"squawk box." good friday morning. welcome to "squawk box" on cnbc. it is great to have you here, tyler. >> have you been in studio? have we done this together? >> i don't know you and i did this together. i was here a couple weeks ago, you were off, joe was off. went for the veteran right hahner ohahn hander out of the bullpen. u.s. equities slated for a positive open. the dow would open 69 points to the upside. s&p by 7, and nasdaq by 13. asia closing mostly higher after positive factory data out of japan. china up by 1%. hong kong, 1%. shanghai roughly flat. european equities, green across the board. germany's up 1.5%, as is italy

and spain and france. strong gains across europe. and look at crude, which is set for weekly gains, up by 1.25% on the week. showing just about that gain today. we got surprising inventory builds yesterday. traders seem to be taking in stride. >> the u.s. treasury department issuing final rules to crack down on those tax inversions. that's when a company is acquired by a smaller foreign business in a low tax country to avoid paying the higher u.s. corporate tax rate. the new rules crack down on earnings stripping when the u.s. subsidiary avoids taxes on domestic operations by sending them overseas as tax deductible payments. got that? sara eisen does. >> this is clearly becoming a signature issue for the treasury secretary, for this

administration. and what he issued yesterday were new rules to crack down on tax avoiding companies. this earnings stripping strategy, it's a common practice by inverted companies, they use the u.s. subsidiary to issue loans from the foreign company that are tax deductible and avoids paying the u.s. 35% corporate tax rate. i sat down with jack lew, his main message is we listened to the opposition, the business community, we're watering them down a bit but still going hard after tax avoidance. >> i think there's a lot of frustration into the united states and around the world in tax systems that just don't seem fair. we've been saying it for a long time. we've taken action. in taking this action today we've shown we're taking tough action to stop the egregious behavior but also listening and responding to reasonable concerns. >> we'll be back with more of

the interview. we talked about why he can't go after just corporate taxes which is the real problem. and many other issues. >> okay. sara, stick with us or come back in a bit. we do have breaking news now concerning senator elizabeth warren and the s.e.c. eamon javers has that story. >> reporter: good morning. senator elizabeth warren just released a tough letter to president obama calling for the removal of s.e.c. chair mary jo white. senator warren saying she's frustrated with white's agenda and upsay tet with the failure pass a spending disclosure rule which would say what the companies are doing with their money politically. she writes this brazen conduct is merely the most recent and prominent example of chair white undermining your administration's priorities and ignoring the s.e.c.'s core

mission of investor protection. what she wants in the letter is for the president to exercise unilateral authority to remove mary jo white as s.e.c. chair and elevate another commissioner to commissioner in order to move forward on this agenda. it's extremely unlikely that president obama would make such a dramatic move just before a major national election. also extremely unlikely he would do it before the end of his term. you can look at this as sort of working the refs here by elizabeth warren ahead of a possible clinton administration. the idea that there are only three commissioners of the s.e.c. now there are supposed to be five. there are two vacancies. mary jo white's term is up in 2019. you can imagine elizabeth warren wants somebody else on the s.e.c., maybe two other people on the s.e.c. who align with her views about how this ought to be handled. and she would like the clinton administration to start paying attention to that if they do get

into office. this is a slot across the bow potentially from elizabeth warren signaling what kind of role she intends to play if hillary clinton gets elected in november. >> i don't understand these publicity stunts. either she's in with hillary clinton and she can call her on the phone and say whoever is the next person, do this. why does she do it this way? there's no chance in the world -- we're talking about -- get your watch out. >> three months. >> i don't understand this. i get what she wants to do. who is she playing to? >> two things. >> there's no base to play to in this particular instance, right? >> there's always a base to play to you have to right. there's two reasons to do this. one, yes, elizabeth warren, assuming hillary clinton is elected, elizabeth warren could call president clinton and ask her to do this or that. but you also have to rally the base. sending this letter in public shows the base that you are doing what you told them you

were going to do, so that benefits elizabeth warren. it's not just the two women here involved, it's all of their staffs, the vaes infrastructure of the government. and she's riding high after the wells fargo thing. we had john stumpf resigning after elizabeth warren dressed him down in the senate. that's viewed among the base of democrats as credit to elizabeth warren. she's using that momentum. >> she called on mary jo white and the s.e.c. to investigate mr. str stumpf and wells fargo. we had her on yesterday, she was circumspect on whether she would or would not look at what's going on there. she played a lawyerly role there. clearly ms. warren wants the okay to go aggressively after

wells fargo. >> she does not think the s.e.c. has been aggressive enough across the board, particularly on this political spending issue. that's one that will resonate with democratic voters right now who are frustrated with all the secret money out there in politics. they would like to force corporations to have to say what they're doing with their money in terms of politics. they think that's only fair. that's an issue that elizabeth warren thinks she has traction on. that's why she is sending this letter. >> you said her term ends technically there 2019. i imagine if donald trump were to win, she would go much sooner than that you think in a clinton administration she goes much sooner than that, too? basically when the president turns over, it turns over. >> elizabeth warren saying what we would like is those two vacancies on the s.e.c. right now, there's only three out of the five commissioners now saying that we would like two commissioners that side with us on these issues to be nominated.

possibly one of those to be elevated to chair you can see a couple scenarios. one where mary jo white says i'm retiring and moving on. one where she says i will stick out my term but the new president clinton elevates somebody else to be s.e.c. chair who would be much tougher on wall street. democrats are skeptical that hillary clinton is tough enough on wall street. they think she gave those secret speeches to wall street, she's in cahoots with them on some level. this is a shot from the left reminding the incoming potentially clinton people what they need to do to appease the left. >> eamon javers, thanks. a busy day for economic data. the september producer price index and retail sales around 8:30 eastern time. at 10:00, be on the lookout for business inventories and consumer sentiment data. we will hear from lots of federal reserve officials. two key ones, boston fed president, eric rosengren and janet yellen. both will be at the boston fed's

60th annual economic conference. rosengren a voting fomc member. before the speech, steve liesman interviews him on 7:30 a.m. eastern. rosengren dissented at the december fed meeting in favor of a hike. it will be interesting to hear from him, hear him elaborate. fed chair janet yellen speaks at 1:30 eastern. her comments will be live on cnbc. it's the official start of earnings season. we expect results from jpmorgan chase in about a half hour's time, 6:45 eastern. then at 8:00, citigroup and wells fargo are expected to hit the tape. keep watching "squak" for full coverage of those results and the market reaction. >> a bit of other corporate news, verizon indicating it may try to renegotiate it's $4.8 billion proposed merger with yahoo! in light of the data breach.

it was reasonable to believe that the breach is a material event that would allow the terms of the takeover to be reviewed, that's according to their couns counsel. two weeks ago we asked the same question, and he demured, tap danced a bit. >> a little buyer's remorse? >> i don't know about buyer's remorse, just maybe a lower price. >> just a lower price. >> want a lower price. >> if you can get a lower price. >> why pay 5 when you can pay 3.5% or 4. >> a buck saved is a buck made. >> opportunistic for them. as we mentioned earlier, treasury releasing final rules in its crackdown on corporate tax inversions. sara eisen spoke with treasury secretary jack lew and joins us again at the table. you guys had a wide-ranging conversation. the inversion rules are what the business community had been expecting for a few months now.

>> and they've gotten used to it jack lew and this administration cracking down on corporate inversions. the rules announced back in april led to the collapse of what would have been a record pharmaceutical deal between allergan and pfizer, now the treasury department is piling on restricting one tax-saving tactic known as earnings stripping. the upshot is the treasury department listened for months to businesses and law americas, their concerns about this rule and now it's softening its stance. i sat down with jack lew last night to discuss what this new rule means. liste listen. >> there's an important final rule that we're putting out today. it takes the earnings strippings rules part of the announcement we made in the third round of administrative actions on inversions, and it makes them final. you know, it is an important statement that the tax avoidance used to support inversions will

be stopped. and, you know, tax avoidance that's egregious will be stopped. >> how much corporate backlash was there to the original rules? >> the original rule was put out in a form that was quite broad. we knew there would be concerns about unintended consequences. happily a lot of concerns came with proposed solutions. we had hundreds of comments, but mostly concentrated on six issues. you could look at those six issues in depth and come up with solutions between some exemptions and some fine tuning to take care of the unintended consequences. i think the purpose of this rule is to really demonstrate that while we need tax reform legislation to really fix our tax code and stop the push that is driving inversions and to make it by law impossible to invert or strip earnings, we need to also in the meantime use the administrative tools we have

to stop the erosion of our tax base, corporate tax base. >> i know you encountered concerns from republican lawmakers, members of the house weighs and means committee warned that the rules would have a significant adverse impact on the american economy discouraging investment and hurting american jobs and workers, and urged you not to pass this prematurely. >> i think when people study what the final rule does, they'll see we addressed a lot of the concerns raised about normal business practices that are not designed around tax planning strategies, which we've tried to address. to the extent that, you know, companies are using the tax code to avoid paying taxes unfairly, earnings stripping is used to that. >> donald trump proposed cutting the corporate income tax to 15% 10% for those repatriating overseas profits. that would discourage inversions.

>> our proposal for business tax reform would reduce the business tax rate, corporate tax rate to 28%. we did that by eliminating loopholes and deductions. i don't think we ought to be losing revenue when we lower the business tax rate. if there are more loopholes and deductions that could be eliminated you could perhaps bring the rate down more. it becomes a trade-off as to when are you taking away provisions that do real good. the challenge on international earnings is to get to a political space where he can can work on a bipartisan basis to legislate. i talked to a lot of republicans and democrats who want to do something about it. and if we could have a men mum tax on foreign earnings and decide what that rate should be in a negotiation, it would be a good thing. it would stop this problem, stop

things like the action in europe reaching into our tax base to address something. >> it can't get done. not with this congress and this administration. >> i think it can get done. i think that european commission's action put a bright light on the fact that if congress doesn't act, others will start doing things that we think are unfair. we agree with the europeans that it's wrong for companies to be able to avoid taxes almost completely. what we don't agree with is the u.s. tax base should be, you know, used by another taxing authority, another government authority. i think the political situation in the new year is going to be an opportunity to deal with this. one thing we said in business tax reform is you should do two things at once, tax the incomes overseas but you can't use that to cut tax rates, it's a one-time tax, use the money to pay for infrastructure. a lot of people want to invest in infrastructure, and a lot of

people think we should do something about the fact we have income going untaxed. i hope there's a moment when that conversation with come together at the beginning of the next year. >> some optimism there about corporate tax reform, an important issue for business. expect business and gop lawmakers to push back on these new rules, even though the treasury is saying we listened and we actually limited the scope of them and watered them down a bit as to not impact businesses that are not trying to avoid taxes, which was the original complaint about this rule. >> so, if we were to look at any deals currently pending on deck, do any of them get pushed off as a function of this? >> not clear that they do. certainly nothing like we saw in april with pfizer and allergan getting pushed off. that is the point, to discourage deals. i asked whether that breakup of that pharma deal was one of his biggest achievements, he said we're not trying to break up deals but trying to claim what's

ours, u.s. profits. i thought that was an important point he made, that the european commission going after apple $14 billion is a symbol if we don't get corporate tax reform done, other foreign governments will come after u.s. profits. >> lobbyists criticized this as a rush review, to try to put some rules on paper before the administration ends so they can't be accused of having fallen asleep at the switch on this issue. do you think it was rushed? did you ask him how thorough he felt the job was? >> they first put out the rules in april. they took the last several months to meet with the house weighs and means committee, other business groups, organization for international investment was involved and critical of the rules. they say they took their time. why they're putting it out three weeks before an election, they have to. the treasury and the administration is using their own authority to interpret the tax code to do things where congress is not. it's a huge frustration of

treasury secretary lew. >> was he pointing to the possibility of some move in the new year, new administration, which ever, to bring back foreign-held profits and use and tax them at some rate? >> yes. >> and the other part of the bargain would be that money raised from those taxes would be used on infrastructure? >> that's his model. >> that feels like the kernel of a deal to me. >> it does. except for president obama did -- with the help of treasury secretary lew, put such an idea in his last budget and it went nowhere because of the environment in congress right now. paul ryan was quick to come out and call it envy economics. it's a question of whether they can do a deal that doesn't include other tax deals, it's always so complicated. yes, there's bipartisan support to build infrastructure now with the republican presidential nominee, donald trump, calling

for infrastructure building and to bring that money back from overseas. you would think there could be some deal. even s&p weighed in on the issue and said tie the portions of overseas cash that 2.5 trill yoctrillion overseas, tie it to where 15% would have to go into infrastructure building. >> you asked him about wells fargo. >> wells fargo, deutsche bank, the british pound. we covered a lot. it will all come out later in "squawk box." >> sara eisen, thanks. >> see you in a bit. when we return, markets in focus. u.s. equity futures, the dow would open up about 73 points higher about now. s&p looking to open up about 8-poi8 points higher and the nasdaq about 15 points. back in a moment.

welcome back to "squawk box." markets will need a bounce to turn positive for the week. if not, that's two down weeks in a row. investors will watch key

economic data including september retail sales at k 30 plus 8:30, plus lots of earnings news. joining us is stephen friedman from ubs wealth management. and james sweeney, chief economist of fixed income at credit suisse. i was thinking about you guys last night only because i was reading your reports. that's why i was thinking about you last night. >> likely story. >> didn't come out right. both of you seem to think that the world is getting better, which makes me nervous. >> mm-hmm. >> you -- credit suisse has a report that says the tide gently turns. you think things are getting a lot better. ubs thinks markets will be better than 7% next year. when both of you agree that could be a problem. >> and when the swiss are positive, that bothers us. >> explain yourself.

>> was a big shock to the world with oil prices down, commodity prices down, led to weak trade, weak industrial production, weak investment, especially in commodity related stuff around the world and basically since february that's been normalizing. trade has started to grow. we avoided a big blowup in china. in the tradable sector globally you're picking back up. that's important. >> but hold on -- let me ask you this. this is on brexit. you seem to think the heightened political uncertainty related to the uk referendum is now over. all that is finished. >> no, we don't think that. >> what do you think? >> on brexit? i think it's something which creates some uncertainty around the eurozone prospect, we have not direct effects so far. it's something which from an investment perspective leads us to be less optimistic on the outlook for the markets.

>> the reason i'm nervous, both of you were negative three months ago. >> um -- >> sort of? >> at the very least you're more positive now. what are you seeing that's changed? >> from an investment perspective, we've been overweight equities all year. we have not turned positive right now. we've been expecting to see the turn in earnings, this is happening now. coming from a market perspective that's not evaluations driving things. those are slightly above average but in neutral range. we're coming out of an earnings recession. the same factors that james mentions, energy, recession ending from an earnings perspective, strength of the dollar, which was a big problem. all that is abating, you can see the underlying growth. >> so steven thinks the break

outis caubreakout is caused by earnings, you think it's because of growth? >> i think it's the commodity global shock. we passed out of it now. right now global growth has picked up a bit. that's good news. >> is 2017 going to be better than globally? >> yes. >> how much better? >> industrial production globally growing at 3%. global gdp perhaps above 3%. that may be high. >> before you go play politics. does it matter who the president is? >> seven key predictions if hillary clinton wins, one main prediction if donald trump is president. >> yes. it matters. >> the market does what on wednesday in november? depending on who wins? >> right now the polls suggest clinton will win. i think it's very much priced in. if clinton wins, not much. if trump wins, i think the

immediate reaction is negative. then you start potentially seeing fiscal stimulus with the tax cuts and that might please the market in the short run. >> i think the risk scenario of a trump victory is negative for the market, but a democratic sweep is also negative for the markets. the markets are expecting a status quo election, if you don't get that, you have risks. >> thank you. coming up, martin shkreli back in court today charged with looting his former biotech company to pay back defrauded investors. meg terrell tells us what to expect next. and a look at yesterday's s&p 500 winners and losers. >> wonderful. bravo. >> i love that. >> great. >> pretty good. >> wasn't bad. >> parts of it wasn't good. >> could have been better. >> i didn't like it. >> it was terrible. >> bad. >> awful. >> boo! have to do that from my phone.

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welcome back to "squawk box." u.s. equity futures, we are in the green, dow scheduled to open up by 91 points, s&p 500 up by 10 points. look at crude, we're looking at 51.03. keeps nudging up. >> up. up. >> time for the executive edge. a new survey suggests 25% of americans completely distrust the economic data reported by the federal government. that includes statistics like the unemployment rate, job

growth and consumer spending. the latest data finds this is most prevalent among donald trump supporters. 48% of trump backers distrust the data. 5% of hillary clinton supporters do. >> martin shkreli back in court today charged with looting his former biotech firm to pay back defrauded investors. meg tirrel has more. >> martin shkreli was arrested back in 2015. at his most recent court appearance, a court date was set for june 26, 2017. this is a status update. he has been charged with miss appropriating $11 mill wion fro his old company, retrophin, charges of wire fraud, conspiracy to commit wire fraud and securities fraud, saying he

lied about how much money his funds had, lied about performance and looted, calling it a ponzi scheme, looting retrophin to pay back investors. this has nothing to do with this old drug price he raised by 5,000%. i was looking to see what happened with the price of that drug. they said they would lower it after this blew up. i talked with the cleveland clinic, they say though the company started giving big discounts to hospitals, 50%, 60%, 50% off of 5,000 price increase is not solving the problem. >> maybe off a 2,000% price increase. >> today we will hear from ben brafman, a lot of what the prosecution will be seeking, arguments over evidence and

inside baseball going on. >> this has been tried in a court of public opinion before it gets to court. i'm wondering if you think now with the mylan situation, if some of the pressure on shkreli is off. >> i don't think so. i don't think he's taking it off himself either. he takes every opportunity to comment on drug pricing. even at one point coming out and saying mylan are the good guys, they're a generic drug company, they're not making a lot of money. not taking himself out of the public eye. >> the smirk. he needs to work on the smirk. he needs to lose the smirk. >> some have suggested that. i think congress might have suggested that. i -- >> there he is with the smirk. >> did you see him in the crazy video with hillary clinton? >> on-demand. >> was that him with hillary clinton? remember that? standing outside of that building downtown near chelsea's place? after she had that little health scare. >> yes. >> she went to her daughter's house. >> home. >> she walked out. he was standing on the street or

something, there was video. so strange. he periscoped the whole thing. >> wow. >> he periscopes a lot. yeah. >> always in the right or wrong places. it's very, very we're. thank you. let's tell you, cnbc's half time report with scott wapner hitting the five-year mark next week. they have an incredibility lineup. it is filled with some ochf the biggest names in investor, david depositioner, jeffrey gun domingugunlach, pelted, dinan, lasry. a huge lineup, you don't want to miss it. jpmorgan expected to report earnings in the next few minutes. we'll bring you those numbers and a reaction from wall street. plus crude oil in focus after a positive week. albeit somewhat of a topsy-turvy

one. we'll talk about the output cut planned by major producers. as we go to break, a quick check of what's happening over in europe. this car is traveling over 200 miles per hour. to win, every millisecond tters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes areetting warm. confmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.

u.s. equity futures at this hour looking in the green. we're getting some reports the earnings report from jpmorgan just crossing. dow looks like it will open up 95 points. s&p 500 up about 10 points, the nasdaq up about 20 points. jpmorgan has beat on earnings it looks like. 1.58, beating the estimate of 1.39. we're looking at the rest of it two revenue numbers we're looking at. one is a reported revenue, one is a net revenue. both of them are very solid beats above the -- just shy of $24 billion in revenue. that was expected. core loans up 15% year over year. up 2% from last quarter. mobile customers up 17%.

credit card sales up 10%. so a lot of strong growth numbers for the company that generally kicks off earnings season for this sector. >> we'll hear from citigroup and wells fargo in a bit. we'll break down some of these jpmorgan numbers as we get them. florida's identifying a new zika zone in a miami neighborhood meaning mosquitos have transmitted the virus to people. this a month after the state declared a nearby area safe after mosquito pressure. this will put more pressure on the u.s. to do something, which they have done very little. i thought we were over zika, or at least things were settling down. oil futures rallying despite

rising inventories in the u.s. investors cheered the week's drop in fuel stockpiles. john kilduf is a cnbc cribber. it's not typical to see u.s. stockpiles rise and oil goes up, is that because total output globally fell because there's an expectation of a production cut? >> the market right now is rewarding the rhetoric around these various meetings that have occurred now among opec members. the sidelines of various energy conferences. in particular there's an important rule in the bond market, don't fight the fed. i think the market is saying don't fight saudi arabia, they're out there doing road shows to give a massive bond sale to get money into their coffers. they got hurt, much more than they anticipated, from the low oil price. they're reacting aggressively to

right the ship, in terms of their economy and get money on the table. what will have to happen for this price to stay up, they'll have to shoulder the majority of the talked about production cut. this million barrels or so. i'm not sure they will be able to do it. i'm not sure they'll want to do it. they're fighting a slew of new production coming to the market from russia, libya coming back. the iraqis are having no part of a production cut or freeze. >> also in istanbul, officials said opec needs to be manageable, reasonable, not go too far to crimp production. even while it may be willing to make a change t seems like the appetite to do something that would have large-scale effect doesn't seem to be there. >> exactly right. it's a dangerous game they're playing, a game of chicken with the u.s. shale industry. we saw in the market a ton of hedging in the past couple of weeks as the forward curve got

over $50 a barrel. that should ensure a u.s. rise in oil production. there's a lot of moving pieces here. a lot of other headwinds in terms of the rise of the u.s. dollar which keeps a lid on prices. again, lots of talk. a real rush to reward the opec rhetoric in saudi arabia's moves, but i don't see it lasting. >> spin the tape forward. let's say they glee in noevembe to production cuts or caps. will they actually follow through and do those and meet those caps? >> history says the balance of opec won't. but the saudis -- >> will? >> may likely will. they have the most to gain. they, too, there's a great story in the times about the problems with their economy. and the wrenching period they'll have to go through here to fix it. the air conditioned barns for the cows will have to go, for

example. but the iranians, having just gone through the sanctions period, they almost girted themselves for this, and are faring much better under this low oil price environment than any of us would have expected. with oil production going up, they're selling more oil. albeit at a lesser price but bringing in money to cover needs. >> how much faith do you put in russia's involvement? >> not at all. they are all talking this good game. the russians are ramping up production massively. they're probably up upwards of 500,000, 600,000 barrels a day, still more to come. the question is where are they? when they say they're going to freeze, what month are they picking? january, when production was about 500,000 -- >> russia will freeze in january. >> i mean previous january 2015. will they pick november today?

where they're at a much higher level. >> what's the trajectory of the price over the next 6, 10 months? >> i think we're near the top end of the market. we could potentially get up towards $60 a barrel for a brief time here. when we get into the winter period. but i think once we turn the corner on the peak winter demand, and we see the petroleum balance sheet globally has not righted itself, it's going to be tube city again. >> meaning? >> down towards the 40s and potentially lower than that. >> if you're a producer or a company lending to a client in this space, you're not out of the woods? >> oh, not by a long shot. though we certainly had a -- a solid number of bankruptcies already. but there's more to come. and the other problem you'll have is the reset of the asset values of the various fields, not just in the u.s. but around the world. the so-called borro borrowing b.

>> so that hasn't happened en masse yet? >> not yet, and they gave a pass the last go-around, and the upcoming one is where you will see damage done to the borrowing bases and lions -- >> even though some of these junk rated companies can still borrow easily? >> again, once they get benchmarked to the new forward curve, the numbers won't add up. they'll get pressure from regulators and others to own up to this problem hovering out there. >> we'll see how it plays out. appreciate it. >> thank you. jpmorgan out with its first of the three big banks reporting earnings. the bank posting profit of 1.58 per share, above estimates of 1.39. revenues beating forecasts, records net income in commercial banking is the highlights of the quarter. jamie dimon saying both loans

and deposits grew by double digits in the quarter. jamie said last year to us, don't worry about whether you're beating the estimates or not. that's not the business. you want to keep beating every quarter where you were before. worth noting in this instance, profit did slide. >> compared with -- >> where they were a year ago. it is what it is. i put it out there. >> you look at the estimates, you go how good are the estimates if they're that far off? 20 cents a share off. >> that's the question, is it the company that beat the estimates or -- >> or the estimators. >> who were off. this goes back to the whisper number and what people were saying before. >> they did have a provision -- credit provision of $1.3 bill yo billion. markets revenue which is a number we watch closely for these companies, markets revenue up 33%.

fixed income particulmarkets re 48%. two quarters ago we were saying they couldn't make money. >> now they're back. >> these were businesses they would have to exit because it wasn't making them money. on the revenue side, strong growth. much more on the jpmorgan report still to come. we'll dig through the numbers with an analyst at the top of the hour. we heard from jpmorgan, next up, citigroup and wells fargo. they're due to report at 8:00 a.m. eastern. we'll bring you the numbers and reaction from an analyst. sq "squawk box" will be right back. sprint? i'm hearing good things about the network. all e networks are great now. we're talking within a 1% difference in reliability of each other. d, sprint saves you 50% on most current national carrier rates.

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welcome back to "squawk box," everybody. new report in "the wall street journal" this morning says donald trump plans to claim that mexican billionaire carlos slim is part of a cabal drudging up that trump touched women inappropriately. the claim centers around lincth support for clintons, the trump campaign said. said slim had never sought to influence the newspaper's cover. some stocks to watch today, intosys cutting its full year revenue guidance. that's putting pressure on the

stock. amazon's cloud computing unit partnering with vmware. the ability to run operations on vm data centers and on amazon's web-based services. amazon unchanged vmw up slightly. honeywell trying to make a case for a resurgent 2017. remember shares of honeywell dropped last week when wall street had a negative reaction to guidance. jim cramer talked last night on "mad money." he said he was quote, shocked, about last week's reaction suggesting he was wrong to focus on restructuring and not a longer term outlook in that last announcement. it worked for hon key well at least for today. here's what cody had to say. >> yes, i wish i included a lot more of this stuff. i gave credit for people understanding what our long-term

profile was. i was wrong. this is one where i could have done a significantly better job of communicating the story. and we tried to do it in the context of 2017 is going to be good. but it seemed to get totally lost. >> cody says honeywell still predicts 8% to 9% growth in earnings. it's not often you get such a strong mea culpa from an executive but he's clearly trying to shore up confidence. and zumiez upgraded. taking stocks to get a feel for teen trend. this is why i don't know. >> this is not our demographic, andrew. >> yes. kayla, help us. >> i'm not a teenager. i might like to be, but i'm not. i think it is zumiez. >> did you see that they just did a rebrand of abercrombie &

fitch? >> did they? >> by the way it looks like the old look pretty much without naked people. >> that was an easy fix to make. i would like them to tone down the cologne smell. >> when you walk into the store. >> or when you walk by the store. >> and finally hp inc. expects to cut up to 4,000 jobs over the next three years. also hiked its quarterly dividend by 7% and said it's upping its share buyback program by $3 billion. i'm starting to think i do like the smell, it's just a little too much. chris rock inking a record payday from netflix. the streaming service is paying rock $40 million for two -- two standup specials. that's it. the first one will tape in 2017. the deal is a loss for hbo which aired rock's previous five standup specials through 2008. i wish i understood the

economics of those. >> do we know how much hbo paid him? >> i don't know. >> netflix boasts about being cash negative. but two pay $40 million for two -- >> maybe this jump starts into comedy. they're already in with chelsea handler. so they could build up the stable. zblmplt in the meantime when we return, jpmorgan out with quarterly results. we're going to have analysis. and then don't miss this morning's interview with boston fed president eric rosengren. back in a moment.

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financials in focus. jpmorgan results are out. we're going to break down the numbers, talk about the state of the big banks, and get quarterly results from citi and wells fargo. a "squawk box" exclusive. eric rosengren joins us for a special interview for fr when rates will rise to the state of the economy. and we hit the road with n winnebago. >> honey, honey. tree. >> it's all right. >> find out what's driving sales from the company's ceo. the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with kayla tausche and mathisen.

thank you for being here. take a look at the markets. the dow up about 100 points and the nasdaq up about 20 points. >> futures getting better after getting jpmorgan. here's what also is making headlines this hour. busy morning for economic numbers. we're about 90 minutes away from the release of september retail sales and producer prices. retail sales expected to be up 0.6%. ppi seen rising 0.2%. after the markets open, investors will get a look at the latest readings on consumer sentiment as well as business inventories. sentiment expected to post just a slight increase. and a computer glitch delayed thousands of united airlines passengers for hours late thursday. the issue was with united's wait reporting system. united says the problem was resolved as of about four hours ago. and jpmorgan reporting just

a short time ago. wilfred frost is with us with the numbers. >> good morning. thanks, andrew. as you guys mentioned earlier, the revenue number came in at $25.5 billion. eps expected at $1.39 per share. a decent beat. let's look at why. the big surprise was really in loan growth. the extent of loan growth. strong q1 and q2. people thought it might slip in q3. it hasn't. it came in at 15% year on year. 2% quarter on quarter. coming into the quarter people were concerned about commercial loans. that was less for jpmorgan. smaller part of thart book. either way it came in at 10% commercial loan growth. that was the surprise there. this does lead to a bigger provision $1.3 billion, though, they say due to the volume of loans they're making. not lower quality loans. either way this will be something to focus on. where is this loan growth coming from?

is it something that concerns them? the other area of the beat was investment banking. it was strong investment banking that was expected a bit better though. particularly came for them in fixed interest. up 48%. and also rates they say was, quote, particularly strong. they cited anticipated central bank action and the brexit fallout as reasons for that strong performance in rates. worth noting that could also be good for citi who have a big skew towards rates. we'll look out for that. mr. dimon said, quote, they remain focused on our regulatory and control agenda. of course perhaps a little bit of a nod towards the wells fargo scandal. that will come up on all of the calls today. he did cite their fortress balance sheet. shares up on that beat. guys? >> okay. thank you, wilf. joining us on the "squawk" newsline is david george senior research analyst at robert w.

baird. what's your headline, sir? >> it was a really strong quarter across the board. as wilf said, they beat. and the upside was really broad based. but the big headline is just blowout capital markets quarter. up 48%. markets revenue up 33% year over year. a good quarter from jpmorgan. >> what's a fair price for the stock now? >> our target on the stock is 72. we review that based on our valuation work and pro forma -- >> so you're going revise that upwards? >> i can't really tell you. we're going to take a look at that and evaluate it later today but we continue to have an outperform and positive buys to the stock here. >> tyler asked a good question the last hour when the news came out and we asked about them beating earnings by so much, is that a function of jpmorgan doing a terrific job or a function of the analyst just missing it? >> i think it's a function of

good execution on the part of jpmorgan and frankly the significant strength in capital markets revenue. i think the street was expecting a very strong markets quarter from jpmorgan, but they did total markets revenue of $5.7 billion. it's probably $2 billion better than what we were forecasting. that revenue markets number as you know is significantly volatile to the more traditional banks. so the upside and volatility, this quarter was a benefit really stem from markets. >> is there a knit to pick in this report as you can see? >> not really on first glance. we're still taking an initial look. obviously i think there's nothing to nitpick about this particular quarter. the sustainability, obviously, of the strength in markets is probably something that's not going to continue in q4, in q1. would expect a positive reaction out of the stock but not to the

extent of the upside in the quarter. but that's really all we can point to at this point. >> that's what i was going to ask you about. wilfred just mentioned much was on the back of the brexit vote which happened at the very end of the second quarter. much of that activity was taking place in the third quarter. do you think that was a one-time gain? >> for the most part, yes. jpmorgan is executing very well. they're number one global investment banking and lead tables. clearly the brexit despite all the fear that the market had about it, it was really a boom for those that are big in fx and fixed income given the volatility we saw in both the currency and the fixed income markets of the last three months. so clearly that's probably stronger than it should be through the cycle, but nonetheless, they did benefit nicely because of it. >> what is your favorite bank and why?

>> we actually recently upgraded wells fargo a couple weeks ago. we think the 15% decline or so in the stock because of the well reported issues facing wells fargo has faced a great opportunity in that stock at just over ten times next year's earnings. we think wells is starting to look really attractive here. >> what's the one thing you want to look for at 8:00 when wells reports this morning? >> really are there any other shoes to drop from an account -- this account opening situation? and then has it really had any kind of day-to-day impacts on the operations of the company which we frankly don't expect? primarily due to the fact that the issues impacting wells had really no material benefit to the company. i think it helped by roughly $2 million of revenue. keep in mind wells does $90 billion a year of revenue.

fair fair fairly negligible. the treasury department taking steps to keep its companies in corporate taxes in the u.s. spoke with jack lew about the new rules to make inversions less profitable. >> i think that the purpose of this rule is to really demonstrate that while we need tax reform legislation, the push that is driving inversions and to make it by law impossible to invert or strip earnings, we in the mean time need to use the administrative tools we have to stop the erosion of our tax base, our corporate tax base. i think there's a lot of frustration in the united states and around the world in tax systems that don't seem fair. in taking this action today, i think we've shown we're taking

tough action to stop the egregious behavior but we're also listening and responding to reasonable concerns. >> more of sara's exclusive interview coming up later in the program. now for a look at the markets. our guest host for the hour, gabriella santis from jpmorgan funds who joins us now. we have to talk about jpmorgan the bank. i know you were looking for loan growth as a sign of growth overall in the economy. 19% is the average core loan growth for the consumer bank. do you think that's one company out performing? or do you think that gives us a little more confidence in consumer demand and the health of the consumer balance sheet? >> unfortunately we can't comment specifically on individual companies. but i think it's something -- this loan growth is something we're looking for in the financial sector as a whole. and it's one of the three main reasons we're feeling very positive on financials in the medium term. so in the beginning, loan growth was really all about commercial and industrial loans.

that was really driving the move there. and now it's become much more about consumer related loans. whether it's mortgages, whether it's credit cards. and if we look at the economy, we still see a healthy consumer. that's a big trend we expect to continue over the next few quarters and a big reason we're positive on financials. >> do you think the activity will switch places as soon as the consumer starts borrowing more heavily? maybe that means companies will sit it out a little more or a boom in overall borrowing? >> i think we're looking for a bit of a step down on cni loans and we're expecting the consumer related part of loans to pick up the tab here from now on. and that's a positive sign for what we can expect for financials and the consumer and hence the economy as a whole. >> about $6 billion in profits for jpmorgan. you were personally responsible for $4 billion of those. >> personally, yes. >> around $4 billion. let's talk about profits more broadly in the economy. people saying well, maybe the

turn in the cycle is here. do you agree with that and do you think that the fourth quarter is going to be the quarter when overall profits begin once again to rise rather than fall or just be flat? >> it is looking like this current third quarter might be another negative quarter. but to a much lesser extent than we'd been seeing in the beginning of the year. why? well, finally we're seeing the fading of a lot of the headwinds from the stronger dollar and low oil prices. as these fade, you would expect u.s. earnings to turn positive. now we look at 2017. now what? now that these headwinds have faded. it's all about growing that top line and that will depend on how strong the economy is in 2017 which we expect to continue at a 2% pace. >> do you think the third quarter weakness has been telegraphed well enough to the market that it's being priced in at this point? >> i think so. i think we've seen the normal decrease in expectations in the

third quarter. especially pertaining to the energy sector which was expected to contribute more before oil prices fell. so i do think so. and maybe we can even get a positive surprise in the third quarter. >> stick around. i know we're going to talk to you a lot more about fed expectations, about what we heard from the treasury. >> and politics. >> oh, boy. >> got to talk politics. coming up when we return, politics with her and the rv industry getting a boost in the past few months thanks to lower gas prices and other factors. we're going to hit the road with the ceo of winnebago and find out what's driving the rv market. still to come, fed for thought. boston fed president eric rosengren joins us for an improve interview. where the fed dissenter believes the rate should be. that interview is straight ahead right here on "squawk box."

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♪ the rv business is revving up. shipments of mobile homes and towables posting the best month since 1977 in august. that according to the most recent data from the

recreational vehicle industry association. joining us now is mike happy. that's the reason for the song choice there. he's the ceo of winnebago. welcome. glad to have you with us. shares up more than 40%. that would make even a guy named sad feel happy. mike, what is driving the growth here? why are people doing it? i've got to say i took a vacation with my family out to yellowstone. i was astounded at the number of rvs i saw on the road. >> been a great year for the industry. certainly the low fuel prices and low interest rates have helped. consumer confidence is in good shape. access to financing is pretty healthy right now for the potential rv customer. but more than anything, i think rv manufacturers are packing more and more value into rv products these days making them

more attractive tools for people to use as a leisure activity. >> a lot more technology in them, i'm sure. a lot more wi-fi and all of the tricks you would find in a technologically advanced home are now on homes on wheels. with things that drive the purchase decision, we focus maybe too much on fuel price. tell me which is more important to you. a rising fuel price? or a rising interest rate on loans? is credit really the thing that matters most? >> yeah, i would say credit is probably a more important factor to acquisition of a new rv than the fuel price. we generally look at fuel price and think about usage first within the industry. and where fuel prices are today, we think there's some significant runway that would have to happen with an increase in order to affect purchases. but really financing and the access to financing is probably

the biggest metric to look at. >> i would think that a rising fuel price might not influence the purchase decision but might influence your marginal propensity to use the vehicle. >> that's exactly right. we do see the rise of fuel prices have some impact on usage by those consumers that already own an rv. but nonetheless, 2016 has been a great year for the industry. almost 400,000 rvs will have been purchased in this calendar year. >> so the gross number of sales is up very strongly. what about the average selling price? what is it in your company if you disclose that, and is it rising as well as the volumes are rising? >> well, we really break our business down at winnebago into two legacies.

around motor homes. those are those you drive. and then towables which we're just now gaining traction. these days you can get a motor home rv from anywhere from $70,000 all the way up to a half a million dollars. whereas on the towable size, it could be $15,000 all the way up to $90,000 or $100,000. really we have a product for any price range customers are looking at. it depends how they're going to use the product. >> who's the average buyer? what is their demographic? what is their income? i'm sure it's different in terms of your different segments that the towable buyer would be a different demographic than the $300,000 or $400,000 diesel motor home buyer. >> yeah. a lot of people think the average buyer in the industry is the baby boomer. when in fact the average age of an rv buyer is in their late

40s. and that age is actually coming down. there's no doubt that the baby boomer segment is still very important to the rv industry especially on the motorized side, but we are seeing younger customers come into the rv lifestyle and use the products differently. they'll use them for tailgating, maybe having the kids around them at a soccer tournament, or going hiking on the weekend. and the rv industry is really evolving to try to attract younger consumers to the lifestyle. >> how do you find those younger consumers? where are they and how do you market to them when it's a big ticket purchase? it might not be something that a lot of millennials consider themselves willing to buy. >> yeah. at winnebago, we're trying to do some largely nontraditional marketing activities at least for our past. we're going to, you know, biking events and we're going to races around the country where people are engaged in fitness events. and we're showing them what are called class "b" touring vans

which are smaller, more compact rvs that allow them to get closer to the outdoor locations that they're spending time in. so we're finding that, you know, through social media engagement but also just being at the events that these consumers sort of gather at, that we can show them our brand but more importantly the types of products they might be interested in. >> mike, thanks very much. >> thanks, guys. >> we appreciate it. mike happe of winnebago. coming up next, snoop dogg cooking up a new show and you won't believe with whom. that's next. plus look at the markets. dow would be set to open up 100 points. "squawk" will be right back. d a. aflac!

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martha stewart and snoop

dogg teaming up on a new cooking show. you're not going to miss this. the trailer being released giving a sneak peek. the two are hosting a weekly dinner party series. it's called mt. martha and snoop's pot luck dinner party." vh1 describing the show as half baked evening of cocktails, cooking, and conversation where nothing is off limits. it will begin airing november 7th. >> i like that. i think that's really good. >> i assume they're doing a special version of brownies for dessert. >> yeah. snoop is such a preppy kind of a -- >> you can have that. >> snoop is a preppy guy. >> back to how many musicians are getting into cooking? quest love, coolio. >> when is kayla doing it? >> i don't think i'm a hip hop star. >> not yet. not yet. just give you time. coming up, we're going to

head up to boston. steve leisman will bring us an interview with the boston fed president eric rosengren. as we head to break, look at u.s. equity future suggesting higher opens. we'll be right back.

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welcome back to "squawk box" this morning. among the stories that are front and center at this hour, jpmorgan is in the books. the numbers are out but we still have two more big banks set to report quarterly profit this morning. citigroup will be out at the top of the hour. also playstation's unit is to release phone games. the games will be made both for app apple's ios system and google's android. and people flocking to pinterest. it has 150 million users. that's a 50% increase over a year ago. the not yet public company was valued last year at $11 billion.

kayla, you're our tech expert. when is pinterest going public? >> i don't think it is. i think it'll get sold before it goes public. >> who would buy it? >> unclear. but it is one of the only platforms where you can actually follow the user to a purchase within the platform itself. has a lot of powerful data. we'll see. but they could also go public. but i think there are a lot of companies that would rather acquire them. let's get a check on the markets this morning. take a look at where futures are. after jpmorgan reported, we saw a sharp increase in the futures. right now the s&p would open by nine. dow would open by 98 points. nasdaq would open by 18. of course this is following positive activity we've seen overseas for hours. europe, look where we are there. currently best performing market is italy and spain. both up close to 2%. asia closed well into the green after starting the week with

japan and hong kong on holiday. hong kong up by 1%. china is basically flat although slightly positive. we did see the biggest weekly drop for the yuan since january. one of the major points of focus this week. crude pierced 52 bucks a barrel earlier this morning. it's currently up more than 1%. take a look at where we were on interest rates. we're going to hear from eric rosengren of the boston fed. in a few minutes' time we're going to talk about whether the fed is going to be perfectly set for a rate hike in december. currently the 10-year yield sitting at 1.77%. and we'll look at the dollar who is strengthened through the course of the week. we're getting interesting news about perhaps the fate of brexit. whether it's a hard or soft brexit. so the pound continues to be the way the traders play and certainly we have seen some dollar strength against the yen and the pound on macro news this

week. finally let's look at gold as well. gold falling slightly. 1254 per ounce. we're awaiting eric rosengren as i mentioned. what do you want to hear from him? what do you think the fed has left to say? >> one of the things i would love to ask some fed members is around this debate they're having within in the fed about r squared. and this is a conversation about what is the neutral real interest rate right now. it's striking when you hear yellen speak at press conferences for her to say we're not actually very accommodative right now with interest rates near 0%. that's not much accommodation. there's this debate within the fed about how accommodative are they right now. i think that makes it very tricky for us to gauge their function. >> do you think the big thing in 2017 is going to be incipient

inflation? >> we do. >> why? where do you see it? wages? >> we see inflationary pressures already. right? they're being masked of course by the fallen energy prices and the strong dollar. but we see inflationary pressures and services already. think about health care, education, rent. those are already going up. so if we do get a little bit more wage growth with such a tight labor market, then inflation will definitely creep up next year. >> gabriella, thank you. janet yellen speaking at the annual fed conference later today. but now let's go live to the boston fed conference where steve leisman joins with us a special guest. hi, steve. >> good morning. i'm here with eric rosengren, the president of the boston federal reserve bank and one of three dissenters at the last federal reserve meeting. thanks for being with us. >> great to you in boston. >> you dissented. you went away from the majority of the committee. what were you thinking? >> my views haven't changed.

what's changed is the economic conditions. so when we have an unemployment rate around 10%, we should be very aggressive in our monetary stimulus. when we have conditions like we have right now which is we're very close to full employment, unemployment rate currently is at 5%, and core inflation is 1.7%. it's relatively close to 2%. still below our 2% target. those conditions are very different. at this point i'm as concerned about overshooting on what is a sustainable unemployment rate. and at that point i have to be concerned about whether if we did overshoot significantly on the unemployment rate, whether we would end up tightening much faster and possibly shortening the recovery. >> when you came in and you got the vote in january, the unemployment rate was 4.9%. what's different about the current 4.9% that makes you more nervous about a tighter job market than the 4.9% unemployment rate in january?

>> it's partly tied to our forecast. so if you look at private sector forecasts and if you look at the boston fed's forecast, we're forecasting an unemployment rate that's going to go below what we think is a sustainable unemployment rate. so our personal -- the boston fed forecast is for 4.7%. that's a little bit on the low side for the fomc more generally, but our own forecast is that by the end of next year, we'll be around 4.5%. by the end of 2017, we're likely to be around full employment. the gdp growth looks like it's going to be strong enough in the second half of the year to continue to provide the unemployment rate to be drifting down. and it's very consistent, actually, with what most private sector forecasts have. >> some of your colleagues including the fed chair janet yellen have used this concept of room to run. and one of the things they point out is over the course of the

past year the unemployment rate has been stagnant. 4.5% up or down in that range. and we've been growing jobs 100,000, 200,000 a month. and 3 million people in the last year have come into the workforce. and that has surprised them. why aren't you on board with this concept of giving the labor market room to run to see if we can bring some of the millions of people who have dropped out of the workforce back into the workforce? >> so it's obviously good news we're bringing people into the workforce. the question is how much longer that's likely to happen. actually, one of the papers at our conference is by alan krueger. and it's actually talking about how people are coming into the labor force. and it highlights that for people out of the labor force, actually, we haven't had over the course of the recovery as many people -- the transition into being in the labor force has not been that great. and he is arguing that it's quite likely that it's not going to be sustainable. and so that if we continue to get growth above potential, it's going to show up in an

unemployment race that goes down. and there are clearly benefits to having a low unemployment rate. if we get to the point where it becomes unsustainable, then we have to worry about raising rates much more quickly. >> you're also concerned about some financial asset prices out there. you mentioned commercial real estate. is that one of the areas you're still concerned about? >> in my remarks today, i'm going to talk a little bit about some of the financial implications of some of the anomalies we've seen in this current recovery. as you know, our conference is about the recovery, not just about the recession. i think there have been a number of anomalies that it's important to take a look at. i'm going to be looking on the financial side, commercial real estate is one area that i'm concerned about. a 10-year rate that's roughly where we think inflation is right now is quite a low rate for the 10-year treasury rate. so the fact that long rates are so low and that there are some sectors of the economy that we're starting to see very rapid asset growth like commercial real estate is a source of concern as people start moving

to try to get higher returns. because we've had low rates for a long period of time. >> so it seems like there's two different things going on. one is that commercial real estate prices of existing real estate. but there's not a lot of construction of commercial real estate going on. i know you've talked about the cranes in boston. but nationally when i look at the investment in structures, it's not been very strong. maybe it's not a policy -- maybe it's an issue of investment. >> so part of it is looking at the composition of the investment. we have had an oil slowdown as a result of the oil prices going down. they've now more recently come up. but as a result we had a lot of investment into infrastructure tied to the oil industry. that declined when we started to see oil prices decline. at the same time if you look at apartment buildings and other kinds of construction, it's been relatively robust. >> so what kind of fed funds rate do you need to slow down the commercial real estate industry. >> so my hope is that we do it slowly and gradually. the longer we wait, the more

likely it is we're going to have to do it more quickly. obviously you don't set monetary policy to one asset class, but i think it's symptomatic of what happens when things become less sustainable. whether it shows up in inflation or asset prices, it's a little hard to determine. but that's why i'd like to have an economy that is at a sustainable unemployment rate for a longer period of time. >> i was looking at the difference between the 10-year bund and the 10-year treasury. 171 basis points gap. how much further can the u.s. move away from what's happening in europe and in japan? they have negative rates. we have positive rates that you want to make more positive. >> we have to do what makes sense for the u.s. economy. one thing that will slow down the u.s. economy is if we raise rates faster than other countries which is what you're highlighting. that the exchange is going to

move when it moves it slows down our economy. that's incorporated in the forecast. most forecasts are growing 2% or faster. that's what we've had most of this recovery. and we've had the unemployment rate declining most of this recovery. so i think that poses one of the risks which is if we get unemployment to 2%, it's no longer sustainable. >> how much do you have in a place that causes inflationary dangers. i do think that we are seeing both wages and prices gradually rising. that's consistent with being very close to full employment right now. so i think it's a positive trend that we are seeing the wage growth and i'm expecting to see more wage growth. but that also highlights that we're not that far from full employment. because when you're at full employment, that would be the time that you'd expect some gradual increases in wages and

prices. >> can you give us your trajectory where you think interest rates will go from here is one enough this year for the federal reserve? and what happens in 2017? >> so i'm not going to be specific about the exact path of interest rates. the summary of economic projections highlights that by the end of next year we're expecting to be a little bit above 1%. then the following year a little bit below 2%. my own view is that if the unemployment rate falls as much as i'm expecting that it is possible that we'll have to raise rates faster than as projected by the summary of economic projections. that's also faster than what the market currently has priced into financial contracts. >> talking about market pricing, the probability of a fed hike in november right now is below 9%. is the market mispriced there?

i do think that we have to consider where the economy is right now. we have tended to move around the times that the chair has a press conference. 60% to 70% over the last week or two. to me that seems appropriate. i dissented in september so i think the conditions were strong enough in september to make a move at that time. the market seems to think there's a high probability in december. we'll see how the economic data actually comes in. >> we better leave it there. thanks for joining us. eric rosengren at the conference about what happened to the great recovery. some terrific papers coming up here today tyler? >> all right, steve. thank you very much. guys, i'm not sure that he could

be any more clear. >> i think he did set up december. they said relatively soon is probably appropriate. >> unless the world changes. >> unless something happens. >> which it has every time. >> something's happened. >> nothing. nothing going on. coming up when we return, iron man reaching out to help mark zuckerberg. plus a steel cage match between a diver and a great white is creating quite a buzz this morning. we're going to show you some pictures. and later earnings from citi and wells fargo out at the top of the hour. the reaction straight ahead. and a programming note. "half-time report" with scott wapner hitting a big mark. monday david tepper, carl icahn,

nelson peltz, jamie dimon, also bob kraft. it all starts on monday at "half-time" at noon. "squawk" returns in a moment.

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welcome back to "squawk box." mark zuckerberg is looking for a voice to an artificial intelligence system to control his home. he posted on the social media site it's time to give my a.i. jarvis a voice. who should i ask to do it? it was only a matter of time before iron man himself came to save the day. now, robert downey jr. offered to be the voice of zuckerberg's a.i. system. he's been talking about how he's been playing with a.i. in his house and trying to develop a whole system. >> i suggest a different iron man. jeremy irons. >> that would be good. >> little spooky. >> john lithgow would be good. >> got to be morgan freeman for sure. i'm sorry. >> if you want the voice of god, that's where you go, right? that'd be a good business for him. >> i've got this amazon

earthquaecho. i talk to alexa all the time. she understands me. siri doesn't. but alexa gets me sometimes. >> she gets you? >> she does. and i get her. >> no, it's true. but it's limited. you only ask it -- the reason why alexa understands you is you are limited in what you ask her. with siri, you think that you can ask siri anything. >> anything. but, you know, is alexa listening to me all the time, you think? that's what some people worry about. that she's listening. she's not going to hear anything in my house. >> supposedly it doesn't actually send back to headquarters, if you will, what you're saying until you say the word alexa. >> okay. >> but it is listening. >> no, it's listening for the word alexa. the second you say that, everything is -- because it's not processing it internally. it's basically sending -- whatever you say is being sent to amazon, they're figuring out

what you're saying quickly and then sending it back and giving you the answer. >> like i say what's the dodgers score and she gets back to me fast. >> and you can't figure that out? >> well, i don't talk to siri about that. i'll ask her. i got it right here. all right. let's move on. just when you thought it was safe to go back in the water, a shark cage -- check out this video. a california man in this video -- terrifying moment. great white shark breaks open and enters the shark cage. look at this. oh, my gosh. the shark leaped out the top. the diver emerges shaken but unharmed. there is the diver. i would be moving very fast there. >> and that is why people are scared of doing those cage dives even though people say it's steel, they can't get through it. oh, man. >> and i guess the shark got away, right? the shark got away. good for the shark.

shark one, man zero. coming up on "squawk box," we wrap things up with our guest host for the hour. find out what jpmorgan's gabriella santos is expecting for the rest of earnings season. and on tap, wells fargo ready to report. the numbers and market reaction moments away. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement

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let's take a look at stocks to watch -- >> look at that guy. >> what? >> they were looking at you. but your pretty face is over there. >> a cash flow forecast. but the computer and printer maker did say it expects to hike its dividend by 7%. also added $3 billion to its stock buyback program. said it's going to cut up to 4,000 jobs over the next three years. honeywell shares are gaining this morning. the ceo told our jim cramer last night he did not properly convey the outlook during a recent management presentation. the stock fell immediately following that event earlier this month. and the rail operator union pacific was added to the focus list at citi group. considering improved shipment

volume numbers. let's get back to our guest host this morning. gabriela santos. yesterday's story in the market began with china. and the decline in exports. are you worried about china? >> i think china's going to be many the headlines for years and years to come. it's a delicate balance. this big transition. they're trying to engineer in their economy. so far we think that they have been successful in stabilizing the big deceleration we had seen towards the beginning of the year last year as well. but it's going to be a constant balancing act. between reforms and stabilizing the economy. i think we're likely to see these episodes. >> ep soetisodes like we saw la august or this january? >> perhaps not as extreme as last august because we feel more comfortable with the government's ability to stabilize the economy. but we are likely to seal in

extra volatility on china. >> i promised we're going to talk politics. >> oh, i thought you forgot about that. we were so close. >> so what's going to happen? i want to know what happens if either candidate wins. does it matter? >> it does not matter at all. >> even though janet yellen would lose her job if donald trump wins. i would think that would matter to you. >> the way we've been thinking about the election, we've been talking about it as an election of extreme but a government of moderation no matter who wins. >> doesn't matter. >> and so it's not to say it doesn't matter at all. it matters for surgeon microsectors. but when we think about the economy and returns and how our clients should be invested, we don't think we should wait for the outcome. >> what do you think happens to global trade? >> well, that's -- i think it's not as much about who wins the election but around the general rhetoric around trade. right? and that's not just in the united states but it's also in

europe. and we're kind of concerned about that. as a driver of productivity. as a driver of growth. and so we are concerned to that extent about this recent rhetoric against trade. >> what presidents can do on trade is one thing. but what they can do with tariffs is quite another. i don't think they have quite the limitless power to move on tariffs that they might have to move on trade agreements. gabriela, thanks. >> thank you so much. coming up when we return, citigroup and wells fargo quarterly results. check out shares here. we will see if numbers can help turn things around. "squawk" returns in just a moment. go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view,

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earnings alert. jpmorgan beating the street. up next citigroup and wells fargo rolling out quarterly results. we'll bring you the numbers as soon as they hit the tape. new this morning, the u.s. treasury lays out rules to curb tax inversions. exclusive comments from treasury secretary jack lew straight ahead. plus breaking economic news. key numbers on inflation and the american consumer as the final

hour of "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" right here on cnbc. i'm andrew ross sorkin along with kayla tausche and tyler mathis mathisen. we're waiting on two key economic reports. retail sales and the producer price index. take a look at the futures right now. market looks it will open up higher. a little bit in part the jpmorgan numbers were good. we're going to be getting wells and citi soon. would open eight points higher. check out the 10-year t-note yield right now. 1.773. kayla i believe is looking at

those numbers. >> beat on the top and bottom lines. revenues $7.76 billion is what came in. the estimate is slightly below that. we are seeing strength in markets at citigroup as well. strength and fixed income. it looks like most banks might be seeing strength in the quarter because of all of the activity following the brexit vote. this is the quarter where the credit card portfolio was put into place with visa. we are seeing loans up 12% for citi and that compares to the same time last year cards purchased sales up 30%. so that growth is pretty much coming right away with the addition of that portfolio.

i think that was fully put into effect the third week in june. so that activity would have been fully priced in in the third quarter. >> it's amazing that one retailer can make that much difference. >> not just any retailer. >> it's not just any retailer, but made a big difference to american express when they lost that. obviously making a big difference to citi. huge. >> wilfred frost is covering the wells fargo story. >> thanks very much. just the headline numbers for you first of all. we were expecting 1.01 for eps. we got $1.03 per share. that's a nice little beat. in terms of revenue, very close to consensus. $22.2 billion was consensus. we got $22.3 billion. so this is a small beat relative to quite a significant beat we saw earlier for jpmorgan. we're looking in terms of reserve build. it says no reserve build or release consistent with the

third quarter. that's in terms of credit quality. loan growth came in at 0 0.7%. loan growth for the sector as a whole was 1.6%. some people forecast it to come down closer to 1% in this quarter. jpmorgan blew it out. wells fargo for the quarter on quarter growth 0.7%. so a little bit softer in terms of loan growth. on the eps number, a small beat. >> thank you very much. jpmorgan as wilf mentioned beating the street and big-time revenue also above forecasts. profits did, however, fall from a year ago. jpmorgan did see commercial banking income as well as double

digit gains and deposits and loans. there you see the stock up president. other stocks we are watching this morning, pnc financial beating the street on the top and bottom lines as well. the bank says its capital levels are strong and that loans and deposits increased compared to last year. it's also adding $3 billion to the stock buyback program. hp also saying it will cut 3,000 to 4,000 jobs over the next three years. stock down close to 2%. and hershey's announcing the ceo john bibrey will retire. the board has appointed a special committee to find a new ceo. issuing final rules to crack down on those tax inversions. that's when a company is in a

low tax company. new rules crack down as well on so-called earnings stripping when the u.s. subsidiary avoids on domestic operations by sending them overseas as tax deductible interest payments. sara eisen spoke to jack lew in a cnbc exclusive interview. >> i think that there's a lot of frustration in the united states and around the world in tax systems that just don't seem fair. and we've been saying it for a long time. we've taken action. and taking this action today, i think we've shown that we're taking tough action to stop the egregious behavior. but we're also listening and responding to reasonable concerns. >> much more of that exclusive interview in just a few minutes including lew's thoughts on the european banking sector. one of many factors keeping investors busy. joining us is rebecca patterson, chief investment officer. also a cnbc contributor and

friend of "squawk box." >> thank you. >> put all those things together. >> yes. >> so i don't know if you remember this. you took me for a ride as it happens -- do you remember picking me -- >> yes. >> i needed a taxi. >> i saw andrew on a street and did a good deed for the day. >> you did. you dropped me off. in the car i said to you over the summer -- >> i remember. >> and you were exactly on the mark about what was going to happen to the market in terms of not just what was going to happen but the way the analysts forecasts were going to go. >> it was good. i should do that more often. >> i want you to do it again right now. >> okay. so what's going to happen? >> you understand to a tee. i was telling many i wife after. and by the way, i didn't listen as much as i should have. i own some mutual funds. she told me -- remember that? anyway. sorry, this is like an inside conversation. but it was amazing. >> well, do it again, will you? >> do it again for everybody, please. >> our clients' portfolios have

gone mutual equities. because we think even though there's some upside for equities from here, our view, we think it's more limited now. valuations are higher. the economic expansion is longer in the tooth. we're seeing that with payroll growth slowing, profit margins rolling over. so we don't want to be over on risk. that said, we do want to own equities. we think that so many people today and you see them coming on your air all the time are so negative about everything. geopolitical risks, political dysfunction, the economy, income inequality. and they're all real. but a lot of that is priced in the market. what happens if next year after this election we do get some fiscal stimulus. or the fed does move very slowly of or china which we saw their ppi inflation numbers this morning which are positive which is a really big deal. china can muddle along for another year. so if we have a decent global economic backdrop and stocks can still keep going, you want to say in the market. you just don't want to get over your sees. the more risk of just pockets of

volatility. like we saw on tuesday. >> what does neutral on equities mean? >> that's a super important point. because it's different for everybody. i tend to think of myself still as a younger investor. i have a long time to invest. and so i don't need to have a lot of liktty today. i can take a longer time horizon. so my neutral for a portfolio might be 80% equities, 20% defensive assets. whatever you want to describe that as. for someone else it might be 70% equities or 50% equities. when you say you're going neutral, that's -- >> it's your own baseline. >> where you are comfortable based on what you're trying to achieve as an investor which is going to depend on how you sleep at night. if january, february, this year kept you up all night, you shouldn't have a lot of risk. at the end of the day everyone needs sleep. >> during the commercial break you were calling this some of the parts of the market. >> yeah. >> are all the parts equal?

>> no, of course not. the earnings season is right now. right? that's our news today. and so that's what the market's focused on. i think we are going to have a better earnings season. i find we always beat -- >> that's only because estimates came down. >> exactly. that happens every time. earnings matter, but i think that's more security by security. and you do get some macrodata out of that. but that one i put aside. i think the election matters a lot. and it's interesting. i was at a meeting yesterday with a lot of other investors. and they basically want what america doesn't. you know, if we have status quo, if the government stays dysfunctional effectively, we can't get anything done, that's what a lot of investors want. because policy continuity. if off democrat sweep or a republican sweep. you have a greater risk of a major policy shift which is disruptive. so if you think what is the equity market going to do

november 9th, the best is if you have a president and you have a congress and they're not all the same party and so you have some checks and balances. that's probably your most optimistic. and that's to me probably the most important near-term event to watch. i think china is hugely important, hugely important. and it's so hard to follow because it's opaque. it's such a different government system, economic system. but the ppi, a producer inflation number that came out last night, positive for the first time in years. to me that's a really important data point. ppi in china has a very high correlation with nominal gdp growth with a nominal economy. so that number if we can see it persist for the next few months and i think we will, i'm not saying it's rebounding. well, the trade data was a little messy. the imports weren't that bad. but there was a currency effect impacting that number. so i think the market overread it in the short-term. which again is the -- >> 10% was a big number. >> it's a big number. but people don't know china like

they know america. and so sometimes i think they misinterpret it on a knee jerk basis. it's a different economy. you have to look at the data differently than you do here at the u.s. or western economies. i think china muddles through and that's good news. i think there's -- barring some major shock with the election or something else, i think we're going to have some positive equity returns going into next year. and i think we are poised hopefully, fingers crossed, to have some inflation. so cyclicals can do better. >> given we were talking about banks all morning, would you own banks? your former employer jpmorgan. >> i can't talk single funds. we do own a number of u.s. banks. some larger, some regional. and a lot of it's going to depend on the yield curve. if the fed hikes in december, all else is good news for the banks. if we have a political outcome, you know, people are so scared about the regulatory reaction if

we have a democratic sweep or a democratic president even. sop more regulation on the banks. but we all know campaign rhetoric is rhetoric on both sides of the aisle. and what they do in office isn't necessarily reflected on the trail. so i think everybody just needs to take a deep breath and say, let's see what happens after we get through november 8th. >> okay. you're going to be sticking around? >> am i? >> maybe not. i thought she was. sorry. >> you're welcome to. >> we love her so much. it's always nice for her to comment. >> you can be late to your day job. it's okay. >> riding in cabs with andrew. there's a tv show there. >> car karaoke, that's next. >> you can just pick people up. >> we can do some financial songs. >> pick up random journalists. >> good to have you with us. >> good to see you guys. the treasury department finding new rules. we're going to hear more from jack lew and what he has to say about the european banks. those exclusive comments are next. stay tuned.

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the treasury department rolling out new rules to fight tax avoiding companies again. this time it's going after what's known more specifically at earnings stripping. it's the strategy where companies use u.s. subsidiaries to take loans from foreign parents in order to avoid high u.s. taxes. our sara eisen spoke exclusively with jack lew about that and other issues plaguing financial markets right now including the health of european banks. >> we continue to see some of these cross border regulations. you mentioned the eu and apple. right now the doj's fine of deutsche bank is causing a lot of stress. a lot of people see that as retaliation for what the commission did with apple and the u.s. >> i'm not going to comment on any specific law enforcement matter. i think that the situations are totally different. state aid is a different concept than we have in the united states. we think that it was applied to a tax matter in a way that was

unfair. we've said so. but that has nothing to do with law enforcement matters. >> as far as monitoring the stability of the financial system, how risky do you see the european banks right now? banks like deutsche bank dealing with negative interest rates and weaker capital positions than those in the u.s. >> i think that european banks are in a better place than they were before. they are better capitalized. had much better results than would have been the case before. but i've said many times we've built up more capital, we've done more in terms of resolution. we're one country so it's easier. but we have banks that are more resolvable. the more europe does to build up capital to have its banking system have the kind of protections that we have, the better. but it's much stronger than it was. i think, you know, you saw after the brexit vote that there was a

lot of concern that there'd be a loss of confidence in banks in the united states, in europe, in not just the uk. there was a volatile moment. but things kind of restabilized pretty quickly. that was actually a vote of confidence that the financial systems were better than they were. it doesn't mean they're all the way there. we have pressed for europe to do more. and we're glad that they've improved from where they were before the financial crisis. i think we've proved in the united states that when you take massive a accident to fix your financial system, it builds a strong financial system. that's actually a good thing for the prospect for u.s. growth. >> and yet we still have questions about the u.s. financial system, bad behavior in banks. i know you spoke at delivering alpha last month about the wells fargo situation. does stumpf resigning matter? >> you know, the decision about who should be ceo is for the board and the executives of the company. i think what the whole set of events around wells fargo shows

is that anyone who thinks that it's yesterday's problem to worry about whether there are abusive practices, whether there are predator practices, it is still an important issue for today and tomorrow. you know, we created a consumer financial protection bureau that is on the beat now. it has levied a large penalty in this case. there are some people who want to roll it back, take its power away. i think it's a mistake. we saw in 2007, 2008 how bad practices, bad consumer practices could actually accumulate and contribute to a financial crisis. i don't think this has that characteristic. it's bad enough that it just takes away people's confidence and trust and their own banking relationship. we need to protect consumers and we also need to protect the financial system and we shouldn't be rolling back wall street reform. >> you can find more of sara's interview with jack lew right now on cnbc.com. and back to today's big bank

earnings stories. wilfred frost just off the phone with jpmorgan's management. >> yes. been listening to the cfo marianne lake. in response to questions about the recent wells fargo scandal, she firstly said she wanted to put front and center, we put customer experience front and center. did admit they are doing quite a deep dive into the potential issues in their own bank -- sorry, potential issues following wells in their own bank. they're doing a deep dive investigation. she said, quote, i find no systemic issues. i said did that mean they found some issues at all? she said yes, they have identified some cross selling issues in their bank. she added, quote, it's impossible to have zero defects. so just to really clarify this. no systemic issues. but they have found some cross selling issues of their own. but very much think it's not a systemic problem and that they put customer experience front and center. i'll add a few more details in

terms of the actual numbers. decent beat for jpmorgan this morning both on strong loan growth and also strong trading revenues in the investment bank. on the trading revenues as kayla and i were discussing earlier, they did put part of that down to a bounce post brexit. that was one of the reasons particularly for rates doing so well in july. that carried through the quarter into the next two months of the quarter. largely she attributed that down to central bank revenue. it's interesting to hear her say that that has continued into the fourth quarter so far. so there's quite a bullish factor that those factors have carried through to this quarter. they're of course saying with the election coming up and a potential central bank action, it's too early to say if it'll continue through the whole of the fourth quarter. guys? >> all right. thanks so much, wilfred frost with that conversation. joining us now, marty mosby of bank and equity strategies. of the three banks that have reported this morning, which one do you like the best? >> well, i think the reports have all been positive.

what we are seeing is the money center and the capital markets revenues are really pushing citigroup and jpmorgan higher. i think what we came to citigroup is one of our favorite banks. we believe the leverage they're getting showing improved probability here will have a little bit more momentum for their stock price. and what you'll see is the growth and tangible book value as they're buying their stock back at a significant discount. so the capital deployment will be something that builds more momentum through the day. >> and citigroup shares are up 2%. the whole sector is really on the rise this morning. but they did have much lower loan growth, marty, than we saw at jpmorgan. we also saw 34% decline in equity revenues. is it as solid across the board for citigroup as it looks for jpmorgan? >> well, what we're seeing with jpmorgan is they've stayed

infor investing and growing where you're seeing some pullback like in citigroup and morgan stanley. so they have outperformed a little bit. but we are seeing the momentum of the overall just markets and the activity we're seeing there should rise all tides for all these money center banks today and then next week we seereleas. >> what questions do you have for management as the calls are about to get under way? >> what we're going to be looking at is one, how much of this is sustainable. we just heard is talking about spilling over into the fourth quarter already. as much as there was in rates in brexit, there was also a big shift in corporate bond spreads. as corporate bond spreads started to come down, what you saw was two things happen. one, investors beginning to -- and the reason they were coming down shifting over to get risks

and yield. as you saw those spreads collapse, you also saw companies start to come in and take advantage of those narrow spreads and low interest rates which is why you saw debt underwriting also do well this quarter. >> marty, i know you have a busy morning ahead. we'll let you get to it. coming up, we have some breaking economic news. we're going to bring you the numbers and the market reaction right after the break. "squawk box" returns in a minute. what's going on here? i'm val, the orange money retiment squirrel from voya.

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welcome back to "squawk box." breaking news! litany of data. september read on retail sales. up 0.6%. that's pretty much exactly as we expected. strip out autos, up 0.5%. strip out autos and gas, up 0.3%. the control group. taking all these little pieces, smacking them into one unit and then plugging that in other calculations and we end up with the control group up 0.3%. none of this is bad. all of it is pretty close to expectations. and there were some subtle revisions to last month but not huge. down 0.3%. headline is now down 0.2%. and now let's look at our inflation read at least on the

far side of the spectrum. let's look at producer prices. if we look at final demand month over month, that was up 0.3%. now, arguably that's a little hotter. we were looking for 0.2%. strip out food and energy, up 0.1% was expected but we ended up with up 0.2%. so another tenth hotter on that as well. month over month ex food and energy, the core we want to keep a very close eye on this on the trade side. that's up 0.3%. then maybe the final demand year over year up 0.7% is also a bit hotter. so every metric here is hotter. if we look at those year over year numbers, up 0.2%. also a little bit hotter than last look. but we did expect it. let's synthesize this together.

yields hovering a smidge higher than they were. but keep in mind here's the next story of the day. we can look at all of the issues and look at global macro. it's not going anywhere any faster than we anticipated. but yet considering all of that we see that yields started to move up even before the data was out. and that is important. there's something going on on the long end with sovereigns. and it's pushing back on central banking policy. and we need to be cognizant of this especially at times where the journal points out mario draghi is running out of things to buy. and look at some of those names. i wonder who makes the decision which companies to pick. tyler, it's cool to hear your voice on "squawk box." >> hey! >> back to you. >> thank you very much, rick. appreciate it. all right. for more on the data, let's bring in steve leisman live from boston where he's been talking to fed governs and the like. steve, what do you think? >> so this is a good number for the consumer. the retail sales number up 0.6%.

motor vehicles and parts up 0.1%. it's a reversal and then some from the august numbers which were revised to be slightly better. you had a surge in gasoline prices during the month. sporting goods and hobbies up 1.4%. we like to look at that to see how discretionary spending a going. i didn't like the number that is the control group. i think that number is just up 0.1%. that's the number that passes over into gdp. we'll see how folks later today end up incorporating that into their gdp. my guess is that's a bit of a disappoint. and stuff translates from this report directly into the gdp calculations. other stuffs like autos they get from elsewhere. we did get to talk to eric rosengren about rates earlier. that's something the market is going to be thinking about.

here's one thing he said about hikes. >> my hope is that we do it slowly and gradually. the longer we wait, the more likely it is that we're going to have to do it more quickly. obviously you don't set one monetary policy to asset class. but it's symptomatic. whether it shows up in inflation or asset prices, it's a little bit hard to determine. that's why i'd like to have an economy that is at a sustainable unemployment rate over a long period of time. so. >> just a quick word, guys. rick is right that the producer prices were a touch hotter than expected. when you look at a year over year rate of 0.7%. it's hard to get excited about inflation coming from the wholesale level. price gains have been very muted. and it's hard to think that there's a whole lot of push coming from the wholesale level. maybe a touch of pressure on

earnings and mortgages right there. >> you know, steve, one question about the producer price index. is that really just goods? or services in there at all? >> no. i think they did incorporate services recently. there is now a services index in there which is a great question. because we've had two -- a tale of two different economies when it comes to inflation. on the good side is where the deflation has come from. the services side is where you've had inflation. and there are a wholesale services number that rejiggered the ppi a year or two ago to include services. and that, by the way, because i know you're to answer this. for services in the index. >> all right, thanks. >> before steve goes, i don't know if you saw this poll we talked about some of the numbers earlier. this idea that the american public doesn't trust any data specifically numbers.

>> yeah, very disconcerting to me. i know. i know. and some people work at cnbc are part of that group who don't trust the data. so that's an issue. we've said as much as we possibly can. i don't know that there isn't 25% of the public out there on a consistent basis who believe that the sky isn't blue. you know? so maybe there's some kind of constant of conspiracy theorists out there in every population. maybe i should hang my hat on the idea that 75% appear to have some belief in the economic data. >> steve, we don't have any data whether those respondents believe the all america survey, but i would believe 100% of them do. >> if i gather it and do it, it's 100% accurate. i can guarantee that. it's just like ivory soap. >> steve leisman up in boston. thank you. coming up, a tale of two tech companies.

twitter's troubles and snap's appeal. we'll talk about the future of social media. "squawk" will be ragt become.

what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.

. welcome back to "squawk box" on cnbc. take a look at where the futures are right now. they have been climbing higher after the financials began

reporting earnings throughout the morning. we are off the highs but the dow would open up 88 points. financials are in focus. shares of the big banks have been positive throughout the morning. jpmorgan kicked it off with earnings just about two hours ago. that stock is up by 1.5%. citigroup 1.5% as well. all banks that have reported all topping wall street estimates on the top and bottom lines. as those conference calls are under way, i'm sure we'll have a plethora of headlines. chris rock in media news inking a record payday from netflix. sit down for this one. the streaming service is going to pay rock $40 million for two standup specials. the first one will tape in 2017. the deal is a loss for hbo which had aired rock's previous five standup specials through 2008. >> we can't find info on how much he got on previous deals.

but i can't imagine we're even in league with what's going on here. also he hasn't done a standup in eight years. which makes this maybe more attractive. >> what about the oscars? >> i don't know if you get paid for that. >> he must get paid. >> we'll look that up, too, for the audience. >> viewers, help us out. meantime, martha stewart and snoop dogg teaming up on a new show. the two are hosting a weekly dinner party series on vh1 called "martha & snoop's pot luck dinner party." describing the show as half baked evening of cocktails conversation. nothing is off limits. >> for anybody who needs a little levity going into election day. >> and they'll be filming that show probably in colorado. maybe the state of washington. >> yeah. >> lots of edibles. >> yes. dessert. >> martha's brownies, a new

twist. >> a new twist. other news to tell you about, mark zuckerberg is looking for a voice to an artificial intelligence system to control his home. he posted on the social media site it's time to give my a.i. jarvis a voice. who should i ask to do it? it was only a matter of time before iron man himself came to save the day. that being robert downey jr. offering to be the voice of zuckerbe zuckerberg's a.i. assistant. >> two big tech stories front and center. twitter advanced to talk to a sales force to sell itself. meanwhile snapchat ready for what could be the biggest ipo. our next guest is at the helm of one of the valley's top venture firms. and to weigh in on more.

they've had 43 portfolio companies acquired in 94 ipos. joining us is the trinity ventures general partner. good morning to you. >> good morning. >> first of all, does salesforce and twitter make sense to you at all? >> yeah. i think, you know, if you think about twitter as a data company, as an extension of what salesforce is doing with chatter internally, that data is pretty valuable for salesforce. because it's a way to measure customer sentiment. and also do customer relationship domain. which is what salesforce has been interested in. so it does make sense. and i think it is something that they are look at very intently for quite some time. i think that twitter's data has been undervalued in the market. and i think many of these companies as they look at it, they're thinking of ways to

extract value asset. >> let's talk about that. twitter thus far has struggled to figure out an economic model to monetize whatever you think the value of that data is. what has you convinced that salesforce could have it better? >> because salesforce isn't the management business. and many businesses use twitter already. companies such as bird eye which happens to be one of our companies actually provides a platform to allow small and large businesses to do analytics on customer sentiments and also do analytics on management and experiences. that is something that i think salesforce is interested in developing and providing to its customers. >> but twitter considers itself as of last week the peoples news network. it doesn't view itself as a data company. do you think it will have to begrudgingly? >> well, i think the two can co-exist. you know, the data asset is

built because of its value in the consumer domain as a pulpit for not generalists, not just celebrities but also politicians. there's a lot of data there about sentiments on not just happenings in the social domain. but also happenings around products and services that are important to businesses. >> what would happen to twitter if donald trump stopped tweet, ajay? i can't imagine. is -- we talk about salesforce and twitter. is it the best fit for twitter? or is there another company that could be better in your view? >> well, you know, there were rumors that facebook and also disney were looking at twitter. and you can see why facebook would also be interested. facebook's business is primarily built around connecting circles of friends and families. and this gives them an extension. twitter's domain is more about strangers connecting with each other, exchanging information

and ideas. sometimes not in a pleasant way. and i know that the twitter numbers have in terms of engagement have gone up since the elections for both parties. so i would imagine that some of these buyers are waiting to see what happens to twitter's engagement numbers after the elections before they make their moves. >> what would be a fair price? >> well, they're roughly around $12.5 billion or so last i looked. it would probably be a slight premium to that. i would imagine the $15 billion type of range. >> and can we talk about snapchat for a second in a meaningful way? >> sure. sure. snapchat is -- >> go ahead. i don't even know what to say. >> well, you know, snapchat is the app for the selfie generation, isn't it? it's sort of picking up from where facebook left off. facebook's demographic as you know is aging. so of course the millennials have to sort of gravitate towards an application that is

their own. it is all about videos and pictures. it has all face masks you can play around with. they've innovated a lot in the last year including with snap streak which helps improve engagement because it challenges users to come back on consecutive days to connect with their friends. and so it's almost like a game of the network. >> but investors have been throwing money at the company. why would it go public if it has limitless capital from private investors? >> well, i think that if you look at snapchat's numbers, it's its daily active users are now over 150 million. which is in excess of what twitter is doing. and revenue rumored only to be about $350 million. so there's a lot of room for it sort of growing into that user base and increasing its revenue. twitter's revenue as we know is $2.5 billion. so there's a huge gap where

snapchat and twitter is. so i think they're looking at massive revenue growth and therefore want to invest in a big way in expanding their product and network. >> fair enough. we appreciate your time this morning. thank you. >> sure. when we come back on "squawk box," jim cramer will join us live from the new york stock exchange. we'll get his take on the top stories of the day including the bank earnings parade. futures right now still in the green. as we head to break, check out a highlight from steve leisman's exclusive interview with boston fed president eric rosengren. >> my views haven't changed. what's changed is the economic conditions. so when we have an unemployment rate that's around 10%, we should be very aggressive in our monetary stimulus. when we have conditions like we have right now which is we're very close to full employment, unemployment rate currently at 5%. and core inflation is 1.7%. it's relatively close to 2%. still below our 2% target. those conditions are very

different. at this point i'm as concerned about overshooting on what is a sustainable unemployment rate and that at that point i have to be concerned whether if we did overshoot on the unemployment rate, whether we would end up tightening much faster and possibly shortening the recovery. ut the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com.

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yes, i wish i included a lot more of this stuff. i gave credit for people understanding what our long-term profile was. i was wrong. this is one where i could have done a significantly better job of communicating this story. and we tried to do it in the context of 2017 is going to be good, but it seemed to get totally lost. >> that was honeywell ceo david cote on "mad money" last night telling jim cramer he was shocked in last week's drop in shares following company's guidance saying he was wrong to focus on short-term impacts and longer term restructuring. jim cramer joins us right now from the new york stock exchange. great conversation last night, jim. >> thank you. one of the things you're looking for when you have a ceo like that you figure you have to beat it out of hthem they screwed up

but he came right out and said i screwed up. all we heard about were the things they changed in 2016 and aerospace wasn't that strong. kind of a really not the narrative that cote should have traced out. he fixes the narrative and the stock goes back up. >> can we talk banks? >> sure. >> okay. so we had jp, citi, wells? how do you trade? >> jp, very strong, citi surprisingly strong because of the costco news, i think that's important. you saw some incredible growth in the credit card. also bond trading. there's still big disparity between the book value and where citi's trading. wells, nothing. >> would you touch it? >> wish we didn't -- >> you wish you didn't. even at this point? because you think it has further to fall because? >> very little upside. if you don't have a clear plan, and i think that the papers are very clear also that you needed

someone from the outside. look, i think sloan's good, up from wall street. but main street people say, listen, that's what they do, get another guy in there who's part of the whole problem. and wells isn't blowing away the numbers. they weren't blowing away the numbers in the last two quarters. it's been the weakest of the big banks. one of the reasons i think it's been the weakest is because they don't have all the excitement that off of a brexit. they don't have good bond trading. they don't have good international. these are the things that hurt banks before but now it's helping banks. wells is just a domestic so-called powerhouse that i now feel like was a cross selling machine and that's where the growth was. and that's no longer going to be incentivized. they better find something to do. >> i'm with you, jim, on the idea choosing an insider was probably not the optimal move. >> no. >> to convey to the public that a new broom is coming in to sweep clean. what would you be looking at in the downstream quarters to give you an indication that the

company's business is really been hurt by the scandals? what numbers would you focus on? >> they have a metric. they have a metric of accounts per person. and it's plus ten. and what you want to see is the metrics more in line with some of the other banks, which would put it lower. a lot of people felt congress was naive in that there was just a lot of speeches. that's not true. there were people asked legitimate questions about how other banks are doing. none of the other banks feel like they were in a position to do this much account opening. but, how did it happen? i'd like to know, did someone open an account on friday, put $25 in it and take it out on monday? is that what the -- is that what some of these lower level executives did at the branches? and which were the branches that were really, really, really violating the rules? all this stuff hasn't come out yet. >> we'll see what the investigation says, but do you worry about j.p. morgan which today said it's identified its own cross selling issues. not systemic but it's impossible to have zero defects.

>> well, i think there's a big difference between zero defects and 5,000 people. look, j.p. morgan didn't run a scam. let's just call it what it is. there's no scam at j.p. morgan. there was obviously a scam at wells fargo. it was. i mean, i think that you have a game plan, the game plan was to trick the system. maybe you -- they batched accounts and on saturday they award people how many cross sells they did and on monday undo the cross sell, take the $25 back. that's a good scam. that's a way to be able to trick the system. i wonder if that's what they did. >> jim, see you in a couple minutes. thanks. >> thank you. >> coming up, today's biggest movers and a programming note. "halftime report" turns five. five is my favorite year, they are celebrating some of the biggest names in investing, temper, icahn, gundlach all starts monday.

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final check on the markets after ppi, bank earnings, rosengren, dow is back in triple digit territory for its implied open. so we'll see in just half an hour's time how we actually do

open. tyler, you'll be joined by janet yellen later this afternoon. >> she's talking at about 1:30, and i think i know what i'll be doing at 1:30, which is watching janet yellen. >> that's what i'm going to be doing. >> yeah, of course. >> and watching you. >> i'll be there. >> waiting for analysis. >> i'll be there. >> thank you both for hanging out with us. >> great to be here. >> make sure you join us next week on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. we cap the week off today with the busiest agenda so far for big banks with earnings, macro week on data running hot, muster, rosengren, yellen all set to speak, china's cpi comes in hotter than expected as well. watch the ten-year, yellen speaks just after lunchtime east coast time.