good morning, everybody. ike becky quick along with joe kernen and steve liesman. andrew will be back tomorrow. we have quarterly results before the opening bell from eli lilly, boeing, caterpillar and a lot of numbers are koumth pop among the newsmakers, we have caterpillar's ceo doug oberlehman. also lily's cfo, derica rice. at 9:00, we have the fafh house price index. this afternoon, the treasury holds an auction of five-year notes. our top story this morning, china fears there was heavy selling in asia's afternoon session. traders are citing reports that top chinese lenders expunged about $3.7 billion in bad debts for the first six months of the

year. that was higher than last year. there was a spike in short-term money rates that weighed on sentiment today. china's central bank refused to injex cash into the money markets for a second straight session. japan, the nikkei was down by almost 2%. the hang seng was off by 1.3%. and the shanghai composite was off by 1.25%. we'll see if that weighs on market here this morning. steve, right now, i'll send it over to you. >> thanks, becky. in corporate news, jpmorgan reportedly nearing a roughly $6 billion settlement to settle claims with mortgage backed securities in a run up to the financial crisis. in separate news on the bank, jpmorgan's $13 billion mortgage settlement with the government kind up costing the company lows her to $9 billion after taxes. a number of buyout firms,

meanwhile, are reportly exploring a deal for all of part of safeway. the name includes cerberus. activist investors jana partners says the company shares are undervalued. it held talks about reviewing if strategic eye cob. boy, taking advantage of its gain in shares since he bought shares of the company only 14 months ago. he tweeted yesterday, sold block of netflix today. i wish to thank read hased hast ted sarandos, nflx team and kevin spacey. that's the thing. we want to see that. i bought the dvd collection

because i -- and i have netflix but i don't know how to -- >> i'm going to get netflix as a result of that and quarterback. >> you know, i started you know what i started watching in a big way? and it's just incredible. i've never saw modern family before. >> you know, i just started watching it in the last couple of months. >> because it's a big -- you know, usa has -- usa is smart. they play really -- seinfeld for years got -- >> reruns? >> yeah, i guess the re ruruns. but the kid is like now i noticed in one series, when they go back to back. it's really smart and really well written. so politically incorrect, though. i don't want anything to seep into my mind. you can say anything on sitcoms today. >> yeah, you can. >> but i had trouble initially. you know, i metal bundy. >> have you, in real life? >> on venice beach.

and i called him al and he got so mad that i called him al. >> and did you do this and stick your hand in your pants? >> we passed one way and we passed him again. and he used an epithet. i felt bad. it was 15 years ago now. but i never thought he would get out of that type cast. he did. he's a cool guy now. well, you would hate to be type cast as steve liesman. >> i love being type cast as steve liesman. >> he hated being type cast as al bundy. >> it's difficult to do that and come back as something else. >> some can. >> what would joe kernen come back at? >> i can't. andrew is going to be like a media mogul. this is stepping stones. he's so successful. >> you're stuck. >> it's ta late for me.

there's ascending, descending. >> and where are you? >> stwiming as fast as i can. >> we like it here. we feel comfortable here. >> i do. and i love modern. how brilliant that was to buy the reruns. because you can -- usa, you can get huge numbers. >> the economics, all this money, all these different outlets, they're all bidding up for reruns of shows that they start to bid on after two episodes. what happens is that money get piled back into creating the shows. that's one of the reasons we're in what a lot of people think is a resans of telecoms, sitcoms and everything like that. it's like a golden age of television. the cool thing used to be being in a broadway play. now all these great actors and actresses want to be in television. >> that is where the money is. >> that is where the money is

and it's where the prestige is, too. >> writers are really smart, creative from modern family. there was one part last night, the book of phil-osophy. he's married to the daughter. one is when you're stops with reading. >> my mother had a watermelon on the back seeing when she was pregnant. >> netflix, it closed down. it had like a 70 point swing or something like that. >> then people started foefting on reed hastings himself. >> we talked about that. >> it reminded him of 20303. maybe as i said in a little bit, thought twice about what was going on.

talking about big distinguish, we have big news coming up this morning. our guest host is american businessman dal get better. we'll be joined of two on groovon's sessioners. >> that's big for my wife and our -- i mean, we're huge fans. at the the only conservative entertainment person on the planet? he's a different kind of -- >> let's get a check on the markets this morning. we've been watching the futures, especially after everything that's happened in china and in japan overnight. there is some of that impact weighing on our futures this morning, as well. dow futures off by about 81 points. s&p futures off by about 10 points. oil prices this morning, wow, they are continuing to slide down another dollar to 97.21 for

wti. >> good. go down. >> that's kind of like a tax relief bill. >> that sounds like it's something bad. >> down 97.23. >> it's potentially bad for some i couldn't say explanation. >> jim tissue was telling us $85 is basically -- in north america, $85 is where it becomes profitable. so if it falls below that, you have issues. >> the benefits are much -- if it goes below that, it's much better. it's a tax cut for the entire world when it goes down. >> it could lead to turmoil in the middle east, though. >> it use. >> the saudis basically take

care of it at $100 to take care of all the social obligations. >> we're on a track, i think, in 2015 we'll be importing like 2 million barrels. it will know nothing. >> it will be nice for us to not be quite so tied to what happens there. >> this thunderstorm warning, 2.499% is the yield on the ten-year. the dollar this morning, as you can see, it is down against did yen. it's up against the euro and the pound. and gold prices this morning, down by about 10 bucks. >> remember how crazy we said the person was that said 2.1% was next? >> yeah. below 2. -- who said that, by the way?

>> i can't believe. and then did you see the stock market was up yesterday, supposedly? >> because of the jobs report being good enough -- >> we didn't know they were going to -- >> to create jobs but -- >> we didn't know they were going to taper already? >> we've been talking about that for a long time. >> they finally figured that they weren't going to -- with three months. >> it's a little worrisome right now and i don't know how the fed feels about this. but the market is kind of getting away from the fed, making its own conclusions. the goldman call, the barclay's call which we reported yesterday, march 2014. we don't know what bernanke and other folks think about that. >> well, wait a second. what is yellen's first meeting? >> her first meeting, i believe, would be march because i think bernanke would be in office at the january meeting. >> and there is no february meeting. >> so march would be her first meeting. >> i don't see why it's such a agree crazy call. >> it's not a crazy call. but remember how things got away from the fed in june?

>> right. >> they spent the time summer redirecting it. >> the ten-year is not a problem any more. >> that's right. >> at all. i expect it would be a progress the other way. >> i mean expectations for tapering. >> we're going to have to do it again. we're going to have to go through that move up in the ten year again. oh, no, it was 2830. now when it backs to 2-2 -- >> i wonder what this means for moore of us. right now, it's time for the global markets report. ross westgate is standing by in london. ross, are you seeing some of the turmoil there that started out in asia overnight? >> we have, indeed, becky. we closed at five-year highs for european equities yesterday. we had nine straight days of gains as you can see xwhiend be right now. we are down, six to through decliners outpacing advancers at

the moment. you could say we've been overbought in the last nine sessions. the ftse down 31, 0.5% lower along with the german market. the ftse mib down 1.4%. what's been going on this morning, a lot of focus has been put on to the ecb. because they are now launching their stress tests. they're going to become the regulator for about 128 eurozone banks this time next year, november next year. and ahead of that, they're now launching the stress tests in the run up to that and they've basically come out and said we're going to want banks to hold 8% of common equities tier one capital using the basul 3 definition. they've been laying out the broad framework. we've had two sets of stress tests condifficulted by the financial crisis and getting stressed in a number of bank who

went bust, as well. so a lot of pressure on the ecb to get this right. show you where we stand with tech sectors. barnlgsz rts weaker sector here in europe. as a result, travel and leisure up and chemicals are up. number of stock necessary focus this morning, as well, just quickly run through these. heineken, down 5% today. this is just the latest company to dmran about the strength of the euro. today, we hit a two-year high on euro/dollar. we just got numged up to 1.58 for the heineken, as well. talking about a week. cation demand, that stock up 7%. they're talking about maybe we

need to unwind or losing our gm alliance, as well. and one final note, for all the royal watchers today, the duke and duchess of york are chri christening their son, george. we had a viewer who wrote in, joe, this is for you, listen up, a viewer wrote in and said they would choose you as a god parent. >> that's really nights. >> i don't know why. >> that's really nice. >> but maybe you could tell us -- >> might be a little bit of a problem. i was raised catholic. i'm trying to do the whole episcopal thing now. i don't know, when you're raised catholic -- it's certainly a lot easier. but i will do that if they want me to. i need to raise the child as search of england, right, ross?

>> yes. you know what? it seems like it's been a while because i saw pictures of kate. she looks like -- she looks awesome. she looks like she never had. now they're finally doing the christening. okay. that must be a beautiful -- i can't imagine how the royal family -- must be a lot of pomp and circumstance in that, too, are on the ross? you know what? i'll do it. i will do it, just do be there. >> good man. >> the person that wrote in was not actually william or kate, right? it was someone who has no -- someone who has no influence on them or their thinking or -- okay. so you're just yanking my -- you know, you shouldn't do that. it's not fair. i got excited. markets are going to continue to adjust the flood of quarterly results yesterday after the s&p 500 hit another all-time high. here on set, collin moore, global chief investment officer at columbia management and

thread needle investments. kind of a cool name. >> threaten the needle. >> let me start with collin. did you think that yesterday's job number changed people's viewpoint on tapering? i was already expecting taper not until sometime next year. >> i don't think it changed it much. i think the market had moved on to march/april as being the highest probability. thing interesting thing was, they had spend so much time trying to sort of get its communication policy sorted out and we've sort of ended up now back in confusion again. because i don't think there is a way to direct people's emotions. i would go for march or april in i was going to determine one?

>> when everything seeps -- >> i mean, is there anything else that matters or can you just assume 85 billion, you know, financial assets are going up? >> it would be really nice to be talking about earnings and stuff. i think i caught your comment just before i came on set and that is the sort of -- the labor number wasn't too much. the market went up because it's pushing out tapering and we're back to focusing on that again. and it has to stop because i look at tapering. it's going to go away because the economy is recovering or the economy is not recovering because it's losing its effectiveness, the purchasing. >> why would you say that, though, when the ten-year is back to 2.49, the markets are back to new year highs. it seems like it's working. >> i don't think the primary case because to drive the markets up. we were mostly getting the

economy to be going faster. and i think it was initially quite effective, but i think it's one of those things that in the second and third and fourth tranches it loses some of its power. so i would actually start. i don't think we need it. >> let me just get michael for a second. michael, are you a single issue voter in terms of whether stock prices go up or down just based on the fed? >> no, i think it's really important to be focused on corporate earnings which are doing better and, in fact, i note that the difference between the economy and the s&p 500 is that the s&p has substantial earnings coming from outside the u.s. which is beginning to turn around, even as the u.s. is doing well. but i'll tell you, they should be starting to fairly we're at it lowest self-since november

20308. why is that month family to me? what was november of -- oh, now i remember. the elections. that's the last time we were this low. so it's been higher than that the entire time? >> a couple months after the real collapse. >> oh, all right. i just remembered them -- >> a lot of things happened then. >> and the adjustment for the participation rate is higher. for every three people that are working today, there's two people -- did you see that today? that's a horrible stat. >> but did you see what it said? >> you read it today, big boy? that's great. >> if you look at the number of americans of working age who are working right now -- >> half of it is because of

demographics. >> oh, okay, good. the other half is because of unemployment insurance, disabled, food tamps. >> zovptd to work, man, i can watch modern family all day long. >> not because of the federal government. >> i'll never have to work again. >> joe, there have been a lot of studies on the issue of whether or not things like unemployment claims keep you from going back to work. >> we need to go back to a nation of achieving, not receiving, all right? we need to go back to a nation of achieving, not receiving. >> at best -- larry summers, at best it extends like a ten-week unemployment stand by a week. it depends it, but there's to

evidence that the level of claimants -- these toes po poe a brings to bridge to self-sufficiency. >> people feel better when they're working. >> yeah. the percentage of young people getting jobs or not, the numbers are distorted by those who are retiring. >> nothing is in a vacuum. >> we are having a persistent problem about the number of young people finding jobs, that is really a big issue. >> some of them are going back to school. >> and we are. >> the other thing is, people retiring -- what was the other thing? people retiring. >> and staying in school longer. which is what you would hope to do and should do in part because

they were bsh. >> yoke you'll, the the best entitlement is the job. how about that? that's another good expression, isn't it? >> absolutely. and the problem is, there aren't enough jobs right now. and what the fed is doing is limited. they don't have the ability to create jobs. that's really more of a fiscal issue that the treasury and the rest of the government has supposed on. >> the jobs will not are the foam are and and the where job. 3/ . how quickly could you be up in boston? >> we can go to lunch or something. >> anyway, thank you. we appreciate it. coming up, very excited. apple unveiling new products ahead of the holiday shopping

season. coming assumer and investor romg calm up next. good morning mou. locks hikes auto one o. game one tonight in boston, there is 2 potential for some rain for game time with the cards and the red sox. looks like that rain should start to pull out as we approach the first pitch. regardless, it's going to be a chilly one with temperatures stuck in the 40s. good news for red sox fans, bad news for the cardinals. last time these two faced in the world series where it was chilly, red sox went on to win both of this game been temperatures will be 5 to 10

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time in and out for the executive edge. this is our daily segment focused on giving business leaders a leg up. apple unveiling a new ipad air and new max ahead of the company holiday shopping season. announcing free upgrades for the life. the ipad air is a full size tablet about 20% thinner than

the previous generation of tablets. it weighs one pound and starts at $399. it has a retina scan. >> that's true. how quickly are we migrating here, electricky? >> fast. >> i would like a thinner ipad. i want a battery that lasts longer. >> one pound? >> the new mac book pro, joe, has the haswell chip. >> ur obsessed with this thing. >> i am absolutely obsessed. >> what does the haswell chip do? >> it's a new more see efficient processor that extends the battery life. i edit these files from the show and i have to plug in but now with the haswell chip and the 1

terabyte of memory -- the most important thing, in my opinion, is apple taking on microsoft office with the free apps. have you been been on, looking at the office and say where is my excel, where is my powerpoint? none of that stuff is available for word on the ipad. >> right. and that was microsoft's decision not to make it available. i think they may have changed their mind since then, but -- >> is it available now? >> i want to say it is, but i'm not 100% sure. in hindsight, that was a mistake, clearly, to not have made it available. >> what is excel again? a pred sheet, joe. you do most identity in your head. you're like a russian engineer or a scientist. >> it's like if you were in school and you missed certain stuff and you never -- i missed that. i don't know what you were just talking about. i've never used excel. i don't know what you mean by -- so there's -- >> really? >> yeah. i don't know what you just said. >> okay. >> so there are -- >> excel is --

>> they charge for that? >> an unbelievable amount of mope. there was loet yumm notes when the computers first came out. >> word is different, as well. >> word is a word processing program. >> we should probably go to this next -- >> folks should probably write in and help joe out. >> becky, does anyone file before april 15th, anyway? >> yes. the irs says that the start of the 2014 tax filing season will be postponed by a week or two next year because of some tax -- it's going to end up meaning a delay in your tax refunds and the agency is blaming all the complications from that 16-day frerl shutdown. the tax filing deadline will still by april 15th. so you don't get any relief on the back end of it. but the people who normally file at the beginning of january, they're going to have to wait longer for those checks. it tends to be people living from pay they can to paycheck. >> remember i asked mccain to check on my -- i still vice

president gotten anything back. my accountant was on hold for 85 minutes and finally gave up at the irs. maybe he called the obama care phone number. >> no. if it was during the government shutdown, that was a problem. >> no -- >> i actually tried calling boehner's office. >> they probably have a pretty big backlog at this point. the irs was a key part of all the mortgages and everything else, the things that were delayed because of that government shutdown. >> well, yeah, it's bad when you can't get your -- and i'm afraid to complain about it, but i just did, i think. because then you get audited. no, the irs would never do that. >> never you. when we come back, john harwood is going to be joining us from kentucky where senate gop leader mitch mcconnell is coming under fire from a an opponent. but first, don't miss ecb president margo draghi on "squawk on the street" coming up at 10:00 eastern.

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welcome back to "squawk box." politicians have returned home to their districts. john harwood joins us from kentucky. this is the home of senate gop leader mitch mcconnell. john, mitch mcconnell has issues at home to deal with. >> he does. he has a challenging general election. he's got a primary and a visit here to louisville, which is a little chilly and windy this morning in late october. reminds us that even though the shutdown and the debt mess is in the rearview mirror, the political energy behind it is not. i talked to matt bevin.

he's the guy running against mitch mcconnell, tea party candidate in the primary. interesting guy in his mid 40s. successful investment manager. his family had a bell company which for years made the bell that rang the opening and closing of the new york stock exchange. and when i talked to him about the outcome of the fight, it's clear, first of all, he's not impressed by the polls. second of all, he was not impressed by the threats and warningings about default. here is matt blevin. >> there was no threat of default. as often is the case in washington, there was these foe crises that are forced upon us, whether it's the default, the fiscal cliff, many of these things are chicken little like, the sky is falling, which, in fact, that is not the case. i would run against him because the american people are tired of having these cryises poured upo them. there's any amount of pork that

gets hoisted about. in the american people are tired of it, the voters of kentucky are tired of it. >> the one thing that we've seen since the shutdown ended and the debt limit was lifted was almost unanimous sentiment among the republican party that in addition to hurting the country, the shutdown hurt the republican party. what about that don't you get? >> i understand exactly what polls are telling us, but you have to look at the source of those. i also see that the very man who supposedly was responsible for this hurting just received an eight-minute standing ovation when he went home to his state. this is not a state that's unrepresented of how people believe in this country. the fact is the american people want men and women to stand up and represent them. >> and, of course, joe and becky, he was talking about ted cruz who got that ovation when he went home to texas. matt blevin is running against mitch mcconnell on the basis of

immigration. he says that mcconnell is an amnesty supporter. he's not. he's running against him on foreign policy. says mcconnell and republicans wanted to go to war in syria. that american people did not. it will be interesting to see how this plays out. mitch mcconnell is an institution in ken kep. he's been in a long time. he's going to raise a lot of money and run a very effective campaign, i expect. but this is a talented well spoken guy for a first time candidate. i thinks has the potential to be more than just a speed bump as mcconnell's aids have indicated. >> the utah guy didn't get a warm reception at all. mike lee. when he went back. and they contrast that with the reception that senator cruz got. mcconnell's last challenge was from the other side, some hollywood actress. remember? >> she was considering. she didn't. >> ashley judd. that didn't last very long.

>> no, i don't think -- i just get the feeling that, you know, when you go to my hometown, you fly into kentucky. i know kentucky. i'm still kind of surprised about central florida, john, and louisville. and how badly -- i can't believe that and clemson. number three and number six. be i don't know, john. i think he's okay. >> although people would have said that about luger. >> if you're going to make me lay down a bet right now, i'm betting on mcconnell, yes. but i'm just saying that this guy -- you know, you've seen a range of tea party candidates crop up over the last couple of cycles. some of them have been so bad that they helped democrats win races in states like indiana, states like delaware, and i just -- nevada, as well. that's why harry reid was there

to fight ted cruz because sharron angle was such a lousy candidate. but i think blevin has some skill. >> we'll see. all right. >> he also has some money to put intiet race. he says he thinks it will take $4 million to $8 million in the primary. he won't say how much he will put in himself. but he has the money, he has the potential to partially sell funds if he would like to. john, thank you. >> you guys should stop talking because this is bad. >> but why would we need a spreadsheet? >> reports and crunching numbers and all that stuff? >> if i need help with that, i go to you or alex. >> okay. coming up, what panera bread is telling us about the state of the american consumer. plus, eli lilly posting

results a couple minutes ago. earnings beat the street by 7 cents. rev 23450us were roughly in line. the drug giant cfo will join us first on cnbc at 7:00 eastern. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down

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welcome back. it's time for today's "squawk box" planner. detroit's city employee unions, pension funds and retirees say

the july bankruptcy fund is an attempt to bust the unions and evade the city's pension obligations. but the emergency manager pointed to oversee the city's finances argues the city faces an insurmountable $18.5 billion in obligations. it says the bankruptcy is the only solution. squawk welcomes dan gilbert today at 7:00. in washington, president obama will welcome the prime minister of pakistan to the white house. and game one of the world series is tonight. first pitch scheduled for 8:07 eastern. that is your "squawk box" planner. >> thank you, steve. panera bread lowered the stock in trading. joining us right now is a senior analyst steven anderson.

is this really as bad as we're getting the sense? >> certainly, the consumer had an under pressure in the third quarter. it's not tend of the world. in fact, the focus of the press release from management seems to be more on issues of throughput. that said, getting more people through at peak periods than it was on any specific macro issue. we see the same issue about 12 to 18 months ago with chipotle. and we think it's playing out with panera, as well. >> what does that mean, getting people in and out the door or just getting them in the door to begin with? >> it's getting more people in through the lines. it's trying to serve more people during the peak of lunch and dinner periods. >> so their growth has been stunned stunted just by the idea that you can't get people in and out any faster? >> that's exactly right. and what we've started to see, even here in midtown manhattan, we've started to see more people getting hired to put more orders through the line.

>> if you look at mcdonald's, it's a different issue, correct? this is a situation where people are coming in the door, but then they're maybe buying things on the dollar menu instead of the more expensive items? >> that's right. mcdonald's core customer is more xkly challenged than those at panera. panera's sales have held up quite nicely, even through the recession. we think this is clearly much more of a glitch in comp growth. we expect that to resume much more towards it's historical range of 3%, 4 wers, 5%. >> so panera, if they hire more people and get people in and out quickly, does it last more than a quarter or a year? >> more in the range of two to four quarters. in the longer term, we think it results in the resumption of a more solid top line growth. >> what do you tell people to do with panera? if it's down already 4.5% to 5%,

do you tell them to go out on and this wait. >> i would remember biology on the dip. there's still pretty strong unit growth. they're adding about 125 or so unit these year. we think that could accelerate. and there's still untapped potential for international, which the company really hasn't scratched the surface of yet. >> can mcdonald's turn it around, too? >> mcdonald's seems to be more of a play on europe at this point. mccdonald's gets more operating from europe. that could be the way to play it. >> carbs. the last thing i need is bread. company name, panera bread. >> they have chicken noodle soup that's pretty good. we're going to talk to the profit, next. care of business.

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we're getting sick of you and your lack of action. all workers are going to receive back pay. many will will be able to keep unemployment checks. >> businesses need to step up. citizens need to step up and a enough. >> my estimate was 2 millionle jobs haven't happened because of this uncertainty. >> we need to get a deal. today on cnbc, follow our tour of champions. it gives the chance to pitch the big idea to the world. entrepreneur and investor, host of camping world. marcus, tell us how everything is going to work.

>> six companies are going to come on. they've been here before as part of the power pitch. they're going to try to be the champion at the end of the day. they're going to get 30 seconds. at the end i'm going to ask a lot of hard questions. >> that's not elevator pitch time. >> they may get 31. that's not a lot of time. >> tell what they win? >> they'll become the champion. i'm not allowed to give them a prize. i may still do it. >> why can't they get a prize? >> i don't know. at the end of the day, the biggest prize is they get to tell their story in front of of millions of people. some of the companies in the past have raised a significant amount of money after being on here. >> we're going to hear from a competitor to pandora. a new app to allow people to get grocery store information while

they're out. we're going to hear from the muz, the hr company working with staffing. we're going to hear from a company called bio light. they make a small tin can that lights on fire and generates you power. it has a world purpose. >> it could be good for the apocalypse. >> it's used in third world countries to generate forms of electricity. >> we have a you small pet company. i think it's going to be a good set up. >> company for small pets? >> it's an online company that sells pet accessories not just small companies. >> nobody is making anything. no manufacturing. couple of tech companies, the service would be the pet company and the can company. >> we're going to learn more today. they may actually make it. >> make it as in? >> manufacture it. they may the forevmanufacturer.

what's going on when it comes to small business with the ability to get financing? the cloud ventures out there -- crowd funding out there. what about the banks these days? >> there are a number of banks. you have the va and chases of the world that have gotten aggressive. have they? because of crowd funding? >> they believe it's their moral duty to get out and provide that. i received hundreds of e-mails saying when is spa going to open? i don't know why they thought i'd know the answer. >> there's financing for small business now. is that different from a year ago? >> banks are getting more comfortable with understanding small business is the foundation of the country. numbers aren't big. you have to have collateral and guarantees and things. if people put up their home and pledge, banks are willing to take a chance.

>> the winner on the closing bell. >> thanks. >> great to see you marcus. >> if you could give a prize, what would be the coolest camper you could give? they have to be custom made or do you have one that's unbelievable? >> i don't tell the unbelievable ones. if i could give a prize and it could be a camper, i would customize a mobile office so they could go around the country and sell their product. >> i was thinking for me not them. we have an all star lineup. earnings and cfo of lie lily and caterpillar. we have former fed chairman allen joining us to talk about monetary policy. government shutdown and janet yell len running the central bank. pnchts our guest today is dan gill bempt he's going to talk about his plan to bring back detroit. we'll have help from cofounders

of groupon and kid rock. "squawk box" will be right back. tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.

from detroit to washington, we are rising above with quicken chairman dan gilbert. thoughts on revitalizing the city to what washington needs to do to fix the budget. former federal reserve chairman and author allen greens span is here. we'll get his talks on when the debt limit will happen. what's in the pipeline for eli lilly? we asked the senior officer as the second hour of "squawk box" begins right now.

good morning everybody. welcome to "squawk box" here on cnbc. i'm becky quick. andrew will be back tomorrow. we've been watching the futures this morning. they've come under pressure. chinese and japanese stocks sold out after concerns of banks issues. dow futures down 70. s&p off 8 points. in our headline, it's a big day for corporate earnings highlighted by dow components. we're taking a look at what's been happening with numbers. we're expected to get numbers from caterpillar and boeing around 7:30 eastern time. we'll have those reports as soon as they hit. also talking with caterpillar chief executive officer doug overhem talking to us at 8:00 eastern time. carl has sold his stake in

netflix. cut from 9 1/2%. icon said it was time to take chips off the table. maybe that's why you saw the stock sell off yesterday. it had indicated up higher $40 in the premarket. it was that and cceo about the stock. >> i'm making this up as i go. quinntupled? >> australian government plans to raise the country's debt ceiling by two-thirds. they're pointing the finger at united states as the reason. the country needs some but not all borrowing capacity. officials say they're not going to a allow themselves to get in the position the united states is in now. steve --

>> landmark case involving the worse municipal collapse in united states history. the federal judge will decide -- you see arms going. they're still going back over quinntuple and quinn triple? what's the difference between them? >> three and a half. >> we're talking about detroit organizing under chapter 9. what's nine, joe? they're still talking about it. scott cone joins us now with this important story. >> reporter: good morning, steve. this is a pivotal phase in the case and important day in deciding the day what was one time america's greatest town. detroit is set by decades of decline and decay and population

decline. 17 $1/2 billion in unfunded liabilities. bankruptcy was the option. unions say it's a run around the pension. they want to block this chapter 9 filing in court. it will come down to stephen rhodes who's been moving this case along with speed since the city files bankruptcy back in july. judge rhodes will have to decide on a few issues. first of all is the bankruptcy filing constitutional? unions say not just the michigan constitution bars pension and benefits but they say chapter 9 of the bankruptcy code is unconstitutional under the u.s. constitution. they'll have to decide whether the city negotiated in good faith with creditors. that's a requirement before you file bankruptcy. they say the city never did in

good faith. the city manager says yes, he did. should the pensions be off limits? the bankruptcy code doesn't allow for vout of the pensions. the emergency manager appointed by mission governor schneider is kevin ore. he said in the speech earlier this month that a bankruptcy would provide important benefits. >> we've had some offhand conversations with some of our stakeholders. they have said, look, we know things have got to change. it gives us an opportunity to have a structured environment with federal court supervision for very real problems. >> reporter: this trial phase should take six to ten days. if the judge approves the chapter nine reorganization, that sets up a whole new round of fights where they decide how creditors will be handled. the idea is to get the city's finances reorganized by march.

that's an ambitious schedule. if you think detroit is alone, think again. you'll be hearing from us in a couple of weeks in a program called "broken cities." the problems are happening elsewhere. we'll show you on cnbc and cnbc.com. >> that's why this case is so important. all these other municipality, creditors in all cases are watching this. this is going to set the template for how ever other city is dealt with beyond this. >> reporter: that's absolutely right. particularly this pension issue. pensions in detroit are not particularly generous. $18,000 for a regular employee. that's not a huge benefit in any event. other cities have been looking at this. their pension costs have gotten out of hand. they're going to look to see how that's handled in this case. it. >> there's a story in the front page of the business section of the new york times talking about extra payments made, traditionally 13 month pay out

if the fund was better than 7.9% in the charter, they would make extra payment because engss weren't all you that generous. that has in turn robbed billions of and made this come more quickly? >> reporter: right. that's a huge part of the pension funds in cities elsewhere. instead of saving for the rainy day, they give it out to pensioners. that defeats the purpose of having a pension fund that's going to pay out over years and decades. >> scott, do you know what the time period is? >> reporter: the judge is likely to rule very quickly. he has said to parties don't prepare post trial briefs which everyone takes to mean he's going to rule if not from the bench shortly after that. then as i said, it sets off this whole other issue assuming he approves the bankruptcy. that's not a given. assuming he does, it sets off a

whole set of issues about reorganization. how the different credit tors are handled. not just the pensioners. it's all the creditors. about 3 $1/2 billion out of 18 $1/2 billion in unfunded liabilities. there's a lot to sort out if the bankruptcy goes forward. >> scott, thank you. this is an incredibly important story. scott will cover all day and beyond. our guest host is determined not to let his city go to ruin. he's trying to revitalize the city through the private sector and capitalism. dan gilbert is founder and chairman of quicken loans also the rock ventures and owner of the cleveland cavaliers. he's with us the rest of the program. this is a day we've been waiting for. you are i believe the largest owner of land in detroit outside of the government itself. something like a billion you've put in? >> it's something like that. there are certainly others

besides ourselves vested in detroit. general motors among them. i tell you what, it's an interesting day. with the bankruptcy is a lagging indicator. us in detroit for a long period of time we knew it was coming and was going to happen. just a matter of when. you never knew for sure. pretty much in your gut knew. this bankruptcy is a painful process. once we get to the other side, it will remove the overhang like gm and chrysler. i think in a few years people won't be talking about it anymore and we're off to the races. >> does it leave the people out in the cold? >> that remains to be seen. nobody knows yet what the state may or may not do. certainly the governor has never said he's going to do anything. >> in term terms of stepping in -- >> i'm not on the in side of discussions. my feeling is they're not going to lose 100% of pensions.

i don't think that's going to happen. i'm sure there's some save of that. what percent, nobody knows. >> the debt would be wiped out? >> i think that's the idea. >> that would be the bottom line? >> that's what the emergency financial manager has said. we've got to wait and see. >> can detroit function as a municipal entity without access to credit markets or is it able to come back relatively quickly into credit markets after reorganization? >> certainly a period of time it can function. the emergency financer manager put a plan out. the plan has significant investment, a billion five i think. i don't have the exact number for safety removal. in the plan he filed he's got investment. >> to get rid of empty houses and clean houses up? >> exactly. coming out of bankruptcy, the city itself operates better and

hopefully hopefully the blight. >> you make it sound easy. part of the problem has to be you've got neighborhoods where there's a couple of houses with people in then. you can't wipe out the entire neighborhood and say we're not going to service anymore. >> that's a different issue. under any scenario you want in the future, removing dilapidated homes works. there's no scenario you could paint saying keep 50 here. when people say to me what about this or that? i say that's the market forces as you mentioned before, capitalism. market forces will take over. one of the things people haven't talked about lately or about regarding this issue is that you're going to have big piece of land and a major metropolitan

area with water, sewer, cable, phone and paved streets at relatively inexpensive land prices. that's unprecedented in the united states history. who knows. that may be more attractive than people realize for rebuilding. >> that's right. harlem was in a bad situation decades ago. they offered the people the chance to buy apartments at $250. they tried to get more police on the streets. people that bought the places are looking at places valued at over a million. >> it's crazy. will it be that way in detroit? we're hoping. >> you're out there -- there isn't a block you don't own property on? >> we're focused on down town. that's an issue. you can't have a booming healthy downtown in dying neighborhoods nor have booming nab ining neig in a dying down town. i can't think of one city in the world has one without the other.

we have over 11,000 people down there now. neighborhoods, we've got to help there too. that's the city and state's job and government's job, but wherever we can help. there's other private businesses and foundations we're very involved in. we'll hopefully make it happen. >> we've heard from jeffrey canada who's joined us in the past to talk about harlem and what happened there. part is police presence, part is good schools. how do you get the funding on a grand scale? you talk about two of the big three. blight, crime and education. you don't get to crime and education if you don't get rid of the blight. you cannot have a safe city with 80,000 delilapidated structure.

we've taken kids downtown and said come downtown, look what's going on down here. stay in school do well. you can get a job downtown. they go back to their neighborhoods and walk past the criminal elements. how long does the high last for them? in any scenario, for those two to succeed, you have to get rid of blight. >> a lot to talk about, the mortgage picture and what's happening with interest rates. fortunately we have you here the rest of the show. >> can't way. next we're also talking to kid rock. that's coming up at 8:40 eastern time. coming up next, the cfo of eli lilly. derica rice joining us when "squawk box" comes back.

still to come, former new york times best selling author allen greens span, the fed's next move and forecasting. it's only on "squawk box," profit from it.

drug giant eli lilly reported the result, drug maker earned $1.11 a share for the quarter, 7 cents above average. good morning. good to see you derica rice. >> good morning. >> 6% revenue gross not bad. that's 2 percentage points. that's unit growth as well as pricing able to raise prices on drugs shras well. >> 60% of that was volume driven growth. that with good cost containment across manufacturing and operating expense areas lever e leveraged that to 41% bottom line. >> i'm looking at progress on new drugs. i'm starting to think eli lilly is more of a cancer company.

i used to think of it with ssri, cymballe at that, prozac and mental health. it seems you've transformed the company to some extent? >> we're excited about the breath of our entire drug development portfolio. we have 39 molecules between phase 2 and phase 3 development or mid to late stage development. it spans areas such as auto immune disease, cancer, diabetes. still in the space of neuro science. one of the strengths of the firm has been that type of breath. >> you're trying to off set the decline in some of your old numbers:to still get a revenue gain is pretty good. animal health took up some of the slack for declining sales of your drugs. what's going off patent? >> we've had strong growth in

animal health. that combined with our entire pharmaceutical portfolio. we have four new drugs for approval around the world. we look forward to launch those next year. that's been the key in terms of corner stone of our invasion based strategy to managing our way through this period of patent ex ppirations coming outf this with strong and expanding margins getting back to the way we used to be. >> it's hard to ignore what's happening in health care obviously with the news the past month on the affordable care act. you have expressed disappointment with the center for medicare and medicaid for the final decision whether it provides coverage for imaging agents for i guess involvement

with alzheimer's and things like that. are you worried about reimbursement getting tighter as cost controls become prevalent after the fca. affordable means more affordable. >> there's no doubt in today's environment that payers are going to take a more stringent approach to formula access. the key to getting beyond barriers is going to be invasion which is what we focus on. you have to bring value, meaning clinical differentiation and outcomes to patients and physicians resulting in benefits to the payers. for us that meant focussing our invasion based strategy and how we different yat today's stad of care. we believe our molecules are first in class or best in class. it gives us that opportunity to achieve that type of differentiation to allow that access. we believe going forward in

terms of environment itself, we believe choice is important for patients and clinicians to provide the best outcome for patients themselves. >> speaking of neuro science because i still think of cymb cymbalta. are there new developments in the treatment of depression or schizophrenia at this point? >> we know both in the area of schizophrenia and depression, there are many patients who either go not well treated. we continue to explore that area of research to find that next invasion that we believe we can bring value patients. in addition to that, we have drugs and development in the area of alzheimers disease. we started this quarter in mild patients. we look to have a read out in the 2016-2017 time frame.

>> that's one we need. basic science still needs to continue obviously. derica rice, appreciate you spending time with us today. dividend now is about 4%. you're also going to buy back more stocks. there's a way of returning cash to shareholders in a couple of ways. >> absolutely. we've been pleased with our performance thus far. as we've managed through our expiration and putting out a series of mile markers or milestones we hoped to achieve, we're ahead of where we thought we'd be at this stage. it gives us the opportunity to return excess cash we were building on our balance sheet back to shareholder in addition to maintaining our dividend at the current level in 2014 and beyond. >> okay. give our best. he went to the wrong st. zavier.

thanks. still to come, alan greenspan. i don't know who is more excited, joe, becky or me. greenspan is celebrating the launch of his new book. we'll hear about it and talk about fed tampering. fed tampering could be pushed to 2014. "squawk box" will be back. which u.s. senator was once a folk singer who made extra money singing in coffee houses? the answer when "squawk box" continues. on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal?

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welcome back to "squawk box" in the headline this is morning, jp morgan chase said to be close to a nearly $6 billion settle over the financial crisis over mortgage backed securities. this settlement is between two of the best. you want to go now? cat or boeing? >> you keep going. >> let me start with boeing which is earnings per share of $1.80 full year 6.52 estimate. that's the high end of the range. revenue 22.1 billion dollars estimate of 21.684.

>> that's a beat on revenue? >> that's a beat on revenue. with boeing, it's about backlog, deliveries. normally he'd be here talking telling us that delivery is the most important thing to look for. 2013 commercial airplane deliveries have been increased. >> 635 to 645. for 2013 total commercial airplane revenue to $53 billion. >> caterpillar $1.45 a share. revenue coming in light. street looking for 14.35 billion. if that's not enough, the company is revising the 2013 outlook looking for sales and revenue to be $55 billion with

profit per share. they're now saying 55 billion versus the street estimate. they're now talking $5.50. lowering the revenue and outlook. the ceo says this year has proven to be difficult with expected sales in revenue $11 billion lower than last year, 17% decline. drop from industries that's mining. they expect industries to be down 40% for the full year in power systems and construction, each down 5%. they say not only is mineing down from 2012 but the demand for equipment has been difficult to forecast. orders for new equipment began to drop in mid 2012 and continued at low levels. we have doug on at 8:00. >> the mining company was bought almost at the top. still would work out.

>> that's been troublesome. >> truly a tale of out cities. boeing is up $2.20. the $1.80 is a 16% gain in earnings per share. in the full year number i gave you 6.50 to 6.65 was raised by the company from 6.20 to 6.40. also they're increasing 787 production to 12 per month and 14 per month by the end of the decade. now 11% gain in revenue. >> these are dow components. boeing up in the premarket. caterpillar down $3. you'll see the percentage drop. >> are they in different worlds? >> it's mining. >> it's totally different worlds. >> boeing is on the heels of 787. >> mining is a big story for caterpillar. >> they're optimistic about

growth in 2014. >> we'll talk to doug about that. nkts our next guest in the federal reserve 18 1/2 year, helped make our nation's most significant economic decisions over the last century. joiningsi joinings us now alan greenspan here to discuss his new book "the map and the territory." chairperson, wonderful to see you. >> great to see you on set down here. so many different places we could go. we could talk to you easily until tomorrow at this same time. >> i have time. >> first thing i want to talk about is just to needle my associate here mr. it's so difficult. you can have people with

opposite opinions. both win the noble prize. that never happens in chemistry. >> he just figured out that all the work he did analytically comes down as it always seems to to human nature. you' deferring to psychology. it's hard to figure anything out in economics? >> no. >> is human nature more than analytical and factual? >> let me summarize quickly. all of us can go back a long way always understood there's a lot of irrational affecting the gdp and market. we all assumed in fact almost

general that those were random and would essentially wash out. therefore you could set up your economic models or any model you want looking only at the effects of people acting rationally in their long term self interest. that was a general proposition. that's what they were teaching in universities and basically what economics was all about going all the way back to last two centuries ago. we missed the timing badly on september 15th, 2008. all of us knew there was a bubble. a bubble in and of itself doesn't give you a crisis. the dot crime crisis, there were losses you could barely see in the gdp.

october 19, 1987 the dow went down 22% in one day. by far the record of all time. i thought we were going to run into all sorts of problems. nothing happened. now to be sure it was touch and go for a while. the fed opened up to spigots. you can't see it in gdp figures. bubbles per se are not the issue. it's turning out to be bubbles with leverage. leverage is critically important obviously because it's the only way you can get the issue going forward. the bottom line is this. i said to myself when i saw what happened on september 15th that there's something fundamentally wrong with the way i and a lot of my colleagues look at the

economy. so i tried to go on what looked so much like to me like a detective story trying to unwind layer by layer. the first layer i tried to unwind was the fundamental premise of everyone looking out for their own long term self interest. i was shocked, surprised and delighted at how many of the aspects of fear, euphoria, time preferenc preference, all things we do. how systematic those systems are. for a model builder, you don't care. >> what you're suggesting is that the old models said you cannot settle at a steady state that is irrational.

you're saying we can settle temporarily at an irrational state. that's new to economic thinking. >> it's new to me. >> since daniel in '79 started doing experiments and wrote the great book not long ago winning the noble prize for economics in his work of psychology. >> can i just add on top of that do you think it's because people look to short term best interest versus long term that causes part of this? >> it's a little more complex. i think steve raids the issue of dan con elman. i found his book fascinating. the trouble with behavioral economics which is what that is about, by itself it cannot give you a model. it's essentially saying in classical economics, there's a

conception of how events occur and are distributed. we have sort of a normal distribution in those old models which say everything is random and by chance. but what the behavioralists show it's quite different than that. we talk about the fat tale. that told me that something f d fundamental is different. >> does that play into greed? >> you've analytically proven that. >> i don't know what the actual multiple is. it's three or more and what happens is, if you're looking at this distribution of outcomes, fear is hugely more important

than euphoria or greed. you can see this by the way business cycles function. they go up. bubbles go up slowly and then go bang. it happens all the time. it will happen in the copper market. >> this explains the hang over we're in from the last financial crisis. >> there are a lots of different issues. >> the other thing i want to get to. as many points as i can. one that's interesting is entitlements drain savings from a society and make it more difficult to grow. it's a vicious circle. then you can't pay for the entitlement when not growing. >> this is an unfortunate set of circumstances. the people who receive social security benefits for example believe they are receiving their own money back, the amount of money they put in plus their

employer plus interest. they think it's earned. it is not. the reason it is not is because it's a social security trust fund severely underfunded. same thing is true with health care. a variety of those. because they're underfunded, people are getting actually subsidized pension. if you told people that this was welfare or charity or something like that, they wouldn't want it. i have a lot of documentation in the book that indicate words matter. >> we're going to take a break. this is similar to what we've been discussing how much the promises that our young people are going to need to keep to elderly people. there's nothing left. the elderly people where we are

now were eating everything so there's nothing left. >> it's eating your seed corn. >> we'll be back. stay with us. we'll take a quick break. when we come back, we'll have more with alan greenspan. in the next hour, we have kid rock to talk about the bankruptcy hearing. "squawk box" is back after a quick break. the recent increase in cafeteria prices is not cool. when you vote for flo, we'll have discounts. ice-cream discounts. multi-cookie discounts. pizza loyalty discounts! [ kids chanting "flo!" ] i also have some great ideas on car insurance.

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we are back with alan green span. we always reference growth. a lot of our problems would be solved with growth, even entitlement problems. we've got to figure out how to get there. when you took over the fed, former chairman never talked about you. you've given the same privilege or respect to ben bernanke. i figure the same with janet

yellen. i don't know what i can get you to say about the last six years of future of fed chairwoman. one comment you made about yellen was that she's very smart. when you didn't understand something academics were saying you could go talk to her and she could explain what academics are saying. i don't know whether that's a compliment or not. when i need to know what an egghead is thinking, i go to janet. what do you think of janet? >> first of all, goodly part of the analytical judgments that are coming out of risk management and a like, come out of the academic community. most of them are academics. look, i'm an academic in a sense. i've got a doctrine and do all other things academics do.

i even taught for a while. i understand 90 or 95% of what they're writing for example, but there's a small amount i don't know and want to know. i often found i would go to janet when i didn't know it. she did. she explained it to me. that was helpful. she's a very bright lady. i think she will surprise everybody. >> how? >> good or bad? >> positively. >> in a good way. we don't know when we're going to taper here. i don't know how you want to address that. >> if you talk about when we should taper or whether we already should have, you're commenting on recent fed policy. can you make general comments? >> let me talk to you about the

economy. we're missing in my judgment, at the moment, two things about what's going on in the economy. first is the significant decline in not only domestic savings, gross domestic savings. as i show in the book, in some statistical detail, it's not my data, it's the bureau of economic analysis data. there's a significant decline in net savings as well. in the last year or two, net savings change has gone to approximately zero being up in the area of 10% of gdp. you can't do anything with that type of system unless you're borrowing money from a broad. that's the only other alternative if you want to finance domestic investment.

>> is that people paying credit cards off more than ever and consumer debt is more than the mortgage. they would rather pay off the cash on a credit card instead of earning in a bank? >> when you look at data. household savings rate is going down. i go into this in detail. look at it in income -- it is generally true households overall. i'm focussing solely on the question of macro economic effects. the macro economic effects of this are very important because unless we want to open up to taking off our $5 trillion net

do we don't have the funds to maintain capital investment. capital investment as we all know is the critical issue in growth of productivity. >> do you see numbers like this, zero? >> i don't know what you mean by net savings. >> gross savings. what i suggest you do. there are tables in that book. i don't want to get into the details of it. >> it has gone up since the crisis. what dan is saying is accurate, leverage at the consumer level has come down. credit quality has come up. all those things are true. you're under the calculation i'm not aware of. >> i suggest you -- unless i could put a chart up here, it's difficult to do. >> we could talk until tomorrow. the problem is we're going to owe money to people we're

borrowing from on the growth we're trying to a achievement interest rates better stay low. dr. greenspan, we never have enough time. good luck with the book. >> here it is. "the map and the territory." thanks dr. greenspan. when we come back, we have more from dan gilbert. caterpillar ceo on the company's latest results next. the company issuing a warning. we have madison square garden ceo and groupons cofounder and light bank key manager. they'll join us along with eric lefkofsky. and then it's kid rock. that's all coming up this morning.

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made in the midwest. >> student doesn't stair you in the face. >> illinois based caterpillar out with earnings. doug oberhelman joins us to talk about the quarter. the debt battle and how to win it back. then our disrupters of the morning the grate minds behind chicago based groupon lefkofsky. >> and gilbert has enlisted the super star kid rock. we'll ask about his push to save the city. >> what does opportunity look like? it looks like detroit. >> the third hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc. first in business worldwide, i'm joe kernen with becky quick. a long way to the other side of the world, andrew is off today. dan gilbert founder of quicken loans. more from dan to come. becky has deadlines. >> dow component caterpillar out with results a minute ago. the company missed estimates 31 percentages, 1.45 earnings. caterpillar cut the full year forecast and blamed problems on the mining industry. chairman and ceo doug oberhelman says it's been a difficult year. he'll join us. boeing also raised full year forecast and increased plan dream lieper production

schedule. drug maker eli lilly revenue came in inline with expectations. right now need to look at markets this morning. we looked at weaknesses in the futures. dow down 75 points. most because of what happened in china overnight. change high come positisitive s. in europe weighing in on the markets. france down 1%. gains for dax. >> dow numbers are down. cat pillar is down. boeing offsetting that. caterpillar posted earnings below wall street expectations.

joining us now to talk about the results caterpillar chairman and ceo doug oberhelman, in terms of operating environment and caterpillar, this has been the toughest year in your tenner, no doubt about it. >> there's no question. this has been a tough and painful year. i'll be glad to see it go at the end of the year. having said that, we're getting the opportunity to take a lot of cost out, work on internal. when you lose $11 billion off the top line, it's lard to recover. our employment is down, we've been seeing activities to reduce costs. i'm pretty happy with that. near a record in cash flow. brought back $2 billion of stock this year. our debt was stronger than before the recession. our balance sheet is bullet proof now. we're ready to go. we need a recovery in mining.

i've seen it come and go over my years. the rest of the business is hanging in there. >> mine as good worse than the analysts thought. you can see they still missed trying to gauge your top line and bottom line. i'm sure it's worse than even your internal forecasts as well. why? where is it? where is the geographic location? to viewers, explain what could be so weak about the mining business and whether it's commodity prices or what? >> commodity prices are good. we're seeing in existing mine, production is up year over year. as the big miners have cut back and stopped their big projects, they've looked to save unmany. we were watching mining production all year. rates kept coming down and down. that's the story. mining is going pretty well. i've had numerous conversations with our big mining customers

last couple of months. in terms of existing mine production, more sales for us. we've seen that tail off this year. that's what's been the biggest miss we've seen. we thought mining production would allow parts business and new products it had not. >> what caused them to cut back on new mines and just focus on the ones they already had? what has changed? global economy slowing down a couple of years ago, the period of underperformance? what causes minors to cut back like that? we saw the mines really explode as india and china grew, famous bricks. world of economic growth through the big recession outside the u.s. and europe was pretty good. they got a little bit ahead of themselves. markets got ahead of themselves in terms of what supply and demand really was. when they cut back on new minds

and expansions, that also impacted their investments in existing mines. we frankly felt that. that's the root cause of the problem. the customers i talked to lately are still very much. we're restaging the business in construction mining and energy in a way to reduce cost so when we see a return to revenue it will be a nice time for us. we'll be smiling again when that happens. right now looking at mining continuing to falter into 2014 frankly. >> doug, you said you don't know if it will be next year, five years or ten years. it makes a big difference to investors. if you had to put your finger on it and pick some time between now and the next ten year, when do you think that will come? >> what we're seeing in

construction equipment is nice upturn now around the world. that should continue into 2014. our energy and power systems business is very strong. we're seeing a record year in industrial gas turbine business, local rail and locomotives. that's strong and doing well. that should continue to pick up. we see 2014 flat this year. both those increases off set a bit with the mining reduction. at some point becky, we're going to see a return in investment. these miners are going to have to replace trucks and dozers and loaders. they're going to have to pick up the after parts market, purchase from us as they service their machines. i'm hopeful. i'm not going to make forecasts on mining. my bet is it's sooner than later. i hope late '14-15 we start to see that. >> you talk about the busy nszness next year.

what about expectation for global growth. is it better than this year? also wonderring how the near term solution in washington has affected your business and if washington should be doing things to make your business better? >> great question. we see global growth picking up a bit in 2014. i'm going to answer your question differently. i think government policy has led us to anemic growth. doesn't allow much reinvestment and doesn't allow employment gains. we're all dealing with that. head to policy, rhetoric better over the next three to four years, who knows. one of the things that could help us all is a couple of wins out of washington. immigration, tax reform, something to get our confidence

back. i know you've been talking about that this week. >> give me a policy, doug. >> last three or four years, something the government did to keep growth to 2% in your opinion? >> every year in the last three years we've had the debt ceiling battle, budget battle, every single year. there's been a huge explosion at some point in the year that doesn't drive confidence. i think that's been in the way of a lot of growth recovery. underneath the economy is trying to grow. signals are good. we're forecasting the growth to be up next year. here we go in the fall screaming and yelling from washington which scares everybody. when you get that a side, maybe tax reform, confidence built up, we could see the economy come back stronger. >> how much did that expand your mining operations? i know it should have could

have, would have. it's about timing and long time i'm sure you're positive on that acquisition. how much did it expand your mining? do you wish you hadn't bought at this point? >> well, here's a little fact. a year before we bought, their total sales were $4 billion. our sales in mining are between $8-9 billion lower than '12. we've seen a worsening for our traditional mining products, trucks and big loaders. two years into the acquisition, it can look good or bad. we made that on a long term basis. the reason we bought bucyrus was to put us in global equipment to cover 70% of mining needs. long term it's going to be very good. we've got to struggle through the cycle in the meantime. i'm not making bets on when it will come around, but it will.

late '14-15, things could look different. i'm sure they will. >> great business for us to be in. >> stocks up a lot. once you get back on track, the onward and upwards and name like cat pillar such a great american icon. we're pulling for you. >> thank you, joe. you look at operational metrics we're dealing with. our china business is up 30% year over year. all china is up. we're leading the market in hydraulic excavators. we've got to be in china if 10 to 20 years down the road we're going to in that business. i'll talk about the explosion in regulations and obama care and all other things

that -- >> he didn't get on those. >> he could. >> you know the answer. we're going to break. i want to clue him in to some of that business uncertainty. >> he blamed the fight over the deficit. >> that was one thing that came up. >> first thing he came up with. >> we're going to break. i'm going to talk to him. >> the big line up is coming. >> ceo of the madison square garden talks to us. we'll talk to the current ceo and cofounder of groupon. kid rock will join us to talk about his ideas for detroit and also our guest dan gilbert is next. ♪

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welcome back to "squawk box" everyone. we have a special series we're calling america's favorite stocks. s&p closed a high yesterday. nasdaq closed at a 13 year high.

we start out with amazon shares up 40% in the last 12 months. the company is set to post results after the bell tomorrow. amazon missed expectations in three out of four quarters although that has not impacted the stock. analysts say revenue is the likely key to watch. investors should focus on growth and higher margin areas. same as netflix. it's the growth now spending for the future. our friends on "squawk on the street" continue this talk and look at apple later this morning. let's get back to our guest host, dan gilbert, founder of quicken loans. what happened in terms of may interest rates shot up, what did you see? >> the overall market business is down from peaks in late spring. we're doing pretty good. we're happy with what's going on at quicken loans. purchase market has been strong. a lot of people are paying cash for homes. >> full cash, 100%?

full cash. those are hedge funds buying single family homes and pulling them. we're seeing an increase. in various part of the country you see a significant double digit increase in home purchases. >> how sensitive are consumers to interest rates? the annual is below 2.5%. >> you've seen the decrease in mortgage rate, almost 50 in the last 30 days or so. it's more sensitive than you think. i think just like alan was saying, a lot becomes more emotional, irrational exuberance or less. when you get a spike, production falls off. it eats it's way back as people realize it's not that huge of a spread either way. >> is this making it harder with

loans? >> it will soon with mortgage rules. consumers have complained, a lot in a rational way in a year or two. you often get the broad brush that comes in. instead of picking it off and saying this area, this area, this area are the problems. a lot of times they broad brush it and say we're going to tighten all credit standards. ones you're tightening have no connection to default rates. it will probably get worse with the qualified rules. >> how about at quicken, are you moving down the credit score or making only the highest quality loans? >> in one of the reasons we survived as an entity and were able to thrive because we avoided the vast majority in the last unnamed decade between 2000-10. we're really sort of --

>> what are you not taking? >> sub prime loans. if we were participating, we wouldn't be around. no one that significantly participated -- >> i saw advertisements for underwater -- >> those are harp loans. >> you're getting help to do these? >> it's the freddie mac fannie mae to get people who are underwater -- this is interesting. you have millions of people who are underwater still even though home prices have come up. >> you'll you still refinance? >> the government has said if people are making payments when they're under water that are up here and done it from 2008 to now, why wouldn't they make it if we lowered their payment? it's a good bet. the government's hands or whoever the lender is or bond holders, whoever takes the ultimate risk including us. we do have risks.

there are millions of customers today. our guys will tell you. people hang up on our people sometimes. i hear this from other lenders. the mortgage stuff has been so -- >> it sounds like a scam when you call. >> we know you're under water. we'll lower your rate from 6 1/2% to 4%. click. >> we federal express or air born or ups people. we've had people in certain areas go to people's doors because we want to help them. >> that would be a good use for the shake down that we're seeing now. >> $13 billion. >> with jp morgan and bank of america. >> if some of the money is supposed to go there? they have a lot of money. >> they have plenty of money. >> it's going to districts in play for 2014 for the house. that's the whole government fight. >> they have a lot of tarp money

left they haven't been able to give away. >> they say i have money. >> this isn't costing anything. yeah there's a guarantee involved still and a risk but not even a cost. >> good news. people should hear more about it. >> interesting stuff. a look from madison square gardens, iconic arena getting pay billion makeover. and and a comprehensive batch of tests next. don't miss "squawk on the street" at 10:00 eastern. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card.

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three years and a billion later t iconic madison square garden gets a major make over, a place i grew up. bridges surrounding the arena. join us now for the exclusive first look. ceo and copresident. what does this mean for the experience at msg? >> it means everything. our fans told us how to transform this building. we set out three years ago on how to transform madison square garden. friday we'll unveil the first public event and the next play

the bob cats. >> talk about bridges and other changes. >> well, we have many firsts of a kind amenities here which is what madison square garden is expected to have. it's a state of the art one of a kind arena, measure by which every other arena gets looked at. we're revealing the new lobby where everybody comes. we've made changes for every fan, people in the first row to people in the last rouchlt one of the changes, the chase bridges sus spened running down the court in the ice with seating creating a new seating angle, seating aspect never before and probably never will be anywhere else. >> let's talk about the venture out in los angeles. you're not just in new york now? >> we have seven venues in all. january 15th we'll open up the forum once again.

we're in renovation of the forum. we'll revitalize it to its original glory. you talk about iconic venues you talk about madison jasquare garn on the coast. >> hank, how are you doing? dan gilbert here. in today's world where it's gotten so good on television to watch a sporting event, professional teams whether basketball, football, these things are necessary to make that game day experience differential from watching on tv, right? >> there's nothing liking live being here. we've seen the growth of media with all forms it's given more reason to come to the live experience. today when you go see the garden which is fully equipped with state of the art wi-fi, new score board, you really get the

best of both worlds experience again with the sense of community, passion. nothing like you get when you come to madison square gardens. >> i forget where that rim is. it's like yeah, i could do that. if you're anywhere near a court you look at rim and they're playing above the rim. it's like this is amazing. hockey is same way. to hear when they hit the boards and stuff. there's nothing like live sport. >> also the speed. the thing i notice the most, the thing you don't get on television is the speed of the game. and athleticism. it's truly remarkable. >> i agree. >> speed and athleticism is like nothing else when you're here at the game seeing how fast they're going, crunch against the board, the slam dunk. it's really something special. no substitute for being here for the concert experience and seeing that live.

live is different from anything else. live is dvr proof. live is the future and will always remain. >> my first concert, basketball game, hockey game all at msg. my parents used to take us to sit in the blue seats at the top. i was like $7 a ticket. i have to ask you. do changes mean higher ticket prices for fans? >> funny you say that. we brought blue seats back. we had a calling to bring the blue seats back. we brought them back. your point is great. we wanted to make sure we took care of everybody, every customer that wants to come. we have 26 price points for nicks and rangers, something for everybody. >> thanks for joining us. >> the garden officially reopens friday night against the knicks preseason game. dan is here and brought a bobble head doll. >> last night at the nba owners

commission, the great commissioner of 30 years is retiring. they passed out the bobble heads. these are defective because they do this. i've never seen that before in the years we've owned the team. i'm trying to move it left to ri right, it won't go. this is clearly david. i've never seen that. you know what i'm saying? >> dan gilbert our guest host with us the rest of the program. let's get a check on markets in the meantime. futures under pressure. down 57 points. we've seen almost 80 earlier. this started with china and concerns. this morning we got news from dow component caterpillar, missed estimates and came in

with earnings of $1.45. a slump in the company's mining business that gets the blame. doug oberhelman told us he remains long term on mining it's just a question of what long term means. stock is down 4 and a quarter %. american capital is buying cole real estate. shareholder remain silent get 13.82 in cash or each share they hold. the deal creates the largest net release of share trust. the company earning 2.10 for the shird quarter well point. well point benefitted from increases in membership as well as lower than expected costs for health care prices. >> petroleum up 0.8. that's going to roll off next month. >> done.

>> can you touch the bottom of the net? >> i think i can. >> i have a hoop in my backyard. >> i have one to adjust the height. >> i don't let the kids do that. they love it so they can put it down so they can dunk all day long. >> i think i can do it now. when i see a real one, it's like that's not really there. >> when your watch your kids play on the court and then go see the grown ups play. >> try to hit a free throw, my first is like four feet short. i don't know. >> athleticism is unbelievable. two cofounders of groupon coming up. we'll ask them about invasion outside the valley. and kid rock talks to us about the revitalization of detroit next. ious. sometimes they just drop in.

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our next guess, our disrupters changing the landscape. joining us, cofounder and ceo of groupon. now the founder and managing partner at light bank.

welcome to both of you. >> thank you. >> we should point out the reason you're here, dan gilbert got to know you a few years ago. you're from detroit. you met them in mexico. >> i bumped into them on the beach in mexico. i had my family on a trip. i said what do you do? we have 10,000 employees and two years going public. oh yeah where you from? >> we're from detroit. oh really. when did you move? they both went to the university of michigan. if i was coming out at that time when i was an entrepreneur, i would not have stayed either. one of the reasons we're trying to do what we're doing is build this culture of entrepreneur ship and create the environment people like brad and eric, the next generation have a reason to stay and build business in detroit. nothing against chicago and what

they've done, but they're example of we can't miss the next one. these guys care about their home down a lot. they're getting involved. >> you did start this business in chicago. why chicago? >> i think brad and i moved to chicago years ago and were in michigan, had a business in wisconsin, and made our way to chicago. once we got to chicago it was immediately like why would you leave? it has the core dna to build a technology business. young vibrant work force, university, culture. there was no reason to leave. for dan's point, detroit is on the rebound trying to get those things back. chicago has them. for us, it's been an amazing place to build a kpaechblt. >> -- place to build a company. >> they started a six day

conference downtown last week. truly a remarkable six days filled with content, thousands of people talking about ideas from businesses and entrepreneurs and everything in between. they really are engrained and involved in a big way. >> we think about entrepreneurs and often think of silicon valley. >> it's happening around the country. >> it's a fact great companies get built all over the country. obviously silicon valley has the most. one of the reasons we start chicago ideas week is not just the focus on technology but focus on ideas and to bring lots of people together in chicago in an urban setting to explore and open their minds to be connected. to me that makes a great entrepreneur community. no question chicago is becoming more connected as a community.

in detroit, dan is doing a phenomenal job creating the connected community where there are resources and a lot of dna of people there to help each other. >> dan has a site for brad and his company in detroit right? >> let's do a deal. >> for an expansion office or something. these guys care about their hometown a lot. we'll be talking. >> let's talk about groupon guys. i know you're in a quiet period. it's something other companies have picked up and copied since then. i wonder how do you maintain a mote around your business? >> the business has proven overtime to be more defensible than people thought. we were incredibly copied or cloned in 2010. there were like 5,000 worldwide.

probably one of the most copied business models of all time. facebook launched deal, amazon launched amazon local. all this was really two and a half years ago to three years that offerings came out. sense then we've been able to maintain or grow market shares. what happens quite often, consumers start to get use to buying from a company, search on google, sell used products on ebay or whatever they do. as long as the company is delivering great value you get the net work mote around the business. >> how has mobile changed the business? >> certainly mobile has been the biggest story over the last few quarters. we had 7 million downloads, 7 1/2 million in q 2. our mobile concentration continues to grow. in terms of large commerce companies probably the most in

terms of penetration, transactions more than anybody. you use it when you're out and about exploring your local market whether buying at a restaurant, getting a spa or doing a local activity. it's just designed for mobile. it's geo eccentric intelligent, knows where you are. it knows through the power of a deal how to explore a city. >> i do realize your in a quiet period. we want to thank you for joining us today. >> thanks guys. coming up, kid rock has been one of the strongest advocates for revitalization of detroit. kid rock will join us next.

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>> kid rock purchased a motor city business made in detroit out of bankruptcy to revitalize the brand. joining us with more, robert james richey known as kid rock. is it mr. rock? >> mr. kid. >> the whole family we're huge

fans, kid. can i call you kid? that's okay? >> call me whatever you like, sir. >> thanks a lot. >> don't take too many liberties on that though. >> i won't. >> the amount of stuff you do, i'm most interested in the $20 tickets to your concert and the $4 beer. that's unheard of. people are pointing out you're probably making a tenth of the money you could have made. this is kinds of stuff you do all the time for fans? >> i try to. it's a simple business model for somebody who wasn't in college and not a student who he probably should have been. the little bit of research i've done, sam walton had it right. bigger volume less price. we're starting to get the numbers back from the tour. it was one of the best summers i've had. >> as far as detroit goes,

you're there to stay. you've bought a water front place to live. are you going to move your studio there? you're not just talking the talk. you're walking the walk trying to bring detroit back. >> i love detroit. the home i got here i stayed in last night and didn't have to fight traffic to here this morning. it was great. being able to speak from the residential side of things having had the home a few years now. detroit has got to come -- regulations, especially the neighborhood with the historic homes. i understand things have knob in place to keep things up. this cannot happen in a city where you're trying to get people back. i'm not downtown. i'm four or five miles east. you fknow, some of this regulation, like putting up a fence and gate in front of my

house. there was a little bit of that going through it. i've had my house a attempted to break in a few months ago out in the suburbs. doesn't matter where you're at. if someone wans to beautify their home and make themselves feel secure no matter where you're at. at the hamptons, people have beautiful gates and things like that. i want to redo the siding, make it better. i've been blessed and want to put the money into it. sometimes it gets frustrating being in a city that you know needs the tax. >> i want to do things ahead of hit because i can be, i've been ble blessed. i know dan can speak on the business side. >> regulations are everywhere. >> professor rock, is that okay if i call you that? you sound like a business school

professor. you were born and raised in the detroit area. you are the symbol for the city. you do things people don't know. kid rock helped us settle the symphony strike because we weren't able to raise the money. he did a free concert. what is your feeling on the street, a city that's been beat up so long? what's the feeling on the street in the detroit and surrounding area? >> being here all these years, i know this. there's no place on earth, and i'm not just saying that, no city with more style than detroit city. hands down that's a fact. a lot of people that come here from other places whether to start businesses, be artists, you've got a blank canvas. when we're young artists, we're

broke. we need places to live cheap, do what we want, pay rent and find a craft. detroit is one of those places. see things like the urban farming. there's a sense of community here. not just the streets but the business world. i've stuck my toe in the water with yourself and penskes. everybody here is a tight knit community. the next five years to me looks like it's going to be the people. i don't think it's going to be the government. i think the government needs to do their part, but i think it's going to be the people. i'm hoping maybe i can have my torch and run down in the city and say look how beautiful a home i've made here. look how great all these things are and show positive things going on. enough with the negative. we've seen it all. books, movies, documentaries, everything on that. it's definitely been reported fairly honestly. know one is going to deny it. let's look at the future and make it positive.

if we get people, kids, people like me that afford to have a nice home on the river. people race up north to northern michigan, one of the most beautiful places on earth. i'm driving south on the river, couple of jet skis there. there's no better bass fishing in the world than lake sinclair. >> now you're talking. >> can i ask about the music business. money is not in the recordings anymore. it's all on the road. that underscores what you did take a hit even on the ticketmaster charge, right, for what you could have been making in the place you make the most money? >> well live nation was great. rather than battle with guys, our ceo went into business with us. we laid everything on the table. i've never signed so many non disclosure statements in my life. we laid it on the table, got beers down to $4. we found getting the numbers

back, people didn't mind buying the expensive beers to buy the bigger ones if they could afford it. people that couldn't, they bought the $4 beers. they could get pay good who cou afford it, they bought $4 beer. we're doing 18,000, 19,000 a night. and we made as much money as any summer tour, if not more. bands are coming to me and saying how can this be? you're splitting everything, splitting, parking, splitting the merchandising, splitting the ticket. now we have to get ticketmaster to play a little ball, be a little fair. dan, i was hoping you guys can do it. i know you're doing some interesting things in cleveland where you can charge a fair price. >> i didn't ask you to say that.

but there is a company called veriticks. i want to thank you for everything that you do for detroit. when you think about our city and musicians, eminem, kid rock, madonna, motown and all the artists, what is it about the city that creates this environment of so many musicians? >> i was going to yell madonna ain't done nothing for detroit. >> don't count her out yet. don't count her out. >> no, i picture my mom in front of the tv saying, "bob, you don't have to blow someone else's candle out to make yours glow brighter." >> if you're in new jersey, mr. rock, we could use a little image buffing up here. >> he holds back. he doesn't tell you how he really feels.

>> that's the way to do it. thank you so much, we appreciate it. big fans. >> thank you. >> thank you, bob. >> coming up, much more from our guest host, quicken loans founder and chairman and the man of detroit, dan gilbert. first, a premarket mover you should be watching ahead of the opening bell. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪

welcome back to "squawk box." the futures right now were down 70. last time we checked, down 55, a little bit better than they were before. can't be the import numbers. maybe the earnings are a little better. the company will take control of a joint venture of samsung's business that makes lcd glass in korea. corning authorized an additional $2 billion in buybacks throughout 2015. >> still to come, our guest most dan gilbert. we'll give him the last word when we come back. and coming up on "squawk on the street," don't miss cramer's interview with howard schultz.

and tomorrow, we'll bring you the numbers and instant analysis. and one of our favorites, guest host martin sass. it all starts tomorrow at 6:00 a.m. eastern. who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.

you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous. well she's a guy, so... [ male announcer ] another reason more people stay with state farm. get to a better state. ♪ let's gets back to our guest

host, dan gilbert, for the last word. we talked about mortgages briefly. what do you think happens from here? if the fed pulls back and starts to taper, will that have a big impact on what's happening? >> it's hard to know what the long term rates will do to short term. rates are at an historical low, 50s, 60s, 70s, however long you go back. i remember when my father had a 5.5% interest rate on his house. he said, "son, you can be in the mortgage rate as long as you want, you'll never see this rate again." we were at 11, 12%. it's crazy that there are millions of homeowners who can refinance and think because they're underwater they can't. it's the government's interest,

who has these h.a.r.p. programs. >> were you happy to hear they weren't going to taper for the feds? >> it's head winds and tail winds. we say rates go up, shouldn't stop business. it's a head wind and when rates go down, it's a tail wind and hopefully we can do business. >> thanks for bringing in mr. rock. make sure you join us tomorrow. "squawk on the street" is next. good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla, jim cramer is live with howard