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 very moment.

you can see kind of a mixed bag. didn't give me italy or spain, normally i get italy or spain when i'm on the desk here. there's germany, france and the ftse of course which is the only one in the green. ten-year note yield, there it is. 1.738 is where we stand. crude of course had the nice move and helped some of those oil related -- energy related companies of late. let's call it down a little bit as you see but still above 50. our road map this morning starts with microsoft shares. they are set to hit an all-time high after strong earnings on a quarter that was boosted by what they are doing in the cloud. we're going to dig into a report with jim. shares of tobacco maker reynolds soaring on news that british american tobacco offering to buy what it doesn't already own in the company for about $47 billion. i've got a lot of details on this one. you'll want to stay tuned. we'll share them with you. and shares of mcdonald's

moving higher. we'll break down the quarter and talk about what it means for some of its competitors as well. let's get to microsoft. it is up as we said in the premarket this after posting better than expected quarterly results helped by gains in its cloud business. ceo sacha nadela on last night's earning recall. >> our annual 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. >> so the cloud is not just helping them because it's growing so quickly, jim, but it's also then having customers who are then moving to other services. >> amazon for the first time has got a real credible threat here. that's how good they are. >> amazon's 31%, i believe, what we call the cloud. where you basically -- >> web services. >> web services. >> as your revenues once again grew triple digits, 121% in constant currency, the margins

here are good. satya is killing it. when i saw him literally a year ago, he came to me with an $18 billion run rate that he thought he could do cloud. and i'm like, i said to him, don't give numbers that you can't deliver on. now he's on target to do 20. this guy is such a heavyweight. it's really incredible how quickly he turned this company around. i would not want to compete against this guy. by the way, self-effacing. but this is a monster good call. >> sometimes all it takes is making one good decision. and if it was that decision, let's get in, this is where everything is going, all computing is moving into the cloud, it's not going to be on the premises any longer. and this is a service. and they did. and they moved there and moved there strongly to potentially compete with amazon web services as the giant. >> for real. remember it was oracle, trying to get to ibm, people didn't like ibm's gross margin numbers, but i have to tell you, david,

even at one point they have to mention they have this device division. remember steve ballmer on previously making a big bet on devices, he gives you throwaway number devices, there was one point i wouldn't have let him got away with it. he can get away with anything. this is a remarkable, remarkable turn. and the stock is still undervalued even up this much. i've got to tell you companies like hp, hewlett-packard, that was a huge win for him. >> you mentioned mr. ballmer, your former classmate of course many years ago. he was a guest on "squawk box" earlier. of course the former ceo of microsoft. and he was replaced by mr. nadella, here's what he had to say about him. >> we grew our revenue and we grew our profit. we made the transition from a pc company to an enterprise company. and now satya's got the company doing the right stuff. he's going down this cloud path. >> down the cloud path, jim. and there's a lot more path to

be walked, it would seem. >> yeah, this is one where they are on fire. and i've -- i just think that people don't understand that this was a -- we would be talking about the consumer business like two years ago. and we would say it's kind of -- >> they actually did okay. >> not bad. >> down pre-nine print in terms of pc sales they actually stayed -- >> yes, they did. remember, this has this renewable subscription stream that is fantastic. but this guy, you know, we're talking about early 2014 that this man came in. this is remarkable. 2014. this is 2016, you hear people say i need more time, need more time. for now on we should be measuring against satya time. this is satya time. nice guy, too. >> this is a very fought over area, we've got one leader, we've got another here significant. who are going to be the big players in terms of offering these cloud services? >> if i don't say oracle, they're going to yell at me. >> okay. >> because of the net suite deal

i feel they are more challenged. >> the deal is in question. we'll see whether it happens. what about ibm? >> okay, so i'm back and forth with ibm. i think ibm is, look, every time i say ibm is trying to do bet ner cloud, someone finds a new problem. you know what's happened is people are measuring waiting for all revenue growth. >> right. >> but i think they've done impressive things. >> we've got to make the difference the difference between the computing power, which is here it is. >> right. >> and the all the software that rides on top of it that the likes of an oracle or crm or workday or so many other companies. >> salesforce platform is used by all companies. every time you say something and don't mention oracle -- >> get them out of your head. don't worry about it. i know, mark hurd is a tough dude. >> this is in my head and oracle's in my head. >> it's scary, but he's not behind you right now. >> that's what you think. it's like pokemon go, right there. but i just think ibm has

strategic imperatives have very gross margins but ibm is out of favor, oracle is out of favor because people feel they needed the net suite for for the small and mid size, okay, because that showed them maybe they can't get the high end. which is going to microsoft. people like dealing with microsoft instead of dealing with amazon. >> why is that? >> you know, maybe amazon is basically not as loved as we think. you know, they're just not, they're just not as loved. david, they're considered more of an evil empire. remember when microsoft was the evil empire? remember when you had mr. klein going after there and steve ballmer going, justice department -- though they play for free. those are the most dangerous opponents in the world. i do think ibm, microsoft much more impressive. salesforce i can understand one point they wanted to buy salesforce.

they don't need salesforce. >> right. >> and i don't know if salesforce needs twitter. i got to tell you -- >> oh, lord. >> there's a lot of bad blood all of a sudden out there. >> yes, there is. we should get to that in a bit. we've got another 53 minutes of our show just you and me to talk. >> i love that because we haven't even talked about how the biggest mistake i ever made was quitting smoking because that's where all the money's being made. >> let's get to that this morning. of course people woke up to the fact british american tobacco which already owns 42.2% of reynolds american has made proposal to buy the rest, that 57.8% that it doesn't already own, offering a 20% premium over reynolds' closing price on the 20th of october, and a deal that values it at 56.50 a share, we're learning about this immediately. in fact at the same time more or less reynolds is because they own -- they have 13 ds, remember they would have to update their filings. remember tesla, solarcity, they had to do the same thing.

>> right. >> they've got to just let everybody know as opposed to trying to negotiate this privately. so here we sit with b.a.t. having made this proposal, reynolds now of course is reviewing it. they don't own a majority, but they do own a significant stake, as we said. let's go through some of the values, jim. >> altria's jumped three bucks this morning. >> right. >> you've got to explain this to me. >> that one i'm not -- >> i'm saying do people think -- >> no, no, there's only one buyer here. >> okay. >> reynolds is not in a position where they can go out and sell to somebody else. >> all right. walk me through this. >> they can't. but what they can do is put up a strong defense. now, in their defense b.a.t.'s going to say the following. and they've started to already. and i can communicate some of it this morning. our offer already is 16.3 times the last month's ebitda that reynolds has put up. >> is that an offer they can't refuse? >> well, they'll say it is, but it's not at 20%. they'll say, listen, when

reynolds bought lorillard it only paid 13 times ebitda. there's going to be about 14 million of cost synergies, we're giving you a decent amount of stock here. why now is the question. it's never been a question of when, it's been a question of -- excuse me, right, it's never been a question of whether they would do this, just a question of when they would do it. >> all right. >> why now? obviously interest rates are very low, a lot of cash they would need for this deal. hence being able to borrow. b.a.t.'s been doing fairly well. >> i was going to ask you what the pound is. >> so many of their sales are international, and they've been beneficiaries of the lower pound given it's made their predict more competitive in overseas markets. and the two companies have sort of aligned. reynolds just recently had an earnings miss, stock went down. so p/e multiples are more closely aligned right now. so those were a number of reasons why now. although they've been planning this for weeks. it's not as though they were waiting for reynolds to miss earnings. they weren't. they were planning on doing this for quite some time. but we'll see where they go from

here. i think this is a key point that needs to be made, and what you may hear, the 20% premium some will say is what you would pay to squeeze out if you were a majority owner. it's sort of what they would refer to as a minority squeeze out premium. the question will be does reynolds go for what they may argue is a control premium, which should be higher than 20%. >> is this like that netsuite? oracle -- that's really larry el ison, give me something to understand. s.a.b. miller? >> i got to think about it. it's a good question. >> hard for me to understand. >> well, what you need to understand is reynolds is going to do the best they can for its investor base. it's grown dividend and had growth until recently. it's got a ceo transition underway, but generally speaking i think it's a fairly well regarded company, correct? >> absolutely. >> and the lorillard deal is done in terms of synergies

they've been expecting from it. from their perspective how hard do they fight? b.a.t. saying we want friendly, collaborative. we'll see. reynolds -- my understanding again this is a key thing in the details, that until they take full control buy all the shares, they can't control the committees on the board. right now those are led by independent directors. they're going to set up an independent committee of directors, 5 of 14 directors, seven who are not affiliated and get a vote unaffiliated shareholders. my guess is reynolds is going to argue for obviously higher bid. the question is how high the a.t. is willing to go. >> i see the stock reflecting perhaps that could happen. okay. weak euro, bayer going after monsanto, weak euro, b.a.t., weak pound, why is it not the other way? why are we not seeing u.s. companies buying over there? what is that about? >> that's a great question. and i don't know. >> we're on this. i'm working on that one, too.

>> i don't understand why the stronger dollar hasn't emboldened u.s. companies to do the reverse. in some cases you're talking far larger companies buying smaller companies, bayer is larger than monsanto. >> maybe it's protectionism. maybe they're afraid. stay on that too. anheuser, bud, inbev. >> it should move fairly quickly but still going to take awhile. reynolds is just getting themselves set up here to sort of deal with this. but keep in mind minority squeeze out premium versus control premium, my guess is that's where reynolds comes down in terms of its argument. but we'll see. >> cbs has to do the best for its shareholders sd. >> that's right. kind of similar but not completely because they have a controlling shareholder in that case. this case they're not a controlling shareholder. >> how about time warner getting a bid -- never mind. let's tease that. >> that's coming up next. let him have the tease. we have a lot more "squawk on the street" coming back after this.

well, we wake up this morning to the possibility at least of ground breaking, really earth shattering consolidation in the media industry in the midst of course of a landscape that is truly changing, jim. and i'm referencing of course

these reports yesterday from bloomberg that at&t and time warner have had some talks. now, they've been about a range of things, but they have included the idea of at&t buying time warner. let me add my own reporting here to the extent that i can. and i can because i did have some chance to talk to some people. this is not -- this is a possibility. >> you're not dismissing this out of hand? >> i'm not dismissing this out of hand. >> are you kidding me? >> i don't want people to seem they're talks in a deal, that's not the case. there have been conversations, i know at least one key meeting. while they discussed a range of alternatives, it's my understanding about would time warner at&t really try to buy time warner or not. now, is that likely? i think it's easy to say no, but is it possible? my understanding is absolutely. >> wow. >> and when you get a report like this and other people

reporting on it of course and investors start getting involved and you start to see a change to a certain extent, not a lot, in the shareholder base and you just get people talking, sometimes you can build momentum. jim, this is an extraordinary moment in terms of the media business. we've talked about it so often. i've said so many times about the unbundling taking place slowly at first and then suddenly. i'm starting to think we're getting closer to the suddenly part where people truly are thinking of tv as the internet. >> how much of this is defensive? i was on the verizon call yesterday. i think, actually, i think aol yahoo is going to be important. that was not a good call. verizon did not do well. i think sprint and t-mo. >> fascinating they are truly having to compete. >> younger versus older, frankly. but at&t with directv was brilliant even though nfl ratings are down. i'm wondering if they're saying, listen, we're getting out of the greyhound bus business. >> it's interesting to bring together of course in a significant way content and distribution. now our parent company is in

that business with the ownership of nbc universal and that. but we are in the midst of the seismic change that's going on. we talk about it so often. it is happening. >> yeah, but david -- >> if you move even in all your houses you've got to start thinking about do you really need your cable. you don't, jim. >> no, i know. >> and more and more especially as we head into next year with all of the bundles that are going to be available over the top, meaning through your broadband, there are going to be real possibilities for you to figure out a way to cut your bill and get what you want. >> a $3 a month verizon bill, small skinny bundle at one of my places. >> so this is forcing everybody to think about things. >> but big time heisman -- >> to fox. >> yes. why stevenson and att, what is that about? >> let's not go too far down the road -- >> you just went down the road. you're on the entrance ramp. >> yeah, i'm on the entrance ramp, and they are too. and if they get own the highway, they're going to go 75 miles an hour, they're not going to start at 20. >> is stephenson different -- he

used to be a plain vanilla guy. does he got some pizazz? >> i don't know. suddenly you've got people thinking about content in a big way. the question is will you see any come to have the forefront. raising a good point. time warner successfully fended off fox very much so. >> yeah. >> it's not clear that they are ready. but if you bring them an offer that is really significant and delivers enormous amount of value to shareholders, he's got to consider it. he's got to. >> then that offer was a real good price, no -- >> he didn't believe it. he had a lot of room ahead of him at that point. but that was a couple years ago. again, is this likely? no. but is it a possibility? i think you have to consider yes particularly in light of all the changes taking place. it's not idle chatter. >> that's great reporting too. shoot, i better have something -- >> jim, we have to start thinking about a lot of this stuff in a bigger way. remember that report from goldman earlier this week about apple and creating ecosystem on the prime side, so to speak, to

actually get moving on the hardware. >> but trying to get apple's business. >> does apple have to go out and do something? >> and apple won't. i think apple won't. >> no, they won't. how about google? would they consider it? >> they have so much money they could consider it. >> they can consider it. what about facebook? >> youtube is coming on so strong. facebook doesn't need to do anything. >> doesn't need to do anything. >> no, we're giving them their content. twitter -- >> twitter -- >> not saying anything. >> salesforce really just crushed them. >> twitter just really -- >> they crushed them. >> they did. >> what they did to them. that wasn't fair. wasn't nice. all right, just going to keep going here. we've got a mad dash coming up. no idea what you're going to talk about. any thoughts? >> i have a key to the market. >> oh, key to this market. take a look at futures, more "squawk on the street" right after this. hey gary, what are you doing? oh hey john, i'm connecting our brains

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♪ we have about six minutes before we wrap up this week we'll begin trading this morning. you said key to this market, mad dash, what do we got? >> mcdonald's had been going down from 130 steadily to 111 because people were continually underestimating a ceo who i'm telling you is bringing about remarkable cultural change. i'm talking about easterbrook, people looking for 1.5% comp, he delivers 3.5. international fabulous. most important all day breakfast continues to be a hit. this is what this man has done

and why it's so hard for people to get their arms around. he has re-energized the franchisers, the people who really determine the place. so what happens is they start putting more money in the place, they start cleaning things up better. they add other shifts. they get excited themselves, and that adds to it's what i call, david, a fly wheel. >> so all this talk about millennials don't eat hamburgers doesn't matter? >> it doesn't. it's a treat. he and i talk about that. it's a treat. the egg mcmuffin doing incredibly well, piping hot coffee, innovations you're going to see over the next 18 months are extraordinary. this guy -- >> technological innovations? >> it's going to make it so you can order not necessarily in the drive-thru. >> oh, okay. >> a little too slow. he's one of the most responsive ceos in america. the people i know who are franchisees, they think this guy is the real deal. and people have to understand

that's who determines the sales. >> that's the key. >> and it's so funny because when you speak to him he speaks very atherially. they got mojo, my word, and this one goes higher. you always do the head and shoulders kind of thing because you're tactically oriented, you're not at all, but this is good. >> there's something happening here. >> what it is ain't exactly clear. >> we got an opening bell right over there. ♪

my name is cynthia haynes and i am a senior public safety specialist for pg&e. my job is to help educate our first responders on how to deal with natural gas and electric emergencies. everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california.

you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell will ring in about 30 some odd seconds. we got a busy morning, jim. >> yeah, a lot of large companies here. >> we haven't gotten to ge, hon honeywell, but anything else you want to keep an eye on apart from earnings? >> the schlumberger call right now, they're calling really still saying the bottom but the bill looks good. halliburton was incredibly

bullish. schlumberger is less promotional, but the oil service group is back. it's bigger than ever, david. this is a turn just like seeing in the airlines being led by halliburton in the oil service and being led by of all things union continental. the union pacific call is every bit as bad as stock. >> wow. there's a lot we're going to follow up. here it is the opening bell at the new york stock exchange. you're seeing realtime exchange back at hq. we should end up with more red on that board given where we look in terms of futures. here's the big board madison square garden and new york knicks opening 70th week. saw marcus camby, was a knicks but what was he a denver nugget for a long time? he was a good player for a long time, not unfortunately long enough for us. drainage pipes celebrating recent ipo. can we get to ge?

>> yeah. >> the numbers weren't good, jim. at least i know your take on them is not a positive. >> i'm not going to disagree. look, the orders were down six. now, that's organic orders, let's be very clear. you've got some compares in the rest of the industry that are slightly better than that. remember, they went big in oil and gas, david. they tried to x it out a little bit, you can't. locomotives not that good, aerospace not that good, service revenues not that good, that does matter a great deal. backlog grew, which is important. but in the order grew 6%. unfortunately it is a mirror of the industrial world. and you're not going to get any excitement here. >> right. i mean, they've lowered their fiscal year '16 industrial organic sales guidance from what was 2% to 4% to now 0% to 2%, eps guidance range now narrowed 148 to 152 a share. >> right. but it's the revenues, david. 29.3 up 4%, consensus was 29.6.

you know we need to see robust revenues in these companies. that's what people want from an industrial. by the way the union pacific conference call talked about needing fewer locomotives. that's not an unimportant business for ge. >> no. >> aerospace by the way, there's a huge shift going on against wide body for narrow body, which is roiling the industry by the way, but the main thing to focus on ge while they're increasing the buyback, doing a lot of things right for shareholders, they did go into oil and gas, david, at the wrong time. >> yes. >> and that's now very clear. >> a poor time to have bought there. of course they got out of financial services, and that has been applauded. they're no longer a significantly important financial institution. that has been applauded. they've got a large shareholder in trion on that stock. they did sell stock, you're right. >> i wasn't crazy about it. my travel trust owns it. minus six orders was stunning. sge digital, yes, big order with saudi arabia. i'm trying to present a mixed

picture as opposed to all negative. it's not ibm in terms of what happened. i didn't think ibm was that bad either. it's mixed like ibm. oh, whatever, i'm putting it out there. not a great quarter. >> yeah. >> i mean, illinois tool works -- >> what about staying in this industry? what about honeywell? >> remember, honeywell kind of -- there were two honey wells, there was the honeywell from that presentation and then there was the dave cote coming on "mad money" and this was the equivalent of "mad money" last week. again, when you look at these -- i think united technologies could be better than some of these guys, but aerospace is a changing breed right now. climate control is a very good business. ge's not climate control. honeywell is, united technologies, that's a real good growth business because that's about cutting emissions. >> okay. >> so i like that business more. and i like the oil and gas business less. oil and gas business is just not so hot. >> even above 50 now?

>> well, look, halliburton recovering u.s. shale. you do need to see a real agreement in november. i don't know if you can do that. natural gas doing better by the way because of export possibilities. really interesting that natural gas export to sha near having an impact on our supply of natural gas because we can't get them in the right places. that's the williams deal. >> that's the pipeline. >> fascinating moment for industrials but not a great moment ppg, dover, honeywell better, but look at illinois tool again down. that was the premium one. danaher, they got more to life sciences. they are smart. >> just in general they built an enormous company that typically is not discussed very often. >> they are really good at what they do. really, really good. but anyway, look, ge's ho hum and you can't be ho-hum. >> well, you got to be like microsoft which was of course a lot better than ho-hum and now sitting at $60.27 a share, jim.

>> can i take a second? i know this isn't a big company, but this is major, novel antidepression drug, it works, there's a lot of upgrades. it's an -- significantly reduce without importantly no weight gain. david, it's going to 70. >> 30% gain. >> it's going to 70 because no weight gain. weight gain is why people stop taking these drugs. that's a monumental thing. richard pops, congratulations, no one thought he could do it and he did it, big. big. stock goes higher. >> right. >> time warner up a buck. people taking it seriously. >> yeah, i mean, it's up. time warner's up, as you say 1.6%. att down a bit. the response i think you sort of hoped for given -- we'll see. >> can i get your sense about the unbelievable conference you were at? i know you spoke to more than

just goldman. >> it's funny because the conference goldman had was for entrepreneurs. >> right. >> i met people from a lot of different businesses. and when you come out of these things, and i'm sure you've had the same experience, you feel very positive about the potential for our country. >> right. >> just so many people doing so many different things. whether it's virtual reality or whether it's cyber security. >> machine learning. cyber security -- you raise a great point. >> machine learning. >> did you see prove point this morning? >> no, i didn't. >> prove point is up six bucks. pfpt. >> yeah. >> all the cyber security stocks have reported just okay numbers. prove point protects your e-mail. well, talk about -- >> we know some people that could use that. john podesta, are you listening? colin powell, are you listening? come on, guys. >> just unbelievable. but these guys are in the sweet spot. >> and when you think about the internet of things and what's coming and the fact so many things are going to be connected, security continues to be a key concern.

you've got to know your network is secure. >> absolutely. i had sky works solutions on last night pivoting a little bit -- going to get to what i want to ask you about, pivoting from cell phones, apple is very strong. the guys from lam research, you need theirs to make format, but i keep coming back to what chatter do i hear? qualcomm, nxpi. >> all right. i'll do a little favor report on that. >> i'm very interested. >> all right. let's talk about nxpi, jim. i got a little bit for you which should help in terms of as the market anticipates this deal. we talk so often about the internet of things, we talk so often about qualcomm, all that overseas cash, this deal has been in progress for some time, it looks like they are nearing the conclusion. there were some reports yesterday, what i can tell you is they do have an agreement at least at this point -- >> are you kidding me? >> on $110 a share. that's the number that qualcomm is going to be paying for nxp. and you can see the stock 104 in

many ways discounting an expectation of let's call it maybe a bit more than that. >> from 120. >> they were asking 120, appears they will be willing to take 110. it was a handshake deal at 110. there's a lot of things to work through here. apparently the contracts at nxpi in particular, jim, are very complex. and so they need to be going over all of those to make sure that whatever may be in particular contracts is adhered to. but they are on track it would seem to have a deal announcement as soon as let's call it next week. kind of keep that broadly speaking later next week. >> in perspective, 110 may seem not as great, but this stock was at 80 a few weeks ago. and they are -- they pivoted really well away from just communication cell phone into the auto. and as you keep saying, david, the driverless you need more semiconductors than you would ever believe and it's nxpi that has the lead. >> i want to make sure people understand they've agreed on a

110 as the price, but the deal is not done. >> okay. no one knew that, that's called news. >> the additional specifics are still being worked on. >> the fact qualcomm is going up will make people feel nxpi didn't get enough money. >> qualcomm went up when the story was first broke. >> chance to not just be a cell phone company. >> this is an enormous deal. it's closer to 40 with debt and everything else, it's well above. this is $40 billion deal before debt. >> look at qualcomm soaring. soaring. >> they will be able to use their cash overseas, which is an important component of this. willing to include stock as well. >> why didn't they hold out for 120, david? >> this machine learning world we're starting with -- >> except amazon. >> yeah, there's so much coming here. everything's going to have a chip inside. eventually we're going to be chips too. >> internet of things, you kept hearing iot, machine learning.

>> a.i., all a.i., a.i. >> artificial intelligence. you begin to think, wow, i'm from a different generation. i'm from spreadsheet, i'm from paper and these guys are beyond us. >> our kids are going to be at a point at their life cycle where they're going to be talking about do i upload my consciousness to the cloud before i go. >> how about the fact the cell phone's wiping out millions of jobs but people claim it's also creating a lot of jobs. but the cell phone is so linked, it's such a bigger ecosystem than it was. but i am concerned about -- i thought that nxpi would get more. i did. >> well, they asked 120, as i reported a week or two ago. 110's not bad. >> not bad versus being at 80, being greedy here. absolutely it's fine. a lot of these guys -- it's interesting, david, when i was talking to lam yesterday, you know that that deal was blocked the kla-tencor and lam. >> all three. >> yes.

>> they might have expected that too when they announced it. but said long line of customers have been unable to get over antitrust enforcement. >> no. >> we'll have cases starting here for the hmos in november, anthem and cigna. and then followed by aetn aetna/humana. >> paypal did blow the number away and the bears who've been all over that stock have capitulated this morning. >> have they? >> yeah. they capitulated. all they did -- someone deliver one more good quarter but finally the bears said we can't just stay negative on this stock anymore. >> all right. not too much up, but microsoft certainly is. twitter's up a little bit too, jim. >> twitter? >> yeah, 16.97. >> really? did they decide that people who were trolls were no longer on? how many accounts do the trolls have? of the 300 million accounts, how many accounts are trolls with multiple names? >> great question.

>> yeah, i know, isn't it? >> yeah. >> and it's an important one by the way. >> they got trolled by crm, didn't they? >> well, maybe -- well, that's one side. >> all right. see that, silence. courtney reagan's on the floor she's got more on what's moving this morning. >> good morning to you, david. we do actually have a lot of movers in either direction when it comes to earnings, but if you take a look at earnings direction decidedly lower dow down by about 96 here in the first few moments of trade, s&p lower, nasdaq also lower despite strength from microsoft. and worth noting the dollar hitting seven-month highs today against a basket of currencies. and looking at the euro, euro hitting lowest level since march 10th at 108.68. and a lot of dow components are on the move today, not all in the same direction. you've talked about microsoft, but it's worth pointing out we're hitting the first all-time high since 1999. you rarely see moves in

microsoft up 5% here in the opening minutes of trade after its eps soared past consensus, revenue beating some strong growth in its cloud business. ge also beating on its earnings. revenue short narrowing that full-year guidance and increasing the buyback by $4 billion, not enough to satisfy investors this morning. you can see shares of general electric down more than 2%. mcdonald's higher by 2.5%. again, a dow component after beating on earnings. some pretty decent same store sales growth. folks are liking that all day breakfast and new chicken nuggets. if we take a look at global markets, actually pretty good week for both europe and asia, global stocks set to have their first weekly gain in four weeks. but both europe and asia mixed this morning. again, some currency at play here. and we know that the ecb is deciding not to move into tapering and keeping its so-called easy monetary policy in place. a lot of deal chatter going on this morning. i know you all have been running through, but it's worth aggregating it because we don't often see this on a friday. you see this often more towards the beginning of the week,

tobacco, reynolds american getting reported buyout offer from british american tobacco for the percentage of the company it does not already own. sources of course telling our very own david faber that both time warner and at&t have engaged in talks for some kind of arrangement going forward. and then in high end retail there is some chatter that coach and burberry may be looking for a deal, but then there's also other reports saying that's not happening. we bring it to you because stocks are moving on this. and coach often gets involved in some of these kind of talks. i think the markets remain skeptical until we hear something more solid but worth pointing out because stocks are on the move. it's a rough morning for shoemaker skechers. shares down sharply more than 16%. the shoemaker issues some pretty disappointing guidance. it missed on earnings. and what i think is interesting to point out because we may see this follow through in other retailers is skechers says it saw weak u.s. wholesale sale. so that means of course the sales it's placing with

retailers to sell its shoes and also some changes abroad. so i'm going to watch that when it comes to other manufacturers that are selling to the likes of wholesalers like department stores. david, back over to you. >> thank you very much, courtney. courtney reagan. let's get a closer look now at the oil markets and we're joined by jackie deangelis at the nymex to do just that. >> good morning to you, david. oil prices on this friday are bouncing around between positive and negative. negative at the moment but staying over $50 a barrel. even with the move we saw yesterday more than 2% selloff this fact that we're staying over $50 is convincing people that is a nice level of support. and we could potentially go higher by here maybe upper 50s even by the year end. but a lot of caveats and variables until we get there. now, the technical analysts are looking at the charts they see a head and shoulders pattern forming, they're even saying we could get to 60 or above in the next six months or so and that flies in the face of what we typically see seasonally this time of year. remember last february we got very close to $26 a barrel, but maybe, just maybe, the tide is

turning in this rebalance that has been forecasted could be happening. still investors should brace for some volatility, i'm told from the analysts, especially with the short-term support in resistance levels. the dollar also should be watched very closely ahead of the election. and also in anticipation of that december rate hike. back to you, david. >> thanks, jacqkijackie. when we return, you'll want to hear what former microsoft ceo steve ballmer told cnbc about facebook and mark zuckerberg. "squawk on the street" is back right after this. dw brought i.t. orchestration to a global outerwear manufacturer, allowing them to handle the recent popularity boom in fanny packs. it's pretty fly. unless being '90s is your thing. well, cdw and hpe services gave them the flexibility they needed to scale up their scale up their cloud resources, making sure supply meets demand. poser!

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spotify suffered widespread intermittent outages. no word on where the attack originated, why it happened, but apparently everything's back up now, jim. does show you though the world that we're entering. listen, russians are hacking everybody's accounts in terms of at least if you're a democrat. >> and don't forget about cyber ransom we never hear about. >> and the release as a result of colin powell's being hacked. >> 14 companies -- >> this is the world we're part of. >> hub spot but pegasus was the one that would fit in the most, 17 had already been acquired over already -- so the note was out of date from may but that was extraordinary document. extraordinary. >> yeah. shares of facebook by the way check them out right now. they're near an all-time high. the market cap company by the way about $370 billion plus. former microsoft ceo steve ballmer was on "squawk box" discussing an offer he made some

time back to mark zuckerberg. >> remember, you have to have a willing seller. i mean, i made a pitch to zuckerberg when the thing was small, you know, he said no because entrepreneurs -- >> how much did you offer? >> i think $24 billion when the company was itsy-bitsy. he said no, i respect that. >> that would have been a good buy. but he wasn't a seller. >> ballmer and i were very near each other in our facebook in the harvard class of '77 facebook, both of us now you would not recognize because we both had giant heads of hair. >> time does go by. >> yes, it does. time, time warner. >> yes, but you both still have very big brains, so that's good. >> thank you. >> you're welcome. >> don't forget steve ballmer had that microsoft phone at my 35th annual -- >> yes, that nokia deal. >> yeah. >> satya nadella came in and did so many things including done, get rid of that. >> he asked me when i saw him

are you a gamer, guy's a renaissance man. >> nadella? >> yeah. people don't realize that. >> all right. you ready for stop trading? >> sure. >> get yourself ready. get yourself ready. get off twitter. >> i was seeing if it worked. our fabulous producer here, shannon, just was putting my friend up, kristen flagstad on, i saw them in the whole cycle, david, the whole vog ner -- >> kirs ten overshadowed, always was. >> all right. there you go. little history of opera for you. we've got "squawk on the street" coming back of course with stop trading from jim.

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time for stop trading with jim. where are we headed? >> my favorite ipo of this year is twilio, they make the infrastructure for a lot of different companies for like this is what you must watch. acacia wasn't able to hold 100 when they did it, if this can hold 40 and go higher, then the market is looking a little better. >> what am i supposed to make of the fact how this thing's

performed so incredibly well after the ipo but then just the last month -- >> david, remember they offered very little then they got the big pop as the institutions come on and they average up in order to get a full position and stock goes higher at full position. >> and now hitting the market with more stock and seeing if it can handle it. >> that said the company is excellent and you may think it's overvalued. i think it's got the best growth path of any of the ipos we've seen in 2016. >> okay. >> what a show. congratulations on reporting on b.a.t., time warner and nxpi. >> thank you for all of your great reporting too. let's sit here and congratulate each other for the last 30 seconds. >> like to point it out because the value added comes from reporting. everybody can get everything from the web. >> that's not going to stop the people of twitter saying we're both idiots. >> compliment. >> how about what's on mad tonight? >> i've got my game plan. i'm also doing some beer forecasting. and i'm comparing the industrials because some industrials are -- not all

industrials are created equal, some more equal than others, thank you, george orrwell. >> thank you, george. eagles, vikings sunday. >> two and a half. >> the vikings have a heck of a defense. >> vikings have the best d, but never know, oblong ball. good piece sunday about the philadelphia eagles and what they do and howie is doing a great job there. and as they say every friday from what i said to them in the huddle, take no prisons. tnp. >> have a great weekend. i will be in touch with you at all times. >> you bet. i'm online. >> i know you are. >> don't worry. serving tonight. >> got it. coming up, more reaction for a big day for blue chips, of course microsoft having a very good session. as you see mcdonald's as well. keep it right here. okay, so your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital,

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their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. ♪ good morning and welcome back to "squawk on the street." i'm sarah eisen along with david faber and mike santoli live at post nine of the new york stock exchange. carl is off today. let's take a look at the markets where we stand right now. the dow's off about 90 points. only gainers in the dow right now microsoft, mcdonlds's and american express. s&p 500 off 0.4%, industrials

and energy getting hit particularly hard. and the nasdaq doing the best of the bunch thanks in part to microsoft and paypal trading around the flat line, not helping matters. wti crude is off by 0.5%, david. all right, our road map does start with microsoft hitting a record high this after reporting better than expected earnings and also showing real strength in cloud business. >> mcdonald's shares are also riding high after comp store sales beat on earnings, global comps up 3.5%. >> and there's a tobacco deal in the works, british american tobacco making an offer to buy what it doesn't already own of reynolds american. it would create the world's largest tobacco company. we're going to give you all the details in this hour. >> but first, let's check in on shares of microsoft. top story after the company reported a big beat. our jon fortt joins us onset with more as we watch this stock, jon, move past the 1999 boom time high. >> yeah. and a lot of this -- i mean, the performance is great. this is driven by the cloud, the

growth rate particularly in commercial, office 365 commercial is better than a lot of analysts expected. the margins are looking good because a lot of these cloud pairs that have achieved megascale, amazon, microsoft, they're not spending as much on building out these data centers. but what's happening here is multiple expansion at a level that a lot of people could not foresee. people believe in microsoft again. not just investors, but also microsoft's peers in technology. take a look at forward p/e. i think as of this move microsoft's forward p/e is now above 20. i mean, when was that going to happen, right? nobody thought -- apple is at 14, intel and cisco at 13, ibm and hp enterprise around 11 or 12 to give you a sense, google's at 24. that's the sort of class that microsoft is rising into expectation wise. of course the linkedin deal is supposed to close in this quarter. we've got to really deliver and execute on that. now they've got vm ware teaming

up with amazon in the cloud on the enterprise. that's going to be tough because vm ware has those enterprise chops that amazon lacked in the past when it comes to doing bigger deals in the cloud with them teaming up with amazon, it's going to be tough for satya nadella and redman to go up against them. but no question they've done it thus far. >> and as you point out, jon, the stakes get higher in terms of how the stock performs because now it's back to being viewed as a growth story. about a 17 forward multiple a year ago up to 20, now you have all the analysts saying, well, if you take out $100 billion in cash holdings you have to kind of make the story a little better. but i would also point out that the stock price is at an all-time high, market cap is nowhere near it. they bought back so much stock, peak market cap in 199 was $620 billion or so, now we're about 470. in retrospect lucky or smart was actually a pretty good strategy for use of cash. >> yes, it was indeed. of course we had steve ballmer on "squawk box" earlier, former

ceo of microsoft. a guy who i think didn't get enough credit for what he did some positive things getting microsoft in position. listen to what he had to say about satya nadella's leadership thus far. >> we grew our revenue and we grew our profit. we made the transition from a pc company to an enterprise company. and now satya's got the company doing the right stuff. he's going down this cloud path. >> and satya was going down this cloud path all along. he was running that division. but it was at that stage where investors really didn't believe in the cloud. they didn't really understand to the same extent this isn't just like another division of the company and we need to just value it on how much cash it's throwing off. so it was hidden underneath a bunch of other stuff. nokia probably not the best idea, but they made a last-ditch effort in devices. you know, skype is a nice bolt on but didn't light the world on fire as some might have hoped. but once you strip some of those things away and once the cloud grows up, you got to remember ballmer did help them get to

this position, now they're really flowering. >> what's the competitive match to watch here? is it amazon and aws versus microsoft? is it salesforce versus microsoft? which one will you be watching? >> i think it's amazon versus microsoft primarily. then you've got a bunch of other enterprise players as you guys, david, were talking about. earlier, your oracles, ibms, trying to make the case for why they should be included in the big leagues. now you're starting to see these deals taking place between amazon and microsoft trying to scoop up other players in the software realm. microsoft got adobe with its harkting cloud onboard as i was saying amazon bringing mv in to bolster sales and try to get a greater share of those enterprise workloads that are moving to the cloud but want to stay on premise too. microsoft's advantage had been, hey, we've got windows server for those who want to stay with an on premise component and make it easier for you to move to

azur because it's the same architecture. now with vm ware amazon can start to make a similar argument. >> michael, quickly on the stock itself, you made a point earlier via e-mail that all-time high does not equate to all-time high in market value. >> yeah, so basically they bought back throughout the mid 2000s really a tremendous amount of stock. people are saying what are they doing. the p/e was so low on microsoft at that time that it actually looks like -- also in combination with dividends looks like a pretty good use of cash in retrospect. so what does the investor care about? do they really care about do i own a piece of the biggest market cap company? they care about what's my actual total return from dividends and appreciation. so it's worked. >> stock price going to get the big headlines anyway. >> it's nowhere near $600 billion it once was in '99 or something like that. >> all right, jon, thank you. see you next hour. another big earnings mcdonald's beat profit and analyst estimates. reporting 3.5% jump, u.s. comp

store sales rising, both better than expected. join us to discuss is analyst at guggenheim securities. also on the phone, bob derington, analyst at telsey advisory group. i think you both like the stock, matt. what was the problem? were expectations too low going into the quarter? is that why shares have been under pressure and getting a nice boost today? >> yeah, well, i think first strength on top line came more from the foreign markets. we have a little bit of caution what the u.s. will be. they had some heavy year ago promotions they're about to lap. there's a lot of unknown how fast they're going to be able to grow their profits while they sell company owned stores to franchisees. that's where they beat. the ebitda grew much faster than what we had anticipated from their core business, not just from selling stores. so i think it was a high quality quarter that came in only a couple of pennies above where the street was expecting. >> yeah, bob, how should we read that global improvement?

they cited uk, japan as particular bright spots. is it the macro economy and those sort of economies is getting better, or is it something mcdonald's is doing specifically right to win and boost sales? >> i think it's a combination of factors. if you look at the year ago trends they were, you know, excuse me, fairly strong then. but i think the real surprise looking at the high growth market foundational market were dramatically better than expected. i suspect that japan probably benefitted a little bit from the pokemon tie-in there, and in china that was somewhat of a drag in the high growth segment, but still nonetheless much better than expected within that segment. >> matt, in terms of the stock, it obviously had a really steep run-up into the spring and then again a couple months later. it sort of got caught up in this whole rush towards supposedly safe stocks, good dividend payers and things like that. did that kind of reset the upper

limit for what the valuation's going to be? because we're still knocking around well below those highs near $130 a share. >> well, they are transitioning their company to more franchise model. they historically trade at higher multiple. our argument is that multiple expansion should incur because they will be getting to historically high margins and higher cash flow -- free cash flow, so that usually goes from a 12 times enterprise value to maybe a 14 times in line with more of their 90-plus franchise peers like dunkin donuts and domino's they can approach closer to those. also i suggest that the stock came under pressure mostly because people were so concerned about the at-home food deflation and what that would do to low end consumer. they benefitted on their margins mostly because of the lower cogs out there. so profitability is being flowing through and they're not seeing the pressure of people migrating as much as we might have been concerned going to even the kitchen. >> bob, we were just talking about microsoft and the transition that has happened

there under satya nadella. we should give steve easterbrook credit, shouldn't we? he's really come in and brought back not only the all-day breakfast but changed some of the ingredients, gone to antibiotic free chicken nuggets. how much has he really changed the culture and improved the relationship with franchisees? >> you know, i think that's a very, very important point, sarah. because i think ultimately we view steve easterbrook as a change agent. and it's his ability and his team's ability to better communicate with the franchisees. you've got to get them on board and keep them on board. and he's going to have to continue to work with them and his team to get them to pull the boat in the right direction. you know, as big as this franchise network is, he needs them working with him. now, the one thing i would suggest we need to keep an eye on is there's been considerable turnover within the executive ranch of this company over the last month or so, so that may change some of the chemistry and some of the effectiveness. and that's going to have to be something that we keep an eye

on. >> yeah, i mean, matt, that could be something to watch. we're also still watching this burger trend. mcdonald's has gotten a lot of bad press lately, it is still the burger king with the big mac, but those going for better for you burgers, where does mcdonald's stand with trying to tackle that challenge with a fine line between pricing and speed and everything else trying to worry about bringing younger customers in? >> that's a great point. i think you want to have the credibility on improving your food or going the right direction, i don't think they could ever match a -- call it a shake shack or habit, but they want to improve their perception of quality. they've called out their chicken nuggets as far as improving those and ingredients in those. but you touched on it, it's price and convenience. people are going to mcdonald's for those two major reasons. you just need to have acceptable food that's on trend. so i think they will continue to improve their food product, but i don't expect them to go after

or compete. they've tried that in the past and it's not a big enough opportunity to disrupt their entire promotional schedule or brand image to go after the steakhouse type burgers. >> all right. we'll leave it there. gentlemen, thank you. good discussion on mcdonald's, matt and bob with shares up about 2.5%. bucking the overall trend in the dow. >> thank you. another mover to talk about here, british american tobacco making an offer to acquire the rest of reynolds american that it doesn't already own. the $47 billion deal represents a 20% premium to yesterday's close hence the 16.5%. the deal would create the world's largest tobacco company. i guess the world's largest publicly traded tobacco company is more apt because you still have china tobacco. in terms of consumer brands, b.a.t. owns dun hill and lucky strike, behind camel, we've talked to david, cameron a bunch of times on this program during earnings after she managed to

combine lorillard with american, that $26 billion deal which is why she came back, she actually used to lead a subsidiary of b.a.t. herself. so there's a lot of -- there's already a very strong working relationship. the question is, do they go for this price or do they try to get a higher one, right? >> that's the key question, sarah, right. they own 42.2%. they're making the offer for the remainder of what they don't own, but they don't control the company. they aren't a controlling shareholder as such. they don't have control, for example, of the board of directors or the directors who sit on the independent committees. and a key will be here where does the value end up. you can see there of course the actual makeup of the offer itself in terms of cash and stock, a 20% premium over the stock price from yesterday. they're talking about $400 million in cost synergies that will be accretive to earnings in the first year that represents 16.3 times the last 12 months of ebitda at the company and as such is a multiple that is 300 basis points above what reynolds

paid for lorillard. but there are others who will say, you know what, that 20% premium for a company that is well regarded as you pointed out that's increasing its dividend and has done so even though didn't have a great earnings report last time, is more reminiscent of what you would pay for a squeeze out, namely for if you had majority control and were simply trying to clean up and buy what you didn't own. it is not a control premium. my guess is that is where the key debate will come down when the directors of reynolds, seven independent directors that they're going to choose, review the deal. and when shareholders ultimately if it gets to them, vote on it, those unaffiliated. that being the remainder -- not the 42.2%. they won't have a vote of course at b.a.t. so we'll see. but there's a lot of compelling reasons for it. it's not an unexpected in terms of it happening. the timing though was something that was always a question. >> well, the shares had sold off sharply after quarterly earnings. >> although they've been working on this for some time.

b.a.t. in the time has seen stock go up in part because weakness in the pound has helped its business because so much of what it sells is overseas. >> and you and jim were trying to figure out sort of why it's working the other way around. why isn't the u.s. using the strong dollar -- u.s. companies buying overseas. tobacco may be an interesting case here because the u.s. market is extremely lucrative. consider this, the u.s. is close to 25% of the global cigarette profit pool even though it's only 6% of global volumes. so americans pay high prices for cigarettes. and that's why these companies including reynolds american have been doing very well. it's not because more people are smoking, it's because the prices. >> the margins are very, very high. >> and they continue to raise price. >> susan cameron is a tough cookie. there's a transition going on in terms of ceo. >> yeah, announce a new ceo coming in january. >> most likely she's going to fight. we'll see. we'll be following for some time, sarah. all right. when we return, athena health shares down more than 6% after it reported earnings now down more than 7%. we'll talk to the ceo jonathan

bush, plus one of donald trump's key energy advisors, oil billionaire harold hamm will be joining us on the polls and trump's energy plan. much more ahead on "squawk on the street" with the dow down triple digits. stay with us.

massachusetts based athena health topped third quarter profit forecast, but the company did cut its full year guidance and shares are down about 7% plus, almost 8%. joining us now first on cnbc athena health chairman and ceo

jonathan bush. always nice to have you, mr. bush. you surprised the stock's down almost 8%? >> i am not a stock watcher. at one point i made a comment about my stock price a couple years ago on your show. and felt rashes for months afterwards. i am sure that between you and all the guys you have you'll figure out the right price. but i'm excited about is our prospects as a business, which are better than ever as the kind of obamacare mandate energy kind of wanes out of washington and we can get back to the core business of letting doctors be doctors by doing their crap work for them and helping them grow their business by hoelping them be an online resource for health care as well as just, you know, doctor behind a sliding glass wall. >> understood. and you're doing a good job of that, although your forward looking guidance seem to be a bit below what people were anticipating. is there a slowdown in those doctors willing to take you on to do as you said, their crap

things? >> yes. there's a shift right now. for the last seven years there've been a series of major federal programs, $36 billion in the high-tech act, of course the aca uncommonly known as obamacare, and then another series of things people call macra, which i won't explain to you. those programs were forcing doctors and programs to buy systems. so everybody had to race to be the tallest midget to win that battle. we were in guaranteed compliance with all those systems and punched way above our weight class all those years. those programs are now waning. no matter who wins the presidential election, it will be a president with historic mandate to change anything. so we are expecting the basis of purchasing to be more return to real sources of cash. can you cut my cost, can you grow my market share, can you connect me to the rest of the health care continuum. we're the best in the world at that and we expect to win big at that compared to all of our

competition is really pre-internet software companies that can't do any of those things. >> hang on, jonathan. hasn't obamacare been very beneficial to your business, all of these mandates for more recordkeeping from doctors and from hospitals? and the fact now some major insurers are pulling out or raising premiums by double digits. and it is under some political pressure here, isn't that a headwind for you? >> so, yeah, i mean obamacare movement, this sort of washington going to make everyone better for the last seven years has created kind of a sugar high in our space where everybody's got to do this program. and it did help us in what i would consider to be a somewhat unhealthy way. go back and look at the tapes on your show, you know, i've been sort of railing against it even as we've been growing a lot of share with it. our real competitive advantage is we are a cloud-based business service, the only one in health care. we can do a lot more broad based work on eliminating the administrative work in medicine

and connecting doctors' care to patients and to the rest of the continuum. and now that most of our energy isn't going to complying with new programs, we are expecting to do a lot more of that. but you're absolutely right, we got a big sugar high along with everyone else from these big frankly silly programs and excited about getting back to our core knitting. >> jonathan, you mentioned neither candidate would become a president with a mandate necessarily to do much. but there is a lot of scrutiny on kind of the entire food chain of health care, of course drug prices but also services. especially with the epipen controversy there was a lot of talk of how far things are priced, how things are billed, what kind of services are loaded into a bill with the assumption it's going to be reimbursed in a certain way, what role do you and your services have in trying to rationalize any of that? >> absolutely. so you're seeing -- what did not change is that prices of health care continue to march upward, upward, upward and that providers who can offer some break in that are going to win,

and those who can't are going to lose. 10% of ambulatory visits, 10% of doctor office visits happened on athena net last year, every tenth one. those were the ones online where you got a welcome text before your visit where you didn't get handed the clipboard, where you got a follow-up with your lab results and an opportunity to make the next appointment online. those are the ones that next year will be able to be available as an online visit as well as an in-person visit. these are the places where we can really help doctors and hospitals differentiate that the old world technology players that have been propped up by the last seven years cannot play in. so we're very -- obviously the market's going to have to adjust to these new basis of competition, that's great. i look forward to it. i don't mind their skiddishness with us, but i'm psyched for what we're going to be able to do in this environment. >> i know you're looking at the election, jonathan. i'm curious what your thoughts are -- >> what election? was there an election? >> wondering what your thoughts are.

surely you have them because you have them about everything on donald trump and his character, especially considering the recent revelations about him and unfortunately about your brother, billy bush. what can you tell us? >> well, obviously i'm sure you've been as mystified as me by the rise of donald trump. a lot of thanks, a lot of credit to nbc corporation for pumping him up with "the apprentice" and all of his shows. i'm sorry he's there. i'm sorry that the candidates we have are the ones we do. i think the malaise is obvious. and of course poor billy, who of us has not had a moment to stand up to awful behavior and missed the moment? the awful comment or the butt grab or the little thing. in mexico today they're handing out whistles to women to try to give them the courage to speak up when they're grabbed on public transportation. all of us are confronted every day with an opportunity to stand up to some tribal crap from our past and we miss them. billy missed that one, but i've seen him stand up a hundred other times.

i'm very sure he's a atalented guy will bounce back big, but of course, darn. >> do you think he was a scapegoat here? melania said in a recent interview that he egged mr. trump on. >> well, i certainly think any outrage from your folks at nbc has got to be crocodile outrage given that they built the donald, "the apprentice" is an nbc property, the universe pageants billy sent to be the host of these things. you know, of course we all do what we need to do, blame not the bird of prey for eating the lamb for that is what he does. i don't blame nbc, but please don't be silly, nbc. we've all been a part of this. talk about an example of inability to stand up to a little scoundrel. all of us have had this. even nbc. >> jonathan, finally, just to bring it full circle here back to your company. assuming hillary clinton -- >> oh, great. >> -- becomes the next president as the polls seem to indicate is more likely than not, of course there are people who disagree. we know that. >> yeah. >> what are your expectations

for what will happen to the aca under a clinton administration? >> well, i think the point i made earlier stands, which is these are two very low mandate candidates, they both have the highest unfave ratings in my life -- >> are you not expecting anything? >> yeah, exactly. >> it's conceivable the senate will also go democrat. >> i actually think -- i'm not expecting anything. i don't think that a democrat senate will -- or a democrat white house will attempt another great leap forward kind of a big movement, i just don't think they'll have the mandate. there's a lot of changes that have gone into effect during the last seven years. some of them could be made to do good. i think managing the regulatory environment, the regime that's been put in place better is a lot better idea. and the only credible thing you could try with the level of mandate that's there compared with starting some great new idea of a regulatory regime. so i'm expecting a very steady regulatory regime where people try to optimize around the

edges. and that's when the free market can really kick into gear. i can't wait. >> right. and as a bush i know h.w. is going to potentially vote for hillary. how about you? >> well, i've settled on the fact that if you can't stand the nut on the left and you can't stand the nut on the right, go for the johnson. and i'm sticking with johnson/weld here in massachusetts where we'll make no difference anyway and happily voting there in hopes we frac apart this tired broken democratic party into two more reasonable groups and frac apart the republican party in the same way. i'd like to get a party a place that i can believe in again. i grew up believing deeply in my uncle george's republican party, really feeling like it was good for people. and when i listen to bill weld talk, i feel the same way. even if he loses, i want to be for something that i'm just thrilled with. and i think most of us feel that way. we're all doing a lot of deals with the devil that we sort of

want to bathe with a wire brush the next day over and we don't have to do that. we're a great country. we can come up with great people that have great ideas that enable our human freedom and agency rather than suppress it in some judge or socialistic way, either one. >> i'm going to remember that, johnson. thank you, mr. bush. >> couldn't help it. >> jonathan bush, athena health. >> scouldn't help it. >> usually ceos steer away from that. when we come back, just one day after their heated debate hillary clinton and donald trump sharing another stage and even a meal. we'll tell you where and why and what we learned straight ahead. the dow is down 108. bend me shape me, any way you want me

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update now for you on the ongoing deal talks between qualcomm and nxpi. i can tell you the two sides have agreed, a handshake agreement at least according to people close to the situation on price, that price $110 a share. the composition of which is all cash. so qualcomm and nxpi have agreed that qualcomm will pay $110 all in cash to acquire nxpi in a

deal worth roughly $40 billion at that price. there are still other things that they are dealing with. apparently the deal itself including a number overcomplex items involving contracts nxpi has with customers that need to be gone over, but it does appear to be drawing close. this after talks have taken place for a number of weeks between these two companies to complete a transaction that size wise would be one of the largest we've seen in the chip sector and of course would have to do with the growing importance of the internet of things, machine learning and the role chips are playing in so many different things. not just computers. you can see nxpi shares have moved down a bit. market hoping price would be perhaps above that, asking $120. qualcomm shares strong ever since this first surfaced continue with that strength this morning. mike. >> yeah, and a cash deal. old tech companies like qualcomm that's what they have, cash and access to cash. >> enormous amount of cash overseas and overseas company enables them to use it. >> all right. coming to a head. thanks, david. as we head to break, oil down

yesterday holding steady today above their $50 a barrel mark. we'll speak to oil billionaire harold hamm. his take on trump, energy and much more is next. stay tuned. you're watching "squawk on the street."

good morning everybody. i'm sue herera. here is your cnbc news update at this hour. large clouds of black smoke billowing from a strategically important iraqi town northeast of mosul. founded by air strikes and border fire from peshmerga positions as part of the iraqi offensive to recapture mosul. hundreds of activists in the philippines burned a mock u.s. flag and demanded president to punish police officers. the protesters marched to the presidential palace to condemn the violent police action. more than 100 firefighters battled late into the night to extinguish a massive house fire

in los angeles. at least one person was hurt, four people are unaccounted for. no word on how that fire started. and hong kong issuing a typhoon warning this morning, but that didn't stop dozens of surfers from taking action. the thrill seekers ran into the sea to take advantage of the unusually large waves. the typhoon is expected to hit about 62 miles off the coast a little bit later today. that's the news update this hour. sarah, back down to you. flirting with danger. sue, thank you. only 18 days until the election with hillary clinton leading donald trump by at least six percentage points in the latest nbc poll. so will the republican candidate be able to catch up? joining us now is noted trump supporter and energy policy advisor harold hamm, founder and ceo of continental resources. good morning to yoru, harold. thanks for joining us. >> good morning to you. >> i just cited the nbc poll, real clear politics average also has her up by about six points. how do you feel about your candidate's chances now after

the third and final debate and with the polls where they are? >> well, i thought he did very well in the final debate. you know, i think the polls -- we've seen this all the way along this election how wrong the polls are. you know, on the other side we've got rasmussen showing donald trump up. so the polls have not told the entire story here. there's a lot to be said about what's going on with this trump movement across the country today. i think it's a washington disconnect, if you will. we've seen people crowded in this country with all the syrian refugees american people want to stop. i think an analogy close to this is brexit. what happened in europe. and i think the american people can step out and say we want this shut down, we want to know who's here, who's coming across our borders. so immigration is a huge part of this. and it's time, you know, that washington listened to what the

american people are trying to say and trying to tell them. >> yeah, we talked a lot about that yesterday with nigel farage of the brexit movement. while we have you, let's talk about the energy policies. because we've got very different ones from hillary clinton and donald trump. it's funny, we did hear a little about it during the second debate, but of course everybody remembered ken and his red sweater a lot more than his question which actually was on energy policy. so what can you tell us as the biggest distinguishing feature of donald trump's energy plan? >> well, the american renaissance have given america a huge shot in the arm. here again hillary clinton wants to follow right on with president obama and basically discount what's been given with this american renaissance. we can -- now, we have not reached american energy independence, but we can. we've said we could by 2020. so it's probably been delayed a

couple years by what's gone on the last two years with, you know, this low point, low prices. but we can reach energy independence. now, we can't under her plan. i called it silly. and it certainly is. i mean, we're going to put 500 million solar panels on everybody's house. guess who makes those? china makes those. all those jobs are going to go overseas, and we're going to totally discount what's been given to us. >> so, harold, if trump's energy plan is so good for business, why are so few public companies ceos supporting him, and especially in the energy industry? "the wall street journal" looked at it back in september and found most of the money from big oil, and they looked at exxon employees and others, was going to hillary clinton. >> well, that report wasn't correct. i mean a lot of them are just coming out. my donation, the contribution just came out today.

so a lot of it's in the later months here. but, you know, donald trump has had good support from this industry. and certainly receiving a very good support today. so it's there and there's no doubt about that. >> mr. hamm, where is the sense that under the obama administration the energy industry has been ham strung? hasn't u.s. oil production approximately doubled over that time with this administration? >> it was not anything to do with president obama. in fact, the tsunami of regulations that he's piled on have been designed basically to stop our industry in its tracks. that's what's gone on. you know, he's not been very bashful about saying that. you know, he's not for oil and gas development and production in the u.s. the wealth that it creates, you know, for this country.

so that tsunami, i call it tsunami because more regulations that he's piled on and all the agencies that he's over -- you know, just this last year more than george bush all through his term. so it's a tsunami of regulations that's been brought about. >> and trump talks about -- harold, trump talks a lot about reversing them. what is he talking about? a lot of people think it's unrealistic, executive orders to undo some of the major regulations from the epa? >> you know, president obama's acting like a dictator. he's used executive orders for everything under the sun. >> i'm asking how trump would reverse those regulations. wouldn't he have to use executive orders to do that? >> he certainly could. they've been executive orders. they've been stacked on by president obama without going through congress. certainly donald trump can reverse every one of those. and he can do that on day one. and he intends to do just

exactly that. >> finally, there are reports that you are in consideration to be donald trump's energy secretary if he does win the presidency. have you had talks with mr. trump about that prospect? >> no, i have not. you know, this was started by reute reuters, who hadn't particularly liked me anyway. that came out by them. they started that speculation. it's strictly speculation. i have a full-time job here at continental. i'm gainfully employed every single day. i work very hard at my job. thank you. >> all right. and we know that you are advising mr. trump either way on his policies. thank you for joining us to talk about some of them today. harold hamm is the ceo of continental resources. >> yeah. thank you very much. as we head to break let's take a look at shares of paypal. the stock hitting all-time high since it's been liberated from e-bay. subscriber growth with new agreement with chinese giant

alibaba. we have exclusive with paypal cfo john rainey. more on that ahead on "squawk on the street." stay with us. [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide.

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today on trading nation, we look at the four most heavily shorted stocks in the market. could any of them be good contrarian buys for you? find out at tradingnation.cnbc.com. more "squawk on the street" coming up.

welcome back to "squawk on the street." take a look where we stand right now about an hour into the trading day. you can see broadly negative on the s&p and the dow, but the nasdaq inching up a bit. certainly helped by the performance of microsoft. general electric though posted results that the street doesn't really like even though better than expected third quarter operating profit of 32 cents a share, revenue was shy of estimates, ge also narrowed full year earnings outlook, increased its stock buyback by $4 billion but lowered fiscal year '16 industrial organic sales guidance from what had been a range of 2% to 4% to now 0% to

2%. it's tough out there, michael, when it comes to oil and gas, when it comes to even locomotives and a number of their businesses. >> and we're hearing about from its competitors about the aerospace cycle isn't that friendly at the moment either. ge's stock has been telling you this for a little while now it's been underperforming. if you look at equal weight of basket of industrial stocks, it has been suffering. in fact, every time it's kind of threatened that $30 level for the last couple of years it's been kind of poised for some kind of a reversal. seems like the market's just saying, look, no real clarity on any pickup into next year. >> it's also the tale of multiple economies. they call it a volatile environment with just some parts doing better than others. mcdonald's for instance seeing global strength in its report, and the analysts telling us that was a little bit of improving economies there. at the same time manufacturing, manufacturers that are still dealing with a strong dollar which is marching back up again still have their headaches. >> i mean, leading indicators look at global pmi indexes and all that stuff, it's starting to

turn highhigher, but certainly to the point it's in these big conglomerates. >> look at ge support mechanism about 3.2%, 3.3% right now. >> yeah, you know, above 3% with a safe dividend is usually a reason for people to step in, maybe that's why it's sort of mitigated here at least in the mid to high 20s. >> yeah, not great reviews on the quarter there from ge. >> all right. let's send it over to jon fortt. he's got a look at what's coming up on "squawk alley" at the top of the hour. >> microsoft is on cloud nine, the question now does it deserve a multiple inching closer to google's? also, we've got the chairman of telemundo to talk about the growing influence of the hispanic vote and the economy, and we sat down with barry dillard talk about the future of tv. he weighed in on a potential at at&t/time warner deal. all that and more coming up. y so figure out this complex trade

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♪ the costs of higher education will be on many voters minds when they head to the polls next month.

hillary clinton promises to make public college tuition free far lot of americans. donald trump pinching an income-based student debt repayment plan post graduation. our next guest says it's the graduate earnings potential which has colleges taking notice, also a key statistics in overall rankings for the klemms. joining us jim stewart. this is becoming more and more important as the way people judge where to go to school. >> yeah. frankly, i think it's about time. for jeers, generations we've had these kind of vague ideas of what's the most prestigious or best school. finally now we have real data. it's coming from the payscale.com. they've got millions of data points now. the government has put out the college scorecard. these are raw numbers about what you could expect to earn. it adjust for is everybody an epg nearing major or math and science majors. now other people are incorporating this data into more sophisticated rankings. "wall street journal" did their first ever this fall. they use it.

the economist has put out rankings. georgetown's center for work and education has done a very sophisticated analysis. so you can now really begin to see with real data what the financial expectations would be if you go to a splparticular scl and there are surprising results. >> such as? >> the one that's shocked me the most and also shows you can get very divergent results from these but take yale, very high prestige school, and "the wall street journal" survey of outcomes it ranked number one, but in the economist survey, which takes a very interesting methodology, it was towards the bottom. it was like 1,200 or something in the rankings. the reason is the economist looks at what you would expect to earn with your basic criteria like your s.a.t. scores, high school grades. and obviously if you have high scores and grades it doesn't matter where you go to school. you'll do pretty well. they estimate how well would you do with those criteria. then they looked at what what

graduates did. and they found that a yale graduate earned $10,000 a year less than you would have expected given those criteria. >> hmm. >> just up the road -- >> so not the best places to go to earn -- >> or telling us what sort of kid goes to that school and what kind of life they want to have after. if they go to become a professor, they're not going to necessarily earn a ton of money. >> true. pay scale did another rating which included the factor of how satisfied people are with their jobs midcareer. that produced a totally different result. so it took earnings and job satisfaction. the liberal arts colleges, which typically don't do so well on these studies, because they do produce a lot of musicians and poets and english professors -- >> journalists. >> and journalists. i'm a liberal ed graduate, i admit. suddenly they shot up in the rankings once you put life and job satisfaction in there. the number one school on that list was clarent, mckenna, and a

group of these schools did well. >> i would think if you've got a lot of software engineers at a particular school at this point it's going to rank quite high. >> the pay school number one school this year which was in the rankings for the first time is soon-yi maritime college. i've never heard of it. >> beneath the throgs neck bridge. >> in the bronx. >> yeah. >> they were number one, over harvey mudd, over m.i.t. incredible. but it cuts through ridiculous prestige notion and puts the spotlight on some schools whose graduates are doing really well where the schools are obviously adding value that nobody knows about. i was looking up places like bentley university in massachusetts. i went to law school in boston. i never heard of it. they do fantastically well in these surveys. malloy college on long island, never heard of it. adolphus broadus in west virginia, never heard-it. but they're doing something right. >> the next ratio that should be looked at is tuition ratio to the earnings.

how much are you getting for your investment? >> that's correct. none of these surveys yet are really doing a sophisticated return on investment carbon monoxide of analysis. one of the tricky things about that is the sticker price at these schools is not what most people pay. it varies so much based on your family resources. so actually some of the most expensive schools tshs net tuition is fairly low because they give out lots of aid. that's still a tricky calculation. >> you're speaking solely, though, from an economic motivation here as opposed to wanting to actually learn. and the value of education more broadly as an english major. >> i was a history major. >> history major. >> look, i totally agree. i mean, it is in a way very crass to take the immeasurable value of a college education and reduce it to a dollar signed, and that's what critics have been saying. on the other hand, the data is now there, something that parents and students care about. to pretend it isn't there, which

is what "u.s. news" is still doing, is not the way to go. it is out there. everybody should recognize it. it is a factor. it should never be the only factor. but why not include it in the mix of things that -- because frankly they are going to do it. i think the danger is as you point out, if it becomes the only basis, then we have suffered. >> managed to get through a whole segment without talking about the election. bet you're happy about that. >> i am. >> jim stewart, thank you. >> that does it for us on "squawk on the street." "squawk alley" is up next. they'll talk microsoft, big gainer bucking the overall trend in the dow right now, which is down 90 points. short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors.

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good morning. 8:00 a.m. at microsoft headquarters out west, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪