Transcripts For CNBC Squawk Box 20240713

This comes after a decline of about 29 points. S p indicated up by 12. 5 you want to take a look at whats happening in the president ry market yields look like they are a little weaker. Dow component is reporting. Company is reporting a quarterly profit 3. 88 a share increasing the full year out look we have a nice gain in the stock there. This is a dow component. Thats the headline. It is going to help the dow. That is one of the reasons 3. 5 points adding nicely we wouldnt be up without United Health a lot of different view points on how theyll fare. Depending what happens they have been weak. Wont mention any names. We have an update lets do black rock first we have a lot going on earnings coming in from black rock looks like they earned 7. 15 better than they were expecting. Revenue looks like they are about in line with expectations. Couple other things, they say the longterm net flows. 52. 2 billion. This is a company has has 649. 64 trillion this companys ceo will join us who is larry fink i was watching live it might have been a fiveminute delay. They are not there that long if its going to be jeopardy james. We dont want to get too attached just show me the numbers alex asks these questions. The first guy was wrong. Blk, it was kind of funny. It was a 7 trillion in assets company, the first guy said who is h r block considering what we pay in taxes, 7 trillion would be small. They dont hold assets for long. Were you excited screaming at screen he was sure it was black stone. In other news, an update on the wework saga. From sources i have spoken to, there is now a major fight going on about which way to lean in terms of the potential next step many are leaping towards a 5 Million Financing effort led by jp morgan rather than selling to the softbank announcing jp morgan would be the offer that would be taken. I guess the point is that people internally would lose their stake. By default, if soft bank comes in, everybody else gets pushed out softbank already has 30 . It depends on who gets washed out where. If you take the jpm deal, there is high risk involved. How are they on the hook for that jp morgan is going to go out and market this. On the debt side potentially you are smiling with sort of a cynical grin i think lean forward, thats taken. Yes it is. Do they still use that . I never understood. Better than leaning back. Got to lean in. Separately, the Guardian Newspaper reported wework is expected to layoff about 13 new projects are getting put on hold they closed about 2,300 phone booths those are quiet, private spaces for people to make calls in these shared spaces. They are calling it densifications thesehave formaldahide. How does that happen . I cannot tell you that. There are people who spend lots of time in those phone booths. Really . Superman actually, he doesnt spend a lot of time. Hes going to be ob today. Fed speaker will be on this morning. Making a case for more rate cuts he said insurance rate cuts may help resenter Inflation Expectations sooner than otherwise. As weve come to expect, he adds that a decision will be made on a meeting by meeting basis pimco cofounder says a new warning. Out with the First Investment out look since retiring in march. He said with trillions around the world, investors should hold stocks that promise secure pay outs he says bull markets and equities are run off the rates i thought the warning would be sign a prenup but that was not the story you just wonder how i think you kind of laughed at that. There but for the grace of god, we all need to worry about these things this become very public. He was putting fish in the house where she was. It wasnt fish. It was dooty can we go back to his market calls. If you have negative Interest Rates, that seems like catalyst for pushing equities higher. Hes had horrible calls on stock. Hes never been right on stocks ever in recent years, his bond funds all underperformed i guess we care about what he says i think the opposite. I get his point that it is real low rates that have driven bull markets but we are in uncharted territory. If you have to pay somebody to hold your money in bonds, i dont understand why that wouldnt continue. Lets talk about lebron james. He had some choice words for houston rocket general manager asked about the nbas ongoing dispute. The star player said he believed morey was miss informed or not really educated on the situation. He was praised by those in china and in the u. S. Got some slack he tweeted im not discussing the substance, others can talk about that he continued, my team and this league just went through a very difficult week and people need to understand what a tweet can do to others i think nobody stopped to consider what could happen or would happen and could have waited a week to send it i think part of what he is saying is if he would have waited a week until they were out of the country, it would have been okay he got up and said, you want us to go out and talk about there and you havent put out a statement. You shouldnt be asking us to speak on your behalf until you have a coordinated effort. Hes saying thank you for your response think about who was working for who . And the money involved. To apiece the ccp is pretty bad. Thats right. In a World Without money is a big thing. You would never do that. Lebron is doing it. Seth curry is doing it i know. I understand i do think the league could have orchestrated that better then youve got to call out everybody. Anyway, the nba is in a tough spot 550 million fans this is the world we live in. But if you are an american company, do you stand up and say america first. The wokest of the woke leagues suddenly got bit in their rear end by their wokeness but you are i said nobody should. There are people who have said to him, you know the quote, shut up and dribble. You could say shut up and act. Shut up and read the prompter thats what id say to you right now. You are very woke. Read the prompter. They do have those phone booths at cnbc im told. With formaldahide ill tell you later what they call them. We cannot tell each other to shut up. We are getting very direct we have new news out on walmart. Courtney is here they want to deliver groceries directly to your fridge. We have details. Announcer and later, black rock larry fink will join us that interview is minutes away squawk box will be right back. Obvious. Sometimes, they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Wthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Walmart rolling out new details of and in Home Delivery program. Courtney has the latest. Starting now for those in kansas city, pittsburgh and other areas will be launched today after the program was announced with penalties shoppers will need to buy a smart lock kit for 49. 95. You pay 19. 95 a month it is a membership fee walmart employees with a year of service that are background checked and trained get a onetime code and have a camera attached it works via blue tooth. Walmart is an investor in level home nor Tech Security makes the garage door. The program will roll out nationwide over time in december, youll be able to leave walmart returns on the counter and walmart employees will do the rest i dont know. The argument is, you give keys to the dog walker, cleaning people i know who those people are walmart says you get a little fact sheet about your delivery person there has to be a limit gosh, if i could get over that factor, wouldnt it be nice to have your groceries in your fridge it would be more difficult if i was home if you were home, why would you need to have somebody put your groceries away. I saw that fresh direct was being shopped around i was panicking, nobody can do it to the level they can i was like, man, somebody else will buy this and mess this up they will deliver in a twohour window the on line grocery business has picked up in the u. S some people dont want to pay for it what about air bnb, come on in get in my bed. Or uber. A stranger, get in my car. Amazon has an at Home Delivery i thought they should come up with a movie and have them be the suspect. Okay. Coming up, did you see jepardy i do watch but i havent seen it in a week in a half jeopardy james is long gone. The bar tender, he was fabulous check this out. The big statistic for 1,000. Blk on the New York Stock Exchange has more than 6 trillion in asset management. More than any other firm what is h r block no. What is black rock. I just love h r block 6 trillion. And making his way to the set. Larry pink joins us. You got it right we knew. From the start, the cclass was ahead of its time. Still, we never stopped making it stronger. Faster. Smarter. Because to be the best, is to never ever stop making it better. The 2020 cclass family. Lease the c 300 sedan for just 419 a month at your local mercedesbenz dealer. I am totally blind. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. But in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Welcome back. Black rock out with Quarterly Results. Larry fink is here good to see you. Good morning. You came in with earnings better than expected. 7. 15 versus 6. 96 the street was looking for. What happened . The same consistent theme, clients are moving away from products to solutions. We raised 84 billion. More impressive is that over the last 12 months, we raised 350 billion. It was across the board from fixed income even in parts of active equities that puts us around 46 billion over the last three years. Our Cash Organization has crossed over 500 billion. Across the board, we have been penetrating more clients i think it is showing up in so many ways. Clients new to wall street or taking clients who used to be at other firms . I think we are winning the market share unquestionably. Probably the most important thing is that clients are awarding more and more in the portfolio. It was announced we will be responsible for announcing 50 million for bravo bank that is just the solution to help them and working with and providing that policy. Who was managing that for them before . All inhouse. In other examples, they are looking to go from six managers to two what more organizations are finding out is having dozens of firms is not proving to have them receive higher alpha. More concentrated organizations who can do more for them it has been an uncertain time in the market. With the economic slow down, we are looking at markets that havent really gone anywhere what do you think when you look around this year to date and 12 months would be flat. What is going on in the market, emerging markets are down three. 6 is pretty significant we have Central Banks resuming the Federal Reserve is buying shortterm instruments but it is they are buying more instruments. We have a supportive Central Bank Regime worldwide. U. S. Growth is at least 2 china is somewhere between 5. 8 and 6. 2. We have so much going on with geopolitical issues, we lose sight that world is moving forward. It is not great but not as bad as we field. All of these negative Interest Rates around the globe, he thinks that is going to put a real limit to the upside there is too much other things happening. If you have negative Interest Rates and you are paying somebody to hold your place in bonds. That looks more attractive what i believe the problem is is the transmission of rates in europe and japan, they dont have a Mortgage Market most consumers there own their home if they own their home, they dont have a mortgage. You see the transmission that translates to a lower Mortgage Rate in europe and japan, im struggling with the concept of negative rates because you dont see that consumer transmission in addition, you have the banks who are struggling with their Net Interest Margin. They are not going to be out there lending and lending. I dont believe negative rates translates to more negative activity es spashl especially in europe and japan where 82 of banks are in a savings. They are not enjoying the low or negative Interest Rates. Can you stay with us . Id love to hes love to stick around we are going to talk about jeopardy who is larry fink. That would have been a more difficult question when we come back, we have more with blackrock Ceo Larry Fink announcer later this hour, the official kick off to earnings season. Citigroup, goldman sach and wells fargo all due before the opening llbe keep watching for up to the minute earnings news and Market Reaction for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Announcer welcome back you are watching squawk box live from the Nasdaq Marketsite in times square. Good morning, u. S. Equity futures up this hour up about 72 points on the dow. Nasdaq indicated up about 26 and the s p up as well strong earnings already for blackrock. Futures are down from where they were meantime, we want to get back to our very special guest. Ceo of black ross rock, larry fink we want to ask you about the ipo market the wework ipo that wasnt has the bell wrung on the ipo market it says something about the private growth valuations. I think thats the bigger issue. This is why i believe in the public market. It is harder to hide reality is shown every three months, thats why having exposure is the best outcome for all companies. Firms like blackrock which historically vested solely in the Public Markets now some are getting access through your funds to private markets. True. How should they think about that especially with situations like an uber. Its a wakeup call there was way too much money flooding in through private growth valuations. It is to be set. There was a mantra about growth at all costs i believe that is a bad culture. If you dont set a culture of building a company with longterm profitable having a culture of only growth at all costs produces a bad outcome. I think this reset in the private growth valuations, hopefully theyll be more about the real operating concern i think there will be a big reset on these valuations. What are you telling them they need to be more thoughtful about what they are telling companies. Are they real or just being sustained by private capital i think this dove tales into everything going on. These private companies are staying private longer they should try to respond to that this is why ive been repeating the whole mantra of transparency you dont think this is a sign of something larger in the economy . People say are we in 2000 or 2001 or is this 99 . People look at this as Economic Indicators again, this is another negative. I dont think that will carry on through the whole economy. It can be mod rated quickly through this process i do believe this is not something that will be systemic but it is a problem. You can make a point that it is cheap money well see this is the investment perhaps everyone is concerned about. If we can figure out where the other mal investments are. I agree the transmission of that produces bloated valuations. We saw that in the credit markets in 2007 and 2006 we saw that in the Growth Equity i dont believe for the size of our economy, that will be something terribly systemic. When you have looked to historic vesting in Election Years, what do you think Election Year is next year. Well we are pretty much there. Unfortunately, yes. You look that Capital Expenditures often go down because companies are waiting to see what happens i think that has changed. Cap ex has been mod rating other elements are transcending whether it is an Election Year i also believe the enthusiasm over the tax cut is transcending into Something Different a tax cut i have said on this show is a onetime event you have an 18 cut below of line that is a one time thing there after that, if you want waging more. That is what has gone on reality sets in. Should i spend more money on cap ex a lot of people believe youll have more profitability but that is below the line. It sounded to me like you thought the market is not overvalued here and there are a lot things going on and the market is properly valued. The market is properly valued overall. The central bank is going to be highly accommodating for the year what im worried about is 2021 and where the economy will be there after. The Federal Reserve, they have very little tools left they are continuing to use those tools. The ecb only has the tool of more qe. Hopefully, our new eqb president Christine Lagarde starts core ersing and usi ersing are you a banker that has warren phobia . I havent thought about who are you, steve kerr hasnt occurred to you . Havent thought about it have you heard of her . Not much. I havent. You may question that. You really havent thought about not yet your Share Holders would consider i promise i will. Until we see who are the candidates and what they stand for after the primaries, ill pay a lot more attention okay sorry you didnt like that answer we will not be watching the debates tonight. Ill be watching jepardy ill be taking my wife out to dinner because im traveling starting tomorrow. Okay. Thank you. A whole slew of earnings coming your way jp morgan, citigroup, johnson and johnson all set to report in the next hour. Dont miss our interview with marcie frost stay tuned, you are watching squawk box on cnbc introducing even more value from fidelity. Fidelity now has zero commissions for online u. S. Equity trades and etfs. And fidelity also offers zero account fees for brokerage accounts, plus zero minimums to open an account. And only fidelity offers four zero Expense Ratio index funds directly to investors. With all of those zeros, there are zero reasons to invest anywhere else. Fidelity. So maybe ill win saved by zero we have earnings now from Johnson Johnson. Earning 2. 12 per share for the Third Quarter. Well walk through that release and bring you some of the new as we get it. A lot of questions about some of the lawsuits still outstanding well bring you some of those numbers in just a bit. Like whack a mole some on the street as recently as last week who say they were outperformed because the worst skas scenario has been priced in. You keep seeing more about the hundred thousand lawsuits. 8 million in punitive damages claiming that a boy on the drug got abnormal breast enlargement. The boy happened to have autism it was not labeled it is an antipsychotic but punitive. I can understand. A boy with autism. The jury award on that a lot of thoses, those get struck down. You can understand a jury have being an emotional reaction. Which is one of the problems having a jury decided. We are expecting jp morgan with us mike santoli is here with us what are we expecting . Some pressure on the interest market that will be weaker given more red in the year. We have the summer swun we go through. Not the strongest performer this quarter. What we want to see is the super regional banks being more aggressive in deploying liquidity. Well see a little more of the strength in the earnings season. We do there every quarter make this exciting for us. Excitement would be steady. The message is probably going to be, look, they have the remend tremendous window. The stock is high. There is not a lot of swing. Historically, the stock does not trade well that is really just the short term give back usually after the numbers. Between the banks, marty, where do you expect to see differentation which of the banks have been either able to start repricing sooner, restructured their assets or put on derivatives take regents bank, that will start to show through. The other thing is credit quality. We have a credit quality costs y low through 2020. Right. So if we can see that still happening. So the real excitement is the delta on these stocks is going to be credit if we dont see credit costs going up, thats where investors should be much more optimistic than they are right now. Were going to take a break what date will we have enough earnings to know date . This week next week . The week after i think bythe end of next week were going know whether the earnings are set and whether theres a problem . Yeah. The tone is set. The percentage of companies. The early numbers weve got two documents out this morning that both beat expectations. Theyre beating expectations that got hacked away. Johnson johnson raised their guidance theyre looking for 862 to 867 where was the street, do you know dont know. We can guess somewhere in that area all right. Were going to take a quick break and then we wille ck bba and marty will be here youre going to stay, too . Yeah. All right of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Welcome back, everybody. We have a report from jpmorgan youre looking at a beat jpmorgan coming in with 2. 68 street was looking for 2. 45. Managed revenue came in at 30. 1 billion and thats compared to 28. 4 billion that the street had been anticipating. Beat on the bottom and the top thats three out of three. You guys are looking through the numbers. Mike, you pointed out that fix came in better. It came in as an up side beat a few hundred million dollars. The estimate was 3. 1, 3. 2 billion, it came in at 3. 8 maybe that was the margin of beat the stock indicated up a little more than 1 in the wake of the other results. It seems like it affirms a relatively strong picture, just unclear whether the markets going to seize on that the markets kept them in the penalty box. Whether its true or not. Right marty, what do you think fix was the area we thought would have a late quarter surge. As youre seeing that reinvestment starting to happen amongst yield investors, that is something we could see this quarter. That will be across most of the center mike, maybe worth pointing out, three dow components out with earnings all beating. Unh is up 8. Right these are big gains that youre watching going into this. They are. The pattern matches the prior two quarters the first and second quarters which is in the last two or three months estimates have gotten sliced away pretty deeply companies on balance are going to beat them by a fair, healthy margin in aggregate. The question is stocks going to react in the proper way or is it going to be in april and july they were strong months for the market because you had that dynamic playing through as you had reporting seasons going on. J j up 2. 5. They set an unusual discount because of all of the litigation stuff surrounding it its an interesting setup. Those are interesting gains dow futures indicated up by 103 points above fair value. Youre watching some of these turn around. We had seen higher prices throughout the morning and better than expected earnings across the board mike, marty, want to thank you both going to see both of you again a little later in the next hour. Coming up, we have two very big hours ahead and they are big, joe i know sometimes you think i over state the case, but this time really, today is different . Today is different. Today youre telling the truth . Today Johnson Johnson out with earnings. Were going to talk about it the companys cfo is going to be joining us. Hes woke right after the break joseph woke. One of the brains behind Elizabeth Warrens tax plan is going to join the show to talk about her candidates plan its a conversation you dont want to miss as we head to the break, cckhe on the futures back in a moment for farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Big moment for earnings. Johnson and johnson reported earnings a few minutes ago. The warren tax plan in depth. And amazons manifesto responds to critics of the companys stance on a smorgasbord of issues. We dive into the bezos plan as the second hour of squawk box begins right now live from the beating heart of business, new york. This is squawk box. Good morning welcome back to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at u. S. Equities at this hour. A number of big dow components all hitting with news this morning. Lets show you whats going on right now. The dow looks like it would go up higher. 98 points higher nasdaq looking to open up 22 points higher. The s p 500 looking to be open about 8. 5 points higher. Lets talk about whats in our headlines at this hour j. P. Morgan chase out with earnings moments ago came in with earnings of 2. 68 a share. That pretty handily beat the consensus by 23 cents. Revenue came in better than the street was expecting the dow component is indicated up by 1. 3 for more high profile earnings out later this hour, well be getting Goldman Sachs at the bottom of the hour and then citigroup and wells fargo. Well get you the streets instant reaction as well all of these dow components that have reported have beat expectations and as a result you see the dow up by 100 points. United Auto Workers Union leaders throughout the nation are going to bemeeting in detroit on thursday. They will be giving an update on negotiations with General Motors with a strike against the automaker now in its fifth week. The talks are continuing but no agreement appears imminent Johnson Johnson Quarterly Results out. Meg tirrell joins us with more. Hey, it was a big beat for j j. Coming in 11 cents ahead of consensus. Revenue beating by 700 million. As a result you are seeing the stock up nowmore than 2 in th premarket. Lets dig into j js Business Units. They have three units, pharma, consumer and medical devices pharma is the largest coming in at more than 10 billion 10. 877 billion for the Third Quarter versus analyst estimates of about 10. 4 billion driven by their immunology drugs remicade came off of patent but beat in the quarter. Medical devices also beat at 6. 38 billion in the quarter consumer also came in ahead, a little bit ahead of estimates but that is the space that isnt doing quite as well for j j right now on their babycare line they relaunched that last year theyre facing pretty tough comps. They raised guidance on the top and bottom lines but our data team notes the raise isnt quite as big as the beat in the quarter on the eps line. They beat by 11 cents, they raised by 6 to 7 cents. Being conservative. Maybe holding on. Based on this last quarter. Thanks, meg joining us to break down the numbers, joseph wolk, johnson and jon johnson cfo its great to have you on. Is that the correct characterization you beat by a bigger number than you raised the full year by, conservative forecast . Hey, joe, its great to be here with you this morning i would say thats maybe a little bit of an over characterization we had a currency headwind so on the year its about worth 22 cents. Previous guidance had it 20 cents. Weve challenged our teams to look for investment that kind of catapults this quarters Strong Performance into future quarters Going Forward. If we can find investments rather than give a penny or two this quarter this year, if we can give 20 cents two or three years from now, wed much rather do that. Okay then the outperformance for the year is really based on a quarter that ended not necessarily continuing to beat expectation we see great momentum for the balance of this year we think thats going to cat a pull the us into 2020 with 2020 with a Strong Performance in pharmaceuticals which weve done well above the Market Growth we were able to hold on to some products that were subject to excludes sisivity risk. Weve done better there. Our broader portfolio continues to do extremely well the medical device story is really a nice turn around for us were much stronger than we were a year ago this time 5. 3 growth when you exclude acquisitions and divestiture impact thats the best quarter weve had since 2015 then lastly in consumer, we continue to optimize our portfolio there focusing on skin health while improving profitability. We think were very well positioned not just for the balance of this year but well into the next few years. Employees have their eye on the ball youre in a Risky Business obviously. Youre designing medical devices. You have drugs for horrific diseases, antipsychotics where there are side effects you have a lot of Different Things where theres liability and were seeing some of that come home to roost at this point. I think the stock price, joe, would you say is already reflecting some of that overhang how do you keep your wits about you with all of this external all these external events happening from employees you just keep plugging away. Good results. We realize, joe, our core business is to make sure were bringing innovation across the three segments of our business we cant get side tracked by some ancillary activity thats going on right now we know that its big business right now for plaintiffs attorneys. If you look at Life Sciences and the outstanding cases in the courtrooms today, 50 of the cases are against Life Sciences companies in a time when the products have never been more efficacious, theyve never been safer. So were going to continue to have a majority of organizations. Weve got a small great legal team working on some of these matters but the bulk of the organization as you see in todays results which are really emblematic of the entire year continue to be around innovation and delivering medicines and solutions for patients. Joe, as a cfo how do you account for the legal risks that you face obviously some major headlines the 8 billion verdict last week on rispiradol which everybody doesnt expect to stand. Theres a judgment of 5. 2 million which i know youre fighting and appealing theres a hearing on that today in the opioid world. A lot of these things are piling up is there a fund that youve set aside . How do you account for these legal risks . Weve taken a responsible approach, meg. We follow the accounting standards. Its got to be likely to happen, reasonably likely and reasonably estimatable. And in the cases that you just mentioned, the risperdal one, Supreme Court is highly suggestive that that wont stand. In oklahoma we do have plan to appeal that we have filed appeal for that particular judgment. We think it was bad theory of law ignoring the facts so when we have a liability that weve got to lean into, we certainly approve for it, but right now in some of the cases that you mentioned theres not that predictability, that reasonableness test thats met even for accounting standards. Hey, joe, im just curious about the reputation of j j and to the degree that im sure youre measuring it constantly polling people, trying to understand what kind of impact these lawsuits and headlines have been having on the company and also what kind of marketing spend you imagine you may or may not have to pursue in the future to try to either recast or defend the companys reputation. Yeah. So thats something that we pay close attention to, andrew its a company thats been founded on its reputation for transformational innovation across health care for decades now, 133 years to be exact if you look into most recent most admired list were still well within the top 20 we always aspire to be number one. Thats what our employees are motivated by, engaged to do. We monitor this closely. I can say that were still the expectations around our company are still the same and were going to continue to do that and focus there. Do you anticipate having to when i say market, advertise against some of these issues you know, andrew, weve had some campaigns out there currently so its part of normal course of business for us. You know, we are more than a baby company weve got Great Innovation in pharmaceuticals and med devices. You know, all throughout life. Thats what we really try to emphasize. Whether thats in response to any particular initiative on the outside or ancillary activity, its really a part of who we are in getting our story out there. One of the nearest term i guess legal risks that j j potentially faces is in the open soids world. You reached a settlement with two counties in ohio for 20 million to not go to trial next week there are thousands more cases out there. A lot of people are talking about the prospect of a global settlement with all of the plaintiffs do you expect that j j could be part of that is there progress being made towards that yeah. So, meg, i would say in oklahoma we found ourselves in a situation where the theory of law and the facts of the case, even the attorney general himself said during the proceedings, this has nothing to do with Johnson Johnson. A reasonable settlement wasnt to be found. We found a different situation in ohio where the funds were going to patients and victims of opioid abuse and addiction and so we had two very different situations were open to a reasonable settlement, some sort of proportionality. Remember, our drugs were less than 1 of the market share of all outstanding opioids. So we want to make sure its in proportion, but where it makes sense for all stakeholders well look to have a settlement. It is pointed out that you dont you hear about the big losses but you dont hear about reversals, you dont hear about wins. Thats a great point, joe in the talc cases we had three cases decided in favor of the company. It doesnt make the headlines or the ticker. Right you made a point about the plaintiffs attorneys. I dont know whether to read anything into that do you think that i mean, obviously theyve performed very essential role in society, but is there does it get overdone, do you think is there something that needs to be done to try to rein in some of this . Its such a big dollar sign on the pharmaceutical industry. Yeah. Wed love to see tort reform over 400 million is spent year to date by plaintiffs attorneys often funded by venture capitalists to drum up caseloads. Really . Its a 36 billion Industry Based on some of the numbers weve seen from that perspective we think tort reform is in order. We all talk about the price of drugs. This is adding to the cost of the Health Care System overall so i think, you know, if washington can come together and find some measures in tort reform, that would go a long way, not just for the Life Sciences industry but industry at large. Bill wolk, thank you for joining us. Thank you. Meg, good to see you. Thank you. We went all over the quarters here today i know. Never been so happy to see our reporters coming in. Thank you. Before we head to a break, lets get a check on the markets this morning weve been watching all morning. You have see stronger implied opens. Dow futures at this point indicated up by triple digits. A gain of 114 points after weve heard from three dow components just in the last hour or so. United health care, Johnson Johnson, jpmorgan, all of them beating expectations on both the bottom and top line. All of them indicated higher unh up by 2. 6 j j up by 1. 8 s p futures up by close to 10, nasdaq up to close to 20 bite my tongue and knock on od squawk box will be right back. What are you doing back there, junior . Since were obviously lost, im rescheduling my xfinity customer Service Appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Coming up, amazons jeff bezos releasing a 10,000 word company manifesto with its position on a number of issues facing americas Top Companies were going to take you through some of his ideas with frank fore of the atlantic. Hes written a cover story on bezos master plan stay tuned, squawk box will be right back. Still to come, Goldman Sachs Quarterly Results. The numbers and the Market Reaction plus, the brains behind Elizabeth Warrens tax plan on tax ve ahansnd how much money is actually hidden. Squawk box returns after the break. We call it the mother standard of care. Its how we care for our patients like job. His team at ctca treated his cancer and side effects. So job can stay strong for his family. Cancer Treatment Centers of america. Appointments available now. Welcome back to squawk box. Amazon recently released a manifesto on a variety of issues in which it has received scrutiny for a closer look at amazon and the founder, jeff bezos. Frank fore a profile of jeff bezos thats worth the time, folks, i spent with it titled jeff bezoss master plan. He spent more than five months speaking with current and former employees for the piece. Frank, thank you for joining us. Pleasure. For those who havent read the piece, ill ask you the question but i know the answer to some degree already what was the Biggest Surprise for you in this reporting process . Because i think you came to this with some preconceptions, dare i say, that changed in the process . Right ive been a critic of the Big Technology companies ive written a book that describes them as an existential threat i walked away from the process extremely concerned about the concentration of power within one corporation and within one man, but i think what surprised me was the extent to which my admiration for the company and fear were so tangled up with one another that when i look at the company, the thing that is so truly impressive is that one guy is able to press his values out through all 600,000 of his employees. And hes created this business that is spanning off in all of these various Different Directions which sometimes seem seemingly disconnected from one another and yet what is the thing that connects this massive sprawling enterprise called amazon together . Its that they all embody the values of jeff bezos and that is both something to look at in awe and marvell at and he may be the greatest ceo in the history of American Business but its also something thats problematic because one of the things that our founders stayed up late at night sweating about was the concentration of power. And they worried about the concentration of power in the executive branch and they worried about the concentration of power outside of government as well. So i hope hes a good guy. I was going to ask you two questions. Did you walk away from this experience and reporting it thinking, okay, i like the values of this guy or not . I like some of his values i didnt like some of the other values i think the point is that you look at something and ill give you one example, which is Space Exploration. Right this is an area where the government has basically sat down were not really in the business of exploring space anymore and heres a guy who from the time that he was in high school had a vision of what space colonization you quote his girlfriend, his High School Girlfriend saying the reason he wants to make all of this money is so that he can go to space. Right thats a thing that hes hes not especially open to talking about amazon but hes very open to talking about his company blue origin and what he wants to do its a utopian vision for how well all live in these giant cylindrical tubes stationed between the moon and earth and its in response to this grave crisis that he sees when the earth runs out of resources generations from now hes chosen to sell a billion dollars of amazon stock each year in order to fund his utopian vision, which is great except that there are all of these questions that we should ask about what happens if he starts to realize his vision and heres one guy using all of his money to set the terms by which we shape the future of the heavens, which is both yeah. Heres my question to you. Having lived through this reporting process and coming to this with some of the views that you had about breaking up big tech to begin with, has it changed your view . No. I mean, i you know, so for starters, i think it should be said that when we talk about applying antitrust law to these companies, theres a sledge hammer that we can take but there are also more subtle things we can do to deal with their power. For instance, weve just been lax about reviewing mergers over time and when you look at a company like amazon, some of its growth is organic, indigenous and stems from the Creative Genius of the people there, but a lot of times theyre just simply buying potential competitors or buying their way into owning various verticals. And so i think without you know, without even having to think about what it would be like to smash amazon apart we could more rigorously apply antitrust enforcement to the company. I also think if we you know, i think that eventually bezos, who is seeing around corners, is going to break up his own company. That aws exists as its own fantastically profitable business, theres no reason that he needs to be connected to amazon, the eretailer. And as he looks at whats happening in politics where theres this increasing bipartisan consensus that big tech is a problem right. Im pretty sure hes going to say, all right, fine. Is that based on just a supposition . Is that based on people inside no, i heard people i heard people i heard people who are close to bezos, you know, throw that out there, not necessarily channelling him but saying that that would be the obvious thing for him to do in the face of this. It follows what they did with headquarters, too . Yeah, exactly okay, fine. Well take our ball and go home. When you talk about that different headquarters, i you know, one of the things that was interesting to me, it was a theme in my reporting was looking at the reasons why they chose to locate outside of washington, d. C. And you look at aws and its growth and you look at the Public Sector is clearly this huge opportunity for amazon that theyre going after it not just by uploading the federal governments cloud, theyre trying to become a major vendor for the federal government where the federal government buys Water Bottles and office seats from amazon. Theyre selling facial Recognition Software to Law Enforcement and how is that effort going in a Trump Administration given some of the comments obviously that the president has made that have been largely critical of jeff bezos personally if not the company as well . Its been a herky jerky process. This jedi process at the pentagon has been held up because of this animosity between trump and bezos. I think when we step back its really interesting we have these two foils because in some ways they represent divergent responses to the crisis in american democracy, that trump comes in and hes got his emotional populus appeal and bezos represents a different response, which is that when we look at bezos we say, all right, rather than having this world governed by this emotional populism, wouldnt it be wonderful if we could have this utopia of rules and technocracy. Is the Space Exploration gene linked to the billionaire gene no. What the hells with these guys bezos, musk and everything i like it here well, look, i think theres something beautiful about exploring space. I understand. And exciting about exploring space but i dont want to ditch planet earth. In terms of existence its one thing humans can aspire to and have for thousands of years. I guess i get that i want to let someone else do that, i think. I dont know. Of all the crises that we face right now as a species, im not sure that i think escaping from planet earth ranks as my highest concern. And no ones won a malthusian bet. Not one person has been paid off to a couple of hundred years who knows. We seem to have maybe well go mine an asteroid if we run out of stuff anyway, are you going to say gooid goo goodbye i am. We have Goldman Sachs out with their own earnings we appreciate your time and perspective. And its a dow component. The fourth dow component of the morning. This one missing on the bottom line by a couple of cents. 4. 79 versus 4. 81 the street had been expecting it looks like revenue came in right in line with expectations, 8. 32 billion. The street was at 8. 31 billion. The numbers theyre calling out on this, they are looking at annualized return on investment or return on equity of 9. 9 for the Third Quarter. Looking at book value per share, 218. 82. Just looking through some of these numbers again, 4. 79 versus 4. 81 but revenue in line with expectations wilfred frost is standing by wilf, what jums out at you in the Goldman Sachs numbers . Basically every single sub line is in line or fractionally Investment Banking was 1. 7 billion as expected. Institutional client services, thats trading, came in pretty much in line fic was slightly beat, equities was a slight beat, 1. 9 versus 1. 8. Investing and lending, 1. 7 as expected investment management, 1. 6 versus 1. 7 billion its coming in pretty much in line on each of the sub levels jpmorgan had a couple of beats in there thats where they differ the biggest area where they differ was fixed income and currencies and commodities trading where jpmorgan, only about 2 months into the quarter was a big beat that hasnt come through to the same extent for Goldman Sachs. The question now i think for the other banks is whether just jpmorgan had that big beat or whether Goldman Sachs was the one to miss out on that area either way, a beat for jpmorgan, which has dragged most of the other bank stocks higher Goldman Sachs at the moment the only one that is missing out on that premarket trade. I guess investors are taking this as goldmans in line, jpmorgan more representative of that pool. Jpmorgan a dow component. Up 1. 8 . You can see Goldman Sachs indicated down less than 1 . Citi numbers out at 8 00 and that will give us more insight as well. Wilf, thank you. Coming up, two big stories in the world of sports and entertainment. First as we head to break, take a look at u. S. Equity futures which has been solid all morning long up triple digits on the dow after a slight pull back yesterday. Nasdaqs up 25 s p up 10. Were coming right back. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Lebron james had some choice words for the Houston Rockets general manager darryl morey asking about the nbas ongoing dispute with china the star basketball player said he believes either morey was misinformed or not educated on the situation. James was praised on social media in china for the comments. Probably got a lot more over there. You know, just in terms of sheer volume 600 Million People. Yeah. 1. 3. 600 Million People like the league. Yeah. And none who are allowed to say they dont like what he said so lets just but it was perspective. Wouldnt that be great if twitter were only positive. I only say positive things. Really . By now. Blocked criticized he was criticized in the u. S. With some tweeting emoji bags of money at him. Lebron followed up on twitter saying i do not believe there was any consideration for the consequences and ramifications of the tweet, i. E. , those bags of money. He meant moreys. Im not discussing the substance. Others can talk about that he continued in a second tweet, my team and this league just went through a difficult week. I think people need to understand what a tweet or statement can do to the others and i believe nobody stopped and considered what would happen could have waited a week to send it. Sounds like hes not mad about the sentiment. You should stand with the hong kong protesters, dont do it the week before i show up . You want to have a bad weekend, check out the dolphins. Theyve had about six weeks that have been pretty difficult well have patrick on later. Did you see the end . You didnt see the end of the redskins dolphins game i did not. So bad. They went for 2 points they were down for 1 six seconds left they decided to go went for a win. Guy had a clear entrance into the end zone hit his hands and he was already running and dropped it the receiver that is painful. Painful. Still to come on squawk box this morning, a big focus on financials. Well break down jpmorgan and Goldman Sachs, the two dow components weve already heard from at the top of the hour were going to add citi and wells fargo to the list. Weve got the numbers and the Market Reaction straight ahead. Plus, one of the creators of Elizabeth Warrens wealth tax will join us economics professor gabriel zukman is hereo ttalk about tax havens, the warren tax plan and much more. Squawk box will be right back. Welcome back to squawk box. Want to show you the futures this morning weve had a number of Earnings Reports. J j, goldman out dow now about well, well call it looks like it would open up 88 points higher nasdaq looking to open 22 points higher s p 500 looking to open 8. 5 points higher. Joe . Jpmorgan reporting less than an hour ago. Shares of the dow component are up almost 2 wilfred frost joins us with more details. We were talking about you yesterday, wilf, whether you were anxious, excited. I think a combination of these as you look ahead. Tilted towards the excitement. Yes given the forum one morning, it was quite a lot of nerves coming in today. Let me get to these numbers. Jpmorgan, eps, 268 big beat compared to the expectation of 245 revenue slight beat, 30. 1 billion versus forecast of about 28. 5 big question coming into this quarter was how much a fall in the yield curve was going to impact earnings. The Net Interest Margin did fall and fall more than expected. It was down 9 basis points from q2 from 249 to 241 it was expected to be 2. 44 . It did miss slightly Net Interest Income overall did not miss it beat expectations albeit just slightly, 14. 4 billion compared to expectation of 14. 2 billion decent loan growth which was up 3 overall year over year. Offset thats shrinking in the margin and that area of the business provisions for credit losses was fine now the beat mainly therefore coming in the other part of the business, the fee income in particular as mike said earlier. Fixed income, commodity, currency trading was 3. 6 billion. It was expected to be 3. 1 billion. Thats up double digit percentages. It seems like the final month of the quarter really beat expectations relative to the update they gave during the quarter. Equities was a slight miss Investment Banking was in line the bottom line with stocks overall, Revenue Growth of 8 . Net income of 8 year over year. Thats why youre seeing the shares jump in the premarket. Wilf, thank you were going to dig deeper. We bring in jeff hart. Hes a principal at sandler, oneill. Marty mosby and our own mike santoli. Marty, why dont you start off telling us about the comparison between jpmorgan and goldman. This is a natural comparison of what you have with a commercial bank and really more of a still more of a broker dealer Goldman Sachs so if you look at the difference, the jpmorgans being able to see in the positive, part of thats related to income related to selling loans, their tax rate was a little bit lower so thats about 1 3 of it. You look at the other third, thats loan loss provision which is going to be lower the credit costs are staying flat every time you see the market anticipating that next leg up, it hasnt happened yet those credit costs are low Goldman Sachs doesnt get that benefit. They havent built a loan book lastly what you have is the Investment Banking and what we saw in thefic business that was the other third of the benefit. Jeff, do you think goldman is going to be the standout, the one that is the exception to the rule or you think jpmorgan is . Boy, its tough not to like jpmorgans results here. Even if you back out the mortgage sales, were still looking at a 7, 8 beat. The standout is jpmorgans results. The read through the peers is pretty positive as well. Im sorry, thats what i mean whos the exception to the rule here is jpmorgan a much better operator than everybody else are you going to see a situation where goldman is just in a different position i think its somewhere in the middle when you look at trading you have to remember jpmorgan had an easy comp versus last year their trading looks good but its versus a depressed comp stuff like investments, thats a big business for Goldman Sachs it wasnt such a good quarter for inl. I think part of it is kind of business mix when you kind of look between the two. I think as you look forward, this should be good news for the peer group but as i kind of i think marty said earlier, certainly better for the commercial the more commercial bank heavy players than necessarily Investment Banking center players. Wilf, you had a point becky, i think youre seeing the likes of them higher because of the impact of the yield curve on jpmorgans numbers was less bad than feared and less than priced into the yield sensitive banks in recent weeks and months the other thing that will be interesting to see what comes out for the likes of citi whose Trading Department is tilted towards more of the fixed income side than the equity side is whether jpmorgans beat was just them or whether goldmans miss was them standing out and if theres a beat, then it works well for citi. Morgan stanleys down a little bit. That tilted more towards equity trading and wealth management. Those two areas havent been particularly strong in either goldman or jpmorgan. Mike, just in terms of kind of seeing how this is going to play out what this means for the rest of earnings season. How much do we follow the financials and say this is going to be an indicator. It has implications for the financials after jpmorgan, citigroup stock popped nicely. After Goldman Sachs numbers came out, youre trying to figure out what this means. Goldman sachs, choppier results. They dont have the massive base of the consumer business pretty much as expected theyre holding their kind of Investment Banking franchise levels if you look at market share its not been that great of a quarter. And it trades the stock trades at exactly tangible book value. So it shows you the street is very skeptical that they can earn a great return even though theyre earning 10, 11 on tangible book. Jeff, very quickly before we let you go what stock would you be telling investors to buy based on this news especially if goldmans weak, youve got to be looking at Goldman Sachs here the point earlier, 12 roes with a road to higher roes and trading at tangible book value any weakness you get today, especially coming into the season with a strong first quarter, thats a place to be looking. Well check in with all of you when we get the numbers. We have a lot more coming up in a moment. The push for more taxes on the wealthy. A special guest on the plan we talk a lot about you dont want to miss this conversation i cant believe it. What . That our new house is haunted by casper the friendly ghost . Hey jill hey kurt movies . Ill get snacks no, i cant believe how easy it was to save hundreds of dollars on our Car Insurance with geico. I got snacks ohhh, i got popcorn, i got caramel corn, i got kettle corn. Am i chewing too loud . Believe it geico could save you fifteen percent or more on Car Insurance. What are you doing back there, junior . Since were obviously lost, im rescheduling my xfinity customer Service Appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. A list of emergencies the democratic campaign. They are then the new economic. A triumph. A professor at university of california the Corporate Tax revenues also raising the tap. The plug in is different. The americans the warren tax plan. And those numbers are there. Thats there. The u. S. A. Is there. Its two there. The cbo only looks at federal taxes. When we do that we find the total tax revenue in the u. S. , 20 national income. Today each group pays around 28 of their income in taxes except billionaires who pay 23 . Theres some regressivity in federal taxes youre talking about the lowest quinn tile is at 1. 7 of federal taxes now in state taxes its 11. 7 versus 8 for the higher quintiles. You get from 1. 7 to 25 taxes paid by the lowest quintile. Thats mathematically impossible. We can have a mathematical debate but you need to realize the working class pay a lot in sales taxes, consumption taxes. What about the earned income. They get the refund when tax time comes did you have the earned did you just back that out and did you back that out i know that what im saying is reality of American Society is that poor cash constrained people pay a lot of taxes throughout the year. One of the ways we deal with this to make it more progressive is with the earned income tax credit thats a huge that makes it much more progressive, much less regressive and you backed that out entirely which makes people think youre trying to skew the numbers to show a certain result is the earned income tax credit backed out of these calculations what were doing is were distributing 100 of tax revenue and 100 of Government Spending as well. So you dont include the earned income tax . No, we do both. What you dont want to do is just to subtract some transfers from taxes and not others. We are looking at comprehensive perspective. All taxes and all Government Spending thats the specificity of our approach. Can we talk more broadly about the issue of taxing the wealthy . Do you think there should be a maximum income or a maximum wealth in america . That idea has a long history in u. S. Society. You have to realize that the United States invented income and wealth taxation with top measure income tax rates of more than 90 in the post world war ii to the state tax rates of close to 80 in the 1970s and 1980s. Thats a u. S. Invention. Thats not a european invention. No continental European Company had whats your personal answer to that question the answer is would you go back to that what we say in the book is extreme wealth is corrosive. So whats the upper limit then for you thats not something for economists to decide let me ask you a separate question if youd indulge me yes, sir. Youve helped design the Elizabeth Warren plan. There are lots of questions of how you could effectuate a plan like that. The Biggest Issue is how is that kind of plan not going to be gamed by people . And effectively how would you on an annual basis effectively value each individuals total net worth at any time . By the way, i dont know what you would do with Michael Jordans brand on any given year or, frankly, Donald Trumps brand given some of the valuations hes but, i mean, how you would actually do that. So 70, 80 of the wealth,. 1 is listed securities, bonds, Mutual Fund Shares 30, 20 is in unlisted equities. In that case we have a solution. We are saying first the come up with the best valuation possible and if the taxpayers disagree, they can pay in kind with shares so if the wealth tax is 3 , you give 3 of their shares. So the government would become then they sell their shares on the market and create the market thats missing. See, this was an explosive proposal in the book and i dont think people focused on it youre saying the government would become a part owner of the private companies where theres a disagreement and then try to resell the shares. Resell. The point is not for the government to own shares its to resell immediately but to create the market value, thats missing thats, you know, a service that the irs could provide. And you find that the top optimal rate for taxing the very rich is 60 . 75 . On the laufer curve where do you find the optimal rate for taxing the rich the revenue maximized tax rate is 60 in terms of average effective tax rate in reality depends on enforcement. Governments can choose to make taxes fail, and weve seen that. What would you do with philanthropy what would you do with bill gates and warren buffet . Thats a good question. Thats a debate to have. We dont talk about that a lot in the book. You could have a wealth tax for foundations, especially for foundations that are controlled by, you know, living individuals, by founders to prevent, you know, tax avoidance, moving money to their foundations. Giving it away to avoid taxes . People are giving money away. You have to pay gift taxes if you give the methodology itself is theres the cboe is not the cbos not going to come to this, Larry Summers is not going to come with it. An hour ahead on squawk box. In the next hour of squawk box, the focus on financials continues. Wells fargo and citi both ready to report. And later, the ceo of the nations Largest Pension Fund on the Global Markets, the trade war and Shareholder Activism marcy frost of calpers is our special guest. Squawk xetns aerbo rurft a break right here on cnbc you should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Live from the most powerful city in the world, new york. This is squawk box. Welcome back to squawk box. On a very big day of earnings, citigroup just crossing the tape right now. Weve heard from jpmorgan and Goldman Sachs. Wilfred frost joining us with the numbers. Revenues in line at 18. 5 billion. Eps is fractionally ahead once you strip out a one off at 197 per share. The expectation was 195. Now the Net Interest Margin has declined like it did for jpmorgan but more than expected. Unlike for jpmorgan its down 11 basis points to 256. It was expected to be about 266. And the other standout factor there compared to jpmorgan is that the Net Interest Income has also declined. Citi does have good loan growth but not enough to see the Net Interest Income miss expectations 12. 1 billion was the expectation. 11. 5 billion is where that has come in. They do have a couple of beats on the fee income side as well fixed income trading like jpmorgan was a beat although not quite to the same magnitude. Equities a little softer again like the others. Investment banking was a slight beat the bottom line here for citigroup is that that decline in the Net Interest Margin has not fully been offset in other areas so youre only seeing eps kind of come in in line. Citigroup trading down having traded up for jpmorgan now its only jpmorgan standing out. Revenue basically flat year over year for citi. For Goldman Sachs down 5 year over year. For jpmorgan, up 8 which kind of tells the whole story for the three banks for this quarter guys wilf, wells fargo also just crossing the tape and what would the special items be i dont know. Ive only gotten headlines i havent seen the results they say 92 cents. The street was looking for 1. 15. Revenue came in better than expected 22 billion versus the 21. 18 billion. Again, im still looking for the actual relieves that would explain that marty, must be some special items that would cause a 20 plus cent miss . A transition period with wells fargo, right its going to have some restructuring. Its going to have some of that reputational and regulatory issues so as youre going through this process theres got to be that period of time when you kind of rebase the company what are the earnings and where is it going to come out . As charlie gets there and it starts to get on the other side of this transition. Let me tell you about a couple of other numbers. Net interest margin, 2. 66 Net Interest Income 11. 36 billion. How does that match up with what you were expecting when the look at the nii, its close we were at 12 billion theyre at 11. 6. Netters margin looks low at 2. 66 that number looks out of kilter with what we would expect. Being where it is, theres probably some earning assets and other things that are compensating for that. Nii is not too far off what we were expecting were going to get it right from the horses mouth on closing bell from wells fargos cfo. He will be live on closi closi bell at 3 p. M. Eastern. The stock is not acting like a significant miss. Before we let marty go, lets talk about this in the context of jpm and also goldman. I know were listening to were looking at 9 whole spread here yes yes. If you will is there given how much some of these guys have run and some that havent sure. Wheres the opportunity from an investment perspective goldman, you say thats a great opportunity . Well, you really do have to take in the valuations as we heard earlier. So if you look at jp morgan, its trading at a premium to the group. Deserves the premium. Okay. When you look at where youre going to actually see your best returns, you have to look at where the markets discounting what the banks are going to be able to do. Wells then . Wells has a longer term story. Weve got to go through this transition theres going to be a period of time where earnings are not going to have the traction frmgt i feel like weve been hearing that for a couple of years. You throw it into the kitchen sink for every quarter. When you throw in a ceo change he gets a couple kitchen sinks. You do. You get that you get that this quarter in particular what youre looking at, we believe, is you have some longer term turn around stories thats goldman as what theyre doing in their business mix. Yes thats what youre going to see with wells over time thats what youre going to see with state street actually we thinkstate street may be ahead of those other two in their Inflection Point if you look at where we think they are in banking, they can perform better than the rest its the super regional banks that have restructured the Balance Sheet and havent really gotten credit for that regents, citizens financial group. Next week when the earnings come in, those are going to be telltale signs of whats happening. I mean, its a similar story. We asked jeff harper who his favorite stock was, his favorite buy and he said Goldman Sachs. There is an underlying business shift where if the returns stay where theyre at or impro improve, youre not getting any of that in the valuation. You buy the strategy . Yes. You do . Yes. Where do you sit with bank of america . Bank of americas been a great turn around story over the last five years. Their expense focus. What i think they did so well is brian focused the rest of the company on generating business and revenue while he was cleaning it up right. And as they came out from under that pressure you saw the Revenue Growth begin to take in line with the rest of the peers. They didnt have to spend five or ten years catching up he had the Business Units in place. So but the valuation with bank of america right now is caught up with the story and they dont have as much of the selfhelp improvement over the next couple of years final question from me. Do you believe that there are any fin Tech Companies out there that are ultimately going to buy not maybe a bank of this size but another bank and take a run at these guys . I dont what i believe they would like to do is develop the process and then use the system that the bigger banks have in order to leverage that franchise. Right. If you look at what happens with bank customers, its very difficult to get them to change over because think of your bill pay. Yeah. Youre using bill pay, its already set up, it rolls every quarter, every month for you changing that is very difficult. You dont think theres a whole new generation of millenians using the fin Tech Companies and they get bought out by the big guys or is there a fin tech that gets big enough to buy one of the smaller regionals and elevate themselves yes. What weve heard of is theres a much easier pattern to be incorporated up into the system than changing the whole paradigm. One bank we havent mentioned at all, Morgan Stanley. Yes. Why Morgan Stanley has a little bit more of this Net Interest Income were talking about the wealth interest business and it was doing well when rates are going up its a little out of favor because that piece of the fluff or that little juice they were getting the last couple of years when rates were up is going to be pulled out. Relative to the rest of the money center banks, it has more of that transition now once rates stabilize, their valuation is low enough and they have other pieces of the business to support their returns. Right. It will be a good investment as we get into next year. Great marty, thank you. Thanks. Thanks very much. Beyond the banks, a couple of other big names reporting results this morning dow component unitedhealth reported 3. 88 a share that beat by 13 cents. Revenue above the forecast in unitedhealth raised the full year forecast as well. You can see that dow component up by 1. 6 now. Also Johnson Johnson another dow component Beat Estimates by 11 cents with quarterly profits of 2. 12 a share. Revenue beat with the results there by growth in pharmaceuticals and medical devices. That stock is up by 1. 2 . When we return, the big business of sports 15. 8 Million People watching nfl games on average during last years regular season. 2019 is off to a strong start as well well talk about what this means for everything from advertising to merchandising right after this stay tedyoreatinun, u wchg squawk box on cnbc welcome back to squawk box. The futures have pulled back a little up 75 points this morning. I have a coffee problem not drinking problem thats the drink i spilled the coffee. You havent really copped to a drinking problem but i just watched it and you were unable to do it. The problem is the liquid decided to go down my tie and face. Drinking problem. A good kind of drinking problem to have. Some people think coffee actually i think is good for you. Its not a bad thing back and forth. Back and forth. Lets oh, whats happening here were on tv. We are on tv. It happens. You have a spotted tie. You like that additional color. The Green Bay Packers knocking off the Detroit Lions late last night in monday night football we dont have the ratings yet, the season so faris off to a strong start Julia Boorstin joins us from los angeles. She has the big story of the nfl. Good morning, julia. Reporter good morning to you, becky high scoring games and a slew of Young Players are driving viewers and the nfl is having a great start to its season. Through thursday night ratings are up about 6 over last year and up slightly more from the 2017 season. 142 Million People have tuned in and digital viewership up 51 over last year streaming allows them to watch in market games through the teams apps as well as the nfl and yahoo apps moffettnathanson writes the strong 2019 nfl ratings growth allow people to watch. They say espn pays the most for nfl rights estimating an average of 1. 9 billion a year followed by fox and cbs paying around 1 billion each annually for their sunday packages followed then by nbc and then again by fox which also pays for a thursday night package now the nfl has now seen two straight years of ratings gains reversing previous declines which does bode well for the league ahead of negotiations for tv rights which have become available after the 20212022 season and then the nfl sunday ticket deal with tv expires next year. Thank you, julia. Stay with us lets bring in patrick gricci. Director of the Sports Business Program at Washington University and a professor of practice in sports business. I have so many things to talk to you about and well talk about some other stuff im going to start with this that jets game, my that was your first mistake. They won. They won they did but i do notice, man, theres a lot of down time for tv commercials. Theres a lot of tv commercials. People are watching this live. Its the last place for live advertising. Its always worth it a lot absolutely. We talk about this in our sports Business Class all of the other you can stream it on hulu, netflix, but sports you have to consume it live and thats why you have such great opportunities for advertisers. I have some other ideas i think when fox or nbc or cbs has different games to show in different areas, i think they should stagger the starts of them lately ive been seeing they go to the end of other games when a game that im not that interested in is over i can see the end of all of these really great games. Theyve been doing that more and more do you notice that absolutely. Every weekend youve got two games starting a little bit later in the afternoon about 15, 20 minutes later going back to one of the things were going to talk about, theyve had the good luck the last couple of years of being a little bit more strategic of making sure you have the marquis matchups. We dont know who the best teams are anymore . Are the rams any good . Suddenly San Francisco is like some great team . I dont understand too much parity. Too many flags too many weird is a block in the back really a penalty . Weird blocks i dont know whats a penalty. Too much review. Too many plays are being reviewed now too. When the ratings went down a few years ago, i dont pin it to the kneeling i pin it to the change in how consumers are consuming sports theyre streaming it these numbers that were looking at, 6 increase, thats looking at the true traditional nielsen ratings. Part of it this year is this is the 100th year of the nfl and they marketed the heck out of that you had Peyton Manning doing all of these webisodes to draw people into the history of the game. The refs are deciding a lot of games every single play. Its not pretty there was like a third and 26 i know. And who knows whether its really pass interference either . Half the time it is, half the time its not. Most of these guys this is their fulltime job. Objective calls. Are we talking about the nba. Lebron james. He came on to talk about i know we want to talk about the nfl. What do you make of this this is lebron james show the tweet show the tweet choice words he goes after the Houston Rockets general manager himself. This is the same guy, because i just saw this other tweet come up, who a year ago, year or two ago, saying injustice anywhere is a threat to justice everywhere our lives begin to end the day we become silent about things that matter. Oh, boy oh, boy. Same guy. It is really a situation, look, andrew the nba is business, its sports they should be promoting their sport. They have the right to promote their sport all over the world i think the way theyve tried to handle this, ill go back to commissioner silvers comments i think commissioner silver is the most outstanding commissioner of any of the leagues we have. He may have stepped in it the first time through but the second time through he said were going to back our players and executives rights to say what they want i think adam said many of the right things but then what i dont understand is what exactly lebron james is doing. What steve kerr is doing, what stef curry is doing. Protecting their own. I get that. This is true money talks my question from a Business Marketing perspective is does it come back to haunt the players does it come back to haunt the league or do American Consumers not really care . I dont believe it comes back to haunt the players or the league when you look at the relationship with china, we, the nba, has the leverage. Chinas an important part of the business, but its only about 5 to 6 . We are bending over backwards. We are not acting like it. It feels awkward. I understand that, but we are all we all work atplaces where we have to be careful what we post, what we say and i you Say Something bad about the Chinese Communist party, maybe there should be more human rights and freedom we have to be careful about saying that . I understand. I understand where youre coming from it is a delicate situation. You dont want to be caught currying favor with the communists. I dont understand how we have the upper hand. Why bother to go through the extent of these back flips and match shin nations. If lebron has the leverage he should stand up and say about every other political and polarizing thing he doesnt like. Its tricky for the nba. I dont get tricky. Its money. It really is. Thats the bottom line the bottom line is the bottom line. Are they eventually going to be seen as a Global League not an American League they already are, becky they are the most Global League apart from you know, soccer is the global game but in terms of a singular league, the epl, English Premier League soccer and nba. Youre being very tactful how about espn there hasnt been a political issue that they havent they got to the point where i can only watch on saturday morning, thats the only time i can watch espn, theyre so political forbidden to talk about this thats as bad as lebron. Im not in the politics of broadcasting. Here you go. I can say this. Jimmy pittero, it is an ex executi executives right what did you think when kaepernick was taking a knee did you think no one should talk did you think kaepernick should be not allowed to play i see the parallel. Kaepernick should have been allowed to express his opinion and i think that david or adam silver has said that players and executives should be allowed to express themselves. Unless its china. Again its a delicate situation its bad. Joe doesnt buy it. I dont. I dont buy it either sorry. We dont agree on much but this were together. Then again, u. S. Companies, their relationship with china. Weve been in bed 20 years benefitting. Our inflation rate has been a point lower because of what we get from china so were all complicit in, you know absolutely. Back to godfather 2. Were all part of the same hypocrisy. Dont think it involves my family. When we spoke about kaepernick two years ago you did have a view it might affect the nfl, ratings, how consumers think, all of it. Right explain the distinction between that and why you think consumers and everybody else related to the nba, at least in the United States or the rest of the world, is not going to care . Yeah, i think its important. There is a slight a big distinction in the fact that the kaepernick situation taking place here in the states, thats going to impact people here in the United States and how they consume content. Are they . No, theyre not. Kneeling before or thats right. You talk about an issue thats in another part of the world that Many American citizens i think its fair to say arent perhaps as well educated on that particular matter than they were the kaepernick situation thats why i believe its not going to have a major impact on how American Consumers consume the sport of basketball. The worlds a much smaller place. It is. That means we all get to see all of these things. It is. I think americans are sitting up paying attention because of how china reacted to that gm tweet that nobody would have seen, the houston gms tweet, had china not picked up on it. You dont think millennials dont know about that . They dont know about the Chinese Communist huh they know about the wiegers, internment camps. Sure. I havent done a pole to know what their interest level is the other interesting thing is if you look at the back end of this with respect to is china going to back off just a little bit because, of course, what are they hosting in 2022 theyre hosting the olympics and so how hard they pursue this Going Forward i think is going to be mitigated. How much do you think the players will be influenced by their agents, their sponsors is nike calling them saying, dont stay a word. That would be a fascinating thing to know. My sense would be there are probably some executives that want to Say Something to their players. Whether thats actually happening, i dont know. I could see why some would. You would think you wouldnt want to put that in an email you dont think nike is nobodys told him. Lets go back to what did commissioner silver say behind the scenes to darryl morey what did fertita say to darryl morey we can only wonder. Dont you think here darryl morey comes off in a much more favorable light than anyone else after all is said and done or do we look at him and say that was a foot in mouth i dont see how you can get criticized for saying stand with the freedom fighters. You shouldnt be. I agree with that. You think silver looks good im not so sure. Its such a delicate balance. Its a tight rope that no one wants to be on. But a lot of companies are. Sure. Thats just the reality when youre doing that much business in a market that big, you set yourself up for that. Actually, a prior commissioner, david stern, had indicated this several decades ago when the nba first got into china. Can i ask you a separate question this relates to nike i dont know if you saw this news nike is closing this oregon project . Did you follow this . This track and Field Program that nike had sponsored, was overseen by a guy who was found guilty by the u. S. Antidoping agency why do you think nike, which has been accused over the years of being involved in doping or supporting doping or supporting things that you would think that consumers would be unhappy about has managed to not be implicated, at least by the consumer thats an interesting case. Again, nike has tried to stand for virtue. Right nkts in a lot of different areas. The fact that theyve been able to avoid this is, you know, a testament maybe to the brand that theyve built up over time. I also think we talked about kaepernick earlier they built a lot of street cred, more street cred bythe way the took a stand on how they essentially promoted kaepernicks cause i dont know if all of these things helped them deflect some of these issues. They built street cred or they created a situation where theyre going to have to show the same resolve so they dont look like theyre complete hypocrites youre right. Whats lebrons twitter account look like . Are any of his followers saying, way to go, lebron . You stood up for i thats what i mean. In china. In china hes getting positive comments in china you cant read right to left its much harder to this is obviously a very divisive topic. You sound like youre in the nba. 20 seconds because were going to get in trouble. Does the jay z nfl partnership mitigate all of this stuff that happened before . Thats a tough call i think that its a partnership that, again, you try to separate church from state. Right i think thats this is church and state coming together here. For sure. I think at the end of the day the jay z nfl partnership is a positive one. Are the cardinals still going to win joe, the fact that the blues finally won their first stanley cup in52 years. The cardinals and the blues. I was more upset about the islanders beating the blues than i was going to get wet . Weve gone way over time. Thank you for being here. Coming up this morning, stock movers lots of Earnings Reports first as we head to a break, dont forget to subscribe to our new podcast. If you miss any of the show, you need to list ento this interviews from our guests, special behind the scenes content and of course the latest head lines everything you expect. Look at us on apple podcast. Subscribe today. We areacinusa me bk jt mont welcome back to squawk box on cnbc. We are live from the Nasdaq Market site in times square. Lets get you caught up on some of the stories investors are talking about today. First up, black rock reporting earnings that beat the streets estimates of 6. 96 revenue essentially in line with forecast Ceo Larry Fink was on earlier to comment on the quarter and what he sees in the markets right now. The market is properly valued overall. I dont see that many extremes and thats because of Central Banks are going to be highly accommodative at least for the coming year. What i worry about is more 2021 after the elections and where is the economy thereafter. Checking shares of blackrock this morning, looks like theyre unchanged right now. Also, take a look at shares of wells fargo. A number of onetime items in the banks Earnings Report when you sort it all out it looks like earnings came in at 1. 12 a share on an adjusted basis. Thats 3 cents below what the street was expecting revenue came in below and that stock down. 8 of a percent walmart has kicked off the socalled in home service that delivers groceries directly to a consumers refrigerator. That was kicked off in june and debuting in three areas. Vero beach, florida, kansas city and pittsburgh. Thats got to be an accident waiting to happen, doesnt it . Come all the way in and stock your refrigerator in. Give them free rein. I better put gunther away. Thats a threat for the people who are bringing in and delivering groceries, too. God knows what happens with the dog or anything else there. Forgot about that could be an issue. Im still my thing is could i taco bell is 25 minutes away can i get that someone to bring it to me yes door dash. Wont be uber eats. How much does that cost whatever the thing is. The question is will it be cold thats the thing. It will be fine cost you 5 bucks extra. 25 minutes away, no, it wont. Okay. All right that was the headline for me but in other headlines, the united Auto Workers Union has called a thursday meeting of leaders from around the nation to update them on the negotiations going on with gm. Strike against the automakers now. Time flies, doesnt it its in the fifth week supposed to go nearly this long. Stocks down 8 since the work stoppage wilf is going to be around. He is were going to get to him now because he just wrapped up being on a call with the folks at jpmorgan and has some of the highlights for us now. Hey, wilf. Yes, indeed i counted four different questions or attempts to get them to comment on wework, all of which were declined really wouldnt take the bait or just any answers at all on that topic. I felt jamie dimon came across as a little bit more bearish or maybe frame it as less constructive he said of course a recession is ahead. That was a little tongue in cheek. Is it going to be soon we dont know that he said the trade and china are hurting Business Confidence and business expenditures. The u. S. Is still growing but we will see, he said. The u. S. Consumer, he said, is not under stress and is doing fine on brexit he said a hard brexit would be tough for the u. K. Economy more so than it would be for the u. S. Still on the topic of china, he did say regardless they are continuing their plans to take full control of their businesses in china and that the chinese seem to make that clear last week that theyre still going to allow Financial Companies to increase the size of their stakes in their subsidiaries in china. And then we also discussed the repo rate a little bit and the way that spiked over the last quarter. A lot of comments and factors that inference it. They did say that on the margin that jpmorgan was constrained by the liquidity, by the regulations and that that was one of the contributing factors to why the repo rate did spike and they did say that they feel like the fed is doing all that it needs to do to fix that. Okay. Wilf, thank you for that appreciate you staying on the line with the folks at jpm. Meantime, when we come back a lot more on squawsquawk. The story of ticktock poaching mark zkeerucrbgs employees. Well talk about that and a lot more when we return. Your but as you get older,hing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. Healthier brain. Better life. Two high profile ipos have their lockup expiration today. Leslie picker joins us. Hi, leslie. Pinterest and zoom are two companies that have their debut prices today a flood of share supply actually hits the market as their lockup agreements expire about 180 days after their recent ipos allowing insiders to sell pinterest has about 538 million shares available to be sold this morning. That does not include the shares held by employees who are still looked up until pinterest reports earnings on october 31st zoom has about 230 million shares that are free to hit the market today so combined were looking at upwards of about 30 billion worth of Stock Available to be sold on the market of course, there will only be a fraction of that thats sold today. Theres no guarantee that will pressure the stocks at least in the short run. Any additional supply that hits the market would need to be met with an additional surge in demand in order to prevent some sort of pressure on the stocks, meaning that they could take some kind of hit over a certain amount of time now given the heightened level of ipo activities in the first half of the year, were looking at about 140 billion worth of stock being released from ipo lockups in the remainder of 2019 so now investors are gaining out whether that makes for a small or large risk to post ipo performances guys. Leslie, thank you for that. Nice to see you on the west coast this morning for more on the other big tech stories that are making some waves right now, ed lei is with us New York Times media reporter and Joanne Littman very distinguished fellow from princeton. The whole combo. The princeton thing is whats impressive. No, im going to give it to princeton. Okay. Lets talk about include you lets go to the distinguished fellow first on ipo lockups, how much does this really matter you know, i think the issue here is if the core valuations of the company are correct, its not going to matter, right you might take a shortterm hit when you start flooding the market with stock but if your core valuation is correct. Its going to be fine. Do we think the core valuation is correct thats the problem. If you look at so far this year the vcs have actually done a terrible job of valuing companies. Almost half of all companies that have gone public this year are trading below their offering price. What does that tell you, right the vcs are valuing these companies at these crazy i want to play i dont want to play the blame game. Is it the vcs fault, softbanks fault, we had larry fink on earlier. Blackrock. T. Roe price, there are a lot of huge firms that got into these very late in the game. In the private space that have pushed the valuations up. Theres a lot more money that had been flooding into the market, not from softbank but others, lie fidelity, big mutual funds found their way into some of these things. I think, you know what, when you have a much smaller constituency of evaluators is what we think of them, the valuation is going to be way off. The whole point of a public marketplace is that you have a lot of people buying into the system and sort of figuring out where it should really be. If its a handful of investors with a few more tacked on, it will be inflated or grossly distorted. Thats the tension were seeing now between the public and private when these lockups expire, all of a sudden you have to rethink what is this Company Worth . Why are we thinking about three months or six months after the ipo . Thats a bad sign. Pivot to the other favorite story, wework. Adam neumann joe is not i thought you would do a little neumann. Newman. Thats expected to happen this week, layoffs it may not stop there. Were learning the company is now favoring, it appears, at least theres a report out there, favoring, a fight going on inside the company, whether to take a jpmorgan debt deal or effectively to sell the company. Thats really what would be going on, to softbank which you could argue is putting good money after bad or trying to save their earlier investment. I dont know why soft bank would go for that. Its going to have theyre saying this. Thats the other question arent they one of the biggest hold you guys still get shouted down. They can get shouted down. There you go. Softbanks deal would squeeze everybody else. The bigger question here is what is wework at the end of the day, what is this company you had these huge aspirations to do we school or whatever it is theyre closing down the school. You had this massive prediction about we live, this cooperative living space that was going to have tens of thousands of units by now right. I think theyve had two buildings and theyre using them as airbnbs at this point. The word what is it again . Densification in a sentence . I havent used it. Is that what theyre its to uplift the i dont know what it is to dens i its in the rea estate industry where you bring people in an open floor plan and have people sit on each others laps. That sounds like an hr problem. Dedensification. Back to the offices the old school. Do you like densification. People have been densifying for years. Totally. Thats the trend. You knew it was a word . I have never used that word i think its a ridiculous word. To transplant what is wework . Its a Real Estate Concern i think if you want to compare correctly, you want to lack at all of the other real estate businesses out there thats their theyre probably valued more accurately. Worth 55 billion or less and in some cases have much more space, much more many more clients than wework has. Lets not forget, wework at its peak was valued at 47 billion which it never should have been under any circumstance. By these private investors. By the private investors. Whats the phrase theyre using. Smoking their own supply no, thats the because really they were fake valuations because it would be one valuation, they would raise the valuation by putting more money into their own thing. To their own thing. Nobody else is credenti credentializing it. Youre smoking your own supply. With the expectation they would unload on all of that in a Retail Investor through an ipo. That tells you something. Thats not coming. The market did its job. If thats the end game exactly right exactly right finally, quick final take on this story cnbc learning that tiktok has moved into offices in mountain view, california, previously occupied by whats app ticktock has hired two dozen people from the social networking giant since last year, guys what do we think of tiktok everybody thinks this is an arm of the government. Meanwhile, we should tell you sequoia, kkr, general atlantic, there are a lot of u. S. Investors. The Chinese Government. Yes, the Chinese Government. The Chinese Government. It has a lot of activity. As soon as theres it happened with snap chat when people in the valley saw their middle schoolers were on snap chat, what is this we need to invest. Same thing is happening in tiktok in terms of the ownership, yes that is what makes this different from all of the others theres concern if youre worried about facebook taking your information, i mean, this is like a beijing coming in. Very, very legitimate concerns about the ownership of tiktok but as ed is saying though, you know, we are going to see this, right facebook is already what your parents use. Then people went to instagram. Now the instagram generation, theyre getting older. Their younger siblings, they have to move onto the next thing. Its just a continuation. Its very addictive its easy to keep scrolling through. Youre making me sad. Were all youre old now. I am. Im not im not on tiktok yet. Are you . Why would you be when the Chinese Government owns it who wachblgnts to be on. Im not on my space yet well get you on friendster well start you with friendster. I found an application where i can get taco bell and earn bitcoin while its being delivered. Have you heard about that . No. Someone sent it in. Im unaware. Coming right now. You like the al fresco. I think someone is scamming you. Ill tell you what it is. Weve got to go. Must be true, you read it on the internet thank you. When we come back, investment ideas from maie os cpers ceo tations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. I thats the retirement plan. E, cool. With my annuity, i know there is a guarantee. Its for my family, its for my self, its for my future. Annuities can provide protected income for life. Learn more at retire your risk dot org. Tell him were flexible. Dont worry. My dutch is ok. Just ok . Tell him we need this merger. Its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Thats our thing. Were changing whats possible every single day. With technology that helps you offer shoppers a better experience. Take your companys app. We can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. And now, applying for credit can happen in a flash. That way, more people can start shopping with you on the spot, wherever they are. Hows that for changing whats possible . Number of stocks on the move this morning dom chu joins us now with some names. Hows your computers, dom . You got all of your stocks ready to go . Its like a hit a lottery this morning people said its a 5050 shot. My computer is working. No way none of ours are. I walked in, there was no blue screen of death, no sad screen system wide. It is system wide not the chinese. Mine worked no, no, im going to blame them actually for the whole process like you said, joe, we have a lot of movers on earnings and analyst calls. Lets kick things off with a couple of dow components johnsod johnson, higher by nearly, well, down 1. 5 , down 100,000 shares a beat on earnings and revenues. It also boosts its full year forecast as well, helped along by strength in prescription drugs and medical devices and other areas. Those shares on the move right now. Fellow dow components, United Health group up around 2 or so, roughly 50,000 shares premarket volume, Health Insurance and managed care company also posting a bullish trifecta, better profits, better sales and then it raised its full year forecast United Health helped along by core Health Insurance and farm sy benef insurance. And shares of lowes, up 1. 5 , 3,000 shares of premarket volume not an Earnings Report, but americas second biggest Home Improvement retailer, upgrade to overweight it w overweight it was neutral they look a better outlook for the housing and Home Remodeling industry into next year and rebound in gross profit margins. A lot of green on the screen well see if that carries into the Broader Market back over to you. Dom, thank you very much. Our next guest runs the nations biggest pension fund. Marcy frost is here. Thank you for coming. Thank you for having me great time to are you here. So many questions circulating and nobody probably has a better feel for this than you do in terms of running a public pension fund, trying to make sure you get a return when youre dealing with negative Interest Rates and extrabanks lowering rates all the time, what people are calling the new normal i know your fund has an assumed rate of return of 7 how do you do that when there is 17 trillion in negative Interest Rates in terms of the bonds being sold from governments. It is quite challenging and it was in december of 2016 when we actually lowered the discount rate or the assumed rate of return from 7. 5 down to 7. We have a new chief Investment Officer dr. Ben ming and ben is running 7 scenarios as we speak. If you think about Global Equity and equity markets, and our Asset Allocation, basically giving us around 6. 1 to 6. 2, still a delta that has to be made to get to that 7 we believe in the private markets are really the only way we can make up the difference. You it is a huge amount of pressure so many people who are counting on this to be able to say this is our retirement, our funds out there. For the last fiscal year, you didnt achieve at those, 6. 7 . How nervous are you about thinking by the way, still phenomenal when you look at the rate of return for a lot of markets out there. How do you get to that point what are the scenarios you are laying out multiple scenarios, one thing that we do, i think we do quite well, we dont think about shortterm market volatility too much we cant overreact to it we have to think longterm, were a longterm investor, very patient capital. But back to private assets and private markets, we do know that we cannot hit that 7 unless we can get more private equity. You can get some serious diversification at calpers so you can smooth out the bumps i was wondering whether you are mad at central bankers, do you think jay powell is a bone head. As a safver. Do you wish do you wish they hadnt been cutting . Do you wish rates were higher . Would it make it easier or has it helped with your equitys . As an investor, it is the Building Blocks of how we build out our Asset Allocation when youre dealing with negative Interest Rates as they first building block, it makes it extremely difficult to attain that i have to think about it from an investor perspective. Do you think they should have been cutting they have to pay attentiont the economy and inflation. I think they have to factor in a lot of things that it is what it is we have to respond accordingly. What about the whole esg push, which you have been a leader on, but now real questions about whether thats your returns we dont believe that esg has specifically hit our returns we do believe that environmental, social and governance issues are important to the longterm health of the fund and those are both shortterm and longterm risks that we pay very close attention to. So, you know, i think there has been some coverage out there that esg around investment, engagement, had an impact on the fund it has cost the fund some money, the investments done around tobacco, for example, and coal but has that made you rethink your approach to all of this i came in three years ago and it was something that i wanted to rethink immediately and i think the board as well as the management of the organization, we believe we get a lot more out of engagement with companies than we will out of investment from companies the number one reason for that is the moment we take our money away, we lose our voice. We have to stay engaged in the markets and think about how do we work with these companies in longterm should they be using the investment dollars of your pensioneers to have a voice at the table of certain types of companys yes you have to be woke if youre operating in california. Even if the expense of your poor pension people. The board of directors opposed moves to divest stocks and private prisons and gun retailers and companies tied to turkey because of all of these reasons. The last 18 months. Mob outside your building yeah our number one focus is 2 million members need to rely on us for pension and healthcare. Thats our focus. Yeah. Just in terms of what you look to with china, i know you mentioned your new cio who s could from a background of investing money there too. Do you look at that as an opportunity . Tensions are tough. Markets like predictability. We like predictability, we do not like extreme volatility. You have to look to the emerging markets. Were not that exposed to china. Were exposed, less than 2 in our Global Equity, we have some exposure in private equity but very small exposure into china today. Marci, thank you for coming we would love to have you back crypto yet . Not yet not yet okay. She said yet. Not yet okay. Thank you thank you when we return, we have this mornings biggest movers and tomorrow on squawk box, dont miss Lee Cooperman he will join us live at 8 00 eastern time stay tuned squawk box will rhtac beig bk. Will it feel like the wheend of a journey . P working, or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Final check on the markets for us today up 85 on the dow lots of dow components stay tuned for squawk on the street, which will be looking at all the different results from the banks and from Johnson Johnson. United healthcare. The dollar, if you will. Or we can just go squawk on the street is next good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber, mike santoli. Cramer has the morning off busy morning of earnings, banks included first, some breaking news from the imf. To Steve Liesman in d. C. Steve . Carl, thanks very much. Saying were in a synchronized slowdown, the imf downgrading Global Growth to 3 . The lowest level since the financia