Transcripts For CNBC Squawk Box 20161021

Ftse 100, italy, spain, all up. Looking at crude. Wti sitting at 50. 91. Lets get to that microsoft story. It is the top corporate story. Shares of the tech giant popping on better than expected quarterly results. The big driver, the cloud. The shares of the microsoft product doubling in the most recent quarter. The stock hitting an alltime high in afterhours trading breaking through a level hit at the peak of the tech bubble back in 1999. Its going to close in on a half trillion dollars again. Its great day to have ballmer on. He took a lot of flack for not turning it into something it wasnt. In hindsight, now that we have the benefit of hindsight, he kept that thing moving along. Increasing revenue. Maybe the share price didnt go all the way back. Got pretty rich himself. How much does he have left . I expect him well have him for an hour. I expect him to be in a really good mood today. Because of the stock price. Very few of us get like 4 billion richer on wake up in the morning. I dont know how much it is. Hes worth about 27 or something. I dont know how much of that is still in microsoft stock. Youll do that for me. Well find out how many shares times like 4 today. If hes got i expect him to be at i hope hes in a giving mood. I would be just showering anyone in my i would be throwing microsoft stork or money at Anyone Around me. Maybe hell lay some on the set. Some type of goodies what do you think, sorkin . Looks like he owned 333 million shares. Times 4. Theyre not worth a dollar either. That was back in 2014. Doesnt look like he sold much stock. Well talk more about this with him. With him. Yeah. He may not want to talk he has a team, doesnt he . It may take a while for the clippers to win a championship. Why not buy the nba . Just buy the whole league. Just buy it. Call it a day. Win every year. Yeah because if you own every team yeah. All those rings. If you buy the nba, do you actually own all the teams . Buy all the treatmenteams. That that you couldnt do. You couldnt do that. The doj . No, each team is worth each team is a couple billion dollars. Really . Given the multiple he had on the clippers. If he paid what he paid for the clippers that he had for every nba team they werent a winning team. No. British American Tobacco is offering so buy the remaining stake in reynolds for 56 a 20 premium over the close of reynolds yesterday. The British Group already owns a 42 stake in reynolds. This would value the company at 83 billion. Brexit must have played into this to some degree, b. A. T. Stock is up sharply since the brexit vote, Reynolds American is down on the brexit vote. This has been in the work force quite some time. We call it an unsolicited bid, some call it a hostile bid. Not really the case because the laws in the uk, the second you decide you want to have any type of negotiation, you have to file. This is pretty much from a logistical component the only way to do this. People will look and say this is an opening bid, sure. Will they go higher . I imagine they will. Theyre kind of in a box. Reynolds is kind of in a box, if you think about its not that theres some other player that can come in these guys own 42 of your company. It was going to happen at some point, it was a question of price, how, when. We learned a lot about the uk merger laws as a result of inversions, especially within the pharmaceutical companies. What happens, all the rules that goes into place. You cant even smoke outside here in the city. You cant. I dont think you can. When you go over to davos, walking down the street its weird. Every Single Person smokes. Its weird. When i go over there, im back to a pack a day. Just from walking around. I was in vegas for the debate. Those people are all drinking, losing money. But there you can still smoke in public. You walk through the casino, you walk through restaurants, people are smoking. Its weird. Down 8,000, youre smoking, you need another. I got to make it back. Go to the cash machine, ill make it back. You can guys explain ecigarettes to me . Vaping . Why could we explain this . I saw a car i thought was on fire. I swear, there was smoke wafting from it everywhere. We pull up to the side of it, a guy, i thought he had a bomb with him. It was a big machine i dont get the vaps. Its a nicotine delivery system. I know. But there was smoke i didnt think the guy could see through the windshield. Nicotine doesnt do anything for you. You have no need for it normally. So you start doing it, then you start you indouse youce your habit that does nothing for you. It must do something to help with stress, right . Members of the military f youre in combacombat, youre far more likely to smoke. Theres got to be a calming effect. Better to do it the vaping way than the traditional i assume its better for your lungs. People people are fixed in the oral stage, psychosocial development. They are its freudian. Its early to take us there. Freud is not ds this squawkward moment was brought to you by i didnt say the this squawkward moment was brought to you by joe kernen. You can regress to those early stages i took psychology 101 at cornell. Do you still dream about trains and stuff this squawkward moment has been brought to you by joe kernen. Having not gone to the math class, going to the finals tomorrow. I have nightmares that i dont get to squak on time. I arrive too late. That doesnt sound like a freudian. You loved your mother, right . Of course. I love my mother. How about you, andrew. A lot. I do. A lot. A lot. Mom, if youre watching. By the way, since i mentioned my mother, happy birthday to my dad yesterday. I wasnt on the air yesterday. Awesome. In media and tech news we are watching shares in at t and time warner, this after bloomberg said that Senior Executives of the two Companies Discussed various Business Strategies including what they said was a possible merger in recent weeks. Neither side was said to have hired financial advisers. Peter chernen addressed the speculation on fast money last night. I dont know anything about the deal. I do have a partnership with at t. I would say two things. They are great partners. They are visionary, terrific to work with. As much as any distribution, they understand the content business because they have had directv for the year and our venture is 2 1 2 years old. Again, i cant speak to the specifics. Theres a lot thats attractive about time warner. Its the biggest content company on earth. Produces more hours does more box office, theres a larger library. It is, if you assume the world is going direct to consumer, it probably has the largest because of hbo. Everybody else is going through cable packages. They do have hbo. Great sports rights, cnn, competitor, but still valuable assets. After this bloomberg report came out, an analyst at jeffries said his firm didnt think the deal was likely. His argument is that at t is not likely to do another big deal after directv and that it wouldnt likely make it through fcc approval. I dont think well see this particular transaction soon. The idea that jeff bukus is willing to sell is news to people. You also have separately, maybe we have tape of it. I interviewed les moonves from cbs, the natural deal that should happen, not cbs viacom but cbs time warner. They overlap with cnn, the things you can do with entertainment so content and distribution married. If all of a sudden you tell us that jeff bukus is actually willing to sell, that could change the dynamics. Both sides are look at that. The bad news is the Redstone Family would like to control the ultimate asset. Unclear if cbs and time warner tieup, if they would have enough of a role to do that. Thats the one little wrinkle in this. Im still bitter the doj did not allow comcast to buy time warner. That was the deal that comcast didnt really want to do. Time warner cable. Oh, there we go. Im bitter about that, too. Im a time warner shareholder. Not a Time Warner Cable shareholder, im a user. Comcast shareholder me. But your bill would have went down. Oh. Right. Thats what im talking about that. What cable bill . Exactly. And you get every channel. 10 bucks. Right. I want to have the comcast box. Did you ask les moonves about survivor and he said that funny thing . He said they came in with that idea and said that was the stupidest thing i ever heard i think we should survivor . Thats a huge hit. He has a lot of stuff the dumbest idea, still the dumbest idea. Talked about letterman, how letterman hated him. Didnt talk to him for years. Letterman doesnt talk to anybody. It was fascinating. Maybe well roll some tape. Letterman hates himself. A lot of those comedians are unlike us. Selfloathing. None of us are. As is very clear, are comedians at all. Investors are watching key earnings reports today. A dow component, mcdonalds, and General Electric a day after verizon results dragged the Telecom Sector down 2 . Joining us is jim paulson and rich stein buburg. One thing that starting with you, rich, one thing that occurred to me this morning was that, you know, i was reading something i think from mark grant about how its probably when its all said and done, we may have another quarter where we have year over year earnings comparisons down or flat. This would be the sixth. We wonder why were having trouble making headway. Maybe we should be wondering why in a period like that how do we even how do we tread water for that period . I think were back to the fed. There is this underlying, you know, pool of money that keeps us above where we should be based on the actual fundamental. Or no. Is it discounting that sooner or later we will have an up quarter. Certainly we will have an up quarter. Dont forget, if financials start to get better with better Interest Rates, higher Interest Rates, energy holds up, joe, those are two head winds that were hurting both earnings and revenue growth. The big problem is in the short run theres a lot of fatigue by the public, by the investment public both for the market and for the political environment that is keeping us probably in shortterm treading water or purgatory in the short run. The dollar headwinds have no longer abated. Theyre back to headwinds again. I dont know why we should be optimistic there. No. The big problem, joe, right now earnings is 130 for next year. 13 eps growth. Revenue growth of 6 . If we stay in a low growth environment it will be hard to really move the ball forward in the market next year. Maybe single digit returns because of that. Probably keeps us range bound. With the strong dollar, which i dont know what happens if the fed gets off the snide f they do find a range, maybe were strong now because were anticipating that eventual increase. I looked at the euro, its below 110. It could keep the fed from raising too quickly. That could be the next thing thats the excuse for the fed. Okay, paulson. I guess its your turn here. Waiting for these inflation and commodities forever. You will be right one day, like the clock. Are we 2 or above right now . I would take it if we were. Is that where we are in this country . I think so, joe. Core inflation at 2. 3 on the cpi. 2. 2, i think. Wages are 2. 6. I think were above there. One thing i think that been interesting is the wage expectation in the tenyear t. I. P. Treasury bond has risen by a half percent since february lows from 1. 2 to 1. 7 . Tenyear treasury over that sameyear period of time has been flat. Hasnt changed. Theres upward pressure here to the fed and to Interest Rates with inflationary expectations climbing in the bond market. If you look at fiveyear swaps around the globe, you see Inflation Expectations also going up most places, not just in the united states. Im a little more optimistic on whats going down with earnings. It looks so far the earnings reports weve had will suggested well probably get a positive year on year growth rate, the first in a while here on this earnings quarter. I think its the quarter that will label the upward turn or the return of positive earnings momentum again, looking forward into next year now. If you put that together with sort of Economic Growth doing better both here and abroad, i think it paints a better picture looking into next year. Were down to below 2 again for this quarter. Why should we think next year gdpwise will be when you say better, you mean 2 . Not awful. Thats what i was talking about yesterday. Not awful. Better than everybody else. Right. Yeah. Doing 1. 3 , well get back up into the 2. 5 or better. Weve been waiting for that for a while. Yeah, for the last couple years. But i do think that i think theres elements, we have a healthy consumer yet. A healthy job market. Getting capital goods reports doing better. Manufacturing sector has been stabilizing. I kind of think you might see better housing activity. Im sorry to interrupt you. You were right about the stock market having a lot of trouble. When did you get bearish with us . About a year and a half ago . At least neutral a your andear half ago . In the summer of 2014 when the market went through 2000, i thought we would tread water. So next year . What . Are you bullish again now . I am. We go 2400, 2500 on the s p . I havent got an official target for next year, i think right now we could make a move northward 10 higher sometime next year. Rich, just real quick, you agree with that or will we tread water . I think in the next year we have a target of 2300. One thing that might be right on jims part is firms like ours have raised some cash into this uncertainty. Were around 15 cash. In one portfolio we have a hedge in the portfolio, so there is that spring that could spring that cash to work if the markets look better. Okay, guys. Thanks. Take care. You didnt have any did you ever have Clinical Psychology . I mean, i probably need some. I dont know any of that stuff that freud talked about. Is any of it found to be relevant . He was a coke fiend. Really . Yeah. He might have also been a nicotine fiend. A lot of the stuff he says, youre kidding, right . All of that stuff. Dont know if any of it has real still ahead, life after microsoft. Former ceo Steve Ballmer weighs in on the economy, politics and his role as owner of the clipper clippers. Whoa whoa whoa he joins us on set for an hour starting at 7 00 a. M. Eastern. Microsoft shares hitting an all time high after reporting First Quarter earnings after the bell on thursday. Joining us is the managing director of Software Research at griffin securities. Big day for microsoft. Finally at a new all time high after all these years. What drove the quarter besides the obvious cloud statement, azur selling so well. Thats the main thing investors are looking at. We knew going into the quarter that the growth and profitability of that business are the two things the invest er ers would focus on, and other traditional businesses, but the 116 growth in that business was nearly double what we thought the growth would be. The profitability was 400 basis points better than we thought. Those two things will take the stock higher. As a percentage of its overall revenue, where does it sit and where do you expect it to go . The rate is about 13 billion a year annualized. That puts it at 13 billion out of roughly 90 billion or so. Its not a tremendous percentage of the business. But when you have a low Growth Company on the whole, you have this tremendous growth in this new business, thats going to add value to the company. Chuckling. 13 billion. When you talk about microsoft, thats a small number relatively speaking. Right. What do you do with the stock from here . Weve been recommending it since july of 2012. A year ago andrew asked mre if i had a dollar i would put it in the name. I said yes. The answer remains yes. Weve been fortunate to have a double in the name at time. But they continue to outperform. Ultimately the big story here for us has always been generating cash flow. You look at the cash flow in q1 the annualized rate was much more than we thought. Biggest competitor is amazon. Is that pie growing so much it doesnt matter . Will they try to overtake them . How do you look at the competition. The pie is there for what will be a small number of ecosystems. Microsoft is and will be one of those ecosystems. The differentiator is not just the capacity, as i mentioned on previous pieces like this before, they have the applications or the functionality with office and azure. Its not just about capacity to do computing, its to extend dominant brands that theyve had into new forms of delivers to customers. The nucleus of what ballmer built is growing. Were going to have ballmer on for an hour, what would you ask him . Nothing about basketball. Who gets the credit . Both of them. Satya improved on what he given. Five years ago steve talked about what we are now seeing. What they would do with windows, speech recognition, all of those things were glimpsed at that time. We think microsoft has tremendous technologies that will concert into revenues more and more over time, including again speech recognition. And combining their technologies across the portfolio is a differentiated story. Thank you for coming in. Thank you. Coming up, General Electric is set to report. Well bring you the numbers and reaction after the break. At the top of the hour, former microsoft ceo Steve Ballmer will join us to talk tech, the economy, politics and the nba, hes the owner of the clippers. As we head to break, heres yesterdays s p 500 winners and losers. That was wonderful. Bravo. That was great. Pretty good. It wasnt that bad. Could have been a lot better. I didnt like it. It was terrible. Was awful. Boo. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. 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. Welcome back to squawk box here on cnbc. U. S. Equity futures, a bit of a mixed picture. The nasdaq will open up higher because of microsoft earnings. The dow opening down about 30 points off. The s p off about 5 point the. Stocks to watch. Shares of alkermes is rising after a successful drug trial in the treat of depression. Alkermes higher by almost 50 . Paypal reporting a growth in active customer accounts. They continue to see rapid growth for one click and mobile payment buttons and for vemmo, the mobile app popular among millennials and us. Ge reporting 32 cent level is above the 30 cent level, in the highlights the company circulated, i looked and looked for revenues, finally had to see it when they posted it. That means revenue will be below expectations. Not way below expectations, but the Company Reported revenue of 29. 27 billion. The street was at 29. 636. Slightly below on that. Narrowed guidance on the full year, ge did. Raised the lower end, the high end came down. 1. 49 is where the street is now. Where is the number . Had it before. Here it is. It went to 1. 45 from 1. 45 to 1. 55 to 1. 48 to 1. 42. Saying it was a good quarter in a slowgrowth environment. That is where it is now. Still under 30 a share. Amazing. It is not similar to microsoft in any way other than ballmer and immelt were both i think they went do Business School together. I also felt like they were both dead money for a long time. Microsoft is now back to 60. Was. Im saying was. Ge was a half trillion company before the turn of the century, i think. It was a 60 company. At 29, its been restructured, out of the media business, out of a lot of the old line businesses. A lot of the insurance businesses are gone. Ge capital has been shrunk. Thats why they say revenue goes down. There were some positives according to the company. Organic growth was 1 in the Third Quarter. 4 if you exclude ong year to date. 6 up 6 in the Third Quarter. Strong healthcare execution, revenue up 4 . As what has been the what jeff immelt has said, returned 25 billion to shareholders through the Third Quarter, including a share buyback, 6. 4 billion through dividends. Its not back to 60, still under 30, but up from 6 during the financial crisis when the commercial paper market froze and there were existential questions about General Electric at that point. Its come back a long way. The longtime shareholders are probably like what am i supposed to do . Lets bring in one of them. The chief Investment Officer of harvard advisory. Youre an optimist. Youve been coming on for ten years. Youre an optimist. Still in this name. You know how you can tell im an optimist . This is the cnbc rise above button. You need to rise above 30 something and stay there, wouldnt you . That would help, too. Is it good enough to get the dividends to return capital to the shareholders . Is that enough for you to be happy with your longterm hold in the stock . No, it isnt. I dont think investors would be happy with that. We certainly wouldnt be. What happens with the shares, a year and a half ago when they announced the big break down of capital and they were going to sell 200 billion in assets, the shares traded up sharply to 30. That discounted that. Now were growing into that valuation. At this point the shares are discounted fully, that doesnt mean theyre not a good investment. When something is a good investment you can still expect to earn the dividend and Earnings Growth rate which should still be a double digit return for ge going forward. Well hold it for our investors. Most of our investors are retired individuals who live on portfolio income. Getting 3. 2 , hoping that earnings can grow on a forward basis at 7 , 8 on the long term is a good return. Is the company at this point you know, its gotten into oil and gas in a bigger way, it has digital operations, we see a lot of the different efforts. It still has varied and sundry operations, is that the right mix now . In the next five years, do you expect it to be positioned better than its peered . You dont leak like youre do you expect it to be in a great position to thrive in the next five years. The portfolio is much better than five years ago. Much better than ten years ago. Clearly the timing on moving into oil and gas could have been better. It would be it would be nice if they had started that move three, four years later. They could have bought the same assets at much lower prices. Having said that, they own what they own. Theyre adding to those assets. Doing a good job managing in an exceedingly tough down market. So, from this point going forward, i think the portfolio looks pretty good. Okay. Just looking at as you were speaking, honeywell numbers came out. Honeywell pulled back on negotia negative forecasts. I wonder what a tenyear honeywell versus ge looks like or utx versus ge looks like. For the last 10, 20 years honeywell outperformed ge dramatically. I think it will be closer. There it is. Ge down 18 in the last ten years, honeywell up 158 . Thats a is that right i wouldnt want anyone showing right there. Not an attractive comparison. No, it isnt. Coming up, vanity fair editor gragen carter weighs in on the political election and what happens after the new president takes office . And crazy hair, andrew, aint it . Great hair. Gray hair. He said gray hair. He said great. As we look as we look at the zingers from the candidates from last nights Al Smith Dinner. This is the First Time Ever, ever that hillary is sitting down and speaking to Major Corporate leaders and not getting paid for it. Its true. Its true. Donald, after listening to your speech, i will also enjoy listening to mike pence deny that you ever gave it. Jake reese, day to feel alive jake reese, day to feel alive ebecause the ultimate expression of power is control. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Time for the executive edge. I spoke to vanity fair editor gr gr Graydon Carter in san francisco. This is what he had to say about the American Culture. What do you think has happened to the American Culture throughout this leelection cycl. This is the natural culmination of all of that, when the race for the presidency becomes this coarse, its got to break and reset or its going in i dont know where it could go after this. When you think about the politics after the election, assuming Hillary Clinton wins assuming. What do you think happens . What do you think happens in this country . I actually think the democrats im not endorsing hillary or anything. I think democrats will do very, very well in the election. You may get a more balanced bipartisan washington, which would only be good for the country. Rather than just stagnant stalemate that it has been recently. How will the media treat Hillary Clinton if shes president . I think the media has been tough on her. The email scandal has been uncovered. 100 days in, shell get a break, and then see how she does. I dont think shell be a transformative president. What about the Republican Party . What do you think that looks like four years from now . I feel sorry for them. I think they have a rough road right now. Its going to take a while to rebuild it where they want to be. What about paul ryan . Well, he i think hes held his own reasonably well. With a bit of waffling. I have no idea what will happen to him. If donald trump becomes president , not good things. Well have more from Graydon Carter and other clips from what took place out in san francisco. Other clips now from last night. Does it bother him that they call him the new establishment . The establishment is so out of style. The new establishment, youre the neck meaning establishment is the problem right now who wants to hear from the establishment . No, no. If you are an upstart company, you happen to make it to be part of new establishment that means youre on your way. I saw that list. Travis kalonic, jeff bezos. New establishment. Theyre establishment. The last eight years havent given us enough of a liberal agenda. What we need is instead of this stalemate, we need another democratic i know your view. We need another democratic president and a Democrat Congress so we can do more of what weve done the last eight years, and really get things thats only a function of the fact that things are so screwed up. Really get things going. Hillary clinton and donald trump sharing the stage last night at the Al Smith Dinner manhattan. Manhattan. The candidates took turns roasting each other at the white tie event that benefits catholic charities. Crowd reaction was laughs to cheers to boos. Its great to be here with a thousand wonderful people, or as i call it a small intimate dinner with some friends. Or as hillary calls it, her largest crowd of the season. Hillary is so corrupt she got kicked off the Watergate Commission. How corrupt do you have to be to get kicked off the Watergate Commission . Pretty corrupt. This is such a special event that i took a break from my rigorous nap schedule to be here. And as you have already heard, it is a treat for all of you, too, because usually i charge a lot for speeches like this. Michelle obama gives a speech and everyone loves it. Its fantastic. They think shes absolutely great. My wife melania gives the exact same speech and people get on her case. And i dont get it. I dont know why. It wasnt her fault. Stand up, melania, come on. She took a lot of abuse. People look at the statue of liberty and they see a proud symbol of our history as a nation of immigrants, a beacon of hope for people around the world. Donald looks at the statue of liberty and sees a four. Maybe a five if she loses the torch and tablet and changes her hair. Both nominees travel to battleground states today. Trump heads first to North Carolina and pennsylvania, clinton campaigns in ohio. More highlights from last nights dinner in the next hour. After the win over the bears, Aaron Rodgers kicked off his halloween celebration early. He showed up to the postgame News Conference wearing a unique cardigan that you might recognize. Made famous initially by the dude in the big lebowski. Why did he do that . Because hes a fan . Everybody is a fan of of course. Youre right. I was surprised they did well. I was watching the green bay game last weekend, he was getting booed in green bay. The offense was so stagnant. They had a good game last night. Theres the dude. That move was so funny. Love it. The dudarino. How about turtoro in there. Fantastic. He was in he was in for, like, three minutes you saw it . The big lebowski . Really . The big lebowski . Yes. Not in the past im aging myself by telling you ive seen it. Ive seen it in the last month. Theres a big lebowski festival every year. You could maybe do the show life there. Just to see what its like, i made a White Russian drink. Because he loved very high calories. You can see that. He wasnt in great shape. But loved White Russians. Talking about high calories and trying to stay in shape. Coming up shg, well talk healte stocks. Squak returns in a moment. Next week, you cant afford to miss squawk box. Its the busiest week of earnings season with the third of the dow and a third of the s p 500 set to report. 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Why pause the moment . Ask your doctor about cialis for daily use. And for a 200 savings card, go to cialis. Com ask your doctor about cialis for daily use. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back to squawk box. Time now for some sectornomics and a deeper look at the health industry. We have the bulk of Companies Reporting next week. We wrap up this weeks report and what to expect for next week. Good morning. Thats right. J j posting slightly better than results brushing off concerns to their arthritis drug. United health group, the nations Largest Health insurer posting a huge profit increase of 23 . The Health Care Business driving st. Jude reporting a 12 increase with worldwide sales of its Heart Failure devices pulling the top line there. But on the flipside, abbott labs taking a hit as the epipen. Write down the investment in the epipen maker. But overall pretty good results so far. What happens next week . Merck kicks things off. But a bulk of results coming out on thursday. Looking at bristolmyers key cancer drug following a 12 decline in september. Lastly, morning star noting it will be to launch in the u. S. And then to round out the week, abbvie pharmaceuticals. Lots to look ahead to next week. Back over to you. Thank you for that. Stocks to watch. Skechers Third Quarter earnings missed forecast. Points to its International Business as the main driver of growth. Fourth quarter revenue is also below estimates. Shares down more than 30 this year. Theyre down 15 just this morning. Third Quarter Results for schlumberger beat. S. A. P. Is raising its full year guidance even as Third Quarter profits fell more than 19 . Also raising the low end of the revenue outlook for the Cloud Business after sales fell 8 in the quarter. Coming up, our guest host for the next hour, current owner of the l. A. Clippers. Great day for him to be here. Especially with microsofts results last night. He still knows the company pretty well, i would imagine. Hell be on to talk tech. I dont know. Were going to talk politics with steve if you want. And also the business of sports. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networksre 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. Steve ballmer off the court. Whoa whoa former microsoft ceo and l. A. Clippers owner is going to join us for the hour. From the future to tech to politics, nothing is off the table. A smoking deal in the works. British American Tobacco offers to buy out Reynolds American. Smoken the candidates roasted. This is the First Time Ever that hillary is sitting down and speaking and not getting paid for it. He actually sent a car to bring me here tonight. Actually, it was a hearse. Donald trump and Hillary Clinton take the stage this time for jokes and jabs. We have the highlights straight ahead as 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 on cnbc. Im joe kernen along with Andrew Ross Sorkin and michelle carusocabrera. And our guest host this hour, Steve Ballmer, former ceo of microsoft and owner of the l. A. Clippers. Ive narrowed down his overnight pay for profits on the move in microsoft. I tell you what ive narrowed it down to. Its more than one, but less than five. With a b. That goes without saying. Youre a mathematician, bay be i. I could have written code for you guys. What was the other thing i was going to oh. When did we make this booking for you to come on today . Months ago, right . Months ago. Had nothing to do with the stock. Same day microsoft regains the alltime high from what . Is it 17 . When was it . I could tell you precisely. It was right when i took over as ceo, it was at the high. And here we are indicated over 60 today. Were going to talk about you. And it was serendipitous you being here today. But i think you can take some satisfaction. The company was positioned to be a next generation microsoft rather than just like some of the other Tech Companies which is stuck in the mud, stuck in the old days. Its a fantastic company. And, you know, obviously the earnings posted last night and really the progress in the cloud and all that, fantastic company. And has been a fantastic company for years. When you were stuck in the 20s, remember . I know you were getting all that heat. But i could still see the revenue numbers. And id look at the quarter and you do like 20 billion in revenues. Its like, someone still needs windows. Where is how is that happening . Who needed windows every quarter . 20 billion worth . Somebody, right . All these people around the world who were trying to automate all this productivity in the economy, windows, baby, was part of it. Lets just go straight to him. Skip the news. We have steve here. Weve already gotten into the conversation. The question i want to know is when you think about whats happened here, why you didnt get the credit when you were in the position. Its not that important in the grand scheme of things. We grew our revenue and we grew our profit. We made the transition from a pc company to an enterprise company. And hes got the company doing the right stuff. Hes a nonfounder worth 25 billionplus. Its not that big a deal the reputation no, i think it is. But i want to know no, no. But he got all this credit in the past couple years. I want to know how you on an emotional level feel about it. Remember i was at microsoft for 34 years. There was plenty of credit along the way. We had a stagnant stock price despite rising earnings and revenue. Im proud of what i did. And im really proud of what theyre doing now. And i like the outcome. What was the multiple in 99 at the last high . 50 or 60, huh . Yeah. The multiples were crazy. 17 years in a long time. Its a long time. Hey, its now paying off in the stock price. I know youre no longer there, but how do you still talk to them . Give us a little bit whats the relationship like . Im clearly an outsider. Im not an insider. But im a large informs investor. How much, how much . Index fund is still a pretty good job. Bigger than gates at this point. I am. I get the Quarterly Investor call. I get little investor kind of discussion. You go to Shareholder Meeting . I have the last couple years. Im busy this year. I teach class at stanford. Im going to do stuff down there at that time. But the number is 4 . Is that correct . That is the number out there. Its pretty close. And you plan to stay in . Ill stay in. Whether ill stay in at exactly the same number or not. With the number at 60, i think im going to think about it. The dividends must be you can do the math on that. Its a good set. Okay so. When you look at the Tech Industry now, who do you look at and think those guys are doing something really interesting. Ive got to worry about them. I think theyre pretty clever. Remember, im not in the Tech Industry anymore. I know. But you dude, im really not. Im not sitting there studying every day. Im not. As a seattle guy, do you look at bezos and go, theres something. Yeah. A little bit. Of course i read the newspapers. I read them with little more interest than the average guy. And i have to think about the microsoft investment to some degree. There are a lot of guys doing a pretty decent job. Microsoft is doing an outstanding job. Michelle said it when you stat down, you probably watch this yahoo deal. I did. Yes, i did. Do you wish in retrospect do you think you sort of missed a great thing meaning you were you shouldnt have bought yahoo . Did you dodge a bullet or one that got away . Remember, its hard to go back in time. Microsofts the only company that ever had any synergy with yahoo. You could get rid of engineers, all the good stuff can happen. And yet most of the value in yahoo wound up being in alibaba anyway. So we would have bought all that value in alibaba not all of which we knew existed. But with 20 20 hindsight, who knows. I want to ask a different picture. Just in that there were things that people say you should have bought. And then but knowing how tech works, watching what people have done when they make a mistake, but you can really screw things up. Was it better to miss some of the things that you missed to avoid some of the things you didnt buy . Whats your biggest regret . People say you could have bought apple. Could have bought google. Not clear you could have bought it. Remember. You have to have a willing seller. I made a pitch to zuckerberg when the thing was small. But, you know, he said no. How much did you offer him . I think 24 billion when the company was itsy bitsy and i could respect that. Entrepreneurs like to run their things. Anything you bougwent to buy almost didnt. And it was thank god. We took a look at s. A. P. I think that was out there. Would that have been good or bad . Hard to know. Now you dont have to do anything. 60 youre back to those highs. Maybe you didnt need to buy anything. Im sure thered be a few things. You dont remember . Oh, i think linkedin the company is now buying linkedin. Believe me, ive looked at linkedin for a long time. We were looking at it when we bought skype. Its fair to say the price would have been lower. Were you happy they bought linkedin or no . Its a great company. It fits with microsofts mission. And i think thats fantastic. Whats the worst thing you did that was like, wow, thats really stupid. Buying aquantive. It was probably what i call just a blow into a gael forced wind. Dare i ask about the phone business . Nokia . The phone business im not apologetic about. Current management chose to go in a different direction. Our board knew what they were doing. Told the board i was going to prepare to leave and i think its just a question how the company wanted to play it. They did what they do. Do you think they will buy salesforce. Thats always the one i think got away or would have happened. To me that was more natural than linkedin. Look. Im a guy who actually believes in revenue had and profit. I really do. And, you know, you can dilute something. And get nothing back. Ill just tell you i could never make the math work on salesforce. Never ever ever ever ever never. While were here, what should happen to twitter . You know, twitter, i think its a really good company. Obviously with some work to do. Just think about this election. Would it have been the same without twitter . Without trump banging out those late night tweets . I dont think so. Yeah we all want this election repeated again and again into the future. Thank you. Probably good for your business. Maybe. But is it good for all of us . 51 of the people cant sleep at night from this. Theyre like i get you on that. But from a twitter perspective, i dont think theres any substitute for it in the market. It is kind of an irreproducible asset. The companys got to take an independent path and got to get to getting a little bit or sell to somebody who can sell it. Ideas how they can ramp up user growth or make money . I am not a product designer for twitter but i know theres an asset there that with the right time, with the right leader, that thing could be something. What about having two companies . Too much work . I think its a weird deal. Im a big believer in almost monomaniacal focus. Who would be the natural partner for twitter in your mind . Acquirer or partner . Either. You know, from a partnership standpoint, i think the company is working well with google to try to get the twitter results integrated into google search. And i think that makes great sense. As an inquirer, you might wonder whether that could be the start of a beautiful friendship. But doesnt appear to be the direction its happening. Can we talk sports for a little bit . Absolutely. Before we get to basketball, i have a question that relates. You watch the nfl and whats happening with the ratings the past couple weeks. Does it say anything to you about sports, about the way were going to watch these things . Does it say anything about the valuation or is it just a hiccup . I would say the interest in sports is every bit as high as its ever been. I think the way people want to watch sports will evolve. And i think unless people get with the program which is what were going to try to do with the clippers, unless people get with the program, you will get less viewership, less revenue. Those thing wills go the wrong direction. But i think theres a chance to remake kind of the Sports Experience over the internet. With as much revenue and money as before . Yeah. I do. You dont think the digital component of this is changing the way we watch stuff and its back to analog versus digital. Yeah. But lets get on board then. Drive the Digital Change and make some money. Is there too much supply . With the ability to skip through commercials is people have companies have bought live events. So they think its a way to gain advertising dollars. Now everything is available to watch. Theres so much sports. Is there just too much supply . Id say the nba, were talking about the ncaa and nfl, pretty unique. Theres a lot of stuff on television that i have no idea how itll ever make money. Thats not my problem. With the clippers i feel every bit as good about the valuation, the amount i paid for the clippers when i did before nfl ratings went down. In my own world, i distinguish between different sports too. Ryder cup i didnt miss a swing. But i didnt watch a commercial. I watched it after i taped it. In the nba and n fannie mae, i need to watch it live. That had to be a question at the Board Meeting. Yeah. It was something at the nba Board Meeting, no question. Now, to you i got to remind you the advertising is a portion of sports revenue. But its not necessarily the dominant portion of sports revenue. Particularly on cable channels which is, for example, where we show up in l. A. With fox sports. All right. Were going to continue this conversation with steve. Got some headlines. In the headlines this morning, General Electric reported 32 cents per share. Revenue did come up short of forecast. Ge also narrowed the 2016 Earnings Guidance and increased Stock Buyback Program by 4 billion. Reynolds american has acknowledged a takeover bid. It says it will evaluate the offer. Its worth 58. 50 per share. You can see that stock rising by more than 18 . I want to correct myself in the last hour. We were talked about an unsolicited bid. Its actually the rules in the thaus are forcing this issue. Its not considered a hostile transaction because they would have to do it this way. Coming up, mcdonalds to release earnings. Were going to tell you what to watch ahead of the earnings. Thats next when we come back. Welcome back to squawk box this morning. We are watching shares of at t and blook berg this morning. Those companies discussing various Business Strategies including what was suggested as a possible merger in recent weeks. Neither side said to have hired advisers. Both companies not commenting on the report at this point. But after that report did come out, an analyst at jeffreys said they didnt think the deal was likely. Theyre still integrating that and wouldnt likely make it through fcc approval. I spoke to cbs chief les moon ves this week about whether his company should pursue a deal with viacom. Were just starting a process to explore the possibilities. Thats all were doing. Theres committees, bankers, lawyers. And thats all im going to say about it. Let me ask you one last question then well move on, i promise. Why not do it . He will tell you that youre the most capable person out there. That youve had such success with cbs. Because im too old and too rich. Hows that . Too old and too rich, he says. But i will say that if time warner is up for grabs, that might change the dynamic. Because cbs has always wanted to merge with time warner. So if this if they really are for sale. Ive always thought cbs and viacom would go together. Because that makes sense for the Redstone Family. Thats what they want. But i think you could see Something Like that. All right. We got another big name reporting earnings today. Mcdonalds is going to be rolling out results within the hour. Susan li joins us with the expectations. Good morning, everybody. Were not expecting a Strong Quarter from mcdonalds like the rest of the Industry Growth is hard to come by in the restaurant recession. The market is looking for revenue to fall 5 from last year. Sales are forecast to come in a little bit higher. 1. 3 . And its only going to get tougher from here as mcdonalds really bumps up against the oneyear anniversary of alldaybreak fast which helped turn around sales. The shares are down 16 since may. Theyre hovering close to the 52week lows. And still trading, though, at 18 times earnings which in this environment where consumers are not eating out these days with the Cheapest Grocery prices relative to restaurant costs since the 1980s, believe it or not, mcdonalds might look pricey. The golden arches is also still trying to stay relevant. The customer for fast food restaurants with young people. 18 to 35. And according to reports, only one in five millennials have ever tried a big mac. So the uncertainty over the election also keeping those from eating out. Then you throw in competition from Meal Delivery Services Like hello fresh and blue apron. I guess thats why weve seen a number of restaurant bankruptcies this year. Its a shame. Big macs are delicious. That sums it up for me. And they are delicious. Its a loss. With millennials, that sums it up. Theyre eating kale. Experiences. Yield is 3. 4 . And theyre going asset light as well. Trying to sell off their asian businesses like china, korea, hong kong. Since they own the restaurants they have a lot of headaches with food safety concerns. But they didnt make the same mistakes we saw yum brands do in china. They were much slower because they were so concerned about the supply chain which is not nearly as controllable over there. Its something you dont want to deal with on a daytoday basis. All right. Thanks. Coming up well have much more with our guest host Steve Ballmer. Clippers are the l. A. Team now. You bet. Were bethats team in l. A. , you bet. You know, its good. Im going to tell you what your nate silver numbers are for making the playoffs. Do you know it . I hope its good. I hope more that we win the championship. Better than the lakers chances i tell you that. All right. Well be right back. D aflac pay. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Coming up, todays top stories plus were going to get Steve Ballmers take on the race to the white house, talk other Tech Companies out west. As we head to break, take a look at u. S. Equity futures at this hour. They suggest the dow would open lower by 38 points. Nasdaq higher by 11. Recently, a 1954 mercedesbenz grand prix race car made history when it sold for a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2016 cla. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. 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. Among the stories front and center. Online Hotel Company triva goe is expected to go public by thanksgiving according to reports. Expedia owns a controlling stake in trivago. Another i po that could be on the way is altice. Reuters reports the Company Wants to go public so it can have stock to use as a currency for future acquisitions. And coach is working on a possible 20 billion merger with burberry. Coach has been working with evercore in the combination of luxury brands. Lets talk a little politics. Hillary clinton and donald trump sharing the stage last night at the al Smith Charity event in manhattan. They took turns roasting each other at the white tie event that benefits catholic charities. Crowd reaction are varied from big laughs to cheers to some boos. Here are some highlights. I have no doubt that hillary is going to laugh quite a bit tonight. Sometimes even at an appropriate moment. And even tonight with all of the heated back and forth between my opponent and me at the debate last night, we have proven that we can actually be civil to each other. In fact, just before taking the dais, hillary accidentally bumped into me and she very civilly said pardon me. And i very politely replied, let me talk to you about that after i get into office. Weve learned so much from wikileaks. For example, hillary believes its vital to deceive the people by having one Public Policy and a totally different policy in private. Thats okay. I dont know who theyre angry at, hillary. You or i. For example, here she is tonight in public pretending not to hate catholics. Donald wanted me drug tested before last nights debate. And, look, i got to tell you i am so flattered that donald thought i used some sort of performance enhancer. Now, actually, i did. Its called preparation. I have deep respect for people like kellyanne conway. Shes working day and night for donald. And because shes a contractor, hes probably not even going to pay her. I dont know how we get into the clippers now. But lets get back to our special guest Steve Ballmer clippers owner, former microsoft ceo. Everybodys got an opinion on politics. Thats my intro to you. Then well get back to whether is three points . Tough have three points . Theres no more showtime . How do you construct a team now . You either dunk the ball or go in the corner and make a three. How much College Hoops do you watch and say i want that guy . Ben simmons, i want that guy . I watch a lot of College Basketball during the playoffs. Because the clippers are i mean, on nate silver you have a 48 to get there so far. But only a 2 chance to win everything because golden state at is 55 . When you look at curry, is it unbelievable to watch what happens when they come into town . Theyre a good basketball team. Theres no question. I think were a really good basketball team. Should you be on the same floor with them . Come on, dude. Get out of dodge here. Absolutely. So you love it when it happens, i guess. Yeah. Those are the best games you can find. I make every one of our home games down in l. A. And i make every golden state game even in the bay area. Are we going to ask about politics . Yeah. Go ahead if you want. Hes got an opinion. Hes a sports team owner. I want to hear. I am a profacts partisan. And what i find is theres no facts. Theyre not correct. Its all personality. And id like to hear, like, a real discussion of the issues. Things i care about. What are you going to do . Im going vote. For who . Im going to vote. Come on. Thats a right of americans. I was in san francisco. Peter thiel donated millions to trump. And hes being lambasted. You couldnt walk a step without somebody saying something relatively terrible about him. Then you had Mark Zuckerberg come out recently and say, look. We have these diverse views. We have to support that. How do you think about all of that . You know, the Tech Industry, it doesnt shock me thered be a natural bias to the democratic candidate whoever it would be. And regardless of who was on the republican ticket. Regardless who is on the republican ticket. That would be my estimation. So you dont learn anything by that. You realize that, right . I mean oh, no. You thought it was significant that people were trashing thiel . No. What i thought was significant was the idea that trump has made some of these comments this is beyond the politics of it though. I think theres politics underneath it. But therefore the decision for certain people to say, look, we dont therefore want to do business with him at all. Which is different. You cant even be i mean, you saw mark. You were crest fallen when he expressed free market ideas. You cant even be an establishment republican and still have thats not true. I dont think thats true. I think the different theres you stick out. There are things more nuanced than i know this is television and theres supposed to be no nuance. Im a guy who is a free market guy. Completely. Yet i also believe there are people in society who have no chance at the American Dream when theyre born. And for me, thats just not okay. So what am i . A democrat or republican . How do you pay for the upgrading of the opportunity for everyone if its not through private sector growth . How do you do all the great things you want to do . Since i left microsoft, its a long story, but my wife and i are figuring out what to do with our philanthropy. And one thing you learn is the government is the biggest player in the market. I started really studying this stuff. And the truth is the government only has two problems. Number one what i call the savings programs do need to come into line. The savings programs themselves Social Security and medicare. Just those two. They lose about 400 billion a year and thats up 28 times since 1980 in nominal dollars, if you will. And most of the government then breaks even. Or makes a little money. The debt hurts us. Then the other thing that hurts us is the size of the Pension Program for Government Employees. Those two things plus the fact that pensions relative to private market. I mean, i dont know what its like for you guys. But lets say microsoft contributes 3 or so to somebodys 401 k . The cost of pension benefits for government workers today is off the top of my head i think 50 . And thats a little different than private business. And thats out of alignment. But what are the chances that theyre ever going to change Government Employee pensions until it comes to the breaking point which what we see all the time in europe, in greece. I think thats very difficult. But its politically difficult. Its mandatory. The bigger issue well, theyre both big. The issue im as concerned about is Social Security and medicare revenues minus expenses is negative. People like to talk trust funds, blah blah blah. Weve been losing money. Just in the Old Fashioned take number a, subtract number b. The thing is basically we lost money every year for the last 36 years. With microsoft but neither candidate wants to touch this. Microsoft could have designed a president probably with software. What would you president when he or she comes into office, what would that person do . My president would commit to a few things. Number one, to really get Social Security and medicare benefits and revenue to be, if anything, positive. We know many people are going to age out rather than enter the workforce. Would you raise revenue through more taxes or cut benefits . I would do both. Again, its a nuanced topic. But id make those pay for themselves. I wouldnt try to take taxes from other realms. I might raise taxes. I mean, lets just put that aside. I am a free marketer. But theres no way to solve the problems unless you do both. I looked at payroll taxes. Social security taxes are whats ailing the private sector . Or its not ailing right now . Its not ailing. If you go back and really read, mostly the economy grows by inflation, population growth, and productivity. And productivitys been pretty steady between 0. 5 and 1 . I think in the Thomas Picketty book he said you can almost time that back to christ. If you want to get the gdp growth number up, lets have inflation, population growth. The amount of that youre going to get on productivity that is per capita inflation adjusted, you might get, you know, on a sustained basis 0. 5 to 1 . So we dont need to fix our corporate taxes. We dont need to do lesson regulation on Certain Industries . We dont need to free up Smaller Banks . No. We can do all those things to some degree and nonetheless i dont think what youre going get is a number that goes from lets just call it 1 to 2 productivity growth. Those things are important. But they wont get there. If we start and i think we have come much closer to a european style of how we want to do things. Arent you still mad at europe . Just all the antitrust issues. Are they doing it right over there . No, im not going to argue theyre doing it right. Thats sort of a different point. I dont argue they do it right. But if we do things perfectly and i think we should. I think the American People are owed having the government run perfectly. Her opinion, his opinion, your opinion and my opinion could be different. Its still not going to get 3 gdp growth. So you think we should blow out the deficit, get inflation, and everybody should have five or six kids. Thats your answer . No, its not your answer. It sounds like it is. No, no, no. Come on. Seven or eight kids . No. You should have the number of kids that is appropriate well, if you want get gdp growth, sure. Grow the population. Its not a bad thing. Thats not what im arguing for. Im arguing for the fact that artificial techniques we did something for this usa facts Initiative Im working on. We took numbers like Interest Rate, deficit per capita, all inflation adjusted, all the tools government has to work with and then compare to the output measures. Whats going on with the stock price . What goes on with housing markets . Whats going on with real ability to spend per year . Theyre just not correlated. The notion that the government really can, quote, manage the economy, is not true. You need innovation out of the private sector. Its the only thing thats going to drive how much money does microsoft have over there now . Overseas. Im enough out of date, but i would guess the number is close to 100 billion. Would it do better here if we could have it here . Ill tell you a secret, just a little secret. If youve got a hundred billion over there, you can borrow against it over here pretty cheap. It turns out the issue is small and frictional. I dont think its a smart thing. I think whats currently happening is silly. Because its just frictional overhead. You know, getting everybody to agree on how to solve it is tough. And in the meantime, its not really hurting business in my opinion. Its not hurting Business Investment. But perhaps it hurts investment in the united states. Because if you could bring the money here, youd be more likely to invest it here. If youve got a great idea here and cash over there, you borrow here at almost zero Interest Rate but still making it over in ireland or wherever. Now back to the fed and this unproductive behavior and not longterm thinking. Were back into not investing in the future. Given the if you take it is an interesting fact. Interest rates were roughly 13 in 1980. Theyre roughly zero today. But if you look at whats happened by private Business Investment, just take capital plus rnd, its just chugged away, slowly up over the last 36 years. And nothing the government does has made a difference. Why do you think theres no Business Investment now . For the last five years. There is Business Investment. It not as it used to be. Thats not true. Really . Thats what everyone seays . Businesses dont say, oh, im going to invest a whole lot of money right now. Unless it makes sense. So we get an asset bubble. Investment and rnd capital is going up nice and slowly. Thats what its done for time. And at the same time all those low Interest Rates, theyre driving that stock market. Youre just lucky microsoft went high because otherwise i would say you dont know what youre doing. Dude, i am a capitalives through and through. I am a capitalist and microsoft lover but there is still more we need to do. More coming from Steve Ballmer in a moment. Were back in a bit. Still to come, earnings alert. Can mcdonalds keep up its alldaybreak fast boom or is it stuck in burger purgatory . Find out. Squawk box will be right back. 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. Welcome back to squawk box. I spoke to vanity fair editor at the summit in san francisco. And i asked about the new big innovator and who could be the next steve jobs. Who do you look at on the list today and say thats the next steve jobs . I mean, its hard to tell. Theres only one person like that in a lifetime. But weve got a number of people here who have become dramatically changed our culture. Whether its jeff bezos. They have made major shifts in the way you live your life. And thats those are these are not incremental. These were major seismic changes. There are people in the audience, probably students, we have 150 students from cal tech and other schools. They probably have ideas we dont know about. Going to be tying our ties for us and whatever else. Jeff bezos versus elon musk, who wins . Like in arm wrestling or space race or what . Who would you be more long . I wouldnt bet against either of them so im not going there. Youre doing a presentation this afternoon with Travis Kalnick who runs uber. Some people think hes not that menschy. Well, we wanted to get him here. It was the clever of the two words together. Hes menschier than people think. How do you read your own magazine these days . I read my magazine in the magazine and our daily hive on my phone. So we got to go to commercial break, but Steve Ballmer tell me this. Same question to you. And i take steve jobs out of it. Whos the next bill gates then . Some young person that we dont know their name. Theres not anyone out there you go, wow, thats the guy. No. Theres plenty of smart guys. But in the time in the Tech Industry, by the time you hit about 35 if you havent had your next great idea, youre kind of cooked. So it is some guy whose name we dont know. Its not some guy whose name we do know. Can we get on the record. There were reports that you wanted to buy twitter. I have never ever ever wanted to buy twitter myself. Come on. I got a good life right now. I dont need to do that. I mean, it wouldnt be fun . No. No. Im having a lot of fun with the clips. Im having a lot of fun with my wife doing stuff at the ballmer group. And im having fun studying the government. Ive got to convince joe that i actually had really fiscally conservative ideas. You dont need to convince me. I was asking questions. You seem to now feel like you said things that some people might think youre a lefty. Its okay. You know, everybodys going and you swear youre right of center. So ill believe you. Fiscally i am. Absolutely. Michelle says that earlier we all want people to succeed obviously. Thats the whole key of the American Dream and what we try in america. Everybodys got an opportunity. Not like europe where youve got these fixed classes that are impossible to move through. We want to hear Success Stories over here. Who has the better which is it a free market system . Her question to you was you seemed to have implied that maybe the democrats have a better idea about you said earlier in the show, im a fiscal conservative but at the same time i think there are some people who are screwed and dont get opportunities. As if you were comparing republicans versus democrats. Well, shame on me. You seem to care much about people that dont have opportunities. Shame on me. Let me tell you exactly what bothers me. If there are communities of people for the average american if youre born in the bottom quintile, so perfect mobility would be you have a 20 chance of staying there. The average across the u. S. , probably 27 . There are people when they are born, they have a 55 chance if theyre born in the bottom quintile, theyre going to stay there. A kid. A kid cant be accused of being lazy and this that. I think everybody gets a shot at the American Dream. Not the european dream. The American Dream. So some people think that Charter Schools might be one way of addressing that rather than the what we have now. And that is one party totally beholden to the teachers unions that want to keep the status quo like it is. I think theres a real big role for Charter Schools. That wont even consider it. You support Charter Schools . I think theres a big role for Charter Schools. Unfortunately it might be naive to think were going to take all of the tradition publics and flip them. But add competition to Public Schools and they would get better. Yes. But expressing virtuous feelings on the front end. Throw more money at it, for example. At education. That may be counterproductive. And you feel good, you feel virtuous and you get to tell everyone. But then you connect the dots and its actually selfdefeating. I would not throw money from the people that you want to help. I would not throw more money at education. I do not think thats the solution. I do think theres a community of kids who lets say, you know, they have trauma every night at home. Theyre getting evicted from their house. You fix the neighborhood or schools first. How do you do it . The school is not the place to start. You have to start in their environment. That keep people sort of on the government dole and dont promote the dig any city of work and earning your own success. You know, if you not a good idea. If youd rather stay home for whatever the total government help is. If it makes sense for you not to get dressed in the morning and pay for gas and child care, then no one helps. Youre creating a permanent class of people that will never get out. You and i agree. Now, if you put a kid in an environment you put a kid in an environment where because of what their parents did they have no chance to even have a decent meal, thats not okay. Can we turn the topic back to basketball . No i want to talk tech kpp i ask one other question separately . I dont know if people have noticed this. You have done some math on your hand . Yes. Put your hand up. So everyone sees. What is that. Ive been getting on twitter and elsewhere, where wha is this math. This is what the u. S. Government looks like by the numbers. By the numbers. Social security and medicare lose 375 billion. Okay. The cost of debt of pensions and overhead, minus 575 billion. Did you write that before the show . Yeah. Baa you wanted it ready . I wanted to remember. I didnt want to screw anything up in this crowd. This is important. If you take the rest of taxes against what you think most is government, makes 800 billion. Can we talk about apple . Yes, if you want to. Whats wrong with apple . Is there something wrong with apple . Theyre making a ton of money. I love profit. So how should we think about apple in a postfounder world . I think the challenge for Big Companies you ran microsoft after the founder. Absolutely. Tim is running the company after a founder. Theres after the founder. And theres when the trick the thing that was magic in the business starts to hit a flatter point. The ieverything, theyre getting a flatter point. And is the problem theres no founder around . Even founders dont always come up with a second big idea. I mean, youre kind of a genius if you come up with one big idea. If you come up with two, and ill give jobs credit. He both did the mac and the did the iseries. I mean, thats unbelievable. Still a great company. Its just not if it doubles again, its worth 2 trillion eventually. Its a great, great company. It really is. And i like profit. They are a most Profitable Company in the world. Or at least in the u. S. You got to sit there but as we were talking in the commercial break, you were talking about when you were at microsoft, its the law of large numbers. Its very hard to grow much faster when you get up to the ether. I think microsoft did a great job this quarter. Profit was flat year and year. Were going to have to go. Elon musk. What are we to think of elon musk . Is tesla going to be the next big thing or do you look at that people are either very positive or very negative. I think he is a brilliant guy. I think the jurys out on whether thats the next great business. Do you own tesla . I do not. Do you own the stock . I probably own some. What do you drive . I drive in a lincoln. My father was a ford employee for navigator . No. I have the mkx. You ride around in one . I drive around in one. Okay. That was worth sof permanent ink there. No. Love and hate or something on your knuckles. Anyway, great to have you. Great having you. Come on back next time you have a nba Board Meeting or something. Theres only one thing im going to say before i leave. And i will not leave without saying it. The l. A. Clippers. Watch us this year. Go clips. I like it. All right. We will. Well, were not going to watch the lakers. Coming up, your were going to talk to Governor John Hickenlooper about the state of politics. And we might ask him about pot again in colorado. That interview is straight ahead. 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 . Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Trade like its 1999. Microsoft shares soaring to record highs. Tech success in the cloud straight ahead. Earnings alert. Dow component mcdonalds served up quarterly results, profit sales, and instant Market Reaction coming up. Plus were going to open the books as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Hes gone. Ballmer is. But microsoft shares are partying like 1999. Welcome back to squawk box on cnbc. Im joe kernen with Andrew Ross Sorkin and michelle carusocabrera. Mcdonalds earnings just crossing the tape. The fast food giant beat earnings topping expectations. Third quarter global Comp Store Sales rising 3. 5 . Its a nice rebound for the shares so far. That might actually help the futures for the dow. Because we almost a 4 gain in shares. Other top stories this morning, microsoft beating the street on the top and bottom lines. The cloud product doubling in the recent quarter. Satya nadella on the conference call. Customers continue to choose the microsoft cloud to help transform their businesses and organizations. Our commercial cloud annualized revenue run rate now exceeds 13 billion. And we remain on track to achieve our goal of 20 billion in fiscal year 18. Once enterprise customers choose one of our cloud services, they continue to adopt more services. Microsoft shares have now doubled since august of 2013. The stock hitting an alltime high. General electric earnings topping estimates by 2 cents. Ge is also narrowing its 2016 Earnings Guidance and increasing its Stock Buyback Program by 4 billion. Slightly lower in trading. Reynolds american has acknowledged a takeover bid from british American Tobacco. The bid is worth 56. 50 per share. That b. A. T. Does not already own. Other stocks to watch today, shares of alkerm erk s surging as it says its drug to meet depression met the primary goal. Planning to speak to the fda. And paypal better than expected results. The growth in customer accounts the company says it continues to see rapid growth for its one click and mobile payment buttons. And for the mobile app thats popular among millennials. I havent used paypal yet. Honeywell revenues topping and says its on track for double digit earnings in the current quarter. As we mentioned earlier, coach reportedly now working on potentially a 20 billion merger with burberry. Thats coming with reports working with evercore on the luxury brands. Back to mcdonalds. Morning stars senior restaurant analyst joining us. Watching mcdonalds over the years, r. J. , its pretty interesting to watch. You bring in the new guy, does the breakfast all dwa long and it goess to new highs. Now, here they have major problems competing with burger chains because their burgers arent good enough. Its feast or famine, so to speak, at mcdonalds. But something went right in this past quarter. I think when you look at the numbers, someone is focused on the same store sales number which went to 1. 5 . I think a lot of that still has residual effect with the alldaybreak fast. But also the mcpick 2 probably had that in results. Right now consumers looking for value in this space. Particularly the food at home Grocery Store sales being lower than what youre paying at the restaurant right now. Value is a key thing. Now, looking beyond that, too, i think the markets going to be looking for the next catalyst. Whether it be another big Product Innovation or update on the refranchising efforts which is going to transform their income statement and make it much more asset light. And, you know, higher margin company. In all, looks like positive results across the board. So is it have they gotten back to where the quality is good because its fresh and the service is good . You know, you dont have to there are some fast food restaurants where ive said, you know, is this a fast food place or where am i . Maybe i got used how im standing here so long. So they got that out of the way. Have they done everything they can do there and need some type of innovation or need to make a Better Burger at this point to go ahead . Yeah. I think i mean, to your point i think the speed of service was critical. Improving that accuracy, thats something they value in this day and age. Needs to be a service. People are and in an amazon world you need to be quick. I think theyve tackled that. But there is more they could be doing. The top chains have been the ones than ordered. So i think mcdonalds has an opportunity as they were all mobile ordering. Finding ways to connect outside the restaurants. Beyond that i think theres also some things theyve been running in terms of small product whether it be Higher Quality beef which theyve been running at certain markets. Those are things that i think also drive excitement to bring people back to the restaurant. So thats whats wrong with the burger . Its lower quality beef . How low . Its quality beef. Its quality beef but theyre going to the fresh beef opposed to frozen beef in market testing. B thats the difference and seeing what kind of traction and if that resonates. They have to put more beef into the burgers to compete with an innout . Whos winning right now . Whos got the best burger . Thats a its a tough call on that one. We have seen a Better Burger phase, but that seems like its tapering down. I think some of the up and coming chains in the Better Burger space, you lose momentum there. I think mcdonalds refocusing on its business played a part in that. Also weve seen more upstart fast casual chains resonate with consumers as well. I think thats a big part of it as well. Didnt need this clown thing. You know . Yeah. Thats for sure. Ronald. Thats the last thing they need. Thats going to peter out. Dont you think . Whats with the clowns . Yeah. Im not worried about that. Ronalds one of the good ones. He is. He works with kids and everything. Its just unfortunate for mcdonalds. Anyway, r. J. , thank you. Absolutely. Among the other business stories of the morning, word that at t and time warner potentially looking at a combination. Theres still lots of questions about its voracity. Joining us now is amy young. Good morning to you. Good morning. What do you think . I think everyone is does it make any sense at all . I think theres a lot of skepticism right now in the market place. But clearly verizon their biggest competitor is buying aol and potentially buying yahoo i mean. And you have comcast potentially going to the wireless business. I think all the carriers are trying to bundle and how theyre selling the bundles are different. Do you think jeff is a seller . Thats sort of the biggest component of the surprise. Plus the idea that at t is trying to digest at the moment. He has a responsibility to look at any potential acquisitions. So i think theres that angle. Theres family overhang for time warner. It makes it a much easier takeover candidate. What do you think the chances are that cbs which is in the midst of its own situation with viacom which has been the natural combination with time warner says lets not do that, lets do this if theyre available. Seems their hands are tied right now. But i think at ts acquisition of directv pushes them to more content. Would you own time warner as a result of this . I think whenever theres an m a spark, you cant dismiss it. And the multiple tends to go higher. And it could smoke out other bidders. I dont cover time warner. But fox made an offer previously. And so i think if at t were to pull Something Like this off at t stock is up on this news, by the way. Right. Because i think people want at t to grow and show growth. I want to understand if whats the proper price for them to pay. What would be a price that you think would be okay. What would be too high . What would be a steel . At the multiple gap. I think its going to be hard for at t to pull off. Well see whether the transaction takes place or not. Im going to bet against it temporarily. But only temporarily. Thank you. Well check this out later. Coming up, tesla banning the use of selfdriving cars for uber and lyft. That story when squawk box comes back. Next week, you cant afford to miss squawk box. Its the busiest week of earnings season. With a third of the dow and a third of the s p 500 set to report. Well bring you the numbers, analysis, and reaction on wall street. Earnings season on squawk box. Dont miss a minute of it. 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. The es and es hybrid. Its your daily retreat. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Welcome back to squawk box. Attention all uber drivers. Uber drivers, if youre planning on using a selfdriving tesla car to make money with ride sharing, do not. The electric car maker announced all will be equipped for technology needed for autonomous driving but a claimer on the website says drivers should only use the car for ride sharing with friends and families, not for strangers. It also said that ride sharing for revenue purposes will only be permissible on the tesla network. Details of those will be released next year. Elon musk hinted earlier this year at teslas future ride sharing service. Now for a look at whats working in the markets were joined by Karen Firestone joins us from boston. Good to you here. Nice to be here. Before we get to stock picks you think are working right now, generally what do you think works in a market like this where Interest Rates are and the valuations where theyre set at this moment . Well, as we know, the market has had a reasonably good year. Its up 6. 5 . People often say the markets flat for the year but its been pretty good. If we look at the rest of the year for the next couple of months, weve got the election, a lot of earnings coming through. If the market could hold these gains, that could be a decent year. Were looking for the kind of company that has the growth better than gdp numbers. Something that surprises people on the upside, holds onto revenue growth, maybe has a bit of pricing and takes advantage. One that fits that bill you think is the tjx retailer. Why . Well tjx is a stock that continues to work on the bricks and mortar side. Its one of the companies that does. Its been able to continue to grow through the last several years of amazon taking more and more market share from all of the traditional retailers. Tough go to the store for the experience. We know that millennials and consumers like the experience rather than having the same old type of store where you can do better at help clicking through your options. And its been able to grow nicely. Theyve had a setback. The stock is down 15 from its recent high. We think this is the time that you can grab tjx and we think its a bargain here. So for people who are familiar with tjx, its almost like treasure hunting. You go in there and try to find really deep discounted names. So it cant necessarily parallel an amazon experience in that way. Newell rubbermaid. Nwl. Right. We had owned jardon who acquired newell. And we decided to hold onto newell. Theyre streamlining. They sold their Tool Division for 2 billion to Stanley Black decker. So theyre taking skus out. They are selling it below roughly a market multiple of next years earnings. Its a consumer staple stock thats been able to show nice growth. Its not trading the kind of numbers that you see from many stocks. Heres one more kicker. If you look at the one bricks and mortar store, its walmart. Now that walmart has given their employees a wage increase, theyre seeing an improvement in sales. And that can help the newell lines. Which are, you know, sunbeam, rubbermaid, and many others. Thanks for joining us from boston. Thanks very much for having me. Whats the problem with the ticker . Its messed up. For example, look at the watch General Electric, it says its down 95 cents. Its not down 95 cents. Its at 28. 95. Its down like a nickel. I notice that mcdonalds is going by 1. 14, down 40 cents when it closed at 1. 10 and its up 4. So we dont want to you did say microsoft was correct, right . The bottom ticker, i think the ones on the bottom some are right. But some on the top, i noticed home depot is wrong. See. They took it away. You spoke and magic. When we come back, just 23 of tech jobs are held by women. The lack of diversity is big topic. Well get details about that when squawk returns in just a moment. 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 . 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. 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. Welcome back to squawk box. The push for gender equality is in view at women in computing. Julia boorstin joins us from houston where theyre trying to bridge the gender divide. Julia . Reporter well, with just 23 of u. S. Technical jobs held by women, more than 15,000 women will gather here to work on closing that tech gender divide. Part of the problem is that women leave tech jobs at twice the rate of men. And part due to poor working conditions and poor work life integration. According to a new study by the institute that runs this conference. The educational pipeline is grim as well. Only 18 of Computer Science majors are female. Thats down from 37 in 1984. And it could get worse if nothing is done to encourage women in this field. The number of women in the computing workforce is projected to decline to 22 by 2025. That would be down 15 Percentage Points from 1995. But plenty of companies are already taking steps in the right direction. Ranking google, intel, and ibm among b the Top Companies for women and highlighting the best practices for hiring and retention. And sequoia highed its first female investor in its history. Now, the vast majority of execs surveyed say theres a direct correlation between diversity and financial success. Which is why theres 300 Companies Recruiting here. Back over to you. Okay. Thanks. Stocks to watch today include skechers. Third quarter earnings missing forecasts. That one actually was check that and it was correct. Its down almost 4. Almost 16 . Shoe makers blaming currency head winds. But it does turn to the International Business. Fourth quarter revenue outlook the company gave was also below estimates. And the shares down more than 30 this year. But thats not hard to admit when theyre down 16 today. So for the whole year theyre down 14 . Schlumberger with Oil Prices Higher the World Top Oil Services Company expects improved activity in north america, middle east, and russia next year. And s. A. P. Is raising the guidance. The german Business Software provider is also raising the low end of the revenue outlook for its Cloud Business. After sales rose 8 with the number in the latest quarter. Coming up when we return, big money in politics. The details of Hillary Clintons biggest donors. As we head to break, look at u. S. Equity futures. Were back in a moment. Sive agge environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Welcome back to squawk box. The tv show thats live. Heres whats making headlines this morning. Mcdonalds shares rising in premarket trading. The company beating estimates by 2 cents with quarterly profit of 1. 1. 50 a share. See, i told you it was up, sorkin. If it has a big day like that it should be up. We should be showing it as up, not down. Yes. They should get what they deserve. There it is. We just had an interview about it. I dont know what they need to do. Better burgers, right . Youve already done breakfast in the morning. Which is great. Already done breakfast in the morning. What a concept. Breakfast all day. Thank you. Its awful drivethru. It takes forever to get anything. At mcdonalds. In the city . In the city, in the suburbs. I was the one holdout in the family. And hows the service . Service is terrible. The burgers are dry. Theyre behind the ball on the grass fed movement. I know they use cage free eggs. But between the Healthy Food Movement and the quality of the existing food is not there. They roll off the counter and crack . Why do you need them in the cage . They want the chickens to roam free. So cage free chicken. Before they get killed. A lead article yesterday in the business section, gmo fears of eight legged chickens in china. Why is that a fear . Sounds like a productivity who doesnt like drumsticks . Productivity increase. Hold on. How many times have i had the lady from Buffalo Wild Wings on . You need one chicken to get two of those wings. I know. Thats not fair to chickens. What if you had an eight winged chicken and then one chicken whats wrong with that . Thats not progress, seriously . I dont think so. Laugh, its funny. You know, youve been using this joke for six years. But yesterday you see that it can be done. It can be done. It can be done. I dont know if it should be done. But it can be done. You know what was interesting to me with that, despite pollution and workers safety, they actually have some strict restrictions on farming, agricultural products. I did a story on pork earlier this year. They ban a certain muscle enhancer that American Farmers use. So they wont take our goods. There are a lot of issues around that. But youre here for something else. New Financial Filings this morning offering insight into political donations. Kate kelly is here. Love the drumsticks. Had to weigh in on genetic chickens. September donations for the two main candidates. Incredible fund raising month for Hillary Clinton. Record for her so far. 73. 8 million in total. Trump raised about 54. 7 million himself. Is that what she made personally from the foundation . Oh, thats campaign money. Thats okay. All right. All the donations. Never mind. And dominated by a singer super pac whereas trump has a couple pacs. And some speeches. Breaking down major clinton donors, theyre stepping it up. Donald sussman gave 6 million in the month of september. His total i think is in the high 20 million at this point. Members of the pritzker family, 2. 5 million. David shaw, 1 million. There were also small for de shaw. As for donald trump, he had an enormous filing from the Great America pact. I hand checked whether any of the familiar business names we cover were in there and didnt see any icahns, bob mercer, no sign of them so far in september. Although im still combing through them. But just to remind people, he had a very good Third Quarter with other pacs. Just to recap that, carl icahn gave 150,000. John paulson 250,000. Harold hamm almost 500,000. So trump is actually surprised, i think at this late stage of the game with big money donors. But clinton continues to outraise him dramatically. Very true. Staying on the topic of politics this morning, back to little bit of some clips weve been showing you from the interview i did with Greydon Carter in san francisco. Heres what he had to say on the topic of the election. What do you think is going to happen at this point . I mean, i dont think hes going to win. I think itll have left a you know, a permanent stain on the whole political process which will wear off after awhile. And i think that hell spend the next year in a state of complete turmoil because he realizes hes probably not done wonders to his reputation to the people he will bump into in new york and elsewhere. That was my other question. What do you think is going to happen to his businesses . I think they will suffer. I think all the people who put money up so they could get him as the rental agent for their buildings to put the trump name on, i think thatll dry up. I think there are a lot of people who will not move into a building that has the word trump on it. Interesting words from graydon carte ecarter. Imagine you may disagree with his views. Totally shocked to hear fra fr that him. Hes been very out there he came up with the short fingered you know, the real contest would be sidebyside trump hair versus graydon hair, i think. I mean, both of them are they both have mirrors in their houses, right . They dont pass by them as i dont think thats fair to either of them. Okay. I dont think thats fair. Coming up, swing state politics. A live report from arizona. Scary clown setting. Which could turn blue for the first time in ten years. Plus well talk to Governor John Hickenlooper. Next. Sing girl, come on. [ singing ] sorry, ariana you gotta go. Seriously . Verizon limits me and i gotta get home. Youre gonna choose navigation over me . Maps get up here. Umm. That way. Girl you better get on tmobile why pay more for data limits . Introducing tmobile one, unlimited data for everyone. Get four lines just 35 a month. 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. Welcome back to squawk box. The futures suggest a positive open for one average, negative for the rest. S p lower by five. Remember microsoft nasdaq is microcap weighted so microsoft is going to have a big impact there in particular. You real said nasty things about mcdonalds. Service has been awful. Every time. I cant even believe you go that often. I love the coffee when i can get it. I love breakfast all day. I love egg mcmuffins. I was so happy i doubled the amount i go to mcdonalds because of the egg mcmuffin. The cage free eggs. Shes at whole foods shopping for kale. Yes. Sure. I have not had service problems. I mean, especially in the drivethru. Not trying to get anything at mcdonalds. Believe me, i can afford it. 1 menu. Yeah. Cant do anything for me. Stocks to watch today, paypal profits and revenue estimates. As well as the new agreement which makes paypal is oneclick Payment Option on the alibaba site. Big changes for the desert southwest. Arizona may be going from being a red state to a blue state. That hasnt happened since bill clinton won the Arizona State of arizona in the president ial election in 1996. But polls show Hillary Clinton has a shot at taking the state. Contessa brewer is live in phoenix with the latest. Dp you go out there just for this report, contessa . Reporter you know what . You cant believe the places they send me to give you some political news here, joe. Hey, so 11 electoral votes up for grabs in this state. The fact theyre up for grabs is shocking. Longtime political watchers here. But the arizona poll this week shows Hillary Clinton is up on donald trump by five points. I mean, this is a state where john mccain and mitt romney took the state by roughly ten points each here. Appears that trumps topic of building walls might actually backfire in arizona. The state would lose almost 49 billion in Economic Activity if all unauthorized immigrants were removed. Nafta obviously was popular down here in arizona among republicans. And free trade in general. Arizona and mexico, you know, have a great trading relationship. So i think they are bewildered by that. They probably worry to some degree. Digital air strike is an Online Marketing and Brand Reputation company. It employees 175 people. Many of those are millennials. Able to support a republican in the primary process. But now shes switching her vote to a democrat. I like the concept of reducing, you know, tax and government size. But it really concerns me when the candidate thats saying that does not have a cohesive plan. Someone thats going to be, you know, short tempered and easily can change course is not something i like in my business. Reporter so we heard that Hillary Clinton plans to focus towards red states. Arizona one of them. She has multiple offices here. She just made a 2 million ad bite in arizona. Michelle obama was here last night campaigning for her. However, Hillary Clinton has not been to this state in the general election process. Donald trump, six times here and he may plan another swing through the state before the election, joe. Okay, contessa. If you got to go somewhere, we could have sent you to, you know, somewhere not as nice as arizona. So thats a pretty good gig out there. Have fun. You going to tee it up . Reporter yeah. See. Golfer. I didnt know. Okay. All right. See you later. Okay. Our next guess is the governor of another Battle Ground state. I dont know if were calling it a battleground state anymore. Colorado where Hillary Clinton has an eightpoint lead over donald trump. Governor John Hickenlooper joining us. Good morning to you. Good morning. How you doing . Im good. Do we consider you still a swing state . I think were still a swing state until after the election. And i think well go back to being a swing state. But certainly donald trump hasnt done terribly well in colorado. Do we even need to vote there, governor . Maybe not. You dont even have to go to the polls, i guess. This ones decided already . Im not saying its decided. Im just trying to understand from the governor to the extent that he has his finger on the pulse going on in the state and given where the polls are. Whether were putting this in the battleground group or not. I still keep in the battleground state group just because, you know, there is so much uncertainty. Im not sure i trust or im not sure anyone should trust all these polls one way or the other. We saw polling mistakes with brexit. Thats why we have the election. Well have to see. Certainly, donald trump has said repeatedly said things and kind of shot himself in the foot out here. Attacked people when he didnt need to. I mean, it reminds me i cant remember in alice and wonderland the mad hatter at one point said people that dont think shouldnt speak. I think that probably applies to mr. Trump and his experiences out here. Denver and boulder will probably you know, pretty Fertile Ground for secretary clinton. Obviously. It was about before the what was it . I guess it was before the video, the billy bush video he was up or at least tied which was Pretty Amazing for colorado at that point. But yeah. At this point, its not looking too good. Well, these are you know, even the republicans out here are pretty Strong Family values folks. So republicans, independents, and some of his, you know, misogynistic comments bill and Hillary Clinton, family valued. Even you got a laugh out of that one. But the bottom line is that i think donald trump is just going beyond any you can try and blame hillary for things that happened decades ago, but Donald Trumps doing it right now. And its i think it has driven voters away by the droves. Let me ask you this. To the extent you would want to offer donald trump advice which i imagine you wouldnt, given the party youre in, is there anything you think that he can and will do over the next few weeks that could turn the state . You know, i think its probably my personal feeling its probably too late. You know, he had a chance a couple months ago if he could have stayed focused on his approach to changing the country. I mean, theres so many people in both parties, right . That are frustrated, that many cases people havent had a raise in a number of years. Theyre doing a job now that is not what they want to do. They dont feel fully employed. Its Fertile Ground for people from both sides saying im going to change things. But he just let things get carried away. Governor, what do you think is going to happen after the election . Well, i think i am very hopeful that Hillary Clinton will reach out to republicans and independents and everyone and say, all right, lets find the things we do agree about. Lets rebuild our infrastructure in this country. Lets get going in the right direction. Lets come together and address do you think thats plausible given everything thats happened . Yeah. I think she is someone if you meet people from upstate new york and hear the stories when she first campaigned in northern new york, she barely won that first election. When she ran for reelection, she won by almost 67 . She turned them around by not caring about party politics. It was lets solve problems together. Thats what the country needs. It depends on congress and it also depends on whether she is as far left as shes gone on to take on bernie sanders. If shes as far left on the platform shes run on, shes not going to get anywhere if congress doesnt change. Its left of where president obama was on a lot of issues. But lets talk quickly i want to see your latest thinking on legalized marijuana. In the past youve said if you could go back in time, you personally would rather wish it hadnt happened. For the will of the people to make it work. Then you softened that. Maybe more ambivalent. Maybe its not as bad as you thought. Or not as good. Where are you now . Certainly a lot of the nightmares that we thought were going to come to pass havent. They havent been as severe. Our fears werent as the reality wasnt near as bad as our fears were. I still tell other governors lets wait a couple years. Lets see what happens to usage among teenagers. Make sure weve got these we just pased a law do you know do you know in frequency of use in teenagers obviously before it was legal it was its not like it wasnt like teenagers couldnt use it. But has it increased now that its legal . Do you have actual numbers you have confidence in for that, do you know . Yeah. Its up a couple percent. But it hasnt been a big spike. It has increased. Were spending 8 million on ads that the marijuana, every time you use its theres a high probability youll lose some portion of your longterm memory. A little sliver. Kids dont think in those terms. Were trying to let them hear that. How about do you have a test for driving while under the influence of sure. Is that on the increase too . It might not be as obvious as someone, you know, with alcohol. Well, were certainly measuring it like crazy. And so were seeing a higher incidence of people being arrested driving while high. Were testing more often. The only way you can really ascertain is a blood test to get to concentration. Governor, obamacare premiums in some parts of the state i read are going up by 40 . Is that a Campaign Issue this year . Well, there are a couple outlie outliers. Certainly there are challenges with the cost of premiums at every level. And we have a few outliers that have gone up dramatically. But premiums have been going up for 30 years. I think the time is now for to get focused on. We expanded Health Care Coverage which i think we needed to do. Now weve got to control costs. Its driving out funding. Right, right. But the premise was they were going to control costs. Like, that was actually the premise in the beginning. It doesnt seem to be working out that way, does it . I think the premise was theyre going to expand coverage. And make sure go back before obamacare. 90 of the doctors did all their prescriptions, all their medical records on paper. 80 of the hospitals did it on paper. Now its the opposite. Now its 90 of the hospitals are digitized and 80 of the doctors are using technology. I mean, thats going to help us get our arms around cost. But so far people are still, especially in terms of pharmaceuticals, medical procedures, we havent controlled how thats being implemented. Okay. Thank you, governor. We appreciate it. Great to see you, sir. You bet. All right. The tickers back up. I havent looked at it to see how things are working but it must be fixed. Stocks to watch today, boston beer cutting its outlooks. The maker of sam adams beer said it was reviewing its brand strategies and increasing competition in the industry. S. A. P. Is raising guidance for 2016 even though the Third Quarter profit dropped by 19 from last year. Its bottom line is expected to be boosted by 6. 5 to 8. 5 increase in cloud and software revenue. And walmart will invest 50 million in a chinabased Online Grocery firm called dada. I dont know whether you can get the eight legged chickens there. Some of the nations most popular websites are suffering intermittment outages this morning. Twitter, amazon. Com, spotify are among those that have been affected. It appears to be reflected on the Service Attack against a popular domain name server company. Were going to bring you more details when we get them. When we return, jim cramer is going to join us from the new york stock exchange. Were going to get his take. Stay tuned. Squawk box will be right back. In 2013, i was working three jobs bartending, sharing a ten by ten room, struggling. I rent this place and then i started home sharing. My roommates help out all the time. They are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. I was able to take three months off to take car of my family during a family tragedy. The extra income that i get from airbnb has been a huge impact in my life. Welcome back to squawk box. Ericsson said fell during the Third Quarter. Company plans to cut further to account for weaknesses in targets. A 40 billion takeover bid for british American Tobacco. The bid is worth 56. 50 per share and involves the 58 of reynolds that british American Tobacco does not already own. Lets get down to the new york stock exchange. Jim cramer joins us now. I saw you tweeting about people that have stuck with esterbrook and youre one of them and youre not surprised today. No, look, this guy is the real deal. He hasnt even started Loyalty Program yet. People like to go there. He knows its a treat. Hes trying to make it more Natural Organic over multiple years. He cant do it overnight because he would wreck the whole food chain. Away from Natural Organic, the food chain is, i think hes a remarkable operator. I think he keeps getting sold short. People keep coming up with things saying its all over, onetrick pony, hes anything but that. Hes also energized. Watch technology he puts in in the next year. He is the real deal. We got to stop saying those guys were onetimeonly. Right, nobody here likes them. Say service is bad. Hamburgers are huh . Look, i go to them all the time. I do too. Maybe i shouldnt. Sometimes im out late on a saturday night. Lets just say it does work wonders on a sunday morning. Every time i go to one its good. Every time. And i complain about the one on the l. I. E. , it was fixed the next week. The guys hands on. Now we got to figure out and youre someone who knows how to run a restaurant, but what do you do with the burgers . Because that might be the next great change in mcdonalds. They got this bad rap that their burgers arent up to speed with like in and out, i guess. In and out is special. Lets see what he can do. If i have fasted for three days, i would have a big mac. Im a breakfast all day guy. Me too. The big mac take with lipitor, i dont have my lipitor handy at all times. Like we you crush the lipitor on it. Its like one of the condiments. Right there at the, like mustard, relish like what i do when my dogs need a vitamin, put it in a piece of meat. Stick it in the meat, the lipitor. Exactly right. Frankly its worth it. But i cant take the lipitor with me to all different places. Breakfast all day, jim, fantastic, isnt it . E. G. Mcmuffin any time . That is my favorite. 330 calories. Yes. The coffee still piping hot. The best coffee in the world. You got the double line now for when you go through the drivetlu. I like to go in but the wife says we have to stay in the car. Easterbrook is so good. Im tired of people denigrating him as a one trick pony. And microsoft sachas fabulous. Im going to start wearing a black tshirt. That was fantastic quarter. He is the selfeffacing guy. Hes very funny in real life. He comes off a little automonotone on the call, hes all right. Jim, thanks. Quick programming note, happy birthday to the halftime report. The celebration continues today with new englands patriots owner robert craft. Thats at 12 30 eastern. Well be right back. , social updates. We call it dark data. 80 is invisible to most businesses. The ibm cloud has tools that can help see dark data and put it to work. Hello, my name is watson. Working with watson in the ibm cloud, we can help an Energy Company predict pipeline corrosion. 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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. Quick check final on the markets. And you can see that the futures have gotten worse, especially in the dow. Now down 66 or so. Microsoft is up, but point out ge shares are now down over 1 after the company said slow Economic Growth particularly in the oil and gas business weighed on full year also lowered full year target while narrowing profit forecast. Join us on monday. Have a great weekend everybody. Squawk on the street begins right now. Good morning and welcome to squawk on the street. Im david faber with jim cramer. We are live from the new york stock exchange. Carl quintanilla has a well earned day off. Lets give a look at futures this morning as we end our week going to end on a down note at least when we open trading this morning. European markets, lets look at how things are faring at this