Transcripts For CNBC Squawk Box 20151007

The safety of the bridge but that wasnt enough to satisfy anybody that was on that. Wouldnt be enough to satisfy me if i was on it. This spans over a canyon 600 feet deep and almost 1,000 feet long. Its closed for repairs. This is the scary thing. Its just like what they did, the native americans did over the grand canyon. I knew engineers but i wasnt smart enough to be a mechanical engineer but i would think glass for a bridge, thats one of the things you dont sand for a bridge. Three little pigs. Exactly. How about steel. I think they should use steel. Talk about infrastructure issues. But wouldnt that be the first thing you would teach someone. Dont make the bridge out of glass. No i get it. Youre supposed to get scared looking down. It is an engineering marvel because its so long and theres no supports along the way. Its a suspension bridge. So from the top its down. See i didnt. Im basing that on pictures. I didnt even know what you were talking about. It was a tourist attraction. See i looked at that and i thought yeah, okay. So it is. Okay. Its scary but even at the time we said wow i dont know if id want to get up on that thing. I have a little bit of an aversion to heights. I know you do too. I do. More than a little bit but maybe they ran out of steel because of all the dumping they do in the World Markets in china of the steel. Its going to be tough. It is. Both on the democrat and the republican side. It is. We have someone today and its going to be interesting. Ben carson. No, a guy in the house. Just totally opposed to it. Interesting read. Youll see what i mean. Well get to the markets at this point. Lets check out and see how the futures are shaping up. Things are looking like theyre off to a positive start. We saw this yesterday and by the end of the day the markets were mixed. The dow was barely up. S p 500 and nasdaq were down. You can see this morning the futures are indicating a positive open. Dow futures up by 73 points. S p futures up by 8 points and the nasdaq you by 25. In todays top stories, inbev is raising its offer to buy sab miller for the third time. So yeah, the company made two prior bids in private. Inbev expects to have support from major sab shareholders and sab miller will formally consider the proposal but its caution the board already said it would reject an offer in this range even though its raised suggesting it still feels it undervalues the company. San francisco fed president jon williams, we should queue some music to make it more interesting. Okay. Thats good. Thats good. A lot to choose from. That might be good for the central bank. Raise rates. Some day. I dont know. Lets see what he said, anyway. This is important. Jon williams warns that the central bank should not raise rates when no one is expecting it. He argues the fed should be communicating its views of the economy well enough that markets will not be taken by surprise and in global news the bank of Japan Holding off on stimulus despite times of economic weakness in japan. In auto news, the uaw is threatening to strike at Fiat Chrysler plants as early as tonight. This would be the first work stoppage in the states sibs 2007. The union notifying the contract extension would end at midnight. They voted to reject a proposed new deal. It was overwhelmingly rejected even though the leadership of the union recommended that its membership vote for this so its a very contentious time and well see what happens. Also volkswagen said some of its vehicles sold in australia had Emissions Software as well. They will complete the fix by the end of the year but anybody looking for ring fencing here looks like not only other countries but other continents were involved as well. In stocks to watch this morning, adobe cut its full year forecast below analysts estimates. Among the reason, the strong dollar i was watching had a huge sell off and then paired those down much more than that. But you can see overall it was one of the last remaining obstetrics stocks really at an all time high. But it maybe was priced a little bit too much for there it is. Look at that. Went all the way down to 75. At one point it was down 10. It really does help to match cnbc in the afternoon at like 4 00. That is quite a he is quite a workhorse. Yeah. Long day. Nu skin cutting its revenue estimate to direct seller okay, skin care. It doesnt actually sell skin. Also blaming the strong dollar and weak sails of china. Saudi arabias Kingdom Holding doubling its stake in twitter paying 15 million. The investment if i recall is owned by the prince. Combine it together they hold more than 5 of the company. Another big stock mover, yum brands shares falling after the company missed on the top and the bottom lines. China comps coming in at 2 . That was far below expectations. They were closer to 9. 6 . As a result yum lowering its guidance. She is senior food and retail analyst at Deutsche Bank and this is not what anyone was anticipating. We thought china was going to be turning and and they had the reputational issues under control and its not the case. The issue was that on the last Earnings Call they hadnt left the supplier incident so the guidance was their best guess on what they thought the recovery would look like and the company had experienced incidents in the past they couldnt predict so we believe on faith the recovery would happen and it didnt. Its surprising to see it miss by that much though. Same store sales up 2 by the almost 10 the street had been anticipating when it came to china. Are you surprised they didnt give you anything ahead of time . On august 18th they announced the rebound had been significant when they announced the Senior Management change. It heightened expectations that the recovery was happening. It clearly was not 2 . They use a lot of different numbers to try to figure out the actual gdp usage of Raw Materials just to get an actual idea. We cant use chicken. Is this a larger commentary on china being worse in terms of the economy there . Or this is totally specific. You go to back september, the cfo of starbucks went out of his way to comment that china was strong. Yeah, tim cook. Steve jobs was on my mind. The steve jobs movie and everything. I didnt think so but you see something totally out of any range of expectations from china. Keep surprising on the down side. And both divisions are weak and i think also as mcdonalds also commented it turned positive in china. It seems to be Company Specific but i think the other issue is that profit in china was fairly strong given how weak the comps were so it begs the question on whether or not theres a pricing discount and maybe they should be looking to reinvest some of their cost savings and better pricing. Obviously this is a huge sell off and shares down by almost 70 . Is this a buying opportunity . Well learn more in terms of what the Management Team thinks was the cause of the mess. If you look at the valuation we havent revised their numbers yet but valuation is not that cheap. Its still trading at 12 times. Its not that cheap. The other thing i would say is that stock is probably overreacting a little bit. They were built in expectations. This is the second saturday night live guy they tried. It was darryl. And then he was like a short timer. I bet theyre rotating through a bunch. A bunch of fake Colonel Sanders . I think its part of the whole gimmick of who is the real colonel. Hes dead. Hes unavailable. I kind of like, have you seen where he gets hooked up to the Lie Detector Test and says are you the real Colonel Sanders and it just goes yes i have you not seen that . What are you watching . Just netflix . No, i dont watch that much tv. Kids, homework, lunch packing, dinner. I dont get to watch as much tv as you do. I dont i do. I proved it because i was watching closing bell yesterday. No its a great show. Thank you for coming in today. Thank you for having me. Anyway, lets check on the markets this morning. Way to sell it. Yeah. Was that the 6th straight session or the 5th straight . I want to say 5th but i could be wrong. Or maybe the day before was the first time five days in a row. I think so. Yesterday was six. The dow was up. Europe was strong. I saw some 1 plus in europe just in germany now. Shanghai is finally trading and it was up a little. It wasnt down. Waiting to see how that reacted. It what . Oh, it was closed again and okay so how long has it been closed . What is it . Whole week. Why . Golden week. For a whole week . I wouldnt close shanghai for a whole week. That would make me nervous. What happens when it opens, you mean . When people dont get to act on what they do for that long, theres talk later in the show about oil that had a huge move yesterday almost back to 50. The ten year is now down. Cant get out of its way at around two and change. And then finally gold, take a quick look. Investors are waiting to kick off earnings season and the dow had its third consecutive earning day. Lets bring in the ceo and cio at snead capital management. Since we saw the fed not move, that was scary based on shang i shanghai. Its off to the races again. Is it back to easy money . That might have been one of the great causes of the rally. We still remain a little cautious. We might retest the lows . We make new lows . Were still in a bull market. Were not going to go all the way back to a bear market. What would get us will earnings be good enough to convince people to come into the market . I hope so but i fear they may not be. Well probably get slightly positive Earnings Growth. The expectations are for a 2 drop in earnings but they have come in ahead of expectations for a couple of quarters. Theres a good chance well have slightly positive Earnings Growth for the year but the Overall Economic data, the ism data was fairly weak so i think were still in an upward trend but theres more uncertainty than even a few months ago. Its not a bad idea. So the s p was up thats one little down day in the dow. You can get every word that is up. Youre a multitasker. Unbelievable. Do you agree with most of that . Were always anxious to get better prices which we have had the chance to do in the last period. We just look back 35 years in the Investment Business so i always try to look at a similar circumstance and whenever you see a swift just indiscriminate decline like in late august and we look back at other situations and its about an 8 week time period. Even a 22 decline retested its low a couple of times and was all done by 8 weeks later but for two years the market rose and the market rose while everybody was scared to death. Were hoping we got that set up. Professional investors are scared and thats what this market lacked for the last year to year and a half. Although it was not so 1980, has it been that long for us . Yeah it has. 25 years. The three of us. Theres got to be some advantage from it. Really. There has to be some advantage. Living the history rather on this knowing it is helpful. To some extent thats probably true. Now can you remember the 80s then . Yeah. Do you remember the 70s how nothing is ever going to be good enough . Ill just give you one statistic helpful in that. The Federal Reserve started measuring the Household Debt Service Ratio in 1980 at the beginning of the year. That was the percentage of americans gross income that had to be spent to service their debt. When the treasuries were 15 americans were using a little bit more of their gross income but legendarily low levels because they couldnt afford to borrow the money or qualify either one. So for the last 14 quarters americans have been behaving like its a 20 prime Interest Rate which is not that big of a surprise because the largest population group, people between 23 and 33 right now have not yet bought a home or married and had children, et cetera. Is that a demographics issue . Its completely a demographics issue. You had a fast food analyst on earlier. She covers a sector thats hog heaven right now. Singles males all over the United States, wheres my dinner and theyre feasting on it. The problem is thats where the puck used to be. Where the puck is going to go thats what makes this such a bright picture the next five to ten years. They all start buying homes. But look, heres the numbers. 86 Million People between 20 and 39 years old. If 65 of them buy a home in the next ten years that is a million and a half, two million Housing Starts and worth 700,000 and by the way and your guest later is going to come in and tell you that he wants them all to live in his apartments. But you use 30 of your gross income to live in a apartment and 15 to buy the average house. Is there another golden age coming . Were still in a bull market. Just in general. 70 of the country thinks were going the wrong direction. I dont think so. You dont think 70 think that or you dont think that . I disagree with 70 of my country men. Growth is going to be slower. Population is older. So its an adjustment period were going through. I still think that were going to have good growth overtime and were still going to have rising stock prices overtime. Its just got as robust. Were not going to have you weve been saying this for over a year. Its more on less been true. The irony is a booming economy is it. Eds thoughts are spot on. You wont kill this thing dont egg him on. When we come back this morning, Oil Prices Rising as we get word that u. S. Production is starting to fall. First as we head to a break, heres a look back at this date in history. Crude oil stock hit 50 barrel. Fighting to a near 3 month high after forecasts of tighter supplies and talk of opec working together. Where oil is heading next. So in september, this is what you see, in september the us eia Oil Production dropped 120,000 barrels between september and august. Now the total drop since peak production is almost a half Million Barrels a day. People shut in because prices are coming back. It really is, joe. Its a reaction by the u. S. Oil industry to these crashing prices. I didnt think the production levels would come down this quickly but theyre doing it. We see the cut backs in capex. 20 on average for every company out there. Really globally. So there may not be a response to opec to the falling prices but theres certainly a reaction by the commercial interests. The jobs numbers and everything, this is pretty significant. They are big multiplier jobs as well. Like keystone does. Oh, never mind. Yeah, you know, towns spring up around you guys have that cnbc show or nbc has that show coming on. Its a fictional deal and reality based. Its what grows up in north dakota for example. Its a big deal. This reminds me of 1998 when prices crashed and we got put in a box in the u. S. Our production crashed never to return for the past couple of years now. Or the swing producer. The u. S. Oil industry is the swing producer. Its funny you say that. Not a government mandated deal. Does this mean saudi arabia has been successful because opec said forget it. Were not fog going to cut back. It looks like its working. Very much so, becky. This was their game plan from the beginning. Its like the theory that rockefeller employed back in the day to squeeze out your competition through lower production. We keep saying this time is different. It wouldnt work the same way because prices rise again and all of this production will come back online much more quickly. Is that true or not . It is true. The time frames are going to be compressed because theres a lot of wells that are set and ready to go basically and come right on to production plus theyre desperate for cash levels. As soon as it hits 50 or 60 i would expect to see monthly numbers jump again. At least 100,000 barrels or so. If you were in charge, what would you do . I would think at 60 that would be a great time to cut back and keep it that high and you could bring in the same amount of money really but if you did that then the u. S. Is going to start does opec just hold the line and stay at higher levels of production to try to keep the pressure on . Im concerned now that this half a million barrel or so a day downturn the saudis could stick it to us and that would send prices back up to 60 to 70. Quickly here. Theyre going to keep tpedal to the metal here for awhile and drain it here. I like your geopolitical conspiracy theories. Because of what the russians are doing right now that the saudis dont like whose side their on so russia is an oil economy so they can stick it if they express their displeasure with russia bombing the wrong guys they can keep Oil Production low. The saudi ambassador was saying exactly that. I dont think they could agree whether or not its sunny outside. They do not want assad in power. And the russians are in syria backing him up. And that whole situation there, you asked me whats keeping me up at night, the syrian situation is because of what can go wrong there in materials of contact between russia and u. S. Led coalition forces, bombing of industry there. What about the point. Exactly. One aspect of this price jump were experiencing right now is this talk that russia and the saudis were going to get together and cooperate. That is hogwash and will come out of this price to a degree rather quickly. Do you drink a lot of coffee late in the day . I drink it all day. That might be whats keeping you up at night. Fair enough. And the cocacolas too. De cafe. Its like nonalcoholic beer. Whats the point . When i was pregnant i stopped drinking caffeine. Why go back . All you get is the taste. Dont you fight the taste to enjoy the after effect . Thanks for coming in. When we come back this morning, why elon musk says he doesnt want to live forever. Plus what the worlds oldest woman eats every day. And a big day here at cnbc. Jal jay leno is back. He has a new series on primetime. Well join us today. Plus, heres what new jersey Chris Christie told us about his first ride. My first ride was a 1971 chevy burnt orange with a black vinyl roof. 110,000 miles on it when i bought it. It was a great ride to have for a high school senior. Jay lenos garage. Only on cnbc. What if there was a bank that didnt just ask members to save; but also helped them to save . That allowed families to keep more of their money; letting them use any atm nationwide for free. And, because every dollar matters, didnt nickelanddime its members with monthly fees. Saving them more than threehundred fortyfive Million Dollars in one year. That would be a different kind of bank. That would be usaa bank. Go online to find out more about our free usaa secure Checking Account today. Hi watson. Annabelle, your birthday is tomorrow. Im turning seven. What did you ask for . A princess. And a pony. You like things that begin with p. I like pink frosting too. Will you have a cake . Yeah. I was too sick to have one last year. The data your doctor shared shows you are healthy. Are you a doctor . No. I help doctors identify cancer treatments. I want to be a doctor someday. I can help with that too. Watson, i like you. Welcome back. Andrew is in california today. Hes there for the vanity fair summit. Thats where he talked to elon musk about everything from space travel to living forever. Do you think about genetics and longevity . Your friend larry paige is investing in a business hoping to end death. Im not a huge proponent of longevity. I think that having a good life for longer is better. Like you want to address the things that happen to you like dementia and so forth. Those are pretty important. But im not sure that i want to get into the genetics thing but its something that will fundamentally change humanity. You dont want to live forever so that you can get to mars . No. I definitely dont want to live forever . How many years do you want to live . I dont know. 100 good ones. 100 good ones. Or 11 more go00 more good ones. Youre 44. 100 good ones in total is fine. In other conversation highlights he told andrew he hopes donald trump doesnt win the republican combination and on the topic of jack dorsey being named twitter ceo musk wouldnt recommend running two Companies Even though he does himself. Okay. I want to live forever but thats just me. Live well forever. I want to live as long as i would be able to. Like a thousand years or longer. Is that it . Speaking of 100 years of life, guinness keeps track of the worlds oldest people and god bless this lady but it seems like something you need to keep pretty you need to keep an eye on it pretty quickly. You might be trying to figure it out every couple of weeks because the oldest lady right now, this is classic, she is susana. 116. She has eaten bacon every day of her life. She was born in 1899. On july 6th in montgomery. She had 11 siblings and she never had any kids but she loved kids and thats what, giving more than probably receiving is what keeps someone young but this is just the one thing ill say here, we have been sort of conditioned to think what is it nitrates or whatever, whats the perception of eating bacon . That its going to kill you. Exactly. So here, obviously theres a lot of and we just heard her talking about genetics with elon musk but a lot of things go into it and a lot of it is hereditary and this speaks to me. You remember my protectionism. Bacon. That we should not have sold the biggest bacon producer to a foreign country. You like oil. You want to keep oil here as a natural resource. I want to make sure that we have bacon here. Yeah. I want to make sure that we dont run out of bacon. If you are eat weigh con every day, good news from express scripts. They have agreed to go ahead and pay for two muscles drugs that lower artery clogging cholesterol. Theres been concerns about this all along. About the high prices of drugs. You know how some of them have been pushing back. These are drugs the top 14,000 dplrsa year and now theyre agreeing to cover two of these drugs. They will pay for one drug that comes from amgen. First of all, it negotiated a lower price for these and second of all you have to get approval from one of its pharmacists. They also say that price is right. This has been the big battle. Rising prices of drug costs that are just raised without any real reason. If there are massive price races they will get a rebate back from those drug companies. Theyre agreeing to cover it. Its good that youll get Pharmacy Benefit Management companies and pressure that they can exert Market Forces on the pharmaceutical companies and, you know, we make sure that we walk the line between the patent protection that allows companies to recoop their investment which is expensive because it takes 12 to 15 years. Its a shot in the dark. Exactly. So were going to talk about in the tpp theres a big argument about how long you would in theesz other countries because they might not have any patent protection, how long do you allow piologics. U. S. Wanted ten years and they settled on five. But the guy from the house opposing because its not zero. Zero . Zero. People in these developing countries should be and you have to think, so we may never develop another drug. Exactly. So you end up giving them theres no patent protection but theres no life saving drug to give them anyway. Look, its a tricky subject matter and i can argue both sides of a lot of these issues and i know you can too. Still to come this morning, ukraines finance minister will be joining us on set next. Later, billionaire investor and funny man jay leno will be here today. Here. Right here in studio with us. You know hes a life long car lover. Hes premiering a new show tonight. Hell give us a sneak peak still ahead. vo what does the world run on . It runs on optimism. Its what sparks ideas. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. The great beauty of owning a property is that you can create wealth through capital appreciation, and this has been denied to many South Africans for generations. This is an opportunity to right that wrong. The idea was to bring capital into the Affordable Housing space in south africa, with a fund that offers families of modest income safe and good accommodation. Citi got involved very early on and showed an enormous commitment. And that gave other investors confidence. Citis really unique, because they bring deep understanding of whats happening in africa. I really believe we only live once, and so you need to take an idea that you have and go for it. You have the opportunity to say, ive been part of the creation of over 27,000 units of housing, and to replicate this across the entire african continent. G20 finance ministers are meeting this week. One conversation that could have a big impact is the meeting between ukraines finance minister and her countier part. She joins us now. Thank you for coming back to set. Thank you for having me. Youre going to be there and one of the stories were watching is the conversation youre having with your russian counter part. Its about a euro bond due in december. Yes it is. That is part of our restructuring that we have agreed with and were right now in the Legal Process and my conversation will be about explaining the Legal Process and the options and the restructuring to the russian finance minister and encouraging them to participate. What are the odds given the relationship with russia and the shaky ceasefire that exists right now . Well im hopeful and i believe that its a good way to take what could be a very points higher political discussion and its probably the best route to take. A lot of people are speculating that russia came into this and was using this as an economic, holding it hostage economically. Do you think thats the case . Well i believe that first of all we have this opportunity to allow them to participate and if they wish to they can and it was very much political lending in the first place at the end of 2014 2013 president putin offered this in order to take ukraine off of its european path which we have clearly moved back to and clearly committed to. I think regardless of whether they participate or not the opportunity is what is important. Our good faith effort to make this happen is important. If they choose not to participate, what happens to the rest of the bailout . The entire package is indeed based on a restructuring. We will not be able to make a decision right away. Well proceed and take every day with care. I believe that in the legal documents of the restructuring we can continue to work with any hold out. They may not be the only hold out, to try to Reach Agreement that is npb neutral. Nothing better can be put on the table legally. Does that mean if you cant pay off the russians somehow the money materializes and deals separately. Thats correct. Most favorite creditor clause in the new bonds, in the exchange, it doesnt allow us to provide better terms including russian bond holders. That puts an awful lot of power in russia just in materials of being able to say were not going to go along with the deal. They can hold out. That doesnt stop the restructuring from going forward. As long as you have a majority of it . Its series by series, bond by bond. The russian bond is one of the 14. If they choose to hold out it may not be included but the other 14 can go forward. The bulk will be successful. What is the relationship in terms of the ceasefire . Well, we have returned to ma Macro Economic stability. We have seen the volatility of the currency disappear and rebuilt the reserves from 5 billion to 13 billion. We have reduced inflation tremendously and were looking at industrial decline. Its slowed. Were 3rd quarter to 1 growth and we turned the corner on the worse situation we faced yerlier this year. The ceasefire has been almost 40 days now and its the beginning hopefully of a path to peace. Gdp is still falling. But at a much slower pace. So month to month its hard to say what september is but were expecting a decrease of about 11 . Next year though because we feel we turn the corner were expecting growth of 2 and thats what the focus is. Return to growth. Return to consumer purchasing powers. Thank you for coming in. Thank you. Appreciate it. Coming up, the grateful dead and john mayer teaming up for another big show in new york. Its free but they hope it will raise a lot of money. Steve sits down with the musicia musicians. Do you remember him . No. Anyway, well have that hold the phone. Because at t and directv are now one which means you can access your dvr at the dmv. Change channels while he changes pants. You dont have to be a couch potato, you can be a train potato and let them watch all the shows they love, inside the ride that you really kind of hate. Introducing the all in one plan. Only from directv and at t. Oohhh no. Just the thought of quitting makes me want to light up. My World Without cigarettes . Huh. I say we take this one less cigarette at a time. Thats what im doing. And thats how zonnic helps me quit. With zonnic nicotine gum, one less cigarette is one more victory. Three great flavors. 3. 99 or less wherever cigarettes are sold. Zonnic. Every victory counts. Seen just about everything. This is what were talking about. Former members of the grateful dead teams up with American Express. Have they gone corporate . Have the hippies is that still used, that term . Its out there. Its not dead yet. Okay. Not dead yet. Not dead yet. The hippies sold out steve liesman, who sold out long ago. Absolutely. You are here to explain. Correspondent doesnt fit on the line. Correspondentee. Nobody made a career out of mocking the prompter like you have, joe. No. If the prompter didnt exist, youd have to invent it. Selling out in a matter of speaking for a good cause. Theres four members of the grateful dead joining up together, teaming up with rock star john mayer, calls themselves dead and company. Its part of a 21 show, 16 city tour, all for profit and fun, but they annoyanced a free share at Madison Square garden november 7 sponsored by American Express to benefit the Robin Hood Foundation. I asked yesterday in an interview about teaming up with a big company like ammex. There are now enough people high up enough in American Express who get what were up to and want to try to spread that around a little bit, and they have the ability to do that. Its not like weve drawn the line and said no corporate sponsorships or anything like that, but nobodys come to us with Something Like this with good ideas like this in the past, and like i said, this is the system working at its best. Guys, we talked about this, this idea of the former hippies, what happened to them . Theyve grown up, on wall street, all over the place, running corporations, running america. The hope here is, folks, the people who win the tickets, theres a sweep stakes for 5,000 pairs of tickets they donate to the Robin Hood Foundation and direct efforts at poverty in new york city, and that the fans watching on line in the approximate will also donate as well. Heres yeah . Heres the part now. Im not surprised about American Express. Im surprised with john mayer. A great guitar player. A great guitar play e and bobby and john played on another networks late show that i cant mention. They have a reputation of dont go there. Well, im just saying they both like this is a family show. They like lefthanded right handed guitars. They like the ladies big time. Its a family show, joe. People can like the ladies. I asked how he ended up playing with the dead. This is probably the most immersive incredible musical experience ive ever been a part of, but, in fact, i think its a really great opportunity to step out of that really sort of monologue solo artist thing, which i was not bored of it, but running out of new colors to paint to use sonically and idea wise so i actually get so much more out of it on a Community Level on a group sort of creative level than i give up, which is very small because its this really sort of nebulous democracy that takes place. Its more of a collective anarchy nebulous democracy . Yeah. I think mine is a little more p. C. So, folks, the real sellout here, the amazing part of this is these guys are selling tickets to 50yearold band of pranksters breaking records at the anniversary this summer and sold out two other shows in Madison Square garden. The amazing long liveliness of the grateful dead is amazing. They sell albums, merchandise, and having a good time and continue to explore. They played with tray from fish at the chicago shows and keep rolling in other musicians. Bill plays at the capital theater. Why he does 30 shows with our friend, pete, there. Is there bad blood . No. They said those are the last shows. Now they have to wait awhile to undo their retirement together. Right. They cant do it in the same year. Tour too . A few together, sure, nobody cares. Call in for a rebate for the show in chicago, no. Theyll operate together. The fans are happy to see the bands come back. To me whats good for us all is they continue to grow musically. John mayer and bob weir is a cool thing to listen to. It is. You heard about it . No, but i googled john mayer current squeeze and his 554,000 google results. I dont think thats i dont think that covers you think its light . The algorithms wrong. Steve, thank you. My pleasure. My pleasure. Here we go. When we come back this morning, we welcome our guest host, samzell, and jay leno is stopping by. The legendary comedian has a new show on cnbc that premiers tonight. First, though, hell share a laugh with us. At ally bank no branches equals great rates. Its a fact. Kind of like ordering wine equals pretending to know wine. Pinot noir, which means peanut of the night. Markets alert, earnings season, and sam zell is our guest host here to speak his mind on the u. S. Economy, politics, and the health of the Housing Market. A selloff in the shares of kfc and Taco Bell Parent Company yum brands. A dismal picture of economies recovering in china. Details ahead. Jay leno is opening his car collection on cnbc on jay le lenos garage, and cruises by the set this morning with a sneak peek of tonights premier. The second hour of squawk box starts right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back, everybody. This is squawk box here on cnbc, first in Business Worldwide, im becky quick with joe, and andrew is on assignment today. We are looking at a positive open this morning. At least rat this point, dow up 65 points, up triple digits earlier this morning, but Holding Gains at this point. S p futures up by 7 point, and nasdaq up by 22. Among the top stories this morning, shares of yum brands pummelled in the premarket trading, down 18 after reporting earnings and revenue well short of what wall street expected. 2 sales growth in china is what they had versus the expecting 9 . Thats why you see the shares under pressure this morning. Yum generates more than half the profit in china. Jane wells has more on the story at the bottom of the hour. Also, Anheiser Busch raised the offer to buy miller for the third time. The latest deal valid at over 100 billion. They made two prior bids in private, and they expect to have support from major shareholders. And sab miller will consider the proposal but cautions the board already said they would reject an offer in the raised range suggesting it undervalues the company. We have new details in the Fantasy Sports scandal. New York Attorney general eric sniderman launching an inquiry into the prospect that employees of the fantasy football sites won payouts not available to the general public. The attorney general asked draft kings and fan duel to provide internal data into the investigation. Draft kings pulled advertising from espn yesterday, and Sports Network is scaling back on draft king sponsored segments within its programming. Check this out. If you did not watch the tonight show last night, former host jay leno subbed in mid way through the monologue, and heres a look at the legendary comedian tonight show return. Thank you, thank you. You know a lot of people think when the republican field clears its jeb bush and trump, the race between the tortoise and the bad hair. [ laughter ] he had a lot of great jokes. I watched it on twitter. I was not up that late. But hes promoting jay lenos garage premiering tonight, and hes joining us here in ten minutes with a sneak preview of the show and Everything Else that he brings to the table. Yeah heres here in studio. He is. Right here, its great. Our guest host is real estate investor, sam zell, the grave dancer, for making money when Everything Else is falling. Lets see where hes finding opportunity today. Sam, its great to see you here this morning. Thank you. Thanks for coming in. Thank you for the invitation again. Last time, you talked about what you saw in the stock market, that things were due for correction, you thought, we have seen one, and i wonder if its a enough of a correction or if you are worried about the valuation . I think that there continues to be a significant disparity between reality and the stock market. I think the best example i can give you is last monday after the target was down 300 and everything was horrific. I looked at the screen, and i said, i dont think theres anything i want to buy. Even though we had a terrific correction last monday, i didnt see anything that jumped up saying, boy, thats value, and we subsequently had a recovery that i dont think fits any kind of economic judgment. You know, stock market is out of sync with whats going on on main street for a long time now. We saw you know who we had on earlier this week . Bernanke. Oh, yeah. He might have something to do with it a little bit. I read this. The coverage of the one of the speeches this week where he basically said that the fed saved the world. Right. Just for the record, he said that was not his headline, but the journal putting a headline on his oped and he disenvowed that headline. Someone asked me, whats the name of the book . A time for courage. Did someone else courage act, did someone else name the book too or was that his . Thats about the most humble. People thought he should have acted at the time and think the fed should be in the game. The big issue today is i dont see how anybody says its time to pass judgment. What inning are we in . A long way from understanding what the you know, the quantitative whatever really has moment. Were not out. Thats right. Through the whole process, are we halfway through the process or not . We have not extyet. And how much does it hurt . A lot of people think we may see another quantitative easing. Right. As the slow down continues. Right. What do you see on main street right now, in the regigel economy because theres so many conflicting views. I think what you see is that the economy is at the moment okay, but so much of the economy is predicated on what i call notary public Economic Issues. I mean, you know, you have San Francisco going nuts with oh cue p and rentals, and you have to ask who is paid by revenue, and theres money fuelling jobs out there like a lot of sub standard jobs that now qualify as being employed, but dont create any opportunity for these people to grow further. I think theres a significant, you know, missing demand. Not only in the United States, but worldwide. In the 64 hour question for any investor today is wheres the demand. We talked theres two kind of record numbers. 5. 1 is not a record, but its very low in terms of unemployment. 62 of the work force is there. Thats a record too. Yeah. And you got which one is more important in describing the overall situation . Theres a lot of people that think that its 62 if 38 of the people are finding it better to stay at home and collect larcollectss well, people have a problem with the term, but collect all the stuff you can get, obamacare, disability, food stamps, everything along with whats supposed to be a temporary safety net, thats a permanent way to live on 50,000 a year, why would you ever go have to buy gasoline, put on clothes, go to a job at 8 00 in the morning . Why would you leave that lifestyle . You would do that because you would have the expectation that you could earn a lot more. But not if you cant. Thats the problem. Right. The expectation has been reduced, and that has, you know, discouraged people from reaching out when they got p a welfare state protection what has the expectation has been reduced, what do you thinks causing that . In terms of what people can and expect to earn in the workplace . I think that the, you know, the world economy, not just the u. S. Economy is operating on slow. Everybodys talked about Wealth Redistribution, but you cant have Wealth Redistribution and growth at the same time. Wealth redistribution is basically regressive, and that is not how you build wealth. I think that the general theme is a leveling and a reducing of aspiration and reducing of productivity. Thats contrary to the long history of the United States, and why the United States has been as successful as it has been over the last 2 00 years. Weve been more successful for the last 50 years than the sort of democratic welfare state model of europe. Our gdp grew 4050 faster. Yes. There comes a point of no return where we become more we become that. We become more similar. Are we past the point of no return to get it back . No. No. We are . You cant take back any entitlement given has never. Taken back in the history of the world. I agree with that, and issue obviously, the answer is not talking back entitlements, but creating a growing environment. I think entitlements are a difficult issue, but i think regulation and inhibition of what id call growth, you know, growth animals is hurting our economy. Right. You know, we need a president who is out there, you know, encouraging everybody to take risk and go for it. Not a president who is waving his finger at the American Public. When bernanke was here the other day, he pointed out productivity is the problem. We hear this time and time again. What is happening . Is this something that can be changed, or how can we boost the productivity number . Well, i think we boost productivity by creating more opportunities for people who o excel, and, obviously, that goes back to your issue of regulation because regulation, artificially limits peoples ability to function and to go forward, and the cost to the economy is quite significant. You know, whether it be, you know, constant redefinition of wetlands or whatever it is or filing paperwork. There comes a time where you just say, im not even whatever it was you were going to try to take on in terms of venture, its not worth it. You know, you talk about growth, just take one bill, the doddfrank piece of legislation. The cost to the American Business community of complying with all of the crazy provisions of doddfrank is awesome, and it is a definitive impact on growth. Fortunately, sam is with us for the rest of the morning so we have a lot more time to talk to him about many issues, n including his read on health of the market. Jay lenos garage premiers tonight, and the legendary comedian is here for a sneak peek at the new series. Yeah is that live . Hi oh, my god. Look at that. Plus thats familiar. Thats the green room. Good. Thats a cool looking green room. Must be new, and representative Peter Defazio sounds off on president obamas transpacific trade deal and why he thinks its the biggest and worst trade deal in history. Squawk box will be right back. The economy is so bad in california, parents in Beverly Hills are forced to raise their own children. That never happens [ applause ] it is so bad in seattle, a guy was panhandling in prompt of starbucks, just to pay for his starbucks. Thats how bad. A priest, rabbi, and priest walked into a bar and burned it down just for the insurance money. Thats how bad it is. You saw someone with real breasts and a gucci, you never see that. You never see that how did i deliver that . Was that okay . Not as good as you. No, no, that was average. Id work on the delivery. Yeah. He was on for one night, subbed in for jimmy fallon in last nights monologue, and, jay, of course, the host of the tonight show on nbc for 22 years, and won almost every night, incredible. The new series jay lenos Garage Starts tonight. Since ive gone to color, its not the same. Does not have the effect of the black and white, but thats okay. You once took a pay cut of 50 , did you not . To 15 million. Well, yeah, but thats really not you did not take another pay cut from cnbc, did you . Stuck with your guns . Theres no pay at cnbc. Yeah, so, i gone all the way full circle. When i looked at the possibility of the show, and i didnt understand what you were going to do, but youre going to see reeves, and you two together, i have to see that, larry fishburn, tim allen, not just talking about cars. Actually, it is. Do they all have cars, right . They are enthusiast. Interesting thing is when you do the tonight show, theres a guest, you go through the publicist, and you cant ask this or dont ask about the cocaine arrest or about all the other things. When you call celebrities and go, look, dont ask about comedy, i wont ask about the movies, but well talk cars, motorcycles, whatever it is, oh, boy, they jump on board. It was just really a lot of fun. One of the most fascinating ones was frap sis ford copola because he does not do anything. When i called him, and hes a real car enthusiast, named after henry ford. Did you know that . I did not. Henry fords father played in the henry ford symphony orchestra. Ford had a radio show as industrialists did in the 30s and 40s, and you named your sons middle name after your employer. Hes Francis Ford Copola after henry ford. A really interesting story and fascinating to talk to. Its great youre back with the nbc family too. Well, thanks. And you picked cnbc. When i think im out, they pulled me back in. Which was Francis Ford Copola, i dont know, did he do the g3 . No, i dont think he did. No, i dont think he did. Thats way off. Yeah, yeah. He had a good roll for a while. Will you run out of celebrities that are into cars . Its not a celebrity driven show. Right. Celebrity with an automotive connection or funny story, they are part of the show, but paris hilton will not be on. Its not that, no. Sam and i used to ride motorcycles together. Thats what we hear. Looks like he should be president of keebler. I think id be a good troll . You look like you could hold a cookie and sell convincingly. I think i had too many of them. Well, there you go. Give us how many have you done . Well, weve done 8 shows now, an hour show, and well start a second series pretty soon. Do you get to do whatever you want, anything that strikes your fancy with this . Pretty much. I mean, im someone who was always when i did the tonight show, anyone could stop the train, but anybody on the staff who has an idea, a suggestion, its thrown out there. If its good, we use it, if not, we dont. Looking forward to it, and i hope it lasts a long time, and i hope you come back, because i love you being on the set with us, but can we talk about you. Talk about whatever you want. We can . What do you think of the late night wars now . Theres no war. Colbert . Hes good, very talented. I mean, im a jimmy guy because its nbc and i wanted jimmy to take over the show for me, so i like his show, but colbert is clever and smart. Interviewing a lot of ceos and business guests. We do that too. You think thats a way to approach this . I dont know. Its i applaud anybody who tries something different, and in late night tv, and, you know, its just another white guy at 11 30, thats not ground breaking. Right. But it would be interesting to get minority opinions and women in there too. Yeah. I mean, it is i think one of the magazines had a story of the late night host, and they are all guys. Does letterman like cars . Dave used to be a big car enthusiast. What do you think, guest on the no, probably not. Dave doesnt do those things. But you, i just read in print that that would have been fun of you to stop in, but you didnt. Daves show . No, i didnt do his show because i asked for our show, and he declined. I said, okay. Was there a response or no response . He didnt want to do it. Thats find. Theres no reason for me to do that show either. Then it wouldnt have been about the last show, but about jay and dave and all this nonsense, you know. I watch jimmy too, and i remember referencing as the worst show i saw was chevy chase. I tried to watch a couple of those, and thats when you respect you or jimmy because i never felt like i wanted to like i was there and needed to get under the chair or needed to crawl away or something because i felt so embarrassed and awkward. Jimmys got the same deal there, i think. You can tell when someones no good. . Jimmys closer to carson than anyone hosting the show. Hes boyish, funny, plays instruments, musical parodies. When i did the show, it was the political tone and monologue. Now we live in an age of viral videos, take a picture of your lunch, send it to everybody, and whoever it might be. Its different. He is really good at doing all the social media sufficietuff a. That was not my thing when i did it. What do you think of the political situation today . Theres a lot there. You get the government you deserve. Thats what i think. Equal opportunity and with i like the humiliate equally. Look at steven colbert, and all i see is left. You were equal opportunity. Is that the way to do it . Are they just responding to the environment now . Can anyone be funny . I mean, i always tried to be a comedian, and i remember years ago, deliberately booked myself into Oral Roberts University to see if i could play it. You realized they are the same as anybody else. They dont want anything alluding to sex jokes. Dont do that, okay, but politics, to me, i tried to go places where i perhaps was not welcome or not thought to do well, and thats the real test, i think, if the joke works. Comedians are lazlazy, you play the choir, preaching to the converted. I meet college kids, and why dont you try to do Something Else . Well, i dont like that crowd. What . Then youre not to me, you should have a broad base. Thats what i say. You call yourself a populous comedian, and trump is the politician. Trumps different. How would you deal with that . . Im not rounding up people humanely and kicking people out of the country. I dont want to build a wall. Would you do the show every night if bill clinton got back in the white house as first man . Well, clinton, obviously, was the golden age of comics. Calculated how many clinton jokes, like, 10,000. Well, thats because most people dont have middle east problems. Most people dont have nuclear weapons. Everybody knows a guy like bill. [ laughter ] you know, so, its easy to relate to, you know, its like peoples cars. People start barking dog in the yard, only i can follow that. If hes back, you consider two nights a week . Well, no, im not coming back, but, yeah, it would be fascinating. Thats great. Excellent to see you. Will you come back and update us every once in awhile . Yeah, just invite me. You havent invited me. And its good, also, not mentioning names, but you cant be mean spirited at night, can you . Thats not a good way to conduct well, it all depends where you are coming from. When you do a show like the tonight show, you need every guest, you know . Yeah, right. Trying to bash every one of nbcs competitors here. I have not got to conan yet. I have a funny story. When we went on, he said, this is going to be a hip show. You wont see Barry Manilow on this program. So, then four months go by, and im watching, i said, tomorrow night, Barry Manilow, so i call, oh, you want to see barry, and he broke out laughing because you realize you need every guest. You cant just say, im just going to do hip, cool film people, im just you need every single guest. You try to walk that line. Right. I love jimmy, but we miss you, obviously. Glad youre back here. Thanks, guys. You picked the right network. Thanks. Jay lenos garage premiers to be the at 10 p. M. Eastern and pacific on cnbc. Sounds like nbc, but its cnbc. We should have sam on a motorcycle. We can ride together. Book him right here. Going to break right now. Talking housing with the guest host, sam zell, but listen up, delays coming to a train route near you. Details after this. Well be right back. Time now for todays aflac trivia yes. Which popular cartoon character was the first to appear on a u. S. Post taj stamp . The answer when we continue. Aaflac aflaaac. Aaaaflaaaac. Someones sandbagging. Id be tired too. He paid my claim in one day when i got hurt. One day . Serious hustle. Serious duck. In just one day, we process, approve and pay. One day pay, only from aflac. Ah when a moment turns romantic why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. 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The network thats double its lte coverage in the past year. Our new extented range lte™ signal now reaches twice as far as before. And its 4x better in buildings. Want more . Get the lowest price on iphone 6s with tradein. Zero upfront and just 5 bucks a month with jump on demand™ get it now at tmobile. Now the answer to todays aflac trivia question. Which popular cartoon character was the first to appear on a u. S. Postage stamp . The answer, bugs bunny in 1997. Amtrak will suspend Train Service in december unless Congress Extends a deadline for safety technology. Theres a deadline for amtrak to implement speed safeguards and the company could likely meet the deadline for part of the northeast corridor, but a stretch in new york and connecticut will not make it in time. These safeguards were mandated by congress after a speeding train derailed near philadelphia last may. A new survey found nearly half of americans have no savings. The data found 28 of those surveyed had no money in the savings account, and additional 21 did not have a savings account at all, just 29 had 1 1 1000 or more many savings. Sam zell weighs in on the health of the market, and president obamas working to get democrats and republicans on board with the transpacific trade deal, and how the democratic congressman peter defaz owe calls it the worst deal in history. Thats saying something. Why he says so. As we go to break, look at u. S. Equity futures. Hello, ken jennings. I havent seen you since that tv quiz show. Hello, watson. You can see now . I can recognize people, analyze images and watch movies. Well i wrote a few books, did a speaking tour, i. Ive been helping people plan for retirement. And i help doctors identify cancer treatments. Is that all . I recently learned japanese. Yeah, i was being sarcastic. I havent learned sarcasm yet. I can help with that. Welcome back, everybody. This is cnbc, first in Business Worldwide. We have new data on housing released moments ago. We have the details of the monthly Mortgage Applications report. Diana . Reporter becky, it was a huge weekly jump total Mortgage Application volume surging over 25 compared to the previous week, but there were two distinct drivers. First, a big dip in Interest Rates after the jobs report, and then anxiety over Disclosure Rules that went into effect over the weekend. Lenders and aepgts pu agents put applications in before the deadline. Up 25. 5 , and purchase application volume up 27 , putting purchase applications at the highest level in five years in all of this according to the Mortgage Bankers association. This as the average contract Interest Rate on the popular 30year fixed mortgage fell to 3. 99 from 4. 08, but that was the weeks average. There was lenders friday in the 3. 6 range, and you can get a lot of applications came in on friday, and just one more note of perspective on this, Mortgage Application volume is less than half of what it was during the housing boom from 2005 to 2007. Becky . Thank you very much. Our guest host is real estate titan sam zell, and we want his take on housing, the health of the u. S. Economy, and, sam, yesterday, we talked with sternlicht, and he looks at realize thinks things are well and real estate in particular picked up. Whats the sense you get of whats happening right now around the nation in. Well, i think as a nation, particularly as it relates to housing, were going through a pretty serious change in the definition of whats appropriate and what works. I would call it a desuburbanization of america. Really . If you pick the town of post world war ii where everybody ran to the suburbs, today, particularly the deferral of marriage, the demographics are changing, the cities are urbanized. I mean, here we are, what is this . The eighth year of the recovery or something . And we are still building only 50 of the houses that we built on average for the last 20 years. So we built, you know, building half the amount, so the reality is that the demand is down, and the demand is down because you dont have kids getting out of college and buying a house and, you know, they are getting out of college, moving to new york or chicago or San Francisco and living in our apartments. We had a guest who joined us earlier this morning pointing out that the demographic trends are what you pointed out because were on the cusp of seeing a new wave of home buying, theres 80 Million People between the ages of 28 and 39, and most between 23, and most have been delayed by the economic slow down, slower to buy homes, but thinks they will do that. What do you say to that idea . I dont think theres any statistical verification of that perception. What weve seen more of is a renaissance to commit and take on long term obligations. Described as a mill len yal today is more interested in experience than assets so the idea of, quote, getting a house, i dont think has anywhere near the sense of urgency that it had. Everybody else grew up someday, sam, didnt they . Sooner or later they say, all right, i want a wife, i want kids, i want a house. Selfabsorbed forever . No, no, but i think they can have wives, kids, and stay in the city. Stay in the city, huh . Yeah. How many new Charter Schools are in the United States. Gh right. You know, i mean, weve changed the game dramatically. 25 years ago, the option to stay in chicago for living in the city were very limited once you had children, but thats a scenario that changed dramatical dramatically, and not just chicago, but across the country. Its all about, you know, where do people want to live, and what kind of an experience do they want to have. If they if theyve in effect moved into a 24 7 city and lived there from 2329 and now getting married, im not really im not really sure they want to go live in the suburbs and watch the grass grow. Be on your electronics in the apartment in the city and never have to leave. You dont need to leave the house, which is what the millennials do they ever leave . New york may be a different city. Do you think new yorks different than other cities like a chicago or l. A. . Sure. Although even in, like, si e detroit. Much more livable cities. They are coming back. In new york city, its not a question do they leave, but its a question of they are almost never in their apartments, and they are at starbucks, theyre at the gym, on the roof participating in whatevers going on. Experiences. On the way to the subway, and so thats why, you know, housing in new york is much smaller, much more exceptive, but even though, much smaller because people, at least our base spends dramatically less amount of time inside their apartments than they used to. So, if you look at that, if you look at housing overall, we tried to get a feel for if things are turning a corner, and, again, this is antedotal evidence, what we heard from ceo of Toll Brothers and all who come on say it feels better than it has been up to any point. Do you agree with that . Oh, maybe. Maybe, yeah. You started with a great term this term, right . Right. How many times have we heard this time, at least twice a year. I mean, im not suggesting the Housing Market is negative. The multifamily market is fabulous. I mean, weve never had a period where multifamily demand was as strong as it is today, and, obviously, instead of buying houses, they are renting apartments, and they are altering where they are living. Okay. Again, sam zells with us the rest of the morning, and we have a lot more to talk about with him, talking about his take on the president ial race and much more. Coming up, president obama making the case for the Transpacific Partnership trade deal, but not all democrats are on board. Peter defazio calls it the worst trade deal in history. Hes joining us next from washington. Actions. They speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. We heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple, unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. The largest trade deal in history, bringing together 12 countries accounting for over 40 of the worlds economy including the u. S. And japan, but not all democrats stand bhiep the president or republicans are either. And this partnership, our next guest called it the worst trade deal in history, and oregon democratic congressman Peter Defazio is joining us on why the deal is bad for america. Primarily its bad for america or industries in oregon that would be affected . I know all politics are local, congressman. Whats the main contention that makes this so bad . Because it builds on failed past trade policies, particularly, this mirrors what we did in korea, well, the trade deficit is up 14 billion with korea, and those thought they would be big winners like oregon settlement, like, woah, our exports to korea are down. These deals are to create winners and losers, generally in the case of the tpp, fa pharmaceuticals hoped to be a winner, may be, were not sure over the provisions for them, and they choose losers, autos, auto parts are losers. Were sacrificing manufacturing, dairys a loser, and, basically, our Consumer Protections. We just lost a case under nafta with a stronger isds, that is, private court for corporations to challenge our laws, saying we cannot require the labeling of country origin of meat. Think about that for a second. In vietnam, they grow shrimp in excrement, in saw waj, and when they are grown, they dump in tons of antibiotics to kill off all the bacteria and things in there. We cant say, this is shrimp from vietnam grown in excrement. We have to say shrimp is shrimp. A lot of times, you know, i did the ben franklin clothes, put benefits on one side and negatives on the other. In a trade deal, you can do that. Right. In terms of adding to global gdp adds 285 billion to global gdp over ten years. We dont have tar tariffs and taxes in the country anymore, but theres 18,000 places where we sell where they do have these things, so the majority of bringing down the barriers will be in places where we export this deal is not about that. They are insignificant trade, you know, tariffs in this. This is about, for instance, were not going to deal with currency manipulation, allowing the japanese to keep currency low, they have now country of origin for auto parts, so the auto parts industry is gone. Ford objects because theres no currency in there. Its another lose forget u. S. Boeing likes the deal. You said the pharmaceutical companies are in the big winners, five years rather than 12 years. Five plus. Five plus rather than 12, but the arch bilogic takes 1215 years of production to recoop the investment. If our past trade policies worked so well, why run a massive and growing trade deficit . Why is korea a 14 billion increase. Were the wealthiest country in the world and import more than we export. Borrowing more than the rest of the world. A good problem to have, congressman. Would you you have a problem with the devils in the details, or are you do you think that free trade has been historically a negative development for the planet and for the United States . Do you not see that free trade go ahead. It devils in the details. You agree with capitalism . I studied economic at the graduate level, but this is not free trade. All right . These deals pick winners and losers. Look, the europeans say no way do we have private courts staffed by private lawyers making irrevocable unappealable decisions about hoour laws. In the Transpacific Partnership, its in there. Oh, we cared for the worst parts of that, dont worry. We have not seen those details, but that one thing is so egregious and its so egregious that australia wants out. We dont know if they get out or not we know they said the Tobacco Industry cant do it. The democratic president and democratic negotiators put this deal together. I dont if you call him a democrat, i dont know if he is, but in the same bane of every representative from reagan to anybody else. Yeah, sure. The president acted like every other president. He was going to get trade when he took over, and renegotiate nafta. Oops, we didnt do that, did we. Same with clinton, well get tough on china, oh, they get favored status. Once in office, they are taken over by the special trade representative, the multinational corporate interests who win big while we lose jobs. Is it a good idea to give up auto parts and jobs to japan . I dont think so. American workers do not think so. The American Public is catching on. This is the last trade deal because its a living agreement, and anybody who wants to can say, hey, well abide by it, chinas indicated interest, and they can come in with no further action by congress because the American People catch on that these deals are losers for this country, for the middle class, for the Manufacturing Base and host of other things. Maybe the Consumer Protection laws, and they dont want more of it. This is the last one. They say, well, after this, it never goes back to congress, were done. I think that, congressman, since world war ii, the growth in the world has been directly related to free trade and growing trade. Sure. We used to have that. The challenge is we have to keep babbling these issues, not every agreement is perfect, but without a continuing, growing trade, the world will, basically, stop growing, and will go back to a bartering system, and every deal has pluses and minuses. Sure. We have to be a leader in comparative advantage, and thats what free today is about. Oh, comparative advantage. You know, when you deal with that was a theory more than 250 years ago when labor was not mobile, when capital was not mobile, and you could grow weed in a place with a warm climate and grow Something Else here, and you traded. That was comparative advantage. Its not comparative advantage anymore, but a race to the bottom. Find the cheapest, most exploitable labor in the world, where . Happens to be in vietnam now, so vietnam will be part of this with no enforcement menment on provisions and can ship parts from china, all sorts of things through their stateowned enterprises, communism enterprises, to compete with free market american capitalist companies. Thats going to work out well. So far its not worked out well in terms of china, and its not going to work in vietnam. The cpi could have been higher over the past 25 years if, you know, we had not been able to import goods and services at much lower prices. I just its almost like standing in the way of its almost like higher prices, you dont have a job. Thats a deal. We haved to do things better here. We can. We need the policies. The level playing field, guys. Dont close the borders and say were not closing the borders. We have to do things better. Not this corporate version of the free trade. Were not supporting the president , congressman. Appreciate your time. I support him when hes right, but hes wrong on this one. Okay, thank you. Thats the one time hes been right, i think. Shares of kfc and parent company, yum brands, plummet after the companys earnings missed expectations. Sales in china weaker than expected, and we have full analysis from jane wells after this. charge music you wouldnt hire an organist without hearing them first. Charge so why would you invest without checking brokercheck . Check your broker with brokercheck. Welcome, everybody. Shares of yum brands tumbling after releasing Third Quarter results. Jane wells is here with more on the story. Jane, good morning. Reporter hey, becky. Yeah, yum has explaining to do. Im looking at the reports from analysts and other embarrassing print, is it time for a new structure . Yum promised a bucket of good news in the second half, but delivered something finger licking ugly from china, half the revenue, same store sales grew 2 , but with the costs, they were supposed to bounce back 10 . Sales were not end proving, but a stronger dollar means the Company Misses the full year goals of 10 . The u. S. Is yums second biggest market. Picture is brighter, taco bell better than expected, margins better than expected, and on the call, perhaps, we learn more about the new cantina with tapas and booze. Are the ads making a difference creating buzz . One interesting thing, hours before earnings we released, kfc sent me a Colonel Sanders superhero comic coming out from marvel comics. They may need help on the call with analysts with a 7 cents miss, 7 miss on revenue, report after report saying, what, isnt china macro . Local competition in china . Goldman sackhs, wrote, quote, w see growing credibility problems, and the call starts in an hour and 20 minutes. Ill be listening, back to you. An analyst said the company had guided higher than august calls throwing everybody off. Saying sales were strong. Yep. No hint, no forecast or anything to analysts that the quarter was terrible, especially in the beginning. Right. Jane, thank you. Great to see you. See ya, thanks. President ial politics, talking to dr. Ben carson. Hes been maintaining second place standing in iowa, and latest journal poll, dr. Carson is joining us on set. His take on taxes and the economy straight ahead. Stocks ready for another strong open, is the rally for real or corporate earnings damper the strong run . The race for the white house, ben carson joining us on what matters to your money, free markets, economy, and taxes. Vw dealerships up in arms over diesel deception and why one dealer says its worse than the madoff scandal. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back, first in Business Worldwide, im joe kernen with becky quick, we are 90 minutes from the opening bell on wall street. Futures right now are indicated up about 87 points on the dow or so, and almost 10 points on the s p, and the nasdaq is going to at least, so far, by indications, get back up to from the big losses yesterday. Theres been a good run in the s p and dow. Theres been, you know, little pullbacks specific to the averages, but weve had four or five pretty good sessions since that scary jobs number suddenly turned into bad news is good again because were back at 0. They are staying at 0. Theres the european markets this morning up 1 in germany, and between a half and 1 in the ftse and in the cac. Becky . The other stories that investors will be talking about today. Mortgage applications surging 25 in the last week. Among the reasons, a push to get applications in before new Disclosure Rules go in effect. Pure storage pricing ipo at 17 a share. The middle of the expected range, right in the level, the memory Storage Company set to start trading today on the New York Stock Exchange under the symbol tspg. They are coming up at 10 00 eastern time. And digicel withdraws the ipo plans citing emerging markets and was expected to raise 2 billion. Stocks on the move, constellation br Constellation Brands earned 1. 56 a share, 24 cents above predictions, and shares of ann hawaiier busch are on the rise, launching a bid for rival sabmiller, sabmiller says the board will consider the bid, but adds the offer is slightly higher than a prior formal proposal that it considered was too low at the time. Well see. Stocks appointmenting to a stronger open this morning as mentioned, and over the last week, the market rallied 4 . Tom lee joins us, the managing partner and leading researcher say the recent move thats been higher looks to stick, and thinks more upside is ahead. Tom, thanks for being here this morning. Thanks for having me. Youve been positive for a while, and sam zell is here and expects a correction in the stock market like weve seen and worries about the stock market being connected to reality at this point. You know, i think thats a fair point, and ive heard that from a lot of clients. You know, they look this year, look, earnings have not been great, and, you know, we got problems developing in emerging markets, why should equities be where they are . I think its, you know, i think those are fair criticisms, but what we have to look at is where what are markets telling us about growth . Theres interesting things, recently, which is resource stocks are acting better. I think weve seen a transition towards value, things like old tech are rallying, and housing, and i think this points to the idea that the u. S. May actually be the epicenter where growth starts to accelerate. Is that saying that you only like particular areas of the stock market and youre no longer liking the overall averages . Actually, i think that the u. S. Growth is taking over from china is actually a very bullish story for the overall s p 500. It means we still like the market. Theres a transition where old tech industrials start to come back as the dollar starts to flatten, and its really a transition in the market, but its a bullish overall. I dont want to boy, i dont think yeah, thats a great theory and you believe in the tooth fairy, too, im sure. Wait, theres no tooth fairy . There is not, as a matter of fact. What did Growth Numbers were stepping into chinas shoes as the growth leer of the world . Oh, i dont think so. You have not talked about the strong dollar is which killing multinational companies. Well, you know, again, were at a very important transition because choi that has been important over the last temperature years, but the analogies to 89 are pretty solid, you know, in 1989, japan was 15 of the global gdp, the single biggest driver over a ten year period, out performing u. S. Growth, a huge driver of import goods and services, but when japan began to slow in 89, that was exactly the year that u. S. Investment spending had hit a 50year low. In other words, we had Capital Stock that was old, housing was actually at about the level it is today starts, and because we saw the capital close out in japan, it was bullish for the u. S. We are in a similar transition. If you look at every decade since 1940, the u. S. Was the single biggest contributor to temperature year growth in every decade other than the past ten years. We thought they were leaning towards indicating they were about to do that, but from Anheiser Busch . We said in the headlines they are considering yeah, 802 they considered, and 804 they rejected it. Tom, go ahead. You said you think this picks up. One of sams points was we could be looking at slower Global Growth for some time to come, not just the United States, but look at all the developing markets as well, you could be looking at a serious slow growth picture. Yes. Look, those are really well reasoned arguments and what we hear from clients all the time, and thats priced into markets, right . Weve seen a real concern about Global Growth and idea that theres a lot of debt to dollar, strengthening, movements in currency are a huge issue for the debtors, but, you know, the u. S. Was at this place to begin in 89. Whenever investment spending is low, it doesnt mark the end of the growth, but its a mid cycle change. I do think growth is going to accelerate. For instance, theres something that you cant argue against the the long term yield curve has been steepening, all year, 18 month high. Its signalled higher growth almost in every case. So i think, you know, we should be more constructive about what the u. S. Can generate. Takes two sides to make a market. Tom, thank you very much. Dpl thank you. All right. Earnings season is underway next week. Third Quarter Results from the big banks. We cant get enough of that when they report. Tuesday kicks you have with jpmori gap, wednesday, bank of america, and write this down, wells fargo also on wednesday, and the list goes on. Today, Institutional Investor releases its American Research team, list of analysts of the year, and john mcdonald, analyst is ranked number one among bank analysts, congrat, and welcome to the show. Let me ask you, the fed not moving, were all planning on someday making a lot more money from a yield curve. Did you ratchet down again expectations for the Money Center Banks based on no action there . Thanks, joe. Yes, we did. We reduced our estimates about 2 23 for next year. As you mentioned, bank stocks are in a Holding Pattern right now, a proxy for Interest Rates. The stocks have been bouncing around with rate, and right now, the Balance Sheets are in great shape, record levels of liquidity, capital, and reserves, but Earnings Growth is sluggish, and environment of low rates where the economy is growing 23 . Good Balance Sheets, Earnings Growth are sluggish now. What does that mean . Does that mean you hold if you got them . Dont make any new purchases . Are you recommending you buy these base it could be october, right . No. Could be december . Could it be december when the fed moves . Yeah. We you have good optionalty to win rates up, and meantime, 2 2. 5 dividend yield, and economies grow 23 , you grow 45 , its not exciting, but theres growth with options to accelerate when rates rise. Valuations are reasonable, Money Center Banks trading at 9 earnings, and regionals at 1112 . Its time to take a look and make purchases on waebness. We like jp morgan, gaining shares in credit cards, retail, investment banking, 2. 5 yield there. Theres attractive values out there. Must be. Trying to think of the big worry that you would have. Its not really europe anymore. Its not bad credit. Its not i mean, everything is moving your way. You need that one last thing, and thats a better yield curve, but at this point, steams like theres not a whole lot of trouble on the horizon for the guys. Regulations maybe. Yeah. Again, thats why we characterize it as running in place right now. Good thing is the issues globally, most of the u. S. Banks are domestically driven so you really are dependent on what happens in the United States. The big fear would be if we dont get help on Interest Rate fund and start to see the signs of a credit cycle worsening. We dont see that right now. Corporate Balance Sheets are in good shape. Our credits not getting better, but its stable right now, so, again, i think you have a situation where the banks are in good shape with positive optionality when stocks rise. Theres consolidation, any plays there . What would you buy . Most of the large cap banks we follow are not going to be too involved in m a. We do think theres quality names out there that you can buy and hold. Suptrust, u. S. Bank, wells fargo, all very good Quality Super regional, and then we think deliver mid single digit growth, decent dividend yes, 510 total return. M a comes slowly back. Banks are concerned about legal risk when they buy another bank. They are concerned about the regulatory scrutiny theyll get if they do an acquisition, and were all thinking about what the role of bank branchs are in the future, and if youre a bank thinking of buying another banks branchs, you dont know if you are buying block buster stores, but refit them to make them look like the apple store and put money in. The value of buy other banks branchs is questioned. Thanks. What do you get for being number one in the all american thing . Get money . A trophy or anything . No. I get invited to come on tv. Jelly of the month club or something . You get absolutely nothing for that . Really . Im not sure. Well see. I get a lot of emails saying congrats. Anyway, i think you should. Thanks, john, see ya. Thank you, guys. All right. When we come jelly of the month club is from . Christmas vacation. Its the gift that keeps on giving. Thank you, randy, whatever the name was. Cousin eddy. The name is . Randy quaid. Hes a whacko. Thoughts on whether trump wins the nomination and biden effect on Hillary Clintons campaign. Coming up, dr. Ben carson joining us, talking Economic Issues and the recent surge in the polls. Well be right back. Actions. They speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back, everybody. The vanity fair summit is taking place in San Francisco where andrew is talking business with envesters and entrepreneurs, and he caught up with mark and asked about the president ial race, and, in particular, Carly Fiorina. Im a fans. I would certainly vote for her for president , a lot more business experience than anybody else on stage. Shes operated in the real world. One of the hypothetical questions is swap her and Hillary Clinton, but who does a better job of ceo and who is better at secretary of state . Thats an interesting thought experiment. He was on the hp board and wooed her to join. Talk about crying when he said that . Unbelievable. Ive been telling him that. Someone with the worst ceo in the world would be better than the career not saying she was, but better than the career politici politician, right, sam . Thats right. Every decision was bad because of compact . Hes on the board of hp and person responsible for bringing meg whitman into the position. Classic. We have not talked in term the of the president ial election and how its shaping up. Youre a republican. What do you think of the field at this point . I think its too big. Too many players. Most of which have no chance. I dont know whether were going to see a repeat of what weve seen for the last couple of months of, you know, support for nonpeople with notary publngove experience. We have one coming on. Yes, i know. Ben carson. I dont know the answer to that. I generally believe that the American People would be pretty red sent to nomination and elect someone without experience. The last one was . Obama. No. No, i mean he was a senator. Dwight d. Eisenhower was the total outsider, but he was a war hero. Made only one vote in the entire senator career or something. So i dont think he was if thats the argument, americans want an outsider if thats the case youre making. The point, at the moment, thats what you are seeing because i think the American People are really pissed off, and i think that they are responding to anything thats different, but theres a lot way between the cup over the lip, and i think, you know, well see a lot of different scenarios between now and, you know, whatever it is, february 1st, the first iowa conference. First caucus. Right. It does feel different this time around. Feels like theres something on the right and left. Democrats are dealing with this too. Yeah, but, you know, what was it, four years ago, at this time herman cane was leading in the polls. Come on. Mitt romney of never as low as any of the traditional candidates youre talking about at this point. Thats true. Maybe its because the field is bigger. I was going to say the field is bigger, and he really didnt have a feel i mean, the nongovernmental people are pretty competent and pretty, you know, vocal, and thats kind of different than somebody way out someplace yelling in. I think, frankly, the Television Coverage has only promoted all of these people, and i think that over the next few months, i think the field narrows down. I think, you know, perry and walker are gone. I got to believe that huckabee and santorum and others, they are not registering at all, and i cant imagine they want to waste time pursuing something. Anyone you wouldnt vote for . Or is there anyone youd vote for, Hillary Clinton or joe biden, would you vote for either of those versus a republican candidate . I think thats too hypothetical a question. Yeah. Obviously, there are some people who are running on the republican side of the ticket who i could not support. Whether the definition of couldnt support amounted to a willingness how many . Who . Yeah. A few. I mean, probably, you know, five or six of them. That you couldnt support . Yeah. Who could you . I could support casic, rubio, jeb bush. Christie . I know him, i like him, but hes damaged goods. Because of the bridge is. Oh, no, hes the governor of new jersey. Hes in a blue state with a blue legislator. Had had a chance to be president of the United States in 2012. Said he was not ready. Said he was not ready, and now four more years of running the jersey, and after that, you cant be elected to anything. In terms of who you would not support, i sense a reluctance. Im not in the business of picking winners and losers, but i view myself as an economic conservative and a social liberal with a number of people who have positions on social issues that are totally and unequivocally unacceptable. Rubio . Well, i think thats right. He has one of the issues, but as opposed to, you know, i mean, the answer is just about the free trade agreement, i cant pick everyone. Its Carly Fiorina you couldnt support because shes an outsider . No, i didnt say that was the standard. Oh. I dont know when i could support carly at this point. I dont think anybodys seen enough of her and listened to her. Youre going to get a chance to tell dr. Ben carson whether you can support him in minutes. Yeah, thats right. Based on what i heard so far, id have a rough time both on the social issues and gun control, and not that im a big advocate of i am an advocate of gun control. Trump not an issue on the social issues. I never really used the definition of bonafied. Whats the problem with trump . I didnt say i have a problem. Do you have a problem . Its a slippery slope. I keep trying to press on mercury. You want me to talk slower. [ laughter ] no, i dont think thats going to help. [ laughter ] i know don. I think don is a very accomplished person. I think that everybody would be making a very big mistake to underestimate him. Right. On the other hand, i doubt he has the temperament and personality to be the president the United States. Does president obama have the temperament and personality . Clearly not in me opinion, but i think the answer is frankly, i have a great deal of trouble believing why donald trump would want to do this. I mean, i just you know you mean he has a good life already . A good life already says he wants to make America Great again. I saw him last night talking. Thats the great statement. I want to make America Great too cant believe hes a politician . And in Donald Trumps world, he took over the ice skating rink and got rid of the rules and got a duck. You cant become the president of the United States and throw out the rules because everybody else has an interest. Thats a very different set of things. Right. Very different definition of power. Talking more in a moment, but when we come back, a long time volkswagen dealer calls the companys diesel deception a fraud that makes Bernie Madoff look like the minor leagues. Thats coming up. Ben carson, a special guest, talking the economy, his tax plan, and the race for the white house. Well be right back. Tomorrow, the House Commerce Committee is grilling vw executives over the emissions investigation, and long time dealers are curious as to what the company has to say since they have not heard much on the recent scandal. Phil lebeau has more on what dealers are saying, phil, what are they saying . Joe, we heard from a lot of angry vw diesel vehicle owners, but we have not heard a whole lot from owners of dealerships as angry as steve caliber with a dealership in new jersey. He said, look, vw committed fraud, major fraud, in his opinion. Hes on a slew of diesel models, he can want sell now because the stop sale order, and to put it in perspective, the level of fraud that he has seen here committed by the Company Whose vehicles hes selling, he said you have to look at Bernie Madoff. This scandal, this fraud makes madoff look like the my yo minor leagues. That is just one of the comments from him. Look at the favorability of models. Looking at the recent rating, down 12. 8 favoriteability rating. Who knows what it is in november and december. Look at what vw of america executives face on capitol hill, we talked to them yesterday and asked about the comments, and dealer and Customer Satisfaction is a top pry priority. As such, we are working actively to address the immediate needs of the nationwide dealer body. Look at shares of vw, lost basically more than 30 in the last month, we asked steve, are you going to sell your dealership . Are you going to sue vw . Whats next . He said, im not sure, but i want a facetoface meeting with people in germany to know what they were thinking when the situation developed and when the fraud was committed. Guys, back to you. All right, phil, thank you. Interesting perception and valid looking at what happens. A programming noept for you, cnbcs newest must see program on prime time is jay lenos garage prehering here at 10 00 p. M. Eastern and pacific here on cnbc. Well talk free markets, the nations debt, and how he wants to cut spending many washington. Right now, as we break, u. S. Equity futures higher all morning. Right now, the dow would open up 85 points, and dow close up to 10. Well be right back. t order szn without checking the spice level. It really opens the passages. Waiter. Water. So why would you invest without checking brokercheck . Check your broker with brokercheck. We are just three weeks from the cnbc gop president ial debate, and trump is the front runner in many polls, and dr. Ben carson firmly in sec. I saw in first in in polls, but pleased to say dr. Ben carson, also author of the new book a perfect union, doctor, great to see you. Thank you. Welcome. So we had and more perfect union, by the way. Oh, sorry, more perfect union. Ben bernanke was on earlier this week and have not begun to raise Interest Rates, nine years since we had an Interest Rate increase, and yet the latest jobs numbers disappointing, and were at 62 of participation in the work force. What do you attribute the worst recovery in a couple of, probably, decades . What do you attribute that to, and what would you do to change that . Well, fist of all, you know, historically, you know, our economy grew at a rate of 3. 3 on until 2000, from 20012014, it grew at 1. 8 . Thats a major difference. If you project that over 20 y r years at 1. 8, thats a huge difference. Many economists tell you reaching 90 , theres sluggishness. Were at 103 right now. Those things are detrimental. Looking at an 18 trillion plus National Debt, i see janet yelp doing the right thing, trying to raise the rate, but what is the debt service if you get to a normal Interest Rate . Right now you talk about 250 billion. Youre going to be approaching a trillion dollars. Thats a hard place to be. Who does that affect . The middle class and poor people because it used to be joe the butcher could put 5 of the check in the bank and watch it grow over a decade and retire with a nice nest egg. Just cant do that anymore. Not having that kind of thing. The only thing making money, risk tolerance, those wealthy people can go in the starlight and, thu, you see the income cap growing. This is a horrible situation that we have created, and our National Debt has just about been doubled during this administration. These are the policies that are hurting people. You can take every penny from the top 1 and apply it to our fiscal gap, and you will barely make a dernt. Its the wrong argument. Go ahead. If you were president , what do we do . A number of things. First of all, kick start. What i would do is declare a six month tech hiatus for the 2 billion overseas and repatriate the money. Tax it at all coming back . 0. However, i would stipulate that 10 of it had to be used in enterprise zones that are set up in major cities or create jobs for people unemployed and on welfare. You want to talk stimulus . That would be the biggest stimulus since the new deal of fdr and does not cost taxpayers a penny. Be careful, becky is taking notes, and hes at the debate. Anything you see here, youve got, one, two, its written down here. Excellent. Okay. Im delighted. No, im taking notes on sam too. I know. Im kidding. Its my way of remembering. Dr. Carson, i think the idea of repatriating the money tax free is terrific, reflecting the fact were one of the few countries in the world that taxes income worldwide and makes no sense. Right. But creating another boom dogle for politicians to waste money with enterprise zones and special debt, thats just another version of everything going on up until now. Those systems, you know, maybe head start, all the other policema programs . Its been done inappropriately, i agree. You go to washington, lift the hood to see how it works, the Immediate Response is to close it and run away. We can submit to that. We can say thats the way its always been. Thats the way its going to be, or we can say the end to that thing. I think 2 trillion worth of stimulus alone would have a Significant Impact on our country. It would. Passing the tpp would have a Significant Impact on our country. Where are you on that, doctor . You go far enough right, the right doesnt want to pass the tpp. Well, you know, i certainly believe in free trade. As long as both sides are fair, i dont see any reason to get in the middle of it and get involved. Does that mean you support tpp . There are aspects of it thats reasonable. Doesnt be renegotiated. Yes or no . Because its. Pushed down the line, you cant go back through congress. See, im probably different than most people. When people say to me, it cant be done, i dont necessarily listen to that because my whole life ive heard that, and i dont necessarily agree with it. You dont take it how it stands today . You wanted renegotiated . I want to renegotiated because right now theres a lot of special interest groups, you know, who benefit. I dont like special interest groups. I only like one special interest group, the American People. I i hope you can explain the tax plan a little bit. 10 flat tax or maybe starts at 15 and goes to 10 . I use 10 because its easy to do the numbers, but the principle that im espousing is complete fairness, and i think the only way to have complete fairness is proportionality. You make 10 billion, pay a billion. You make 10, pay 1. You get the same rates and prif le privileges. Thats fair. Remove all the loopholes, the deductio deductions, zero. Some say thats not fair because the guy who made 10 billion still has 9 billion left, and we have to take more of the money. Thats socialism. I dont know of any examples where that leads to prosperity. What led to prosperity in this country is that guy put a billion dollars in. Lets make the environment even more business friendly so that next year, he makes 20 billion and puts 2 billion dollars in. Thats how we went from nowhere to the pinnacle of the world. You know, we declared independence in 1776, and less than 100 years from that, we were the number one economic power in the world. Thats phenomenal. We created the right environment to do that. Although the tax code has been progressive always. If you make more, you pay more. Yeah, well, we managed to struggle through that. Oh, but before 1913, that was not the case. I think the income tax bill of 1913 was the first progressive, you know, serious effort. So the last 103 years its been progressive taxation. I agree with that statement, but it goes back to Something Else. People say, if we do your system, theres no more charitable giving. Deductions, right. People were charitable before 1913. And americans tend to be charitable people, and would be more charitable if they had more money in their pocket. Also, people say, you know, the guy who paid 10, he cant afford to pay anything. The problem with that argument is, can he afford to drive on public roads . Can the children go to Public Schools . I came from that demographic. I can tell you that people there are not all looking for handouts. They want to pay their fair share. They want to be a part of it. What they would much prefer we do is rectify the economy and give them a ladder whereby through the hard work they ascend the ladder of opportunity and become part of the fabric of america. Thats what we have to con acce concentrate on, not keeping them comfortable. Wheres corporate taxation . Well, once we do the six month hiatus, money comes back in, has to be reestablished at a level lower than the average. I want i want global, you mean . I want us to be a mag whats the average now . Well, between 1520. Between 1520. I want something i want us to become a tax haven for people because it also becomes an opportunity haven for people. Regulations, every time we add regulations, usually the existing regulations stay in the books, so it just gets bigger and bigger and bigger. Exactly. Its a daunting challenge to address it. How did you address it . I remember many an afternoon sitting in the Corporate Board table at costco and kellogg where i spend many decades, and talking about now what are we going to do. You know, doddfrank, the next regulation that coming on. How many lawyers do we have to here . What new departments do we have to create . Well, that costs a lot of money, and guess who gets to pay for that . The consumer. Every time we do it, we add to the consumers debt. Its almost like passing a tax every time we do that. Im not a person who believes that we should get rid of all regulation. Our founders said if men were angels, no government or regulation would be necessary, but men are not angels nor are women for that matter, and, therefore, we, obviously, need appropriate Regulatory Oversight in our country, and thats perfectly reasonable. The definition of appropriate always requires a cost benefit analysis, and from a political point of view, and particularly on the Current Administration, i dont think they know how to spell cost. I thought you said kernen administration. That sounded good. I dont know how to deal with the Current Administration, its clear they are divorced from reality. We need to deal with real people. One of the things i discovered in my decades of work in the corporate world and in establishing a National Scholarship program, which is very successful, by the way, i sounded like donald trump there. [ laughter ] you caught yourself. [ laughter ] is you dont have a comb. No, sorry. You know, the fact of the matter is, all of these policies that the Current Administration utilizings demonstrates a distinct lack of understanding of economics, and ive met an incredible people in the Business World who know how to run things, and i believe that we need to run our government like we run an efficient business. You know, applying things like lean cig sigma to the different departments in the government, which, generally saves 25 and gets much more effective processing, and we got 4. 1 million federal employees. Thats absurd. We need to reduce that by attrition, we can get it down in three to four years to a reasonable level. We have 645 Government Agencies and sub agencies all of which have budgets. We need to across the board cut the budgets. Anybody who says theres not 34 fat, i think they are living in an alternate planet. Doctor, what do you think your the typical carson supporter, is it on social issues or on Economic Issues . Its on a whole host of issues. Host of issues. You lose some economic voters with the social, and, i guess when we have rallies, you know, i see huge numbers of of millennials and young people. I know they, for the most part, probably dont agree with me on the definition of marriage or whether marijuana should be legal, but they do understand that theres somebody who is looking out for their future, and understands the economic implications of our fiscal irresponsibility and what it would do to them. They realize theres somebody who is thinking proactively and provide multiple levels of energy so we are knocked out in a vulnerable situation, and who understands how to use our energy on a global level to put putin back in his box where he belongs, and somebody who understands what global jihadests are. They are not a little jv team we dont need to worry about in the middle east. They want to destroy us. We have to have a plan, and it cant wait to something they do and then react to it. How long the is debate . Three hours . Two hours. We might do three. We need more time. Hopefully, well see you then. Looking forward to it. See you any time in new york, great to have you on. Absolutely. Thank you so much. Appreciate it. Thank you, dr. Carson. Up next, the best kept secret in the soda industry, what the owner plans to do with the secret recipe for dr. Pepper. As we head to a break, look at snapple, off a one year high, 82. 26. Well be right back. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Welcome back. Lets get down to the New York Stock Exchange. Jim cramer joins us now. Instead of me asking you a question. I have sam zell here, i thought you would want to ask him something. Was listening to the demographic story, love when you talk. What can we do about Student Loans . That makes it so that you have to stay with your folks. What can we do about this burden . Obviously Student Loans is an entitlement that has been allowed go crazy. This is a very, very serious problem. Its affecting peoples future decisions, people are getting out of college with, you know, significant obligations, and we also have a scenario where colleges are raising costs because they can, not necessarily because they have to if they were implementing the same kind of discipline that often they recommend for the federal government. How do we get this to be a part of the National Debate . You know, obama tried, kind of drifted away. This is the most important demographic issue i follow. I think it starts with what are the standards. How much of those loans ended up being for education that has no practical reality to it . You know, how many of these people are graduating after having built up all kinds of loans but have no practical ability to earn a living. Without those standards, the student loan problem will just continue to barrel out of control. Thank you for speaking the truth as always. You are never afraid. Thats why we love you. Thank you. Jim, thank you. Well see you in a few minutes. When we come back, well wrap things up with sam zell. First the original recipe for dr. Pepper is being auctioned off in virginia. The Company Holding the auction says more than 1 Million People have visited its website. Opportunities arent always 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. Bounty is two times more absorbent. More sit per roll. So one roll of bounty can last longer than those bargain brands. So you get more life per roll. Bounty. The longlasting quicker picker upper. Lets throw people in jail, its okay. Thats not me. That says becky. But it says you on the other part. It did . Yeah. What does it want me to do. Introduce sam. I cant be you. We look alike. We might a little bit. Ruddy, ginger complexion. Lets get back to our guest host, sam zell. We solved some of the problems of the world. I think we have a knfew things left do here. That would be terrible if anybody saw this show and thought we resolved most of the issues. Do you think that staying where we are in terms of the fed at this point is what we should should we let the market also eventually take control. Theyll have to maybe theyll follow the market. I dont know if thats a bad thing or not. I can almost see their point about the dollar and about inflation. I dont know what i would be doing if i were them. What would you be doing . I think we allowed Interest Rates to be too low for too long. Have we missed the opportunity to raise them. I dont know that we missed the opportunity, but i think that, you know, when Interest Rates are zero for this long a period of time, it changes behavior. It changes behalf your in not the most positive sense. Theres no clock. Theres no meter. In terms of whether you do a deal . In terms of whether do you a deal, make a decision. When the bar is so low, it screws up your perspective. I think the snead have raisfed raised Interest Rates a long time ago. They got themselves in a hole here. And they are so focused on it that the whole world is waiting to see what the fed will do. And operate in reverse. Im not sure that the overall result wouldnt be positive if they raised Interest Rates immediately. One complaint for tpt is that we didnt reverse currency manipulation, and a lot of people say we did not raise because we want our Manufacturing Companies to be able to export. We didnt raise because we didnt want the dollar any stronger. How is that different officials have told us that. How is that different . Frnlg i dont think its diff at all. I think everybody manipulated currencies since the beginning of time. The question is degree. The last 18 months, all these major currencies off 30 , 40 . Thats what is really impacting growth worldwide. Because if you dont have currency stability, you go back to being a bartter economy. We know that did n great to be with you. Thank you. Jay leno, ben carson and you. Thank you. That does it for today. Join us tomorrow. Right now time for squawk on the street. Good wednesday morning. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. The month of rocktober continues. Yum, adobe and this morning monsanto reporting. Oil has not closed above 50 since july, awfully close to that now as we get inventories. Our road map begins with yum brands down 15 on