"squawk box" begins right n s r. live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin, along with joe kernen and michelle caruso-cabrera. the dow looks like it will open off 16 points. the nasdaq opening off about 15 points. we'll talk about microsoft in a moment. s&p 500 looks like it would open about down three points. overnight in asia, looking at a bit of a mixed picture. the nikkei down, shanghai marginally up. >> flipping those boards. it's good for a friday. >> for friday. for monday -- >> say it on any day.

ftse 100, italy, spain, all up. looking at crude. wti sitting at 50.91. >> let's get to that microsoft story. it is the top corporate story. shares of the tech giant popping on better than expected quarterly results. the big driver, the cloud. the shares of the microsoft product doubling in the most recent quarter. the stock hitting an all-time high in after-hours trading breaking through a level hit at the peak of the tech bubble back in 1999. >> it's going to close in on a half trillion dollars again. it's great day to have ballmer on. he took a lot of flack for not turning it into something it wasn't. in hindsight, now that we have the benefit of hindsight, he kept that thing moving along. increasing revenue.

maybe the share price didn't go all the way back. got pretty rich himself. how much does he have left? i expect him -- we'll have him for an hour. i expect him to be in a really good mood today. >> because of the stock price. >> very few of us get like $4 billion richer on -- wake up in the morning. i don't know how much it is. he's worth about 27 or something. i don't know how much of that is still in microsoft stock. you'll do that for me. we'll find out how many shares times like $4 today. if he's got -- i expect him to be at -- i hope he's in a giving mood. i would be just showering anyone in my -- i would be throwing microsoft stork or money at anyone around me. >> maybe he'll lay some on the set. some type of goodies what do you think, sorkin? >> looks like he owned 333 million shares. >> times 4. >> they're not worth a dollar either. >> that was back in 2014.

doesn't look like he sold much stock. we'll talk more about this with him. >> with him. yeah. >> he may not want to talk -- >> he has a team, doesn't he? >> it may take a while for the clippers to win a championship. why not buy the nba? >> just buy the whole league. >> just buy it. >> call it a day. >> win every year. yeah! >> because if you own every team -- >> yeah. >> all those rings. >> if you buy the nba, do you actually own all the teams? >> buy all the treatmenteams. >> that -- that you couldn't do. >> you couldn't do that. >> the doj? >> no, each team is worth -- each team is a couple billion dollars. >> really? >> given the multiple he had on the clippers. if he paid what he paid for the clippers that he had for every nba team -- >> they weren't a winning team.

>> no. >> british american tobacco is offering so buy the remaining stake in reynolds for $56 a 20% premium over the close of reynolds yesterday. the british group already owns a 42% stake in reynolds. this would value the company at 83 billion. brexit must have played into this to some degree, b.a.t. stock is up sharply since the brexit vote, reynolds american is down on the brexit vote. >> this has been in the work force quite some time. we call it an unsolicited bid, some call it a hostile bid. not really the case because the laws in the uk, the second you decide you want to have any type

of negotiation, you have to file. this is pretty much from a logistical component the only way to do this. people will look and say this is an opening bid, sure. will they go higher? i imagine they will. they're kind of in a box. reynolds is kind of in a box, if you think about -- it's not that there's some other player that can come in these guys own 42% of your company. it was going to happen at some point, it was a question of price, how, when. >> we learned a lot about the uk merger laws as a result of inversions, especially within the pharmaceutical companies. what happens, all the rules that goes into place. >> you can't even smoke outside here in the city. you can't. >> i don't think you can. >> when you go over to davos, walking down the street -- >> it's weird. >> every single person smokes. >> it's weird. >> when i go over there, i'm back to a pack a day.

just from walking around. >> i was in vegas for the debate. >> those people are all drinking, losing money. >> but there you can still smoke in public. you walk through the casino, you walk through restaurants, people are smoking. it's weird. >> down $8,000, you're smoking, you need another. i got to make it back. go to the cash machine, i'll make it back. >> you can guys explain e-cigarettes to me? >> vaping? >> why could we explain this? >> i saw a car i thought was on fire. i swear, there was smoke wafting from it everywhere. we pull up to the side of it, a guy, i thought he had a bomb with him. it was a big machine -- >> i don't get the vaps. >> it's a nicotine delivery system. >> i know. but there was smoke -- i didn't think the guy could see through the windshield. >> nicotine doesn't do anything for you. you have no need for it normally. so you start doing it, then you

start -- you indouse youce your habit that does nothing for you. >> it must do something to help with stress, right? members of the military f you're in combacombat, you're far more likely to smoke. there's got to be a calming effect. >> better to do it the vaping way than the traditional -- >> i assume it's better for your lungs. >> people people are fixed in the oral stage, psychosocial development. they are it's freudian. >> it's early to take us there. >> freud is not --- ds >> this squawkward moment was brought to you by -- >> i didn't say the -- >> this squawkward moment was brought to you by joe kernen. >> you can regress to those

early stages -- >> i took psychology 101 at cornell. >> do you still dream about trains and stuff -- >> this squawkward moment has been brought to you by joe kernen. >> having not gone to the math class, going to the finals tomorrow. >> i have nightmares that i don't get to "squak" on time. i arrive too late. >> that doesn't sound like a freudian. you loved your mother, right? >> of course. i love my mother. >> how about you, andrew. >> a lot. >> i do. a lot. a lot. mom, if you're watching. by the way, since i mentioned my mother, happy birthday to my dad yesterday. i wasn't on the air yesterday. >> awesome. in media and tech news we are watching shares in at&t and time warner, this after bloomberg said that senior executives of the two companies discussed various business strategies including what they said was a possible merger in

recent weeks. neither side was said to have hired financial advisers. peter chernen addressed the speculation on fast money last night. >> i don't know anything about the deal. i do have a partnership with at&t. i would say two things. they are great partners. they are visionary, terrific to work with. as much as any distribution, they understand the content business because they have had directv for the year and our venture is 2 1/2 years old. again, i can't speak to the specifics. there's a lot that's attractive about time warner. it's the biggest content company on earth. produces more hours does more box office, there's a larger library. it is, if you assume the world is going direct to consumer, it probably has the largest because of hbo. everybody else is going through cable packages. they do have hbo.

great sports rights, cnn, competitor, but still valuable assets. >> after this bloomberg report came out, an analyst at jeffries said his firm didn't think the deal was likely. his argument is that at&t is not likely to do another big deal after directv and that it wouldn't likely make it through fcc approval. i don't think we'll see this particular transaction soon. the idea that jeff bukus is willing to sell is news to people. you also have separately, maybe we have tape of it. i interviewed les moonves from cbs, the natural deal that should happen, not cbs/viacom but cbs/time warner. they overlap with cnn, the things you can do with entertainment -- >> so content and distribution

married. >> if all of a sudden you tell us that jeff bukus is actually willing to sell, that could change the dynamics. both sides are look at that. the bad news is the redstone family would like to control the ultimate asset. unclear if cbs and time warner tie-up, if they would have enough of a role to do that. that's the one little wrinkle in this. >> i'm still bitter the doj did not allow comcast to buy time warner. >> that was the deal that comcast didn't really want to do. >> time warner cable. >> oh, there we go. >> i'm bitter about that, too. i'm a time warner shareholder. not a time warner cable shareholder, i'm a user. >> comcast shareholder me.

>> but your bill would have went down. >> oh. >> right. that's what i'm talking about that. >> what cable bill? >> exactly. and you get every channel. >> 10 bucks. >> right. >> i want to have the comcast box. >> did you ask les moonves about "survivor" and he said that funny thing? he said they came in with that idea and said that was the stupidest thing i ever heard -- >> i think we should -- >> "survivor"? that's a huge hit. >> he has a lot of stuff -- >> the dumbest idea, still the dumbest idea. >> talked about letterman, how letterman hated him. didn't talk to him for years. >> letterman doesn't talk to anybody. >> it was fascinating. maybe we'll roll some tape. >> letterman hates himself. a lot of those comedians are -- >> unlike us. >> self-loathing. >> none of us are. as is very clear, are comedians

at all. investors are watching key earnings reports today. a dow component, mcdonald's, and general electric a day after verizon results dragged the telecom sector down 2%. joining us is jim paulson and rich stein buburg. one thing that -- starting with you, rich, one thing that occurred to me this morning was that, you know, i was reading something i think from mark grant about how it's probably when it's all said and done, we may have another quarter where we have year over year earnings comparisons down or flat. >> this would be the sixth. >> we wonder why we're having trouble making headway. maybe we should be wondering why in a period like that how do we even -- how do we tread water for that period? i think we're back to the fed.

there is this underlying, you know, pool of money that keeps us above where we should be based on the actual fundamental. or no. is it discounting that sooner or later we will have an up quarter. >> certainly we will have an up quarter. don't forget, if financials start to get better with better interest rates, higher interest rates, energy holds up, joe, those are two head winds that were hurting both earnings and revenue growth. the big problem is in the short run there's a lot of fatigue by the public, by the investment public both for the market and for the political environment that is keeping us probably in short-term treading water or purgatory in the short run. >> the dollar headwinds have no longer abated. they're back to headwinds again. i don't know why we should be optimistic there. >> no. the big problem, joe, right now

earnings is $130 for next year. 13% eps growth. revenue growth of 6%. if we stay in a low growth environment it will be hard to really move the ball forward in the market next year. maybe single digit returns because of that. probably keeps us range bound. >> with the strong dollar, which -- i don't know what happens if the fed gets off the snide f they do find a range, maybe we're strong now because we're anticipating that eventual increase. i looked at the euro, it's below 110. >> it could keep the fed from raising too quickly. that could be the next thing that's the excuse for the fed. >> okay, paulson. i guess it's your turn here. waiting for these inflation and commodities forever. you will be right one day, like the clock. are we 2% or above right now? i would take it if we were.

is that where we are in this country? >> i think so, joe. core inflation at 2.3 on the cpi. >> 2.2, i think. >> wages are 2.6. i think we're above there. one thing i think that been interesting is the wage expectation in the ten-year t.i.p. treasury bond has risen by a half percent since february lows from 1.2% to 1.7%. ten-year treasury over that same-year period of time has been flat. hasn't changed. there's upward pressure here to the fed and to interest rates with inflationary expectations climbing in the bond market. if you look at five-year swaps around the globe, you see inflation expectations also going up most places, not just in the united states. i'm a little more optimistic on

what's going down with earnings. it looks so far the earnings reports we've had will suggested we'll probably get a positive year on year growth rate, the first in a while here on this earnings quarter. i think it's the quarter that will label the upward turn or the return of positive earnings momentum again, looking forward into next year now. if you put that together with sort of economic growth doing better both here and abroad, i think it paints a better picture looking into next year. >> we're down to below 2% again for this quarter. why should we think next year gdp-wise will be -- when you say better, you mean 2%. not awful. that's what i was talking about yesterday. not awful. better than everybody else. >> right. yeah. doing 1.3%, we'll get back up into the 2.5% or better.

>> we've been waiting for that for a while. >> yeah, for the last couple years. but i do think that -- i think there's elements, we have a healthy consumer yet. a healthy job market. getting capital goods reports doing better. manufacturing sector has been stabilizing. i kind of think you might see better housing activity. >> i'm sorry to interrupt you. you were right about the stock market having a lot of trouble. when did you get bearish with us? about a year and a half ago? at least neutral a your andear half ago? >> in the summer of 2014 when the market went through 2000, i thought we would tread water. >> so next year? >> what? >> are you bullish again now? >> i am. >> we go 2400, 2500 on the s&p? >> i haven't got an official

target for next year, i think right now we could make a move northward 10% higher sometime next year. >> rich, just real quick, you agree with that or will we tread water? >> i think in the next year we have a target of 2300. one thing that might be right on jim's part is firms like ours have raised some cash into this uncertainty. we're around 15% cash. in one portfolio we have a hedge in the portfolio, so there is that spring that could spring that cash to work if the markets look better. >> okay, guys. thanks. >> take care. >> you didn't have any -- did you ever have clinical psychology? >> i mean, i probably need some. >> i don't know any of that stuff that freud talked about. is any of it found to be relevant? he was a coke fiend. >> really? >> yeah. he might have also been a

nicotine fiend. >> a lot of the stuff he says, you're kidding, right? all of that stuff. don't know if any of it has real -- still ahead, life after microsoft. former ceo steve ballmer weighs in on the economy, politics and his role as owner of the clipper clippers. >> whoa! whoa! whoa! >> he joins us on set for an hour starting at 7:00 a.m. eastern.

microsoft shares hitting an all time high after reporting first quarter earnings after the bell on thursday. joining us is the managing director of software research at griffin securities. big day for microsoft. finally at a new all time high after all these years. what drove the quarter besides the obvious cloud statement, azur selling so well. >> that's the main thing investors are looking at. we knew going into the quarter that the growth and profitability of that business are the two things the invest er ers would focus on, and other traditional businesses, but the 116% growth in that business was nearly double what we thought the growth would be. the profitability was 400 basis points better than we thought. those two things will take the stock higher. >> as a percentage of its overall revenue, where does it

sit and where do you expect it to go? >> the rate is about 13 billion a year annualized. that puts it at 13 billion out of roughly 90 billion or so. it's not a tremendous percentage of the business. but when you have a low growth company on the whole, you have this tremendous growth in this new business, that's going to add value to the company. >> chuckling. 13 billion. when you talk about microsoft, that's a small number relatively speaking. >> right. >> what do you do with the stock from here? >> we've been recommending it since july of 2012. a year ago andrew asked mre if i had a dollar i would put it in the name. i said yes. the answer remains yes. we've been fortunate to have a double in the name at time. but they continue to outperform. ultimately the big story here for us has always been generating cash flow. you look at the cash flow in q1 the annualized rate was much more than we thought.

>> biggest competitor is amazon. is that pie growing so much it doesn't matter? will they try to overtake them? how do you look at the competition. >> the pie is there for what will be a small number of ecosystems. microsoft is and will be one of those ecosystems. the differentiator is not just the capacity, as i mentioned on previous pieces like this before, they have the applications or the functionality with office and azure. it's not just about capacity to do computing, it's to extend dominant brands that they've had into new forms of delivers to customers. the nucleus of what ballmer built is growing. >> we're going to have ballmer on for an hour, what would you ask him? >> nothing about basketball. >> who gets the credit?

both of them. satya improved on what he given. five years ago steve talked about what we are now seeing. what they would do with windows, speech recognition, all of those things were glimpsed at that time. we think microsoft has tremendous technologies that will concert into revenues more and more over time, including again speech recognition. and combining their technologies across the portfolio is a differentiated story. >> thank you for coming in. >> thank you. coming up, general electric is set to report. we'll bring you the numbers and reaction after the break. at the top of the hour, former microsoft ceo steve ballmer will join us to talk tech, the economy, politics and the nba, he's the owner of the clippers. as we head to break, here's yesterday's s&p 500 winners and

losers. >> that was wonderful. bravo. >> that was great. >> pretty good. >> it wasn't that bad. >> could have been a lot better. >> i didn't like it. >> it was terrible. >> was awful. >> boo. sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential.

what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs.

switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com. welcome back to "squawk box" here on cnbc. u.s. equity futures, a bit of a mixed picture. the nasdaq will open up higher because of microsoft earnings. the dow opening down about 30 points off. the s&p off about 5 point the. stocks to watch.

shares of alkermes is rising after a successful drug trial in the treat of depression. alkermes higher by almost 50%. paypal reporting a growth in active customer accounts. they continue to see rapid growth for one click and mobile payment buttons and for vemmo, the mobile app popular among millennials and us. ge reporting 32 cent level is above the 30 cent level, in the highlights the company circulated, i looked and looked for revenues, finally had to see it when they posted it. that means revenue will be below expectations. not way below expectations, but the company reported revenue of

29.27 billion. the street was at 29.636. slightly below on that. narrowed guidance on the full year, ge did. raised the lower end, the high end came down. 1.49 is where the street is now. where is the number? had it before. here it is. it went to 1.45 -- from 1.45 to 1.55 to 1.48 to 1.42. saying it was a good quarter in a slow-growth environment. that is where it is now. still under $30 a share. amazing. it is not similar to microsoft in any way other than ballmer and immelt were both -- i think they went do business school together. >> i also felt like they were both dead money for a long time.

>> microsoft is now back to $60. >> was. i'm saying was. >> ge was a half trillion company before the turn of the century, i think. it was a $60 company. at $29, it's been restructured, out of the media business, out of a lot of the old line businesses. a lot of the insurance businesses are gone. ge capital has been shrunk. that's why they say revenue goes down. there were some positives according to the company. organic growth was 1% in the third quarter. 4% if you exclude ong year to date. 6% -- up 6% in the third quarter. strong healthcare execution, revenue up 4%. as what has been the -- what jeff immelt has said, returned $25 billion to shareholders through the third quarter,

including a share buyback, 6.4 billion through dividends. it's not back to 60, still under 30, but up from 6 during the financial crisis when the commercial paper market froze and there were existential questions about general electric at that point. it's come back a long way. the long-time shareholders are probably like what am i supposed to do? >> let's bring in one of them. >> the chief investment officer of harvard advisory. you're an optimist. you've been coming on for ten years. you're an optimist. still in this name. >> you know how you can tell i'm an optimist? this is the cnbc rise above button. >> you need to rise above 30 something and stay there, wouldn't you? >> that would help, too. >> is it good enough to get the dividends to return capital to

the shareholders? is that enough for you to be happy with your long-term hold in the stock? >> no, it isn't. i don't think investors would be happy with that. we certainly wouldn't be. what happens with the shares, a year and a half ago when they announced the big break down of capital and they were going to sell 200 billion in assets, the shares traded up sharply to $30. that discounted that. now we're growing into that valuation. at this point the shares are discounted fully, that doesn't mean they're not a good investment. when something is a good investment you can still expect to earn the dividend and earnings growth rate which should still be a double digit return for ge going forward. we'll hold it for our investors. most of our investors are retired individuals who live on portfolio income. getting 3.2%, hoping that

earnings can grow on a forward basis at 7%, 8% on the long term is a good return. >> is the company at this point -- you know, it's gotten into oil and gas in a bigger way, it has digital operations, we see a lot of the different efforts. it still has varied and sundry operations, is that the right mix now? in the next five years, do you expect it to be positioned better than its peered? you don't leak like you're -- do you expect it to be in a great position to thrive in the next five years. >> the portfolio is much better than five years ago. much better than ten years ago. clearly the timing on moving into oil and gas could have been better. it would be -- it would be nice if they had started that move three, four years later.

they could have bought the same assets at much lower prices. having said that, they own what they own. they're adding to those assets. doing a good job managing in an exceedingly tough down market. so, from this point going forward, i think the portfolio looks pretty good. >> okay. just looking at -- as you were speaking, honeywell numbers came out. honeywell pulled back on negotia negative forecasts. i wonder what a ten-year honeywell versus ge looks like or utx versus ge looks like. >> for the last 10, 20 years honeywell outperformed ge dramatically. i think it will be closer. >> there it is. >> ge down 18% in the last ten years, honeywell up 158%. >> that's a is that right i wouldn't want anyone showing right there.

not an attractive comparison. >> no, it isn't. coming up, "vanity fair" editor gragen carter weighs in on the political election and what happens after the new president takes office? and -- >> crazy hair, andrew, ain't it? >> great hair. >> gray hair. >> he said gray hair. >> he said great. >> as we look -- as we look at the zingers from the candidates from last night's al smith dinner. >> this is the first time ever, ever that hillary is sitting down and speaking to major corporate leaders and not getting paid for it. it's true. it's true. >> donald, after listening to your speech, i will also enjoy

listening to mike pence deny that you ever gave it. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

ebecause the ultimate expression of power is control. get up to $5,000 customer cash on select 2016 models. see your lexus dealer.

. time for the executive edge. i spoke to "vanity fair" editor gr gr graydon carter in san francisco. this is what he had to say about the american culture. >> what do you think has happened to the american culture throughout this leelection cycl. >> this is the natural culmination of all of that, when the race for the presidency becomes this coarse, it's got to break and reset or it's going in -- i don't know where it could go after this. >> when you think about the politics after the election, assuming hillary clinton wins -- >> assuming. >> what do you think happens? what do you think happens in this country? >> i actually think the democrats -- i'm not endorsing hillary or anything. i think democrats will do very, very well in the election. you may get a more balanced

bipartisan washington, which would only be good for the country. rather than just stagnant stalemate that it has been recently. >> how will the media treat hillary clinton if she's president? >> i think the media has been tough on her. the e-mail scandal has been uncovered. 100 days in, she'll get a break, and then see how she does. i don't think she'll be a transformative president. >> what about the republican party? what do you think that looks like four years from now? >> i feel sorry for them. i think they have a rough road right now. it's going to take a while to rebuild it where they want to be. >> what about paul ryan? >> well, he -- i think he's held his own reasonably well. with a bit of waffling. i have no idea what will happen to him. if donald trump becomes president, not good things. >> we'll have more from graydon carter and other clips from what

took place out in san francisco. other clips now from last night. does it bother him that they call him the new establishment? the establishment is so out of style. >> the new establishment, you're the neck -- >> meaning establishment is the problem right now who wants to hear from the establishment? >> no, no. if you are an upstart company, you happen to make it to be part of "new establishment" that means you're on your way. >> i saw that list. >> travis kalonic, jeff bezos. >> new establishment. >> they're establishment. >> the last eight years haven't given us enough of a liberal agenda. what we need is -- instead of this stalemate, we need another democratic -- >> i know your view. >> we need another democratic

president and a democrat congress so we can do more of what we've done the last eight years, and really get things -- >> that's only a function of the fact that things are so screwed up. >> really get things going. >> hillary clinton and donald trump sharing the stage last night at the al smith dinner manhattan. manhattan. the candidates took turns roasting each other at the white tie event that benefits catholic charities. crowd reaction was laughs to cheers to boos. >> it's great to be here with a thousand wonderful people, or as i call it a small intimate dinner with some friends. or as hillary calls it, her largest crowd of the season. hillary is so corrupt she got kicked off the watergate commission.

how corrupt do you have to be to get kicked off the watergate commission? pretty corrupt. >> this is such a special event that i took a break from my rigorous nap schedule to be here. and as you have already heard, it is a treat for all of you, too, because usually i charge a lot for speeches like this. >> michelle obama gives a speech and everyone loves it. it's fantastic. they think she's absolutely great. my wife melania gives the exact same speech and people get on her case. and i don't get it. i don't know why.

it wasn't her fault. stand up, melania, come on. she took a lot of abuse. >> people look at the statue of liberty and they see a proud symbol of our history as a nation of immigrants, a beacon of hope for people around the world. donald looks at the statue of liberty and sees a four. maybe a five if she loses the torch and tablet and changes her hair. >> both nominees travel to battleground states today. trump heads first to north carolina and pennsylvania, clinton campaigns in ohio. more highlights from last night's dinner in the next hour. after the win over the bears, aaron rodgers kicked off his halloween celebration early. he showed up to the postgame news conference wearing a unique

cardigan that you might recognize. made famous initially by the dude in the big lebowski. >> why did he do that? because he's a fan? >> everybody is a fan of -- >> of course. you're right. >> i was surprised they did well. i was watching the green bay game last weekend, he was getting booed in green bay. the offense was so stagnant. they had a good game last night. there's the dude. >> that move was so funny. love it. >> the dudarino. how about turtoro in there. >> fantastic. >> he was in -- he was in for, like, three minutes -- >> you saw it? >> the big lebowski? >> really? >> the big lebowski? yes. not in the past -- i'm aging myself by telling you i've seen it. >> i've seen it in the last month. >> there's a big lebowski festival every year. you could maybe do the show life

there. >> just to see what it's like, i made a white russian drink. because he loved -- very high calories. >> you can see that. >> he wasn't in great shape. but loved white russians. talking about high calories and trying to stay in shape. coming up shg, we'll talk healte stocks. "squak" returns in a moment. next week, you can't afford to miss "squawk box." it's the busiest week of earnings season with the third of the dow and a third of the s&p 500 set to report. we'll bring you the numbers, analysis and reaction on wall street. earnings season on "squawk box." don't miss a minute of it. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track

and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. theno one surface...out there. no one speed... no one way of driving on each and every road.

but there is one car that can conquer them all, the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $369 a month at your local mercedes-benz dealer. just like that, a moment turns romantic. so why pause to take a pill? and when you're having fun why stop to find a bathroom? with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach,

delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. why pause the moment? ask your doctor about cialis for daily use. and for a $200 savings card, go to cialis.com ask your doctor about cialis for daily use. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

welcome back to "squawk box." time now for some sector-nomics and a deeper look at the health industry. we have the bulk of companies reporting next week. we wrap up this week's report and what to expect for next week. >> good morning. that's right. j & j posting slightly better than results brushing off

concerns to their arthritis drug. united health group, the nation's largest health insurer posting a huge profit increase of 23%. the health care business driving -- st. jude reporting a 12% increase with worldwide sales of its heart failure devices pulling the top line there. but on the flipside, abbott labs taking a hit as the epipen. write down the investment in the epipen maker. but overall pretty good results so far. what happens next week? merck kicks things off. but a bulk of results coming out on thursday. looking at bristol-myers key cancer drug following a 12% decline in september. lastly, morning star noting it will be to -- launch in the u.s. and then to round out the week,

abbvie pharmaceuticals. lots to look ahead to next week. back over to you. >> thank you for that. stocks to watch. skechers third quarter earnings missed forecast. points to its international business as the main driver of growth. fourth quarter revenue is also below estimates. shares down more than 30% this year. they're down 15% just this morning. third quarter results for schlumberger beat. s.a.p. is raising its full year guidance even as third quarter profits fell more than 19%. also raising the low end of the revenue outlook for the cloud business after sales fell 8% in the quarter. coming up, our guest host for the next hour, current owner

of the l.a. clippers. great day for him to be here. especially with microsoft's results last night. he still knows the company pretty well, i would imagine. he'll be on to talk tech. i don't know. we're going to talk politics with steve if you want. and also the business of sports. guess what guys, i switched to sprint.

sprint? i'm hearing good things about the network. all the networksre great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50%

on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com.

steve ballmer off the court. >> whoa! whoa! >> former microsoft ceo and l.a. clippers owner is going to join us for the hour. from the future to tech to

politics, nothing is off the table. a smoking deal in the works. british american tobacco offers to buy out reynolds american. >> smoken! the candidates roasted. >> this is the first time ever that hillary is sitting down and speaking and not getting paid for it. >> he actually sent a car to bring me here tonight. actually, it was a hearse. >> donald trump and hillary clinton take the stage this time for jokes and jabs. we have the highlights straight ahead 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. and our guest host this hour, steve ballmer, former ceo of

microsoft and owner of the l.a. clippers. i've narrowed down his overnight pay for profits on the move in microsoft. i tell you what i've narrowed it down to. it's more than one, but less than five. >> with a "b." >> that goes without saying. >> you're a mathematician, bay be i. >> i could have written code for you guys. what was the other thing i was going to -- oh. when did we make this booking for you to come on today? months ago, right? >> months ago. >> had nothing to do with the stock. >> same day microsoft regains the all-time high from what? is it 17? when was it? >> i could tell you precisely. it was right when i took over as ceo, it was at the high. >> and here we are indicated over $60 today. we're going to talk about you. and it was serendipitous you being here today. but i think you can take some

satisfaction. the company was positioned to be a next generation microsoft rather than just like some of the other tech companies which is stuck in the mud, stuck in the old days. >> it's a fantastic company. and, you know, obviously the earnings posted last night and really the progress in the cloud and all that, fantastic company. and has been a fantastic company for years. >> when you were stuck in the 20s, remember? i know you were getting all that heat. but i could still see the revenue numbers. and i'd look at the quarter and you do like $20 billion in revenues. it's like, someone still needs windows. where is -- how is that happening? who needed windows every quarter? $20 billion worth? somebody, right? >> all these people around the world who were trying to automate all this productivity in the economy, windows, baby, was part of it. >> let's just go straight to him. skip the news. we have steve here. we've already gotten into the

conversation. the question i want to know is when you think about what's happened here, why you didn't get the credit when you were in the position. >> it's not that important in the grand scheme of things. we grew our revenue and we grew our profit. we made the transition from a pc company to an enterprise company. and he's got the company doing the right stuff. >> he's a non-founder worth $25 billion-plus. it's not that big a deal the reputation -- >> no, i think it is. but i want to know -- no, no. but he got all this credit in the past couple years. i want to know how you on an emotional level feel about it. >> remember i was at microsoft for 34 years. there was plenty of credit along the way. we had a stagnant stock price despite rising earnings and revenue. i'm proud of what i did. and i'm really proud of what they're doing now. and i like the outcome. >> what was the multiple in '99 at the last high?

$50 or $60, huh? >> yeah. the multiples were crazy. >> 17 years in a long time. >> it's a long time. hey, it's now paying off in the stock price. >> i know you're no longer there, but how -- do you still talk to them? give us a little bit -- what's the relationship like? >> i'm clearly an outsider. i'm not an insider. but i'm a large informs investor. >> how much, how much? >> index fund is still a pretty good job. >> bigger than gates at this point. >> i am. i get the quarterly investor call. i get little investor kind of discussion. >> you go to shareholder meeting? >> i have the last couple years. i'm busy this year. i teach class at stanford. i'm going to do stuff down there at that time. >> but the number is 4%. is that correct? >> that is the number out there. it's pretty close. >> and you plan to stay in?

>> i'll stay in. whether i'll stay in at exactly the same number or not. with the number at $60, i think i'm going to think about it. >> the dividends must be -- >> you can do the math on that. it's a good set. >> okay so. when you look at the tech industry now, who do you look at and think those guys are doing something really interesting. i've got to worry about them. i think they're pretty clever. >> remember, i'm not in the tech industry anymore. >> i know. but you -- >> dude, i'm really not. i'm not sitting there studying every day. i'm not. >> as a seattle guy, do you look at bezos and go, there's something. >> yeah. a little bit. of course i read the newspapers. i read them with little more interest than the average guy. and i have to think about the microsoft investment to some degree. there are a lot of guys doing a pretty decent job. microsoft is doing an outstanding job. >> michelle said it when you

stat down, you probably watch this yahoo deal. >> i did. yes, i did. >> do you wish in retrospect -- do you think you sort of missed a great thing meaning you were -- you shouldn't have bought yahoo? >> did you dodge a bullet or one that got away? >> remember, it's hard to go back in time. microsoft's the only company that ever had any synergy with yahoo. you could get rid of engineers, all the good stuff can happen. and yet most of the value in yahoo wound up being in alibaba anyway. so we would have bought all that value in alibaba not all of which we knew existed. but with 20/20 hindsight, who knows. >> i want to ask a different picture. just in that there were things that people say you should have bought. and then -- but knowing how tech works, watching what people have done when they make a mistake, but you can really screw things

up. was it better to miss some of the things that you missed to avoid some of the things you didn't buy? what's your biggest regret? people say you could have bought apple. could have bought google. >> not clear you could have bought it. remember. you have to have a willing seller. i made a pitch to zuckerberg when the thing was small. but, you know, he said no. >> how much did you offer him? >> i think $24 billion when the company was itsy bitsy and i could respect that. entrepreneurs like to run their things. >> anything you bougwent to buy almost didn't. and it was thank god. >> we took a look at s.a.p. i think that was out there. >> would that have been good or bad? >> hard to know. >> now you don't have to do anything. $60 you're back to those highs. maybe you didn't need to buy

anything. >> i'm sure there'd be a few things. >> you don't remember? >> oh, i think linkedin the company is now buying linkedin. believe me, i've looked at linkedin for a long time. we were looking at it when we bought skype. it's fair to say the price would have been lower. >> were you happy they bought linkedin or no? >> it's a great company. it fits with microsoft's mission. and i think that's fantastic. >> what's the worst thing you did that was like, wow, that's really stupid. >> buying aquantive. it was probably what i call just a blow into a gael forced wind. >> dare i ask about the phone business? nokia? >> the phone business i'm not apologetic about. current management chose to go in a different direction. our board knew what they were doing. told the board i was going to prepare to leave and i think it's just a question how the company wanted to play it.

they did what they do. >> do you think they will buy salesforce. that's always the one i think got away or would have happened. to me that was more natural than linkedin. >> look. i'm a guy who actually believes in revenue had and profit. i really do. and, you know, you can dilute something. and get nothing back. i'll just tell you i could never make the math work on salesforce. never ever ever ever ever never. >> while we're here, what should happen to twitter? >> you know, twitter, i think it's a really good company. obviously with some work to do. just think about this election. would it have been the same without twitter? without trump banging out those late night tweets? i don't think so. >> yeah we all want this election repeated again and again into the future. thank you. >> probably good for your business. >> maybe. but is it good for all of us?

51% of the people can't sleep at night from this. they're like -- >> i get you on that. but from a twitter perspective, i don't think there's any substitute for it in the market. it is kind of an irreproducible asset. the company's got to take an independent path and got to get to getting a little bit or sell to somebody who can sell it. >> ideas how they can ramp up user growth or make money? >> i am not a product designer for twitter but i know there's an asset there that with the right time, with the right leader, that thing could be something. >> what about having two companies? too much work? >> i think it's a weird deal. i'm a big believer in almost mono-maniacal focus. >> who would be the natural partner for twitter in your mind? >> acquirer or partner? >> either. >> you know, from a partnership standpoint, i think the company

is working well with google to try to get the twitter results integrated into google search. and i think that makes great sense. as an inquirer, you might wonder whether that could be the start of a beautiful friendship. but doesn't appear to be the direction it's happening. >> can we talk sports for a little bit? >> absolutely. >> before we get to basketball, i have a question that relates. you watch the nfl and what's happening with the ratings the past couple weeks. does it say anything to you about sports, about the way we're going to watch these things? does it say anything about the valuation or is it just a hiccup? >> i would say the interest in sports is every bit as high as it's ever been. i think the way people want to watch sports will evolve. and i think unless people get with the program which is what we're going to try to do with the clippers, unless people get with the program, you will get less viewership, less revenue. those thing wills go the wrong direction. but i think there's a chance to

remake kind of the sports experience over the internet. >> with as much revenue and money as before? >> yeah. i do. >> you don't think the digital component of this is changing the way we watch stuff and it's back to analog versus digital. >> yeah. but let's get on board then. drive the digital change and make some money. >> is there too much supply? with the ability to skip through commercials is people have -- companies have bought live events. so they think it's a way to gain advertising dollars. now everything is available to watch. there's so much sports. is there just too much supply? >> i'd say the nba, we're talking about the ncaa and nfl, pretty unique. there's a lot of stuff on television that i have no idea how it'll ever make money. that's not my problem. with the clippers i feel every bit as good about the valuation, the amount i paid for the

clippers when i did before nfl ratings went down. >> in my own world, i distinguish between different sports too. ryder cup i didn't miss a swing. but i didn't watch a commercial. i watched it after i taped it. in the nba and n fannie mae, i need to watch it live. >> that had to be a question at the board meeting. >> yeah. it was something at the nba board meeting, no question. now, to you i got to remind you the advertising is a portion of sports revenue. but it's not necessarily the dominant portion of sports revenue. particularly on cable channels which is, for example, where we show up in l.a. with fox sports. >> all right. >> we're going to continue this conversation with steve. got some headlines. in the headlines this morning, general electric reported 32 cents per share. revenue did come up short of forecast. ge also narrowed the 2016 earnings guidance and increased

stock buyback program by $4 billion. reynolds american has acknowledged a takeover bid. it says it will evaluate the offer. it's worth $58.50 per share. you can see that stock rising by more than 18%. >> i want to correct myself in the last hour. we were talked about an unsolicited bid. it's actually the rules in the thaus are forcing this issue. it's not considered a hostile transaction because they would have to do it this way. coming up, mcdonald's to release earnings. we're going to tell you what to watch ahead of the earnings. that's next when we come back.

welcome back to "squawk box" this morning. we are watching shares of at&t and blook berg this morning. those companies discussing various business strategies including what was suggested as a possible merger in recent weeks. neither side said to have hired advisers. both companies not commenting on the report at this point. but after that report did come out, an analyst at jeffreys said they didn't think the deal was likely.

they're still integrating that and wouldn't likely make it through fcc approval. i spoke to cbs chief les moon ves this week about whether his company should pursue a deal with viacom. >> we're just starting a process to explore the possibilities. that's all we're doing. there's committees, bankers, lawyers. and that's all i'm going to say about it. >> let me ask you one last question then we'll move on, i promise. why not do it? he will tell you that you're the most capable person out there. that you've had such success with cbs. >> because i'm too old and too rich. how's that? >> too old and too rich, he says. but i will say that if time warner is up for grabs, that might change the dynamic. because cbs has always wanted to merge with time warner. so if this -- >> if they really are for sale. >> i've always thought cbs and

viacom would go together. because that makes sense for the redstone family. that's what they want. but i think you could see something like that. all right. we got another big name reporting earnings today. mcdonald's is going to be rolling out results within the hour. susan li joins us with the expectations. >> good morning, everybody. we're not expecting a strong quarter from mcdonald's like the rest of the industry growth is hard to come by in the restaurant recession. the market is looking for revenue to fall 5% from last year. sales are forecast to come in a little bit higher. 1.3%. and it's only going to get tougher from here as mcdonald's really bumps up against the one-year anniversary of all-daybreak fast which helped turn around sales. the shares are down 16% since may. they're hovering close to the 52-week lows. and still trading, though, at 18 times earnings which in this environment where consumers are not eating out these days with

the cheapest grocery prices relative to restaurant costs since the 1980s, believe it or not, mcdonald's might look pricey. the golden arches is also still trying to stay relevant. the customer for fast food restaurants with young people. 18 to 35. and according to reports, only one in five millennials have ever tried a big mac. so the uncertainty over the election also keeping those from eating out. then you throw in competition from meal delivery services like hello fresh and blue apron. i guess that's why we've seen a number of restaurant bankruptcies this year. >> it's a shame. big macs are delicious. >> that sums it up for me. >> and they are delicious. it's a loss. >> with millennials, that sums it up. >> they're eating kale. >> experiences. >> yield is 3.4%.

>> and they're going asset light as well. trying to sell off their asian businesses like china, korea, hong kong. since they own the restaurants they have a lot of headaches with food safety concerns. >> but they didn't make the same mistakes we saw yum brands do in china. they were much slower because they were so concerned about the supply chain which is not nearly as controllable over there. >> it's something you don't want to deal with on a day-to-day basis. >> all right. thanks. coming up we'll have much more with our guest host steve ballmer. clippers are the l.a. team now. >> you bet. we're bethat's team in l.a., you bet. >> you know, it's good. i'm going to tell you what your nate silver numbers are for making the playoffs. do you know it? >> i hope it's good. i hope more that we win the

championship. >> better than the lakers' chances i tell you that. all right. we'll be right back. d aflac pay. aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at aflac.com/boat blurlbrlblrlbr!!!

today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care,

to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪

coming up, today's top stories plus we're going to get steve ballmer's take on the race to the white house, talk other tech companies out west. as we head to break, take a look at u.s. equity futures at this hour. they suggest the dow would open lower by 38 points. nasdaq higher by 11.

recently, a 1954 mercedes-benz grand prix race car made history when it sold for a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. and to think this one actually has a surround-sound stereo. the 2016 cla. lease the cla250 for $299 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats,

their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

♪ among the stories front and center. online hotel company triva goe is expected to go public by thanksgiving according to reports. expedia owns a controlling stake in trivago.

another i po that could be on the way is altice. reuters reports the company wants to go public so it can have stock to use as a currency for future acquisitions. and coach is working on a possible $20 billion merger with burberry. coach has been working with evercore in the combination of luxury brands. let's talk a little politics. hillary clinton and donald trump sharing the stage last night at the al smith charity event in manhattan. they took turns roasting each other at the white tie event that benefits catholic charities. crowd reaction are varied from big laughs to cheers to some boos. here are some highlights. >> i have no doubt that hillary is going to laugh quite a bit tonight. sometimes even at an appropriate moment.

and even tonight with all of the heated back and forth between my opponent and me at the debate last night, we have proven that we can actually be civil to each other. in fact, just before taking the dais, hillary accidentally bumped into me and she very civilly said pardon me. and i very politely replied, let me talk to you about that after

i get into office. we've learned so much from wikileaks. for example, hillary believes it's vital to deceive the people by having one public policy and a totally different policy in private. that's okay. i don't know who they're angry at, hillary. you or i. for example, here she is tonight in public pretending not to hate catholics. >> donald wanted me drug tested before last night's debate. and, look, i got to tell you i am so flattered that donald thought i used some sort of performance enhancer. now, actually, i did. it's called preparation.

i have deep respect for people like kellyanne conway. she's working day and night for donald. and because she's a contractor, he's probably not even going to pay her. >> i don't know how we get into the clippers now. but let's get back to our special guest steve ballmer clippers owner, former microsoft ceo. everybody's got an opinion on politics. that's my intro to you. then we'll get back to whether -- is three points? tough have three points? there's no more showtime? how do you construct a team now? >> you either dunk the ball or go in the corner and make a three. >> how much college hoops do you watch and say i want that guy? ben simmons, i want that guy? >> i watch a lot of college basketball during the playoffs. >> because the clippers are -- i mean, on nate silver you have a

48% to get there so far. but only a 2% chance to win everything because golden state at is 55%. when you look at curry, is it unbelievable to watch what happens when they come into town? >> they're a good basketball team. there's no question. i think we're a really good basketball team. >> should you be on the same floor with them? >> come on, dude. get out of dodge here. absolutely. >> so you love it when it happens, i guess. >> yeah. those are the best games you can find. i make every one of our home games down in l.a. and i make every golden state game even in the bay area. >> are we going to ask about politics? >> yeah. go ahead if you want. he's got an opinion. he's a sports team owner. >> i want to hear. >> i am a pro-facts partisan. and what i find is there's no facts. they're not correct. it's all personality. and i'd like to hear, like, a real discussion of the issues.

things i care about. >> what are you going to do? >> i'm going vote. >> for who? >> i'm going to vote. come on. that's a right of americans. >> i was in san francisco. peter thiel donated millions to trump. and he's being lambasted. you couldn't walk a step without somebody saying something relatively terrible about him. then you had mark zuckerberg come out recently and say, look. we have these diverse views. we have to support that. how do you think about all of that? >> you know, the tech industry, it doesn't shock me there'd be a natural bias to the democratic candidate whoever it would be. >> and regardless of who was on the republican ticket. >> regardless who is on the republican ticket. that would be my estimation. so you don't learn anything by that. >> you realize that, right? i mean -- >> oh, no. >> you thought it was significant that people were trashing thiel? >> no. what i thought was significant was the idea that trump has made

some of these comments -- this is beyond the politics of it though. i think there's politics underneath it. but therefore the decision for certain people to say, look, we don't therefore want to do business with him at all. which is different. >> you can't even be -- i mean, you saw mark. you were crest fallen when he expressed free market ideas. you can't even be an establishment republican and still have -- >> that's not true. i don't think that's true. i think the different -- there's -- >> you stick out. >> there are things more nuanced than -- i know this is television and there's supposed to be no nuance. i'm a guy who is a free market guy. completely. yet i also believe there are people in society who have no chance at the american dream when they're born. and for me, that's just not okay. so what am i? a democrat or republican? >> how do you pay for the upgrading of the opportunity for everyone if it's not through private sector growth? how do you do all the great things you want to do? >> since i left microsoft, it's a long story, but my wife and i

are figuring out what to do with our philanthropy. and one thing you learn is the government is the biggest player in the market. i started really studying this stuff. and the truth is the government only has two problems. number one what i call the savings programs do need to come into line. the savings programs themselves -- >> social security and medicare. >> just those two. they lose about $400 billion a year and that's up 28 times since 1980 in nominal dollars, if you will. and most of the government then breaks even. or makes a little money. the debt hurts us. then the other thing that hurts us is the size of the pension program for government employees. those two things plus the fact that pensions relative to private market. i mean, i don't know what it's like for you guys. but let's say microsoft contributes 3% or so to somebody's 401(k). the cost of pension benefits for

government workers today is off the top of my head i think 50%. and that's a little different than private business. and that's out of alignment. >> but what are the chances that they're ever going to change government employee pensions until it comes to the breaking point which what we see all the time in europe, in greece. >> i think that's very difficult. but it's politically difficult. it's mandatory. the bigger issue -- well, they're both big. the issue i'm as concerned about is social security and medicare revenues minus expenses is negative. people like to talk trust funds, blah blah blah. we've been losing money. just in the old fashioned take number "a," subtract number "b." the thing is basically we lost money every year for the last 36 years. >> with microsoft -- >> but neither candidate wants to touch this. >> microsoft could have designed a president probably with

software. what would you president when he or she comes into office, what would that person do? >> my president would commit to a few things. number one, to really get social security and medicare benefits and revenue to be, if anything, positive. we know many people are going to age out rather than enter the workforce. >> would you raise revenue through more taxes or cut benefits? >> i would do both. again, it's a nuanced topic. but i'd make those pay for themselves. i wouldn't try to take taxes from other realms. i might raise taxes. i mean, let's just put that aside. i am a free marketer. but there's no way to solve the problems unless you do both. i looked at payroll taxes. social security taxes are -- >> what's ailing the private sector? or it's not ailing right now? >> it's not ailing. if you go back and really read,

mostly the economy grows by inflation, population growth, and productivity. and productivity's been pretty steady between 0.5% and 1%. i think in the thomas picketty book he said you can almost time that back to christ. if you want to get the gdp growth number up, let's have inflation, population growth. the amount of that you're going to get on productivity that is per capita inflation adjusted, you might get, you know, on a sustained basis 0.5% to 1%. >> so we don't need to fix our corporate taxes. we don't need to do lesson regulation on certain industries? we don't need to free up smaller banks? >> no. we can do all those things to some degree and nonetheless i don't think what you're going get is a number that goes from let's just call it 1% to 2% productivity growth. those things are important. but they won't get there. >> if we start -- and i think we have come much closer to a

european style of how we want to do things. aren't you still mad at europe? just all the anti-trust issues. are they doing it right over there? >> no, i'm not going to argue they're doing it right. that's sort of a different point. i don't argue they do it right. but if we do things perfectly and i think we should. i think the american people are owed having the government run perfectly. her opinion, his opinion, your opinion and my opinion could be different. it's still not going to get 3% gdp growth. >> so you think we should blow out the deficit, get inflation, and everybody should have five or six kids. that's your answer? >> no, it's not your answer. >> it sounds like it is. >> no, no, no. come on. >> seven or eight kids? >> no. you should have the number of kids that is appropriate -- well, if you want get gdp growth, sure. grow the population. it's not a bad thing. that's not what i'm arguing for. i'm arguing for the fact that

artificial techniques -- we did something for this usa facts initiative i'm working on. we took numbers like interest rate, deficit per capita, all inflation adjusted, all the tools government has to work with and then compare to the output measures. what's going on with the stock price? what goes on with housing markets? what's going on with real ability to spend per year? they're just not correlated. the notion that the government really can, quote, manage the economy, is not true. you need innovation out of the private sector. it's the only thing that's going to drive -- >> how much money does microsoft have over there now? >> overseas. >> i'm enough out of date, but i would guess the number is close to $100 billion. >> would it do better here if we could have it here? >> i'll tell you a secret, just a little secret. if you've got a hundred billion over there, you can borrow against it over here pretty cheap. it turns out the issue is small

and frictional. i don't think it's a smart thing. i think what's currently happening is silly. because it's just frictional overhead. you know, getting everybody to agree on how to solve it is tough. and in the meantime, it's not really hurting business in my opinion. >> it's not hurting business investment. but perhaps it hurts investment in the united states. because if you could bring the money here, you'd be more likely to invest it here. >> if you've got a great idea here and cash over there, you borrow here at almost zero interest rate but still making it over in ireland or wherever. >> now back to the fed and this unproductive behavior and not long-term thinking. we're back into not investing in the future. >> given the -- if you take -- it is an interesting fact. interest rates were roughly 13% in 1980. they're roughly zero today. but if you look at what's happened by private business

investment, just take capital plus rnd, it's just chugged away, slowly up over the last 36 years. and nothing the government does has made a difference. >> why do you think there's no business investment now? for the last five years. >> there is business investment. it -- >> not as it used to be. >> that's not true. >> really? that's what everyone seays? >> businesses don't say, oh, i'm going to invest a whole lot of money right now. >> unless it makes sense. >> so we get an asset bubble. investment and rnd capital is going up nice and slowly. that's what it's done for time. and at the same time all those low interest rates, they're driving that stock market. >> you're just lucky microsoft went high because otherwise i would say you don't know what you're doing. >> dude, i am a capitalives through and through. i am a capitalist and microsoft lover but there is still more we need to do. >> more coming from steve

ballmer in a moment. we're back in a bit. still to come, earnings alert. can mcdonald's keep up its all-daybreak fast boom or is it stuck in burger purgatory? find out. "squawk box" will be right back. guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50%

on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com.

welcome back to "squawk box." i spoke to vanity fair editor at the summit in san francisco. and i asked about the new big innovator and who could be the next steve jobs. >> who do you look at on the list today and say that's the next steve jobs? >> i mean, it's hard to tell. there's only one person like that in a lifetime. but we've got a number of people here who have become dramatically changed our culture. whether it's jeff bezos. they have made major shifts in the way you live your life. and that's -- those are -- these are not incremental. these were major seismic changes. there are people in the audience, probably students, we have 150 students from cal tech and other schools. they probably have ideas we don't know about. going to be tying our ties for

us and whatever else. >> jeff bezos versus elon musk, who wins? >> like in arm wrestling or space race or what? >> who would you be more long? >> i wouldn't bet against either of them so i'm not going there. >> you're doing a presentation this afternoon with travis kalnick who runs uber. some people think he's not that menschy. >> well, we wanted to get him here. it was the clever of the two words together. he's menschier than people think. >> how do you read your own magazine these days? >> i read my magazine in the magazine and our daily hive on my phone. >> so we got to go to commercial break, but steve ballmer tell me this.

same question to you. and i take steve jobs out of it. who's the next bill gates then? >> some young person that we don't know their name. >> there's not anyone out there you go, wow, that's the guy. >> no. there's plenty of smart guys. but in the time in the tech industry, by the time you hit about 35 if you haven't had your next great idea, you're kind of cooked. so it is some guy whose name we don't know. it's not some guy whose name we do know. >> can we get on the record. there were reports that you wanted to buy twitter. >> i have never ever ever wanted to buy twitter myself. come on. i got a good life right now. i don't need to do that. >> i mean, it wouldn't be fun? >> no. no. i'm having a lot of fun with the clips. i'm having a lot of fun with my wife doing stuff at the ballmer group. and i'm having fun studying the government. i've got to convince joe that i actually had really fiscally conservative ideas. >> you don't need to convince

me. i was asking questions. you seem to now feel like you said things that some people might think you're a lefty. it's okay. you know, everybody's going -- and you swear you're right of center. so i'll believe you. >> fiscally i am. absolutely. >> michelle says that earlier -- we all want people to succeed obviously. that's the whole key of the american dream and what we try in america. everybody's got an opportunity. not like europe where you've got these fixed classes that are impossible to move through. we want to hear success stories over here. who has the better -- which -- is it a free market system? her question to you was you seemed to have implied that maybe the democrats have a better idea about -- >> you said earlier in the show, i'm a fiscal conservative but at the same time i think there are some people who are screwed and don't get opportunities. as if you were comparing

republicans versus democrats. >> well, shame on me. >> you seem to care much about people that don't have opportunities. >> shame on me. let me tell you exactly what bothers me. if there are communities of people for the average american if you're born in the bottom quintile, so perfect mobility would be you have a 20% chance of staying there. the average across the u.s., probably 27%. there are people when they are born, they have a 55% chance if they're born in the bottom quintile, they're going to stay there. a kid. a kid can't be accused of being lazy and this that. i think everybody gets a shot at the american dream. not the european dream. the american dream. >> so some people think that charter schools might be one way of addressing that rather than the -- what we have now. and that is one party totally beholden to the teachers unions that want to keep the status quo like it is.

>> i think there's a real big role for charter schools. >> -- that won't even consider it. >> you support charter schools? >> i think there's a big role for charter schools. unfortunately it might be naive to think we're going to take all of the tradition publics and flip them. >> but add competition to public schools and they would get better. >> yes. >> but expressing virtuous feelings on the front end. throw more money at it, for example. at education. that may be counterproductive. and you feel good, you feel virtuous and you get to tell everyone. but then you connect the dots and it's actually self-defeating. >> i would not throw money -- >> from the people that you want to help. >> i would not throw more money at education. i do not think that's the solution. i do think there's a community of kids who let's say, you know, they have trauma every night at home. they're getting evicted from their house. >> you fix the neighborhood or schools first.

how do you do it? >> the school is not the place to start. you have to start in their environment. >> that keep people sort of on the government dole and don't promote the dig any city of work and earning your own success. you know, if you -- >> not a good idea. >> if you'd rather stay home for whatever the total government help is. if it makes sense for you not to get dressed in the morning and pay for gas and child care, then no one helps. you're creating a permanent class of people that will never get out. >> you and i agree. now, if you put a kid in an environment -- you put a kid in an environment where because of what their parents did they have no chance to even have a decent meal, that's not okay. >> can we turn the topic back to -- >> basketball? >> no i want to talk tech kpp i ask one other question separately? i don't know if people have noticed this. you have done some math on your hand? yes.

put your hand up. so everyone sees. >> what is that. >> i've been getting on twitter and elsewhere, where wha is this math. >> this is what the u.s. government looks like by the numbers. >> by the numbers. >> social security and medicare lose $375 billion. >> okay. >> the cost of debt -- of pensions and overhead, minus $575 billion. >> did you write that before the show? >> yeah. >> baa you wanted it ready? >> i wanted to remember. i didn't want to screw anything up in this crowd. this is important. if you take the rest of taxes against what you think most is government, makes $800 billion. >> can we talk about apple? >> yes, if you want to. >> what's wrong with apple? >> is there something wrong with apple? they're making a ton of money. i love profit. >> so how should we think about apple in a post-founder world? >> i think the challenge for big companies --

>> you ran microsoft after the founder. >> absolutely. >> tim is running the company after a founder. >> there's after the founder. and there's when the trick -- the thing that was magic in the business starts to hit a flatter point. the ieverything, they're getting a flatter point. and is the problem there's no founder around? even founders don't always come up with a second big idea. i mean, you're kind of a genius if you come up with one big idea. if you come up with two, and i'll give jobs credit. he both did the mac and the did the iseries. i mean, that's unbelievable. >> still a great company. it's just not -- if it doubles again, it's worth $2 trillion eventually. >> it's a great, great company. it really is. and i like profit. they are a -- most profitable company in the world. or at least in the u.s. you got to sit there -- >> but as we were talking in the commercial break, you were

talking about when you were at microsoft, it's the law of large numbers. it's very hard to grow much faster when you get up to the ether. >> i think microsoft did a great job this quarter. profit was flat year and year. >> we're going to have to go. elon musk. what are we to think of elon musk? is tesla going to be the next big thing or do you look at that -- people are either very positive or very negative. >> i think he is a brilliant guy. i think the jury's out on whether that's the next great business. >> do you own tesla? >> i do not. >> do you own the stock? >> i probably own some. >> what do you drive? >> i drive in a lincoln. my father was a ford employee for -- >> navigator? >> no. i have the mkx. >> you ride around in one? >> i drive around in one. >> okay. that was worth sof permanent ink

there. >> no. >> love and hate or something on your knuckles. anyway, great to have you. >> great having you. >> come on back next time you have a nba board meeting or something. >> there's only one thing i'm going to say before i leave. and i will not leave without saying it. the l.a. clippers. watch us this year. go clips. >> i like it. all right. we will. well, we're not going to watch the lakers. coming up, your we're going to talk to governor john hickenlooper about the state of politics. and we might ask him about pot again in colorado. that interview is straight ahead. ♪ it's been over 100 years since 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 the art and expertise of high-conviction investing. ♪ translation? why invest in average?

there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points

and can help protect your potential profits. fidelity -- where smarter investors will always be. trade like it's 1999. microsoft shares soaring to record highs. tech success in the cloud straight ahead. earnings alert. dow component mcdonald's served up quarterly results, profit sales, and instant market reaction coming up. plus we're going to open the books as the final hour of "squawk box" begins right now. ♪ live from the most powerful

city in the world, new york. this is "squawk box." >> he's gone. ballmer is. but microsoft shares are partying like 1999. welcome back to "squawk box" on cnbc. i'm joe kernen with andrew ross sorkin and michelle caruso-cabrera. mcdonald's earnings just crossing the tape. the fast food giant beat earnings topping expectations. third quarter global comp store sales rising 3.5%. it's a nice rebound for the shares so far. that might actually help the futures for the dow. because we -- almost a 4% gain in shares. >> other top stories this morning, microsoft beating the street on the top and bottom lines. the cloud product doubling in the recent quarter. satya nadella on the conference call. >> customers continue to choose the microsoft cloud to help

transform their businesses and organizations. our commercial cloud annualized revenue run rate now exceeds $13 billion. and we remain on track to achieve our goal of $20 billion in fiscal year '18. once enterprise customers choose one of our cloud services, they continue to adopt more services. >> microsoft shares have now doubled since august of 2013. the stock hitting an all-time high. general electric earnings topping estimates by 2 cents. ge is also narrowing its 2016 earnings guidance and increasing its stock buyback program by $4 billion. slightly lower in trading. reynolds american has acknowledged a takeover bid from british american tobacco. the bid is worth $56.50 per share. that b.a.t. does not already own. other stocks to watch today,

shares of alkerm erk s surging as it says its drug to meet depression met the primary goal. planning to speak to the fda. and paypal better than expected results. the growth in customer accounts the company says it continues to see rapid growth for its one click and mobile payment buttons. and for the mobile app that's popular among millennials. >> i haven't used paypal yet. >> honeywell revenues topping and says it's on track for double digit earnings in the current quarter. as we mentioned earlier, coach reportedly now working on potentially a $20 billion merger with burberry. that's coming with reports -- working with evercore on the

luxury brands. back to mcdonald's. morning star's senior restaurant analyst joining us. watching mcdonald's over the years, r.j., it's pretty interesting to watch. you bring in the new guy, does the breakfast all dwa long and it goess to new highs. now, here they have major problems competing with burger chains because their burgers aren't good enough. it's feast or famine, so to speak, at mcdonald's. but something went right in this past quarter. >> i think when you look at the numbers, someone is focused on the same store sales number which went to 1.5%. i think a lot of that still has residual effect with the all-daybreak fast. but also the mcpick 2 probably had that in results. right now consumers looking for value in this space. particularly the food at home

grocery store sales being lower than what you're paying at the restaurant right now. value is a key thing. now, looking beyond that, too, i think the market's going to be looking for the next catalyst. whether it be another big product innovation or update on the refranchising efforts which is going to transform their income statement and make it much more asset light. and, you know, higher margin company. in all, looks like positive results across the board. >> so is it -- have they gotten back to where the quality is good because it's fresh and the service is good? you know, you don't have to -- there are some fast food restaurants where i've said, you know, is this a fast food place or where am i? maybe i got used how i'm standing here so long. so they got that out of the way. have they done everything they can do there and need some type of innovation or need to make a better burger at this point to go ahead? >> yeah. i think -- i mean, to your point

i think the speed of service was critical. improving that accuracy, that's something they value in this day and age. needs to be a service. people are -- and in an amazon world you need to be quick. i think they've tackled that. but there is more they could be doing. the top chains have been the ones than ordered. so i think mcdonald's has an opportunity as they were all mobile ordering. finding ways to connect outside the restaurants. beyond that i think there's also some things they've been running in terms of small product whether it be higher quality beef which they've been running at certain markets. those are things that i think also drive excitement to bring people back to the restaurant. >> so that's what's wrong with the burger? it's lower quality beef? how low? >> it's quality beef. it's quality beef but they're going to the fresh beef opposed to frozen beef in market testing. b that's the difference and seeing what kind of traction and if that resonates.

>> they have to put more beef into the burgers to compete with an in-n-out? who's winning right now? who's got the best burger? >> that's a -- it's a tough call on that one. we have seen a better burger phase, but that seems like it's tapering down. i think some of the up and coming chains in the better burger space, you lose momentum there. i think mcdonald's refocusing on its business played a part in that. also we've seen more upstart fast casual chains resonate with consumers as well. i think that's a big part of it as well. >> didn't need this clown thing. you know? >> yeah. that's for sure. >> ronald. that's the last thing they need. that's going to peter out. don't you think? what's with the clowns? >> yeah. i'm not worried about that. >> ronald's one of the good ones. he is. he works with kids and everything. it's just unfortunate for mcdonald's. anyway, r.j., thank you. >> absolutely. among the other business

stories of the morning, word that at&t and time warner potentially looking at a combination. there's still lots of questions about its voracity. joining us now is amy young. good morning to you. >> good morning. >> what do you think? >> i think everyone is -- >> does it make any sense at all? >> i think there's a lot of skepticism right now in the market place. but clearly verizon their biggest competitor is buying aol and potentially buying yahoo i mean. and you have comcast potentially going to the wireless business. i think all the carriers are trying to bundle and how they're selling the bundles are different. >> do you think jeff is a seller? that's sort of the biggest component of the surprise. plus the idea that at&t is trying to digest at the moment. >> he has a responsibility to look at any potential acquisitions.

so i think there's that angle. there's family overhang for time warner. it makes it a much easier takeover candidate. >> what do you think the chances are that cbs which is in the midst of its own situation with viacom which has been the natural combination with time warner says let's not do that, let's do this if they're available. >> seems their hands are tied right now. but i think at&t's acquisition of directv pushes them to more content. >> would you own time warner as a result of this? >> i think whenever there's an m&a spark, you can't dismiss it. and the multiple tends to go higher. and it could smoke out other bidders. i don't cover time warner. but fox made an offer previously. and so i think if at&t were to pull something like this off -- >> at&t stock is up on this news, by the way. >> right. because i think people want at&t

to grow and show growth. >> i want to understand if what's the proper price for them to pay. what would be a price that you think would be okay. what would be too high? what would be a steel? >> at the multiple gap. i think it's going to be hard for at&t to pull off. >> we'll see whether the transaction takes place or not. i'm going to bet against it temporarily. but only temporarily. >> thank you. we'll check this out later. coming up, tesla banning the use of self-driving cars for uber and lyft. that story when "squawk box" comes back. next week, you can't afford to miss "squawk box."

it's the busiest week of earnings season. with a third of the dow and a third of the s&p 500 set to report. we'll bring you the numbers, analysis, and reaction on wall street. earnings season on "squawk box." don't miss a minute of it. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

the es and es hybrid. it's your daily retreat. get up to $5,000 customer cash on select 2016 models. see your lexus dealer.

welcome back to "squawk box." attention all uber drivers. uber drivers, if you're planning on using a self-driving tesla car to make money with ride sharing, do not. the electric car maker announced all will be equipped for technology needed for autonomous driving but a claimer on the website says drivers should only use the car for ride sharing with friends and families, not for strangers. it also said that ride sharing for revenue purposes will only be permissible on the tesla network. details of those will be released next year. elon musk hinted earlier this year at tesla's future ride sharing service. now for a look at what's working in the markets we're joined by karen firestone joins us from boston. good to you here. >> nice to be here. >> before we get to stock picks you think are working right now,

generally what do you think works in a market like this where interest rates are and the valuations where they're set at this moment? >> well, as we know, the market has had a reasonably good year. it's up 6.5%. people often say the market's flat for the year but it's been pretty good. if we look at the rest of the year for the next couple of months, we've got the election, a lot of earnings coming through. if the market could hold these gains, that could be a decent year. we're looking for the kind of company that has the growth better than gdp numbers. something that surprises people on the upside, holds onto revenue growth, maybe has a bit of pricing and takes advantage. >> one that fits that bill you think is the tjx retailer. why? >> well tjx is a stock that continues to work on the bricks and mortar side. it's one of the companies that does. it's been able to continue to grow through the last several

years of amazon taking more and more market share from all of the traditional retailers. tough go to the store for the experience. we know that millennials and consumers like the experience rather than having the same old type of store where you can do better at help clicking through your options. and it's been able to grow nicely. they've had a setback. the stock is down 15% from its recent high. we think this is the time that you can grab tjx and we think it's a bargain here. >> so for people who are familiar with tjx, it's almost like treasure hunting. you go in there and try to find really deep discounted names. so it can't necessarily parallel an amazon experience in that way. newell rubbermaid. nwl. >> right. we had owned jardon who acquired newell. and we decided to hold onto newell. they're streamlining.

they sold their tool division for $2 billion to stanley black & decker. so they're taking skus out. they are selling it below -- roughly a market multiple of next year's earnings. it's a consumer staple stock that's been able to show nice growth. it's not trading the kind of numbers that you see from many stocks. here's one more kicker. if you look at the one bricks and mortar store, it's walmart. now that walmart has given their employees a wage increase, they're seeing an improvement in sales. and that can help the newell lines. which are, you know, sunbeam, rubbermaid, and many others. >> thanks for joining us from boston. >> thanks very much for having me. >> what's the problem with the ticker? >> it's messed up. >> for example, look at the -- watch general electric, it says it's down 95 cents. it's not down 95 cents. it's at $28.95. it's down like a nickel. i notice that mcdonald's is

going by $1.14, down 40 cents when it closed at $1.10 and it's up $4. so we don't want to -- >> you did say microsoft was correct, right? >> the bottom ticker, i think the ones on the bottom some are right. but some on the top, i noticed home depot is wrong. >> see. they took it away. you spoke and magic. when we come back, just 23% of tech jobs are held by women. the lack of diversity is big topic. we'll get details about that when "squawk" returns in just a moment.

♪ it's been over 100 years since 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 the art and expertise of high-conviction investing. translation? why invest in average? sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs.

switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement 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.

welcome back to "squawk box." the push for gender equality is in view at women in computing. julia boorstin joins us from houston where they're trying to bridge the gender divide. julia? >> reporter: well, with just 23% of u.s. technical jobs held by women, more than 15,000 women will gather here to work on closing that tech gender divide. part of the problem is that women leave tech jobs at twice the rate of men. and part due to poor working conditions and poor work life integration. according to a new study by the institute that runs this conference. the educational pipeline is grim

as well. only 18% of computer science majors are female. that's down from 37% in 1984. and it could get worse if nothing is done to encourage women in this field. the number of women in the computing workforce is projected to decline to 22% by 2025. that would be down 15 percentage points from 1995. but plenty of companies are already taking steps in the right direction. ranking google, intel, and ibm among b the top companies for women and highlighting the best practices for hiring and retention. and sequoia highed its first female investor in its history. now, the vast majority of execs surveyed say there's a direct correlation between diversity and financial success. which is why there's 300 companies recruiting here. back over to you. >> okay. thanks.

stocks to watch today include skechers. third quarter earnings missing forecasts. that one actually was -- check that and it was correct. it's down almost $4. almost 16%. shoe makers blaming currency head winds. but it does turn to the international business. fourth quarter revenue outlook the company gave was also below estimates. and the shares down more than 30% this year. but that's not hard to admit when they're down 16% today. so for the whole year they're down 14%. schlumberger with oil prices higher the world top oil services company expects improved activity in north america, middle east, and russia next year. and s.a.p. is raising the guidance. the german business software provider is also raising the low end of the revenue outlook for

its cloud business. after sales rose 8% with the number in the latest quarter. coming up when we return, big money in politics. the details of hillary clinton's biggest donors. as we head to break, look at u.s. equity futures. we're back in a moment. sive agge 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.

♪ welcome back to "squawk box." the tv show that's live. here's what's making headlines this morning. mcdonald's shares rising in premarket trading. the company beating estimates by 2 cents with quarterly profit of 1.$1.50 a share. see, i told you it was up, sorkin. if it has a big day like that it should be up. we should be showing it as up, not down. >> yes. >> they should get what they deserve. there it is. we just had an interview about it. i don't know what they need to do. better burgers, right? >> you've already done breakfast in the morning.

>> which is great. >> already done breakfast in the morning. what a concept. breakfast all day. >> thank you. >> it's awful drive-thru. it takes forever to get anything. at mcdonald's. >> in the city? >> in the city, in the suburbs. >> i was the one holdout in the family. >> and how's the service? >> service is terrible. the burgers are dry. they're behind the ball on the grass fed movement. i know they use cage free eggs. but between the healthy food movement and the quality of the existing food is not there. >> they roll off the counter and crack? why do you need them in the cage? >> they want the chickens to roam free. >> so cage free chicken. >> before they get killed. >> a lead article yesterday in

the business section, gmo fears of eight legged chickens in china. why is that a fear? >> sounds like a productivity -- >> who doesn't like drumsticks? >> productivity increase. >> hold on. how many times have i had the lady from buffalo wild wings on? you need one chicken to get two of those wings. >> i know. >> that's not fair to chickens. what if you had an eight winged chicken and then one chicken -- what's wrong with that? that's not progress, seriously? >> i don't think so. >> laugh, it's funny. >> you know, you've been using this joke for six years. >> but yesterday you see that it can be done. it can be done. >> it can be done. i don't know if it should be done. but it can be done. >> you know what was interesting to me with that, despite pollution and workers safety, they actually have some strict restrictions on farming, agricultural products. i did a story on pork earlier this year. they ban a certain muscle

enhancer that american farmers use. so they won't take our goods. there are a lot of issues around that. >> but you're here for something else. new financial filings this morning offering insight into political donations. kate kelly is here. >> love the drumsticks. >> had to weigh in on genetic chickens. september donations for the two main candidates. incredible fund raising month for hillary clinton. record for her so far. $73.8 million in total. trump raised about $54.7 million himself. >> is that what she made personally from the foundation? oh, that's campaign money. >> that's -- >> okay. all right. >> all the donations. >> never mind. >> and dominated by a singer super pac whereas trump has a couple pacs. >> and some speeches. >> breaking down major clinton donors, they're stepping it up. donald sussman gave $6 million in the month of september. his total i think is in the high

$20 million at this point. members of the pritzker family, $2.5 million. david shaw, $1 million. there were also small for de shaw. as for donald trump, he had an enormous filing from the great america pact. i hand checked whether any of the familiar business names we cover were in there and didn't see any icahns, bob mercer, no sign of them so far in september. although i'm still combing through them. but just to remind people, he had a very good third quarter with other pacs. just to recap that, carl icahn gave $150,000. john paulson $250,000. harold hamm almost $500,000. so trump is actually surprised, i think at this late stage of the game with big money donors.

but clinton continues to outraise him dramatically. >> very true. staying on the topic of politics this morning, back to little bit of some clips we've been showing you from the interview i did with greydon carter in san francisco. here's what he had to say on the topic of the election. >> what do you think is going to happen at this point? >> i mean, i don't think he's going to win. i think it'll have left a -- you know, a permanent stain on the whole political process which will wear off after awhile. and i think that he'll spend the next year in a state of complete turmoil because he realizes he's probably not done wonders to his reputation to the people he will bump into in new york and elsewhere. >> that was my other question. what do you think is going to happen to his businesses? >> i think they will suffer. i think all the people who put money up so they could get him as the rental agent for their

buildings to put the trump name on, i think that'll dry up. i think there are a lot of people who will not move into a building that has the word trump on it. >> interesting words from graydon carte ecarter. imagine you may disagree with his views. >> totally shocked to hear fra fr that him. >> he's been very out there -- >> he came up with the short fingered -- you know, the real contest would be side-by-side trump hair versus graydon hair, i think. i mean, both of them are -- they both have mirrors in their houses, right? they don't pass by them as -- >> i don't think that's fair to either of them. >> okay. >> i don't think that's fair. coming up, swing state politics. a live report from arizona. scary clown setting. which could turn blue for the first time in ten years. plus we'll talk to governor john

hickenlooper. next. sing girl, come on. ♪[ singing ]♪ sorry, ariana you gotta go. seriously? verizon limits me and i gotta get home. you're gonna choose navigation over me? maps get up here. umm... that way. girl! you better get on t-mobile!

why pay more for data limits? introducing t-mobile one, unlimited data for everyone. get four lines just $35 a month. and it's got the spring and bounce of a traditional mattress. you sink into it, but you can still move around. and now that i have a tempur-flex, i can finally get a good night's sleep. buy the most highly recommended bed in america for as low as $25 per month and a 90 night free trial.

welcome back to "squawk box." the futures suggest a positive open for one average, negative for the rest. s&p lower by five. remember microsoft -- nasdaq is microcap weighted so microsoft is going to have a big impact there in particular. >> you real said nasty things about mcdonald's. >> service has been awful. every time. >> i can't even believe you go that often. >> i love the coffee when i can get it. i love breakfast all day. i love egg mcmuffins. i was so happy -- i doubled the amount i go to mcdonald's because of the egg mcmuffin. >> the cage free eggs. she's at whole foods shopping for kale. >> yes. sure. >> i have not had service problems. i mean, especially in the drive-thru. not trying to get anything at mcdonald's. believe me, i can afford it.

>> $1 menu. >> yeah. can't do anything for me. stocks to watch today, paypal profits and revenue estimates. as well as the new agreement which makes paypal is one-click payment option on the alibaba site. big changes for the desert southwest. arizona may be going from being a red state to a blue state. that hasn't happened since bill clinton won the arizona -- state of arizona in the presidential election in 1996. but polls show hillary clinton has a shot at taking the state. contessa brewer is live in phoenix with the latest. dp you go out there just for this report, contessa? >> reporter: you know what? you can't believe the places they send me to give you some political news here, joe. hey, so 11 electoral votes up for grabs in this state. the fact they're up for grabs is shocking. longtime political watchers

here. but the arizona poll this week shows hillary clinton is up on donald trump by five points. i mean, this is a state where john mccain and mitt romney took the state by roughly ten points each here. appears that trump's topic of building walls might actually backfire in arizona. the state would lose almost $49 billion in economic activity if all unauthorized immigrants were removed. >> nafta obviously was popular down here in arizona among republicans. and free trade in general. arizona and mexico, you know, have a great trading relationship. so i think they are bewildered by that. they probably worry to some degree. >> digital air strike is an online marketing and brand reputation company. it employees 175 people. many of those are millennials. able to support a republican in the primary process. but now she's switching her vote to a democrat.

>> i like the concept of reducing, you know, tax and government size. but it really concerns me when the candidate that's saying that does not have a cohesive plan. someone that's going to be, you know, short tempered and easily can change course is not something i like in my business. >> reporter: so we heard that hillary clinton plans to focus towards red states. arizona one of them. she has multiple offices here. she just made a $2 million ad bite in arizona. michelle obama was here last night campaigning for her. however, hillary clinton has not been to this state in the general election process. donald trump, six times here and he may plan another swing through the state before the election, joe. >> okay, contessa. if you got to go somewhere, we could have sent you to, you know, somewhere not as nice as arizona. so that's a pretty good gig out there. have fun. you going to tee it up? >> reporter: yeah. >> see. golfer. >> i didn't know. okay.

>> all right. see you later. okay. our next guess is the governor of another battle ground state. i don't know if we're calling it a battleground state anymore. colorado where hillary clinton has an eight-point lead over donald trump. governor john hickenlooper joining us. good morning to you. >> good morning. how you doing? >> i'm good. do we consider you still a swing state? >> i think we're still a swing state until after the election. and i think we'll go back to being a swing state. but certainly donald trump hasn't done terribly well in colorado. >> do we even need to vote there, governor? maybe not. you don't even have to go to the polls, i guess. this one's decided already? >> i'm not saying it's decided. i'm just trying to understand from the governor to the extent that he has his finger on the pulse going on in the state and given where the polls are. whether we're putting this in the battleground group or not. >> i still keep in the battleground state group just because, you know, there is so

much uncertainty. i'm not sure i trust or i'm not sure anyone should trust all these polls one way or the other. we saw polling mistakes with brexit. that's why we have the election. we'll have to see. certainly, donald trump has said repeatedly said things and kind of shot himself in the foot out here. attacked people when he didn't need to. i mean, it reminds me -- i can't remember in alice and wonderland the mad hatter at one point said people that don't think shouldn't speak. i think that probably applies to mr. trump and his experiences out here. >> denver and boulder will probably -- you know, pretty fertile ground for secretary clinton. obviously. it was about before the -- what was it? i guess it was before the video, the billy bush video he was up or at least tied which was pretty amazing for colorado at that point. but yeah. at this point, it's not looking too good.

>> well, these are -- you know, even the republicans out here are pretty strong family values folks. so republicans, independents, and some of his, you know, misogynistic comments -- >> bill and hillary clinton, family valued. even you got a laugh out of that one. >> but the bottom line is that i think donald trump is just going beyond any -- you can try and blame hillary for things that happened decades ago, but donald trump's doing it right now. and it's -- i think it has driven voters away by the droves. >> let me ask you this. to the extent you would want to offer donald trump advice which i imagine you wouldn't, given the party you're in, is there anything you think that he can and will do over the next few weeks that could turn the state? >> you know, i think it's probably -- my personal feeling it's probably too late. you know, he had a chance a couple months ago if he could have stayed focused on his approach to changing the country.

i mean, there's so many people in both parties, right? that are frustrated, that many cases people haven't had a raise in a number of years. they're doing a job now that is not what they want to do. they don't feel fully employed. it's fertile ground for people from both sides saying i'm going to change things. but he just let things get carried away. >> governor, what do you think is going to happen after the election? >> well, i think -- i am very hopeful that hillary clinton will reach out to republicans and independents and everyone and say, all right, let's find the things we do agree about. let's rebuild our infrastructure in this country. let's get going in the right direction. let's come together and address -- >> do you think that's plausible given everything that's happened? >> yeah. i think she is someone if you meet people from upstate new york and hear the stories when she first campaigned in northern new york, she barely won that first election. when she ran for re-election,

she won by almost 67%. she turned them around by not caring about party politics. it was let's solve problems together. that's what the country needs. >> it depends on congress and it also depends on whether she is as far left as she's gone on to take on bernie sanders. if she's as far left on the platform she's run on, she's not going to get anywhere if congress doesn't change. it's left of where president obama was on a lot of issues. but let's talk quickly -- i want to see your latest thinking on legalized marijuana. in the past you've said if you could go back in time, you personally would rather wish it hadn't happened. for the will of the people to make it work. then you softened that. maybe more ambivalent. maybe it's not as bad as you thought.

or not as good. where are you now? >> certainly a lot of the nightmares that we thought were going to come to pass haven't. they haven't been as severe. our fears weren't as -- the reality wasn't near as bad as our fears were. i still tell other governors let's wait a couple years. let's see what happens to usage among teenagers. make sure we've got these -- we just pased a law -- >> do you know -- do you know in frequency of use in teenagers -- obviously before it was legal it was -- it's not like it wasn't like teenagers couldn't use it. but has it increased now that it's legal? do you have actual numbers you have confidence in for that, do you know? >> yeah. it's up a couple percent. but it hasn't been a big spike. it has increased. we're spending $8 million on ads that the marijuana, every time you use its there's a high probability you'll lose some portion of your long-term memory. a little sliver.

kids don't think in those terms. we're trying to let them hear that. >> how about -- do you have a test for driving while under the influence of -- >> sure. >> is that on the increase too? it might not be as obvious as someone, you know, with alcohol. >> well, we're certainly measuring it like crazy. and so we're seeing a higher incidence of people being arrested driving while high. we're testing more often. the only way you can really ascertain is a blood test to get to concentration. >> governor, obamacare premiums in some parts of the state i read are going up by 40%? is that a campaign issue this year? >> well, there are a couple outlie outliers. certainly there are challenges with the cost of premiums at every level. and we have a few outliers that have gone up dramatically. but premiums have been going up for 30 years. i think the time is now for -- to get focused on.

we expanded health care coverage which i think we needed to do. now we've got to control costs. it's driving out funding. >> right, right. but the premise was they were going to control costs. like, that was actually the premise in the beginning. it doesn't seem to be working out that way, does it? >> i think the premise was they're going to expand coverage. and make sure -- go back before obamacare. 90% of the doctors did all their prescriptions, all their medical records on paper. 80% of the hospitals did it on paper. now it's the opposite. now it's 90% of the hospitals are digitized and 80% of the doctors are using technology. i mean, that's going to help us get our arms around cost. but so far people are still, especially in terms of pharmaceuticals, medical procedures, we haven't controlled how that's being implemented. >> okay. thank you, governor. >> we appreciate it. great to see you, sir. >> you bet. all right. the ticker's back up. i haven't looked at it to see how things are working but it

must be fixed. stocks to watch today, boston beer cutting its outlooks. the maker of sam adams beer said it was reviewing its brand strategies and increasing competition in the industry. s.a.p. is raising guidance for 2016 even though the third quarter profit dropped by 19% from last year. its bottom line is expected to be boosted by 6.5% to 8.5% increase in cloud and software revenue. and walmart will invest $50 million in a china-based online grocery firm called dada. i don't know whether you can get the eight legged chickens there. some of the nation's most popular websites are suffering intermittment outages this morning. twitter, amazon.com, spotify are among those that have been affected. it appears to be reflected on the service attack against a

popular domain name server company. we're going to bring you more details when we get them. when we return, jim cramer is going to join us from the new york stock exchange. we're going to get his take. stay tuned. "squawk box" will be right back.

- in 2013, i was working three jobs bartending, sharing a ten by ten room, struggling. i rent this place and then i started home sharing. my roommates help out all the time. they are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. i was able to take three months off to take car of my family during a family tragedy. the extra income that i get from airbnb has been a huge impact in my life.

welcome back to "squawk box." ericsson said fell during the third quarter. company plans to cut further to account for weaknesses in targets. a $40 billion takeover bid for british american tobacco. the bid is worth 56.50 per share and involves the 58% of reynolds that british american tobacco does not already own. let's get down to the new york stock exchange. jim cramer joins us now. i saw you tweeting about people that have stuck with esterbrook and you're one of them and you're not surprised today. >> no, look, this guy is the real deal. he hasn't even started loyalty program yet. people like to go there. he knows it's a treat. he's trying to make it more natural organic over multiple years. he can't do it overnight because he would wreck the whole food chain. away from natural organic, the food chain is, i think he's a

remarkable operator. i think he keeps getting sold short. people keep coming up with things saying it's all over, one-trick pony, he's anything but that. he's also energized. watch technology he puts in in the next year. he is the real deal. we got to stop saying those guys were one-time-only. >> right, nobody here likes them. say service is bad. hamburgers are -- huh? >> look, i go to them all the time. >> i do too. >> maybe i shouldn't. sometimes i'm out late on a saturday night. let's just say it does work wonders on a sunday morning. every time i go to one it's good. every time. and i complain about the one on the l.i.e., it was fixed the next week. the guy's hands on. >> now we got to figure out and you're someone who knows how to run a restaurant, but what do you do with the burgers? because that might be the next great change in mcdonald's. they got this bad rap that their burgers aren't up to speed with like in and out, i guess. >> in and out is special. let's see what he can do.

if i have fasted for three days, i would have a big mac. i'm a breakfast all day guy. >> me too. >> the big mac take with lipitor, i don't have my lipitor handy at all times. >> like we -- >> you crush the lipitor on it. it's like one of the condiments. right there at the, like mustard, relish -- >> like what i do when my dogs need a vitamin, put it in a piece of meat. stick it in the meat, the lipitor. >> exactly right. frankly it's worth it. but i can't take the lipitor with me to all different places. >> breakfast all day, jim, fantastic, isn't it? e.g. mcmuffin any time? >> that is my favorite. 330 calories. >> yes. >> the coffee still piping hot. the best coffee in the world. you got the double line now for when you go through the drive-tlu. i like to go in but the wife says we have to stay in the car. easterbrook is so good. i'm tired of people denigrating him as a one trick pony. >> and microsoft --

>> sacha's fabulous. i'm going to start wearing a black t-shirt. that was fantastic quarter. he is the self-effacing guy. he's very funny in real life. he comes off a little automonotone on the call, he's all right. jim, thanks. quick programming note, happy birthday to the "halftime

report." the celebration continues today with new england's patriots owner robert craft. that's at 12:30 eastern. we'll be right back. , social updates. we call it dark data. 80% is invisible to most businesses. the ibm cloud has tools that can help see dark data and put it to work. hello, my name is watson. working with watson in the ibm cloud, we can help an energy company predict pipeline corrosion. and help a start-up to use social data to predict market trends. now businesses can get more out of their data. that's what the ibm cloud is built for.

now businesses can get more out of their data. prge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world.

sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com. quick check final on the markets. and you can see that the futures

have gotten worse, especially in the dow. now down 66 or so. microsoft is up, but point out ge shares are now down over 1% after the company said slow economic growth particularly in the oil and gas business weighed on full year also lowered full year target while narrowing profit forecast. >> join us on monday. have a great weekend everybody. "squawk on the street" begins right now. ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl quintanilla has a well earned day off. let's give a look at futures this morning as we end our week going to end on a down note at least when we open trading this morning. european markets, let's look at how things are faring at this