fan duel and draft kings shutdown in that state. it's friday october 16th, 2015 and squawk box begins right now ♪ >> live from new york where business never sleeps this is squawk box. good morning and welcome to squawk box on cnbc. joe was mentioning the u.s. equity futures. take a look for yourself. you can see this morning we were looking at modest advances but this come after pretty big advances yesterday. the dow futures up by 28 points. the nasdaq up by 16 and the s&p up by four points. on the agenda earnings and economic data. dow component general electric is set to post quarterly results at this hour. then later this morning we'll be

hearing from honeywell as well. a few reports of note, 9:15 eastern time industrial production and then at 10:00 it's consumer sentiment and the jolts report. that's the job earnings and labor turnover survey that's closely watched. >> big stories this morning, investors putting money to work in the latest week. the u.s. stock based mutual funds attracted $2.5 billion. this reversal following $8 billion of outflows during the prior week. also in global news a big test for greek's left wing prime minister today. a penalty for early retirement and expansion of property tax. cleveland fed president is addressing recent assent among policy makers. they have had different views on monetary policy in the last week. this isn't surprising and is the result of what she is calling

cross currents in the economic data. she argues the central bank is trying to be as clear as it can on its rational for policy. >> esther, who is there? >> esther george was -- >> but loretta is an old name isn't it? >> like a classic name. >> yes. >> they're coming back. >> i want to talk about the markets in a second too. i want to show a chart but it's a huge move yesterday. and it started slow again. >> it started slow. >> have you noticed this melt up. >> but people started thinking through that it's not going to happen this year. >> let's go back further. i only want to go back a month and do you remember fed day? >> i do. >> that was the 17th. they didn't raise. it really looked like cause and effect that they didn't raise and it went down. the exact bottom or the bottom, however you want to phrase it was the day the employment

report came out and it sold off and rebounded and it's rebounded ever sense. so the market has starts. i don't think the market sometimes or players really know what they want sometimes. >> no, i agree with that. >> in hindsight you can look back and say the mark was indicating that this was going to happen. it's a discounting mechanism that always gets it right. i think the market doesn't know which way. >> the market wanted great jobs numbers and wanted to see we're turning things around and say forget it. we'll take second place. we'll take the fed staying forever in easy money. >> it can't go 180 -- it can't want something and then go 1880 degrees and say this is what we wanted. >> if you believe, he is starting to make sense of me and that is let's not get too complicated. if rates are zero and they're going to stay zero and the economy isn't horrible, you have low rates. you have nowhere else to go. i kept asking is there a day of

reckoning with all this fed action. >> he and brian rogers were both very positive about the futures. >> just look around. inflation is low, it's going to stay low. corporate profits aren't horrible. a lot of billionaires in china. >> more than in america at this point. >> i want to talk about that. i'm going to interview andrew, using andrew's questions. >> income inequality. >> that's what we're talking about. but i'm going to ask you, how are we supposed to think about that? >> it's my favorite way to do this. >> i know. let's go to the chairs. >> it's a big population. >> so it's not a zero sum game. >> but it's also bigger in income inequality. >> but what about that place is communistic at this point. >> communism is what built the billionaires. >> it's crony capitalism. which is a problem.

stocks to watch, i mention yum at the start appointing keith mester. with a would you call him? we've had trouble. that's actually his name. >> that is what you call him. >> adding this gentleman to its board. the move sparking speculation that they'll spin off the china business. yum is close to finishing a review of strategic options. barbie had had trouble for awhile. there's a lot of other things that kids might want to play with. >> there's a new ad campaign. sales were down 25% of barbie before the latest numbers but there's a new ad campaign. they're trying pretty desperately to stop the stem of this. >> but how do you make a totally pc barbie. >> i wish we had the newco

new commercial. >> lena dunham barbie. i'm not going any further. a stronger dollar and another drop in barbie sales. there's barbie video games. barbie horse, barbie pegasus. >> i haven't seen the movies but not the video games. >> that's not going to do it. you need the dolls and clothes and cars. more cost cuts, they now expect a rebound in grilling activity. it will take longer tan first expected. in a statement the company's ceo warns exploration and production spending will remain weak through 2016. >> in other corporate news, nestle is cutting the full year outlook. they missed expectations. a noodle recall in india and

rebate adjustment in nestle skin health. also hugo boss slammed in europe this morning. cutting it's full year sales and profit deals. a slow down in china and more hesitant tourist spending on the retail front in the united states. >> also we should tell you that shares of wynn are down sharply. disappointing quarterly results. the ceo is not hiding his feelings slamming the macau government for not telling him how many tables he would get for a new casino set to open in the gambling hub next spring. >> it's become a major issue in macau as to the impact of government policy on planning for employment, promotion, hiring and compensation. none of us are really clear on

what our environment is going to be like going forward and it makes planning and adjustment almost a mystical process. >> other gambling news for you this morning. nevada ordering fantasy -- nevada ordering fantasy sports operations to shutdown in the state. the state calling the sites unlicensed gambling. >> zero tolerance. >> you have a zero tolerance for the pronunciation of nevada. >> pronunciation. anyway, mcdonald's is deciding what to do with it's huge u.s. real estate holdings. they'll discuss more at an investor meeting in november. they called on mcdonalds to spin off it's holdings as an investment trust. >> that's not an awful looking chart. >> the last couple of months. >> it was a year. >> but the last couple of months

is a pretty good-looking chart. >> let's do that versus walmart another household name and they hook different. wow, this guy has it going on. >> yeah. >> with what he was able to do in europe. >> it's an expectation that he is going to do it. not that he has done it yet. i think he's a good guy. >> once again i don't know whether the market is that smart. it's leading but it's also to some extent. >> there's a huge new menu some people are talk about. >> that's to me as simple as an egg mcmuffin at 2:00 p.m. >> have you done it? >> no, i haven't becky. >> you sounded like you were slobbering over it. >> i thought about i. i saw white castle selling something yesterday on waffles, stuff on waffles. >> how long has it been since

you've been to white castle. >> not that long. no, there's one out where i live and i have been. >> on your way in a couple of sliders. >> no but if i'm out there doing something else. >> i didn't think anybody bought sliders before 11:00 p.m. or after 5:00 a.m. >> i don't get sliders, there's a fish -- god knows what kind of fish it is. i get these little fish things. i have a problem with fast food. i do. >> the dow, joe mentioned how it closed up on thursday. we saw it rally throughout the session closing on the highs of the day. soft economic data the idea that the fed won't raise rates any time this year. that is kind of what fuelled all of this. joining us is morgan stanley's wealth management senior market strategist and she is merrill lynches portfolio solutions.

>> congratulations on your 20th anniversary. >> thank you. do you think this is a situation where the fed isn't going to raise rates so the party is still on. >> i would 100% agree with that. what's amazing on this rally is we have gotten broad participation buying. so certainly if you look at the futures market the market is now seeing somewhere in march or april the fed will raise rates. now at bank of america merrill lynch we're saying there's a chance if the economic data is supportive that they'll raise in december. we believe the fed does want to lift off. >> so if they can't find an excuse for it you think they'll go ahead. >> right. but here's the thing, only once since the fed has been in existence have they ever raised during the month of december. because during career end there's such a scramble for capital to close books but we're still going to stick with we know the fed wants to lift off.

if they have an excuse to lift off with the economic data they will do that but with a we're telling our clients is if and when they begin they'll do it extremely gradually. this isn't going to be the old fed where they aggressively raise rates. we think they go a quarter of a point and go to the next meeting. what we're telling our clients is interest rates will stay a lot lower for a lot longer. think of the 1930s and 1940s. rates didn't move for many, in years. the rate environment will remain benign even if the fed lifts off. >> part of the thing wall street is trying to figure out is how long will the fed keep rates so low but what's happening with the economy. >> i think what we have seen, the market rallied off the fed delaying rate hikes and i think the market took that as a rate cut. you saw financial conditions

ease off their delay and bottom on bad news. but i think what a lot of people were missing is the labor market is strong and housing is doing well and you're seeing this across the global. the global economy is doing okay and you have effectively a recession in global manufacturing and that's what the market needed to price in. shower growth overall in the globe in the u.s. and figure out what the right multiple for the market should be based on that but the fed may be in a bind here. delaying rate hikes weaken the dollar. this rally in cyclicals and the beat up sectors. if the fed is going to hike again you say see pressure on those sectors and the dollar strengthening again. >> so you think this is a fickle rally. >> it could be a little bit of a fickle rally. especially in emerging markets. there's room to run here but as soon as the markets become convinced the med is going to go -- >> the fed doesn't care about the emerging markets.

>> they won't tell us that. it's labor and inflation but they did acknowledge international developments recently and they have to take that into account. >> they care about everything. >> exactly. >> there's nothing they don't care about at this point. >> a agree with that. >> especially stanley fisher. he was a former governor with the bank of israel and brings a more international experience to the fed. not that that changed their view but helps shift them to an international focus. >> the reason for the sell off was the depreciation in the yuan and you saw the enormous spike up to 50 and the fed had to have looked at that in september. >> is it okay that at this point it looks like the market, if you had 4% gdp which anyone would kill for for a lot of different reasons. solves a lot of our problems but a stock market that sees that immediately starts worrying about wage pressure and inflation and that's actually a lot of times it's you worry

about one of those cycles where the fed has to raise rates enough to cause a recession to get the economy from being overheated so this stock market really does like sub 2% gdp growth as long as rates stay at zero. is that a more friendly environment for stock prices than an economy that's really kicking -- >> interest rates have always been one of the main drivers of the stock market. is certainly when they're going down. except when you're having major financial crisis like '08 and '09 risk assets tend to rise. >> when he the gain and the lows since 2009 has been in the worst recovery in post war history. at this really slow recovery which keeps the fed at zero. but that scares me because it doesn't seem like it's really -- >> here's the thing -- corporate

profits have supported the market for rallying. the question that i think we're all asking right now is we're in an earnings recession right now. so we're in earnings season and we're seeing a lot of numbers. >> you're looking at margin pressure. >> exactly. this is what the market is battling with. what's the direction of corporate profits going forward? and they're giving the market more wiggle room because they feel the fed is on hold. we're still expecting a lot of volatility. markets hate uncertainty. we don't know what the fed is going to do. we don't know where global gdp is. china is still a major concern and one of the reasons why the emerging markets been so weak. so as long as uncertainty is there markets will be choppy. but here's the silver lining. the consumer has been spending. if you look at consumer confidence there's a strong correlation between their spending and stock market performance. so one of the indicators i'm

watching is where is the confidence of the consumer? if we're seeing the consumer not have as much confidence maybe we get more concern from gdp since 70% comes from the consumer. >> we have too much stuff -- you are very sparkly. do you remember rain man? >> i am known for a little. i'm very happy and a wore red and black. i was going to say we're a little into the red but we'll eventually go back into the black. >> i feel underdressed right now. >> you have a tie. >> you should run with that. >> i reminded her for some reason of christie brinkley. i didn't know if i should take that for a comment or insult. >> weird. >> i don't know what to do with that. >> i don't see that. >> believe me i do not see that either. >> take it as a compliment. >> it's early in the morning. >> thanks for coming in.

thank you. >> thank you very much. >> very sparkly. coming up, why -- do you remember that? coming up why republican presidential candidate mike huckabee says that wall street is like a strip club and you know the huckster doesn't like things like that. first as we head to break -- wouldn't be caught dead in nevada, in fact. here's a look back at this date in history. ♪ hello, ken jennings. i haven't seen you since that tv quiz show. hello, watson. you can see now? i can recognize people, analyze images and watch movies. well i wrote a few books, did a speaking tour, i... i've been helping people plan for retirement. and i help doctors identify cancer treatments. is that all? i recently learned japanese... yeah, i was being sarcastic. i haven't learned sarcasm yet.

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because we should fit into your life. not the other way around. in political news we're now just 12 days away from the next gop debate. catch it here on cnbc. john harwood brings us the latest installment on his speak easy series with the candidates. here's his sit down with mike huckabee. >> you were the republican populous before it was cool. >> what that's supposed to mean. >> that's what i'm getting at. you have them saying we need to help the people in the middle and working classes. >> nine years ago in the cnbc debate in michigan, i remember it well. >> i was there. >> we were all asked how is the economy doing and everybody was

giving the standard republican language. >> stock market seems to be doing pretty well. >> that it's just doing great. i said well i guess if you're working in the corner office things are going swimmingly well but for a lot of americans it's not doing so well. the people that handle the bags and make the beds at our hotels and serve the food, many were having to work two jobs. i was just hit by that from the wall street journal and others that thought i was ignorant when it came to how the economy was functions. well it turned out i was ahead of my time. within a queer the economy had fallen apart and the peel at the top were feeling what i was watching happen to the people at the bottom already. >> let me ask you about wall street and it's relationship to the rest of the economy. >> look i'm not sure that the repeal was a brilliant idea because you erase the line between traditional banks -- >> would you bring it back? >> very likely. and i'm not saying there shouldn't be some regulatory controls.

and i hate to use the word controls. some regulation. but what you don't want is one that doesn't simply enforce the rules but tries to totally control the flow of the game. >> now ben bernanke said in an interview that he regretted the fact that no individual wall street executives were prosecuted for their role in leading up to the financial crisis. do you agree? >> absolutely. they should have. these were the smartest people in the room. these were the people that were supposed to be the geniuses. these were all ivy leaguers and they knew what they were doing. shuffling paper around and getting paid ridiculous sums of money. >> why do you think none of those prosecutions ever happened? >> money, politics. the contributors keep flowing to washington. washington keeps doing the dance. i've said that washington is like a strip club.

you got people tossing dollars and people doing the dance. it was a casino. and i got in trouble for saying that very thing eight years ago. i'd like to say i was right. >> governor, thank you for doing this. >> thank you, john. enjoyed it. >> now the interesting thing is that on a policy level mike huckabee's description is the sales tax. critics say his plan just like some of the plans of other republicans is tilted toward people at the top that consume less of their income. he says that analysis is wrong including an analysis that george w. bush's tax commission made in the early 2000s when they said it wasn't a suitable option for that reason. >> does he back that up with anything, john in he says it's wrong. but you use the george w. bush tax commissions plan. how does he say i'm right and they're wrong. does he have any proof with that? >> i have not seen the data

behind his assertions but he has studies that more accurately take into effect what he calls the prebate which gives money back to the people at the bottom in advance to cover the disproporti disproportionate hit they would take on consumption that shows that their gain from the fair tax is greater and, in fact, the gain tapers down as you get off the income scale but i haven't seen exactly how he comes to that conclusion. >> were you ever of the belief that biden was actually leaning toward a run. >> no. >> never. okay. >> and i'm still not and if he runs i'm going to set a world record for wrong. >> no, no. i know. but lately it looked like he wasn't going to because he's -- i'd be aafraid number one and i think they already started talking.

yeah. >> they'll skewer him but then -- and then you know the debate performance that everybody loved. but then they're saying that the families a go and he's checking with a few more people and the decision is coming and it still might be a go. i don't know what to think. you don't have any -- >> i was told by a wise person that he's going to drag it out for quite a long time and it will never look more like he's going to run than just before he tells us he's not going to run. >> that's interesting. always darkest right before the dawn. all right. thanks, john. >> you bet. >> when we come back, we're waiting for quarterly results from dow component general electric. stick around. we'll be right back. it's what sparks ideas. moves the world forward. invest with those who see the world as unstoppable.

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♪ welcome back to squawk box. we're waiting on results from general electric. in the meantime let's get a check on the markets this morning. a gain of over 200 points yesterday from the dow. they're still green arrows but they have been witteling away this morning. s&p futures are just about one and a quarter points above fair value and the nasdaq is up by close to 10. check out what has been happening in the early trade in europe. you'll see right now that things are higher across the board. the cac is up by .7%. similar gains for the ftse 100

and dax in germany. in asia overnight you saw that the nikkei closed up by about 1%. the shanghai composite was up by 1.6% and stocks were higher, the hang seng was higher as well. take a look at what's been happening with wti. we were looking at wti back around $50 in the not too distant past. just in the last several trading sessions. you can see it picked up a little bit of ground. 46.95 after settling down a little bit. >> we do have honeywell. $1.60. 5 cents ahead of expectations. pretty good number. as far as the sales go. 9.6 billion looks below expectations, i think for honey well which looks like 9.8. 9.847 and they're talking about sales of 9.6. sometimes there's other -- these companies derive some revenue in a way other than sales. i don't know if that's the case

for honey well but it looked like this is a little below expectations. let me see if i have anything in the overall press release. delivered another strong quarter of earnings growth and exceptional margin expansion. only 1% core organic sales growth but 190 basis points. >> the dollar is a big issue for the companies selling overseas. reported sales are down 5% because of foreign exchange and lower pass through pricing as well. >> okay. now back to waiting for ge. we'll watch. we'll revisit honey well because it always helps to get a trade. >> honeywell also says they're confirming their full year

guidance at $6.10 which is in line with where the street is too. that's the number that the company is actually confirming and they say they're confirming where the street is for that. >> we have a couple of other stocks on the move. yum appointing keith mester to its board. yum is close to finishing a review of its strategic options. he's a protege of carl icahn. mattel falling. another drop in barbie sales and schlumberger hints at more cost

cutting. exploration of production spending will remain weak in 2016. other corporate news to get to, nestle cutting it's full year outlook. the company plans a noodle recall in india and a rebate adjustment in nestle's kin health and then shares of hugo boss getting slammed. cutting it's profit view. among the reasons a slow down in china and hesitant tourist spending on retail in the united states. >> are boy action figures not doing well now? >> going back to mattel. >> i'm just back to understanding barbie. >> teenage mutant ninja turtles are huge. >> i wouldn't be playing with physical things anymore. >> kids are still playing with the animals. >> then what's wrong with barbie. >> what about a lean in barbie

ceo that has equal pay but still dresses. >> that would sell. >> i think it might. >> i think it might. why don't they think about these things. >> they're trying. maybe we'll get this commercial before the end of this. >> why aren't you consulting with them? >> good idea. >> barbies were good with our kids too but they're early and haven't bought them. >> they're 12 and 11 now so they're not interested anymore but having boys it's the same with you. a lot of teenage mutant ninja turtles and super heros. >> we're still on trucks. >> make more money. >> i'd campaign for it. >> is kyle a lego man? >> not yet. >> lego crazy. >> are you? >> for hours. >> those are hard to put together though. >> that's his thing. >> when i buy kyle legos guess who gets to put them together? >> you do. >> you've been to the place.

>> there's a netflix of legos so we also get -- so max has gone through every lego that exists. so we have legos shipped to us every month. >> like a burch box. >> you put them together and do everything and then you send it back and they keep sending you new legos constant. so there's constantly new legos. >> what happens if you lose some of the pieces? >> it's fine. it's allowed. >> not a fan of the lego movie. lord business. lord socialist was the prot protagonist. >> it was god. >> we don't allow the kids to watch that movie yet but not for that reason. >> i'm sure. >> i was told there's some language. >> whatever reason you didn't watch it.

good. lord business. >> we haven't seen ge pop yet. >> i'll let you know. earnings season is in full swing and the market has seen wild swings so far. where are platinum portfolio members putting their money. joining us is sarah. she is the head of global equity research at tiaa. good morning to you. >> good morning. >> you're making some moves this morning? >> we're not making moves. we still like what we have. we have diamondback energy. we like the supply-demand situation in the energy sector. rig counts are going down and we think it's time for energy stocks to start working. >> and should we go through all thr three? >> we can or i have a couple of new names. we like renauld in europe. if you look at them for example they own nissan and diamler. that makes up 90% of the stock

price. and also they have a great cost saving program in place where they share their platform with other car makers. and they're revamping their product line and owl of that together makes them look attractive to us. we like sales force. it's clear skies for this cloud maker. they have new products coming out. they're focussing on revenues and margins. we expect expansion going forward and the second half of the year is seasonally strong for them. it's not often you get this high quality growth company with 20 to 30% top line growth at a reasonable price. >> but you would not replace anything on your list with these companies. so you don't like these companies that much. >> we like them all but we think the energy sector looks really strong right now. alexion has been hurt because of the drug pricing issues we have been hearing about. a lot of it is noise but they

have an analyst day coming up and we think it's time for margin expansion. they're done with the heavy investments. we have been waiting for the story to play out. now is the time also. >> what's your take on the conversation we have basically at the beginning of every program which has to do with the fed and what's going on? >> we think inflation is benign and because of that we think there's a good chance that interest rate increases get pushed out to next year but investors like that and that's why you're seeing the market resume it's rally. we have strong underlying ones in the u.s. it leads to a market investors should keep warming up to. >> old habits die hard. ge hits and we say how high on the way up in terms of reporting these things. looks like 29 cents -- right, remember when we used to -- >> stop the break news. the dow component. >> it's a dow component. but they don't love us like they

used to. they told us -- >> tell the story. >> i'll tell it. not feeling the love. 29 cents a share. three cents ahead of expectations. i want to quick lily look at th revenue number. ge it was up 4% although if you factor in fx, foreign exchange, it was town 2% at 27.9 billion. the 27.9 compares to analyst estimates of 28.57 billion but whenever you talk about ge we know that there was a lot of reshuffling of assets and restructuring so there was a time when revenue was going down and they said we're trying to shrink revenue in nonprofitable business. you can't assume it is going to be seen as a negative. margin up 100 basis points. orders, wow, orders down 26%.

that is driven by not being able to match some of the big orders from last year. specifically aircraft engine and locomotive orders and then you got oil and gas. which no one will be surprised they're town due to the environment they're operating at. alstom is going to close as expected within a couple of weeks and the guidance has been affirmed for the year. >> what is the guidance? i'm looking for that now? >> the street is at $1.30. the street is at $1.30 right now so usually the street has the same guidance as the company. saves you a lot of time and effort. spreadsheets and, you know, panel checks. who needs that. in a volatile environment ge performed well this quarter with industrial profit growth, organic revenue growth and margins up 100 basis points.

our ge capital exit plan is ahead of schedule and we expect ge capital dividends up $3 billion for 2015. sales 30 billion of commercial lending businesses. bringing it to $126 billion to date and then on top of all of this, you got the activist angle. so we'll see if we hear anything from anybody. >> i can't imagine -- i think there's a honeymoon period and they all -- nelson peltz, by the way, he's friendly. they just have to hit their numbers. the question is how long do they hit the numbers for? but for now he's probably a very happy camper. he was not jumping into the stock based on one quarterly result. >> let's see what the street is saying. at least one person that does this for a living. william blair analyst. we couldn't get william blair himself.

unavailable. but nick you're going to have to help us today. is this better than or pretty much what you're expecting? >> looks better joe. we had 26 cents with 3 cents from the verticals and 23 cents from the industrials. so it looks like we got a little bit more out of the industrials. >> the way that the order growth is explained, you probably, because you followed so closely you knew about the big aircraft engine and locomotive orders from last year would make comparisons tough. did you know that? >> you had a tremendous amount of tier four locomotives and ge was the only one with that product. it's exceptional. cat won't be out until the middle of next year and that's

just for class one railroads here in north america. >> so tier 4 is first two emissions or something? >> yeah, it's the most environmentally efficient and green locomotives that are now required to be operated here in the u. s. >> when do you think t you know, they also added that oil and gas orders were part of the drag. could be as early as this quarter next year, maybe. >> yeah, the last, i guess, you know, challenging comparison for oil and gas should be the fourth quarter. they start to get a little easier in terms of comps in the first part of next year. in terms of in market demand picking up that might stretch out until probably '17. we'll have to see. but they had order that came in in the fourth quarter from egypt to add power for 60 million

people in five months and ge managed to do it but it was a very large order. they completed and delivered that by end of may this year. so that was a big part of the year ago orders. >> for activists that had wish lists, what's left to do? he got rid of so many underperforming parts of the company. what would an activist analyst be demanding that the ge does now? >> well, nelson is, you know, kind of the classic looks at offerings profitability and equity and the cash generated and wants to shrink as much as possible the share pace so he's just asking ge to, quote, do more faster in terms of cost out. i don't think anybody can believe that the cfo at ge is

weak. he's very aggressive on costs and will get it down to 12% of sales here in 2016 and the vice chairman is focused on delivering 75 points of basis points through the rest of the decade. so ge should be at 20% even margin by 20 and that's a pretty good run rate from say 16% roughly this year. >> i mean, does -- shrink to share base. is ge a candidate for a huge buy back. would you buy back stock on a multiple in ge? >> the best buy backs are ones where people don't understand what lies ahead in terms of positive change for a company. and here this company almost went bankrupt without the federal reserve stepping in and helping allow ge capital to rollover it's short-term debt and so i doubt we're going to look at a big lever up. there's 35 billion of capital

that will come you that's excess down at the financial services subsidiary. once we liquidate $200 billion of ge capital assets. 100 billion should be done this year. that frees up about 18. about 12 of that will come up and 3 billion will be utilized to give you about a $15 billion cadence for repurchase in '16, '17, and '18. that's a big number. the highest one previously done was under $10 billion. i don't think they're going to go out and borrow 20, 30, 40 and then in-turn wait until they get their cash unlocked. that's a little risky. >> it's our 20 year thing and i wondered whether you were watching on the day ge was threatening to break under five.

keith sharon, ge closed up a quarter after he was on in defense of it. i remember the day like it was yesterday. anyway, thanks. we also want to thank our platinum portfolio member for joining us on set this morning. >> when we come back the country that dethroned america as the world's billionaire capital. you're watching squawk box on cnbc. first in business worldwide.

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coming up, the country taking the title as home to the most billionaires. here's a hint. it is not the united states. we got the answer when we come back in just a moment.

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china is now the world's billionaire capital, and a new report shows that this country's billionaire population jumped 70% in the last year. it's total number is now 596 topping the 537 billionaires who live here in the u.s. we have to point out the study was before the big break in the shanghai market, show, and i don't know.

>> that's app interesting point. >> although, most of the billionaires, they are self-made, which is kind of cool. not a lot of -- >> a lot -- >> not a lot of vanderbilt money. >> like billionaires in russia. awarded this. >> and the other guy is -- he's got a conglomerate that made acquisitions, but many of them, i think alie share of real esta. smart people, real estate. >> always. >> it is. >> risky business too, real estate. >> here we are talking stocks. >> i know, i know. paper. >> paper. >> you can't, you know -- >> which is land. >> land. >> app old expression, you heard it. coming up this morning, we have some top stories to talk about including ge shares under pressure following their latest quarterly results. stay tuned. you're watching ""squawk box" here on cnbc, first in business worldwide.

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earnings alert. general electric rolling out quarterly results, and the big question, what do well known activist nelson pelz make of the numbers? ipo oh no, another public offering falling far short of expectation, and why it spells troubles in the broader market. >> a bad bet? nevada shuts down sports betting operations in the state. we begin our second hour right n now. ♪ live from the beating heart of business, new york city, this is "squawk box."

welcome back to "squawk box" here on cnbc, first in business worldwide. investors putting money to work in the latest week. u.s. based stock mutual funds and etf attracted.5 billion. there's a big reversal following $8 billion in outflows during the prior week. as for the markets this morning, a check on the futures right now, we have a little bit of a mixed picture on the board there for you. i wish i could call it unchanged. dow opening up about 7 points, nasdaq would be up by 6 points, and s&p 500 off quite marginally. mixed quarter for general electric. ge earned 29 cents a share, 3 cents better than the street expected, but revenue was shy of what analysts had forecasted. there's a weak pricing environment, decline in aircraft, engine, and locomotive orders because they came off of

strong year where you won't see those orders again. here's what the analyst had to say about the quarter. >> we had 26 cents with 3 cents from the verticals and 23 cents from the industrials so it looks like we got more out of the industrials. >> the quarterly results this morning, earnings beat by a nickel. revenue fell short in this case too. if you check out the shares, you'll see right now that the stock is up by 40 cents, again, both are industrials that sell products overseas and foreign exchange was an issue with the revenue. also, look at shares of mcdonalds trading at all time highs. >> i want to look at this chart. when did that happen? we -- look at that of the what is that? that's two months ago, at 90, right? >> amazing. a fast bill. by the way -- >> look at other way -- >> july and august rolled out a new menu. >> last narrative, did they stop with the monthly same store sales in. >> said they would stop, but i

don't know they did. >> last narrative, wow, they just got nothing new to introduce. >> that's the point, though. maybe there's not enough sales to check on the stuff to get into the quarterly numbers. >> last i thought they were flailing. the last narrative we were reporting on. >> i would say yes because there's -- there was talk in july about the minions. >> a year with the new guy? >> i don't think it's been a year, has it in. >> i don't either. >> the moves, talking about the new menu, breakfast in the afternoon, allowing those things to happen, and now the chain is close to deciding what to do with the huge u.s. real estate holdings as well. the wall street journal says the company's leaders will discuss more on the business strategy in an investor meeting coming up in november. some analysts and investors called on mcdonald to hold off earnings as a real estate investment trust. i don't know what people think about that or is that speculation into it. >> can you get french fries at 9:00 in the morning yet?

>> i don't know, i have not tried. >> andrew? >> i don't think you can. >> i don't think you can either. do yo go occasionally? the kids like it? the twins? >> occasionally. >> it's okay. >> we do it. i do it at the airport too, by the way. >> so do i. >> everything in moderation. >> everything in moderation. >> though i like to supersize the fries. >> french fries in the morning may not be moderation. >> it's moderate. you don't get two larges. the latest thing that's got me is the tom brady. you know, the deflategate, all that stuff -- >> you're okay with? >> frosted flakes are not food, and they are responsible for -- corn flakes are not food and they are responsible for the disease in the country? tom? really? put your helmet on in the next game, you know what i mean? that's unbelievable. you know who is, i think, inspiring some of that? >> gisele? >> exactly.

>> i thought so. all smart men listen to their wives. >> they do. if my wife said corn flakes cause all disease, i might not. among the stories this morning, nevada ordering sports operations to shut down calling the sites unlicensed gambling, and they want a bigger take, apparently. no, i didn't mean that. >> every time we read this, i have to figure out what the situation in nevada was, if it was a tenuous relationship to begin with. will be interesting. the broader markets now, a wild week for stocks, and d dom chu has highlights for the session. >> i want to say for the record that i don't think french fries in the morning is different than hash browns. >> i'm bad with the calorie count on both. >> i want a quarter pounder at 6:00 a.m. than an egg mcmuffin at 9:00 a.m. >> i'm looking this up. >> you should be able to, dom. >> oh, my gosh.

hash browns calorie count is 470. >> relax, would you? >> calorie wise, it's inflated, but stocks are posting fractional gapes here in the past week, half a percent, maybe not hyperinflated, but a move here. we'll build on that today. look at the more internals, funneling down to the sectors we want to focus on here. utilities, the best performers in tell communications. less sensitive, higher dividend payers stood out this week opposed to consumer staples and industrials. staples, yes, a payer as well, but they are down half a percent and industrials down about 1% here, so generally speaking, you've got utilities, telecom leading st leading, and staples and industrials trailing. sandifg up 12%, and garmin down

13, and seagate computer storage devices down 15%. best and worse this week. of course, the earnings season started in earnest over the course of the last week. ge this morning. you talk about this idea of we want to talk about the ipos. with ipos, first data was a huge deal, right? biggest so far this year. and it closed below the ipo price. that's something to note here, only one day, but, still, and albertsons, another ipo we expected still postponed in indefinitely, and earnings season, that's the real point here, and as of at least the middle of this week as we start to count things up, generally speaking, 74% of companies in the s&p beat earnings estimates, 11 to 15 have not met analysts' expectations, and that's a little bit generally just what we see in the early parts, i guess, of the earnings seasons, joe, so, overall, that's the reset. we get a heck of a lot more many earnings reports this week. we'll see if the numbers change, joe, as the week progresses. back to you.

>> you'll be here the next three wee weeks, right? >> i'll be here all week, all next week, the week after that. i'll be here a good while, i think. >> mcdonald's hash browns have fewer calories than french fries, hash browns 150, and french fries 250. >> you want to live your life like this? >> yes. a moment on the lips a lifetime on the hips. >> all fat no fun. >> i never heard that. >> no fat, no fun. if you're going to do it, you know, get something out of it, have cheesecake, you know, let's bring in barbara reinhart, and research partners. i looked at the monthly chart, you two, and not of you two, but the monthly chart of the averages, and we went down initially, jason, barbara, down

when the fed did not move, and now straight up with the terrible employment report. the market doesn't know more than we know at times on what itments to do, does it? >> one thing to important to note over the time period is the risk appetite indicators went into panic mode. we were hovering there when the market made initial decline in the month of august when you went down, you know, pretty much 11% over six straight days, but it reached it again at the end of the september, and when you reach pappic, on most risk indicators, that's a good sign the market's making a con stipulation. >> it was engendered by fears of a slow down and cured by a terrible jobs number making no sense. >> here's the thing, markets have not been making headway throughout the entire year. >> true. >> there's been pretty much in investor appealing through the market cycle we've been in, and especially this year. >> we're not up on the year yet, are we? >> no, flat. >> flat. >> i would agree with barbarbar.

one of the curious things about the market, mutual funds and etf flows all together, there's net reductions from domestic equities, so one of the things that you normally see in a, you know, a bull market top is you have big retail or individual investor participation. you've not had that this time. saying that, though, i'm with you. i think the fed largely, it has unlimited bullets, but in terms of its influence on the market, i would say there's a growing consensus among my clients that the fed's somewhat impotent and already made a policy error no matter what they do. we said investors look for love in all the wrong place, saying they look for monetary policy, and now it has to come from someplace else, and, largely, i say the monetary policy is sterilized by regulatory policy. you either need fiscal policy or something else to spur the economy, and it's hard to get really bullish on the market for the next year if you look at --

looking for $120 in earnings for s&p 500. again, put a 16 multiple on that, that's 1920, a 17 multiple is 2040. you know, you're kind of there. >> then you got, like, bill miller, record for 15 years. >> yes. >> the s&p. >> yes. >> sometimes it's as simple as what's right in front of you. benign inflation. very low interest rates. nowhere else to put your money. an economy that's better than any other economy in the world, so why wouldn't it just be just looking at those things, why wouldn't you buy stocks? >> remember, as jay sop sason s there's a lack of other places to put your assets. >> that's a positive i thought. >> it is, but the other issue is the major decline seen in crude oil prices over the past of the 12 months is going to be a stimulus. remember, it bottomed in january, march, and bottomed in august. >> you're arguing, but you said that bill miller's right, that

it's benign inflation, nowhere else to go, oil prices are low so market should go up, is that what you're saying? >> should be going up because you hit panic on the risk indicators. >> fundamentally. >> it's important, though. especially with markets gyrating up and down because of the lack of fundamental muse at this point. >> we talked about every single move in the market, and it's just been, you know, a lot of noise. >> i would say with bill, too, he's a great stock picker, and so that's -- >> right. >> this is pandering, but i say this is a time where i would argue that stock picking should make a big difference because i think big gains and multiples for the market as a whole are probably difficult to achieve over the next year. i'm just trying to think of what the catalyst would be, aside from tina, talking about for three and a half years. >> right. >> i'm saying, at a certain appointment, you know, that string runs out and you need new

fresh money to come in, and unless the retail investor comes in, that could be something. corporates have been buying. the other thing you see in the semiconductor now, too, is there could be a lot of m&a. that's another thing that could provide catalysts for multiples. >> would a much stronger economy be good or bad for stocks? >> i think a stronger economy is probably -- especially a leader in the economy is what many investors are looking for at this point. >> good or bad when people start worries about, you know, wage pressure and end of a business cycle orchestrated? that's so far off, isn't it? >> so far off. you need a hockey stick in wages, fast wage growth to stoke inflation fears at this point. i would say on the margin relatively better economic growth is better for the markets. >> i agree with barbara. >> it's slow, and it sounds like a secular bowl market and environment for, you know, unless there's some systemic ability? there's not, is there?

succe buildup of risk? >> well, we don't know. >> it's impossible to know. >> you're not going to have a financial crisis led by the banks again. that's true. >> maybe asset inflation. >> look where the bubbles are, right? bubbles are very difficult to detect, every single time you had a bubble over the course of the past 15 years, it's been well talked about and well publicized for years i think. >> you don't know where it's bubblelicious until after the fact. oh, that was the moment. greenspan said how many years? '96. but how many years until that? 2000. >> that's the essence of a bubble, they build over a long period of time. it's fundamental. >> so there's a bubble in the private market for technology? >> no, no, not a bubble. >> you could say it's small, and then there's breaks. there's little breaks in things, and you see it could break. other things break, and when things break the wrong way, it's

not just a small little issue then, but it's a psychological issue. >> the big bubble, in my view, is sovereign debt. i mean, that, to me, now that's -- a little different because you have central banks that are willing to step into the reach and buy it, but, to me, that's the biggest bubble out in the financial markets right now. i also think the private equity market is my own opinion is -- i don't know if it's a bubble, but people are putting or reaching for yield or reaching for performance there. >> i have -- we got to go. andrew, there's a song, a group called the unicorns, you know, and there's a song "i'm a unicorn," or something that i will play for you. >> i don't call them unicorns anymore. >> why not? >> there's so many of them. they are not rare. i need to call them dragons. >> dragons are rare. call them horses. >> thoroughbreds. >> what do we call uber or air

bnb? >> valuations? >> call them small. >> unicorns. >> we have the song waiting. we'll stick with unicorns. >> thank you. dragon was last minute. >> thanks for coming in. thanks so much. when we come back, ipo problems, companies price below their expected ranges. others dropping after their debut. talking about the issues and what the story says about the health of the broader markets after this.

albertson's hoping to bring the ipo to market after postponing at the last minute, and kate kelly is joining us now with the ipo blues. what's going on? >> well, e don't have the blues, app drew. >> the market does. will they come back? >> they are bummed. yes, the decision for one day postponement followed by resolution yesterday for a longer one was an indication of the tough market ipos are in now, single outlook for a company, walmart on wednesday, poisoned the well for many others. there was reason for encouragement yesterday, however, walmart stock's free fall from wednesday slowed down a little bit, and first data, the payment processor, $ 2.6 billion offer did well, opening above the offering price, granted, below the intended

range, and closing at that same level. albertsons, considering pricing last night, which would have been just a one day delay, it was not enough to go forward. the company is focused on a price of $20 per share, and investor momentum remains somewhat below that. they'll look at a deal in the coming weeks and may issue additional financials to reassure investors, i'm hearing, but meantime, the luxury car maker, ferrari is doing far better on the road. i realize that's a pun, and momentum for the deal priced next week sits at top of the $48-$50 range thanks largely to the iconic brand involved. they are doing a bit better. >> how many things are pulled that we don't know about? >> well, good question, especially with the fact that you can do the confidential filing now, right? >> right. >> you don't know who filed until a couple weeks before the road show. >> is it daring that jack dorsey filed with square at this point in the game sm. >> daring he's running two companies, one of which is

twitter which needs full-time attention, right? >> right. >> yeah, i mean, i think the feeling 1 the market's real choppy and volatile right now, and nobody knows what's going to happen the rest of the year, let alone next year, but the companies coming public, some of them anyway, really want, like, the sponsors want to exit or they just really need to pay down debt, need the cash, and hope to get in there before the window closes, but -- >> the view that the window closes, the window's already closing. it's closing even more. >> right. underwriters are nervous about that, as you know, but, yeah, there's a sensitivity in the market right now. i mean, obviously, like, we're on the verge of a rate hike, we think. >> we think. >> maybe not. depending on who -- >> but if the bull run in equities is ending, you know, is this a good time? i mean, obviously, ipos continue to have to happen in the coming years, but there are golden periods too. >> we decided -- >> what's that? >> we decided it's not ending. >> yeah, okay? >> it's not me.

that's the consensus this morning. in the green room, what were you doing? >> chatting with the guests about the wine and stuff. >> a good thing to know. >> sorry. i spaced. >> you did. it's complicated. >> and you missed that party. >> i was in d.c., you know, breaking news. >> you know, thank you, kate kelly. >> have you fixed it yet? n anyone else? >> oh, that's a pun. >> i didn't mean to. ferra ferrari's on the road, blah, blah. >> nerd side. cute, though. >> they teach you to write so many cliches at the wall street journal, don't they? >> i know. >> it's bad. >> take a listen. coming up, you're going forward, likely to find very tired, though excited at the end of the day mets fans. you know, one thing i will say, we talk about murphy's law yesterday, over and over and over again. >> you did? >> this guy single handedly won the game, murphy won the game. murphy won single handedly.

home run, stealing third. unbelievelele. i'm not a mets fans, but we'll tell you why. i don't know why. which basketball hall of famer won a record 11 championship rings? the answer when cnbc's "squawk box" continues. aa-flac! aflaaac. aaaa-flaaaac. someone's sandbagging. i'd be tired too. he paid my claim in one day when i got hurt. one day? serious hustle. serious duck. in just one day, we process, approve and pay. one day pay, only from aflac. ah!

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which basketball hall of famer won a record 11 championship rings? the answer? bill russell with the boston celtics. the squawk sports, mets and cubs ready to faes oce off? isn't that cool in the gnarl league championship series, two big media cities and a long drought in both. not as long, obviously, for new york, but this was after the mets beat the dodgers last night 3-2. the mets trying to reach the world series for the first time since 2000, and the nlcs starts saturday night at city field much the first post season meeting between the mets and cubs and there is some serious sports backup going on,

especially tomorrow between notre dame sc, and -- >> i'll take the other side of the game. >> michigan state and michigan, mets play tomorrow, rangers play tomorrow, and there's serious backup, texas a&m and alabama or something. it's a huge -- this is just -- >> this is it. >> taking the notre dame side. >> are you? >> yeah. >> i have to take sc. >> we have season tickets. proud of you, son. ge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer

and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world.

welcome back to "squawk box" everyone, cnbc, first in business worldwide. among the stories front and center today, t-mobile u.s. is jumping to the nasdaq from the new york stock exchange. they announced that this morning, and the change is effective on october 27th. also, gallion group founder is sued by his younger brother for $13.5 million. one cleared of insider trading,

and the other said he's owed unpaid commissions and legal costs. american apparel predicts a return to profitability, a profit of 2018 is predicted, last ended a year in the black all the way back in 2009. the headlines today, a wall street journal report that the company uses key technology in just one of the tests. last night on "mad money," jim cramer asked holmes about the testing method, and how it stands up to the fda and quest diagnosti diagnostics. >> we've done it, slotly, and published in the fda decision summary from this summer from a 900 patient study to get fda clearance of the exact system that the journal is questioning, and we demonstrated venus versus finger stick across 889 patients for the test, doing that over and over again for every single test. >> what she's talking about is a

system, eddyson, pricking your finger, matching up it up to see if there's diseases, and apparently the wall street journal says the only disease fda allows to use this on is r herpes in this case. now, she has continually said that the existing lab companies are out to get her and that's where bad news is coming from, but her valuation, by the way, is twice that of existing company, of a quest or the other labs combined out there. >> yes. >> that's where the issues are coming from. does the new technology just taking drops of blood work? she has all the other tests before the fda, but according to the journal this morning, they asked for all the tests to be rerun, they were not able to verify it is equally accurate. >> what's that say about w

organizatiwalgreen's? >> the laws were changed to allow that, and they have over 50 pharmacies doing this. the journal called one pharmacy yesterday, and they said they had been told to just go back to the old way of doing it for now. a lot of questions still out there. she points to the fda, and they say at this point -- >> does the fda have access to the technology reportedly used in the way -- >> i don't think they have access to the technology. >> who does? >> does anyone? >> it's my understanding they say that is their -- >> i understand that. i understand it's a trade secret. if someone besides the competitor ought to be able to see -- >> world of science you share your information. >> and has to be duplicated or we'd be all using cold fusion. >> what they're looking at is whether the finger prick tests are as accurate as the blood drawn from six viles in your arm. that's the big question.

>> using standard equipment. >> jeff is from yale is here. one of the issues on that, you prick the finger, you take less blood, and they were diluting the blood by using all sorts of chemicals to create more volume or liquid. >> to run that in the old semen equipment, and the viles they used, and it's -- that's nothing proprietary about that, just a little thimble size vile. >> these are not gray areas -- is or isn't with molecular biology. you know. >> the -- i thought cramer's questions were great. she didn't have answers. >> 889 people tested, what the fda approved. now the question becomes, if you can prove that the tests are just as effective, but that's not what the journal said. >> looking at a private company,

do you have to believe the ceo? what do you work with for public information? andrew, you said something in health care, the fda weighs in more than they have, and you know a telltale sign is when you start to see the brilliant and revered statesman, henry kissinger, sam nun, two former u.s. senators, a couple former retired general as admirals on there with the average age of l 80. kissinger -- >> george schultz, crist, a doctor. >> the only licensed -- and almost 90 years old and not board certified anymore. >> when you see the marquee names, that's the sign. you see the same names, going on -- >> originally, i imagine they were there for two things,

status and status in washington, right? i think that was supposed to say to the fda or whomever -- >> maybe. it was like having -- they didn't need reo backed with the board, and what is henry kissinger going to do? explain why putin upset. >> i'd like to hear from the fda on this. if they ask them to redo the tests to prove they are just as effective. >> using the pin picks for a single test. >> until the others are either approved or disproven that you can't use them as effectively. i want to see the signs on that. >> it is something. thinking of the 20th anniversary of the show, it is tragically o nostalgic to the hype we had about cyberspace back then, is that where do we get the tech hikes? they are caught up in the loop. they are behind them, and we have larry oracle behind them. people don't ask questions

because they are blessed. it's known in the biotech community for a long time is that the more dangerous your drug is, the easier it is to get it passed because you only have to get a few opinion leaders to go for it and everyone else falls in line in the medical community who don't test it. marquee names on board, something nobody understands, they don't challenge it. that's risky. we don't know if it's fraud or exaggerations or mus commun communicatio communicatiocommun miscommunications, but there's a lot of explanations here. >> something's amiss. >> they wanted to tighten it up for the marketing accuracy. >> the general council -- >> well, that's the outside. >> outside. >> by the way, i love dave boyce, doing great work for greenberg and others, but somebody's having trouble. he does not come in just for a run of the mill routine traffic ticket. >> right. >> while you're here, two other

questions. today is ellen coleman of dupont last day on the job. what happened? >> we see it happen a lot. someone steps down tragically, but mutually. she didn't want to be the lightning rod for activist anger anymore. you can see she didn't take zef advanc -- severance just walked out the door. it was a shame. hp with various more recent ceos like the seven they've had in the last 15 years, is that the one method -- before that, lou platt went through a similar thing, remarkably strong performance, motivated interest running hp under him, but they were cautious about getting into certain things in cyberspace where he was vindicated over time. he stepped down willingly, begrudgingly, but it was a big mistake, the company goes in

tail spin. this happened at motorola, one bad quarter, slow results, and look how it implode afterwards. this happening so many times where you have these suicidal boards. very sophisticated people. >> the likelihood, i imagine, is that as long as ed breen is ceo, the company is in pieces in 18 months. >> i thought that was a shame. i couldn't invest as well as he could, but analyzing the company, i don't believe he has insight into the industry or the company, is that why would you -- why would bill miller want to talk about selling off chemicals now, a treasured asset, because of a momentary blip? they basically -- it's a business heavily built on china. that's temporarily off. ed breen is fantastic. he's probably the nation's

premier guy, and you go into tyco, you split -- >> that's what he does. he does it with a scalpel, he's app artist. >> tyco was in adt security systems, u.s. surgical. >> creating value. >> and baby diapers. that was absurd. >> two other things quickly before you go. general electric. we had earnings this morning. friendly activism. hear of that? nelson peltz is now describing himself as a friendly activist. does that make sense to you? >> fantastic. i applaud nelson. this is nation's most -- i think promising industrial enterprise of the operation. i think that's great to see as they had very strong less, you know, most roontly 4% or gappic growth. i think they had more, recently 7% organic growth, coming

through the beggest deal in ge's history. an acquisition, it's cleared, exciting to get positioned for power, and, energy is down a little right now, but they are very well positioned for great growth, and it takes awhile to redo this. jeffrey of value act, another one of these people who plays a productive and constructive role, and i think, you know, we've seen that with relational investors in the past, and home depot's board, it works. i applaud them on this. it's just it takes awhile with walmart to see this happen. you want it to -- >> i want to hit walmart. what's the take on what happened in the last two days? >> i didn't mean to lead you into it, but it worked, the segue in mind my is i see both human battleships going through turning. we saw that with ibm or when thompson reuters got out of -- got -- got out of running that, 100%, newspapers like 300 newspapers, toronto globe and

mail, times of london, got out of all of that in five years, but not five weeks. we see that ceos can perform incredible turn arounds, and we talked about the jump up to 103 from 90 before. this happens quickly. it can happen, you know, in a mcdonald's two month scenario, and they are on a roll. two-thirds assets are gone. this is such a different company. not jyour grandfather's ge anymore. remember not ge, gte? >> speaking of 20 years ago, nobody remembers that other than us, joe. you know why that was? there was a successor to ge, jack's job, didn't get it, got the gte mind, and they confused gte and ge. >> thank you, sir. >> sure. thanks a lot. >> talked about a lot of stuff. >> rapid fire. >> rapid fire. >> boom, boom.

thank you. >> thank you. when we come back today, if y missed the catch of the year, we have it for you after the break. by the way, whining can be a good thing, especially if it's a $30,000 bottle. a big auction bringing top dollars to sellers. that story in a bit. meantime, the futures at this hour, relatively flat earlier today, we saw green arrows across the board, and this morning, the market is waiting for a little of direction. we'll be right back. more data means more freedom to do..whatever. that's why at&t is giving you 50% more data. that's 15 gigs of data for the price of 10. because the more data you have, the better. and right now at at&t get $300 credit for every line you switch

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welcome back, we've seen amazing plays in football already, but this is thee play of the season. stanford, ucla. i'm going to stop readi ining s can see this. quarterback connects with the receiver in the end zone for an amazing catch, adjusts to the ball, and then -- >> holy cow, caught it with that guy! >> oh, yeah, he's got it behind him. >> he clashes with the guy and football. >> adjusts the ball, pins the ball on the back of the defender, amazing. they got beat badly early.

they beat ucla. >> that's the best catch i've seen. >> no, no, no. i was just out of pure luck at o'dell beckham's greatest catch. >> this year? >> last year. >> i said this year. >> the sideline, reached back like that, remember that? we sat there watching, like you kids just saw something you'll never see. he was great. good sports. you know, i don't like new york teams, but i like the rangers, i'm coming around. it's the media center. everyone thinks they are more important because it's new york and midwest is totally, you know, ignored. >> now that you're ignoring the bengals, they are doing well. >> bengals? football we're talking about. yeah, they are doing well. i want to stick with this. sticking with this. i have no interest one way or another. do you? anything? sports wise? >> i'm a new yorker, i root for

the mets. >> anything? curling? >> bad mitten, ping-pong. >> you can't jump on the wagon? >> i can't? too late? >> i'm trying. >> we have a 1% segment coming up. >> we do? >> we whine a lot here, well, joe does, and wealth reporter, robert frank, is here with a bottle of wine that's huge, a $30,000 bottle of wine, which is quite crazy. report, tells about it. >> well, andrew, we go big here on "squawk box," the favorite win of thomas jefferson and hemming way, the most valuable wine in the world, this is a $30,000 bottle, and, yes, we'll drink some coming up on "squawk box."

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what better way to celebrate squauk's 20th anniversary than with $30,000 wine? report frank is joining us now. >> that's the way we do it. >> with a special guest. >> conflating. >> this is not $10,000. >> this is nothing but the best for you guys. >> all right. thank you. >> one of the five premier, first royalty of wine, it's been meeking wine since the 15 hirhirk1500s. onyx starts tomorrow at 11:00 in the morning, and we have a rare interview, the owner of the winery, and thank you for

joining us. >> thank you. >> so your father bought mar go in the 1970s for $16 million. look at the values of just the chate chateau, just the wine and cellar worth more than that today. what do you think of all this incredible runup in wine prices? is it a bubble? >> no. it's not a bull. we have been bringing prices also throughout the year. t it's like this because there's a worldwide demand in market. one vintage to another goes up and down like this. if you have a bad vintage, you can't control the quantity or quality. if it rains for two months, starting in august, you'll -- you don't make a good vintage. >> which is what makes the great vintage years. >> exactly. >> even greater. the chinese have been driving the market over 5-10 years. >> they drove it for the half

vest 2009 and tw2010, but less present. i'm rather happy because the country coming up now and buying more is america who is coming back. >> really? >> america didn't want to buy the wines that had a chinese price, so, which i guess was pretty smart, so now that the prices are more reasonable, they -- america's coming back. >> you have one of the most beautiful chateaus, i'm told, in all of france. do you think that that bar doe will be more like napa valley in terms of bringing tourists? it is so beautiful. so many people want to go there, but it's not quite that open yet. will you bring more people to your chateau? how can they go there? >> well, we're very, very, very open. we've changed tremendously. we train thousands and thousands and thousands of people. it's -- we have two flow innovation. one flow for the wine because that's our business, our main job, and one flow for tourists,

and we've just built a new cellar, done and design by norman foster, and this is also helping the flow of the tourists. so we have many always standing at the gate taking pictures. >> so i don't know if you've seep the new steve jobs movie, but before he introduces the macintosh on stage, he's brought a bottle of 1955 margot, showing how famous this is. what year is this? >> a 1990, a gorgeous vintage. you have to realize it's already 25 years old, so this is probably the only wine in the world in together with some cases of burgundy when we get better as we age, and every collector who's had app older wipe in our place or in the best has had a shock and said, what is this? it become like silk and velvet. much older wines, too, and none of the other wine regions as of

this minute can do the same. this is the magic of the place. this is a -- >> you don't want an old wine -- old wines are no good -- >> i'm not saying they are not any good, but they do not get better. they dry out. this one, it's 25, but it has a great future ahead of it. >> like squawk. >> when did we open it? >> a half hour. >> we could have opened earlier, it's young by our standards, it copes with anything. >>. >> cheers. >> cheers. >> thanks so much, to squawk box, 20 years, to the next 20. ? thank you. >> thank you. >> smells good. >> never too early for margot. >> that is really smooth. >> that is dlirks, even for breakfast. >> isn't it? it's harmony. >> the auction tomorrow at

11:00, you can bid online, by the way, they'll sell close to a million in wine. >> wow. >> straight from the cellar. >> this is 25 years. coming up in the next hour, reacting to ge earnings, plus, fed watchers making predictions on when rates rise, and a new unicorn has been sighted. get that song, by the unicorns, the ceo joining us when we come right back.

the issue that matters most to the money. we cover them all and get the latest equities view from bank of america, senior equity strategist. >> app direct hitting the billion dollar valuation mark. >> dear barbara, -- >> i like unicorns. >> wow. >> wow is right. the company's ceo talking about how they are disrupting the cloud in the latest run of funding. >> never too early to drink. >> starting to drink already. >> all right. who has a bottle opener? we break out the wine and order up a $30,000 bottle as the final

hour the "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box," everyone, this is cnbc, first in business worldwide, i'm becky quick, and we are less than 90 minutes away from opening bell. everything's basically flat lining waiting for direction. markets in europe at this hour, though, held on to more of the gains. you'll see now, actually, gave back a lot of gains too. looks like the ftse up by.4% as well as the cac. dax is up by.15%.

andr andr andrew? >> a mixed quarter for ge. earnings beat the street, and revenues fall short. talking to an analyst in a minute, and we should get nelson on. nevada, nevada, nevada, nevada ordering fantasy sports operations to shut down in the state including fan duel and draft kings calling the sites unlicensed gambling. alibaba buying video streaming services, the price tag is $26 per share, a 30% premium to yesterday's closing price. as of yesterday, the market cap was 3.8 billion. that's a big transaction. i met him several years ago. this is, like, the youtube and netflix of china. combine. alibaba and now number two in the billionaire list? >> who is number one?

>> we talked about it earlier. >> i was not paying attention. you know, it's complicated. >> stocks on the move this morning, honeywell earning $1.60, 5 cents above estimates, revenue fell short because of the strong dollar. yum cut the profit forecast, continued volatily in a key china market and added investor meister to the board. wynn resorts, 80 cents a share, profit revenue shy with business falling 38%. they call the environment bewillering because of news by the chinese government about how many you can have, strange micromanagement. intel missed by 9 cents. revenue missed the forecast on weaker than expected sales of

barb irgs barb ir barbie dolls and related accessories. i don't know the ceo there now, but lean in, pay a quality ceo barbie. >> looking for more professional roles for barbie. >> do you think people know the term? >> sure. >> lean in barbie. >> right? >> yeah. >> i know. >> done with mcdonalds. we can get royalties on this idea? >> no. you're not going to give it as charity? a charitable idea? >> yes. >> back to general electric. joining us on the squawk newsline, the analyst, steve, we heard from the company, 3 cents better than street looked, revenue light. is that why stocks are lower, what happened? >> i think the stocks probably trading lower because of the significant run that they've had

coming into today. it's really tough to below that there'd be a lot of significantly positive news to move people into the stock on just on earnings this morning. i think actually if you look at it rs you got 4% organic growth put up. honeywell put up one today, and it's hard to argue the organic growth is impressive still, but order rates down 26% in total, all of that is equipment, services were higher, and, remember, the guys make, like, 80% of the money on the services front so you want to definitely see straights there, but equipment down, held pricing, which was impressive. i think this is probably more profit taking than anything. >> you did mention shares run up because anysnelson announced hi stake. friendly activism, something to agree with and look at the numbers, hey, this is pretty much what we expected? >> well, i think if you're an owner, you're appropriately

always saying these were good. you can do better. i think ge would, of course, acknowledge that it's never good enough, and they need to push very, very hard. that being said, is it close to expectations coming into the quarter? i think the answer is at least, yes. that margin expansion, all critical to the overall story mr. peltz has overtime, you see that coming through the numbers, see it in multiple cost reduction ways from equipment margins to overall margins issue and i think that's critical, and all the other major things underway are on track. we heard it happens next week, the change, the projections happening, and that in the underlying business is okay. look, oil and gas, all should be worried about in equipment orders are tanking, these guys held profit dollars. i mean -- sorry, margin. they held margin, right? that's, you know, frankly, compared to my other oil and gas

exposed names, pretty good. >> steve, you like the stock at these prices? what is your price target? >> my current price target is $32, stock at 28 issuish, and, i like it. look at 32, you build in better scenarios, particularly around the buybacks, a little bit better margin performance, et cetera, and it's not hard to see, frankly, more upside from the number, and, you know, remember trying to put a number of $40 plus at the end of 2017, you know, i think you put the upsides nearest together to be close to that. >> $32 is the 12 month record? >> correct, yes. >> steve, thank you. >> thanks, becky. >> defensive stocks outperform cyclicals. which are winners in the fourth quarter? joining us now is bank of america, limpsenior equity strategi strategist. assume that overall this is a

friendly environment for stock investors? >> i think it's a good time to be invested in the stocks. i think the number one driver for long term returns is valuations, and when we look at valuations today, we think they are reasonable, which probably is republican returns over the long term. in the near term, though, there's reasons to be cautious. we are surprised how strong risk reversal's come. we know that we're going to have a lackluster third quarters earnings season, the culmination of the bad news in the quarter, and i think it's better going forward, but right now, there's a bad earnings season. you have, you know, increasing concerns around the shut down, and you have no uncertainty on the fed, and so there's a lot to be worried about right now, and so i'm surprised the market's been able to rally strongly. >> we're seeing adjustment -- not adjustment, but reporting two numbers, every company saying, here's organic growth rate, not helpful, and s&p in

oil and gas related, and that's going to be bad, is that right? >> that's right. >> overall profit mar ggins are peaking or another leg left? i'm not convinced they are peaking if rates stay at 0. >> think about things separately. foreign exchange is the worst now even if the dollar continues to strengthen here or weakens here. i think it's -- strengthen here, it's a head wind, but less going forward. worst quarter for oil prices year over year, will get better, and margins, overall, that story's a little overstated that we have super high unsustainable markets. most of the improvement is below operating line so taxes are lower because we make more profits overseas, tax rates are lower, and look at the secular level, that's mixed. i think four out of the ten sectors have below historical margins, and so when i look at margins today, the big drivers

of higher margins are technology. some is sustainable because, you know, 10-15 years ago, google was not making much for profit, et cetera, and then the other one is discretionary which is why there are more margin risks. they have the highest exposure, and earnings season noted that wages had been part of the issue. >> you're making the case that long term valuations are somehow fine and you should invest now, but given the argument you gave, whatnot wait? what's the argument gwen? >> i think investors, professional investor or individual investors are notoriously bad with timing and trying to get cute with target returns. that's 2008. there was a fall, and people pan panicked, sold, over never got back in. that was the worst thing to do for the total return. look at -- if when we look at historical valuations, the argument is that if you do just the math behind it, you can explain upwards of 80-90% of returns on valuation alone, which is why there's investors

like warren buffet buying on value, they don't care about what the growth is going to be, and then there's the time horizon. >> did we have to talk about sectors? >> we can too. >> with all the things you've said, what should out perform others? >> yeah, so in general, our main sector recommendations are going to be based on that sort of medium term horizon, and in the medium term, the best return you get are in the sectors no one loves. last year, if you did one trade, the most short over owned stocks and buy the least owned stocks, that's 30%. this year it's 17%. it matters. if you look at the most overweight sectors and what people puked out, technology industrials and energy are the best risk-reward right now because you'll see growth improve over the next couple quarters, and those are the company poised to benefit from that. >> you know, there's a lot of

reasons why the economy is not as strong as we'd like it to be, obviously. >> absolutely. >> would you say the market's performance five to six year bull has been in spite of the public sector or the government not being as nice to the private sector as it possibly could be? talking about regulation, corporate taxes, things like that, will this election make a difference in extending a bull market do you think if, for example, someone who worked on corporate tax reform or regulations, if they were to get into the oval office, does that help? >> i think on the margin, if you have corporate tax reform where overall corporate taxes are going to come down -- >> regulations, you know. >> regulations add cost. taxes add cost. improving the profitability, people pay for improved profits, so on the margin, it does matter, but in terms of extending the bull market and

impacting the cycle, our work shows the economic cycle matters more than political cycles. i argue that maybe over the last couple terms, you had more impact from government and so it's been the political cycle with impact on the economic cycle, but historically, it's really about what the economy's doing, and i don't think the political cycle matters. >> i asked earlier, rather have 4% gdp growth for the stock market or 2% gdp growth? >> 1%. >> that's when you worry about a wage price hike? >> yeah, that's right. that's why we underweight discretiona discretionary. >> you want 4% market higher or everybody does better? >> market goes higher. the most important indicator now for the market is growth. people are going back and forth on, you know, the fed and monetary stimulus. the reality is the market told you what we wanted to see. the market went down with no rate hike. we're less and less -- benefit to risk rallies when you see easing monetary policy.

>> that's a purple, really purple tie. >> i wore a tie like that yesterday. >> that's blue. >> that's blue? >> you're color blind. >> you're color blind. >> i was going to accuse you of doing the walk of shame, you wore that yesterday and never went home, but that's not -- >> i figured -- >> that's blue? >> is that blue? i had problems with color. i wonder about that because i see the color. >> what color is this? >> blue. >> same color. >> maybe you didn't get the memo. >> yeah, i wore purple yesterday -- i think i wore purple yesterday. >> is this red? >> it is cranberry. >> people with red green color blind can't tell. >> what do you do in the morning? >> it's a crap shoot. >> i do a lot more than you do in the morning. >> it's nice to see you, and when we return, it is blue. steve liesman with credit information on the probability

of a rate hike this year or nexting and later, is russia helping or hurting the u.s. with the syria crisis in we'll speak to a harvard professor, neil ferguson, the one and only, in just a bit. you wouldn't order szechuan without checking the spice level. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brokercheck.

welcome back, the futures now are probably little changed from last time we looked, and last time we looked, they were up a little, now down 5 points or so, a big gape yesterday, and we've been in a bull market for the last two or three weeks since the bad jobs report. that's exactly two weeks ago, wasn't it? >> yes, sir. >> two weeks ago. the 17th was the fed made -- >> the statement. >> yes. passed on rates, went down for a while. >> it's been a run, man. >> down for a while -- >> i have a chart on it. i have a chart. bad was bad and bad became good. >> it's the top of the show. >> do you have a chart? i have one. >> that's what i'm saying. >> check the chart out. i'll show you how bad was bad. >> the 16th is today -- >> did you do the fed against the s&p? >> no, but it went down on the fed's inaction, and then it went up -- >> for those, like, in the shower at the time, we're going to give you -- >> it's possible.

>> huh? >> yeah. >> you don't have a tv in the shower? >> do you have a tv in the shower? >> i don't. some places do. >> yeah, they do. >> that's weird. >> it's. an extraordinary move. here we go, guys -- do you want to talk about the shower? >> no, go ahead. >> listen, this is a lesson folks. what you have to listen to, pay attention to all the fed speak and data, but, i want to show you, here's what happened the next why it happened. here's the probabilities, guys. this chart, the yellow is just two weeks ago, and that was the probability of the fed rate hike by a month, and the blue is yesterday. look what happened to the 50% mark. two weeks ago, 52% gone, happened in january. that's pushed ahead three months. folks, here's the number. there have been 41 speeches since the last fed meeting. i say this so my bosses understand how hard we work here, and full 30 days of data, some mattered more than other.

here's the one, two, three step for the fed here. okay, one is the statement. then you have the december fed fund futures. you have a step down. two, it's the jobs report. that's another step down. and them, okay, so there's 41 speeches, which ones matter? there was a fed speech by chair yellen. not that one. the combination of brainard and interview, that's the latest leg downright there. >> so, also, yesterday, the "wall street journal" report saying they will not raise this year. >> exactly. that comes from that interview, exactly. talking about what joe was talking about, bad was bad, then bad was good. here's the futures chart going downward, and the market came boun can p, and then right at the jobs report, joe, reverses course. here's -- the reason i came on here was to ask you, how do you know e make that change? that all the sudden i am buying bad news and not selling it. >> you're not supposed to know

that. we said earlier for all the credit the markets get for being a discounting mechanism that's always right, the market can't interpret things on a daily basis, almost to the same extent we don't know how. initially, there's disappointment there was no hike and embrace of the notion. >> all in the same week. >> a three or four day period. >> i asked about esther george, the kansas city, had her on. >> because you throw it out, doesn't mean i knee to know. >> you know that loretta and esther have old-time name. >> never thought of that. esther, loretta. >> both on the hawkish side. >> esther is definitely. >> people have not name kids that in a while, right? loretta -- >> the old names are coming back. >> they always do. >> i think they are too. haven't we had esther george on? >> from jackson hole. >> yeah. >> we have not had her on -- could publicly invite her now. >> we should.

>> with loretta. >> at the same time? el see if i it wake it happen. that would be cool. >> one was the one i wanted to make fed chaeirman? was that esther? >> i think it was esther, like, basically, it was the nike version of fed policy, just do it. >> just do it. >> a nike thing. she was -- she makes sense. look, there's two arguments out there. >> nip still saying that, just do it? >> well, there's app idea that we know -- which is we no longer require mrmg rates, right? >> right. d the response to that is, you know what? we've had the really low rate, and look what you got with the economy? 2% growth. you still have huge numbers of people who are partially employed or things like that, so imagine what it would have been without it. that's the argument. there are guys out there trying to write pieces, david kelly

wrote one for jpmorgan how we are better off with raised rates. i'm not personally convinced by it. i'd like to be convinced, but remember our all america survey, 42% of the survey says it hurts the u.s. economy. they have convincing to do. >> we talked today what does the target like more, 2% gdp or 4%? that harkens back to the stock prices, main street would love full employment. full employment, even 4% or 3.5%, but wall street worries about that. >> right. >> that's sort of a cynical, you know, that just -- that -- that's bad. what's good for the guy on the street is not good for the fat cats opens stocks. >> i want to get back to how do you know when bad is bad and good a good? i personally have always stuck to the idea that good is good. >> yeah. >> no matter what happens -- >> we all think that.

>> growth is good, jobs are good, market is fickle around the concept, but over time, an investment idea says if there's more people employed and more growth, and larry kudlow has the idea that this notion that growth does not cause inflation. what's growth? growth is building factoriefact. that's not inflationary. >> right. we had paulson said the slow growth bull market will end when the fast growth comes. >> well, that -- i mean, the fed -- >> doing well for the past six years. >> well, the -- >> 2% on yearly basis. >> fed rate hikes end expansion. >> that's right. coming at full employment. >> full employment. >> steve, i have wine for you. >> that's nice. >> do you want some? >> here. >> i don't know good wines, but i want to know. >> i didn't notice -- well, you know, can you tell the difference between a $50 bottle and $1,000?

>> i know a good beer and scotch, but i'm not a wine guy. >> i drank from it, but go ahead. >> okay. >> when we come back this morning, harvard history professor neil ferguson is joining us to talk middle east strategy and more -- >> wow. >> you like it? >> woah. >> really smooth, yeah? >> i could have this for breakfast. >> you are. >> you are. keep sidewalking, tweet us stories that have you buzzing. use #keepsquawking with it. we'll be right back. actions. they speak louder. we like that. not just because we're doers. because we're changing. big things. small things. spur of the moment things.

changes you'll notice. wherever you are in the world. sheraton. 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.

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zplmplgts co coming up, putin the strong force in the middle east? can obama counter -- >> we love this video. >> what's the strategy and ultimate goal? find out next with harvard professor and his story, neil ferguson. take a look at u.s. equity futures. back in a moment.

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welcome back to "squawk box" this morning, here's what's making headlines at this hour. our first economic report of the morning is about now 45 minutes away. the government's out with industrial production for september with economists

expecting it to climb .2%. selling assets in north dakota's region, reuters reports a private equity firm buys the assets for $500 million as recently as last year, analysts thought the assets would fetch $3 billion. that says a lot about what's going on in the energy complex. ups increased rates for ground service by app average of 4.9%, and by 5.2% for gps air service. that increase taking effect on october 26th. >> that should bother you. oil prices down, raising rates? >> it does. the reason they are doing it, though, because they are now delivering to more residential areas because more and more people are doing this. it going to come back to amazon prime raising rates. >> right. >> to call it a fuel surcharge bothers me, just say you're delivering further away, it's difficult to get to, that's one

thing. >> you like picking on the airlines. >> not a quid pro quo? >> now ups does it, raising rates, you didn't care about starbucks because of coffee prices going down because you worship at their alter. >> no, i drink it here for free. >> the airlines got to go down. >> the coffee world is no monopoly. i argue with shipping -- >> what's that got to do with anything? >> isn't that a cartel at that point? >> usbs, and increasingly now am sk amson and others are pricing. >> profitability, you can't go tit for tat if prices go down. you lower an airline ticket no more than you can do with ups or coffee. a lot of things go into it. >> i agree, a lot of things go into. >> thank you. a united states is halting the withdrawal of troops from afghanistan to keep thousands of military personnel in the

country through the end of president obama's time in office. meaning that the 14-year war continues. neil ferg suson is the author o the new book "kissinger, 1923-1968, the idealist," thank you for being here today. >> good morning to you. >> watching what happens in afghanistan, realizing it's been 14 years, not ening soon, that brings up the five points from kissinger in terms of trying to decide where america should be involved. he points out he thinks america should not be involved, not the policeman for the world, and if you are involved, be there to support the local troops. we did not listen to the lessons before we got into this. >> yeah. this comment of his goes all the way back to the time of the vietnam war, and as a his tor yap, i have a sinking feeling that the united states just refuses to learn from its own history. back at the teem that the president was pulling troops out of iraq, the beginning of the presidency, some of us said this

was a bad idea, and that there was a high likelihood that iraq would sink back into civil war after the success of the surge, and that's just what happened. and at the same time, some of us warned if you did absolutely nothing about what's going on in syria, it might well escalate sb a bigger civil war, and that happened. i think at least now in the case of afghanistan, the president shows signs of listening to some of those who have advised him to stick in there and not pull everybody out, but the reality is that the numbers of troops involved in the case of afghanistan are small, and as usual, the president is saying it's just for maybe a year at most, and so there's a time limited thing. if you're fighting -- d . >> this is different -- >> that's what you want to hear. this is back to the 1960s, fighting guerrilla or or insurgency, you want the u.s. to

say we're out in 18 months saying time is on your side. >> in this case is different. this is the first time that the president has not given a timeline for it, in fact, he said this hay very well fall in the hands of the -- whoever the successor is to make the decisions, the next president -- >> that is in a short period of time time from now, but i get the point. we have to take a step back here and ask what exactly is it that president obama's national security strategy is. at first, when he came to power, most of us just assumed it was the opposite of what george w. bush has dope. we've seen recently a bit more subtlety than that summed up by the con cement of strategic patients. i wonder what that boils down to, though. you listen to what the president said in recent years about the middle east, for example, he seems to be hoping that some kind of e quill lib yum and balance is achieved between

sunni and shoite forces is desirable, and my fear for some time that does not lead to balance but an explosion. look at the data, and this is a data program, right, so look at the data on armed conflict under obama's presidency. fatalities from armed conflict are up by a factor of 4 worldwide, nearly all of it concentrate in the muslim world, and fatalities from terrorism in the same time frame basically since the saad arab spring have begun are up a factor of 6. those watches assume that the middle east is a dangerous place. afghanistan's a dangerous place, and it will be dangerous for the longer duration, but fact of the matter is each year on president obama's watch, the situation is getting worse, and there's a real dangerous of an exponential conflict in the region from north africa to south asia.

my concern is that other states could fail. we've seen iraq begin to break up. we've seen syria more or less completely broke p up. libya is in state of anarchy. i don't agree with president pew tip, i criticize frequently, but he said something that was very convincing. is american policy basically to cause states to deteriorate? unfortunately, we don't have an answer for that. >> speaking to students in indiana universitying and a student asked from the audience, when, if this is the time we have to put boots on the ground in syria. he said, no, not yet, but he said that he could see something like that being discussed or is being discussed right now, and he went on to say it would start with support troops, something like people who are there, special forces, trying to see what's happening on the ground. if you are our special forces on the ground, putin in the same theater, what happens?

what's the potential? >> not to mention turkey, not to mention the gulf states. a great many people are getting involved in this civil war. the problem is that the united states has really left it very late. this reminds me of kissinger's most important points. if you do nothing in the face of a crisis and hope that thing will be okay, you can end up in a much bigger mess than if you act early. i think in the case of syria, the president really dragged his feet from the moment this civil war again. if you go through the timeline, 20 11, he asked assad to step aside. he says no. 2012, under great pressure to act. we can't act in case we cause a civil war. a civil war happens. 2013, redline over chemical weapons is a pink dotted line damaging to u.s. creditability. 2014, isis beheads people. we launch air strikes, and now isis controls more territory.

in 2015, he's left putin to take the initiative, the russian president now acting more or less unilaterally in tandem with assad, his ally, while we try to figure out what to do next. that's what goes wrong if you kick the can down the road. remember, more than 300,000 people died as a result of this civil war. millions of people have been displaced. europeans are just beginning to feel effects of the huge disruption, americans barely aware of it. it's a huge deal, and, by the way, it's worse before it gets better. >> i'm not sure it was your piece in the journal, but the piece, the threat that it was -- if you are surrounded by lawyers, what do lawyers do? they try to minimize risk and try to, you know, think of situations and have the most risk aversion possibling and that's what happened in terms of some of the -- that may be the define i

defining foreign policy core element of the obama administration. >> i think that's what and that was the point in the wall street journal. >> yes, that was you. >> lawyer don't make strategi s strategists, all do respect to the profession, but lawyers work on a case by case basis and are risk averse. think of the things that happen, and write long clauses to cover our asses against them happening. that's to the a good way to make the strategy. by the way, i borrowed the argument from henry kissinger making it back in the 1960s arguing if you want to do strategy, be a historian and have a sense of what's motivating the other guys and have a strategic frame work. everything is connected, not a case by case basis, that's what they got wrong. >> cover our assets, cover our -- one thing i thought about recently, so putin, his deal might be trying to bring russia

back to its prominence. i think he would really like -- kind of short, too, i don't know whether that plays into it, but that's got a lot to do with what he wants, so he does all these things, and i think he assumes there's not going to be in the repercussions from us. if we were to do something in terms of enforcing no-fly zone or challenge him, do you think he'd back down, or do you think it makes things worse? >> well, i don't think we will. i mean, this is the reality. president putin has learned that the president does not play chess. he sort of plays solitary, and the strategy is risky, but, one, the position is weak. the russian economy is in difficulty. it's not easy for russia to act militarily as we've seen in ukraine, but here putin is making a shrewd chess move with the intention of establishing russia as the power broker in the syria civil war and in the region generally. notice that up doze one of the

great achievements of the u.s. foreign policy in the early 1970s, which was essentially to kick the soviet union in peacemaking in the middle east. i think the u.s. had the position of leadership in the region right down until the obama presidency, and this president threw it away. now we see the russians playing the role they dreamt of in the previous eras. it's not going smoothly for putin, but he looks like the man with the initiative and somebody who calls the shots. >> neil, before you go, i have to ask because you spent time with kissinger, talking about the board, have you had a discussion about ferinos and understands the technical implications of the country and can comprehend -- not comprehend, but get beneath it and what to do if there was a scandal there? >> never underestimate kissinger's intell legislate.

two, it's a two volume biography, and volume one ended in 1968. i have not written volume two. watch this space. >> neil ferguson stanford university, when does that start? >> next year, looking forward to that very much. >> yeah. nice weather shift. >> nice weather shift. >> that is not my main motivation. [ laughter ] >> closer to the headquarters, though. >> thank you, neil. >> thank you very much. >> closer to pebble beach. coming up, there's a unicorn in the clouds. app direct is disrupting the way companies -- is this unicorn? yep. ♪ they are selling software, raising crazy amounts of cash. i didn't like the song very much. the unicorns, andrew. unicor unicorns. monday, a special conversation with three most powerful people

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the party's not over in silicone valley, not yet. this according to a new forbes piece saying the unicorn boom just begun, and one company that fits the mold is app direct, a software provider for samsung and staples, and they have a new

round of funding led by jp morgan driving the cloud starts valuation over the billion dollar mark. joining us right now to talk about it is the cofounder and ceo director of app direct, how are you? >> good morning. >> what is app direct for those uninitiated yet. >> app direct makes is easy for businesses of all sizes to find, buy, and manage the software or cloud services that they need to make their business more productive. >> so -- just to give an example, for example, you can go on and if you want to use microsoft office 365, you can do that through you? >> exactly. so what we found is that businesses want to buy software from a local trusted provider that could be the i.t. pro or getting it through your telecom company. if you're a customer of at&t, go to at&t, get your internet, your phone, and you can also get your

e-mail like microsoft 365 all from one provider on one bill, and app direct enables that at the back end. >> you are effectively the app store, like the apple store, but for everybody else, is that fair? >> exactly. that's a fair way to put it. we're the app network that helps sell cloud services and makes it easy for businesses to get services they need. >> what's the economic model? who pays who? >> sure. so if you're a business, you subscribe to software. one of the benefits of cloud is that rather than paying a large upfront fee, as a business, you go, you pay a low monthly fee that's a free user fee to get started and to grow. you as a business pay the telecom provider or it pro at a retailer, and you get services on one bill. >> you raised a lot of money this year, talking about unic n unicor unicorns, and for you, was there a rush to get in under this -- what seems like a closing window

in where valuations stand right now? >> well, i mean, we saw this as validation of the market m moment momentum, and following on investors led by peter and the investment of facebook and pay pal, that validates the momentum, and we thought it a good time to both address cash and to have cash to strait our growth and also really validate our position in the market. >> we got to run, money off the table or other investments in the business? >> all in the business. we're really, you know, strong supporters of the business and growing in the future. >> dan, good luck with it, we'll watch it, and all these unicorns going public or not but we'll see. dap, thanks again, appreciate it. when we come back this morning, jim cramer from the new york stock exchange, we'll talk to him about his interview with the ceo, stick around. we'll be right back.

let's get down to the new york stock exchange. jim cramer joins us. we have been talking about your interview last night. what was your gutt feeling and also what did your brain tell

you about -- after that was over? where were you? >> i think it's important, first of all, it's a private company so it's tougher to get information. i had felt that elizabeth quinn did well and tried to ask all the tough questions, but at the same time after my interview the journal came out with subsequent information about how only one of the nano tenured tests is being done because remember elizabeth said on "mad money" they're not doing anything that's fda approved. if the journal is right, there's only one test being done. more has to be found out. i -- when i read the journal, the journal did excellent reporting here. i did feel that perhaps theranos may not be doing nearly as much as i felt they might be doing after i did the interview. i just think the journal's new information is very important and it raises eyebrows, frankly.

>> does a board that's, you know, chock full of iconic figures that are all sort of -- you know, they made their reputation 30, 40, 50 years ago, is that now suddenly something that should cause people to sit up and take notice because they're asleep at the switch or something? >> i don't know. i mean, one of the reasons -- i mean, i think the people behind the company, the venture capitalists are really first rate. i think that the benefit of the doubt is to go to theranos because they are trying to revolutionize medicine, get it to take control and people take tests more. all of those things are good. the thrust of the business is good. eric topel talks about how it's a good idea for a patient to take control and theranos is part of it. only the herpes test has been done head to head. it was mentioned on the show talked about how there had been lots of i felt head-to-head tests, lots of them. this is very important. it's a very tough situation.

very tough. >> do you trust her? straight up, do you trust her? >> do i trust her? i believe that her intent is good and i need to know more information. i -- the journal is -- i've always loved "the journal" and always respected it and they're very well vetted. she acquitted herself well. the new information that came out, i have to hear the rebuttal. >> that's the same thing i thought, jim. when she was talking about the 889 patients who had gone head to head. it was a little unclear. i didn't think it was unclear until i read "the journal" this morning. >> if "the journal" is right, it's just herpes, i need to call walgreen. i need to hear from walgreens and cleveland clinic. "the journal" followed up and said many places have stopped using it. wow, there's a lot of questions here. and i think that "the journal" story post my interview raises questions that need to be answered. >> thanks, cramer. >> thank you, sir. we'll see you in just a couple

minutes. coming up an early christmas present for santa claus. why the north pole is cheering this morning. we've got some deals after the break. 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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there was a bottle of chateau margot. we tried a $1,000 bottle of chateau margot. ivan tweeted that he would definitely buy a $30,000 bottle of wine as long as he could immediately flip it for more money. some of you, some of us probably, too, weren't ready to make a big cork popping investment. one squawk fan said he would only spend $15. i personally can't taste the difference between a $50,000 bottle of wine or a 50 dsz bottle of win. >> this was nice and smooth. >> i'm sure you could find $15

wine that tastes like that. also, santa claus isn't just coming to town, he's joining the city council. this man leading all write-in candidates for the north pole alaska city council. santa claus is his legal name. >> yeah. that's randy quade trying to sneak across the border again. >> that's in our ear. >> bye, everybody. >> have a great weekend, great week. make sure you join us on mondays. "squawk on the street" is next. ♪ ♪ congratulations to the mets and the david who's celebrating today. good friday morning. welcome to "squawk on the street." i'm carl with jim cramer at the new york stock exchange. october is the best month so far. closing out a busy week. macro dat i