Good morning. Welcome to Worldwide Exchange on cnbc. Im sara eisen. Im wilfred frost. Happy friday. Lets get straight to the market action. Yesterday slight declines, it was a broad decline. 10 out of 11 s p sectors ending the day in the red. This morning were in the red for the s p and dow, but the nasdaq called higher fractionally. Microsoft in after hours trade, doing well off the back of that announcement. The tenyear treasury note, the yield 1. 742. Back down towards the 1. 7 level a bit over the past several days, having touched 1. 8 six or seven trading days ago. As for the early trade in europe, lets show you whats going on with european equities. Mario draghi didnt give the markets much to trade off of yesterday. Sort of punted the decision on extending qe to a big december meeting. The german dax is the bright spot, just barely positive. Little action. Ftse 100 in the uk flat as well as italy, spain under a bit of selling pressure. The boards in asia, show you what happened after u. S. Equities finished marginally lower. Nikkei down a bit, hang seng unchanged. Oil prices fell 2. 3 yesterday, but we remain above 50 a barrel. We got a bit of green on screen today, but nothing significant. 50. 7 for wti. The euro did move off the back of Mario Draghis comments and is soft again today, even though he said we did not discuss tapering. We didnt discuss the potential to discuss tapering. He tried to dodge that question yesterday. Despite that, he made it clear they would not end current quantitative easing abruptly. That was seen as a slight win for the euro doves. Breaking below the 109 levels. Some of those levels relatively important for support. 1. 0878 at the moment on the euro. Dollar strength seen against the pound but not significant. Weakness against the yen. Not much happening in the dollar pairings today. Gold prices, this morning falling just about 0. 2 . Nothing too significant. 1265. We did learn investments pulled 3. 4 billion from u. S. Based stock funds in the latest week. Lipor reporting the same amount was poured into taxable bond funds. 7 billion was pulled from money market funds during the period. The flow of money is pointing towards fixed income. The trading week wraps up today with some fed speak and more earnings reports. Theres no economic data, but San Francisco fed president John Williams gives the keynote address at the federal home loans annual conference. Dan tarulio is speaking later. In earnings, honeywell, general electric, sun tryst and syncorny financial reporting. Microsoft, shares of the tech giant popping on better than expected quarterly results. The big driver here is the cloud. Sales of microsoft cloud products doubling in the recent quarter. The ceo pushing the focus on cloud commuting rather than pcs. Listen to him on the came. Customers continue to choose the microsoft cloud to transform businesses and organizations. Our commercial cloud annualized revenue run rate exceeds 13 billion. We remain on track to achieve our goal of 20 billion in fiscal year 18. Once enterprise customers choose one of our Cloud Services they continue to adopt more services. Investors are rewarding satya. Microsoft shares have doubled since august 2013. The stock hit an alltime high in after hours trading hitting a height it hit at the peak stock bubble, 1999. If we hope at these levels, that will be a record high. The analysts impressed with some of these numbers in the cloud. Discounting the fact that pcs and mobile remain weak for microsoft, its all about that transition. The buzzwords you need to know in terms of growth for microsoft, commercial cloud business, that is azur and office 365. And the growth rates continue to be tremendous double digit growth on revenue on what was higher comps last year. Share Price Performance is staggering. We forget about microsoft. We talk about the f. A. N. G. Stocks, more exciting tech stocks. Microsoft since the lows in 2009, up 400 . That trumps the postipo poor performance of facebook. So Satya Nadella has done an extraordinary job with this. I have one outside question, likewise for amazon and all the cloud companies, are they open to a massive hack . Weve seen hacks in all sorts of email servers and areas of online businesses. I wonder, is cloud as everything goes to the cloud . At the moment, its crucial to their growth. If any of these companies saw that its an outsized risk. Which is why these companies are investing in their own security products. You alsoed point out this is a strong business. They compete with sales force, and those come pestipetitive jue flowing. Sales force trying to challenge that. Did not learn much about the microsoft linkedin combination. Aws is the nimble. Satya nadella changed the direction of this huge company and is doing well with that. Deal news, British American tobacco is offering to bite remaining stake in Reynolds American for 50. 56 in cash and stock or 47 billion in total. This is an unsolicited takeover offer, but the British Group already owns 42 in reynolds. The deal would value the u. S. Company at 81. 3 billion. The market likes it from both sides. After the market hated Reynolds American last results a day or two ago. They missed expectations, the stock sold off sharply after being a strong performer as it was also trying to combine and finish the acquisition, and announcing the new ceo would be stepping in on january 1st. The timing, people have been saying we might see more u. S. Takeovers of uk companies with the pound falling. They have huge global earnings but report in sterling. Its an important time for them to be buy a u. S. Dollar company. Speaks to the consolidation industry which has been challenged over the years because of regulation. The industry has been doing better on higher pricing as sales continue to decline. Other stocks to watch today, shares of alkermes is surging at its drug to treat depression met the primary goal in a late stage trial in patients not helped by standard antidepressants. They plan to speak to the fda about the next steps towards seeking approval. Alkermes higher by almost 50 . Paypal reporting a growth in active customer accounts. They continue to see rapid growth for one click and mobile payment buttons and for vemmo, the mobile app popular among millennials and us. I dont have it. I use them all the time. Here is dan schulman on the Conference Call last night. Along with our agreement with visa, the deal with mastercard exempts paypal from current or future or digital seeds and has cost certainty for years to come. Thanks to our agreements with visa and mastercard paypal has a seamless, quick, simple way to activate paypal payments at the point of sale. Good with payment technology, but not with Telephone Technology it seems. Yeah. A little hard to hear, talking about some partnerships that investors like. Amd reporting a wider Third Quarter loss but saw an increase in revenue. The chipmaker posted four straight years of losses. Amd issuing Fourth Quarter guidance below estimates and the stock had been an outperformingoutperforming outperformer over the past 12 months. Skechers Third Quarter earnings was down. The Fourth Quarter revenue outlook is also below estimates. Shares down more man than 30 . Schlumberger beat forecasts as more producers are putting rigs back to work. They expect improved activity in north america, the middle east and russia next year. Is it the biggest Oil Services Business . I thought the Australian Company was. Certainly in the u. S. Yeah. In the u. S. Im not sure its the biggest. It is flat in the premarket. Sap is raising its Fourth Quarter guidance. Sales rose 8 in the quarter. Its up 3 in german trade this morning. In media and tech news, watching shares of at t and time warner. This after bloomberg report last night said the two Senior Executives at the two companies have discussed various Business Strategies including a possible merger in recent weeks. Neither side is hired a financial adviser. The speculation addressed last night. I dont know anything about the deal. I have a partnership with at t. I would say two things. They are great partners. They are visionary, terrific to work with. As much as any distribution, they understand the content division, because theyve had directv for the year and our venture is 2 1 2 years old. Again, i cant speak to the specifics. Theres a lot thats attractive about time warner. Its the biggest content company on earth. Produces more hours does more box office, theres a larger library. It is, if you assume the world is going direct to kocconsumer, probably has the largest because of hbo. Great sports rights, cnn, competitor, but still valuable assets. After this bloomberg report came out, an analyst at jeffries said his firm didnt think the deal was likely. His argument is that at t is not likely to do another big deal after directv and that it wouldnt likely make it there approval. Time warner shares did spike. This has been one in play to talk about as an independent company. Its seen as a jewel especially because its the owner of hbo, cnn, all sorts of other Media Properties in what is an industry ripe for consolidation. Verizon integrating yahoo. The question on the fcc is an interesting one because this is the next administrations job to try to approve it. Yahoo clearly and time warner different companies. Either way you look at t all of these Companies Looking for some kind of Growth Opportunity because theyre starting to stagnate in the core business, but they have strong Balance Sheets so they could do it. Also remember, news corp. Tried to take them over, that was rejected last year. Will it be open to a deal this year . Some say comcast and nbc universal, the fact they bought that would allow the Regulatory Environment to be more friendly as a competitor. No confirmation on whether they happened yet. Brexit talks, theresa may attending her First European Council meeting. I bet that was a tasty one. A live report from brussels next. Welcome back to Worldwide Exchange. Good morning to you. Happy friday. Lets get you up to speed on market action. Yesterday slight declines about 0. 2 . Not big in size but broad in nature. 10 out of 11 s p sector the were in the red. Called lower today. Again, nothing too significant. About a quarter percent for the dow and s p. The nasdaq is outperforming because of a boost from strong microsoft numbers. Europe, yesterday ecb meeting, mario draghi his comments led to a slight weakening of the euro because he suggested that theyre not going to end quantitative easing policy abruptly. Though there was no talk of tapering. Either way, a softening of the euro, equities up off the back of that. Not something can. 0. 1 of gains to round off a week which has seen germany an france up as a whole. The ftse 100 pretty much flat. British Prime Minister theresa may is attending her First European Council meeting this week. Nancy hungerford has all the details. Good morning. Eu Council President donald tusk kicked off the meetings with a note of hospitality towards theresa may, saying she would find herself in a nest of doves, not the lions den that some brussels watchers had speculate. But it was a different story when you listened to the words of francois hollande, he said if the uk wants a hard brexit, they will get hard nexus, repeating a line weve seen from the french president who faces seriously tough polls going into spring elections. When it comes to the message from the Prime Minister herself, she was quick to put the focus on russia calling for a united response to the conflict in syria specifically, but also spoke to her eu 27 counterparts and insisted that she was still a part of this union and she still wanted to be included in these meetings. It was not the time to sideline the uk until they trigger article 50. Take a listen to what she had to say. This is my First European Council. Im here with a clear message, the uk is leaving the eu, but we will continue to play a full role until we leave. Well be a strong, dependable partner after we left. Its in the interest of both the uk and the eu that we continue to work closely together including at this summit. We must show that robust and united european stance in the face of russian aggression. The uk has put russian actions in syria on the agenda for this summit. We must continue to Work Together and its vital that we Work Together to continue to put pressure on russia to stop its appalling atrocities, sickening atrocities in syria. That was the message from uk Prime Minister theresa may who reportedly was pushing for a harder response towards russia along with the french president and german chancellor, angela merkel. What came out of here last night was a message from eu leaders that theyre watching russias involvement in syria. They want the aggression paired back but its not time yet to push for new sanctions. Where we stand toe, as theresa may continues to talk with counterparts on trade deals, particularly when it comes to moving along with the ceta, watch out for her meeting with eu commissioner jeanclaude juncker, we could see some fireworks out of that one. Thank you very much for that. On the pound, a currency strategist writing that the technical picture suggests a new turbulent 121 to 128 target. Near the bottom of his new range. A lot of the wall street firms have 120 now. As the target. Yeah. He does say in the note that below 120 there stops to be Technical Support again. Im confused. Is the uk part of the eus trade deal that is being negotiated with canada . Its still part of the eu how does that work . Theyre trying to negotiate their own exit, why should she participate in european wide trade deals. If the eu signs a trade deal tomorrow, britain is a part of it until they leave. Donald trump and Hillary Clinton are blitzing battleground states today getting serious after some laughs. Well have that next. As we head to break, heres todays National Forecast from the weather channels reynolds wolf. Good morning. Lets look at that forecast across the country. If you happen to be in the east, wow. Showers and storms on the way. With it maybe some thunderstorm activity, new york with 72 degrees, chance of scattered showers and storms. Not as much moisture in the deep south, which is unfortunate a lot of the southeast mired in drought. 73 in dallas. Beautiful day in denver, 75. The heat continues to build in los angeles. Going with a high of 90. Pacific northwest looks lany at times, 38 degrees, chance of showers. And in bismarck, partly cloudy, 65 degrees. Twothirds of the nation relatively dry. For the latest on your weather and news, stick around, youre watching Worldwide Exchange. 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 sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Welcome back to politics. Nbcs edward lawyrence has the latest from campaign trail. The Charity Dinner last night raised 6 million for children, designed to have republicans and democrats laugh. Just watch. Reporter in a moment hidden from most in the room, donald trump finally shook hands with Hillary Clinton at the alfred e. Smith Foundation Dinner new york. The republican candidate started off his speech being political. Hillary believes its vital to deceive the people by having one public policy. A different one in private. Reporter after a round of boos, trump got the message this is about fun and charity. This is the first time ever, ever, that hillary is sitting down and speaking to Major Corporate leaders and not getting paid for it. Its true. Its amazing im up here after donald. I didnt think he would be okay with a peaceful transition of power. Reporter clinton did her part for the roast. Getting through these debates through donald has to count as a miracle. Reporter on the campaign trail, clinton had president obama in florida and his wife in phoenix trying to rally support for election day. Then says today he will accept the results if he wins . That is that is not a joking matter. Reporter trump held a rally it ohio before the Charity Dinner. If i win reporter leaving the door open to challenging the results if they dont go his way. Donald trump has three events scheduled in North Carolina and pennsylvania. Hillary clinton will be at a rally in cleveland, ohio today. There were some good jokes in there. Once trump got off the serious topics. Thank you for bringing us a taste of that. Trumps campaign ramped up spending in september but he still trails Hillary Clinton in spending and fundraising. Trump spent more than 70 million last month and raised 55 million including a 2 million personal contribution. Thats more than double spent in august. Clinton spent 82 million last month and raised 74 million. Shes still winning the cash pile fundraising, but he is ramping it up. And you guys are still winning the cost of election race. Yes. Nobody spends more. This mornings top stories coming up and a round up of global action. Well be right back. Good morning. Markets now, another round of tests for Companies Ready to roll out results. And check on cloud 9. Microsoft shares soar to record highs on better than expected quarterly results. And Hillary Clinton and donald trump trade jokes at a white tie dinner. Well bring you the highlights. Its friday, october 21, 2016. Worldwide exchange begins right now. Good morning. Happy friday. Welcome back to Worldwide Exchange on cnbc. Im sara eisen. Im wilfred frost. Futures at this hour are called slightly lower. Mixed. Mixed. Thats annoying, cant predict it. Theyve been yoyoing. Yesterday we saw slight declines, small in size but broad in nature. 10 out of the 1 1 s p sectors in the red. Clinging on to gains for the week overall. The nasdaq in the lead for the week. Well see what happens with todays trade. If stocks do gain on the week, that would be breaking a two week losing streak and the best gains in a month. Certainly hanging on to gains for the week are germany and france up over 1. 5 for the week. The ftse 100 is the laggard. Germany and france today are flat as is all of europe. The euro softened over the last couple of days. The ftse 100 has lagged. Asian trade, a quick look at that for the day is mixed as well. Lackluster performance around the world. Japan slightly down. Shanghai slightly up. Oil had a strong week as well. Its given a bit back over yesterday. But wti at 50. 70. Brent at 51. 57, up more this morning 0. 3 . Gasoline strong as well. Fundamentals of oil have improved since that deal was reached to cut production from opec members. Tenyear treasury note yield has been unchanged. Off the highs we hit. The june highs last friday of 1. 80, around the flat line of 1. 74. Not a lot of conviction there. As for the u. S. Dollar. Pretty much a story of following yields. Stayed near the strong levels. The euro has cratered here in the last 24, 48 hours post ecb. Euro 10. 88. Weaker against the swiss franc, against gold. Looks like gold and various currencies shows a broadbased euro selling. The dollar is weaker against the yen. Worth watching, stocks correlate to that one. The pound is weaker again by a quarter percent. 1. 2223. It was higher on that inflation number we got. Cratered perhaps a strong word. Mini crater. Gold prices in dollar terms, well check that right now. With the stronger dollar a bit of pressure on gold lately. Down about a quarter percent or 3. Microsoft shares popping better than expected quarterly results. The big driver . The cloud. Sales of the cloud doubling in the past quarter. Satya nadella has been pushing a focus on cloud rather than pcs. Customers choose the microsoft cloud to transform businesses and organizations. Our commercial cloud annualized revenue run rate exceeds 13 billion. We remain on track to achieve our goal of 20 billion in fiscal year 18. Once enterprise customers choose one of our Cloud Services they continue to adopt more services. Microsoft shares have doubled since august of 2013. Quadrupled since 2009. Breaking through a level hit at the peak of the tech bubble in 1999. Azur is the big competitor. Satya that democrnadella making transition transitioning this company away from pcs into commercial cloud, a standout performance. Playing on that loyalty to the Microsoft Office suite of products, offering microsoft 365 now as part of the cloud. A lot of people started to move towards apple, but theres that corporate loyalty to Microsoft Office. Those shares should be a standout in the session. British american quarterback is offering to buy the remaining stake in Reynolds American for 56. 50 a share in cash and stock or 47 billion. A 27 premium over the Closing Price in rai. The British Group already owns 42 stake in Reynolds American. The deal would value the u. S. Company at 81. 3 billion. Reynolds american shares spiking in the premarket up 16 . We mentioned earlier they have been having a tough week. Earnings disappointed this week. Announced a ceo transition for the new year and the British Company is making its move. Despite a fall in the pound. They have benefited from that. They do a lot of business overseas, so the share prices have been on fire. Back to global markets. Maybe some corporate specifics in ra moment. Joining to us discuss markets is paul markum covering Global Equities, managing about 6 billion. Good morning. How are you . Doing very well. Thank you for joining us. Your headline view is the rest of the world is more attracti attractively priced than u. S. Equities. The u. S. Investor base has been keen on its own economic market. One reason is the economic recovery is a bit more robust than that of the rest of the world. They were quick out of the gates to reform the banking sector. The europeans took their time to get that sorted out. The dollar running up, it gives us more time to get assets trading more cheaply. You mentioned the banking sectors there. How much behind is the u. S. Banking sector at the moment . Deutsche bank in particular. The capitalization of Deutsche Bank is insignificant, and theres a bit of a denial around Deutsche Bank and recognize that issue and get ahead of it. It seemed recently with the spike in bund yields that the opportunity may be there to get the share price of Deutsche Bank up a bit and recapitalize it at a more capricious book to price multiple, but maybe with the ecb news the other day that opportunity could be missed. Either way there needs to be an injection of capital at the bank. Havent u. S. Stocks and sectors been outperforming other Global Equities for good reason . Weve heard from strategists on the network that stocks are overvalued in this country for months and years, yet that has not stopped them from going higher. You keep hearing theres no alternative. Globally and in other asset classes. Are you suggesting were at an Inflection Point where that changes . I think it does need some form of news flow to be consistently better from the rest of the world. One thing thats very much the trend with europe over the decade, its not an economic self starter. It tends to need china and the u. S. To do well to derive benefit from that. We have not seen the european economies rally well. The japanese economy is proving to be notoriously deflationary. Thats been persistent despite the efforts of the bank of japan. I can see why u. S. Investors see foreign stocks less easy to get their arms around. The ftse 100, quite an international index. You can get exposure globally through it and the yield is attractive. Is that something youre positive on or is there pain to come . I think the ftse 100 hedged is a reasonable place to be. It feels like the sterling can fall even from here, even though we will a harder or swifter brexit than was talked about over the summer. This morning we have seen the m a activity combing from a much higher oversees earned driven share price. It feels domestically the uk can have difficulty given the fact it imports goods. Theyll become more expensive. The margin hit taken by Certain Companies cant last. Speaking of dehamand for u. S stocks, how about demand for u. S. Stocks. I know you cant talk about individual stocks, it suggests, weve heard this from banker after banker appetite for i also think that in this particular industry, the consolidation benefits are considerable given that the businesses are run on a country by country basis. Theres Cost Reduction that could come out of that. Pricing globally in brand drives can be much more compelling given the fact that there will be this merging of two major distributors. Camel and lucky strike under one big roof. I wouldnt know. I dont smoke. I know the Company Names but not the brands. Either way, paul, you spoke expertly for not being able to mention Company Names particularly. Thank you for joining us. Thank you. Were continuing our sect sectornomics series this morning. This time jumping deeper into healthcare. Good morning. It has been a tough year for healthcare stocks mostly due over to Prescription Drug coverage and pricing woes. The sector is down 2. 5 compared to the overall s p 500 up over all 5 . There are some top spots. Edwards Lifesciences Corp uf nearly 50 . This stock surged if april after a procedure using its hard valve vice was found to be superior to open heart surgery for some patients. The stock closing at a high of 105. 03 with investors continuing their enthusiasm ever since. Another top performer, cooper companies, up 33. 7 on a string of good earnings this year. Last month the vision and surgical segments hit record revenues for the first time. Also Intuitive Surgical surging 24. 8 . On wednesday they reported increased Third Quarter profit thanks to sales of surgical robots. We have to get to losers. Alexion down 36 . Endo down 67 . These companies down by factors including the growing National Controversy surrounding drug pricing, increased uncertainty in m a and management turnover. Gary tuckman pointing out that endo falls into that category with ability to pay down that debt. Thank you for running through some of the winners and losers in the worst performing sector this year. Top trending stories now, just a day after the final president ial debate, Hillary Clinton and donald trump shared the same stage in new york city last night. Though under much different circumstances. They attended the alfred smith Foundation Dinner, a white tie event that benefits catholic charities. The only buffer between clinton and trump, you can see in the middle, new york Cardinal Timothy dolan. They both took the mike and poked fun at each other and themselves. This is such a special event that i took a break from my rigorous nap schedule to be here. And as you have already heard, it is a treat for all of you, too. Because usually i charge a lot for speeches like this. Trump also made fun of her for not getting paid for this speech. I thought she was very funny. That might be very surprising. I had not seen that yet. Trump got some zingers in. This one didnt go over too well with the crowd. Weve learned so much from wikileaks. For example, hillary believes its vital to deceive the people by having one public policy. A totally different policy in private. Thats okay. I dont know who theyre angry at, hillary, you or i. For example, here she is tonight in public pretending not to hate catholic catholics. Some unusual boos from the crowd there. Its really he got on to some funny points as well. Its funny to go back and watch this event last year and some of the lines from last election cycle, from romney and obama. Not so long ago, but such a different time. Complimenting each other, speaking admirably. Funny lines that were not biting. For the most part, this was a massive improvement compared to the recent debates. They shook hands, smiled, laughed, maybe fake laughs, but still an improvement to the recent exchanges. Still wreaked of the vitriol were seeing in the election cycle. Coming up, the must read stories. Later this morning, former microsoft ceo and now l. A. Clippers owner steve ballmer. Hell join squawk box for an hour starting at 7 00 eastern time. This woman owns this house, with new cabinets from this shop, with handles designed here, made here, 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. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. Welcome back. The washington street journal has what if there was a sane donald trump. Oh, my god, sane donald trump would look normal and happy, not grim and glaring. He would be able to act on good advice, explain his positions with clarity and depth, not the impatient half grasping of a notion that marks real Donald Trumps public persona. Shes noting his big win was getting the Republican Party to wake up and see that at least half the base, perhaps more, supports the sort of position they didnt espouse in the past. Since then has he galvanized and expanded that base . No. Its an interesting take. Goes through some slightly jokey positions on where hes gone too far, and if he held things back. The pipe dream of republicans. I bring it up because the debate a couple days ago, he took the bait once again. Certain topics where he scored points, but the headline was on whether he would accept the results. Thats her point on this. Its a funny line, under any other circumstance with any other candidates running or any other election year, both candidates, clinton and trump wouldnt have a chance. Because theyre paired together, they both do. Still to come on Worldwide Exchange, a call on currencies, citis global head of strategy, Steven Englander will join us. D 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. Welcome back to Worldwide Exchange. Your snapshot of currencies, euro weaker against the dollar, just breaking above 1. 09. The pawned weaker as well. The yen as well. The dollar is trading at the highest levels since march. Should u. S. Companies be worried again . Joining us is Steven Englander. What is driving the euro lower here . Thats the big question. Theres a number of possibilities. I dont think theres a definitive answer. Because of the timing with respect to the Ecb Press Conference yesterday, people are reading and rereading draghis comments to see if there was a dovish tilt. Others are looking to see if theres rebalancing to see if china is losing more reserves than anticipated. The other thing thats possible is that with the polls shifting towards clinton, theres a possibility thats beginning to assert itself that maybe shes winning the house which would be bond market negative view fiscal policy and a view that you would buy dollars against everything. Wait, wait, what does that meec mean, dollar negative if its viewed unfriendly for the u. S. . I think everybody is chasing rates now. Thats the immediate reaction. If you think the u. S. Will do fiscal and rates back up, you buy the dollar. What about the yen . We have not had clear indication from the bank of japan for a while now. We have broken important levels, one feels on general macro trends that theres a long way the yen could fall versus the streng strength relative strength in the u. S. I think thats correct. The japanese would love for it to fall. They would love for the fed to bail them out. For the u. S. To do a big fiscal package that would drive dollar yen up. I think theyre hoping the market believes that their policy of targeting the yield curve can generate first order impact either on the japanese economy or on the exchange rate. I would say theres a lot of skepticism that theyre in the drivers seat of anything. What about the mexican peso, this is seen as the proxy for a donald trump probability of winning the u. S. Election. Whats priced in at this point and how do you trade that going into november 8th . Look, some people are trading the skew on that, basically that the far out of the money options are much more expensive than close to the money options. Obviously you mean it will get volatile around election day. It will get volatile, but its not going to move as far as the market is afraid its going to move. I think that obviously since the third debate where it didnt look like trump was able to deliver any kind of knockout blow, i think the market has been shifting odds towards a clinton victory. Some polls being very wide. The view being shes not nearly as aggressive on trade either as trump is or as her election rhetoric is. Basically people are buying back some things they sold. If bemove we move on to the best currency, the british pound, what is your thought about that . Or the worlds worst performing. Depends on how you look at it. Investors were on the sideline waiting to see if article 50 would be triggered. Weve gotten that indication. Trading 1. 22 is cheap. It could go lower. We think it could end 1. 15 1. 20 range. Theres a temptation to say if it can go to 1. 20 t could go to parody. There gets a point where it could go so cheap that bottom fishers come in. Finally, add it all up and you have a broadly stronger dollar again. How stronger would it have to get, do you think, before it might give the Federal Reserve pause when it comes to raising rates in december . I dont think the dollar will be the story here. If were going to get the fed to pause, its either something unexpected, like a trump win, or it would be Something Like the data continued to be soft and they start paying attention that the data is going the wrong way. But i think the dollar itself its more likely that the dollar would pause if there were pressure in emerging markets than because of anything that happens on the dollar side per se. Steven englander, thank you very much for joining us. Energy is my chart of the week. Best performer in the s p 500. I dont think i got one. I think microsoft. Good morning, comedian in chief, the candidates take a moment to roast each other at the al smith dinner. The best lines straight ahead. Shares of microsoft soaring straight ahead on better than expected results and cloud revenue. And a cigarette deal in the works. British American Tobacco offers to pay 47 million for the stake of Reynolds American that it doesnt already own. Apparently somewhere people still smoke. Friday, october 21, 2016. Squawk box begins right n s r. Live from new york where business never sleeps, this is squawk box. Good morning. Welcome to squawk box here on cnbc. Im andrew ross sorkin, along with joe kernen and michelle carusocabrera. The dow looks like it will open off 16 points. The nasdaq opening off about 15 points. Well talk about microsoft in a moment. S p 500 looks like it would open about down three points. Overnight in asia, looking at a bit of a mixed picture. The nikkei down, shanghai marginally up. Flipping those boards. Its good for a friday. For friday. For monday say