Transcripts For CNBC Squawk On The Street 20161019

Candidates tonight in las vegas. Morgan stanley wabeating the street. Well look at the state of financials. And this leaked salesforce document shows acquisitions the company considered targettarget. Are more big buys on the horizon . First up, Hillary Clinton and donald trump square off in their final president ial debate tonight. Clinton does lead most polls with 20 days to election day. Bloomberg has her up nine ahead with men for the first time, that poll was tied in september. Jim, the market hasnt adjusted as much as some of these polls have. No, and i think that one of the combinations here is labor, bank stocks have done well. Has reaction been great . Theyve been okay. But if the if Bernie Sanders gets elevated to go to the senate, goes democratic a lot of talk about Budget Committee what that would mean. Yes. And Elizabeth Warren becomes more of a force than she already is, then i think a lot of these banks are going to be back in this, well, lets relook at what happened at wells. Could it happen there again . Whenever you get that washington intervening with banks, you start thinking they just dont want banks to do anything other than be community banks. Goldman sachs is not a community bank. That was a great quarter for goldman, but the muted reactions to these i think is a recognition of the power of Hillary Clinton to be able to lead a whole ticket. And if that occurs, there will be segments we dont like. Drugs, when you get off the desk with drug ceos, they are very concerned that a Bernie Sanders will be powerful. So thats the two groups im most concerned with. John harwood who well talk to in a moment talked to Chuck Schumer about some of this at least on the senate side yesterday. Infrastructure was one thing schumer spoke about in terms of early policy agendas. Maybe thats why caterpillars not that down if youre doug oberhelman, im trying to get my arms around why he was let go because i think he was really making a turn there at caterpillar. But people watch volck material and mlm, if theres infrastructure, but there really hasnt been just all talk, no action there. I come back to the drug stocks and bank stocks. Look out. I mean, that j j quarter yesterday, that was a good quarter, but there was a question about a proposition in california that would really make it so california would pay much less for drugs, pay the v. A. Rate, if that passes, youre going to see drug stock earnings ratchet down. For more on what the debate will bring in the nearterm tonight, lets go to our chief washington correspondent john harwood who is in las vegas. Good morning, john. Good morning, carl. Were getting close to the finish line. Less than three weeks left. And even though the third and final debate is the least important of the three, it is still a huge moment in the campaign. One last chance for these two candidates to connect with tens of millions of people get their messages across. Lets step back and take a look at where the race stands right now. If you look at the average of polls which is the best way to do it on realclearpolitics. Com, you see the story they tell, which is Hillary Clinton in the high 40s, now above 46 . Donald trump stuck below 40 at 39 . So thats more than a sevenpoint lead. Thats pretty significant. Johnson and stein in single digits, of course, after that. And where is the Hillary Clinton advantage coming from . First of all, and most importantly, collegeeducated whites by three points are favoring her. That looks like a small number, but its very unusual for a democrat to be doing so well with collegeeducated whites. That is a traditionally republican group. Then you go below that and you see big advantages, a 20point advantage among women, 20point advantage among people under 50 years old, almost a 60point advantage among nonwhite voters, and urban voters huge advantage as well for Hillary Clinton. Now, what can donald trump do about all that . Its very difficult at this point in the campaign especially with all the negative publicity that hes been dealing with about his actions with respect to various women whove come forward and what hes been captured on tape saying. The question is is he going to try to diminish that disadvantage among women . Can he do that . Or is he simply playing to his base and counting on this theory that his campaign has operated under, which is they can just supercharge that base they can make up some of this deficit. Downando daunting task. For Hillary Clinton shes trying to protect her lead, provide a positive message and get some of those undecided voters to tilt her way in the end. John, we were talking with jim about the congressional ticket, down ball lot races, ar there individual races either on the house or senate side that will act as a proxy . On the house side its much different because of gerrymandering and the way the differences are drawn. Democrats have to gain 30 seats to regain the majority. Thats a very steep hill to climb, not expected thats going to happen. On the senate side they just need to pick up four seats. Kp theyve got tons of targets. Youve got wisconsin, illinois, seats that are leaning toward the democrats, those are pickups, thats two of the four they need. Then you have states like pennsylvania, new hampshire, pat toom toomey, kelly ayotte, and even in a state like missouri, red state, roy blunt is on the defensive. So democrats are favored at this point to win the senate. And here in nevada where harry reids retiring and that seat is the one republican opportunity, well see whether they can pick up that with joe heck whos a republican congressman. John, we will see you tonight. Be sure to watch cnbcs special coverage of tonights president ial debate 9 00 p. M. Eastern time right here on cnbc. We move to the banks this morning. Morgan stanley beats expectations with its results, like other Financial Firms this earnings season getting a lift from bond trading activity, fic up 61. And as the as Dow Jones Today said no longer the runt when it comes to ome. No, stressed over and over again Wealth Management, Wealth Management, watch this happen. Sure enough Revenue Management 3. 9 billion. Pretax margin of 23 . What youre seeing is people at these banks starting to make more money. Theyre making more money on these divisions we had become convinced maybe there was no way theyd ever return. Thats why, again, what you were talking about is so bornt, not that Wealth Management be crimped by any fed change in the senate, but you wont pay as much for these banks. Try to get multiple expansion, pay more betting going to be something not one off. And the Wealth Management business at Morgan Stanley despite what you hear periodically of the brokers going out of the elevator in the morning and not coming back, i feel very strongly that this Morgan Stanley quarter is once again an affirmation of what gormans done. Hes turned it into a very special Wealth Management company with some very good fixed income. Hes a good executive. And this is a nice turn from the previous quarter. Some people didnt like it. Yeah, david, i assume youve had a chance to look at the numbers this morning, well see if he gets to that 10 roe but next year. Yeah, not quite of course. Goldman sachs was, what, 11. 2 , i believe it was yesterday. And to remind everybody well be sitting down a bit later today with Lloyd Blankfein, the ceo of goldman, which by the way did end the day up. But Wealth Management theyve stressed in part because they want the consistency of results to be there. They believe a higher multiple will result from the lack of assisttutes in the business. Fixed Income Securities and commodities had a monster quarter for Morgan Stanley jumping 154 from the Third Quarter of last year, of course that was not a particularly good quarter. But even sequentially very strong. Look at all the notes this morning from the analysts who follow Morgan Stanley, it is pretty much uniformly positive in terms of their reviews of the quarter particularly because they were restructuring and have been cutting costs on the fixed income side. But it didnt seem to stop their ability to succeed there in terms of trading. Theyve always been strong in equities, but as you know well, the ups and downs Morgan Stanleys had through the years in fixed income have been something that investors certainly have not liked and perhaps another reason why they havent been willing to pay up for the earnings from this company, very strong on that front. Strong beat on all fronts. They did see the comp ration go up a little bit. Not too much. Tax rate may have been lower than some anticipated helping a little bit. I focused on Wealth Management only for what you said, im always concerned anything fic, that could be more than one off. Maybe, maybe not, but brexit you had a lot of turmoil. If we go back to calmer times, ill still like Wealth Management. So i want to asterisk. Im not saying it was on steroids, but i want to asterisk that all that kind of trading because Morgan Stanley is not really made its hallmark. That was a windfall. But you know, david, theyre trying to position themselves as a very good Wealth Management operation that really has very little government very little interchange with the government, which does matter. Right. They want to do revenues in fic, above a billion a quarter, they were way above it this quarter to your point, jim. Wealth management has been the stress, no doubt about it. Dont forget Investment Banking, m a advisory, underwriting still an important part of what Morgan Stanley does. And a billion dollars a quarter is not anything to ignore. But agreed. Wealth management certainly one key way to measure the progress of this bank. Dont forget it wasnt that long ago flemming left, they have new management in that part of the business. This does appear to have been a good quarter as well for ted pick of course running and overseeing fixed income currency and commodities. Yeah. Its good. Hard to pick which one is best. Goldman david will be talking to Lloyd Blankfein. Hes very by the way, dont be surprised if he isnt critical of himself. Thats one of his hallmarks. I do feel that was a very clean quarter. Went over it this morning. Some people are saying theres this lending business that wasnt so good. David, that goldman quarter really distinguished itself as the old goldman when you get that roe. So maybe make lloyd a little less critical. Maybe give him a little push because you know how he likes to joke a little bit about how well the bank is doing. But that was a good quarter. It was. But lets get back to the performance of the stocks themselves. I mean, generally speaking now guys weve had pretty good numbers from Financial Institutions that we focused on. Wells fargo again we kind of put in a different category given the problems theyre having outside of their actual results the fundamentals didnt seem to deteriorate that much though it may be happening more now in terms of deposit taking, but jim, the stocks havent done that much, have they . No. You mentioned this at the outset of your comments, is there a multiple there are people reexamining what really should be paid for these companies, and simply saying even in a rate environment where it would seem that youve got the wind at your back, im not willing to pay up. No, look, i think this election is critical for these guys. I mean, will someone say, you know what, these banks, theyre too big and we got to break them up again. Dont forget, i mean, wells and j. P. Morgan, bank of america huge part of the banking business. If you get a very activist senate and the house actually changes, the gerrymandering probably makes it so it doesnt happen, but if it does change, youre going to say someones going to call hearings and say these banks are starting to make too much money. Lets look into that. And, david, i dont want to pay up. If these ceos are back in Congress Talking about their business. Davids got a lot to come this morning. Not just blankfein but george lee, david sol mon george lee . Yes. I like him. Investment banking. Intel falling in reaction to the companys Current Quarter guidance. Chipmaker outlook overshadowing better than expected results helped in growth by data center and cloud. Questions about whether or not this pc cycle is sustainable in their view. Yeah, that and i was really let down about the enterprise. I thought the enterprise for the data group was going to be very strong. Bad read throughs here, i actually like those companies. There were two intels on this Conference Call. There was the intel youre listening and its like, wow, this was just the quarter 65 margins and revenues were terrific and i like it. And then they just drop a bomb by saying, listen, were kind of overearned here. And the Fourth Quarter, which is the quarter ive always revered from intel, the one you always want to buy, the one i remember having great preannouncements, they just took the air out of the balloon. It was almost like nothing they did mattered. And thats a shame. But, again, this Enterprise Business should have been stronger. A lot of the analysts critical saying why did you even think its going to be stronger. The answer is because private cloud a lot of Companies Moving to private cloud, not just public cloud. They do a lot of business with amazon, google, alphabet. It was a surprise to hear how weak they thought the Fourth Quarter i wonder if brian i would not have spent much time lowering the boom and spent more about the tenyear journey stacy smith has had. And brian is another one of these guys. We have this era of nonpromotional ceos. Brian, he should be in there saying, listen, weve made a lot of good moves, diversified away from pcs, but no, hes another guy. Its like i got to send a psychiatrist out there to say, listen, guys, you know what, the era of selfeffacing management is over. Youre smart enough . Im going to run their Conference Call next time. Im going to change the narrative. Stock will be at 38. When we come back, speaking of not selfeffacing ceos, salesforce m a wish list gets leaked. Were going to fill you in on that. As we said davids got lots from goldmans conference out there, cohead of Investment Banking David Solomon in an exclusive. Another look at the premarkets. Its the anniversary of black monday 87. More squawk on the street from post nine in just a moment. Alpha seems more elusive today. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential it appears salesforce eyed 14 companies as possible m a targets back in may before it considered buying twitter. The journal cites a salesforce internal presentation which came from a trove of former secretary of state Colin Powells emails leaked in september by d. C. Leaks. Adobe among the possible targets listed on the 60slide document. Others included service now, but not twitter. No, let me give you a rundown on these. Adobe, first of all, adobes bigger than the ceo of adobe, theyre very good friends, marc benioff. Next one, workday, very good friends in neil. Unlikely these are going to happen. Service now, these guys come on mad money every quarter, service now is very, very expensive. But benioff does respect that. The two i find most interesting, peg sis systems because that is swallowable and that does infrastructure for Customer Relations management. And viva, which i had on recently. He used to work at salesforce and thats a Life Sciences vertical. Marc doesnt like to have he likes to give the verticals whether it be Human Resources to workday, whether it be Life Sciences to be unlikely, so i got to tell you, it really is telling the tweet twitter had already been down to 14 and was not on the list because twitter was the one everybody talked to. Now, tablo data, which i know salesforce not crazy about because its not social, mobile or cloud, and thats what or Artificial Intelligence or machine learning, so i know that one was dismissed very early not by them but somebody else is interested in play, that companys very quiet. That was another stock that broke down in february when linkedin went broke down. This is an interesting list. Sit embarrassing . I dont know. Benioff stressed to me over and over again we look at everyone. There isnt anyone they dont look at, but some dont make sense at all. And adobe i was surprised to see that in there. Adobe aint looking at salesforce either. I talked to thats not going to happen. Yeah. David, your thoughts on this one . You know, guys, i mean, i think its interesting. Listen, people should understand this is not a typical many corporations of course put together potential lists of acquisitions they will never pursue. But its a good idea to have your board sort of come along with you so you dont surprise them one day by presenting something theyve never heard of, never thought about in any way, shape or form. You want support of your board when youre going before them to get approval for potential deal. So this is not something thats atypical. But what is of course this new world where were seeing things getting hacked all over the place. Now, this was made public as a result of mr. Secretary powells emails being made public to some extent. You know, it does lead you to wonder, guys, whether there is also hacking being done for profitable purposes that we never hear about. Im just saying if they can get into his email and other peoples emails, how many other directors are having their emails hacked . And perhaps people are just benefitting from profiting somehow. I dont know. But this is certainly a new world that were in here with so much of this stuff conceivably being able to be gobbled up by those with not necessarily good purposes. Boy is that a great point. Im interviewing preet barra next week for a presentation for us. I felt the same thing, this is really good info. Youll see service now up. One thing i thought was creative nobodys talking about, marc benioff is looking immediately the rating for glass door, the first thing he thinks about for ceo and that is where they like the guy. And the ceo glass door is something a lot of people feel is touchy feely, but im going to look at glass door reason whether or not to like someone or not. Again, i want to stress, there isnt anything that has hit benioffs desk that he says he wont take time to look at. So twitter hits the desk and boom. But, david, youre so right. These lists we could put this list in front of anyone. But how about this, david, when it says in play and you get to a code name like tuscany, like sonoma, what is champagne, a code name indicates there could be something going on. Yeah. I mean, there could be. I mean, they always use code names, of course bankers do and companies do when they are pursuing a deal and in talks. Right. In this case they certainly decide to code name even earlier. I dont believe there were any talks involving these companies, but internally they wanted to put those code names on it. Thats great. Really did a great job keeping it out of the public realm, didnt it . Tuscany, i like the wine very much. I dont like sonoma wines very much. Maybe tuscany is better. It does give a quick sense as to their thinking. I mean, when they have a deck that says Digital Commerce remains significant gap in the salesforce portfolio, jim, it gets you thinking about what they think their needs are in the future. Right. They did demand ware, im telling you i had peg sus systems on, i thought that was a natural fit. Thats the one people are buying tablo on that, thats not social, mobile cloud. I want to be on this one. Well get cramers mad dash in a few minutes. Shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. 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Whoooo for people with hearing loss, visit sprintrelay. Com. The es and es hybrid. Its your daily retreat. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Just about a minute before the bell. Lets get cramers mad dash, watching . Halliburton. This is a remarkable quarter. Given the fact we all know oils at least come back from the february lows. But listen to this, north american results improved took advantage of the rig count growth. North American Business delivered 9 sequential Revenue Growth results grew by 58 million, 41 incremental margins. A lot of people felt they werent making any money because they had to cut their rates in order to be able to get more drilling done. But this is a very encouraging number. Very encouraging for halliburton. For halliburton. Yes. And it does say that, look, business at 50 is not bad for these guys. Thats amazing. You would think they need 80. But halliburtons done a great job shrinking its workforce and making more money with less. Mean crude go from 51 to 55 . New sweet spot because there is a little bit of dearth in inventory right now. Interesting. Theres the opening bell. And the s p at the bottom of your screen. At the big board today its stor Information Services and the society of industrial and Office Realtors at the nasdaq social reality, an internet advertising company. Just a brief mention 29 years ago today, black monday down 22. 6 . You came in that day and all you wanted to know was what the you wanted to speak to a broker, couldnt get a broker on the phone. You wanted to know whats your by the way, i add it was sometimes its better to be lucky than be good as karen cramer would tell you. And we had all cash except for some j j puts and was able to ride that for a very long time. Trump says he sold everything. I have a piece of paper says sold everything. But i think the week before that was one of the worst weeks ever. But the economy didnt fall off a cliff. It was dynamic hedging, it was futures, chicago overtaking new york for the first time, we didnt know what it was. It was actually some weakness of the floor brokers for Treasury Department investigation. The most upsetting thing you came in on monday and you dont know if anything you did was true. I mean, the back offices all overwhelmed. It was a dark period for our business, but not for the economy at all. With that in mind, just remember what that meant for the markets and not maybe so much for the economy. Yahoo of course bottom line beat. Page views up since the september 22nd announce of that breach. I mean, yahoo was that was the surprising line. No surprise things continue to deteriorate and a lot of their businesses, but i mean if verizon tomorrow says, listen, we have issues, this these numbers make it seem like that they shouldnt. Some suspect it was people going in to change their passwords having not looked at their accounts for a long time. That could be. M. A. V. E. N. Revenue is different. There wasnt anything in there that if this company were alo alone, stand alone like alibaba this is a Company Simply in decline. So was aol and look what you get Tim Armstrong in there putting these two together and you could have a powerhouse. Im not giving up on verizons whole internet strategy. Att when they bought directv that changed trajectory. Both remain stocks i really like. If you buy verizon well ahead of this quarter, i mean, i dont know, thats more of the hostage to Interest Rates now. David, what are you watching out there . You know, on the yahoo stuff, guys, there was one as you referenced i think theres one slide in the deck from yahoo, User Engagement trends and carl i think you referenced before and after september 22nd and when we learned about of course that huge breach that took place two years ago. And they say of course theres no change. And there does appear to be no change. But you still have those comments from the general counsel at verizon. Perhaps they saw the background of the transaction and realized they paid more than they would have liked to or maybe they needed to and wants a price cut. Well see. There have been no conversations i will tell you between the two companies about a price cut at this point, although verizon certainly seems to be stirring that possibility up. And as jim says, it wouldnt make that much difference to yahoos overall stock price but there are investor who is short alibaba, go long yahoo, they play the arbitrage there. For them of course it would have a more significant fallout. So well see where this ends up. But it doesnt at least appear at this point that there have been a lot of conversations about a potential price cut. Whether that comes to be something that happens, well see. Yep. Starbucks naming their first ever ceo of starbucks china. She was already president , belinda wong. There was an article this morning said starbucks is going to go back to making domestic numbers of 5 . The analysts are all keying on a return to growth my Charitable Trust owns this forever, return to growth in the u. S. But i think that schultz is over and over again he is on today, over and over again stressed china is where you should be looking at. So this might heighten the look at china, might make it more important. Dont forget yum is about to split. We have a positive note about yum this morning. Credit suisse, i think the people have to recognize yum is about making china more visible, starbucks has to make china more visible because thats where the growth is. We could name every city that has a major league franchise, and many of them would be like tier seven chinese cities, and there are still lines around the block at a lot of starbucks. Starbucks has not been able to communicate to date how important china is or the analysts arent listening. Maybe this will help the narrative of howard schultz. By the way we did get gdp overnight, 6. 7 for the Third Straight quarter, which some people say conotes stability in china. I think the worries about china seem look, you always have to worry about a country because you dont know anything. The communist party the other day, by the way, the communist party not intrigued by samsung telling them, hey, dont worry. I mean, communist party, remember they run the court system, the prosecution, there is really judge and jury, they have its called a totalitarian state. So they can control the numbers. Its not like theres somebody out there saying, you know what, i dont like the numbers. I think that theyre untrue. Because i think that might be a white collar crime. By the way, white collar crimes over there are often treated the way blue collar crimes are treated in our country. Yeah. Shanghai had decent gang actually relatively flat overnight. David, not seeing a lot of action in the financials. We should mention wells fargo did delay the sale of tenyear bonds. Stumpf by the way also leaving the boards of chevron and target. Yeah. You know, be curious to see how the financials overall perform. Theres a look at wells. Not getting all my quotes as you might imagine out here in the dark. Its still very early and all our systems arent up. But the performance weve seen this week and last week after earnings that were generally positive have not proved out in the marketplace, though i guess goldman did end the day up yesterday. Changing tace ining tracks quic week with st. Jude and problem with defib ri laters, abbott is buying st. Jude on the Conference Call affirmed theyre going ahead with that deal if there was any concern. Let me read quickly, he says theyve done all the right things, that being st. Jude. Theyve been in great communication with us and based on everything we know i dont see this impacting the close of the deal or the business long term. Ive seen a lot of expectation in the press, i mean, every time theres a product issue ill say based on everything i see this deal is going to close. Thats miles, he wont say the same thing about aleer certainly, but he is saying it about st. Jude, jim. I thought the abbott call was good one. We have to go back to selection, david. Go back to this proposition 61 in california. I mean, when miles white delivers a quarter with a lot of good growth, when alex delivers a quarter j j, great growth, great pipeline, these stocks dont go up, im telling you thats a sign. Thats a sign people are saying what happens in november, if we get people who want to have v. A. Pricing, thats what the proposition in california is about, for the single government. Because the v. A. Offers a very good deal, and theyre very tough on the drug companies. Obviously v. A. Pricing, david, would kill the margins of all these companies. Yeah. Thats interesting. Is that really something thats a strong possibility . What, that proposition 61 wins . Yeah, im starting to think it might be. Theres really a wave of populism going around. Bernie sanders is a factor. Cant panny for this. I didnt think prop 61 had a chance for this, now im starting to think a lot of people are realizing the veteran administration gets good prices. No kidding. If your fathers a vet, shouldnt he get a better deal . You served the government and put in harms way, i sure hope the vet gets you a better deal for drugs. But if everybody else does, yeah, youre going to see the margins come down 3. 8 billion is at stake in california purchasing of drugs if they prop 61 passes. Do a little tech here. Intel is below the 50day for the First Time Since june. Obviously the dows weakest component. Apple discussions about an october 27th product launch. New product. Max. Yep, new product. I still think china and the story about samsung is going to come into play. Seagate by the way a really good quarter but people are reading through the negative part of intel into seagate. Maybe thats a mistake, but seagate had a big move. I come back to intel and lower the boom on this one section, they did say gross margin come down. Saw 65 , wow, that was the holy grail where intel can go. Intel had been recommended the day before on very good expecting a very good quarter. That didnt play out. That was an ill advised recommendation. What do you think of belichick saying im done with the tablets . I think he hates everything. You know, you got five rings, you can hate everything. He can hate netflix. Im surprised he didnt say i also hate netflix. He went on for five minutes. Look, i was watching i was on the sidelines, they had really good seats. Scott wapner thank you for recommending me to go to the game. And theyre all looking at the service. John who killed on ellen yesterday, hes the long snapper, he looks at the surface, johnny jones, punter, they all look at the service, except for the coaches who were looking at the old photos from up at the top of the booth. So i think belichicks onto something. Look, belichicks never impressed me as a happy guy, but who cares . Did anyone see the espn thing where they had einsteins face on belichick . I thought that was fantastic. Hes real. He can even dress like a slob and get away with it. If he doesnt like the surface, i dont think is sacha going to lose sleep over that . Well, if another coach does, yeah. Waiting for belichick, we know what we know this is like a dennis green thing, they were who we said they were. The surface is not as loved as people would like to think. Now theyre coming after me. But i saw actual hard copy photos used as much as the surface. If you missed this really quickly yesterday this is Bill Belichick on the surface. You know, as you probably noticed im, you know, im done with the tablets. Ive given them as much as i can give them. Theyre just too undependable for me. Im going to stick with pictures. Several of our other coaches do as well. Because there just isnt enough consistency in the performance of the tablets. So i just cant take it anymore. Tablets are everywhere on the sideline. Oh, yeah. That was not a ringing endorsement. He could have thrown in the Samsung Galaxy note 7. I mean, hes basically saying the surface isnt safe to use. This was a little shocking because microsoft paid a lot of money to make that happen. Yes. David, dont you think its amazing lets say you attack nike. Listen, nike clothes are bad too. Can he get away with anything, this guy . I guess i dont know. Hes the most ornery fellow i think this sport has ever seen. He had a threeletter explanation as to no longer going to be coach of new york jets. I dont know, man, belichicks a genius, i guess. Whatever he says goes. I think that, carl, that its going to become a gift, right . Is that what you call it on twitter of him throwing that tablet down . That thing is going to be all over the place for a long time. Yeah. Theres a lot of opportunities. Michael dell is no longer michael dell is a private company, but i dont expect meg whitman to start throwing hewlettpackards, but in the ends what this says is a very high profile endorsement was really kind of wrecked by the most high profile coach. But any time you talk about belichick with other coaches they always say, yeah, hes the meanest, but hes won five rings. It can excuse anything. Like sacha should come out and say hes won five rings he can do whatever he wants. This guy is allowed to do whatever he wants. Indeed. And he does. You got to love him frankly. Microsoft by the way basically unchanged today. Well keep an eye on that. Is he short microsoft . No, he has no time for anything other than football. I dont want to be near that guys life. I dont think he has dont bother me. Everythings dont bother me. During the football season i dont know what kind of life he has, but i do love him. Look, heres what everybody says about belichick including sacha, im sure hes saying i wish he did coach the squawk on the street even thou seahawks. Dow being dragged down by intel obviously. Lets get to bob pisani on the floor. Mixed open here. China was up, asia was up in general. Chinas Third Quarter gdp estimates matched expectations. Remarkable there. Once again the stocks that matter, the ones providing earnings are moving the market. Energy Stocks Energy over 50 on oil and halliburton news spurring oil, materials are up nicely too. Financials also holding up. Good Earnings Reports. Again, a big beat. Its hard to move tech stocks when intels down 5 . Thats why tech is weak right now. So banks beating again. We saw not just Morgan Stanley but i like the regionals, bb t, u. S. Bankcorp. , this is important for the earnings situation because its turning the picture around overall. I think the most important thing this morning was halliburtons comments, oil service here, the surprise profit from halliburton, only one cent so maybe beat by seven cents. A lot of people saying there wasnt a lot of revenue beat, it was mostly cost cutting. Thats true, but its the tone they struck more important. Cautiously optimistic. Take a look at dave lesar, the ceo, as we look forward, we expect increased rig count growth, things are Getting Better for us our customers. He did say caution on holiday and seasonal weather related downturns, but bottom line is they see more confidence in general about oil now in a new range of 50 to 60 for 2017 rather than 40 to 50. And i think that tone is what really matters for the markets. On commodities separately bhp a production update in london. They didnt really change anything. I would say modestly optimistic. The ceo on the commodities overall here, we have seen early signs of market rebalancing, thats andrew mackenzie. What does all of this mean . Were about 15 of the way through the earnings season. Obviously its still very early, but we have turned positive on earnings estimates. Were in an earnings recession, is it evergoing to turn around . Right now it has. Earnings up 0. 2 . This is the blended number as well as the revenues also six consecutive quarter of negative growth also starting to turn around up 2. 5 . A lot of this is because the financials have been so much better than anticipated. The estimates have really yo overturned the s p picture all around. Today financials expected to be up 6 in earnings for Third Quarter. Just a couple weeks ago only up 1 . So all these big beats we are seeing from the banks are having a big influence because financials are the second Biggest Group in the s p after technology. Those big earnings are moving the s p earnings outloforward overall. The big question right now whats happening with the earnings picture. So far right now the number of Companies Beating is well above average. Its about 81 . The average is about 63 . Thats way above average. And the magnitude, how much are they beating is also well above average. The big question is, okay, is this an anomaly, are we going to see this throughout the rest of the quarter . It would be very important if we did. We dont know, but early signs with tech companies, intel notwithstanding, has been encouraging. Next story is going to be the industrials. General electric on friday, well see some other ones, honeywell has already had comments, negative comments recently, but Illinois Tool Works will be reporting on thursday as well. A lot of this whole question is going to turn on this Global Economic situation because were going to see very carefully what General Electric has to say about that. And that, carl, may really determine the tone of the Third Quarter outlook, and in particular the Fourth Quarter guidance. Very encouraged by the cautiously optimistic comments from halliburton. Carl, back to you. Bob, thank you very much. Bob pisani. Lets get a check on bonds this morning as well. Go to Rick Santelli at the cme in chicago. Good morning, rick. Good morning, carl. You know, if you look at intraday of tens weve had a couple of basis point creep, but once again seems the 1. 70s are somewhat home. Look at a oneweek chart you can see that. So todays topic is 1. 70s are the new 1. 50s. Remember that entire month of august other than one session all settled in at 1. 50 somewhere . Heres that chart. The 1. 70s are very much like that. What happened after it ran its course of consolidation . It leaped 20 basis points. Many believe that the 1. 90s or close to 2 will be the next leap, doesnt matter when it leaps, matters how long it stays in this range. Thats what traders are grappling with as of course we see volatility on the options has come in a little bit. Now, if we really want to talk about the box of chocolates that Mario Draghis been giving some of these Financial Institutions whose tradings look pretty spectacular on some of their latest reads, every piece of candy is a bit different. Maybe its this chart, the onemonth of investment grade. See how those spreads are collapsing . Thank you, barclays by the way, our onemonth of high yield, theres another box of chocolates. Another taste of chocolate, or the fiveyear high yield. These tightening spreads and the notion of what the ecb continues to do and other Central Banks either are doing or hint at doing really makes the trading a little bit easier, dont you think . And if we really want to look at maybe the driving force were supposed to Pay Attention to as treasuries seem to be moving in a range of course and what pops them out of range seems to be unemployment data, fed meets, ecb meetings, bank of japan meetings, its the dollar index. This is a 15year chart. I want you to Pay Attention to how we are close to knocking on that 100 door for the third time. Pay very close attention to that level, whether its in the Options Market here or the orvegt options, that will be a big level depending on whether it holds or we slice through. Carl, back to you. Rick, thank you very much. Rick santelli. When we come back, david fabers exclusive with David Solomon, dow up 31 points. A lot more still to come on squawk on the street. Theres no one road out there. No one surface. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all, the mercedesbenz cclass. 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Just a real person, real fast. Whenever you need them. Great, thats what i said. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Time for cramer and stop trading. Just doing some checking by the way before we get to the main, i dont think theres anything of the yahoo deal to change out the price. I think verizon has to pay it. Now, when nike took the contract from reebok, okay, it was 2010, this is for the nfl, it was for the 2012 season. It will be interesting to watch whether apple doesnt try to get the ipad with the nfl. That surface deal is from 2013. Expires in 2018. Using the logic behind reebok and nike, it would be right now for tim cook to be able to call the nfl and say, you know what, that 400 million that microsoft paid, were willing to do ipads when that contract ends out in 2018. They would have to start talks now judging by what nike and reebok did. That is the one i think people want is the ipad. I guess who has more sway with goodell . Tim cook or paul allen . Thats a very interesting question. I do feel that it will hurt the surface to be honest. I just think whats going to happen thats going to replay over and over again and belichick is the most visible guy who uses the surface in america. Not unlike when Steve Ballmer to my reunion harvard, he brought a microsoft phone. I said what the heck is that. He said, well, this is a microsoft phone. I said well i found someone who uses it. I love that story. Whats on mad tonight . You got schultz. Yes. Thats going to be with kelly. Now, kelly we have another kelly, kelly king. Now, corbus is a guy any time we have a lightning round we have corbus on. But kelly king, we have to ask about whether its the regionals time. The regionals are doing much better than the big banks. I think one of that is a lot start doing acquiring again. But i got to ask about politics. And i hate politics, but you got to ask. I mean, because banking, we keep waiting for banking to be turned into the Greyhound Bus business by a couple of those people in congress. 20 more days, jim. Holy cow, were going live. I heard mad money going live and i hear were going to have dominos pizza. My executive producer has ruled that out, which is insane. We will see you tonight, jim. Mad money 6 00 p. M. Eastern. When we come back, faber at the goldman conference in california with the cohead of goldman David Solomon in a moment. And can you explain to me why you recommend synthetic over cedar . Super food . Is that a real thing . Its a great school, but is it e right the one for her . Is this really any better than the one you got last year . If we consolidate suppliers whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Ok. Sure. 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Morgan stanley joins its peers adding to the Bank Earnings win streak, easily topping expectations. Well dig through those numbers. Plus, goldman dealmaker David Solomon Investment Banking division cohead at Goldman Sachs will be joining us from that builders and innovators summit with david. But of course the big story today and tonight will be that third, final and likely heated debate kicking off at 9 00 p. M. Eastern time. Our john harwood is in las vegas this morning and joins us with the preview. Hey, john. Well, carl, the best predictor of what this third debates going to be like is to look back at what the first and second debates were like. What we saw in the first debate was that donald trump was donald trump started out with an effective argument by saying Hillary Clinton was a 30year proponent resident of washington and participant in the political system but hadnt produced change. Hillary clintons strategy was to bait donald trump to tell donald trump that he had insulted alicia machado, that produced a twitter war, accused of not paying income taxes, saying that was smart that was thrown back at him. Then at the debate you had the release of the entertainment tonight tape in which he was captured saying lewd comments about women on the debate. Hillary clinton then in the second debate used that and said thats who he is. Weve seen who he is. But we saw a more aggressive donald trump in that second debate when he came back and said youd be in jail if i was president. Im going to appoint a special prosecutor. Problem for trump is that the bad news has kept coming, more and more women have come out when he denied in that second debate to Anderson Cooper that hed behaved in a way hed been shown on that entertainment tonight tape. That then has produced a cascade of news that has driven his poll numbers down further. So the question is, what can work for him . What can aggression towards Hillary Clinton work . Hes going to bring president obamas estranged half brother as his guest, a benghazi victim, the mother of a benghazi fatality will be in the audience as well. So tough task for donald trump. Hillary clinton wants to try to as much as she can express a positive vision that might pull some of those undecided voters her way. Well see what happens tonight, guys. John, of course we recall in the last debate trump asked the moderators why arent you asking her questions about the emails, for instance. Chris wallace is moderating. Doesnt her prep have to change this time . Sure. And certainly the wikileaks email will create some moments where Hillary Clinton will be on the defensive. And donald trump has indicated hes going to go aggressively after as he tried to in the last debate bill clintons past conduct. Its just that that hasnt worked terribly effectively. Wikileaks is a news source of material for both trump and Chris Wallace to question her on. And i would expect her to emphasize in response the fact that Russian Hackers have been or believed by u. S. Intelligence agencies to have been behind that. And cast that as a larger issue than the content of those emails. And since youre in las vegas, john, ive been asking you every day about the tight senate races. This one is interesting. Of course harry reids seat, how that factors into this one as well as the donald trump factor and what looks to be a close race. What are you hearing . Well, this has been the soul pickup opportunity for republicans. Harry reid retiring, joe heck, whos a fairly well regarded congressman on the republican side has been doing well. But Hillary Clintons been rising up in the state. The chances of Democrats Holding it have risen although its still a very competitive seat. Republicans need to carry this seat, given the vulnerabilities they have in wisconsin, illinois, pennsylvania, new hampshire, north carolina, missouri, they need to carry this to provide some sort of insulation against the possibility of a sweep of democrats of those other races that would give democrats a majority. John, well see you tonight, of course. Make sure you tune in tonights cnbc special coverage of the final debate right here on cnbc 9 00 p. M. Eastern time. One of our top earnings stories here, Morgan Stanley reporting a huge beat. Our david faber joins us now from Santa Barbara, california, where he is at the Goldman Sachs builders and innovators summit. David. Thanks, sarah, thats right. Were going to be speaking with Lloyd Blankfein, of course the ceo of Goldman Sachs, a bit later this morning. Goldman reported earnings yesterday. They were quite strong. And interestingly Morgan Stanley stock price did fairly well yesterday based on the fact investors expected given the environment in what weve seen is generally positive results for many of the big banks, Morgan Stanley would also have similar results. And they did. In fact, as you said a beat across the board really for this company. Which is far more focused on Wealth Management than some of its other competitors namely Goldman Sachs for example. But it was fixed income, currency and commodities where the company did extremely well despite what has been a significant Cost Reduction in the area taking out as much as 25 in terms of costs. They were able to put up a very big revenue number there. And that did drive a lot of what was behind the better than expected results in terms of at least when analysts had been looking for. I think they came in at 81 cents a share for the Third Quarter, consensus was somewhere around 63 cents a share, to give you some sense there. Wealth management though also continues to be a key focus for the bank. And there the margins were quite good above 23 on the Conference Call james gorman also saying in fact that they had record revenues. And it was down to the manage money side of things, the banking depospoeposit side in tf that, in terms of transaction levels that in fact havent really picked up that much. So, again, pointing to the fact that it was a fairly good quarter in that regard as well. So overall quite strong for Morgan Stanley, but interestingly if you pardon my turning here, the stock price as you guys know not doing much of anything this morning up only about 9 cents as i mentioned yesterday it had benefitted from goldmans better than expected results, but investors at this point seem to be taking a wait and see approach. Perhaps wondering what the future will hold there or simply worried about to the last segment with john what the election is going to bring in terms of new regulations perhaps. Who knows. But the actual results have not been met perhaps by what the companies had hoped for at least in the stock market given how Strong Financial services has been. On that subject by the way we are going to be speaking not only with Lloyd Blankfein, the ceo of Goldman Sachs after earnings came out yesterday, but in a few moments from now sitting down with David Solomon who runs Investment Banking at goldman. Well talk about the overall environment for transactions and capital markets. And then a bit later george lee will also join us. He oversees tnt, which has been a very active area, particularly the Technology Part of things when it comes to m a. Well talk to mr. Lee about the landscape there and what we can expect for this Fourth Quarter. Send it back to you guys. David, thank you very much. Cant wait for more. David faber out in Santa Barbara. Speaking of the banks, we do want to get to eamon javers who has a news alert from our washington bureau. Good morning, eamon. Good morning, carl. Federal regulators circulating proposed new Cyber Security regulations this morning. Regulations would apply to banks with more than 50 billion in assets. And they would essentially do two things. One, they would require the banks to have the most effective Cyber Security controls that are available commercially at their disposal. And, two, they would require the banks to be able to recover within two hours from a devastating Cyber Security attack. Now, think of these as the st t startistar starting point for a conversation with industry and the federal regulators of just how secure secure means in the era of Cyber Security. These proposed regulations are out for comment from industry. And the comment is expected to go on for several months. They expect maybe finalized regulations in january, so this is the starting gun of a Cyber Security race here for the big banks in terms of Cyber Security regulation, carl. Every day we get a reminder why thats on the table, eamon, thank you very much. Eamon javers. When we come back, a lot more on tonights final debate. Will a change of tune come from either candidate . Will that sway voters as david mentioned we will go back to the Goldman Sachs builders and innovators summit. Well hear from goldmans cochief of Investment Banking David Solomon, take a look at where stocks are trading. Intel still weighing down the dow, which is hanging onto a 15point gain. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive fixodent plus adhesives. Theres a denture adhesive that holds strong until evening. Just one application gives you superior hold even at the end of the day fixodent. Strong more like natural teeth. Just 20 days left. It all comes down to this, round three clinton versus trump. Youre looking at live pictures from the university of nevada, las vegas, home to tonights final president ial debate. Just what does each candidate need to achieve tonight . Joining us this morning from d. C. , charlie black has advised every republican president ial nominee from reagan through romney. With us here at post nine, kerry and obama president ial Campaign Advisor mark hannah, author of the best worst president. Good to have you both. Thank you. Charlie, start with you. Kasich himself was on the morning shows today and said the notion of a rigged election is like saying we never landed on the moon. Do you believe trump carries that message into tonight . Well, you know, he might bring it up a little bit, but i doubt it. I think what donald trump is going to try to do tonight is to talk about issues in policy. He needs to make the differences between his policies and mrs. Clintons because this could be a change election. She represents the status quo, he represents change, he needs to explain how hes going to make things better with economic policy, trade, immigration and all the other things he has talked about. So you do not believe he essentially tries to torch the Party Tonight . Oh, i think he might get a jab or two in here and there, but look, hes behind now. Hes behind. He knows it. When he was effective in august and Early September in talking about issues and sticking to his teleprompter, he gained in the race. He caught her. He needs to do that again. He still has time, but you got to do it on the issues and framing this is change versus status quo not by hurling insults at her or the election system or other members of the Republican Party. Mark, you have to admit, i know youre coming from the other side, if trump had made it that, hes an outsider, hes going to come shake up washington, force change, come outside the world of the elites and so the untrustworthy policymakers with business chops, this would be a very different race at this point. But hes gone so off message. Absolutely. It would be more competitive, we saw the populism he stoked in the primaries. I hope charlies right. I hope he does make it about issues because this is an area where Hillary Clintons people have hoped it would become about issues. But donald trump just keeps digging himself down deeper and deeper in this ditch. The more he kind of acts like a poor sport, the more he acts like a sore loser before hes already a loser, the more he tries to, you know, burn the whole place down. That gets headlines. That is newsworthy and were going to be talking about it. Most people i know that are following this campaign dont really know what donald trump stands for. They just hear these stories about his behavior in the past. Im not sure thats true. Hes made a pretty strong stance against some of our trade deals, and thats a consistent message weve heard from him, against high taxes, against the washington corruption, i mean, if it does turn to issues and the economy is one of the 15minute segments on tonights agenda, how does she win the economic debate . Well, she knows that there are all sorts of independent economic analysts that have shown how her economic policies create jobs where as Donald Trumps youll shed 3 million to 10 million jobs over the course of ten years. The National Debt is a very big issue. This is something for all the president s successes and triump triumphs, we are left with a big debt. Hillary clinton is prepared to talk about that and all the sort of weeds and all the details that shes familiar with. Donald trump i think is going to potentially go nuclear here, desperate times, desperate people call for desperate measures. I hope it doesnt go ugly, but you know, the end of this trilogy could be quite dramatic, i think. Charlie, we just said you worked for reagan, a lot of people remembering reagan down six when we were about at this point. Yes. And of course came back to beat carter. Yes. You think this is doable for trump . Oh, theres plenty of time for him to win, but he has to get the momentum back the way he got the momentum in august and september was by talking issues and contrasting his policy positions with those of mrs. Clinton. And president obama on things Like Health Care and obamacare. He needs to get back to that. Hes a smart man. He knows it. I think we will have a substantive debate tonight, and maybe he can turn the corner and begin to catch up again. Do you believe yesterday he talked about this he called it an undercurrent of his supporters who were not counted, pollsters unable to model in what is a likely voter this cycle, do you believe thats true . I dont. I mean, our pollsters are very, very astute in both parties. They use the technology to select whom they interview. There could be, you know, 1 or 2 of people they talk to who are secretly for trump, but not really. It doesnt work that way. I actually disagree with charlie here. I think there are people who see donald trump so unpopular, so much of a pariah, we call it social desirability bias, people respond to pollsters with what they think the pollster wants to hear sometimes. Im nervous about that. As a Hillary Clinton clinton supporter im concerned that donald trump might have this latent base of resentful support. So i think Hillary Clinton needs to go for the knockout punch tonight. I think she needs to go on the offensive. Shes kind of been waiting in the wings trying to, you know not mess up. Not mess up. Wait out the clock. I think thats a strategic mistake. I think she should own this issue. Theres near universal assent that the behavior of donald trump in the past is discrediting to the office. And i think this is this could be an opportunity for her to give a gender speech much the same way that barack obama gave a race speech at the end of the campaign in 2008. Quite historic speech that in personifying and using donald trump as a proxy for everything that women face in all the challenges women face on the cusp of a historic election where we are about to elect the first woman president. In the moment we have left, mark, we need to talk about the emails. Shes also coming into this debate after americans have been reading tens and thousands of emails from her Campaign Manager and her staffers. And its embarrassing. And theres a lot of light being shed. And theres been a lot of news reports. So how does she handle that issue and also stick to her themes . Shes going to get a lot of tough questions. Both candidates will get tough questions from Chris Wallace no doubt. Look, your audience is quite savvy. They know what a negotiating position is. If there are things that come out where she says she took a public position and a private position, they know that when it comes to compromise, you need to get out there and make the most ambitious and ask and make the most ambitious opening statement. I think she can explain this away in such a way that shows the role of her as a diplomat is much different than her as president. And i think, you know, i think she can infare that fairly well. I dont think charlie agrees with you. I didnt expect charlie would. As a diplomat she ruined the middle east. Oh, yeah, that had nothing to do with paul bremmer and the coalition provision authority. Nuclear deal was her deal along with president obama. Listen, i do agree to this extent. You can be a liar and still be a good negotiator. I do think thats true. But shes lied to the American People over and over and over, and thats why shes not popular. One last question, charlie. I know theres no love lost between trump and kasich. You did advise kasich for a while. Are you supporting trump . Yes, im for trump. Im going to vote for trump. Look, given donalds background and history and some features of his character, i understand why some leaders in good conscience do not want to vote for donald trump. Ive been a republican my whole life. I worked for paid jobs in Republican Party, i owe it to the party to vote for the nominee. Im trying to help. Well, charlie has been republican his whole life and donald trump has not and he said some pretty nasty things so i would be offended if i were a republican. Its true, charlie, Republican Party after november 8th the establishment has been exposed and looks increasingly out of sync with its voters. Well, thats a long answer to that question, but no, when its over, its over. Hopefully donald trump is president , he is a negotiator. Hell go work with Republican Leaders in congress and for that matter with democrats in congress to try to get things done. Thats what he does for a living. But the party will be fine. Weve always had some tensions between purists and mainstream conservatives, those might continue. But we can still get things done. Some tensions. Euphemism of the day. I think this is a major civil war, major implosion of the Republican Party, but i could just be, you know, exaggerating that. I could be lying, right. Be a democrat. I could be a democrat, right. Mark, charlie, great to have you both. Thanks, carl. Thanks so much. Of course be sure to tune in tonight cnbc coverage of that third and final debate begins at 9 00 p. M. Eastern. Good discussion there. When we come back, check out shares of intel getting slammed down nearly 6 . Well dig through the Earnings Report straight ahead. The dow up 34 points. Has helpes 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. Intel reporting earnings that beat analyst estimates but gave slightly disappointing revenue guidance and didnt inspire much confidence on the call. Our jon fortt joins us with more, jon, as we look at intel taking about 14 points off the dow here. Yeah, sarah. I mean, it was the guidance that was really the issue. It was a beat on the top and bottom really, but a couple issues stood out. One was pc demand, particularly in consumer and particularly in the nondeveloped market. So stacy smith formerly the cfo now chief operating officer just talked about the continued weakness there, how its not where he wants to see it. Then of course you had an inventory build in the quarter that they expect to have to sort of draw down a bit in q4, which they said they still expect to see a strong quarter. And then in the Data Center Group you have weakness on the enterprise side. Cloud growth still pretty strong, but enterprise theyre just not buying. Bryan krzanich says he expects that as Companies Start to build up their private clouds that will come back. And they said they expect that they can still get strong growth over time if enterprise remains flat to even down slightly. But they werent ready to call exactly when that crossover is going to happen. Of course they usually give better guidance for 2017 in january, and then at their Analyst Meeting in february, so people are going to be watching that. We also have to keep in mind this is a stock that was at tenyear highs coming into this quarter. So now its looking like its down 5 , 6 this morning. Well see where it ends up where it shakes out when people digest this, guys. Yeah, up now only 3 for the year, jon fortt out west today. Well see you in a bit. Another company were keeping a close eye on, tesla, getting ready to unveil a new product today. Our phil lebeau joins us with more. Phil, what do we know about it . Very little, sarah. We only know its a new product and elon musk has said in the past its not expected by most people. So that has people guessing, well, is it perhaps a new vehicle, are we talking Something Else . I doubt its a new vehicle, but when this new Product Announcement comes out some time today, and thats what weve been told to expect this announcement some time today, it is a product that according to mr. Musk is not expected by most. And there is a fair amount of speculation amongst those who closely follow tesla that it might be an advancement with the companys autopilot system. In other words, not a whole new vehicle but them saying, look, we have tweaked autopilot in certain ways to allow it to be more advanced and perhaps thats what we might be hearing about a little bit later on today. Take a look at shares of tesla in the last year. While we point out the stock price in the last year is because relative to other automakers tesla is not outperforming them as it has in recent years. Now, you can make an argument given the valuations its hard for tesla to go a whole lot higher and to have the success its had in previous years, but it will be interesting to see this quarter, guys, when you look at tesla all of the news coming up, it will be interesting to see what happens with the stock between now and the end of the year given solarcity merger, given possibility of a capital raise, some big news coming up over the next couple of months. Hey, phil, hes a master of hype. Hes done this thing before on twitter, sort of teased announcement like this. Right. Whats his track record when it comes to delivering . You mean do we get the excitement out of it . Do we come away going, wow, look at that . Yeah. Its hard to say. Because, look, there are sometimes hes come out, take the hyperloop, which i know is not a tesla product, but when he came out with hyperloop he said ive been thinking about this, he does a Conference Call, it dominated the news that day and people are like, wow, look at what elon musk is thinking about for transportation in the future. There have been other times when there have been Conference Calls and theyve said weve got a new Leasing Program. And ive had people say, really . Were doing the news on a Leasing Program . So its hard to say. It really depends on the particular announcement. It is a cult, as cramer likes to say. Phil, thanks so much. Our phil lebeau. When we come back, Goldman Sachs Investment Banking division cochief David Solomons going to join us. Well get his take on whats driving deal making and a lot more. Dow up 48 points. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. The Conference Call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Im Courtney Reagan and heres your cnbc news update at this hour. Plumes of smoke pouring out of a building in early mosul early today as iraqi forces try to retake the city from isis. The u. S. Led coalition is supporting the iraqi operation, which could take months. Mosul is iraqs second largest city and the largest urban area controlled by isis. Well, the man accused of setting off bombs last month in new york city and seaside heights, new jersey, is waking up in a state prison this morning. Rahimi moved out of the hospital yesterday, he was injured in a shootout with police on september 19th. The Democratic National committee apologizing this morning after one of its Campaign Buses dumped raw sewage on a road outside atlanta. The bus which features the likenesses of Hillary Clinton and her running mate tim kaine was in town for an early voting event. And People Living in the northeast, southeast and Southern Plains will get one more day of record warmth. The National Weather service expects temperatures to reach highs 10 to 20 degrees above normal before a cooldown tomorrow. Thats your cnbc news update for this hour. Now lets send it over to Jackie Deangelis with the eia inventory report. Good morning, thanks so much, court. Thats right, the department of energy out with weekly crude inventory report. A drawdown of 5. 3 million barrels. We were expecting a build this week. This draw was even steeper than what we saw from the api last night. So you saw big jump in crude prices trading around 51. 15 before the report, all the way up to 51. 50 after. A couple of other supportive factors in the market, chinese gdp data also strong, and also the Saudi Energy Minister making some comments saying that he thinks the downturn in oil prices is coming to an end. So certain factors taking us up here, but 51. 50 a key technical level when it comes to crude oil. Theres a lot of momentum in this trade to the upside right now, whether you believe in these numbers from the department of energy or not. One thing ill say, gasoline saw in a build 2. 5 million barrels, sometimes later in the day that can balance out. David faber, back over to you. All right, thank you very much, Jackie Deangelis. Well, we are at Goldman Sachs make sure i turn here get buildings and innovators conference. Were joined now by David Solomon who is the cohead of Investment Banking at Goldman Sachs. Of course this is a conference where you invite a lot of entrepreneurs, private companies to hear from various people and talk about network, of course, in terms of the world theyre living in as private companies and what they can do to continue to try to grow their companies. Eventually they may become public, david, but there seems to be a desire on the part of Many Private Companies to stay private longer. Is that true . Theres no question that the ipo process has gotten more complicated over a period of time. And in that context, if you look at the availability of capital and the things that Young Companies need to go need to grow, theyve been able to maintain and build their businesses in a private form longer than they might have in the past. As a result of that people put off the process of going public until later. Its a complicated process. When you become a public company, theres a lot more you need to do. And so if you can grow your business, if you have access to capital, and you have an ability to compensate your people and really move your business forward, certainly i think many entrepreneurs, founders are considering delaying ipos for a period of time. Some are looking at what was an extremely anemic First Quarter for ipos. And it still what are we running about 17 billion, i believe in total volume for this year versus a fiveyear average of 52plus billion saying its different now. Companies are never going to come public that might have otherwise. Is that true . I have a hard time looking at the way the world is today and interpolating because ipo activity is slower that it has to be that way as you move forward. We had a very as you pointed out, a very slow start to the year. It was less than 1 billion of ipos in the u. S. In the First Quarter. Things have picked up in the second or Third Quarter. Youre now seeing more activity here. But theres no question were running below the kind of yearly average as weve seen over the last five years. There are a bunch of things going on in the world that i think have an impact on that. If you look at brexit, you look at the u. S. Elections, those are things that to some degree tweak markets, tweak confidence, and that also slows down that activity. I notice though, i mean, when we talk about so Many Companies now that are Important Companies already in their own right, an uber for example, or an airbnb, none of them are in the Public Markets at this point, or a spotify. I can name so many, snapchat may come of course in the not too distant future. Are they as a result of not going public earlier in their gestation, so to speak, not given the opportunity to investors they otherwise would to see the incredible growth curve . Well, a lot of these companies have raised significant capital privately. And that capital comes from mutual funds and other constituti Institutional Investors allowing people to participate along the way. You know, you pointed to a handful of the largest private companies. I did. Its actually interesting if you step back and look there are 175 approximately unicorns out there today. These private companies with a valuation over 1 billion. Only 23 of them have a valuation over 5 billion. And only four, okay, have a valuation over 10 billion. So when you really kind of step back and say and talk about that group, its a very, very small group. There are lots of companies that are growing. They need capital. The Public Markets will always be a source of capital for those businesses. And the cycle of this will ebb and flow. Capital had been very available privately. Its Still Available privately, but its a little bit tighter. Is it tighter . Why . It is. I think we went through a period of time where people were willing to look at look for growth in a very aggressive way, and they were willing to Fund Companies without really understanding a clear path to profitability. I think investors have gotten more disciplined. Theyve seen a number of companies that have not been able to meet their growth goals and have not been able to grow as quickly. And i think theres a little bit more discipline out there than there was, you know, maybe 18 months, two years ago. Its funny you mention the audience for the equity so to speak of these companies that are not coming public, its the same audience that would be there if they were coming public. A portion is definitely the same audience. Look, markets are very efficient, Institutional Capital exists in many forms. And the people that are managing Institutional Capital are obviously looking for exposure to places where theres growth in the economy. This is one space. And so theyre going to find ways to participate in that. But at some point do all those companies i think i named the four that are above 10 billion, but do all of them come public at some point . Or do some manage to stay private far longer than wed ever anticipate . There are different paths businesses can be bought, sold, or consolidated up with other industries, businesses can go public. I think when you look at some of the investors invested in these businesses, there has to be over some period of time a path to liquidity. So for most of these businesses that will force something transformational in order to monetize the ninvestments investors have made. M a is another part of Investment Banking we havent gotten to. Its been a not bad year. I mean, we came off a record in 2015, but 16 hasnt been bad, but weve had a lot of bumps in the road. Antitrust comes up a lot in conversations i have now as key consideration for anybody thinking about a big deal. Because weve had so many stop this year. Sure. What are you seeing when you get in the boardroom or talking to companies about something and the willingness of ceos to move forward given the antitrust environment . Well, its important to keep in perspective the fact that while m a activity is down a little bit more than 20 yeartodate, its still running at a level that over the course of the last five years is relatively robust. We havent seen as many big transformative deals so far this year. And certainly when our bankers are in boardrooms talking to ceos, antitrust is something that comes up to the degree that there have been a handful of transactions that have been stopped or blocked, the bar for a board to move forward certainly feels higher. But in addition confidence has a lot to do with how people think about these big transformative transactions. And we talked about brexit, the election breeds uncertainty. You know these are things too i think to some degree have slowed a little bit of that activity this year. I can imagine brexit we figure out, the election will thankfully occur not too long from now. Absolutely. But antitrust, i mean, do you expect the regime to stay more or less the same but not just here eu, not to mention china which figures prominently on antitrust as well. Yeah, it doesnt feel like theres an obvious path to a change in the nearterm, but once again, you cant i think its very hard to look forward and say just because we are there wont be an evolution of that over some period of time. Wheres the evolution going . Any sense . Dont know. Will the election have a, you know, a have an influence one way or the other . You tell me. Well, if its Hillary Clinton is it more of the same . I think its hard to see in the nearterm a Material Change in the Regulatory Environment that really accelerates m a. Now, thats not going to stop m a altogether, but at the same point as we said its raising the bar. People want to be sure they do their homework, that the transactions in a position where theyve got a good chance of bringing it to the finish line. Finally, im going to give you a chance to plug the conference here. Because when we sat down you did say to me, you know what, people feel the world is so difficult and theyre worried and all, but whn you come here you leave feeling much better, why . Well, i personally think theres a lot of negative rhetoric about whats going on in the world. Theres a lot of negative rhetoric around whats going on in the u. S. Economy. And i personally say, you know, i think the u. S. Economys doing fine. Were growing slow, its sluggish, but you can listen to a bunch of that rhetoric and you can say, you know, wow whats going on thats good. Well, entrepreneurship and entrepreneurial businesses here in the United States are creating jobs, theyre growing, disrupting, having a real profound effect on the economy, on the society, this conference is something we created five years ago to bring interesting entrepreneurs together every year to collaborate, learn, find ways to accelerate their business. And so weve brought about 100 entrepreneurs together, they spend two days here, they listen to more seasoned entrepreneurs and its a terrific event. Go back over the last five years theres some very prominent Business Leaders that started here in the 2012 cohort, our first cohort of entrepreneurs, travis was here, drew houston from dropbox, neil blumenthal, at the time theyd raised about 14 billion, didnt have a single store. They now have over 50 stores. Weve watched a number of these entrepreneurs running young businesses. Weve seen those businesses develop. And we have some very interesting entrepreneurs here today. And were excited about the next two days in front of us. All right. And eventually they go public one way or the other. One way or the other. David, thank you. Absolutely. Appreciate it. Thank you so much. David solomon cohead of Investment Banking Goldman Sachs. Well have george lee joining us and Lloyd Blankfein later. Back to you guys. Great lineup, david. Thank you. See you in just a bit. Head north now the vanity fair new establishment summit is underway in san francisco. And our jon fortt is there giving us a look at what hes got coming up from the conference on squawk alley at the top of the hour. Hi again, jon. Hey, sarah. The sun has just come up in san francisco. Its going to be a big day for content here. Les moonves, bob iger from disney, big time investor here former head of growth at facebook, were also going to dig in with Walt Mossberg and whether google can take advantage of samsungs stumbles. All that and more coming up on squawk alley. Matters. In, every millisd 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. Its full steam ahead for earnings season, so what are one or two of the best opportunities out there for you . Go to tradingnation. Cnbc. Com to find out. More squawk on the street coming up. 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 on the street. Markets are edging higher as you can see consumer staples, stocks sticking to the downside in this particular trade so far. The sector is the worst performer in the s p 500 down by about 0. 2 nearly all components negative. Tobacco companies renld among biggest laggards. Other stocks weighing on the sector include mead johnson, sector the second worst performer this month. Could be a driver for consumer stocks with more and more names reporting over the coming weeks, guys, back to you, sarah. Dom, thank you very much. Lets get over now to the cme group. Rick santelli has the santelli exchange. Good morning, rick. Good morning, sarah. Thank you. Like to welcome my special guest david trainor, thank you so much for taking the time this morning. Glad to be here. All right. David, lets start out with just getting the landscape numbered up. Roughly whats the size of the u. S. Economy these days . Just close. You mean in terms of gdp or global total gdp. Total gdp. Im thinking its close to 17. 9, 18 trillion, does that sound about right . That sounds about right. Whats the last thursday right around Late Afternoon we get the size of the feds Balance Sheet. Do you recall what that was last thursday . I think its pretty big. I dont exactly remember the number but its big. Its about 4. 5 trillion. So we have an 18 trillion economy, we have a feds Balance Sheet thats 4. 5 trillion. David, whos the boss of the Federal Reserve . If mandates were to change or issues crop up, who is whose name is on the door as the boss of that organization, that entity . Janet yellen. Well, i mean, if janet yellen wouldnt congress in some way be considered the boss, for example, if they wanted to change the directives of the Federal Reserve . I think ultimately, yeah, i think theres a lot of political influence on the fed. Since they kind of have the final vote, yeah, i think theyre not afraid to exert some influence there. A year ago we had a debate at cnbc, i asked two questions regarding the fed. Youve written rather extensively as of late that clinton and trump talking about the fed is a sideshow. It should be meaningless. I think talking about the fed should be one of the highlights of this political season. The reason i think that is just because most people have no idea the power they wield over their lives and how their policies have taken care of just a select few. Goldmans trading returns were up 17 . I think they should thank central banking policies and mario draghi and the corporate securities theyre trying to find to buy. Why do you think the fed should be off limits . I think i dont know if its off limits. I think we need to focus more on fiscal policy because i think our economy, our countrys evolved past the need for a central bank. I think markets are better at setting rates on the margin than central bankers. Capitals not disseminated through Loan Officers anymore. Those Loan Officers were risk averse. You needed a minimal return to make sure they didnt allocate capital to lower return activities. We dont have that problem these days. Markets are better at returning no, you make a great point. You make a great point, david. We were just talking about investing, unicorns. You know, the feds the head regulator. Regulations cited as the number one or number two problem in the country by every entrepreneur thats successful that ive ever heard over the last several years. But at the end of the day, even though the feds the biggest regulators, a lot of these these investors and entities know the goaround. But the point is that central bankers may have control over less in that regard, but they have control over more in so many other areas. Were running out of time here, but i guess my last issue is, i understand fiscal policies. Dont you think the fiscal policies would have been under the microscope if we would have started talking about the fed years sooner than we have . Your final comment. Final comment is that the fed really doesnt have as much influence as people think. Low Interest Rates are here to stay. And as long as we understand that, we dont need to worry about what the feds going to do much, because theyre not going to do much, and if they do, it wont matter. Lets focus on what will move the needle, fiscal policy. At least on one issue we agree. I think an algorithm could duly replace a lot of their shortterm issues that they seem to be so wishywashy on with regard to where rates ought to be. Thank you, david trainor. Sara, back to you. Thank you, rick. Thank you, rick. Donald trump saying he would spend up to 1 billion on his own campaign. We have the details on how much money he actually spent. And tune in today at noon eastern for the halftime report. Scott wapner will be joined by another great lineup. Jim chanos, nelson peltz, keith meister. Much more ahead on squawk on the street. Were near session highs, the dow up 80 led by Goldman Sachs and chevron as wti charges past 52 a barrel. Well be right back. So what else is new . Hows your mother . Umm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference costou twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Did you know your business doesnt have to suffer from slow internet . Comcast business now offers blazing fast internet speeds up to 250 mbps. Over 6 times faster than dsl. Get internet for as low as 59. 95 a month. Call today. Comcast business. Built for business. Did you know sharing wifi with your customers could leave your business exposed . Only comcast business offers wifi pro. Two separate networks one thats private for you, and one thats public for your customers. Upgrade to wifi pro for only 19. 95 a month. Call today. Comcast business. Built for business. A year ago, donald trump said he would spend up to 1 billion of his own money on his campaign. How much has he actually spent . Our Robert Franks been digging through the numbers and joins us now with more. Good morning, robert. Good morning, carl. As of yesterday, the billiondollar target by donald trump had been downsized to 100 million. Take a listen. Remember, by the time this ends, i will have spent over 100 million on my campaign. Hillary spent nothing. She gets all her money from the special interests and donors. Now, when it comes to actual spending, election filings show that trump has spent less than 60 million of his own money. Thats through september. And if you look at the contributions to his own campaign, theyve actually been falling this year. In the First Quarter, he was giving his campaign more than 5 million a month. That peaked at 11 million in march. But in july and august, that was down to 2 million a month. Even trumps 60 million may be overstated, his campaign has spent more than 8 million to reimburse trumpowned or trumprelated companies. So, some of the money he spent on the campaign will actually go back to his own companies. Now, he still has 19 days left and clinton hasnt spent any of her own money, or certainly very little of it. The Trump Campaign saying mr. Trumps contribution more than covered the costs of any reimbursements to him or his related entitieentities and th has contributed an unprecedented amount to his campaign. But guys, given that this campaign started with the selffinanc selffinanced candidate whos going to spend up to a billion, were now looking at a slightly lower number. All right, robert. Thank you very much. Thank you guys. For truthspotting those trump ad dollars, how much hes actually putting into the campaign. Check out the price of oil right now. I mentioned wti passing that 52abarrel mark. It is now up about 3. 25 . Were looking at the highest level since july of last year and potentially the best day in terms of the jump in the price of oil since august. August . August or september, i think it is, when ewe saw a 3 move higher for oil. No surprise, energy and financials are leading the s p right now. Yeah. And all the leaders are transocean, halliburton, chest peek, marathon. We got that surprise draw in inventory, and with that, stocks went to session highs, up 75. Yeah, after a draw last night in the api inventory data. Chevron is the best performer in the dow. Intel is the biggest drag. And that does it for us here on squawk on the street. Coming up, more big interviews from david at the Goldman Sachs builders and innovators summit, including george lee, goldmans cochairman of global technology, media and telecom. And then later, an exclusive interview with Goldman Sachs chairman and ceo Lloyd Blankfein on earnings, politics, the economy and much more. Stay with us. The dows up 76 points. Good morning it is 8 00 a. M. At the vanity fair new establishment summit in san francisco. Its 11 00 a. M. On wall street, and squawk alley is live. I spent last night in the arms of a girl in louisiana and though im out on the highway, my thoughts are still with her such a strange combination of a woman and a child