p.m. eastern time. >> a good look into apple all day long today. twitter is going to be followed, maybe more ibm fallout and we'll see how that plays into the way the market trades as the futures going into the day look decent. >> you know where they'll talk about that? >> tonight. >> no, next. >> "squawk on the street..stree" . >> don't move. good morning, welcome to "squawk on the street," i'm david faber along with simon hobbs, sara eisen, carl quintanilla and jim cramer have -- what are they doing? preparing for that big debate. the republican presidential debate on cnbc, live from the university of colorado boulder, coverage begins at 5:00 p.m. eastern. we'll take you out to boulder momentarily. we're at post nine where at this time we always give you a look at futures. so let's do that and give you a

sense of where we are in the markets. in terms of futures, ten-year note yield, crude oil as well. ten-year yield around the 2% level. and wti crude is up. let's get to our road map for this morning. it begins with shares of apple. they are higher in the premar t premarket. the company beating expectations and doubling cell phone sales in china. >> walgreens quarterly results beating estimates as they agree to buy rival rite-aid. >> and twitter shares down more than 10% in early trading. user growth and forward looking guidance below expectations. >> tonight is the night, the republican presidential debate on cnbc. coverage begins at 5:00 p.m. carl quintanilla, becky quick and john harwood will be our moderators. very exciting. the first opportunity for the candidates to really entertain a

lot of the questions about the economy, about their views of the markets and all sorts of things on business. they have not been asked that many of those kinds of questions. >> how about the budget deal that is expected to pass the house today. a number of candidates voiced opposition to it. the last debate was six weeks ago. if anything, we learned this whole race sun predictable. a shift in the polls happening just this week, with dr. ben carson in the lead. it will be interesting to see how that shapes the dynamic. >> those two at center stage, also the two outsiders. as you go and you drill down, on jobs, economy, it's inevitable that you will go into areas -- into policy they had to build quite rapidly to have a full spectrum of ideas on all the things that the senators, governors and other people in the gop race have kind of lived through in terms of policy creation for many more years. on a personal level, obviously,

particularly with trump being more acute in his criticism of carson. >> of carson. you wonder whether donald trump and carly fiorina will have an edge tonight because both of them have been business leaders, they're running on their records as business leaders, creating wealth for shareholders, creating jobs -- >> then also attacked for that. >> the split that you mentioned has to do with whether, you know, some of them have had governing experience, some of them have not. i wonder when pressed on very specific issues, like the debt ceiling and like flat taxes, which some of the candidates have -- >> or abolishing medicare in the case of carson, of course which has caused friction and discussion. >> i wonder if any of them will have a view on apple. >> interesting. >> i think they will be asked about technology and this whole idea of the gig economy. >> the sharing economy. >> and, of course, china.

i'm sure mr. trump will chime in on that. >> apple reporting better than expected quarterly -- i was getting there. >> take you right there. >> apple reporting better than expected quarterly results, shares in china nearly doubled. the company sold more than 48 million iphones in the period. apple issuing conservative guidance for the current quarter. last night tim cook expressed optimism about iphone growth. >> we believe that iphone will grow in q1. we base that on what we're seeing from a switcher point of view. we recorded the highest rate on record for android switchers last quarter. >> for more reaction on apple's earnings, let's bring in the number one apple analyst, tony

sakanagi. tony, you were on the call last night and had a bit of a heated extraining wichange with tim co particularly about the way the business is moving forward. let's take a listen to that, if we may. >> we don't guide beyond december, as you know, tony. >> in terms of your first comment, you didn't ask me to comment on that just to be clear, i would have -- our forecasting doesn't work like you articulated it. i recognize people can have their own models and so forth, but just to make it clear, i'm not agreeing with your point. >> in layman's terms what was the substance of that discussion? >> we were really debating whether apple would be comfortable talking about iphone growth beyond the december quarter. the context is that there are a number of tailwinds that should

make it easier for apple to grow the iphone in the december quarter. but beyond that, those tailwinds go away. i think there's a fear in the investment community that december will be fine. iphone units will grow. but thereafter they won't. and, you know, apple typically doesn't provide guidance for more than one quarter. because this is such a central investor concern, i thought it would be appropriate to try and push tim to see if we might get more direction beyond december, but we were not able to. >> if you listened to the analysis, if you listened to what people are saying, it sounds almost binary, it's win or lose on whether they're actually able to grow in that subsequent quarter. what are you telling people about that? >> i do think it's uncertain, simon. i agree with tim, that the metrics that apple put forth about new iphone users, our analysis suggests that more than half of the buyers of iphone in

the just completed quarter were first-time iphone buyers. that's a really notable statistic. now -- i think that bodes well for the future. it is certainly possible that apple gained more than their fair share last year, that sets up difficult comparisons, maybe they don't grow this year. but the fact that half or more of the people who bought the phone this quarter were is posi. >> what is the recommendation on the stock, tony? >> the stock is trading -- so the recommendation is for investors to own the stock. the thinking is that the stock is discounting 5% growth forever. it trades at a free cash flow multiple of about seven times. we think apple does have the opportunity to continue to gain share in iphone. iphone is the principal product, which means they should continue to grow. >> tony, we'll leave it there.

thank you for the analysis. did want to update viewers on something at the bottom of the screen there. carl icahn, i wouldn't say quiet, he's never quiet, but we have not seen him engage on an activist situation in a bit of time. apparently writing a letter this is on twitter, to the company aig. asking it to separate into three independent companies. want to get a look at that letter to get some more information on what it is he's recommending. i'm now handed said letter. pursue tax free separations of life and mortgage insurance subsidiaries to create three independent public companies, each he said would be small enough to avert the financial institution. that designation is key for so so many companies, one reason why ge left the financial services businesses, or is in the process of doing so.

icahn believes there's no more need for procrastination, and the time to act is now. aig is slow to follow others in breaking up life and casualty into separate companies. this is actually a quote from john paulsen in the letter from carl icahn. we're seeing mr. icahn active. i want to see what size of the stake is. aig has had nothing short of a tumultuous history, but is on at right side of that now, having been bailed out, the largest recipient of government funds other than fannie and freddie. that said, under the leadership

it righted itself, divested itself of many assets, but reinvented itself, now becoming the premiere activist. >> reinvention in a time of new regulation. that's the core. here's a quote, we believe you must acknowledge that the enhanced regulation is intended to be a tax on size designed to approximate the cost that large companies impose on the financial system. in a way, this is a recognition it's going to be a long haul. >> if you take that tact, where do you end up? if you start runs through financial services with that argument. he said it took them five years to get to where they are now, which is way too long. >> you shrink, i guess. >> not everyone can shrink. >> we'll see what aig -- >> i'll have more on this as we go along in terms of aig and its what its response may be as well to this letter from mr. icahn.

trying to figure out what his position in the company is talking about an $80 billion market value for aig. even with his significant funds available, i'm curious to see the size he has gone with. apple is his largest dollar possessio positi position. all right. a busy morning, on a big day for us at cnbc. let's head out to the site of tonight's republican presidential debate. eamon javers is at the coors event center at university of colorado, boulder. can you give us a sense -- we were talking about the economy, taxes, jobs. can you give us a sense of what kind of questions will be asked tonight? >> i'm exactly the right guy to ask about questions, because i have no idea. those are being closely held. i don't have the questions. today is a fed decision day, we'll expect -- the market expects the fed to hold rates

steady today. you wonder what these presidential candidates think about that, where they think the fed ought to head going forward, when they think they should unwind the huge positions the fed has gotten itself into the past several years. we will be talking about the economy, talking about jobs, talking about taxes, all of those things are going to come up. i'll give you a little hint of some of the behind the scenes gamesmanship we've seen over the past 24 hours. last night there was a bit of a tiff here between some candidates and the republican national committee. the christie and paul campaigns were not happy with the size of the green room their campaigns were allocated by the rnc. they tweeted out some pictures of the green rooms they got here. one had a toilet right in the middle of it. they complained that marco rubio's green room had a movie theater. donald trump's had some couches, flat screen tvs. some of the lower polling candidates acutely aware of

their position. the rnc says they fixed this problem. after this hit, i will go down to the pabasement and try to fi those green rooms. >> such divas who do they think they are? rock stars? beyonce? >> there's all this gamesmanship, particularly between the candidates themselves. all the candidates physically within the same proximity, the question is how much interaction do they have with each other today, going through the day. they will be getting walk-throughs, doing rehearsals, in the green rooms. will they try to get into each other's faces before the debate back stage. that's a moment we'll look for. so much of this is psychological. your mental state of mind. we saw jeb bush yesterday going out for a hike with military veterans, clearing his head, getting ready. absorbing the air in colorado. getting himself mentally in a place to get on that stage for what might be a make or break moment for his campaign. >> a lot of people want to see

his demeanor, how angry governor bush is. thank you, eamon. we'll be following this all day. coverage begins 5:00 p.m. on cnbc. david? >> thanks, sara. now want to get to some breaking news for you exclusive to cnbc and to me. hyatt hotels is in advance negotiations to acquire starwood hotels and resorts in a cash and stock transaction. the talks between the two companies have been ongoing for weeks and a deal could be announced within the next week or two. the transaction under consideration would have the smaller hyatt buying starwood and having its management take control over what would be a sprawling owner of upscale lodging properties the world over. hyatt owns the park hyatt, hyatt reregency, starwood brands include w, sheraton, which contributes as much as 50% of its profits and westin.

yesterday shares of starwood soared on reports that three chinese companies were considering making a bid for starwood. people close to the situation tell me that while there has been some interest from the chinese, none of the companies have made an offer. and it remains unclear whether any will. the price being contemplated by hyatt in the negotiations could not be determined, though it will be a mix of cash and stock. hyatt is controlled and did go public six years ago. any deal would end up with starwood share holders ending a decent amount of the company. since announcing the plan to explore strategic alternatives in late april, starwood held talks with a variety of suitors. the most serious of talks were with the intercontinental group, though they did not advance as far as the current talks with hyatt. i should add hyatt and starwood have declined to comment.

simon, you can see the stock is reacting positively here. want to caution people, don't know the price. though there is an expectation it would be above current price, even with that move up yesterday on the journal's story. given your experience and knowing these brands well, i would love your take on the terms of that combination of bringing them altogether. >> you have four big brands around the world and these are the two weakest getting together. hyatt -- to put hyatt in the game is interesting. controlled by the billionaire pritsker family. they would argue they don't actually operate the business for a quarterly reaction. they are long-term players, and they have underperformed on quarter to quarter basis until the co got them to a bet pore signals relative to the market. if we could show a year-long

chart of starwood and hyatt that would be helpful. the interesting thing to note here, maybe that's why the pritzker's are moving, the stock cycle on lodging has turned. until recent reports, starwood for the year was down about 30%. so, if the hyatts or the pritzker are going to move now, the atmosphere in the industry is slightly pessimistic. today you have big companies reporting more or less in line, that's good enough for analysts. there's a concern they won't be able to raise revenue for available room to the extent they have done next year. they're moving at the right time. >> important to keep an eye on shares of hyatt. the consideration that is being negotiated is cash and stock. hyatt is far smaller in market cap than starwood. again, a decent amount of cash, but they will be using stock and you would expect therefore that

shareholders of starwood would own a significant amount of the combined company. hence you want to keep an eye on hyatt shares, market check taking place here. >> just to keep everybody on board. the co of starwood left in the spring, and explicitly they've been trying to sell the group in whole of in part for six months. >> they announced strategic alternatives in late april. >> it's interesting that yesterday somebody put that story in the journal that there were three bidders coming from china. >> you don't think there's going to be a bidding war between the chinese and hyatt? >> obviously that's why they put it in the paper. >> they could announce a deal with hyatt as soon as the next week or two, sometimes a public disclosure of these conversations can have an actual impact on how the deals go. we'll see. >> they'll have to speed up the chinese. the criticism in the article was they may be moving too slowly. >> i want to know what happens to my starwood points. >> i'm sure they'll be fine. simon will let you know.

>> the federal reserve is set to wrap up its two-day policy meeting in just a few hours from now with its key interest rate decision and statement out at 2:00 p.m. let's get more from steve liesman who is in washington. what you are watching for today? >> this is a tricky meeting for fed chair janet yellen. her communication policy increasingly criticized on wall street as we showed you yesterday in the fed survey. no rate hike expected but the focus on the guidance in the statement. if it suggests the possibility of a hike in december. steven stanley points out i still believe that the majority of the committee very much wants go in december, if the data allow it and they can gather the nerve to actually pull the trigger. but keeping that flexibility is going to be tough. much of the news in the last statement, which was the good news, it's turned softer, not bad news, but definitely softer. things like jobs and household

spending have taken a turn downward. and the big issue what does the fed do with the global line in the statement where it said, recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. six weeks later we don't know how the forces will play out, though the reaction of u.s. consumers and businesses to the even events of late summer have been notably muted. the fed wants the flexibility to hike this year if the data goes their way, but it's hard pressed to do so if it accurately describes to the market the state of the economy. and there will be a statement, no press conference. the fed has publicly announced it has procedures in place to hold a press conference if it decides to hike rate at a nonpress conference meeting. sara?

>> my only question would be, as it relates to the u.s. economy, it's true that the case for liftoff, for raising interest rates has weakened since the summer when they were talking about raising interest rates by the end of the year. >> that's true. there is a notion which we've been talking about of whether or not the fed should remove emergency funding levels. in other words, an idea which jim bullard has talked about from the fed and the private sector, look, we have 5% unemployment, we have 2% growth. not terrific but it's not zero. but we have interest rates and a fed balance sheet that is at emergency levels or financial crisis levels. could the fed engineer, sell to the market this idea, hey, we're not hiking rates. all we're doing is removing emergency funding or emergency levels. that idea is being debated inside the fed. >> it is a tough call, steve. thank you very much. we'll see you a little bit later. steve liesman in washington. >> it's a rough morning for twitter following its earnings

report last night. here what co jack dorsey had to say. >> and we're expecting a slightly higher open. it's fed day on cnbc and the gop presidential debate. more "squawk on the street" straight ahead. big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift?

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you're watching cnbc's "squawk on the street" live from the financial capital of the world where the opening bell at the new york stock exchange is about to ring in just about six minutes time. let's touch on twitter briefly. twitter shares down sharply in the after hours action despite third quarter revenues, citing active user growth and forward guidance came in below expectations. here's what jack dorsey had to say on last night's conference call via periscope. >> our focus is on three things. a more disciplined execution, simplifying services, and better communicating our value. we've made meaningful progress across all three. without wanting to get too technical they broke down what was happening within the business to show the off revenue items that kind of indicated

that the core growth wasn't what it otherwise might have been, but what's interesting is so many people are looking through this to what dorsey will do with the business, the change, is that will come in 2016. still saying it's a good business. t >> two major disappoints, user growth, only growth of 4 million from the quarter before. and then the guidance came in very light. 741 million was expected. they projected revenues of 695 million to 710 million. this is a wait and see story. dorsey on the call, i read the transcript, didn't get into specifics on new products. i think analysts wanted to hear how moments is doing, launched a few weeks ago, aimed at enticing non-twitter users. he didn't suggest much in terms of how much progress they're making. but they're selling advertising on moments. adam bain --

>> could have been ceo. >> could have been. he was talking about they have been making money from non-logged in twitter users. that's something the former ceo talked about. >> there was nothing for the analysts to grab hold of and say this is the break through. it's worth pointing out, jack dorsey who has a stake of 200 million in twitter worth a bit less today, said he will give a third of that into the employee pool so that they can retain talent. presumably, when they were negotiating with the board for him to get the job and be co of square, which is coming to market, this was part of the negotiation with the board. i don't think any of this could have been a surprise internally. it's a much longer game they're laying out here. >> dorsey kept making the point, we'll make twitter easier to we'll make twitter easier to understand. they did launch their first tv commercial in the world series last night. did you see it? >> i did not see it, even though

i watched every minute of that. when i got to bed, i was like this. >> how did you feel about the outage. >> fascinating, i have to say. >> two outages, weren't there? >> a google fiber outage in kansas city, and fox had its own outage. twitter, that was great, reading the tweets. clever people out there. >> venting. >> yes. talking about twitter, the use of twitter during the game was interesting, whether they can capitalize on those things is the question. >> down double digits still in the premarket. another mover today should be mondolese, beating on the top and bottom line. the big brand behind oreos and ritz crackers. poe sure 40% of revenue. that's a struggle now. 80% of its business comes from overseas, dealing with a strong dollar. it continues to show margin improvement in the form of cost

cut cuts. >> that's a good move, 30% up year to date. >> how about that? >> irene is joining you later? >> irene will be joining us to talk about the quarter to talk about activist. nelson peltz on her board. bill ackman with a 5$5.5 millio position in the stock. >> fascinating. one has to believe that ackman is keeping her occupied. again, having nelson peltz on your board, one would expect, is enough to be doing the bidding of those shareholders who want to see more done on the margin front. it's interesting to see an activist follow another activist in. the size of that position, the largest out there in terms of an activist position. >> at a time when the stock was trading at a record high and margin improvement was there. you wonder what he's pushing her to do. we'll ask her to talk about some growth initiatives she has planned to turn volume around and get it growing into next

year. >> well there it is you hear the applause building, what will be that opening bell in seconds from now. see how i knew that? amazing. look at that. there it is. we will see if we end up with a bit more green on that board. perhaps a mixed open, if you will. slightly -- there we go, a bit more green than red. here at the big board that was nbc's daytime drama "days of our lives" celebrating 50 years. >> wow. >> 50 years on television. >> david. >> i'm not far. >> not far? >> not far. come on, the first episode aired after you were born -- before you were born. >> do you remember it? >> yes. >> over at the nasdaq, cool corporation, wholesale distributor of swimming pool equipment. >> starwood hotels a gainer today on your reports that hyatt is close to doing a deal.

the stock opened up just over 8%. trying to look at where hyatt is. >> hyatt up 5%. that's important because there's no shortage of investors who will talk about the potential risks of an integration of that size with all of those brands. there's some who believe the sheraton brand itself needs to be improved. >> let me point out something. sheraton, i don't know where they are recently, but they were not winning hotels in asia when they should have been. the data is very, very poor coming out. which is w they weren't booking hotels. they didn't have the growth. they didn't have the pipeline. you have these two guys, hilton and marriott right at the top, with these great pipelines, it's similar to the gop debates. two leaders and the rest. >> what a portfolio of upscale brands. the largest if you define it

that way in the world f this combination comes to bear. >> the criticism also has been they had not gone down market in this country to the holiday inn style brands, and slightly below that which is why the deal with intercontinental was on the cards. intercontinental in the uk would have been a tax inversion, we thought. >> as i reported, simon, there were talks that took place. they were relatively serious in nature with intercontinental but did not get as far as this potential deal. cash and stock, i don't have a specific on price. hyatt buying starwood, despite the fact that hyatt is far smaller than starwood. nonetheless, cash and stock deal to acquire the company. it's management would take over. a deal could be as soon as a week or two away. >> starwood has its conference call at 1:00 this afternoon.

is the c.o. going to say i can't talk about rumors in the market. why don't you join the call? >> is it going on now? >> 1:00 this afternoon. >> the stock was up sharply yesterday on the "wall street journal" story about three potential companies in china that may want to make a bid, as i reported there have been no bids made by chinese companies. there's been some interest expressed, but the story from "the journal" yesterday seemed to indicate it would be the government that decided should any of them make a bid which one it would be. >> just, if we have time to talk about it, for the chinese insurers that are increasingly allowed to invest around the world, as you have seen with the waldorf, hotel properties are a great bet. they're good dividend pairs, inflation proof, and there's one market that's the stand outgrower around the world even know, and that's chinese people

traveling abroad. if you can embed a chinese brand, potentially around the world, a lodging brand to carry those people as they move around, that's a good thing. >> we'll look forward to that call where they will take more interesting questions. >> see if they answer them. by the way, both companies declining to comment. >> aig this morning, another story that hit us. this in the realm of activism. carl icahn taking an unspecified position in the company, putting a letter out in which he wants the company to pursue tax separations of its life and mortgage sub sid wasidiaries to three independent companies to avoid the designation of being a systemically important financial institution, which he claims at least would free up capital. i did have an opportunity to

speak to speak to people close to aig. aig put a statement out. aig says we maintain an open dialogue with shareholders, welcome their feedback. we have taken important significant steps to reposition aig by both simply feeing and de-risking company and realizing attractive valuations from non-core asset sales. they believe at aig it's not this it's about maintaining the ratings they have in the insurance market that will force them to keep capital. so that getting rid of that d designation would not free up cal tall and breaking up the company would not create company but create the need for more capital at the company. they point outgoing after highly

regulated businesses as activists does not often end in success. consider john paulsen going after hartford group. he did not get what he was after there in terms of potential split. the company talking about being organized around customers and their needs, so the idea of splitting apart these businesses is not one that they certainly would embrace. by the way, the company has shrunk. they returned about 13 billion in capital to shareholders since 2013 and they have divested assets of over $90 billion. sold nearly 30 businesses in the midst of the transformation that's taken place since they were a ward of the state, if you will. also look at the opening trades of apple. the best performer in the dow jones industrial average. helping propel the entire technology group. it is opening with a gain after reporting earnings last night that beat expectations or at least match expectations with

the 48 million iphones sold during the quarter. some saying the guidance was conservative, but apple posted 99% revenue growth in china, a place that is key for apple in terms of growing further, gaining market share, and a lot of concern lately about the slowdown in china's economy and what that might mean for apple. >> couple others i wanted to mention. one is northrop grumman which last night was awarded by the department of defense this new contract for long-range bombers for the u.s. air force. there's some discussion about what the price tag might be. initially it looks like $20 billion it could rise to 80 billion or $100 billion notwithstanding legal challenges from those that would have got the contract, namely boeing and lockheed martin. on the down side, akamai has opened in negative territory. it has come through with some soft results partly because of the dollar and internet traffic.

>> another one to watch is r.a.d., the ticker for rite-aid after it was reported yesterday during the session, it was reported by the wall street journal that there would be a deal, walgreens buying rite-aid. rite-aid surged, went up 40%. after the deal was announced, rite-aid shares went down about 8% or 9%. they're down 8% now. i wonder if there's some concern here that won't go through the antitrust. >> antitrust will be something that they will have to deal with. we'll see given their presence in various markets. also the fact simply that there was some hope that perhaps they would get a premium or their 52 week high on the stock, $9 a bit below that. despite being an enormous premium to where the stock was trading it had come off significantly from the highs. part of it was the speculation before we got the price which,

again, is $9 a share in cash from walgreens, as we know, that's been a company that has grown significantly through acquisition, aggressive under the leadership of the man who built boots, which was then sold to walgreens. he owns a lot of the combined company or a good amount. walgreens has the presence of activists taking a significant position, jana. >> clearly investors approve of the takeover. when we talk about antitrust, we are talking about walgreens and rite-aid, number two and three in drug stores. cvs the giant. cvs stock was up yesterday as well. the whole sector was up. it bought omni care. >> so they're going consolidate pharmaceutical companies so they will have greater market power to presumably push drug prices down which at the moment is a

hot topic. >> walgreens has 16%, cvs 24%. >> it's not all been as often can be the case with these deals very positive. seeing some notes bringing up some questions in terms of the strategy what it means, whether it's really about strategy or simply about financial not strategic imperatives that they're taking on here with this deal. to your point, ftc will be important. we'll see how that goes. >> the only other group to point out is energy, which is the second best performing group in the s&p 500. it was at the bottom yesterday. oil rebounding. anything can change with the oil bond dollar trades in the fed statement. >> let's get to bob pisani on the floor who has more on what's moving this morning. >> good morning, happy wednesday. important thing about today is we're seeing reversal of trends. the major indices right now, i'm

glad to see this. recently transports and the small caps, the russell 2000 have been notably underperforming the rest of the market. the nasdaq 100 has been outperforming. at the open we saw the transports and the russell doing better. the nasdaq underperforming, reversing the trend more towards a bit of mean reversion. that's basically, i would say, now flat in the last ten minutes or so since the markets opened. we'll see how that does. bear in mind, transports and the russell have been underperforming recently. let's talk about revenue. i've been hitting on this throughout the earnings season. i want to point out something to you, who has been beating and missing on revenues. health care and tech have had some nice beats, industrials and materials have not. it's not just the strong dollar, that's my point, it's the economy and slower orders. is anyone getting better revenues? there's an exception.

defense and aerospace doing great. several companies, all the big ones, general dynamics, northrop grumman, lockheed, all beat on top line. general dynamics beat and raised the 2015 guidance. northrop grumman had a strong beat on the top and bottom line. we are at historic highs, northrop grumman, ratheon and lockheed martin. there's a deal shaping up to avoid the government shut down. this is more money for defense in these bills, that's one reason all the defense stocks have been moving up aggressively. i want to go back to revenues a good example of the inability to get revenues up is hershey. they probably get 90% of their sales in the united states. they were up 2%, flat excluding currency. the comments from the company, north american sales below expectations. they say the consumer is making fewer trips to the stores and in-store merchandising may be

declining. volumes were down in china. they do have exposure there. they raised some prices bus had notable volume drops over there. hershey's down about 9% on the year. finally, fomc announcement today, only eight of them in the year, as i noted many times this is the prefed announcement drift since 1994, the s&p is up an average 0.49% in the 24 hours before that, and this accounts, according to the federal reserve's own date tax these eight days account for roughly 80% of the returns in the stock market since then. that got attention in the two years since it's happened. flat in the last 24 hours. we'll see if that holds true again today. >> thank you very much. let's go to bertha coombs. >> we have health care a bit of a drag here, but technology is higher with apple in particular. really that's the one thing that's the positive influence here on the nasdaq 100 after its

earnings, getting an upgrade to overweight from pacific crest that is boosting the chip sector. that's one of the strongest sectors where we see apple suppliers moving higher. walgreens, you know the story there, they beat on the earnings. they are forecasting lower earnings because they are going to suspend buybacks in order to fund the deal for rite-aid. color from the call. they are not really outlining how many stores they expect they'll have to divest in order to secure ftc approval for the deal. they were also asked, because it was talked about transforming, being a bigger health care player whether they will take a page from cvs and not sell tobacco, they said they're not ready to announce on that anthem, though it beat and its guidance is strong, it says it is still trying to work out the individual market. back to you.

>> bertha coombs, thank you very much. coming up on "squawk on the street," back to boulder, colorado as we count you down to tonight's republican presidential debate. plus former senator kay bailey hutchison says she is supporting jeb bush and it could be make or break time for the florida governor in tonight's debate. ♪ today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant.

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. yes, we are counting down to this evening's republican presidential debate. coverage starts at 5:00 eastern on cnbc. rick santelli is at the debate site. he will be asking the candidates questions tonight. you get the undercard panel first, then at 8:00 eastern, the top ten candidates. rick, you're always full of energy and ideas, questions. how do you narrow it do? >> so many good questions, so little time. look at this setup. cnbc and the staff have done a great job on logistics. carl, becky, john, harwood will come up with the probing

questions. i will have a bit of a chance to dig down, see if we can get the candidates to give us some good answers to some great cnbc economic questions. simon, the energy is running high here even though temperatures are running low. the room is a bit cool, but every minute we get closer to the debate thing also really heat up quite a bit. >> it won't be cool later. you were credited five, six years ago by the journal of being a founder figure within the tea party movement. i haven't talked to you recently about how you feel about that. with that -- >> how you feel, simon. >> very proud, i hope. how you would approach that, different from everybody else? when it comes to jobs and the economy, what will you focus more on, do you think? >> i think it's all about jobs, jobs, jobs, it's not necessarily the number of jobs. it's the callity of jobs. it's the notion you can have a

job and still not have the wages commensurate with trying to lead a good life. take a vacation once in a while, buy a car. i think that we get so focused on every first friday of the month, just looking at numbers, though the last two numbers have been paltry, yes, there's been job creation. you know as i know, this audience will know, the candidates know, the average guy on the street, he's not sure if we came out of the post-crisis recession. >> i'm wondering, rick, if you think there's going to be -- which has a better chance of stirring up a good debate? the republicans on that stage criticizing the white house handling of the economy or each other's plans for the economy? >> i know criticism is part of the entire process, sometimes a lot of golden nuggets come from those heated discussions. i can tell you, doesn't matter if it's democrat, independent, socialist democrat or a

republican, to me, all politicians have a lot of things they need to answer to. they have a whole lot of needs in the future that have not been addressed in the past. at the end of the day, there's so much that needs to be done, it's not about party anymore, it's about policy. it's about a lack of policy. i think the only way to promote better policy is not about criticizing the white house or coming or criticizing the tea party freedom caucus, it's about trying to be more honest. there's a lot of third rails we need to address. those third rails are not easy. one person's subsidy is another person's tax expenditure. taking a nickel away from any group is nearly impossible. it will be a huge mission. cnbc is just the right group to dig down and get the answers we need. >> rick, it's a big day for you,

big day for us, big day for the candidates, break a leg. >> thank you. >> rick santelli at the gop debate, coverage starts at 5:00 eastern. the first panel at 6:00. the ten at 8:00. >> rick santelli with a zen-like positive message ahead of the debate. up next, the gop candidates and your wallet. where the participants in tonight's debate stand on entitlement reform. "squawk on the street" will be right back. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪

social security and medicare will be among the big issues taking center stage in tonight's republican presidential debate on cnbc. where do the candidates stand on entitlement reform? sharon epperson is at the site of the debate in boulder, colorado with some answers. >> reporter: good morning. that's right. it's going to be a big issue tonight. by 2034, as we know, the social security administration has forecast that its trust fund for retirement benefits will be exhausted. while most tonight agree social security needs some serious reforms, they don't necessarily agree on how do that the latest from jeb bush, he outlined his plan for social security reform yesterday which entails encouraging more private savings by individual workers and

helping small businesses set up starter 401(k)s for employees. he proposes increasing the minimum benefit that retirees receive from social security but reducing benefits for the wealthiest beneficiaries. that proposal is a common recommendation on this field of candidates. we're looking at chris christie also suggesting reducing social security benefits for retirees who earn more than $80,000. and then eliminating benefits for individuals with incomes over $200,000 in retirement. donald trump and ben carson have also said wealthy americans should voluntarily give up their social security benefits to bolster the health of this government system. and then when you look at the outl outl outl outliers like carly fiorina, she said she wants to demonstrate that the government can execute with excellence. hike huckabee favors keeping social security benefits as is and paying for it through a

broad tax on consumption. there are a lot of opinions out there on how to keep this program runs for future generations. tonight we're going to see who can elaborate on their plan to fix social security and how that will impact future retirees. >> sharon, this debate is going on around the world, in europe they would say, okay, yeah. if you start means testing it for the rich, watch how gradually it becomes unpopular that it's phased out. that's the two-edge sword here, surely. that >> that's right. that's a big discussion here. another big discussion is raising the eligibility for receiving those benefits. a lot of the candidates want to increase that age from where it stands now to 69 or 70. some people are saying what about those folks who have jobs where they'll have to retire early? that have health problems? how will that hurt certain groups? low income workers, minorities? there's a lot of debate about how this is going to play out. we'll hear more tonight. >> sharon, we know you'll be

asking some questions of the candidates tonight as well. looking forward to watching. thanks for joining us. >> sure. >> sharon epperson in boulder. coming up, much more on tonight's gop presidential debate. we will talk to reince priebus, and also irene rosenfeld when we come back.

. good morning, welcome back to "squawk on the street," i'm david faber, along with sara eisen and simon hobbs. we're live from the new york stock exchange. carl quintanilla on assignment in colorado for the debate tonight. we'll hear from him later in the hour. for now, let's look at the markets. oil, as we like to do at this time, we are ahead on all the major averages, wti, moving one way or the other significant amounts. up almost 4% this morning. big day on cnbc. the republican presidential candidates set to take the stage tonight. the chairman of the republican national committee will join us live from colorado.

>> shares of apple and twitter reacting to their quarterly results in opposite directions. find out how you should be playing those stocks today. >> and our friend, david faber moving stocks higher is in advanced talks to buy starwood hotels. the deal, he said, will be announced in a week or two. >> we will start with the debate. just hours away from the republican presidential debate tonight on cnbc. this is the first time the candidates face off since dr. ben carson overtook donald trump in the polls. does this signal a game-changing moment for the candidates and republican party? on the ground in colorado is chairman of the republican national committee, reince priebus. good to see you. >> nice to see you, too. >> what we learned so far from this season is that the debates can shape this race. how do you think that ben carson has stolen the lead will influence tonight?

>> it's hard to tell. your guess is as good as mine. all these candidates have a different strategy, you've been seeing the pre-game happening among all the different candidates, at least preluding a different approach to the debate. obviously i think doctor carson is saying he's not going to take the bait. others saying they'll come out aggressively. all the candidates ought to consider reagan's 11th commandment and conduct themselves in a way that's good for the party and the country. i think they will. >> i have a feeling we'll hear a lot about president reagan tonight. let's talk about the republican party. backers of trump and backers of carson are not necessarily the same part of the republican electorate. how split is the party right now? >> i don't think it's split. i think that like any -- we have two major political parties in this country. there's two doors people can walk through. when you have two doors people can walk through, within that room of each door you have

different types of folks that have different things that are first on their mind and what they look for in a candidate. we have a lot of candidates and each one of those candidates i think appeals to a different kind of voter. and that's what you're seeing. at the end of the day when we come together in march or april of next year, we'll have one person that prevails, our party will then unify, we then need to go on to the next phase, getting to the convention and winning a general election. >> mr. priebus, that's going to be a difficult process, isn't it? let's say that mr. trump wins. just forsake of argument. will you be able to unite the rest of the gop around him? the rest of the people on capitol hill? he's not clearly born and bred

party. he's a candidate which expresses something different that you kind of brought into the fold. >> sure, he and others might express something differently, but at the end of the day they're going to be running against hillary clinton, we'll be running against hillary clinton. i think hillary clinton is the unifying figure in our -- that we would be running against in the general election. obviously it's about getting our country back on track, getting our debt trajectory under control. all the things you all talk about every morning. ultimately this is going to be a race between the republicans and the democrats, whoever our nominee is, we will unify behind that person to make sure that we have got a party and a candidate that is ready for prime time. >> you know, we talk about the polls, the candidates talk about the polls, the truth is the polls are not really a good, reliable indicator of which candidate will run for president. at this time in 2008, it was rudy giuliani leading the polls,

herm herman cain in 2012. how much stock are you giving to the polls now? >> when you've got 14 candidates, you got to figure out a way to get everyone on the debate stage, we're doing and cnbc and other entities are doing the best they can in trying to have some line that draws a distinction and qualifying factor for getting on the debate stages. i think polls go up and down. i do agree that it's very early. i do agree that just because people might be up today doesn't mean they'll be up tomorrow. they do fluctuate. that's why each debate allows for -- if it has to be, a different group of people on the main debate stage depending on how those polls change. you might see some of that as we get closer to iowa. >> what view are you taking of two watershed moments now for your own party in the house?

on the one hand, the fact that we could get a budget deal passed today. then presumably paul ryan elected as leader tomorrow. ryan has been very careful, while he supports the deal, to bitterly criticize the process and the way in which it was handled, arguably behind closed doors with the obama administration, a shock to the conservatives who are themselves hopping mad, many of them, at the position in which they find themselves. how can paul ryan yunite them b friday? >> well, i mean, look, i don't know if you can unite every single person in the house by friday. far be it for me to talk about house process. one thing about paul ryan, he's someone that wants to build and unify the party. he wants to include people in the process. he's not somebody that wants to punish anyone. he's not someone like that. he wants everyone to have a voice what paul wants to do, i believe, is have a big vision for the house. have big things that we want to

accomplish for the house. so that when you get into these tactical arguments, the tactical arguments don't become armageddon because everyone understands there's some things that are big out there that we need to do together as a party. that's what paul ryan brings to the table. i think that's why everyone is so excited about him being the speaker of the house. >> chairman, as you mentioned 14 candidates still for the republican nomination. 10 on the stage in the main debate. how many months need to go by before this field gets significantly pared down? >> cnbc, very smartly, put in a floor for the first time in the debate, but in a floor saying if you're not at 3%, then you can't be on the main stage. it's very similar to what y'all did four years ago. i think as we get closer to iowa and the march 1st deadline,

you'll probably see potentially that floor creep up as we go. i think it's important now that it's early that we include as many people as we possibly can. and i think cnbc did a nice job of starting that process. >> well, thank you for the compliment to our network. reince, good to have you on. >> thank you. >> that's the chairman of the republican committee, routine r priebus. okay. as we first reported about an hour ago, this morning, hyatt hotels in advanced negotiations to acquire starwood hotels and resorts in a cash and stock transaction. the talks have been ongoing for weeks, and a deal could be announced as soon as the next week or two. transaction under consideration would have the smaller hyatt buying starwood and its management therefore taking control of what would be a

combined company that includes hyatt brands such as park regen brands like sheraton, regi send where among others. yesterday it was reported that three chinese companies were considering making a bid for the company. people close to the situation tell me none of the chinese companies have yet made an offer and it remains unclear whether any will. the price contemplated by hyatt could not be determined, though as i said it will be a mix of cash and stock in hyatt. hyatt is controlled by the piri pritzger family. starwood shareholders would own a significant percentage of the combined company. that depends on the mix of cash and stock. hyatt is controlled by the

pritzgers. starwood has held talks with a variety of suitors, the most serious of those before hyatt was with the intercontinental group, but that did not advance to deal terms. hyatt and starwood have declined to comment. >> no suggestion they like to take the whole thing private? >> no. because pritzgers like to do that. >> that is not currently contemplated. they would be getting much larger as a public company. down the road some might suggest spinning things off into a reit structure. >> can i point out the last time we had a hotel deal was when

blackstone went private. that was the top in the market. when you see big deals like this, we spoke about this before with mma racing forward. some deals you think, that's got to be it. in an environment where the stocks -- the stocks have turned within lodging. >> the $100 billion beer dear. aren't we awaiting word on that? >> we have another week extension to get the agreement done. they're going to. >> up next, apple is out with strong fourth quarter results. demand for the iphone staying strong. investors have sent the stock higher after recent losses. more on that after "squawk on the street" comes right back. well, right now you can get 15 gigs for the price of 10. that's 5 extra gigs for the same price. so five more gigs for the same price? yea, allow me to demonstrate. you like that pretzel?

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the countdown clock is on. serve hours 45 minutes and six seconds to go before the republicans face off in their third debate. it's been six weeks since the last one and dr. ben carson has stolen the lead in the polls. will donald trump go after him tonight? seven hours, 44 minutes and 50 seconds to go. less than four hours until the federal reserve statement. >> we have apple into the mix as well. shares of apple slightly higher today after the company once again beat earnings expectations. the tech giant cautioning investors about its full year outlook. ashley lambert joins us with some analysis on apple. i guess we should -- the trouble

with financial markets and financial programs is that we're looking at the rate of change in something. and what we don't comment on is the fact that this is actually another blistering quarter for apple. it is extraordinarily profitable. it is growing at an extraordinary rate, is it not? >> yeah. absolutely. it is growing, yes, it ischlis. but in a year to year basis, they are having tough compares. we're looking at growth rates, growth rates are slowing down. when you look at iphones, the penetration of the smartphone is high, which is making it hard for them to grow the iphone category. >> my question as we look at stock at 116.23, the degree on which it's able to follow through. somebody pointed out to me recently this is a unique moment in a stock's history where you have, after earnings, literally

thousands of man and woman hours pored into researching all the detail that we know and extrapolating out everything that we might imagine. the market settles at 116.17. that's a fair price now for a considerable amount of time, isn't it, until something substantial changes? this is fair value. >> it seems like it. listen, our price target is 125, which is in the ballpark here. and essentially if you look at it, you know, the stocks next leg will depend on when we can get more growth from the company. the big driver is iphones, and for that we need to see the demand during the holiday season, how strong the demand is during the holiday season. and also going beyond that, we need to see how much of a tick down we get in march. there's a risk that these -- apple shipped the iphone late and shipped in china early that would imply that december quarter shipments will be

artificial inflated because of the timing. we need to see how demand holds through in march. all those factors contribute to the uncertainty. >> let me ask you a quick question on that. this relationship between apple and luxury goods is fascinating. luxury goods create a sense of scarcity. do you not think that deliberately apple tries do that in some markets? >> it's possible. if you look at it, in the earlier part of the cycle, yes, that helps. as we go towards the later part of the cycle, that's the time they need mass markets, they need to go downstream. that's where with the iphones 5s or the older generation iphone 6 they're trying to target the mid tier of the market. they talk about share gains, which is interesting from two point of views. android is more popular in the mid tier market. and secondly that's the place where up until a year or two ago

we were talking about smartphone penetration, now we're talking about share gains, which is a sign of mid sharing markets. essentially what apple is going to do, it will create scarcity while at the upper end of the market. at the mid tier it will have to play the volume game. >> apple has become a cash machine outside the united states, 206 billion with 91% of it held outside of this country. how should investors look at that? what can be done with that? >> for the cash locked up outside the country, we need government to kind of give some type of tax holiday or some type of incentive for companies to bring it back so that this can be returned to shareholders. until then, it's use will be limited. apple is not unique in that. you have all the tech companies and many other industries with a lot of karen sitting outside the u.s.

at the same time apple is returning cash back to shareholders. it gives them room to invest more. >> it's a practical fact that some people hold the stock believing that will happen. abhey, thank you for your time. >> thank you. up next on the program, we go live to boulder, colorado for a preview of tonight's cnbc republican presidential debate. coverage begins at 5:00 eastern.

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we are just seven hours away from tonight's republican presidential debate in boulder, colorado. can you feel the electricity? can you feel it? i can. >> i can. >> i can feel the alpha waves. >> john harwood will be one of the debate's moderators. he joins us live now. he's got as good of hair as any of those candidates, does mr. harwood. we won't talk hair, john. we'll talk about what your expectations are, of course, from what we're going to see this evening. >> i think the extraordinary amount of fluidity in this race means the debates will be unpredictable and interesting for viewers. because you have turbulence in the outsider lane, ben carson pulled ahead of donald trump in iowa. we've seen that's annoyed trump. caused him to change the way he

talks about carson and two iowa voters. then you also got the traditional establishment lane with people like jeb bush who we once thought would dominate this race, struggling to keep a place in the race. same is true of chris christie, john kasich, marco rubio is playing a bit more patient game. so it ted cruz. ted cruz hopes to be the beneficiary if the outsider candidates like carson and cruz fall away. all of that means a lot of churn on the stage what we'll try do is capitalize on that to get people to really lay out and contrast with each other their plans for the economy, what they'll do to make everybody in america better off. >> john, as you know, trump's whole thing in this campaign, his consistent message is how well he's been doing in the polls. how much buzz and attention he's creating. so i guess -- >> bingo. >> now that his loudest message doesn't serve him what does he do now that he's no longer number one in the polls and

momentum is fading? >> that's what we'll watch for tonight. last night in iowa, he was having an event, he was pleading with iowa. get your numbers up what you are doing to me? that fuels the idea that maybe the race could take a turn that becomes less enjoyable for donald trump. how does he react to that? does he stay in? does he shift tactics, spend big money on advertising, which he has not done so far. all of those things will make this debate super interesting tonight. >> john, i'm fascinated as to how you're going to conduct the questions. it's inevitable with the subject matter that you're going to want to drill down. that's what we do every day. at the same time you have two candidates in the lead, carson and trump, who are outsiders who are not political animals of nature and are trying to build a full policy spectrum in front of everybody. so it's not as ironclad, it's still a work in progress for many of them. how do you question without

getting got you moments where they would be inappropriate? >> simon, your analysis is exactly right. these are two candidates new to public life, who are sort of synthesizing their philosophy and how it translates into policy on the fly. the core of the appeal of both ben carson and donald trump is emotional rather than about particular policies. but that's a dimension they got to develop and you've got other candidates who are so familiar over years of being in the political process with the rhythms of debate, with the to and fro of tax cuts versus budget deficits, that's home territory for them. so what we've got to try do is see what we can pull out of the outsiders, get the traditional candidates to make the case for why their experience is better than the fresh eyes of an outsider. >> will be interesting to listen to those with governing experience and those with business experience there are

wide groups on the stage tonight. thank you, john. we'll see you in a bit. john harwood in boulder. straight ahead, more from colorado. a back stage tour of the debate venue courtesy of jane wells also there, and larry kudlow will weigh in on what he wants to hear specifically on policy tonight. can a business have a mind?

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good morning, i'm sue herera. here is your cnbc news update. the house is poised to vote on a bipartisan budget deal that will last for two years. it comes as republicans are set to nominate paul ryan as their next speaker. ryan says that he will vote for the new bill because it makes meaningful reforms. dennis hastert arriving at courts this morning. he has pleaded guilty to lying to the fbi in a $3.5 million hush money case. the deal calls for him to serve up to six months in prison. hastert will be sentenced february 29th. iran says it will attend the international talks on syria's future tomorrow in vienna this after being invited by russia and the united states. the foreign minister will represent iran. and this is an unusual story. more than a dozen models hitting the catwalk in paris wearing dresses made out of chocolate at

the annual chocolate fashion show. the designs were created by up-and-coming fashion designers. they paired up with world famous chocolatiers. that's the cnbc news update at this hour. >> you wouldn't want to do that in summer, would you? >> no. >> not a summer show. >> let's hope those lights don't get too warm. >> fashion and chocolate, what could be better. sue, thank you. we are a few hours away from the coverage of tonight's republican presidential debate. jane wells joins us now with a look back stage at the debate site. good morning. >> hi, guys. no chocolate melting here. it's freezing in this place. they have 200 lights so we hope it warms up later. we're in the final countdown, after six months of planning, here we are on the stage. you have some technicians still here. an engineering staff of 40 people just for the debate that

doesn't include the lighting or staging. they're going through a final head set run. at the top of the hour, these chairses over here, this is where carl, becky and john will come out and do their final run through. later this afternoon, the candidates will be coming up on stage to go through their run throughs. yesterday we were here. i have a picture we took when they had the students stand-ins yesterday during the debate practice. we couldn't find a mike huckabee stand-in. he was m.i.a. perhaps not ironically the donald trump stand-in had the most hair. later this afternoon, the real man himself, all of them will be here. in the audience tonight, about 1200 people including about 100 students. the students pushed here for more tickets. they got more. they will be coming from all departments, colleges and schools here at the university of colorado from engineering, history, media, someone from the school of music will sing the national anthem. all that happens later today.

once the run-through gets done, once they get the carpet nailed down, whatever you guys working on? >> putting on the podiums here, got these lights. >> get these fancy lights going on? good job. i hope it warms up later. back to you. >> i don't know what a man bun is, i guess we should move on. >> oh, simon. google it. it's big out here. >> very in right now. >> thank you very much. jane wells in boulder, colorado. for more on what we can expect tonight, let's bring in our own larry kudlow, also live from the site. it's a big night for the party, larry. what do you hope happens? >> you know, it's a very important night, simon. you've got a lot of people in this debate who may not be around for the next debate. and who may not get as far as the iowa caucuses. they're hanging by a thread. so, having said that, message,

economic growth, positive optimistic message, how do you get the middle class going again? how do you create enough jobs? the country is cranky, simon. the country is divided. it's conflicted. the republican party has to have a message that says we can solve this we can solve this. >> you know, larry, it's more than a month since governor walker quit the race and suggested that other people do the same for the sake of the gop. so people could focus on a few candidates. half a dozen are hanging on by their fingernails. do you wish they would go and clear the field? >> look, i wish they would give it their best shot. that's what they're here for. you have a lot of experienced people here. they'll give it their best shot. you have trump and carson in the first tier, you have got cruz and rubio in the second tier. maybe carly fiorina, but she's

kind of fading. then con kasich, chris christie, you have rand paul, they're the ones that may be on the cusp. and you have jeb bush, that's correct. jeb's numbers are crashing. those are the people that have to have -- let me tell you, bush, kasich, christie have got to have good economic nights on cnbc. good message nights. good clarity nights. otherwise i think donors are going to pull the plug. >> larry, you, unlike a lot of folks, have studied the specific economic policies and proposals of the candidates. whose economic message for growth will translate? >> sara, you have a bunch of them. most of them believe in lower tax rates. my own personal view, the best thing we can do for this economy is slash the corporate tax rate. i love that. i think jeb bush has a good

plan. i think donald trump has a very good plan on lower corporate taxes. the others have it. the question is can they get it out? carly fiorina, who i admire, she had an op-ed piece in the "wall street journal," she didn't say anything. she didn't have specifics. >> she had specifics on problems -- she was criticizing democrats control of the white house and the economy and the progress they're touting. she was going after hillary clinton not fellow candidates, and giving specifics on the african-american unemployment and women's poverty being the highest in 20 years. >> yes, yes, i agree with you 100%. but at this point in time, in the dynamic of the republican race, blasting the economy, blasting hillary, blasting obama is not enough. >> right. >> they have to say -- i worked for reagan. they have to say reagan-like.

here's the problem. here's how we're going to solve the problem. be optimistic, you have to have not just a positive message, but be specific. we're cnbc, we'll ask the tough questions. >> that cuts to the heart of what i think might happen tonight. i'm concerned tonight, larry, because you have a group of governors and senators who have marinaded in this for years, they know these topics inside out, they have a huge advantage when inevitably cnbc, as it is supposed to do, digs down on the economic specifics and carson and trump who are still putting together their policy platform, it may appear as if they don't have it together to the extent that at this early stage they might rightly not have it together, if you see what i mean. >> you make a good point. i don't think they have the expertise yet that some of the senators and governors do. you make a good point. on the other hand, mr. trump has surprised people.

he had a good tax cut plan. i'll give him that. i don't agree with him on mass deportation. on taxes a pretty good plan. dr. carson who i know and who i have interviewed, he has work to do we'll see what he produce tonight. here's one for you, simon. ted cruz, i was told yesterday by the cruz people they have just finished a new economic program. and a lot of it may be unveiled this evening. cruz is a very smart guy, i'm looking to hear a lot from him. and marco rubio, he has a somewhat controversial tax plan, but they know their stuff. what is governor kasich going to say? what is governor christie going to say? chris christie has an economic plan, he never talks about it or mentions it. again, back to carly fiorina, a smart woman, but she has no specifics. so they're going to be tested tonight. if they fail the test, guess what? the donors may pull the plug. >> i do want to mention the fed.

it's also fed day is we'll get a fed statement and decision before the debate tonight. i always cringe when republican candidates talk about the fed. it's a political punching bag which stands in stark contrast to you who has been very supportive of janet yellen and of her policies. do you expect it to come up tonight? do you think they have the issue wrong? >> i hope it does come up, sarah i think you make a great point. you'll get the announcement. i reckon they're not going to raise rates. i don't want them to raise rates, at least for a while. i want to hear -- voters have a right to know, taxpayers what is your interest rate position. will you want the fed -- will you come crashing down on the fed for new rules or what? the fed is independent, but presidents meet with fed chairmen all the time, i was in a lot of those meetings with reagan and volcker many years ago. so, presidents have influence on

fed policy, all right? influence, not over. you make a good point. i want to see them speak to the country about the dollar and interest rates. i think it would be a great thing for cnbc to do. you know what? no one's asked them about the fed and if we don't, no one will. >> that's true. >> you certainly, larry, have the pedigree to do it. we'll all be watching. hope it goes well. larry kudlow there. coverage tonight of the debate starts at 5:00 p.m. eastern only on cnbc. up next, shares of twitter plunging on stagnant user growth. invests not happy with what the company was saying on the conference call. more "squawk on the street" when we come right back. here at td ameritrade, they're always working.

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the market is in rally mode. the dow up almost 100 points, the s&p up a half percent. consumer staples are lower. dom chu has more on that. >> one of two sectors in the red, utilities the other one. staples sticking to the down side today. that sector is competing with utilities for the worst performing sector so far in early trading. walgreens is dragging down that sector the most despite an earnings beat and that $9.4 billion deal to acquire smaller rival drugstore chain rite-aid. other laggards are hershey, cvs and meade johnson. for the year, it's important to point out consumer stapales are holding on to those gains. it's currently the third best performing sector in the s&p year to date, up 4%. yes, a sect every you know a lot

b the consumer staples, a big focus today. >> they've been the focus of deals as well which helped the stocks. let's get out to steve liesman in washington with the cn cnbc update on the economy. >> a big change in the cnbc rapid update tracking forecasts gdp up to 1.7, today the economists who we average up, they upgraded by 0.3% to 1.7% because of the trade numbers this morning that were at upside on exports and also down side or lower imports which subtract from gdp. deutsche bank at 2.2, barclays at 1.4, goldman at 1.3. we have thursday gdp numbers at 1.5, so we're light in consensus out there on the street. finally, 2.7 is the average of growth if this number ends up

right for the last two quarters. not too shabby, something for the federal reserve to consider when it looks at how global economic weakness is affecting the united states. >> i have two questions, given the forecasts, do they have to downgrade the assessment of the labor market and downgrade the assessment of the economy and to what extent can they leave the door open for december? >> that's an excellent question and gets to the nut of the problem that janet yellen has today. they have not always described as accurately as they can the current situation out there. they have to modestly downgrade labor, modestly downgrade household spending and some other parts in there are not doing great. they have to do both those things what they want to do is keep that flexibility for december to raise rates. i think what they'll do is take a step back in their concern over global economic weakness, because you know that's happened. that was in the statement,

created a huge issue at the last meeting in september. but that has not seemed to really continue, at least it seems to have stabilized a bit. >> we'll see how they phrase it. >> very important. >> steve liesman, thank you very much. we have to look at twitter right now. twitter's third quarter revenue beating estimates but shares are falling hard on slower growth projections. shares down 6%. also that monthly average user rate disappointed. here with a take is mark mace. anything that makes you optimistic that jack dorsey has a handle on twitter's problems and that he can turn it around or are you a seller? >> our rating remains neutral. we've been fairly cautious on the stock for quite awhile. about a month ago we lowered numbers. we've been low on the street, continue to be that way. you know, jack, it's still early days for him. moments, probably the biggest

product to come out since he officially took over, has been a little bit of a disappointment. but it's still early. give him time. in terms of the stock, we think it's a bit too rich for us given the risks. >> what about the tone of dorsey and some other executives, bane and noto on the conference call, did they do anything to reassure investors? dorsey kept saying he wants to make twitter easier to understand. he is focused on the numbers of monthly users. do they have a plan? >> yeah, i think they have a plan. it starts with the consumer product. it is a little -- it continues to be difficult for the average user to use really for a power user. i think they have a plan. the problem is that it might require a pretty meaningful change to the core experience for twitter. that may be something that a founder is unwilling to make

those big changes. the jury is still out. we're a bit skeptical that they'll make the necessary changes in the product that are needed. part of that is because, you know, jack is co-founder of the company and probably will want to hold on to the core >> interacting with friends, family, and we'll see if twitter can glom on to that as well.

>> a long run ahead. thanks for weighing in on the quarter of citigroup. shares down 7%. coming up, carl will be joining us live from boulder, colorado, as we count you down to tonight's republican presidential debate. find out how he is preparing for all the action. "squawk on the street" will be right back. well, right now you can get 15 gigs for the price of 10. that's 5 extra gigs for the same price. so five more gigs for the same price? yea, allow me to demonstrate. you like that pretzel? yea.

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sflirchlg the c nbsz gop debate is just hours away. our own carl quintanilla live from boulder this morning. carl, it's good to see you in this. tell us how you have been preparing. >> well, a lot of it has been going down to that amazing set that our producers and team have constructed. just an amazing setup. the beautiful light. obviously room for the ten lecturns and getting used to all the audio and the fact that we'll be in a room with about 1,000 people or so. we have worked our way through a lot of the policy prep that we've been in for obviously several months. now it's more about logistics and keeping it to time, making sure we get to all the topics we

want to discuss. >> this has been like jumping on to a moving train. >> anything in terms of format in terms of the time that the candidates have or follow-up? is there going to be a program that you fooiz follow in terms of trying to get them to answer questions? >> yeah, for the most part it is -- it's one minute answer. >> there's not a lot that you'll be able to do in terms of wool. we'll be listening very loefl for their comments about taxes,

about jobs, about housing, about the fed, about china. in a way it's sort of like -- it's like "squawk on the street" only on steroids, right? only the guests are all a-listers. you do have a lot more time than the four or five minutes that we have between commercials. >> with the political motivation where are i hope you ask about the dollar. that's one thing. also, carl -- >> i somehow knew you would say that. >> that's a real surprise, right? >> i would like to know how you are going to be tweeting and moderating at the same time. >> i don't think that's possible. i'm not even planning on having the phone on set. this is about focus and not letting them get away with inconsistencies and making sure voters get away with the best information they can get in two hours time.

>> looking forward to, it carl. >> our carl quintanilla out in boulder, colorado, where he will be moderating the debate tonight. >> gathering in new york for the women's wear daily ceo summit. our courtney reagan is there live, and she was just able to sit down with one of those ceos. courtney. >> the theme here at the women's wear daily summit is really the new face of fashion. whether it's new ceos or companies that are newly public. martin ellison, the ceo of jc penney, was the first to take the stage. he was very candid about all of the work that needs to be done at somewhere c penny to move the company forward into a growth phase. specifically talking about the science piece. optimizing customer data as well as optimizing their logistics network better. then pierre, the ceo of jimmy choo, a very different company. it's been public for about a

year. he sat down exclusively with me to talk about the u.s. consumer and what he sees there as the dollar strengthens, of course, and we see volatility in the stock market. >> to be frank this one is not going to be -- then there is the average very wealthy, still average clients, which i guess there has been an impact on the stock market for sure. i think this is a new environment where we are in for now. that combined to huge changes in the flow of tourists because it was a very strong component of the american business. >> those factors all add up to a bit of a softer business here in the united states than he had initially anticipated. coming up on "power lunch" we're going to be speaking with the

ceo of land's end. just eight months into her position at the helm of the company and 18 months after land's end was spun off from sears. sarah, david, back to you. >> courtney. >> thanks very much. it's been a busy morning, to say the least, of course, given potential consolidation of the hotel industry that we have reported on. carl icahn's interest in aig, writing a letter there. doesn't tell us how much of it he owns. the company saying wronk it's a good idea. >> obviously the improvement has been 234 cost cutting efforts. we'll talk to her about when she's going to grow again. maybe ask her about --. , he is saying he doesn't eat oreo's anymore. >> they're not made in china. what's his problem? >> he has a misconception they're being made in mexico. we have to leave it there. over to you guys on squawk alley. >> thank you.

busy morning for you. we'll pick it up from there. it is 9:00 a.m. in boulder, colorado, where just hours from now we'll kick off our coverage of tonight's cnbc presidential debate. it's also 11:00 here on wall street and "squawk alley" is live. carl quintanilla is out. john is live at wal-mart in san francisco fresh off oracle, and simon hobbs yet again.