Transcripts For CNBC Squawk Box 20161010

Wednesday. Until the end. 8 1 2 pounds, youre ready. Thats a good, healthy weight. Anyway, we wish becky the best. Well be talking to becky im sure a lot. Hopefully well see becky, but probably not for a little while. A little boy and a girl. Its totally rounded out. In the meantime, we have so much to talk about. Well start with u. S. Equity futures and well get to the debates in just a second. Take a look at this, the dow jones up 77 points after last nights performance. The nasdaq up 21 points and the s p 500 up ten points higher. The asian markets in hong kong and japan are close d for the holiday. Youre looking at the european equities right now. As we flip the board around, were seeing everything up pretty much across the board. Finally, well take a quick look at crude, wti right now this morning. Youre looking at 49. 60. Yeah. So down about a half percent. It was down on friday. Pierced 50 for the First Time Since june last week. Well watch the saudis comments on that. Well get to the debate in india minute, but first well go to the halting in production of the Samsung Galaxy note 7. The replacements caught fire, not just the original models. Smoke from one device forced the evacuation of a Southwest Airlines flight last week. All 75 people on board had to be evacuated. Since then, at t and tmobile stopped exchanging the phones were replacements. In a statement they say, quote, they are adjust iing shipments ensure quality. Samsung shares are down 1. 5 as the company is in the middle of the activist target. Well see how this situation plays out. Meanwhile, stop lee fisher is arguing u. S. Job gains remain solid and growth should pick up in the second half of the year. He made the comments to the socalled group of 30 during the annual imf and World Bank Meetings that took place over the weekend. Fischer says the decision not to raise rates last month was in his words a close call and done mostly to allow further progress on jobs. We do have a busy economic calendar. The bond market closed for columbus day. On wednesday we get the meetings from last months fed meeting. September look for jobless claims. Friday, september sales, ppi and consumer sentiment. Earnings season is just about to get underway as well. Several big names reporting this week. Alcoa starts us off tomorrow. Csx posts numbers on wednesday. And then the three big banks will hit on friday. Citigroup, jpmorgan and wells fargo. Joe . It was close. We may do it next time. I just want to let you know that. It was very close last time. Were going to do it. We are. Were going to do it. It wasnt close at all last time. Call me in december. Are you at 55 . Well see what the minutes look like. See, i think its going to be a good jobs number, as ive said. Oh, you werent here on friday. 150. I was here on friday. Oh, you were here. Oh, no, no, you werent here. I was here. Hitting you remote is not the same as feeling trust me, through the ifb, i can feel he was getting the pulse of the economy in columbus on the ground. We have an election to talk about and then well talk about this. Well talk about the election. Todays top story, it was bitter from the start, candidates skipping im glad we got to see the action there, you know, that was a fact thinker right there with the director. The candidates speaking the traditional handshake. John harwood was there for a firstland hand look. He is joining us with more. Reporter good morning, joe. That debate followed a rough week for donald trump after the release of the tape from 2005 with billy bush on access hollywood. Over the weekend many republicans moved away from donald trump. Donald trumps reaction last night was to, as Hillary Clintons was, to appeal to the base of his party. She appealed to the base of hers. And he was trying unite republicans by going very hard after Hillary Clinton and bill clinton, her husband. So lets take a look at what happened when they talked, for example, about the tape. Hillary clinton talked about what it said about donald trump. And donald trump pivoted to the clintons. What we all saw and heard on friday was donald talking about women. What he thinks about women, what he does to women, and he has said that the video doesnt represent who he is. But i think its clear to anyone who heard it that it represents exactly who he is. If you look at bill clinton, far worse, mine are words, and his was action. His was what hes done to women, theres never been anybody in the history of politics in this nation thats been so abusive to women. Reporter now, the same thing happened in a different version on economic policy. Donald trump accused the familiar republican argument that even though Hillary Clinton says shes only raising taxes on wealthy people, that really means shes going after the middle class. And, of course, she reiterated she was going after the people at the top. Take a listen. Were cutting taxes for the middle class, and i will tell you, we are cutting out big league for the middle class. And i will tell you, Hillary Clinton is raising your taxes, folks. Look at me, shes raising your taxes really high. And what thats going to do is a disaster for the country. People like donald who pay zero in taxes, zero for our vets, zero for our military, zero for health and education, that is wrong. And were going to make sure that nobody, no corporation and no individual, can get away without paying his fair share to support our country. Reporter now, what donald trump was doing in the debate was trying to stem further republican defections by uniting them around their negative views of Hillary Clinton. Hillary clinton was appealing to a much more diverse electorate. His supporters are overwhelmingly white, dominated by nonCollege Educated older voters, especially rural area voters, small town and rural areas. She appeals to a more urban and diverse audience, blacks, hispanics, women, especially single women. The problem for donald trump is that her base is a lot bigger than his base. Shes leading the race. Our new survey monkey poll has her up by five points over donald trump. And it doesnt really reflect the impact of this weekend. Her arguments were also stronger on the merritts, which is what is going to make it difficult for him to expand his base by getting more of those collegeeducated voters. But he, as one republican pollster told me last night, his best goal last night was to stop the bleeding and maybe he did that. More on last nights president ial debate, well bring in the former congresswoman from new york and former new york cochair of Carly Fiorinas campaign and former u. S. Congressman harold ford. I was watching you and listening, i dont know what you were thinking, so i wont try to glean that, but what were you thinking . You were shaking your head. I was listening to john talking about the segment of the electorate to whom donald trump was addressing his rematches. And he was quite careful and rightly so to include every part of the american electorate, particularly members of urban and minority communities who have been absolutely left behind by the kind of policies that Hillary Clinton continues to aspouse. And when donald trump said last night, i think one of his best points was that when she says these things, its just words. When she sounds conciliatory, when she sounds as though shes the stateswoman, whats behind those words, in fact, unfortunately are the wrong policies for this country. Policies that will continue to set everyone behind. And john is assuming its not working with people that you he may try, but its ringing hallow. That is johns view. I dont know that it would have rung hollow. You listened last nightin the way they addressed the audience in the nation. Hillary clinton sounded very rehearsed and practiced, overly so. When she said she was found out through wikileaks, she said, theres what you say in public and what you say in private. Wink, wink. She attributes it to Abraham Lincoln . Honest abe. That is just that is a remarkable rehearsed line very ingenuine. If trump would have seemed too old if he said i knew abe lincoln, he was a friend of mine. That would have been the lloyd benson, but that would have dated him too much, i think, to say that. But when i spoke to you earlier, you said you thought trump did pretty well. I think he studied or steadied the ship. He said he would indict her, put a special prosecutor if he was elected president , i think in a lot of ways that reminds you of the donald trump you dont want. I thought both of them did what they needed to do again. I dont know that any needle was moved in a significant way. I thought mrs. Clinton did a great job of articulating a vision, what she needed to do. And donald trump tried his hardest to move away from the controversy that swirled around his campaign. I think a lot of mainstream republicans look at the debate last night and say, well, he didnt go off the tracks. But in a lot of ways hes capable of doing it again in the next 30 days and pulled many of them back into the fold saying its okay to stand with him because im not as outside the political mainstream as you might think. But we have all seen him over the last year. Hes entirely capable of blowing up again. He pulls you back in and then there are great movies that say, every time i think im out they pull me back in. But i think the Republican Senate candidates who are on the fence are going to have to make a decision this morning. Do you unendorse him and run your own campaign to try to hold on to the senate seat . Or do you stick with him between now and election day and run the risk of him again alienating, angering and dividing the country in ways that disadvantage you . I certainly dont want to be in that position. I think the democrats find themselves in a much stronger position in the senate races across the country. And i think secretary clinton finds herself in a stronger position as well. Interestingly, the moment that went the most viral is when he acknowledged that he and mike pence had not come to an agreement about syria policy. At least he outright said he disagreed with him. He said we have not talk in a while. Right. But it comes at a time that theres a divide widening between a candidate and his running mate. And Carly Fiorina came out over the weekend endorsing mike pence for president and others are doing the same thing. Is that a viable strategy for republicans . I think a viable strategy for us is to take heed to the policy premesis that donald trump did articulate last night. And i think one of the strengths, harold points out, rightly so, that donald trump is not inside the mainstream of professional politicians. What are you going to do . Im going to vote for the republican ticket. Im going to vote for donald trump so long as he continues to represent the kind of policies that every american desperately needs. Its not about republican or democrat with me. He has not assaulted women. Nor does it include without a hint of ironny. I thought that was the most disgusting i cant even salvaging women is not what donald trump did but Hillary Clintons husband did. To present herself for an advocate for women is offending to me as ament with. Im voting for the economic policies, tax reform, tax relief and regulatory reform. No hint of ironny there. So how about when they go low, the clintons go high. Which over the past 30 years, i the we all know thats the way the clinton machine theres no hint of irony there either . The clinton machine goes high. I have told you that tees people have some bashed in the other side of it to me is so andrew, lets assume, you and i can agree, we both have things that trouble us about each others candidate, dare we say. He did a great job last night of moving off the issue in many ways. I have things that trump brought up about Hillary Clinton. Lets get beyond that and talk about the policies that make sense. Anybody thinking about the economy, anybody thinking about people who desperately need work and who need an education. Hillary clinton is not representing the best interests of those among us who most need that. Heres a man who filed bankruptcy multiple times, wont release tax returns to the country, put that aside, we can deal with the economy. But the question i have is, do you trust him with the Nuclear Codes . Do you trust the man who tweets at 3 00 to 4 00 who can be tempted, who can be antagonized, do you trust that kind of person, that temperament in the white house to deal with those issues on the every day basis . Harold, he needs to have the steady thank you represent. I agree that he needs to, but seriously, he very seriously needs to continue to demonstrate that he can be in control. I have no fears about the Nuclear Codes. But i do fear a smooth talking practiced politician who among her many questionable actions has secretary of state also allowed 20 of this nations uranium supply to fall into the hands of russia. Our enemies. Why do we not talk about that . Hillary clinton as secretary of state, as part of the russian reset, as we all know, allowed dealings with uranium, now 20 of our uranium is in russian ownership. She allowed members of the c consortium outside of moscow have access to outside information. They said obviously she knew that what the c meant. And its on the top of all the classified he at that point said, you know what . After the interview, were really not convinced she did know that. And the level of understanding of Just State Department classification, after two or three or four years as secretary of state, as the person in charge of classifying things, maybe it wasnt a malicious intent to put the security of the country at risk, but she was clueless. Seriously. Either shes but she can have the codes . The temperament, in all fairness, you talk about fitness in temperament. I think we can all agree around this table this is not a paragon in terms of mr. Trump at the kind of temperament to go with the president. This is where i have the greatest concern about a trump presidency. And i think those around this table probably share that. But thats part of the appeal to his base, the polished slick sort of saying the right things. Slick being intelligent. Slick being fair minded. Slick being honest. But Hillary Clinton is not an honest person. Come on, this is a movie that Steven Spielberg did. I beg to differ. When he said he wanted to appoint a special prosecutor, did that make you applaud . Or do you say to yourself, this is a problem. Thats hyperbolic. I would discourage that. Is the wall hyperbolic . The wall is something that millions of americans endorse as a security measure, as did Hillary Clinton. We have all seen the tape of Hillary Clinton endorsing the exact same thing. We need to have a structure. We do need to have a structure. When he couldnt distance himself from david duke because he said he didnt know enough about the kkk, i dont put that on you, but how did you interpret that . Because were talking about hillary, mrs. Clinton making comments about public and private positions. The kkk ive seen no indication whatsoever, and i have talked with africanamerican president s, theres no indication that donald trump harbors any sentiments of racism. He has hired an advanced and extolled africanamerican colleagues. One of his spokespeople is africanamerican. Why doesnt he condemn them . Condemn the supporters constantly at rallies screaming racist things . Hillary clinton has condemned roughly half the American People as deplorable and irredeemable. That to me is not the kind of attitude but she apologized for that. She apologized for that and mr. Trump has not apologized. I hear you and know it is painful and dont put you in the group, but these are facts that a lot of americans will find it hard to get around. He had a pretty decent night last night, did as well as he could, but there many questions that remain and we have 29 days to litigate. He has been reaching out, and rightly so, and in all sincerity, to communities that historically have not necessarily been associated in recent deck wades with the Republican Party. And hes doing it for real. Because the policies that have been in place that Hillary Clinton still espouses, donald trump wants educational choice for families in disadvantaged communities. He wants them to have the choice, the option to charter schools, to get a better education. Hillary clinton supports none of that. If we dont get tax relief in this country, we are not going to have the kind of Small Business growth that folks who want to start those kind of businesses need to have. Clearly, so many of these issues are lightning rounds. Next time tell us how you really feel, okay . Im just trying to be calm about it. I hear you. Again, if i had to defend your position, i would be doing the same thing that youre doing this morning. Gerald ford, thank you so much. Residents from florida to North Carolina are cleaning up this morning after Hurricane Matthew ripped through the region. The latest after the break. The death toll from Hurricane Matthew in the United States rising to 19. And floodwaters in North Carolina are expected to remain at Dangerous Levels for days. The weather channels jim cantore has the latest. Reporter as matthew pulled away yesterday, the sun came out for many. Unfortunately, the water was still coming up. Here along the tribuy tetaries, see this river crest at 24 feet. Its going to stay above the old record through at least saturday. Unfortunately, this is where i95 sits. And that means water will be sitting on top of interstate 95. Yesterday when we arrived on scene, two hotels here behind me under water being rescued by the lumberton rescue crews. They got 108 people out of here. No harm, no foul, thats the good news. But the problem is a lot of those people that were in these hotels actually left the coastline. And they have no idea what theyre going to be heading back to today. Some of them cant get back because their automobiles are sitting under 4 to 6 feet of water. 20 rivers in major flood stage across the state of North Carolina. Another october, another flood. This one was contributed heavily by matthew. The cleanup continues. Im meteorologist jim cantore in lumberton, North Carolina. We will have more on the cost of Hurricane Matthew cleanup later on this morning. And back to Business News, a little elon musk news for you, teasing a new product for tesla. In a tweet yesterday musk said hell announce the new product on october 17th. Musk says the unveiling with solarcity is dismissing claims that they need to raise equity saying it wont be necessary. Coming up, well get the latest fed meetings on wednesday and were kicking off earnings season at tend of this week. The monday morning strategy is coming up. And take a look at s ps winner and losers from last week. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capturopportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. When a moment turns romantic, why pause to take a pill . Bothrectile dysfunction like needing to go frequently, day or night. Tell your doctor about all your medal conditions and medicines, and ask if your heart is healthy enough for sex. Do not takcialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. 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Well get earnings with the flood starting in earnest this week. Mean whig, the Deutsche Bank saga continues after john ryan failed to secure a deal with the doj over the weekend. Ryan attended the world banks meeting in washington raising hopes he might personally be able to negotiate the 14 billion fine that the doj has demanded. Meantime, well talk more about the markets ahead of what is going to be a busy week. Its the official kickoff of earnings season. Plus the fed will release minutes from the last meeting on wednesday. Plus, we are still digesting what took place with the jobs report on friday. The Portfolio Manager from Deutsche Bank is here. You were saying you have a provocative view in what is happening in terms of job growth over the last 12 months . It is misunderstood . The argument that janet yellen has made is that you allow the economy to run longer to get more people to join the labor force. In the last 12 months we have seen the labor force grow by close to 3 million. The average gain in the labor force since the economic expansion has begun has been 5,000 per year. So when you see an outset in pickup this way, it suggests when labor markets get this tight, we are literally seeing people come out of the wood work to join the force. Im suggesting that this is actually helping people rejoin the workforce and get jobs. Whether she should have raised rates last month or the month before that, that is a whole separate issue. Because right now the economy is not in the same predicament it was when the unemployment was 10 . Yet Interest Rates are at low levels. Depending on what side of the political alley youre on, you can take it either way. As tim fischer said on friday, it was a goldilocks number, something for everyone. But tim fischer gave a speech last week to reference the secular stagnation. The fact that we have persistently low Interest Rates. What is that about . A lot of things you see happening in the economy and in Politics Around the world is a as a result of this persistent sluggish environment that we have in the economies of the world. So explain what is happening with stocks then. I think that right now the reason were not growing very rapidly is productivity is nowhere to be found. At the end of the day, the actual growth that you have is the sum of productivity growth plus labor force growth. Productivity growth has been actually in negative territory by half a percent. But guess what, in the Third Quarter all indications suggest productivity is going to pick up. Thats one of the reasons why the thursday quarter numbers will probably be as much as doubled we saw in the second quarter. What are earnings going to look at . They are possibly going to be negative for the whole year. But next year because the head winds of energy, the head winds of a stronger dollar are not going to be before us, i think earnings could pick up. Were looking at probably in the neighborhood of 5 to 7 . Thats grossly below what the consensus is, but the consensus is overly optimistic. The bottom line is that energy is finally getting into the inflection point, which means earnings will pick up. Donald trump said last time he thought growth was going to slow next year. Theres a real question of what is going on in the world. It depends on who is the president. Well, i think whoever is the president , theres got to be fiscal attention paid to what is going on in the economy here. I think that what you have going on, look at what happened in england last week with the british pound. You have real moves in the markets that reflect something that we have never seen before. And i think that we have to take a moment and really ask ourselves what is going on here. Focus on earnings, its a market of stocks. But at the end of the day, is there something bigger going on here in terms of the macroeconomic environment that the fed is aware of that we have not raised Interest Rates in 2016. How does a long term move away from globalization help or hurt the stock market . What happens to a company that becomes less goblilobalized . I think you saw this on friday, what happened to the british pound. Theres a fear of closing down markets, the lack in access to other markets. You saw that in the british pound and you see that affect the markets frequently. And the candidates have that a front burner item about whether or not we are going to participate in open trade or not. Youre shaking your head. If you shut down the International Markets for the s p which gathered 50 of their revenues overseas, it will completely collapse the Financial Markets. We saw this as we moved away from free trade during the compression. And we know that it basically snowballed into a greater depression around the world. Shutting down markets and becoming isolationists is not the weighing too. Okay. I know were talking economics here, youre an economist, but if you have a portfolio, what do you do about all this . If you are a Portfolio Manager a portfolio with mostly stocks. I can make a bond argument myself. Well, let me tell you what you do, you have to be really diversified and you have to realize in a period of uncertainty, the rates of return are not going to be as impressive as a period where we have less uncertainty. We are always going to have uncertainty, but this period, and by the way, i think it is short. Wean now and the election, people are nervous. But once the election comes, things move closer to the center because it doesnt matter whether it is a democrat or republican that gets into the white house necessarily. Because generally during the campaign here, a lot of rhetoric, as you get closer to november, candidates will move once they get elected, they move back closer to the center because they want to get things passed through congress. So a lot of the rhetoric will go away. I would like to give a counterpoint to that. Theres a nice scenario for stocks because of low Interest Rates and dont see them rising so fast. The longer the curve is extremely low, its been lower since we ended quantitative easing. Lower since we began to raise the shortterm rates. And i think the lower Interest Rate could fortell a positive stock market. Thats not a Counter Point because our view is optimistic for next year. We are looking at earnings growing between 5 to 7 , if thats not a bad move for stocks. Do they always move to the center after getting in . They typically have. Ive been in the business the last 33 years the last eight years we have seen politicians move to the center. The other side will not allow it. Im a nonpartisan economist. I dont take sides. Which side didnt allow it . Any time you have an opposition in congress. It is congress again, okay. It is not always congress. It doesnt matter we both watched what happened democrats or republicans, you have to twoparty system and both vie for attention. We know president obama moved to the center in the first or second four years. We probably disagree. Okay. Have you seen any move to the center . The country is extremely partisan and dont have a Movement Toward the center. Thats what the next president has to do. Whoever it is. Donald trump or Hillary Clinton, we have to have a leader who is going to be able to work with congress and Work Together to move this economy forward. We are going to leave the conversation there. This debate wont get settled this morning. In the meantime, thank you both. Coming up, a look at what market moves have to say about the election. Mark santoli has the breakdown. 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It doesnt mean that investors prefer it that much one way or the other, but thats the track. Leading into last nights debate, you had a lot of people welling up expectations that maybe there would be some kind of divisive turn, that the market would declare the election for Hillary Clinton. Thats not happening. You are seeing modest moves and the mexican peso is the agreed upon proxy for whether trump has a shot or not. That solidifies that Hillary Clinton is the oddson favor. But oddly enough, there was talk that after fridays revelations you might have a democratic swipe. I dont think the market is handing that out either because that would hit certain sectors like biotech and perhaps like the banks and energy. So all this basically means after last night, the market is kind of going along with the expectations that theress a general sense that Hillary Clinton is the likely winner. However, i dont think because of the brexit vote and the shot with the polls wrong there, i dont think the market is rushing to price in a sure thing. But also focus groups polled at the end of the debate actually said that they thought that donald trump came out ahead. That they were pleasantly surprised with his performance in the debate. So looking at futures this morning, and looking at the market actually trading up, i mean, its so hard to decide what is a result from the election. I said its a very broad its day by day. Where was it . I havent seen what you supposedly you intimated if you look at it overall, that the track it has tracked real clear politics in a composite poll. Last week the market barely moved. The market certainly wasnt soaring as she went to 85 on silver. Last night after you look at the betting market, youre about 80 . Because the Prediction Markets went up to 80 overnight. The mexican peso is stronger today. So they are implying that i think we look at the longterm look at the peso. It is much weaker. Thats why im saying there is no declared winner from last night. Its completely hard to do it. I think the way to think about it in market terms is trump beat expectations after guidance and analyst estimates were massively lower. When you said if both houses of congress went, there were a couple sectors, like you heard. I would add the private sector. First of all you dont need to pick biotech or energy. Come on, the house is a long way from tipping. The hope springs eternal, though. I think thats why the market just sits back and they dont actually want to rush to price in, except where you have some kind of sense of the probabilities that are turning in one direction. So what about people who are trying to play currencies . These are multitrillion dollar extremely liquid markets that have shown us this year that they can turn on a dime. The people say, im going to invest in the peso because i think it is going up because i believe clinton will win the election or the other way around. Or if they want to play the chinese yuan against the election as well, that is risky. Completely treacherous. People involve in the Foreign Exchange markets are kind of frustrated by the mexican peso and the way its become this play thing, which is supposedly tracking the polls. Its like a handful of traders agree, this is the next thing. How many players are involved . I think it is a big enough cross. But i think on the margin, thats the main thing moving. I think you have the price of oil moving, all this stuff that matters in mexico. Right now theres a frustration that its a bad way to necessarily look, if you want to tell me that people are sitting back and holding more cash because they dont know what is going to happen, and its a very volatile race and anything can happen in one month, i would buy into that. You can watch it. We dont know which way to play that either. We dont know whether they want a big jobs number or a small we dont know whether they want no hike or so all this is so hard. I think the time has run out for one of those numbers to change the story for either side. Mike, a 50 would change it. 150 was not too hot, not too cold. They can still go in december. But nobody would have gotten attention for that over the week, right . So its not Something Like that people think tipped the scales. We have earnings that will take precedent. We are stuck 2 or below gdp. A lot of the macro japan is stretching for 1, were hanging at 2. Thats the rest of the world. The world is easing and we are trying to go. Thats all we get, no rate increases, just the rhetoric. In the last two years, what has the fed done relative to what it has done before . Gotten modernly tighter. Mike, good to see you. Mike santoli. New out this morning, oliver hart won the nobel memorial prize in Economic Sciences. Why do we say it that way . Because alfred nobel didnt set up a prize, so it is given by a different group. But a lot of nobel lawyers in economics. And it is such an inprecise science that one can say up is up and one says up is down and and they both win. The Royal Swedish Academy of Sciences Says they are vulnerable to the reallife contracts and institutions as well as potential pitfalls in contract design. Finally well have a 45minute segment just on what their work is. Youre going to host a google hangout. Thats a good idea. Im going to host a google hangout. Before we head to break, well take a quick check on the u. S. Equity markets. They are in the green in a big way. The dow opens 70 points higher, the nasdaq up 20 and the s p 500 up nearly 10 points. And take a look at the price of crude, wti bouncing off the lows of the session after the Energy Minister said its not unthinkable that oil gets up to 60 a barrel this year. We are almost at 50. Coming up, a big winner at the box office. Well talk about that next. Our guest host at the top of the hour is a squawk box master. Mohamed elerian is here to talk stocks, the fed and the political uncertainty. Squawk box will be right back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousas of miles away. Th the help of at t,ed bull racing can sha critical information about every inch of the car from virtual anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Youre watching cnbc first in business worldwide. Welcome back to squawk box, an update now on the aftermath of Hurricane Matthew. Its no longer a hurricane and no longer battering the southeastern u. S. , but the devastation continues to be overwhelming. At least 19 people in the United States are dead as a result of the storm and more than 2 million businesses and homes are still without power across the southeastern seaboard. Poor logic estimates that the Economic Cost of Hurricane Matthew will be at least in the 4 billion to 6 billion range, which not as bad as earlier estimates, obviously, but still a very large number. Yeah, back to Business News now. Jack going hollywood. Alibaba is teaming up with Steven Spielberg to develop films for china. There will be a Minority Stake in the Production Company and get a seat on the board, just furthering jacks ambitions in the movie industry. But interesting to see these two bed fellows now. Pretty cool, right . Well see what they come up with. In the meantime, we have other movie news. The girl on the train taking the top spot at the weekend box office, adapted from the best selling book, the psychological thriller stars emily blunt as a person involved in a missing persons case. And tim burtons latest movie, miss per grns home for puculiar children came in second best, about a school for children with second power. And i saw a great movie, guys with the kids. Storks. I tweeted about this. I saw storks which is a great i would recommend it for kids. My wife cried. I did not cry, but i could have cryed. Youre toughening up a little bit. I saw the previews to that. For kids, it was great. The kids loved it. And i think the tweet i mentioned was that steve, the money man behind mr. Trump is, one of the producers in the film. Yes. Who are the voices . I dont know. I was more focused on mr. Maneuchin in the credits. Because the stork visited star koi. Yes, the stork did, over the weekend. Dropped that baby off. Yeah. Thats how it works . Yeah, i dont know Cabbage Patch is more likely. You go out there. Because ive sthene dolls. Im glad were just keeping this above water. Family friendly programming at 6 55 a. M. Have you seen dumbo . They have actual shots of the stork. For people who werent watching at the beginning of the show. Becky had the baby, 8 pounds, 5 ounces. Just before midnight on friday. Todays the 10th, the 7th. I believe so. Yes. Good birthday. So our congratulations and well wishes to them. Do you know what sign that makes her . No, i was going to check that. Coming up on squawk, more reaction to the debait last night. Well be right back. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . And its got the spring and bounce of a traditional mattress. You sink into it, but you can still move around. And now that i have a tempurflex, i can finally get a good nights sleep. Buy the most highly recommended bed in america for as low as 25 per month and a 90 night free trial. Round two in the books. Hillary clinton is raising your taxes. If you can look at me, shes raising your taxes. We are back on the right track. He would send us back into recession with his tax plans. Donald trump and Hillary Clinton taking the stage for the second president ial debate. Were going to bring you the highlights, straight ahead. Its a big week for the markets. Earning season officially kicks off and lots of feds speak on the agenda. Mohammed alari will tell us what hes testing. What does elon musk have up his sleeve this time . The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here. Im drew curtainen, along are andrew and our guest host for the next two hours this morning, mohammed alarian. Well hear from him in just a few minutes. The futures have been in positive territories for most of the morning session and now up 71 and a half because we had minus 18 on fair value. So the 53 points, add it together with a negative number positively, right . We used to do this for people because we dont need to. You got it and people got it, right. Exactly. It used to be called the sorcon. It did, yeah. But now youve got it and the viewers have it. At the same time. So they can, you know, do it without having to pay the royalty every day. And europe, its green, green, green across the board. Not too significant but up the day. And oil has been hovering between 45 and 50 recently. Just over 50 now. See whether that portends anything, whether we go now, if its a 50 to 60 range, but it has been for 50. And we dont usually look at gold, but i think golds been interesting in the past twoweeks. Gold was up this morning, but well below 1300 and some people say back within 11, handle again, if the fed really gets ingumption. We heard fischer again today, they were close, mohammed, close call in september, pretending that december is definitely going to happen, but well talk to you about that in a couple of metropolitan. In the meantime, lets bring highlights from last nights debate. Hold on for a second. We want to do top corporate stories before we get there because we have a big headline this morning. Elon musk saying the auto maker will not have to raise funds this quarter for the plan to acquisition a solar city. I didnt tell in contrast to last week when it was planning to raise additional funds by the end of the year. Musk also tweeted there would be an unexpected tesla product thats going to be unveiled next week. So a lot of people will be watching to find out what that is all about. Separately, samsung suspended production of the galaxy note 7 smart phones on reports in fires in replacement devices, the second ones, too. Samsung had been in the process to issuing juvenile phones to owners following a massive recall. At t has now stop issuing those replacements and now allowing users to change their phones to other phones. Both companies have hired advisors to explore a potential merger by viacom and cbs. All right. Meanwhile, donald trump, Hillary Clinton squaring off for the second president ial debate last night. Last night, john harwood joins us now with the highlights. Hillary clinton came into that debate last night after a weekend in which republicans had been repudiating donald trump in droves over that access Hollywood Tape that came out with him talking about women in ways that many people found repulsive. Hillary clintons strategy in the debate last night was to use that tape to try to reinforce the doubts of voters, especially women voters, especially College Educated voters and soft republicans who are wavering on donald trump and use them to pull them to her side. Take a listen. If this were just about one video, maybe what hes saying tonight would be understandable. But everyone can draw their own conclusions at this point about whether or not the man in the video or the man on the stage respects women. But he never apologizes for anything to anyone. Now, what donald trump did was to try to redirect that fire back at Hillary Clinton, take advantage of her unfavorable ratings and doubts about her, even with core democrats. Take a listen. You really owe him an apology. Youre the one that sent the pictures around your campaign, sent the pictures around with president obama in a certain garb. That was long before i ever involved. So you actually owe an apology. Now, that is an approach that appeals to people who are inclined to believe the worst about Hillary Clinton on any subject, that shes capable of smearing president obama, which is of course is what shes accused him of doing with the bursar story. The problem with it is that while it appeals to people who already hate Hillary Clinton, its thought persuasive to people beyond that group. It doesnt expand your base. Why do i say that . Well, president obama, milg mic obama r both strongly campaigning for Hillary Clinton. The same with charges about bern Bernie Sanders, that she conspieco conpired to rig the campaign for bernie sander. And if im president , youd be in jail, talking about criminal charges. The fbi decided not to charge Hillary Clinton and in fact fbi director comey while saying shes been careless with her email, he said the case as a matter of criminal prosecution wasnt a close call. So this is why donald trump again, appealing to the base, not expanding the base. Joining us now is betsy, former Lieutenant Governor of new york. Historically a trump supporter. Are you still supporting him . Absolutely, and i think he clearly won the debate last night for three reasons. First of all, he addressed the addressed the issue of the body locker room talk and measured it against some of the really big issues against world, christians being beheaded or drowned in steal cages. Second, he very effectively prosecuted Hillary Clintons two biggest weaknesses, her reputation for dishonest and she represents the status quo. Shes been in washington for 30 years and what has she done . But most importantly of all, he disclosed, highlighted her disdain for the public because shes really running not to jump start the economy, not to defeat terrorism, shes running on political to be the Speech Police and he made it clear last night, shes going to teach men how to talk respectively to women. Shes going to make sure that overweight people arent fat shamed. Shes going to make sure that white people show more humility in the presence of african americans. Shes going to make Illegal Immigrants feel right at home. And people who disagree with her are going to be labeled bigots, racists, homephobes, xenophobic, you name it. And most americans dont like the idea that thats what this election should be about. But take a look at Hillary Clintons ads. Not one is on an issue, the economy, terrorism. Theyre all about these politically correct issues. Can we just talk about the Political Correctness for one second which is to say youre a woman. I dont know if you have two children. I have three daughters and two granddaughters. And you have no problem with what this gentlemen said . Of course i do, but i dont think this is an issue in the election. I dont think this is what a president ial election should be about, not when the economy is sputtering along at 1, 2 , newt when there are terrorist attacks in every part of this currently, not when were facing such a world devastation in the middle east. With all these big issues, i dont want this campaign to focus on what he said 11 years ago on a bus with a bunch of guys. But hew hewitt when he called for donald trump to withdraw from the race said this is off of research. This is just the beginning. As a republican, do you fear theres more to come . Im not afraid of that. I think its irrelevant. We know who donald trump is. What you see is what you get. Unfortunately, were only beginning to see more about Hillary Clinton. Shes been around for 30 years, but she, as she admits herself, has the public persona and the private per sona. And then the wiki leaks, she supports open borders and open trade, even though shes telling supporters something very different. She supports drastic cuts to social security, a plan labelled the cat food plan because the elderly would have so little to spend. Each candidate has given each party so much to take aim at. The real issue is whether these issues are apples to apples, and how you compare an issue over emails and personality. Let me put that in perspective for you. Ive worked in many jobs, Lieutenant Governor, in the private sector for business and running a not for profit. And when i met any of those positions, i didnt erase my records on the job. Honest people dont do that. When she erased 30,000 emails and then says it wasnt me, it was somebody who worked for me, that was one of the highlights last night. The fact is she cant defend what she did because all of us go to work every day and im sure not anyone at this table has decided theyve got to erase the records when they leave a job. Let me ask you several questions. One of the things he mentioned last night was he hoped to put her in jail if he were to become the president. Are you comfortable with that . Yes. Americans feel that Hillary Clinton, because of her position, first lady, senator, secretary of state, shes getting a pass for behavior that most americans could never get away with. When you have a subpoena, you show up with the evidence as requested. You dont say, well, im sorry, somebody who works for me destroyed it. And again and again, we see Hillary Clinton getting away with things that ordinary people dont get away with, and americans are fed up with the establishment. Do you feel comfortable with a president who wants to put their political opposition in prison . Im sorry, that question is like when did you stop beating your wife . That isnt the question. Its not putting your political opponent in prison. He never suggested putting Bernie Sanders or any of the republicans on the primary stage in prison. Hes talking about a woman who has clearly violated the trust of the American People and it seems the law. The first 15 minutes of james comey, head of the fbi, statement about Hillary Clinton, led everyone to believe he was going to call for a prosecution because everything she had done was contrary to the law. And then he does some sort of verbal pretzel deal and decides that hes going to say hes not bringing charges against her, but the evidence clearly supported that. Would you be proud for him to be your president . Yes. Because im going to be proud when america is growing at 3 and a half again, when we have a Strong Military defense, and when we have regained our stature in the world, and thats what donald trump will do. Okay. Betsy, thank you for joining us. Thank you. Coming up, earning season officially kicking off this week. Well hear from mohammed is expecting from the markets and how the election could add to that volatility. Thats next on squawk box. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Mohamed eleri welcome back to squawk box this morning. Take a look at futures. Theyre up in a nice way this morning. Dow opens up at 8 00 this morning. Dows up 22 points and the s p 500, up 22 points. The bond market closed today. On wednesday, we get the minutes from last months fed meeting. Thursday, look for jobless claims and on friday, september retail prices. The producers index and it is officially earning season, kicking it off tomorrow and csx is out with numbers on wednesday and results on the three big bangs coming up on friday. All reporting in the wells fargo news, of course. It will not just be the numbers, but a lot of people looking here at what john stump has to say. Lets get to Mohamed Elerian, alions chiefnic advisor. Hes also the author of the only game in town. What was your take . 150 was enough to keep things going, but below expectations. Does it mean december is definitely happening or still just 50 , 55 . With this fed, no one can say whats definitely happening. The 150 is the number we have to get used to at this stage of the cycle. That will be the average of the next 3 to 6 months. And thats because of a shortage of workers . So the labor market is so strong that the reason its not 200 or 250 is because you cant find qualified people and yet we still cant grow above 2 . A few things. One, were taking slack out of the labor market. We created 15 million jobs. Secondly, well now focus on wages, well see the wage pickup or not. But the critical issue to answer your question is the Labor Participation rate. Would it continue to edge up . Weve got a slight up take on friday. Or will it stay constant . Whats mising for us to feel that were at or not feel it, but whats missing from the pool, where we are from 3 to 3. 5 . If were at 5 unemployment, normally, you would think your gop would be more robust. So thats a simple answer and complicated. The simple one is we have a huge deficit. Only you could say that. Its simple and complicated. Is this your private and public take on things, like ab lincoln . The private sector is not investing enough, doesnt feel confident enough, accumulating cash or giving it back to Financial Markets. Its problem is two things, one, is it doesnt have clarity. We have major issues in play right now, major cloebl global issues in play, very unusual political uncertainties, especially in europe. And finally, dont forget, these days, if you make a mistake on investment and youre stuck for 5 years, you can get eaton alive. So Business People are more careful, and i understand that. So we have a hassive investment deficit on the private side. We understand that. What we dont understand is the productivity of it. My own feeling, we are mismeasuring it, but theres a good debate going on. Are we mismeasuring gdp or is it really as lackluster as it seems . Weve always had issue with gdp measurements. I think its doubtful this economy can grow longer than it has before and the benefits can grow to more people. We dont have the inclusive growth and capitalalism were capable of. Do you think the fed should be waiting until after political events happen . We saw this with brexit, tons of commentators said this is a binary event and now people are saying, why do it before the election . But that shouldnt be how the fed works. I would see a hike in september. I think they also missed a window last year. I would normalize. Thats where i would be. Why . I acknowledge the economic arguments are balanced. I acknowledge that. But i think the risk of financial instability down the road is getting higher and higher and the longer we stay at these artificial ultra low rates, the more we fuel financial instability. So if i was sitting in that room, i would have argued to hike. But i dont think many people think in terms of the risk of financial stability. They look at the economic outlook. Theres starting to be a change. Weve had three federal officials come out in the last month, say be careful as this may mean down the road for Financial Markets. Do you think well hear companies invoke instability, uncertainty, when they start reporting earnings this week . Especially global. I think whats going on in europe is meaningful. I think people see a lot of uncertainty. We have major elections, a referendum in italy coming up in a couple months. We have elections in germany, france. This is strong antiestablishment movement there as there was here. So yes, youll hear about uncertainty, particularly in your if we, lets say, go for the next couple of years and just for arguments sake, we go up on the Capital Gains rate, keep the Corporate Tax where it is and leave regulation where it is and blare more regulations in over that, is it possible for just with everything staying the way it is now, is it possible to get out of our own way at 2 . Will we go to 3, 3. 5 . Can things recover given the current deal . I just came from washington dpk where there was the meeting of the annual meeting of the throwback and was whats striking is were starting to see a Tipping Point in terms of what people think is desirable in terms of policies. Not feasible. The feasible bit has a political element to it. So people are not confident they can be implemented, but we are seeing a growing sense on whats needed. Whats needed is a set of Structural Reforms starting with Corporate Tax reform, infrastructure spending, better labor market retooling and a better regulatory environment. Whats also needed is less dependence on Central Banks and greater use of fiscal policy and finally, completing an economic architecture thats holding back growth. So whats interesting to me is that starting to be a consensus that we need to get out of this unbalanced policy mode, but implementation is in political issues and no ones comfortable about that. Whats funny is that the disclosures out of hillarys speeches to goldman sax were all private sektder cat nip for people that like to no, theres too much regulation. You should love it. I did. This is why people are mad at her, for saying you know, its almost like, wow, theres a glimmer of understanding on how things work in this. By the way, one of the things i was looking at. And i apologize, i was listening to you. We were talking about abe lincoln and this quote that everyone said was made up. Which quote was made up . Its actually in the emails. Its in the spielberg movie. But also contemporaneously in the emails. When she was talking, she was talking about lincoln. So it wasnt like she just made this up after the fact, five years later. Youre like doing the Fact Checking for us. A little Fact Checking. We said she made it up out of thin air, and i went up to look exactly what the email said, and she said at that moment, she was talking about the spielberg movie and lincoln. So i put it out there. Mohamed, stick around so well get back for you. The winner from last nights debate. Twitter will bring you those numbers, right after this. They may want the latest products and services, but they demand the best shopping experiences. Theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. There has never been anything like it. And were going to have a special prosecutor. Its just awfully good that someone with the temperament of donald trump is not in charge of the law in our country. Because youd be in jail. Secretary clinton welcome back to squawk box. Last nights face off between donald trump and Hillary Clinton, breaking twitter records, making yesterday the most tweeted day of 2016s election. The social media site reporting there were more than 17 million debate related tweets that had been sent out. Shares of twitter, however, down about 8 , in large part because theres an expectation that nobody want to buy it. I find them by the way the most surprising thing is twitter has had its best year ever in terms of number, people on the site using it. And yet they seem to be struggling to monetize. Because theyre paying their employees more, investing more in the product. And revenues and growth has been roughly flat. You would think, given all of the action on twitter, if this moment doesnt work, what moment will . Coming up much more from last nights debate and what the candidates had to say about the economy, taxes, when we return. Good morning. Welcome to squawk box. Among our stories, shares of merck on the rise following up beat results for a study of the companys immune boosting drug. Patients who took the drug lived longer than those receiving conventional chemotherapy and the stock this morning is up 3 . China based online retailer alibaba struck a juvenile partnership with hollywood director Steven Spielberg. They will distribute partners in china while alibaba will become a u. S. Producer in distribution. And suspending exchanges of samsung note 7 smart phones, that announcement coming earlier this hour. Samsung is said to have halted production after reports that phones replaced in the massive recall were experiencing the same overheating problem as the originals. And the coalition for clu inclusive capitalalism hosting their third conference today, bringing together ast owners, ceos, policy owners over 20 countries to restore capitalalism and try to regain some of the public trust. Speakers include jamie diamond and larry fink. And christine a, joining us to talk about the coalition. Shes also been a longtime supporter of Hillary Clinton and i want to start the conversation there and get into what inclusive capitalalism mean. But help us understand in terms of what you saw last night in the debate. As long as you know im speaking in my personal capacity, because capitalalism is nonpartisan, nonidealagical. But it is true in my personal capacity, i am a supporter of Hillary Clinton. I think she did really great last night. I think she put forward a positive vision for the country. She showed that she is steady and even, that she doesnt go down every snake hole that is put in front of her by the other side. I think she did really well last night. I think donald trump did well with the 30 of americans who like the hear him talk about what he did last night, but i dont think he moved anyone last night. I think she probably did. Fair enough. Lady, let me ask you this. I want it relates to Inclusive Capitalism. I want to ask you i imagine in your personal capacity. Around some of the emails that did emerge over the weekend from Hillary Clinton and some of the things shes said about wall street and also about free trade, which seemed to be different than some of the things shes said publicly. And when it comes to trust, how you think about that. Thank you for asking that. I dont know the specifics of what was released this weekend because ive been working on this conference that were host today, but i do know i have been in the room with many people from wall street when Hillary Clinton has said to them, you have got to understand that my job as president will be to make this country fair for all americans, that i am devoted to everyone who works hard and plays by the rules. And i am going to pursue policies for those people, even the ones who dont vote for me. I have heard her say that in a room of wall street, mega donors, mega ceos. So i know the truth of her commitment. There is something i want to say about that trust factor. What i will tell you is the people who trust hillary the most are the people who know her the best. The people who trust donald trump dont know him at all. They are closing their eyes to the truth of who that man is and im really sorry about that for america, but i am hopeful that hillary will prevail on election day and this will all be a bad memory. Laid ey, lets talk if we could about whatclude capitalism in this conference is all about. What are use the phrase Inclusive Capitalism, what does that mean capitalism has to be a system for everyone. Adam smith would have seen Inclusive Capitalism as a redundancy. But to too many people, it is a complete oxy moron. And we are gathered here with the Worlds Largest asset owners, largest Asset Managers, because we are trying to find ways we can Work Together to be part of the solution to creating broadly based prosperity. What do you do about the severe distrust out there as represented most recently by the situation at wells fargo . People look at some of these big Asset Managers, these big institutions and say we cant trust these people. Well, and that is a very good example of why Asset Managers have got to dig deeply into their own investments and who is investing in wells fargo . Who is managing that company . And customers, regulators, should be very angry. If we allow unethical behavior, we as investors are going to lose money. It wasnt very nice place to be to be invested in volkswagon, wells fargo, hsbc, rolls rois, when they were involved in illegal activities. So what were saying is as investors, to create Inclusive Capitalism, that means we need to engage with boards and managers and make sure that they are living up to ethical standards. Lou gursner had a piece in the wall street journal just last week about this, which i thought was great. He says, we dont employees dont do what we expect. They do what we inspect. And it is our job as investors, as owners, even as customers, to inspect how companies are behaving. And by the way, i think customers have a huge role to play in this. If customers stop buying from companies that are unethical or companies that dont treat their employees well or dont take care of their supply chain, suddenly thats going to percolate up to the boardroom and behavior will chain. Fair enough. We appreciate your time this morning. We wish you luck with the conference today. Thank you. Thank you. Appreciate being here. Thanks. Coming up, Hillary Clinton and donald trump laying out their Energy Policies and sparring over plans for the cole industry. Well talk to murray industry ceo Robert Murray when we return. Return. Im the company data hog. I do the sales, the marketing. I have to do that from my phone. We use tons of data. I really dont have to worry about it cause everything is unlimited. I need data and i need it now. Its the end of data limits for your business. Get unlimited 4g lte data as low as 30 bucks per line. Switch your business to tmobile work. They had been up about 70 or so. They have edited now, now up 94. On the dow, up 25. Just up 25 on the nasdaq. Up nearly 13 on the s p 500. Lets get back to Mohamed Elerian this morning, the chief advisor at alians. You wrote a piece this morning in the ft where you talked about the market as frogs swimming in a warm pot that is about to come to a boil. Why . So anybody whos looking at evaluations and trying to reconcile that when with what they see on professional and economic front, its hard to do. Central banks have been very affected in insulating market from whats happening underneath. Theres no recognition that Central Banks are becoming less effective or in the case of the bank of japan, ineffective and almost counter productive. So the protection that markets have received from Central Banks is lessening and that exposes them to the potential for quiet quite, much higher volatility, and a significant downicide. One frustration that ive heard from a lot of investors is the fact that singles stories can move entire sectors. Mylan can bring down the entire health care sector. How do you invest around that . Its hard. And it speaks to two things. One is that liquidity is not as ample as it used to be. Theres been a structural change. One consequence of shrinking the middle, which is the investment banks, is theres a lot less liquidity for whats much bigger now and thats the end users. So when theres a change of you, that sector gets hit hard, both on the way down and on the way up. The second issue is because people are edgy, wondering, whats the Tipping Point. They know theres an unsteady momentum. Thats why one of the hardest things for longterm investors today is they have to be much more tactical. They have to take advantages of these opportunities that open up when liquidity is not ample enough. What to do. What youre supposed to do is accumulate some cash here, recognize that youre going to have to be much more opportunistic than youve been in the past. So now i have to buy individual stocks . Buy what am i supposed to do . So we have come from a period in which weve seen quite a bit of volatility. Look at january and february. And people camen and said this is an overreaction, why . Because market technicals were driving. This is an over reaction to china. Well get those on the way down. And youll have to learn to fade that if you want to make money. If you dont, just be the story of the last two years, which is you can be flat but volatility or you can not it wouldnt have felt that good. But this year, if you would have bought almost any asset class, you would have been up, stocks, bonds, oil, gold. Hasnt happened since 2010. And what does that tell you . We are in a very artificial market. Thats a lot of money sloshing around. And theres a big floor underneath. Exactly. So ultimately, the call is can Central Banks continue to provide that big floor . Anybody who ises correlations acting this way, they tend to be efficient. Thats why the socalled expert in the Financial Markets are much more nervous than the average person. They say correlations that make no sense and they worry. In the past, things that make no sense, what is unsustainable, becomes unsustainable. How do you have time to worry . People who tend to do it havent been correct. Correct. And that is the frustration right now, this is a very artificial market. Absolutely right. All right. Well keep talking about this. Weve got a lot of moving parts here, mohamed. Stick around. Coming up, Energy Policy in focus. The candidates laying out their plans for the coal industry. Well talk to Robert Murray, ceo of murray energy. Up next. As we head to break, look at the top tweeted moments from last nights debate. Taking the top spot, trump disagreeing with Vp Mike Pence on issues related to syria. Well be right back. Well be right back. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Our customer is a our 21yearold female. Heavily into basketball. Wait. Data just changed. Now shes into disc sports. Ah, no shes not. Since when . Since now. Shes into tai chi. She found disc sports too stressful. Hold on. Let me ask you this. Whats she gonna like six months from now . Who do we have on aerial karate . Steve. Steve. Steve. And alexis. Uh, no. Just steve. Just steve. Just steve. Live business, powered by sap. When you run live, you run simple. Donald trump and Hillary Clinton weighing in on the respective Energy Policies at last nights debate. More specifically, what each candidate would do for the industry. You laook at our minors. Hillary clinton wants to put all the minors out of business. There is a thing called clean cole. Cole will last for 1,000 years. Im the only candidate from the very beginning of the this campaign who had a plan to help us reinvitealize cole country. Joining us now, Robert Murray, chairman president and ceo of murray industry and operator of cole mines in the u. S. Hes a supporter of donald trump. You want to do a fact speck . I didnt realize hillary was the only candidate that actually had a plan for the cole companies. Did that was that the truth there . No, it is not. Hillary clinton has no plan for the cole industry. She has no plan for reliable low cost electricity in america. Shes all about wind mills and solar panels. Thats because the Clinton Foundation and her campaign have gotten millions of dollars from the manufacturers of wind mills and solar panels. Theres more electricity in making the wind mill than ever comes out of one. What they get is a 4 kent a kilowatt hour tax credit and warren buffet, one of the billionaires benefiting by this the most, himself said we dont make any money on the wind mills, but we make a lot of money on the tax credit. Shes sold out to the manufacturers of wind mills and solar panels. She will continue the policies of barack obama, which have destroyed reliable low cost electricity. And sir, that woman thats trying to raise children on her own, that single mother, that customer of a product that is manufactured in the global marketplace, that couple on fixed incomes, are seeing their electric rates go up 50 . And so there is no Energy Policy for Hillary Clinton. And as far as my cole minors are concerned, shes offering after she destroyed the jobs of my cole miners, along with obama, she now wants to get 30 billion of taxpayer money and give it back. I can tell you, sir, these folks dont want Hillary Clintons welfare. They want jobs. She has no policy at all. Shes about kickbacks. Shes about paying to play. So is clean cole clean enough for the Renewable Green Energy lobby . How clean is it and is that the only cole that we should be using in the future . I guess old cole just, you know, the narrative is theres no place for that in the future energy needs of the country. But is clean cole clean enough . Yes, it is. Critical combustion will make cole fired electricity just as clean as wind mills and solar panels, cleaner than natural gas. The technology is there. It has to be put on. But whats happening is the government is picking winners losers and giving tax credits to the manufacturers of wind mills and solar panels while they end through regulation the operation of our cole mines. The cole industry is produce the coal industry is producing one half of the coal it did at the election of obama. That is 4 kent a kilowatt hours, sir, of electricity. The bind at solar is 26 cents a kilowatt hour and gets 4 krents from the taxpayer. So when she says shes putting coal miners and Coal Companies out of business, shes not talking about business. Shes talking about money. The single mother is standing in the way of her 26 krent an hour wind mills and solar panels. One last point, the lowest 25 million families on economic scale in the United States now spend 22 p krents out of every dollar that they obtain for energy and we need to be thinking about energy and hurting the poorest in the country. People on fixed income, the manufacturer of a product for the global marketplace. She is a disaster. She has no Energy Policy and donald trump has an all of the above policy where i will use all forms of energy and yes, there is Clean Coal Technology today that will allow coal to be burned cleanly. If we were to just for arguments sake, just get rid of coal completely right now, what would take up the slack . Im trying to figure out how wed do it and how much more per kilowatt, the apples to apples comparison to what it would cost to totally replace all coal right now for utilities. Dud we do it . If you eliminated all coal in this country, people will freeze in the ardark. The lights will go out. The reliability of their power grid will go away. People well, if we did it gradually so that that didnt happen, what would be the replacement source for the electricity . What do they want to use . Thats what im saying. There is no replacement. You see, wind and solar only works if the winds blowing and the sun shines. You need about 30 coal, where we are today, to make sure we have a reliable power grid. There is no alternative to it. But she is vowed to destroy and expand her word on obamas policies. That is is disaster for america. That is a disaster for people on fixed incomes and the poorest people in this country and the lights will go out. People will die on the operating table with her policies. Two questions. How quickly can you you said turn it on in terms of trying to make this truly clean. How long does that take . What type of investment does that take . It would take a lot of investment. It would take many, many years, but there has to be a government commitment to it, just as the government is supporting the peoples taxes, wind mills and solar panels, they need to support the Clean Coal Technology. Put it on. We need a level playing field. Thats what donald trump has said. Well use it all. Well use all forms of energy to make electricity. So there needs to be a level playing field, not picking winners and losers, sir. Oh, that was both of us. Okay. My other question was a business question. What do you think of tesla . Have you ever invested in tesla . Im curious. Tesla is a fraud. Hes gotten 2 billion from the taxpayer, has not made a penny yet in cash flow. Here again, its subsidies. And Hillary Clinton said they need government help. She was talking about elon musk, warren buffet, the prilgtskers, the pole skaez, stooir, the wealth i say family, podesta himself. Thats who she was talking about in supporting her friends. It has nothing to do with the environment. And by the way, you could close down every coal fired plant in the United States today and you would not affect the temperature of the earth at all. Not at all. Just the temperature in the ladys house that you might affect that temperature, but not the temperature of the planet. Anyway, robert, we appreciate your time this morning. Thanks for making the case for us. Thank you, sir, for having me. Youre welcome. Wow. Wow. Thats all i really have to say. You know the scariest thing that was out over the weekend, just thinking about people that dont have the where with all necessarily to pay for for health care or energy, 7 out of 10 americans have less than 1,000 in savings. Yep, ive seen it. That is unbelievable. They wouldnt be able to pay for an emergency. I thought it was 400. Costs do matter. Weve got to run. Youre sticking around, right . I am. Coming up a very busy week ahead for markets in addition to this stuff. Plus, more reaction from last nights debate. Bill daily joins us and later, cnbc senior contributor larry cuffed low joins us and gives us his take. Squawk returns in just a moment with a very big hour. With a very big hour. Osts 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov the gloves are off. She talks about words that i said 11 years ago. I think its disgraceful and she should be ashamed of herself. He gets derun his campaign anyway he chooses, decide what he wants to talk about. Hillary clinton and donald trump debate in primetime. Theyre now just 28 days until the president ial election. Crude reality, Saudi Arabias Energy Ministry Says 60 oil is not unthinkable this year. A live report in istanbul, coming up. And samsung halts production of its note 7. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning. Welcome to squawk box right here on cnbc. Im andrew, along with joe and kayla. If you did not hear the news, becky had the baby. What was it on friday night, we decided . Not we decided. Before midnight. They decided to induce or something. Yeah, it was prior to midnight. And it was all, i think, just the way it went, you know. She wasnt i think when did she i think tuesday. Wednesday she didnt come in. Kaly noel. A bundle of joy right there. 8 pounds, 5 ounces. Gorgeous. And then i heard the significant other. Matt quell. He left one day and didnt tell anyone. He said, im leaving and it happened. And you know what im talking about. So that happened. And then i think that happened so it was about 12 hours. Not quite but you know, right before midnight. And she was a trooper. She worked up until wednesday. She is a super human. Put us all at risk. You know, if it happens, its like, who knows. Street blocked off or something or traffic or we all feel like the nervous husband. I mean, you need to get where they can handle Something Like that. Every time they see something with road rage, they say let them go, they might be on their way to the hospital. Right. You dont want to have a baby in a car. You just dont. Best wishes to becky, matt, and the whole family. And she is a super woman. And then kyle. Yes. I hope he is taking the news well, big brother kyle. Ill bet he is. Nothing like, you know that song, the little girls because they grow up probably you cant say that anymore. But anyway, it was well intentioned in the old days. And our good friend Mohamed Elerian is here for the rest of the hour. The first hour, weve got a lot to talk to him about. In the meantime, take a quick check on fufrcheck on the futurt now, they are in the green. European ecties at this hour, also in the green, which is maybe what were working off of here. There you see it, pretty much across the board. Making headlines, merck shares, rising after the results for a study of an immune boosting drug for lung cancer. Patients who took the drug lived longer than those who received conventional chemotherapy. Verizon, at t and others are suspending exchanges of samsung note 7 smart phones. Samsung was said to halt production after reports that the phones were replaced as a recall were experiencing the same overheating problem as the originals, which begs the question, what did you change and obviously that was not the fix. It still happened. So were back to the drawing board there. And twitter shares are dropping sharply. The decline follows a bloomberg report from the weekend that would suggest that potential suitors are unlikely to make a bid for the social network. I dont know whether the hype from the Business Media about how much in demand this was going to be. For a minute, i even said, is this gold . You know, all of a sudden, google and disney well, big players. They all wanted to buy. Now did they change their mind and not want to buy it or did the business crash totally over play what was going on . Maybe they saw how much the stock ran up on news of a potential deal. But when it was around 26 a day the marking it up really did want to buy it, but the shareholders came back and raelkted so negatively and the back lash has been so negative. Google, i dont know where they stood. And disney, some people would say was doing it as a courtesy because jack was on the board and they respected that. Regardless, well see where twitter opens today, certainly not look good for that company. Other stocks, bank initiating on netflix. Market expectations through 2020 appear to be too high on the business. Although it does say the riskreward balance is unatactive on netflix, unlikely to be target buyer, down 1. 5 this morning. United technologies downgraded to neutral from buy the analysts there, too high given a number of underlying issues that will criticism earnings at that company. And vicomand cbs are taking another step towards recombining the wall street journal reports both companies to explore a potential merger. Vicalm and cbs were part of the same company until they parted ways in 2006. You can take a look at those stocks, down this morning. Joe, well see if whats old is juvenile again there. Dont get me started i love investment bankers, i do. Anyone can see those companies deserve to be together. Synerg ies are so clear. You put them together, its all viscosity, rationalization of go back. How long ago was that, andrew, ten years . What are these two companies doing together . Theres nothing here. Weve got to separate. How much are you charging to separate . Oh, we can do that for how much are you charging to im going to get you the actual banking fees on that separation bump i think were talkth at least 100 million. I love that. Who would put these two together, you know, ten years ago . These two got to be together. They say that things have changed, right . Blah, blah, blah. They would say the media world has changed and power, yes. Maybe they placed the wrong premium on the different ceos. Hindsights alwaysf 20 20. But he might be able to fix it. Maybe he could. Maybe he should have been in charge the entire time. Weve been through a few guys, preston. Felipe came in. Oh, we talked thats going to be your 45 minute segment. Yeah, on the juvenile nobel it was on contract. Yeah, the memorial cross, not a real cross. In the meantism, lets get back to our top story of the morning, the president ial debate, donald trump talking about his plan to combat isis but not the quite the same plan we heard from Donald Trumps running mate mike pence earlier in the week. You disagree with your running me running mate . Right now, syria is fighting isis. We have meet that want to fight both at the same time. Syria is russian and its iran, who she made strong, and kerry and obama, made into a very powerful nation and a very rich nation very, very quickly, very, very quickly. I believe we have to get isis. And joining us right now to discuss that and more banks, hes martner at a law firm and political analyst. Also served as National Council to the 2008 and 2012 mit romney campaign. What did you make of that exchange. Well, you now know whos at the top of the ticket. So its not totally unusual for r running mates to have different views. It got asked in a particularly stark fashion last night. Donald trump said what he believed and shes the guy at the top of the ticket. And dont you think the voter looked at that and told the truth, very honest. There was something very uthentic about that moment. Yeah, there was something uthentic about it. I suspect the running malts will have a chat today, just to go over the play book a plilt bit and each will be asked about it. And so theyll come up with a common answer that both respects their differences but also talks about how they will do a better job than Hillary Clinton. Does it matter, though, that so many republicans have thrown support by pence instead of behind trump . I mean, there hasnt been party unity throughout the course of this entire election . Does it matter anymore now. Well, i suspect it does in the long run when you talk about how you get your turnout to a majority on election day. But whats also true is that donald trump and mike pence have been running a campaign that doesnt realize much on the party hirarchy and usual republicans and the folks theyre making their real appeal to are low propensity republicans, who may be republicans, may be democrats, may be independents, but their whole argument in this campaign has been a change argument and thats designed to cut across party lines. So ben youve been in campaigns. Tell us a little bit about what goes on behind closed doors. Houf do you see this going . Whats going to come out of it . Well, what the campaigns now have to do is concentrate in the next 30 days on getting those voters who may be trumppence supporters but dont usually vote out to the polls. So i think a lot of the conversations are, number one, how we can post up against the Clinton Campaign. But number 2, they need to be talking about the mechanics. In other words, how you have a ground game operation which has been very underfunded, very underdeveloped. You mentioned party unity before. All of that worked on turning out the republican vote has been left up to the Republican National committee. Usually, its a campaigns responsibilities but not this year and so thats a huge burden on the rnc. And again, a lot of the conversations will be about what resources do you have . Where are you going to put them . Whats the messaging were using to get voters out in the last 30 days . Ben, when you think about whats happening, even in the past 24 hours, are you surprise under what im surprised by is going into the weekend, given the tapes, it almost seemed that disqualifying event, so many republicans came out against him, but we had Business People and jack welch who had come in this program to talk enthusiastically about donald trump saying we needed a juvenile nominee. And to a large degree, i dont know who you thought won the good bait last night, but were no longer talking about that anymore. Its actually moved onto the issues again. Yeah, it really has. And its been this has been a campaign where you sort of do a head snap about every 48 to 72 hours. And that will continue. Im sure that with the Clinton Campaign will be doing today is to try and get the conversation back on the tape, back on donald trump and the case Hillary Clinton tried to prosecute, not all together effectively last night. And the Trump Campaign will be trying to hammer the chains. Of course, theres another debate on october 19th, and that will be when these sort of colliding messages in fact do collide right, live and in person. Okay. We appreciate your time and perspective this morning. Thank you. Thanks. Good to be with you. Thanks. Coming up, saudi arabias Energy Minister says 60 oil, not unthinkable this year. Well have a live report currently taking place in istanbul, up next. Youre watching squawk box on cnbc. Cnbc. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. I was diagnosed with parin early 2013. Lly it took awhile to sink in. We had to think a little more seriously about saving money for the future and for the kids. The income of airbnb really helped to mitigate the stress. But we have that flexibility of knowing that if you know things get worse, we have this to help keep us afloat. So thats very, very important for us. Welcome back to squawk box this morning. An update now on the after math of Hurricane Matthew. No longer a hurricane and no longer battering the southeastern u. S. , but the devastation is overwhelming. At least 19 people in the u. S. Dead as a result of that storm. More than 2 billion businesses and homes still without power. Core logistics estimates the dmk cost of the hurricane will be at least in the 4 billion to 6 billion range. Well, prices take a quick look this morning with the buff 50 as steve joins us live from the World Energy Congress in istanbul. And pretty solidly at 50 at this point. I dont know that were headed back to 40. 60 would not be a surprise at some point this year. Yeah. Exactly. And im hearing a lot of that from ministers and some of the big ceos, as well. They think theres a much firmer environment for the price out there, as well. Weve been listening today to actually one of the biggest men in the world and falir who is basically the most powerful man, a saudi oil minister, and hes been talking about how he really thinks there could well be an opec deal. Theyve talked about it in algiers, havent put meat on the bones yet. Lets hear what he had to say about the possibility for a deal and what he does and doesnt want it to do to world markets. I think opec needs to make sure we dont crimp too tightly and create is shock to the market. Like i said, we want to be very responsible. The prices have dropped too low, that has impacted investment, Many Companies and countries are hurting. That needs to be relieved. At the same time, we dont want to get give the market the opposite signal and shock markets into prices that could be harmful. Thats the whole point. Not shocking markets. Because last time, we saw opec cutting aggressively. Of course, they were doing it to defend the price. We made it go from 147 down to 41 and everyone was very worried from the Oil Community about how low it could go. And their action meant the price went up again for three years between 2011 and 2014, we saw some stability, as well. They believe in saudi that they can get some form of deal in vienna for the open meeting and possibly bringing nonopec, as well. And on the issue, the key player is russia. And the russians are here in some style. Theres a meeting going on literally 100 yards to my left with serious players, including the president of turkey and russia and of course everyone will remember the shooting down of a russian jet, possibly over turkish air space, last november, created a real superpower tension between turkey and between russia, as well. Now, the reprofession has been on since june. Now these two are talking. Whether you can get the russians on board for an opec deal remains to be seen. But big stories here in istanbul. Back to you. Well see what the result of that meeting is and well look to you for that. Now for a look at whats working in the markets, joining us now, ceo hurdle calahan and company manages over 23 billion in assets. And john, you heard steve mention the late november opec meeting. Of course, wti and brent, both up to date. But are we an oildriven market for the next few weeks . What were really looking at is reacting to prices. If the oil prices moves and moves prices, were looking for dislocation. Wheres the opportunity . I was struck by mohameds comments earlier about being more tactical in the marketplace today. The dominant factor were still living with is the low return market, low return environment were in, created by swrurk. Were really serious investors, really looking for where can we find the returns that meet our clients needs . Were chief vestment officers managing about 24 billion for 400 clients in 46 states and really looking for where do you find those opportunities today . And so if oil, we actually liked oil last year, and we still own it. Not oil, but the Actual Energy companies. And thats done very well. And so well continue to hold those positions. But were always looking for twlaez opportunity . So john, what do you tell your clients if they come in and say, i hear that debater . The markets going to give me, its going to be lower. But i also theyre alpha, what you can create for me on top of the smarkts being challenged by all these distortions in the market. Right. So i think first of all as you know, mohamed, in a shortterm, the price movements are almost random. Were really looking for the prices reliably converging on the cash flows. So first of all from a beta standpoint, we know nothings cheap. Bonds are almost priced to ineffectiveness. And u. S. Equity market is not cheap. Were trading it 21 times our notion of earning. So thats high. So where do we want to look . First of all, we like stocks over bonds. And secondly, we Like International over the United States. So well tilt to that. Because if the United States is priced to give us a 4 and a half real over the next 10 years, merging markets are priced to give us a 9 and wooechk europe is priced to give us 6. 5, 7. So were looking on the margin to own stocks as much as i can, to own more international than u. S. And to earn enough cash to be tactical. We still like private equity and selective hedge funds. So in a lot of ways, its a small ball, how do you grind out these returns, find them, position your beta right, keep plenty of cash and look for inefficiencies in the marketplace . What sort of down protection do you have . 9 real sounds great in theory, but you dont know that it will happen until you get it. Were really more interested in the opportunity for loss than volatility. What kind of risk are we focused on . Two kinds of riskz. Achieving our clients goals, which is to achieve 5 real returns at least over time and not losing money. So we want to manage down side risks while were seeking the returns that meet their needs. So when we look at a 9 real earnings yield in emerging markets, first of all, those markets can be bifurcated. We dont want to own alibaba. We want to own the more stable, quality yield companies. Can i ask you an unpopular question . Theres so much focus these days on the bita issue, which is basically everyones trying to avoid losing money. And they dont want to see theyre they dont want alpha, but they dont really want alpha. And its sort of hard to get alpha if youre really playing for beta all the time. Well, you want to do both. So alpha is valuable. Yes, but you know what i mean. This has become a problem, by the way, for Pension Funds and everybody. Because nobody is willing to actually deal with any kind of real risk. Well, thats true. In other words, the Pension Funds, thats a whole different story. Theyre in a game thats often times different from the rest of us as investors. But i would say alpha is valuable, scarce, and fleeting. If you can find it, you want it. But you also have to position most of your money correctly relative to beta. So where are the beta opportunities today . And then this tactical notion, so as a chief investment officer, youre really allocating capital, you want to allocate among beta opportunities, active managers and in and out of the market based on tactical moves. And thats how you try to achieve those returns you need. Youve got a whole asset clasyou cant even touch. Bonds, absolutely. How do you spread your risk and say things, got paw be a lot of stocks and a lot of cash . You know, i dont cash, if i have 80 stocks instead of 60 it would be nice to have a normal 60, 55 stocks, 35 bonds, 15, you know but thats not the hand thats been dealt to us. Thats not the market. Right. We have to react to the market we have. Im glad im on tv, anyway, you know, and not you. John, thank you. My pleasure. Coming up, the winners of the nobel prize announced this morning. Well tell you who they are, right after the break. Right after the break. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint ves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your busiss to sprint and save 50 on most rrent verizon, at t and tmobile tes. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Coming up, a former white house chief of staff bill daley. Well get his reaction to last nights debate showdown when we return. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. We had to think a little more seriously about saving money for the future and for the kids and for their college funds. We thought, well this airbnb is actually a great way to pay those extra bills. Every bit of extra money helps these days. We have a Retirement Fund of our own and i take a draw on it. I dont want to take too much either because i dont know what life is going to bring to me. I get to keep 97 of my rental price. The extra income i get from airbnb has been a huge help. Airbnb has helped me so much financially especially starting my own business. San francisco is such an expensive place to live. The way people work and travel is changing. The guests are now able to stay longer, stay five days, enjoy another day in San Francisco and spend more money in the neighborhood. My guests are able to extend their stay and spend more money on activities and restaurants. The extra income that i get from airbnb has been a huge impact in my life. Welcome back to squawk box. Heres whats making headlines this morning. Fed vice chairman tim fischer says it was a close call. The deciding factors a labor market recovering more closely than expected, as well as inflations still short of the feds 2 target. Gasoline prices up 4 according to the latest lumburg survey. That puts the average price at 2. 29 per gallon. Gas prices are up 0. 13 over the past twoweeks. And mylan will pay 465 million in settle charges involving the epipen. They had been accused of misclassifying epipen as a Generic Product which would allow it to pay a smaller rebate the medicare programs. The company did not admit or deny wrong doing, but you can see how the markets interpreting having that checked off the list for the company. The stock is up about 13 . Twitter shares, though, are sliding to their lowest level since august 3rd. This comes on increasing speculation that no suitors will ultimately step forward to buy the company. Shares are risen as high as 2432 last week on talk that a number of companies were potentially interested in a purchase of twitter over the last month, stock is down 4 . Joe . Okay. It is that time of year. Nobel prize announcements, oliver hart and ben hole strm, a professor won at harvard, holstrom at mit. Anyway, theyve won the nobel memorial prize in Economic Sciences for their contributions to contract theory. The Royal Swedish Academy of science says their theories are valuable to the understanding of real life values and constitutions as well as potential falls in contract design, which if youve ever not had a contract that covered everything, youd know exactly what were talking about. Join us on the squawk newsline is professor holstrom. Is it strown up there or mit in general . Are you talking to me . Yes, sir. I didnt hear what you asked. Are you at the sloan school or at just regular mit as far as a professor . Im at mainly at mit economics but im also at the sloan school. Excellent. Were happy this is not a nobel prize in chemistry or physics, but were still worried were maybe not as ready to understand what youll tell us as we might be. But in laypens terms, can you tell us about your work . Well, economics is all about the incentive. So this is about the incentive contract. Its about trying to motivate people to do things that are beneficial for the parties and the contract. So its about designing contracts but in the narrow i think a maximum of the theory. But as we have started to understand things better and thats part of my look, my orders, among others, its to understand that its very much bigger question than these incentives. Its not about how much how one designs jobs, stops those organizations. And so its about the whole system that influences our behavior. Professor, real quick, just on the incentives, though, and its something i think were all fascinated by. There seems to be a big has been a big push over the past decade or two. We want our professors to have stock, and then theres been almost a backlack in the last couple years, weve seen certain executives, perhaps two things we wouldnt want them to do and weve suggested they almost had too much skin in the game, their incentives werent aligned properly. How do you think about that . I think that mistakes have been made in the design of the incentives. Thats clear. And so i will say that the biggest mistake was that they could cash out so quickly. If you are interpret no, you cant cash out quickly, you have your own skin in the game, and the biggest design flaw in the compensation in my view that theyd enforce these executives to hold onto their incentives for longer. But that is changing right now. Professor, congratulations on your prize. You and professor oliver hart have given important insights on the importance of incomplete contract and how you have to support bottom up incentives with top designs. So when you look out there, is there a sector, is there an issue in particular that you think that your insights have not been applied to enough . Well, im more of im trying to understand the book and so thats the first page. You know, its like many things. Youll be diagnosed with understanding why people are behaving the way they are before you try to change the behavior. And so thats been where my emphasis has been. But as i just said, one of the things weve blown is about the fact that incentives of the executives and be able to cash out. Some of it has to do with, especially oliver harts work, has to do with just understanding what contracts are and understanding that what the contract is in. So it has been these are deep theoretical insights that are not so easily, perhaps, explained to laymen. But let me say just a above and economics is that some of the most obvious sounding questions to laymen, such as why do we have money or why is that so important. You know, these are the deep questions that actually lead to progress and understanding these issues and i think oliver and i have contributed to that. Great. Professor, once again, congratulations. Congratulations to professor hart, as well, and thanks for joining us today to explain things. Thank you. Youre welcome. Bye bye. Now to politics. Were talking beyond to president ial race, though, this morning. Jabbers joins us with a look at house legends and the overall balance of power. Good morning to you. Yeah, good morning. Those gross comments released by donald trump are released from donald trump over a decade ago are causing ripple effects all the way through the senate and house campaigns, all across the country here. Take a look at kelly ayat in new hampshire. Shes running for senate, an incumbent. Shes in a very tough election. Earlier, she had backed donald trump and said she would support him. Now, over the weekend in the wake of the release of this tape, she has changed her mind. Heres what she had to say about it. I cannot vote for donald trump based on what he has said and done and the actions he talked about in those tapes and i want my daughter to know that. That is more important to me than winning any election. Now, take a look at the margin of control in the United States senate and you see the democrats need a pickup of at least four seats overall to gain control, five if donald trump wins. Ultimately, those seats may be out there for democrats. The betting has been that it would be tough for democrats to pick up the senate but not impossible. In the house, however, its a different picture for democrats, a much bigger challenge. They need 30 seats netd pick up and because of the jurisdictions of all the different house seats, the jury manering that has gone on over the years, that is a tough climb for democrats. Nonetheless, there are some republicans who do feel that it is at least theoretically possible now with the crumbling of the Trump Campaign that we could be seeing a moment where democrats have actually a legitimate shot at the house of representatives this year. That would be a big change in political fortunes from just earlier this year. Weve got paul ryan on the halt seat now. Over the weekend, he disinvited donald trump to his event in wisconsin. He has not unendorsed donald trump, though, and all eyes will turn to him today as House Republicans hold a Conference Call at 11 00 a. M. To discuss strategy going forward, what theyre going to do about their donald trump problem and of course the rnc itself having a Conference Call at 5 00 p. M. , as well. So a lot of moving parts today, guys. All right, thank you. Last night, donald trump attacked Hillary Clinton over her middle class tax plan. Okay. Gremlins. I think that was not the middle class tax plan. That was the clinton floor or whatever theyre called. Anyway, joining us now, former secretary bill daley. Funny things happen on live television. He also started as chief of staff to president obama. Secretary daily, welcome. Its good to see you, i think. I see you. Thirtyfour. There he is. All right. Excellent. I thought i was going on to be announced as nobel prize winner. Did you yeah, thats maybe Nobel Peace Prize for you. Maybe. For keeping peace when you were there, you probably were in the running when you were chief of staff, right . No, it was a great time. Okay. And let me see how i can just ask my whats a good generic question . Help us understand what happened last night. Well, if you remember the old gong show, i think its probably the aanalogy would be closest to that show. Its coming back. Well, it came back last night, i think. My guess is after an unprecedented weekend, my sense is he probably stabilized the slide, whether hes able to hold that, many of your previous guests have said or reporters have said, they thought he played to his base. Thats a big piece of the Republican Party. So its not as though republicans can totally walk away with that. Not only did you see the politicians panic over the weekend, post that video, put you also saw a lot of people who were strong supporters of trump, like jack welsh, walk away. Which to me, i mean, as you know, joe, jack is not exactly a fan of Hillary Clinton. Never has been. Didnt advocate to vote for her, obviously. But the fact that he walked away as a preeminent former business person who was there out front, he had been with other candidates, i think ted cruz originally, that to me says a lot more than a lot of politicians who may be in the middle of a race and theyre panicked because theyre trying to win and they see the middle voter slipping away from them. But when you see people like jack welsh and maybe other people walking away from this candidacy, thats a serious walk. Very serious. So in your own career, youve walked a fine line. You know youve been a bankster and youve been in the you know, and im saying that, you know how im saying it, tongue and cheek. And youve also been, you know, in the obama administration. So youve had to walk that line. Youre a private sector guy that appreciates the private sector. Now were seeing this sort of i think its humorous take on Hillary Clintons private and Public Comments on wall street or on the private sector. And the Bernie Sanders types in the left, theyre mad. Because they say, look, shes saying things that are like pro private sector. And then more reasonable people are saying center left or center right, maybe this is the real Hillary Clinton thats closer to the way bill clinton governed from the center. But its just funny because its a test for those far on the left in your party, they look at it as a negative that shes actually, you know, amenable to working with wall street. And then you see what im saying, right . Where are you on this . Well, look, theres no doubt that the far left and the far right have been driving this sort of bus of inaction and congress and in our political system. Wait a minute. Thats your opinion. I would not agree with that, obviously, at all. Sure you wouldnt. Well, those two mid term elections, their route was for a reason, bill. But joe, you have to also. Go ahead. But you have to also admit that in both of those mid term elections, you had very small turnout. President ial elections bring out the nation and they focus on election and thats when the mood of the country and where the country really feels is shown, not in midterm that are very small. When you start your first term by hijacking 17 of the economy through hook or crook into obamacare and then you have people not working with you later, some people might say thats just carm aeroor payback, though to. I think its been pretty obvious for the last eight years that the Republican Party debate within that party, which is now coming to a head, and you saw it with boehner, canter being thrown out, the far right pushing, even saw it going back to newt gingrich. Basically even when this election is said and done and whomever wins, theres going to be half the country that ive never seen anything like this, that think that one half thinks one candidate is, you know, just horrific, the other half thinks the other candidates horrific. I know. Its unprecedented and bad for democracy. Its going to be unbelievable. Youve got to help to change that, joe, by being a little more reaching out to the other side. I do what i can, but i can do so much, bill. Thank you. Appreciate it. I know. Thank you. Coming up on squawk box, weve heard from a Hillary Clinton supporter. Up next, well talk to cnbc contributer and trump advisor, larry could low. Thats up next. Thats up next. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. When we come back, trump supporter larry kudlow makes his candidates case. First, take a look at futures. Dow will open up triple digits. Well be right back. Welcome back to squawk box this morning. Joining us right now is cnbc senior contributor larry kudlow. Larry, i want you to just take us through the emotional roller coaster youve been on over the past 48 or 72 hours. Because i know you are a trump supporter, but it sounded like there were moments where you were having flashes of questioning that. There were moments. There were moments. I cannot deny that. The vile tape, as i call it, is inexcusable. But even worse it connects to some of the dots weve heard from him this past year, or this past campaign season. I dont like that one bit. I dont know, ive been in a lot of locker rooms, so have you guys. I dont talk that way. Never have. Never will. I was almost in the camp, i didnt declare and im not going to declare this morning lord knows, but for me i wont vote for mrs. Clinton. I expect to vote for mr. Trump, but i thought for a moment there id just have to write in mike pence. That that was the way out for me. Just to give me a wrap. Yeah. She was creaming him about this whole, you know, she was really nailing him about what he said. Deservedly so. And she connected those dots to whats happened in the campaign regarding women and other groups. Okay. He took a big risk. And im going to give him credit for this. Took a big risk and brought up the bill clinton infidelities and so forth. And i think basically the way he said it was pretty decent, if you will. He sort of threaded the needle, if thats the right manafor. I think this is still the most painful thing the clintons have ever gone through. Im not an expert on the clintons, but thats what i think. And then he had a very good comeback because he got into some issues and i thought he did rather well on the issues. No question. He can always do better, but hes coming along. Got the economics thing out decently. I still want him to sell it better. He got the energy thing out, the health care thing out, that was pretty good. And he had her on the ropes. And her business with, you know, private this but public that is really a killer. So at the end of the day, andrew, im going to give him a small victory on points. I think what really happened last night his Campaign Like a stock looking for a bottom, i think the campaign found the bottom. He will have some tomorrows, but hes still got a very difficult uphill climb. This campaign though has been able to have a lot of these issues traditionally short lived. They were impressed with his performance last night. They were comparing him to the september debate performance saying he was polished, he didnt stoop to extremely low levels. He had some humor about him. He did have some humor. Thats really important by the way. The way he handled the lincoln thing was very good. Very clever. I think it embarrassed her. I think that he was much better than the first debate. Period. On every account. Particularly on the issues where he was so shaky in the first debate. Im not a poll driven guy right now. I think that stuff comes not for another couple weeks. But, but, but, he has to deal with couple things. His own party. He did get mike pence back on the ticket, there was a period on friday where he was off the ticket. Regarding Mitch Mcconnell we will see. He lost a lot of republican support. Hes not goipg to get that back. People like kelly ayotte and john mccain, how important are they to the National Campaign . I dont know. He bottomed. He lives for another day. The whole thing could have fallen apart. Do you fear what hugh hewitt fears, that more research could be coming . I do. He was a smart guy, hes a friend of mine. You hear that everywhere. Look, let me make my case. Im not political guy, but on the economy he pretty much got it out, at least the case that weve helped him with, okay. Shes raising taxes, thats a recession scenario. Hes cutting taxes, particularly business taxes, thats a prosperity scenario. Thats america competitive, thats a wage scenario. Hes just, to me, has to hammer that home more. Not once but several times during the debate, the stakes are very high. I myself am very concerned about our business tax on competitiveness and so forth and so on. He needs to do a little selling. You know, selling. Ronald reagan could sell a case. I mean how hes going to cut tax rates for businesses, Small Businesses, individuals, so what does that do . A, it puts more money in your pocket. What reagan used to say take home pay, just more money in your pocket. B, youll have more after tax that gives you incentives. Incentives to invest, maybe start a new family business, incentives to bring the money overseas back home. We havent had any investment in this country basically in 15 years. We havent had any wage hikes basically in 15 years. Supply side economics is growth economics. And it also just helps the family. More money in your pocket. Thats more demand side. Incentives later, thats supply side. I just wish hed make that case. Right. He has a prosperity plan. She has a recession plan. Thats the way i see the election. Id like him to really start framing it that way. Hes got one more debate. We will see. Larry kudlow, thank you, sir. I wont give him a pass on the stuff. A final prediction from mohamed el earn. And ralph de la vega joins squawk alley. Here i am. Building a jet engine. 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Guest this morning Mohamed Elerian, whats your prediction . You have a prediction . Did we warn you about this . So, joe, whats the big message from todays show . You said it, weve never seen so much political division, weve never seen negative interest ralts, never seen Central Banks so involved in the market, weve never seen so many things. This is what i call unusual uncertainty. Were going to get to a Tipping Point and i think thats the main takeaway. Its also happening in europe, not just here. Run things at slow growth things start to break. All right. Kayla, thank you. Ill be here tomorrow. Make sure you join us tomorrow. Squawk on the street begins right now. Its just awfully good that someone with the temperament of donald trump is not in charge of the law in our country. Because youd be in jail. Secretary clinton a scene from last nights debate