Transcripts For CNBC Squawk Box 20161028

Said there. Wti, 49. 54. You rolled your eyes. Im trying to figure out i initially thought that ge was going to sort of double down and cost average in, because now things are cheaper to buy. It looks like this is sort of if response to trian, trying to get more focused on turbines and medical imaging and the other businesses, sort of maybe offload something theyve been trying to get in in such a big way since 2007. Theyve been adding to oil and gas, right . Now theyre getting out. We dont know. Though the company picked all the wrong times to get into all the wrong businesses. I wasnt going to say that. Being a big bank, energy company, or a media company. Which makes me think they own all these what i think are valuable oil and gas assets, now its cheaper to buy them, the ones you bought for too much, you can buy them at a better price. Now they will offload some of the stuff they bought at higher prices . Put it into a partnership, spin it off. Unclear. Have you made calls on this . Ive made calls. Your job does not end. It never ends. I see that. Thank you. Coming back from atlanta do you have an accent . I have no accent. No accent. Had a peach, though. Did have a peach. Someone said yesterday there was more maybe we i didnt want to give it away. Are more peaches produced in South Carolina than georgia. Though we have the moniker. I had one at the airport. You liked atlanta. People are nice. Very, very nice. Even to you. And they know you. They know your whole we have some great fans in atlanta. I know that. I do. You do. You do. You do, too . They came over to the okay cafe, not only kaylas parents, but others in addition who watch the show. Just making sure you were doing okay. And you had everything you needed. My fans are kaylas fans. Fans of everyone. They said you were sitting back by the take out . We were sitting behind yeah. We werent in the main area. Okay. Because they still had business to do. They werent trying to shut dont restaurant. Good stuff. We did have a scary moment last night for mike pence. The Campaign Plane carrying the governor skidded off the runway after landing in heavy rain. About 30 passengers were evacuated off the plane. The plane did not strike any of the fencing and was not in danger of going into the water. No one was injured. Were thankful for that. Governor pence will join us at 8 00 a. M. Right here on the squawk set. A lot to ask him about. Dont have a lot of time, i guess i remember that plane going into the water. That was probably 10, 15 year s ago. At least 15 years ago. That was on takeoff, though. Laguardia shgt t, the run wa do you still go inand o and f there . Constantly. Another reason to move to new jersey. Because newark a longer run way. President hillary will have a lot of infrastructure, some of it might find its way down to right . Thats what they say. Thats what they say. As we im coming to dealing. Im dealing. You tell me, when you were down there, even georgia is gone for republicans, right . No, no, no. Close, trump will probably win down there. Okay. All right. I felt like i was very much in trump country. Did you really . I did. How did you find those people came in with the masks. How did you like that . The other one, that just is going to get more votes than people think. The lady was pretty strident about not liking donald trump. But the other guy on the other side, the trump supporter he was great. He was good. I evinvited him up here. He said buy me a plane ticket. I liked him. He sells jewelry. Nice guy. Yeah. Yeah. As we yeah. You got a christmas a present, holiday present for i did not. Ill have to order it there him. General electric is in discussions with baker hughes on potential partnerships. Ge said while nothing is colon clueded, none of the options being discussed include an outright purchase. The wall street journal would actually merge the oil and gas business with baker hughes and could be a deal worth 20 billion. The paper reports the businesses could be combined and spun off into a new publicly traded company. Last week ge said the oil market bottomed but the demand for infrastructure equipment would take longer to recover. Ges oil and gas operations have higher revenues than baker hughes. Baker hughes, the market cap is 23, but the stock immediately ran up 20 and came back down after it was clear it was not an outright sale. Chipotle building a team of high profile Investment Bankers to defend against bill ackman. Chipotle hired Goldman Sachs, as well as a law firm and crisis pr from joel frank. Ackman has not made public demands of chipotle. Shares of chipotle are down more than 12 in the last two months. We did have big earnings out after the bell. Amazon and alphabet reported for the latest quarter. Amazon missing on the bottom line causing the stock to sink. Currently down 12 . Alphabet beating on the top and bottom line. Joining us to break down the results, james chocmok. Great to have you. Thanks. What should we start with . Start with the bigger news, amazon. Okay. Were investors too greedy to expect address much profit as they did . I dont think it was greedy. What you saw in the first half of this year was the performance in the stock driven by fundamentals. In the second half it got ahead of itself because of the scarcity value of high quality growth names that are in the tech world. I think that drove it a bit more than it should have. When you look at the profit expectations for the fourth quarter, which is the biggest seasonal Holiday Shopping period, it left a bit to be desired. Shipping costs up 43 . The company says thats just an investment in the holiday. Was that roughly in line . Its not just shipping, the content, rapid expansion of Fulfillment Centers. They had 18 Fulfillment Centers this year. The last time it was that big was 2012. Theyre positioning for the future. Its not something that im too worried about. Im neutral on the stock, but as far as the longterm trajectory, im not that worried about it. Prior quarters when the spending ramped up that much, the investment ramped up that much, cloud canceled it out. Sure. Is cloud as big as it needs to be . Cloud is on fire. That was what youre seeing in the cloud is 45 , 55 incremental margins. We hear from customers that price. I think the bigger issue is the international segment. Because to justify some thoof te 1,000 plus targets, you have to assume that replicates north america, and its difficult to see that path because of the fact that india is a question mark. You sound bullish. If the stock is down 5 , why not buy here. I sound bullish because its hard not to love amazon. Being an avid customer, but you have to look at the numbers. You give the benefit of the doubt to north america, fine. Give it to aws, check that box, but its difficult to do it to international. When they try to go into hollywood, grocery, when you think of the cost of refrigeration. Trying to go to mars. Trying to go to mars. You read about all this brickandmortar idea. Do you like that . Does that excite you or scare you . It excites me. The refridge pageration part of whole grocery thing scares me. Thats another beast dealing with that. They could be the new omni channel. They can optimize the products on their shelves based off of demand and turnover they expect. Does that mean they ultimately look more like walmart than walmart . Thats the idea. I think it will still be delivery driven, right . Well, now theyre also talking about at least the report suggests theyll be having stores on the corner of the street. But thats for when you think about densely populated markets, i think it does make sense. You can use it one as a mini Fulfillment Center for onehour deliveries and have Higher Turnover goods being sold. Quick comment on google. 7 billion buyback doesnt hurt. It doesnt. You saw acceleration across the core metrics, paid clicks on a tough comp. We still saw acceleration. Pricing iffy, overall, its a positive trend. I think the bigger point for google is they need two major cultural shifts at the company. One is they have to if theyre going to go into hardware, they need to be able to spend tons of money and have a high tolerance threshold for marketing spend. And, two, they need to have an enterprise sent trick cloud strategy, which is a high touch experience. And thats not something theyre totally they dont have an 800 number for customer service. Well, a lot of these companies dont, thats one of the big gripes. James cakmak, thank you. Now talk about my favorite topic, i was so excited about this. After months of rumors, apple finally unveiling the newly designed macbook pro. Im still sporting a macbook air legacy 2010 11. Right there with you. Ive been thinking whether i want to buy the macbook the small, baby one, or do i wait for the 13inch, this thing with the magic strip. Right. Should i be excited or not . I think so. Its been four years since they updated the macbook pro, their higher end laptop machine. We heard a lot leading into the announcement that them have a touch bar, this strip above the keyboard. Sounded gimmicky, but after just demoing it a bit, versatile. I like that they brought touch id, the fingerprint sensor to the mac. Are you disappointed that the laptop doesnt look fundamentally different . In a world where people moved towards microsoft has the surface, you can go from being a laptop to being a tablet, literally going its the equivalent of having mac os to going to almost ios, being able to flip back and forth, to having the touch on the screen. A lot of overlap there already. This is so different. This is not that different. Its not that different. You know, you can say if it aint broke dont fix it. But their business has been struggling. The mac business has been down. Will this help it . I think so. There was a lot of pent up demand. People like you and me waiting for this. But the pricing is high. Much higher 1799 for the 13. Then you can go up to 2400. Youre going. They used to have a great price point, under 1,000. If you were a student going to school, this was a great system. But the macbook pro was always a premium. Now theyre getting rid of the macbook airline, line. Its still there but theyre phasing it out. The macbook will be the lower end. I loved the lightness, but the keyboard never did it for me. Well have to see how good the keyboard is on the macbook pro. Did you play with it . I banged on it a bit. I want to spend more time with it this is all nerdy. This keyboard thing is an issue. The keys accidedont travel. Normally when you hit a keyboard, it goes down and up. The new keyboard, its so thin, it feels like youre typing on glass. Thats right. Judging a few minutes typing, it does feel better, but need to spend more time. You wouldnt know whether you hit it two or three times . Sort of. Kind of sort of. Ed is like a tv star. Usa today is the only place they put their main people i know. You know where they buy the commercial space . Right here. I know where im going with this . The deal book, tuesday column you have. Yes. You could be on tv. I could be on tv. On the new york times. You, krugman, collins were saving our shekels. Arent we all . Yes. Yes. You want to comment on the deal . Id rather not. He told me hes comfortable, but 400 takes on that commercial . Yeah. For a 15second commercial. All right. All right. Print and radio, theres a reason for it. Whats the name of your column . Deal book. Deal book. We try to leverage the brand. All around the deal book brand. Yeah. You can produce. Talk talk that will help your career. Coming up, theres a lady in the elevate their people are afraid to talk around. What is that about . The other commercial. Yeah. Yeah. Thats thats sports. It is sports. Christine brennan. You go. Important data point on the economic calendar. Well tell you what to expect from our first look at Third Quarter gdp due later this morning. Coming up, 30 minutes, three ceos. The heads of choice hotels, party city, and seal dare join us on the economy, politics and more. Its a ceo triple play on squawk box. Welcome back. Time for todays executive edge. Well start with the european edition of stocks to watch. Ubs posting a 60 slump in Third Quarter net profit. The bank citing risk aversion. The swiss banks Security Unit was hurt by a slump in equities trading. Royal bank of scotland warning that lower profits are eroding profits. Lets they were weighed down by legal costs over settlements with u. S. Authorities over u. S. Mortgage backed securities. Sanofi lifting its profit for the year after better than expected earnings. They announced a 3 billion buy back since 2017. Those reflected efforts to cut costs to make up for poor diabetes drug sales in the u. S. The first report on Third Quarter gdp is out at 8 30 a. M. The forecast is for growth of 2. 5 , versus 1. 4 in the Second Quarter. Economists raised their outlook following positive trade and housing data. It will be interesting. Usually not too far off. I thought we were worried about the low, 2. 5. Maybe it is chevron and exxonmobil lead the list of earnings today before the opening bell. Also well hear from drugmaker, abvi, mastercard and hershey. Joining us now is j. J. Kinnahan from t. D. Ameritrade. I thought we ended up yesterday, but we ended down. 18,169 on the dow. Similar numbers in terms of a trading range on the s p 500. Last time you were on, i think we were happy about the small move, not that we want things to go down. Nice for something to happen. Nothing is happening. Is it the election or the fed . As we look at clients and talk to clients, combination there of. Its the election, which sectors will be winners out of that. You talk about this range in the z s p 500, were at 2126 would be a number we have bounced off. Thats one where i would be looking. On the upside, like 2178 area. Thats a tight range that weve been in for a long time. Weve been in the range for months. Weve been at these levels for years. Absolutely. But every morning we say there could be the next meeting could be the one. Were at a point where on last nights close, talking 75 probability of a rate hike in december, based on fed funds. We need to get stuff out of the way. One of the problems for retail traders, they get caught up in whats happening now. Not looking forward. Its a great time for people to be looking for if we do have the rate hike, i think well all agree financials should do well. Theyre off a nice earnings season. What are the sectors that will get hit . We saw housing suffer yesterday with bonds in the massive selloff. That might be one people look at not doing well. One other thing people miss is not only whats going to happen shorter term, but longer term and how it will affect personal finances. A quarter point on a mortgage is probably about 4 bucks a month on an average mortgage. Not a huge difference. Overall, i dont know if people as you guys know, rate rises tend to come in chunks. You must i dont know if you have a technical idea about it, but in the old days, 5 , 6 , 7 , techs wouldnt mean anything. I saw 182 today. I was like oh, my god. Look at the tenyear, these are i guess these are intermediate terms high in yield. Its 185, andrew it hasnt been 185 in a while. It was at 187 yesterday on its absolute high. Some people said above 177, its going above 2 if it gets to there. We bounced off this 187 one time. It bounced down. The yield bounces down as bonds rally. The gdp number today will have a lot do with it. When youre in a 75 probability, and we know the fed wants to save face. When you talk about four rate hikes and we had a grand total of zero, they have to do something in december. Theyre under pressure from the economy. Aint no face left. Theres like a like a single point. Its halloween. A horror show. We all thought the fed would be hiking into a strengthens economy and that equities and bonds could outperform in tandem. But the move in yields la been ci has been cited as a head wind. How does that add up . Because of the free money. When we see it, well see an initial reaction from the stock market. Because of the free money is gone. To joes point, people are so used to the low rates, havent seen anything in such a long time, the lightest move means a lot. A quarter point is not that big a deal in the grand scheme of things, its just been a year since we saw it. It was a long time before that. Ten yo tenyear rates are still r relatively low. We have seen before, the economy never seems to get stronger and all we get are higher rates. Shortterm. I think sometimes we all, you know, your job is to have a shorterterm view. You have to talk about the market every morning. Thats not true. No one ever told us that. You think people are telling us anyone ever told you be short term . Never think short term. They dont even care about ratings anymore. That got a big laugh. Any way were done. Thats why the music is playing. See how that works . I dont have an ear piece. You dont have one in. You dont need one. There you go. Always a pleasure. Coming up, 30 minutes, three ceos, our triple play starts after the break with the ceo of choice hotels, the big bucks behind halloween. The ceo of party city talks about the holiday. And the ceo of sealed air, behind many of the ship prognosing products you use every day. As we go to break, a look at the s p 500 winners and losers. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. 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. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Welcome back to squawk box on cnbc. U. S. Equity futures, they were down on the dow significantly, now up 4 points. Its turned around. Nasdaq will have trouble overcoming amazon, which was down, like, 5 . Based on where that stock is, its like 40 points. Did you see that . I did. Anything else . Not bad. Thats why the markets are good. Anheuserbusch. Thank you for that segwauseg. Inbev cut guidance as sales declined in brazil. The second largest market. The Worlds Largest brewer and maker of budweiser said core profit fell 2 versus 4. 5 growth that the street was expecting. The firm announcing it would cut its outlook for brazil for the second time this year. Ab inbev bought sabmiller for nearly 100 billion earlier this month. These results are for the pr pretakeover group. Shares of ab inbev down almost 4 . Choice Hotels International beating on the top and bottom lines in the Third Quarter. The Company Working to refresh its well known comfort inn brand and making a new push into the upscale category. Choice owe tells also announced a more generous parental leave benefit package. Joining us is steve joyce, ceo of choice Hotels International. Lets start with earnings. Stock was up sharply yesterday. Impressive beat for the quarter. Where did you see the demand from . Couple things are going on. We are adding new hotels in a significant number. We did a 25 increase in new deals, and leisure is holding up much better than business. We have a significant leisure component in our hotels. As a result people are still traveling for their vacations, even though they may be doing less for business. And that added with the fact that we put some new things in place, particularly some rate management tools and ways to optimize revenues. We did significantly better than everybody else in the business. So that all combined got us to a fairly significant rev par increase, which is how much youre selling per room, at 11 when everybody was middle to low single digits. When you say youre doing rate management, promotions . Rewards . A bit of everything. One thing were doing, we decided we want to stop this nonsense with the Online Travel agents about where the lowest rates are. We have put on our site for our Choice Privileges members which we have just redone, we said to you, you know what . You keep looking at all this advertising. But the lowest prices are on our site. We guarantee you it will be up to 7 lower. So, were getting significant push from that through yoour channels. Why did you choose 7 in. Because 8 seemed lhigh and seemed low. Typically 7 . I give people 50 bucks if they find a lower rate. People take it seriously. They look, we tell them its the lowest price. They look all over to try to find a lower run. Rarely, sometimes they do sh, t get 50 bucks. 8 is too much, 6 is not enough. The question is what would move a consumer to be meaningful. We asked them. People are staying. What does that mean, no business does it mean gas prices are cheap . People are not going to europe . Are people saying here and going to disney or wally world . Our customer is a drive market customers, lower gas prices put on average 600 in their pocket. So theyre using that to visit family go to national parks. My husband just did a two week tour of the national parks, stayed at a couple of comfort inns. See america. He went to atlanta, ohio. Now bring the wife and kids i think we stayed at one of his i love those. Thats something that is coming out of what millennials want. People want to be able to take. We went to 12 fuel paid well pa for maternity, four weeks for their partner and to take care of parents. Thats been well received. When people saw that, people are coming to us saying we would like to work for you. Only slightly off topic question, would you want to own a trump hotel chain right now . Im curious. This is a big issue. A lot of stories about whats happened. The answer to that is no for precisely that reason. The political positioning that hes taking is not a good thing in the hotel business. You want to appeal to everybody. My view is two years from now, if youre going to chicago, you want to stay in ang Upscale Hotel and youre on expedia, and you want to stay at the trump hotel, very nice hotel. Beautiful hotel. Ive seen it. Would you say thats a good rate, ill do the other one because really . Heres what will happen. There are people move in groups. Companies book based on a certain way. Depending on your political orientation that will affect your buying decision for hotels. We try what we want to do, we represent the 99 . Thats at a pretty rarefied air up there. I think that its going to affect him longterm. I had a different idea. Youre so close, steve joyce, you can either be joyce hotels, or you could just steve choice. Choice hotels. You could be a key employee i have had that suggested to me. Have you . Yes. With Doug Mcmillan at walmart when i took the job, the first headline was joyces choices choice. I was like thats not good. Someone thought of this . Why i do always think im the first one . Thinking with your noggin. Joyce hotels. Steve, good to see you. Thank you. When we come back, scaring up profits at party city. The retail chain depends on halloween for 25 of its revenue. Its ceo jim harrison will join us after the break. Lets look at whats happening in european markets right now. 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. 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. Twitter announcing it will discontinue its mobile sharing app vine, its part of cost cutting efforts that will include a 9 cut in the work force worldwide. Twitter introduced vine in 2013 as a way for users to share snippets of videos that were six seconds or less. Never really figured out how to monetize it. There is some warning on the internet today. There is well talk about halloween flonow. Should i put it on . Yeah. I will get space that will get tweeted out again. Its officially the spookiest time of year, halloween sell bre celebrations about to kick off. Consumers expected to speed about 3 billion on costumes alone. Total spending will hit the highest in the surveys history. I think youre getting a phone call, sir. Jim harrison is here, ceo of party city, they get 25 of the annual revenue look at joseph 679. Look ridiculous. You lock great. This is nice. Thats ridiculous. My kids want to be an astronaut. Theyll enjoy this. I wanted to be an astronaut. Youre a third of the way. Now your hair will be messed up. Youll have to wear this the rest of the show. Nice to see iment. You look great. You think . Not really. When you look at this particular halloween season relative to others what do you see . Halloween comes later and later every year. Halloween for us represents north of 20 of our almost 25 of our total retail revenues, about 20 of our total revenue. How fierce is the competition from amazon . I will admit something that will make you unhappy. The sorkin boys, including this one, so theres three of us, are going as a gorilla family. We purchased our costumes, i hate to say this from amazon. The fum f the full fur. Im disappointed in you. I apologize. I didnt know i would be seeing him. If i knew i would have do you sell a good gorilla costume . We sell a good gorilla costume. Do you know what it cost . Not off the top of my head. Amazon is a competitor in halloween. They sell costumes. But what we do at party city is similar to what we did before we owned party city, we take something and blow did out with multiple open shtions. If you go into party city for a berth day party, you pick a princess pattern, you could have north of 50, 60, 70 different skews that you could buy around that party. Weve done the same thing with halloween. What weve done, in addition to the costume in a bag which is what you bought, thats the click and pick purchase. Thats what we did. We give you the opportunity to be more creative. You go to party city and buy separates, be anything you want to be. For instance, for bat girl with all the separates we have, spider girl, you could have five or six people go to a party, and they all look entirely different. Why are the costumes so much cheaper than they used to be . We used to rent costumes, now people buy them because its not that far off. Most factories are owned in china. We own a factory in madagascar. My favorite economic indicationer is how much people spend on costumes for their dogs. I dont want to upset anyone, im not a dog lovlover. I grew up in the bronx. I had this on backwards, you should try that on backwards. Thanks. Thanks. We have to go. 25 of your business is halloween. What are the other two or three holiday theres a do it . Big graduation. Summer. Theres a holiday every month. You have from thanksgiving, christmas, nothing in. Theyre holidays, but not big holidays for its. You do look good. Thank you. You can get a small dog, chihuahua. Nothing . When you grow up on arthur avenue, you dont want to walk around with a chihuahua. Look good. Good to see you. I played along with you. I usually dont. But i like this one. I was going to wear that. No, no, here. Here. I was going to take it off. They wanted to choose the one that wouldnt mess my hair up. Me too. Our third ceo of the half hour, bubble wrap inventer sealed air gives us a business update. The stock is down more than 9 the last year. Well talk about that and other things when the ceo joins us next. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive recengrand prix race carsbenz 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. 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. Sealed air wrapping up its Third Quarter. The investor of not surprisingly bubble wrap reported better than expected profits. But revenue missed slightly. The company is citing a slump in emerging markets for the decline. Joining us is president and ceo of sealed air. I think about how i would if i were ceo try to manage the company. It seems like you are sort of held hostage by Economic Conditions around the world and how it you know, currency translations. Whether people are packing and shipping for things. So it almost seems like you maybe dont control your fate as much as other companies. Am i wrong on that . Well, actually, we do control our fate, yes. We have had negative translations around the world. And we are a very global company. We have about 60 of our sales outside of north america. And therefore we have the Global Environment in mind. Having said that, we have the Second Quarter of record ebida percentage at 7. 7 . We have generated 10 increase cash flow in the Third Quarter. We are on par for our 550 million Free Cash Flow guidance. And we are very pleased with some early signs that our innovation are really making it in the market place in food packaging. We are the world leader of protective packaging and number two in the world for hygiene. So those are very good signs. We lead the industry through our innovation everywhere we play. So were pretty encouraged as to where we see the future. Were not happy with our 1 currency sales growth since the beginning of the year. We have announced that were going to move to 3 in the coming fourth quarter. Which should be approximate for next year. So when did you take over as ceo . What year . September 2012, exactly four years ago. So somebody else bought diversicare in 2011 and it makes sense now youre spinning off a third of the company into a separate company. And you can focus better that way, do you think . Actually, interestingly enough, thats exactly what were doing. Because there are not very many synergies between our traditional business and our diversicare business. Were not doing it because we dont like it. Were doing this because we believe that this division is now going to be able to fly from its own wings. What is very interesting is that diversi and our hygiene business has basically revolutionized the industry with technology. We are the first one introducing the internet of things which we call the internet of clean. We are leading the industry with natural products. And we are the First Company which has introduced robotics into cleaning equipment. And not only that, but we have Just Announced a Research Agreement with carnegie melon and also a commercial agreement with discovery robotics to leapfrog and increase our leadership in that industry. So when youre going to see at your corridors at cnbc some robots cleaning on themselves or vacuum cleaning on their own, think about us. Because theyre probably going to be ours. Wow. Hear that, sorkin . Yeah. Robot custodians. That would run the gamut of custodial services . It is amazing. Nobody was talking about robotics two years ago. We acquired a Startup Company in april of 2015. Since then we introduced those robots around the world. Very big business in australia. Very growing business in europe. Same here in the u. S. Very much for health care in hospitals, in offices. Everywhere you have about 15 to 20 an hour man power costs, you can bring that. And our new alliance with discovery robotics is now giving an eighthour autonomy to those robots which is phenomenal. Okay. J jerome, when youre like, if youre Walking Around your facility would you pop the bubble wrap . Id do that. This is an iconic brand, iconic product. It is a smaller one today because we have moved to the next generation. I still do it. You didnt answer my question. Do you still do it . Oh, i still do it. Joe, i can send you little boxes. A day you might be stressed, we have little boxes where we can send you those and you pop them. Can i tell you who doesnt like it . Dogs. Dogs do not like if you want to do something funny. Put it down on the ground and they walk on it and theyre doing it and they run away. Its really cruel. But you love to pop them . I do. And hes the ceo, he loves it. My kids love it. All day doing that. Why . I dont know. Its a fascination. Thank you. Were going to pop some bubbles. Meantime when we come back, the guest host for the next hour is Arthur Brooks. Always fun to be with us. And were going to be joined later by republican Vice President ial nominee governor mike pence. Squawk returns in a just a moment. 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. Inside the numbers. Amazons latest quarter giving a reason for concern ahead of the big Holiday Shopping season. Were going to speak to a top analyst about the results and what you should be watching for in the fourth quarter. Plus we talk Homeland Security and crisis in the middle east. We ask which candidate brings more to the table. And Wireless Infrastructure Company American tower making a play in europe. The ceo is here to explain. 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 kayla tausche. The futures at this hour, i cant even necessarily okay. Now theyre up a little. I wasnt going to guess. Im talking about the dow jones because the s p is down fractionally and the nasdaq is down. Some of the blowups weve seen this quarter have been tech stocks. But it depends on who you are. Netflix was, like, awesome. Speaking your language. Millennial language . No. Purely manhattan. Or new york type thing. Wicked. How about wicked . Whats that . Like boston. Wicked. Oh. I thought you were talking about wicket. My daughter says everything is lit now. Have you heard that . Yes. Its hot. Is that good . Yeah. Its hot to be lit. History repeats itself. Remember in my generation it was groovy. Or bring it back. Okay. We better go on. Here are some headlines for you this morning. Were less than 90 minutes away from the Third Quarter gdp. Consensus says the economy grew at a 2. 5 annual rate. A new airfare increase appears to be taking hold. American airlines has now matched the increase. Apple has introduced new versions of its macbook pro laptops. A so called touch bar screen can be used for a variety of functions. Some models include the new touch i. D. Features that have been on iphones and ipads for years. Now theyre going to be on your laptop. When governor pence gets here, we will ask him just how scary this was. Because it sounds pretty scary for the vp nominee governor mike pence. 40 people on this charter jet. The Campaign Plane carrying governor pence skidded off the runway in la guardia after it landed in heavy rains. Emergency personnel evacuated about, i guess it was 30 passengers on board the plane. Governor pence was traveling from ft. Dodge, iowa, and headed to a fund raiser appearance at trump tower. Fortunately no one was injured and donald trump who was on his way to a rally near cleveland reached out to governor pence after the incident to make sure everyone was safe. I know the governor was shaking some of the First Responders hands. So it was a scene last night. And a programming note. As i said, governor pence will join us at 8 00 a. M. Eastern in studio for an interview. And amazon and alphabet results are officially out. Amazon missing on the bottom line causing that stock so sink. Joining us now to break it all down, gene munster. He is Piper Jaffrays Senior Research analyst and one of our favorites. Gene, help us through this. You saw the numbers on amazon. You saw where the stock went. Was that the appropriate reaction . No. I think its going to bounce back here. And the reason is that all of the areas that theyre spending in are areas that have produced Revenue Growth in the past. So these fulfillment and content are no surprises. So the stock was down 7 , its down more or less 5 now. I bet that in a week or two it will be up from where this is at. So yes, this brings back some bad memories for investors about some investing theyve done in the past, but i think its wisely spent money for amazon. When you make a prediction like that, explain to us how you map out amazon. When you look at the multiples, they never make that much sense. What is the math youre doing on this . We think theyre going to continue to gain shares. That was consistent from the previous quarter. Sop they continue to gain share. The overall market is going 15 . We think they continue to gain share, continue to have Margin Expansion. We think thats going to drive margins higher. As far as the stock coming back, is this basically creates bigger comps for next year. Even though this is anxiety for investors, the reality is this is setting up for a good position for 12 months from now. So those are the types of things we look at when we talk about the ability to bring back amazon has always been a bit of a story stock. Im trying to understand. When you make a spread sheet to the extent you do on amazon, what multiples are you looking at to get on the numbers you get to . Well, were using 14 times our 2018 ebida to get to a 900 target. Thats the exact number. And were assuming that margins go from 3 today to 10 in the next four years. So i think some investors we meet with think thats very aggressive. They have not shown that in the past. But when you start to think about the investments theyre making in robotics, now half the Fulfillment Centers have robots and they tend to pay off in a year and a halfs time. So where do we get that Margin Expansion . Thats the core question. And the answer is that we think that continue ed efficiencies a going to drive that. And do you have any concern about just the Capital Spending . I mean, this is becoming a truly capital heavy, capital intensive business at this point. Well, were concerned on days like today when it makes investors nervous. But as far as the real investments, were not. They opened up 18 Fulfillment Centers. The most theyve done in comparison to that was 12 in a quarter in 2012. So this is a significant jump up. The reason were not concerned about this, this is part of the reason why amazon can continue to dominate over the next 10 to 20 years. Is this Capital Spending makes it almost impossible for somebody to compete with them. And so to be able to replicate this is nearly impossible. And i think that makes investors uncomfortable with this. As investors and i want to get to google in a second. But as investors, how much focus should be on the Retail Operation versus aws. And also the spinoffs i imagine of aws in terms of other kinds of software and things we havent thought of yet. Aws is 9 of business. Its about 30 of profits. So the answer is that we should probably spend 30 to 40 of our time thinking about aws and 60 thinking about their Retail Business just in terms of profitability. Over the long haul thats going to kind of drift back to 50 50. And so i think that i forgot what the second question was, but thats how we think about that mix. This gets right into google. If youre thinking about buying shares of google or amazon right now, which do you like better . I would take amazon over google. Both are great names to own for the next five to ten years. I think the reason why amazon is different is this infrastructure play is hard to replicate. Both Great Companies though. When you think about googles earnings, were you pleased, happy, unhappy . I was pleased. Compares to 25 last quarter. They had a different comp because they added an extra link in their mobile results that made the September Quarter a little bit more difficult. So they powered through that. I think the setup here to amazon, the buzzword bingo it was all about Machine Learning and artificial intelligence. And ultimately some of those things are going to make you use google more. So i think theres reason for optimism beyond just the near term on google. You like the buybacks or you think they could reinvest that money in rnd in a meaningful way longterm . Were more in the camp of invest in great businesses, other bets. Theres so much room they can do in automotive that i think the money would be better spent and investors longer term would like that as an rnd investment. Gene, they always do these cryptic announcements about things like even buybacks which are normally so simple. And they took the buyback number to ten digits. Do you know the significance of that . I dont know the significance about this one, but there are inside jokes that they play the megageeks at google. I dont know what the interpretation of this inside joke is, but it is its an inside joke. So us outsiders can only guess. Yeah. Weve been struggling with what to do with twitter for some time. Since were talking about google, i wonder whether you think it would make sense for them to buy and at what price . I dont cover twitter, so ive got to be aware of that. But at the end of the day is that, you know, everything is for sale at a price. I think that google may be interested in this kind of longer term. I could see them fit it in. But i think twitter has issues. They just talked about cutting their vine business. I think that needs to settle out before theres going to be m a. Okay. Gene yeah. Hundop. That means 100 . Oh. That was a lit interview, wasnt it . That was a lit interview. Im not going throw any shade at you anymore. Jk. Just kidding. Did you know jk . I did. I will never use dope. Ever. I will never use the word dope. People use that word. Its a good thing, right . Yeah. Really . Yeah. Gene munster, if youre still with us, thank you. Thank you. I like this one. People say fomo. Fear of missing out. Now theyre using jomo for things that a lame. Its the joy of missing out. People at home that arent watching this discussion are probably jomo. Probably. I got some other ones if you want. Or not. Lets save them for the rest of the show. Yes. Spread them out. People will yeah. People will definitely try some really weird ones in here. Anyway. Now i know. My kids are speaking i think theyre talking about me sometimes. When we return, just ten days now to the election. Were going to ask Arthur Brooks of the American Enterprise institute about this unconventional election cycle and who would be better for business. . The meantime, lets get a check on futures. Theyve added to the gains in the dow. Up 29. S p now positive. Nasdaq continues to be weak relative to the others. Well be right back 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 . Yeah. Well, we gotta hand it thto fedex. Glasses. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access for Small Business. Fedex. Welcome back. After yesterday, could have checked for that himself. Anyway, trump has repeatedly said hell give 100 million to his campaign by election day. But he gave just 30,000 in the first weeks of october bringing total contributions to a little more than 56 million. In corporate news, chipotle is bringing a group of lawyers to defend against bill ackman. Thats according to reuters. Hired Goldman Sachs and morgan stanley. Its also hired pr crisis firm joel frank. Ackman hasnt made any public demands of chipotle after becoming its second largest shareholder last month. Shares of chipotle down more than 12 in the last two months. So roughly spanning that investment horizon. But still down about half a percent. They did have earnings this week too. And General Electric is in discussion with baker hughes on partnerships. While nothing is concluded, none of the options include an outright purchase. Last week believes that the oil market has bottomed. But demand for equipment that the Company Makes would take longer to recover. We discussed whether ge is getting in or out of this business at exactly the right or wrong time given the prices of crude at the moment. And twitter announcing its going to discontinue vine. You ever done it . No. Ive watched vines. All right. I i was going to make a joke but i decided not to. About vine . Yeah. Its part of twitters cost cutting efforts you can figure it out. A 9 cut in its workforce worldwide. The vine website will stay active after the mobile app is shut down. Giving users a chance to download and save their videos. Twitter introduced vine as a way for users to share snippets of videos that were six seconds or less. Now now im not that clever. But if you ever were to make it, you could do it on vine. But i decided im not going to make that joke. I know the way you think. I thought about it immediately. You would never do it anyway. All right. As if halloween wasnt enough a reason to binge on candy, today is National Chocolate day. The average american spent 86 on chocolate last year and consumed 9. 5 pounds of chocolate. Thats a lot of chocolate. Coming up, the viral pen pineapple apple pen now going into the guinness book of world records. As we head to break, also take a look at futures. Its not just a car, its your daily retreat. The es and es hybrid. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound among the stories front and center, corporate earnings as we wrap up the busiest week of earnings season. Xerox matched estimates. Revenue fell below street estimates. It also plans to split into two separate companies is on track to be completed by the end of the year. Newell brands Beat Estimates with earnings of 78 cents a share. Revenue slightly below forecast. Maker of sharpie markers and rubbermaid food containers also raised its outlook. And on National Chocolate day, hershey came in 11 cents above forecast. It was a coincidence, hershey reporting earnings on National Chocolate day . Makes sense. Any national day theres like ten other national days. One is National Chocolate day. I did not know that. Should be handing out hershey kisses today. I will eat some chocolate today. Youre going just really commemorate. Ill make it a point. Have some stuff at home already. This is a tough time of year for me. The holiday season. Starts with lets say nobody comes to your house for halloween. Then you have no choice but to eat it all. Then whats next . Thanksgiving. Christmas. Then january 1st, youre there. Ive got ten pounds. Got to carb load ahead of january 1st. Then the january juice cleanse. Thats after that. Does that work . Debatable. All right. Gdp is going to be out in a little over an hour. Steve leisman joins us. Im confused because i thought people were below two. Ive got to look up the atlanta fed because they did not update when i updated. Then they updated later. They were at 2 then the durables came out. We are at 3 , our rapid update is at 3 . The consensus is at 2. 5 . And the question you want to ask yourself, are we setting ourselves up for another disappointment in i was just looking before i came on. We have disappointed on gdp in other words, the forecasts were below the actual numbers that came out. Seven quarters in a row now for an average miss of 0. 5 . A half a point. If youre doing 1 or 2 , thats a lot to miss by a half. Yet, heres the thing. It later gets revised upward. So the miss is actually 0. 1 . So i dont know. Its one of those slapstick things you could walk in and hit the rake and it hit yous in the head every time. Murphys law we the fed trying to raise in december would mean it is weak. So it wont happen. Do you get a feeling if you look at the 10year and the 2year, is the market feeling more inflation or a touch more is that the best explanation out there . We can accept it if its a good reason. I wish it finally would be a good reason. But weve been disappointed every time. Were looking for a bit of strength in the consumer. Were looking for a bit of strength in business. And of course theres the famous soybean story weve been talking about all week. Those are things that we are going to be watching. But you have not factored in avocados. Im very confused. I have to research the avocado story. The shortage is a big issue. Price is going up. But is it helping gdp, allen . Andrew. Whos allen . I really havent been through the first who is allen sorkin . The interesting thing is most avocados for the u. S. Are actually grown in mexico. You can get more expensive ones. How does nafta factor into this . Thats a good point. All i know about avocado is how to pick them for guac. Lets say youre set on it for night. Bring home an avocado too hard, theres no way. Its too hard. But then if you get one thats too soft, you cant do that either. So i know. I will go through the entire thing. You know how to keep your avocado green once you cut it . No. Thats another one. How . Lemon juice. 2. 1 is the atlanta fed. I thought id completely ruin this avocado conversation by giving you a number. You didnt either talk to me about its a whole complex. Its soybeans, soybean oil, soybean meal. Im all over the soybean oil thing. Because that has been up because its replacing palm oil that has been hurt by the Southeast Asian countries because of el nino. Its just one great big world is all it is. Palm oil, when you say that it makes me laugh. I dont know why. But anyway. Allen, you go thank you. Sal leisman, i appreciate for all that. Look at what theyve done. Can we get a shot of that . Well, when we return former israeli Prime Minister is going to be our very special guest from the crisis in the middle east to politics here in the United States weve got it covered. As we head to a break, take a look at u. S. Equity futures. Dow looks it would open up 17 points higher. We are back in just a moment. This man creates software, used by this bank, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this Vice President , this little kid, oops, and this obstetrician, who works across the street from this man, who creates software. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. 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. Welcome back to squawk box this morning. Donald trump sending a message to israel this week that a Trump Administration would stand sidebyside with the jewish people to fight enemies like iran. Joining us now to talk about u. S. israeli relations, former israeli Prime Minister ehu dba rack is here. Im half an hour late to my favorite show. This gentleman got here on time so were going to start with him. What do you think of what donald trump has said . We are on television. We are on the air. I dont think its appropriate for a former israeli leader to talk about concretely before the 9th of november especially since i happen to know one of the candidate for more than 20 years and highly appreciate and i never met the other candidate. Cannot make comparisons. You know, all candidates happen to be post election ended up being supporting of israel, its base. Not just on world views but on a wide foundations of common and shared values between the israeli people own the american one. Lets put ourselves after the election and suggest that whoever is the president is going to support israel. But they may support israel differently. They have at least hinted at different directions. You want to weigh in there . The government, never voted to any of the parties which consisted on the opposite side of the aisle. Its up to the israeli public to decide the election. And the israeli leadership. So there might be differences. I think that its healthy. Israel is in a tough neighborhood. Its nothing to compare middle east is nothing to compare to the midwest. Tough neighborhood. I cant understand all the worries. And also israel is strongest country and we can be selfdoft make up our mind and act. The greatest risk is sometimes being unable to take one. What is the greatest risk right now . Is iran the greatest risk . Iran remains a Great Potential risk in the future. If they try later to break the deal. We always have a new rival. The recent one is isil. But the old one is hamas, hezbollah. All alive and kicking. But i think there is no with all respect, there is no existential threat around israel right now. Israel is the strongest country and i say it not just as a political position but as a matter of professional judgment. How would you measure the relationship the United States has had under barack obama with israel . I think in terms of israel, most of his two terms. And in terms of the cooperation between our respective intelligence communities. As well as some exotic request we raise behind closed doors from time to time supporting our missile defense. He was extremely spoerptive in almost unprecedented way. But that could not save us from other political issues that happen from time to time. Youre kind of youve written some things about the current Prime Minister. You see not the polar opposite, but i would imagine any problems that netanyahu had with the president , that you wouldnt share the same feelings. I never try to hide my criticism of our government. I thought all along the way that with all differences or debates that we might have administration. President obama, biden, kerry, hillary at the time. They will also is part of the solution, not part of the problem. What about the iran deal . You know how antiiran netanyahu was. And im asked about how i feel about the iran deal, i respond with mixed feeling. It is when your motherinlaw takes your new bmw and drives it over the cliff. Its like the catskills in here. We feel that its a bad deal. But its a done deal. All the talks about someone that can come out of the blue and just consulate. Its a little bit hollow because its not just american iranian agreement. Its china not follow, russia not follow, germany and france will not follow. Is it as simple as Prime Minister netanyahu in your opinion is more hawkish and youre more dovish . Simple as that . No. Whats the mood of the country right now . Because hes look. Filtration in the middle east is always complicated. With the possibility of the need for a hawker than netanyahu and others. Theres a deal now the iranian are not going to break it for five or six years. Because they want to harvest the benefits of it. So it will be with us for some time. They will keep developing the new generation of long range missiles because its outside the deal. They will keep being very active on the cyber warfare arena. But all these elements are out of the agreement. No one knows what will follow six or eight years from now. My personal judgment is that the iranians have in mind following in the footsteps of north korea and pakistan who ultimately defied the whole world. Rather than following libya or south africa who voluntarily gave up their nuclear intention. Thats a pretty scary forecast. Im having a hard time seeing the good part of your motherinlaw going over the cliff with the bmw. I was talking about your motherinlaw. I love my motherinlaw. But i dont see the good part about the iranian agreement. I understand your worries about it. Couldnt we agree its a terrible deal and it would be a good idea to renegotiate it . The difference between the two elements. I said loud and clear, its a bad deal. I thought even at the time. 15 or 18 months ago. We had to say it bluntly to the american public. Even the president. But theres a thin fine line. Rather than individuals. In the american political process, we expect the United States to respect the sovereignty of israel. I sat down with three different president s and told all of them at critical moments to say. When it comes to issues which are critical to the future of israel in security or future of the jewish people. We will not delegate our responsibility to anyone including our best friends who happen to be you. We will take our decisions as a sovereign and we will act upon them. I used to tell our government behind closed doors and to public the same way we expect the United States to expect the sovereignty of israel, we have to respect the sovereignty of the United States. So when it comes to internal political processes, the American Arena be it the congress or whatever, we shouldnt belittle. Its one step too far. But the iran deal is not a domestic United States concern. I would say it had more to do with what happened to israel. We were perhaps spearheading a deal. Of course. But it affected you more. So i dont see that as respecting the sovereignty of the United States to do what it wants. No i mentioned the sovereignty of United States in regard to the political process. When it comes to a political process inside the congress, we shouldnt be there. The same way when we discuss how much, how far to go in building the settlement andrew talked about the last eight years and whether it was positive or negative for you in israel. It seems like some of these things where maybe you had some cooperation are dwarfed by this overall deal that was done that maybe wasnt as advantageous. I would think there are a lot of people in israel and Prime Minister netanyahu that would think that was the defining moment of the obama presidency. The iran deal in terms of israel. It was a bad deal. And we shouldnt hide it. But we are looking at practical terms. Of course its closer to our face. We look at it totally different way. Thats why we had such disputes with the American Administration all along those years in regard to it. But at certain point you have to realize, its a deal. Its a done deal. But terrible rhetoric coming out of iran afterwards. Still with the great state. Still with the we have to annihilate all of that after the deal. Never we cannot control the minds of others and their dreams. I just kept thinking strategically and concretely israel is the strongest power thousand miles around jerusalem. From benghazi and now everyone knows where benghazi is to tehran. Including these two nations. We will remain. So we have to think to compare, i sought for example it is much more practical to sit behind closed door with the president without hiding our position. And making sure that enough intelligence assets are invested knowing what the wrooirns are doing and when. Back to the table or even surgical operation back to the table. I believe it was missed to do just that immediately after the signing of the agreement. And the choice of netanyahu to fight the Congress Rather than to sit down behind closed doors with the president of the executive branch without hiding our positions. The same speech would have the same impact. Not the same impact but the same connection with the members of american legislature. Because 80 of them now appeals to we want to thank you. This was a great conversation. Come on back. Thank you. By the way, hes also now an investor and entrepreneur. Does your motherinlaw have cable . My mother shes off. Im a little bit older than all of you. My motherinlaw lives in spain is presumably not watching this. But still. Great to see you. Thank you, all. Coming up, American Tower owns and operating nearly 144,000 broadcast towers around the world. The Company Recently announcing new plans to expand into europe. The ceo joins us after the break. Keep it locked to squawk box. At the top of the hour, indiana governor and Donald Trumps pick for Vice President will be our special guest. Well be right back. The at t time warn er merge. Joinings now is ceo of American Tower which owns and operates 144,000 Communications Towers around the globe. Welcome. Good morning. Morning, kayla. At t is the biggest share of your revenue. 16 . So have you weighed in on how you feel about this and what it means to you . Well, we dont really comment on our customers transactions sfe specifically. But the broader trend were seeing is a convergence between Broadband Access to the home, a mobile operation and spectrum. And branded content. And thats the characteristics, i think, that are included in this particular transaction with at t. How do you gauge how many more towers you might need to satisfy a certain of what theyre bringing to the table. Its based on the growth rate all of us are using. Across the entire spectrum of mobile operators in the u. S. And all of us as consumers, the data growth is 30 to 40 of the year every year over the last 5 to 10 years. Its really increased the amount of data going through the mobile network. And that drives equipment onto o sites. Can you explain this . The future of 5g. The idea the next generation lte, if you will. That everything is going to go at super fast speeds and this idea that they will compete head on with the Cable Operators. Now, some of the Cable Operators like comcast and verizon. We havent seen how that is going to play out. But how expensive is it to pursue 5g and how fast is it really . The mobile industry spends about 30 billion a year for 4g diplomat. We expect that 30 billion a year is going to roll roughly into the same amounts for 5g. 5g standard is not going to be retd i did until 2019. Until then, its 4g. And how long does it take to get to 80 of the country . Itll take probably six to eight years to roll that whole network out. I think its going to come in stages this time thats different. The first will be fixed wireless. That is a cable and fiber to the home substitute. In other words, instead of trenching or hanging cables over telephone poles for the last block to your house, therell be a fixed wireless transmitter using 5g that will be a competitor. Andrews question is the most interesting one. How are we going to know the difference . I just want my call to go through and want to get my data and come down fast when im trying to do by gps, et cetera. How am i going to know the difference . Why should people watching this care . Youll care because you can get a lot more bits through a piece of given spectrum. So youre viewing a video is going to be more robust. You can go to hd type of transmissions. On a wireless. Right now its eight seconds and its bumming me out. I want it in four. There are places still 2g around the world. People talk about how the wireless folks could be the winners. But i also understand that the cable guys could be so much still has to go over a wire at some point along the way. Thats the bad call piece if you will. So the cable wuch the comcast and time warners, et cetera, own could be used for that connectivity. Its now the last hundred yards. But will you always be able to have more data on it and then in the future if you think were going to go to vr and have even more data that were going to want, that 5g or whatever will always be marginally slower . Not necessarily. Thats the breakthrough of 5g. You can get ten to a hundred times the through put. Talking like hes an engineer or physicist. You know all this stuff, really . Of the six people that run our company, four of us are engineers. How many employees do you have . Weve got about 5,000 employees. How many climb those towers to do maintenance . Probably among all the countries we have, probably 500 at most. And who the hell are these people . They are pretty fearless. Many of them are exmilitary. Have you done it . Ive been up to about 250 feet. I see the ladders that people climb and i get scared from the ground thinking of someone else having to do that. Well, the exciting part, joe, when you get up there a couple hundred feet, the wind is actually moving the tower. Oh, good. You would really have a good time. I wish i hadnt asked that. Would you ever . We should do a segment. Jim can take joe. No way. Hat, harness, youll be set. Youre all tied off all the time. One of the funnest parts of the climb for the training is the instructor will tell you at some point, while the tower is swaying in the wind, take your hands off and lean back. Lets go to break. Coming up seriously i feel nauseous. Coming up we wrap up the hour with Arthur Brooks. Check out the futures which are up a little bit. Vertigo. Well be back. Ten days until the election and the president ial race has proven to be one of the more contentious in u. S. History. Arthur brooks is here. Saying its one of the most contentious is probably an understatement. You were just talking about newspaper coverage of this. For sure. Media coverage of this, its been an unusual Media Coverage season for sure. But for me the interesting thing, particularly for here people watching squawk box, is the underreported part of this election cycle which is this Incredible Connection between the economy and political populism that weve seen over the past 150 years. So theres a great article. Theres a great journal article but a technical article. I read it so nobody else has to. Its from the journal called the economic review that looks at 140 years of financial crisis data and then connects it with political populism looking at 800 elections in 20 countries. Bottom line, heres how it comes out. At this point in a financial crisis, you tend to see a 30 increase in populism among the american and other western countries publics. In other words, this is donald trump by the numbers. We would expect to see this. Now, exacerbate that with earned media at 80 levels and 16 other candidates in the circular firing squad. But its not a big surprise. How long or short lived is that . This is the interesting thing that happens. Whether or not it persists for a long time has to do with what actually solves the problem of populism. We have populist candidates who always say im going to kick out foreigners, build walls, all these things as the solution. It turns out what is in populism is Economic Growth symmetrically spread across the population. You can get strong growth, 3. 5 , 4 growth and figure the right wa i to push that to society, the interest in immigration issues, trade issues, Foreign Policy issues, and wed have our game back on. Too bad that, you know, that the populous is the one talking about the and the globalous is the one that wants more it depends on your point of view whether were screwed or not. But my point of view is we need somebody who is aspirational, has conventional views about Foreign Policy and politics but is an inspirational figure and is a warrior for pushing the ideas. Are you more or less hopeful irrespective of who wins on december not december. November 9th you wake up, irrespective of who wins, you think well be in a better position after this . I think were in the position of starting to repair things. And i think look. Theres a movement of us in washington, d. C. And i know everybody is easy to slam washington, d. C. These days. But my colleagues and i at the American Enterprise institute our big dedication is bringing the country back together. How could i not be hopeful . Looking at 2020. We will see, joe. We have to get ready for 2020. I know its depressing for you. But we got to have content, brother. Good for cable. My hygienist said the most random thing. She said i should think of my teeth like an apple. It could be great on the outside not so great on the inside. Her advice . Use a toothpaste and mouthwash that strengthens both. Go pro with crest prohealth advanced. 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And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Your money your vote. Ten days from election day and we have a special conversation with republican Vice President ial nominee mike pence. That interview is minutes away. Breaking news on the economy. Well get a first read on Third Quarter gdp. The numbers and the Market Reaction straight ahead. Plus behind the wheel with autonation ceo mike jackson. The largest auto retailer in the u. S. With Quarterly Results. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with Andrew Ross Sorkin and kayla tausche. Were getting ready for governor mike pence, the Vice President ial candidate making his way to the studio. A lot of people would like him to be the Vice President ial candidate. But for you guys in the control room, hes the Vice President ial candidate. Meantime lets bring you up to speed on the top market stories out. 63 cents, this just hit. Looks like its about a nickel ahead of expectations for exxon. A revenue number is always difficult to compare to analyst estimates. But company is talking about 58. 68 billion and if you remember, they used to actually do 100 billion in a quarter. With where oil prices are, thats no longer the case. Looks like its below the current consensus estimate of 63. 8 billion. So its very hard to compare apples to apples. Also sorky, you might remember this. The company do you remember in the thats not the right days . Is it the salad days that you want to return to. Younger, better years. It used to be a ten number at times where theyd make 10 billion in a quarter. But now a far cry from that. Did we look at the stock and see whats happening . Fractionally down. The other thing you look at is how much of the reserves you replace and what production looks like. You look at upstream. And then you look at downstream obviously which is refining. So thats a multifaceted company. Well get more on that. But weve got other things to do including the first read on Third Quarter gdp which is coming at 8 30 eastern. And polled economists are looking for growth of 2. 5 . Better than the 1. 4 the previous quarter. We had positive trade and positive housing data this week. The futures this morning will take a quick look. Up 21 now on the dow. Nasdaq continues to be weak. S p up just a third of a point. This is something weve been looking at because it hasnt been here in awhile. And now its 1. 86 . Like we said, when we were 7 or 8 , if you moved ten basis points, no one would notice. But you move from 11. 6 to 1. 86 and its a much more noticeable. Its an uptrend. Maybe the bond market is doing its work for the fed. Again, stocks will react cautiously. Probably. You know what . This is a day where maybe well see whether theres a reason were at 1. 86 with the gdp number. Then we wouldnt feel bad about rates moving up. Joe mentioned amazon. Earnings falling far short of the streets estimates. Not only that, but its holiday forecast is disappointing investors. The company warned that high spending on warehouses and Video Production will continue to drag on profits. Amazons cfo discussing the companys investments on its conference call. What youre seeing essentially in the second half of this year is a stepup investment around content and the film center investment. But also things like echo and alexa which are adding a lot of resources. India and aws as people there look for rapid growth in that business. Sales in that business, Amazon Web Services increased by 55 in the latest quarter. And google parent alphabet beating expectations. Strong sales on adds might help drive results. Company also announcing plans to repurchase 7 billion of its class c shares. Discussed on the conference call. Our move to alphabet was motivated by our belief that revolutionary ideas drive the next big growth areas. Longterm success requires a equipmentment to making bets, putting the right talent and resources behind those bets, and remaining flexible and dynamic as we pursue them. Shares of alphabet up about 5 . Lagging rivals like facebook and apple. A string of european banks are out with Quarterly Results this morning. Ubs which is the biggest money manager in terms of financial assets. A 60 slump in Third Quarter net profit. Citing risk aversion, lower trading volumes, and negative rates as head winds. Skip those last two words. Royal bank of scotland swinging to a Third Quarter loss. Warning investors that low rates are eroding its profits. Kurdish bank also said it was weighed down by legal costs related to its settlement with u. S. Authorities over the sale of Mortgage Backed securities. And bmt paribas beating results and that offset flat revenue from the Retail Banking business which was hurt by persistently low rates. All right. As we have governor pence here, im going to get right to it. Our news maker of the morning with only ten days left to the election. Joining us now governor mike pence of indiana. The republican Vice President ial nominee who joins us in one piece this morning. We only have ten minutes, we want to say were glad youre safe and everybody on the plane was safe. Thank you. It made me immediately think you could be a king or whatever and if youre on a slippery runway, youre just like the rest of us. Amazing. You must think of that. Well, we feel very thankful this morning that our pilots and the First Responders at la guardia responded so professionally and so quickly. There was about ten seconds of uncertainty. We landed and you could tell they were getting on the brakes pretty strongly. We slid and when the mud came up on the windows we knew we were off the runway. But it seemed like those First Responders were there before the plane stopped rolling. Luckily you werent thinking about previous la guardia incidents where there is water eventually. Hopefully that wasnt even didnt enter your mind. Didnt enter our mind. We had a peace about it. Our family says the safest place in the world to be is in gods will. We couldnt feel more happy to have the privilege to run and. For cnbc as you can imagine, our viewers are focused on the economy. So were going to go through a quick list of questions there. But before we do, just overall, you were i know about what you and governor daniels did in indiana. People know about the success story. You were in congress. Youre a governor. So you know a lot about this stuff. When youre talking to donald trump about all these issues, hes the boss. Do you defer to him . Does he say to you, youve done all this stuff. I defer to you . Or is it somewhere in the middle. How does that work . Well, hes the nominee. And hell make the play calls we ha if we have the privilege to be president and Vice President. What if you absolutely know better about something . I do think one of the reasons he tapped me was because of the success weve had in the state of indiana. In the state of indiana, we demonstrated you can live within your means, balance budgets. Were one of a handful of states with a aaa bond rating. And weve signed into law 3. 5 billion into tax relief. 2. 5 billion into Infrastructure Investments and education. We call indiana a state that works. Because we demonstrate that you can have growth even while youre making critical investments in the life of your state and maintain a sound balance sheet. We talked about that a lot. Will that extrapolate to the nation as what plans do you have to get the overall economy growing out of the mud . 1 to 2 . We may get 2. 5 today. That would be the greatest thing ever. How do we get back to 3 or 4 . Level with the American People. A 1 economy is not good enough. And the American People know it. Donald trumps got a plan very different from Hillary Clintons plan. Hillary clinton wants to raise taxes by a trillion dollars. She wants to continue this failed policy of obamacare by adding single payer and more governmentbased health care solutions. She wants to continue the avalanche of regulations on washington, d. C. Donald trump wants to do in part what weve done in indiana but especially what Ronald Reagan did in the 1980s and that is cut taxes across the board for Small Businesses and family farms. Lower the Corporate Tax rate in this country to 15 . The truth of the matter is as you all know here on this program, we have one of the highest Corporate Tax rates in the western world. Were going to make sure america can compete with lower tax rates, going to repeal obamacare. Were going to repeal every single unconstitutional executive order that barack obama has put into effect thats stifling american jobs and growth. And were going to have the kind of trade deals that really put the interest of the American People and the American Economy first. Given youve been a hawk on debt, on adding debt, how do you square the circle, if you will, of what the economists say. Both conservative and liberal, that your plan ultimately in the longterm will add more debt . Even if it juices the economy in the shortterm . Number one, we take issue with some of those projections certainly. And look. The truth is we are never going to tackle a nearly 20 trillion National Debt unless we get this economy growing again. Were never going to meet the needs of providing for the common defense, meet the infrastructure needs, or all the challenges our nation faces unless we get americas economy out of this ditch. I think what you have in donald trump is a leader that understands everything begins with growth. And getting this economy growing again through tax relief, tax reform, and getting this albatross of obamacare off the backs of the American Economy has got to be job one. I mean, Hillary Clinton wants to tinker around earlier this year she said before they called it obamacare they called it hillarycare. They want to change it around the edges hillarycare is obamacare on steroids. I dont know where you were. But i remember this diagram of what hillarycare was. I was campaigning in iowa yesterday. The American People know how we can meet the needs of our Health Insurance and our Health Care Economy and thats through more consumer choice, free Market Solutions, Health Savings accounts, Association Health plans. I mean, why dont donald trump and i are committed to allowing the American People to buy Health Insurance the way we buy life insurance, the way we buy car insurance. That is across state lines not with the topdown government takeover of health care. Which is what obamacare was from the beginning. Its like an october surprise for you. The last weeks gift that keeps on giving. I have to tell you, the projection of average increases of 25 premiums. And you look at places like arizona where its multiples of that. Its just a hardship on working families, on Small Businesses. This is something that i can tell you the crowds as im out campaigning, theyre aware it, concerned about it. And they want to see obamacare repealed and they want us to have a free Market Solution to the Health Care Needs of our economy. Part of the economic plan is trade reform and bringing jobs that are overseas back here. How do you convince companies how do you make Companies Move their manufacturing back to the United States when in many cases theyre manufacturing for an overseas consumer . How do you make sure they dont pass along price increases to the consumer . And how do you make sure the trade deals we end up with arent new trade deals that would benefit china or other countries even more because china doesnt like tpp. China doesnt like the deal we have in place and theyre not part of it. When i was in china last year, they were interested in being part of the tpp. I met with the vice premier over there, he made it clear theyd like to be part of that deal. Donald trump made it clear were going to get out of that deal. Were going to look to expand trade, but were going to do it one country at a time so we can have the accountability in those relationships thats been lacking in many of these multinational trade agreements. But i think the answer to your question is going to be found first in lets make america a more attractive environment to grow jobs and grow businesses. Apple would say we have to make iphones in china because thats where that Skilled Labor is. It doesnt exist in the United States. But thats part of it. Donald trump and i are talking about the kind of education reform that in the state of indiana one of the things we focused on was career and technical education. Lets improve the overall environment in the this is the most powerful economy in the history of the world and yet weve seen too many businesses to locate overseas because of taxes, regulation, because were not investing in the right ways. Thats going to change under donald trump. And that of itself is going to bring jobs back, onshoring jobs. Keep them here. I want to do infrastructure quickly. Youve seen Hillary Clintons ads. Were going to tax the rich and spend all this money thats going to do infrastructure and have all these jobs forever. Donald trump was a builder. He probably has a soft spot for infrastructure. Is Public Infrastructure tax and then have the federal government build things. Is that going to be part of the Trump Administration . What would you tell him about that . What did you think about that in indiana . Well, not only donald trump was a builder. Donald trump is a builder. He wants to do infrastructure just like a democrat. Right . I think hes more comfortable talking to bricklayers and, you know will that be productive . Theres no question weve made a commitment to the infrastructure but not just the standard approach. One of the things weve done in the state of indiana is public and private partnerships. Martiali thats what donald trump is calling nationwide. Were going to make a real commitment to make sure that weve got the infrastructure to support a growing economy. Ive got two quick questions for you. One, was it appropriate for donald trump to come out ahead of the announcement of at t and time warners merger and say he was against it even before its gone through the review process . I think one of the things thats appealing about trump didth is that he speaks his mind. Speaks it plainly. The American People dont have to doubt where he stands on the issues. I think speaking skepticism on that as washington, d. C. Evaluates that merger was more than appropriate. But i think thats something thats very refreshing about him. When you campaign with donald trump and for donald trump, i think hes made a connection to Everyday Americans like no one in my life time since Ronald Reagan. He speaks straight from his heart, straight from his mind. And the American People are grateful for that candor. The campaign has used so much of the information thats come out from wikileaks. I want to know what you thought of the appropriateness of that. I put it in the context when Donald Trumps tax returns came out, when some of the women came out and made some of the allegations, he said that was inappropriate to be published. He had lawyers try to sue or threaten to sue the new york times. How do you think about that . Well, i think the whole issue of unsubstantiated allegations is a separate issue. And obviously his tax returns were stolen and made public without any objection in the National Media really speaks for itself. Which could be the same case with the wikileaks. Sure except the National Media are buying into the argument from e the other side that the issue here is where they came from and not whats in the emails. I mean, what were seeing in this avalanche of emails which some have come from freedom of information request and some have come from various media sources. What we see is this relationship between Hillary Clinton as secretary of state, a Family Foundation that was taking millions of dollars in contributions from foreign governments and foreign millionaires and then the presence of a private server presumably to keep all of what was being said and done about that out of the reach of public disclosure. I think the American People are very, very troubled by whats becoming more clear as they call it Clinton Incorporated now. The pay to play politics. And its exactly the pay to play politics thats going to end when donald trump becomes president of the United States. Great to have you. Especially right here on set with us. Good to be with you all. Thank you. When we come back, our mike jackson is going to join us for the rest of the hour. Make his state on the state of the auto industry, the economy and much more. Stay tuned. Youre watching squawk box right here on cnbc. Now that fedex has helped us simplify our ecommerce, we could focus on bigger issues, like our passive aggressive 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. Proposition 61 is a very, very it is time for theward. Pharmaceutical industry to stop the entire nation is looking at pharmacepacalifornia. Ry. E. Lets go forward together. Thank you all very much. Welcome back to squawk box. Our guest host this hour mike jackson is the ceo of autonation. Its great to see you. Youre wearing your pink tie. Were going to talk about this in a second, but were put them up here. Guess whats going on here . Wheres yours . This is how im doing the interview. Like this for the rest of the show. You just put them on so theyre clean. You want to talk earnings . If people tweet this out and retweet it, youre going give some money away. And with our drive pink effort across the enterprise, we have raised or donated 8 million so far to various cancer causes with the principle one being finding a cure for press cancer. Like this shot . Its you with my feet. Lets talk earnings. We matched the record Third Quarter from last year with 1. 05 a share. Revenue of 5. 6 billion up 4 . We did have two challenges in the quarter which actually are for the entire year. We have certain manufacturers that are using very disruptive Marketing Strategies that leads to multitier pricing. Can you name some names, please . Let me describe what it is first. You end up with various dealerships with very different pricing. Again, this is from certain manufacturers. That initially would seem to improve sales. But over time were very corrosive. Customers are very unhappy because customers of today crave fairness and transparency in price. And these strategies actually create big discrimination in pricing between various customers. And eventually lead to a decline in sales. And a decline in resale value and a decline in value of the brand. So we are struggling with those challenges. We dont think theyre sustainable. But while in the midst of it, its very disruptive. For those who dont know who youre talking about, who are you talking about . Well, the leading would be nissan. They have the most aggressive with the most disruptive activities. And if i look at nissan sales, the retail sales are down 5 to 6 in a flat market. Their resale values are declining. If you dont run these programs after three years on average, cars have a resale value of 50 . And those with the disruptive practices are down 44 , 43 . So youre undermining the resale value of your existing customers. And that hurts the brand ultimately. But while were in the midst of it, its very difficult to manage. Takata had a Significant Impact all this year and in the Third Quarter. It was about 6 cents in the quarter for us. It is a safety device thats been recalled. That is causing serious injury if not death. And the number of evils involved is staggering. Can you 14 of our used vehicle inventory is on sales hold during the quarter because of takata air bag. And the issue is we cannot get replacement parts. Thats what i was going to ask about. Can you speak to whats going on on the ground on this issue . I know so many people that have cars that have arguably been recalled, they call up their dealer, and they say i need to get it replaced and theyre still driving on the street because they cant do anything. There is no replacement part. Its an extreme frustrating situation. You have two manufacturers that have done an exemplary job. To move parts to get into e the marketplace and care for customers in a proactive way. On the other end of the spectrum, we have manufacturers where were not even allowed to order the parts. You cannot enter an order. Theres no availability yet and well let you know. And its a very opaque situation we dont know what to tell customers. When the customer calls you, what do you tell them . We tell them were waiting for instructions as to when there will be availability. Sometimes some manufacturers will let us place for the customer. But the idea that autonation can call up and say id like to place 100,000 orders. They say you cant. And i dont think the industry on a safety device is moving fast enough to get parts into the market place. Were going to continue this conversation. Is there anything that could be done to expedite it either from a government perspective . What would you do . Well, there needs to be consequences for the manufacturer to not supply the parts. They either if they cant supply the parts, either have to have some sort of compensation system, a loaner vehicle system. Where there is a cost to the manufacturer for not having supplied the part. As long as theres no cost, theyre just its just moving way too slow. Mike jackson going to be sticking around. Were going to continue wearing our pink socks for the rest of the hour. We have a lot more to talk about. Coming up, breaking economic news. Were minutes away from the first read on Third Quarter gdp. Well bring you those numbers and Market Reaction. Squawk will be back. Happy home in exile oh which way should i go . Home is where i want to be home we love being green. So the nest learning thermostat connects to your phone, and learns what you like, to help you save energy. And thats something everyone can appreciate. Breaking economic news, a first read on Third Quarter gdp. Rick santelli, the numbers, please. Please. This is a biggie, joe. Our first peek. And it is quarter over quarter up 2. 9 . Thats better than expected. Atlanta fed excuse me. Atlanta gdp now at 2. 1 . 2. 9 is the number that follows the look last quarter at 1. 4 . Lets go there u the internals. On consumption side, a bit of a surprise to the downside. 2. 1 . Thats less than half the 4. 3 from last quarter and 2. 6 expected. If we look at the price index, 1. 5 versus expectations. But down a bit from the 2. 3 . Finally personal Consumption Expenditure 1. 7 . 0. 1 cooler than our last look. So 2. 9 isnt too bad. When you look at 1. 4 and then factor in 2. 9 even though its our first look, gives a more true glimpse of what were looking at. For those of you saying its terrific were back on track. Yes, earnings a little bit better. Maybe the best quarter since 2014, but lets keep everything in perspective. If we look at the Third Quarter of 14 it was 5 . The Third Quarter of last year was 2 . So it isnt bad. Weve had some better. The average still puts us below 2 but it is better than expected. But heres whats really noteworthy. A number thats better than expected should have pushed yields up. Granted, its only knee jerk, but only 1. 86 is where they were. They were at 1. 87 . Who out there uses percentages . Who uses them in the wrong instance . Bunds would be the whereon instance. Continue to monitor how this filters through. Pretty much doubled down. Well see what it looks like when the full breadth opens in about an hour. Back to the gang. And of course pretty wild word series action tonight, huh . You know what i . I just looked it up. 8 08. I get to watch it. Its a really important game so im looking forward to that. I saw the futures go up, and like so many times now im trying to figure out do they stay which i wish they would. Then i said maybe theres something weak in the data that i didnt hear about yet and thats why theyre up. Because these guys are still whether its machines or whatever. But they still dont want the fed to hike. Maybe they just got it in their head that its 75 that theyre going to do it in december. And maybe now they do want Stronger Economic activity and dont need to sell off the stock market now. Well, you know, listen. Lets be fair. Earnings season, half over, is better than expected. Its the way we see it. Right. But you know what . Its still better than we were expecting. Im not saying that i think the price of equities is equitable with fundamental Economic Activity whether its domestic or global. I dont think it is. And i think Interest Rates are going to be the great divining rod that tries to get them back in sync. Why . Because the sovereign market is pulling away. Its at the end of the tarmac with regard to central bank policy. The logistics of everybody positioned for what Central Banks have done for years. That game is over. And how all of that adjustment affects equities, thats going to be the key moving forward. I mean, youre in chicago. You should know about soybeans. Leisman is telling me its soybeans again. Let me chime in quick. Exports up 10 . So when joe suggests this idea that this number is not around its a snapback for sure from some of the weakness that was probably indicative of the economy by itself. But a 10 increase in exports. Did you aempbl the three . Whatd it come out to . The average is 1. 7 . So were growing probably 1. 5 to 2 is the right number. But whats interesting here is goods exports contributed 1 . I dont know if thats all soybeans. One of our economists ian shephe shepherdson has suggested its a big part of this with the outsized amount of exports of this one particular product and you can have that remember we multiply every quarter to quarter change. Let me go through real quick, rick. And ill get you back in here. Youre right underperforming on the consumer side. 2. 1 , over performing on durable goods. Well get to mike jackson on that in a second. Business investment puddling along 1. 2 . Structures, equipment still down 2. 7 with a big question have we finally reached the bottom of oil prices, have we seen the big decline to equipment spending done in the as ge suggests, done in the economy finally. Government 0. 5 . It was down the prior quarter. I see this stuff all evening out and you want to find the zen with all this. We were running below what we think is trend in the economy. We snap back. I wouldnt get overly excited that 3 by the way, rapid update going in, the average of all was 3 . We beat gdp now by 0. 8 . I want to point that out. I want to make sure we all understand that. You were pointing out earlier that gdp normally gets revised upward. It has been, yeah. What are the odds that this gets revised down . I dont know if the trend is broken, but seven quarters now weve come in below forecast. Youre shaking your head. The reason they wouldnt necessarily get it wrong on a continuing basis. They come in below, it could be revised up a little bit. I dont know theres any anomalies here. That export number looks a little bit squirrely to me. You like reversion or regression . Theyre both the same. Let me get this straight, steve. We get an anomaly on exports, we get excited. I said the opposite, rick. Listen, you lump it all together, its like nongap accounting. Soybean is good if you follow the soybeans. Theres a lot of questions maybe with these. But in the end, its about whats the consistent, Sustainable Growth rate of the u. S. Economy. Right. And that means you lop off anomalies in both directions. What were left with is not enough but its better than we were hoping for. Thats the way i look at it. I agree. You step back and look at it. Less than 2 growth. Steve, if i said to you im going to give the u. S. Economy free growth and gasoline, youd say its going to be 4 . Here we are with free growth in u. S. Economy and mike, you sell trucks into parts of the economy. Your business is sensitive to construction. You see some of that. And also im guessing a little bit of the oil and gas. What are you seeing there . What i see is it bottomed out . I see plateaued to modest growth. If youre talking the energy states, oklahoma, texas, theyre struggling. Still struggling. No sign of a bottom there . Maybe a bottom. But if you look at year over year comparisons, the rate of decline has stopped. But its still a how about construction . Construction is going along okay. Everythings okay. But to say the u. S. Economy is growing as it should, i mean, the shackles are on this thing. We dont have the right trade deals. Regulation is out of control. The tax system is broken. The list goes on and on. This economy should be grower faster than less than 2 . Speaking of oil and gas quickly, quickly want to tell you exxon reported earlier this morning. Earning 68 cents a share handily beating estimates that called for 37 cents a share. Chevron says the latest results show the first two quarters of the year. Chevron shares up about 1 . Exxon shares had been low ir by a third of a percent. We will dig into into those numbers. Yeah. Little bit later on. When we return, were going to talk about ge and discuss things with baker hughes and a partnership. When we return here on squawk box. The greatest population shift in Human History is happening before our eyes. 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. Gilman go get it, marcus. Go get it. Coach gilman used his cash rewards credit card from bank of america to earn 1 cash back everywhere, every time. At places like the batting cages. [ crowd cheers ] 2 back at Grocery Stores and now at wholesale clubs. And 3 back on gas. Which helped him give his players something extra. The cash rewards credit card from bank of america. More cash back for the things you buy most. General electric is in discussion with baker hughes on potential partnerships joining us steven wanoker. So this is a deal that does ge wish they hadnt bought so much gas or is it strategic for both companies . To be clear, what theyre talking about are partnerships right now. Theyve ruled out an outright sale. But this is a need for them defensively theyre already in the business, right . So given theyre already in the business, the question is how do they position against schlumberger and others pursuing these collaborative partnerships. They dont have the full spectrum and they need to if theyre going to create this digital oil field. If you put them together, theyre much stronger and can be more defensive. Timing make sense . Given where we are in the cycle, isnt this the best time to enter these discussions . Wait until things are at their most highest paying points, right . And youre in a stronger position in ges case, this is now a 13 billion revenue business. Theyre getting out though. Lets say they buy and combine the entity, thats not whats being talked about . Thats not what im talking about. To me it made sense you bought up a this other stuff from 2007 on and paid top dollar. Average it down now with everything so cheap. But it didnt look like no. Theyre not con ten plating a purchase of the business. What does it look like in your mind . Dm my mind, a Large Partnership that allows them to get better deep water access. In a digitized way. Not spinning it off . It could be. Thats one of the options. I could see them doing it down the road. But theyre not going to do that in the down part of the market. Negotiate the partnership today if youre going to spin it. As we talked about before. Right. So i think theyre going to probably get the partnership established. And down the road maybe consider that as an option. But this is not trying this is not focused on look. I think trien is a great focus for ge. I think that can only help. I know there are other activists in baker hughes. As long as the board is using that input in the right way for the longterm value of the company. Then its a good thing. Whats your rating . Market perform. You have a price on it . Now since the stocks retreated about 13 . You might go back to a market of outperform. That would depend on their performance and outlook. So we need a little bit of reinvigorati reinvigoration. Good yields. Thank you, sir. Great to see you. When we come back, autonation changing the way it sells cars. Youre watching squawk box on cnbc. Some things are simply impossible to ignore. The strikinglydesigned lexus nx turbo and hybrid. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Up next well head down to the new york stock exchange. Jim cramer will join us with his look on todays top stories. Stay tuned. Squawk box will be right back. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Today i am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. Hello, my name is watson. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Lets get down to the new york stock exchange. Jim cramer joins us now. Lots happened since amazon, but im still looking at it and wondering are we back to saying we dont trust them for spending too much money . I think they got everybody just says its fine, jeff, do what you got to do, right . I think theyve earned some respect here. I think if people want to sell it down 35, 30 points, be my guest. Usually when youre down much, get another weak opening on monday, maybe thats the chance to buy it. The idea they did anything other than say they did what they typically do is spend more the opportunitys great, everybody runs from it, thats when historically youve been able to buy it. They create these buying opportunities for you, everybody gets fearful and then they deliver on their spend. I just think, lets give them the benefit of the doubt. Theyre smart guys. How about ge baker hughes, jim . How does it finally end up looking . Who is it good for . Both of them . If ge did buy high and offload low, that would be just terrible. Yeah. Thats what it looks like. I mean, i think the dynamics got to change pretty soon or looks like obviously baker hughes listen, ge will be sensitive about what im about to say but looks like baker hughes got the better end of the deal. This is a level to be the buyer, not the seller. Its friday. Margaritas all around. Yes, the aldama, a spicy margarita im going to make tonight. Whoa. Message me maybe tell me what makes it spicy. Im willing to try it. Thank you. All right. Thank you. And ill try it until i get it right. And coming up on halftime report, dont miss former Yankees First baseman mark teixeira. Hell be live at 12 30 eastern. Stay tuned. Squawk box will be right back. Surprise we heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . 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. Autonation says it has a new retail brand strategy. One price negotiation free and transparent pricing on all preowned vehicles and ceo mike jackson is our guest host. Not only that, but i mean, you have a lot to tell us, mike. So if i look at our company today, we have largest in america premium luxury business. Almost 100 franchises from coast to coast. And today we announced six additional franchises. Then we have our volume franchise business, 280 franchises. And we branded all those dealerships autonation back in 2013 to build a digital capability autonation express. On those Building Blocks the Free Standing preowned and Customer Care centers branded autonation usa. So we have tremendous success with customers from new car sales through year six. Now were going to expand our business into year six through ten. So well have a compelling value story and a compelling experience for our customers in these autonation usa centers. And in order to do that weve also launched autonation precision parts, branded parts, autonation accessories, autonation collision centers, autonation auctions to support this bigger preowned platform. And so if i look at the business, well have our franchise luxury business, our franchise volume business, and were going to have a whole new business autonation usa. So you know who they talk about this deal being accretive or dilutive, is this dilutive initially . Brand extensions is one of the most compelling but it costs money to start, doesnt it . But ive already paid to launch the brand. Right. And have it recognized by over 80 of the marketplace. Id say youve already got that. Ive already launched and built autonation ek press. Now im reaping the opportunities for what ive already done. Because to have the degree of confidence that these stores will be successful, to have a brand out of the box, have Digital Muscle out of the box gives me a high degree of confidence. So those are costs ive already paid. In the initial startup the next few quarters of course as were building the first store, were going to do five stores next year, another 20 sites in development, but within the second year those stores will be profitable. And a brand extensions that we do, parts, accessories, collisions, are immediately beneficial to the company because weve already paid weve already invested in the brand. And the brands only going to get stronger from this point. So the used car business as well, thats something well, if i look at the marketplace, the new Vehicle Market retail is around 14 million a year. It is cyclical. However, the preowned business is 40 million a year. Preowned, i said used. Preowned is 40 million a year. So its a much bigger marketplace. And we talked about earlier the customer very much desires a much fair more transparent experience. So were one pricing the entire preowned business. Look out over the next five, ten years, people talk about the remarkable transformation of technology thats going to be put inside of these vehicles. And what does that do to the preowned market, which is to say people may today say, you know, a car if i bought off the lot today may be similar to a car i bought two or three years ago, maybe the some of the safety features are a little different, but five, ten years from now talk about autopilot and tesla, i know you have your own views, but as that change comes how does that change the preowned business . Theres no question that innovation is one of the Main Attractions to the new vehicle business. We again will remain with a big position in the new vehicle business. That innovation comes at a price. The most expensive innovation comes in luxury. We have a big business there. And then eventually it makes it into the mass volume market. But theres a cost for it. You dont think theres going to be some major Tipping Point . No. Theres a value story within the preowned business. And theres 260 million vehicles already on the road that people who want transportation with a value component is very compelling. And well will larger than the new vehicle business. And so to have a big presence in that marketplace with a strong brand that gives the consumer an experience thats much can we get a shot of that . Look at that great logo you got there. So youre going to be like mobile. So youre not just auto dealers, auto parts, batteries, collision centers. Does wayne know wayne must be psyched . Waynes thrilled. Im a humble car salesman from new jersey. Right. I sell cars. But what is exciting is that you know, the hardest thing to do in business is open a sustainable competitive advantage. Once you do that you extend it. Any brand capabilities competitors dont have, weve done that. And now were extending and seizing the opportunities that come with it. We are much more in control of our destiny because we have a brand. We need to thank you. We need to go. And most importantly we need to thank you for supporting Breast Cancer awareness and research. I appreciate. I put up my socks last time. More feet on the desk. For a good cost. Join us on monday. A very good cause. Squawk on the street begins right now. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. A big morning as we get gdp for the Third Quarter, 2. 9, thats the fastest in two years, and above expectations. Well dig into tha