we need to attack, you know go after the infrastructure opportunity we have in this country i think trumps policies and what he wants to get done, i am 1,000 aligned on it i feel that he could make it a lot easier on himself and the country in terms of how he goes about doing it i dont think he will ever lose his soul i think being authentic is a key trait of a leader. Thats one of the reasons he got le elected. What his big challenge will be is how do i preserve the core, my core constituency and stimulate progress and to move things along i this he thats only going to come from doing an even better job of getting people aligned and getting people moving in the right direction. Lets talk about the economy. What we hear from so many people that come in here is that the economy is doing so well around the globe. You can look at china. You can look at europe you can still going to be seeing growth in places like china, but now we see it in europe. Is that what you see from what you have been watching too i see everything that everybody else sees. You know, i see our economy here as solid it hasnt taken off to the extent that people hope it would. There are a lot of factors unemployment is at an alltime low. I think things are moving in the right direction. I think weve got a real opportunity in the next three years to get some things done. Thats all i would like to see happen well continue this conversation david novak is our guest host for most of the morning. In the meantime, lets get to andrew. He is in saudi arabia this week at the future investment initiative, and, andrew, what do you have for us now . Hey, becky. I have an old and good friend of ours, Glen Hutchins. He is here from north island its great to see you. I have been told that 70 of saudi arabiaians are under the age of 30, and the country has a high youth Unemployment Rate they have been run by an aging leadership for a very long period of time, and now they need to make a big move forward. I think conceptually its a good idea and what theyre doing symbolically is making that announcement and committing to it as a technology investor, they seem to have the right kind of technology path. Is supposed toe solar. It is remarkable if it happens the way its been deskriekd. Its hard to call something 500 billion in scale a microcosm. Right but i think it is, right . Has a good track record you balance these things out. Its fun to watch, and you wish them really well thats the other person thats here. That could get him to 1 trillion the funds were much smaller, and i think we have even had a conversation about the danger of size and scale some of my asian friends here have observed. That scale of investsing in technology is something thats unprecedented. It reminds me a little bit of about five, six, seven years ago when people started investing in late stage venture at scale. Facebook was one of the first examples i thought that was too big the robot just went viral. Im supposed to see sophie later on a panel its about the robot i would pay to see that, but i gather its free the where were we i was skeptical about that scale. It turns out to work im suspending judgment. The one thing thats really important here is venture will always be in the startup phases its still a small business. Right and some very small number of biz will graduate to the scale of uber or wework. That can absorb capital of that scale. All right . Thats not changing the nature of the venture business. Its almost adding a private market of the scale, even bigger scale in a role that the Public Markets used to serve. Right two quick questions you did mention weworks. Theres an article in the wall street journal last week about weworks, and then yesterday they did a deal with lord taylor. I dont know if you saw it out here are you a believer is weworks a Technology Company or a Real Estate Company i think thats distinction is irrelevant today almost everything we do will have a technological capability. Broadband, wireless, Artificial Intelligence theres a difference between a fraud and a bubble mortgages from 2005 to 2007 were both a fraud and a bubble. The internet stock from 1999 were a bubble, but not a fraud all right fair enough. Thank you. Appreciate it. Great to see you well send it back to you guys thanks andrew, thank you coming up, boeing earnings squawk box will be right back. 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 the expectation is for revenue of 23. 92 billion. 9. 8 is the profit margin. Both the operating cash flow and Free Cash Flow better than expected operating cash flow 3. 4 billion. Drars p00 million greater than analysts were expecting. Free cash flow of 3 billion thats 1 billion better than analysts were expecting. The goidanuidance has been fullr earnings this guidance is primarily due to a lower than expected tax rate as a result, the new guidance is 9. 90 to 10. 10 full year earnings per share the current street estimate is at 10. 04. Again, it was at 9. 80 to 10 before the raise in guidance one last note, guys, there is another charge for the tanker program. This is a program that has had several charges over several quarters over the last couple of years. The charge in the Third Quarter for that program as they continue to try to get things right there. 329 million guys, back to you. Okay. Phil lebeau, thanks. Well be watching the trade in boeing one of the great Manufacturing Companies domestic Manufacturing Companies. Well see how see about tax reform and how it affects boeing meanwhile, President Trump just tweeting the reason flake and corker dropped out of the senate race is very simple. They hit zero chance of being elected. Now act so hurt and wounded. Dot, dot, dot. Outside of flake ask corker, it was a love fest with Standing Ovations and great ideas for the usa. Those are there was one more. Oh, i guess were not going to do this. 11 minutes ago Clinton Campaign and dnc paid for research that led to the antitrump fake news dossier the victim here is the president. He put that in parenthesis actually, it says it here. fox news. Thats what it says. Its the story weve seen plenty of the papers today as well i mean, after hearing for a year that it was not i want to know which republican you dont know. Unidentified republican. We started paying during the primary season coming up with the dossier saying all these things about trump with the russians. Yeah its been interesting. Let me go back to business news. Tesla has begun making helping them rebuild the energy grid after the devastating hurricane caused massive damage on the island. Tesla announced via twitter that hospital del neeno in puerto rico is the first of many Energy Storage going live there are several tesla power pack units being installed the project will allow the hospital to generate and store energy when we come back, barren sternlich, and then senator rob portman. Take a look at the u. S. Equity futures. After a gain of over 160 points yesterday for the dow, you can see the dow futures are indicated up by another 13 points dow component out with earnings th watere helping earlier. S p futures are down by close to three points the nasdaq off by 11 stick around squawk box will be right back. That make everything from cell phones to rail cars more efficient. Which helps improve every aspect of advanced rail technology. All with support from a highlyeducated workforce and vocational job training. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. 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. David novak is yum brands chairman and ceo novak is also the founder of is and author of oh great one, a little story about the awesome power of recognition. David, weve been talking about leadership, but lets talk a little bit about business here too. I realize youre not running yum now. When we look at chipolte, its not easy to be a huge chain and to continue to open places throughout the country there are strong same store sales that tapered off a bit i think chipolte is a great brand. They had some food safety issues when you are a strong brand and they have a customer following they continue to have it, but not as great youll come back over time i think what they need is to the gift of the team thats usual will you how anybody recovers from a food safety issue i havent seen numbers recently, but they had a big delta in terms of what they really needed to have to open up new units i think they are a strong concept that will rebound. I think about pepsi and cocacola and mcdonalds everybody out there has to try and deal constantly with these changes. I thought it was interesting looking where they said that one of the reasons why they werent doing so well was their queso product. That just you know, that didnt really ring that true to me because what really made chipolte work was the entire concept work we would open up a taco bell, and we wouldnt see any cannibalization. There are two different segments never envious. I remember the taco bell incident was weird it was not really a health concern. It was like a weird media report remember i was kidding you about it when you were in one time i was upset about it because it wasnt true somehow we had to weather through it, and we did we have a strong brand when you have a strong brand its a virus issue. They had just gotern past the point where people had forgotten about all those issues they had a while ago. Their problem is they built their whole concept on being whollier than thou when youre not and it comes back once, thats a problem. If it comes back twice, its a bigger problem if it comes back again in any way, shape, or form, you are in a bigger hole that you go the to dig out of i this i thats really what theyre trying to do right now its the concept of locally grown and not having to centralize its probably part of the problem too. You dont have centralized controls over how this is being produced or where its going yeah. Well, they have their challenges theres no question about that i do believe its a strong brand with fairly decent food. Overpriced in my view. Thats where i always went to taco bell. Still do for, like, 4 its great. David will be with us for the rest much the show never talked to you about pizza hut or kfc really. Kfc, i need to know how many colonels are there im confused they get for expensive and then prima donnas. By trading out the colonel, were able thats what buffett says about the gecco. Cant ask you for more money gecco versus flo, you know, and some of your competitors people are always looking forward to they get to be prima donnas Colonel Sanders . If they had if they had that role forever, you become a celebrity. The verizon guy is now a sprint guy senator rob portman from the tax timeline futures this morning, once again, the dow was in positive territory. Its down now, though. Maybe well look at some of the individual connell poenents today. We head to break, heres a look at european markets. Quk xilbeight back. Dow joins is right above flat line s p indicated down the nasdaq indicated down too. Lets see your wallet. Capital one, Third Quarter profit beat forecast credit card issuer is helped by rising Interest Rates as skurpz took on more debt. That offset an increase in loan losses at t Third Quarter profits fell 9 and missed forecasts. The wireless carrier lost more video subscribers to traditional and online tv competitors and fewer customers also upgraded their phones ahead of apples launch of the iphone 10. Dow component visa, the credit card issuer earned 90 cents a share for the Third Quarter. Beating estimates by a nickel. Revenue also came in above forecast the l. A. Dodgers opened the world series last night with a victory over the houston astros. It was dodger pitcher clayton k kershaw that had 11 strikeouts and only allowed three hits. They win 31 game two of the world series is tonight. Dog gone it. Doesnt start until 8 00, unfortunately. When we come back, senator rob portman talks tax reform stick around my name is jeff sheldon, and im the founder of ugmonk. Before shipstation it was crazy. Its great when you see a hundred orders come in, a hundred orders come in, but then you realize ive got a hundred orders i have to ship out. Shipstation streamlined that wh the order data, the weights of , everything is seamlessly put into shipstation, so when we print the shipping ll everythings pretty much done. Its so much easier so now, were ready, bring on t. Shipstation. The number one ch of online sellers. Go to shipstation. Com tv and get two months free. Swho live within five miles of custyour business . 54, like these two. And that guy. Or maybe you want to reach women, ages 18 to 34, who are interested in fitness. Namaste. Whichever audience youre looking for, well find them were the finders. We work here at comcast spotlight, and we have the best tools for getting your advertising message out there. Anywhere, any way your audience watches. Consider them found. Snoo it was a 5050, and it became 51 after the veep voting on that. The Banking Industry has lobbied heard to roll it back. The group had banned Financial Companies from requiring companies to surrender their right to sue in order to open checki checking accounts or credit cards. The Senate Approved a Disaster Relief package. This includes a bailout of the financially troubled National Flood Insurance Plan that bill also includes money for the california wildfires, and it extends emergency credit to puerto rico to keep its deposit functioning. Lawmakers say more money will be needed as the United States recovers from hurricanes harvey, irma, and maria. Republicans hopeful for a november 1st tax bill now unveiling. Putting them one step closer to tax reform before the end of the year joining us now not just from the great state of ohio, but from the best part of ohio. Ohio senator rob portman cincinnati thanks for joining us today. Good to be back on with you snoo we would need you until 9 00 youre here to talk about tax reform thats what i want to do i want to start with that lunch. President trump tweeted out this morning that there was a lot of, i dont know, enthusiasm in the room its not necessarily senator flake and senator corker, but he said theres a lot of applause and a lot of enthusiasm for the prospects for what happens with tax reform were you at the lunch . I was at the lunch, and there was a lot of enthusiasm in the room, including from bob corker and jeff blake, about tax reform you know, you and i have talked about this so many times this is an opportunity to help the people we represent in very tangible ways. Its going to increase wages, increase jobs. Help the middle class that are going through a period where theres flat wages and higher expenses and so its you know, its something exciting. Were finally getting around to doing what we should have done a long time ago. I know you, and i know you are a mildmannered dignified gentleman. I figure you might share some similar thoughts about this. Do you think it needs to be if you werent going to run for reelection, would you is that why you are in line with the president , or do you not think that as a man of good conscience, do you not think its necessary for you to speak up, which is what flake was saying yesterday i i do speak up when i disagree with his policies, and i speak up when i agree with them, and my job is to represent the folks in ohio, including in your hometown of cincinnati, and you got to work with the president. I worked with barack obama i got 50 of my bills signed into law by barack obama, as you know our job is to put our head down and start legislating. Thats what people hired us to do thats what ill continue to do. Do you support that do you think it helps the party . Do you not ascribe blame to them do you ascribe wram for what people are calling disunity in the Republican Party both those guys were friends of mine. Theyre both good friends because they do focus on whats right. By the way, both of them are for tax reform the notion this morning that theyre somehow going to vote the other way because of their views about the president , its crazy. It helps the middle class in their state. I think everybody ought to focus on tax reform and Getting Health Care costs down, dealing with this Opioid Crisis we have a real problem in cincinnati and ohio. I think you got to decide what is best for the people you represent. Focus on that. If the president is successful, the country is more successful you have to disagree with him on policy issues as they come up, and i continue to do that as well i know. Policy issues are one thing, but, you know, whether you disagree with, i dont know, whether he is a moral, you know an example for our children, et cetera, et cetera, you are not really commenting on that you are not going to resign from the senate because of a tweet, i guess, are you we saw that 401k exploded then trump said, hey, this is not going to happen. We thought, hey, thats a good use of twitter, and then we heard corker say you should stay out of this. Were going to write this ourselves. You shouldnt be weighing in on that the reason is the idea of changing to a roth rather than a traditional 401k or ira treatment, is to be able to save money in this tenyear window. Its kind of a gimmick longer term, they get less revenue. The way to try to pump up the revenue, which is important to try to get tax reform done i think it would have resulted in fewer people having access to retirement plans takeup rate among 401ks and iras when theyre offered as roth is less than traditional ones if you were to tell people you cant get a traditional retirement plan, contribution plan, you would see less takeout theres a lot in the tax bill that we need to get to sfat and local taxes. How do you stop everyone from going to 25 i dont know if we can add to that discussion. Let me ask you something thats not about the tax reform you saw the other news yesterday i was alluding to that a couple of investigations one into the iranian deal and another one into the way comey came up with that letter, like, two months before he interviewed anyone you know, the Justice Department then the gps fusion news that came out you saw that too it wasnt some nebulous force giving money to the steel. It was the dnc and hillary clinton. You just keep your head down we dont have time, senator. You are lucky. Let me just say one thing i think the Senate Intelligence committee will roll these up into one package thank you we have to take a break. Thank you. Good to see you, senator thanks well be right back. Energy is changing fast and were changing with it. Building a smarter grid, investing in new technologies, thats aeps road to the future. And the International Brotherhood of electrical workers helped make that happen. The ibews Outstanding Union professionals have the skills and training to get the job done right. Thats good for our customers and for our bottom line. Ibew members are our power professionals. They should be yours as well. 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. 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. The president asks senators who should head the central bank well talk to jimmy dunn who said this last year. You think yetten should be replaced i think you just said yes im live in saudi arabia with an exclusive interview with billionaire jim coulter of tpg were live in riyadh as 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 live from the Nasdaq Market site in times square. Im joe kernan along with becky quick. Andrew is live in saudi arabia well hear from him in just a bit. Its a predigital Leadership Program. I do biweekly pod casts with leaders like jamie dimon we did weekly blogs. The whole idea is that we really want to make the world a better place by helping people become better leaders what im trying to do now is help develop leaders at all levels for example, i created a program called lead to feed, which is we dock our taking people with you leadership learning. They apply the learnings with project teams ever to solve problems in the community with a specific focus on hunger we support a million kids the last five years, and its the largest, Fastest Growing privately funded Leadership Program in our country were going to try to get inside of their heads, and make sure that you attack the perceptions and the issues that exist as leaders thats my alma mat mater. I got a journalism degree before the fake news thing came into play yes, i did i majored in advertising he found that to be very helpful. Theres a whole idea here to help in particular millennials of 75 Million People they want to have more leadership wisdom, and so you can get that from the podcasts and the blogs. All the im in the process of developing a Leadership Program that well be offering to them i really believe that this is its where the through internet the internet yeah, the internet training. Millennials really want the training that way. I just ran across, interestingly, this lady that were going to partner with, and shes got a program called global game changers, where actually you start teaching leadership in Elementary Schools and teach kids to understand what their true talent is, and then apply that talent with all their heart, and that ends up being their super power, and then you ignite good i really believe that you can develop leadership you know, leaders arent necessarily born i think what you have to do is give a high selfawareness, understand your talents, find your passion, and apply that as aggressively as you can into the area that you love and take people with you along the way. You know, theres a big leadership gap, though, right now. 70 of employees are not engaged at work, which is i think a fault of leadership. Whether you like it or not, the perception of leadership in government isnt really where you really want it to be whether you are democrat, republican we need to develop better leaders. I think we can get better leaders coming along in the pipeline in the United States. You know, were going to have Better Success as we go forward. Thats what im passionate about now. I was worried if everybody was a leader there would be no one to lead. I studied all of the Great Companies when we were spun off of pepsico my team went off and met with all the companies at the time and had great results. The single biggest thing that they all talked about and they hung their hats on the most was their culture. They really felt that they had a culture where everyone counts. Where everyone no matter what level youre at, you make a difference i think i always said be a leader, act like a leader. It doesnt matter what kind of job you have, where you are at in the organization. Take the lead. Be proactive help in the enterprise grow. I think culture is the most important priority for any ceo you have to get that Work Environment. If you get the Work Environment right, you are going to have a lot longer tenure i think i read somewhere 40 of ceos fail within their first 18 months, and then more than that really dont live up to the expectations of the people that hired them this is, like this is a major problem. We have to develop better leaders. I would say that the leaders that are failing dont have the culture, dont take the time to create the culture, dont take the time to get people aligned, and thats what were going to try to teach people how to do and starting at the very youngest age and moving up to people who are in business great david, thank you were going to talk more about this well be here for another 55 minutes. Theres a flat line today. Now down four. S p down four as well. Nasdaq indicated down 13. 5 lets get you caught up on earnings this morning. Boeing came out with Quarterly Results. The profit moved 2. 70 a share that was 6 cents better than the street was expecting revenue also beating forecasts cocacola topping earnings and revenue estimates. The quarter was helped by cost setting and higher demand for sprite and tea and coffee in north america, which is cokes biggest market visa earnings 97 cents a share that Beat Estimates by 5 cents revenue also coming in above forecast, and the credit card issuers citing strong crossborder volume and process transactions that dow compoen ebt is up by 1 and check outthe shares of chipolte the burrito chain reporting Third Quarter profits and same store sales below forecast the company is hurt by foodborne illness outbreak at a store in virginia that happened over the summer. It cited high prices for avocados also, the new menu item queso, lackluster lackluster response. You dont buy that . What has made chipolte in the past has been their entire concept. For them to be tapping into the great need of queso and it not meeting their expectations, it doesnt exactly ring true to me. All right another company out with Quarterly Results this Morning International paper. Earnings coming in 2 cents above forecast revenue also Beat Estimates. Results were helped by price increases and lower maintenance costs, despite the business being impacted by two hurricanes lets bring in the ceo of international paper, mark sutton marcus, its good to see you this morning i was reading what tax reform could do to i use it as an example earlier since you export 100 of your pulp to customers globally, and if you could be a slight change in your Competitive Position would be big for you. It would we could connect the dots easily between tax reform and ip doing better and hiring more people. Our tax rate does create competitive issues relative to some parts of the world where we compete. We would be a big beneficiary if we could get lower tax rates that do two things obviously, help from an export standpoint, but more importantly for us, our business is really driven by the economy and the consumer if lower tax rate for people and for businesses spurs economic growth, which we believe it will, we will benefit from the demand signal. More than we will from the tax reduction. You see theres quite a disagreement among the democrats and the republicans on whether really it does help consumers. You have seen the estimate that the average person could keep 4,000 more per year, and its hard to. I think what happens is two things one, people do have more money thats discretionary money, and if they believe its going to be there for a while, then Companies Like ours and others you dont have to work for us to benefit. All the people who support us will hire more people. For example, the export business for international paper. We have 700 employees working for our company, directly related to making products for the export market. Theres another 3,500 to 4,000 that support that 7,500 coming into our business with input materials and taking our product away in the lonlist istlogisti. As we sell more, as we have more demand, all of that supply chain will hire more you said that really whats more important in terms of earnings power is whats happening in the economy what do you see happening in the economy right now . Our biggest business is corrogated packaging we serve every segment it usually tracks just below maybe 50 to 70 basis points below gdp. We see an economy that looks and feels from our perspective like a 3 gdp economy some sectors are slow, and theyre off set by those that are very strong. The rest of our company in europe, we had a good quarter, and in latin america, its mostly brazil for us still in a recession you think we have wind at auerbach, and we are hoping that some of the policy issues that you have been talking about this morning can get sorted out and get businesses and peopleation more certainty. , and i think that will lead to Stronger Economic growth. I think about how much cardboard comes into my house these days because of how much ordering i do online. Does that matter for you online shopping, or is that a wash because you are sending cardboard boxes either to the stores or directly to me. The boxes that comes to you replace a box that went to retail a lot of that is being shipped instead to a retail store, to a digs bugs center where its been unpacked and repacked to the individual consumer. The resources are renewable it can all be renewed. 0 90 of those boxes are recycled into the stream to be made into new boxes. Its a pretty Good Business model for the practical nature of getting the product to use safely, and its a pretty Good Business model from a sustainability standpoint. Mark. Do you need 20 or would 25 be enough to make a difference . Were usually a little less than the statutory we are a company that does actually pay taxes 20 to 25 would be in the zone that we would be supportive of recognizing to get to 20, you have to make some tradeoffs earlier in the year. You remember the discussion about the border tax adjustment that worked for some it didnt for others we would trade for lowering the tax rate to the 20 to 25 range. Zbloolt you have decided to put a plant you were almost forced to do that, because the bottom line would be enhanced by that well, the the thing you have to remember about our products is they tend to largely serve the local market because of the nature of the product there are some cases where we were competitive, but maybe the supply chain got so long with ocean ships and all of that that we made a Service Decision to put a plan closer to the end use market thats the other thing you hear companies manufacturer where they need to be, and it wont help that much lower in part because of foreign taxes. Right thats what i meant when i said we pay a few points below the stat our rate. Well, i dont know. We appreciate thank you making that clear for us today thanks for coming on today appreciate it. My pleasure okay. Have a good day you too a big hour still ahead on squawk box. Up next well be checking in with andrew. He is in riyadh this week, and he joins us next with billionaire jim coulter. Also at 8 30 a. M. Eastern time, another newsmaker will be joining us longtime deal maker jmy dimunn will be here in studio with us stay tuned you are watching squawk box right here on cnbc but theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Skbro thank you for being here nice to be here snoo most of the investors have not left this bubble that were in right now people going to davos in the desert he ventured out last night. For years i taught at stanford, and a number of my students reached out for me and invited me out to a dinner at the edge of the desert i found myself with a group of 30 or 40yearolds eating barbecue on a hill what i wanted to find out was whether whachs happening in the room, which is quite special is happening outside the room sometimes you go to davos, and people are skiing unaware anything is going on the question is the mood here. The mood outside. The conversations reminded me of the talking about the future. Talking about technology talking about growth he think the moods has moved which is promising for this area do you see your firm ultimately doing business here i think the first thing that should happen is they need to get a local investment culture going. You know, again, im from san francisco, and part of what makes the bay area great is the local investors investing in local companies. Before they should worry about International Investors coming in, i think they need to build from bottoms up. Ultimately, given the population here, given the growth, given the demographics, we should absolutely be investors here that may be still a few years in the future i mentioned his name several times on the show today. Were going to see him on a panel in just a little bit do you see an age of super sized and Venture Capital . I think whats interesting is if you tie what he is doing with what the kingdom has also done with blackstone, on the infrastructure side, the idea of creating market leaders to meet their needs is an idea that i think will resonate and perhaps well see more of. What other Sectors Health care . Who knows . Are think the general direction is a little bit away from generalest ideas and towards more specific ideas. I think its fascinating that the vision fund is more focused particularly on Technology People often say that size is the enemy. Size is ov p the anyone its true. Its also the enemy of people like the kingdom who have to size in order to really meet their needs. We are ultimately going to have private markets at large scale to meet what the king doll is trying to do here. It makes sense that theyre trying to are there other sovereign wealth out there that could do stuff to this scale. There are certainly other poles of capital equally large and equally visionary. I have to ask, travis is here we saw him walk past us just earlier. Former coo of uber you are a big investor in uber one of your folks is on the board. I cant say its okay with me, but ill let you go. Thanks, again. Joe, im going to send it back to you hey, andrew thanks notre dame just got its biggest gift ever. Were going to tell you how much was donated. In the next half hour were going to talk to someone on the board of trustees at notre dame. Jimmy dunn a longtime deal maker he will join us at 8 30 a. M. Eastern time wow. Well be right back. Draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Notre dame just received its biggest unrestricted gift ever private pilot committed 100 million to the indianabased university the transfer of money wont happen until the 1987 graduates death. The school can use the donation for any purpose it wants there were only two gifts of 100 million or more to universities last year up from eight in 2015. When we come back, weve got some breaking Economic News. Durable goods orders are about to cross the tape. Well bring you those numbers. Plus, squawk box newsmaker jimmy dunn a notre dame graduate and a member of the ard boof trustees there. A donor in is had own right in a big way there. He will be joining us too. Squawk box will be right back. Prevagen helps your brain n and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Down nine on the nasdaq the tenyear is in that area where if the yields break through here, it could be significant. 2. 46. Rick santelli probably has some comments on that he is standing by at the cme in chicago. What are the numbers you have for us all right september preliminary durable goods read is over twice expectations 2. 2 expecting. No revision. Transportation still up nicely up its the best proxy for business spending. Up 1. 3 following 1. 3 revised upwardly from 1. 1 that is really good news if you look at shipments versus orders, also up smartly. Up. 7. 1. 1 revised to 1. 2 these are pretty good preliminary numbers. You are darn right i have something to say about 2. 46. A lot of people are saying things we start to visit the higher end of the range weve done that the last several dwreerz. Were faebl one and a half, two basis points above where we said last year. How many percent of the stock market above where we said last year its not a bad thing its a good thing. If john taylors potential to be fed chairman is pushed this long, great. Its a wonderful discussion. You have seen so many things that should have moved the tenyear, rick, that didnt. Theres only a few things that mattered with the tenyear you know what i mean overriding things. I cant believe theyre attributing this to think its john taylor . You think its the earnings that we saw people are saying that i saw it yesterday the bond market is more volatile because of the way the fed chairman is being chosen thats why i didnt know we could move it. The participants can age out. Okay its been a long time. The fact of the matter is this isnt a bad thing. This isnt, oh, my god, you know, brim and firestone this is a good thing stock markets are going higher earnings are pretty good the potential for legislation is good on the tax side thats an inherent positive for the equity markets i just dont see it. Its inevitable. I really do think if you look at the last three or four years, we always tend to see the higher former rates as we get into the last door. The back half of the last quarter. All right im with you, rick well, well see. Maybe by the end of the year ive been waiting for three for, i dont know, my whole life, it seems. Waiting waiting for three yeah. Lets tell you about some other news this morning. Amazon unveiling a new program for prime members that allows delivery drivers to drop off packages inside of the customer home make that possible amazon has introduced its own internet connected security camera, and an accompanying smart lock that will allow delivery people to open the door. The company is offering free inhome setup for those that dont want to offer the lock and security cameras themselves. Oh, yeah got to be trusting, i think. Now to President Trumps pick for the next fed chair rick was just talking about, during a lunch meeting yet with Republican Senate leadership, the president asked which senators would like to see him nominate the lead which candidate the senators would like to see him nominate to lead the fed. He asked for a show of hands vote President Trump didnt say who came out on top. It was not four or five of the other names. It was just general poul or john taylor he didnt raise his own hand. No. There were people making the argument that he might still like he is a real estate guy he should be a poul guy. He should be a low Interest Rate guy. During the campaign, he was a taylor guy he said theres a lot of assets inflation. By keeping rates low for so long i have no idea whether he just goes with neither one would surprise me, kevin or poul or somebody else. It wouldnt surprise me if he goes with somebody else outside of those two as well all right. Lets get to our next guest. Jimmy dunn is senior sandaler oh nightly partners. Thanks for being here. Good morning, becky nice to be here. Lets talk about a lot of things that have been happening, but, first of all, lets talk about business and how deals have been going. Plus, what you see on the pipeline right now how are things market has been very good i mean, weve led 30 months. Weve been very active theres been a lot of deals done this year the three largest deals weve been involved with, and the flow has been pretty consistent it doesnt feel quite as full as it has, but i think youll see more of the same in m a, which ive been saying for years, and that is whats been happening. You are going to see continued consolidation. As weve been talking about tax reform and as weve been kind of watching it play out on capitol hill, do you think thats had any impact on what Business Leaders are willing to dpo right now . Are they waiting to see what happens . It seems like something could be imminent i dont think its had a lot of affect. I think theres more concern i think the biggest worry in the market now is that nothing will happen that would really be unfortunate given the way the stars have lined up down in washington. The reality of it is the market is fairly priced, and if we can get deregulation and real tax reform, i think we could be undervalued. I dont think thats in there as fully as it could be it would be a real by lift to the market deregulation seems to be happening on its own it doesnt take a vote in congress to get any of that part done for the banks and even greater leveraging affect for them if we dont get some, i think its bad, but we wont get anything, i think, until the next year. Hey, jimmy. Your firm has been consistent every year and every market. You know, what makes what makes it different in your view . Is there anything you are doing different with your culture . Well, i hope so good morning, david. Weve had the same the same basic framework. Weve always had the client in the middle and trying to service the client and figure out what he wants and get it done for him. Weve never been involved in massive principle trading. Weve never worried about leveraging our own Balance Sheet. We were aggressive and able to do that, and we continue, although at less of a frantic pace, by during the crisis, it was like a mash unit for our firm because there was somebody in every in every office trying to figure out a way to get capital into the system. Now its a much more organized and systematic and much more deal with debt now weve always sort of weve always had the client in the center, and everything revolves around him not so much our own Balance Sheet. You have never deviate from Financial Services has that ever been a temptation, or have you basically you see this as a major strength in differentiation . Well, we you know, we probably could have. You know, weve been doing this now for it will be 40 years the next august. To be an expert in the area and to know whats going on, but the secondary institution has been a big benefit to us, and we dont have anile thattent migration in our place i mean. Ef we have to figure out a way to get ultimately its been a strength. I probably could have been more aggressive maybe in hiebd sight that worked out okay you want taylor you would love a nice yield kuv, wouldnt you things change right you need with david in there, its a good thing to think about to talk about leadership you need someone that can really handle an environment that will be very different than the one he is entering i think we need more of a leader i dont think its taylor, and i think poul is a good man, buh rl capability that can handle a lot of different problems at one time he likes warsh , i think. Thats by far the best choice i mean, it doesnt you know, theres no question about it i mean, he can he can handle an environment that is going to be very, very different in five years. All right . He has the depth and the ability to be able to do the right thing when we need it the most, and thats what a fed chairman will be known for not the environment he has when he comes into. Why is that why do you think that about warsh talk to him i mean, he is read what he has written. He has the confidence and the depth that will matter the most. Im completely sure about that if its not, kevin if its one of the other candidates that weve mentioned. Go ahead yeah by the way, what . No, i was going to say, by the way, joe, you mentioned that in 87 graduate im thrilled with what he did, but i graduated with ken he is more successful to me. He is more generous to me, but he is not jung younger than me he graduated in 1978 not 1987 you didnt quite do well enough in your s. A. T. s to get here im sorry, becky im sorry i interrupted you. If he can give 100, you can give 500 thats what i immediately thought. He has been tremendous to the university that kills you that he was supposedly nine years younger. That was thats, by the way, came out of left field we talk about that he is factbased. Thats just silly. Shes done we need to take get out of were well out of the crisis you know, the reason why the stock markets are roaring is that weve had Interest Rates so low for so long. We need to we need to take the training wheels off and let the economy go to work and go let the tenyear go to the level its supposed to be at you know, we its time for a change, and we need to get a real effective leader that has the depth and not just woertd about the status quo, and in five years when things are very different, well have we need very sure hands in that office the president , donald trump, has been on this show and told us that as a real estate guy, he likes lower rates. He has said that publicly. Its hard when you start thinking about being the president and being in an environment of rising rates. Thats typically what has led to economic concerns along the way. But, becky, he is not a real estate guy anymore he is the president of the United States. Okay so obviously real estate we have to face this, and we can have we can have an environment where low rates is just absolutely benefitting the upper 1 that owns the assets we have a broader, deeper, better economy for all of americans, and not just for a certain few including myself all right not going to say anything about where you are either i know you im working yeah. I know you are very close to somewhere where if you werent working, you could easily be there in, like, five minutes, i think. Thats true, but its not open yet okay. You know what, when i played that particular place, i wished it wasnt open anyway, you know, that was a low blow with the notre dame stuff i do have you know i have a brother, a father, and a sister all went to notre dame i didnt know them jeff flake with an 18 measures Approval Rating in arizona. A lot of my colleagues have spoken out really they just gave me a standing o they just gave me a standing o coming back are the days top stories. Squawk box will be right back. 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. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. York stock exchange. More stuff to talk about in the dow today, jim anything that raised your eyebrow, whether its coke or visa once again, visa. You have al kelly just doing an unbelievable, unbelievable job at visa. Shes continuing what charpie sharp was doing thats so seamless and visa is maybe the Great Technology and finance company out there. Its been straight up. The european acquisition was great. You got double digit growth. Were seeing double digit growth from gigantic companies. I saw Goldman Sachs had a sell on 3m, had to admit it was to great. These American Companies are delivering i know there are a lot of Smaller Companies that didnt do well yesterday but im impressed with what some of these big cap guys are doing. What did you think of the results of at t . They said they expect additions instead of losses. At t kind of threw the entire media world for a loop a week or two ago. Look, i feel that at t is a company thats got a yield that is in vie lat. The cash flows gotten better with time warner if you want to have income as an individual investor you got to feel good about what theyre doing. I know that the charts bad. I know someone who doesnt like the subscriptions. I like yield when were yield starved and the Balance Sheets better after time warner than before look, ill take the other side of the trade if i want income. Jim, youre a mexican food connoisseur because you own a restaurant were you a taco bell or a chipotle guy deep down you know what, taco bell late at night is just an unbelievably good thing to have. Man. Amen. Good answer, jim. Amen. What can i say . Kfc by the way, kfc this weekend. You know what, i have the bucket i wasnt going to have four pieces i had the darn bucket. Jim, just like with a cocktail its always late night somewhere too for taco bell. Good food, nothing like it. Make him the next colonel. He would be a great colonel, thats true. Thanks, jim. Oh yeah thanks, jim well see you in a few minutes up next, ann has a surprise for us. Eay . Rll were going to head back to saudi arabia right after the break. Cocktails 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. thanyes or no . Gin. Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. Head back to saudi arabia. Andrew, weve been talking off camera about your surprise we love surprises. Well, we have a couple of surprises. First of all, we had an amazing week here. I know were only halfway through. Im headed off in just a bit well bring you that video and we have a host of videos that were going to show you, behind the scenes stuff we had a great opportunity to have an interview with the ceo of aramco. I think we have a picture from that i had a great opportunity to speak with prince al walid i know joe will probably rib me, this is us on the dunes in the desert and then you said are we having fun here i want to show you how much fun were having first of all, you said drinking. You know me and food heres my watermelon drink. Looks like a bloody. Great better than alcohol. And then theres a tradition here, arabic copy and dates which im going to bring you guys back. Heres some beautiful dates. Those are pretty. Come on over. Were going to show you how this is done. This is the traditional way its done hes going to pour it and then what i have to do is drink it but then the rule is if you want more you just keep pouring, right . But if you want it to be done, you have to do this. So thank you by the way, he went to unlv to give you a sense of just how small the world really is. Anyway, thats thank you so much for that. Weve had an awesome time here we will see you back in new york, guys for now, i will bid you farewell. That was a rugged looking shot of you out there. Calendar worthy. Peter otoole is like, i thought i was a good andrew of arabia you kind of look like. Swimsuit edition. Yeah. God almighty. I knew i was stepping in it by showing you that picture. I knew i was stepping in it. Be still my beating heart i think thats something you should on cosmo you should fold that out sort of. Thats calendar worthy im not kidding. Andrew, thank you. Our guest host this morning is david novak paul ryan is making comments about the tax plan we know well be seeing the house plan next week he said the u. S. Will have a rash of corporate inversions if congress does not get tax reform done final thoughts on this jimmy dunn said it right, the world is expecting action and its time to have it anything less would be a failure. Jimmy was classic about warsh, wasnt he, wow. Kevin is unbelievable hes got the balance he reads everything. I think hes the best choice myself. Recently hes worked with druckenmiller and stan is a guy you might like to pick his brain. Kevin has everything. Hes got the broad diverse base of experience that you really need to have hes thoughtful. I think jimmys point about being able to handle what we dont know is important. Hes got that metal to do that. You want a steady hand so the market doesnt get spooked but thats a different market. I think hes a steady hand that will do the steady thing through all times. Thank you so much for being here today. Spending time with you for two hours, thanks, david and you look great. Thank you. Hair is awesome make sure is this me . Yeah, go. Make sure you join us tomorrow squawk on the street is next good wednesday morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer futures off on blue chip earnings we will get to coke,