2013. did i mention andrew is back? "squawk box" begins right now. morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin who is back from asia today. we're going to start things out with earnings central. quarterly results are set to hit the taim tape from ford, 3m, cow chemical, sweet row and united continental among others. we'll be joined by many of the news making ceos southwest boss gary kelly. andrew liveris, auto nation's ceo mike jackson. it is an important day on the economic front, too. we'll be getting weekly jobless claims. later in the morning, there's october flash pmi. the latest job openings and labor turnover survey, that's

the jolt report coming out at 10:00. then we have the kansas city fed survey, as well. equity futures this morning, at this hour, at least, are indicated higher. dow futures indicated up by about 50 points above fair value. s&p up by about 6.5. andrew, back over to you. good to have you back. >> thank you. it's good to be back. this is a very different place than cnbc asia and bernie. we'll talk about that in a bit. rr done nelly is going to buy consolidated graphics for $620 million. as joe was just mentioning, bank of america lost a fraud trial over u.s. mortgages yesterday. live on fraud for claims related to defective mortgages for funds sold to its countrywide unit. and finally, lehman brothers, remember them? the lehman brothers holding company, this is the one that sort of went through the bankruptcy process is suing

giants stadium. it wants to recover more than $100 million of a canceled interest rate swaps contract that would used to hedge bonds issued to the arena. the lawsuit came about as lehman .giants stadium couldn't agree on the settlement amount to swap contracts after lehman fooird filed for bankruptcy. mr. kernen. >> andrew, good. the tape i wanted, didn't bernie lowecall you a socialist? >> he called me a sociologis sociologicalist. >> it was during the obama care discussion? >> he is proud proudly righter than right. >> he's right of me. >> absolutely. 100%. >> wow. >> hangs out in seattle. thinks everyone should have a gun. >> wow. >> it's true.

>> sounds like a soulmate. >> you guys should get together. they have a -- it was a lot of fun out there. >> while you were traveling, did you notice the ten-year yesterday? >> i was on an airplane yesterday. >> i don't know where it is today. it was $2.49% yesterday. >> it's back above right now. 2.50%, though. it was pretty amazing. so it was about obama care when bernie called you that. it's been so long, the government shutdown. what was it that the republicans were insisting on and the white house wouldn't do it? do you remember? >> something about obama care being delayed. >> the mandate. >> something like that. i don't really -- i can't really recall now what it was. but i think that's -- it's something about that. >> hit me with a feather.

was the it the individual mandate they wanted to -- why couldn't they have said a week ago, let's do eight weeks and the republicans would have said, yes, victory. it would have been a compromise. >> because i think the obama administration didn't want to be seen to be caving for this. they have to admit, though, when you look at the problems for the website, not everyone is going to be able to sign up. but what about all the people who are trying to get health care and aren't going to have it because it's getting dumped january 1st by their existing plan. >> do you remember, though, when i was saying both of these sides are in a tenable position. the one side, it was in the democrats' side to delay it so they could get it together. and it was in the republicans' best interest to not delay it to let it roll out before it was ready. that's how stupid both sides are half the time. they're in positions that are undercutting their long-term goals. number of stocks to watch this morning, at&t earnings beat the street by a penny revenue, just

sightly below estimates. but the internet content delivery, they've got to be resolving with the cloud at this point i would think. outlook was on the conservative site citing uncertain outcome of negotiation with its biggest media client. this is likely apple that they're talking about. shares originally spiked on results and fell. >> i wonder if they have anything to do with the nsa? they would knot know. >> that got ugly yesterday. >> the last thing i remember is w tried to give her a back rub. now we have a spy problem. meanwhile, i tried to work excel. he had used excel. he has all these democratic candidates and he increases his contributions each year by 5%. >> come on. >> and it's a spreadsheet. it's representative.

the control of this guy. you've never done microsoft excel? >> never. >> you have used it? >> yeah, over the years. >> for what? stocks analysis? >> no. not huge analyses, but -- >> political candidates. >> party lists. >> party lists. so not democratic party, but parties. >> exactly. put yes or no in each box. >> it was a rough after the bell session for tech names, some of them. sa man tech reported lower than expected second quarter revenue. below expectations. this company makes that norton antivirus software. sometimes i see that come up and i don't know how to get rid of that. >> it's a little x. >> people laugh at me for not using excel. i don't know how to make an icon move or to make it bigger. >> what? >> if it gets bigger on the laptop at home, i don't know how to make it smaller. i'm not in that generation. i'm sorry. i never learned how to use

windows very well. i didn't. .then i got a mac and everything is sort of -- >> different. >> yeah. you feel how to do it. >> right. >> the virus software was hate by low demand for storage and security in a weak pc market. other movers include angie's list. i've seen angie in commercials. she's young and rich. the online review company posted lower than expected quarterly revenues at first year membership renewal rates fell. it forecast current quarter revenue sort of market estimates and medical devicemaker varian, medical systems reported lower than expected fourth quarter results. demands for products that fell due to uncertainties. something else that's slashed, it's earnings forecast for the full year. we're going to do a lot about the stock market today. we're going to have marty on, a great stock picker. lots of -- 8 billion, 9 billion, he's been in the business a long time. what i want to ask him,

macrowise, now that we know the jobs report, everybody knows why should the stock market go up at this point? >> same reason. >> but if there's no more multiple expansion, then maybe we start going up because it's what we do. companies do better as time goes forward and earnings go up and you -- the stock price should go up the same amount that earnings go up. so you find companies increasing their earnings because they have the right idea. they have good demand. >> do you think it has something to do with qe? >> everybody knows now that we're not saying it's that good or bad for the process of qe. >> at least this year. >> i believe march is the soonest that they're going to taper on any of this. >> right. >> mark faber was on earlier. you heard him saying when they get up to a trillion dollars -- >> we saw randy k can rosner in hong kong. and he said, you know, when your

grandchildren are born. he thought this was going on way longer than anyone -- >> he's that guy, too. >> and faber said during a crisis, anything the government introduces as a program to deal with the crisis in the past has stayed permanent. i never really thought of qe that way. >> greenspan. that was his point, to surprise new a good way. >> it can't be gasoline for the engine. it has to be a prime of a stalled engine. you prime the pump and then -- >> to keep it running again. >> that's what richard fisher said all along. >> the white house said it may announce revised guidance about the date by which americans are required to purchase health insurance. it's not immediately clear whether the adjustment would need to be approved by congress. >> full damage control today.

>> john, do you want to take on what joe was saying? >> i'm sorry, i missed your question, andrew. >> given the practical problem that clearly the administration is confronting, why didn't they make this a piece of whatever was happening two and three weeks ago? >> well, i mean, they are trying to make this thing work. whatever was happening two or three weeks ago was an attempt to destroy the law and they're trying to make the law work. if they can't make it work, they're going to reap some of the consequences that republicans were trying to voice on them. but their goal was to try to make it functional and that's still their goal. we'll see whether they can do it. >> it's not good prwise, john. my point -- and it would have never happened, but my point was why didn't they say, we'll give you eight weeks of a delay.

.republicans would say, they're throwing us a bone. all along, the white house could have used more time to get this thing more ready to go. it's weird that both sides were in these entrenched positions where neither one of them could move off of their position and both of them would have been at an advantage if they had. it was counterproductive. >> well, look, this situation is counterproductive, no doubt about it. but, you know, we're going to see whether they can have their tech surge be effective. we still don't have the reason to think that the basic idea behind the law and the basic mechanism at the heart of the law is functional, so far as we can tell. it is a technological problem. >> exception think about the types of premiums here seeing in other places.

>> what about the prices? >> i saw last night, one of the insurances in michigan, 40% increase is what it was going to be in detroit. >> for who? >> your paper, poor are going to pay more often. >> i'm not sure how that works. it may be in states that had not expanded medicaid, there are some people who are going to fall between the gaps. but my understanding of the way the price increase rate increase situation is going to work is that because of the individual mandate and the higher standard for individual market policies, that some people who have bought very bare bones policies, especially who are young men, because of the ways in which price, insurance companies are allowed to price policies and charge women more than men and charge -- >> becky has been saying this for three years.

the analysis suggests that the ambitions to increase comp tegz evenly have unfolded uneachly and at least in the early -- have not addressed any factors that kuhn attribute to higher -- they haven't done anything about lowering the prices. >> that's it. insurance companies are reluctant to enter challenging new markets because rates are high -- >> fair enough. >> as a result, particularly in rural areas, it ends up being a little more difficult. >> yes. look, there's no doubt that some markets are more difficult and less profitable for insurance companies than others. but, you know, it's not like this health law was going to solve all of the problems that we've been wrestling with health care for decades. >> you know, john, i'm less concerned with the politics and how that all plays out. but more with january 1st. there are a number of people who

have been told that their existing insurance will no longer cover them, that they have to go to these exchanges. you may say give them a six or eight-week delay, but what if someone is legitimately trying every day to get health care insurance and doesn't have it by january 1st and has to have some gap of time where they have no insurance coverage? >> well, you know, the way the enrollment period is working on the exchanges is that you have to -- originally, there was a six-month enrollment, from october 1st to the end of march. and they had been saying initially that if you -- you need to sign up by february 15th in order to be covered by the end of march and be in compliance with the insurance requirement. now they're saying because of some of the technical problems, if you have applied by march 31st, you will then be in compliance. and that is one way of sliding in. look, it may slide more. if they can't get the computers to work, if you can't get on the

website and find your insurance -- >> what do you think is the timeline? is there a timeline at all? >> i don't think anybody knows. >> different insurers are trying to verify stuff. >> they've tried to resist giving a timeline and i think that is probably smart on their part because they don't know when they're going to work. they've got all these people, you know, it's an incredibly xhex thing involving interaction between federal governments, insurers, state governments and i don't -- >> i'm not a tech guy. i don't understand how it goes. >> some tech guy somewhere, john mcafee, will know -- you saw that crazy story, right? >> i don't think so. there's so many moving parts, andrew. >> it depends on what they choose to do. >> they have so many tech people involved in it. >> but i read something the other day that you could do with old software and old nuggets, you could do everything you need to do, but it would be better if -- >> squeak emanuel was one of the

architects of the entirety thing saying he thinks there needs to be daily updates and weekly performance -- of how to check some of these things. so it's enough to concern even some of the architects of this plan at this point sflp. >> this is a realtime experiment in crisis management by government. and, you know, so far, it's not looking very good. >> this is just a rollout. this isn't even providing the health care for everyone. i can't wait until that's happened. >> that's the easy part. >> is that the easy part when there's no doctors left . -- anyway -- >> when there's no doctors left? >> it's going be -- that was one of the pieces that was around yesterday, yeah. you're increasing demand, but not supply at this point, john, right? you're increasing demand and -- >> well, we need more primary care doctors and there are things in the law which encourage people to go into primary care.

but -- .there are some states, it is true, where because of scope of practice restrictions, the shortage of primary care doctors is more difficult than others because, you know, nurse practitioners can't do as many things in some states than they can in other states. that's one way in high demand states you can deal with some of the increased demand for medical care. >> but you know, i can deal with a glitch in signing up, but hopefully the actual administration of helth care .getting treatments -- you know, this is just a bad omen in my opinion. if this part is that difficult, we'll get through this, it's not hurting anyone at this point, but when you're trying to see a specialist, is he covered, is the procedure covered? will there be reimbursement for this drug? when all this starts happening and hopefully -- >> true, joe --

hopefully not every corporation farms it out to obama care. and i know the people in congress and the senate are hoping that, too. >> but joe, just to clarify, though, even if people go on the exchanges, we're not talking about government doctors. we're talking about -- >> i'm not saying that. you're talking about that -- you're talking about who -- there will be experts that panel that decides what's covered and what's not, john. and there are going to be, you know, decisions about who's in the network and who is not. >> i think you're going way down the road. >> all right. if you feel like this is going well so far, we don't have to worry about anything else, then that's -- >> no, no. have you heard me say everything is going well so far? >> no. but this is the part where -- this part i don't even care about. i care about how five years from now how the entire system is running. >> but, joe, let me just pose this question to you. we work for nbc. what's happened to our health care since obama care? >> nothing. nothing at all.

so already get health care, the vast majority of employers get health care. >> we don't know how that works, john. >> for most of those people, all this stuff doesn't really make a difference. we're going to have our open enrollment for nbc, you know, around thanksgiving time like we do every single year and it's not -- >> you've seen how many people are trying to go to defying contribution. you know, this is going to be an alternative for most companies to look at, which may cause them to change what they provide right now. >> that is true. and it's an interesting question to see how much that happens. if that does, in fact, happen -- >> it's been happening quite a bit, right? >> well, not as much as people have -- been describing. we have a long-term -- wait. hold on. we have a long-term trend in which employers have been trying to shed benefit costs, but it is not -- i don't -- i haven't seen

it dramatically accelerated. remember, firms have dropped insurance, firms have changed benefits. premiums have gone up for a long, long time before this law was passed. >> all right. coming up -- thanks, john. the icahn family house of cards, an interesting bet between carl icahn and his son. they are going about their netflix. but first, squawk sports news, game one of the world series going to the red sox. david ortiz and mike napoli drove in three runs apiece. boston really did pound -- waynewright, i thought he was the best pitcher around, 8-1.

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time now for the executive edge. this is a daily segment focused on giving business leaders a leg up. a father/son drama over netflix. as we discussed yesterday, investor carl icahn sold more than half of his netflix stake and made a pretty penny in the process. esz said to be so convinced that he is right to sell is shares that he made a big bet with his son, brett, who disagreed with that decision. brett and his partners say they believe the streaming company is still undervalued. if his son's views are proven right and it turns out he sold the netflix shares too soon, it was his son's ideas that carl get into netflix in the first place. >> when he first spoke about it, he spoke about it as if it was his idea because he was mr.

blockbuster on the down side. >> apparently brett is also the inspiration behind the apple investment, too. >> there you go. maybe -- >> you're an investor. you buy it at 50. it goes to $330. you sell avenue v half your position. that's not huge stretch of the imagination. >> maybe these young fellows, it's 30 years old. >> i think he's 34. >> maybe they have different outlooks. it's kind ooh a -- the tempest in a teapot. he has $20 billion. who cares about a couple million here and there? >> it lives through times when you see collapses in stock market prices, as well. when you hear the ceo talking about this is a very exuberant time in 2003, that might give a long season some investor to pause. >> in general, you buy a $50 stock, it goes over 00, you sell half your position, that's like a graham and dodd book almost.

>> so we give him credit if he's right or wrong? >> i'm not going to talk about this story again. >> sometimes stocks act ir yashlly, anyway. >> oh, dad, you sold? the whole thing is -- they're too rich to talk about. they're not us. you know, the rich rpt like us. >> they're not. >> they've got money. >> they've got money, that's right. let's talk about blackstone founder steven swartzman. he is breaking ground on a college in beijing housing a $300 million scholarship program bearing his name. it's expected to rival the rhodes scholarship. swartzman says he's setting up the program to train leaders with better understanding of china. he talked about those plans on "squawk box" last spring. >> right. i sort of came across just thinking about the rhodes program and the enormous impact of the rhodes with 84 students a year. >> right. have. and we look at what bill clinton has done by way of impact. and if you go through the list of those people, it's pretty

remarkable. so i figured if we could attract the same caliber of people to go to china, learn that, and then feedback in their societies what was going on, it is a good thing. and so that is how it happens .that's the way it's structured. >> very quick turn around, though. six months ago, he was talking about it here on set and now he's breaking ground today. >> right. and at the time he answered, you know, people that said, well, you know, will it help you that you do blackstone does a lot of business in china? and he goes, no, there should be a cheaper way to do it. but a hundred million to -- >> it's pretty good for everybody. >> it is. .it's a lot for him, but it's not -- you know, i know there's cheaper ways to do it. who gave that $150,000 prize and acted like it was a lot? was that ice isner, do you think do you remember? not even 200. >> when people give to charity, i'm going to give them credit

for do it doing it. >> really? you want to do everything you can to prison them from getting wealthy enough to give to charity and yet it's okay when they do. you try to prevent them from making more and -- >> and then we give them credit when -- the government certainly has a better idea what to do with the money when they do. >> of course they do. >> when we come back, we're going to talk about earning wes, the economy and we'll be joined by david and barry after this. but first, the few quarterly results hitting the tape this hour including generac. earnings beating the street. the company's ceo will join us tomorrow morning. earnings estimates, diamond offshore fell short. finally, a beat for starwood hotels. stick around. "squawk box" will be right back. i love having a free checked bag

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we pulled back yesterday base odd some weakness in asia. the major averages today, though, are called higher. where do we stand at this point? let's get a couple of guys take on this. barry knapp is with barclay's. david bianco, deutsche bank. start with you, barry.

seven months ago, you said we're near the highs. we probably might pullback and then for a while i said you look stupid and then for a while you looked right. now i think you look stupid again. where are you at this -- things look like they're going pretty well here and the market wants to move high per. >> well, our idea and the reason we would get a pull back in the second half the on the year was you go back through every business cycle going back to world war ii, you get to a point where the fed decides the economy is on the self-is us staining stage in a normalized policy, right? >> that never happened. >> right. until -- >> how could you know? >> if you're 159 and 18th within we still thought that was the outcome for the markets. now we've obviously pushed that back to at least march. and, you know, you're into favorable seasonality. so i definitely think there's an argument to be made that core fundamentals are improving, but the expansion of multiples has way outpaced that. and were we in the spring or the

summer, i'd probably be pretty cautious at this point. but going into favorable seasonality at the enof the year, it's hard to see your way clear towards the market getting disrupted. >> plus, anyone that was recalibrating an equity multiple based on interest rates being at 3% on the ten-year, now you've gotten a reprieve there, too. we're back down to 2.5, which makes the stock market less expensive versus bonds. >> yeah. you know what? i think that's fair, although i think there's a real subtlety to that in the sense that where qe has worked, where that interest rate differential argument has worked is on the defensive sectors. the ones with high dividend yields, the bond like characteristics. not so much in the growth sensitive names. now, those growth sensitive stocks industrials, tech have been performing exceptionally well since may. i still take that as a sign that underlying trends are getting better, that all of the headwinds associated with public policy uncertainty, the mortgage

credit channel being impairsed, the tax hikes are going to fade and growth will be stronger in '14 and the market is telling you that that's the case. however, the argument that just stocks are cheap versus bonds, to me, only works in the names that are bond like. >> so, david, what i'm hearing from barry, and i expect to hear from you and i know we're going to hear from marty seth is it's night when a rising title, all shifts, there may come a time when you need to find companies that are well run, in good positions in their markets to increase earnings and that's why you buy. are we there yet where you need be pretty good at this? >> well, in all times, it's good to be a stock picker. >> it is. not as important as others. >> we're at a point in time when the earnings growth is going to be about normal, which is better than we've seen in the past handful of quarter. but i expect to see more .more earnings growth .we're at a normal pe. when you're in an environment like that, the market is fairly valued, should give you normal returns from here and insurance.

>> you can't count on -- if you can't count on multiple expansion, maybe a little multiple expansion, it would be nice to find companies that grow at 15% or 20% a year. then you would make maybe that -- >> right. the price is locally demanding. the way we see it is that there is most likely going to be further gains from here that are driven by healthy earnings growth, about 7% for the overall s&p 500 next year, 2%, 2.5% dividend yield. there's some potential for further pe expansion, but we think if that occurs, if it occur necessary a justified way, it's because interest rates rise, yields rise, but they plateau at levels beneath historic norms. >> we're not, like, on a big ship in the night like cruising along like things are pretty good but not seeing something? you know who i'm thinking about? >> yeah, the titanic. >> not the titanic and leo and all that, but are there icebergs? we're not worried about europe?

>> did you see 7% on the earning egg growth? >> right. >> what would derail all this? >> what we're counting on to us us to that type of earning egg growth is healthy growth out of china, an improvement which we're seeing in u.s. and global manufacturing activity, some u.s. exports and most importantly where the improvements have been slow, they're expected to get better next year and investment spending. we have oil prices that justified, cam ex, china is not growing as quickly as it was but it's healthy and its demand for capital goods are there. >> i don't see anything happening. do you, andrew? i'm not worried about a darn thing. are you worried about the government in three months? >> what are you worried about? >> that will surely be an issue. even if they don't taper, which they may well not do. they may go up. >> they're not going to go up. faber sets -- were you here for that? >> i was not here. i was in hong kong.

>> you would look cool, now that -- a ponytail? >> yes. so head on you look business like. then you turn to the side and people go whoa -- >> you can add them into your hair, a weave, an extension. >> and by the way -- >> you've got a different kind of stengdz, didn't you? no. okay. keep going. sorry. >> i don't even know where that -- >> i don't know. i don't know, either. but you talk about someone getting an extension. >> you temper tizzy -- they didn't play the music at least. >> no squadward moment yet. >> we've had dress rehearsals for all the mashlg risks out there, government shut yoens, fiscal cliffs, tapering. i think you're asking a good question, what is one of the risks that we're not aware of yet. >> members are like, wow, this is a great. >> i hadn't thought of dress rehearsals. >> it's such a great boat we're

on. it's so big. it's beautiful. >> so when you're keeping an eye out -- >> play the violin. >> music playing, caviar. >> i think the iceberg is china, but it's the credit cycle in china is the problem. so even what the market was upset about yesterday, it's not so much -- yeah, there's a risk that the chinese government tightens to choke off the property bubble, but they have a much bigger financing problem over there. when the tapering talks started wsh the hot money flows came back out of china. that's what's financing small and medium sized businesses there. the state run enterprises, they have around bad loans. that was part of yesterday's sell-off, as well. when the most money flows start to get pulled away from china, away from india and away from brazil, all thoughts companies that rely on credit, so their expansions over the last ten years are going to have a significant problem. so that is the spot. >> for two hours, we'll have --

look, do you see how many situations he has? and a lot of the stocks have already been moving and marty seth, you know marty seth, right? good. all right. you guys are more macro. >> i would make the point that -- >> you hear the music, right? rur going to make another point. >> one more point? >> you can't. >> come on back for the next point. >> you think we just talk to music all the time? >> it's been nearly one year since superstorm sandy devastated the east coast. one of the big issues? power. we're going to talk about what has been done to skurch the future of the national grid. and it's a virtual who's who of corporate leaders on "squawk box" this morning. at 6:50 eastern, southwest ceo gary kelly, his company posting earnings in line with estimates. we'll talk about that. then a number of big executives coming up later. we're coming right back.

is the east coast better equipped to deal with a hurricane at this point than it was a year ago? steve holiday is with national grid. steve, what do you think? are we better prepared than we were a year ago? >> well, sunday, of course, was an unprecedented superstorm. superstorm sandy. it was the first time the u.s. saw a storm that affected both the electric and the gas system. my colleagues here did an awesome job. we had 16,000 people involved in

recovering from that storm. it was an extraordinary event. the reason why we have to think about the future, of course, though, worldwide, we had 800 storms worldwide last year. clearly, we have to think about whether in a different way going forward. so two things that we've been going in particular, one of those is coordinating with the industry the ability to get people to the sites faster. huge amount of coordination is now resulted in a better plan. i think than ever existed for the east coast before. and the second area that i'm particularly excited about is advancing our own ability to predict where the storms are going to cause most damage. so our folks here work with m.i.t. to look back at the history of storms, why the damage was, and can we get a tool that predicts the weak spots.

those two things are going to make a difference. >> would it change your mind about whether or not it would sht down ahead of the storm, ahead of the water hitting the ground? >> on the gas system, unquestionably, to isolate parts of the system to make sure that if you keep the gas flowing where the storm isn't going to hit. it's part of the emergency response plan. particularly down say the new york. >> i ask that because there is an $80 million lawsuit that was brought in july by the 120 homeowners in breezy point. it was brought against us and the long island power authority. they say you were partially responsible for this because you didn't shut off the gas in time. your company has fought back and said it was the ohm owner's negligence. >> that lawsuit, i don't believe there's any responsibility on national grid or liek. we shouldn't forget the impact on sandy on human life and on property. there are still hundreds of people who are not back in their

homes yet. >> right. and i guess that's part of my question, though. if you look at this in hindsight, would you change it so that you can shut down power and electric before the water actually hits? that's what happened. when you water hit, that's why -- maybe it was the homeowner's responsibility to turn it off, but i'm wonder fg your company could have done something differently, too. >> no. there wasn't any indication of isolating a piece of the situation to make a difference. the point i'm making is it's unprecedented to get water into underground gas systems and filling up with water causing damage. there has been something going on within the industry is are there ways to isolate parts of the system far faster than the system is designed to be done today. it's unprecedented. the emergency on the gas system was the first of its kind where there was a national need for gas crews to come from across the u.s. to help on the gas business.

electricity business, we've seen that on storms in many, many years. the mutual aid on goes was the first of its kind ever. it's clear, though, we have to get good at that as the future of the industry, as well. >> i'm looking at a washington post piece, steve. it's just -- it's "the washington post." don't blame climate change for extreme weather. it goes on to say that in popular -- well, you see that as in the popular media, but the science does not support it at all .he's quoting people from -- you're just -- is it a given for you now that climate change is -- you're taking corporate actions based on more extreme weather based on climate change? >> i would not get into the scientific -- i'm not qualified to do that. >> you used to be in the hydro carbon event. you caused all this global warming at some point, didn't you, when you worked at exxon? now you're preparing for that. you're getting it coming and going, steve. >> let's put the science just to one side.

it is crystal clear to me in my company that we have to prepare to protect our customers with their energy supplies for the expectation we're going to have more storms, more frequently, of higher intensity. >> why? >> that would be the prudent and acceptsble thing to do. what is causing those storms is irrelevant. we need to protect against them. that's why we're making the investments we're making. we're making investments. that's crucial. >> gavin smith. >> showing the reliability of what we need. >> gavin smith of nasa streams are almost nowhere to be found in scientific literature. but it's a popular perception that global warming means all extreme ves increased, even though anyone that thinks that for ten seconds thinks it's nonsense. anyway, we appreciate it. i just don't want you doing all this stuff for your company if it's not necessary. anyway, coming up, the view of the economy from 35,000 feet.

squawk will take flight with the ceo of southwest airlines. his company's earning eggs and outlook, next. i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.

welcome back to "squawk box." southwest airlines reporting in line with estimates. joining us now first on cnbc. happy to have him here, gary kelly the ceo of southwest. you carry more -- did you realize this, guys?

they carry more passengers in the united states than any other airline? is that true, gary? >> absolutely true. it's been that way probably since about 2006, 2007. >> yeah, it's unbelievable. give us just -- given that, give us a sense of where you think the consumer is right now. >> we've had a decent year. we started out the year very strong. we saw some impacts in the spring in early summer from the tax increases and sequestration. but you had a really good summer. had a great third quarter, all-time third quarter record of $241 million. and consumers were out there buying and flying. and we were having -- having a grand time until the government shutdown in october. but we're looking at a good fourth quarter. >> let's talk about that until the government shutdown in the fourth quarter issue. because people are going to be satisfied i imagine with today's results but they're going to be looking forward trying to understand what's happened this fall. give us a little bit of a read. >> well, you know, if you look at our fuel price per gallon for

the first time and i can't remember when, we had two quarters in a row of very stable fuel prices. $3.06 a gallon in the second quarter and the third quarter. so let's start there for the fourth, we're looking for another stable quarter in the fourth quarter. demand for the holidays in particular bookings look really strong in november/december. a lot of the thanksgiving travel falls into december. so we're taking that into account, obviously. so still looking for increase in unit revenues here in october, although not as high as i think it would have been had the government not shut down. >> and give us a read also on ticket prices. they continue to go up. i always thought of you, gary, as a discounter, but i've got to tell you, i took a trip to denver on you guys and it was not a cheap trip at all. >> you've got to book early. get a great fare. we're the low fare policemen in the country. and it's always been the case and it's still true today. we're adjusting to higher energy prices. but we're still by far the low

fare leader in america. but prices are higher because energy prices are higher and fares are up year-over-year probably 5%, 6%. >> quick -- two quick questions for you. integration on airtran. it's been -- some analysts have said it's gone slower than you expect. where are you there? >> we're right on track. our plan always was to have airtran fully integrated by the end of next year. and that's what we reported again this morning. the major activities that remain are to rotate the boeing 717s out of the airtran fleet. that is just now beginning. so there's no way we would've integrated airtran before we got that down. and then we're bringing up international operations on southwest next year. and that'll complete the integration. >> all right. thank you very much. appreciate it. >> thank you. >> you bet. >> thanks for having us. >> ceos keep coming on "squawk box."

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the earnings parade in full gear. dow chemical, ford, and gm ready to set the tone for the market. but will they hit their notes? or miss a beat? guest host martin sass is hear to talk us through today's results and tell us where he's putting money to work. >> could obama care be delayed. reports that the deadline to

have insurance could be postponed after technical glitches at the government's websites. we'll talk about what it means for americans trying to plan for health care insurance coverage. >> plus, we hit the slopes. find out what you can expect this upcoming ski season from vail resorts as the second hour of "squawk box" starts right now. >> good morning and welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin. in studio this morning, guest host martin sass is the ceo and senior portfolio manager, he's going to be sharing his stock ideas throughout the hour. also, take a look at futures this morning, see how things are setting themselves up with green arrows. the dow looks like it would open up about 69 points higher. s&p 500 little over eight points and nasdaq up close to 15 points. ford earnings are just hitting the wires and we'll go over to

phil lebeau in chicago. and he's got those numbers. good morning to you, phil. >> hi, andrew, better than expected numbers by ford from a wide margin. ford beating the street earning 45 cents a share versus the estimate of 38 cents. that's a record $2.6 billion pretax for the third quarter for ford. revenue coming in a smidge lower than analysts expected at $33.9 billion. that's about $800 million less than what analysts were expecting. also, the guidance being raised for profits as well as profit margins for the entire year from ford. so in the past, they said they would be equal to, perhaps better, now they're saying they will be better than last year, both in terms of profits and profit margins. and when you look at the numbers in terms of why ford beat the street, two things stand out, strong sales and revenue in north america. in fact, they made $2.3 billion in north america. that's not a huge surprise. but the real surprise, europe. they were only losing $228

million in the third quarter in europe. that's well below what the street was expecting. most on the street expected ford to lose at least $450 million. you put those two together and you have a company posting better than expected numbers. again, ford earning 45 cents a share versus the street at 38 cents. guys, back to you. >> all right, phil, thank you very much. we'll continue to watch that stock. we do have other earnings out this morning, as well. dow chemical reporting third quarter results just moments ago. profit of 50 cents a share, that was 4 cents shy of what the street had been expecting. revenue below estimates, as well as revenue in the middle east impacted some of those results. cash flow is strong and momentum is positive. joining us right now from midland, michigan. and andrew, can you explain some of what happened here? >> sure, becky. caused hydrocarbons in september. the on again, off again war in syria. but that means for us, we're going to get price increases out there and you run out of

quarter. fundamentally those price increases are out there right now. with the volatility being up and down. that four penny miss is what we buy in hydrocarbons every day. what we should look at is the year-on-year. we're up 19% year on year on earnings per share which is a very strong result. and so the underlying business was strong, cash story as you mentioned was also very strong. so momentum going into the fourth quarter and certainly 2014. >> let me ask you this, if it was hydrocarbon prices, that's come down sharply over the last several weeks, right now down around $97 a barrel and change. that's the lowest level we've seen since june. does that mean this quarter we're in right now is shaping up to be much better because of the shift in hydrocarbon pricing? >> well, certainly the oil to gas ratio is what we look at a lot. and it's less about the absolute number, becky and more about the

up and down. so the hydrocarbons go up and come down when it's off. so actually, we prefer stable even if it's a higher number. we like high oil versus low gas because of our very positive exposure here in the united states. our u.s. business is very strong, our plastics business was very strong because of our stock advantage here in the united states. q4 slow for us. but the momentum, u.s., china, emerging asia, all positive momentum stories and then our focus markets, electronics, agriculture, packaging and plastics all very positive going into our fourth quarter of next year. >> you also mentioned price increases that you can put on because of the higher prices for hydro carbons. will those stick with your customers if, again, it's not necessarily the down or up you'd like a steady price, but with high prices coming down for wti, isn't it harder to make price increases stick with your customers? >> another reason price

increases stick is supply demand gets tighter. improving economy mean demand goes up. and automotive is going up, housing and constructions going up. so there's some markets that are tightening that enable price and value share to occur. and that's really the packaging plastics business. the ones that are exposed to wti are really propeline derivatives. that's a strong result. and it's the first time we've seen hydrocarbon based codeines also go up. that all goes as well for the paint season early next year. look, this is our fourth consecutive quarter of year-on-year earnings growth. that's pretty strong momentum. so whether we get it from price or low feed stock costs or both and what we prefer to get it from is our technology then, you know, frankly march gin expansion should continue. >> marty sass is our guest host today and he has a question for you, as well. >> hi, andrew. >> hi, marty. >> when you mentioned your feed

stock cost advantage in the united states and assume you're referring to the very low natural gas prices that we have as a result of unlocking the shale gas that's caused the supply glut and caused the united states to have a tremendous cost advantage in natural gas versus the rest of the world. can you discuss the impact that's going to have on your operating margins? i would think it's going to be a huge opportunity for you and how you expect to capitalize on that. >> marty, it's a phenomenal question. and so the gas produces gas liquids. the gas liquids are what we use to make 95% of all products that all of us use every day. with advantage usa, advantage dow, we're putting $4 billion to $5 billion of capital on the u.s. gulf coast as we speak to take advantage of that advantage so to speak. that'll enable us to export from here. we're exporting right now. that value chain right now, the plastics packaging value chain, we're running that flat out and

it's got great margins. but to becky's earlier question, as demand tightens, as we get the consumer back in the economy, those margins should expand. in the next two years, we consider our margins should double of that advantage you just asked about. >> andrew, also, i wonder what you think about what's happening over at dupont. pushing to split that company up into two different pieces. other similarly related products. what do you think about a split like that? and what do you think about how you're doing things at dow. >> well, look, i make it -- i do definitely can tell you about what we feel about the dow story. the integration of chemistry and biology and physics and material science is the domain of large companies that can take the integration and provide value to a customer base. if you've got focus markets which we are doing with

packaging, with agriculture, electronics, these businesses need the integration to get better answers and higher value. most of the world is commoditizing, becky. and so the chinese are overbuilding, the chinese are taking technology from us. the chinese are basically averaging out the average. it's going to be a commodity world unless you put intellectual property at play in key markets. in our announcement today, i hope you picked up. we're announcing $3 billion to $4 billion of divestments of commoditized business. in essence the chinese have overbuilt. you've got to stay ahead of that commoditizing trend by playing science in r & d to key markets by being focused. that's the domain of large integrated companies like a dow. >> that's an argument for bigger is better as long as you're focused on areas you think you -- >> yeah, sorry to interrupt you. that focus is where you focus your r & d and marketers and you

go with the world trends like feed the world, provide better infrastructure, better housing, better medicines. the world needs all those things but you need r & d, you need to afford that r & d be being focused on the key markets. >> thank you for joining us today. >> always good to be with you, becky. >> andrew liveris of dow. >> we introduced marty as the senior portfolio manager of md sass. aren't you md sass? >> i am. >> how did you get that job? i would be the grand -- that's it? senior portfolio. >> i like that title. team, you hear that? change the business cards. >> i'd be a hell of a lot higher than a senior. we at 7:30 are going to talk about some of your individual issues, which we've talked about before and the individual situations. i want to get to -- you're not a macro guy, but you have really smart macro thoughts here.

and number one, you think we're in this -- in the u.s. at an inflection point. >> yes. >> i don't want to put words in your mouth. growth still sluggish, tapering postponed, waiting for the economy to accelerate, which will happen some day? >> i personally think you'll see it in the first quarter. what we're seeing and that's why i call it an inflection point. we've had this very sluggish growth, as you know. and that's been extended through october 17th with the government shutdown. >> right. >> next year, we have much less fiscal drag. so just from that, the swing factor of less fiscal drag will accelerate economic growth. >> people have been making that point this week. >> and then in addition as you know, we're seeing the world recover. ford just reported earnings which doesn't surprise me. the european operation has been a big drag on results. it's improving because we have a recovery underway, stabilization and recovery starting in -- >> have you mentioned ford in

the past? >> no, i haven't. but i think it's indicative with what's happening. we have a synchronized global economic recovery that -- where i think we're going to see gradually improving economic growth throughout the world. and i think the u.s. and europe are actually going to be the ones with the biggest increases for very sluggish, you know, recession in europe or sluggish growth here. >> you point out that the weak labor market and the large output gap from the -- what we've been through for the past few years, this is a longer runway than normal for the economy to come back. but that doesn't mean that somehow it's never going to come back. it's noninflationary growth. we've seen this in the past. it could be a good time for stocks, right? >> yeah, exactly. i think we have a situation as you point out, joe, a lot of slack in the economy. not only with production but excess capacity. we don't have the inflationary pressures that would put a stop

to the runway of economic growth. also allows our new dovish fed chairman if she gets elected to perpetuate this policy which i think we'll see around the world. of central banks fighting deflation, stimulating growth, injecting continued monetary accommodation. that allows this economy. the economy and the stock market. >> and the recent pullback in yields, the 249. you figure people ought to get out of the long stuff. allows them to do different things and fixed income. >> exactly. i think what we're seeing is a countertrend rally in the bond market. so as you know, the fed surprised the street by not -- by postponing the tapering i tr yesterday. >> yeah. and i think maybe it goes down to 2.3% to 2.2% up toward the

lower end but up to the 3.5% level. >> no more -- we may not see multiples contract but expansion is not going to be what drives things higher. it's going to be dividend growth and earnings growth. >> exactly. we've seen multiples go up here to 15.7 times on '13 earnings and 14.7 on the following year. we would say that maybe it could go 16 times, slight increase in multiples. >> not a contraction, but a slight increase. >> a slight increase, but earnings as you point out driving -- >> 7:30, we've got five good ones to talk about and then we actually have another five or six of some of your biggest positions. how much are you managing? >> $6 billion. >> just you? >> the firm, not me. a team.

you've got to change it, g.p. general partner. we do have other corporate headlines. plus obama care delayed. the administration may delay enforcement of the affordable care act's individual insurance mandate. what that means for your coverage come january 1st. "squawk box" will be right back. did the government shutdown and debt ceiling debacle leave a bad taste in your mouth? we're asking corporate america, investors and political thinkers what washington needs to do to avoid another debt debacle. can a grand bargain be reached? are we headed for another doomsday? daily analysis and fresh ideas starting at 6:00 a.m. eastern time daily. watch "squawk box." tell washington to rise above and win us back. ♪

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welcome back to "squawk box" this morning. let's catch up on the earnings reports this morning. first one being starwood hotels earn 71 cents a share. beats estimates by 8 cents. revenue also above analyst estimates and starwood is raising its full-year guidance, as well. also, generac holdings.

you already bought your stuff? >> a year ago. >> earned $1.06 a share, revenues beating forecast by a wide margin and the company raising the full-year sales guidance. seen strong increases in the last few years. the company's ceo is going to be joining us on "squawk box" tomorrow. and home builder, earning 43 cents per share for the third quarter. >> because they put the two together. >> they did. >> they beat estimates by 9 cents, revenue beat forecast. net new orders fell 17% from a year ago. and finally, xerox earning 26 cents a share for its latest quarter 1 cent above estimates, revenue was shy, though, above consensus as is its current quarter forecast and we'll see what happens to that stock. you can see in the premarket action there, we have a yellow. now we have the yellow thing next to it. that's the indication? >> premarket, yeah. >> that is premarket off now

over 6%. joe? >> thanks, andrew. every newspaper today has some lead story on the affordable care act. it's there on the cover. we are joined by a couple of gentlemen right now. tom miller, the american enterprise institute. i'll start with you, you aren't going to debate and yell at each other. but you do have differing viewpoints. igor in reading what you say, this is a, perhaps, a small incremental step being taken to allow people to not incur penalties if they are unable because of some of these problems to sign up by the deadline. and nothing more than that. and in your view, a positive development for implementing the law. >> i think so. they had this weird glitch that if you bought insurance after

about february 15th, you would still be penalized even though the enrollment period lasts all the way through march 31st. so they are going to align those two things to make sure if you buy insurance the very last day that it's available, you don't get penalized and it makes sense to me. and if you talk to them, they say, look, this is as far as we're going to go for now. we're not going to expand the enrollment period, not going to delay the mandate. the question, of course, is can they fix this in time? and if they can't, if the problem problem is bigger than they imagined, they'll have to do more. but for now, they're saying we're taking a small step. >> depending on where you -- like so many things, where you stand depends on where you sit. are you allowed -- the president has changed this -- a couple of things about this law and there are some people who say, look, you keep arbitrarily changing parts of the law and you aren't allowed to do that. are you of that mind? or you cut the president some slack here?

>> well, you're assuming normal procedures apply to this administration. we've got other track records of the law being delayed, distorted, changed around. not just the employer mandate, delay from last summer, there are all kinds of things where the dog chewed their homework and they had to do it differently. now, in a technical sense, you have a lot of latitude, administrative guidance, regulations, interim guidance where if things are a little bit out of whack for a short period of time, you can claim some extenuating circumstances. what this administration is scared to death of is actually having some legislation move again on this law because they don't know what type of political mess they'd be in once they open that door. so they will say let us fix what we already broke. just you stay out of the way and we'll make it up as we go along. and making up a lot of stuff. you can't make this stuff up, though, it actually is happening and that's the sad part of the way the law's unfolding. >> igor, you know, getting off on the wrong foot, that's an

expression. this is a small but important part of rolling out the affordable care act what we're seeing right now. what some people that don't like the law are at least arguing is that if you can't even do this right, what happens when you've got 19% of the economy under your watch and, you know, you're actually providing health care for people at that point. people that may have lost their old health care because companies don't want to do it anymore? is this a good for the government having such a large role in providing health care? >> well, they've got to get this right, absolutely. if they don't fix the enrollment problem in the next three weeks, they're in trouble. but i think, really, the good news here is that when people get to the actual health care product for the most part in an area where there's a lot of competition, they seem to like it. they qualify for the subsidies, they're paying less than they're paying now. and, remember, these are private insurers who are going to be

providing this coverage. they're going to be working with private providers. while the government is facilitating the competition, they're really not controlling the delivery of health care or how health care is paid for. so that still remains within the competitive market. but you're absolutely right. if they can't figure this website out, you know, they're going to be in trouble moving forward. >> the president has addressed the issue of the government's problems with these exchanges. can you -- either of you or both of you speak to the private exchanges, companies like we own towers watson which has private exchanges, others who are offering these exchanges and what you see as the potential for those exchanges? >> sure. >> what they're doing now and how effectively they're operating now and what you see in the future? >> well, you named a couple.

and i'd add mersa rolling out for this next year. that's the counter model and that might be the next evolution of employer-sponsored insurance to provide a wider range of choices and an effective environment. that model doesn't seem to be running into the same things. partly because it's not trying to do everything in the world and have all of the adjustments in income and trying to regulate every plan possible, at least the ambitions of the exchange. it's early in this stage. we've had a lot of predictions in the past. this is the next wave of the next version of health insurance. it's got some potential and some possibility. i think it'll take a couple more years to know how far embedded it becomes. but as employers feel under greater stress and pressure from the wave of regulations of the affordable care act, particularly if they're self-insured, self-funded, this might provide another vehicle to provide something more effectively. and it'll be an interesting contrast to what's happening with the government run exchanges which have the black

flag that consumer reports put out recently saying stay away from the exchanges for at least the next month. >> that's not what consumer reports said and they put out a statement saying it's being misinterpreted. again, there is some good news when you look a little deeper. yes, the federal exchanges are having a lot of problems. but if you look at the state-run exchanges, the 13 states in the district of columbia, they're having a lot of success. they're signing people up. people are now going to be covered. and i think the hope is if you can scale that up. scale that up to the national level, you can get this thing fixed. and look, you know, we've had a lot of these kinds of problems in the past. i seem to remember when medicare part d was first rolled out, the website for that for seniors to sign up for prescription coverage was delayed three different times because it just wasn't working. so, you know, it's still not clear how deep these problems run but there is a chance that we're going to be, you know, two, three months removed and all of this will kind of be in the past that this thing could

actually work. but we just need some time, some money to figure it out. >> tom miller, thank you. hey, igor. is it igor? >> it's igor. >> does anyone pronounce it igor like that movie? it's igor, right? >> yeah. you got it. >> okay. because i don't want to -- if it's igor. >> could be raining. >> it's igor. >> frankenstein. >> gentlemen, thank you, very cordial. igor was like -- you're like some under 30 guy, right? 30 top under 30. smart. >> still under 30, thankfully. >> see you guys later. thank you. when we come back, highlights from game one of the world series and then the earnings parade continues. ford, dow chemical, 3m and much more. which names will you be watching today? and later, vail resorts for the upcoming ski season. "squawk" will be right back.

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now the answer to today's aflac trivia question. which u.s. representative participated in big brothers, big sisters? and had michelle obama as her mentor. the answer, democratic representati representative terri sewell of alabama. at 8:30 eastern time, the labor department will be out with a report on initial jobless claims. we'll be watching that closely because the fed will too. at 10:00 eastern time, the government will issue new home sales figures, as well. ford came out with earnings of 45 cents a share, that beat estimates by about 7 cents. raised the yearly profit forecast and says the situation in europe is improving although

it still does have posted losses in that region. and john skully is said to be mulling a bid for blackberry. this is according to the toronto globe. scully says he sees value in blackberry but it needs experienced management. joe? >> the st. louis cardinals -- let me mention -- we'll get to the cardinals in a second. 3m, $1.78 versus $1.75 is where the estimate was. also have a forecast for the year from 3m. company is narrowing the full-year view from 665 to 675, and the estimate is 670. shocking. that's right in the middle of where the -- they have narrowed their estimate. the sales numbers is going to be probably something people look at here.

7.854 and they did 7.92. and that's above expectation. yeah, and that's, you know, people are interested in revenue and revenue growth in this environment at this point. the operating income, 1.7 billion. display and graphic sales, they do a lot more of that now. health care sales 1.3 -- what's that? >> that's where the business is. forget about the post-its. nothing to do with anything anymore. >> scotch tape and post-its. >> sponges. >> i bet you post-its, you know how to do things on your electronics, right? i don't know how to do that but you don't use them anymore, do you? >> not much. sad -- >> it's like the "new york times" sort of -- >> don't. >> well, it's a business that's going away. >> i will tell you, i think the post-it business has continued. >> it has. >> you can still buy them. >> i still use the blackberry. >> yes. >> okay. back to -- the cardinals -- man,

they were scoring so many runs against the dodgers. what happened? the st. louis cardinals flew in one of baseball's great cathedrals, fenway park to begin the 900th edition of the classic. the red sox got an early upper hand, staked to a 5-0 lead after two innings and red sox pitcher jon lester with eight strikeouts and it was 8-1. john lackey will pitch tonight, game two for the red sox while the cardinals will send rookie sensation, who is this guy? andrew michael -- why would you even try? michael wacha. he's going to be on the mound tonight. >> going to be looking for that. >> it's on too late. it's on too late. but there are two games this weekend. >> we can show clips. >> what's today?

thursday. >> today's thursday. >> yeah, two games we are going to be able to watch but then there's college football and everything else. coming up, more stock ideas from our guest host marty sass, also, then, high expectations for the upcoming ski season. the ceo of vail resorts on how the company's handling the economy. "squawk box" returns right after this. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card.

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we're in the middle of earnings season. covering a lot of them. but what are some individual stock picking ideas from someone who has been doing them for how long? >> oh -- >> we don't talk about that. last time -- you did hesitate a little bit. i did say that when i started, you were legendary. as a broker. that was 1981. >> yeah. >> i had been in the business quite a while. >> all right. so let's do the rationale behind. you're long ebay. you would buy ebay? why? >> so, you know, it's very hard to find in a market that's up 24% this year s&p. and a leading internet company,

the leading ecommerce and mobile payments company that is actually up 2%. >> it's lagged -- it's gotten so hot that sector in ebay -- >> that's correct. >> although, it doesn't look horrible on that chart. >> it was up 56% or so last year. and it's up nothing this year, 2%. so what's -- by the way, one of the themes that i look at is situations where investors perceptions lag reality. so the perception is that ebay's growth is slowing. i spent an hour with our analysts yesterday going through every single key metrics at ebay, nothing's slowing down. it's just very consistent. >> was he nervous? a senior portfolio, the guy that owns the company? >> we were grilling. >> you were? >> yeah. that's what we do. >> exactly. that's my job. >> we went through every metric. it must have been 50 different metrics for the company and we looked at the growth

sequentially year-over-year and everything is just beautifully steady strong double digit growth. every part of their business. >> ebay. >> ebay. >> you know, everybody talks about amazon which is up 42% in the last couple of years. and the difference is, they're losing money, they'll report earnings today, that would be a loss. probably a bigger loss than people expect. nobody cares because they're accelerating the top line. >> right. >> ebay is focused on very profitable business, they just acquired a company in the uk which very interesting little start-up company that has thousands of couriers that can allow same day delivery. so they're going to extend that. they've already extended that to 25 markets in the united states. they're competing head-on, innovating constantly. they're trading at, if you forget about cash which is $8 a share. 16 times our estimated earnings for 2014. if you back out the cash, it's

14 times earnings. it's less than the market. and we think it'll grow 18% to 20% a year compounded annually for the next five years. >> adt? >> adt. there's another laggard. again, focusing on situations where perceptions lag reality. adt is down roughly 14% this year, the stock. and that's because there's subscriber acquisition. this is a recurring revenue model business. it's security. >> i have it, yeah. >> they -- their subscriber acquisition costs have gone up, which suppresses earnings. and people are concerned about competition. let's take the subscriber acquisition cost. the big driver there was a new product which they're branding throughout the country. they have over 6 million customers, 4,900 salesmen and 400 distributors. >> 6 million customers. >> 6 million customers in the united states. >> all right. >> and they're rolling out this service which is a home order

mason ecosystem, kind of like apple's where you have on your ipad you can control everything in your home. and it's called pulse. and it's $45 a month. it's an affordable price for a very sophisticated system to control everything in your home. it'll control energy, it'll control health care. it has many dimensions to it. that's why their acquisition costs are up for future earnings. >> okay. >> they're going to buy back 23% of the company through share buy backs, through the end of 2015. they see the value, we do too, we think it's a great situation. >> in the past, you've mentioned u.s. air. >> yes. >> and you've mentioned activists and sinclair broadcasting. can you mention all three of those in like -- >> 30 seconds? >> no. but like 40 seconds apiece. something like that. >> good. >> u.s. airway? >> the whole industry is going through -- >> you've been making money since you told us -- >> thank god. they keep beating consensus.

all the major carriers are beating consensus. the industry has changed. gone from a period of chronic losses to sustaining and improving earnings. consolidation, which has strengthened this industry in a sustainable basis. i think we'll see a u.s. air, which is trading 5.8 times our estimate of earnings, getting a bigger expansion whether they merge or not with american, as you know, it's being contested now. >> in the generic area. >> generic, you mentioned there was a -- mckesson did something. >> yeah, i read that mckesson, which is not a surprise, it's been in the press. >> biggest distributor, yeah. >> the united states -- the world's biggest pharmaceutical distributor, roughly $125 billion a year in revenues.

and mainly in the u.s., they just acquired a major distributor and retail pharmacy in germany, based in germany, $5.4 billion deal. it's going to be major accretion to mckesson's earnings. >> you like mckesson too? >> i do like mckesson. where it plays is what's hidden in this whole picture is that this plays into the whole consolidation of the generic industry. the interesting thing about generics for distributors is that the profitability of generics is roughly two times that of branded drugs, people are surprised by that. they think generics because they're cheaper have lower profit margin, much higher profit margins and much higher dollar profit per generic. that's expanding their bottom line and profits. and this will help accelerate that. >> we'll do sinclair and some of

the other ones you can talk about dow chemical some more. >> sure. >> okay. good. we'll have more from marty sass. >> we're going to give you a preview of the upcoming ski season in a moment with the ceo of vail resorts. and then in the next hour, also we're going to talk about more about the possible delay of the individual insurance mandate for obama care. what it's going to mean for companies and individuals looking to sign up. "squawk box" returns with that and a lot more in a minute. ♪

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welcome back to "squawk box" with the start of the ski season almost underway. the leading industry transformation, our next guest usually joins us from the rockies, today on the set. robert katz the chairman and ceo of vail. you want skis or snowboard? >> i'm on skis, but we like them both. >> we want to go places there aren't any. >> the shredders? >> no, we welcome the shredders.

>> out of control. >> my kids are like, you can hear them coming. oh -- >> no, no, no -- they bring excitement, actually. the shaun white generation. >> because you're worried about your life. >> no, no, no. >> let's talk about ticket prices. what are they going to act like this winter compared to last winter? >> they'll be up. no question about it. >> they've got them up there. >> well, we have a strategy that says for the skiers who are really loyal and want to ski all season, we provide a season pass. >> right. >> the season pass is an incredible deal. it's about $700. you can ski 26 mountains all season long no restrictions. >> we'll get to the epic pass in one second. >> like us, we show up for, you know -- >> over a week. >> for a week. we're on the five-day, maybe even daily -- >> depending on the situations. >> how bad is it? >> over $100 a day. >> $100 a day? >> over $100. you should be buying a season pass. if you're coming out a week,

it's an easy deal, no-brainer. $700 a day, right? and it's probably going to be over $120 a day at vail. come out for your second trip, it's free. >> what percentage of your customers are now buying the epic pass versus either daily tickets or some kind of week long deal? >> so it's about 50% of our visits actually come from season passes, 40% of our lift ticket revenue. and we have almost 400,000 pass holders around the world. 80 countries. >> you started this epic pass thing and the idea is to expand the business globally. how many people are actually using the pass at multiple -- at multiple mountains. >> a pretty big percentage probably in the neighborhood of about 20%. one of the things with skiing, though, people like that option. it's kind of like golf. they're going to be able to go to multiple places. whether they make that trip -- >> how do you make sure it doesn't get used by someone else. >> i have a picture.

>> if i'm wearing my helmet and goggles. >> then we ask you questions -- >> trying to find the deceptive ways to do it. >> that price point. i've got my wife and two kids and i just did it. we're going to be there, i think, for five days and it comes out to exactly $700 and we're only going once. it makes sense, sounds like a good deal. but i'm only going once. so i'm paying for a season pass for five days. that's all i'm looking at. >> great powder day, two weeks later, one month later, you're skiing for free. >> have you seen the farmer's almanac this year? >> i have. >> why are you laughing? >> it's terrific. we've had a great early season. >> i have an app and every day -- >> you look at it? >> it alerts me. >> i've got two things to go over with him. one is margin, comes from the ticket or rental stuff? >> margin comes from ticket first and foremost and then ski school. >> talked about where your money's going to. >> last question, most important

because this is a colorado issue. >> yes. >> you see this story about pot smoking? >> i have seen it, yes. >> and what are you going to do? >> we don't allow that on the mountain. >> you don't? >> no, there's a big thing about it. >> just on the list. >> no, no, no. >> no, it's not. and we operate on federal land so it's not permitted on federal land. and, two, can't be -- >> we're, you know, the primary guest that's coming to our resort -- >> you don't want people going off the mountain. >> you won't outlaw the knuckle draggers they're called too because they're always like this -- >> this happens every time i'm on. >> now you know why. >> try to get him a discount on a ticket. >> no, i don't want -- coming up, an update from phil lebeau on ford. he spoke to the company's cfo. he'll bring the comments a of this. and we don't stop until you get enough of the auto industry. [ male announcer ] this store knows how to handle a saturday crowd.

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let's get back to phil lebeau. >> you know, joe, really two stories stand out from ford this morning. one, they beat the street by a wide margin, 45 cents versus the estimate of 38 cents. that's a big tip of the hat. not only what's happening in north america, but international operations. first time since the second quarter of 2011 that ford posted a profit in large part because it cut its losses in europe. that's the main story here and the other story is that ford is

raising its guidance both in terms of profits as well as profit margins for the entire year. so they made $8 billion pretax profit last year, they're going to make at least that this year. in fact, they've already made $7.2 billion. we're going to be talking with bob shank, cfo of ford. we'll talk with him coming up, "squawk on the street" a little after 11:00, guys this will be one of the stocks to watch today for sure. back to you. thanks, phil, coming up, we'll talk about obama care being delayed. more reaction by the white house. and then auto nation's going to be recording. we'll go under the hood of the nation's largest car retailer. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ 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.

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headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. where are you putting your money to work? >> i get my money advice from pbs. >> where should i put my money? in tech stocks or the housing market? >> tech stocks. >> we'll ask martin sass if it's time to take money on or off the table. >> the rollout of obama care marred by glitches. >> now, can you say the alphabet for me? >> well, a very, very heavy -- we had a very -- >> we'll ask the former director

of the health exchanges how long the problems could delay the mandate. and breaking economic data. jobless claims and international trade numbers are hitting the tape at 8:30 a.m. eastern. the third hour of "squawk box" starts right now. >> welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernan along with becky quick and andrew ross sorkin. >> back together. >> the round trip is like 25,000 miles, isn't it? >> yeah. a lot of miles on united. i'm hoping that -- >> frequent flyer stuff. i'm right there with you. our guest host, martin sass, chairman and ceo of md sass. first, though, andrew who as i say is -- >> back from asia. a little bit of earnings news to talk about. the dow component 3m reporting

$1.78 per share, 3 cents above expectations, revenue of $7.92 billion, slightly higher than expected. a lot of post-it notes. we don't know about that. ford reporting a third quarter beat earnings per share 45 cents versus expectations of 38 cents. that's a stock you like, sir. revenue was in line with expectations. ford also raised its yearly profit forecast and says the situation in europe is actually improving though it still posted losses in that region. also, we talked to gary earlier on this one. southwest airlines reported third quarter earnings of 34 cents per share, that was in line with estimates, revenue was also in line with expectations. shares rising in part on the company's strong holiday forecast. he did say things would be getting better than some people anticipated. and finally, xerox, 26 cents per share for the first quarter. revenue was shy of consensus as is current quarter forecast. shares there, though, falling in early trading almost 4%.

let's get a quick check on the markets, take a look at u.s. equity futures. dow looks like it would open about 60 points higher, s&p 500 up about six points and nasdaq about 11 1/2 points. >> new ultrahigh for 3m. the dow's at an all-time high. most of these dow stocks you've got to check. most of them -- yesterday, boeing, that was -- >> yeah. >> right and 3m today, an all time high. >> that's what you would think. >> in fact, as joe was mentioning, the s&p 500 snapped a four-day streak of record highs on wednesday. is it time to play it safe and take money off the table? joining us right now is chief investment officer at bmo private bank. and our guest host today is martin sass who is the ceo and portfolio manager of md sass. you actually think the market is

fairly valued at this point. why is that? >> yeah, i think it's fairly valued based on the huge liquidity we have, $1 trillion injection from the fed every year. and positive momentum. you know, if you were to just strip that away for a minute and look at valuation, we're only growing earnings and revenues at around 2% right now. and i do think that the market could drop, say, 10% or so once we get back to kind of the basic fundamentals. but for now, you know, riding this liquidity and riding the momentum is not a bad place to be. >> that's not necessarily how you see things, is it? >> well, i think we're in a secular bull market that's going to last for several more years but i do think it's going to get interrupted by corrections. and one of the triggers of looking at, you know, what could go wrong because we've talked about what can go right is in march, there's two events that are likely to occur. one is tapering, the initial

start of tapering. if i had to put a bet on it, i'd say march is the meeting they'll start the taper. and i think that can get people shaken in anticipation of that. the debt ceiling debate again, it's not going to be the scary scenario that we saw last time. but i think we're going to see bickering down in washington again. i would expect there'll be a correction. we've had a straight-up market, unbelievable, up 24.4%. and, you know, a lot of stocks have gone up a lot more than that. so 10% correction would not shock me in this bull market. but i wouldn't let -- i wouldn't have investors try to, you know, trade that because one doesn't know when that's going to happen or when you get back. so i think the big picture is stay invested and good, sound undervalued companies. >> when you see a correction, you would say buy into that? >> yeah, exactly. >> and you would say the same thing, i think i heard you? >> yeah, the interesting thing is, it seems now that

untractability in washington is like a car wreck on the side of the road. slow down, look at it and keep going. i think investors are starting to realize this is more or less business as usual and not getting fussed by it. i do think, you know, the other thing in washington is the only thing left really are entitlements. there isn't much discretionary budget for these guys to work with. i do think if we do make substantial progress on the entitlements and try to get, you know, that down plus perhaps raise a little revenue move toward the middle, i do think those are the ingredients for a multi-year market. we do need to make substantial changes in washington. and who knows if we have the wherewithal to do that right now. >> hey, how do you think the economy really stands right now. we're getting all of these numbers after the delay from the government shutdown. but have you seen a dropoff in the numbers? and do you expect that to continue?

>> well, we did see a dropoff in numbers in early october because the american public was a lot more spooked about the shutdown and the debt ceiling than the stock market was. we did see in early october that the weekly chain store sales came off the mortgage applications were weak. we also saw confidence numbers come down. what we have seen in the last couple of days, though, in looking at daily confidence numbers, for example, like the index. this shutdown is something with a very temporary impact. the federal workers who were furloughed were going to get paid anyhow. no real impact on their consumption. and i think -- of course you know we had this cutback in government ordering during the period of the shutdown, but then the contracting's going to snap right back.

the shutdown was the first two weeks of the quarter. we have the rest of the quarter to make up for whatever the shutdown took out of it. i think for the quarter as a whole, the shutdown's not going to be a big event. >> all right. thank you both. >> thank you. let's get more from marty sass, our guest host today. when did you start buying sinclair broadcasting? >> we bought it in july, joe, when the stock declined 25%. >> what happened in july? >> what happened in july was there were rumors that a memo was being circulated by the federal communication commission, which it was indeed that would limit -- would change the discount that they apply in accounting the amount of stations,ing the percentage penetration tv stations could have. so there's a 50% discount for uhf versus vhf in accounting that 39% cap. >> this is media, andrew, pay

attention. >> locked and loaded here. >> all right. >> so that spooked people because sinclair if you do that count and they -- if that went through, sinclair has capped out the amount of stations they have. they're right up at 38% penetration on that change in formula if that happened. first of all, i don't know that's going to go through. and even if it went through, they may make other changes that will liberalize it. and there are other ways to increase penetration without the -- >> like what? >> like having deals to manage stations. and the economic benefit which they already do have. so even forgetting that, just looking at this company which generates. it's got a double digit free cash flow yield. its earnings are exploding. earnings this year will be double last year. there are a number of stations

that have gone up to 162 from 58 2 1/2 years ago. they're going to roll out a new channel 8, which is a 24-hour local/national news channel. it's not going to cost them anything. they're going to take all their stations and put it altogether. >> that going cable or local? >> that's going to be licensed throughout, cable to satellite to every provider and tcharge retransmission fees. they're raising retransmission fees at 30% a year compounded. >> right. >> there's another kicker here for the whole industry. sinclair's the biggest beneficiary. and that is their ceo is leading a move to approve a new technology that will take tv spectrum that is unused and allow it to be television to be

broadcast directly to your mobile phone instead of downloading it, your station will go right into the mobile phones. that alone we estimate can be worth as much as the whole price of the stock and it's not priced in at all. it's a hidden asset. >> either on or off air. he probably has some thoughts on just media in general. the way things are moving and the way it's going to go -- >> even the barry diller project. >> all that stuff. media -- the landscape is daunting. one thing i know is i like spending time watching great content on a really clear tv. that's -- as far as leisure time, that's never going to go away. i just don't know who wins and loses? do you know? >> the problem is you can now watch your big screen tv and see all that stuff. >> i watched gus slit someone's throat with a box cutter. this is the first episode of the

fourth season of "breaking bad." i'm not spoiling the last season. you spoiled the last season. anyway. that's neither here -- "walking dead" sunday night, you know what else i'm watching? blacklist on nbc. and modern family. i like watching -- i like to watch. just like chauncey. you know i like to watch. >> you do. >> problems with the rollout of obama care now expected to force a delay possibly. we're going to talk to the former head of the health insurance exchanges. and later, a read on the auto sector. mike jackson will join us. you know this company too, don't you? he's going to join us to talk about the company's third quarter results. [ male announcer ] what if a small company became big business overnight? ♪ like, really big... then expanded?

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good morning. welcome back to "squawk box." technical glitches in the rollout of obama care could force a short-term delay of the individual mandate. joining us now with more is joe ariel, the former director of the health office. the office rather of health insurance exchanges at hhs. he's now a managing director at

phelps and phillips. good morning. >> good morning, andrew. >> how long will this fix? >> i don't think anyone knows the answer to that. it seems every time there's a problem with this law, it gets magnified into a major crises. this one could turn into a major crises, but at this point, about a month to fix it. and if it's fixed in that month, no one will remember. >> where do you get the idea this is going to take a month? some say this is a very complicated problem. so many different insurance companies, different states, this is not just something where you can go in and tweak a couple of lines of code. >> i don't know how long this will take. that's for the experts to figure out. but what we do know is that the business fundamentals here are sound. the president used the imagery of a health store and that's appropriate here. these exchanges really are health stores and there are a lot of people shopping, 20 million on the federal side and millions more on the state side.

there is a problem with the checkout lines now. nobody really wants to go to the checkout lines today. they want to wait and shop and browse. and most people don't want to pay money for a product that won't take effect until january in october. they would rather pay late november, early december. thatst the window to fix this problem. the experts are working on it. i'd have my hair on fire if i was still there and one of the experts -- working with those experts. for the rest of us, take a deep breath and relax and know there's a good product out th e there, people can go to the website today, check out the product, shop and browse, look at what they may want to buy and hopefully it's fixed within a month and there's no harm to this law. >> are you a believer -- there's been a suggestion that young people especially who go to the website, have a hard time checking out as you might describe it, decide you know what, i'm not going back? >> well, there's certainly an issue in that the people who most need the coverage will wait however long they have to wait

to get through the lines and get the product. and people who don't need it as much today who are very important to have inside this law will maybe be a bit more impatient. again, as long as that problem is fixed at the time when people want to go to the checkout line it's fine. i don't think those young people are looking to buy today. they will be looking to buy in late november and into december and the problem needs to be fixed at that point. but there's another aspect to this which is that way to get to the checkout line easiest is an online functionality. there are multiple ways to get through the checkout line here. you can do it on paper still, you can call somebody on the phone and work through it in a phone call, you can go to an insurance company still, web brokers, all kinds of different avenues to access this product. and really, if you think back in time, traditionally that's how people get insurance. they go to their insurer, a web broker, get on the phone, they do it on paper. this online functionality very important, it's a key to the

success of this law long-term, but it is by no means the only way in which people can get through the checkout line. >> what do you think the government's going to have to do to explain to the public, a, what they have to do and, b, what the new deadlines ultimately mean. are you going to be -- you're going to see a lot of advertisements, online advertisements. what do you think they're going to have to do given you pick up the paper every day. i think i do a lot of reading. i don't really even understand where we are anymore. >> well, it's a very good point, this is a very consumer oriented law. consumers are going to be in the driver seat in terms of these health stores and health exchanges. a lot more advertising is going to be directed at the consumer. in the past it's mostly been directed as employers, that's the main way people buy insurance. there'll be a lot of that although as your earlier guests pointed out, even for employers, they like this exchange idea so much they're looking at doing private exchanges. a previous guest described that as kind of contrary to this law.

in fact, it's exactly the same type of operation as this law. it's imitating the public exchanges on the private side so that ten years from now many millions of people more than the ones on the public exchanges will through private exchanges having that same kind of shopping experience and the advertisement will go directly for the consumer and will just have a better health care system for it. >> if you were still at hhs, would you have gone ahead with all of this? >> absolutely. there are people who have waited many, many years to get this kind of coverage to tell them that, sorry, we have to delay the law, particularly in the 16 states that are running their own exchanges that have succeeded. if every state is doing what kentucky is doing today, we would be well on the way to the $7 million enrollees already. they've enrolled more than they need to move towards that number. so the states succeeding, we certainly don't want to stop them from going ahead right on time. and once that's true in the federal government that has an

obligation to make sure the law goes forward for everybody else, as well. so i think it goes forward on time. it's just a question of whether we'll have full online functionality. >> see whether people actually sign up. thanks so much for joining us this morning. >> thank you. coming up, talking about breaking economic data, weekly jobless claims and international trade numbers, they hit the table at 8:30 a.m. steve liesman has new exclusive cnbc data. steve? >> yeah, very excited to bring you the all-america corporate awards. the most loved company starts with an "a," a tech and retail company. it's not maybe who you think when we come back. ♪

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steve liesman is crunching survey data this morning searching for america's most loved company. he joins us now with the all-america company awards. good morning to you, steve. >> yeah, a new part of the survey, andrew. we asked 800 americans to give us a favorability rating on 20 companies we wanted answers for. and here were their answers. first, let's start off with the most loved and we're going to see the runner-up. ford coming in with a 67 on a scale of 0 to 100. who is the most loved? it's amazon, believe it or not. gets the highest favorability rating of the 20 companies.

let's move on now to the least loved and not a big surprise here, we asked about four banks, jpmorgan was the runner-up in the least loved category. and, of course, you know, the least loved actually was goldman sachs coming in as the least loved company with a 37. remember, scale of 0 to 100. amazon gets a 67, goldman gets a 37. here's an interesting one. we looked at the most average, gm ties with walmart. i think if you're gm or walmart, that's kind of like where you want to be. you want to be right in the middle, both of them coming in with a 57. the average of the 20 companies. and here we go, most mars and venus award. the biggest difference between men and women. runner-up is microsoft which has a seven-point advantage among women. and the winner is facebook which has a nine-point advantage. i guess that bottom is not moving right now. that bottom piece. most partisan runner-up general motors and for reasons i don't know, verizon has a -- what was the number here? it has a 12-point advantage

among the gop over democrats. i don't know why that is. maybe somebody can explain that. how about between rich and poor? $75,000 in income up and below. the runner-up is amazon and the winner, you probably guessed this one, apple. apple has the biggest difference in favorability rating between rich and or. finally, one other category i want to add. we call it the mason dixen award. coca-cola enjoys a 12-point favorability rating in the south compared to the north. guys, we're going to have to put all this online, the 20 companies and later on today at "fast money," we'll give you head to head. what do you think, andrew, nfl versus mlb? >> oh, nfl by -- >> right. >> large margin. >> not as large as you think. one question, one region in the country where it's even, where do you think that is? >> that's a good -- boston. >> well, right here in the northeast. >> right here in the northeast. >> it's even. of the four regions in the

country where the nfl and major league baseball are even. >> you said amazon's the most loved? >> that's the next step, andy. the most loved. and all the guys at the top of our list, their stocks are all doik well. now, it's not like if you're not loved, you're not doing well, but if you are loved, you are doing well. >> we'll be watching that throughout the day. when we come back, we do have breaking economic news. we're just a few minutes away from the weekly jobless claims for august. that was a report delayed by the government shutdown. right now as we head to a break, take a look at the u.s. equity futures. they have been higher all morning long. those dow futures up by about 60 points above fair value. "squawk box" will be right back. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price --

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welcome back to "squawk box," everybody. we are just seconds away from the weekly jobless claims and the international trade numbers for august that were delayed by the government shutdown. we've been watching and waiting for this because the jobless

claims are numbers that obviously the fed will be watching very closely. we've already gotten the last jobs report before the next fed meeting before the end of this month. right now the u.s. equity futures are indicated higher, after a little bit of a selloff last night down by about 50 points. the dow futures indicated up by 68 points above fair value. steve liesman is here, but jim, take it away. >> thanks, becky. the jobless claims come out as 350, as expected 2340. last week was revised higher to 362. continuing claims, 287. last week was revised up to 2882. the one thing that's somewhat decent is the trade balance is a little less negative. but i don't think people are concentrating too much on that today. i think they're more concentrated on the claims number. and remember, the market seems to want numbers that aren't bad, aren't good, but somewhere in the middle. i think the market would love numbers that continue to give us

a lack of clearity. the stock market did nothing on that, still up 525, yields are 2.485 which ticked down a hair. >> isn't that a bit of a setback if the market is looking, still, for that goldie locks? i thought we'd gotten to the point where we were okay with that and wanted good news again. >> yeah, we've blown by that. we did get to that point a couple of months ago. now most economists talking about march for the first talk of taper. as soon as you get three or four months out, it doesn't -- at this point in time, taper's just off the table until it isn't in my mind. >> that also means when taper is back on the table, then the market has to readjust again. >> there will be some shock to it. my thinking, though, by the way, there might not be as much shock with the janet yellen fed chair

because she has such a reputation, i think she might get a little more leeway than another chairman might. >> you're not going to believe it until you actually see it? >> i'm not going to believe it until i see it. >> all right. let's bring steve liesman. you're looking through the jobless claims. >> yeah, i'm looking for the word california. i don't see it. remember, we've had this problem with california tech, a technology problem with their system. i'm not seeing it. i see that california -- >> i see this is still elevated by california backlog. >> you see that, i read the story, i didn't see -- >> still elevated by california backlog. i don't know if that means the ones we hadn't seen to this point are coming online or maybe talking about the revisions. those were revised a little higher. >> here's the problem, we had a ramp-up to 373, it's come down three straight weeks, 373, 362, 350. looks like we had an initial surge perhaps from the government shutdown or government shutdown related. but what we're looking for and maybe not seeing is the extent to which there has been a

private sector impact here. >> let me tell you -- >> i'm not sure i see it. >> a labor department analyst said claims in the backlog in california are still working their way through the system. technical problems as california converted to the new computer system have distorted the claims since september making it difficult to get a clear read of labor market conditions. california's a big state. >> this has been running for well over a month. maybe need to get -- someone needs to go and take over the system and get it to work. i know we've got another problem with another computer system in the country. maybe it's going around. but i don't know, it seems -- it's been a very long time that california's been distorting the data here. >> remember, though, the lack of clarity is part of what the market probably likes. and over the last month, this number has been invalidated by a glitch every week. a lot of months have to pass before the market really begins to trust this number again. the one thing that's important to it, it certainly isn't showing block buster jobs growth. the fed is back.

>> in 11 years, jim, i've never heard a person say that we like lack of clarity. it's the first time. >> i've never said it before. >> there's a trade on -- because the fed can't see, then they have to keep -- >> that's the sad thing about qe. sad thing about qe, it is a new word. but we're starved for any data. did you see the ten year? again, we're below 2.48 again. this was a weak, i think this was a weak number, right? and suddenly, i don't know if the -- >> concerns you still have the numbers, they raised it to 3.52. >> we'll take 10,000 surprise weakness and we'll actually trade on it. we need our -- >> we're spoiled too. >> the trade deficit coming in is something that will help gdp a bit which the fed will like to see. if it's lower than what was baked in. >> wow, look at that, wti below. >> i ain't going over there. >> that's going to be good for

profits, low oil prices. >> bad for traveling over there. >> joe, there's so many beautiful places in america. >> national parks. >> they're open. go there. >> they're open in the wintertime, yosemite. >> i'm going to vail, paying full price. >> you didn't get a deal? >> nothing. >> you have people on tv to get your daughter into college but you don't get anything. >> no. i haven't gotten anything. >> do you get a donut at least? >> i've gotten a pen. i got a pen. >> steve, a question, the threshold i've been waiting for is this six-month payroll at 200,000 or more payroll gain. >> it's an evans test. >> yeah. is that still the right threshold to be looking at the fed tapering? >> i think they're going to be, what's the right word -- >> a general feeling. >> it's not like you can say

here are the goal posts and when we hit these, we're done. >> i think that concept is -- would be right if they did 200,000. but if you had like the participation rate going up. >> right. >> and you were able to find jobs and the unemployment rate were coming down but maybe not so fast. and there was a sense -- the word evans keeps using and other guys is momentum in the economy. and you kind of know it when you see it and feel it. >> and maybe the work you're looking for is wholistic. >> wholistic and general sense of the atmosphere of the economy. and that's a way that monetary policy is way more art than science. >> what is it? what is strong -- in this case, it's going to be a whole bunch of different factors, claims will be going down. you'll know that. you've been there before. we have been there before. we can get there again hopefully. but a couple 250s. going to spook jim eurio. >> to put a finer point on what you're saying, we may know what happened.

we saw good earnings from ford. there is the lack of clarity, but one thing we know for sure, we're not in that right now. so that's all we have to go with. now, things could obviously change and the fed, they don't know when things are going to change either. they're hoping just like we are. >> and just the timing of the stuff, it may well be until december you get some clarity on the momentum in the economy. >> i hope so. >> we've got another big number coming for us on -- >> november 8th. >> second week, second friday in november. >> yeah. there's an election in new jersey, too, i think. >> is that the same day? that week? >> it's on a tuesday, though. >> it would be the tuesday before. >> okay, guys, jim, steve, thank you very much. >> the ads now in new jersey are that the guy that is running -- i'm running against. basically saying he's such an incredible governor he's able to be the favorite to run for president. this isn't a guy you want for governor. >> our point is he's not going

to be there to finish. >> i know that's what the point is but nobody thinks you're running for president, you know, anyway. it was a weird -- back, you know, the back-handed compliment. coming up, we're going to do quarterly results from the nation's largest car dealer. mike jackson is going to break down the company's quarter and give us the latest read on the auto sector when we return. avo: the volkswagen "sign then drive" sales event is back. which means it's never been easier to get a new passat,

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auto nation rolling out third quarter results, the country's largest auto dealer reporting profits of 75 cents a share. 14% up from a year ago, but 2 cents shy of expectations but revenues beat forecasts coming

in at $4.5 million. joining us mike jackson. mike, would you say that the bottom line was below what you were forecasting? how do you beat on revenues and not hit the analyst number? can you explain it? >> absolutely. it's our fourth consecutive all-time record earnings per share. and since we don't give guidance from time to time, we'll be outperformed guidance and sometimes we'll be lower than what the analysts have said. so you're talking to a guy that's basically won the super bowl four times in a row and you want to talk about the point spread. the fact of the matter is it's four consecutive all-time records in a row, it's a great performance on the part of the company. >> how do analysts get it wrong? how many follow the company? do you know now? >> of course i do. >> the info from you, don't they? don't they get body language and direction from the company?

>> well, i'm not an analyst. so it's not my expertise to talk about what the. >> i think -- >> what the analysts do, joe. the fact of the matter is. it's the fourth all time record in a row. and you have to think about companies that formally give guidance and those who do not. we do not give guidance. >> good. all right. and stock goes higher and revenue has become more important in this market than a lot of times. we know how items can factor into earnings per share on any given basis. martin sass is here. he told me about auto nation. this is what he said, mike. the largest new car dealer in the u.s., you're going to benefit from the wealth effect of higher asset values and also high-income consumers after so many cars are so old. that's a tough one, isn't it? i'm going to try to twist your arm to get you agree with that.

>> i really like marty, he's very insightful and to the point. >> astute. >> absolutely. as far as asset valuations, well, we own 80% of our assets in the u.s. i'm not saying we're a real estate play, but we think we're well positioned. as far as what's happened in luxury as you know we have a big position in that with a third of our profits coming from premium luxury, primarily the germans. we think that's going to grow faster than the value market. but the underlying fact is there's huge pent up demand, genuine replacement with the average age of the cars, now 11.2 years old which is going to drive this business going forward. now, there was some difficulties going into october with the government shutdown. definitely the pause button was hit out there in america. but we fully expect to get that behind us and our forecast of

industry sales of mid 15s will probably come in at the high end of the range by the time the year is over. >> what's that word o'reilly uses opine. you like to opine on washington. they messed you up this time, they get another chance in three months, what do you make of what's happening. what do you wish would happen? >> well, i think it's a new low of dysfunction. one is the issues, i have issues with obama care, we can talk about that. but what the republican tea party did, it would be like if you're playing a game of poker and you know you have a losing hand, you know it and you push all the chips on the table, well, that's just stupid or crazy. neither of which are very good. and i have to tell you, iffer the business community, it was very unsettling to see the tea party overplay the hand so

poorly, you know. it's almost incompetent for politicians to negotiate that way. so it was not the finest moment for the republican party. and i think a business is genuinely reflecting on whether there are enablers of this dysfunction and whether we have to be more supportive of the entire center of the spectrum. whether it's democratic or republican. i hear that conversation going on everywhere. and i have to tell you, that's where i am at. >> does auto nation got to prepare for obama care? how would it -- how is it affecting auto nation? >> well, it's a lot of preparation work. first, as far as why it was pushed out a year for employers, i can tell you unequivocally the systems are simply not ready. that it would function and you would have what's going on now for individuals in corporate america, it would be a massive revolt about the dysfunction of

the systems to meet the law. and they probably should've postponed the entire thing for a year because they're simply not ready. the complexity and the requirements to meet the standards are absolutely mind boggling. we have difficulty getting our arms around it. we're doing everything possible to prepare for it. if the systems are there, it's probably manageable. without the systems, it's going to be just a huge mess. for corporate america. >> mike, my perception is that strong sales for you and for the auto companies is being driven really by the higher income consumer. let's say 100,000 plus who are much more likely to buy a new car than the lower income. is that what is the big driver?

and if we broke it in between income classes, is that where you're seeing the strength? >> well, we have to look at the entire spectrum of the sales, which when you include used cars, our total sales in the quarter for new and used are up 14%. so people who can't quite make it to a new car are in the preowned market and the pre-owned market is extremely strong. and what is supporting it is we have the full spectrum of financing available. from a 10,000 used car that has a subprime credit customer right through a bmw with a customer with a credit score 750. to leasing the full spectrum of credit is available because the financial institutions have seen that the american people pay for the car first. >> all right. you know i love that, preowned.

you're the kind of guy that could've come up with that, you know. did you do that, jackson? >> yeah. >> huh? >> that's your thing, isn't it? pre-owned. >> yeah, i'm a car salesman from new jersey. what do you expect? >> it's good to see you. yeah, you're going to be up today. so right about, i guess -- >> yeah. >> they're selling the analyst, not the stock. we'll see you later. thanks. when we come back, it is cramer time. two mad minutes. "squawk" will be right back. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading.

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welcome back to "squawk box." let's go to the new york stock

exchange. our good friend jim cramer joins us. >> i think it's so great that he said, listen, my stock should be down and it's not. ford delivered, autos the bright spot of this economy, despite what's happening in washington. >> we had andrew liveris on from dow chemical earlier. they missed expectations but each also said things are starting to turn. he blamed it on high oil prices with why they missed for the last quarter. he said if you look at the auto industry and in housing, they're going to have pricing power and they'll have higher rates and he thinks the rates will stick because of the strength in autos. >> i think that's exactly what's happening. there's a couple of segments that are good. take a look at a couple of the big cap companies. ford was good. i'm looking at 3m. you have unbelievable growth particularly in emerging markets. there are great things happening

in big cap companies, provided you know where to look, which is companies that are not dependent upon america. >> did you see the southwest numbers today? >> i just know every airline has been terrific. >> would you still love the airlines? >> look, the airlines, you get another whole wind at your back because of what's happening in oil. you just mentioned oil still going down. but southwest air is good. i think usair getting respect. this is a group that continues to act well. you know why that is. they doesn't want to call it oligopoly pricing but there's just not a lot of competition anymore in the airline business and that is fantastic for the seat -- revenue per seat. >> you long the airlines? >> we're long delta and usair. i think one of the things going on is going to be a revaluation of the multiples on the stocks.

when you look at delta, who is now going to be buying back stock, is in the s&p, paying dividends, all the good things that big cap strong companies do, when you compare them to, say, fedex, fedex delivers packages. usair delivers people. you look at the spread in multiples, fedex is 14 times earnings, usair is five times earnings. almost every metric, delta is at or beats fedex. >> wow. >> today. >> that long-term negative perception -- >> exactly. i hated airlines my whole career -- >> until now. >> this last year. >> we will see. >> it's been disastrous till now. >> i don't want that extra seat. >> if i ever fly coach. kidding. kidding. kidding. >> if i ever fly commercial.

>> if it were only true. >> what are all these people doing on a plane? >> that's what the kids say, who are these people, dad? >> we'll get in the last word on the market when "squawk box" returns.

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let's gets back to our guest host martin sass for the last word. dow chemical? it's down today. >> i'm not invested there. >> and you wouldn't? >> no, i think there's more interesting things. >> microsoft. >> they're suffering from pc sales down six consecutive quarters. >> how about amazon? >> no earnings. buy ebay instead. >> buy ebay instead of amazon. how about ford? >> doing well but not interesting enough risk reward for me. >> it's up almost back to its high post bailout. it was a little over 18. how about 3m? anything like that? >> i'm not involved. >> none of the big caps realreall really -- what about netflix? >> no value. >> apple? >> cheap stock. not sure that they have the

innovation anymore, unlike say an ebay that does. >> what's your biggest position? >> activist is number one. ebay is number two. sinclair is number three. everything i've been talking about here. major positions. usair. >> we got to go. martin, thank you. we got what we could out of you. we're out of time. >> that does it for us. now it's time for "squawk on the street." good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. some big time bellwethers are out. we have a seven-month high on china's pmi. breaking news on carl icahn and appl