>> announcer: live from new york where business never sleeps this is "squawk box". good morning. welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen and michele carus caruso-carbrera. anthony clemente our guest says it's wrong. netflix added 370,000 domestic subscribers in the last quarter and 3.2 million international subscribers. the company announced it will increase its spending on content to $6 billion from $5 billion this more.

in the u.s. they were expecting 300,000. so 370 was 20% more. but last year in the same quarter they added 900,000 or 800,000. so "wall street journal" is making certain points. and then to almost double the bottom line when you're at hundred times earnings that's good but is it still pennies. what was the actual number? pennies per share. >> still pennies per share. >> i'm sort of surprised the international, do they have the content around the world that people will pay for. >> they haven't spent a huge amount of money yet on true international programming in the new languages and what it means is actually that american programming or u.s. programming with ghienglish is working. >> they have a benny hill type show ready to go or monti python. do they know the cultural? >> what you're finding is

"narco" is working in a lot of places. it's working here and in south america and parts of europe. it's working. >> what does a billion dollars more spent on content mean in the number of shows and how many, how much new programming you'll get out of that? your show cost a billion, didn't it? >> think to your self well look, they are producing one movie by some reports that will cost them $100 million. they are doing two comedy specials with chris rock cost them $40 million. let's say a comedy or trama series will cost them any from 20 to $50 million a series for like a 10 or 12 part series kind of thing. that's on the high end. if they are doing a "game of thrones" kind of thing. you get ten "game of thrones" possibly. >> my point is this doesn't settle it.

what the girl said yesterday one quarter doesn't settle it. there's other people that pay for content. other companies can do what netflix does. we'll see. if you become a hit based company it's like -- i just remember -- i'll never forget those guys at ge. then they had a movie studio. what's the variation per year that we might have. >> we spent on how much the writer, the director, the production and didn't make any money? >> two pest you have to remember. one it has to be a hit and the portfolio approach matters. the more you do hopefully you'll nail one or two. the hit idea doesn't, it's a different type of hit. doesn't hatch to hit ratings wise. all it has to do is keep you from either make you a new subscriber or keep you from turning and leaving. so now they can demo out each show. a certain show that works for your may not work for her that's

fine as long as you both stay because there's another show she likes and that's the trick. >> you've seen netflix go through ten year brought. >> hit based is advertising based, revenue based, ratings based. for netflix it doesn't matter. >> you're thinking about fact that -- >> you have to have a couple of big shows for each demo. that's the trick. all you need is just one or two. once they become obsessed with "house of cards," they will keep the subscription for the entire year. >> i'm in a drought right now in content. it's not helping. >> "americans" you like "americans." >> no. fantastic. it's fantastic. >> you can get it on netflix. >> terrified of ronald reagan these russian spies. you would love it.

>> they should be. he ended the cold war and brought down the wall. >> that's what it's about. >> 7% economic growth. 900,000 jobs per month. you know nothing about this. >> i heard about it. >> you think he blew out the deficit. >> among the other stocks to watch, ibm shares tumbling. the numbers marked big blue's 18th straight quarterly sales decline. the firm invested heavily during the quarter. they spent $5.5 million on acquisitions. that's compared with a little over $821 million in the same period last year. >> unite the health just reporting, quarterly profit of $2.17. nine cents above estimates. health insurer raised its full year forecast. also due out this morning blackrock, johnson & johnson, goldman sachs. johnson & johnson cfo will join

us at the bottom of the hour first on cnbc. no relation that i know of. at 7:00 a.m. eastern time blackrock chairman larry fink will join us. parade of top executives doesn't stop there. we'll bring you exclusive interviews with the ceos of eli lily, united airlines and hasbro. >> caruso is -- >> my father. >> cabrera is my mother. >> why do you do that >> latins do that. >> i got a couple of different. on the economic agenda key inflation data due at 8:30 a.m. eastern we get the latest consumer price index numbers and that should give us some clarity on the fed's next rate hike if there ever is one. checking the markets u.s. equity

futures were sort of piggybacking off of europe this morning and up 84. got nowhere. we'll see. looks like a pretty friendly session this morning. i don't think netflix is hurting with nasdaq up nearly 40 points. here's what's happening in europe. most up 1.5%. in asia, shanghai 3080 at one point. good move there too. that's not hurting. oil apparently heading down then turned around and gave some strength to the global equity markets. for more we're joined by phil orlando and jim keerny. let's focus -- we spent so much time on the fed. let's talk earnings. hasn't been a great beginning to earnings season although after

bank of america thinks are not as bleak as the first couple of days. >> so we're only 10% or so. it's very early. but numbers are down about 3%, 3.5%. >> they are down again. >> yes. the season is supposed to be down 2%, 3%, this is going eighth consecutive negative year-over-year for quarterly earning. this should be the end of the cycle based on the way the currency and energy rolls off. fourth quarter should be positive. we're not expecting anything great out of this quarter. >> eighth consecutive year-over-year quarter so that's two years. >> correct. the earnings recession continues. >> funny how the market has gone nowhere in two years. >> and the economy -- >> almost like i want knew before it happened. >> exactly. we're sitting here basically at 1% stall speed rate, gdp the last three quarters. the third quarter which is going to get flashed in two weeks we just took our estimate for third

quarter down last week to 2%. >> from what? >> we were 2.6. atlanta fed took their number down 1.9. not a great third quarter. we're at 2% for the fourth quarter. not expecting anything great. >> i wonder when the last time anyone actually took a number up because the fed it seems every quarter that's the story. >> they were 3.8% terrify beginning two months ago. >> this last quarter -- we always say that. a month and a half later wreen 1.9. never realized we're waiting for this and seem always disappointed. >> that's the case. i was at fishers lunch yesterday in new york, and he seems pretty complacent. you know, jobs numbers where they need to be. >> sanguine. meaning we do have to raise or

don't have to raise? >> he didn't come out and say that. he said look we're where we need to be on jobs. inflation. cpi we're there. pc e we got a little more to go. we'll get there. we're fine. we're just moving in the right direction. >> jim, you stay long stocks? >> i think so. last night's action in netflix and ibm tells you a whole lot. >> ibm was good >> no i don't think ibm was good. you need to be selective pup can't buy everything. you can't tone entire market pup have to find the secular growers. those looking for the bounce it's not coming. up need to find those companies that have their own morpts. >> if there's no cyclical bounce why would the fed works they raise because they need to raise? >> rates are too low. there's a moral hazard. there's bubbles being created. going up a little bit takes a little bit off the table. >> you think we're in a period of like the ten year will stay below 2 for how long?

>> below 3. >> lowe 3. >> for a few years. the economic growth just isn't there which again is why when it comes back to stock pick being you have to find those companies that have their own growth stories. >> so when you talk about interest rates for the ten year staying below 3% what do you think about the dividend trade that's so popular a move from 2 to 3 could still punish them. >> likely punish them. i was looking at a number of names last night that had no earnings growth over five years. yet their stocks are up nicely. if you are banking on that you'll be very disappointed over the next two years. >> get out of those kind of stocks. >> i would be underi weight fo those stocks. >> any hope? >> you got the renewal of this brexit overhang that we now know is going to come in i guess march. and then what are the economic ramifications from that. we don't know how well or how

poorly those negotiations will go. >> do we worry about the uk or the rest of europe. architect of the euro said this is like a house of cards. like netflix. >> short answer is we don't know. >> uk might do better. uk may have got smart enough to get out of that mess. >> the good news is with the pound solo that that could become a stimulus for export activity as we get all this worked out, but we don't know how those negotiations will work out. >> china and japan. china the market was weak last week. not great there either. nothing. >> there's nothing cranking. >> tuesdays are like the day after monday. not a thursday or a friday. i've noticed. right? >> no. i think we're stuck in a world where you're looking at two,

maybe three -- >> i notice an article. >> we know we'll bhart on "worldwide exchange". i like that synergy. must reads. the "new york times" could use a little help. >> on that note are there any sectors you avoid because of the election. when you read about queen elizabeth and the "wall street journal". >> sure. i think we'll have a whole lot -- you'll have a whole lot of volatility in financials and health care over the next 30 days or so. but i think there's some real opportunity particularly in health care. health care is down year-to-date. if you can dig through some of that wreckage you can make money in health care. >> even if hillary clinton wins. >> watch the house race and the senate. a clean sweep by democrats health care could be one more pressure. if republicans keeps the house or senate health care will be just fine. >> that's exactly right.

the market priced in hillary will win. the question from our perspective what's the check and balance there? the fire wall is the house staying right. if that doesn't happen, if the ds are on the table that to cross potentially an entirely different set of economic and financial market underpinnings. we got to watch that whole thing not just who will win the presidency. this is a bigger deal than the top of the ticket. >> queen elizabeth, latest poll out, polling millennials about communism. >> don't start. >> and socialism. half of americans between 16 and 20 would vote for a socialist. 21% would back for a communist. capitalism viewed favorably by 64% of those over teenage of 30 but capitalism only viewed by 42% of millennials. so you have bernie sanders and you got elizabeth warren and you got all the rhetoric and you got these young people that some day are actually going in the

workforce maybe if they move out of their parents basement and think, have no idea how the world works. i'm thinking about halloween, honestly. thinking about -- can you get a realistic man bun. can i get up with of those things and i can get the hipster beard and i'm thinking about earthquake and some ink and come in like that. i'll come in as a millennial. >> come in as a millennial on halloween. >> with a bong? >> no. that might have been my generation. is millennial a good -- i guess i don't want to make too much fun. we need them, right? god help us. >> a couple of them. a couple of millennials. >> what do you think? would it work for me? >> it would. i turned my front yard into a graveyard on halloween this past weekend i got a hillary mask and a trump mask. i built these ghouls in the front yard.

i'll put two of them out there and see what kind of response i get. >> which one is scarier looking. >> they both are pretty scary. >> what are the millennial phrases. >> netflix chill. >> i don't like that expression because you know what it means. 16-year-olds having sex. >> yeah. netflix and chill, we'll watch netflix and chill, netflix is on in the background. a lot of these things -- >> beyond me. >> joe knows this stuff. >> some day i was hoping i could do that the. chances are -- >> you. watched -- >> watching netflix. i'm in a drought. >> "americans." >> the "americans." >> thank you guys. coming up netflix shares soaring this morning after the company posted staggering international skrier numbers that beat

expectations by 50%. the stock is up higher 18% in pre-market. opposite coming up johnson & johnson about to check in to earnings energy. dom economic caruso talks about quarterly results. and what's next for thaerl giant. "squawk box" returns in just a moment.

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welcome back to "squawk box". some stocks to watch today. visa ceo charlie scharf who oversaw the company's reunion with its european affiliate is stepping down and be replaced by former american express president and board member alfred kelly. in a letter he said he needs more time to spend with his family. here he is on the current call yesterday. >> we need be on the east coast more than we're able and, therefore, i don't feel i can spend the time necessary in san francisco to do this job properly. >> united airlines third quarter profit fell but still beat forecast. carrier says cheaper air fares and higher wages from new labor

contracts will squeeze results this fall and united ceo oscar munoz will join us in an exclusive interview all 8:00 a.m. >> can we go back to the charlie scharf news. it was authentic and i believe it and picks up and says i'm done. taking my ball and going home. >> there are priorities. >> i know. to me i thought it was remarkable. >> we're sure that's the story? >> assuming that's the story. >> right. >> i mean it sounded authentic on the call. >> we all could be wrong. >> historically i need to spend time with my family has bean cover for other things. >> the way he said it seemed so different to me. i think that's right. we'll hold judgment. let's talk netflix because they reported third quarter earnings after the bill adding 3.2 million subscribers. here's reed hastings on the

earnings call talking about the quarter. >> it's time for me to apologize for the volatility again. you know, this time it's in a good direction. but i think more and more investors, you know, are able to look at the multi-year picture and they see the patterns emerging and so it will be less and less about our guidance. >> joining us right now to break it down is managing director at concord. good morning. what did i say? i called it concord. kenicord. so help us here. >> complicated word with all those letters. >> teleprompter can be dangerous -- all those syllables. >> now we're wasting time. so, can i ask, on the volatility issue -- >> yeah. >> should investors care about the volatility with this stock?

>> absolutely. you own a stock you want it to work for you gradually over time. i think this has been a super volatile stock over the last new years. what we saw last night was a validation of the strategy, right. which is develop a lot of great original content and use that to gather subscribers. in the u.s. they beat their subscriber numbers and it shows they have some pricing power. >> what do you think they can raise if price to reasonably? >> tough to say. i think in our long term model by 2021 going up to $15 or $14 and contemplate more original content and faster speeds and all that stuff. the other big part of it was internationally where they've launched in all these countries and just getting -- >> are you surprise by that? we were talking earlier about the content itself which is to say they developed some international oriented new language content but a lot of it is just old program snooping

they are definitely exporting the hollywood content globally and that's most of the contend international lir but now localized with local language content in 20 countries. >> how important do you think that is? >> i think it's important. what we've seen in earlier markets like brazil is that those consumers want both. they want hollywood and they want local. and that's where they are head. >> how does pricing work in the rest of the world versus united states. we get fixated what the u.s. consumer is spending. when it comes to percentage the bulk of the subscribers. you price differently. >> they have a strategy where they are not necessarily pricing the product for the economics of each country. they are going in with a price that's roughly equivalent to the u.s. price and their strategy for the foreseeable future is i'll take whatever number of subscribers i can get. if you look at the addressable market in each of those countries and sort of a penetration curve that goes to a

reasonable level in those countries you do get some really big numbers for the next five years and then they might have to start think about lowering the price to go mass market. it's a mass market product more or less. >> $6 billion for content. does that excite you or worry you in >> i think it's a right move. number one, that original content is a lot more expensive than licensing content but then they own it and then their profit margins go up in the future and they don't have to pay licensing fees. if you think what's driving the subscriber market, think of a cable box. the quality of that content is what's going keep them competitive. >> isn't that what leads to volatility. you use the word pattern there. is there ever a pattern here. to joe's original point if this is a hit driven business rather than the original story which was the new way of distribution,

volatility is forever, right? we worked at a network that had great thursday nights and then weak thursday nights. >> right. volatility is partially a function of some of the third-party data that's out there, sort of mid-quarter that tries to track what subscribers are doing and they often get it wrong. >> i'm thinking one quarter have great subscriber growth and next quarter they don't. >> we're coming to this period where they are trying to raise the price. ungrandfathering people in the u.s. and that's created this expectations, mismatch game for the last several quarters. and, you know, the bottom line is this a company trying to revolutionize an industry, television industry has been around for a long time. any time you get a situation like that you'll have more volatile results. >> you think this business stays independent? >> for the foreseeable future i do. they've never bought a company, right? and i know we're talking about

somebody buying netflix. >> or them buying somebody else? >> i just feel they view -- they view the world, like they've mission, they have a unique strategy and they feel they got the best people in the business, right or wrong and i think they want to execute for a while. >> apple or google, somebody should have bought them when they were 15 billion. now it's like $60 billion. >> yahoo! should have. >> would they have killed it? >> they might have. >> killed the video. >> i think the google, apple thing is interesting but won't happen any time soon. >> michael thank you. >> not everyone is driven by, consumed with ambition and climbing and power and the next thing that they are going to do. >> talking about me or hillary? >> being so like thinking about, like having no conception of this guy going -- you know,

cashing in his chips and going to be with his family pup have no conception. >> very difficult. >> i find i want doubtful too. >> you do too? you're driven, consumed, climbing, climbing. >> i own. >> do you own -- >> i own it, baby. i'm on tv. it's our nature. >> aren't you headed to some place like donald i got a million things going. >> sorkin university. >> and ties. >> coming up, ibm beating expectations but earnings and revenue fell from the same period. stock sunday pressure this this morning. we'll have some envelopes next. plus a closer look at the balance in the senate. eamon javers has more on marco rubio's re-election bid in florida. here's yesterday's s&p 500 win's and losers.

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welcome back to "squawk box" right here on cnbc. take a look at u.s. equity futures at this hour as we show you that board, dow opens up higher about 89 points higher. nasdaq looking to open up 42 points higher and s&p 500 up

about 14 points little spring in your step. is that what that music was about. "walking on sunshine." >> warm out. >> each day. up, down. it's been that way hasn't it. it really has. with some 100-point moves. goes up 150. wow we're up 150. next day down 250. >> you're talking about the markets not the weather. >> it was hot yesterday. >> hot today too. >> 70 degrees already. according to my watch. >> apparently there's an election and now we're taking a closer look at the balance in the senate, eamon javers joins us now. we cents him down to florida. could have gone to new hampshire. some interesting races around. >> reporter: yeah, that's right. we're here at the university of central florida in orlando where last night resenate candidate marco rubio squared off against his democratic opponent patrick murphy in a debate here at the university that's been largely over shadowed this whole contest for the senate in florida by all

of the noise surrounding the trump versus clinton presidential campaign. marco rubio is endorsing donald trump but has criticized him and some of the comments he made. he's trying to estrada tell donald trump issue. here's how he did it last night. >> i'm not arguing that this is a race between abe lincoln and george washington. these are two deeply flawed candidates. it's why it's so important we have a candidate in the senate that will stand up to these people. >> reporter: you get the sense of how much attention he's focused on donald trump and hillary clinton. the debate began at 7:00 p.m. the first mention of donald trump's name came at 7:02:00 p.m.. largely about which candidate stands which presidential candidate and we spent some of the day yesterday here in orlando talking to voters around the region here and you get the sense that there's really just tepid support on both side, both trump supporters and clinton supporters. take a listen to some trump

supports we met yesterday. >> most likely vote for hillary but still on the fence. >> i've never been on the fence before. if i had to vote today right now honestly i would vote for hillary clinton. >> i was a bernie guy in the primaries and now that he's not my option i've always known that donald trump is a danger to our country and we cannot allow him to lead the reins. >> reporter: those transparent hillary clinton supporters. now take a listen to the donald trump supporters we met. >> i'm going to vote for trump. >> why is that >> because i'm really against abortion. i'm really against gay marriage. >> i made up my mind a couple of weeks ago. i think we need somebody who is not typical politician to sort of change things up a little bit. >> reporter: and guys out of all the people we talked to yesterday, we only met one person who had an opinion of any

kind on the rubio versus murphy senate race. this race has been overshadowed by the presidential level and that's a problem for marco rubio as he tries to step out of donald trump's shadow here and create an independent candidacy for himself. back over to you guys. >> long time ago but weird how trump smoked him in his own state which was during the primaries, which was weird. a lot of stuff has happened since then but pretty embarrassing. almost didn't run again because of that. >> reporter: yeah. he was thinking about not running. then decided after some pressure from republicans to get into the senate campaign. remember the senate, the balance of the senate is really to be decided here in november. there's some indications that demonstrate have at least a chance of retaking the senate here and marco rubio is going to be one of the guys who holds it for republicans if they are going hold it this fall. >> it's weird. if the journal has quite a bit on kelly ayotte who, you don't

know, the republicans don't know which way and trump supporters don't know which way to hope for. a lot are angry with her but then if she doesn't make it she could be the deciding republican that swings it the other way. trump supporters are mad ator but do you want her to lose. it's crazy. the whole thing is crazy. it will be over some day. >> reporter: that's right. here in florida i was going to say you got this interesting dynamic with rubio denouncing donald trump but continuing to endorse him and then trump has said well rubio has been nice to me lately so i hope he wins. trump is tepidly endorsing rubio and rubio tepidly endorsing trump. a lot of strange bed fellows. >> i can't remember anything like this. like i said the count is 24 days, 25. something like that.

>> reporter: i've lost track. >> i hate it when time goes quickly. because things do go very quickly the older you ge and it scares me. sometimes i wish i can put it on pause for a while and hang out. seconds keep moving. i'm ready for this one. >> reporter: a lot of people we talk to here in orlando are disgusted with this election cycle. they can't wait for it to end. they don't want to vote. >> the thing is once the election is over one of them becomes president. that's the thing. >> reporter: right. stakes couldn't be any higher. >> thanks. >> reporter: you bet. earnings and revenue frel from the same period last and the company is transitioning way from old businesses. joining us now is equity analyst at jeffries. ibm is going, moving away from main frames all those old legacy businesses, more and more

revenue coming from the new businesses, the watson enabled stuff, cloud analytics yet the stock this morning is acting like investors are spoiptd they are not getting there fast enough. >> yeah. it's interesting. the revenues did beat consensus. once you dig into the numbers a little bit, earnings quality questions, gross margins fell below expectations. they had some one off benefits from taxes and also there's a pretty big dramatic jump in ip income which is a new thing we haven't seen before. so i think as you dig into it things aren't quite as positive as you might think. >> why so concern about ip income in particular? is it hard to value? >> the question is we know these are deals that we aren't privy too. private unannounced deals. the company said these are multi-year agreements and they

also said that they are basically using this as a way to monetize their assets to make up for a short fall in software which is a big portion of their business today. analysts have a hard time to know what to make of it. this is a multi-year high for income. >> this isn't related to this $5.5 billion worth of acquisition s year-to-date. they buy those companies to monetize the assets they have already like watson but you have a doubt how much that is working or what it add? >> yes. so watson is an interesting topic. they mentioned watson 35 times, 49 times in the whole call. yet the company doesn't talk about the contribution for you up point they made billions of dollars in acquisition basically buying data to improve watson and its capabilities but the

company won't commit to billion dollars of revenue in 2018. it's frustrating because they spend a lot of time talking about watson. they spend lots of money and employ a lot of capital to improve watson but not seeing any results. >> you have it underrated and you're not changing that any time soon? >> no. we kept that rating last night. >> how do you think about their ai project watson relative to what google is doing and facebook is doing and the future of those companies when it comes to machine learning and the like? >> i think one thing ibm is unique in that regard is that they know the enterprise very well. a lot of vertical expertise. acquisitions they made are in health care. for example a big focus area. so i think that industry perspective and knowledge really is an advantage for them potentially but in the early days of monetizing ai and this

is a v-you know, emerging trends. i think the advantage is their expertise but we're just wondering when we'll see some results from that. >> okay. james good to see you this morning. thank you. >> the headline yesterday apple has hired a big brain in ai to make siri less dumb. siri is dumb. i dictated something four times -- i was enunciating so clearly. it's frustrating. you are the dumbest -- you know. >> it's not it being dumb. >> no. >> it's the ai part. >> ai has got -- we're stuck in a mostly clear, you know. then you know what's going to happen. >> you take over. >> malevolent. here's something else. you know what day it is.

>> tuesday. >> you know what day the election is on. >> tuesday. >> so it's either 28 days or 21 days and you know what is it. 21 days. >> 21 days. not 24 or 25. >> if you were to ask siri -- >> how many days until the election. >> yeah. >> how many days until the u.s. presidential election. >> here's what i found on the web for how many days until the u.s. presidential election. >> not bad. >> how many? >> it sends to you the presidential election countdown clock so you can get the information. >> she doesn't tell you why doesn't she tell you 21 days. >> she's not that smart. >> does alexa know? >> i don't know. >> earnings just in for blackrock. $5.14. 14 cents above estimates.

revenue was essentially in line. ceo larry fink says that the asset manager was able to thrive even as investors migrated away from equities at a fixed income in cash and as we have been talking, we're pleased to say that larry fink the ceo and founder will join us to talk about the quarter right at the top of the hour. we'll spend half hour with us talking about all kinds of stuff. then johnson & johnson was just out with numbers. company earned $1.68 a share. two cents above estimates. revenue above forecast. something like 17, 19 billion. company also raised its full year forecast, there it is 17 billion. ibm in the 19 billion. dominic caruso will join us in a few minutes. first on c nbc. i don't think you know if you're related. >> i'm logging in to ancestry.com right now. >> caruso is a pretty common

name. >> extremely common. >> are you related to aaron sorkin? >> no. nice guy. >> how about that attorney ira sorkin. >> not related. yeah. >> maybe way back. >> nope. we've tried. >> okay. who would you rather be relate to, ira or aaron? >> i like both. >> coming up, lights, cam remarks action hollywood's next big blockbuster might being made in china. we got that story when we return in a moment. and, sprint saves y% 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.

we've been hearing so much about how you're a digital company, so you can see our confusion. ge is an industrial company that actually builds world-changing machines. machines that can also communicate digitally. like robots. did you build that robot? that's not a robot, that's my coworker earl. he builds jet engines with his human hands. what about that robot? that is a vending machine, ricky. john, give him a dollar.

>> time now for the executive edge this morning we're talking movies. dalian wanda unveiling big plans to bring hollywood to china. they will have everything from stage and set rentals toitying. in the meantime johnson & johnson just out with earnings. we'll dig through the report with the company's cfo right after the break.

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johnson & johnson is out with its third quarter results just moments ago. joining us now is dominic caruso. a member of our global cfo

council. and our meg tirrell joins us on set. you are, like, an expert on j & j. i saw him -- dominic just heard you were here and looked like he got very nervous. because you might have -- dominic, are you going to be okay if meg asks you pointed questions? >> sure. i'm fine. i'm fine, joe. good morning. >> he's confident and ready for it. one of the things we could get to it for michelle later, but there was venezuela actually got mentioned in the results, dom n domin dominic? >> let me answer that in a minute. overall the result wrs very good, i think. we're very proud of the results. strong sales growth and underlying sales growth about 5.9% and good earnings growth. 12.8%. very proud of the results. you might remember we increased our guidance last quarter and now we're tracking to those. with respect to venezuela, we're

just comparing the results of this year to last year. at the end of last year, we had a devaluation so that provides for some comparison issues. but it's only about 30 basis points on the results for johnson & johnson. >> i think the thing everybody wants to know about is the results -- the impact of pfizer's launching its biosimilar. they're going to introduce that into the market at november to 15% of yours. what will be the impact on your sales of that? >> yeah, sure. well, good morning, meg. we've said before and we're going to reiterate today that our guidance for this year would not change regardless of whether a biosimilar launches. with respect to a biosimilar launch going forward, a few things to keep in mind. one is we think the launch is an at-risk launch because we plan to defend our property rigorously. which a crowded marketplace. lots of discounting, lots of

competitive entries. we know how to compete in this market place very well. the product's done very well for some period of time. in fact, today we're going to highlight the depth of our portfolio and the strength of our in-line product. we're confident our pharmaceutical business will continue to do extremely well. >> so what -- so you think on appeal you'll succeed. that was a senacourt drug. how old -- what was pfizer's argument that the patents on the antibodies that have already been in some other patent years ago? i don't understand. >> well, joe, i don't want to get into the technicalities of the patents, but the patent has been challenged and we of course have defended the patent through multiple stages of appeals and we're not through that appeal process so we're going to continue that appeal process and we feel very good about it. >> i want to ask you about

pricing, of course. i think the price of the biosimilar may have surprised people at a 15% discount. but huge topic in the election. discounts mandated on drug companies in california. how does this affect your business? what do you think of prop 61? you guys have put some money into trying to defeat the measure. >> sure, meg. just a couple thoughts overall on pricing. you're right. a lot has been talked about with pricing. just to put it in perspective, drug pricing represents -- or drugs represent about 14% of total health care costs. so we think there's an over-emphasis on drug pricing quite frankly. and there have been some companies that priced excessively but we have priced very responsibly and our growth has been largely attributed to volume and not price. we've invested more in r & d. so we feel very good about our position on pricing. >> thank you, dominic. "squawk box" will be right back.

now that fedex has helped us simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

a "squawk box" news maker. blackrock ceo larry fink is here to break down the company's quarter, weigh in on the markets and the economy and more. first here on cnbc. earnings alert. goldman sachs rolling out quarterly results. we will bring the reaction from wall street. plus the business of fine wine. we'll tell you how one prince built a bourdeau empire. grab a glass as 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" here on cnbc. i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. our special guest this half hour, larry fink, ceo of blackrock. we'll hear from him in just a bit. we're going to hear from you right now because i decided. because you've made -- off camera you made the point that great earnings in a very difficult environment. so there was some managing through some things that weren't optimal. >> well, the whole industry is facing what i would call turmoil. much of it has to do with our clients are having quite a bit of head winds. persistence of low interest rates, expected rates -- you have clients really trying to search. what we're seeg more and more that clients are looking for more solutions.

they're looking for an institution that could provide a disciplined approach of multi- -- >> hold that thought. andrew, you're going to -- i didn't want to preempt your lead in. >> he has something? >> he's going to intro you. >> a formal introduction. >> okay. good. >> hold the phone for one second. >> there's, like, producers and -- i don't know. rundowns and scripts. let's check on the markets. right now the futures are indicated higher up about 83 on the dow jones. netflix obviously has given some strength and firmness to the nasdaq. but that's not even one of the new text spots. what do they call them? amazon, google. but it sort of -- it isn't, but it's certainly new. and it's not bogged down in the ibm type environment. and then there's the european markets. all green across the board. yesterday was the day to go down. tomorrow will be the day to go

back down. and then i think thursday we go back up, right? >> it is one of the stocks. facebook, amazon, netflix, google. >> that's like how many days left until the election. it's a tuesday. it's a multiple of seven. i give siri grief for being stupid. but. here's what's making head lines this morning. the government is out with september consumer prices. cpi expected to show an increase of 0.3%. ford is slowing production of its popular f-150 pickup truck. it will shut down production at its kansas city plant for a week. idle several others over a the next month. this due to slowdown in auto industry sales. reuters report the sports

goods chain dick's is for the governmentsmith international bid. >> i know golfsmith. you probably do too. >> i know of them. stocks to watch this morning include j & j. we just spoke to the cfo. company earned $1.68 a share. revenue also above forecast. johnson & johnson raised forecast for the year. we just talked to dominic caruso in the last hour. >> overall the results are very good. we're proud of the results, strong sales growth. underlying sales growth about 5.9% and good earnings growth 12.8%. proud of the results. you may remember we increased our guidance last quarter, now we're tracking to higher expectations. >> and shares of f.a.n.g. member netflix -- >> so smart you are.

>> streaming giant added 370,000 domestic subscribers in the last quarter. here's the real number. 3.2 million international subscribers. company also announced it will increase its spending on content to $6 billion next year from the $5 billion this year. and shares of ibm tumbling following profit and revenue topping estimates. reped by growth in the cloud and analytics program. the numbers marked the company's 18th straight quarterly decline in sales. it also spent $5.5 billion on acquisitions in the first nine months of the year. that was well above the $821 million spent in the same period last year. now to a proper and formal introduction of larry fink this morning. blackrock earnings just how the with a profit of $5.14 per share beating estimates by 14 cents. larry fink is the founder and

ceo of blackrock. nearly $5 trillion under -- are we close to five? we're over five? >> yes. >> wow. i remember when we were just over four and possibly in the threes. >> i remember when we were just over a billion. >> i think $5.14 works. because -- right? it's based on a hundred. >> but it's not our money. client money. 100% of that money is client money entrusting it with us. >> you were saying it's a tough environment. >> it's a tough environment because it's tough for our clients. like i said, low interest rates, loweri ining expectated returns. you're going to see many pension funds in the course between now and year end lower returns from probably 7.5 to 7 maybe the 6 handle. you're seeing lower and lower

expectated returns which have the impact on the ability to meet their targets. that's the pain we're seeing from our clients. they are witnessing a deterioration between their gap of assets and liabilities. you're seeing that insurance companies are having a harder time attaining their necessary returns to meet their insurance premium targets. and so our clients are looking for solutions. they're utilizing different techniques whether it's factor based investing, huge implementation in etfs across the board. and so we have been helpful in navigating our clients. and we had seen in the third quarter not only $51 billion in flows in etfs in the third quarter. we actually had inflows and active products too. >> where's that money coming from though? meaning -- if you're winning, who's losing? >> as an industry, u.s. equities

outflows was $240 billion in the fur first nine months. so you're seeing huge outflows in equities. inflows in cash. inflows in fixed income. and then you're seeing a migration from active to passive. >> and that was my question. on the active to passive debate, is there a mistake being made which is to say that active has been a -- dare i say a failure or relative failure over the past couple of years whether you're a hedge fund or actively managed fund on a relative basis it has not performed. everybody seems to be getting out. i wonder whether that is an indicator. >> we're a believer in active. we did have outflows on active side. we're continuing to invest in our active portfolios. we're using maybe different methodologies, more big data,

more factors. we're looking at different techniques to try to earn the return after fees our clients are demanding. so i don't believe active is dead. we're not part of that narrative. i don't know why there is that narrative. performances have been weak for active. but we believe that there is going to be a roll for active management. but i do believe what people are missing, many investors across the board are using passive for active. >> what do you mean by that? >> many people are using passive strategies to get -- to have investments in different components of the world -- different areas of the world. let's assume if in a global index, you have a certain allocation in emerging markets. you could invest higher than

that index and navigate around it. so you're seeing many more investors are using etfs as exposures. if i want to be successful in -- >> you're saying, though, what are seen as usually techniques for being a passive investor in etf they're being used in a greater way to manage your portfolio. >> you're seeing it across the board. and if you think about everything in terms of factors -- let's simplify fixed income for a second. it's easy to describe it in fixed income. there's really only four factors. duration, credit, global credit, and complexity or mortgages. instead of owning thousands of bonds, you can own four etfs and emphasize what area that you think is going to out perform. you may think global credit. or you might like mortgages who are going to overweight a

mortgage etf. >> and save a lot of money if you're buying just the etf. >> think about the operational differences too. so the people are forgetting that in the narrative. this is why we're seeing more and more active investors using etfs. that's one thing that i don't believe that narrative is out there. and i think people are missing it. more and more active investors are using etfs to navigate their portfolios. >> let me ask another question. you mentioned the pension funds lowering their long run goal. might even be somewhere below that. what do you think is realistic? are those still too high? in this global environment with especially developed world with demographics that we're witnessing, i think probably closer to a 6% is probably the right long-term --

>> is that a 20-year long-term for you? 10-year? if you were retiring tomorrow -- >> right. >> -- at somewhere in your mid-60s maybe even late 60s, early 70s. >> if i'm retiring tomorrow, yes? >> what would you think your expected returns annually would be over the next 10 or 20 years? >> well, it depends on their asset allocation. if you're retiring at 60 years old, if you're 60 in good health, you're going to live to 90. so you have 30 more years. that's one thing that's missing. with that in mind, with the extra -- you know, you should be heavily still invested in equities. that's one of the biggest problems. i think one of the failures and why we have so much global anger, 30 years ago when you left your firm whether your firm failed and closed down or your factory moved to another component in another place of the world, you generally left

with a defined benefit. and you had the security of a pension fund. today and since financial crisis, when most people lost their jobs, they lost their jobs with a defined contribution plan that they were responsible for navigating themselves. and as we know, most people have panicked over time. they over-invest in bonds. over-invest in cash. under-invest in equities. i think that's one of the major contributions of this fear and anger. this is one reason why for years and years i'm trying to push people to say, okay, be 100% in equities. but you have to have a longer horizon. >> we should talk about that more in the next block. >> and we will. maybe a little politics too. larry, stick around. thank you. coming up, much more from larry fink. then later eli lilly announcing a commitment to global health care. john lechleiter will join us for that first on cnbc.

still to come, inside hasbro's toy chest. sales jumping this quarter thanks in part to elsa and olaf. >> so cute. like little baby unicorn. >> hasbro ceo joins us in a "squawk box" exclusive interview. we'll be right back.

let's get to our special guest blackrock founder and ceo larry fink is here. what i first want to talk about is just -- i want to see whether you think there's anything to this. active management. there's got to be a reason it's not working. i'm just wondering if it's not working because of the fed and because of zero interest rates so there's no actually price discovery anymore. so guys that used to be able to do things based on stuff that worked forever because assets get valued in a very sort of logical way, when everything is just -- you know, when nothing's actually being valued structurally, then there's a problem. i'm wondering whether we should be worried about that. >> well, i think with all the central banks we can't just blame it on the fed. right now -- >> maybe that's why it doesn't work. is that why it doesn't work? >> i think what you're seeing because the aggressive behavior seeing more correlated the same. you don't see -- where a lot of investors do well is when you

think -- when you have breakdowns in the correlations. when you have different movements. >> that means things aren't trading on value. valued and undervalued. i think it will come home to roost. >> i don't think the inherent trading in this environment -- what you're saying if they stop buying you're going to see different asset categories move larger than others. but i wouldn't say it's inherently misvalued in this environment they're valued because the scarcity of assets. when you start seeing less bond purchases from central banks, you're going to see certain asset categories. if there's not enough private demand, you'll see the spreads widening out. >> you're acting it was obvious in this environment that things would be different, why didn't these really smart guys figure out in this environment they should have been able to beat the averages more than they have but they didn't?

>> i think, once again, that's one trend a lot of people miss. so if you invested in stocks that were not part of an index, you had much greater problems. invested in stocks that were part of an index, they did better. so you had major changes and i think the majority of people missed it. but let's be clear, too. i do believe regular fd had big changes, too in terms of information flow. and so i do believe the market environment has changed. i would also categorize quite frankly maybe there's just too many investors and another reason why everything is so correlated. >> we talked about queen elizabeth earlier. we're not talking about that queen. we're talking about elizabeth warren. >> "the wall street journal" calls her queen elizabeth. >> i love the center for american progress. because you know their policies. i like to say it's like a really tall basketball guy you call him

shorty. or like a bald guy you call him curly. i think that's what they mean by progress here. everything goes backwards. center for american progress to actually take us back. but that's neither here nor there. but she said and you want to know -- >> who's she now? >> elizabeth warren. >> said we don't need no -- she didn't say no. but we don't need cy tooe, morgan stanley, or blackrock getting to choose who runs the economy so they can capture our government. would you rather be mentioned or not be mentioned? i'd prarather be mentioned beca she's talking about big money players. i'd feel left out if i was goldman sachs. why isn't she hitting on me? she's wrong about things usually, but i'd want her making fun of me. are you happy she mentioned you or unhappy? >> neither. it's just annoying. it's noise. i'm not paying much attention. >> it's just noise?

she's in charge of -- she's running the left side of the party here and if hillary clinton gets into office, there's all kinds of questions about how much power elizabeth warren will have. >> she also said you just pay lip service to hillary's bold agenda. and it's coupled with a sigh -- give me one of your knowing glances and then i want to see you twiddle your thumbs. >> i don't twiddle my thumbs. >> you don't. i haven't seen that. but i have seen the sigh. >> get to the point. >> why blackrock? and do you think there's merit to the idea that the revolving door should not be with -- obviously sort of the dregs society should not be in government. >> there's no revolving door. i don't know anybody from blackrock who went to government. we have a number of people who left government and stayed in the private sector and are part of blackrock. >> what do you make of that? what was she trying to say? >> she didn't want anybody

without experience in washington. that's all. >> would you agree with that assessment? >> so i don't -- >> with apologies, can i say one thing. would you ever go to a heart surgeon that wasn't a heart surgeon? i mean, if you had a heart attack, the whole thing is crazy. crazy. i just want to -- >> but you guys are focusing on one component of this. i mean, let's see how this all plays out. but obviously you hear from the right side of the table, the left side of the table. i really don't pay much attention to this. i know it creates a sound bite for you guys -- >> hold on. it matters because of the following. >> why? >> for the following. >> it's sound bites. >> you talk to people who support hillary clinton and they say, don't worry about what she says on the stump and don't worry about elizabeth warren. read those e-mails. that's the real hillary when it comes to wall street. so who is the real hillary? >> first of all -- >> it matters to you.

if elizabeth warren -- >> why does it matter to me more than anybody else? >> because your firm is being -- >> tell him about your story. >> you know what? >> he's got a story today. >> we're being labeled by a lot of people. good labels, bad labels. i can't focus on that. i don't focus on it. i know it's great -- i'm sorry i'm not creating a great sound bite. >> you still have a chance to do this. andrew's piece today is if you look at the e-mails in hillary clinton's camp, they might be tougher on wall street than people are saying. >> i went through all the e-mails not just the speeches but also the e-mails of the staff. >> you didn't have anything better to write about? >> when you look at some of the comments the staff makes, you don't know if she is the staff and they're really indicating the way she feels, but you think she's actually going to be harder than i think some people expect her to be. in terms of the regulation that may be coming. this idea of a risk fee, for example. i mean, things that may fundamentally change wall street

to the idea she wants to add different trading pieces. that could have a huge impact on your business, right? >> probably not. >> not on you. >> impact on traders. but no. >> for you actually it would probably be better. >> no, i don't -- our clients could be harmed by added tax. excuse me. but i don't think it's a big issue. >> you don't want to be treasury secretary? >> i'm happy in my job. i'll be in my seat in january. >> you've never thought about it? >> i'm going to be in my seat in january. >> we've got an alexander hamilton segment coming up. that could be a cool thing. >> i think it's pretty cool being the founder of blackrock. >> one of the founders of blackrock went to wellsly. >> i'm going to have lunch with her. >> hillary? >> no. >> no, no, no. >> again? >> revolving door.

>> thanks. >> sorry i didn't have sound bites for you. >> no, those were good. >> thank you. coming up in the next hour, cnbc exclusive interview with oscar munoz. "squawk box" will be right back. this just in. 50 million customers' data was not compromised this morning in a security breach that didn't happen. wall street, not rattled... at all! no. sir, sir. what went right? everything. we have a brief statement on this non-breach. we're happy to report there's nothing to report. my dad's company wasn't hacked today. cool. it's been over 100 years since my dad's company wasn't hacked today. the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires

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coming up when we return, goldman sachs expected to report quarterly results. we'll bring you those numbers as soon as they cross the tape. "squawk box" returns in just a moment. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪

♪ one of the stories front and center this morning, we're getting the latest on home builders sentiment this morning. out with the monthly index. that's coming up at 10:00 eastern time. economists looking for that index to drop to 63 for october. that would be down two points from last month. yet another computer glitch plaguing the airline industry. booking services providing saver cooperation suffered an outage yesterday. left passengers unable to book tickets or modify existed reservations. that happened for airlines including southwest, jetblue and other carriers. however, saber says the issue is now fixed. and united beats estimates on the top and bottom lines. however, the airline also says that lower airfares and higher

wages will hurt its bottom line for the quarter. we're going to talk about all this with the company's ceo -- new ceo we should say, oscar munoz at the top of the hour. eli lilly announcing a new $90 million initiative. the drug maker investing to improve global access for the treatment of diabetes, cancer, and tuberculosis. joining us now to discuss, john lechleiter. how many more times are you coming on? are you chairman or nonexecutive chairman. >> i hope i'm on again next week when we announce our third quarter earnings. i'm going to stay on until i retire at the end of the year. >> we'll see him as a cnbc contributor a that. >> if he's lucky. >> exactly. if you get that big promotion. is this -- the new gentleman, is he jesuit educated? or were you unable to find

someone like that? >> well, dave richts is a great choice. a lot of experience around the world in china, canada, and the u.s. i don't know about the jesuit education. two of his children are in the jesuit high school here in the city. >> that's good. you will pass the "squawk box" mantle onto him? he understands what's required of him in terms of the appearances on the show, right? >> i absolutely will. i'm not quite sure i can explain it to him, but i'll put it over his shoulders. >> all right. you're still boss, dude. you can still -- you know, he could screw this up. so just make sure he understands, you know, what's required. so tell us about this initiative, john. >> well, joe, what we're announcing today really extends and expands the program we started back in 2003 in providing two really old, 50-year-old, 60-year-old medicines. transferring the technology for those to help treat multi-drug

resistant tuberculosis in the hot spots around the world. this led us in 2011 to expand that to include non-communicable diseases with a focus on places like brazil, south africa, where it's an epidemic. what we're announcing today is an ambitious extension of this work under the mantle of the global health partnership. and we're saying we aim to reach by 2030, 30 million people on an annual basis that would not otherwise have access to health care outside of our traditional model. so if you say the world has 7 billion people, we think lilly's footprint today enables us to reach and effectively provide medicines to about $2 billion. so this is the focus on the other $5 billion. in many parts of the world where we otherwise don't have much of a presence but can bring a lot of expertise to bear.

>> so goldman sachs recently put out a call on lilly that they went from a buy to a neutral i think at the end of last month. saying the pharma giant is entering a period of accelerated growth. a long lasting period of accelerated growth driven by a pipeline. they didn't say lechleiter's leaving so this is a good time to buy the stock. i think what they're saying is you managed through a period where there were some patent expirations. you know, there was a lot of restructuring in the company that you did. this new guy, mr. ricks is he the one to take it up? >> absolutely dave is the right guy. he led the business most affected by the patent operations. he saw the patent losses of sim ball ta, avista and really had

to recreate his own product portfolio which includes the drug for psoriasis and rheumatoid arthritis. dave's got a great handle on the pipeline, the importance of the pipeline investing. at the same time, joe, we said at our investor meeting in may, we think we're going to be launching 20 new drugs between 2014 and the end of 2023. clearly somebody like dave who brings the commercial experience is going to be the perfect person to lead lilly through that and make sure the launches are successful. >> great. so we will see you hopefully next week, john, if you have the time. that'll -- probably that will be one of the last times we see you with the earnings report. but that'd be great. and we look forward to speaking with you at that time. >> thanks, joe. >> it's bittersweet. >> well, there's a time for everything. lilly's in great shape. great time for transition for me personally. >> okay. sounds good.

thank you. and we mentioned goldman sachs and that the report in goldman sachs is actually out now with what is it $4.88 a share which is, like a dollar above expectations. >> which were $3.82. the fixed income trading revenue was bigger than expected. as was expected based on all the other banks we have seen -- >> revenue way above. $8.17 billion and they were looking in the sevens. >> $7.424 billion. right. and so that's all the other banks had led us to an expectation you'd see a big beat there. and we are definitely seeing it. goldman sachs more exposed to trading than any other. >> one note because i'm always focused on investment banking. $1.54 billion in the third quarter. that's unchanged with the third quarter of 2014. but 13% lower for revenues for

advisory. compared with the strong third quarter of 2015 which reflects the decrease in industrywide mergers and acquisitions which to me says a lot about the way the world says about the economy and the lack of confidence that ceos and boards have. >> all right. so we'll see if it gets a pop even though it's been climbing in anticipation of the numbers. a lot of it might be priced in already. we'll discuss more. just out with their earnings. so coming up after this, we'll hear from an analyst about the bank's quarter. and then a quick check on the markets at this hour. dow woeld open higher by 102. nasdaq by 44.

welcome back to "squawk box" this morning. take a look at futures. they are in the green. the dow looking it would open up higher 98 points.

then the s&p 500 up 14.5 points. robert frank joins us with a special guest. >> and some special beverages. never too early for a good bordeaux. sotheby's tomorrow will auction off wine from the famous bordeaux. joining us is the owner prince robert of luxembourg. thank you for joining us. >> thank you. >> the wine market like the art market like the collectible car market has gone through a bit of a tough phase in the last 12 months to two years. what are we seeing now in the wine market? what do you think tomorrow's auction is going to bring? >> well, first of all, thank you for having me. we're dealing with a very different market. we have interest from around the world. i think even for a small family business like ours, we've seen the strength of the global market. i anticipate that we'll see that in the auction tomorrow.

>> now, you own oat brignon. some say it is the oldest luxury brand in the world. what are you seeing in demand for the wine and vineyards? the chinese have been buying vineyards in france like crazy. i think 80 bordeaux vineyards they purchased. do you think those values will grow? what are the chinese doing with all that wine? >> first of all, correct. it was acquired by my great grandfather clarence dillon. came to bordeaux estate in 1935. since then there have been relatively few acquisitions of the top estates in bordeaux. and we have seen more. i think that interest will continue to grow. bor toe ray mains a very exciting place. not only for the wine but also

for the city. we have seen a lot of growth and tourism. >> we obviously don't have the same facilities that you might have some vineyards out here. we have about 10,000 visitors a year. nothing compared. we just opened up where the last four months have had 180,000 visitors coming to join us to celebrate the global wine culture. so, yes, china has been very present at that. americans are also starting to come back. and i think with a two-hour length to paris next year. >> now, these sell for thousands of dollars a bottle. this i think is about a $1500 bottle. some bottles go to $6,000, $9,000. but this bottle is what? around $20?

>> just under $20. the idea when i was a young man a long, long time ago was to start a wine that was more accessible that we would also bring to the market when it was drinking well. in those days i didn't have a wine cellar. so i created that new super premium brand in bordeaux. >> do you mind if i pour some of this? >> please. >> you started a restaurant in paris as well. >> that's correct. we have extraordinary history of at the owners opened. >> do we let this breathe? >> i think it's been breathing for awhile. >> exactly the right thing. this will help us. breakfast of champions here. >> i'm feeling very "today" show right now. >> absolutely. >> one more glass. >> and in terms of the -- again, back to the market for wine.

are the chinese buying? at auction? >> we've seen a lot of interest come up again over the last year. as we have in the united states, actually. the american market really has taken off. we've also had two very exciting vintages with 2015 and now an extraordinary harvest in 2016. and the american market has always been slightly capricious but excited by the top vendors. >> and the u.s. is the biggest market for le mission? >> it's always been popular in the united states. i think it has to do with centuries ago by the new orleans family in the middle of the 19th century. and so, yes. even then part of le mission was sent to the united states. i think it was by the fact we have robert parker, great wine

export. the other great wines of bordeaux. so le mission has seemed to be a somewhat unknown champion to the greater wine market in the united states. but also elsewhere. >> all right. cheers. good luck. >> thank you very having me. >> fantastic. thank you. >> where in paris is the restaurant? >> it's in the heart of paris. >> so you could walk there? >> absolutely. >> easy street to remember. it's franklin d. roosevelt number 31. >> anybody you know there that could get a table? >> i think we could get you in. please come and see us. it would be a pleasure. >> beautiful. >> thanks for coming in today. coming up when we return, goldman sachs shares, a big earnings beat for the quarter. we will dig through results with an analyst when we return.

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goldman sachs reporting third quarter earnings this morning. marty mosby joins us on the phone. good to have you here, marty. big beat in revenue by $750 million and on eps. they came in at $4.88. not surprising a lot of that due to trading, correct? >> that's correct. you had some stronger fixed income. but what you saw in the trading

side was their equity business actually was up from the prior quarter a year ago. which is different than what we've seen in the other brokers that have reported so far on money center banks. the other thing is you have investment in lending. so their gains in that business with the valuations in the market going up actually produced about half of this variance that you're seeing in the earnings today. >> the revenue beat is 750 million. equities $10 million there was a lot of other parts of the business that also came in above expectations. the stock now trading higher by about 1.75%. it had rallied into this number because of the performance in all the other banks this quarter. did you expect more out of this quarter? did the market expect more? is this good enough. >> i think this is enough. what we're seeing is, again, the market will discount the market and lending benefit. so again, part of that will be a

short-term benefit. you're also looking at the expenses. this part of the year goldman sachss starts to lower. now dropped to 38 and will drop to 30%. that's more seasonal in nature. that also creates a little bit of favorable earnings surprise in the back half of the year. >> return on equity above. 10%, 11.2%. it's the first time since before the financial crisis that they're up that high. can they keep that going? >> when you look at more normal levels of trading activity, that's when they can produce the double digit returns. when you see the market get some subdued pressure, they drop below 10%. that's what we're looking at in the range. a normal kind of volatility that you see at goldman sachs. >> this beat on revenue expectations especially when it comes to trading, there have

been questions about whether sustainab sustainable, repeatable focused on the brexit outcome which led to volatility, changes in position, et cetera. how concerned are you or not that this kind of revenue can continue when it comes to trading? >> well, i think we're comparing against a low level that troughed out in the first and second quarters. i think that was abnormally low. i think what we're getting to now is probably around what you should see in a quarter when you have normal activities. and every now and then you're going to have an event like brexit. this point is we are seeing the markets rebound in just traction levels. and that is positive for these money center banks. >> the comment just looking at the investment banking business. and frankly how poor it was. not necessarily poor at goldman sachs. but what it says about confidents in the markets. among ceos and companies and

ipos. when you look at this, do you say if goldman has it right and it's cyclical it comes back or do you think there's something else going on? >> i thought your comment earlier was insightful. that was the one disappointing thing that you see in these numbers. is even in debt placement, goldman wasn't able to see the benefit of those on investment banking going up like you saw in e the other money center banks. this is a reflection when you look at advisory or the m&a that there's a lot of uncertainty in the market, with brexit, with what is the fed going to do with interest rates. you have a lot of folks sitting on the side lines to the degree we can get some confidence and stability going forward as we enter 2017 get a lot of these events behind us or transition towards some equilibrium. but that is definitely a proxy for uncertainty in the market

right now. >> marty, thanks for joining us. marty mosby. >> thank you. and we should tell you about a new study saying that the legalization of marijuana could help sacramento bring in a pot of money. report from university of the pacific in stockton says california's capital region could reap 20,000 jobs and generate $4.2 billion in business if it becomes a hub for legalized marijuana industry. study also said if local leaders chose to limit the number and businesses could bring in about 1500 jobs and generate $332 million in revenue. polls indicate that voters are likely. coming up when we return, a ceo exclusive double play. first we've got the ceo of united airlines oscar munoz here. and then hasbro ceo brian goldner is going to join us to talk about the toy economy and how "frozen" helped boost their

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earnings central. a flood of quarterly results and

first on cnbc interviews. >> i think we're very proud of the results. strong sales growth. >> we're seeing huge outflows in equities. inflows in cash. and then you're seeing a migration from active to passive. >> up next, united airlines ceo oscar munoz. the company beat the street but could turbulence be ahead? a cnbc exclusive coming up. plus this is no childs play. toys will come to life when we talk business with the ceo of hasbro. >> so play nice. >> 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" on cnbc. i'm joe kernen along with andrew ross sorkin and michelle

caruso-cabrera in for becky this morning. the dow up 100 points and the nasdaq almost 47 points. the 10-year treasury yield, it was above 1.8% neearlier this week. it's 1.766% at this point. and oil had also -- >> oil. >> oil had been lower. it turned around and that gave some strength to the markets as well. we've got a ton of quarterly results this morning. we're going to get to those in a couple minutes. first one economic stat to watch this hour. the september consumer price index due at 8:30 eastern time. consensus calling for the number to rise by 0.3%. we will watch to see what it ultimately is. >> wilfred frost joins us from the breaking news desk with all the details. >> indeetd.

expectations for gs were elevated following strong estimates. but they smashed the street's estimates earning $4.88 per share. fixed income commodities trading was strong. almost 50% growth from q3 last year which compares to peer average of 39% thus far. this gain they say was due more to rate products than currencies and commodities. equities performance plus 2% year on year. some of whom saw significant declines. also a nice boost in investment and lending book. investment bank performance appears a little soft. $1.54 billion in revenue was flat year on year. down 14% quarter on quarter. that compares to 15% year on year growth for peers so far in q3. on expenses up year on year. over the course of the quarter.

all in all it equates to double digit which the market certainly welcomes up nearly 1.5% in the market. the question will be do they hold onto those gains. >> i was going to say the stock's trading up 1.6% but it had moved higher in advance when all the other bank numbers came out. >> exactly. it's moved up over the last couple of days. i think we were expecting slightly better performance from the eps numbers we had coming in to results as a whole. i think that's a big beat. that's why we have extra gain this morning. >> thanks, wilfred. coming up -- not coming up but in other financial news and names, blackrock earnings beating the street by 14 cents. revenue essentially in line. able to thrive despite equities to fixed income and cash assets. ceo larry fink joined us in the

last hour. >> i do believe what people are missing, many investors across the board are using passive for active. this is why we're seeing more and more active investors are using etfs. that's one thing i don't think that narrative is out there. i think more people are missing it. more and more they're using that to navigate portfolios. >> shares of blackrock unchanged right now. $354.60. >> it says extended hours up there. >> it's tough. that big widespread. united health, though, topped forecasts on the top and bottom lines. you know this was a dow component? company also raising its full year outlook thanks in part to falling claims costs. and the shares you can see up three or so at $137.

and johnson & johnson also posting earnings and revenues ahead of consensus. raising the full year forecast. increased drug sales and j & j's cfo joined is this morning. >> overall the results are very good, i think, we're very proud of the results, strong sales growth and underlying sales growth. and good earnings growth. 12.8%. proud of the results. you may remember we increased our guidance last quarter. sha sha. >> shares up -- >> i didn't know they put an airline in the dow. >> you nieted health care. >> yeah. they do it all. >> and there's the other big corporate story of the morning. the biggest stock mover right now. netflix topping estimates. the streaming service adding 330,000 domestic subscribers in the last quarter. ceo reed hastings on the

conference call last night talking about the company's competitors. >> we've had a great couple years at these price points. there's a lot of competition entering the market. we're focused on how do we increase value to the consumer by having more spectacular shows. so people watch more of netflix. over time that will take care of itself. we don't want to get over-confident because we've had a good couple years here. >> can you call it a conference call when he's actually on camera? we're going to need a new word soon. this is the future. everybody's going to stream video instead. >> netflix shares looking up about 19% in the premarket. also shares of ibm declining following its earnings report. profit and revenue topped estimates. but this was the company's 15th straight decline.

>> revenue was roughly flat in total but the quarter played out what we said it would. we had good growth in our strategic imperatives. so up 15% on a constant currency basis. that's kind of what we're looking for for that business. in fact, it accelerated a bit from the second to third quarter. and the watson business within that is part of our cogtive solutions business. it's obviously growing and cogtive solutions in total were up five. and with the solutions the software solutions piece was up eight. so quite good growth across the platforms. >> and the firm also said its growth in newer businesses including cloud competing and artificial intelligence divisions. always talks about how they're going to get away from empty calories. >> mainframes? >> the older legacy businesses they consider empty calories. united airlines posting

better than expected earnings last night. joining us now phil lebeau with oscar munoz. >> we're here with oscar munoz ceo of united airlines. $3.11 a share is the earnings. revenue coming in over $9.9 billion. give me your thoughts on how united did. >> it's a combination of things. we have an incredible array of human engagement across. we're building momentum not only on customer service but our financial deliverables. you've seen momentum on our top line over the last four quarters. and we see that continues into next year. >> you have made it a point since you came in as ceo cutting costs while also driving higher revenue? but you're still lagging your competitors a little bit. you're closing that gap though. give me outlook here as you try to close that further.

>> it's ban question that's been constant. there's been a lot of push to accept the fact that maybe the differentials, network structural, or otherwise we don't adhere to that policy. i have a new leadership team that's outstanding. and as we've done our strategy work over the course of the summer to unlock our potential has been our terminology. we see the possibility of being the best airline in the world across off assets. so this is another quarter in the step towards that journey. >> part of that management team is bringing in scott kirby. his expertise as everybody knows in the airline industry is in terms of driving greater revenue. i know it's been relatively short-term. but are you noticing that impact in terms of he says i think we can do greater success in this area? >> me saying what i feel about my insight into that is one thing. someone like scott with his experience, when he project projects that same feeling, i think it's infinitely more exciting. i turn to him all the time and say thank you.

it is a complex large business. on multiple fronts tough have a lot of experts. >> relative to your competitors, your stock has had a better year in the last year. but one question that's out there from all investors and i hear this from people. when will the airlines see that bottom in passenger revenue per available seat. it was down 5.8% for you in the third quarter. can you give us some sense of when you see that bottom? >> yeah. we have an investor meeting on the 15th. we'll get more to that. we have a chart in our presentation today that shows the improving trajectory, we see that not only bottoming out. we'll dub it that way. >> does that force a lot of your competitors both on the low cost side as well as your full main line competitors. is it forcing everybody to pull back and say, okay, we know that we had to put in a lot of seats

to defend our market share. is that fair if you will. is it pulling back a bit? >> you know, generally the industry over a long period of time is like all industrying sort of self-managed. and i think everyone understands the simple economics of capacity. >> right. >> and demand differentials and what it causes on the yield. i think you are seeing a bit of that discipline across here domesticicly. >> joe's got a question for you. >> i do. so oscar, i remember your predecessor, big thinker. i hope you remember probably for the merger. but for awhile, integrating labor contracts, computer systems, the two cultures of united and continental proved a little bit more problematic than maybe he realizes. is that in the rearview mirror now completely? all outstanding issues with that integration are in your view taken care of? and are you united now or continental now?

i used to love continental. i like united. but i always loved continental. which are you now? united or continental or united continental? >> we are simply, joe, a united united. with regards to the broader question about the difficulty of the integration, the labor things, are they behind us? generally saying all is behind us is never an easy thing to say. but i think predominantly you can say that. and frankly my basic barometer i tell everyone. when you fly us, just ask someone how they feel about our company. i think you'll feel a smile and hear some positive things. not just internal which i call the new spirit of united but also from the financial perspectives as you're beginning to see us deliver the proof, not the promise, that engaging the humans involved in our business, together we can accomplish a lot of things. it's great to see that financial benefit become slowly proved.

>> great. because newark is close to my house. it's important that this all works out for me. >> it's all about you, joe. >> terminal a, you're doing improvements to the united club. but it's closed. i'm not asking you to hurry that up just for me, but just as long as you're aware. but i'm expecting big things. >> hang in there. at ewr we're building what's called a polaris club for our business first product. wait until you step into that place. it's going to be amazing. we'll continue to operate there just for you, joe. we'll be sure to keep it clean. >> i like that. >> oscar, joe brings up a good point regarding the experience, the customer experience. when you first took over and obviously you had your medical issues that you had to take care of, but now that you're back day-to-day operations, were you concerned when you first stepped in in terms of seeing the inconsistency of the product that united was putting out? >> sure. at the end of the day, we're a

people business and a huge operating business. and we have a good customer base. i've always -- back in the railroad space and now in the airline world, i've always rejected the cultural notion that you can't have -- that you have to have a tradeoff between efficiency and productivity. so you have to do both. it doesn't have to be a tradeoff. you invest in the efficiency capability to get more consistent to your point. that leads to customer service which leads to revenue growth. you have to think that way. and again, more importantly engaging the human spirit here is what we've been able to do so far. now i've got an incredible team that's got the more industry experienced and it's exciting. this quarter is the first example of that. >> we've seen so much come online. transatlantic. you guys are feeling a lot of pressure especially from low cost carriers out of europe who are coming into the u.s. does that remain sort of the hand to hand combat area for the airlines because there's so much capacity coming online? >> yeah. it's probably one of our weakest

markets. not only the brexit hangover you're feeling but also the capacity issue. we monitor that. we work on it. china's looking a little better. latin america is looking actually positive. our domestic business is also showing signs of improvement. but the atlantic continues to be our biggest issue. >> oscar munoz, ceo of united airlines a day after they posted better than expected earnings and beat the street by 5 cents a share. back to you. >> thank you for that, phil. >> it's commercial and you've got little questions. >> i'm going to be on a united flight this morning from newark -- >> out of newark? >> out of newark. but i don't want any preferential treatment. if i mention to him -- >> but you're flaying commercial? >> i am. >> you don't need -- you rarely need that treatment. >> man of the people. >> middle seat right here. >> crying babies.

>> it could be. we'll see what happens. coming up, hasbro ceo brian goldner will join us. we'll talk the business of toys when "squawk box" returns in a moment. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars.

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amazon launching a new family friendly feature. family friendly feature. a lot of fs. e-commerce giant rolling out a family vault. it will allow prime users to enjoy free storage on prime photos. invite up to five family members or friends to share your online account to combine photos as well as taking advantage of another five gigabytes of storage for video and for other files. >> all right. let's talk toys. we all like toys. toys from the movie "frozen" and disney's princess line brought some of the magic to hasbro's third quarter earnings in a big way. rose 24% to $257.8 million. it's the highest quarterly earnings revenue ever exceeding wall street expectations. for more let's bring in brian goldner. he is president, chairman, and ceo of hasbro. thank you for joining us this morning. >> good morning, guys. >> who knew? who knew that girls and "frozen" were going to do this? when you got that deal from

mattel, did you know this was going to happen? >> we've always believed strongly in the girls business. in the early 2000s our business was a $50 million business. we grew it to be north of a billion dollars. we always wanted to work more significantly with disney. we worked for many years to build our reputation with girls through consumer insights and creativity. then we were able to grow the princess and "frozen" business. >> the question is whether it's sustainable in that when is the next disney "frozen" franchise going to come out and what's going to happen between now and then? >> well, first, bigger part of the business is the princess business. this year we launched all 11 princesses not even including anna and elsa. that is a big business and we believe it could be bigger than it's been in its history. through developing great innovation. this year we're launching and have all 11 dolls out on the market. and sales thus far have been really strong.

then of course there's "frozen." next year there's a "frozen" special that will happen during the holidays. we expect over time great content from the walt disney company. in the first quarter 2017 you'll see a live action "beauty and the beast." i know kids and families will be excited about that. >> you can name all 11 without pausing? >> well, why don't we do it together, joe. >> no, i'm not sure who -- i bet you can probably come up with them. we don't need to do that, but -- >> i might struggle. >> i think i could come close. >> if you can't do it, i can't do it, obviously. >> on the disney deal just so i understand it, what percentage do you have to give away on each sale? >> well, we pay royalties that are different between our marvel business and our lucas films "star wars" business and princesses. making a princess line is more costly than an action figure.

we take all those things into consideration as we make deal. >> let's talk about boys. different story at the moment. >> well, boys business grew in the quarter. obviously for the year a lot of people have been talking about "star wars." but for the year "star wars" is up considerably. and we still feel very comfortable that "star wars" could hit that $500 million mark we achieved last year. we also saw great growth in transformers. that's a brand that's bigger than it's ever been in non-movie years. we continue to build that with content and story telling. in fact, this quarter we launched streaming content with an ncn network that's on youtube. we've got more than a hundred million views for this content focused on fans. it's really driving a fan-oriented product line. so there's a brand that's grown for us. our nerf business is very exciting. it's continued to grow. it's the largest brand of our company both in the third

quarter and in year to date. it was even bigger than "star wars." that's the goal of our franchise brand strategy. to drive our franchise brands to be billion-dollar brands over time. when we look back over the last 15 years, those brands were four times smaller or have grown four times over this period. again, we continue to see growth in our own brands, through great consumer insights. >> two of the brands i wanted to throw out there, jurassic park being one and the other is rogue one. >> we just began merchandising that september 30th. i hope you've seen the trailers. it should be an exciting story. i won't give too much away. but suffice it to say, i think both families and fans are going to be excited to see that movie. and that's part of the strategy. then we go into 2017, we have another episode trilogy movie from "star wars" next holiday. so "star wars" continues to have consent as we go forward both in

television and in feature films. >> brian, it's cinderella. snow white. >> pocahontas. pocahontas, aerial. >> ariel. aurora, belle, jasmine, mulan, tiana who i don't know. and rapunzel. who is tiana? >> she's one of the princesses. >> all right. but you know what i like about this? they're not necessarily royal blood. which is -- you know, that would be sort of -- >> that's the whole idea. >> it's not coming from his memory. he's reading. >> of course i am. i looked them up. it's obvious. but it's very good to know. >> you know all the princesses by name? >> he was nodding as i was going. >> i was nodding as if i knew. brian, great to see you this morning. thanks for joining us. do come in next time you're in new york. >> thanks. coming up, breaking economic

news, consumer inflation data is straight ahead. >> princess and the frog. >> and then later, look, joe. tim kaine is going to sit down for an exclusive interview -- >> citizen kaine. >> you can watch this afternoon at 4:00 eastern. coming up, hamilton's play bill. we'll break down the big business of the hit broadway musical with one of the stars of the show. "squawk box" goes backstage next. 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, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

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a huge impact in my life. september cpi is hitting the tape. rick santelli standing by. important number for once, rick. the numbers, please. >> they're all important. just a question of timing. up 0.3% on headline as expected. strip out food and energy, up 0.1%. that's 0.1% light. no revisions on our last look. now let's get to the meat of the matter. year over year up 1.5%. as expected but hotter than our sequential last appearance. and the one concentrating on the most and that is ex-food and energy year over year. this number has been running on the hot side. we're expecting 2.3%. our last look was 2.3%. came in light at 2.2%.

keep this in mind, to find a higher year over year number than 2.3% you have to go back to the fall of 2008. okay? so we've had a lot of 2.3%. one, two, three. three of them. but this is on the light side. but i don't know how much you can read into this as good or bad news. as joe pointed out, the hook here is if you look at the pound dropping and what's going on with how certain entities are raising their prices. central bankers may get the dessert they want with more whipped cream and a bigger cherry with regard to pricing pressures. the big feature today, you could slice and dice it up. global stocks are higher. preopening futures are higher. that puts a moderator on some of the other markets. we want to see how that affected interest rates which have been sensitive to the way stocks have been queasy lately that they've

run up a competitive fashion week to week. we want to pay attention to the upside and around 173 on the downside. >> got it. thank you so much. steve leisman is with us on set to give his analysis of the data. >> it kind of feels inflationy. if that's a word. >> it's kind of a high pressure one? >> yeah. rent up 0.3% again. apparel was one of the few that was down. gasoline up more than economists expected. so the kind of commodity decline from a year ago is rolling off. this number is below what the fed is looking for when you translate it into the pce number. but you've got to take note of the idea that you have 2.2% on the core number year over year. what else is up here? services up 0.2%. i just want to show you some of what the fed has been looking at which is fed expectations. they had said market based applications were low. you can see they've been

creeping up. they're still below 2%. but that was something that stayed in the fed's hand. that's kind of going away. then i want to turn quickly to something else. this is the way the show works. i listen to it. come back with more detail. which is why you've got to watch the whole show. >> very nice. >> it's a package. you guys talked about growth and the atlanta fed. here's the atlanta fed chart. joe, this shows what you were talking about. we started off the quarter with a robust optimistic rosy feeling of north of 3%. it has now been down to 1.9%. look there. i want to show you some of the detail. what the rapid update does is no one model has a monopoly on the future. so we use an aggregation of models. that thsds up to 2.6%. so atlanta fed on the low side. goldman sachs, they have a good model at 2.6%. but you're right because the

rapid update has come down as well. we were up at times near 3%. >> never go up. >> you're also right about that. and i don't have the chart to show you, but it is true that over the last several quarters we skr -- >> quarters only? it seems like years. >> it's really the last four especially. where we started off very optimistic near 3% and come down near 1%. >> you started off saying this number of the cpi was inflationy. >> inflationish? >> but in the wake of janet yellen saying it's okay to have a high pressure economy, historically an inflationy number would suggest they're going to raise rates. you can't draw that conclusion anymore. >> if i could get technical about this, what the fed wants to do is show it's symmetric about its target. if it ran below 2% for a long period of time, then we shouldn't be upset or be too concerned that it runs above. they're not above. they're still at 1.7. i will stand out the more

hawkish fed chair yesterday said we have pretty much met our targets of inflation and unemployment. >> bottom line, does this number move the needle at all? >> this number is a little bit of ammunition for the hawks on the committee. you can't say it's not there. you can't say it's a big issue, we have to move yesterday. but you can say it's gathering. and the less i talk, the quicker you get. >> to our next guest. the star of "hamilton." i can't wait. >> which i have never been able to get tickets for. >> expensive. >> stubhub. >> i can't buy tickets to a place for two people where i can bring my entire family to florida. this economist in my can't do it. >> coming up next, the hamilton phenomenon has taken the industry by storm. we're going to talk to one of the cast members next. and can you explain to me why

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welcome back to "squawk box" this morning. take a look at the futures right now. we are in the green. dow looks like it would open up much higher. about 130 points higher. s&p up about 19 points. nasdaq up about 56 points. stocks to watch this morning, harley-davidson matching forecasts with profit of 46 per share. and chipotle downgraded to

underperform from market perform. the firm says the restaurant chain's loss stems from last year's e. coli scares may be permanent. separately, dick's sporting goods is preparing a bid for golfsmith international. it would compete with an offer by worldwide golf shops. "hamilton" the musical, it's taken the world by storm. it's become a broadway blockbuster and cultural phenomenon. with fans ranging from president obama to hollywood and hip hop elite. according to forbes since its debut last year, the musical has never had a weekly gross under $1.2 million. it is projected to gross $100 million with $25 million in profits. joining us now from the forbes under 30 summit, one of the stars of "hamilton." everybody calls him oak. he plays the roles of james madison and mulligan on stage for which he has won a grammy award. congratulations.

he's also one of the year's inductees into the 30 under 30 list. oak, great to have you here. >> hey. it's nice to be here. >> so cnbc, the audience would be naturally disposed to a musical about "hamilton." but the appeal of this musical has been far wider than that. why do you think that is? >> i think the appeal -- the reason why it's been so much wider is because it's the music and the way the story's told. when you take the time out to take about five, seven years for lin to write the piece. when you take the time to write and create something, you see it in the quality of the work. it's kind of undeniable. it touches on cores. it touches on basic human emotions and experiences. i think that's why it's so relatable. >> it must have changed your life. you got to perform at the white house. when you joined the cast, did you ever think it'd be such a big hit?

>> i didn't know. i knew i loved it for the reasons why. i knew lin did such a remarkable way of telling the story through song, through music. through a genre of music that's near and dear to me which is hip hop and r & b. i hoped other people would love it as much. i just sat back and waited and hoped for the best. >> has this changed your life? i bet it has. >> i'm talking to you right now, yeah. it's changed my life. >> that's hardly the peak of what you've been able to do in the wake of "hamilton." >> yeah. but, you know, it has. you know, as artists you can work for many years doing many, many things and not all the time you get this recognition and acclaim. so it feels really good and a lot of opportunities and doors have opened because of it. i'm eternally grateful for that. >> we just had the ceo of hasbro on talking about "frozen." i read online you may be doing a show related to "frozen"?

>> pardon? say that once? >> i read online that you may be in a broadway show related to "frozen"? >> no, i did a lab of the show "frozen." there's going to be another it ration. we have no idea what's going on. but the first table read of it, the first go at it i was involved. it was great to work on it. >> what's it like being named in forbes under 30? did you ever expect that? >> no. i did not expect that at all. it's been really great. it's a really great community. everybody's been so warm and welcoming. it's inspiring to see other people who are under 30 around my age doing really remarkable work and really dedicating their lives to changing the world. it inspires me to do more which i think is all anyone really asks for. >> what do you want to do next? >> pardon? >> what do you want to do next?

>> to focus on my spoken word, my poetry. talk about issues and inspire people to be more empathetic, really. that's kind of my goal. i want to start working on this documentary that the idea is to kind of showcase different people who have experienced different kinds of genocides, hardships, kind of juxtapose them all with each other, put them all next to each other and hopefully that will bring a bridge of empathy. so that's, like, my main focus after this. kind of, like, just put all my energy and resources into kind of creating something that will really kind of bring cultures together. >> sounds fantastic. it was a real pleasure to have you on. we wish you lots of luck with that project. i look forward to it when it comes out. >> thank you so very much. thank you. >> thanks. >> that was great. when we return, jim cramer

joins us live from the new york stock exchange. we'll get his take on the top stories. then later today democratic vice presidential candidate tim kaine will sit down for an exclusive interview with kelly evans. if you can catch it this afternoon, it's at 4:00 eastern.

welcome back. let's check out the futures which have been strong all morning. i didn't think it was inflationy. leisman's the expert. but if they're looking for 2.3% and it's never gone above that and we go back down to 2.2% and if the gdp numbers are being ratcheted down, why would these guys move? and if these guys don't move, then the market likes it and goes up. i don't know. but who knows, maybe it is inflationy. but a lot can happen between now and december. we'll see. see it to believe it. that's what happens when you have no credibility. you have to see it to believe it. maybe they're finally realizing they've lost credibility and they need to get one under their belt. they got one under their belt in ten years. maybe two. all right. 1.76% on the 10-year now. oil prices firmer this morning up 0.58%.

making headlines this morning, social security recipients and federal retirees will get a benefit increase of 0.3% in 2017. that announcement just out from the government. now that the september cpi figures are in the books, the increase isn't much, but there was no increase at all for this year. >> because it's index to inflation. >> it is. corporate news. visa ceo charlie scharf is stepping down. he'll be replaced by former american express president and visa board member alfred kelly. in a letter to employees, he said he needs to spend more time with his family. here he is on the conference call yesterday. >> we need to be on the east coast more than we are able and therefore i don't feel like i could spend the time necessary in san francisco to do this job properly. >> all right. so what do we think? do we believe this historically when people say they're resigning to spend more time with their family? we're doubtful.

>> i would like to take him at his word. >> how old is he? looks early 50s? >> i would like to take him at his word. >> there was a specific thing there. he lives on the east coast, company's on the west coast. >> what do you mean? you're the one that said why would anyone ever do that instead of climbing the -- >> corporate ladder. >> exactly. the power, the acclaim, the notoriety. >> i know charlie scharf and i would like to believe he's an honest man. >> you yourself can't see that style. family's got to go wherever you go. >> he was born in 1965 according to wikipedia. >> not true. >> so 51? something like that? very close to the year i was born. same century. in global news, saudi arabia is poised to launch its first-ever bond sale -- >> that was funny, joseph. you made a funny just now.

>> i did? the same century thing. the move comes as the kingdom turns to the debt markets to help ease economic issues related to the downturn in oil prices. the banks tied the sale -- or tied to the sale said that saudis are expected to to conclude that the road show for the dollar denominated bond today, expecting it to conclude. afterwards they'll release initial price guidance. they're thought to be targeting a sale between $10 and $15 billion dollars worth which would make it the largest issue of international debt in the middle east. >> and the first one for saudi arabia in about a bazillion years. >> is that true? >> they had done a loan from banks as like a test run to see how this might go and this is because of the declining oil revenue. dalian wanda has big plans to lure hollywood to china. $750 million in incentives to hollywood to shoot at a $5 billion studio in china. the subsidies extend from

everything from stage and set rentals to editing. this has been very controversial, because there have been some members of congress who have been very concerned about a, quote, chinese takeover of hollywood. the purchase of amc and then dick clark. i mean how could the chinese take over dick clark. you can imagine what a congressman is thinking or congresswoman. right? >> that's true. >> that's true. >> stocks to watch. we've got some stocks to tell you about. ford will shut down production of its best-selling f-150 pickup truck at a plant in kansas city for a week. it will also idle three other plants. the move will affect 13,000 workers and come after sales of f series pickups fell 3% last month. investors have poured $30 billion of orders into a rare investment grade bond from sprint. ifr says that the bond, which is backed by sprint's wireless spectrum, is expected to boost the company's liquidity. goldman sachs was sounding out appetite for the five-year note

at a field of 4% to 5%. >> that's high. why is it so high? >> people worry about sprint. are you long sprint? >> that spectrum should be really good. and burberry trading lower. a 14% drop in wholesale revenue offsetting a rise in retail sales. the luxury chain is seeing strong demand from tourists and domestic customers in the uk. >> f-150s, are they tied to homes sales and construction? >> yes. >> when you see them shutting down for a week -- >> they have been pretty strong up to this week. i was surprised ford back to 11. it's gone nowhere. dead money, five years. look at that. >> wow. well, that's just the three-month. sports business news. under armour striking a deal to be the exclusive provider of uniforms for major league baseball. espn confirms the company will take over from majestic athletic starting in 2020.

under armour is teaming with fanatics. under armour lost out to nike on a bid to be the official uniform provider for the nba. >> 5% yield, though, on ford so it's not really dead money. the biggest stock mover of the morning is netflix. earnings and revenue topping estimates. they added 370,000 people in this country, subscribers. that's 20% above estimates but down from, i don't know, a lot more in the year ago quarter. i think 800,000. but the international subscribers are what people are focusing on. 3.2 million. reid hastings on the conference call last night talking about the company's competitors. >> we've had a great couple years at these price points and there's a lot of competition entering the market. what we're focused on is how do we increase value to the consumer by having more spectacular shows so that people watch more of netflix.

and over time that will take care of itself. but we don't want to get overconfident just because, you know, we've had a good couple years here. >> netflix shares indicated up 18%. let's get down to the new york stock exchange. we have things to talk about. jim, netflix, ibm, goldman sachs, take your pick. >> netflix was astounding in part because it's very difficult to predict. a lot of that is because it's a hit-based company. a lot of people have to start realizing this is like a movie studio. when they have a big hit, you just can't believe how many people go to it. in this case it was narcos and it was gigantic. one of the things reed is, he's very, very philosophic about the amount of time that you spend. you could easily develop a thesis. take netflix and take domino's an you say, okay, listen, people are staying home and eating pizza. there is just a definite trend, a change, video games, netflix. he talks about all of this. reid hastings is a true

visionary and we doubt him at our own peril. >> 70-inch samsung. >> yeah. >> i'm with you. >> it goes well with it. look, i watch everything they do. i've got to tell you that what i did was i bought that ipad pro and netflix is astoundingly good. by the way, apple keeps going up but nobody cares anymore. >> it does. so jim, i tried to watch something that every episode was different. a different murder, longmire. i'm hooked on having something carry over to the next episode. that's the other thing. you can't do like a "law & order" anymore, can you? >> when you watch these things, you just get addicted. if you miss a narcos, go back to zero. you have to start all over again. by the way, i call into question whether "house of cards 4" was so good.

and there were credit card issues. why is reid hastings doubted and other people aren't? the guy keeps proving himself over and over again. he's just the real deal. i like that guy. >> i know. dvds coming in the mail. i go that's a joke. that's going to be gone in a year. here our entire life revolves around, what is it, netflix and chilling. >> and they roll it out. people love it. >> you know, the great thing is to us chilling is domino's. to millennials, it's something else. >> i'll see you guys later. coming up, the biggest movers. as we head to break, happy birthday to the halftime report. the celebration continues with jamie dimon and mark lazarie today starting at noon. i do the sales, the marketing. i have to do that from my phone. we use tons of data. i really don't have to worry about it 'cause everything is unlimited. i need data and i need it now.

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it's a tough environment because it's really tough for our clients. as i said, low interest rates, lowering expected returns. people are lowering their long-term return targets. so you're going to see many pension funds in the course between now and year end lower their return from probably a 7.5

to 7, maybe even in the 6 handle. >> and that was blackrock ceo larry fink. he joined us for a half hour earlier this morning. let's get a final check on the markets, which have been solid for the entire session. still triple digits, up 116 on the dow. nasdaq up 55, s&p up 17. thanks, michelle. >> thank you, michelle. >> have fun at your vf circle -- >> i will see you all from california tomorrow. >> vanity fair circle meeting. >> make sure you join us tomorrow. "squawk on the street" starts right now. ♪ good tuesday morning. welcome to "squawk on the street." we're here at the new york stock exchange. earnings season goes from a jog to a run this morning. 11 s&p companies on the tape. ten of them beating on earnings. with that, futures are positive. we'll get to goldman, ibm, ne