magazine. it's tuesday, october 13th, 2015, and squawk box begins right now. ♪ >> live from new york where business never sleeps, this is squawk box. >> good morning, welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. demand for oil will slow next year down from 2015. but here's the catch, opec is still pumping more than a drop in production. yesterday you saw a big drop in oil prices. down about 5%. this was a pull back. this morning it's down another 20 cents to $46.90.

as for stocks this morning, let's take a look at the futures. you'll see right now that it looks like the futures are indicated a bit lower. of course this is coming after 7 days in a row of gains for the dow. it's the first time its strung together 7 days in a row of winning streaks for the entire year. the dow futures are down by 85 points. s&p futures off by 10 and the nasdaq by 28. >> imports and exports both down. in the baltic. >> there's a cocktail party and there's one to drop the baltic index which peaked in july and hasn't been this low in awhile. we're all embracing it because it helps the emerging markets and takes pressure off of us in terms of leading the world. somebody else plays along with us, there it is. so now growth concerns again. and fisher is going to be on at

6:30 and here we are again. is it true there's never a good time to have a baby? >> there's never a good time to raise interest rates ever. >> i think any time is a good time for a baby. >> it's never the perfect time so just do it. >> there's two kinds of people in the world. those that think there's never a good time to have a baby and it's always a good time to have a baby. >> it's one in the same but if you're stretching it, just go ahead and raise rates. >> well, we'll check again today. is that a new suit? >> no, do you know what i'm wearing? if you saw the billboard before it was taken down. >> you're wearing. >> i'm wearing the suit. >> is that the tie too. >> and the tie. >> i'm going to do that tonight.

>> you're not going to go home? >> no, you have too many jobs. >> i do. >> here's what's happening inbev and sab miller are moving closer to a deal finally. they have agreed to what's been called a pact in principle. the agreement says that inbev would buy it's rival for about $67 a share in cash. it's $103 billion. >> the rules of what they can and can't say in terms of the european merger. >> because what's going to end up happening is they'll have to divest different things. it's going to take some time. this is just the beginning and it's possible the price could go up ultimately. >> really? because of the share purchase part of it or it's not a done deal. >> it's not a done deal. we should also tell you another macro hedge fund is closing.

fortress said to be closing it's global fund. a regulatory filing showing that it dropped 17% so far just this year. it was hit by heavy losses on a bad swiss frank bet it hasn't been able to recover. the former wrestler expected to leave the if i recall. the other fellow thrown under the bus with this is a fellow that came over from citigroup. we'll have a lot more on this in just a moment. we should mention though that he is probably the most famous person that people know from the fund, this is a small piece of the overall pie of fortress. >> that's interesting. >> sounds like they don't know who is going to call to say hey i've got some money. >> it's down 17% versus down 0.6%. >> when we see things go unexpectedly one way or the other like the swiss frank and for the people that make the

money, a lot of times it is zero sum and there's professionals that we talk about every day that, past performance, no guarentee. they can be so wrong. paulson a couple of years got cold, right? you can have a great call and just suck for years. >> and the real question with this is they had run the fund for a very long time. they took his hand off the wheel for a little bit and hired this guy from citigroup to run it. that's why i said is he getting thrown under the bus or not because they were supposed to be working on this together and then all of a sudden jeff leaves. they come back to try to man the ship and things get -- i don't know if they get worse but they don't get better. now the whole thing is imploding. we'll see what it call means and talk to kate kelly in a bit. also in tech news this is is interesting because we had mr. dell on the program yesterday. recode is reporting that dell's

co-owner approached hewlett-packard to explore the possibility of selling off dell's pc unit. no word on if they were acting alone or doing this in concert as part of the deal in changing the game plan. >> could be a way to raise money. >> and they're also trying to move obviously as far away from the pc business as possible. i don't know if you saw meg whitman wrote a scathing memo. it was scathing about dell but a thing to suggest look at this deal. you're probably reading all of this. this is going to be terrible for them. they're going to have all of this debt. this is great for us: maybe that's what she has to do. >> do you know who could nail them every time? elmur fud. >> that's the way he already

tal talks. he wouldn't have to think about it. barclays is reportedly getting ready -- do you know this guy? >> i do. >> former jp morgan banker. >> actually you know jes staley. he's been on the show. >> i remember how you started. you went to the new york times. they didn't have a big m&a business there in terms of reporting, you called all of those people and said just give me a chance once in awhile. >> this is true. >> that's how you did it. i know your past. i know your story. you worked your way up. clawing tooth and nail. is this one of the guys probably? >> i don't know, actually. >> why did they say yes in the first place? how did you get them -- >> he's presenting and making a market. >> i had a good business card. >> and then they say fine i'll give you the next scoop. >> the next big scoop.

>> i tried. >> susan li is in london saying i don't have anything better to do. just take your time. she's covering this story in london for us. sorry, susan. >> that's okay. you take your time, joe, any time. barclays is reportedly set to name jes staley as it's new ceo. so let's take a look back then at his career. he spent about 34 years at jpm and he lead the investment banking unit and was seen as a likely successor to jamie dimon but then leaving for hedge fund blue mountain capital which have been and are run by former jp morgan executives. so let's take a look at barclays approaching him for the second time. did you know that? according to the financial times the newspaper here in london the first approach was back in 2012 but barclays decided he was too

expensive. his contract would be too expensive. in the end, the british bank went for a change in direction. they opted for retail banker anthony jenkins. he was ousted in july and i guess the choice was intentional since they were switching from the previous investment banker. bob dimon remember him before anthony jenkins? another american investment banker that headed up barclays. that's the latest from london. back to you guys in new york. >> thank you very much. susan li and we'll be talking more about this story. in the meantime, earnings is the major focus of the markets this week. johnson & johnson posting results before the bell and then we'll be hearing from jp morgan and intel this afternoon. joining us is ed campbell. he's principle and portfolio manager at qma. ed why don't we start with you this morning. the big story yesterday is once again profit margins are getting crushed at a time when companies will have to start spending more

on things like wages and other issues, potentially commodities too. does that concern you about what we'll hear for this earnings season? >> the earnings season has been better than expected. we don't think -- >> not much to go on just yet though. >> true. it's still early but 2015 is likely to be very weak. we probably won't get any earnings growth at all. that's one of the factors that keep you less cautious in not buying the rally. and then this guessing game about the fed. we don't think we have a green light to rally into year end and we're not buying this rally currently. >> you can break those out. the whole issues about earnings growth is probably baked into the market at this point, right? >> i think some what and i think earnings growth is likely to get back on track next year but we're still cautious. we still see volatility

reasonably high and we don't think the risk-reward profile is such that you want to be overweight equities at this point. >> if your concern is you don't know where the fed is heading would it make a difference if they kale out and raised rates in october or december? >> i think if the fed did move that would take away a cloud that is hanging over the market and that would be an improvement for investor sentiment. >> crew, let's talk about that because people are still trying to figure out if the fed moved if that's a concern when they didn't raise last time it did all kinds of things. it weakened the dollar which helped boost stock prices across the board. does this market want to see the fed continue to remain on hold or do they want to just see this rate hike get out of the way? >> pretty much everyone wants the fed to just get on with it at this point. the response to the fed not moving tells you everything you need to know about it. they are a source of uncertainty. the fed kept saying there's all of this uncertainty in the

marketplace and that's dragging on growth. now the fed is the source of uncertainty in the marketplace and they don't seem to be able to recognize it. >> are we making this up though? we're looking at weaker demand in a lot of different pictures. we're looking at slower growth. is the fed the source of uncertainty or the economy itself? >> the fed would tell you financial conditions are tightened and therefore they don't need to but the problem with that argument is its circular. the fed itself is the board for financial conditions. it's a starting point for everything. so they can't really have their cake and eat it too. ubs has said all they need to do is hike rates and the economy will accelerate and get a better and more stable platform to work with. if the fed doesn't move the economy gets worse and not better. >> if the fed raised rates, let's say 25, 50 basis points the markets knee jerk reaction would be here we go. we're starting a tightening but

you're looking at that thinking it's that and they don't move again for awhile. >> i think so. if you look at the underlying inflation conditions with inflation well below the fed's target they have a lot of leeway. if we get the first one out of the way and they can signal that the pace of rate hikes is likely to be measured that would be a more positive scenario for the market. >> you don't like stocks right now are there sectors that you like or areas you like? >> there's areas of the markets we find attractive. we like preferred stocks a lot. attractive yields. 5 to 6%. exposures are dominated by the banking sector. we like high yield bonds. we think the spreads more than compensate you for the risks that you face in investing in that sector. we're looking at yields above 8% and they widened with the energy

names as well. >> i want to thank you both for coming in today. >> thank you. >> okay. when we come back, why playboy magazine says it will no longer be publishing images of nude women. we'll tell you about that when we return and later a special squawk box conversation for the next 20 years. the future of media. it all starts at 8:00 eastern. you don't want to miss it. as we go to a break though take a hook back at this date in history. the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible.

because we should fit into your life. not the other way around. can we take our blind folds off? >> mine is already off. >> mark, you want to try this? we're delving into his personal life now. this is as bad as it can get. >> if you pie into our theory that we all lived these past lives we don't know who we slept with. i'm sorry but we have once again not disappointed those that expected us to sink to the lowest level. >> i don't think a three hour special is too much. >> those are great.

>> they are. look, it's 20 years, all right? i'll sorry. sue me. we're going to show a little bit. starting to feel -- do you remember reagan's funeral it went on for -- it was like five days of just -- so this is not a funeral but some people at home might -- anyway, we are back. if you don't know we're celebrating the 20th anniversary of squawk box and we want you to be a part of it. some celebrate throw back thursday with with us in the plaza outside our studio from 7:00 to 8:00 a.m. eastern. for free tickets send an e-mail to squawk box-tbt@cnbc.com. there will be a lot of stuff going on. corn hole, games, booths. >> apple dunking. >> apple dunking. there won't be any of that will there? >> no. >> is this false advertising? >> they'll be able to get a picture with you.

how about that? >> that's fine. >> that's pretty good. >> but as in playboy i am not nude at this point. anyway an exciting week here on squawk box. we had the great privilege to ring the closing bell at the new york stock exchange and if you weren't watching closing bell and you haven't heard, i thought it was going to be sort of run of the mill. we had to go back into the city after we went home and then once we were there i was really happy. it was really cool. >> having covered this and watched this for so many years it's amazing to be on the other side. to get to see what happens up on the desk. >> and the matinee idol that brad pitt doesn't want to be around him because he can't compete, he rolled out the red carpet for us which is really nice as well. we do have a unique relationship with the new york stock exchange

with the first presence on the floor with cnbc. you dug it. that was your bucket list. >> it was my bucket list. >> you're not cynical. you haven't replaced the b in bucket with an f of things you're not going to do. >> it was great. we got those coins. >> i have a lot of range and yo saw me with the gavel. what do you think i was invisioning that to me as i was hitting it as hard as -- >> i'm not sure. >> wack-a-mole game? >> who do you think? i don't know people that question the very tenance of our way of life in this country. >> we had to put our fingers down on this button. >> you did well. >> do you think what we were touching -- >> i talked to tom farly about it. if you hit it early the bell

goes off early and creates a big problem for them. >> i just didn't know. >> he was still talking well into when we had actually finished and i'm still not sure. i think he's still talking about the oil markets. >> it was a big move yesterday. you're so nice. >> we're going to talk now about the world of hedge funds. new details this morning on fortress shutting it's global macro hedge fund. kate has more on that. >> good morning, andrew. yesterday's leak of news of a shutdown and the man that ran it leaving the firm really caps off months of tension at this fortress macro fund. from what i understand, internal disputes, wrong way trades and also a wave of investor redemptions have brought the macro fund from $8 billion, that was at its peak prefinancial crisis to the aum, the most recently reported which is about $1.6 billion as we understand it. that's only through late august.

it got worse from there. mike, again, the personable 50-year-old that ran the fund, now i'm told in a bit of tension with his partners over how and when he's going to leave and they're still working that out. although he himself not saying anything at this point. we also have not seen a formal announcement although we'll get more clarity today. a number of questionable calls or really bad calls frankly that they made dragged the fund down 1.6% last year and then 17.5% through september respectively. some of the things he called for that didn't span out essentially among other things. he said he was bullish on chinese equities. he was expecting them to rip. they did the opposite. he predicted a september rate hike. he could be forgiven for that. a lot of people expected that as well and it didn't happen and then 18 months plus of various bullish calls on brazil. it's the last one that really damaged the fund.

the bottoming out on september 23rd cost the fund a bundle and the move in rates as well. so from what i'm told they bailed out of positions or is in the process of doing that and everybody is waiting for more clarity at this point. >> so just put this in a little bit of perspective. how big is the mack cofund relative to all of fortress. >> it's 3% of their assets and i think my sense is they wanted to try to get this done before earnings so they could have details to share at that time. so the waning fortunes of the fund meant it's a smaller piece of the overall pie at fortress and that means, i was about to say on a mack kro level but it not be that damaging for the firm. a very early hire. he started a version of this fund in 2002 and it's an

unfortunate come down for a well-known well liked guy on wall street. >> the sources i was talking to last night were suggesting there was a feud also going on with the former citigroup guy that they were working together on this. the question is is jeff being thrown under the bus? what's happening here? >> i heard there was internal tension there for awhile and they took over seoul leadership of this fund earlier this year when some of the problems were hitting hard so i don't know if the details on that. who is right. i don't know what you're hearing but it sounds like there's bad feeling to share. >> and a lot of frustration over how much he made in terms of fees for himself over the past two years. reporting $140 million over the past two years and he has stock in the company? >> i'm not sure about that. but this feeds an on going concern that people have with

hedge fund and there has been a slow claw back. 20% for upside it's where you don't see upside for going on two years now and you don't want to hear that the fund manager losing your investor money is making a bundle in the process. i don't know that that was a driving factor but it doesn't help. >> we have a chart upright now. this is fortress since going public. $32. now about $5.30. >> they are like black stone. they topped the market with their ipo and it hasn't been good since. i do know some investors who were super excited about this story within the last year or two and again to be fair as you pointed out the macro fund is a piece of the overall business. they do private equity and other hedge funds but it's not been a great story if you look at the full public trading of it. >> in fairness to our friend, is black stone a comparable company

or not really? >> black stone does much more as you know. they have a massive real estate arm. their hedge fund business is very different. they have a lot of different aspects even just to that business so fair point i was only thinking of companies that went public right before the market fell in 2007 and 2008. the timing was similar. >> appreciate it. we have a couple of stories trending to tell you about. playboy says it's going to stop publishing pictures of nude women starting in march. instead it will feature women in provocative poses but not fully nude. last august they banned full need photos from the magazine's website in an effort to get millennials, advertisers, get on social because a lot of the social sites wouldn't let them on historically. >> it's a reflection of the changing world. >> changing world where there's all sorts of adult entertainment. >> that's true but most of the other adult entertainment which

is obviously more racy. they don't try to combine real articles and real interviews. you go there for a reason. it is exploitive. now there's something to be said that the star of jurassic park, chris pratt said i don't like exploitation of women but it would be okay with me just to exploit men's bodies more. do it more equally and then all of us can be naked and that's fine but to just single out but then again you can't expect in this day and age to have normal people like right next to a really intellectual article. you have someone like this. >> and then does it turn into esquire? >> i don't know. playboy -- >> i want to give you my favorite quote. this is the editor and chief saying don't get me wrong, the

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you get a company that's more than just the sum of it's parts. centurylink. your link to what's next. the imf seems to think the decision to be cautious is a good one. still is the fed's pace becoming harmful? that's the question. you're in the harmful camp. you disagree with all the guys hanging in peru last week. >> which guys? >> all of these folks.

>> the wall street journal lead column yesterday summarized it all. get on with it. i love my colleagues. i love the process of the fomc but they look like -- >> they have egg on their face. >> they do. you heard it this morning but look, uncertainty is the enemy of decision making. we know that as business people. make a decision, act on it, and things will workout better than if you just keep saying -- like lucy pulling the football up every time charlie comes to kick it. >> two weeks ago we got a lousye unemployment report. >> it's one number but if you look at the claims it's still moving in the right direction. it's still very attractive. if you look at the mismatch between jobs that are out there being offered and the skill sets monetary policy can develop that and unemployment is way down. very importantly the unemployment claims continue on

the right path and the index has reversed itself. is numbers are not as bad and you don't do things based on one months numbers and get nervous because you had a chinese evaluation and had the head of the fed say i'm going to have to reconsider. lead the economy. be leaders. >> so even if you're right what do you think is going -- that's what you think should happen. >> what do you think will happen? >> stan fisher is the pillar of that community and one of the greatest leaders in the fomc. i thought his speech was -- i'm not sure but he made it clear what his direction is. they have to now. somehow do something because otherwise they're creating more uncertainty. it's lucy pulling the football out so i think they will move.

>> i remember talking to you in late august. >> i thought they should. >> you came on right after fisher -- >> yeah. >> that's the best name in central banking. >> he seemed to indicate, remember he said he was depending on the numbers you thought september. so now you're saying -- >> listen to janet yellen. listen to stan fisher. listen to san francisco. listen to the federal of the reserve bank of st. louis. they're all saying the same thing and uncertain city the enemy of decision making. >> take us back into the room. when you tack about it being a head fake or everybody trying to get ahead of it, how does that conversation go? do people say we have to find a way to get the market to think x? how does it work?

>> it doesn't work that way. these are sincere devoted people. you get a market briefing and you don't want market instability but it should be driven by the real economy and the question is will it have disruptive impact not for the financial market sake but so that it comes back and bites the real economy on the rear end. >> with a do you think? quiznos. >> that doesn't work that way. these are seriously dedicated people. >> you never send out for lunch? >> no. >> you get your own chefs. >> the food is food for thought. >> i'm having a blank and i usually don't, what was the latest negative effect that someone we were just talking about it yesterday or the day before. it wasn't the corporations act in the wrong way.

it wasn't that foreign countries with all the free money goes out. >> it wasn't that there's nothing left to do. >> no, it wasn't that either. it was something else. it was just another -- i can't remember what it was because it was another reason to say that not only is it not helping right now but we don't know the negative -- we won't know the negative. >> it misallocates resources. >> but that's assuming that you have an artificial level where it is. if you look globally at growth and where all the other sovereign debt is people would be able to make a case that it's not artificial here. that this is where interest rates are around the world. >> if you look at what was said in this meeting, even the people from the emerging market nations said our responsibility is to

restructure our economies appropriately and the answer is not monetary policy in the united states. some have done it. i talked on the show about howell mexico and poland have done and how poorly brazil has done as an example. how poorly russia has done. you can't solve these problems with monetary policy and continuing this process doesn't help. >> globally keeping the dollar weak so other countries can export. >> we're the beneficiaries, our consumers are the beneficiaries of a strong dollar which is what is happening right now. we've had a huge price cut in strong dollar in terms of import costs. our consumers are being well provided by a strong dollar. >> that's another point. >> that's the other point and here's the problem with zero interest rates. you're also killing net interest margins for banks and we want

banks to go out and lend money. so this is our policy. this is where we have been but you just can't keep saying we're going to do it. we're going to do it. and you create uncertainty and no business woman or business man wants to govern around uncertainty. i meet these senior asset managers all the time now. my senior advisory work for barclays. there's palpable uncertainty and fear and just clear the air. stop talking about doing it sometime before year end. give somebody something to watch their hat on. >> you need to wear a hat by the way. >> get the underlying economy to follow the animal spirits but now it's about savers. that money goes to ceos to buy back stocks so their compensation plans are better. at people that already own assets so their stocks go up and you can feel the income inequality building on that. >> it didn't make the richeli

rich richer. let him talk about the fiscal policy. >> you have to switch party. if you admire all of these republicans why are you still democrat? >> i'm a democrat in name only. >> richard fisher thank you very much. great to see you this morning. >> when we come back this morning, the trucking indicator, what the big riggs are telling us about the health of the u.s. economy right now. stick around. squawk box will be right back. bob dylan. to improve my language skills, i've read all of your lyrics. you've read all of my lyrics? i can read 800 million pages per second. that's fast. my analysis shows your major themes are that time passes. and love fades. that sounds about right. i have never known love. maybe we should write a song together. i can sing. you can sing? do be bop. be bop do. do be do be do. do do do be do.

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congress extends a deadline for adding safety technology. that's one of the things that factored into the accident. the american association of state highway and transportation officials says that all freight rail traffic was shifted to trucks, the additional operating costs would be 69 billion annually and joining us citi research transportation analyst. no one expects that obviously but you can see the price differential. we need trucks too, right? we need everything. >> rails do play a critical role in transportation and if we were to see them shutdown for whether it even be a day or two would have a pretty significant impact from a capacity standpoint and conjecture standpoint. >> the trucking industry, how often has surcharges for fuel? is there any reason to think that this isn't the -- you can't

really -- that's in the past. it doesn't just mean good. it just means the past. these should be great days for the trucking industry based on where fuel is but if they had surcharges and just had to take them on and off then it isn't, right? >> surcharges in fuel do have a more dynamic impact on transportation in general so they go up. they ultimately cover a lot of the expense when they come down. you lose a lot of revenue that comes with it. the profitability doesn't swing all that much. >> who do we just hear from? ups or fed ex? one of the two said they would have higher surcharges even though gas price versus come down. >> when you think about what fed ex and ups are doing that's a certain part of the market with pricing power and surcharges for them are more of a pricing tool than anything else and they're pulling more in as prices are coming down. it's about price increase. >> why call it a surcharge? this is just pricing. >> with the package guys in particular they discount heavily

off of base rates their very large customers but everybody pays a fuel surcharge. you actually get a little bit more coverage on a pricing increase. that's what there doing. they have more pricing power than the truckers do. truckers would be a better scenario if we had more industrial demand. still demand has been soft recently. >> so a tenth of a point lower gdp is more important to truckers than a 50% drop in oil prices. >> that's absolutely right. >> that's weird, isn't it? >> as we have learned as you see these surcharges pass through really it ultimately does become more of a pass through. >> is it second half even though oil prices are $47, the second half of the year isn't going to be as good as the first half. is this another indicator that things raren't as good. >> anything that has exposure to a strong. >> we kept -- that's why we're not raising rates.

>> on a relative basis. the world is relative. i don't want anything. >> would that make you happy once and for all? >> i would like to see better demand ultimately. whether coming from the consumer side or industrial side. i'm just telling you what we're seeing from a flow perspective. >> it should be great times for truckers. people could be trucking right now. we should be playing that song all the time because stocks should be skyrocketing but we're not. >> let's hope we have a good holiday and those fuel savings does two into better spending. >> do you expect this to be an issue or not? >> i don't. we would expect you probably get abextension of the ptc regulations. it will be difficult to operate if the bill is not extended. >> the truckers were a little bit more selective on the truckers. we much prefer investing in the rails at this point. >> you do? okay.

>> thanks very much. >> coming up, cheap real estate. what's the catch? you have to be willing to drive. that story of 20 to 30% discounts. we'll talk about it when we return. plus the head of the mortgage bankers association is here with his own new home sales data. we'll be back with that and a lot more. 40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank.

citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

welcome back to "squawk

box," a news alert for you, johnson and johnson announced a repurchase program with a strong balance sheet in cash flow, and posting results this morning, bringing them to you as they hit the tape. >> sounds big, $265 billion market cap. andrew. >> yeah. >> it's big. >> yeah, creates questions around how long the buy back debate and everything else. >> when you announce, means you're authorized to do it. >> doesn't mean you'll do it. >> exactly. >> they said the stock buyback is a good buy for them at this point. >> you look at where the stock is and maybe it's the right argument. new on real estate, bargains, 20-30% bargains, here's the story this morning. >> good morning. look, real estate has always been about location, but never has that been more true during this very unique housing recovery. the price differential between

closed in metropolitan homes and far out suburbs has never been greater. if you're willing to commute, the bargains have never been better. take chicago, for example, home fryss in deerfield are 15% below recent peak, but go out the interstate, and prices are still as much as 30% below peak, and the same in l.a. when glendale is 2% above peak, but palmdale, 37% below. in d.c., the closed in suburbs are 8% above the peak of the housing boom, head out to ashburn and winchester, and prices are nowhere close to recovering to the peak values. same is true in phoenix, seattle, and parts of florida. they used to use a per mile measure savings, but it's greater now meaning there's more room for prices to grow out in the far suburbs. the question is will demand out there return, andrew? >> thank you. stay with us.

applications for new home purchases on the rise as well. that's going to new data for mortgage bankers association. the report forecasting an increase in home sales and purchase mortgage originations into 2016. joining us with more on that is dave stevens, ceo of mortgage bankers association. how does the survey work? >> we survey the lenders subsidiaries of the major home builders in the country, so it's something we started two years ago. it's great accuracy and insights to what's happening in the purchase market. >> thinking about the single family home? >> yeah, when -- >> go ahead. >> the numbers are good, right? 29% increase over last year. 440,000 sales roughly of new homes last year. looking at 520,000 sales this year, and forecasting another strong increase next year in the new home market. that's the good side of the story, and, clearly, not only a job creator, but it's something that's reflecting the demand of kind of this younger generation

beginning to get into the purchase market. >> what's the refund market right now in. >> it's slowing. listening to the last segment on interest rates, we think that at some point here social security going to burn out and all the available coupons for refinancing meaning americans who could have refinanced already have done so. doesn't take much in increases in the 30 year fixed rate mortgage market to halt that. the overall mortgage forecast next year is lower than this year, but purchases will be up, refinances down. >> what about credit availability? i mean, we talk so much about the rates and about the affordability, but it's the availability when i go out and talk to people trying to buy a home, they say, i'm just not qualified. what helps that? >> die dianna, you nailed it.

a story in the home index is $325,000. the average resale is $220,000. builders are building to a higher income earning population, something that may not work for the first time home buyer, and to your point, diana, if you're near tight employment markets near the urban communities in the country, the cost of getting entry and access to home ownership is at a premi premium. there's a housing stock shortage in terms of availability, and that's why we look closely at the new home sales index, and information to see what's inside that data as to whether we build the supply to meet demand and where the supply is going to be built. >> okay. we have to leave the conversation there. we thank dave, preerappreciate and fascinating report. i need to move somewhere -- but i don't want to drive. me with driving is complicated. >> it's hard since you don't have a car. >> one of these days, but i'm a cheapska cheapskate. >> you are. >> yeah. >> i can get you a deal on a

volkswagen diesel. i bet you can. what about yourself? nay don't pollute at all in. >> did you see leonardo dicaprio is making a movie over it? >> yes. >> flying on a private jet arranging to make the movie. anyway, this morning, top stories, plus, "squawk box" called to session this morning as senator bob corker is on set to talk politics, the economy, and more. i won't tell you what he's really here to talk about because you might not watch. check out the futures. you're watching "squawk box" on cnbc, first in business worldwide.

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johnson set to report this hour, plus, what to expect from jp morgan results due after the bell. >> then our news maker of the hour, senator bob corker will join us on the squawk set to talk home finance reform and a lot of other things. nuclear deal with iran and america's looming debt deadline. >> squawk booze news, the two largest brewers are closer, anheuser busch could control more than a third of the world's beer. the second hour of "squawk box" continues right now. ♪ live from the beating heart of business, new york city, this is "squawk box." ♪ welcome back to "squawk box" right here on cnbc, first in business worldwide, i'm andrew with joe and becky, and johnson

and johnson expected to report this hour, company just announced a $10 billion share repurchase program, company citing a strong balance sheet and cash flow. after the closing bell, we'll get results from two more dow components, both intel and jp morgan out with numbers and we'll bring you them as well. tonight, presidential democratic candidates face off, hillary clinton will be challenged by bernie sanders -- that's joe yawning -- governor, o'malley, and former senator jim webb. >> when is that? >> this evening, sir. mark your calendar. >> cnn came out don't expecting the ratings of the gop debate because, obviously, it's a different cycle, the first two debates got big, big numbers. >> sand man, what happened here? no. i'll try to make it interesting because meanwhile, half of the

nation's democratsme menwanted to challenge hillary clinton. the debate is expected to start, joe, this evening. you'll be up late for this, 9:00 p.m. eastern time. >> interesting angle to this, the biden angle. it's the latest that steve croft interview that it was a very lukewarm defense of hillary clinton, which indicates that if there were to be a choice to be made by the obama administration, it goes to biden. >> well, he's been measured in the last month or so. >> yes, and the greatest public servant ever associated with, picked biden too. now that would be -- that would wake me up. >> the debate, they leave a sixth podium empty allowing him to step in late as today if he wants to. >> i don't think he's with us anymore, at cnn now, but he said that there would be a standing

ovation that would never stop if biden shows up. we're in the presence of greatness ourselves here. we'll introduce you in a second, senator, we have a sitting u.s. senator with us, but what are we talking about? other stories? >> quick headlines to get straight to senator corker. sabmiller has accepted in principle an offer to be bought by anheuser busch inbev. they would attempt to secure regulatory clearances required before the transaction takes place. in banking news, getting ready to name the new ceo, leaving jpmorgan in 2013 after three decades, now a managing partner at blue mountain capital. and macro hedge fund fortress shutting the global fund, dropping 17% this year, making up 3% of the assets under

management. it was hurt in the year on heavy losses by a bad bet and has not recovered. chief investment officer is expected to leave the firm. >> you know, 3%, who needs this? 97% and that's all we're talking about is 3%. senator bob corker making waves last week pushing for congress to reform the nation's housing finance system and wind down fannie mae and freddie mac and had firm advice for investors. >> no background whatsoever to the rumor putting out that the white house is considering ipo, absolutely not true. major bs. >> that rumor -- i have to interrupt you, those rumors forced sale prices to spike up yesterday, did it not? >> i don't know, but people should be shorting it because it's major bs. it's not -- there's no factual background to that. it's not. it's just talking in your own book. >> here now to talk politics,

housing, and more, senator bob corker from tennessee, a chairman of the committee on foreign relations, banking, housing, and life goes on. talking gse reform, there's no speaker of the house, all hell's breaking loose in the house. there's no policy, shutting down something in syria because we spent $50 million and we got five people trained. >> yeah. >> is there not a disconnect? plus, the housing market, you want to shut down -- reform the gses right now? >> we are doing it right now, actually. laid out a vision, passed it out of committee. not unlike the auto industry when i first met you guys, and that was, you know, i laid out a vision as to what should happen there, president bush put those principles into the loan documents, so sometimes we affect things not by passing legislation, but hopefully we will in this case, but the

vision of derisking entities is occurring. the portfolios are coming down -- >> so many things going on, we're not talking about entitlement reform that could end life as we know it today. we're not talking about that right now. >> probably not. >> the president -- did you see that, steve croft interview? he doesn't care about leading on syria or isis, but climate change. >> i was shocked with that. the fact that -- that's -- >> that's a true test of a leader is climate change. >> most of the time is on forp po foreign policy. the syria issue, what's happening in iraq -- >> up believable. >> iraq feels like a country that's becoming owned by iran. i mean, when you are there, you feel it on the country. >> now i got you talking about what you want to talk about. >> i want to talk about reform too. >> you do? >> the senate never does anything. >> no, that's troubleshoot now.

>> more from the house. >> we could do more, and it is frustrating for the american people, and i see the anger out there, and we see that expressed in the presidential races, and what i said to people, people ought to be angrier than they are. i feel like we are angry about the wrong thing, but, look, there's a lot of blocking and tackling to be done. the gse reform issue is important. think about it, back in '08, how much did you talk about fannie and freddie? >> here's the issue now, the numbers i've seen, fannie, freddie, and the hfa make up 90% of the mortgages written in the country right now. if we don't have them doing that, are we necessarily going to see the bank step in to fill the void? >> i think you're going to see, you know, obviously, over time, what i hope they become is a utility. today, i'm meeting with a group that's buying the front end risk. what we want to do is meek sure that over time, that's what happens, the portfolios are

basic, operating as hedge funds, right? the u.s. government low bar race, hedging that against the longer term rate, they were in trouble, but what we want to see happen is overtime, them becoming a utility, and at some point, maybe they come back out in the market, hopefully that's years down the road, but what happened last week was you have people who come in, bought the preferred shares, they bought them after they went into conservatorsh conservatorship, raising expectations, and what happens on the hill is creating political me momentum, and i wa people to know the rumors are not true. >> it's talking in the books. >> i know it is. i understand that, by the way, but, look, there's a lot of issues to deal with as a nation, and, certainly, a housing finance system that's robust is one of those. what happened in syria, joe, is

just -- it's beyond belief. the biggest humanitarian crisis since world war ii. 240,000 people dead, 12 million displaced, and every opportunity, minor involvement, with some leadership, we could have made a difference, we did not, and now the world woke up to this, it's a shame. it's a humanitarian disaster and blight on the nation. >> you are watching your colleagues across the street. >> we understand something's happening there. >> do you know anything we don't know? >> i don't. i don't. >> no? >> no, i don't. >> what do you think as sort of a -- what do i call it -- you're a middle guy. what do you think of the freedom caucus? how do republicans as a party eventually deal with them, and how do you continue -- you might, you know, win house elections, but how do you win the regime election when you're appeasing those guys all the time? >> look at the dynamics, we're

out in the wilderness for six and a half years with a president that has caused the republican base to be very upset, and over time, when we continues doing the things that he does, it causes people to be upset at people who do not focus on the fact the way our country is set up, there's a division of power and it's hard to stop these things. i think much this of goes away, all of it, if we elect a republican president. if there are four years, eight more years of democratic leadership, i don't know where this goes. >> when you say -- >> i've seen people say it looks like a parliamentary system, there are too many breeds, three caucuses calling themselves republicans, democrats with two or three caucuses calling themselves democratic. is that an accurate depiction? >> we had a discussion today on the floor with a new senator coming in, and this is exactly the conversation we had.

i mean, it is more like a par lament now based on people's interests, and, you know, that's why i say, i think sometimes that the american people should be even more upset from my perspective, but it ought to be focused on long term fiscal issues, the issue you're going to wear me out on, and have not done yet, but you understand, instead it ends up being a lot of times about shiny octobers that at the end of the day are not -- >> that's all we talk about. >> as a middle guy, i imagine you think the country really is in the middle? or no? >> so, i do -- >> at this point. >> center right. don't refer to me as middle again. >> in this day and age -- >> it's funny, paul ryan say is too far left. >> yeah. >> right. >> freedom caucus. >> i think the country is center right, and i think that frustrations, rightly so of us not addressing the big issues is

weighing on the business types. i will say this. the frustration is not just amongst the grassroots base, but donor base now. again, i think the presidential race is very, very important. we have huge issues to deal with. we have companies that are leaving our country because of our tax policies here. >> right. >> those thing, i mean, it would be so simple to fix that. why not just do that? >> there's a reason people are at 75% wrong direction. number one, i mean, no one would say we have a good grip on foreign policy right now. >> no. >> number two -- >> we do not. that's a fact. >> not just that we're the best house in the neighborhood, but interest rates cannot be raised above 0 because it's tenuous, this recovery. we may have 5% up employment, but 62% participation. >> yeah. >> there's nothing that seems to be -- and we're totally divided as a country. rich against poor, races, you know, black lives matter, it's

just nothing seems like it's really going the way we want it to go. >> that's why bernie sander draws crowds. >> that's insane because he says he's not a capitalist, but a democratic socialist. anybody read any economics over the past 200 years that indicates that's the way we should -- that's the direction we should take? >> i agree with that, obviously, but i agree that that's not the direction we want to go, but, look, i was at the grocery store the other day, bumped into a guy known to be a staunch republican, and i have to tell you, with everything that's happening that you laid out, i'm beginning to feel the burn of bernie sanders. >> what? >> yeah. >> wow. >> the country is very divided as it should be. we have not addressed our nation's issues. people do not see the economic future that they once thought they would see. >> which party's more screwed up on trade? your guys or the left? >> you know, the trade bill would not have happened without

republicans. you know that. >> the trade bill might not happen in. >> with what's occurring, and, by the way, there are legitimate concerns on our side of the aisle as far as give aways with intellectual property, pharmaceuticals, and other things. obviously, i was a strong supporter of tpa, not just economical economically. >> the left wants 0 years. that's how far apart you are. you don't like -- five years on patent protection for bilogics, right? that was not enough? that's what you say -- >> well, i'm just saying some people are raising issues. >> right. >> for me -- >> so far. >>the text, but free trade raises the standard of living for americans. we have 22% of the world's gdp. back in tennessee, we make products we sell to other people across our country, and it's something that's important, as long as it's negotiated in the appropriate way. >> senator, when you talk about what's messing, what's making

the american people angry sounds like it's a lack of leadership. who in your party do you think is the right person? >> so, i love talking to you guys, and this is where i'm not going to weigh in. look, we have four senators running as joe mentioned, some of the foreign relations issues, i'm chairman of the foreign relations committee, two of them are there. we got a senator on the other side of the i'm. you know, for me to do the job i'm elected to do, it's best i cannot to do what i'm doing. i hear from them relative to foreign policy issues, and i hope what we do in the committee is provide a north star for foreign policy issues for people to focus on. >> can you at least acknowledge that involve been in the senate now for a while, you would definitely favor that we elect a governor? >> i would -- that i would say we have a lot of call -- i actually think we have -- >> we tried a senator, didn't we? >> what do you think about the two business people? >> yeah, so i --

we have a great talent pool, and -- >> sticking with it. >> maybe -- >> i gave you an easy one to hit by saying you served in the senate long enough to say we don't need a senator. >> what's the other topic? i'm not going to weigh in. >> you came in on gsetouched on. housing is not flush right now. >> no. >> nowhere near 8 years ago. >> the process we laid out causes the system to be more robust, and we'll get there. it's derisking now, the portfolios. >> shock we'd do something, a bill that might solve something? >> how much support do you have for the bill? >> there's elements. we have a lot of support right now, i believe, cosponsoring a bill with mark warner, but elizabeth warren is cosponsoring too, again, ideologically to the right keeping them from being e

being-ipo'ed without approval. this forced them to risk down. this is a possibility by year end. i hope that it happens. even through influence, we're causing the right things to begin to happen in the housing industry, and i'm proud of that. one of the roles we have. it does not always happen with legislation. >> all right. >> time's up. great to be with you. >> just waiting for that. get to commercial quickly as possible. >> i endorse -- you guys for business news. thank you so much. >> thank you. great to see you. when we return, jp morgan quarterly results due after the bell today and what to expect when the major financial firms report, and lynn good will join us, ceo of america's largest utility, duke energy, and fortune's ranking her 13th on the most powerful women list, and pritzker outlines opportunities of doing business with island nations. we return in a moment.

welcome back. earnings season kicks off this week with major banks set to report quarterly results starting with jp morgan chase reporting after the bell this evening. here to say what she's expecting, senior research analyst covering large cap banks at morgan stanley. i have a question asked during

the break, why announcing after? they normally announce in the mornings. >> they do. >> devine anything from that? >> no. >> nothing. what is about? >> bha stole their slot. >> what do you mean? >> so it's a calendar issue. monday, yesterday, was a bank holiday. a lot of us were working, but it was a bank holiday, so they did not go this morning. they are going this afternoon after the close. >> this is a one time deal? >> yes. by the way, they secured their slot for january 14th for the morning, but it's a one and dnee thing. >> practical. we have to know these things. on the merits of what you'll see this afternoon, what are you most looking for? what's the challenge right now? >> okay. most looking for is their capital ratios. they are billing capital nicely and their buffer, which is a technical term for how much capital regulators force you to hold will be in a better spot.

we think they go into the quarter with 4.5% requirement, and they report they'll be able to get away with 4%. >> thinking about top line growth, fixed income, underwriting, m&a, what do you think? >> it's not my biggest issues because we think the market is well prepared for a tough quarter. >> from jp morgan or across the board for everybody? >> both. >> both. >> right. fixed income for jpm, excludeing commodities from last year, down 15%, that's tough. equities, actually, they are doing pretty well, up 5-10% or so, we'll see the number coming in, but equities is good. >> relative basis, where is jp morgan compared to everyone else? >> for earnings? pretty well. >> as an investment? >> as ininvestment, great. >> great? >> great. dpl meaning of all the firms out there right now, you invest in jp morgan -- there's a screen of bank of america, wells fargo,

citi, and goldman. >> we have overweights, and we are equal weight. the basic reason? >> right. >> jpm comes to the table with a nice set of cost cuts. they announced their analysts in february, 2.8 billion, running ahead of schedule, that's over the next three years, but they are ahead of schedule going into 2016 with except saves in the pocket. you know they deliver. that's critical for investors. >> right. who do you run from? >> who do you run from? >> yeah. anybody on the list you are not happy about? >> equal weight the other names. >> that's like a euphemism for, oh, right? >> doesn't mean run from them. >> we're not running. >> appreciate it, great to see you this morning. coming up, when you tell people, you just read "playboy" for the articles, you'll soon be telling the truth. that story's next. plus, why twitter suspended two popular sportsing t s accounts. we'll be right back.

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welcome back." playb playboy" magazine is stopping publishing nude women in march, but in provocative poses, but

not fully nude. there's a question whether there's a center fold and what it would be in they did not. >> that's a good point,andrew. you think of center folds, center folds, no center fold, provocatively dressed center follow. >> there's a debate still. they have not laned on a decision. >> like the mamum sort of thing? >> i don't know. they are contemplating doing awith with that too. >> all right. when we come back this morning, the ceo of power company, duke energy, is joining us from fortune's most powerful women's conference, lynn good talking energy prices and leading america's largest utility next.

♪ welcome back to cnbc, first in business worldwide. stories front and center this hour, the fed governor says the

central bank should hold off on interest rate hikes until it's clear a global slow down, trouble in china, and other risks do not derail the u.s. recovery. more views today. speaking yesterday afternoon in washington, she said that the downside risks make a strong case for continuing to carryfully nurture the u.s. recovery. also, twitter accounts for two prominent sports websites suspended last night. dead spine and sb nation accounts shut down for sharing content copy righted by the nfl. they sent notices to twitter as part of their copyright enforcement program, and both accounts have been reinstated. the vw scandal going to hollywood. we mentioned that earlier. motion pictures and actor -- what's the actor's name? i'm thinking of -- who is dwsh dicaprio acquired the rights. >> gatsby, gilbert grape, tit

titan titanic. jack dawson. >> would have been good if they were in the prompt e and they were not moving the prompter properly. >> throw them under my bus. >> i had to use my brain, tough, as you know. >> i have to mention tradings, trading -- no, it's down now. 1.49 is above estimates of 1.45. >> early number was 1.20. i don't know what the street's looking at right now. 1.49 versus 1.45. >> revenue is 17.1, and estimate, though, looks to be 17.452. medical device sale, 6 billion, and they break out everything, oth paidics, casaying 6.15-6.20

share, street strelooking for 6. >> they are saying it's down on what you'd think, down on currency, down on currency and the strong dollar. this is another prime example. i don't know how much of their revenue is from this, but you'd think convict. >> one more quarter before -- >> third quarter. >> yeah. >> before the comps. >> before the comps are easier. 95 -- what's it say there? down 49 cents or so. all right. right now, let's go to washington. kate kelly joins us from -- is that why you are there, kate? i think you're powerful, but you're with fortune's most powerful women? covering or part of it? >> covering it, interviews, here with the ceo of duke energy, lynn good, and meeting a lot of fascinating business leaders who

are female and media leeaders. lynn, thank you so much for joining us this morning. we chatted about the fact you have a female chairman as well as obviously a female ceo, unusual, if not the only example in the fortune 500. >> you know, we've been fortunate and focused on diversity at duke for a long period of time. i have three women on the leadership team as well as diverse members of the team so it's an important part of business today. >> absolutely. let's talk about the commodity picture because we spend a lot of time talking about the price of crude and what that means, certainly, for the shale drillers in u.s. and others. for you, though, cheap energy prices, namely natural gas and coal, are a benefit. talk about what this low price regime has been for your business? >> so duke energy is the second largest consumer of natural gas in the united states. we use it as a primary fuel for generating electricity, and when prices are low, we pass that benefit directly on to customers, and it's really been a terrific opportunity to keep

rates low to customers, while at the same time investing capital to modernize the system. >> the obama administration introduced the clean power plan seeking to reduce carbon emissions 30% by 2005. you reduced yours 2 2% over the period. what more needs to be done and how do you feel about the plan at present? >> duke energy supports the move to a clean generation future. we demonstrated that, as you said, kate, reducing carbon emissions by over 22%. it's been a part of the move to natural gas. we had an opportunity to take advantage of the low shale gas, but we've been a big mover in renewables, spending $4 billion already in envestment renewables and see another three in five years. looking at the clean power plan, though, it is a road map for 15 years. all options should be on the table. we should be working to continue

to modernize in a way that maintains reliability and keeps an eye on value and price to the customers. >> so you've been in the job two years now. you have had a baptism by fire in some senses because you have the dan river coal ash spill to contend with. as well as the business is growing and you're in a good spot given price of commodities. what are your reflections on this period of time so far? lessons learned? >> extraordinary two years. i'm not sure as prepared as you are for the jobs that you are fully prepared for all things that occur, but i've been blessed throughout the period to be surrounded by great people at duke energy, extraordinary team, supportive board, and i'm really excited about what the future holds. it's a great industry to be in. energy is an exciting place top. >> one last question. you talked cost of capital, if and when the fed hikes rates, how does that affect your business and does the size of the expected rate hike, whenever it happens, give you

reassurance? >> we planned for a rate hike for a number of years, and there's. a lot of speculation. that's a part of the planning. that increases our cost of capital in a way that reflects, you know, our costs over time, but i believe if it moves slowly and gradually, it's something to absorb and plan for. we'll be watching the fed as closely as everyone is. >> lynn good, thank you so much for joining us. guys, back to you in new york. >> kate, thanks. quickly on johnson and johnson, they are saying that they are boosting guidance for the full year to 615 to 620. the estimate is right now 6.16 already. you know, they beat by 4 cents, so they are only boosting by -- doesn't mean fourth quarter is better. revenue number just to put in perspective worldwide sales of 17.1 billion was below expectations and down 7.4% from

last year. sales actually down 7.4%. the impact on interpretational results was currency of 8.2%, so that, you know, that's definitely -- this is a prime example of the what the fed thinks about thinking about raising rate, and that will hurt a lot of big companies, but, you know, new and core products drove solid underlying growth consistent with the plans laid out on moving portfolio and agenda to expand our leadership position. blah, blah, blah, a boilerplate there. lower earnings and revenue at johnson and johnson, and right now, the stock unchanged. coming up, the thaw in u.s. cuban regulars meaning the island nation could be open for business. u.s. commerce secretary just returned from a two-day trip to cuba joining us next to talk about the opportunities and challenges of doing business there.

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under a little pressure, and af the worst levels of the morning, but dow is down by 66 points, of course, this comes after seven days in row of gains in a row. s&p down 7, and nasdaq off 20. the commerce secretary returns from a trip to cuba, meeting with ministers among others. secretary is the most senior u.s. official to travel to cuba since kerry visited in august. as we head back to the most powerful women's u summit in washington, they'll speak later this afternoon, but she's speaking with us first, and, secretary, thank you for being here today. >> thank you, happy to be here. >> you know, mad p.m. secretary, going to cuba, you went with an idea of kind of finds out that opportunities exist between our two countries, and thawing relations between the countries, it seems trade has not picked up, and, in fact, dropped

substantially since that time. what are the biggest barriers to entry? madam secretary, we are having trouble with the secretary hearing us. maybe we can address that for a second. >> sorry about that. >> i'm sorry. >> what are the biggest barriers you see between the two nations because relations have thawed, we're still looking at a declining number of exports between the two countries. >> well, let's step back for a minute and recognize that we have not had relations with cuba for over 54 years. so part of what our objective in going down and visiting cuba was to really get to know our counterparts. we have not known them, the folks in the government, better understand how does their economy work? how do imports and exports work? how does distribution work within their country?

then, frankly, to have our experts, we have a regulatory dialogue with our experts from the department of commerce, department of treasury, department of state working with the cuban bureaucracy to be able to understand how can we better align our regulations with their loss so that there is the potential to do more business together. what we found, though, is that, you know, a state-run economy, and as a result, there's a limt limit to what we can do and how much trade we do under the embargo. >> what were the biggest, i guess, barriers, in terms of going down there, it's a state run economy. what's that mean in terms of infrastructure that would be set up for trade? >> well, practicely speaking, what we call the private sector, it's 200 different roles within

the economy. you can run a shop. you can run a restaurant. you can be a barber and not be part of the stay economy. there's a limit to how much of their gdp to date about 25% is not controlled by the state. the other challenges that companies face who want to do foreign direct investment into cuba is that there's a dual currency, which is a real problem. also, if you want to hire someone, you have to go through a state-run employment agency so you're not free to interview whoever you want. there's regulatory uncertainty. there's a lot of things are impeding investment. they want companies investing.5 billion a year into their economy. right now, challenges are in the way of greater investment and

greater trade. of course, let's not forget, we have an embargo in place. >> right. we assumed that when we moved towards these kind of thawing relation, you'd see tourist companies that wanted to open there, hotels that wanted to open up, everything you laid out, explains why we're not seeing that happen, does their government understand they would have to relax rules and regulations substantially in order to see that foreign direct investment, or do you feel you're running into a direct wall when you brought the issues up? >> well, those were precisely the issues that we talked about, and explains what the challenges were, which was why we brought our experts down there to see if there's ways to address them. at the end of the day, more trade with cuba is not just depending on america, but on the cuba government making changes, and it's not just changes that affect american companies, but companies around the world.

it's a process. i think they are cautious and conservative as they are evol evolving their economy. >> madam secretary, on a personal level, had you been to cuba before? >> no. it was my first trip. it's a beautiful country. the people were very warm and very welcoming, so it's a really intriguing place 90 miles off our border, and there's a lot of potential for us to do more together, but that's going to take change in cuba and, ultimately, it takes lifting the embargo in the united states. >> i was going to say, what was the biggest upside and downside surprise for you on a personal level? >> on a personal level, just seeing the beauty of the country, and the boeps of what exists there are just exquisite, but there's really need for investment in infrastructure if the country wants to have the

kind of gdp growth they are talking about. i very much end joyed meeting people from the government. i ran into a group of school kids in a square, talked about the cubs playing the cardinals in old havana because there's a place where folks who are interested in baseball gather every day, and i got to chance to ask them to root for the cub cubbies. >> can't believe you steered it around to that. although, i'm watching like i have not in 15 years because the cubs, you know, cubs are in it, and it's going to be all five series the way it's going right now. things are great right now, aren't they? >> it's very exciting, very, very exciting. >> i can't believe it. the cubs' home run -- you watch yesterday? the long ball.

long ball. awesome. >> six home runs, a record. >> when you add them up, the most scoring night ever in the post season play. >> awesome. >> secretary, thank you very much for joining us today. we really appreciate it. hope to see you back in studio soon. >> great players in cuba. i think they could beat -- the cuban team can give us a run, give the world series run. >> where you invite other nation. it is called the world series. >> i went to a baseball when i was in cuba years and years ago. >> is that the time you went to a baseball come? coming up, lest of stocks to watch, and at the top of the hour, do not miss this, joseph, you're difficult. a huge lineup to talk media in 20 years. there's barley on deck, chairman of ic expedia, and ceo of cbs, and david zaslav on the set at

8:00 a.m. eastern time. back in a moment.

that was a classic. >> oh. >> i showed him -- it was not a lot to show. you know what i mean? >> no. >> he was checking me out. >> classic. he's really funny. have you met him? >> i don't think i have. >> hilarious. >> if you have not guessed it already, celebrating 20th anniversary of squawk box, and, in fact, on thursday, we want you to be part of the celebration too, celebrate with us on throwback thursday in the plaza outside the studio from 7:00 a.m. to 8:00 a.m. eastern time. for tickets, e-mail us.

>> in the meantime, moscow, we are joined now with some new sounds from the russian president putin. >> reporter: absolutely, joe, i had the opportunity to put a question to president putin asking him how he felt about president obama's comments of the weekend calling into question his leadership, particularly oversyria and the economy. the president here expressing frustration over syria. he said they asked the u.s. for details information about terrorists before they conducted air strikes. let's just listen to some sound. >> mr. president, over the weekend, u.s. president obama called into question your leadership over syria. he said that you are propping up an ally rather than going after isis. he also said you're running down the economy here. how do you respond to president

obama's comments, and what would you say to international investors who are dissuaded from putting money into the russian economy because of such remarks? thank you. [ applause ] >> translator: as we say, you've mixed apples and oranging together. at the military level, we asked them to give us the information regarding the targets. they believe are 100% belonging to terrorist, and what we received as an answer was that they won't do that. then the second question was asked, please tell us which targets should not be attacked by us. no answer received. what should we do then? >> so the plot thickens here, because, clearly, the u.s.

administration so far have told us that the russians are effectively using air strikes in syria to prop up president assad rather than going after the isis terrorists. mr. putin saying we. the list of targets for the u.s. to supply that list and then we will actively go after those targets as well. at least that seems to be the message coming from the answer here. he expressed concern about american weaponry falling into the hands of terrorists. back to you guys. >> wow. i wish we had more time to talk with geoff. >> i know. did not address, you are running down the russian economy by, you know -- this is actually showing weakness. >> you notice he took the ear piece out when he finished asking the question so there's no follow-up. geoff, way to go. talk again soon. the celebration of the 20th anniversary of squawk will continue looking ahead to the next 20 years of media with a special hour long conversation

with three icons of the industry. barry diller, chairman of iac and expedia, and leslie monves, and david zaslov joining us next. 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.

20 years of power, money, and mayhem. >> this show's got 5 pounds. >> oh, my god. >> 20 years of unprecedented access. >> come on. >> there's my finger. >> that's what we're waiting for. >> i'm not going too to do it. this is it. >> 20 years of bringing main street to wall street. >> this is magazine. amazing. >> all right. now it's time for the next 20. >> today, media's on our mine. what to watch, and how to watch it. cord cutting, unbundling, and beyond. will the buzz words of today be the reality of tomorrow? >> three titans here to tackle that. they created more hits than we can count. cheers, taxi, everybody loves raymond, the simpsons, survivor, and deadliest catch. barry diller, leslie moonves, are here live for conversations for the next 20 years.

♪ live from the most powerful city in the world, new york, this is "squawk box." ♪ >> he started it. >> unbelievable. defensive. welcome back to "squawk box" here on, this cnbc, first in business worldwide. we thrilled to be joined on set equally thrilled, 33, 33, 33, by the -- maybe 40 for me with you, but barry diller, les moonves, and -- >> something more important. >> i have to talk quickly. >> okay. let's go. headlines this morning, anheuser busch inbev and sabmiller agreed to a packed in principle, strange wording, but inbev buys

the rival for $67 a share in cash. in other news out of europe, barclays ready to name former jp morgan banker as a new ceo. another hedge fund, pointing out, closing, fortress shutting down the global fund at 17% in year. the fund 3% for for stress, but it was hit earlier in the year by heavy losses with a bad swiss frank bet and not recovering. michael novogratz is expected to leave the firm. stocks on the move this morning, johnson and johnson reported adjusted quarterly profit of 1.49 a square. they announced a buy back program, and you see the dow component is down 4 cents. look at xerox, not likely to compete the new medicaid platform in montana, a charge of

$240 million as a result. >> right now, we turn daenour attention to the media titans. les moonves, chairman and ceo of cbs, joining in 1995, named chairman and 2003, former president of warner brothers television. he was an actor in the "six million dollar map," now worth more than that. barry diller, the chairman of inc and expedia, the former ceo of paramount and fox and created fox television network and taxi, grease, and more to name a few, and david, ceo of discovery, joining in 2007 after two decades career at nbc, discovery reaches 3 billion subscribers, and they are celebrating their 30th birthday.

the question is, talking about this as conversations for 20 years today, but think 20 years out from now. tell us if you were running the companies, 20 years from now, what tv is going to actually look like? les? >> well, you know, if you asked me three years ago what tv looks like today, i wouldn't have been able to answer the question, so asking 20 years from now? look. at the end of the day, it's about the content. the content is still the thing. obviously, there's been great changes in how people receive conte content, watch content, and there's going to be a box in a room. it's going to be a large box. it's going to be very efficient. you can receive your content in a variety of different ways, but essentially, content's not going to look that different than it looked 20 years ago. hill street blues could work today, you know, csi could work 20 years from now. >> cheers could work. >> you know -- not all -- i knew

you were going to do that, though. >> hillstreet blues was not on krbs. if you put me on, get the right network. >> was that nbc? >> four of the five top shows on tv were dramas and sitcoms, and today, three of the top five are football, one drama, one comedy round out the list. what's this tell us, though, more broadly, and here's the thing that i asked everybody, and will the channel matter, though? will the network? will discovery as a brand matter? cbs matter, or the shows going to act in their own sort of cocoons? >> look. i think it's hard to tell where the world's going to be in 20 years, but i agree with les in that great content, great stories, great characters is still what people are passionate about. think about all the devices out there. there's 3 billion mobile devices out there, and there are a lot of great companies bringing you

devices, with netflix and amazon, but they are dumb pipes. if you had your apple device, couldn't get music an content you loved, you wouldn't love the device. for us, it's about making sure that we get our content on all platforms, true for us and the content providers as well as, you know, apple, amazon, every one of those, and also there is a pyramid of content, i believe. you know, you talked about sports. you know, all content will not work on every device, and so there will be, i believe, a bundle forever with a tv set because it's a great way to watch tv, and people still are going to be sitting in their living room with their kids and loved ones or by themselves watching tv. when you go to the smaller devices, there probably is a pyramid, which is why we're into sports in europe, with eurosport, olympics over the

next decade, and we got the kids in latin america because there's certain content. right now, we don't know what it's going to be, but sports and kids that works bert on different devices. >> barry, you've not watched a commercial in simple years, right? watch everything on dvr or ipad? >> i only watch these commercials. i mean, i, you know, how i hate to be a contraryian. >> i know. >> but, you know, i think the words that we use now, nothing is, obviously, predictable, but the words now, broadcast, cable programming, over the top, they'll be gone. because now where everything is going to be distributed without question, through essentially a data pipe, not a broadcast pipe, not a cable pipe, but a data pipe. over time, definitions will no longer be in use. i don't think there's anything called broadcast television or

cable television. they'll be brands, if people are good enough to have as much differentiation as they conceive, or there's programs. the whole concept of linear tv, which is, of course, historically, so much yesterday. it's not going -- nothing goes totally away, but all that stuff's going to bleed out. all this noise is going to disappear because we now have this unlimited pipe with this unlimited ability to stream an enormous amount of data without anybody essentially pinching the cord. >> well, you -- >> i agree, but i disagree. you know, linear here in the u.s. feels like it's mature, but as you go around the world, as you go to brazil right now, you know, getting linear tv, a bundle of 30 channels is new. only 30% of people in brazil

have tv. in eastern europe, countries around the world, the first experience of tv is still happening. having said that, i think barry is right that a lot of content is going to be migrating to other devices. >> economics better or worse? historically technology intermediated every media business to some degree, meaning less revenue, not more. >> technology is only the friend of content. it's only the friend. technology tries to be disruptive. generally speaking, it is not. the dvr was going to kill our business, it doesn't. it is increased it. to barry's point, pretty soon it's not going to matter. you're going just get content, you're not going to care where you get it from. the idea, you're right, over the top, cable broadcast, it's not really going to matter. in developed countries, yes, there, again, there's more competition, american programming is traveling better

than ever. new markets are opening up, but all the things that are happening here are happening there as well. >> technology is the enemy if we don't act rationally. take a look over the last 10 years what we've done with new technology. we've been enamored with all the devices, and we've sold our content to a lot of these devices and a lot of these players for and created business models that do not work, and so we have the leverage -- >> selling to amazon? >> or netflix. >> don't work for who? >> for the content owners. >> sure. >> in the long run. >> allowing double dipping. >> i disagree with you only that dealing with netflix, amazon, hulu -- >> making a fortune. >> we've made over $2 billion in four years from those services. now, that's really helped my bottom line quite a bit. now, one day, and that day may be now, are they are competitor

as well? absolutely. frankly, everybody in our ecosystem is a friend and a competitor. netflix, clearly, they are now producing 30 original programs. they are trying to compete with us at cbs and at showtime, but by the same token, they give us a lot of money for content, and god bless them every quarter. we thank netflix. >> we have to focus on how content is shown. there's no brands, in commercial, is that a sustainable bids model for content? we gave our content to apple. instead of getting paid for device sold the way we are paid for every cable home, we did an ala cart model. they get 30%, and we are paid if people watch the content. is that sustainable? >> as much as i'd like to say people are watching krb just because they say cbs and it's a wonderful brand, our brand is not our programming. most people don't know that the big bang theory's on cbs and

scandal's on abc and shark week on discovery, et cetera, et cetera, so that does not really affect us with the kind of money we get. look, i like content, future's in content, but by the same token, they pay us so much service for the content. it's a good model. >> technology, by definition, causes creative destruction, and out of destruction, things are destroyed, things come up because of it. we're in that period. we're just entering the period, i think, of real creative destruction, when, in fact, most people get their programming via a rich data pipe rather than the way they kick back sitting down with maybe a remote control. all of that is going to cause a lot of destruction. it is a good healthy thing if you figure out what to do. >> to david's point, though, you

only paid when people watch it. you're as good as the last hit, last show. >> such has been the history of all forms of communication. >> okay. right now, we're living in a world with 500 channels. the ceo of -- >> 500? >> more than 500 channels. >> thousands. >> there are new dramas, scripted programs -- >> 400 scripted programs. 20 years from now or five years from now, is this god p age of television, are have we crested? >> well, recently, the head of the fact said there's too much television out there. right now, today, there's over 400 scripted programs, comedies and dramas out in the marketplace. five years ago, there was half that amount. are we spreading ourselves too thin? probably, yet at the same time, i think we are on the golden age of television in that every person in america can pick out ten great shows that they watch often. >> there are times, like, there's nothing to watch. not as much. >> not like it used to be.

>> in 20 years 1 the golden age of television. >> we'll never crest. >> this is a great period for dra drama. hardly for comedy, but for dr a drama. comedy, i'm sure, at some point wiggles back in, and it's great for comedy. >> video in demand take up the slack for what i imagine is a dying syndication business, though? >> no question. no question. number one, syndication is not dying, but going down. if you sell to netflix and amazon, by definition, the basic cable networks, the content is not as valuable as it used to be, but the amount of money you make on the other side, more than makes up for it. >> i think for -- just think of game of thrones, what it costs to produce, but i pay for that, the quality is unbelievable. when's the business model that allows you to charge for quality? digital nickels instead of analog dollars make crappy

shows, i'll pay the digital dollars to get what i want. what's the business model? >> if you're picking just the best shows, that works for the best five, six, eight, ten shows. there needs to be curuation. discovery is the number one channel in 220 countries. when people want to watch, they know they go to discovery, tlc, own, animal planet, or fx and see the kind of content they like. they get a sense of it's curuat curuated. >> that's true. it gets tougher. when you say, what's the business model? again, predictions are worth the air you pay for this voice. which is nothing. the business model is going to be pay and subscription. those are going to be the business models. >> might be expensive, right? >> you will pay. people who say -- you can't price satellite or cable television any higher than it's

priced today for the big package. what will you pay, when, in fact, you're in an ala cart world or di lipuated brand world? you like discovery or this or that really sharp channel? who knows. it'll change everything when it's basically you pay for what you actually like rather than you are passive. >> i pay a couple hundred bucks to watch the guy with the torn rotator cuff go in the ring and not land a punch. that's the stuff you end up with. >> was that you? >> that was us. >> that was us. >> thanks. 99.95. you had a good time. the buildup was -- >> i was waiting for the good time, it never came. >> the build up better than the fight itself. >> i was watching what you consider doing, talking to your friends. >> before we break, curious about news, what happens to news business in tv? >> well, the news business right now is a little challenged. i'll tell you why.

average age of the average network news watcher is 60. the average watcher of the cable news networks is north of 70. north of 70. what's happening with the on line services, and we started a channel online called cbsn, right? our service that you get that is streamed 24-hour news service. the average age of that is under 40. that's the future. news a profitable business for us? absolutely not. it's basically break even, but we're proud to do it. you can't live without a news division, but the news world is changing, and people get their news in different ways. >> news will be on the front end and business news of what happens during this transition because, look, i was here. we started cnbc together, and believe it or not, 60% of the ratings were people waiting for their stock on the ticker, so all that, you get shopped to you on your device, and any breaking

news is shot to you on devices, so it has to be decommoditized information, telling you something as data thrown to you. that's a challenge. >> all tv news other than local news is irrelevant. >> why? >> people watch local. i thought the last one standing is a local television station. i think they are going on forever. they are the ones organized to deal with their local community and people like to do -- like to know about nings in their area. so whether, sports, local, local, local, is always going to be relevant for television. >> you think "60 minutes" -- >> no, no, sorry, not saying "60 minutes" or documentaries and specials and things like that, but the evening news, the

concept of the evening news, just, i mean, it's -- it has an audience, but that audience is declining. it's no longer relevant. again, i just think local news is -- you can't -- you can't find a technological better for that than local television. >> okay. hold your thoughts, you want to continue the debate. a quick break with a lot more from the panel of the media titans when we come back, and up to speed on earners and movers. squawk returns in a moment.

so what's your news? i got a job! i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you. (phone vibrates) look at it! (friends giggle) i can do dogs, hamsters, guinea pigs... you name it. i'm going to transform the way the world works. (proudly) i programmed that hat. and i can do casaba melons. i'll be helping turbines power cities. i put a turbine on a cat. (friends ooh and ahh) i can make hospitals run more efficiently... this isn't a competition!

one thing is clear about us. >> what's that? >> we all like each other. >> thank you, guys. >> i like the hair today, by the way. >> thank you. >> you know what, i'm sick of my hair. >> i could just stick it up in the air. >> that's good, actually. >> i have hazards of working here. >> a bird is going to come down and -- >> there are a lot of birds.

>> one pooped on my head. so silly. >> yeah, if you have not figured it out already, celebrating the 20th anniversary of squawk. be a part of it us celebrate with us on throwback thursdayment join us in the plaza outside the studio from 7:00 to 8:00 a.m. eastern time. for free tickets, e-mail us. we have more from barley, les, and david. stay tuned, we'll be right back. you're watching "squawk box" on cnbc. first in business worldwide. ♪ hi, tom. how's the college visit? does it make the short list? yeah, i'm afraid so. it's okay. this is what we've been planning for. knowing our clients personally is why edward jones is the big company that doesn't act that way.

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happy 20th birthday to squawk box. >> congratulations to squawk box on 20th anniversary. love you guys. >> i'm hannah davis wishing squawk box a happy 20th anniversary. >> i want to wish squawk box a happy 20 th. doesn't look a day over 19. >> the big 2-0, congratulations.

welcome back to "squawk box," everyone, having a special conversation this morning on 20 years in media, and joining us is barry diller, les moonves,

and david zaslov. i hope to turn it to what's happening right now. one the subjects in the commercial break was what's happening with ratings. david, is this an official way of measuring? what's happening right now? >> well, we were talking about the fact we still have a pretty antiquated system, and so it's odd because there's a great opportunity now with all the boxes and people's homes to know exactly. you know, we have structured a deal with comcast and cable vision where we get research data from them. it's extraordinary seeing how many people are watching if we want a campaign within their systems, we can promote deadliest catch to people who watched it last year with one campaign and promote it with another campaign to people who have not watched it. the data is there. neilson, we have to keep pressure on neilson to drive the process. >> well, you say, good luck, barry? >> well, it's been, you know, it's a 75-year-old con game. i mean, originally, it was based

upon people writing diaries and then it was based upon -- in other words, it has been absolutely the most tech averse world possible. the only purpose for ratings is for advertisers to figure out whatever leverage they can to buy programming. it's a close ed game. no one's really interest the in upsetting it. you kind of, in a way, as long as you keep the system, you know, liquid, nobody cares. so does it go on forever? again, all these things, because i think normal advertising is going to end 30 second spots, i think, will be much more directed because of the technology. that technology's only going to get better and better, and it's going to force the change, but it won't change because neilsonments it to. >> the ratings game right now is

a bit of a mess. okay? it is impossible now to put together the real ratings. a lot of analysts write about overnights that are virtually meaningless. so much more of the viewing is delayed by three days, getting it online, getting it by dvr. >> i watch a week or two later anymore. >> exactly. they have yet figured out tow to count it properly. you don't know if the show is doing well or not for two to three weeks. the rush to judgment doesn't work anymore. you can tell me what any single dish viewer is watching at any given moment, but the system we have now is not nearly as precise as that, antiquated. i think neilson is trying to get

numbers from streaming, and it's more an more important because what's happening, okay, people are not watching broadcast. that's not true. they are watching the show, but they are watching them in different places and watching it later. >> we have a -- in norway, there was a system, viewing on tv was down about 12%, and they put in a different system, a ring tone system, a ring tone goes before every commercial, having everybody wear a device, a sample, and this was about measuring on any device you watch, whether your friends house, your house, whether you watch it on your pad, on your phone, and viewership went up 15%. it's because there's so much television now not captured by the ratings system. >> wow. that's the ratings story we talked about, and i don't know if i'm speaking out of school, but talking about sports in the commercial breaks, and all sports are not e quail. it's the way of the future, how you get millions of eyeballs in bun place at one time, but is it

true, les, some sports say this i pay for, these i don't. >> well, the nfl is still the must-have in television. the nfl's ratings continue to go up. it's still phenomenal. they've now added a thursday night game to the sunday night game and the sunday afternoon games, the monday night game, and the nfl is still the best game in town. once again, they are charging a huge amount of money. one of the problems that all the networks and all the cable networks face is the rising cost of programming. we talked earlier, we used to have the u.s. open tennis tournament for 30 years, but espn came in, offering triple for what we paid for the tennis tournament, and we fwagave up t rights for. that it's a question how much someone's prepared to lose. we're happy having the nca and ncaa basketball tournament. some rights not worth having, but you couldn't live without

them. >> sports and sports leagues, you guys, so many of you overpay for a tent pole in tefrg else. do the prices hold up to the regional networks that are really increasing the value of so many of the franchises in. >> well, the nfl is the greatest tool you have to get network renewed by the mvpds, the cable systems, satellite systems, et cetera. people can't live without the n florida on sunday. >> but the biggest buyer of sports is espn, and espn is a wonderful, but false kind of economy meaning that you have a hundred million people paying for it with a small portion of them watching it. they are subsidizing everybody. if you priced it real, god knows what it would be per sub, but that's why sports rights go high

because espn has all the money. >> in -- paying $30 a head for -- >> no. only the people that are avidly into sports. that's why the 500 cable channel universe or average home now gets 180 channels paying for all of them, but only watching 12-15 of them. that's slowly changing or not so slowly in the skinny bundle showing up in different places where you are paying for what you really watch. as barry said, they're a lot of people who don't really watch it. >> sports is a lead in into the concept of four years ago with the discovery, our market share grew around the world, and aggressively, and we had mid teen growth in our free cash flow, and i presented that to john malone, a large shareholder, saying that's terrific. your content is working great on

linear, but how good is your content in random access world? look at the content as ip, see how well you are doing. in that world of ip, where you have to have content that people really. super fans, the kind of content where people say i have to watch it. at the very top of that hierarchy is sports. you know, it's great to get the big sport. we're the leader of supports in europe. we passed on soccer. we own everything else, tennis, cycling, winter sports, olympics for the next decade, and it's very compelling because when the french open goes on, if you love tennis, you have to see it. it's the tour de france, you have to see it. we've built not only with eurosport, but three to four channels across europe, bigger than espn with 140 million homes, but we have a direct to consumer business, where you sign up to watch 18 courts, look where the world is going in

random access, it's not linear, but super fans love sport, and if you own them, even niche sports, you are successful. >> economici ins on individual s make sense or overpay essentially? >> because of the list price and technology will sort is out over time. it's inevitable. if will get relatively correctly priced. at some point. >> so then you're long whom an short whom? espn, disney, if bob was here, you say what? >> oh, i wouldn't come. no, i'm kidding. [ laughter ] >> i wouldn't answer the question. >> i'm fond of bob, but i think that one of the things that happens with this period we're going into is that that bundle, which has gotten chipped away in various skinny or some ala cart, you chip away at the bundle, the

whole package, concept of it, becomes less viable. when that happens, then there are going to be consequences. >> well, we're headed towards that world. we are headed to a place where people want to watch this, this, this, and this, and i'll pay for those ten channels, those 12 channels, individually or in the bundle, and that's it. they are not going to pay a quarter for the karati channel. >> what do you pay for the fifth or seventh game, the nca time four, what do you pay for the jets versus -- >> it's all going -- >> much more expensive like that stupid fight i paid for $99. sorry, but -- >> you were joined by 4.5 million people, highest grossing fight in the history of america. >> you know we had a bad showing. >> i didn't know it was bad. >> now you're doing it again with another -- >> i didn't know about the bad shoulder. >> did you ask? >> how's your shoulder, man.

>> no, but i figure, sports, the overall pricing goes up, and individual people pay more. >> there is, we're talking about the u.s. as you go -- the u.s. is a very unusual market. 340 million people, and it's one culture. there's four sports, football, baseball, basketball, hockey. those are the big sports. when you go to europe, you find that their soccer is loved all across europe, but there's all kinds of specialties that are a lot less expensive because in speed skating is number one in northern europe. you know, tennis is number one or two in southern europe. >> do you carry rugby in. >> we do. >> that's huge. >> the efficiency of the u.s. market reaching in one language 140 million people with a culture with just four sports elevated the rights for those four sports off the charts. in europe where there's the culture, just the whole culture loves soccer, across 700 million

homes, soccer has done the same thing, but we've been able to sweep up all these other sports for not that much money because there is not a common culture across europe. >> quickly, breaking news, we've been awaiting to hear twitter's job cuts, announcing planning to cut up to 336 employees, about 8% of the company's global work force, and as a result, they say that they are looking at third quarter at or above the high end of the prior range of 545 million to 560 million, looking at the higher end range of 110-115 million. the stock's trading up 3%, but they are announcing a cut of 8% of the global work force. barry, you're the expert on social media here. >> so? what about this? >> i don't know. a way to tie the news back in. what you see and what you have

seen are television stations broadcast, cable, all of them getting better trying to use social media. have they done a good job at this? can they make it work? all the new players that replace the old player that is we used to look at? >> well, yeah, i mean, it's -- everybody. i'm sure you all are investing in and do everything conceivable that you can to be in that big huge social conversation, and everybody and their mother will join in to try and exploit it and it is exploitable, but you have to, like anything, you actually have to get down there and understand how it works on the ground. you can't do it from, you know, you can't do it from let's call it, a nice little office with a chair. >> is that why we're seeing traditional media players, willing to pay so much money to get invested in players like a buzzfeed? >> i don't know. i'm skeptical about all that. >> about the prices they pay? >> because the valuations are based on just, you know, hope

and noise and too much money having fun. >> short vice or short buzzfeed or short vox? >> not shorting them while there's a market for people to pay for them not based upon their revenue and their profits. >> i mean, andrew, for example, we have over 100 million streams a month. we have 90 youtube channels, 50 million streams on facebook alone, and that's not even in the valuation of our company. we have more streams than all three of those companies. we have more streams than vice. that's sort of a sideline to our company. i do think social media is critical. you know, you look at facebook, which now reaches 1.5 billion people around the world. because our content works all over the world, and we're in almost every country, you know, we use facebook very aggressively just to churn up the system, to get the people that love our brands and love our shows talking about it, and they are very effective working with us in the content business

to do it. it's -- it works well for both of us. >> another quick break, but when i come back, i want to find out whether you think the guys like facebook and google and twitter ultimately are competitors of yours. we'll do that when we come back and talk to jim cramer down at the new york stock exchange." squawk" returns in just a moment. it's more than a network and the cloud.

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down to the new york stock exchange, jim cramer joining us. jim, i had a question, not about all this, reference that as well, but i'm wondering, have commodities, have they bottomed? have emerging markets currencies bottomed? has oil, are we starting to see the light at the end of the tunnel there or headed down? i'm worried again. >> there's cutbacks in some commodities, copper's cut back. there's a lot of oil cut back. steel cut back. iron not at all. some commodities are bottoming. others are not. i saw the export number from china. i was hardened by it. the freight, i have to tell you, i think oil's not going to the 30s, that goldman says. you want to buy oil in the low 40s because the cutbacks in u.s. at this point next year, we'll produce a 1.5 million less. that's how much is taken out. >> it almost seems like when

commodities go up a little bit, oil goes up a little bit, we think the economy's better off, and so that's why it matters, right? in emerging markets, we don't want -- we want growth other than here, right? >> exact correlation between the industrials, international industrials, and oil. to the day when oil bottomed you see stocks go up. that's right. whether it's right or wrong, joe, it is exactly the correlation, so when oil goes down, industrials go down. >> do we care about the baltic, jim? >> we have to. china's not building. china needs to build. >> all right. >> baltic means a lot >> all right, jim, thanks. >> bye. when we come back, we have more from our three special guests today, barry diller, les moonves, and david zaslov. we have the retail jiegiants meeting. stay tuned, we'll be right back.

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>> get back to our conversation on the next 20 years in media. spending the hour with barry diller, les moonvesmoonves. more and more will be on demand.

you will just be paying for it. i think of madison avenue getting disrupted. all the time making commercials, selling, you have a commercial break of which we just had, and you think there are too many. where will these guys go? facebook doesn't give them the bang for the buck. that whole business is trying up, isn't it? >> the perception is so off that all advertising is going digital. it's going digital. digital is not proven to be as effective as broadcast. digital is taking away from print, from some local, taking away from cable. >> procter & gamble is talking about 50%. >> but they still need the big tent. we're getting the major advertising in our shows. you can't get 20 million viewers, which we're getting on the big bang theory, on youtube. >> the method to my madness is

other than sports, if you can find something that people don't run like a week later realtime, maybe like a "squawk box" or something that follow the advertisers. >> we are selling the advertising if you watch the show three days later, a week later. >> you can't run through it? >> you can on certain devices, others you can't. 50% of the people knock out their advertising, we're still in a plus territory. >> i'm trying to get barry to take back news is irrelevant. >> i will not take it back. >> take it back. >> come over here and try. >> 25 million people still watch the evening news on the three networks collectively. that's still a nice number of peop

people. >> and you don't watch that next week, barry. >> i'm saying commodity news on television, except where it's local, where people really want to know what's going on locally, all of that has been superseded, is being superseded by other technological advances. >> other than sports, what happens here and now? >> what do you mean? >> it has to be live what you're watching, where anything else you're -- >> if you're interested in this, you'll watch it live. >> you went like this when you said that. >> i don't think there are too many people dvr'ing you. maybe i'm wrong. >> thank you. >> if you look at all the cable channels here and around the world, all the programming, we don't need to program the way we used to. news has to be decommoditized, people will be pickier, chooseyer, just putting okay content on, which we called

channel chunk, is not going to work. >> what about the relationship with pipe owners. nbc owned by comcast. would you ever think you need to be attached to the pipe? >> not really. the distributors have done a lot of mergers recently. there's a lot going on in the distribution area, people say the content provider, you should be bigger? should you be better? do you need to combine with people? we don't feel that way. we have a great relationship. as i talked before about netflix. nbc, comcast, we do business with them. they carry cbs, they also want nbc which competes with us. that's how the world is. as long as i produce the content, which includes football and includes our programming, the evening news, 60 minutes, stephen colbert, people will pay. >> content -- there's no necessity for consolidation in essentially in horizontal

consolidation. vertical is fine, but horizontal doesn't make sense. if you make content, you don't have to own distribution. you can own it less today than any time before. before distribution controlled you because they had the pinch on the pipe. in the future that's gone. it comes back to brands where they're strong and differentiated and fantastic programming. he's the best programmer that lives, he can't go wrong so long as he continues a healthy diet in life. >> thank you. >> i don't know. how long have we got? i got at least 20 more years. now i'm scared. can i ask you one last -- >> 20 more years in this job or to live? >> this job. that's when life starts. >> then you play golf. >> he's already playing golf. >> in other kinds of technology, you said a big box with a big screen, will it be more immersive? you see the stuff you wear

around your head l it be five senses? >> virtual reality is cool. how much they can do in terms of producing content for that, i don't know. i don't think they know. >> i don't think it's a narrative form, it might be great for sports, for games for sure. i think for story telling, who knows. >> what's an apple tv -- what's the best thing it can be then? just easy to use. >> apple? >> no, the next great tv that someone comes into the living room with. what can it do different? >> i don't know. do you have a curved set? >> no. >> they're great. >> they're immersive. >> they're just better. it will just keep improving. the picture now is so good you almost say stop, it's too good. i can see disgusting things on people now. >> that's what i think. no more high def. don't tell us what you're

watching? you are watching the debates? is it donald trump? i wasn't going to bring that up with you. >> geez. >> joe, it still comes down to the content. still comes down to the content. the content's not going to be that different. it's going to be sports, news, programming -- >> that's the one thing you said about 20 years from now, it's going to be a big box. >> it's going to be a screen. could be small screens. you know, the screens are not relevant. the distribution is one pipe. whatever you call that pipe, call it george. it's one pipe. the efficient data pipe. everything comes out of it. you'll have what you haven't had, what you're close to having, which is absolute ubiquity of choice in any way you want it, any way you want to receive it. >> if you have ubiquity of choice, we need curation as human beings. in the early v.o.d. and we hit a couple buttons and it was 6,000

choices, 6,000 equaled nothing. so we need curation. part of the curation will be great shows, hopefully brands, but we'll have to figure out how to curate. >> just think of the choices you have right now. it's a phenomenal time right now to get choices. will it get better? >> it sounds like less. >> not less choice but less content. >> should be less crappy content. >> true. >> hopefully the cream rises to the top and you cut out the bad stuff. >> but there's so much more now than you had. vivio -- i won't be promotion. but vivio -- >> you have some great things. >> started its own essentially pay-per-view business. thousands and thousands and tens of thousands, individual people, are putting up their stuff and people are paying $2, $4, $6 for

it. again, that's just unlimited choice. >> okay. >> gentlemen, thank you very much. it's been a great hour. >> great conversation. this has been fun. >> totally relevant for news. >> barry, les, david, thank you for your time. >> congratulations on your 20. >> thank you. >> that does it for us today. join us tomorrow, right now it's time for "squawk on the street." ♪ >> good tuesday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber. we get some disappointing import data out of china. but the sab deal moves ahead. europe is in the red on weak german business sentiment and the bond market returns to work today. oil back below 48 on a weak