Transcripts For CNBC Squawk Alley 20161031

Time, and this is going to create tremendous value for our customers and, really, our investors. This is a good deal for investors. Speaking of timing, martin, it has been a challenging one for your industry. Oil services hundreds of thousands of layoffs. Where does that leave the industry . Are the layoffs done, and is there a sense that youre on the brink of a recovery . You know, sarah, we all hope that the layoffs are done. As ive said over and over again, thats the most difficult thing about this industry. That all said, you know, when you have these two great franchises coming together as lorenzo talked to the synergies and the example that we gave on the investor call this morning, so much of it is going to come out of product redesign and bringing that engineering expertise to play. Being able to leverage a much bigger spend, you know, in excess of 20 billion annually into the marketplace in terms of our combined supply chains, these are the efficiencies that will come and get the costs down and cost savings we can pass on to the Customer Community and actually protect the workforce and not be, you know, going there to get our cost base down, which unfortunately has been this industrys practice and thats why the genius of this combination is going to, you know, make that not the area that we have to go to so much into the future. Yeah. You know, mr. Craighead, i would never be one to judge the deal on the first day stock price performance, but you talk about or certainly mr. Immelt has talked about a 30 premium. Were talking about, obviously, the enhancements that will occur as a result of the union itself, but im looking at a stock now 1 30i 30i. 5 . Whats the market missing . I think thats the complexity of the transaction, but also its the missing element of the ge oil and gas business. Its not a publicly traded entity, but as we were able to get under the sheets and look at the business, its a fantastic business. Lorenzo and his team have done a terrific job of managing through the cycle. I remind you that its the Worlds Largest Oil Field Equipment manufacturer, great brands, great positioning in the marketplace, a great track record in that, as well as not to speak to the ge store, which is another whole value contributor, and then you look at the marrying up of this. 17. 5 a share, 37. 5 ownership in the new company, its a fantastic, fantastic outcome for our shareholders, but as you say, you know, its the first few hours. I think it will sort itself out. Complicated deal, david, its going to sort itself out, but were very look, were a completely focused and aligned on how the synergies take place and how the data gets created, so again, ive seen this in the past, you know, its going to take a while for the deal to get sold in, but we are extremely confident in terms of the ability to execute. Yeah, jeff, in other words, optionalty, which can indicate a number of different things. I could imagine you buying more, buying other companies, using the currency thats created as a result, or selling. Can you give us any sense where your instincts may lead you when we talk about the options available as a result of this structure . Look, david, i think from our standpoint, this completes the most Competitive Oil and gas enterprise in the industry. I think its a direct fit, its in a central business, its an industry where ge has done well, and where you can use the technology, the services, the global footprint, so we view this as the ability to run this thing and generate tremendous value for the baker hughes shareholders, for the ge shareholders. You know, were always honest with ourselves as it pertains to are we the best owner, are we creating value, but in this case i believe weve got tremendous value creation, using the ge store and the ge footprint, and were going to run this place well. All right. Well, gentlemen, jeff, of course, we always appreciate it. Thanks to all three of you for joining us. Good to be with you. Youre welcome, good to be with you, too. Carl, send it over to you. All right. Sarahs question about politics, of course, helps us pivot to a big day for politics. Just over a week away from election day, peter teal is set to speak at the National Press club in washington. Well get you there live when he begins speaking. In the meantime, plenty of criticism over the email case. John harwood in washington, good morning, john. Good morning, carl. We have an entire weekend consumed by the question of these fbi emails. You had the Vice President ial candidates fanning out to sunday shows to place their argument, but look, i think were going to cut short what i was about to tell you about tim kaine and mick pence and go right to peter theil. To the people who are used to influencing our choice of leaders, to the wealthy people who give money and the commentators who give reasons why, it all seems like a bad dream. Donors dont want to find out how and why we got here, they just want to move on. Come november 9th they hope everyone else will go back to business as usual. But it is just this heedlessness, this temptation to ignore difficult realities indulged in by our most influential citizens that got us where we are today. A lot of successful people are too proud to admit it, since it seems to put their success in question, but the truth is, no matter how crazy this election seems, it isless crazy than the condition of our country. Just look at the generation that supplies most of our leaders. The baby boomers are entering retirement in a state of actuarial bankruptcy. 64 of those over the age of 55 have less than a years worth of savings to their name. That is a problem. Especially when this is the only country where you have to pay up to ten times as much for simple medicines as you would pay anywhere else. Americas overprized Health Care System might help subsidize the rest of the world, but that doesnt help the americans who cant afford it and theyve started to notice. Our youngest citizens may not have huge medical bills, but their College Tuition keeps on increasing faster than the rate of inflation, adding more every year to our 1. 3 trillion mountain of student debt. America has become the only country where students take on loans they can never escape. Not even by declaring bankruptcy. Stuck in this broken system, millennials are the first generation who expect their own lives to be worse than the lives of their parents. While American Family expenses have been increasing rele relentlessly, their incomes have been stagnant. A median household makes less today than 17 years ago. Nearly half of americans wouldnt be able to come up with 400 if they needed it for an emergency. Yet while households struggle to keep up with the challenges of everyday life, the government is wasting trillions of dollars of taxpayer money on far away wars. Right now, were fighting five of them. In iraq, syria, libya, yemen, and somalia. Now, not everyone is hurting in the wealthy suburbs in washington, d. C. , people are doing just fine. Where i work in Silicon Valley, people are doing just great. But most americans dont live by the beltway or the San Francisco bay. Most americans havent been part of that prosperity. It shouldnt be surprising that is peter thiel speaking in washington, d. C. Were going to monitor that. In the meantime, because he is expected to take questions, in the meantime kate kelly does have his prepared remarks and looked through some of those. What can you tell us . You heard his general intro. Despite the fact the electoral process has become rattling and volatile to many, the state of our nation, he believes, is really one of peril. He talked about economic sort of disparities between the elite class in which he operates and everybody else. My understanding is, hes going to go on to say he doesnt agree with everything donald trump has said and done, he doesnt think the millions of people who plan to vote for trump do either. Hes going to say quite clearly his comments about women were offensive and not acceptable, inappropriate. At the same time, though, he, and he believes trump supporters, dont pull the lever as an endorsement for everything trump says, they do it because they agree with some of his ideology about the economy and Foreign Policy. To get into a little more detail on that, hes a little bit concerned about the Foreign Policy stance of the democratic party. He believes its more hawkish today than it was at any time since vietnam. In particular he doesnt like Hillary Clintons approach to syria. He thinks the nofly zone she wants to establish could actually, and he says this quite clearly, risk us having a Nuclear Conflict because many of the planes flying in that area are russian. He goes on to also say he thinks in addition to the housing bubble that led to such economic chaos a number of years ago, bill clinton resided over an enormous stock market bubble, so clearly he has concerns about the clinton dynasty and Hillary Clinton in particular. Trump wants to normalize america with less of a trade deficit, what he regards as more responsible Foreign Policy, and ways to address the negative impacts, carl, of free trade on Many Americans and the resulted loss of industry and manufacturing jobs. Certainly some themes that will resinate well in some important states. Kate, thank you. I imagine well speak again shortly. Lets speak with thiel and the election as we kick off squawk alley. Joining me, as well. John broad and shelly palmer, who joins us with palmer advanced media. Good morning, guys. Once again here we are talking about the split between policy and character. What do you make of thiels thoughts and how will they be received where he comes from . Look, you know, the First Amendment basically says the government cannot tell you how to think. It doesnt say anything about private individuals and or anyone else having any consequences, so peter thiel is a believer in this particular point of view, and we, all of us, should be willing to hear it. Certainly, Silicon Valley would be very, very hypocritical if they say i dont care about his politics, therefore, im not going to let him say it. They dont have to like him. They are just people. Here we have a situation where a lot of americans have an issue, a lot of americans have another issue. Thats what the democracy is about. Just go for it and vote on election day. He seems to be distancing himself from the beltway, from the valley. Just in the beginning of his remarks, john, he said people in d. C. Are doing just fine. People where im from in Silicon Valley are doing great. Basically saying its not your future thats in jeopardy. Yeah, you know, the thing i find sort of ironic here is peter thiel lives his life on the fringe. This is a guy who paid students to drop out of college, he secretly financed hulk hogan versus gawker. Here he is in potentially his most mainstream act of saying i port the republican nominee for president of the United States, as 40someodd percent of the american electorate is going to, yet thats whats getting him in incredible amount of heat and calling for his ousters of Board Directors and partnerships and i find that a little bit odd. Honestly, what hes talking about, the things that hes saying are not incorrect. You may or may not like donald trump or Hillary Clinton, you cannot deny there are all kinds of fiscal issues in the United States that really need to be looked at hard and the political system that we live under doesnt tend to look at them very hard. Sure. So hes not wrong about what hes saying. Who hes choosing, some people have an issue with. What hes choosing, disruption. Hes going disruption through the instrument he has available to him. Yes. There are massive problems with this country, i want to make wholesale change, out of that change, something positive may come, but we cant have what weve had historically in washington. 12 months ago you would have been hard pressed to find someone who said peter thiel would become a household name in this election. What do you see as his future politically . Do you think hes vying for a place in the administration . If he made that speech in a rationale way, im a billionaire and can make these changes, i do understand the fiscal reality of the United States, if he does that, he should be running for president. We are entitled to the peaceful transition of power, we should vote for him. How is his Business Record viewed in the valley, just what hes done on paper, good or bad . I think hes done well for himself and the valley. Incredibly positively. We have a paypal win, the first outside investor and board of director to facebook, founders fund, top echelon. You get on the list, you see his name pretty much where you need to see it. Politics is inherently personal, which is why so many people have come out and supported him and say he has a right to feel how he feels, but this election has been polarizing unlike any weve seen. I wonder if he will have issues in the valley given his politics . Politics and business generally are not discussed in polite company. You make a choice in your life. Hes a man of relative power, and with great power comes great or relative responsibility. In his mind, this is what he needs to do. Everyone i met feels they need to do something. Ive yet to have a discussion with anyone who doesnt have a very strong opinion about who should be the next president of the United States and does cause some consternation between people. Hell pay the price, but he can afford it. I think hell see some fallout. Weve already seen reports of people not wanting to accept his investment in their company as a result of his political views. I think that will be the very small minority. Politico had a poll this morning, 71 of people want the election over, which makes you wonder who are the other 29. Whos enjoying this. November 8th cannot come fast enough. We take stock of what thiel is saying. When we come back, more coverage of peter thiels speech in washington. Well listen to some of the q a, perhaps, when squawk alley comes right back. And asleep a. Shop our biggest sale of the year, including all tempurpedic mattresses. Save up to 600, now thru november 29th. Get your tempurpedic. The most highly recommended bed in america. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Sharing a ten by ten room,ng threestruggling. Nding, i rent this place and then i started home sharing. My roommates help out all the time. They are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. I was able to take three months off to take car of my family during a family tragedy. The extra income that i get from airbnb has been a huge impact in my life. Peter thiel is still speaking in washington. Were awaiting a question and answer session to begin. In the meantime, back to kate kelly with her thoughts. Kate . Looks like the prepared remarks just wrapped up and hes sitting down to take audience questions, so i wont speak too long, but two things i wanted to point out. There was a section of his speech he talked about the lack of diversity of thinking, especially when it comes to politics in Silicon Valley and also by extension in the media. He mentions something the advocate said, the advocate magazine, saying that essentially peter thiel is not a gay man. In other words, as if he doesnt deserve to be considered a gay person because of his support for donald trump. Obviously, a very eyebrow raising comment there from that magazine, which focuses on gay and lesbian issues. Back to you guys. All right, thanks so much. Meanwhile, lets get back to the National Press club, where peter thiel is taking questions. A lot of what they do does feel, to me, like rearranging deck chairs on the titanic. Its precisely im worried about that that i think we need to think a little bit outside the conventional policy box and have sort of a broader public debate about the kinds of things we might want to do, but certainly, i worry about the decline. I take it very seriously, and one of the things i think i would have liked to see a race between trump and sanders, because i think both of them viscerally felt the decline and viscerally, they very much disagreed about what caused it, what to do about it, but that would have been a very different sort of debate. What we have is a debate between one candidate who says everythings more or less fine or as good as it can be, and another one who says, you know, that were on the titanic, its about to sink. So i prefer the second one. You talk a lot about backing an outsider and how thats important for america, but isnt there also something to be said about somebody who understands how washington works better to actually get things done . You know, thats i would argue weve been trying that for quite a long time. On the kinds of issues i talked about today, the trade double, the war bubble, the globalization bubble, these various bubble policies, the insiders have been getting it wrong for a long time. You know, they were asleep at the switch when we had the dot com bubble in the 9 0z, even more asleep in the housing bubble in the last decade, and the insiders have somehow been doing very micro policy adjustments and then letting these massive bubbles inflate on their watch. And so i think there is an argument. The trump point that hes made repeatedly that hillary has experience, but its bad experience, somehow resinates with me a lot. Has your support with mr. Trump affected any relationships or close business relationships in Silicon Valley . You know, its certainly generated a tremendous amount of discuss, gotten a lot of push back from people, who say the least, but friendships, close working relationships, are also very well intact. Any businessmen you deal with that are more privately supporting trump and dont want to say it publicly . One of the strange things of doing this, it has surfaced, you know, not a large number, but a small number of those people who, you know, feel they cant say it in public and what not, and are happy that ive done it. Its sort of been, yes. Let me talk about that for a second. What have you learned this election cycle about Silicon Valleys appetite for political difference . Well, i its more polarized than i realized. I certainly thought of Silicon Valley as a fairly liberal, fairly democratic place, you know, overwhelmingly backed obama in 2008. And but i didnt think it was going to be this sort of a visceral reaction, where, again, most of the Larger Tech Companies maybe they havent said you shouldnt back trump or anything, but surprises me anybody would say that if youre beyond the pail for taking a position thats held by half the country, you know . There are positions beyond the pail that are extreme fringe views. Ive often supported fringe views in life extension or fringe views in minority views. This is the first time ive done something thats actually conventional. It didnt feel contrarian. It was like the first time ive done Something Big in my life that was just what half the country believed in, and its been the most controversial thing ever, so that really surprised me. Have you suffered has your company suffered any blowback because of your position . I dont think so. That would be an even crazier thing. Its like im not trump. You know, the founders of the companies i invest in are not me, their employees are not the founders, it would sort of conflate two or three groups of people like this, thats a really crazy thing to do. Perhaps we should occasionally be held responsible partially responsible for people one degree of separation from us. If you hold people responsible two degrees or three degrees of separation, that way lies insanity. Just to clarify, you dont believe your company has faced blowback from consumers or vendors you deal with because of your position . Not in any meaningful way, no. On your Rnc Convention speech, you said where i work in Silicon Valley, its hard to see where america has gone wrong. Do you think Silicon Valley understands america, and whats that source of disconnect there . Its Silicon Valley has been extremely successful over the last decade or so. It is but its been a success that is a success of specific companies. You know, a number of which ive been involved in. And the story people in Silicon Valley always want to tell is one in which their specific success is individuals and as companies gets conflated with a story of general success or general progress in the United States. So were doing well, therefore, our whole civilization is doing well, everybodys doing well, the whole countrys taking the next level, so thats the narrative people love to tell, specific success linked to general success. And i think the truth has been more one of specific success but more general failure. Ive been a critic of twitter, for example, where on our website we said they promised us flying cars and all we got is 140 characters, but its not a critique of twitter as a company. Its a perfectly good company. Its a perfectly great company, just not enough to improve Living Standards for 300 millionplus americans. While were on the topic, i want to get back to trump for a second, but how do you think that disconnect in some ways shapes the companies and the products that are created there . Its you know, this gets very speculative, but i would say that one way ive often described the dichotomy is Silicon Valley deals in the world of bits, most is the world of adams. Computers, mobile internet, software, that ensemble. Theres been a narrow cone of progress around those kinds of industries, but then you often have less good of an understanding for the sort of industries that involve an adams, building things, you know, real estate, which trump is in, sort of the stereotypical industry involving adams. Those are ones that are often much more heavily regulated than the world of bits, and so if youre in the world of adams, you might be very concerned about government regulation. If youre in the world of bits, which is much less regulated, you might be much less concerned about government regulation. So there is this big separation just in terms of what they do. I wouldnt blame that on just a blind spot in Silicon Valley. I think thats too easy. Perhaps Silicon Valley has focused on the world of bits because its actually gotten very hard to do things in the world of adams. When i was an undergraduate at stanford, you know, there was still a lot of different engineering fields you could study in the 1980s. They were all bad decisions. Bad idea to become an engineer, chemical engineer, mechanical engineer. These were all industries that were sort of in structural decline because they were getting outlawed, regulated to death. Nuclear engineering. Your parents would have been irresponsible to let you study that as a field in the 1980s. Even electrical engineering, that was a good field for about a decade, not so much anymore. Computer science, not even in engineering field, that was the only sort of scientific technical field that actually had a future in the 1980s. Lets go back to mr. Trump. Well have more questions about Silicon Valley in a minute, but was the timing of your donation in any way related to the revelation about the access Hollywood Tape of trump . No. I think the tape was extremely, extremely poor taste and inappropriate, as i said. I didnt you know, i didnt think as much even about the donation as i should have. My general perspective on this year was that money didnt matter that much. The candidates who raised the most money on the president ial level did incredibly badly. I didnt even think that trump needed my money, you know, he hadnt raised that much money, they hadnt asked me for money, i hadnt donated, so when they asked me, i wasnt sure they needed it, but i thought id go ahead and write them a check, but i didnt think that much of the connection. And, of course, i didnt think anybody would think you would donate to a candidate because the worst thing theyve done. You support candidates normally because of things you like about them, not things you dislike. Like it is, i think, almost all people voting for trump are voting because of the sense the u. S. Is very badly off track and that perhaps we have to do some things to fix it. You mentioned in your speech mr. Trump is not necessarily humble, but are you concerned about some of the personality traits, comments about women, his more bombastic style . Are you concerned what that says to younger americans and says to our political discourse today . Well, i think were i think weve been pretty clear this year that there are a lot of things that are beyond the pail and i think there are things that trump said a decade ago that he would absolutely no longer say today. I think that part of our discourse is getting policed adequately and will continue to get policed adequately. I think the temperament, you know, the kind of place where i worry about that most on a policy level is do we get into more wars or not. Im not sure whether thats sort of a matter of temperament or a matter of world view, but certainly, i would worry much more on that with hillary getting us into wars, nuclear one, which is the most dangerous, probably involve us in a confrontation with russia, and i dont think Hillary Clinton has accused trump of being overly hostile to putin. But are you concerned about mr. Trumps temperament when it comes to the Nuclear Codes at all . I think he wouldnt even get us into a situation where it would be even close, so if you look at the specifics, where might something happen, where might something go wrong, i would think that in some ways hillary is much more dangerous than trump. I dont think hillary will get us in nuclear war either, but its a much more confrontational Foreign Policy. Impact trumps temperament with north korea, china, that could pose trouble because of how he responds. Q a with peter thiel continue at the National Press club. Hes so far said hed prefer to see trump sanders, that those two candidates sense the importance of the trajectory of the United States. Says that d. C. Insiders had predicted stes eed essentially,t between two families. We should mention, too, top of dredge right now, live feed of peter thiel saying maybe his future in politics is just beginning. Could be. Look, hes right. Incentives and outcomes arent aligned the way they generally are in business. People forget we live in a republic, we elect our leaders an they make decisions for us, which is awesome. Now go to the polls and vote what you want. Peter can do all that. Hes going to face whatever flak he faces and everyones going to make their own choices right now, but like you said just a few moments earlier, this election cannot come soon enough. Right. You mentioned his comments that we wanted flying cars and all we got where are 140 characters, not taking aim at twitter specifically, but saying our country needs more advancements to improve the Living Standards for its population. What do you think that a president could bring on that front . I mean what policy could be put in place to actually change that . Both candidates have laid out fiscal policy, have laid out college education, how to pay for that, laid out health care policy, all of which aimed at improving quality of life. Weve missed that. I think the substance of this campaign has been absolutely overshadowed by all of this other stuff. Thats the point. In practice you look at the entitlement programs and their affect on National Debt and what we have to do. You look at relative tax rates, you can go down the list and find policy to talk about, but i havent heard a whole lot about that, because there have been serious other issues overshadowing, but if we are honest with ourselves, no politician ever has been willing to talk about the very hardest financial issues, and there a president can lead, but look, we have three branches of government, right, executive branch, legislature, and judiciary. The Founding Fathers put that in place so this discourse would not be adversely impacted by any one group. The president has to lead. So you have to choose a leader. Certainly, thiel, is bringing us back to some kind of policy discussion because so much of the race has been about gender and character and honesty. Kay kelly, do you want to try to cap this off and tell us what the take aways are . I have to say two things that really struck me. Number one, a lot of focus on thiels lack of contributions to the Trump Campaign, until recently, and he actually said i didnt think the Trump Campaign needed my money. Just digest that for a moment. Theyve really lagged behind Hillary Clinton on the fundraising front. Its hard to see where that comment might come from, but there it is. The other thing is, questioned about the temperament of donald trump when it comes to being trusted with the Nuclear Codes, he said, Hillary Clinton actually might be more dangerous because of her hawkish Foreign Policy, so he was a little measured. I dont want to just go for the quick headline, but it was a striking thing to say. Yeah, theres been a lot of discussion about whether or not trumps closeness to putin, as some might call it, is in the end perhaps a positive thing. Time will tell. Thanks so much to you, shelly palmer, john brod, thank you very much. When we come back, well continue to monitor peter thiel taking questions at the National Press club. Plus, the fbis Clinton Probe could throw the election off course. Squawk alley continues after a break. Hi, everybody, im sue herrera, heres your news update at this hour. Iraqi special forces continuing their advance on isisheld mosul taking heavy fire, but moving within two miles of the citys limits. The dawn assault saw Armored Vehicles drawing east of the city drawing mortar fire. Rescue and Emergency Operations continuing in the Historic Center of norcia a day after the central italian town was rocked by a powerful 6. 6magnitude earthquake. Italys premier pledging to find temporary housing for all of those displaced by the quake. A massive fire this morning in northern california. Firefighters battling a threealarm fire at an apartment complex under construction in oakland. No word on how the fire started or if anyone is hurt. And pope francis arriving in sweden to mark the 500th anniversary of the protestant reformation. He was met by the swedish prime minister. It is the first time the pope has commemorated the anniversary of the reformation. That is the news update this hour. Back downtown to squawk alley. Kayla . All right, thanks so much, sue. Meanwhile, Political Uncertainty making its impact known in the wake of the fbis ongoing email probe. Now we have Silicon Valley heavyweight peter thiel taking questions on his support of donald trump. Joining us to discuss the impact on the markets is jack ablan. And dina fordham, citis chief Global Political analyst, whose new report says the fbi probe is the black swan that could slthr the election off course. Tina, i want to start with you, because you try to parse exactly how the developments of last friday will exact the markets view of the election. The markets gave up gains on friday on those headlines, but im wondering if its not as simple as we may like to think, given that this review will take weeks and its impact on whoever wins the presidency will be unclear for weeks. Well, thats exactly right. I mean, the development is a black swan in that it has injected a very high degree of uncertainty into this race. It takes about a week for new information to filter into polls, which takes us right up to election day, and as you say, the fbi is not going to be able to come to any conclusion about the emails, of which there are reported to be tens of thousands, before the election. So it means that markets are going to be having to try to, you know, hedge their bets, when just a week or ten days ago, a clinton victory was pretty much priced in. Jack, the swing state polls were tightening even before the revelations of friday, so how do you think the markets behave, given how much uncertainty there is . Well, were seeing it. We see it friday. I think today is certainly were assessing a lot of information. You know, not just political information, so i think today somewhat flat, but looking beyond just the election next week, i think that a lot of that dissatisfaction thats been fuelling trump and fuelling brexit and other populous moves wont go away. This is impacting between a third and half of the country, and i think as an investment strategy, we need to realign in many respects for a new approach and a new regime, whether its clinton or trump. I think we have to look beyond that. You know, Political Risk is one of the hardest things to model for in the market, dina, and any president that wins the election will, obviously, have to get his or her policies through congress. How much focus are you placing on the tipping points of power in the house and the senate, and what are you preparing for next week . Well, i think that what were telling our investors to prepare for is a spike in advanced economy Political Risk, because, you know, here in london in terms of what Global Investors think, they tend to regard a Trump Presidency as a Political Risk, but even a Clinton Presidency with the likelihood of divided congress, a likelihood of a return to debt ceiling shenanigans, fiscal cliffs, as well as a very real potential for continuous investigations and even impeachment risks says to me that under any scenario, investors are going to have a lot of Political Risk to be concerned about. Jack, where do you watch for that Political Risk to make itself known . Yeah, i mean, i think that its a critical period between not just, obviously, next weeks election, but that period between the election and then the inauguration. You know, for example, if it is candidate clinton, who is she going to be selecting for key policy making roles . Will it be, you know, Elizabeth Warren . Do we have to focus on the banks . Clearly, i think that health care is no matter who is in, health care is at risk. Heres an area thats benefited by unprecedented level of patent protection thats been extended for years and years and years since, well, since the early 80s, and i think that will likely reverse over the coming years, so i think there are, i think, tides that are shifting, and i do think that while, you know, democrats and republicans have been bickering for years, one thing that they were agreeing on for the last 30 years was free markets, free trade, and i think thats starting to reverse itself. All right. Well, still have a week to go. Well see how it plays out. Jack, tina, thanks to both of you for joining us today. And still to come, live from the cme, Rick Santelli in the santelli exchange. First, merger monday on wall street, ge combining its oil and gas business with baker hughes, creating a new publicly traded company with some 32 billion in revenue. Well be right back. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Find out what he thinks happens now. Plus, what the ge baker hughes deal means for the rest of the energy sector. And booyah, jim cramer will join us for the hour on volatility and opportunities before election day. Halftime report, we will see you top of the hour, kayla, about 15 minutes away. All right, sounds good, see you then, scott. Lets get to the cme group now, Rick Santelli in the santelli exchange. Morning, rick. Good morning, and thank you very much, kayla. You know, i was here friday little after 1 00 eastern when the markets had their move, and the move, of course, was the notion the fbi still was working on some of the email issues regarding one of the candidates. But how big is big . Ive been an outlier much of this election regarding what the markets were pricing in, if anything, and what type of bent or slant either candidate posed truly for the financial sectors and the economy. Now, we could say that theres certain issues of health care, we could say theres issues of the peso, but all in all, since Charles Biedermann told us so eloquently today that passive investing is on the rise, it doesnt really surprise me. You know, think about people back in the day that used to like betting on horse races. Well, if theres a horse that always seems to win, you dont need all the handicappers and all the material. You just bet on the obvious horse thats always going to win. When you need the help is when all the horses seem to be about the same quality with regard to speed, and i guess what im referring to is, theres a lot of things on autopilot right now due to central bankers, a whole lot more than politics, and in that environment, passive investing seems to make sense, but trust me, when things get shaken up again, i think youll see a baton pass to a guy in the more active forums, but we digress. Hearing today about black swans, i get it, that really upsets the apple cart, but purely from the market standpoint, im sorry, but ive seen big, and i dont think weve seen big. Lets just look at superficially the major components to the marketplace. Thursday, heres all the closes from the s p, all the way down to the dollar index. If you look at where they closed friday and where they are now, i challenge you to find big in any of this. 21. 30 is where were at roughly in the s ps, look at thursday and friday, down no different, nasdaq, no different. If we look a twoyear note rate, virtually unchanged. Two basis points move on tens. Dollar index did have a half cent move, but now hovers unchanged. What im getting at here, purely from a market standpoint there doesnt seem to be a lot of difference. Does that mean the issues arent important . No, but it may mean the biggest issues that affect our lives cant be changed by unknown candidates making many promises. Theres three branches of government. How the other two turn out were not sure. Things like entitlements and debt and health care arent going to be solved overnight, so as exciting or nonexciting as this might be, im sorry, as a market guy, theres no excitement there. Carl, back to you. Well said, rick, thank you very much. Rick santelli. When we come back, one company that wants tohbo go, spx accounts all in one place. Were continuing to watch the market. S p is now up five. Dont go away. Whats the value of capital . Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats 10 times faster than slow internet from the phone company. Say hello to internet speeds up to 150 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. From spotify to hbo and amazon, consumers are using a subscription economy. Our next guest has built a business on managing all of those subscriptions. He is the ceo of zwara. Welcome. Thanks for having me. Your model seems perfectly placed at the perfect time. Walk us through how you manage to help your clients climb on board this train, which is moving at lightning speed. Everybody nsz that the world is moving towards subscriptions. Customers are buying less and less products. Why buy a car if you can Access Services like uber and lyft and why buy software when you can point your browser to Services Like salesforce. Com and google. We help Companies Grow the subscriptionbased Business Models. Existing technologies, such as erp and sap that really dont work. We help Companies Drive Business Model innovation, launch new pricing and packaging and drive these subscription businesses. You have some big backers, including benihof and black rock. You have clients like telecom and media and packaged goods. How hard is this to do from skra much . You focus on supply chain, distributions. The key thing is these Business Models are customer centric, subscriber centric Business Models. You need to know what their preferences are, what they purchased in the past, and perhaps you subscribe to a netflix or hbo. Does this customer want to pay more for more capabilities . Are they going through a period in their life where theyre paying less . Price, packaging, creating a new subscription experience is really, really difficult for these new businesses. How do you decide what a consumer is willing to pay for a Certain Service . We launch a service that theyre taking more transportation rides and buying more services. They give suggestions of the customers that you need to worry about because they might be going to a competitor or turning off your service, but, on the other hand, what are the customers that are ready for additional offerings. A lot of people wonder whether were entering a period of subscription fatigue where you simply cant take on any more of those. Thats what you had helping to cure ate, right . Absolutely. What we find is in periods of economic downturn, people prefer subscription businesses. Sales force. Com as an example. The whole industry took off in the two recessions about 2001, 2009. What people find is why spend all this money up front to buy a product when you can simply pay a service to get what you need and then turn it off and on when you need to . This is clearly the Business Model of the future. Its great to have you. Well keep your eyes on you. The ceo of zuora joining us from out west, and its also the subject of mike santollis column today at cnbc. Com pro. Peter theil talking gawker. What he said after the break. They may want the latest products and services, but they demand the best shopping experiences. Theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] with these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. So dont wait. Call now and request this free decision guide to help you better understand medicare. And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Peter at the National Press club a few moments ago mentioning gawker. Our kate kelly has highlights on that. Kate. What i caught i didnt see the entire exchange, but its going to be highly controversial, i think. He talked about the standard to which president ial candidates and other major public figures should be held. He said we need to examine whether thats the same as a tech ceo should be held in terms of standards. He said there needs to be an evaluation when you think about holding the media accountable for what he deems to be perhaps inappropriate speech or speech that goes too far. Obviously the hulk hogan scenario being one example as well as his own outing by gauber. That was all very interesting material. He said he is not underwriting lawsuits that are currently pending against new York Magazine or the daily mail. The latter being a suit brought by emamalania trump. The term single digit millionaire quickly becoming a hot topic on twitter. Thanks, kate, to you. Meantime, back to hq and the judge. Welcome to the halftime report. Im scott wapne wr. The big call on nike that is shaping that stock today. With us for the hour. The host of cnbcs mad money jim cramer is here as well. Jim, its always good to have you. Thank you. We begin with our call of the day. Bank of america going to sell on nike sending those jim, i go to you first. They say competition is intensifying. Market share loss to