producers about a planned output cut. wti has fallen under $50 a barrel. right now 49.43. as for stocks to watch, chep ch chipotle's third quarter profit falling. the same-store sales fell nearly 22%, worse than expected. they have forecast sales to rise in the high single digits in 2017. panera bread's third quarter results beating forecast. they were helped by price increases on its menu and it is raising the full-year outlook. that stock seeing a nice pop. pandora's third quarter earnings falling short of estimates. they are also cutting the full-year guidance as the number of active listeners fall and costs rise. akamai rising 6% beating forecasts. the company, which helps speed up the delivery of content over the internet was helped by strong demand for its cloud security products. >> pandora, what's the problem? apple? >> i don't know if it's apple, i think it's more of a spotify thing. >> spotify is doing well? >> it's just a fraction -- just split up now. >> it's a tiny thing. >> what are people using? >> do you pay? >> he's one of the apple music people. he came late to the streaming game. >> but i'm good at it now. i listen to whatever i want to. to comes into the phone. >> that means you're good at it. >> comes right into the phone. i was wondering if that was ailing pandora. >> i think it's an advertising thing. a pay thing. i think apple music clearly has to be a piece of the problem. but there's a lot of larger things going on. >> do you being crazy, eating like six doughnuts when they come in but not eating a taco bell taco, i would say chipotle has problems with the taco bell innovations. the first day we were talking about the breakfast type stuff. i got a 12-pack -- >> just for you. >> i was trying to be good. i didn't have one. >> the taco shell was almost a dorito-tasting taco shell with the mystery meat and the -- it was unbelievable. i'm just saying -- >> joseph, if it makes you feel better, i was at a doughnut store at 19th street. >> you didn't eat. >> i inhaled them. >> that's your weakness. >> yes. >> interesting weakness. >> you and homer. more stocks to watch. vertex pharmaceuticals reporting narrow third quarter loss beating forecasts as sales were up 36 percent. express scripts narrowing the guidance for the year. they received subpoenas for information about its relationship with drug companies and charitable foundations and specialty pharmacies. juniper networks reporting third quarter results that beat estimates. the computer network company also forecasting higher than expected fourth quarter numbers. edwards lifesciences reporting third quarter revenue that missed forecasts due to lore than expected sales of its minimally invasive heart valves. particularly outside the u.s. what are those made out of? pig heart valves. weatherford international posting a huge third quarter loss on charges. the oil driller's results did miss forecasts. as we mentioned at the top, apple's profit beating the street during its fiscal fifth quarter by the company posted its third consecutive decline in quarterly revenue. here is tim cook on the conference call yesterday. >> it's very hard to gauge demand when you're selling everything you're making. we'll find out more through the quarter. we're confident enough to give you guys guidance that we're returning to growth this quarter, which obviously feels good for us. and from a longer term point of view, out of the 90-day clocks, and so forth, we are very bullish on china. >> joining us now is robert baird's senior research analyst, will power. you were on that call, i imagine, listening to what time hook had to say. it was their hope. did you take hope away from this? >> good morning. thanks for having me. absolutely. i think, as you look at the supply challenges they're facing, the results look pretty good. you have to step back. if they deliver to the numbers they delivered last night relative to expectations a couple months ago the stock probably would be up. the stock moved up in front of the print on the back of the samsung challenges and the u.s. carrier sport they got with the initial launch of e-phone 7. with rising expectations, they didn't have quite the upside. i thought the december quarter guidance looked encouraging. they are expecting a slight return to growth. i think, you know, our bet is that that growth accelerates in the next cycle. >> the next cycle, you mean the next phone cycle? 2017/2018? >> we are expecting slight growth this year beginning in the december quarter. something akin to call it 1%. as i said, very slight. that growth accelerating as you move into what's reported to be iphone 8. you're right that would be september next year. so, a year from now. you would see an acceleration of that growth. in the meantime, you're getting paid to wait with $50 billion of free cash. >> a sticking point on the conference call was a step up in r&d spend. that was a sizable increase for the quarter. there was a point made on the call that perhap the r&d spend may not be as efficient as before. are you getting enough from the company about innovations down the road and that the money they're spending will pay off in terms of ways to diversify the revenue stream? >> that's a good question. they have stepped up the spending. arguably we have not seen the fruits of that today. as you look at r&d, a lot is being spent for products that will be out in three, four, five years. so one thing you are getting paid for here in mart is the ca part is the car front. what do they do with the car? what do they do with tv? elements they're look at and working on. partly because of that and further innovations with existing products, you are seeing a step up in spending. that's something we're okay with. >> what do you think the stock is worth now? >> 1.15. >> we raised or target price to 1.33 overnight, based on 12 times counter 17 earnings, plus current net cash. 12 multiple is a big discount to the market, but it traded at a discount to the market for some time. you look here, it's 1011 times forward earnings. will, call options, you buy one, you know what it costs. you can lose it. it's not that much. they go into the car business, you have no idea how much that option costs. that thing has unlimited -- that's not a regular call. that's like a naked call going short or something. that's unlimited risk if they go in the car business. they would have to be crazy to try to go into the car business. so 63% of the revenue is from the phones. but these revenue numbers, my problem with apple has always been the law of large numbers, how you keep up. it's not an annuity to do 50 billion a quarter. they did 50 billion again almost in revenue. down 9%. for the next quarter talking revenue up near 80 billion. that's a powerful, powerful company. a powerful brand. i don't know about whether it gets a trillion dollars or not. >> we're not betting on that either. there's uncertainties out there. i guess as i think about the call option, i don't think you're paying anything for it. >> you'll pay if they try to do it. that could be like buying a boat that could be a hole in the water, all you do is pour money into it. >> i think as we look at most products they rolled out, they have rolled out products where they think they can make -- >> this is a car. not a phone. you know, you need elon musk to do a car, don't you? >> i don't know about elon musk. >> you love elon musk. >> i do love elon musk. he's like midas to you. >> not everything has turned into gold yet, but he pushed the human race forward. that's what i like about musk. what product has apple put out in the past several years that's been new, derived from their r&d that's impressed you? >> well, you know, i personally like the watch. i think we all recognize it's not moving the needle. overall that market has been smaller than some might have surmised. outside of the watch, i'm not sure -- >> so your new price target is based just on phone growth when there's some thought out there that 80% to 90% of high smartphone users in china, they already have a high-end phone? it's almost a fully penetrated market? north america is almost fully penetrated? where does it have left? india? will india take to you that higher level? what's driving the stock? >> i think part of it is the annuity element. these phones are designed to work for two, three years on average. so you continue to build this bigger installed base that builds in this annuity piece of the business where you get this natural upgrade, even if it is lengthening. that piece alone helps. india remains extremely early. with 4g networks building out that opens up opportunities. we'll see the we know the income levels of different demographics there. i still think there's opportunities. we're not looking for double digit growth in smartphones, but they can generate $50 billion in free cash flow which looks powerful. the other thing we call out here, you touched on it with the pandora comment earlier, look at services revenue stream of $6.3 billion, up 24% year over year. app revenue -- >> that's low double digit, but percent is revenue. >> a small percent of revenue, but an area where they continue to make progress and speaks to the strength of the ecosystem and the basic customers they have. >> will, we always appreciate your perspective, especially at this early hour. thanks. >> thanks for having me. we'll shift to the macro look at things. despite weakness on tuesday, our next guest said there's potential for a strong year-end rally. joining us is tom lee, managing partner and head of research at global advisers. is that for this year, 2325 on the s&p? >> it's happened it could happen. >> something big will have to happen. i was looking at -- i looked at the dow. 18,160. that was december of 2014 we were at 18,160. we're going to hit two years without anything. any forward progress on absolute terms. this is like boring. >> i think that's how investors are feeling about markets. that's what clients are telling us. the markets have gotten dull. shrugging off earnings. >> shrugging off bad earnings or good earnings? >> overall it's been one of the better earnings seasons. >> after five straight quaurtders of decliquaurtd e quarters -- >> now 68% of companies are reporting earnings growth. part of it is the election jitters. >> that will be gone in 13 days now. not that we're counting. then, you know, i guess andrew will be worried about brexit? >> eventually, yes. >> the fed will do something in december probably. you figure -- are you going to lower your price target? that's another thing watching paint dry, between 2,100 and 2,170. ugh. you think 2,325 by the end of the year in. >> it's possible but a lot of things go right. investors have to be confident that growth will pick up. post-election, you can sort of make the case that that's very likely. we know government spending has been a huge head wind in the expansion. it's the first expansion where government spending has been this big a headwind and fiscal stimulus is coming next year. the pmis have been turning up. we know investors have cash on the sidelines. it's not the scenario couldn't happen, i think it's just we need to see the catalyst emerge. >> tell me about the -- what's on the sidelines, as we hear conflicting things here. where is it? it's got to come out of bonds. >> yeah. just think of it this way. retail investors have been taking out money at a pace that you saw early this year and kind of at levels you saw during the financial crisis. the public's essentially been liquidating stocks. the tracking beta is essentially flat. that's one of the biggest declines since last year. we know sentiment is rock bot m bottom. it's not at extremes where it's guaranteed to turn, but it's gone flat and waiting for signs. >> why wouldn't the negative be that europe and japan, they're just stuck forever. never going to be inflation. demographically, they're old, they don't have kids. europe not fixing strict wall problems. rates stay at zero around the world. how do you know that's not going to happen? >> i think it's likely to happen, but, you know, europe's never been the tail -- europe is the tail waging the dog. >> i know. don't say that, there are people over there watching. if you could say it in a nicer way. >> yes. it's the la woof -- >> they don't like to admit it. >> japan is a malaise for decades, but the japanese labor market is finally getting tight. >> if inflation got to 2%, 3%, fireworks would be going off. >> yes. japan just needs to grow its population. op boa open borders. >> i want the bottom line on the 2325 year-end target. you say it's likely to happen. what is the probability that it will happen? you seem on the fence here. >> it's october. >> he's like it could happen. it's possible. >> in december he'll have a more certain answer. >> on the one hand why i believe it's highly probable, the stock market and the high yield market almost always move in sync. the high yield market is up 18% this year. the s&p 500, any time the high yield market has been up 10% has averaged 22% gain. the stock market is up four. >> that's a good answer. >> good answer. >> good answer. >> but the market is acting very strange. >> right. >> that's why i'm kind of -- you can't be too sure if something is not playing out. i wonder if it's the dollar or if it's the election. >> you think somebody will wow a couple traders on fast money with that statistic later at 5:00 p.m. >> thank you. >> high yield market is up 22%. >> tom lee told me that. >> the question is whether you will cite tom lee on "squawk box." >> of course i will. >> just want to make sure it's one of the lees. melissa lee or tom lee. >> distant relations. >> thank you, tom. coming up, chipotle shares under pressure. same-store sales fell nearly 22% in the third quarter. more on chipotle's turnaround efforts next. still to come, quarterly results from coca-cola and boeing as well as comcast and southwest airlines. we'll bring you the numbers and instant reaction on wall street. "squawk box" will be right back. 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. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business. chipotle coming in short of forecasts. joining us with more on this is steven anderson. >> thanks for having me on. >> how much should we be paying for chipotle giving its troubles and given it looks like it's in contraction mode with the number of stores opening. >> this is not the growth story it was even a few years ago. given some troubles now, probably no more than 25 forward multiple. this is based on 18 estimates. this lands you about another $100 below. >> so the $300 level. >> about $300 per share. given the fact there is limited visibility with regard to company sales. now the company put out what we view as aggressive goins fuidan next year, but the company is dependent on discounted offers to try to get traffic in. there's no indication when that will reverse. >> the company indicated the latest t latest turiso offering is gaining some traction. it was selling well. could there be some help in chorizo? >> the last time chipotle introduced a new product, it provided a boost in comp growth. i think this could do that, by they're coming off difficult year over year comparisons. still a lot of concern among the customers who don't frequent as much. in a year's time, very competitive and fast moving. a lot has happened. >> who do you like better right now? >> at this point we like panera bread. they came out with earnings, they beat on both the top and bottom lines. they're really doing well with the new clean food. i think they've reinvented themselves, not only with that but some technology initiatives. last night's conference call, it sounded like the company wanted to play catch up, but not sure the street is willing to invest the time or the effort that's required. given that it's still trying to rebuild sales and margins. >> they exist oftentimes in the same location. so they're a direct beneficiary. are they still seeing that? >> for the most part we agree with that. certainly some of chipotle's customers may have gone to the fast food segment, mcdonald's. but for the most part, chipotle and panera are the two major national fast casual chains. a lot have co-residency in the same shopping centers and locations. i would agree with you, panera remains a beneficiary of that downside. >> avocado prices, that foiled also chipotle's quarter. >> foiling my life. >> is it? >> i love avocados. who doesn't love avenue ckaca a. >> the fact that the commodity price has been low has acted in chipotle's favor, but the minute commodity costs on the whole tend to increase, chipotle will see that earlier than peers because of how they're purchasing food in spot markets. >> what's the word on avocado? what is the view on avocado prices over the next 12 months? >> at this point prices have more than doubled. at this point, no change from the current levels. it's certainly a drought, continued drought in california, they had to import some from mexico. certainly it's going to be pressure point for chipotle. >> joe -- >> instead of doing the oil boards, where we tell you what wti crude is, can we add avocado? >> futures contracts in avocados? >> this is like a 1 percenter problem. it's like, my avocado has doubled in price. there are people that are not -- >> i appreciate that. >> they can't buy meat or milk. >> avocado has good fats in it. >> very healthy. >> very healthy. >> okay. >> it fills you up. that's the thing. >> but i stopped buying them. >> you have, too? >> i stopped buying them. >> yes. >> have you? >> i haven't stopped buying them, i wince when i see the price. >> my thing with avocados, finds the one that's not too hard, not too soft. >> yeah. very difficult. >> i dent even look at the price. >> so you think that avocado, that's a true 1 percenter problem? >> yeah. >> maybe 2%. if you're losing sleep -- >> like complaining about the annoying echo in my hallway? >> yes. >> your massive hallway. >> your center hall. >> such an annoying echo. >> stephen, thank you. stephen anderson. >> screaming kids in first class, one percenter problem. obamacare premiums set to increase by 20% for some customers. we will talk to the ceo of centie centiene. here's a look at yesterday's s&p 500 winners and losers. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley ♪ good morning. welcome back to "squawk box" right here on cnbc. u.s. equity futures in the red, if you're a short, maybe this is good. dow looks like it will open off 70 points. nasdaq off 25 points. s&p 500 looking to open off about 8 points. a number of earnings reports out this morning which may affect which way the market opens. we have one report to tell you about, southwest airlines reporting quarterly profit of 93 cents per share, beating estimates of 88 cents. revenues slightly below forecasts. it's turned in a competitive fare environment. gary kelly will join us in a couple minutes first here on cnbc. >> you are a young man. the '70s -- the fares were the same as they are now. >> yes. >> in the '70s. >> yes. >> they were. and take your -- you don't have a car, rent one and drive to florida and see how many -- see if you don't fly next time with the two kids. though it is cracker barrel there are some fun things to do. >> i love cracker barrel. i just went for the first time this weekend. >> are you kidding me? >> no. >> first time ever? >> ever. >> yeah. what's the other place? stucky's? fun things on the highway. cabela's. >> i'm flying down to florida with the kids. is that okay? >> fly. fly for $200 per round trip and then complain about the monopoly you always talk about. >> florida, no problem. l.a., it's the smaller cities that don't have the -- >> look at it holistically, it's a bargain. it's safe. knock on wood. flight attendants for the most part are nice. probably not to you, because you don't treat them -- you are looking for peanuts, right? >> i buy the food before i get on at this point. >> at costco. >> he does. and brings it. >> that's smart. >> it is. >> no, no, no. that's what i do before i go to the movies. >> yeah. they gouge you on the candy. >> this is something where prices are going up. >> this is true. >> obamacare under pressure after the administration confirmed the average premium is estimateded to increase by 25% next year. another big blow to the law. did you see the president yesterday saying, you have a smartphone and there's a couple bugs, you don't throw the smartphone out. you don't go back to the dial-up -- that's not the same. then he made a joke about samsung, burst into flames. horrible. a number of insurers including aetna and humana announcing they would retreat from obamacare. joining us is michael neidorff, ceo of centene, which focuses primarily on government controlled costs. medicaid is a great business to be in as it expands under medicaid, almost that simple, isn't it? >> not quite that simple. it's a matter of focusing -- we are decentralized. there could be different populations in different states. we think the affordable care act or obamacare has been a good product for us. we're pleased it worked out so well for the 500,000, 600,000 lives we're coverering. from people who don't know centene from eunited or aetna. why are you not having the same issues as some of these that we're hearing about on a daily basis? >> i think the difference is united and aetna and the others, they have a broader range of products. they have commercial products. we're a $15 billi15 -- $50 bill company, in 30 states. we have 15 states where we have the obama care. it's decentralized. it's very specialized to that particular state. we use local networks. we are focus on high quality being the least expensive, ensure they get quick care when they need it. in every state we've been a net payer back on the risk quarters versus receiving money. i think the difference is the large companies, when they lost their individual plan under obama care, they went out and tried to use the aca to rebuild that business. we stayed at the low end. we called -- we coined the word churn, people move on and off medicaid, they move on to the silver or bronze obama care. they keep the same network, same positions, just a different card. that's worked out very, very well for the recipients and we've done well, too. >> so, given where we are right now and what we're hearing about 2017, if nothing changes with the law what does the future look like two, three years from now in terms of one company being the only company in a large market? or, you know, subsidies rising so much to cover whatever -- if it's a 25%, 30%, 40% increase in premi premiums. what does the landscape look like if nothing changes to the law. >> if we do not make the necessary adjustments, you will end up with centene's dealing with the low-end socioeconomic, the medicaid population, and you'll find few will be left in the balance of it. because it will get expensive. there's some structural things that need to be fixed. if they are, i think the law can be made to work. watts the key one, two three things that need to change to keep insurance companies in these marketplaces? do we need single payer? that will do it? >> i don't think single payer. i don't think this country would accept single payer. it would be rocked with problems. i think what we need to do is a small group of us sit down and help them figure out what's wrong. we know. for example there's only three tiers. the highest level cannot cost more than three times the bottom level. most insurances you have different categories, and you need at least seven. so you can keep the rates competitive. you need to build some wellness into it. so that you get some benefits from that. you have to structure it, have different benefit levels. the young, healthy person does not want to have the same benefits that the older, more chronically have. doesn't mean they shouldn't be part of the pool but with different products. the whole problem is the way the bill was passed. there was no chance to clean it up. i think now hopefully after the election there will be that opportunity. >> that last point, michael is the key, that the young, healthy individuals out there, they're not paying. they would rather pay the penalty, that's more affordability to them than actually paying a premium. how do we make sure in the future that the model is sustainable by getting the younger, healthier people in? is it just having those tiered programs so they play less? >> that's right. whether it's tiers for age, sex, adjusted in most insurances. in this case i would encourage that we allow to design a less expensive product. it may have a higher deductible, may have a different copayment. maximum out of pocket may be different. there's things you can do so it becomes a catastrophic coverage for the young, healthy person. you bring them in the pool, they'll still be paying premium, you'll end up with a different balance in the total ensured pool. that's what it takes. >> you're speaking a lot of sense. my question is in a hillary clinton administration, do you think you get the things you're talking about? >> i think so. i've had some conversations with individuals in the administration. i've encouraged them that after the election that a half dozen people sit down with the people they designate and help them understand the changes. i've also said if you get a table of 50, 100 people around it that will not work. everyone's self-interests come 2346 in. you focus on sound public policy and everyone wins. we may find them willing to do that type of thing. if we do, we'll end up with an effective healthcare system. >> michael, thank you. i saw something yesterday or today that young people are forgoing obamacare and buying beer instead with the -- i can understand that. going to live forever. it's expensive. appreciate it. can't remember, it was on twitter or -- i see all these things, then i can't find them. that's the problem with today's media. i see it -- that would be a good reason for google to buy twitter, then you could search it better. >> that would be for us. what would it do for google? good for us. >> what would it do for google? >> search more. >> better search results that you would be on more. >> $15 billion, you get a few pore searches. >> you might click on an ad. >> you think they will? >> no, the price comes down another $5 billion, they might. coming up a shakeup at google's fiber business. and a programming node, today on half time, under armour ceo kevin plank. a look at the european markets, red everywhere. did you know your business doesn't 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 that's private for you, and one that's public for your customers. upgrade to wifi pro for only $19.95 a month. call today. comcast business. built for business. welcome back. u.s. equity futures at this hour indicated kind of tracking what's happening over in europe, weak markets over there. now down 70 on the dow jones. 8 and change on the s&p 500. the nasdaq indicated down over 25. apple not helping anyone today. down three or four points. alphabet is hitting the pause button on its high speed fiber internet program. craig barrett, the ceo of alphabet access says new rollouts will be halted and layoffs will be announced. barrett is also stepping down himself but will remain with alphabet as an adviser. in august the "wall street journal" say the it was rethinking its program after underground cables proved to be too expensive and time consuming. talking about the time warner deal, at&t, talking about wireless. i wonder how that is all factoring into their thinking. if you live in a 5g world, do they say we don't need the cable? even with wireless you need k cables under the ground. you have to carry a lot of data around the country. >> there's still pipes. coming up, southwest airlines earnings in focus. chairman and ceo gary kelly will join us first on cnbc. let's look at the stock on the back of its earnings. imagine it's trading higher. southwest up by 1.3%. "squawk box" will be right back. 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 risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential welcome back to "squawk box." southwest airlines reporting a quarterly profit of 93 cents per share, beating estimates of 88 cents. revenue slightly below forecast. joining us now to talk about all of it is chairman and president and ceo gary kelly, first here on cnbc. good morning. >> good morning. >> the good news, you beat on the profit side. a little bit light on the revenue. what happened there? >> well, it was pretty interesting quarter. first, we had a technology outage in july. that was that was anticipated by everybody. we came right in line with what we expected. we have tough year over year comparisons. our net revenues were down in the 3.5% range. it looks like those trends are going to continue here in the fourth quarter. but it was a solid outing except for the tech outage. it's a competitive environment out there. really strong earnings and return on capital. so we're in a very strong position. >> i saw the word competitive used multiple times. what's going on with ticket prices broad i dly speaking? >> well, gdp is growing. and the number of seats being added domestically this year is at 5%. it's a competitive environment. that's great for consumers. our average fares were down more than $5 year over year. and it's just a great time to be flying. we're all benefitting from lower energy prices compared to levels that we had in 2013-2014. and some of those savings are being passed on to consumers. we still have real strong profits, still investing in the business, still growing. we're slowing our growth for next year to enable us hitting a target of positive revenue growth. >> how are you thinking about hedging fuel prices these days to the extent you are? >> the need for hedging right now is less. i think it's a mistake to be totally naked. so we always want to have coverage in place. but we're very profitable at these energy price levels. and we want to have a hedging program that takes that into account. we're about 63% hedged for 2017 and are in the money somewhere around $80 a barrel. so we're still out of the money with our hedge. and about 36% hedged in 2018. beyond that i think we've got good opportunities to have a low cost hedge vane some good catastrophic protection in place. >> there was that outage late last week with sabre that i know impacted you briefly. how big an impact will that be or not? >> it was de minimis. it was over quickly. it wasn't a widespread impact. just a portion of the customer experience. but we're very focused on installing a new reservation system. it will bring us a lot of new capabilities. and we're also overhauling our entire data center to make that a lot more fortified. technology is a continuous effort and something that we continue to invest in. i'm very proud of our technology folks. they do a great job. >> i saw you announce plans to fly to cuba. $59 at least initially. how expensive will it be? >> it is a crap chute to start with. we only have a handful of daily departures. there's not a lot of aircraft time involved. it's an exciting thing to have that market opened up. but right now my expectations are wide open. it's really hard to know. $59 is a good deal, so if you're traveling, you might want to take advantage of that. but, you know, we'll see how things go there. havana starts service on november 12th. we're still looking for good times to fly into santa clara. all from florida. but over time i think they're all three going to be very successful routes. >> can i combine my southwest flight with like a hertz rent a car down there and you have any idea what i might get? $59 ticket and a '59 chevy is what i might get? you know? >> you could be in marketing. send me your resume. that's a good idea. >> do they have rent a cars, sorkin? >> yes. >> you can get a new rent a car? like a '62, new. >> i'll be going in december so i'll let you know. >> gary, you mentioned florida. one question i want to ask, the impact of zika. are you seeing any impact of zika in terms of flights in or out of miami or elsewhere? >> it's one of those issues where it would be impossible for us to tease that out anyway. but overall, you know, you saw our third quarter load factor. it was all by a record. i think we were off by a tenth of a point. so load factors are very strong. the traffic is growing very nicely. and that includes florida. so no, we're not seeing any issues there. >> i'm just reading through the press release. it looks like your cost for fuel was about $2.02. you see it will be $2.10. how do you think of the price for jet fuel prices going into 2017? >> it feels like we have probably bottomed here in 2016 so we're planning for rising prices in 2017. and then quarter by quarter comparisons are going to vary, i think. you look back at the first quarter of this year, prices were very low. i think we'll easily be higher in the first quarter. second half of next year, i'm not sure yet how they'll compare. overall we're assuming that fuel prices will rise. i don't think they're going to rise dramatically any time soon. as we were talking about hedging earlier, we're going to build our hedging program around that concept. >> okay. gary, we appreciate it. >> thank you for having us. >> thank you. i always try to pay a little extra to get on the "a" list. when you board. >> you board first. >> i hate to tell gary this. tough try to gain the system. you pay for the business system or otherwise try to pay at the last second to get into the "a" group. >> 1% problems. >> gary knows all about this. next time he's on, swrooel a conversation -- >> gaming the system. >> it's not the "a" -- coming up, earnings alert. we're expecting results from comcast. and they're usually comcastic. the numbers and reaction straight ahead. when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. earnings alert. nbc's parent company comcast set to report numbers straight ahead. plus coca-cola, boeing, and more all set to report results as earnings season rolls on. speaking of rolling on, we ride shotgun with the ceo of ryder. we talk the company's latest quarterly results. high fly ball into left. at the wall. good-bye! 6-0 indians. >> and the cleveland indians dominate the cubs in game one of the world series. the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen. melissa lee is hanging out with us for today's show. dow looks it would open off about 65 points. and the nasdaq looking to open down as well. off about 23 points. and joseph -- >> yes, andrew? >> nice to see you. >> nice to see you. >> you have something for us that could be comcastic? >> usually is. was i overstating that in your review? >> i like to be objective. >> yeah. right. i noticed that. especially politically. comcast a penny above estimates. revenue also above consensus forecast. if you look closely and looked at a lot of the metrics that analysts watch, like most quarters, most of the metrics were at worse in line with but almost all exceeded analyst expectations. consolidated, cable, and nbc universal revenue as well as consolidated cable and operating cash flow. there are a couple of things -- you're such a worry wort. customers added. that's the best third quarter video customer result in ten years. this kind of goes against some of your biggest worries. also 330,000 high speed international customers were added. then if you actually go and look at the details, a lot of the stuff, the numbers are huge because of the olympics. >> yep. >> the huge games. you back them out, they're still good. revenue increases. oh. there was a new theme park. that's why those numbers were off the charts too. but if you back those out, the numbers were still pretty good. so on the news so far, you can see the stock up about 36 cents. had a weird session yesterday where it was strong all day long. up as much as 50 cents and ended up down like 44 cents. >> it could be because we had that news cross around 2:00 about the at&t offering. and we did see charter communications $35 for a hundred channels which are still to be announced. but we saw charter communications decline on that. this conference call for comcast should be interesting on the back of the proposed at&t/time warner. >> is that a little bundle? >> for 35 bucks, analysts thought it was going to be 50 bucks. >> skinny is in the eye of the beholder as you get older. am i right, steve? >> why are you bringing steve in? >> because there's a millennial around here. >> i'm not sure you should. you're going to see the free cash flow down about 48.5% year over year. >> that was because of the expenses for the olympics. that snaps back immediately. i saw that. what do you mean do you know if i saw that. >> i'm making the point. >> well don't make the point like making it like i didn't see it. make it -- >> there are people that will look at that number and say what had to the cash flow. >> professional kind of. >> we're all on the same page. parent company. comcastic. coca-cola by the way just reporting 49 cents a share. also above forecasts. cz sara eisen is here with more. >> and two phones. >> yes, i have my private e-mail. >> that's not always a good idea. >> i have to put the coke numbers on one phone and read the release on the other. it's a messy quarter. coke is going through a messy patch. it is refranchising. basically reorganizing its entire bottling and distribution. and so analysts were expecting -- some highlights from the quarter to tell you about. organic revenue growth which is the measure for these companies up 3%. that was driven by an equal mix of volumes and pricing. total revenues down 7% from last year. in terms of breaking it down for sodas and stills, the volumes in soda better than negative. last quarter they were just above zero. still the growth there in terms of volume coming from flat, the waters, sports drinks, non-soda. north america continues to be a bright spot. and the strong dollar continues to hurt this company knocking two percentage points off of that sales number. they also saw growth in sprite, fanta, and energy drinks which helped offset the decline. also the fact that coke zero doing better help offset the decline in soda and diet. james quincy telling me diet looked a little less bad in terms of those declines. it really is. they continue to emphasize a north american phenomenon. in terms of what they saw overall -- remember, pepsi reported a better quarter around the world and especially in russia. quincy told me it was a little better in china. but argentina are still tough. i asked whether there was any political uncertainty given the election coming up. consumers making their decision coming up. not so much he said. u.s. continues to look strong in terms of their overall strategy they are trying to grow soda globally. and they're trying to reduce the sugar count. they're doing things like experimenting in the uk with coke zero sugar they're calling it now. instead of coke zero. just to get the message across it has zero sugar. so unlike pepsi which is more into healthier snacks and emphasizing frito-lay and away from coe la, coke is going all in. >> good luck to them on that. >> and they're growing it through marketing and trying to sort of continue to grow that market and higher prices which they can control now. >> decade-long decline now in soda specifically. >> seemed like a stretch. i thought about it. people on both sides think about the candidate being elected. i need something stronger than a coke. or maybe something mixed in with coke. >> if it was a mix, you'd be great. >> like rum and coke. or heroin and coke. no. >> i don't think it's a growth liquor. >> coke isn't going to do it for me. >> like an emergency drink? maybe that's the one. >> nice so see you. >> you too. glad i made it. >> grain alcohol maybe. we have other headlines to tell you about this morning. tesla motors reports quarterly numbers after today's closing bell. expecting a quarterly loss on revenue. analysts have been cutting for tesla a few weeks ahead of that. government will be out with september new home sales. sales expected to fall 1.5% adding to a 7.6% august decline. just out from the mortgage banker's association, mortgage applications falling. this as the average 30-year mortgage rate fell to 3.71%. diana olick will have more on this. apple revenue fell for the third straight quarter as iphone sales dropped from a year ago, we mean sequentially it fell for the third straight quarter. earnings came in at $1.67 a share. a rosy outlook on hope for strong sales of the iphone 7, tim cook addressed the numbers on the call. >> our results for the september quarter were very strong. we generated $48.96 million. gross maher gin was at the top of the range. we reflected continued improvement in year over year performance compared to the last two quarters as we forecasted in january. iphone sales were up in 33 of our top 40 markets. >> joining us for more on apple's results, steve melanovic. this is just a -- what a powerhouse this company. $76 billion to $78 billion. that's the good news. what concerns me is the one trick pony aspect of the iphone. and not to sell the iphone short. it has transformed everybody's lives. i would have never imagined that ten years ago what an iphone can do. carrying around a encyclopedia and all the music. to have that in this little thing is unbelievable. can apple go to a trillion-dollar market cap just on iphones? >> probably not. the $76 billion no $78 billion outlook was above the street you mentioned. >> that's in a quarter. that's unbelievable. >> look, it is unbelievable. obviously it's kind of -- our sense is that they want to do things in the home automation. they want to do things with augmented reality. perhaps a car. a lot of the technologies aren't mature enough to pull those off yet. i think for another year or two it is going to be about the iphone. that's sufficient to take the stock higher. >> the technologies aren't mature enough in the technologies in the broader sense in the world? or apple's technology? because they're spending a lot on rnd. and we're seeing things in automation, things in cars that exist out in the world that are for sale. so what's apple's delay here? >> absolutely. i think it is the general world. some people think apple's behind in artificial intelligence and so forth. i think that's yet to be determined. as much as people want new things from apple, it's not like anybody else has come up with major new categories. fitbit has done okay as has apple watch. it's going to be a number of years before we have driverless cars on the streets. >> how do you even factor that into the thinking? is there -- do you say to yourself google has all these engineers and they're going to come up with it. do you see what i'm saying? >> it's hard. you look at apple's rnd. it's been growing at 25% to 30% for years. we haven't seen a lot of product that has reflected that yet. we also look at the stock and according to our figures, the stock is only 10% of the value of the stock is looking at profits more than three years out. or conversely the stock is a decline in the installed base over time. that seems a little too conservative. >> if apple had announced on monday that they were acquiring time warner, you would have thought what? same price. >> i would have thought they are making the leap into the content pool. again, last night -- >> and you would have applauded that or thought that's crazy? >> that's a good question. apple's been super focused. enit appears that they believe they want to be able to be the ones to display the content, to manage the content. they are beginning to move a little into content. saying they should have acquired time warner. should have acquired netflix. i'm not so much on that side of things. but to believe they shouldn't be doing those things you have to believe the innovation is coming and there will be major products over time. i think the rnd budget suggests that's coming. >> he was asked about the deal and about content and he said -- sort of backing up at the vanity fair establishment conference that tv is of great interest to me and others at apple. that was his wording on the conference call. you think that's going to be the next thing? >> obviously they're working with apple tv. they talk a lot about tv through apps. tv industry being disrupted and so forth. degree in which i get into the content, seems to go back and forth there. they really started in music. are they going to be going to other places, start out with a hollywood studio of their own. that seems to be why they got beats and tried to move them toward content. at the end of the day it's still about iphones. we believe that fiscal '18 is the big year for that. i think the earnings momentum is bottomed. so your comparisons is improving now. >> so to get an apple tv and i'm thinking there are a lot of things i would like on my tv. or do i know for a fact that the tim cook apple tv would be as good as the -- >> that's the question. there was an article out recently that suggested tim cook could be the next ballmer in terms of an innovative ceo, choosing an execution person to run the company. and that didn't work so well. >> and who's the person? who's the satya nadella at apple? >> we think it's johnny ive. i don't fully agree with that view. i think it is -- for a big company given their organization, i think they can rack quickly. it's a concern in my mind but i think apple could be -- >> did steve jobs do the newton? was that steve jobs? >> might have been before. >> was that a bob scully situation? >> but he just had some kind of weird intangible style just knowing exactly what it would be. i don't know. is that still in the dna of apple now for the tv? it'd have to be a great tv. >> but i think it's two things. it was the innovation piece but also just the perfectionist. i don't know. now that you have the new ios, do you have bugs on it? it will occasionally bug out. >> i have to turn it off. >> occasionally it will crash on itself and go back to the main screen. >> yeah. >> those are things in a steve jobsian world would be so unacceptable that it wouldn't reach -- it would never reach you. >> or are we -- >> he was a i believe to keep that culture. i think they understand the customer experience. >> yes. we all like this much better than the other phones. >> i don't have any -- >> you have no complaints. >> i look at my kids. if they don't have wi-fi, it's like we've got to do something. >> it's like not having water. >> it is. anyway. >> thank you so much. coming up, mortgage applications out just a few minutes ago. at 10:00 a.m. eastern this morning home sales out. and check out futures at this hour. at this rate dow jones average looks to open 66 points down. "squawk box" will be right back after this break. sick of getting gouged for limited data? introducing t-mobile one. one price, all unlimited for everyone. get 4 lines for $35 per month each with unlimited 4g lte data. switch today. 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. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business. welcome back to "squawk box." stocks to watch today comcast just out with earnings. parent company of cnbc reported profit of 92 cents a share. penny above estimates. revenue also above consensus forecasts. chipotle profits plunging as it continues to struggle from a series of food safety scares last year. the burrito chain same store sales fell 22%. that's worse than expected. but their forecasts were a little bit better. for sales to rise in the high single digits in 2017. panera third quarter results beat forecasts. same store sales rose 3%. casual dining chain was helped by price increases on its menu. a lot of companies like -- andrew, don't you think you could drop the bread part. >> i long said that for this day and age. >> in this carb day and age. >> like panera arsenic. >> panera poison. >> and pandora's third quarter earnings fell short. the music streaming service also cutting its full year guidance as the number of active listeners falls and costs rise. coming up when we return, one of my favorite writers holman jenkins of "the wall street journal" is here. he's talk about the at&t and time warner merger. but first, could housing prices spook buyers in the coming months? 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(interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world. welcome back to "squawk box." a weekly mortgage application report released moments ago. diana olick joins us with the tails. >> a slight drop was not enough to even boost refinances. total mortgage application volume fell 4.1% last week seasonally adjusted. mortgage application volume to purchase a home fell 7% to the lowest level since january. it's still 9% above last year, but that comparison might be skewed a bit due to new mortgage rules that went into effect last october. now, the average rate for 30-year fixed mortgages with conforming balances dropped a little bit to 3.71% from 3.73%. and that's for loans with 20% down. applications to refi a home loan also fell down 2% for the week. now, the nba released its forecast in boston this week saying that purchase application would rise but refinance volume would drop 40% next year. that would reduce by 14% compared to this year when the refi market was very high due to the very low rates. now we get the latest read on sales of newly built homes at 10:00 a.m. eastern time please watch on "squawk on the street." >> thank you. coming up, boeing set to report results. the numbers are next. and the ceo of ryder is here. "squawk box" will be right back. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. among the stories front and center at this hour, nbc universal parent company comcast reporting quarterly profit of 92 cents per share. that beat estimates. revenue also coming in above estimates. comcast also reporting upbeat results for video subscriptions. and coca-cola just out reporting 49 cents per share. that's 1 cent above estimates. revenue also above forecast. the soda giant said it had 4% organic growth this year. also seeing markets expand more than 50 basis points. finally walmart may reverse its decision to invert indian's online retailer. the retail giant's having investment on suspicions that flip cart may have been inflating its numbers. so that's a little bit of interesting intrigue. and then are we going to go -- >> we've got breaking news. boeing's out. let's get to phil lebeau. >> boeing in the third quarter beating the street on both the top and bottom line. we want to focus on the bottom line. because there's a bit of matt involved here, the estimate on wall street was for earnings of $2.62 a share in the third quarter. but there is a one-time 70 cent tax benefit included there. so you strip out those 70 cents and you still have boeing beating the street. $2.81 per share. let's look at the key metrics for boeing. operating cash flow of $3.2 billion free cash flow of $2.6 billion. better than the street was expecting. revenue slightly better than expected. and the operating margins for the company overall coming in at 9.5%. that's down 1% compared to a year ago. and then the commercial airplane division 9.4%. that's down 0.6%. one other thing, the deferred production balance cost. basically what you're looking at are the costs baked into the 787 in particular as they work through the backlog. that decline -- one of the first substantial declines as you start to make them see money on the 787. guys, we should point out that because of the tax benefit, boeing is adjusting and now expects to earn $7 a share. that's a benefit of 70 cents because of the tax benefit in the third quarter. and revenue because of better execution, better deliveries is also increasing full year guidance by $500 million between $93.5 billion and $95.5 billion. and on the bottom line beating the street by 19 cents. back to you. >> this comes after better than expected lockheed, better than expected northrup and boeing. >> correct. and when you look at -- the defense division, margins of 10.4%. they're operating at a slightly better rate than when you look at the company overall. >> phil, thanks. phil lebeau. >> you bet. in opposition to the at&t and time warner merger, it's idiotic. that's the latest holman jenkins op-ed. joining us now is holman jenkins from "the wall street journal." you want to go with idiotic part first? >> this is going to symbolize how corrupt the merger process has become. their whole fortunes are hanging on these deals. you can't take the government to court and fight these things. so basically they're going to have to sit there and be shaken down for whatever the government wants from them. then they're going to have to decide if the deal still makes sense. that's how they do it these days. >> does the deal make sense? >> from the point of view of the parties, it's a hail mary if you ask me. i don't think i have a better idea. they're both challenge businesses. the tv business is unbundling. the wireless business is stalled. they've got to do something. maybe this is it. >> would you prefer if you were a wireless carrier, would you prefer to own more carriers, more spectrum? i mean, how are you thinking about it? >> if you're a wireless carrier in the u.s., you can't buy another wireless carrier. so horizon is not going to work. this has potential especially if 5t wireless lets you break in. no offense to your parent company. and start transferring those rents to you. we're going to take this out and challenge cable. >> right. but you don't like the idea they won't be able to use the content, if you will, in any exclusive way. >> i think the government should. this is just tv shows. this is not bread and water that we need or air. but in any case, they didn't want to do that anyway. they wanted to be able to offer packages to subscribers on at&t's wireless network that will make sticking with at&t more attractive. they didn't want to cut other people off from this content. that would be depriving them of revenues. >> what about favoring from one to another. >> what do you mean? >> if you owned -- if you were a subscriber to at&t, you could watch with no data caps? >> that's fine. that's the way it should be. that's the problem. even in the justice department has no anti-trust complaint against this deal. fcc is desperate to get in there an regulate on grounds of privacy. and that's what's really going to hang up this deal, i bet. >> how does directv now wish they talked about yesterday at a conference, how does that fit into this whole thing. could that be a glimpse of what they're doing with time warner? >> directv basically bought that so they could get the deals with hollywood. now they're the biggest buyer except for comcast the biggest. directv's satellite is going away in the long run. >> so this ott service i'm talking about. $35 a month, is that a glimpse of what to expect? >> is anybody really going to want those channels in the future? the future is hbo which is a streaming platform and library to compete with netflix and amazon. i think there's going to be a big three and those are the three. >> one of the things you talk about when you look at the future of media is you use the kindle as an example to say -- am i right about that? >> yeah. >> when you buy the kindle, it comes with both access to books, obviously, but the wi-fi is part of it. >> it's a zero rated device, essentially. yeah. >> and so you think -- tell us what the holman jenkins view of -- so hbo is just going to come with connectivity, if you will. >> you're going have so many devices and so many services. and the cost of connectivity -- one day, it's easy to imagine because of wireless being cheaper than laying wires in the ground. it's going to be incurred in the prices of items you buy. >> when you talk to the folks at at&t, they would say the cost of -- like 5g, it's going to take five to ten years to even get 80% of america hooked up to 5g and it's going to be expensive. by the time you actually want to make it work, meaning the economics of it work, we'll be on 6g. >> yeah. but think about already netflix pays a good chunk of the cost to get your content to you. they just don't pay for the last mile. you do. we have a complicated system of billing every household and individual and even individual devices. it's really complicated when basically it's just going to be this ubiquitous connectivity everywhere. there's got to be an efficient way to pay for it. i think vempblly it might raise up to the suppliers. >> holman jenkins, great to see you. great column. worth a read today. >> it is. you know, this wacky regulatory -- >> it's a mess. >> -- environment that we're in right now. >> yeah. >> and i still wonder about the whole net neutrality thing. is it really -- is it going to last as long as the last one from 1930 or can someone with more sense reverse that? how hard is it to reverse that? >> it depends on the course. congress could do it. if we get one that wanted to overnight. there's also this ubiquity that they're bringing along. it just isn't going to be enforceable. when the wireless connectivity is everywhere and you're not thinking about it. you're not going to think about net neutrality anymore. >> thank you. >> thanks. >> i saw you walking here. it was like, oh, my god -- >> distracted you. >> doesn't take much. coming up, we're going to keep on trucking. the guy producing this hour loves that. anyway, truck -- how'd think of that? a truck company and you play truckin. ryder, a great gauge of the country's economy. the ceo joins us after the break. at the top of the hour, apple predicting a holiday bounce after samsung falters with its galaxy note 7. we'll talk about what investors should expect this holiday season. "squawk box" will be right back. , to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man, who creates software. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured. now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. ♪ okay. all right. could have been that or something about a truck. find a lot of truck songs. ryder system reporting third quarter earnings yesterday. here to talk results, ryder systems ceo robert sanchez. probably would be expensive to license any of those songs, but not a bad idea if you start advertising? >> i think that's a great way to promote trucking. through music. >> we'll get to some of your results in a second, but every day that we talk about, you know, autonomous driving, we worry about how many jobs could be displaced. is that something that you ever consider and something that -- i mean, is it going to happen in five or ten years where all these guys, the whole romance of being out on the road as a trucker, is that going to fall by the wayside too? >> i think it's going to be a long time before truck is on the road without a person in the truck, a driver in the truck. so i think the real positive thing for the industry is that trucks are becoming much safer. even though there's still going to be a driver in the truck, the electronics are making it safer for them to drive it down the road. the video you saw yesterday with the beer truck driving with the driver actually sitting in the back seat, that's probably not a likely scenario in the short-term to really be across all vehicles. but with the driver behind the wheel, a safer -- reality today, there's technology making it safer. >> you had numbers that were good. expectations top and bottom lines. is it -- is what dictates how well you do -- is it a combination of how many people are rending trucks and then how much you get to sell the vehicles for in the used truck market? we had a guy on yesterday ken langone talking about how soft the market was for trucks. does that hurt? >> absolutely. ken's right. the used truck market and rental market are very soft right now. in a slow growth economy, there's really too many trucks and not enough freight right now to move. you've got to work your way through the inventory of trucks out there and then get back to a better market. i think what's been positive for ryder is our ability to grow other parts of our business. so all of our contractual outsourcing business whether it's the truck leasing business or the dedicated transportation or the truck and the driver or the logistics business. all of those grow 7%, 8%. what's really a pretty difficult environment. we're quining new companies to outsource those activities to ryder. >> what's the total amount of percentage of revenue that comes from those other businesses? >> it's about 85% of the revenue coming from those outsourcing businesses. you've got 50% that's come from -- we resell them in the used truck market. >> if there's -- you point out additional wholesaling activity. how is that different from how you -- >> we're one of the largest retailers of used trucks in the country. we have 60 used truck centers around the u.s. and canada and the uk where we sell most of our vehicles to end customers. but we do wholesale on occasion when we have more inventory than we'd like. we try to retail as much as we can but when in an environment like this, we have to wholesale a bit more. >> and you don't get as much money on the wholesale. now i can understand that. in my terms. >> you got it. >> so how about -- are your results inelastic or elastic with gasoline prices or fuel costs? does it matter? >> fuel cost doesn't really impact us. because we pass through -- we're a reseller of fuel, if you will, to our customers. we pass that through to our customers on the way up and way down. >> what you really need is what? economic activity? a strong housing market? is that what does it? >> there's no substitute for a strong economy. you know, we have gdp that's grown at 1%, 1.5%. that feels different than when it's growing at 3%. so things we can do to get the economy really going is what's going to help us. it makes it so there's more product movement. customers need more trucks. they need more services. and that's really where the -- you've got a rising tide, if you will, that could lift all ships. really the growth that we're getting is through our initiative and our ability to get new customers to come to ryder. we do business with over 50,000 companies, small to mid sooiz many of them. and large industrials also. so getting manufacture of those companies to outsource to us is what's driven our growth. >> can i rent a ryder truck over in europe? >> in the uk you can. >> and nowhere else? so how much is in the united states? like 90% or 95% or something? >> right. we're 85% in the u.s. we're in canada, mexico, and the uk are our major operations. we have small operations in singapore. >> small operations in singapore, all right. excellent. we appreciate your time today. and please come back. and good luck -- we all want -- i want like four -- i think 4% gdp would be good for me. >> 4% would be phenomenal. >> yeah. all right. we need to get back to it. we still can, andrew. i don't want you to be so despondent. some day we can. >> make america great. >> i didn't say that. but i want morning in america. i don't want late gloaming in america. i want shining city on a hill. >> which is it? i thought things were so great that we could increase interest rates. which is it? >> from zero we can -- i think we can increase it from zero. >> okay. i just want to understand. >> we're at emergency levels. >> okay. >> you think you catch me in some type of inconsistency? really? with zero? we can't go up from zero? up next, stocks to watch this morning. the big hour still to come on "squawk box," the ceo of glaxosmithkline will join us to talk results, taxes, and much more. then 8:30 a.m., why the markets may be at a pivot point. chris hyzy joins us. and then tesla reporting after the bell today. plus a volkswagen settlement approved. we go under the hood of the auto world with bob lutz. "squawk box" will be right back. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ the strikingly-designed lexus nx turbo and hybrid. get up to $5,000 customer cash on select 2016 models. see your lexus dealer. did you know your business doesn't 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 that's private for you, and one that's public for your customers. upgrade to wifi pro for only $19.95 a month. call today. comcast business. built for business. now to sports. a big night for the city of cleveland. lebron james and the cavs raising their nba championship banner. meantime across the street at progressive field, i think it's the insurance company, right? it's not like a political -- is it? i hope not. they play a game from like 40 years ago? anyway, the indians hosted the chicago cubs in game one of the world series. everything went the indians' way. starting pitcher corey kluber turned in a strong performance. and roberto perez hit two home runs including a three-run shot in the eighth inning to put the game away. and cleveland shut out chicago 6-0. game two of the world series is tonight, but it's late. >> so you're not going to watch? >> i can't watch that. you didn't watch last night, did you? >> well, that's for a whole other reason. >> which was? >> lack of interest in these teams. >> in those teams? this is -- >> that's true. >> $2,000 a ticket to get into wrigley. >> really good, by the way. >> i told you that. it's too much sugar and preservatives. >> cliff bar. >> right. that's my brand. and that's a second in a row you're eating my brand. you're taking my stash. >> it's okay. >> it's your bar? >> those are mine. you can have one. >> so mean, joe. >> i'm still promoting rx bars. you don't like them. >> aftertaste. >> so much better. more protein. >> so get those. nobody's fwtwisting your arm. sorry. sit me or you? >> it's me. >> then you could have. >> look at garmin. earned 75 cents a share and revenue exceeded forecasts by a wide margin as well. edwards life sciences report quarterly profit matching estimates. medical device maker fell short. thanks largely to lower international sales of heart valves. down 12%. that's big. >> that hurts. akamai came in above estimates. revenue above forecast as well. the web services company also gave strong current quarter guidance thanks to sales of its cloud security products. joe? >> yes? okay. more stocks to watch. vertex pharmaceuticals with a narrow loss. sales though rose 34%. that was driven by a drug for cystic fibrosis. express scripts narrowing its guidance for the year. the pharmacy benefits company said it had received subpoenas for information about its relationship with drug companies. and juniper beating analyst estimates. also forecasting higher than expected fourth quarter numbers. didn't edward lifesciences? in case you missed it, or in case we didn't emphasize it enough, edwards lifesciences third quarter revenue that missed forecasts due to lower than expected sales of its newly invasive heart valves particularly outside the u.s. just for emphasis. >> well, it is down 12%. we can read it twice. >> yeah, yeah. that's -- all right. and weatherford international with a missed forecast. happens when you just do things in. >> that was a good rundown. riveting. newly appointed wells fargo ceo tim sloan says he's sorry. in a speech yesterday sloan acknowledged the bank did not respond to the problems soon enough and the role of the leadership played adding it still hurts people felt we blamed employees. wells is also addressing the can zal in a new campaign. you should expect more tough headlines. some of this is going to be very painful for us. coming up when we return, sir andrew witty, is ceo of glaxosmithkline. we'll talk to him on drug pricing and much more. maybe a little on obamacare. take a look at futures at this time. we're back in a moment. is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential. under pressure. shares of apple falling after the tech giant reports its first annual revenue decline in 15 years. we're going to tell you what tim cook said straight ahead. earnings alert. glaxosmithkline out with quarterly results. ceo sir andrew witty joins us to break down the numbers. rise of the machine. >> watson? >> what is jericho? >> correct. >> who is agatha christie? >> correct. >> and ibm's watson dominated jeopardy. now it's lending its brain to thousands of businesses. the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." all right. back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and melissa lee. futures right now -- we haven't checked in a little while. still down. but not quite as much as before. early on they were down about 70 on the dow. the s&p was down almost double digits. and nasdaq has improved a little too. it's now down less than 20. take a quick look at the 10-year. i saw it was just under 1.78% let's call it on the 10-year. if i had to bet what comes next -- i'm sorry. 1.25%? or 2.25%? i don't know. some people think we go back down. others think with the fed possibly doing something in december or likely to do something in december i guess would finally get over 2%. you think? or you don't know? if you were a betting person -- >> i think it's sort of range bound. once bonds hit a certain level, people want to buy them. >> 2.5% or 1.25% is next? >> 2.5%. >> how about you? it's opposite day. i should say 1.25%. >> i don't know. >> if you said 1.7% or 1.9% i'd say 1.7%. >> you would? >> yeah. >> i want to know. if you know, you know a lot. >> that's why we don't know a lot. moving on to today's top story, surprise, surprise earnings coca-cola posting better than expected earnings and revenue. the beverage maker had sales growth this year and seeing margins expand more than 50 basis points. boeing also topping wall street consensus in its latest quarter. aircraft maker raising full year revenue and profit forecast. comcast, the parent beating the street on the top and the bottom lines. comcast says the rio olympics were the most profitable in its history. also reporting upbeat for cable and video subscriptions. other stocks to watch. edwards -- we're not doing edwards. we may. still down 12%. southwest airlines revenue shy of estimates. southwest benefitted from lower fuel prices and record traffic, but the shares are under pressure because of lower than expected growth in the key metric of revenue per available mile. ceo gary kelly joined us earlier this morning. >> it was a solid quarter except for that tech outage. it's a very competitive environment out there. but really strong earnings and return on capital. we're in a strong position. >> northrop grumman. and chipotle continues to recover from a series of food safety scares last year. seam store sales dropped nearly 22%. and panera bread's third quarter results. same store sales rose. the casual dining chain was helped by pricing increases on its menu. also raised full year outlook. okay. another key stock to watch this morning is apple. revenue falling for ae third straight quarter. apple ceo tim cook said he was optimistic about strong sales for the iphone 7. all this coming ahead of the company's hello again product launch where new mac books are expected to be sold. i want the new mac book pro. >> a lot of people do. they haven't refreshed this line in a long time. they brought down inventory of the mac. speaks well for the possibility of some uplift. when you look at the revenue per unit on macs, it's worth almost two iphones. you don't have to sell as many macs as iphones to get a nice upside. >> i'm buying it. irrespective of what happens. >> people are drinking at home when you say irrespective at home. did you see that yesterday? >> i'm using the word irrespective a lot. >> everybody's got a crutch. >> everybody's got a crutch. so what's it going to look like? >> what's what going to look like? >> this. >> the new mac book? >> yes. >> now there's going to be a screen on the keyboard. so you'll be able to -- you could touch the keyboard before. now you'll be able to touch it in new ways, joe. no, no. literally. not so to speak. literally. >> should we go back -- >> i'm just serving them up for you. go back to the numbers. all right. as far as the phones went, there were no huge upside surprises. but tim cook had already said previously that they're going to be able to sell every iphone they can make. they're especially constrained in the iphone 7 plus which is the larger phone. it's the one will dual cameras. that's the one you would expect to benefit from this trouble that samsung is having. but apple's saying they can't make any more of these than they had planned. it's going to be difficult to take advantage if it's there. they weren't saying on that call if that demand is actually there yet. they said they expect to come into supply/demand balance by the end of the holiday quarter. they're not sure about the 7 plus. the benefit for apple if there is some is likely to come after the holliday quarter. maybe the cycle will have more legs than it would afterwards for this phone. average selling prices, apple expects to come up to last year's level. margins expected to be good. and there's expected to be revenue growth again in the holiday quarter. >> did you buy what tim cook said about china? we saw a sharp decline year and year in china which includes taiwan and hong kong down 30%. that's a sharp contrast to what we saw a year ago in the quarter. he said something to the effect of, you know, 2015 was huge upgrade cycle. now we're just getting back to normalized rates. we had a note saying 80% to 90% of smartphone users in china have a smartphone. so what are you -- what do you make of -- >> i don't entirely buy it because what we're seeing overall out of china, we see this in qualcomm's results and intel's results and other makers that there's a trend toward the mid-range in china right now. that's not to say apple's doing really poorly at the premium end. just the premium end opportunity right now isn't as big as it once was. again, those folks have phones right now. maybe the upgrade cycle isn't in full gear right now. so the question is does it come back, is samsung in position again to capture some of that if it does come back? samsung particularly didn't handle china well with the galaxy note 7 and communication around the recall and what to do there. so i mean, under other circumstances if apple had more phones to sell right now in china, they might be in a better position than they are now. but overall doesn't look like they're in a bad position. they're very stable. average selling prices are up. margins at the high end of the range. they're projecting growth for the holiday quarter. how many millions of iphones can you crank out at the right quality level so they don't blow up like samsungs that are firing on all cylinders. they could just use more cylinders. >> thank you, sir. >> all right. thank you, jon. coming up glaxosmithkline beating estimates. sir andrew witty joins us to break down the quarter. that's a first on cnbc interview. and "squawk box" will be right back. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? 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(cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley welcome back to "squawk box." stocks to watch this morning. pandora's third quarter earnings falling short of estimates. the music streaming service is also cutting full year guidance as costs rise. bottom line for mondelez international 9 cents above estimates. also raised full year forecast. revenue short of estimates as mondelez dealt with what it calls challenging market conditions. in other consumer news, arby's is testing venison sandwiches at 17 locations in the u.s. the stores were chosen in heavy deer hunting areas like wisconsin and minnesota and michigan, pennsylvania, tennessee, and georgia. and the sandwich features a thick cut venison steak and crispy onions with a berry sauce on a toasted roll. i know quite a bit a bison around. venison is i think maybe the berry sauce might help a little, right? have you had it? >> it's usually paired with something like a currant sauce. >> the meat is a little gamey. but i guess they got a lot of -- poor bambi. they got a lot of deer ready to -- bambi doesn't -- yeah. poor bambi because the mother doesn't know what's going on. but bambi is motherless. >> i have no good segue to the next -- >> from bambi? >> from bambi. but some jeff bezos news for you. amazon expected to pass macy's as the biggest apparel seller in the u.s. next year. expects that amazon clothing accessory sales to grow 30% next year and macy's to drop 4%. expected to rise from 6.6% to 8.2% last year. i remember when it was 0% and people thought -- they couldn't believe they were getting into the so-called fashion business. and here jeff bezos taking another piece of the buy. now in some political news here. justin timberlake may have had good intentions when he took this selfie in a voting booth in memphis but he may have also broken a law. he flew from l.a. to tennessee to cast his ballot but taking a photo inside voting booths, that's prohibited in that state. that new law took effect in january. it's a misdemeanor with a penalty that could include 30 days in the slammer. he has since deleted that pic. >> wow. meantime across the pond in an election faux pas in france, jean francois, do you think that's -- >> i would say -- >> no what? ooh, man. you speak french. >> some. a little bit. >> speak french for me. >> no. >> running to become -- do you remember that? addams family? >> yeah. >> i didn't want to -- the reference. the presidential candidate for the right wing party. he shocked france voters this week when he failed a key election test knowing the price of a traditional french pastry. he guessed that the chocolate bread cost about 10 to 15 cents. it's actually a little more than a gyro. he tweeted he's conscious of his figure so he stopped eating chocolate bread years ago. nothing in france costs 10 to 15 cents. does it? you walk into a place, it costs a euro to look at the chocolate bread. don't you think? >> to walk out of the house. coming up when we return, we are going to go across the pond. ceo of drug maker glaxosmithkline will be our guest. plus the watson revolution. ibm is betting big on supercomputers and thousands of companies are already on board. we have a live report from the world of watson. that's coming up next. welcome to "squawk box." the futures right now are looking down, i hate to say it. they're not as bad as they used to be. dow looks it would open off 31 points. and the nasdaq off about 18 points. all right. drug make ter glaxosmithkline out with earnings. the company beat estimates and saw profits soar thanks in large part to the weakness o the british pound. joining us now is meg tirrell who brings that special guest. >> joining us now is sir andrew witty ceo of gsx. thank you for joining us. >> good to be here. >> obviously brexit happening, there's a lot of uncertainty in england. tell us how that's impacting your business and going forward what your expectations are about that. >> well, first of all, we've seen a very good quarter in q3 this year. our earnings and constant exchange rate up 8%. then a huge tail wind from currency. you can see that that is driving something like a 27 percentage point increase in our earnings number. if we took the end of q3 rate versus international currencies, that would give an annual effect of 21 points. so very positive. that combined with the underlying performance of the business very strong new product really driving up our incoming cash flow. $1.8 billion of cash flow during the quarter. that's up from 0.5 billion a year ago. very significant improvement. looking forward to terms of currency impact. and we also have significant manufacturing base within the uk. so that gets us somewhat from the potential of effect. so overall it's a positive story for gsx. >> i want to ask you about something we've been hearing from your colleagues this week. just yesterday merck and eli lilly talking about pricing concerns about the u election. you have always sort of had a different take on this from different u.s. colleagues. how are you looking at the u.s. election and how that will impact your business going forward? >> i would like to look much more at the returns we could generate from the business. i think that's what matters to shareholders in the end. whether it comes through price or volume or through cost management. and we're really trying to focus on all three of those aspect. in fact, in the united states, pharmaceutical business has a price impact of minus 2%. so our prices are falling at the net level in the united states. we're working within that kind of framework. it's something we've become used to in the european theater over the last ten or so years. how do we respond? we focus on insuring that we're investing behind our value creating new products. we're pricing our new products at or below the level of historical products in the market place. and we're seeing a great reaction to that. in this quarter alone, we sold 1.2 billion pounds of products. that was up 80%. we're now annualizing that innovation number at $4.8 billion a year. and 25% of our pharmaceutical business now comes from brand new products. one in every $4 we sell is from products which were not on the market four years ago. we think that's really the answer to this issue. rather than being too focused on the high price scenario, let's try and find a price which works, which helps affordability, opens up volume market places and that's been true for a long time in the emerging markets. it's also true in the united states, meg. and as an industry we need to be focused on how we give that value for money and together with other stake holders let's work together to make this system easier to understand, easier for patients to get reimbursement, more transparent. >> i want to ask you also about your new ceo coming in next year. your head of the consumer business. what does that csignal about th future of gsx and maybe to the disappointment of some investors not going to split up. >> i think first of all the performance of this group this year speaks to the strength of the company and the strategy we've put in place. 8% top line sales growth. 12% under -- that's 12% constant exchange rate. full kick in terms of currency. super strong performance across all three businesses. . so 6%, consumer up 5%. vaccines up 20% in terms of sales. that's very encouraging for the strategy that we've deployed. a terrific pick by the board. i think they've picked somebody who has a passion for this kpan. but also had has a world view, is curious about how we can drive value in all of our businesses. i think she'll be a terrific ceo. >> thank you so much for joining us this morning. >> thanks, meg. >> our thanks to you, meg tirrell. to tech now. five years ago watson was a jeopardy champion now ibm is betting big to prove the supercomputer is still relevant. we're joined from e the world of watson in las vegas. deidra? >> reporter: good morning, guys. that's right. ibm is going all in on watson. 16,000 people are here at this event and they're all interested in using artificial intelligence in the future battleground in computing. so it has been a long campaign for ibm to commercialize watson. but we are finally seeing the fruits of that come to life here at the event. we're seeing thousands of businesses. actually put on display the ways in which they're using the watson technology or plan to. like woodside. it's using watson's learning abilities to digest huge amounts of information to make decisions quicker and more efficiently. american airlines is also using cognitive technology to predict weather patterns. >> everything we do with these cognitive analytics will help us moving forward. >> reporter: also here in vegas, big partnerships have been announced like one with gm. gm is going to be bringing watson into its vehicles as well as slack the business messaging app going to be using watson technology to power its next it ration of its virtual assistant. the list goes on. the biggest leaps in the past few years having in medicine, education, and military technology. experts say aai is on the verge of changes everything and watson is well positioned to be a dominant player. but the challenge, guys, for ibm is how to make money with watson and soon. after 18 straight quarters of declining revenue, ai still makes up just a small percentage of sales. we'll be able to talk more about this with ibm ceo ginni rometty. that's on "fast money." coming up, are car makers stalling america? we're going to get bob lutz's take on it. stay tuned. you're watching "squawk box" here on cnbc. the lexus rx, rx hybrid and rx f sport. this is the rx...elevated. get up to $5,000 customer cash on select 2016 models. see your lexus dealer. ♪ welcome back to "squawk box." here's what's making headlines this morning. mortgage applications falling more than 4% last month. both new applications had -- toyota recalling in japan and europe. it's the faulty takata air bag inflaters. that includes some that were used as replacement parts in prior recalls. as we talked about on this show, the problem with these recalls is half the time they tell you that your car is recalled but they don't have the replacement parts to actually put into the car to fix. it's become a huge problem. nintendo has cut its full year profit forecast despite pokemon go. the game boosted the company's bottom line. but that's been negated by a significant rise in the japanese yen. so currency playing a little bit of a role there. newly appointed wells fargo ceo tim sloan has told employees he's sorry for the pain employees have felt as a result of the sales practices scandal. did not respond to the scandal soon enough. and he added it still hurts that people felt we blamed employees. >> hurry. because it's out. trade data. jim iuorio standing by in chicago. the numbers, please? >> it's not disappointing. the market wanted to know if the strong dollar was going to weigh on trade deficits. deficits out as negative $56.1 billion which is better than expected. we do have to remember the recent strength in the dollar is only the last couple of weeks. it may not be inflected in that yet. we had the first two months of the quarters somewhat lower inventory numbers. if there were three months of a row in that, we could think that gdp we saw last time might be worse. this gives fed somewhat clearance. the stock market didn't react, was down 7.5 ticks coming in. the 10-year yield was 1.78. now it's 1.779%. so nol really changed on this. the weakness in the stock market right now is probably more due to apple and probably the fact we're in the heart of earnings season. back to you guys. >> steve, what do you make of it? >> a couple of things. the dollar. what it says is the gains we made in trade, the good numbers we're getting is probably not going to last. as jim suggested, guys, as you look at the charge of the dollar here, that strength began in october. you're shaking your head, joe. to the pound and what could happen to the you're row. >> look at that. last segment we had like six going forward. >> what should i have said there? >> just a filler. because no one ever -- >> that should help in the future? that should help in the coming months in the coming quarter? >> it's redundant. >> here's the pound and the you' euro. but i want to talk about something else which a going on. which is soybeans. >> yeah. >> do we have a soybeans on -- >> yeah. i was going to ask. >> are you up on that? >> no. >> do you know about soybeans? >> i don't. >> soybeans have been -- soybean exports to china have been surging. ian shepardson came out with a note not long ago that one of the reasons we may be up near three and four is because of soybeans. >> whatever it takes. >> soybeans are surging because they are rebuilding the hog herd. and they had weaker exports in south america. weaker crops down there. so they're surging to china. >> the price of soybeans are up also? >> prices are kind of midland. now, again, this may roll off as the chinese farmers get up to speed on how well they can do. the two biggest states in the country for soybean production. >> obviously we have no idea. >> illinois and iowa are the two. >> what about avocados? >> i don't know about avocados why are you doing avocados? >> we talked about them in the 7:00 hour. and it's important to my livelihood. >> i only care if it's going to affect gdp. is avocados going to affect gdp? >> soybean oil? >> yeah, there's something about soybean oil replacing another oil that comes from an asian country that has not done well because of el nino. >> that's not bad. it was almost in the teens. >> how about them in the back? i didn't even tell them i was doing this soybean rift. and there they go. they're up a bit. but here's the thing. that also may roll off in the fourth quarter. and if you add that potential rolloff, i don't know. i have no ability to predict soybean prices. >> do you know -- >> that and the stronger dollar could then make trade less favorable in the fourth quarter. >> what happened to the hogs in china? remember when they were all in that river? >> right. so they had weak hog prices and they stopped -- they let the hog herd sort of run out. china is the largest consumer of pork in the world. >> it's got to be at least one of the big -- >> pork is huge over there. >> they bought all our bacon. anyway, so they bought the bacon and the hog herd rolled off. it's interesting. >> really? >> it is. futures prices roll off because they think the herd price will go down. you think with the herds being big that the prices would go up. that's all the arcana i have for you this morning. >> that's a lot. >> but it's relative to gdp. >> thank you. >> we're going to call this nerd central. >> you're welcome. >> let's bring in chris hyzy of bank of america's global wealth investment business. you say we are at a pivot point. what do you mean by that? >> clearly steve just talked about it. soybean. and herds. there's a huge pivot point right now. not just the election president not just the italian referendum. but market valuations, the overall fixed income market, liquidity. there's pivot points everywhere. and the market's been flat on the basis of five to six quarters of relative flat to negative earnings. and the market's been hitting a new high. comes back down, hits a new high, now in a stalled period again waiting for some catalyst. i could adjust your targets and your forecasts or just stick to the middle of the road. it says here's the multiple, here's earnings. and that should trade around and there's catalysts that come and go. so you stay fully invested. fixed income is about to be a bigger drag as we shift up in yields. not aggressively. but we shift up in yields. the fed has a window open from time to time. so you pick your spots. you have a rebalancing plan and you say invested. >> what's your gauge on the u.s. consumer? i mean, recently in earnings season, we've gotten some data points about the housing market specifically that may indicate that consumers are feeling a little tapped out. misses from sherman williams and others. are you concerned at all? >> always concerned when the consumer feels like it's tapped out. the consumer has a while to go. you've got job strength going on. it's the most second guessed jobs recovery we've ever seen. when you take a look at demographic data, sure the participation rate's lower than we would like it to be. but overall real incomes in the house are going, consumer has the leverage. what they haven't done is relever. and that's why it looks like consumer data compared to prior cycles isn't where we want it to be. but i would say that's a pretty good thing. so consumer confidence is at levels that we should feel pretty good about. and consumer spending at least when you look at credit card data is really, really running at good levels. the difference is and what's confusing a lot of economists, there's a huge spending shift. you're going from goods to experiences. >> makes it hard to measure. because the service data is terrible. we get it quarterly and it ain't so good. like today we got the advanced trade in goods. >> yes. it's very hard to see the trend. >> terms of sectors, it sounds like you're saying hold the nose by the market. hold it for longer term. >> you know, if we -- you get a 3% to 5% pullback. that will take you down to a multiple. that's a market you should buy. not necessarily looking at massive bull market gains. we've been saying this as a buffalo market. but it's in the bull family. it's rather unattractive, it's heavy. so yeah we would buy the market. we would stay invested. and when things get a little over valued, we would look to rebalance down. technology is the one area that you can get full tech yield and you could get good tech growth. and you mix those two together. that's an area that is favorable. >> market ready and priced for a quarter in december? >> say that again. >> is the market ready and priced for december? >> yes. what it's not ready for is more than 2% next year. >> it's in the bull family. it's heavier. >> you've been using this before. >> do you pay attention? >> i was on vacation. do you? like a colorado buffalo. >> as opposed to? >> there's a water buffalo that's a little different. >> why is that called a buffalo? >> i don't know. >> we'll look that up. >> here's your tease. we have our all america poll economic survey. clinton versus trump and what i think is the most detailed survey of america's opinions on the candidates and the economy. i believe it's also the first -- one of the few polls that have come out since the third debate. a lot of them have been tracking polls. >> that'll be good. >> yeah. >> chris hyzy, thank you. coming up, we're going to talk to bob lutz about tesla's impact on the auto industry right after the break. "squawk" returns. ♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. digital works for banking and financial services. lets talk about how digital works for your business. ♪ welcome back to "squawk box" this morning. take a look at the futures. they're not as bad as they used to be but not great either. let's show you that screen if we could. there it is. dow off 52 points. actually, a little bit worse. it pulled back a bit. nasdaq off 20 points. s&p 500 off about seven points. walmart reportedly may reverse its decision to invest in flip cart -- flipkart. on suspicions that flipkart may have been inflating its numbers. in other global cooperate news, vodafone fined by uk over sustains customer failures. the mobile operator did not act quickly to deal with those issues. all of this largely related to billing procedures. wall street is worrying about slowing car sales and the economy while automakers report earnings this month. bob lutz is part of general motors and also my idol. i'm not going to say your age, but -- >> it's okay. >> 84. i need to know what's the key? is it no bacon? bacon? alcohol? no alcohol? exercise? what do i got to do? >> pick your parents carefully because it's 90% genetic. >> too late. too late for that. both of them are still alive. good. your view isn't necessarily as negative, bob, i don't think. the market may have peaked but it's at a high level. >> exactly right. >> is that it? >> yeah. i mean, if it isn't constantly growing, growing, growing, and it stays steady at a high level, the companies can do very well with that. and i was having dinner with a large gm dealer last night who also has subaru and i asked him how's business. he said business is fantastic. little bit better than last year and it's probably spotty around the country. but basically so far everybody is pretty much selling everything they can make and incentives have not started to creep up the one worry i see is ford has announced downtime for the new f-150. >> right. >> and that's kind of worrisome because when what is normally the best selling vehicle in america announces that they have high inventories on the thing, i checked gm pickups both chevy silverado and gm sierra are continuing to sell extremely well. gm is building a bit of inventory because they're going to have downtime in november and december for thanksgiving and christmas. so far inventories look good. >> it's weird that there'd be a difference between what the f-150 and the other ones. you worry about housing and all kinds of stuff that seems to correlate. we had other people like mike jackson sort of raise a flag about incentives and how we're going back to some of the same mistakes from the past. you said that's not the case right now that they're overdoing it. >> apparently one or two people whose inventory is at a worrisome level are starting to resort to some of the old practices which we know will maintain the market size while destroying profitability. i really don't see us getting back into that because every major automobile executive ceo today remembers what it was like in 2006, 2007, 2008 or leading up to 2008 when we basically had profitless prosperity. we had high sales numbers with zero profitability. and everybody knows that that's -- and i think everybody is willing to let sales go down and take downtime. rather than keep incentives going. >> involving andrew here. china's on a tear. gm is in an enviable position. lots of new products. and gm stock should be where tesla stock is. because tesla doesn't make any money. and that's like -- how's that make you feel? is that okay? it's true, but -- >> i want to understand his feeling about it. tell us. >> and i'm going to give out your twitter account or your e-mail for all the tesla maniacs that are really going to be made. >> that's exactly right. tez la supporters are like members of a religious cult. and it's just like steve jobs was worshipped at apple, it's the same way with elon musk who is seen as new visionary god who promises this fantastic future, a utopia of profitability and volume. the only problem is steve jobs delivered and elon god bless him hasn't delivered except for increasingly negative cash flow and increasing profitability. more and more capital spending. and, you know, this acquisition of solar city where you're tying two sinking ships together for synergy. i just don't see anything about tesla that gives me any confidence that that business can survive. >> you mean -- what do you think happens to it just so i understand. are you saying it's going to go bankrupt? >> well, ultimately unless people keep pouring new money in, but the last time i checked, their quarterly cash burden is about $250 million for a company that size. that's horrific. which means that every time they get like a $500 million injection through a new stock sale or a $750 million injection of new money, it lasts them two or three quarters. and this is -- this is a problem that volume can't fix. because if you are in a variable loss, that is you're not recovering labor and materials in your sell price, then doing twice as many or three times as many or four times as many doesn't help. the losses just get bigger and bigger. >> all right. we should start with tesla. we should get right to it. >> it's fascinating. >> it is. all right. bob lutz, thank you. >> thank you. >> we'll see you again. >> thank you very much. bye-bye. >> you're welcome. see you. when we return, jim cramer joins us from the new york stock exchange. and take a look at the futures right now. it's been holding steady all morning here. we are looking at a lower open across the board here. be right back. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. i think the government is a little behind in understanding technology, and we're doing the best we can to get ahead of it. and some of the hackers who are hurting all of you guys and causing a real existential threat to you guys and to the government and to the infrastructure, are way ahead of the game. >> that of course u.s. district attorney preet bharara. jim cramer joins us from the nyse. i saw mr. bharara tweeted out a picture of him ringing a closing bell. and how he was really happy -- i've done that. i did it before him, i think. you probably have too, jim, haven't you? >> yes, a couple times. i got to ring the opening bell with my dad probably one of the most exciting days. i asked is there anything i can ever do for you and said, yes, let my dad ring the opening bell. this is where if people understood capitalism and they understood job creation, they would like the country a lot more. and, boy, is that ever right? >> i don't know if you heard bob lutz talking about tesla. >> yeah. >> people that love tesla say he's one of the old car guys that, you know, drove the industry into the ground. and other people say, you know, other people agree with that. i guess, what do you think, somewhere in the middle? >> look, i had jay leno maybe two yards from me saying, look, you keep on writing off tesla but they are the first car company to come along since the big three that are making a huge number of cars and selling them. but i think he's so right about the solarcity thing. that is just some sort of bailout for a company doing quite badly. and the cash burn is totally true. but people keep throwing money at this company betting one day it will be like amazon and it will flip and the company will make a lot of money. that's a leap of faith. but the people who drive teslas believe in tesla. the people who own the stock, they cannot be shaken. this company could do anything it wanted. it could take money and put it in a chimney not unlike the great scene in "the shield" where there's armenian trade money. >> you can say a lot of things, conflicts with merger and all of that, he is putting his money where his mouth is in a remarkable way. >> yes. he absolutely does. and i wasn't insulted when he said i was just perhaps a simulation when e did confront him on this issue. he said, you know, you could be a simulation of mine. kind of a legendary way of looking at things. but i think, yeah, it's not alchemy, and he's not a guy trying to make a quick buck. however, i think he can destroy a quick buck with solarcity. i ain't going to play solarcity. >> buffett doesn't pay himself either but he's still worth a gazillion dollars. if elon musk, things started going south and he saw the writing on the wall, he'd be doing the, oh, no, i got into a diversification plan with someone and these purchases aren't -- he'd be able to sell quick enough. he could have a couple of hundred million in the bank in three days, easily. >> then we could watch a great movie. who would play him? jeff bridges? who would play elon musk in the movie? good question, right? >> that's a good one. that's always something that's fun. i don't know if -- jim, you know, it may not be that accurate because, you know, i mean george clooney was my second pick for you. i don't know who my first pick, but george clooney. >> i thought robert downey jr. already played -- >> oh, that would be -- >> he was in "ironman". >> i got a hat. they gave me a hat. i thought it was going to be a bomb. they gave me a hat. i negotiated hard. >> george clooney for cramer, obviously. that's obvious. anyway, thanks. >> thank you guys. coming up this morning, biggest movers and later don't miss interview with kevin plank on "halftime report" at noon eastern. stay tuned. you're watching "squawk box" on cnbc. my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? final check on what's happening today. there's the first apple. apple shares down about 3% after the results last night. and then we'll look at the futures one last time. the dow indicated now down about 62. s&p down 7. nasdaq down 21. >> thank you to melissa lee. and make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. attention remains on the micro this morning as earnings dominate. boeing, coke, chipotle and of course apple with its first revenue decline in 15 years. we're going to cover it all. europe's largely in the red as was asia overnight. ten-year around 1.78. oil lower after api inventories showed a build. and we'll