good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off today. welcome to october. this is the month that may be best known for some of the market's worst days and for good reason. it has had five of the six one-day worst stock drops every. the 1929 crash, 1987's black monday and, of course, the financial crisis, as well. but before you pull up the covers and go back to sleep and avoid investing this month, take some solace in these statistics, as well. there's a slow gain in october going back to 1928. the dow is up nearly 3%. the s&p about 7% and the nasdaq almost 8%. but it has been a rough run for the small caps. the russell 2000 down more than 5%. despite a volatile end to the quarter, the dow, the nasdaq and the s&p suspect all closing higher for the period.

i'll send it back to you. >> u.s. stock futures indicating a higher open. october has actually ended up higher 50 times in the last 86 years. oil a little higher, but still in the 98 range. gas, he paid $2.89 a gallon. ten-career yield, 2.49%. the strengthening u.s. dollar has been and continues to be a bigger story. there is some chatter out there, guys. it could see parity. one to one euro slshl dollar.

>> we've been talking about this for a long time. at 1.26, it's already split quite a ways. parity? that is a long way to go. >> we were there, but a long time ago. 50 pounds ago, actually, in my case. gold is trying to hang on above $1200 bucks. >> do you sit here in the afternoon in this seat? >> yes, i do. how did you know? >> because i watch you and i see you're messing with all the computers. now i know who to plame. >> no, i need to raise them. >> no. ing on, better. >> we're going to get to this morning's confirmed story. a confirmed ebola patient in texas. meg, good morning.

>> good morning, andrew. a few details coming out when the case was confirmed. tom frieden getting a bit of a timeline about how this patient arrived in the united states. he was traveling here from liberia to visit team. it wasn't until about four to five days later that he started showing symptoms, which is important because they're saying these only spread when the patients are symptomatic, like showing the sign of a fever. that's an important thing to note. on sunday, the patient was admitted to the hospital and placed in isolation where he is currently being treated. frieden did outstanding a few steps they're taking. the first steps are ensuring nobody else gets infected. he said there is a team from cdc coming to dallas. >> we have a team en route to texas now. we will work hand in hand with state and local and hospital

public health and epidemologic staff to monitor them for 21 days to see if they have fever. this is core public health work. this is what we do in public health. >> that patient didn't have symptoms, didn't have a fever until he got on the plane. they are tracing the contact he came into with his family, with health care workers. that's a big job they're doing there. he also stressed he has no doubt that we will control this case and it will not spread widely here in the united states. guys. >> meg, we have a bunch of questions. >> i have two. i'm going to start with this one. do we have any idea or any estimate of how much people this particular patient was in clinical contact with? when we talk about contact, it's not just being around other people. what exactly has to happen?

>> frieden telling us yesterday it was probably a handful of people he kapt contact in contact with from his family and the health care team he's been involved with. ebola doesn't make contact through the air. you have to come into physical contact with it. it's bodily fluids. >> meg, what about sweat? if you hug someone who has it, what about the idea that if you share a drink with them or if they sneeze on you? would that count? would that be something that's contagious? when you say that they don't spread it wh when they don't have symptoms, does that mean that you're less likely to get it or -- >> they're saying you need to be showing symptoms and the virus needs to take time to work itself up to be contagious. if you're not showing symptoms, you're not spreading it to other people. talking about what kinds of

bodily fluids you could take to spread this disease, it has to be going from one person's body into -- you know, the skin cut, through your eyes, your nose, your mouth, not where you're sitting next to the somebody on the plane and you sneeze. this is not spread as easily as a cold. >> meg, again, i'm on the cdc's website. if you go to ebola and if you go to transmission, this is the first thing you need. the natural reservoir of ebola has not been identified. the manner in which it first appears is unknown. so with all due respect to the head of the cdc, how can he is -- and i know this is his job is to cool people off a bit, but how can he is don't worry, we've got it covered. we don't know how many people this infected patient came in contact with. he's visiting family in liberia, he comes to the united states,

hugs them, he shares time with them. do you believe the cdc is being forthcoming? >> i think they're trying to be responsible and commuting what they know medically about how ebola spreads. they don't want people to panic. people are clearly very worried. they're worried about travel. they're worried about just how far this could spread. right now what we're hearing is that they are confident they can contain this. and it's important to note even before this case was diagnosed here in the united states, this has spread to nigeria. there was a patient who traveled to nigeria and can did get into contact with i think 19 people there because they didn't have the same protocols in place to trace the contact and put that patient in isolation immediately. even before this case was diagnosed, they said they think that have that in control in nigeria. it's important to note that they think they have it under control there. we have a lot of protocols in place to make sure this doesn't spread. >> one thing that did kern me is

this gentleman showed up at the emergency room last friday. at that point, the emergency room took a look at him and sent him back with antibiotics. this was a week after they had been figuring out what to do with someone with ebola showed up. you may not know the answers to this, but did he tell them he had just come from liberia? what does ebola look like in the early stages to make it difficult to determine what it is? >> it's unclear why that happened, why they treated him with antibiotics. i think it does show a lot of similarities at the beginning. they were hoping it was something else. clearly, that's worrisome that he was treated with antibiotics and sent home two days before being admitted and then, of course, confirmed to have ebola. >> obviously, a lot of questions. meg, thank you for taking aus these questions from us. we will check in with you later this morning. megan is on the scene there in dallas. >> you have to stay calm, but the cdc's website is not doing

anybody any favors. i just read you the top of it. this is the cdc's own website. during outbreaks, the disease can spread quickly within hell care settings such as a clinic or a hospital. >> the other thing is, you're talking about something that has a 70% rate of killing the host at this point and that scares a lot of people. i don't know if you have a better chance of survival if you were here in the united states, if you are being treated. what it does is dehydrate you. >> honestly, i'm not a doctor, so i can't say, but i think there's not a reason to panic. >> the key is to get it early, right? you have to kwaurn quarantine people off.

and the reason it spreads so far in west africa and they don't have the facilities that we have. a lot of western health care workers -- there's a lot of confusion about what causes this. excellent book. not directly about ebola called fill over and he talks about the growth of pandemics. unfortunately i just finished the book a few months ago. but you have to address things early, block them off and things appear in unexpected ways. >> even though they were ramping up, expecting that it would eventually touch on america's stores. >> we have an infectious disease specialist coming up at 7:30. in the meantime, the markets in china and hong kong are closed for a public holiday. susan lee joins us with the latest. what does the theme look like at this point?

>> well, you mentioned the day. it has special meeting in china and this year, 20, marks the 65th anniversary of the founding of modern communist china. here in hong kong, a whole different atmosphere this year. the 350e78 behind me are looking for the chiet to choose their own leadership. they did raise their flag this morning amid high intentions, more road closures. tonight we are looking for a lot more people to come into this main protest. this should be the biggest night of the six days of protests that wove seen. 250,000 are expected right here in this main heart, the main artery close to the government house and the central business district. it looks like the police have backed off so far, but tonight

we'll be watching and monitoring the situation. there were supposed to be fireworks displays as there were each and every year in celebration of october the 1st, but that has been canceled because of the ongoing events behind me right here in the central part of hong kong. >> susan, thank you very much. that backup of ongoing tensions n closed out the first kwarder solidly higher. why have investors remained so resilient in the wake of global issues? joining us right now is jim russell, from u.s. bank wealth management. and gentlemen, welcome. do you expect the trend to continue through this year? >> i do expect it to continue. i know the market has been resilient, but i'm not sure all

consumers have. i think there's still a lot of skepticism out there. the skepticism is because there's a lot of disbeliefs in the u.s. economic growth funds that we've been seeing. i think friday's jobs numbers will certainly paint a broader picture of whether these trends will continue. i think for most investors, we shouldn't panic simply because this has been a six-year recovery at this point. rallies don't tend to die of old age. i think for most investors, they need to stay equal weight equities. >> jim, how about you? >> becky, good morning. we're of the same mind. we think equities are probably the place to be and specifically u.s. equities, at least at this particular time with so many global events going on. some of the futures a little bit unknown. we think the earnings are strong, will be confirmed in the third and fourth quarter. rates likely to remain pretty low. the negative, of course, are china, europe in terms of income

growth next year. >> as james was just mentioned, it does seem like every time the markets drop, there is somebody who is willing to step in and buy that dip. is that what has been keeping us from having a more marked pullback? >> we think so. the important in emerging 2015 estimates. so we don't think the markets are extended from a valuation standpoint. there does seem to be a persistent bid underneath the marketplace. bonds are very extended, so we think equities are a good place to resign at the moment. >> you mentioned the jobs

numbers coming up. if we get another weak member this time around, will that change your mind about where we're headed and how the economy is doing? >> i think it will be harder to brush off another weak number. we're forecasting jobs gains of about 216,000. so we are expecting a bounceback. consumer confidence up until last month's reading was generally trading higher. so it becomes more anomalous. to me, the underlying strength that we saw and the geopolitics you saw around the world and the international markets. i think some of the pullback we've seen, i think the bid is because you have headline risks out at hong kong, for example, the market holds back a couple of percentage points. but then we get positive economic numbers and people dive back into the markets at that point.

>> jim, you sound like you agree with that. i thought i heard you -- >> yeah, we do. we think it's extremely important that the jobs number gets revised up. also the august number to be revised forward. we think the august economy's two-step forward, one step back, not all the data is working for us right now. housing is a little bit jumpy. consumer confidence is mentioned. frankly, we got a chicago pmi number that was a little weak. case-shiller yesterday was also weak. we're looking at a bit of a soft patch here. we're very anxious for the

friday number to be on the strong side. >> jim, james, thank you both for joining us today. >> thank you. let's talk about the corporate news for a moment here. angie's list reportedly exploring strategic options. the stock dropped 72% on the queer. coming up next when we return, the companies that could be impacted by the news of the first confirmed case of ebola on u.s. soil. and the secret service under fire. that bench jumper putting the agency under the microscope on capitol hill, but that probably wasn't the worst in recent months. we'll tell you about it in just a moment.

boish and good morning. the secret service is under fire this morning. an armed contractor with a criminal record was allowed on an elevatorer with the president during the recent visit to the cdc last month. the man did not follow orders from the secret service agents when they asked him to stop using a cell phone camera to videotape the president in an elevator and he even took pictures. after agents questioned him,

they looked him up in a database. that's when they learned about his criminal background. he was fired on the spot. the private security firm that he worked for. the secret service agents discovered the man had been armed while he was on the elevator with the president. >> craziness. and don't they have to go through metal detectors constantly? >> he was a security guard. >> so he was able to get through. >> but he also had a fairley extensive criminal record prooern being hired by the cdc. dominic chu puts together a list of companies that could by impacted by this developing story. >> you know, this is first and foremost as a tragic story, a very is at sad story and a very important story for the overall health of our country.

but more importantly, a lot of people are trying to figure out ways this will have an impact on the rest of the company, the rest of the world. there are certain companies out there poised to benefit or not benefit because of what's happening with this particular outbreak possibility or this particular instance. if you look, the stocks that are the experimental drugmakers, the tekmira pharmaceuticals. it's a $460 million company. >> which start did they have? >> tkm ebola. this is the one that the doctor that came back and was treated here was given. they were given an fda clearance to use their intrimtal drug treatment. >> that was the first two humans treated with this? >> right. biocryst pharmaceuticals is another organization. the u.s. government has recently given them funding for research on ebola.

they have about a hundred doses to make this, but they don't have enough to ramp it up if things go beyond where it is now. >> ee bowl what has been around for decades. it's not been developed. >> ebola hasn't been at the forefront for a very long time. it has been around for a very long time, but it hasn't been a real focus for a lot of researchers and developers. >> the first time its made its way to u.s. shores. >> right. >> in the mast, it's been stamped out of the way. >> that hits the second point.

there was another sector industry in the market that we saw the impact. that was in airline stocks. this is a -- maybe a secondary derivative play. the idea that someone can travel on an airline and -- >> or if countries end up shutting their doors at some point. >> this could have an impact. >> so those are the two places that saw the most impact after the bell yet because of these ebola headlines. everybody else is going to say, hey, ba about other things? we're not at that stage yet. there isn't that feeling it's going to go beyond this right now. this is important because people can be right or wrong when they invest in the markets. maybe they punished airline stocks unfairly, or maybe those that developed the drugs are being given too much credit or maybe not for the drugs they're trying to develop right now.

there are places where you will see the impact of this beyond the most important ones. >> you get some criticism saying you're fear mongering this, you're overhyping that. ebola is difficult to transmit. they don't know if it ultimately comes from bats. that seems to be where they've narrowed illustrate down. here is the reason why it's getting so much attention at the time. the biggest outgreat was about 15 years ago in uganda. we have 3600 confirmed cases. they were in west africa until today. so this outbreak has been exponentially larger. it's still very small. >> i don't want to make he this a bigger story or smaller story, but the nigeria example is an example that should be used as a country that's more advanced than most of these others

countries and they have effectively been able to control it if not stamp it out. we may have issues. i don't want to say we don't. >> who is looking here and looking there? no one is doing that. >> i feel like there's a little bit of that. >> you can also underhype something. and tell people that -- and the reason that i was a little critical, the cdc director, is that the cdc's own website seems to have a higher level of concern than what we heard from the cdc itself. i just want their message to be consistent. >> i would agree with that. i don't know that we're hearing everything. i don't think it's a cause for running around with our hair on fire. i agree with you on that. but there's a lot we don't know about. and the idea that it's here for the first time. the good news is, again, it could spur innovation, it could spur some of the scientific discoveries that i think we've been very lax. >> this is the united states. we have a lot of resources. >> the shame of it is, we haven't done more to attack this

disease in africa to this point. and we've let it get to this point. dom, thank you very much. >> you're very welcome. coming up, much more on that lone, single u.s. ebola case in dallas. we have a top infectious disease expert. he's going to tell us the risk. he's going separate fact from infection, tell us if andrew is ride, take it easy, or maybe a bigger concern. who knows. he will answer the question. but first, pimco's damage control, executives at the fund giant, speaking to cnbc the first time since the sudden departure of bill gross, did they do enough to calm investors? more "squawk box" in just a moment. your goals, our technology. introducing synchrony financial, bringing new meaning to the word partnership. banking. loyalty. analytics. synchrony financial. enagage with us.

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good morning. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off today playing golf. >> in scotland? >> in scottland. >> i'm getting up at 3:00 in the morning, and he's golfing? >> there are some beautiful pictures that he's been tweeting of himself, no less. not selfies. he must have a photographer with him. >> he has a handler, from what i understand. his handler has a handler. >> anyway, our next store, mcafee says searching the game jimmy kimmel online carries a 19% risk of landing on a site that is tested positive for spyware, virus is or malwear.

that earns the late night comic of being the most dangerous celebrity. other famous people with red flags and the latest mcafee ratings, sierra florida. and bruce springsteen along with chelsea handler and christina aguilera apparently is dangerous, as well. so watch yourself on google there. >> amazon and disney had said to be getting along at this point. the wall street journal reports the e-commerce giant is accepting preorders for disney's dvd after nearly two months of an absence of that. no word on if the two sides are close to an agreement. amazon had a similar dispute with warper brothers and ended up making a -- before finalizing an agreement. letget back to the pimco st. yesterday i spoke with the ceo doug hodge and the cio of the

group dan ivacsyn. clearly, stopping investors from pulling money out of pimco was their primary focus, right? so i asked them to explain why pimco should still be investors best bet. >>. >> i think the answer is very simple. we're focused on pimco's first principal, the first principals of investment process, delivering superior investment performance, and the high standards of client service in the industry. and that is what pimco is about. that's what pimco is about. >> the mandate will continue to be very focused on performance and we're confident that we'll be able to deliver on those returns that our clients expect. >> "the wall street journal" now reporting that huj funds are trying to profit by shorting some of the biggest holdings in

the pimco total return fund, thinking, guys, the money is pulled out, you have more stuff, what happens if there's more of something, prices go down. joining us now with a guy who knows something about trade, greg zuckerman, special writer at the "wall street journal," covers better than anybody these kinds of special situations, the mortgage prices. good to see you, again. i dig the beard, man. >> good morning, yeah. tell me wife. this is an unusual situation. this is not like the mortgage crisis where there are, you know, hundreds of thousands if not millions of these types of instruments out there. how big could this sort of -- i don't know what you call it, anti-pimco trade actually be? >> we see this time and time again. you're seeing it at a much bigger level now with pimco, it's a huger portfolio.

and the argument is, a, they're going to get a lot of withdraws. oregon and b, while the new management may not be as enamored with the same investments as mr. gross, they're going to do some selling. so it's sort of a cat and mouse game. it's acting, like i suggested to you yesterday, that it's normal. they're up for the fight of their life. >> greg, i love you, i respect your writing. as they said to me yesterday, $2.2 trillion in assets. 75% of those were covered by people besides bill gross even before he decided to leave. >> that is true. those other investors have done quite well, as you mepged. dan ivacsyn is a superstar in his own right. that said, that's a lot of money. i would argue it's never in the history of the bond markets been

a fight tore so much money among so many. they're all fighting for five, six, seven, $800 billion. it's a lot of change. >> you know, it's interesting because right as the show ended yet, 3:00, i got off air and they said, hey, this guy is on the line with you. you know what he said? he said if ivacsyn is that good of an investor? his credit fund did well at a time when every credit fund did well. what do we know more about dan? >> lisp, you can nitpick -- >> this was a competitive guy. >> all you can do is compare him to his peers. you don't want to go overboard,

not a huge favor of managed funds to begin with. but if you're going to have somebody manage your money, dan ivacsyn is not a bad person to do it. >> my bigger question with this, how do you deal with the idea that you're not having to remain liquid. >> yeah, you know, it's crazy. if you're thinking about it, they're a huge fund and they themtz aren't sure every day. my thesis is or my understanding is right now you're getting institutions hanging back and doing something about it. it's the retail right now that's bolting. we're going to see, i think today we're going to get data about how much. we estimated as a body ooh about 10 billion, we think it's going to be much more. there's all kinds of heated conversations. jerry mcchoir, they're on the phone, fighting for the same client. it's a fascinating situation. >> maybe the thing is, it's a great time to be one of these

pension funds because you're going to get a great deal no matter where you go. everybody is going to offer you great deal to come with them right now. >> yeah. more broadly speaking, pulling out of hedge funds in general, there's a fight for these guys. more of them should be in index type models. >> a lot of people are upset both sides. they're a little upset at bill gross for doing this because their funds are suffering right now. the funds are an issue. >> janus has not even been on the radar. it's not even -- it's not as if they can put their money with

janus. they have to get approved, they have to do all this stuff. >> that's exactly right. and it's not just that. pimco was a huge place and bill gross has enjoyed having that at his disposal. he's alone in a room right now in pimco -- in newport beach. he's giving you credit here, he's created a $2 trillion bond giant from nothing. so -- >> and it would be a heck of a lot easier to manage smaller sums of money, too. >> that is true. >> the birdied greg zuckerman offering the greatest trade ever. i have to throw that out there for you, buddy. >> thank you very much. >> that's your payment for getting up early. up next here on "squawk box," the shrinking defense budget is not putting a dent in lockheed martin. stick around to find out behind the report runs.

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lockheed martin stock is trading at all-time highs. he has a accelerating on the stock and a price target of $157. david, thanks for joining us today. >> good morning. >> so we've watched the stocks take off despite all the concerns around it. why do you have a accelerating? >> the defense stocks have performed very well over the past year. most recently on the activity, really, to combat isis has

driven the stocks to all-time highs. there are other names within the group that we would prefer over lockheed. general dynamic on the large cap side and then some small cap names like golds and alliance texas. but specifically on lockheed, lockheed is trading at a large premium to its peer group. it trades at a premium as well as to the market. and then second of all, expectations are very high for lockheed. the sense of expectations have about 10% to 15% earnings growth baked in over the next couple of years. we see a fair amount of risk to these expectations because they're on their high all-time margins. then we have the f-35 where we're concerned about the production rate ramp as well as the amount of profits that lockheed can make on the s-35. >> how long have you had a accelerating on the stock? >> around a year.

from here, we begin the specations. looking at 10% to 15% growth, we think the group comes in under that. >> you said there are other names that you like better. which ones are those? >> specifically, general dynamics where we are a buy rating. the large cap size given general dynamics exposure, not only to the sense market, but to the business market, as well. and then among the small cap defense names, especially aligned texas from ack and angles hii.

>> the united states advance and push into these techs on isis, the push into the middle east, does that change your mine at some point? >> we don't think the activity with regard to combatting isis is going to have much of an impact on the overall baseline defense budget. so, you know, certainly we always relook at our ratings and price targets. but right now within the group, again, we prefer general dyna c dynamics over lockheed martin. coming up next, apartment hunting in new york city can be challenging, but urban compass hopes to make it easier. plus, bake job news. yes, there is bacon cheeseburger index is not painting a pretty picture about inflation. inside the funds, coming up on "squawk box" when we return. ameriprise asked people a simple question:

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facebook could have a future in hollywood, could be good news for the fans of the show "twilight" releasing the final installment of the series a few years ago, but the new york times reports they picked five directors to make short films based on the characters. the movies are available

exclusively on facebook, which apparently now, app drew, wants to be netflix that wants to be nbc. >> everybody wants to be something they are not. real estate this morning, new york city's most powerful agents want to work for them. renters who were once gun shy about apartment hunting want to find homes through them, and backed through big names, founders fund and salesforce.com, but what makes urbancompass, what makes them, we have him here. you started a year ago. raised new money, congratulations at that, valued at $360 million, in business for 14 months. >> since last year on the show, we increased to 360 million, entered sales, number of employees went up, and expanding in new regions. >> this is what i don't understand about the business. you took digital technology and

bring it to this world of real estate, which is always is people business. >> uh-huh. >> yet, one of the things it appears like over the past year is you hired a lot of people, boots on the ground. is that expensive and must take margin out in terms of what the digital technology was supposed to do. am i not thinking about it right? >> from a margin perspective, in this space, there's 1.1 million brokers that reflect $70 billion of revenue, all independent contractors. they are not salary employees. the reason we did this, you know, my cofounder sold a company to google and another to twitter, wanted to bring technology to space that did not have it. the largest portion of the employee base are engineers and data in research team, the largest in new york real estate. >> biggest thing in real estate is just the control of information. that's always been why it's been so valuable, why you needed a real estate broker to get you

in, whether it's rental or purchase to this point. what you're talking about is using technology to free up information. >> that's exactly right. we've invested heavily in a data research team. hired sofia song who headed data at a great company. >> there's problems with the old guard who likes things the way it is. >> crushing every single competition that tried to intrude on their world since then. why will you win? >> we're much more resources than anyone else who tried to enter the space, resource in terms of capital, resource in terms of engineering talent and strategic partners with 103 corporate partners, 24 law firms, a lot backing us to be successful and add our investors, who they are as individuals and corporations. if nip can do it, i believe we can. >> there was a flattering article written about you, two critics, and i just want you to

respond. look this, this is competitor. we have a sales force going out to hustle listings. hear no before you get a yes, nobody's going to do that on a salary. goes on say, another competitor, you think a broker on salary sweet talks a land lord to look at a shaky credit report? how does the technology partake that piece of it out, the hustle part? >> yeah, and so i'm the first one to say if we were wrong, and if there's one place we're wrong, salary is not the right way to incentivize an agent, and what we found is consumers want someone who is working early in the morning, late at night, and the best way to incentivize someone is commission. that's why they are independent contractors now. that's the one thing we pivot. the technology's confident throughout the period, and our customer service focus as well. >> new york is still the main focus. >> new york's the main focus. >> moving to d.c. this fall, and

then we're pursuing opportunities to partner with local companies in boston, miami, san francisco, and los angeles. >> why take on partners? >> when i say "partner," i mean acquire. >> looking to make acquisitions? >> yes. >> that's a nice -- >> interesting way to put it. >> future partners. future -- forced partners. hey, we now own you. >> a question, you deal with data bases, and i don't know that you can speak to it, but there's a lawsuit, city habitats, in new york city, there's a data base. they think you hacked into the data base and sue you as a result. >> i think wh there's a fast growing company that will take, you know, five of the top ten employees from a different company because they want to work for you or two offices close, you see, you know, you'll see things like this. we are not concerned about this by any means, and, you know, this is -- our lawyers say it's typical for fast growing companies. >> okay. we'll watch.

come on back. let us know how it's going. >> great, thank you very much. >> great, congratulations. still to come this morning, headed back live to hong kong. the pro-democracy rally expanding on china's national day, and first confirmed case of ebola in the united states. we are live from dallas with the latest. we have that, plus gas prices plunging, 26 states with gas less than $3 a gallon. how big an impact will this have on the economy closing in on shopping season? a top economist set to tell us. another action packed hour of "squawk box" is right ahead. if i told you that a free ten-second test could mean less waiting for things like security backups and file downloads you'd take that test, right? what are you waiting for? you could literally be done with the test by now.

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ebola in america, first case in dallas. what are the risks now that it's reached our shores?

>> china's national day brings out protesters. pro-democracy crowds in hong kong grow despite the growing government opposition. a live report just ahead. october arrived. will the markets scare away the ghosts of september? second hour of "squawk box" begins right now. welcome back, i'm becky with andrew ross and brian sullivan, joe is off today. a rare interview with steve, shares of the gaming empire under pressure since the hong kong protests began. a major player. why they are not worried about china right now. that's coming up at 7:40 eastern time. >> all right. think october. think ghosts, goblins, hallow n

halloween, all that stuff comes to mind, but it's not scary for investors. now, october is the month most associated with big stock market crashes. yes, the biggest dropped days, but the month itself is not always full of red arrows. in fact, the s&p 500 overall is a small gain in october from 1928. three months left, dow up 3%, s&p has done more than twice as good. up 7%. the nasdaq about 8%. however, it's been a rough run for small caps. russell 2,000 index down more than 5%. despite a volatile end of the quarter, the dow, s&p, and nasdaq closed higher for the period. big test for the markets today? september adp report due at 8:15 eastern time. when that comes out, give you the numbers, and that could be a preview to the jobs report coming out friday. notice what i did there, guys? normally, when we say "jobs

report," you have to put the modifier, all-important, the all-important jobs report, but i argue it's not that important lately. >> this time it could be, last month's was weaker. if there's a second weak print, you can't brush it off. there's a stronger number, revise last month's, but if they don't, two months in a row of bad numbers, then it's the all-important jobs report. >> bad numbers are good for the stock market. >> oh, not necessarily. >> bad news is good news. >> is there a point where bad news is bad news? they are pulling out of qe. look, maybe they won't raise rates, but is there bad news? this is when the economy was to be stepping up, taking the baton from the fed and running the next leg. >> listen, i hope you're right. we get to a point where good news is good news and bad news is bad news, and bad news is good news, i'll buy you all a cocktail. >> oh, i'm getting my order in the control room saying yes too. >> okay. i didn't invite them.

>> yes, you did. they are "squawk box" too. the story everyone is talking about. e bola, confirmed case of the disease in texas. the patient is in isolation. we are joined from dallas with the latest. >> reporter: that's right. the patient is in isolation here at texas health presbyterian hospital traveling from liberia to the country, and emphasizing the party was not symptomatic on the plane, but developed them four days later. in the hospital sunday. they are tracing contacts the patient may have come into contact with during that period and they are sending a team to dallas to track and monitor the con tacts. they emphasized yesterday they know how to contain this. >> i have no doubt that we will control this importation or this case of ebola so it does not

spread widely in this country. it is possible someone who had contact with the individual, a family member or other individual could develop ebola in the coming weeks, but there is no doubt in my mind that we will stop it here. >> so the cdc emphasizing that in the past decade, the u.s. had five imported cases of viral diseases similar to ebola. none resulted in any transmission in the united states. now, there are still a few things we don't know here. precisely, how many people the patient did come into contact with. dallas mayor's office saying they put the ems crew, who transported the hospital in quarantine to be safe. we don't know the exact status. he is critically ill raising questions treated with experimental drugs used before on parties here in the united states, and speculation sent stocks flying last night.

a lot of question marks on what's going on here. again, it's important to emphasize the cdc says they know how to contain this. back to wow. >> thank you so much. we talked both the experimental drugs, an area you focused on a lot. things that you looked into in the past. i just wonder if you think any of them look like they would be the best potential chance, any of them look like they would be something that we can get up and running? >> reporter: well, there's a couple worked on. of course, the one that got a lot of attention was a private company, very, very small company. they used the entire supply of the drug to ramp up more. that could be coming. this is talk about frequently, a technology called rna interfeerninte interferen interference. they have supply of the drug, just tested in animals, going into safety studies, but participating in clinical trials in west after ri karks and the fda cleared that for potential use here in the united states.

that could be used. they did confirm it's been used on a couple pashlgts here in the u.s., and they are not controlled study, we don't know if it's the drug or the care they are getting. there's a lot of questions about whether drugs help. but, of course, a lot of hope they will. >> thank you, we'll check in later this morning. prodemocracy protesters rally in hong kong today. the markets close tea for a public holiday. susan lee joins us with the latest. susan, we know closure of the holiday there swelled the ranks of the protesters. what are you seeing now? >> that's right. yeah, i can tell you the crowds have come alive in the last ten or 15 minutes. they are chanting behind me. there's a sea of lights that is symbolic of the occupy central movement. they are switching on mobile phones and lights on their phones and waving them around

inin unison. this is symbolic because it replaces the fireworks display, the light we would have got. usually it's a massive fireworks, but because of the protests, the government cancelled that for this year. i can tell you, just in the last hour or so, that more and more people pile on the streets. it is a holiday here. tomorrow is a holiday as well, speaking to protest leaders, just in the last 24 hours, they expect 250,000 people here in the main protest site, the largest crowd yet seen in this six-day protest and speaking to those on the ground and given they don't have to work tomorrow, you know, there's a commitment they could stay here all night long, which, you know, the government may not want to see. back to you in new york. >> susan, you made the point yesterday the protesters were peaceful protesters and polite at that. >> yeah.

>> i wonder if that mood continued when they are there throughout the night? >> yeah, it continues. as you hear behind me, there's a lot of laughter. a lot of comrade. we are getting cookies and water to be hydrated, and going around the protest site after people left, shower, regroup, and pick up their own treasure. what other demonstration does that take place? i tell you tonight, i speak to the protesters, there is concern, just by the number of people coming on to the streets, 250,000, but the police are more confident. in fact, since want night of the pepper spray and baton charges and tear gas, i feel the police presence and police hostility backed down quite a bit. >> all right, susan, thank you very much. we appreciate it. checking in be you later on as this continues. no shortage of scary helines this year with the latest from hong kong adding fuel, so what does that mean for the market,

and should investors be concerned? joining us is the director of global macro at fidelity investments. joining us also is brandon, managing director at crane shares, a new etf provider focusing specifically on chinament thank you for being here. talk about china. how does this change the dynamic, or does it? >> realm, i think, ultimately, think about china as two markets. onshore market defined by the shanghai stock exchange, world's sixth largest exchange globally. interesting over the last several days the hong kong market, definition of china that forpers invest in, sold off tremendously. very rapid desent, and mainland markets up the last several days. i think you is different view of what's taking place in china from the chinese in the mainland and foreigners' view

>> they are not one of the same long term? >> as part of the agreement, the hand off of hong kong back, that agreement allowing full autonomy expires in 2047, but the protests are around the election where full autonomy, hong kong people want to legislate their chief executive, the chinese are making movements viewed as nagging on that opportunity, and i think protests are one about people protesting, they want that one country, two system, the freedoms that people in hong kong enjoy. china is very, very economically dependent on hong kong. it's a two-way street. the protests are very important. an element of the protest is a protest against the heavy handedness of the police over the weekend. the students have predominantly been peace. . there was a more disruptive element within the protests. we feel like the backing off of the riot police over the last

several days is a move that the -- there needs to be a dialogue between the situation where the people want to elect their chief executive. we think, you know -- >> does it matter in the markets in the en? >> clearly for foreigners investing in hong kong, you know, sold off over 5% in two days. i mean, that's just massive down moves, and so i think foreigners are very worry as is this the start of the a greater trend? when we look at the mainland markets where we are invested, that market has been very indifferent to what's taking place in hong kong today. >> all right. we look at hong kong. we know that's a story for the moment, look broadly around the markets, what jumps out at you? what surprises me is how resill yepts markets have been no matter what the news throws their way. >> yeah, well, for me, the question is is it systemic. we talked about this the previous time i was on when it

was the russia-ukraine headlines dominating the news, and, you know, for china, this, obviously, is a big deal, and it compounds other changes already underway, transitioning to the consumer-based economy, they have a credit cycle, property market, and so for china, this is just another issue to deal with. for our markets, you know, s&p's up 7 as brian mentioned. we do see pockets of weakness. we are now sort of in the fourth stealth correction of the year, so, you know, small caps down 5% from the recent highs ae emerging markets down 6%. we see rotational, stealthy corrections in the risk markets. that's been going on all year so far. >> but having said that, it sounds like you don't think this is necessarily systemic. where do you think the best place for the money is at this point? >> i think it remains the u.s. you know, the u.s. economy seems

to be in the flow or as the fed says, reaching escape velocity. we're in the sweet spot where the growth is consistent, pretty steady, inflation nonexistent, and look at the break-evens, inflation expectations coming down hard, so in a way that gives the fed license to wait or slow down path to rate normalization, and you saw the dos meeting, they were more aggressive, and that's one of the reasons the dollar rallied here. and they are killed by the yield curve, and the fed slow and steady and inflation low and economic data strong, we could sustain this for maybe several more years. >> all right. thank you so much for joining us. thank you for coming today. >> thank you. >> all right. on deck, how the airline

industry is likely to react to the risk of transporting people that may have been exposed to ebola. plus, good news on a tough morning. gas prices down blow three bucks a gallon in america. will that fuel consumer spending? will that drive the economy? >> well done. >> will the rubber meet the road? back right after this. thank you. thank you mom for protecting my future. thank you for being my hero and my dad. military families are uniquely thankful for many things, the legacy of usaa auto insurance could be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life.

good news for prices at the pump, and much of america, not all. more and more gas stations are seeing gas and selling it for less than $3 a gallon. in fact, according to aaa, you can find gas at or below three bucks in 26 states. lowest in the central and southeast parts of america. the national average still above that at $$3.39, and the daily national average drop to a seven month low, and aaa says prices could fall further. end of the year, i was tweeted a picture of $2.89 in georgia, i believe it was. anyone out there on the radio, in the car, i mean, park, don't just take a picture while driving. there it is. far left. if you see lower than that, tweet us here, and we'll maybe get it up on the show "street signs" at k 2:00 eastern.

less than an hour away from the adp report and 48 hours away from the all-important jobs report. here to handicap the employment picture and how important plunging gas prices are for the economy. the chief economist, lost in all the bad news, dominating the news all the time, is that gas prices are probably one of the biggest taxes and probably the most -- most regressive taxes in the united states. i call it a tax. >> the timing is brilliant. you know, it takes people months before they realize how better off they are, gas prices fall, oh, i have more money than i thought. approaching the busiest season for retailers, halloween, thanksgiving, and the holidays. timing is great. by the time people realize they have extra cash, it's when they want to spend it. i'm looking for a solid holiday season. gas prices have not finished

falling yet. >> however,'ian, are there other inflationary forces counter acting the benefits? >> not in the short term, no. i'm nervous in the next year, year and a half, but right now, focus on q4, think about the holidays, how the economy looks into year end, and this is like a free gift to consumers. >> it's effectively a raise. >> it is a raise, absolutely a raise. as you point out, it's a regressive, you know, people on lower income spends more on gas so they get a bigger benefit when the price b drops. i'm looking for a really solid holiday season, and a nice pop for consumers end of the year. timing's great. >> fair to call it the all important holiday season? >> oh, sure. most of the time, you pay the represent, keeping the lights on, and everything is geared up for halloween, thanksgiving, holidays. that's when you make money. to have potential customers effectively get a raise at this time of year is perfect. >> how much are you worried about object?

we talk about october and the wives' tales -- >> or the husbands' tales, be fair. >> an abomination, and if it is, what that does -- >> abomination? abomination is a stretch. i'm happy with things at the moment. i'm looking at decent payroll growth. looking at lower gas prices. looking at a nice stock market, lost a little momentum, but it's okay. it's good. >> where does it have to be come sort of november, december to actually have an impact either way? >> yeah, it's not going down substantially. where we are now is plus or minus 5% does not make the difference. we got, you know, we have a big rally over the last year or so. >> right. >> what matters in the short term is cash flow, cash flow, cash flow, and that's where the gas price story comes in and labor market is getting better. it really is. >> the wealth effect of the target. >> oh, sure. >> for those who own stocks.

home prices pretty well. >> depends on the number. there's so much conflicting data. >> depends on where you are. >> of course. 20 % gains in some places and 0 in others, compared to a year ago, no doubt it's better. this decent reasons to think consumers get into the holidays are in reasonable shape, if not better than reasonable. dpl it's one case seen, but ebola on american shores. what impact does that have down the road. not concerned at this point. >> it's about fear, isn't it? if this is contained, adamant it is contained, but they could say that. if it is, it's not a problem. if it spreads or we get cases popping up around the country. that's a different ball game. you can't factor that in. that's the classic, you know, black swan out of nowhere wrecking everything. i'm assuming it'll be fine. >> we like to hear that. everything will be fine. >> yeah. because the alternative is that it is not. >> listen. we are caught -- i'll just go

off for a tangent a second here. in the media, it's a tough spot. if you report the facts, ebola is deadly, spread over western africa, you're fear mongering. if you ignore it, you're not paying attention to a story on the cover of every paper this morning. what's a proper balance, not a media coverage, but americans at home saying what do -- we can over worry ourselves into doom and gloom, right? can't worry about life. give us a reason to be optimistic in the next six months. >> in is a country with a massively advanced comprehensive health care system. africa is not. they don't have the resources to deal with it. the same outbreak and physical circumstances here compared to west africa generates outcomes and the fact there's cases here and there, that's where the similarities end. everything here is different. >> thank you. >> refuse to be a fear monger.

>> love it. so positive in the morning. we need that. >> thank you. coming up, when we return, how can we prevent the widespread outbreak of ebola in the united states. now the gloom. i apologize. how can airlines screen to keep infected people off planes? that's next on "squawk box" when we return. time now for today's aflac trivia question. how much did ebay buy paypal for in 2002? the answer when cnbc's "squawk box" continues. and a gentle wavelike motion... aahhh- ahhhhhh. liberate your spine, ahhh-ahhhhhh aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just four days. ahh! four days? yep. find out how fast aflac can pay you, at aflac.com.

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7:30 on the east on a beautiful wednesday morning. welcome back. among stories front and center, the number of people applying for mortgages fell last week. this, despite another drop in interest rates. meantime, the nation's car makers report their monthly numbers today. edmond says sales likely fell 20% from august, but sales are

still up 11% compared to september of last year, and auto sales, guys, remain strong. shares of angie's list soar this morning. the company may explore options like a possible sale of itself. angie's list stock needs something, down 72 % in the last year. >> cdc confirming ebola here in the united states. the question now becomes is this the first of many, and what can we do to prepare? joining us now with more on this is dr. william, an infectious disease specialist at vanderbilt university medical center in nashville. thank you for joining us. >> pleasure, good to be with you. >> this leads us to a lot of unanswered questions. people are wondering when it's an infectious disease, when you can get the things, if a gentleman was on the plane, if you could get it, and how prepared are we to deal with it? >> we are very prepared.

infection control people in hospitals over the past two months reviewed all their infection control procedures because we anticipated just this sort of thing happening. a person coming in from west africa, they were healthy at the time they traveled, but got sick here. came to our emergency room. we're prepared at vanderbilt, done a drill. colleagues around the country have done the same thing. >> you know, i feel this is a place to handle things like this, we are prepared, but in this instance, the gentleman of in the er room days after arriving from liberia, sent home with antibiotics. is that the right way to have handled this? what happened? what went wrong? >> we have to know details. we don't know how ill he was or what he told the physicians or what examinations did, and let's look at this as time goes on. >> what should be happening at emergency rooms? i mean, when someone shows up

with something like this, what does it look like when you show up, how hard is it to figure out it's ebola, how much does it look like other things? >> so the word is out there. something very simple, if any patient with the fever comes to the emergency room, they should be asked, have you traveled, and if so, where? those two simple questions are a clue how to operate from that point on. i don't know if the questions were asked, but they should have been. >> what makes me wonder too is you wonder about the disease, how deadly it is, 70% of people who come down with it do not survive. what happens if you are in better conditions, in a u.s. hospital, able to be replenished with fluid. what is the survival rate rise to at that point? do we have any idea? >> oh, yeah, we have reasonably good ideas. the supportive care we're able to provide in the united states is so much better and

sophisticated than what's available in west africa. supportive care is clear, the fundamental part of survival. we can move that needle of survival way down and patients coming to us are cared for appropriately and echgsively. >> when you say down, how far down? >> we're not sure, but doctors without borders are moving the fatality rate to 30%. i bet we can do substantially better than that here. look what happened in the small number of cases that come to the united states. when we provide supportive care, look at brantley, came out looking like a peach. >> he did, and, again, trying to report the story in a rational way, but the other cases, they were identified in wegs africa, brought under strictly controlled circumstances. this latest gentleman, we know it's a gentleman because of reports identified him as a he.

he came on his own. give us a reason to feel better about it and how it's not a reason to be concerned. >> it's not a reason to be concerned. we know we can control the infection control precautions used to care for the patient. we can do it safely. what we provide is supportive care in the unites is better than what they can do in west africa, and parallel, our public health people are going to contact all the contacts, the close contacts of the person and put them under surveillance. this works better here than it does there. >> if an airline ceo call you up and said, look, should we limit the flights that we have to west africa right now? >> keep the flights going. the economies of the country are absolutely in perilous shape.

we need constant communication, goods coming in, goods coming out as well as people. they screen people at the airport for fever before they are allowed on the plane. that's the best they can do. >> should we be doing something in the way in? >> he was fine at the airport -- >> if you fly in from west africa, should homeland security put you on a tracking list? should we be doing something we are not doing already? >> no, nothing that elaborate. that person could have sat right next to me on the plane. i would have no concerns because they are not hazardous to others or communicable until they are sick. >> if they sneeze on you? >> sneezing does not count. this is not a respiratory infection. you can get the flu on a plane. i've done that. this -- this disease, this virus is not transmitted by sneezing or coughing. >> it is not? thank god. i want to ask you one question.

one of my best friends in life, a ph.d. who you nope, one of the leading infection disease experts out there. he asked me not to use the name, but he said he's not nervous. i want to put that out. listen, i'm not worried about it, hospital systems here are better. any risk of disease, not this america, but in africa because of the size of the outbreak evolving into something else? >> oh -- >> that's what he said to me in the e-mail ten minutes ago. he would be worried about, as a guy that does this for a living. >> yeah, yeah. in west africa, we are concerned about the spread of ebola to yet other countries. sin gal had an introduction, introductions into nigeria. they are curtailed through effective public health action. so far, we got this outbreak contained. now we have to reduce it and stop the transmission of this virus. >> all right, doctor, thank you very much for joining us today. we really appreciate your time.

>> my pleasure. coming up, catching up with casino tycoons, steve wynn, hear from the outspoken billionaire about the state of gaming, china, and tax inversions. that's next when we return. later, a company at cutting edge of cloud based innovation. helping companies get on the cloud with enterprise software. the company's ceo joining us in a bit. "squawk box" returns right after this. requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. sometimes they just drop in. always obvious.

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welcome back, see how the futures set it up, ahead of the markets today, dow opening up higher, lower, little bit lower, nine points off, s&p 500 opens up two and a half points and nasdaq about eight points. we should tell you about shares of walgreens boosting this morning, collaborating with the chain on medicare prescription drug plans. preferred retail pharmacy network features 8200 walgreen pharmacies nationwide. >> steve wynn lives in interesting times. he is suing for slander. protests in hong kong near the most lucrative market, and

shares jumped on the reports the market is finishing an investigation on lending practice at the cow. wynn sat down with our jane wells. she is back from vegas this morning with more, and he's always an interesting guy to talk to. >> you know, becky, when you get a chance to sit down with wynn, you're never disapointed. the only thing off limits was the lawsuit, not discussing it, but he talked about china believing beijing will compromise with protesters in hong kong, but only to a point. >> everybody in china's pragmatic and practical and people in hong kong have tremendous self-interest. it's not in the control of students, and i think it's dr after the plisz calm down, i think -- >> you're not concerned about the impact? >> oh, listen, i'm concerned about everything, every day, more scared about the united

states. do you trust the central government, they say yes. >> do they mean it? >> yes. they criticize there's corruption or they wish the air was cleaner, but the fact of the matter -- >> food safety an issue. >> but i'm telling you what i see and hear permly, the average person in china does not feel separated from the government and is satisfied. their aspirational for a better life, but you don't have the kind of polarization we do in america. this polarization, nothing like that in china. not close. >> would they be allowed to have a polarizing opposition? whatever that would be? >> there are demonstrations every single month in every province in china.

perhaps you didn't know that. >> no. >> every single month in every province for a better life. >> he says china has the most lao sai fair environment. we have thoughts on inversion, ebola, online gaming, don't bet on it, and my favorite says take on carl icahn owning the vacant tower in the strip, he says, quote, that carl icahn is a real character. this, from steve wynn. >> ha-ha! someone who might top him when it comes to personality? hard to imagine. >> exactly. that will be on fast -- the stuff on china is good and hard news, this bit, when he talkings about carl is my favorite. >> talking about protests every day in china, i didn't realize that either. that's when he says that he's seeing it happen here, and what about protests the size of this, up to 250,000 people are expected tomorrow.

this is an area of china, hong kong that has been used to kind of having its own way and having things differently. seems to be a potential clash. >> i think in his mind and what he was saying to me is that there will be some compromise, but not as much as the protesters want. he says, quote, it's not in their culture, the character of the central government to give in, but he does not think this is going to have a long term impact on his business, and that, as he said, the people are china are pragmatic and will be worked out. he says after the police calmed down, it's students, it's the holiday, a party atmosphere, everyone is having fun. >> we hear they are incredibly polite protesters who clean up their own garbage, unlike what we see here. >> yeah. >> jane, give me a hint what he thinks about ebola. i can't help but wonder. that's what we thaw about this morning. he said, i asked yesterday,

also, the ceo of mgm resorts, guys who run operations that are very public and very open, and what do you do now that ebola has one confirm case in the country, and wynn's take on it was that he's been listening very carefully to how it is transmitted, and he says it's not airborne so that's not concerning him and feels confident there's a vaccine soon. >> thank you so much. we'll watch throughout the day, and i'll tune in later for the carl icahn comments too. >> thanks. >> when we return, revolutionizing bids through the cloud. the ceo of kenandy talking about the marketplace and cloud computing impacts business. later, ray dalio shares his secrets. we're back after a quick break.

welcome back, internet of things enables door locks, refrigerators, and phones to communicate with each other without human interaction, predicting 50 billion devices will be contacted in 2020. the next guest, a pioneer, says this revolutionizing and changing the way we live. the founder and ceo of kenandy, those are your sons? >> ken and andy. >> you're not wearing any internet of things on you? >> right. >> one of the things i wonder about the devices you're wearing, the apple watch, the

iphone in the break. batteries are required to make all this stuff work. >> uh-huh. >> i just wonder whether this watch, they need to be charged constantly, and whether, you e kn know, a lot with processing, but where are we? >> i agree on the charges. my iphone, waiting for the i6, i hold a charge less than a day -- >> doesn't make it as many hours as you will in the day. >> it's unacceptable. i think that, you know, that's a major thing. i mean, i agree with you. >> is there a sense then by 20 20, whatever these -- does that make sense? >> a lot of people are working on improving battery life, and so, hopefully, that will be a technology around the corner. >> you see that thing going around, basically like your phone ten years ago, four days of charge, you could drop it from a two story building, and

it was smaller, four hours of charge, breaks if you drop it. we've gone backwards. you know what i mean? >> it's not a mobile phone, but now a cordless phones. >> close the apps, dim the brightness, keep it off. >> i was in canada last weekend -- >> i'm joking. >> no, no, i was in canada, trying to take pictureses, and i was trying to take pictures on the camera on my iphone, and i was worried about the amount of battery time. so i turned all applications offer, and when i tried to turn them on, and my internet doesn't work. >> what is your view on the security issue? it's a cloud issue, but then relates to the interpret of things. we heard -- is it star -- which is the hotel company, announcing you can literally walk into the hotel checking in and just open your door with your foechb, and i'm worried if you sit inside the hotel room, someone else

walks in. because the code will be off. >> you know, views on security are changing. everybody's worried about the late education thing, but i think the -- the major companies are putting hundreds of millions and millions of dollars in security. when you think of public and private cloud. it's safer because of the amount of money that the big companies can afford to put on security. you know, i think that, you know, there's an issue. you know? do we stop because of security questions? what connectivity, what you codo with having all devices connected and having people connected, get medical treatments to countries in africa and, you know, diagnosed there and doctors halfway around the world help out people there. the, you know, the whole world is becoming a connected --

>> here's the next cloud question, but it's an enterprise question. you are in the silicon valley to me, which is in a post larry ellis onworld -- >> he's left? >> he's not left the world, but the oracle, how about that? >> yes, okay. >> that company's trying to get into the cloud, but not really in the cloud yet, but on the way. you have all the big guys trying to be in the cloud business that you're in. >> yes. >> you think what now that he's gone? >> well, first of all, i don't believe he's gone. >> okay. >> you know, he made the speech at oracle, doesn't look too gone to me. executive chairman, and he is running technology so he's -- i don't see there's a big change of guard there. i mean, he certainly deserves to retire, doing a great job building in oracle, but i don't think he's retired. start with that. >> okay. do you believe that the biggest

players, oracles and saps of the world are the biggest players ten years from now? >> no. >> no? >> no. all software has to be rewritten. it's going from mainframe to minicomputer and minicomputer morphed into client server, and every software needs rewritten. you have to write every single software, start with a clean sheet of paper and rewrite all software in order to take advantage of the modern technology. >> can you do that? do they have the relationships? short the companies because ten years from now they'll be a shelf themselves, or microsoft, by the way, a company holding on, and the stock is not doing too poorly, you can argue about innovation. >> yeah, i think the banks right now, you know, they collect 22 % a year in the annual subscription service, and they'll be around for a very, very long time, being able to collect revenue.

>> that's what oracle does too, though. >> oracle and sap. >> i was talking, you know, back to the oracle, but we're replacing our software. my first company was computers, doing manufacturing software on minicomputers and client server computers, and we're right now replacing our system from 20 years ago. >> this is no knock on the banner on the banner of the screen, but -- >> i love the banners. >> can we just say -- put the word "cloud" to bed now. i can't stand the word. isn't that just computing? >> yeah. >> who computed anymore? give me a floppy to install on the computer. isn't cloud computing just computing now? >> it is. >> i feel like companies put it in the name or whatever because they want to -- we're green. we make bleach. no, you're not. >> softwares of service. that's the difference. softwares of service where the

customer gets up and running quickly and efficiently. go back a step. talk about why is cloud important and why is softwares of sofs important? businesses write today change very quickly. >> yes. >> they have to implement software very, very quickly. the business processes are changing. look how fast things change in the internet world. ten years ago, there were one billion users connected to internet via a hard wire. the last ten years, we got into mobile. now, as you point out, andrew, we're going to have 50 billion -- some people say 75 billion connectsed di vices in the next ten years. you have to be able to be agile with the software. get it to run quickly, and that's the promise of the software of service in the cloud. >> we have to thank you, leaving the conversation there, but prooert it very much. thank you. >> when we return, ebola on u.s. soil. latest from dallas after a

person is diagnosed with the deadly virus. we'll get you ready for friday's job report. adp payroll data hitting the wires. the numbers and market reaction minutes away. "squawk box" will be right back.

welcome back to "squawk box" on cnbc. brian sullivan is in today, joe has the day off. counting down to the adp employment report. for a snap shop of september's job picture, we'll get that at 8:30. forecasters saying the economy likely added 209,000 private industry positions last month. also futures ahead of that report, take a quick look, setting up for the day, that could change getting the numbers -- adp is 8:15, not 8:30. dow opening down about now at 19 points off, s&p 500 off four and nasdaq off eight points. auto makers report numbers today. edmond says sales fell 20% from august, but sales forecast to have risen 11% compared to

september of last year. deal numbers are in. it's official. m&a activity hitting a post crisis high. the value of deals now topping 2.6 trillion in the first three quarters of 2014, a 60% year over year increase. merger monday may be back. >> treated in a dallas hospital, first case of the ebola virus found in the united states brought over from west africa like the doctors and nurses were from liberia. we are joined from dallas with more. >> that's right, in isolation treated in dallas. he came over on a flight from liberia, did not show symptoms on the flight, only became symptomatic four or five days later. that's important. as we said this morning because the disease does not sped when it's not symptomatic. they are emphasizing that there's no concern about other people on that flight. now, it's even saying that it's

not recommending people on that same -- those same commercial flights, plural, undergo monitoring. now, i got off the phone with'iwith' ian there at the school of health, and we talked about how ebola can be transmitted. he emphasized what the director of the cdc says if a patient does not have fever, they are not contagious. you have to be very, very close to somebody if they were feverish, and they would have to cough directly on you in order for you to catch ebola. otherwise it's through blood, vomit, feces. he pointed out something important which is interesting. not infectious on the plane, it originated in liberia. we don't know if there was somebody in the same situation coming from liberia on that flight. emphasizing that, you know, the patient, himself, was not contagious on the flight. now, the texas department of

state health services saying today that there are no other suspect cases in texas at this time. finally, another thing that they emphasized that's important to note here is that there's still an urgent need for more efforts in west africa where it's rages, more than 6500 infecteded there, more than 3,000 who die. it's important to keep that in per spective and think about -- we have a case here in the united states, but the cdc, public health experts emphasizing they know how to contain it here in the united states. guys? >> meg, i know the cdc is emphasizing they know how to contain it, hospitals put on alert, but we know that those alerts have not been completely effective. i mean, this gentleman in particular was sent home from the er even though he showed up with a fever within a few days of arriving from liberia. any word from the hospital at this point as to whether they asked him if he'd be traveling, whether he offered that

information up? >> reporter: we don't have that information. if the patient offered information he was traveling in liberia, they would have had the protocols in place to test for ebola. they treated him with antibiotics and sent him home. it's not an abnormal thing to do if they didn't know he was traveling in liberia, you treat something that is the most expected thing he could potentially have. until you know what it is, you assume if he's coughing, a bacterial infection, treat with antibiotics. something to be concerned about, and hospitals are on high alert for this thing, but the cdc, of course, emphasizing they have seen the viral fevers, cases coming to the united states before and always contained them in the last decade. >> one other thing that came up in emirate university hospital where two other patients were brought back, treated, successfully treated and released, one of the issues they had was trying to deal with the

waste that came from it. of course, when you're incredibly sick with ebola, vomiting, the diarrhea, all of that has to be disposed of, had 30 barrels of contaminated waste. a question who deals with that, the waste management company or what garbage disposal picks that up. questions to be resolved in dallas now as well. >> absolutely. the cdc is sending a team here. there are experts in that to figure out how to deal with the waste. it's interesting you mention patients not related, but the way the cdc and who talk about potentially treating patients and some have been is with donated blood from patients who survived ebola. that happened in nebraska. that's an interesting part. could the patient be treated that way? we talk about drugs. that's another potential treatment option here. >> great point. thank you very much. >> reporter: thank you, guys.

>> right now, our major story on the radar, the demonstration in hong kong continuing on china's national day and number of protesters swelling north of 0 250,000 people. how will this play out on the world stage? roger altman is founder and chairman of ever corp. partners and has more right now. roj e what do you think of what you see with the pictures? >> you know, becky, they cymbal symbolize it's more difficult than the conventional wisdom. what i mean by that is the conventional wisdom is they mark upward, solving problems along the way, and very first timely and very smoothly. this situation illustrates, and if you step back and just enumerate what the giant challenges are, growing at 7%

steadily in order to provide jobs to the millions of chinese migrating from mural china to urban china, converting economic model from an investment centered one to a domestic demand one, solving the giant ecological problems that confront china from air quality to adequate water supply squelchisquelch ing dissent in the country and so forth. look at hong kong, it's a symbol to the degree of which it's not as smooth and necessarily as successful as the conventional wisdom suggests. >> is this a situation -- we've had people the last couple days trying to get their heads around this, roger. is it a situation that the united states should stand from a distance and watch? is this something they should be involved with just from the democracy point of view? what is it? >> well, in terms of an active

involvement, i don't see that. there may be a statement from the united states urging peaceful outcome and urging progress or continuation of democracy, but in terms of beyond that, after all, we have so much on the own plate, ukraine, isis, so much else, and no one knows how this is going to turn out. i doubt we're going to see a true crack down because i think that represents defeat. even though he has eight years to go on his term, that's what he would be remembered for, so i would be surprised if we see that, but precisely how it evolves, no one knows. i think the chinese leadership has the opportunity to be patient here. after all, elections in question are a long way off.

maybe the hong kong leader will be stepping down in effort to calm protests, but i don't think the united states is going to take an active role here, no. >> when i look out, i see bigger problems for china, i was there a year and a half ago, buy a watch, get a discount, but it was more expensive in hong kong than it was in new york city. i thought, it's 4,000 u.s. dollars a year. that is it. this is a developing market. look at the number of up employed men because of the one child policy decades ago, look at income inequality that dwarves ours, and there's greater economic problems for china. who knows where the protests go, but look in five years, are they bert or worse than it is now? >> i think it's going to be better. china has accomplished enormous things.

over 20 years, 500 million chinese citizens have been lift out of poverty. that's one of the greatest achievements in human history. moreover, china's share of world gdp and world trade has grown faster over the last 50 years than any developing nation in the history of the world including the united states when we were a developing nation. china's making tremendous progress. i'm trying to say that the idea that it's going to be smooth sailing straight up is questionab questionable, and hong kong demonstrates that. >> thank you for joining us today. you're having trouble with the ear piece, love to have you back in studio again soon. thank you so much for taking the time. >> my pleasure. let's go to phil lebeau with breaking numbers. how do they look? >> strong, brian, priced reporting september sales increasing 19 %, greater than the estimate of an increase of

15%. jeep and ram lead the way. jeep up 47 % last month, and ram up 35% last month. prices stronger than expected sales in september. we'll get the other auto makers in a bit. number to focus on is 16.5 million, the expected sales rate for the month of september. we'll see if they exceed that expectation. back to you. >> all right, phil, thank. when we come back this morning, a read on the jobs picture on private payroll number after this, keep it locked here. plus, you can't afford to miss numbers in the market reactions. squawk box will be right back. financial noise financial noise financial noise

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welcome back to "squawk box," everybody, seconds away from private payroll data from adp. watching futures this morning, and at least at this point, things look like they barely budged. futures down 13 points, s&p futures down by just over three points, the first trading day of the final quarter of the year. it's october. sometimes that tends to be a scary month, but as brian pointed out, what was it? deny giving statistics it was 50 out of the last 84 octobers ending positive? >> yes.

>> a bad rep, but it's had scary days. >> you can't be ben affleck and be judge by "jersey girl." >> talking about adp, the number we've been waiting for quite some time. >> it's 15, rising by 213,000 in september. here's the numbers. revised down august by 2,000. strong showing for goods and manufacturing inside goods. manufacturing up 35,000. service strong at 155, and nonpayroll estimate is 2 15, in line with that. bringing in the chief economist, and, mark, your comment in the report was interesting, broad based, something we're seeing now for the first time here? >> across every industry.

and if you go back early in the recovery, mostly low paying, two to three years ago, it was high p paying, and now middle paying jobs as well. broad based. >> mark, how are you measuring that? mark, how you measuring good, quality jobs? what's the measure of that? >> yeah, well, i look at job growth with classified industries, classify industries base on pay scales ak look at growth across pay scales, and you can definitively see low paying jobs kicking into gear early in the recovery. that's not a-typical but what happens. in the last 12, 18 months, there's middle paying jobs going to the improvement, state and local governments, teachers going back to work, the construction jobs related are middle paying jobs, so that is a

good sign that we're seeing job creation across the spectrum of weight scales. >> mark, you didn't really revise too much the last report whether it was a big gap between you guys and the bls. you pretty confident we'll get not only a strong number from the month of september, but an upward revision? >> yeah, they are usually wrong in august. you know, what all revisions are in, a boat load of revisions, a revision on friday, and my guess is they revise up the august number, a revision next month. revised up at 25 k. when it's said and down, my guess is employment in august rose by 200 -- hey, by the way, that is -- signals how remarkably stable the job growth is. we get 2 00 k job growth for three years. >> unusual. >> like someone is drawing a line and we get the numbers. >> mark, don't see that.

people believe that's what's happening then. >> quickly, where are we on gdp in terms of what these jobs are telling us, about how fast the economy's growing. >> yeah, gdp in the current quarter q3, just ended quarter is tracking between three and three and a half percent, you know, down from the 5% in q2. underlying gdp growth, extracting from the vagaries of the data is 3%. that's consistent with 2 00k in job gains. >> we'll see next week from additional data we get from adp, i can't talk about it, but a new report next week giving us more detail. >> really? >> on the job market you will be interested in, going from jobs -- i think i can say this, from jobs to wages, who makes what, who, why, where, and when. cool in-depth data. mark is on next week launching

the data. >> looking forward to it, steve, thank you. up next, according to e-marketer, advertisers spend close to $550 billion this year it get the message out, 6% more than last year. where is this money going? we'll ask nbc partner who is canadian to give you the business, and don't forget, minutes away from hearing the biggest hedge fund manager in the world. ray dalio joining us. don't miss that. stick around. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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>> advertising in full swing because it is advertising week. commerce taking center stage, polling 17 00 marketing executives, 84% use facebook as the platform. is that the new ad platform? a game changer? talking advertising with miles. before we get to the facebook stuff, i want to talk football for a second. >> okay. >> as nfl, as a advertising, marketing executive, do you want your brand associated with the nfl? >> viewership is growing, twice as much growth with women than men. bottom line in my opinion is

that i think they'll get through this. i think they have not handled it well, but -- >> a representative say, should we do anything about this? is it an issue? >> showing concern about how poorly it's belt with relating to the lack of sensitivity about the ray rice situation, about -- >> nobody's dropping out? pepsi drops out, coke takes that slot. >> nobody's dropping out. >> okay. >> they are expressing concerns. >> atlas. this new facebook platform. how important really is it? tracks you wherever you go? >> allows marketers to track multiple devices, allowing -- which critical is the measureable of viewership online and translation into sales offline. >> how is it tracking that piece of it? >> because the technology allows you to be able to go amongst

these platforms and follow you to how you are going to then have sales. that's the issue. you nknow that quote, half advertising doesn't work, we don't know which half. ? dealing with the measuring impact. facebook is 1.3 billion users. microsoft bought this as part of this for 6.3 billion. >> a stake? >> selling for a hundred billion. >> what was it worth? >> i think the future will tell you that, but it could be a tool that every one of our clients will use. >> if you could spend a dollar with facebook or dollar on twitter, which is more powerful right now? >> probably facebook. twitter is growing. these are not poor decisions.

these are end decisions. in other words, you are trying to place multiple bets in multiple places on an ongoing basis. you don't know what's going to have the greatest advocacy. critical thing, though, is mobile is the big growth, and i'll tell you why. people spend 25 % of the time on their pda, only 10% of all ad spending is on mobile devices. mobile growth will ultimately match viewership. >> i have to ask, maybe i'm an ink stained old reporter or something, but impact of an ads in a newspaper or magazine or in print, i remember that ad. i can tell you what side of the magazine it was in. i -- online, it's tough for me to remember any of it. >> the notion of frequency, right? advertising is about frequency and reach. it's the number of impressions also that's critical, not only the extent of how memorable that impression was, but the frequency of it. the reality, though, is that you

can reach more people faster online than you can through newspaper. >> right. >> or printed media. >> i want to get views on a potential merger, at least chatter about one. do you think it makes sense for aol to merge with yahoo! star board, on -- a shareholder in yahoo! now pushing the company to do so on the assumption that display advertising, if you combine that, it improves things? >> no question there are benefits to be derived from the consolidation, and i'm sure there's huge cost savings and ability to use sales platform is beneficial. the question is it's not ben official, but at that price? >> are you a fan of yahoo!? are those -- is that old? still new? >> play an important role in the marketing mix. you know, i think aol and organizations made huge strides of investing in future technology to improve the ethics

of online advertising. >> miles, thank you for being here. >> thank you. a special interview with a hedge fund manager, ray dalio, and ed hess talking market strategy and a new book "learn or die." when we're back. how much money do you have in your pocket right now? i have $40, $21. could something that small make an impact on something as big as your retirement? i don't think so. well if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge

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all right. welcome back to "squawk box," let's recap the economic data of the morning. the adp private sector employment report comes in better than expected. in fact, rose 213,000 in september, and that trumped estimates by 10,000. >> we have breaking news right now from coca-cola. they are changing its pay plan which was under scrutiny and criticism from david winters, an invester who says the plan dilutes shareholders too much. there's bmg a lot of debate about this. of course, warren buffet abstained on this vote, which some thought effectively a no-vote. others did as well.

the equity plan itself was approved by share hollers, and they have come back and changed the plan after consulting with shareholders including warren buffet this morning. that plan now effectively the same plan to some degree in terms of the amount given out, but here's what is changing about it. there's a lot less shares. they are going to be distributed to employees. instead, there's a lot more cash that's going to be distributed to employees. previously under the plan, all employees received a mix of 60% stock options, 40% performance shares. beginning in 2015, a substantial majority receive 100% performance cash. stock options go away for most employees at coca-cola. what will change is that by 20 16, the mix of those that are getting shares and cash will be two-thirds, what are call performance shares, and one-third stock options. performance shares effectively means that you will get

certainly, restricted shares burr get them over a three year period if you hit certain benchmar benchmarks, not what happens to the stock price, but what happens to the performance of the company. we will -- looks like this is a real move for coca-cola. >> oh, big. >> what david winters pushed for, warren buffet abstained the vote, didn't want to vote, but had problems with the plan as well. this is a real move to address concerns. >> it really does on that delusion. one last point. the 2014 grants on shares outstanding would have been 1.7 would have gone to employees, and by 20 15, down to .8 on average. we'll try to reach out to see what they have to say about it this morning. in the meantime, a chapter of man versus machine. is the massive swing by business to upgrade technology putting

jobs and company at rifrg? here to tell us why you need to live by the learn or die montra is the garden school of business and author of the new book "learn or die with the, and with us, a special guest, the man behind one of the book's case studies, legendary hedge fund manager, ray dalio, of course, the world's largest hedge fund with 163 billion dollars. you did not hear me wrong when i said that in assets under management. thank you for being here. congratulations on the book. >> thank you. >> i'll speak to the issue. this is a culture -- this book, a lot about culture, and to the extent that this is about ray and the idea of bringing mistakes to the forum, talk about markets in a second a enmayeand maybe mistakes there, but in terms of culture, the idea that you are supposed to be open and honest and candid about mistakes

in business, and i would argue most businesses are not. >> you're right. most businesses are not, but the science of learning is clear. most learning takes place from making mistakes, and in order to learn from mistakes, employees have basically have to overcome their fear of making mistakes and their ego defenses. what type of environment does that take? takes an varieenvironment where have permission to speak freely, candor. an environment that looks at mistakes as opportunities to learn, and it's through making mistakes, learning new things, we change our mental models. we deal more realistically with the real world. and the reason mistakes are so important is is that when you look at the science of learning, it's not a pretty picture for us humans, all right? basically, cognitively, all right, we are reflective, fast, lazy thinkers, big confirmation

machines. look at us emotionally. we're affirmation machines, confirming our ego. basically, in order to learn, you got to overcome those human limitations it takes. it takes the right business environment, culture, business processes, and bridgewater's in the book because that was the most advanced learning organization that i've found that is base ed on the science learning. >> okay. ray, explain -- i mean, people have different views about the firm and culture. some people love it. some people can't stand it. >> some don't understand it. >> some don't understand it. people say you and the entire firm are very blunt. very, very blunt. how do you get people -- talk about the ego issue. how do you get people to accept criticism at that truly blunt level? >> i say, isn't it great to be

totally honest with each other? do you know how much spin goes on in a organization? talking behind one's back, misunderstandings? imagine an environment to speak freely and others speak freeplyr and talk about strengths and weaknesses. if they don't talk about the problems or the weaknesses, wouldn't it be great to bring the problems to the surface and then talk about them freely? there's an ego barrier to your greatness. right? everybody has weaknesses. the thing i've seen in -- i had the pleasure of knowing extraordinarily successful people. everybody thinks they are born extraordinarily successful. in all of the cases, there's aspects about them that are totally great, and the other side is a major barrier. they are successful because they understand what the barrier is and how to get around it. that what stands in the way. imagine a totally honest

environment. >> can people in your firm be honest with you? can they say, ray, boy, you screwed this up. i'm sorry. >> i get it all the time. it's great. i love it. why wouldn't you want to know what people think about you? is it true? maybe it's true? we can't see ourselves objectively. what's the problem about that? you have to ask yourself, what's backwards here? that you wouldn't want to know if people think you have weaknesses? that you wouldn't want to know if those weaknesses are true? isn't that weird? that you wouldn't want to know. >> knowing weaknesses and addressing it are two issues too. >> first step is knowing them, and then you can address them. you can address them in one of two ways. you can address them that you're going to make them into strengths to work on or create some complimentary relationship with another with a corresponding strength. for example, a person is creative, not reliable. the other person is reliable, not creative.

they may work together and be effective. that's what you want to do, right? >> how accepting are people? how many people come into your firm, and quickly, decide, this is not going to work because the ego issue, perhaps, gets in the way. >> yeah, takes typically 18 months because they -- they come from a world which is backwards. i think our whole education system is backwards. your children are taught that if they get the grades correctly and they get everything right, that's great. they are taught that mistakes are a problem. they are taught not to learn from mistakes. it's the opposite. in other words, if you can teach your kids that everybody has weaknesses and everybody makes mistakes and that you can learn from those things. you're in a culture where you can't talk about it. think about what you can't say. i mean, all of you. you can think about things you can't say to each other or even to the management of the firm. how can you care about this company if you can't say things and you can't work it out and it's true.

it's so essential to our effectiveness because think about the markets. in order for me to have independent thinkers and you have to have independent thinkers in order to be successful in the markets because the consensus is priced at. every time you're making a decision in the markets, you have to have a view that's different fromconsensus, that's risky. you don't know if you're right or wrong. humanity and putting your view out or have disagreement so you can work yourself through the disagreement, to find out if something's wrong, the thing that's up believable to me is that people will disagree with each other and not think the other -- maybe i'm wrong. i mean, 50% of the population's di agreeing, somebody's got to be wrong. how do you know that person's not you? can you work through that? there's something in society that means you can't have disagreement. two people go to dinner at a restaurant. one likes the food, the other is reluctant to say they don't like the food. isn't that crazy? >> it is. >> we're going to pause for a

quick moment. a quick break. coming back, the book "learn or die," coming back with ed and ray in a quick moment to continue the conversation after the short break.

back to our special guest, ray dalio, and ed hess, professor at the university of visitor garden school of business and author of "learn or die." gentlemen, we talked about the

book, that you have to learn from mistakes, recognize, but, ed, once you get people into a room and recognize mistakes, actually krcorrecting them is a big deal and getting people to work together when they disagree. >> you are quite check. basically, we know from the science that i, by myself, cannot overcome my confirmation bias, ego defenses. i need other people. in order for me to do that and what other people -- think about the type of relationship that's important. relationships are so critical. we need a relationship that i have to trust you. i have to trust you you're not going to do me harm. if i trust you, we can both be vulnerable. i can be open and honest and transparent. you can be open, honest, and transparent. then we can work through the issues or i can say, look, my

weakness is x. i need help. watch out for me in meetings when i'm doing this. tell me. give me a sign. how do you handle x? you get that type of open expiration because what you need in companies to be great learning organizations is egoless collaboration, vulnerable collaboration -- >> takes all sides, though, saying this is my fault, your fault, what if i think you're a jerk? >> well, one, you need to think about why do you think i'm a jerk? all right? i mean, is it fact based or is there something inside emotionally that we are not connecting, and if i am a jerk and you can't work with me, you need to say to me, i have trouble. i think you're a jerk. i'm going to say why. let's explore that. let's try to talk through that. maybe i am a jerk and we can't work together. >> have you been in a fistfight? i've been in a few. >> yeah. >> that's not the way it works.

yeah, but in the real world, we have to talk about things and explore them. >> look -- >> the figure fight thing, right -- >> yeah? >> so take neuroscience. it's all neuroscience. there's a part of the brain that is the fight or flight part of the brain. when there's a disagreement, because of the animal instinct, there's an instinct you are being attacked. that's dominant, instinct reaction. if you think they are a jerk, it's because you have not had a quality conversation back and forth to understand their perspective and then to resolve that. you won't talk about it. now you are faced with a choice. would you rather talk about it or not? another -- i'd rather know you think i'm a jerk, and then hear why, and then respond to it because there may or may not be merit in that. now imagine a place, nobody's talking about such things.

an idea in terms of how radically transparent it is. everything is tape for everybody to listen to. >> tape recorded? >> that's rights. everybody can listen to any conversation so there can be no spin. you hear it directly. >> let's go back to the tape. >> that's right. everybody can listen to everything. we see we are all struggling. we are all struggling with something. every's struggling. the better you get at something the higher job you gettings you struggle at that job. everybody sees everybody's human. you have these incredibly open relationships. it takes time to get used to, but at the end of the day, you have really honest relationships. >> ray, we pick our friends. we pick our -- you don't pick our family, unfortunately, that's what they say to me at the thanksgiving table, but we don't pick cowork es. thrust into the situation with people we didn't know yesterday. most of the time, you have great

relationships. you're in an ego driven business. hedge fund workers are risk takers, believe they can win, no? >> there's a number of things there. >> sorry, i get few time and chances with you. >> no, that's okay, that's okay. first of all, we believe we win, some people, i think, that thing that i've learned is that if you have an ego, so you lose humanity, lose the fear of being wrong, you're going to die, in my business, okay? that the number one thing is worrying about being wrong. that humility, and needing to bring in other people, groups -- the way i succeeded -- i was taught by the markets, having my head kicked in enough times with wrong mistakes, that i form an opinion of what i think is going to happen, and i have to find people who disagree with me to

try to hear their thinking so i then can stress test my thinking and increase my probability of being right. so the power of thoughtful disagreement, when there's disagreement like everybody should think who is the smartest person who disagrees with me? have a conversation so that you can take in what that reasoning is. that improves the probability of being right. being successful in the market is a function of the probability of being right. that means taking in other people's views to check if you're wrong. >> ray, we'll stick in one more break. coming back, talking the markets and views where things are. back with ed and ray, and the book, of course, "learn or die." back in a second. but your erectile dysfunction-that could be a question of blood flow. cialis for daily use helps you be ready anytime the moment is right. you can be more confident in your ability to be ready. and the same cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently or urgently.

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no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. welcome back, everybody. let's get back to our special guest, legendary hedge fund manag manager. we are having a great conversation around the table. i want to talk more about that in a moment, ed. while we have you here, ray, we've got to ask you about what you think about the markets right now. just where you see things headed using some of what you've learned, listening to people around the table who don't always agree with you, who will

disagree and tell you that. where do you think things stand? >> i think it's important to understand how monetary policy -- we're coming to the end of monetary policy. when interest rates hit zero and then there are no risk premiums, it's ineffective. think about what what we went through. we first hit zero interest rate, but we had big risk premiums, big spreads, higher returns of equities. then that went out on the risk curve, the buying went out on the risk curve and it brought down the expected returns of those asset classes, bringing up their prices. and that price appreciation has caused a lot of appreciation. so if we look at the prospective return, it's very narrow. monetary policy is dependent on that. we have no spread in europe. we have no spread in japan.

so two out of the three major central banks really have very little effectiveness in monetary policy. the united states has very little spread. returns of equities, probably only about 4% going forward. so right now the u.s. economy is picking up. we're talking about monetary policy. monetary policy can still be effective. ofb of course, it'll be very effective. my real concern is when the next downturn comes, which probably won't be for another couple of years. maybe a year or 18 months. so the issue of monetary policy, be very important not to have a monetary policy that is faster than discounted within the curve. there's a rise -- in other words, you take the curve and take what's discounted. it's important not to have it faster. if i i was running monetary policy, i would wait to see for the whites of the eyes of

inflation because in the world that we're in, in a world where europe is depressed and doesn't have an effective monetary policy, japan is depressed, doesn't have an effective monetary policy, and china must slow because of the nature of its debt. we have an economy globally, which is relatively weak with deflation pressures. united states is comparatively isolated. since my monetary policy is tightened, it's going to be a lot more effective than my monetary policy to ease. make sure i have inflation pressure. >> so you think janet yellen is doing the right thing? >> yes, i do. >> one to ten, ten being ultimate confidence, zero being zero confidence, when the fed speaks, how much confidence do you have in what they say? ten, zero? >> there are mixed views in the fed. and i think that the fed is describing what they're perceiving. i would say a seven. >> okay. >> you mentioned downturn in 18

months to two years. why did you pick that time period, frame? >> i think right now in the cycle there's no really pressing need for it. we're building -- it's really good the way we're building capital and the processes. we have plenty of liquidity in the system. the conditions are good. corporatewise, balance sheets, everything. that should continue to have that kind of momentum. i see no real reason for a problem in the united states now other than two tight a monetary policy. and i don't think you'll go to too tight a monetary policy. we are in a world right now where the other countries will move capital to the united states, which strengthens the dollar. in other words, the interest rate in europe is lower than the interest rate here. and so that kind of movement strengthens the dollar. all of that means there's no real pressing issue. but i think that if we start to think about when does the next downturn come, because there's always a downturn, and that comes later in the cycle.

so i'd say probably like two months in the cycle depending on -- two years, depending on how fast the fed tightens monetary policy. >> thank you, ray. we really appreciate it. >> i love this book. >> thank you. "learn or die" is the name of the book. we should also tell everybody to go online, check out your website. >> howtheeconomicmachineworks.com. >> thank you. >> stick around, everybody. we'll be back after a quick break with some news on a special guest for tomorrow. es we sprayed to be made. and making something stronger... will mean making it lighter. one day, factories will work with the cloud. one day... is today.

welcome back, everybody. earlier this half hour, we had news out from coca-cola. looks like they're taking heat from what it has heard from its investors over the course of the last several months. it is going to be cutting back on the stock options that is handing out to its officers. this again was something that david winters had been first advocating for earlier this year, back around march. it was something that was defeated in a shareholder proposal at the coke annual meeting this year, but there were a number of abstentions, including warren buffett, who wasn't thrilled but didn't want to vote against coca-cola. tomorrow, warren buffett will be joining us live onset.

he'll be here starting at 8:00 a.m. eastern time. we'll get the chance to talk to him about coca-cola, what he thinks about this move, and many other things as well. brian, i want to thank you for being with us for the last couple of days. it's been fun. >> real pleasure, guys. thank you so much. >> thank you for waking up early. >> we'll see you today on "street signs." right now, time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla at the new york stock exchange. welcome to the month of october and q-4 where we kick things off with some pretty good economic data in the u.s. not necessarily in europe, though. we're going to get to all of that. our road map begins with the markets. adp shows hiring picks up in september ahead of the big jobs number on friday. after yesterday's big move in commodities, futures are drifting lower. >> markets are closed in china, but the holiday in that country not dampening the protests